www.bookfiesta4u.com1-1PowerPoint byPowerPoint byMilton M. PressleyMilton M. PressleyCreative Assistance byCreative Assistance byD. Carter and S. KogerD. Carter and S. Koger
Chapter 1Chapter 1Defining Marketing for theDefining Marketing for the2121stst CenturyCenturybybywww.bookfiesta4u.com1-2PowerPoint byPowerPoint byMilton M. PressleyMilton M. PressleyUniversity of New OrleansUniversity of New Orleans
The future is not aheadThe future is not aheadof us. It has alreadyof us. It has alreadyhappened.happened.Kotler onMarketingwww.bookfiesta4u.com1-3happened.happened.Unfortunately, it isUnfortunately, it isunequally distributedunequally distributedamong companies,among companies,industries and nations.industries and nations.
Chapter ObjectivesIn this chapter we will address the followingIn this chapter we will address the followingquestions:questions:What is the new economy like?What is the new economy like?What are the tasks of marketing?What are the tasks of marketing?www.bookfiesta4u.com1-4What are the tasks of marketing?What are the tasks of marketing?What are the major concepts and tools ofWhat are the major concepts and tools ofmarketing?marketing?What orientations do companies exhibit in theWhat orientations do companies exhibit in themarketplace?marketplace?How are companies and marketers responding toHow are companies and marketers responding tothe new challenges?the new challenges?
The New EconomySubstantial increase in buying powerSubstantial increase in buying powerA greater variety of goods and servicesA greater variety of goods and servicesA greater amount of information aboutA greater amount of information aboutpractically anythingpractically anythingwww.bookfiesta4u.com1-5practically anythingpractically anythingA greater ease in interacting and placingA greater ease in interacting and placingand receiving ordersand receiving ordersAn ability to compare notes on productsAn ability to compare notes on productsand servicesand services
The New EconomyWebsites can provide companies withWebsites can provide companies withpowerful new information and salespowerful new information and saleschannels.channels.Companies can collect fuller and richerCompanies can collect fuller and richerinformation about markets, customers,information about markets, customers,www.bookfiesta4u.com1-6information about markets, customers,information about markets, customers,prospects and competitors.prospects and competitors.Companies can facilitate and speed upCompanies can facilitate and speed upcommunications among employees.communications among employees.Companies can have 2Companies can have 2--waywaycommunication with customers andcommunication with customers andprospectsprospects
The New EconomyCompanies can send ads, coupons,Companies can send ads, coupons,samples, information to targetedsamples, information to targetedcustomers.customers.Companies can customize offerings andCompanies can customize offerings andservices to individual customers.services to individual customers.www.bookfiesta4u.com1-7services to individual customers.services to individual customers.The Internet can be used as aThe Internet can be used as acommunication channel for purchasing,communication channel for purchasing,training, and recruiting.training, and recruiting.Companies can improve logistics andCompanies can improve logistics andoperations for cost savings whileoperations for cost savings whileimproving accuracy and service quality.improving accuracy and service quality.
The three major challenges faced byThe three major challenges faced bybusinesses today are globalization,businesses today are globalization,advances in technology, and deregulation.advances in technology, and deregulation.www.bookfiesta4u.com1-8advances in technology, and deregulation.advances in technology, and deregulation.Which of these affords the greatestWhich of these affords the greatestopportunity foropportunity for establishedestablished businesses?businesses?Which affords the greatestWhich affords the greatestopportunities foropportunities for newnewbusinesses? Why?businesses? Why?
Marketing TaskTen rules of radical marketingTen rules of radical marketingThe CEO must own the marketing function.The CEO must own the marketing function.Make sure the marketing department startsMake sure the marketing department startssmall and flat and stays small and flat.small and flat and stays small and flat.www.bookfiesta4u.com1-9Get face to face with the people who matterGet face to face with the people who mattermostmost –– the customers.the customers.Use market research cautiously.Use market research cautiously.Hire only passionate missionaries.Hire only passionate missionaries.
Marketing TaskLove and respect your customers.Love and respect your customers.Create a community of consumers.Create a community of consumers.Rethink the marketing mix.Rethink the marketing mix.Celebrate common sense.Celebrate common sense.www.bookfiesta4u.com1-10Be true to the brand.Be true to the brand.Three stages of marketing practiceThree stages of marketing practiceEntrepreneurial MarketingEntrepreneurial MarketingFormulated MarketingFormulated MarketingIntrepreneurial MarketingIntrepreneurial Marketing
The Scope of MarketingMarketing: typically seen as theMarketing: typically seen as thetask of creating, promoting, andtask of creating, promoting, anddelivering goods and services todelivering goods and services toconsumers and businesses.consumers and businesses.www.bookfiesta4u.com1-11consumers and businesses.consumers and businesses.
