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Basic Entrepreneurial Marketing Principles
CSU NorthridgeDept. of Marketing
Franck VIGNERON
“Marketing creates Needs” ...
“Makes People Buy Things...”
?
“Marketing creates Needs” ...“Makes People Buy Things...”
Marketers can not create needs. Marketers can help people
articulate their needs into wants. Marketers can help create wants. Marketers seek to create
satisfactions
What Motivates a Consumerto Take Action?What Motivates a Consumerto Take Action?
NeedsNeeds - states of felt deprivation including physicalphysical needs for food, socialsocial needs for belonging and individualindividual needs for self-expression. i.e. I am thirsty.
WantsWants - form that a human need takes as shaped by culture and individual personality. i.e. I want a Coca-Cola.
How Do Consumers ChooseChoose Among Many Products and Services?
How Do Consumers ChooseChoose Among Many Products and Services?
Customer Value Customer Value - difference between the value the customer gains from owning and using a product and the cost of obtaining the product.
Customer Satisfaction Customer Satisfaction - depends on the product’s perceived performance in delivering value relative to a buyer’s expectations.
Both are closely linked to Quality Quality and Total Quality Total Quality Management (TQM)Management (TQM).
Customer Satisfaction
Expectation
PerceivedPerformance
Disconfirmation Satisfaction
The extent to which a product’s perceived Performance matches a buyer’s expectations.
Other Applications of Marketing
Person Marketing: Mkg efforts for getting attention, interest, and preference of a target toward a person, e.g., Celebrities (Shaquille O’Neal) or political candidate (Bush).
Place Marketing: Visitors, improve image, real estate, …
Cause Marketing: “friends don’t let friends drive drunk”
Event Marketing: Sporting, cultural or charitable activities; Salt Lake City 2002 Winter Olympics
Organization Marketing: Navy = “let the journey begin”
What is a “Problem”?
Problem: perceived difference between an ideal and actual state
The Ideal State
Expectations
Aspirations
Cultural basis
Effect of Changes in Life Basically: values, needs and goals
The Actual State
Actual Physical Situation
External Prompts
How to “Create” Problems for Consumers
Create new ideal state
Create dissatisfaction with actual state
Where do People Search for Problem Solutions?
INTERNAL
EXTERNAL
Memory /Thinking
Word of mouth, media,store visits, trial
CATALOG
Psychological Core
Need Recognition
Information Search
Evaluation of Alternatives
Purchase Decision
Postpurchase Behavior
The Buyer Decision ProcessThe Buyer Decision Process
1/ Problem Recognition& 2/ Decision Making
IdealState
ActualState
Intensity of Discrepency
Less than Minimum Treshold
No Recognitionof Problem
Greater than Minimum Treshold
InformationSearch
EvaluateAlternatives
BuyPost-PurchaseEvaluations
ProblemRecognition
SatisfactoryInternal Search?
ExternalSearch
Yes No
Attributes
Brands
A Model of Consumer Decision Making
INPUT
PROCESS
OUTPUT
A Simple Model of Consumer Decision Making
Firm’s Marketing Efforts1. Product2. Promotion3. Price4. Channels of distribution
Sociocultural Environment1. Family2. Informal sources3. Other noncommercial sources4. Social class5. Subculture and culture
Need Recognition
Prepurchase Search
Evaluation of Alternatives
Psychological Field1. Motivation2. Perception3. Learning4. Personality5. Attitudes
Experience
Purchase1. Trial2. Repeat purchase
Postpurchase EvaluationOutput
Process
Input
External Influences
Consumer Decision Making
Postdecision Behavior
THE PLANNING PROCESS
1.
2.
3.
4. 5.
6.
Marketing EnvironmentMarketing Environment
Company
Macroenvironment
Microenvironment
The Marketing EnvironmentThe Marketing Environment
Company
Demographic
Economic
Natural
Technological
Political
Cultural Company
Customers
Intermediaries
Suppliers
Competitors
Publics
?????????????????????????????
