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Exam2ReviewLectureNotes:Chapter5
ConsumerBehaviorandMarketingStrategyPlanning(Exhibit51)
Threekeydeterminantsofconsumerbehaviorinclude:
1.Individualconsumerfactors:economicneeds,psychologicalvariables,socialinfluences,andthepurchasesituation.
Youhavetomakeadecisionafterevaluatingallofthesevariableaboutwhetherornottobuy 2.Externalinfluencesonconsumerbehavior:likemarketingmixesandotherstimuli. 3.Theproblemsolvinganddecisionmakingprocessesconsumersgothrough.
ConsumerDecisionMakingProcess Itisageneralfivestepprocessthatmovestheconsumerfromrecognitionofaneedtotheevaluationofa
purchasedecision. Itisaguidelineforstudyinghowconsumersmakedecisions.
Exhibit6.1:ConsumerDecisionMakingProcess
NeedRecognition
Thisisthefirststageinthedecisionmakingprocess.
Resultofanimbalancebetweenactualanddesiredstates. Ex.acarthatsnotgettinggoodgasmileage
ConsumersScaleBack APewResearchCenterpollsuggestsconsumersaremorefocusedonbasicnecessities. 63%ofwomenand51%ofmenreportbuyingcheaperbrandsandincreasedshoppingatdiscountstores. Anincreasednumberofrespondentsreportedinternetasanecessity,whileadecreasednumberreported
television. NeedRecognition
Amarketingmanagersobjectiveistogetconsumerstorecognizeanimbalancebetweentheirpresentstatusand
theirpreferredstate. Advertisingandsalespromotionoftenprovidethisstimulus.
Marketinghelpsconsumersrecognizeanimbalancebetweenpresentstatusandpreferredstate. Internal
EX:Hungerandthirst External
EX:Carrecommendations Stimulus
Anyunitofinputaffectingoneormoreofthefivesenses: 1.Sight 2.Smell 3.Taste 4.Touch 5.Hearing
RecognitionofUnfulfilledWants Whenacurrentproductisntperformingproperly. Whentheconsumerisrunningoutofaproduct. Whenanotherproductseemssuperiortotheonecurrentlyused.
InformationSearch InternalInformationSearch
Recallinformationinmemory. Aninternalinformationsearchistheprocessofrecallinginformationinmemory.
Thisincludespriorexperienceorpriorknowledgeaboutaproduct. ExternalInformationSearch
Seekinformationinoutsideinenvironment. Canbeobtainedfromtwotypesofsourcesincluding:
1.Nonmarketingcontrolledsourcesincludepersonalexperience,personalsources,andpublicsources.
2.Marketingcontrolledinformationisbiasedtowardaspecificproductbecauseitoriginateswithmarketerspromotingthatproduct.
Thesesourcesincludemassmediaadvertising,salespromotion,salespeople,productlabelsandpackaging,andtheInternet.
Anexternalinformationsearchreliesoninformationintheoutsideenvironment. Thisincludespersonalandpublicreferences,advertisements,andpublicity.
EvokedSet
Theinformationsearchshouldyieldagroupofbrands,orevokedset,whicharetheconsumerspreferred
alternatives. Fromthisset,consumerswillfurtherevaluatethealternativesandmakeachoice.
EvaluationofAlternativesandPurchase
Oncetheevokedsetisconstructed,theconsumerisreadytomakeadecision. Onewaytomakeachoiceistopickproductattributesthatareimportanttohim/her,thenexcludeallproductsin
thesetthatdonothavethatattribute. Anotherwaytonarrowthenumberofchoicesistousecutoffs,orminimumormaximumlevelsofanattributethat
analternativemusthave. Manytimes,priceisanimportantcutoffattribute.
Thegoalofthemarketingmanageristodeterminewhichattributeshavethemostinfluenceonaconsumerschoice,anddesignamarketingmixthatstressesthoseattributestotheconsumer.
Asingleattribute,suchasprice,maynotalwaysexplainaconsumersevaluationofproducts. Attributesthatthemarketermayconsiderimportantarenotalwaysimportanttotheconsumer.
Brandnames,suchasJohnson&Johnson,haveasignificantimpactoverthechoiceofproducts.
Purchase
Ultimately,theconsumermustspecificallydecide:
1.Whethertobuy. 2.Whentobuy. 3.Whattobuy(producttypeandbrand). 4.Wheretobuy(typeofretailer,specificretailer,onlineorinstore). 5.Howtopay.
CognitiveDissonance
Onceapurchasedecisionismade,thenextstepintheprocessistheevaluationoftheproductafterpurchase.
Consumersexpectcertainoutcomesfromthepurchase,andhowwelltheseexpectationsaremetdeterminesthelevelofcustomersatisfaction.
Priceinfluencesthelevelofexpectationsforaproductorservice. Whenpeoplefeelinconsistencybetweentheirvaluesoropinionandtheirbehavior,theyfeelaninnertension
calledcognitivedissonance. Inpurchasedecisions,thisisalsocalledbuyersremorse.
Forexample:Whydopeoplewhohavebeenrepeatedlywarnedthatcigarettesarebadfortheirhealthcontinuetosmoke?
Becausesmokersknowonethingandfeelanotherthatscognitivedissonanceatwork. PostpurchaseBehavior
Consumerscanreducedissonanceby: Seekinginformationthatreinforcespositiveideasaboutthepurchase. Avoidinginformationthatcontradictsthepurchasedecision. Revokingtheoriginaldecisionbyreturningtheproduct.
Marketingmanagerscanhelpreducecognitivedissonancethrougheffectivecommunicationwithconsumers,suchasfollowupnotes,advertising,andguarantees.
PsychologicalInfluencesWithinanIndividual
Needs:basicforcesthatmotivateconsumerstodosomething. Wants:learnedneedsthatis,theyareneedsexpressedasadesireforaparticularneedsatisfier. Drive:astronginternalstimulusthatencouragesactiontoreduceaneed.
InClassVideo ConsumerDecisionMaking VermontTeddyBear Need:toshowloveandtobeloved BestsmallcompanyinAmerica BearGram#1seller Wearenotateddybearcompany,wearethebeargrambusiness Peoplelovethattheyaregettingaoneofakindgift Whatmotivatesconsumers?
Consumerswanttobeseenasromanticandtobeappreciatedforgivingthisgifts,theywantemotionsandfeelings
Seasonaltrends:giftgivingholidays,Vday,Christmas,Graduation Priceisntanissueduringgiftgivingholidays Mengenerallywaituntilthelastminute Emphasizeadirectconsumermarketstrategy
Developedtohelpwithproblemrecognition Fivestages:
1.Problemrecognition Topleasesomeonewithaspecialgift
2.Informationsearch Searchactivityinitiatedwhentheycall800numberandtalktoabearcounselor Radioadvertising VTBcansolveyourproblem Logontothewebsite Catalog
3.Evaluationofalternatives Someweighalternativewhiletalkingtobearcounselors
4.Purchasedecision 5.Postpurchasebehavior
Senderscontactcustomerservicetomakesurethebeargramwasdelivered Negative:beargramwaswrong,broken,etc.>disappointedcustomer Positive:rightbeararrivesontimesatisfiedcustomer
PossibleNeedsMotivatingaPersontoSomeAction(Exhibit53)
ThePSSPHierarchyofNeeds(Exhibit54)
Physiologicalneeds:themostbasicneedspeopleexperience.
EX:biologicalneedsforfood,liquid,rest,andsex. Safetyneeds:concernedwithprotectionandphysicalwellbeing.