Table 1.1DemandStates andMarketingTasks1. Negative1. NegativedemanddemandA major part of the market dislikes theA major part of the market dislikes theproduct and may even pay a price toproduct and may even pay a price toavoid itavoid it——vaccinations, dental work,vaccinations, dental work,vasectomies, and gallbladdervasectomies, and gallbladderoperations, for instance. Employers haveoperations, for instance. Employers havea negative demand for exa negative demand for ex--convicts andconvicts andalcoholics as employees. The marketingalcoholics as employees. The marketingtask is to analyze why the markettask is to analyze why the marketdislikes the product and whether adislikes the product and whether amarketing program consisting ofmarketing program consisting ofproduct redesign, lower prices, andproduct redesign, lower prices, andmore positive promotion can changemore positive promotion can changewww.bookfiesta4u.com1-12more positive promotion can changemore positive promotion can changebeliefs and attitudes.beliefs and attitudes.2. No demand2. No demand Target consumers may be unaware of orTarget consumers may be unaware of oruninterested in the product. Farmersuninterested in the product. Farmersmay not be interested in a new farmingmay not be interested in a new farmingmethod, and college students may notmethod, and college students may notbe interested in foreignbe interested in foreign--languagelanguagecourses. The marketing task is to findcourses. The marketing task is to findways to connect the benefits of theways to connect the benefits of theproduct with people’s natural needs andproduct with people’s natural needs andinterests.interests.See text for complete table
Can you name a category ofCan you name a category ofproducts for which your negativeproducts for which your negativefeelings have softened?feelings have softened?www.bookfiesta4u.com1-13feelings have softened?feelings have softened?What precipitatedWhat precipitatedthis change?this change?
The Scope of MarketingPlacesPlacesPropertiesPropertiesOrganizationsOrganizationsGoodsGoodsServicesServicesExperiencesExperienceswww.bookfiesta4u.com1-14OrganizationsOrganizationsInformationInformationIdeasIdeasExperiencesExperiencesEventsEventsPersonsPersons
Marketing Conceptsand ToolsMarketers and ProspectsMarketers and ProspectsNeeds, Wants, and DemandsNeeds, Wants, and DemandsProduct, Offering, and BrandProduct, Offering, and BrandValue and SatisfactionValue and Satisfactionwww.bookfiesta4u.com1-19Value and SatisfactionValue and SatisfactionCustomer value triadCustomer value triadValueValueValue = Benefits / Costs =Value = Benefits / Costs =(Functional benefits + Emotional benefits) /(Functional benefits + Emotional benefits) /(Monetary costs + Time costs + Energy costs +(Monetary costs + Time costs + Energy costs +Psychic costs)Psychic costs)
Marketing Conceptsand ToolsExchange and TransactionsExchange and TransactionsExchangeExchangeTransactionTransactionwww.bookfiesta4u.com1-20TransactionTransactionBarterBarterTransferTransferBehavioral responseBehavioral response
Marketing Conceptsand ToolsRelationships and NetworksRelationships and NetworksRelationship marketingRelationship marketingMarketing networkMarketing networkwww.bookfiesta4u.com1-21Marketing networkMarketing networkMarketing ChannelsMarketing ChannelsSupply ChainSupply ChainCompetitionCompetition
Company OrientationsToward the MarketplaceProduction ConceptProduction ConceptProduct conceptProduct conceptwww.bookfiesta4u.com1-23Selling ConceptSelling ConceptMarketing ConceptMarketing Concept
Company OrientationsToward the MarketplaceTarget MarketTarget MarketCustomer NeedsCustomer Needswww.bookfiesta4u.com1-24Stated needsStated needsReal needsReal needsUnstated needsUnstated needsDelight needsDelight needsSecret needsSecret needs
Company OrientationsToward the MarketplaceIntegrated MarketingIntegrated MarketingExternal marketingExternal marketingwww.bookfiesta4u.com1-25Internal marketingInternal marketing
Company OrientationsToward the MarketplaceProfitabilityProfitabilitySales declineSales declineSlow growthSlow growthwww.bookfiesta4u.com1-26Slow growthSlow growthChanging buying patternsChanging buying patternsIncreasing competitionIncreasing competitionIncreasing marketingIncreasing marketingexpendituresexpenditures
Company OrientationsToward the MarketplaceSocietal Marketing ConceptSocietal Marketing ConceptCauseCause--related marketingrelated marketingwww.bookfiesta4u.com1-27
Can you identify the trends that haveCan you identify the trends that havemade the marketing concept, themade the marketing concept, thecustomer concept, and the societalcustomer concept, and the societalwww.bookfiesta4u.com1-28customer concept, and the societalcustomer concept, and the societalmarketing concept more attractivemarketing concept more attractivemodels for contemporarymodels for contemporarymarketing managers?marketing managers?
