BA 655 Revised Spring 08

8/6/2019 BA 655 Revised Spring 08

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Chapter 1Chapter 1


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Marketing DefinedMarketing Defined

The process of creating, distributing, promoting,The process of creating, distributing, promoting,

and pricing goods, services and ideas to facilitateand pricing goods, services and ideas to facilitate

satisfying exchange relationships in a dynamicsatisfying exchange relationships in a dynamic

environment.environment. ProductsProducts

Can be goods, services and ideasCan be goods, services and ideas

Design product to satisfy a need/wantDesign product to satisfy a need/want

DistributionDistribution

Make available at right place and timeMake available at right place and time

PromotionPromotion

Advertising, sales, PR, promotion, etc.Advertising, sales, PR, promotion, etc.

PricePrice

Acceptable price to create valueAcceptable price to create value


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OrganizationsOrganizations

Customer FocusCustomer Focus Target group -- target audienceTarget group -- target audience

Differentiated products and messagesDifferentiated products and messages

Consumer research -- market from a differentialConsumer research -- market from a differentialadvantageadvantage

Define business in terms of customer needsDefine business in terms of customer needs IBM sells problem solving/uncertainty reductionIBM sells problem solving/uncertainty reduction

Revlon sells hopeRevlon sells hope

Customers buy solutions, not productsCustomers buy solutions, not products

Must bring customer satisfaction in line with otheMust bring customer satisfaction in line with othe

company goals & capabilities -- realisticcompany goals & capabilities -- realistic


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Core Concepts ofCore Concepts of

MarketingMarketing Needs, wants, demandsNeeds, wants, demands

Needs -- state of felt deprivation -- dont create needsNeeds -- state of felt deprivation -- dont create needs

Wants -- specific satisfiers -- shaped by culture andWants -- specific satisfiers -- shaped by culture andindividual experience -- we can influence wantsindividual experience -- we can influence wants

Demands -- wants backed by buying power --demandsDemands -- wants backed by buying power --demandsoften for a group of benefits and may be addressed byoften for a group of benefits and may be addressed bya number of needs/wantsa number of needs/wants

Basic needs are relatively few -- usually have manyBasic needs are relatively few -- usually have manywants -- and limited demandwants -- and limited demand

ProductsProducts Anything that satisfies a need or wantAnything that satisfies a need or want

We buy the service/benefit -- sell the serviceWe buy the service/benefit -- sell the service

Marketing myopia -- focus on the product versusMarketing myopia -- focus on the product versuscustomer needcustomer need


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MarketingMarketing Value, cost and satisfactionValue, cost and satisfaction

Value is consumers estimate of products capacityValue is consumers estimate of products capacity

to satisfy a need or want --versus the costto satisfy a need or want --versus the cost

Cost is part of the need-satisfaction equationCost is part of the need-satisfaction equation

Often more emotionally driven than rationalOften more emotionally driven than rational

Exchanges & transactionsExchanges & transactions Exchanges -- the act of obtaining desired objectsExchanges -- the act of obtaining desired objects

by offering something in returnby offering something in return Transactions -- actual trade of value between twoTransactions -- actual trade of value between two

or more partiesor more parties

Agreement reached -- the eventAgreement reached -- the event


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MarketingMarketing Relationship MarketingRelationship Marketing

Built over timeBuilt over time

Centers on mutual benefitsCenters on mutual benefits

Extremely valuable assetExtremely valuable asset Markets -- the set of actual and potential buyersMarkets -- the set of actual and potential buyers

of a productof a product Centralized of decentralizedCentralized of decentralized

Exist wherever something of value is desiredExist wherever something of value is desired

Driven by a set of customers versus a set of suppliersDriven by a set of customers versus a set of suppliers[industries][industries]

Potential customers share a particular need or want --Potential customers share a particular need or want --and may be able and willing to purchase/exchangeand may be able and willing to purchase/exchange


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MarketingMarketing Marketers -- people seeking a resource fromMarketers -- people seeking a resource from

someone else and willing to offer somethingsomeone else and willing to offer something

of value in exchangeof value in exchange

Marketing -- working the exchangeMarketing -- working the exchange The one with the greatest desire to make theThe one with the greatest desire to make the

exchange is the marketerexchange is the marketer

Normally a company serving end-users in the faceNormally a company serving end-users in the faceof competitionof competition


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Company OrientationsCompany Orientations

Toward MarketplaceToward Marketplace Production conceptProduction concept -- emphasis placed on-- emphasis placed on

production and distribution efficiency.production and distribution efficiency.

Contends the customer will buy products thatContends the customer will buy products that

are widely available at low costare widely available at low cost Product conceptProduct concept -- holds that consumers will-- holds that consumers will

favor products that offer the most quality,favor products that offer the most quality,

performance, or innovative features --performance, or innovative features --

marketing myopiamarketing myopia Selling conceptSelling concept -- responds to overcapacity ---- responds to overcapacity --

sell what they make rather than make what thesell what they make rather than make what the

market wantsmarket wants


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Company OrientationsCompany Orientations

Toward MarketplaceToward Marketplace Marketing conceptMarketing concept -- the key to achieving-- the key to achieving

organizational goals consists in:organizational goals consists in: determining needs and wants of target marketsdetermining needs and wants of target markets

delivering the desired satisfactions moredelivering the desired satisfactions more

effectively and efficiently than competitorseffectively and efficiently than competitors


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Support firms (e.g.,ad agency)

Competitors

Customers

Channel

firms

Thefirm

MARKETING

Production

Finance/

accounting

R&D

Personnel

The Environment

The BoundaryThe Boundary

Spanning Role ofSpanning Role of

MarketingMarketing


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Factors InfluencingFactors Influencing

Marketing StrategyMarketing StrategyDemographic/

economic

environment

Political/

legal

environment

Socio/

cultural

environment

Technological/

physical

environment

Suppliers Publics

Competitors

Marketing

Intermediaries

Marketin

g

inform

ation

syste

m

Marketing

Planning

system

Marke

ting

organiza

tiona

nd

imple

menta

tions

ystem

Marketing

controlsystem

PlaceTarget

Customers Price

Promotion

Product

h


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The Four PsThe Four PsComponents of theComponents of the

Marketing MixMarketing Mix

ProductProductProduct variety

Quality

Design

Features

Brand name

Packaging

Sizes

Services

Warranties

Returns

PricePriceList Price

Discounts

Allowances

Payment period

Credit terms

PromotionPromotionSales PromotionAdvertising

Sales force

Public relations

Direct Marketing

PlacePlaceChannels

Coverage

Assortments

Locations

Inventory

Transport

Marketing

Mix


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Marketing-MixMarketing-Mix

StrategyStrategy

Advertising

Sales force

Publicrelations

Direct mail,telemarketing,and Internet

SalesPromotion

CompanyOffering Mix

Promotion Mix

ProductsServicesPrices

Distributionchannels

TargetCustomers


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Chapter 2Chapter 2


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Creating CustomerCreating Customer

ValueValue

Relative

Price

Relative BenefitDrs. Michael & George Belch, 1994. All rights reserved.

High "Rip-off" Expensive Premium

Equal Bad Buy M.O.R. Good Buy

Low Ecomomy Inexpensive Bargain

Low Equal High

Alternative Value States


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The Planning ProcessThe Planning Process Define missionDefine mission

Examine internal environmentExamine internal environment

Examine external environmentExamine external environment Set corporate and business unitSet corporate and business unit

goals & objectivesgoals & objectives

Design programsDesign programs ImplementImplement

Examine feedback and provideExamine feedback and provide

controlcontrol


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Market-OrientedMarket-Oriented

Strategic PlanningStrategic Planning The managerial process of developingThe managerial process of developing

and maintaining a viable fit betweenand maintaining a viable fit between

thethe organizations objectives, skills,organizations objectives, skills,and resourcesand resources and itsand its changing marketchanging market

opportunities.opportunities.