What the mix? What is the MKG mix? What are the 4 Ps?
Four Ps of Marketing
MarketingMix
TargetMarket
PricePromotion
Product Place
What is a Product?
Convenience Shopping Specialty Unsought
Goods Services Places Organizations People, etc..
Types of Types of Consumer ProductsConsumer Products GENERIC term that IncludesGENERIC term that Includes
Entrepreneurs vs Managers
Source: http://www.entrepreneurship-isemi.com
What is a SWOT Analysis?
5 Eyes Marketing Strategy
Past
Present
Future
Yourself
Competitors
Situation Analysis
S
W
O
T
Things the company does well.
Things the company does not do well.
Conditions in the external environment that favor strengths.
Conditions in the external environment that do not relate to existing strengths or favor areas of current weakness.
SWOT
Do not limit the S and W to the Product Threats: focus on specific competitors Opportunities:
• Do not describe what you will do. EG, develop a market development strategy based on the growing senior population
• Avoid basic opportunities: population growth, economic slow down, health consciousness, obesity rate, gaz prices,…
• Identify opportunities outside the product/consumer level
BENCHMARKING = Analyzing Competitors
Identifying the company’scompetitors
Assessing competitor’s objectives, strategies,strengths and weaknesses,and reaction patterns
Selecting whichcompetitors toattack or avoid
Assessment of strengths and weaknesses of competitors.
Marketing Strategy and TacticsMarketing Strategy and Tactics
A marketing strategy is a means by which a marketing
objective/goal is to be achieved, usually characterized by a
specific target market and a marketing program to reach it.
Marketing tactics are detailed day-to-day operational decisions
essential to the overall success of marketing strategies.
Generic Marketing StrategiesGeneric Marketing Strategies
MarketPenetration
MarketDevelopment
ProductDevelopment
Diversification
Four Basic Types of Strategic Opportunities
MMAARRKKEETT
PPrreesseenntt
NNeeww
PresentPresent New NewPRODUCTPRODUCT
Overall CostLeadership
Differentiation
Focus
Middle ofthe Road
Basic Competitive StrategiesE-machines or Wal-Mart Subaru or IBM
Leica or Mephisto Sears or Holiday Inn
Competitive Leadership
Operational Excellence
Alaska Airlines/Dell
Customer Intimacy
Ikea/VW
Product Leadership
Intel/Sony
Companies Gain Leadership Positions by Delivering Superior Value to their Customers Through These Strategies:
Market LeaderMarket Leader
Market ChallengerMarket Challenger
Competitive Marketing Strategies
Market FollowerMarket Follower
Market Nicher
Developing an Effective Marketing Program
Requires analyzing marketing problems/opportunitiesThis analysis has 3 steps and is grounded in primary and secondary marketing research data
Once an opportunity has been identified marketing strategy must be developed
CustomerAnalysis
CompetitiveAnalysis
Analysis ofOrganizationCapabilities
OpportunityIdentification
3 generic strategies for achievinga differential advantage overcompetitors are available:
•Product Differentiation•Overall Cost Leadership•Special Market Focus Offering ProductDifferentiation & Low Cost
Strategies Lead to Tactics
Direct our promotion to
males, ages 25 to 40 years old.
Advertise in magazines read by this
group of people
Advertise on television programs
watched by this group
..
Possible Tactics
Strategy
..
High Level Strategies1
HOW ??????
Low Level Strategies
2
Tactics
3
HOW ??????
..
..
..