EX:health,medicine,exercise,andsecurity. Socialneeds:derivedfromapersonsinteractionswithothers.
EX:love,friendship,status,esteem,andconnectingwithothers. Personalneeds:concernedwithanindividualsneedforpersonalsatisfaction,unrelatedtowhatothersdo.
EX:personalsatisfaction,accomplishment,fun,freedom,andrelaxation. PerceptionDeterminesWhatConsumersSeeandFeel
Perceptionreferstohowpeoplegatherandinterpretinformationfromtheworldaroundthem. Marketersareverymuchinterestedintheprocessespeopleusetohandleincomingmarketingmixstimuli,
becausepeoplecantprocessalltheinformationtowhichtheyareexposedonadailybasis. Thevolumeistoogreat.
Selectiveexposuremeansthatconsumersseekoutandnoticeonlytheinformationthatintereststhem. Selectiveperceptionmeansthatpeoplescreenoutormodifyideas,messages,andinformationthatconflict
withpreviouslylearnedattitudesandbeliefs. Selectiveretentionmeansthatconsumersrememberonlywhattheyreallywanttoremember.
TheLearningProcess(Exhibit55)
Marketersunderstandthatvirtuallyallofconsumerbehaviorislearned,sotheyareveryinterestedinhowtheycan
positivelyaffectthelearningprocess. Learningisachangeinapersonsthoughtprocessescausedbypriorexperience.
Asmentionedpreviously,adriveisastronginternalstimulusthatencouragesactiontoreduceaneed. Cuesarestimuliintheenvironmentthattriggeradriveorresponse. Aresponseisanefforttosatisfyadrive. Reinforcementoccurswhentheresponseisfollowedbysatisfaction,whichreducesthedrive.
Marketersoftentrytoidentifypositivecuesorimagesthathavepositiveassociationsfromsomeothersituationandrelatethemtotheirmarketingmix.
Manyneedsareculturallylearned. PsychographicsFocusonActivities,Interests,andOpinions
Personalityandlifestylesareotherpsychologicalvariablesthataffectconsumerbehavior. Personalityaffectshowpeopleseethings.
Marketershavefounditdifficulttoincorporatepersonalityintothemarketingmix. Psychographicsorlifestyleanalysis:
Activities:identifywhatpeopledoobjectivelyobservable. Interests:tendtocreatestrongerdrivesthatmaypinpointmarketopportunities. Opinions:thewaysinwhichpeoplefeelaboutthings.
Bycombiningopinionswithinterestsandactivities,marketerscandeveloparobustviewofcertaintargetmarketsegments.
LifestyleDimensions(andsomerelateddemographicdimensions)(Exhibit56)
FamilyLifeCycleInfluencesNeeds(Exhibit57)
Thetraditionalfamilylifecycleflowfromyoungandsingle,togettingmarried,addingchildrenwhogrowupand
laterleavethehome. Increasingly,manyAmericansarechoosingnottohavechildren. Anothergrowingfamilylifecyclepatterninvolvesdivorce.
Youngpeopleandfamiliesacceptnewideas. Reallocationforteenagers. Increasingsinglesmarket. Sellingtotheemptynesters:peoplewhosechildrenaregrownandwhoarenowabletospendtheirmoneyin
otherways. AdoptionProcessSteps
Manynewproductconceptsrequireanadoptionprocess.
1.Intheawarenessstage,thepotentialcustomerfirstlearnsabouttheexistenceofaproductbutmaylackmoredetails.
2.Iftheintereststageisreached,theconsumerwillgathergeneralinformationandfactsabouttheproduct.
3.Inevaluation,theconsumergivestheproductamentaltrial,applyingittohisorherownpersonalsituation.
4.Intrial,theconsumermaybuytheproducttoexperimentwithitinuse. 5.Theconsumerultimatelymakesadecisiononeitheradoption/continueduse,orrejectionofthe
productfromfurtherconsideration. 6.Afterthedecision,thereisconfirmationwheretheadoptercontinuestorethinkthedecisionand
searchesforfurthersupportthatitwascorrect. Dissonancemaysetinafterthedecisiontensioncausedbyuncertaintyabouttherightnessofa
decision.
ConsumerBehaviorinInternationalMarkets Thelessamarketingmanagerknowsaboutthespecificsocialandintrapersonalvariablesthatshapethebehavior
oftargetcustomers,themorelikelyitisthatrelyingonintuitionorpersonalexperiencewillbemisleading.
ThisphotohelpsillustratetheculturalissuesthatMcDonaldsaddressedwhenexpandingintotheSaudi
Arabianmarketcustomersaresegregatedbysex. Failuretounderstandlocalculturalfactorscanbethedifferencebetweensuccessandfailure. Someculturalfactorsareassubtleastheyarefundamental.
LectureNotes:Chapter6
BusinessandOrganizationalCustomersABigOpportunity
Individualpeoplemakepurchasestosatisfytheirneeds,butsodoorganizations.
Theorganizationalmarketisactuallybiggerthanthefinalconsumermarket,atleastintermsofthenumberofpurchasesmade.
Theorganizationalconsumermarketisoftenreferredtoastheindustrialmarketorthebusinesstobusiness(B2B)market.
Businessandorganizationalcustomersbuyforresaleortoproduceothergoodsandservices. Therearefourmaincategoriesforthesecustomersincluding:
1.Producersofgoodsandservices:manufacturers,farmers,realestatedevelopers,etc. 2.Intermediaries:wholesalersandretailers. 3.Governmentunits,atthefederal,state,andlocallevels,aswellasforeign
governments. 4.Nonprofitorganizations:bothnationalandlocalorganizations.
BusinessProducts Areusedtomanufactureotherproducts. Theybecomepartofanotherproduct. BusinessProductsaidthenormaloperationsofanorganizationorbusiness. Areacquiredforresalewithoutanychangeinform.
*...thekeyisintendeduse* Aproductthatispurchasedforpersonaluseisconsideredaconsumergood. Ifthesameproductispurchasedforuseinabusiness,itisabusinessproduct.
Thekeyinclassificationasabusinessproductisintendeduse. ThesizeofthebusinessmarketintheU.S.andmostothercountriessubstantiallyexceedsthatoftheconsumer
market.
BusinessversusConsumerMarkets
Purchasevolume:businesscustomersbuyinlargerquantitiesthanconsumers. #ofcustomers:businessmarketershavefewercustomersthanconsumermarkets.
Anadvantageisthatitiseasiertoidentifybuyers,monitorcustomerneeds,andbuildpersonalrelationships.
Adisadvantageisthateachcustomerbecomescrucial,especiallyforthosemanufacturerswhohaveonlyonecustomer.
Locationofbuyers:businesscustomersaremoregeographicallyconcentratedthanconsumers. Distributionstructure:businessproductstypicallyhaveshorterchannelsofdistribution,anddirectchannelsare
common. Ontheotherhand,consumerproductspassthroughadistributionsystemthatmayincludetheproducer,
thewholesaler(s),andtheretailers. Natureofbuying:morepeopleareinvolvedinabusinessmarketpurchasedecisionthaninaconsumer
purchase. Representativesfromqualitycontrol,marketing,finance,andpurchasingmaybegroupedinabuying
center. Natureofbuyinginfluence:typically,morepeopleareinvolvedinasinglebusinesspurchasedecisionthanina
consumerpurchase. Typeofnegotiations:negotiationismorecommoninbusinessmarketingdecisionsandmaytakemonthstowork
outthefinalcontracts. Useofreciprocity:businesspurchasersoftenchoosetobuyfromtheirowncustomers.