Aim is toAim is to shape and reshapeshape and reshape

companyscompanys business and productsbusiness and products toto

yield target profits and growth.yield target profits and growth.


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Corporate MissionCorporate Mission

StatementStatement A comprehensive statement whichA comprehensive statement which

defines the purpose and nature of andefines the purpose and nature of anorganization of people.organization of people.

In business, the needs of the customerIn business, the needs of the customerare its basis.are its basis.

It should be future-oriented andIt should be future-oriented and

provide direction. It helps select theprovide direction. It helps select thebest strategies from amongbest strategies from amongalternatives. It provides focus andalternatives. It provides focus andconcentration.concentration.


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Benefits of MissionBenefits of Mission

StatementStatement Orients toward futureOrients toward future Provides overall grand strategyProvides overall grand strategy

Infers which businesses we will not be inInfers which businesses we will not be in Provides directionProvides direction Helps in selection among alternateHelps in selection among alternate

strategiesstrategies

Differentiates usDifferentiates us Positions usPositions us Allows concentration of resources on aAllows concentration of resources on a

market nichemarket niche


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Elements of a MissionElements of a Mission

StatementStatement Reflect the history of the companyReflect the history of the company Reflect current preferences of the owners/managersReflect current preferences of the owners/managers Recognize influences of the market environmentRecognize influences of the market environment

Consider corporate resourcesConsider corporate resources Base on distinctive competenciesBase on distinctive competencies Define the competitive scopeDefine the competitive scope

Industry scopeIndustry scope

Products and applicationsProducts and applications

CompetenciesCompetencies Market-segment scopeMarket-segment scope

Vertical scopeVertical scope

Geographical scopeGeographical scope

...and express the corporate vision in an exciting, positive way...and express the corporate vision in an exciting, positive way


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The MarketingThe Marketing

Planning ProcessPlanning Process

3. Determine3. Determine

2. Identify Target

Markets2. Identify Target

Markets

5. Develop Programs to

Implement the

Marketing Mix

5. Develop Programs to

Implement the

Marketing Mix

6. Implement the

Programs6. Implement the

Programs

7. Establish Control &

Evaluation Criteria7. Establish Control &

Evaluation Criteria

8. Implement Control

& Evaluation

Procedures

8. Implement Control

& Evaluation

Procedures

1. Analyze Present

Marketing Situation1. Analyze Present

Marketing Situation

4. Select the

Appropriate

Marketing Mix

4. Select the

Appropriate

Marketing Mix


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1. Analyze present Marketing Situation

EXTERNALANALYSIS INTERNAL ANALYSIS

Market Size and growthCompetitorsBuying practicesPolitical/ legal environmentTechnological environmentIndustry past performance

Present& potential

Financial resourcesProduction capabilities & capacityEngineering and R&D capabilitiesMarketing capabilities

Corporate mission & objectivesDistribution capabilitiesCostsTop management style




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Specifically define-segmentSpecifically define-segment

Geographically locateGeographically locate

Determine size and growthDetermine size and growth

Estimate resistance to be encounteredEstimate resistance to be encountered

Assess your ability to overcomeAssess your ability to overcomeresistance expectedresistance expected

2. Identify Target Markets




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TYPICAL MARKETINGOBJECTIVES

Sales volume figure

Sales growth rate

Market share

Market penetration

Return on investment

Company image

Social responsibility

CRITERIA FOR EFFECTIVEOBJECTIVES

Consistent with corporateobjectives

Realistic

Attainable Measurable

Specific

Not mutually exclusive

3. Determine Marketing Objectives




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4. Select the Appropriate Marketing Mix

Product/Service Strategy--Specifications, Branding Product

Line, Product Support Activities, Packaging

Distribution Strategy--Channels, Types of Middlemen,

Warehousing, Inventory, Transportation

Promotion Strategy--Personal Selling, Sales PromotionsAdvertising, Public Relations, Direct Marketing

Pricing Strategy--List & Net Prices, Discounts, Rebates,

Freight, Bidding, Leasing

The Marketing PlanningThe Marketing Planning

ProcessProcess


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Determine required mix activitiesDetermine required mix activities Estimate time required for each activityEstimate time required for each activity

Arrange activities in a logical sequenceArrange activities in a logical sequence

Combine activities into programCombine activities into program

Establish dates for start & completion of each activityEstablish dates for start & completion of each activity Assign responsibility for the performance of each activityAssign responsibility for the performance of each activity

Determine costs and budgetsDetermine costs and budgets

5. & 6. Develop and Implement Marketing

Programs to Carry Out Marketing Mix




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Planning ProcessPlanning Process7. & 8. Establish Control and Evaluation

Criteria & Implement Procedures

s Identify key performance areas

s Set performance standards

s Measure performance results

s Compare results with standards

s Identify discrepancies

s Diagnose causes of discrepancies

s

Determine corrective action


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Contents of aContents of a

Marketing PlanMarketing Plan Executive SummaryExecutive Summary

Summary of goalsSummary of goals

Recommendations of actionRecommendations of action

Consider writing lastConsider writing last

Current Marketing SituationCurrent Marketing Situation Market situationMarket situation

Product situationProduct situation Competitive situationCompetitive situation

Distribution situationDistribution situation

Macroenvironment situationMacroenvironment situation


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Marketing PlanMarketing PlanThreats & OpportunitiesThreats & Opportunities

Strengths & weaknesses -- internalStrengths & weaknesses -- internal

Opportunities & threats -- externalOpportunities & threats -- external

Issues analysis -- competition,Issues analysis -- competition,

environment, economics, etc.environment, economics, etc.


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Marketing PlanMarketing Plan ObjectivesObjectives

Financial objectives -- profits, sales,Financial objectives -- profits, sales,etc.etc.

Marketing objectives -- growth, share,Marketing objectives -- growth, share,awareness, image, distribution, etc.awareness, image, distribution, etc.

Marketing StrategyMarketing Strategy Integration of all toolsIntegration of all tools

Strategies for target marketsStrategies for target markets Marketing mixMarketing mix

Expenditures, how support goals, etc.Expenditures, how support goals, etc.


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Marketing PlanMarketing Plan Action ProgramsAction Programs

Tactics of the planTactics of the plan

Who, what, when, howWho, what, when, how

muchmuch Budgets -- projectedBudgets -- projected

profit/lossprofit/loss

ControlsControls

Financial goalFinancial goalperformanceperformance

Awareness, attitudes,Awareness, attitudes,

trial, repeat, adoptiontrial, repeat, adoption


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Chapter 3Chapter 3


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Information SystemInformation System Assessing information needsAssessing information needs

What are we trying to solve?What are we trying to solve?

Get only what we needGet only what we need

Developing informationDeveloping information

Internal recordsInternal records

Marketing intelligenceMarketing intelligence

Marketing researchMarketing research


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Information SystemInformation System Internal RecordsInternal Records Financial records, sales data, orders, shipments, warranty cards. etc.Financial records, sales data, orders, shipments, warranty cards. etc.

Reveal market saturation, decay in absence of advertising, origin ofReveal market saturation, decay in absence of advertising, origin ofsales, profile of customer, etc.sales, profile of customer, etc.