Market Penetratio
n
NPD
Market Development
Diversification
PRODUCT
Existing
Existing
New
New
Market
PRODUCTPRODUCT
PRICEPRICE
PLACEPLACE
PROMOTIONPROMOTION
High Level Strategies
Low Level StrategiesTactics
1
2
3E.g., Quality, Branding & Service, …
E.g., skimming, captive, …
E.g., direct, indirect, exclusive, hybrid, …
E.g., skimming, captive, …
STP Segmentation Targeting & Positioning
Market Targeting
Market Positioning
Market Segmentation
Marketing Differentiation Strategy
AUndifferentiated Marketing
B Concentrated Marketing
C Differentiated Marketing
Company Marketing MixCompany Marketing Mix Market
Target 1Target 2Target 3
Target 1Target 2Target 3
Company Marketing MixCompany Marketing Mix
Company Marketing Mix 1Company Marketing Mix 1Company Marketing Mix 2Company Marketing Mix 2Company Marketing Mix 3Company Marketing Mix 3
Marketing strategiesMarketing strategies
Two-Way Brand Extension: Marriott HotelsTwo-Way Brand Extension: Marriott Hotels
QualityPri
cePri
ce
High
Economy Superior
Fairfield Inn(Vacationers)
Standard Good
Average
Low
Courtyard(Salespeople)
Marriott(Middle
managers)
MarriottMarquis
(Topexecutives)
Four Ps of Marketing
MarketingMix
TargetMarket
PricePromotion
Products Place
Branding
The Sam's Club logo used from the 1990s until 2001.
The second Sam's Club logo used from 2001-2006.
The current Sam's Club logo used since 2006.
BRAND AWARENESS
BRAND ASSOCIATIONS BRAND QUALITY
BRAND LOYALTY
•Familiarity Liking • Help Process & Retrieve Information
• Differentiate/ Position
•Create Positive Attitudes/ Feelings
• Reason-to-Buy
• Line Extensions
• Create Reassurance
• Time to Respond to Competitive Threats
• Reduced Marketing Costs Trade leverage
Managing and Building a Brand Knowledge
Recall versus Recognition
Perceived Meanings
Brand can possess an appealing image that consumers value directly
Expected Performance
Price Sensitivity & Purchase rate
Individual Product Life-Cycles Programmed to Yield Expanding Company Sales
Time Time
sale
ssa
les
Individual Product Sales
Total Company Sales
P1
P2
P3 P4 P5 P6 P7P8
Managing product lines and brands over time:The Product Life Cycle (PLC)
Total Industry Sales
time
-
MarketGrowth
MarketMaturity
MarketIntroduction
MarketDecline
Total Industry Profits
+
+
Product Life-Cycle Stages and Marketing Steps
TimeTime
SaleSaless
INTRODUCTIONawareness
and trial
GROWTHMaximize
share,grow market
LaunchLaunch TakeoffTakeoff RapidRapidgrowthgrowthShakeoutShakeoutMaturityMaturity DeclineDecline
MATURITYMaximize profit,
Defend Mkt Share
DECLINE Reduce/
Delete, milkthe brand
Product Strategies
Stages in the Adoption ProcessStages in the Adoption Process
Awareness
Interest
Evaluation
Trial
Adoption
Adopter Groups
2.5%
Innovators
13.5%
EarlyAdopters
34%
EarlyMajority
34%
LateMajority
16%
Laggards
Buyer behaviorBuyer behavior
Elements of the MKG MixElements of the MKG Mixthat compose a cohesive MKG programthat compose a cohesive MKG program
PlaceOutletsChannelsCoverageTransportationStock level
PromotionAdvertisingPersonal sellingSales promotionPublicity
PriceList priceDiscountsAllowancesCredit itemsPayment period
ProductFeaturesBrand namePackagingServiceWarranty
Marketingmanager
Cohesive marketing mix
PromotionPlace
Price
PromotionPlaceProduct
MKG PLAN
I. EXECUTIVE SUMMARY
• A stimulating summary of the marketing plan
II. CURRENT MKG SITUATION
• Internal Analysis: Strengths & Weaknesses
• External Analysis: Opportunities & Threats
III. ISSUE ANALYSIS
• Evaluate Potential Strategic Alternatives
• Recommend Alternative(s)
IV. MARKETING OBJECTIVES
• The goals to be achieved through the marketing plan in such areas as customer satisfaction, sales volume or market share
V. MARKETING STRATEGIES
• Overall Strategies & STP - used to achieve the objectives
VI. ACTION PROGRAMS
• 4P’s - that will be used to achieve the objectives
• Programs that pinpoint who is responsible for the marketing activities and that establish budgets and timetables for executing the MKG strategies
VII. CONTROLS
• Procedures for monitoring the plan over time and for taking corrective action if needed
Memo
New Products from SonyNew Products from Sony
1950s 1960s 1970s 1980s 1990s 2000s
2000s:•MD Walkman•Cyber Shot•DVD Handycam
1995: PlayStation video-game system captures 80% of U.S. 32-bit market.