Itisnotunethicalorillegalunlesstheexchangeiscoerced. Useofleasing:businessescommonlyleaseexpensiveequipmenttoreducecapitaloutflow,keepstateoftheart
products,andgaintaxadvantages. Primarypromotionalmethod:businessmarketersemphasizepersonalselling,especiallyforexpensive,
customdesignedproducts. DemandinBusinessMarkets
Businessdemandisdifferentfromconsumerdemandinthefollowingareas: 1.Thedemandforbusinessproductsisderiveddemand,meaningthatorganizationsbuyproductstobe
usedinproducingcustomerproducts. Asaresult,businessmarketersmustcarefullymonitortrendsandpatternsinfinalconsumer
marketsaswellascustomersforecasts. Demandforbusinessproductsresultsfromdemandforconsumerproducts
2.Inelasticdemandisdemandwithoutregardtoprice. Anincreaseordecreaseintheproductpricewillnotsignificantlyaffectthedemandforthe
product. Achangeinpricewillnotsignificantlyaffectthedemandforproduct
3.Jointdemandoccurswhenmultipleitemsareusedtogetherinafinalproduct. Multipleitemsareusedtogetherinmakingthefinalproduct.Demandforoneitemaffectsall.
4.Fluctuatingdemand:thedemandforbusinessproductstendstobemoreunstablethanthedemandforconsumerproducts.
Demandforbusinessproductsismorevolatilethanforconsumerproductsthusrequiringmoreplanningandexactingdetail
Asmallincreaseordecreaseinconsumerdemandcanproduceamuchlargerchangeindemandforthefacilitiesandmanufacturingequipmentneededtomaketheconsumerproduct.
Thisisknownasthemultipliereffect. TypesofBusinessProducts
1.Majorequipment:capitalgoodssuchaslargeorexpensivemachines,mainframecomputers,airplanes,and
buildings. Depreciatedovertime. Oftencustomdesigned. Personalsellingisanimportantmarketingstrategy.
2.Accessoryequipment:lessexpensiveandshorterlivedthanmajorequipment,includesfaxmachines,personalcomputers,andpowertools.
Usuallynotdepreciated. Oftenstandardizedandpurchasedbymorecustomers. Advertisingisanimportantpromotionaltool.
3.Rawmaterials:unprocessedproducts,suchasminerals,timber,wheat,corn,andfish. Becomepartoffinishedproducts. Personalsellingisthemarketingmixcomponentused. Distributionchannelsusuallydirectfromproducertobusinessuser.
4.Componentparts:finisheditemsreadyforassemblyorthatneedverylittleprocessing. Twoimportantmarketsforcomponentpartsinclude:
1)Originalequipmentmanufacturer(OEM) 2)Replacementmarket
5.Processedmaterials:useddirectlyinmanufacturingotherproducts,includessheetmetals,chemicals,andlumber.
Donotretaintheiridentityinfinalproducts. Priceandserviceareimportantfactorsinchoosingasupplier.
6.Supplies:consumableitemsthatdonotbecomepartofthefinalproduct. Shortlivesandinexpensive. Generallyfallintocategoriesofmaintenance,repair,oroperatingsupplies(MRO).
7.Businessservices:expenseitemsthatdonotbecomepartofthefinalproduct. Thisincludesjanitorial,advertising,legal,managementconsulting,marketingresearch,andmaintenance
services.
ServingSmallBusinessCustomers
MarketersfrequentlyaimtheiradvertisingandpromotionatspecificsegmentsoftheB2Bmarket,asillustratedin
thisadfromKyocera. Theadsmessagehighlightsthefactthatprintingcostscanbeaheadacheforsmallbusinesses.
Italsoemphasizesa$2,000rebate,whichhelpssmallbusinesscustomers. Duringthecurrenteconomicdownturn,watchingmarginalcostshasbecomemoreimportant. ObjectiveofBB&T:helpsmallbusinesses.
SpecificationsandQuality
Unliketheindividualconsumermarket,organizationalbuyerstendtofocusmoreonqualityandexactingpurchase
specifications. Organizationalbuyersoftenconcentrateonqualitycertificationinmakingpurchases.
ISO9000isawayforasuppliertodocumentitsqualityproceduresaccordingtointernationallyrecognizedstandards.
Purchasingspecifications:writtenorelectronicdescriptionsofwhatthefirmwantstobuy. Thespecificationsdescribetheneedstheorganizationalbuyershave. Specificationsmaybefairlysimple,ortheymaybeverydetailed.
LandsEndVideoNotes KINDSOFPURCHASES
Straightrebuy Modifiedrebuy NewTaskPurchases
BUYINGCRITERIA EconomicCriteria QualityandServiceCriteria VendorCriteria
MultipleInfluenceandRolesintheBuyingCenter
Purchasingmanagersarespecialistsinbuyingactivitiesfortheiremployers. Multiplebuyinginfluence:severalpeopleplayapartinmakingapurchasedecision.
Thecollectionoftheseinfluencesisabuyingcenterandincludes: 1.Buyers:thepurchasingmanagerswhoareresponsibleforworkingwithsuppliersand
arrangingforthetermsofthesale. **Havetheformalauthoritytodoit.**
2.Users:thepeoplewhowillactuallyusetheproduct. Theymaybeproductionworkersorsupportstaff.
3.Influencers:peoplewhoexpertiseisusedtohelpdeterminewhichproductsareneeded. Theyareoftentechnicalpeoplewhohelpwritespecifications.
4.Gatekeepers:peopleinkeypositionsintheorganizationwhocontroltheflowofinformation. Theycanincludereceptionists,secretaries,researchers,andothers.
5.Deciders:thepeopleintheorganizationwhohavethepowertoselectorapprovethesupplier. EvaluatingOrganizationalBuyingInfluences
Althoughmostbuyersinorganizationalmarketsareprofessionals,acomprehensivevendoranalysisconsidersall
influencesonpurchasedecisions. Vendoranalysisisaformalratingofsuppliersonallrelevantareasofperformance.
Thegoalistolowerthetotalcostsofapurchase. Abuyersbehaviorneedsarerelevant,too.
EX:ifabuyersmaincontactwiththesupplieristhroughasalesrepresentativewhoisuncooperative,thesupplierislessattractivetothebuyer.
Ethicalconflictsmayariseinbuyersupplierrelationships. Someorganizationshaveprovisionsintheircodesofconductgoverningtheseinteractions.
Purchasingmayalsobecentralizedinmanyorganizationsbyconcentratingthepurchasingforallbranchesatonelocation.
Thismayhelpthebuyingorganizationtomanagespendingorachieveeconomiesofscale. Requisition:arequesttobuysomethingiteventuallybecomesapurchaseorder.
Electronicrequisitionsarebecomingmorepopular.
BuyingSituations
Often,businessfirms,especiallymanufacturers,mustdecidewhethertomakesomethingorbuyitfromanoutside
supplier. Ifafirmdoesdecidetobuyaproductinsteadofmakingit,thepurchasewillbe(1)anewbuy,(2)a
modifiedrebuy,or(3)astraightrebuy. OrganizationalBuyingProcesses(Exhibit63)
Likeindividualconsumers,organizationalbuyersareproblemsolvers.
Thethreekindsofbuyingprocessthatareusefulinclude: 1.Newtaskbuyingoccurswhenacustomerorganizationhasanewneedandwantsagreat
dealofinformation. Itofteninvolves(1)settingproductspecifications,(2)evaluatingsourcesofsupply,and
(3)establishinganorderroutinetofollowinthefuture. Itrequiresinformation.