Marketing Intelligence SystemMarketing Intelligence System Environmental surveillance -- everyday flow of information toEnvironmental surveillance -- everyday flow of information tomanagementmanagement

Internal and external sourcesInternal and external sources

Sales forceSales force

Distributors, retailersDistributors, retailers

Purchased information -- Nielson, IRIPurchased information -- Nielson, IRI

Published data -- trends, trade associations, economic forecastsPublished data -- trends, trade associations, economic forecasts Can be gathered formally and informallyCan be gathered formally and informally

Key is to make it available for decisionsKey is to make it available for decisions


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Analyzing theAnalyzing the

MacroenvironmentMacroenvironment Marketing EnvironmentMarketing Environment

Forces and factors that are external to the company:Forces and factors that are external to the company: Largely uncontrollableLargely uncontrollable

Potentially relevantPotentially relevant Environmental ThreatsEnvironmental Threats

Unfavorable trend or disturbanceUnfavorable trend or disturbance

Lead to major impact on company, product or brandLead to major impact on company, product or brand

Must forecast character & degree of impactMust forecast character & degree of impact

Marketing OpportunityMarketing Opportunity Potentially favorable trend or actionsPotentially favorable trend or actions

Constant monitoring to identify potential opportunity --Constant monitoring to identify potential opportunity --trackingtracking


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Tracking MajorTracking Major

Environmental ForcesEnvironmental Forces Monitor Six Major ForcesMonitor Six Major Forces

Demographic EnvironmentDemographic Environment

Economic EnvironmentEconomic Environment

Natural EnvironmentNatural Environment

Technological EnvironmentTechnological Environment

Political EnvironmentPolitical Environment

Cultural EnvironmentCultural Environment

Deciphering and responding to theseDeciphering and responding to theseforces is criticalforces is critical

Each provides threats & opportunitiesEach provides threats & opportunities

10 Megatrends10 Megatrends


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10 Megatrends10 Megatrends

Shaping the ConsumerShaping the Consumer

LandscapeLandscape Aging boomersAging boomers

Delayed retirementDelayed retirement

Changing nature ofChanging nature ofworkwork

Greater educationalGreater educational

attainmentattainment

Labor shortagesLabor shortages

IncreasedIncreased

immigrationimmigration

Rising HispanicRising Hispanic

influenceinfluence

Shifting birth trendsShifting birth trends

WideningWidening

geographicgeographicdifferencesdifferences

Changing ageChanging age

structurestructure


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DemographicDemographic

EnvironmentEnvironment Study of populations: size, density, location,Study of populations: size, density, location,

age, sex, occupation, etc.age, sex, occupation, etc. The Baby BoomThe Baby Boom

Worldwide population explosionWorldwide population explosion Highest growth -- poorest countriesHighest growth -- poorest countries

Population age mixPopulation age mix Baby boomersBaby boomers Generation XGeneration X

EthnicityEthnicity Salad bowl vs. melting potSalad bowl vs. melting pot Micro-marketingMicro-marketing


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DemographicDemographic

EnvironmentEnvironment Study of populations: size, density,Study of populations: size, density,

location, age, sex, occupation, etc.location, age, sex, occupation, etc.

EducationEducation Americans becoming more educatedAmericans becoming more educated

FamilyFamilyTypical family rarely existsTypical family rarely exists

Geographic shiftsGeographic shifts Mobility from technologyMobility from technology

Shift from mass to micromarketsShift from mass to micromarkets


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Economic EnvironmentEconomic Environment Income DistributionIncome Distribution

Track income &Track income &changes in spendingchanges in spending

Four structures:Four structures: Subsistence economySubsistence economy Raw material exportingRaw material exporting

economyeconomy IndustrializingIndustrializing

economieseconomies Industrial economiesIndustrial economies

Spending PatternsSpending Patterns SavingsSavings

DebtDebt

Credit availabilityCredit availability


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Economic EnvironmentEconomic EnvironmentsU. S. moving to two-tieredU. S. moving to two-tiered

economyeconomy

Income rising slowly for some --Income rising slowly for some --BoomersBoomers

Effecting retailing patterns --Effecting retailing patterns --

retailers in the middle beingretailers in the middle being

squeezed outsqueezed out

Effecting product offerings, etc.Effecting product offerings, etc.


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Natural EnvironmentNatural Environment Poses opportunities & threatsPoses opportunities & threats

Shortage of raw materialsShortage of raw materials

Increased cost of energyIncreased cost of energy Increased levels of pollution --Increased levels of pollution --

opportunitiesopportunities

Changing role of government inChanging role of government in

environmental protectionenvironmental protection


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TechnologicalTechnological

EnvironmentEnvironment Accelerating pace of changeAccelerating pace of change

Must be fast, lean, entrepreneurial -- able toMust be fast, lean, entrepreneurial -- able to

move quicklymove quickly

Allows new levels of mobilityAllows new levels of mobility

Unlimited innovation opportunitiesUnlimited innovation opportunities

High cost of R & D for technological innovationHigh cost of R & D for technological innovation

High risk factors lead to minor improvementsHigh risk factors lead to minor improvements

vs. new productsvs. new products


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Political EnvironmentPolitical Environment LegislationLegislation

Attempts to protect companies from each otherAttempts to protect companies from each other

Attempts to protect consumers from unfair and dangerousAttempts to protect consumers from unfair and dangerous

practicespractices Sometimes to protect communities or society as a wholeSometimes to protect communities or society as a whole

EnforcementEnforcement Effect of laws depends on power put behind theEffect of laws depends on power put behind the

enforcement agency -- FDA, FTC, etc.enforcement agency -- FDA, FTC, etc.

Varies with sitting political party/budgetsVaries with sitting political party/budgets Public interest groupsPublic interest groups

Can be more powerful than legislationCan be more powerful than legislation

Employ sophisticated tools/marketingEmploy sophisticated tools/marketing


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Cultural EnvironmentCultural Environment Core cultural values -- high persistenceCore cultural values -- high persistence

Relatively enduringRelatively enduring

Key consideration in positioning a productKey consideration in positioning a product

Examples: work ethic, marriage, honesty, rootsExamples: work ethic, marriage, honesty, roots

SubculturesSubcultures Homogeneous ethnic or lifestyle groups within the larger cultuHomogeneous ethnic or lifestyle groups within the larger cultu

Share common beliefs, behaviors -- cannot type-cast too narShare common beliefs, behaviors -- cannot type-cast too nar

Examples: seniors, teenagers, Catholics, RepublicansExamples: seniors, teenagers, Catholics, Republicans

Secondary cultural values -- shift through timSecondary cultural values -- shift through tim How people see themselves & othersHow people see themselves & others

How see organizations & societyHow see organizations & society

How see natureHow see nature


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Chapter 4Chapter 4


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Information SystemInformation System Marketing ResearchMarketing Research

Systematic design, collection, analysis and reporting of dataSystematic design, collection, analysis and reporting of dataand findings relevant to a specific marketing situation facingand findings relevant to a specific marketing situation facingthe companythe company

Formal gathering processFormal gathering process

Used in a variety of ways:Used in a variety of ways: Planning -- understanding the marketPlanning -- understanding the market

Product -- design alternatives, features, names, packageProduct -- design alternatives, features, names, package

Price -- appropriate range, skim/penetrate, price vs. qualityPrice -- appropriate range, skim/penetrate, price vs. quality

Promotion -- pre-test ads, post-test, media mix, premiums, etc.Promotion -- pre-test ads, post-test, media mix, premiums, etc.

Place -- type of dealers, retail movement, channel inducements,Place -- type of dealers, retail movement, channel inducements,stocking goodsstocking goods

Control -- sales/market share, sales vs. potential, new programControl -- sales/market share, sales vs. potential, new programeffectiveness, imageeffectiveness, image


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Information SystemInformation System

The Marketing Research ProcessThe Marketing Research Process

Collecting the InformationCollecting the Information

Secondary data -- data collected from otherSecondary data -- data collected from othersources for other reasonssources for other reasons

must be in a useable formmust be in a useable form

must be relevant, accurate, current, impartialmust be relevant, accurate, current, impartial

available from trade associations, Governmentavailable from trade associations, Government

sources, etc.sources, etc. Role of InternetRole of Internet


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Information SystemInformation System Collecting the Information(cont.)Collecting the Information(cont.)

Primary data --Primary data -- research approachesresearch approaches

Exploratory ResearchExploratory Research

Observational research -- actual behaviorsObservational research -- actual behaviors Focus-group research -- discuss aspects of aFocus-group research -- discuss aspects of a

problem : 6 - 10 people with moderator --problem : 6 - 10 people with moderator --

qualitative vs. quantitativequalitative vs. quantitative

Causal Research -- experimental design to testCausal Research -- experimental design to test

cause & effectcause & effect Descriptive Research -- survey research --Descriptive Research -- survey research --

measure peoples knowledge, beliefs, attitudesmeasure peoples knowledge, beliefs, attitudes

preferences, etc.preferences, etc.