1985: 8mm Handycam arrives.
1979: Walkman revolutionizes personal stereo tape players.
1982: Compact- disc player becomes first digital consumer electronics product
1975: Betamax VCR has initial success but loses out to better-marketed VHS VCRs.
1968: Its Trinitron TV becomes and remains the standard for color TV quality.
1955: First Japanese transistor radio starts its record of successes.
1946: Sony founded in bombed-out store. Its rice cooker never gets to market.
Strategic Roles of Most Successful New ProductsStrategic Roles of Most Successful New Products
Strategic Role
Defend marketshare positionEstablish footholdin new marketPreempt marketsegmentMaintain position asproduct innovatorExploit technologyin new wayCapitalize ondistribution strengthsProvide a cashgeneratorUse excess oroff-season capacity
Percentage of responses
0 10% 20% 30% 40% 50%
Externally driven
Internallydriven
IdeaGeneration
IdeaScreening
ConceptDevelopmentand Testing
MarketingStrategy
BusinessAnalysis
ProductDevelopment
TestMarketing
Commercialization
Major Stages in New-Product Development (Fig. 9.1)
The Research ProcessThe Research Process
STEP1: Defining the Problem and Research Objectives
STEP 2: Developing the Research Plan
STEP 3: Implementing the Research Plan
STEP 4: Interpreting and Reporting the Findings
Secondary Secondary DataData
Data that has been collected for reasons other than the
specific research project at hand.
Primary Primary ResearchResearch
Original research undertaken by individual
researchers or organizations to meet
specific objectives.
Designing Primary Research
Quantitative studies more likely for collecting descriptive information.
• Qualitative studies may be used to get new ideas.
Quanti Research
Quali Research
Marketing Research ProcessStep 1. Defining the Problem & Research Objectives
Marketing Research ProcessStep 1. Defining the Problem & Research Objectives
ExploratoryResearch
DescriptiveResearch
CausalResearch
•Test hypotheses about cause- and-effect relationships.
Gathers preliminary information that will help define the problem
and suggest hypotheses.
•Describes such things as market potential for a product or attitudes and demographics of consumers
who buy the product.
Types & Levels of Information Needed
– preliminary information: identify issues
– problem definition– first stage of descriptive or
causal research
– expand understanding of factors
– describe phenomenon– representative sample
– test cause and effect hypothesis– experimentation
New Product Pricing Strategies
Market Skimming Setting a High Price
for a New Product to “Skim” Maximum Revenues from the Target Market.
Results in Fewer, But More Profitable Sales.
Market Skimming Setting a High Price
for a New Product to “Skim” Maximum Revenues from the Target Market.
Results in Fewer, But More Profitable Sales.
Use Under These Conditions:
• Product’s Quality and Image Must Support Its Higher Price.
• Costs Can’t be so High that They Cancel the Advantage of Charging More.
• Competitors Shouldn’t be Able to Enter Market Easily and Undercut the High Price.
New Product Pricing Strategies
Market Penetration
Setting a Low Price for a New Product in Order to “Penetrate” the Market Quickly and Deeply.
Attract a Large Number of Buyers and Win a Larger Market Share.