2.Astraightrebuyisaroutinerepurchasethatusesexistingsupplierstofillastandardorder. Theyoftenuseecommerceordersystems.
3.Amodifiedrebuyistheinbetweenprocess. Somereviewofthebuyingprocessisdonebutnotasmuchasinanewtaskbuy.
MajorSourcesofInformationUsedbyOrganizationalBuyers(Exhibit64)
Anewtaskbuystartswithauserwhobecomesawareofaneedandbeginsresearchingsolutions. Eventhoughawidevarietyofinformationsourcesareavailable,businessbuyerswillusethesourcesthey
trust. Tobuildtrust,amarketermustmakesureitsinformationisreliable.
Onesourceofinformationcomesfromthemarketingfirm. Thisincludespersonalinformationthatcomesfromtalkingtothesellingfirmspersonnel.
Inaddition,thefirmproducesinformationthatappearsinprintformonpaperoronline. Buyerswillalsoturntosourcesofinformationoutsidethedirectcontroloftheseller.
ThesecanbepersonalsourcesorImpersonalsources BuyerSellerRelationshipsinBusinessMarkets
RelationshipsbetweenbuyersandsellersintheB2Bmarketmaybecasual,armslengthrelationships,orthey
canbeclose,longlastingpartnerships. Marketersshouldknowthedegreeofclosenessthatisappropriateforagivenrelationship.
Closerelationshipsbetweenbuyersandsellersmayproducemutualbenefits. Thebestrelationshipsinvolverealpartnershipswheretheresmutualtrustandalongtermoutlook. Closelytiedfirmsoftensharetasksatlowercostthanwouldbepossibleworkingatarmslength.
Closerelationshipsmaynotmakesense. Theycanreduceabuyersflexibilityandleverage. Somepurchasesaresimplytoosmallortooinfrequent. Somepurchasesrequiresomuchspecialattentionthattherelationshipwouldneverbeprofitableforthe
seller. RelationshipsHaveManyDimensions(Exhibit65)
Cooperationtreatsproblemsatjoinresponsibilities.
Thebuyerandsellerworktogethertoachievebothmutualandindividualobjectives. Bothsidesareinvolvedinproblemresolution.
Boththesupplierandthebuyerbenefitwhentheycanshareinformation. Typesofsharedinformationmayinclude:
Itincludestheexchangeofproprietarycostdata,discussionofdemandforecasts,andjoinworkonnewproductdesigns.
Itisfastandeasytoupdatetheinformation. Itsavestime. Itcanleadtobetterdecisions,reduceduncertaintyaboutthefuture,andbetterplanning.
Eventhoughsharedinformationisuseful,itmayberiskyifthereisapossibilitythatoneofthepartnerswillmisuseit.
DynamicsofBuyerSellerRelationships Theremaybeanimbalanceofpowerfavoringoneofthepartners.
Apowerfulcustomermaycontroltherelationship. Althoughamarketingmanagermaywanttoworkinacooperativepartnership,thatmaybe
impossiblewithlargecustomerswhohavethepowertodictatehowtherelationshipwillwork. Buyersmaystilluseseveralsourcestoreducetheirrisk.
Buyersoftenlookforseveraldependablesourcesofsupplytoprotectthemselvesfromunpredictableevents.
Buyingvariationsbycustomertype. TheGovernmentMarket
Governmentbuyerstypicallyusecompetitivebiddingandapprovedsupplierlists,andputlegalconstraintsonthe
latitudeofindividualbuyers. Thesizeanddiversityofthegovernmentmarketmakeitanattractivetarget. Governmentbuyersarerestrainedbypurchasingregulations,andcompetitivebidsmayberequired. Forroutinepurchases,agovernmentunitcanprepareanapprovedsupplierlist. Governmentpublicationshelpmarketerstolearnwhatgovernmentwantstobuy. Indealingwithforeigngovernments,informationislessavailable,andtheremaybesignificant
obstaclesthatfavoradomesticsupplier. Isitunethicaltobuyhelpindealingwithforeigngovernments?
Notinsomecountries. IntheU.S.,theForeignCorruptPracticesAct(FCPA)prohibitsU.S.firmsfrompayingbribes
toforeignofficials.
LectureNotes:Chapter7 EffectiveMarketingRequiresGoodInformation
Marketinginformationisneededtoinformmanagersaboutalldecisionsmadeinthedevelopmentofmarketing
strategy. Marketingmanagersmaywanttogatherinformationaboutanyoftheelementsinourmarketingstrategyplanning
model. Forexample,indevelopingstrategy,amarketingmanagermayfinditusefultolearnmoreaboutcustomer
attitudestowardthecompanysbrandname. Oramarketingmanagermaywanttoknowthepricesbeingchargedbycompetitors.
Amarketingmanagermightwanttotestwhethertheuseofadvertisingontelevision,inmagazines,orontheInternetwouldbemosteffectiveinbuildingawarenesswithaparticulartargetmarketing.
Orthemarketingmanagermaywanttoknowhowwellaparticularproductissellingthrougheachofthecompanysprimarychannelsofdistribution.
MarketingInformationInputstoMarketingStrategyPlanningDecisions(Exhibit71)
Twomajorelementsrelatingtomarketinginformationare(1)marketinginformationsystems,and(2)marketing
research. Marketinginformationsystems,andtheircomponents,ensuretheavailabilityandaccessibilityof
information,aswellasthetoolstoanalyzetheinformation. Manyfirmsrelyonmarketingresearch,whetherinhouseorcontracted,togetanswerstospecific
questions. MarketingDecisionSupportSystems
Aninteractive,flexiblecomputerizedinformationsystemthatenablesmanagerstoobtainandmanipulateinformationastheyaremakingdecisions.
Characteristicsinclude: 1.Interactive 2.Flexible 3.DiscoveryOriented 4.Accessible
EffectiveResearchRequiresCooperation
Sometimesdevelopingagoodrelationshipisdifficult,becausethemarketingmanagerandtheresearchcomefrom
somewhatdifferentprofessionalworlds. Marketingmanagersneedresearchbecausetheyhaveproblemstheywanttosolve,buttheysometimes
havetroubleexplainingwhattheyneedtoaresearcher. Ontheotherhand,researcherswhoareveryskilledinthetechnicalaspectsofmarketingresearchmay
notcompletelyunderstandthedecisionsituationfacingthemanager. Mostlargecompanieshaveaseparatemarketingresearchdepartmenttoplanandmanageresearchprojects.
MarketingDecisionSupportSystems
ThefastestgrowinguseofDSSsisfordatabasemarketing.
Itisusuallythekeytoolforsuccessfulonetoonemarketing,whichreliesonveryspecificinformationaboutamarket.
TheRoleofMarketingResearch Marketingresearch:theprocessofplanning,collecting,andanalyzingdatarelevanttoamarketingdecision.
Itprovidesdataontheeffectivenessofthemarketingmixandinsightsfornecessarychanges. Itisamaindatasourceformanagementinformationsystemsanddecisionsupportsystems.
TheRoleofMarketingResearch Marketingresearchhasthreerolesincluding:
1.Descriptive:gatheringandprescribingfactualstatements. Whatisthehistoricsalestrendintheindustry?Whatareconsumersattitudestowardaproduct?
2.Diagnostic:explainingdata. Whatwastheimpactonsalesafterachangeinthepackagedesign?