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Information SystemInformation System Collecting the Information (cont.)Collecting the Information (cont.)

Research instruments:Research instruments: Questionnaires -- requires professional expertise,Questionnaires -- requires professional expertise,

testing/debuggingtesting/debugging Mechanical InstrumentsMechanical Instruments

Sampling plan:Sampling plan: Target populationTarget population Sample sizeSample size Sampling procedures -- random, stratified, clusterSampling procedures -- random, stratified, cluster

Contact methods:Contact methods: Direct mailDirect mail TelephoneTelephone PersonalPersonal


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Market DemandMarket Demand Two types of demandTwo types of demand

ExpansibleExpansible

Non-expansibleNon-expansible

Total market demandTotal market demand

Total volume bought by a defined consumer groupTotal volume bought by a defined consumer group Defined geographic area in a defined time periodDefined geographic area in a defined time period

Defined marketing environment and defined level and mix of industryDefined marketing environment and defined level and mix of industrymarket effortmarket effort

Market minimumMarket minimum

Market potentialMarket potential

s Primary demandPrimary demand

s Selective demandSelective demand

The Boston ConsultingT e Boston onsu t ng


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Stars Question Marks

Cash Cows Dogs

Mark

etGrowth

Rate

20%

18%

16%

14%12%

10%

8%

6%

4%

2%

Relative Market Share

10x 4x 2x 1x 0.2x 0.4x 0.1x

The Boston ConsultingT e Boston onsu t ngGroups Growth-ShareGroups Growth-Share

MatrixMatrix

1

2

3

4

5

6 78


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Chapter 5Chapter 5


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Factors AffectingFactors Affecting

Consumer SatisfactionConsumer SatisfactionConsumer

Psychology

Perspective

Prior

ExpectationsProduct

Performance

Confirmation/

Disconfirmation

Consumer

Satisfaction/

Dissatisfaction

Marketing

Management

Perspective

Drs. Michael & George Belch, 1994. All rights reserved.


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Tracking CustomerTracking Customer

SatisfactionSatisfaction Critical is done on regular basisCritical is done on regular basis Several methods availableSeveral methods available

Complaint & suggestion systemsComplaint & suggestion systems

Customer satisfaction surveysCustomer satisfaction surveys Ask the customerAsk the customer TelephoneTelephone Mail out surveysMail out surveys Exit interviewsExit interviews

Ghost shopping -- retail outletsGhost shopping -- retail outlets

Lost customer analysisLost customer analysis Tracking research very affordableTracking research very affordable Can also get competitive information at the sameCan also get competitive information at the same

timetime


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Porters Value ChainPorters Value Chain

Support ActivitiesSupport Activities Firm InfrastructureFirm Infrastructure

Human ResourceHuman Resource

ManagementManagement

Technology DevelopmentTechnology Development

ProcurementProcurement

Primary ActivitiesPrimary Activities Inbound LogisticsInbound Logistics

OperationsOperations

Outbound LogisticsOutbound Logistics

Marketing & SalesMarketing & Sales

ServiceService

Margin -- endMargin -- end

resultresult Primary steps toPrimary steps to

create customercreate customersatisfaction: bringsatisfaction: bring

materials in, operatematerials in, operate

on them, send themon them, send them

out, market them,out, market them,

service themservice them


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Customer RetentionCustomer Retention

AftermarketingAftermarketing

Markets are maturing & flattening outMarkets are maturing & flattening out

Products are also maturing -- approaching parity qualityProducts are also maturing -- approaching parity quality

Marketplace grown more complexMarketplace grown more complex

Marketers are increasingly distanced from their customersMarketers are increasingly distanced from their customers multiplicity of channelsmultiplicity of channels

Become more reliant on intermediaries to deliver customerBecome more reliant on intermediaries to deliver customer

satisfactionsatisfaction

channels are the only contact with the customerchannels are the only contact with the customer

Customer retention will be key to success in the marketCustomer retention will be key to success in the market

placeplace

Terry G. Vavra, Ph.D.


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AftermarketingAftermarketing Requires shift in focus by organizationRequires shift in focus by organization

place emphasis on retention vs. new customer acquisitionplace emphasis on retention vs. new customer acquisition

Establishing and maintaining a detailed customerEstablishing and maintaining a detailed customerbasebase

Blueprinting customer contactsBlueprinting customer contacts Conducting customer satisfaction surveysConducting customer satisfaction surveys Analyzing informal customer communicationsAnalyzing informal customer communications Formulating & managing formal communicationsFormulating & managing formal communications

programsprograms Hosting special customer events or programsHosting special customer events or programs Identifying and reclaiming lost customersIdentifying and reclaiming lost customers


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Acquisition of customers can cost 5 timesAcquisition of customers can cost 5 times

more than retaining current customers.more than retaining current customers.

The average customer loses 10% of itsThe average customer loses 10% of its

customers each year.customers each year.

A 5% reduction to the customer defectionA 5% reduction to the customer defection

rate can increase profits by 25% to 85%.rate can increase profits by 25% to 85%.

The customer profit rate increases over theThe customer profit rate increases over the

life of a retained customer.life of a retained customer.

i C


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Herrington CustomerHerrington Customer

Satisfaction HierarchySatisfaction Hierarchy

Customer

is an Integral

Team Member

Dedicate Resources to

Understanding Customer

Basic Support Services(Billing, Schedule, Service)

Meet Core Capabilities

(Product Must Work)

Drs.. Michael & George Belch, 1994. All rights reserved.

Two-way Relationship

(Employees Listen to Customer)

T l Q li


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Total QualityTotal Quality

MarketingMarketing

Customer PerceptionCustomer Perception Every Company ActivityEvery Company Activity Total Employee CommitmentTotal Employee Commitment High-Quality PartnersHigh-Quality Partners Quality Can Always Be ImprovedQuality Can Always Be Improved May Require Quantum LeapsMay Require Quantum Leaps

Quality Does Not Cost MoreQuality Does Not Cost More Necessary But Not SufficientNecessary But Not Sufficient Cannot Save Poor ProductCannot Save Poor Product


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Chapter 6Chapter 6

Stages in the PurchaseStages in the Purchase


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Stages in the PurchaseStages in the Purchase

Decision ProcessDecision Process

Problem

recognition

Information

search

Alternative

evaluation

Purchase

decision

Postpurchase

evaluation

C BC B


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Consumer BuyerConsumer Buyer

BehaviorBehavior Need to understand target consumerNeed to understand target consumer

Who they areWho they are

Objectives in relation to your productObjectives in relation to your product

Where & how often they purchaseWhere & how often they purchase

Where they are in the buying processWhere they are in the buying process

And more...And more...