Market Penetration
Setting a Low Price for a New Product in Order to “Penetrate” the Market Quickly and Deeply.
Attract a Large Number of Buyers and Win a Larger Market Share.
Use Under These Conditions:• Market Must be Highly Price-
Sensitive so a Low Price Produces More Market Growth.
• Production/ Distribution Costs Must Fall as Sales Volume Increases.
• Must Keep Out Competition & Maintain Its Low Price Position or Benefits May Only be Temporary.
Strategy that Calls for Spending A Lot on Advertising and Consumer Promotion to Build Up (Pull) Consumer Demand.
Pull StrategyPull Strategy Strategy Selected Depends
on:
Type of Product-Market &
Product Life-Cycle
Stage
Strategy that Calls for Using the Salesforce and Trade Promotion to Push the Product Through the Channels.
Push StrategyPush Strategy
Communication Mix Strategies
Continuum of Possible Channel-Target Market Relationships
Intensive Intensive DistributionDistribution
Selective Selective DistributionDistribution
Exclusive Exclusive DistributionDistributionMany
OutletsOne Outlet
CigarettesCigarettesChewing GumChewing Gum
Auto PartsAuto PartsDry CleanersDry Cleaners
Men’s SuitsMen’s Suits
AutomobilesAutomobiles
MachineryMachinery
Rolls RoyceRolls RoyceDealerDealer
• Intensive Distribution: Maximise the number of points of sale
• Selective Distribution: Evaluate sales potential, competency and location
• Exclusive Distribution: Agreement to sell on a specific area
AdvertisingPR
Place(Distribution)
Personal Selling
Product
SalesPromotion
Promotion
Place
The Promotional Mix
Advertising Strategies
4P’s
Price
Direct MKG
Any Paid Form of Nonpersonal Presentation by an Identified Sponsor.
Any Paid Form of Nonpersonal Presentation by an Identified Sponsor.
The Marketing CommunicationsMix (Promotion Mix)The Marketing CommunicationsMix (Promotion Mix)
Advertising
Personal Selling
Sales Promotion Short-term Incentives to Encourage Sales.
Public RelationsBuilding Good Relations with Various Publics by Obtaining Favorable Publicity.
Direct MarketingDirect Communications With Individuals to Obtain an Immediate Response.
Personal Presentations by a Firm’s Sales Force.
Advertising Strategies
Basic Communication Model
Sender(Source)
Receiver(Consumer)
MessageChannel
(Medium)
Feedback
Advertising Strategies
What are the 4 main Com Objectives?
I… P… R… C…
Informative AdvertisingInform Consumers or Build Primary Demand
i.e CD Players
Comparison Advertising
Compares One Brand to Another
i.e. Avis vs. Hertz
Persuasive AdvertisingBuild Selective Demand
i.e Sony CD Players
Reminder AdvertisingKeeps Consumers Thinking
About a Producti.e. Coca-Cola
Advertising ObjectiveSpecific Communication Task Accomplished with a Specific
Target Audience During a Specific Period of Time
Setting Communication Objectives
Changes in Advertising Objectives during the Product Life Cycle
Advertising Strategies
Define objectives and plan the promotional campaign
Develop product awareness, stimulate generic demand, and attract distributors
Create product acceptance and brand preference if there are competitive products
Maintain and enhance brand loyalty convert buyers and distributors of competitive brands
Minimal expenditures just enough to phase product out
Sales
General promotion objective
Advertising strategy
Screen concepts, create advertisements, and plan media selection
primary demand advertising to get potential purchasers to try the product. trade advertising to introduce product
Extensive advertising expenditures emphasizing advantages of the product and brand
Reminder and emotional advertising and promotions to promote repeat purchases and differentiate brands
Minimal advertising expenditures emphasizing low price to reduce inventory
Pre-Pre-IntroductioIntroductionn
IntroductioIntroductionn GrowthGrowth
MaturityMaturity Decline Decline
Time