3.Predictive:addresswhatifquestions. Whatifquestions,suchashowcandescriptiveanddiagnosticresearchbeusedtopredictthe
resultsofaplannedmarketingdecision? ManagementUsesofMarketingResearch
Improvethequalityofdecisionmaking. Traceproblems. Focusonkeepingexistingcustomers. Understandthemarketplace. Alertthemtomarketplacetrends. Gaugethevalueofgoodsandservices,andthelevelofcustomersatisfaction.
ChangesAreUnderWayinMarketingInformationSystems
Marketingmanagersneedinformationabout(1)customersandtheirresponsestothemarketingmix,(2)targeting
andsegmentation,(3)competitors,and(4)themarketingenvironment. Thealsoneedinformationthatwillallowthemtododetailedcostanalysisforthepurposeof
implementationandcontrol. Marketinginformationsystems(MIS)helpmakethisinformationavailableandaccessible.
BigDataExplosionBusinessestodayareawashindatasetstoolargetoworkwithusingconventionaldatabasemanagementtools.
AnMISallowsamanagertogetmoreinformation,faster,andeasier,bymakingitreadilyavailableinaneasytouseformat.
AnMISorganizesincomingdatainadatawarehouse. Intranet:asystemforlinkingcomputerswithinacompanythatworksliketheInternet.
Anintranetiseasilyaccessibleandisalsoeasytoupdate.
ElementsofaCompleteMarketingInformationSystem(Exhibit72)
InformationsourcesforanMISmayincludeformalmarketingresearchstudies,aswellaspreviouslypublished
internalorexternaldataandthisinformationiscollectedandstoredina.. Datawarehouse:aplacewheredatabasesarestoredsothattheyareavailablewhenneeded.
SomeMISshaveadecisionsupportsystem(DSS)thatputsmanagersonline. Fromthedatawarehouse,otherelementsoftheMISallowmarketingmanagerstoaskquestionsandseek
answers. Decisionsupportsystem(DSS):acomputerprogramthatmakesiteasyforamarketingmanagertogetand
useinformationwhileheorsheismakingdecisions. Marketingdashboard:computerdisplayofuptotheminutemarketingdatainaneasytoreadformat
customizedtothemanagersareaofresponsibility. Marketingmodel:astatementofrelationshipsamongmarketingvariables.
Itallowsamanagertoseehowanswerstoquestionsmightchangeinvariouswhatifsituations. Allofthisinformationfeedsintothedecisionthatmarketingmanagersmakeandultimately influencesimportantoutcomesofthedecisionwhichbecomefeedbacktotheprocess.
Thedatabaseiscontinuallyrefreshedwithnewinformation,makingitanuptotheminutemanagementtool.
FiveStepScientificApproachtoMarketingResearchProcess(Exhibit73)
Scientificmethod:adecisionmakingapproachthatisobjectiveandorderlyintestingideasbeforeaccepting
them. Hypothesis:educatedguessesaboutlikelycausesandeffectsthatcanbemeasuredobjectivelytohelpeliminate
unnecessaryrisktaking.
Themarketingresearchprocessisafivestepapplicationofthescientificmethod. Step1isdefiningtheproblem.
Themanagerandtheresearcherdeterminethekeydecisionissuesrequiringinformation. Step2isanalyzingthesituation.
Aninformalstudyofinformationthatisalreadyavailableintheproblemarea. Step3isgettingproblemspecificdata.
Thecollectionofdatathatiscustomizedtothedecisionmarketersuniqueneeds. Step4isinterpretingthedata.
Theprocessofgettingmeaningfromthecollecteddataitisatransformationofrawdatatousefulinformation.
Step5issolvingtheproblem. Thedeliveryofrecommendationstothemarketingmanager,whoisultimatelyresponsiblefor
implementingtherecommendations. Themarketingmanagermayfindthatatanystep,asolutionmightbeidentifiedtheearlyidentificationofa
solutioncansavetimeandmoney. Goodmarketingresearchrequirescooperationbetweenresearchersandmarketingmanagers.
Researchersmustbesuretheirresearchfocusesonrealproblems. DefiningtheProblemStep1
Thisisthemostimportantandoftenthemostdifficultstepintheresearchprocess.
Often,theresearchmusthelpthemanagertofleshouttherealproblemfacingtheorganizationandthetypesofinformationneededtosolvetheproblem.
Findingtherightproblemlevelalmostsolvestheproblem,inmanycases. Inordertofindtherightproblem,themarketingstrategyplanningframeworkcanbeuseful.
Dontconfuseproblemswithsymptoms. Keyperformanceindicatorsinmarketingmaybesymptomsofothermorefundamentalproblems.
Settingresearchobjectivesmayrequiremoreunderstanding. Theresearcherandmanagercandevelopalistofresearchquestionsthataremostimportant. Asingleresearchprojectmaynotbeadequateforansweringallofthequestions.
AnalyzingtheSituationStep2
Situationanalysisisbasicallyaninformalstudyinanswertothequestion,Whatinformationdowealready
haveintheproblemarea? Situationanalysishelpseducatearesearcher,byprovidingbackgroundaboutunfamiliarproblemareas.
Thesituationanalysismayuncoverinformationthatleadstoanearlyidentificationofasolution,oritmayhelptodeterminewhatothertypesofinformationarereallynecessary.
SourcesofSecondaryandPrimaryData(Exhibit74)
Asituationanalysisusuallyincorporatessecondarydata,whichmayprovidetheanswers,oratleastsome
background,relevanttotheresearchproblem. Secondarydata:informationthathasalreadybeencollectedorpublished. Primarydata:informationspecificallycollectedtosolveacurrentproblem. Muchsecondarydataisavailable.
ExamplesofsecondarydatasourcesfrominsidethecompanymightbedatafromtheMIS,financialinformationfromtheaccountingdepartment,orreportsfromthefieldsalesforce.
Informationfromoutsidethecompanymightincludegovernmentinformation,tradeassociationstudies,orinformationavailableinmagazinesorjournalarticles.
SearchtheInternetforinformation. SearchenginesmaymissimportantdatabasesavailableontheInternet. SpecialinterestdiscussiongroupsornewsgroupsontheWebshareinformationontopicsofspecific
interest. Governmentdataisinexpensiveandavailableindigitalorprintedform.
Mostcountrieswithadvancedeconomieshavegovernmentagenciesthathelpresearchersgetthedatatheyneed.
Primarydatamaybeobtainedthroughobservationorquestioning. SourcesofSecondaryData
Secondarydataisdatapreviouslycollectedforanypurposeotherthantheoneathand.
AdvantagesofSecondaryData Savestimeifontarget. Aidsindeterminingdirectionforprimarydatacollection. Pinpointsthekindsofpeopletoapproach. Servesasabasisofcomparisonforotherdata.
DisadvantagesofSecondaryData Maynotgiveadequatedetailedinformation. Maynotbeontargetwiththeresearchproblem. Qualityandaccuracyofdatamayposeaproblem.
TheNewAgeofSecondaryInformation:TheInternet TherapiddevelopmentoftheInternethaseliminatedmuchofthedrudgeryassociatedwiththecollectionof
secondarydata. Gatheringsecondarydatahastraditionallybeenatediousboringjob.
Theresearcheroftenhadtowritetogovernmentagencies,tradeassociations,orothersecondarydataprovidersandthenwaitdaysorweeksforareplythatmightnevercome.
PrimaryData Primarydata:informationcollectedforthefirsttimethatisusedforsolvingtheparticularproblemunder
investigation. Advantagesinclude:
Answersaspecificresearchquestion. Themainadvantageofprimarydataisthattheywillansweraspecificresearchquestionthat
secondarydatacannotanswer. Theinformationisproprietary.