Need to understand what drives the purchase processNeed to understand what drives the purchase process The stepsThe steps

The influencesThe influences CultureCulture

SocialSocial PersonalPersonal PsychologicalPsychological

Th B i D i iTh B i D i i


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The Buying DecisionThe Buying Decision

ProcessProcess Researching the buying decision processResearching the buying decision process

Interview recent purchasers of your productInterview recent purchasers of your product

Interview people who didnt buyInterview people who didnt buy

Interview people who are thinking about buyingInterview people who are thinking about buying

The purchase decisionThe purchase decision Brand decisionBrand decision

Vendor decisionVendor decision

Quantity decisionQuantity decision

Timing decisionTiming decision

Payment method decisionPayment method decision Postpurchase behaviorPostpurchase behavior

Relationship marketingRelationship marketing

Reinforce the decisionReinforce the decision

Th B i D i iTh B i D i i


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The Buying DecisionThe Buying Decision

ProcessProcess Different buying roles people take on for differentDifferent buying roles people take on for different

buying decisionsbuying decisions InitiatorInitiator BuyerBuyer

InfluencerInfluencer UserUser

DeciderDecider Various stages customer goes through & tools usedVarious stages customer goes through & tools used

Must know where customer is in the processMust know where customer is in the process

Match tools to the customers buying stageMatch tools to the customers buying stage

Types of buying behaviorTypes of buying behavior Complex buying behaviorComplex buying behavior

Dissonance reducing buying behaviorDissonance reducing buying behavior

Habitual buying behaviorHabitual buying behavior

Variety seeking buying behaviorVariety seeking buying behavior


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Chapter 7Chapter 7


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Industrial BuyingIndustrial Buying

Decision ProcessDecision Process

Evaluate product

and supplier

performance

Negotiate a purchase order

Information search and

evaluation of suppliers

Determine product

specifications

Need recognition

iff i


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Key Differences Business/Key Differences Business/

Consumer MarketsConsumer Markets

Market Structure and DemandMarket Structure and Demand

Fewer buyersFewer buyers

Larger buyersLarger buyers

Close supplier-customer relationshipClose supplier-customer relationship

Geographically concentrated buyersGeographically concentrated buyers

Derived demand -- for OEMsDerived demand -- for OEMs

Inelastic demandInelastic demand

Fluctuating demandFluctuating demand


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Key Differences Business/Key Differences Business/

Consumer MarketsConsumer Markets Nature of the buying unitNature of the buying unit

Professional purchasing proceduresProfessional purchasing procedures

Several buying influencesSeveral buying influences Direct buying, reciprocity, leasingDirect buying, reciprocity, leasing

Human element still enters in -- notHuman element still enters in -- not

totally rational/professionaltotally rational/professional

ey erencesey erencesiB i /


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yyBusiness/Business/

Consumer MarketsConsumer Markets Types of buying decisionsTypes of buying decisions Buying decisions are often complexBuying decisions are often complex

Large amounts of moneyLarge amounts of money

Technical specificationsTechnical specifications

Interaction/coordination of more peopleInteraction/coordination of more people

Three basic types of buysThree basic types of buys

Straight rebuyStraight rebuy

Modified rebuyModified rebuy

New task -- where most marketing effort focused --New task -- where most marketing effort focused --creating:creating:

B i / CB siness/ Cons mer


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Business/ ConsumerBusiness/ Consumer

MarketsMarkets

The Decision ProcessThe Decision Process More formalizedMore formalized

Often detailed written proceduresOften detailed written procedures

Buying decision more dependent on buyer/sellerBuying decision more dependent on buyer/sellerrelationshiprelationship

Both buyer and seller have fewer options to goBoth buyer and seller have fewer options to go

somewhere elsesomewhere else

Process often done with RFPProcess often done with RFP

Specifications, pricingSpecifications, pricing Delivery/service termsDelivery/service terms

Payment termsPayment terms

QuantityQuantity

B i / CBusiness/ Consumer


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MarketsMarkets Who makes the decisionWho makes the decision

Understanding the decision influencers is criticalUnderstanding the decision influencers is critical

Often not apparent who real call-maker isOften not apparent who real call-maker is

Must understand:Must understand: Who are the real decision makersWho are the real decision makers What decisions do they makeWhat decisions do they make What is their level of influenceWhat is their level of influence What evaluation criteria do they useWhat evaluation criteria do they use

Gatekeepers are difficult to identify -- influence aGatekeepers are difficult to identify -- influence a

no decision, but cant say yesno decision, but cant say yes Never under-estimate the purchasing agentNever under-estimate the purchasing agent

Never under-estimate the financial officerNever under-estimate the financial officer

Build relationships up and down the organizationBuild relationships up and down the organization

B i / CBusiness/ Consumer


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MarketsMarkets

Role of marketing mix elements vary:Role of marketing mix elements vary:

Personal sellingPersonal selling

TelemarketingTelemarketing

Direct mailDirect mail

Trade showsTrade shows

Media advertisingMedia advertising

Publicity/Public RelationsPublicity/Public Relations Seminars/SymposiaSeminars/Symposia

InternetInternet

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Of Concern to BusinessOf Concern to Business

MarketersMarketers

Who are the major decisionWho are the major decision

participants?participants?

What decisions do they influence?What decisions do they influence? What is their level of influence?What is their level of influence?

What evaluation criteria do theyWhat evaluation criteria do they

use?use?


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Chapter 8Chapter 8

Targeting andTargeting and


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a ge g a dg g

PositioningPositioning

Market

Segmentation

Market

Targeting

Market

Positioning

1. Identify

segmentation

variables and

segment the

market

2. Develop

profiles ofresulting

segments

3. Evaluate the

attractiveness

of each

segment.

4. Select the

targetsegments

5. Identify possible

positioningconcepts for each

target segment

6. Select, develop,

and communi-

cate the chosenpositioning

concept


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Market SegmentationMarket Segmentation

Segmentation: the sub-dividing ofSegmentation: the sub-dividing of

a market into homogeneousa market into homogeneous

subsets of consumers -- the subsetsubsets of consumers -- the subset

may be reached with a distinctmay be reached with a distinct

marketing mix.marketing mix.


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Must be:Must be:

MeasurableMeasurable

AccessibleAccessible

SubstantialSubstantial

ResponsiveResponsive

Benefits:Benefits:

Can spot & compare marketingCan spot & compare marketingopportunitiesopportunities

Use to allocate/prioritize fundsUse to allocate/prioritize funds


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Segmentation StrategySegmentation Strategy

Key take-aways:Key take-aways: Allows company to match strengths of product andAllows company to match strengths of product and

resources with needs/wants of a target consumerresources with needs/wants of a target consumer

Helps determine positioning strategyHelps determine positioning strategy

Allows concentration of resources -- strength inAllows concentration of resources -- strength in

select area[s]select area[s]

Allows company with limited resources to competeAllows company with limited resources to compete

with larger firms -- niche marketingwith larger firms -- niche marketing

Can limit the organizations opportunities -- andCan limit the organizations opportunities -- and

increase vulnerabilities [can over-segment/over-increase vulnerabilities [can over-segment/over-

target]target]


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Must decide if will segment or notMust decide if will segment or not Undifferentiated MarketingUndifferentiated Marketing

One consistent productOne consistent product

One marketing mixOne marketing mix Mass target marketMass target market

Differentiated MarketingDifferentiated Marketing Operate in one or several segments for its productOperate in one or several segments for its product

Separate products for eachSeparate products for each

Separate marketing programs for eachSeparate marketing programs for each


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Movement to increased segmentation --Movement to increased segmentation --

micro-marketing -- niche marketingmicro-marketing -- niche marketing

Few truly mass productsFew truly mass products STP marketing:STP marketing: SSegmenting,egmenting,TTargeting,argeting,

PPositioningositioning

Target MarketTarget Market


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SelectionSelection

Identify the appropriate targetingIdentify the appropriate targeting

strategystrategy

Determine which segmentationDetermine which segmentationvariables to usevariables to use

Develop market segment profilesDevelop market segment profiles

Evaluate relevant market segmentsEvaluate relevant market segments Select specific target market[s]Select specific target market[s]

Major SegmentationMajor Segmentation


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Demographic VariablesAge Occupation

Gender Family Size

Race Family life cycle

Ethnicity Religion

Income Social class

Education

Psychographic VariablesPersonality attributes

Motives

Lifestyles

Geographic VariablesRegion State Size

Urban, suburban Market density

& rural Climate

City size Terrain

County size

Education

Behavioristic VariablesVolume usage

End use

Benefit expectations

Brand loyalty

Price sensitivity

Major SegmentationMajor Segmentation

VariablesVariables



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SelectionSelection Evaluate relevant market segmentsEvaluate relevant market segments

Segment size and growthSegment size and growth Current dollar salesCurrent dollar sales

Projected sales growthProjected sales growth Expected profit margins by segmentExpected profit margins by segment

Company objectives and resourcesCompany objectives and resources Core business strengthsCore business strengths Depth of resourcesDepth of resources