Dataarecurrent. Sourceofdataisknown. Secrecycanbemaintained.
DisadvantagesofPrimaryData Primarydatacanbeveryexpensive.
Thecostofprimarydatamayrangefromafewthousanddollarsforalimitedsurveytoseveralmillionforanationwidestudy.
Tosavemoney,firmsmay: Cutbackonthenumberofinterviews,anduseInternetstudiesinstead. Usepiggybackstudiesbygatheringdataontwodifferentprojectsusingone
questionnaire. Disadvantagesareusuallyoffsetbytheadvantagesofprimarydata.
SurveyResearch Surveyresearch:themostpopulartechniqueforgatheringprimarydata,inwhicharesearcherinteractswith
peopletoobtainfacts,opinions,andattitudes. FormsofSurveyResearch
1.Inhomepersonalinterviews:providehighqualityinformation,butareexpensivebecauseoftraveltimeandmileagecostsfortheinterviewer.
NotapopularsurveytoolintheU.S.andEurope. 2.MallInterceptinterviews:conductedinshoppingmallsorinamarketingresearchofficeinthemall.
Surveysmustbebrief. Itishardtogetarepresentativesampleofthepopulation.
However,probingispossible. 3.Telephoneinterviews:costlessandprovideoneofthebestsamplesofanytraditionalsurveyprocedure.
Manyfacilitiesfortelephoneinterviewsutilizecomputerassistedinterviewing,whereinformationisdirectlyinputintoacomputerapplication.
ThefederalDoNotCalllawdoesnotapplytosurveyresearch. 4.Mailsurveys:benefitsarethelowcost,eliminationofinterviews,centralizedcontrol,andanonymityfor
respondents. However,mailquestionnairesusuallyproducelowresponserates.
Consequently,theresultingsamplemaynotrepresentthesurveyedpopulation. Mailpanels,consistingofasampleofhouseholdsrecruitedtoparticipateforagivenperiod,yieldresponse
ratesof70%. 5.Executiveinterviews:involvesinterviewingbusinesspeopleattheirofficesregardingindustrialproductsor
services. Thistypeofinterviewingisexpensive,duetotheprocessoffinding,qualifying,andinterviewing
respondents. 6.Focusgroups:atypeofpersonalinterviewing,characterizedbyseventotenpeoplegatheredinameeting
place. Theinteractionprovidesgroupdynamics,withaninterplayofresponsesyieldingricherinformationthan
individualinterviews.
GettingProblemSpecificDataStep3
Therearetwobasicmethodsofcollectingprimarydata.
1.Observing. 2.Questioning.
Itcanrangefromqualitativetoquantitativeresearch. Qualitativeresearchseeksindepth,openendedresponses,notyesornoanswers.
Theresearchertriestogetpeopletosharetheirthoughtsonatopicwithoutgivingthemmanydirectionsorguidelinesaboutwhattosay.
ObservationResearch Observationresearchisthesystematicprocessofrecordingthebehavioralpatternsofpeople,objects,and
occurrenceswithoutquestioningthem. Itreliesonfourtypesofobservationincluding:
1.Peoplewatchingpeople. 2.Peoplewatchinganactivity. 3.Machineswatchingpeople. 4.Machineswatchingactivity.
ObservationalSituations
Observationalresearchdependsonwatchingwhatpeopledo.
Itmaybeconductedbyhumanobserversormachines. AnalyzingtheData
Crosstabulation:amethodofanalyzingdatathatletstheanalystlookattheresponsestoonequestioninrelationtotheresponsestooneormoreotherquestions.
Afterthedataiscollected,thenextstepistoanalyzedata. Thepurposeofdataanalysisistointerpretanddrawconclusionsfromthecollecteddata.
Dataisorganizedbyonewayfrequencycounts,crosstabulations,andmoresophisticatedstatisticalanalysis. Onewayfrequencytablesrecordtheresponsestoaquestion.
Theyprovideageneralpictureofthestudysresults. Acrosstabulationlooksattheassociationsbetweencertainresponses,suchasassociationbetweengenderand
productchoice.
InterpretingtheDataStep4(Exhibit76)
Dataanalysisandinterpretationfollowdatacollection,anditanswersthequestion,Whatdoesitreallymean? Quantitativeanalysisisfacilitatedbytheuseofstatisticalpackages:easytousecomputerprogramsthat
analyzedata. Dataanalysiscanbeeithersimpleorcomplex.
Oneofthemostpopularanalyticalapproachesiscrosstabulation. Thetableshowsthecombinedresponsesfortwoquestions:
1.Whatisyourhouseholdincome? 2.DoesyourhomehavebroadbandInternetservice?
Amongpeoplewithahouseholdincomeofmorethan$75,000,72.4%havebroadbandInternetservice. Amongpeoplewithahouseholdincomelessthan$30,000,thepercentageofpeoplewithbroadband
Internetserviceisonly23.7%. Therefore,thecrosstabulationanalysisshowsthathouseholdswithhigherincomesaremuch
morelikelytohavebroadbandInternetservice. KeyConcernsinDataInterpretation
Thefirstquestionamarketingresearchermustansweris,Isyoursamplereallyrepresentativeofthepopulation?
Population:thetotalgroupofinteresttotheresearcherormarketingmanager. Sample:asmallergroupselectedtorepresentthepopulation.
Thekeyhereistoensurethatthesampleselectedrepresentsthelargerpopulation. ChatterontheInternetnotrepresentativebutcanbeuseful.
Researchresultsarenotexact. Confidenceinterval:therangeoneithersideofanestimatethatislikelytocontainthetrue
populationvalue. Validityproblemscandestroyresearch.
Validity:theextenttowhichdatameasureswhatitisintendedtomeasure. Poorinterpretationcanalsodestroyresearch. Problemscanariseiftheresearcherdoesnotunderstandthemanagementproblem,sothemarketingmanager
andresearchershouldworktogetherclosely. Ethicsinvolvedininterpretingandpresentingresults.
Themostcommonethicalissuesconcerndecisionstowithholdcertaininformationabouttheresearch.
SolvingtheProblemStep5
Inthislaststepoftheresearchprocess,managersusetheresearchresultstomakemarketingdecisions. Researchersandmanagersarefascinatedbytheinterestingtidbitsofinformationthatcomefromtheresearch
processandtheyareexcitediftheresearchrevealssomethingtheydidntknowbefore. Ifresearchdoesnthaveactionimplications,ithaslittlevalueandsuggestpoorplanningbythe
researcherandthemanager. Whentheresearchprocessisfinished,themarketingmanagershouldbeabletoapplythefindingsin
marketingstrategyplanningthechoiceofatargetmarketorthemixofthefourPs. Iftheresearchdoesntprovideinformationtohelpguidethesedecisions,thecompanyhaswasted
researchtimeandmoney. PreparingandPresentingtheReport
Concisestatementoftheresearchobjectives. Explanationofresearchdesign. Summaryofmajorfindings. Conclusionwithrecommendations.
FollowingUp Thefinalstepinthemarketingresearchprocessistofollowup.
Theresearchershoulddeterminewhymanagementdidordidnotcarryouttherecommendationsofthereport.
Weretherecommendationsfollowed? Wassufficientdecisionmakinginformationincludedinthereport? Whatcouldhavebeendonetomakethereportmoreusefultomanagement?
InternationalMarketingResearch
Marketingresearchcontributestointernationalmarketingsuccess.