Segment structural attractivenessSegment structural attractiveness Competitive assessmentCompetitive assessment Cost estimatesCost estimates


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Chapter 9Chapter 9


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Brand DecisionsBrand Decisions

What is a brand ? -- a name, term,What is a brand ? -- a name, term,

design, or any other feature thatdesign, or any other feature that

identifies one sellers good or serviceidentifies one sellers good or service

as distinct from those of theas distinct from those of the

competitioncompetition

Have consumer franchiseHave consumer franchise

Simplify consumers choiceSimplify consumers choice Command consumer loyaltyCommand consumer loyalty

Th W ld 10 M tTh W ld 10 M t


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Rank Brand

6. Nokia7. McDonald's8. Disney9. Toyota

10. Marlboro

The Worlds 10 MostThe Worlds 10 Most

Valuable BrandsValuable BrandsRank Brand

1. Coca-Cola2. Microsoft3. IBM4. GE

5. Intel

Source:Business Week, 2005


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Brand DecisionsBrand Decisions

Levels of brand meaningLevels of brand meaning

AttributesAttributes

BenefitsBenefits -- link attribute perception to-- link attribute perception to

product benefits -- need satisfiersproduct benefits -- need satisfiers

ValuesValues -- what communicates about-- what communicates about

buyers valuesbuyers values

PersonalityPersonality -- what we aspire to be -- how-- what we aspire to be -- how

we want to be perceivedwe want to be perceived


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Emotional

Bonding

Personality

Attributes

Hierarchy of BrandHierarchy of Brand

BondingBonding


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Brand DecisionsBrand Decisions Brand equityBrand equity

AwarenessAwareness

PreferencePreference

LoyaltyLoyalty

Brand portfoliosBrand portfolios Measurement of brand equity -- the price premiumMeasurement of brand equity -- the price premium

it will bringit will bring Value of a brand -- competitive advantagesValue of a brand -- competitive advantages

Reduced marketing costsReduced marketing costs

Higher trade leverageHigher trade leverage Higher pricesHigher prices

Can launch brand extensionsCan launch brand extensions

Defense against price competitionDefense against price competition

Contributors to BrandContributors to Brand


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Contributors to BrandContributors to Brand

Image & EquityImage & Equity

Product Performance Packaging Distribution

Advertising Promotions Sales literature Word of mouth Competition

Personnel Policies Facilities Perceptions Experiencethe net present value of experience

Major BrandingMajor Branding


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Major BrandingMajor Branding

DecisionsDecisions Branding decisionBranding decision

BrandBrand

Non-brandNon-brand

Brand-sponsor decisionBrand-sponsor decision Manufacturers brandManufacturers brand

Private brandPrivate brand

Licensed brandLicensed brand

Brand repositioningBrand repositioning

Brand strategyBrand strategy New brandsNew brands Brand extensionsBrand extensions

Line extensionsLine extensions

Brand StrategyBrand Strategy


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Brand StrategyBrand Strategy

DecisionsDecisions Line extension -- existing brand nameLine extension -- existing brand name

extended to new sizes, flavorsextended to new sizes, flavors

Brand extension -- brand name extended toBrand extension -- brand name extended tonew product categoriesnew product categories

Multi-brands -- new brand names introducedMulti-brands -- new brand names introducedinto same product categoryinto same product category

New brands -- new brand name for a newNew brands -- new brand name for a newcategory of productcategory of product

Six Steps to Building aSix Steps to Building a


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1. Assess current brand status1. Assess current brand status

2. Determine what we can stand for2. Determine what we can stand for

3. Develop positioning platform3. Develop positioning platform4. Forge a personality4. Forge a personality

5. Manage brand identity contact5. Manage brand identity contact

6. Mind the brands identity6. Mind the brands identity

Six Steps to Building aSix Steps to Building a

BrandBrand


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Conducting a BrandConducting a Brand

AuditAudit What is our top-of-mind awareness?What is our top-of-mind awareness?

What are our attribute ratings?What are our attribute ratings?

Do we have a clear mind association?Do we have a clear mind association? How do we score on product/ serviceHow do we score on product/ service

performance?performance?

How are we doing on customerHow are we doing on customer

complaints- and what do we do withcomplaints- and what do we do with

them?them?


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The Brands IdentityThe Brands Identity

Brand name associationBrand name association

Brand name meaningBrand name meaning

Brand iconBrand icon Brands current positioningBrands current positioning

Current strategic personalityCurrent strategic personality

Brands overall identity-- theBrands overall identity-- the

essenceessence


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What Can WeWhat Can We

Stand For?Stand For?

Strengths &Strengths &


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Strengths &Strengths &

Weaknesses AnalysisWeaknesses Analysis

Update S.W.O.TUpdate S.W.O.T

Determine potentialDetermine potential

opportunitiesopportunities Research findings as inputResearch findings as input


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Competitive AnalysisCompetitive Analysis

Who are all direct competitors?Who are all direct competitors?

What are their strengths andWhat are their strengths and

weaknesses?weaknesses? What is the level of intensity ofWhat is the level of intensity of

competition?competition?

What are our opportunities withinWhat are our opportunities withinthe competitive set?the competitive set?


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Develop PositioningDevelop Positioning

PlatformPlatform


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Forge A PersonalityForge A Personality


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Brand PersonalityBrand Personality

Who would this brand be if itWho would this brand be if it

were human?were human?

The strategic expansion of theThe strategic expansion of the

brands positioning.brands positioning.

Where do BrandWhere do BrandP liti CP liti C


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Personalities ComePersonalities Come

From?From? The founders- AppleThe founders- Apple The owner- United AirlinesThe owner- United Airlines

Product Performance- LysolProduct Performance- Lysol

Advertising- Federal ExpressAdvertising- Federal Express

Brands users- American Express; The GapBrands users- American Express; The Gap

Bank of AmericaBank of America

Icons- Wells Fargo; Prudential; TravelersIcons- Wells Fargo; Prudential; Travelers


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Manage BrandManage Brand

ContactsContacts

The Core of BrandThe Core of Brand


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IdentityIdentity

Brand Name

TOTAL BRAND

IDENTITY

TOTAL BRAND

IDENTITY

Marketing

Communications

Logo/Graphic

System

Promotion/

Merchandising

Selling

Strategies

Product/ Service

Performance

BRAND

ESSENCE

Brand Positioning

Strategic Personality

The Four Sources of BrandThe Four Sources of Brand


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MessagesMessages

Planned messagesPlanned messages

Product messagesProduct messages

Service messagesService messages

Unplanned messagesUnplanned messages


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Mind The BrandsMind The Brands

IdentityIdentity


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The Brand TriadThe Brand Triad

The three identities:The three identities:

The customersThe customers

The marketersThe marketersThe brandsThe brands

Th B d T i d C tTh B d T i d C t


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The Brand Triad Cont..The Brand Triad Cont..

The customer must:The customer must:

Be clear about what he/she needsBe clear about what he/she needs

Buy it when its deliveredBuy it when its delivered

Ideally remain loyal to the brand that gets it rightIdeally remain loyal to the brand that gets it right

The marketer must:The marketer must:

Read the customer and understand needs/wantsRead the customer and understand needs/wants

Manage the brand to deliver desired benefitsManage the brand to deliver desired benefits

The brand must:The brand must:

Be likableBe likable Be accessibleBe accessible

Be credibleBe credible

Be relevantBe relevant

Be loyal to its customersBe loyal to its customers


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Chapter 10Chapter 10

Differentiating &Differentiating &


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gg


Differentiation -- a way to set yourself apartDifferentiation -- a way to set yourself apart

from the competition.from the competition.