Customerneedsandinterests,aswellassegmentingdimensionsandotherenvironmentalfactors,maybeconsiderablydifferentinforeignmarkets.
Decisionsmadewithoutsoundmarketingresearchareladenwithrisk. Inmanycountriesitisdifficultforaforeignertogatheraccurateinformation. Marketersdealingininternationalmarketswouldbewelladvisedtoavoidmistakesbyusinglocalresearchers. Ifafirmisengagedinsimilarresearchprojectsinvariousoverseasmarkets,somecoordinationand
standardizationmakessense.
LectureNotes:Chapter8 ProductDecisionsforMarketingStrategyPlanning(Exhibit81)
Productmeanstheneedsatisfyingofferingofafirm. Theproductideaencompassesmanyattributesofaphysicalgoodorservice:(1)itsfeatures,(2)benefits,(3)
qualitylevel,aswellasitsaccessories,installationrequirements,andinstructions. Anyproductmustalsobepositionedrelativetotheotherofferingsoftheorganizationinitsproductline.
Brandingisakeyproductstrategyarea. Marketersneedtodecidewhattypesofbrandstheywishtoproduce.
Thepackageismorethanjustameansofprotectingtheproduct. Itcanhelptopromotetheproductorenhanceitsuse.
Marketersmustdecideiftheywanttoofferproductwarranties,andiftheydo,howextensivethewarrantieswillbe.
Thetypeofconsumer(productclass)thatwilluseitdeterminesifaproductisaconsumer WhatIsaProduct?
ProductisthestartingpointoftheMarketingMix. Price,distribution,andpromotionstrategiescannotbedetermineduntilthefirmhasaproducttosell. Aproductiseverything,bothfavorableandunfavorable,thatapersonreceivesinanexchange. Wellconceivedprice,distribution,andpromotionstrategieshavelittlevaluewithoutastrongproductoffering.
Exhibit101:CampbellsProductLinesandProductMix
AllofCampbellsproductsconstituteitsproductmix.
Eachproductintheproductmixmayrequireaseparatemarketingstrategy. Insomecases,productlinesandmixessharesomemarketingstrategycomponents.
BenefitsofProductLines 1.Advertisingeconomies:productlinesprovideeconomiesofscaleinadvertising. 2.Packageuniformity:packagesintheproductlinemayhaveacommonlookbutmaintaintheirindividual
identities. 3.Standardizedcomponents:reductionsinmanufacturingandinventorycosts. 4.Efficientsalesanddistribution:aproductlineenablesafullrangeofchoicestocustomers,andasaresult,
betterdistributionandretailcoverage. 5.Equivalentquality:allproductsinalineareperceivedashavingsimilarquality.
ProductQualityandCustomerNeeds Fromamarketingperspective,qualitymeansaproductsabilitytosatisfyacustomersneedsorrequirements. Qualitymaybeabsoluteorrelative,butinallcasesthecustomersexpectationsforqualityinagivenproductform
thebasisfordetermininghowtoachievecustomersatisfaction.
InthisadforVolvotrucks,Volvopromisestomeettheneedsthattruckershaveforhighfuelefficiencyand
performance. NotethattheadfeaturesbothatollfreetelephonenumberandaWebsitesothatinterested
consumerscaneasilycontactVolvoinordertolearnmore. Branding
Typesofbrandinginclude: 1.BrandName:thatpartofabrandthatcanbespoken,includingletters,words,andnumbers. 2.BrandMark:theelementsofabrandthatcannotbespoken. 3.BrandEquity:thevalueofcompanyandbrandnames. 4.GlobalBrand:abrandwhereatleastathirdoftheearningscomefromoutsideitshomecountry.
RecognizedTrademarksandSymbolsHelpinPromotion(Exhibit83)
Brandingmeanstheuseofaname,term,symbol,ordesigntoidentifyaproduct.
Somecompaniesuseacombinationofsomeorallofthesewhenbranding. Abrandnameisaword,letter,oragroupofwordsorletters. Atrademarkincludesonlythosewords,symbols,ormarksthatarelegallyregisteredforusebyasinglecompany. Aservicemarkisatrademarkthatreferstoaserviceoffering. Brandsmeetneeds.
EX:brandsmakeshoppingeasierbecauseconsumerscanidentifylevelsofqualitywithspecificproductsandshortenthetimeneededforinformationsearch.
Brandingalsohelpsmarketersbecauseitcan: Reducesellingtimeandcost. Improvethecompanysimage.
ConditionsFavorabletoBranding
Theproductiseasytolabelandidentifybybrandortrademark. Theproductqualityiseasytomaintainandisthebestvaluefortheprice. Dependableandwidespreadavailabilityispossible. Demandisstrongenoughthatthemarketpricecanbehighenoughtomakethebrandingeffortprofitable. Thereareeconomiesofscale.
Ifbrandingisreallysuccessful,costsshoulddropandprofitsshouldincrease. Favorableshelflocationsordisplayspaceinstoreswillhelp.
AchievingBrandFamiliarityIsNotEasy
Brandfamiliaritymeanshowwellcustomersrecognizeandacceptacompanysbrand.
Thefivelevelsofbrandfamiliaritythatareusefulforstrategyplanninginclude: 1.Brandrejectionmeansthatpotentialcustomerswontbuyabrandunlessitsimageis
changed. 2.Brandnonrecognitionmeansfinalconsumersdontrecognizeabrandatall,eventhough
middlemenmayuseitforidentificationandinventorycontrol. 3.Brandrecognitionmeansthatcustomersrememberthebrand. 4.Brandpreferencemeansthattargetcustomersusuallychoosethebrandoverotherbrands. 5.Brandinsistencemeanscustomersinsistonafirmsbrandedproductandarewillingto
searchforit. BenefitsofBranding
Brandinghasthreemainpurposes: 1.Productidentification
*Themostimportantpurpose* 2.Repeatsales 3.Newproductsales.
Thetermbrandequityreferstothevalueofcompanyandbrandnames. Thetermglobalbrandreferstoabrandthatobtainsatleastathirdofitsearningsfromoutsideitshomecountry,
isrecognizableoutsideitshomebaseofcustomers,andhaspubliclyavailablemarketingandfinancialdata. Brandloyalty,aconsistentpreferenceforonebrandoverallothers,isquitehighinsomeproductcategories.
TopTenGlobalBrands
TraderJoesTheBrand
About80%oftheitemsofferedatTraderJoesareprivatelabel. TraderJoesoffersseveralsubbrandswithintheTraderJoesfamily,suchasTraderMingsforChinesefoodand
TraderDarwinsforvitamins. TraderJoespurchasesdirectlyformthemanufacturerandshipsdirectlytoitsdistributioncenters,wheremanyof
theproductsareportionedandpackaged. Cobranding
Cobrandingisplacingtwoormorebrandnamesonaproductoritspackage.
Ingredientbrandingidentifiesthebrandofapartthatmakesuptheproduct. EX:IntelinDellcomputers,CoachinteriorsinLincolnautomobiles.
Cooperativebrandingoccurswhentwobrandsreceiveequaltreatment. EX:promotionalcontestsponsoredbyRamadaInns,AmericanExpress,andContinentalAirlines.
Complementarybrandingreferstoproductsadvertisedormarketedtogethertosuggestusage. Thebenefitsofcobrandinginclude:
Enhancementofprestigeorvalueofaproduct. Increasedmarketpresenceinmarketswithlittleornomarketshare.
CharacteristicsofaGoodBrandName(Exhibit84)
Arespectednamebuildsbrandequitythevalueofthebrandsoverallstrengthinthemarket.