Differentiation allows for price premiumDifferentiation allows for price premium

based on the extra value perceived by thebased on the extra value perceived by thecustomer -- the position in the mindcustomer -- the position in the mind

Four broad ways to differentiate:Four broad ways to differentiate: BetterBetter

NewerNewer FasterFaster

CheaperCheaper


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Positioning starts with a product. A piece ofPositioning starts with a product. A piece of

merchandise, a service, a company, anmerchandise, a service, a company, an

institution, or even a personinstitution, or even a person

But positioning is not what you do to a product.But positioning is not what you do to a product.Positioning is what you do to the mind of thePositioning is what you do to the mind of the

prospect. That is, you position the product inprospect. That is, you position the product in

the mind of the prospect.the mind of the prospect.

Ries and TroutRies and Trout


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Developing a strategyDeveloping a strategy

What position do we holdWhat position do we hold

What position do we want to holdWhat position do we want to hold

Who is the competitionWho is the competition

Can we competeCan we compete

Can we implementCan we implement

Approaches toApproaches toPositioning a ProductPositioning a Product


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Positioning a ProductPositioning a Product

or Serviceor Service By product or service attributesBy product or service attributes

By price/qualityBy price/quality

By use or applicationBy use or application By product classBy product class

By product or service userBy product or service user

By benefitBy benefit

By imageBy image


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Determining strategyDetermining strategy

Identify competitorsIdentify competitors

Assess perception of consumersAssess perception of consumers

Determine competitors positionsDetermine competitors positions

Analyze preferencesAnalyze preferences

Position decisionPosition decision

ImplementImplement Monitor and evaluateMonitor and evaluate

Assessing & Building aAssessing & Building a


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ReputationReputation

Key Questions to Ask:Key Questions to Ask: Whose minds really matter? Whose opinions will influence our reputation?Whose minds really matter? Whose opinions will influence our reputation?

How visible and credible are we relative to the competition?How visible and credible are we relative to the competition?

What factors within our control offer the greatest potential for shaping ourWhat factors within our control offer the greatest potential for shaping ourcorporate position?corporate position?

Does our organization have meaningful, believable, unique, andDoes our organization have meaningful, believable, unique, andsustainable advantages over other firms?sustainable advantages over other firms?

Are our products, product line and corporate positioning strategies andAre our products, product line and corporate positioning strategies andtactics consistent with one another and mutually reinforcing?tactics consistent with one another and mutually reinforcing?

Should we work toward a global image or tailor our positioning to meet theShould we work toward a global image or tailor our positioning to meet theneeds of different market segments?needs of different market segments?

What combination of communication tactics should be used to enhanceWhat combination of communication tactics should be used to enhance

the visibility and credibility of our organization?the visibility and credibility of our organization?

Corporate Positioning:Corporate Positioning:Alternative PositioningAlternative Positioning


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Alternative PositioningAlternative Positioning

StrategiesStrategies

Market LeaderMarket Leader Biggest & most secureBiggest & most secure

Quality LeaderQuality Leader Best/most reliable products & servicesBest/most reliable products & services

Value LeaderValue Leader Greatest benefits relative to priceGreatest benefits relative to price

Service LeaderService Leader Most responsive to customers probleMost responsive to customers problem Technology LeaderTechnology Leader Leader in developing new technologiesLeader in developing new technologies

applying innovationsapplying innovations

Relationship Leader Most Committed to the customers sucRelationship Leader Most Committed to the customers suc

Prestige LeaderPrestige Leader Most exclusive and/or unique imageMost exclusive and/or unique image

Knowledge LeaderKnowledge Leader The best functional, industry or technicThe best functional, industry or technic

expertiseexpertise

Bargain LeaderBargain Leader The lowest priceThe lowest price


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Positioning CriteriaPositioning Criteria

Important -- deliver a highly valued benefitImportant -- deliver a highly valued benefit

Distinctive -- competitors dont offer, or weDistinctive -- competitors dont offer, or we

offer in more distinctive wayoffer in more distinctive way

Superior -- either real or perceivedSuperior -- either real or perceived Communicable -- visibleCommunicable -- visible

Preemptive -- competitors cant easily copyPreemptive -- competitors cant easily copy

Affordable -- target buyers must be able to payAffordable -- target buyers must be able to pay

the differencethe difference Profitable -- must be profitable to the companyProfitable -- must be profitable to the company

Difficulty inDifficulty in


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yy


Mind defends itself:Mind defends itself:

Selective exposureSelective exposure

Selective attentionSelective attention Selective retentionSelective retention

Difficulty inDifficulty in


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yy


How to get through:How to get through:

Keep it simpleKeep it simple

Complex productsComplex products Confusing productsConfusing products

Positioning: over simplifyPositioning: over simplify

Focus on one attribute/benefitFocus on one attribute/benefit


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Need to RepositionNeed to Reposition

When companies lose their marketsWhen companies lose their markets

When companies leave their marketsWhen companies leave their markets Consumers dont automatically acceptConsumers dont automatically accept

New products may weaken imageNew products may weaken image

Get back to basicsGet back to basics

When markets leave companiesWhen markets leave companies

Technology shiftTechnology shift

Change in consumer preferencesChange in consumer preferences

NEED LINKAGE IN REPOSITIONING


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The Product Life CycleThe Product Life Cycle Asserts that a product will go through different stagesAsserts that a product will go through different stages

in its lifein its life New stages of buyer interest & requirementNew stages of buyer interest & requirement

Changes in competitionChanges in competition

Economic changesEconomic changes Must plan successive strategies for each stage of theMust plan successive strategies for each stage of the

products lifeproducts life Strive to extend the products life and profitabilityStrive to extend the products life and profitability PLC asserts:PLC asserts:

Products have a limited lifeProducts have a limited life

Products rise and fall at different stagesProducts rise and fall at different stages

Different speed of movement across different productDifferent speed of movement across different productcategoriescategories

Different Forms ofDifferent Forms ofProduct Life CycleProduct Life Cycle


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Product Life CycleProduct Life Cycle

Product categoryProduct category Have the longest life cyclesHave the longest life cycles

Product formsProduct forms More analogous to the standardMore analogous to the standard

BrandsBrands Can be short or long lifeCan be short or long life

Some brands go on foreverSome brands go on forever

Product rejuvenationProduct rejuvenation

Product can go through several life cyclesProduct can go through several life cycles Done by marketing, repositioning, productDone by marketing, repositioning, product

enhancementenhancement

The Product Life Cycle: AThe Product Life Cycle: AReference Chart on Managing itsReference Chart on Managing its


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g gg g

Constantly Changing PhasesConstantly Changing Phases

TIME

SALE

S

Develo

pmen

t Growth

Compe

titio

n

SaturationDeclin

e

Source: Dr. Chester R. Wasson 1971

e ro uc e yc e: e erencee ro uc e yc e: e erenceChart on Managing its ConstantlyChart on Managing its Constantly

Changing PhasesChanging Phases


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Changing PhasesC a g g ases

STRATEGYOBJECTIVE

Toaw

anad

No

The PLC MaturityThe PLC Maturity


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StageStage Most products are in maturity stage in matureMost products are in maturity stage in mature

marketsmarkets Must manage slower growth over longer timeMust manage slower growth over longer time Three phases of maturity:Three phases of maturity:

GrowthGrowth StableStable

DecayingDecaying

Alternate strategiesAlternate strategies Market modification -- convert new users, enter newMarket modification -- convert new users, enter new

segments, steal competitors customerssegments, steal competitors customers Product modification -- Quality/feature improvementProduct modification -- Quality/feature improvement

Marketing mix modification -- price, distribution,Marketing mix modification -- price, distribution,promotion, sales, servicepromotion, sales, service


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Analyzing theAnalyzing the


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CompetitionCompetition Why study competition?Why study competition?