ProtectingBrandNames&Trademarks
Registeringbrandnamesandtrademarksisimportantbecauseitmeansthatnooneelsecanusethemwithout
specificauthorizationfromtheowner. U.S.commonlawandcivillawprotecttherightsoftrademarkandbrandnameowners. TheLanhamAct(1946)spellsoutwhatkindsofmarks(includingbrandnames)canbeprotectedandtheexact
methodofprotectingthem. Abrandcanbearealassettoacompany,buteachcompanymustprotectitsown.
Ifabrandbecomesagenericdescriptivewordforaproductcategory,protectionislostandthebrandbecomespublicproperty.
Evenifbrandsareregistered,counterfeitingisacceptedinsomecultures,especiallyindevelopingnations. Manypopularbrandedproducts,suchasLevisjeansandRolexwatches,havebeencopiedwithout
authorization. Weakregulationinmanydevelopingcountriesmakesitdifficultforcompaniestoprotecttheirbrandsfrom
counterfeits. WhatKindofBrandtoUse?
Afamilybrandisthesamebrandnameusedforseveralproducts,suchasSunkist,whichoperatesonfreshfruit,
juice,vitamins,andsoftdrinks. Usingafamilybrandisagoodapproachiftheindividualproductsareofasimilarquality.
Aspecialcaseoffamilybrandingisalicensedbrand,awellknownbrandthatsellerspayafeetouse. Individualbrandsmaybeusedforoutsideandinsidecompetition.
Whenacompanymakesveryunrelatedproductsthatrequireaseparateidentitytoavoidconfusion,developingindividualbrandsforeachcanbeagoodidea.
Somecompaniesdevelopseveralversionsofaproductsuchastoothpaste,eachwithauniquepositioninthemarket.
Genericbrandsareproductsthathavenobrandatallotherthantheidentificationoftheircontents. Theycanbeimportant,lowcostalternativesforconsumers,suchasinthemarketforprescriptiondrugs.
WhoShouldDotheBranding?
Inadditiontothetypeofbrand,thebrandscreationandownershiparealsopartoftheoverallproductstrategy.
Manufacturerbrandsarebrandscreatedbyproducers. Manufacturerbrandsaresometimescallednationalbrandsbecauseoftheirwideappeal.
Dealerbrandsarealsocalledprivatebrands. Intermediaries,suchaswholesalersandretailers,createthesebrands.
Thebattleofthebrandsisacompetitionbetweenmanufactureranddealerbrands. Manyretailershaveexpandedthelinesofproductssoldundertheirstorebrands,whilereducing
theamountofspacegiventomanufacturerbrands. Whoswinningthebattleofbrands?
Thebigwinneristheconsumer,whobenefitsfromgreaterchoiceandmoreintensepricecompetition.
Trademarks Atrademarkistheexclusiverighttouseabrand.
Othersareprohibitedtousewithoutpermission. Manypartsofabrandandassociatedsymbolsqualifyfortrademarkprotection.
Trademarkrightcomesfromuseratherthanregistration. Torenewthetrademark,thecompanymustproveuseofthemark. Rightcontinueforaslongasthemarkisused. Trademarklawappliestotheonlineworld.
Aservicemarkperformsthesamefunctionforservices. Partsofabrandorotherproductidentificationmayqualifyfortrademarkprotection. Companiesthatfailtoprotectfacetheriskofproductnamesbecominggeneric.
Thislistincludesaspirin,cellophane,thermos,monopoly,cola,andshreddedwheat. PackagingPromotes,Protects,andEnhances
Goodpackagingmakesproductseasiertoidentifyandpromotesthebrand. Packagingcanenhancetheproduct.
Itcandomorethancontainandprotecttheproduct. Thepackagecanmaketheproducteasiertouseorsafertouse. Itcanalsodetershopliftingandcanalsobedesignedtoachieveecologicalobjectives.
Packagingsendsamessage. Creativeuseofdesigninpackagingcanvisuallyhelptotietheproducttootherelementsofthe
promotionmix. Theyconveyinformation,suchasthenutritionalinformationonfoodproducts. Itcanalsopromotethebrandatthepointofpurchaseorinuse.
Packagingmaylowerdistributioncosts. Goodpackagessavespaceandweightsotheyareeasiertotransport,handle,anddisplace. Inhelpingdistributorsandendsaleretailers,goodpackagesaremorewelcomebythese
intermediaries.
FunctionsofPacking Functionsofpackagingareto::
1.Containandprotectproducts. 2.Promoteproducts. 3.Facilitatestorage,use,andconvenience.
*firstthreearethemostimportant* 4.Facilitaterecycling..
WhatIsSociallyResponsiblePackaging? 1.Packagingcanhurttheenvironment.
Ecologicalconcernsarebecomingmoreprominentinpackagingdecisions. Producershavebeencriticizedfordevelopingpackagesthatharmtheenvironment. Otherscontentthatmanufacturersdonotdiscloseallofthepossibleharmfuleffectsoftheir
products. 2.TheFederalFairPackagingandLabelingAct(196^)requiresthatconsumergoodsbeclearlylabeledin
easytounderstandterms,togiveconsumersmoreinformation. Thelawalsocallsonindustrytotrytoreducethenumberofpackagesizesandmakelabelsmoreuseful.
3.Ethicalissuesremain,andexamplesofsuchissuesareeasytofind. Somecompanieshavebeenaccusedofdesigningpackagesthatconcealdownsizedproducts. Dealerbrandedproductsareoftenpackagedtolookverysimilartomanufacturerbrands.
GlobalIssuesinPackaging 1.Themajorlabelingconcernispropertranslationofingredient,promotional,andinstructionalinformationon
labels. 2.Packageaestheticsareimportantfromaculturalperspective.
EX:colorsmayhavedifferentconnotationsindifferentcountries. Packagesizeisinfluencedbyavailabilityofrefrigeration,amountofstoragespace,andeventhe
purchasingpowerofbuyers. 3.Extremeclimatesconsiderationsandlongdistanceshippingnecessitatesturdierpackages.
Packagesmayneedalongershelflife ProductClassesHelpPlanMarketingStrategies
Consumerproductsareproductsmeantforthefinalconsumer. Businessproductsareproductsmeantforuseinproducingotherproducts.
*Itispossiblethatsomeproductsmightbeinbothgroups.* Sellingthesameproducttofinalconsumersandbusinesscustomersrequires(atleast)twodifferentstrategies.
TypesofProducts
Productscanbeclassifiedaseitherbusinessorconsumerproducts.
Theclassificationasabusinessorconsumerproductdependsonthebuyersintentions.
TypesofConsumerProducts
Thisapproachclassifiesproductsbyhowmucheffortisusedtoshopforthem.
TypesofConsumerProducts
Productsandservicesthatfallintoeachoftheconsumerproductcategoriesinclude:
ConvenienceProduct:candy,softdrinks,deodorant,aspirin,hardware,anddrycleaning. ShoppingProduct:homogenousshoppingproductssuchaswashers,dryers,andtelevisions.
Decisionsarebasedonthelowestpricedbrandwiththedesiredfeatures. Heterogeneousshoppingproductsareessentiallydifferent,forexamplefurniture,clothing,
housing,universities,etc. Decisionsarehighlyindividualandbasedonfindingthebestproductforme.
SpecialtyProduct:finewatches,expensiveautomobiles,andgourmetrestaurants. UnsoughtProduct:newproducts,insurance,burialplots,andencyclopedias.