Have to growHave to grow

Mature markets-- mature productsMature markets-- mature products

Battle for share -- take from your competitorsBattle for share -- take from your competitors

Shape your product positionShape your product position Need to track latent competitors as well as directNeed to track latent competitors as well as direct

competitioncompetition Need to be able to strike a balance betweenNeed to be able to strike a balance between

competitor and customer orientationcompetitor and customer orientation Need to understand how to build an intelligenceNeed to understand how to build an intelligence

system to monitor competitive movementsystem to monitor competitive movement


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Competitor AnalysisCompetitor Analysis

Identifying

CompetitorsDetermining

Objectives

Identifying

StrategiesAssessing Strengths

& Weaknesses

Estimating

Reaction Patterns

Selecting Those

To Attack/Avoid


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Developing a CompetitiveDeveloping a Competitive


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AnalysisAnalysis

Identifying the competitorsIdentifying the competitors Competitors include:Competitors include:

Products that compete directlyProducts that compete directly

Products that meet the same needProducts that meet the same need Latent competition may be more dangerous than directLatent competition may be more dangerous than direct

Competition may be classified by industry or byCompetition may be classified by industry or by

productproduct

Industry competition -- all firms that offer a productIndustry competition -- all firms that offer a product

or products that are close substitutes for each otheror products that are close substitutes for each other

Developing aDeveloping a


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Competitive AnalysisCompetitive Analysis Identifying the competitorsIdentifying the competitors

Market concept of competition -- all firms that offer a product orMarket concept of competition -- all firms that offer a product orproducts that satisfy the same customer needproducts that satisfy the same customer need

Define by the customer servedDefine by the customer served Mapping -- product/market battlefieldMapping -- product/market battlefield

Battle for the mindBattle for the mind Determining competitors objectivesDetermining competitors objectives

ProfitProfit

Market shareMarket share

Service leadershipService leadership

Quality leadershipQuality leadership

Global leadershipGlobal leadership Technological leadershipTechnological leadership

Objectives determine how they set strategy and respond to attackObjectives determine how they set strategy and respond to attack

Developing a CompetitiveDeveloping a Competitive

AnalysisAnalysis


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AnalysisAnalysis

Identifying Competitors strategiesIdentifying Competitors strategies

Closest competitors -- chasing same targetClosest competitors -- chasing same target

consumer with same strategyconsumer with same strategy

PositioningPositioning PricePrice

Quality, etcQuality, etc..

Strategic mapping -- track changing customerStrategic mapping -- track changing customer

needs & wants, and how competition isneeds & wants, and how competition is

changing to meet themchanging to meet them Competition can reshape consumers wants --Competition can reshape consumers wants --

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Assessing strengths & weaknessesAssessing strengths & weaknesses Benchmarking -- identify the top performers in theBenchmarking -- identify the top performers in the

category & measure against their strengthscategory & measure against their strengths

Mapping -- track -- build a matrixMapping -- track -- build a matrix

SalesSales Market shareMarket share Profit margins, ROI, new products, etcProfit margins, ROI, new products, etc

Sources of informationSources of information Secondary data, personal contact, observation, hearsaySecondary data, personal contact, observation, hearsay

Primary research -- tracking studiesPrimary research -- tracking studies Monitoring -- share of market, mind, heartMonitoring -- share of market, mind, heart

Share of mind & heart should lead to share of market andShare of mind & heart should lead to share of market andprofitabilityprofitability


C titi A l iC titi A l i


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BenchmarkingBenchmarking Determine functions to benchmarkDetermine functions to benchmark

Identify key performance variablesIdentify key performance variables

Measure performance in best-in-classMeasure performance in best-in-class

companiescompanies

Measure the companys performanceMeasure the companys performance

Specify actions and programs to close the gapSpecify actions and programs to close the gap

Implement and monitor resultsImplement and monitor results

Designing MarketingDesigning MarketingS i


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Strategy selection dependent on organizationsStrategy selection dependent on organizationsposition in the market:position in the market: Market leaderMarket leader

Market challengerMarket challenger

Market followerMarket follower

Market nicherMarket nicher

Each position has its challenges andEach position has its challenges andopportunities -- and available strategies:opportunities -- and available strategies:

Increase share in the market we are inIncrease share in the market we are in Be content where we are -- short termBe content where we are -- short term

Know we are sliding -- manage accordinglyKnow we are sliding -- manage accordingly

Try to expand total marketTry to expand total market

Market LeaderMarket LeaderS i


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Expand total marketExpand total market New usersNew users

New usesNew uses

More usageMore usage

Expanding market shareExpanding market share

Profitability related to marketProfitability related to marketshareshare

Market share -- cost vs. valueMarket share -- cost vs. value

Defending market shareDefending market share

Must constantly innovateMust constantly innovate

Determine which terrain toDetermine which terrain to

defenddefend

Key strategic alternativesKey strategic alternatives Position defensePosition defense

Preemptive defensePreemptive defense

CounteroffensiveCounteroffensive

MarketMarket

broadening/diversificationbroadening/diversification

Consolidation defenseConsolidation defense

Market ChallengerMarket Challenger

iS i


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Two alternativesTwo alternatives

Can attack theCan attack the

leader & othersleader & others

for sharefor share

Can play ball --Can play ball --

not rock the boatnot rock the boat

Market ChallengerMarket Challenger

S iSt t i


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StrategiesStrategies Attack strategiesAttack strategies

Price discountPrice discount

Cheaper goodsCheaper goods

Prestige goodsPrestige goods

Product proliferationProduct proliferation

Product innovationProduct innovation

Improved serviceImproved service

Distribution innovationDistribution innovation

Manufacturing efficienciesManufacturing efficiencies Intensive advertising &Intensive advertising &

promotionpromotion

Market FollowerMarket Follower

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Requires specific strategy to be effectiveRequires specific strategy to be effective

Often, more profitable to followOften, more profitable to follow

"Followership" often not profitable if below"Followership" often not profitable if below

the number 2 or 3 sharethe number 2 or 3 share Strategies for followersStrategies for followers

Cloner -- follow closely the product and marketingCloner -- follow closely the product and marketing

mix of the leadermix of the leader

Imitator-- copies some things, maintains someImitator-- copies some things, maintains somedifferentiationdifferentiation

Adapter -- builds on leaderAdapter -- builds on leader

Market NicherMarket Nicher

S iSt t i


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Leader in a small industry/marketLeader in a small industry/market

Can be very profitableCan be very profitable Know their market wellKnow their market well

Meet needs betterMeet needs better

Usually sell at high margins -- high valueUsually sell at high margins -- high value

Market NicherMarket Nicher

St t iSt t i


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StrategiesStrategies The ideal nicheThe ideal niche

Sufficient sizeSufficient size

Growth potentialGrowth potential

Negligible interest to majorsNegligible interest to majors

Firm has required resources & skills to meet needs of theFirm has required resources & skills to meet needs of theniche marketniche market

Can defend against attack with goodwillCan defend against attack with goodwill

Key is specialization -- do better than any one elseKey is specialization -- do better than any one else

Multiple nicher vs. singleMultiple nicher vs. single Effective market entry strategyEffective market entry strategy

Specialist Roles ForSpecialist Roles ForMarket NichersMarket Nichers


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Market NichersMarket Nichers

End-use specialistEnd-use specialist

Vertical-level specialistVertical-level specialist

Customer-size specialistCustomer-size specialist

Specific-customer specialistSpecific-customer specialist

Geographic specialistGeographic specialist

Product or feature specialistProduct or feature specialist

Quality-price specialistQuality-price specialist

Service specialistService specialist


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Wh t i P d t?Wh t i P d t?


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What is a Product?What is a Product?

Anything that can be offered for attention,Anything that can be offered for attention,

acquisition, use or consumption that might satisfy aacquisition, use or consumption that might satisfy a

need or want -- can be physical objects, services,need or want -- can be physical objects, services,

places, organizations, persons or ideas.places, organizations, persons or ideas.

Marketing focuses on the product benefit -- not theMarketing focuses on the product benefit -- not theattributeattribute

Marketing cannot make up for a bad product -- canMarketing cannot make up for a bad product -- can

sell it once! In fact, good marketing will hasten asell it once! In fact, good marketing will hasten a

bad products deathbad products death

P d t Cl ifi tiP d t Cl ifi ti


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Product ClassificationsProduct Classifications

Three classificationsThree classifications

Non-durable goodsNon-durable goo

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BA 655 Revised Spring 08

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