How Business andMarketing are ChangingCustomersCustomersBrand manufacturersBrand manufacturerswww.bookfiesta4u.com1-29StoreStore--based retailersbased retailers
How Business andMarketing are ChangingCompany responses and adjustmentsCompany responses and adjustmentsReengineeringReengineeringOutsourcingOutsourcingPartnerPartner--supplierssuppliersMarketMarket--centeredcenteredwww.bookfiesta4u.com1-30OutsourcingOutsourcingEE--commercecommerceBenchmarkingBenchmarkingAlliancesAlliancesMarketMarket--centeredcenteredGlobal and localGlobal and localDecentralizedDecentralized
How Business andMarketing are ChangingMarketer ResponsesMarketer Responsesand Adjustmentsand AdjustmentsCustomer relationshipCustomer relationshipmarketingmarketingIntegrated marketingIntegrated marketingcommunicationscommunicationswww.bookfiesta4u.com1-31marketingmarketingCustomer lifetime valueCustomer lifetime valueCustomer shareCustomer shareTarget marketingTarget marketingCustomizationCustomizationCustomer databaseCustomer databasecommunicationscommunicationsChannels as partnersChannels as partnersEvery employee aEvery employee amarketermarketerModelModel--based decisionbased decisionmakingmaking
Chapter 2Chapter 2Adapting Marketing To TheAdapting Marketing To TheNew EconomyNew Economybybywww.bookfiesta4u.com1-32PowerPoint byPowerPoint byMilton M. PressleyMilton M. PressleyUniversity of New OrleansUniversity of New Orleans
The Internet willThe Internet willcreate new winnerscreate new winnersand bury theand bury theKotler onMarketingwww.bookfiesta4u.com1-33and bury theand bury thelaggards.laggards.
Chapter ObjectivesIn this chapter, we will address theIn this chapter, we will address thefollowing questions:following questions:What are the major forces driving the NewWhat are the major forces driving the NewEconomy?Economy?www.bookfiesta4u.com1-34Economy?Economy?How are business and marketing practicesHow are business and marketing practiceschanging as a result of the New Economy?changing as a result of the New Economy?How are marketers using the Internet,How are marketers using the Internet,customer databases, and customercustomer databases, and customerrelationship management in the Newrelationship management in the NewEconomy?Economy?
Adapting Marketing to theNew EconomyMajor Drivers of the New EconomyMajor Drivers of the New EconomyDigitization and ConnectivityDigitization and ConnectivityDisintermediation andDisintermediation andwww.bookfiesta4u.com1-35Disintermediation andDisintermediation andReintermediationReintermediationCustomization andCustomization andCustomerizationCustomerization
Procter & Gamble’s Reflect.com site allows customersProcter & Gamble’s Reflect.com site allows customersto design their own beauty productsto design their own beauty productswww.bookfiesta4u.com1-36
Adapting Marketing to theNew EconomyIndustry ConvergenceIndustry ConvergenceHow Business Practices are ChangingHow Business Practices are ChangingOrganize by product units to organize byOrganize by product units to organize bycustomer segmentscustomer segmentswww.bookfiesta4u.com1-37customer segmentscustomer segmentsShift focus from profitable transactions toShift focus from profitable transactions tocustomer lifetime valuecustomer lifetime valueShift focus from financial scorecard to alsoShift focus from financial scorecard to alsofocusing on the marketing scorecardfocusing on the marketing scorecardShift focus from shareholders to stakeholdersShift focus from shareholders to stakeholders
Table 2-1: Old Economy vs. New EconomyOld EconomyOld Economy New EconomyNew EconomyOrganize by product unitsOrganize by product unitsFocus on profitable transactionsFocus on profitable transactionsLook primarily at financialLook primarily at financialscorecardscorecardFocus on shareholdersFocus on shareholdersOrganize by customer segmentsOrganize by customer segmentsFocus on customer lifetime valueFocus on customer lifetime valueLook also at marketing scorecardLook also at marketing scorecardFocus on stakeholdersFocus on stakeholdersEveryone does the marketingEveryone does the marketingwww.bookfiesta4u.com1-38Marketing does the marketingMarketing does the marketingBuild brands through advertisingBuild brands through advertisingFocus on customer acquisitionFocus on customer acquisitionNo customer satisfactionNo customer satisfactionmeasurementmeasurementOverpromise, underdeliverOverpromise, underdeliverEveryone does the marketingEveryone does the marketingBuild brands through behaviorBuild brands through behaviorFocus on customer retention andFocus on customer retention andgrowthgrowthMeasure customer satisfaction andMeasure customer satisfaction andretention rateretention rateUnderpromise, overdeliverUnderpromise, overdeliver
Adapting Marketing to theNew EconomyEveryone does the marketingEveryone does the marketingBuild brands through performance,Build brands through performance,not just advertisingnot just advertisingCustomer retention ratherCustomer retention ratherwww.bookfiesta4u.com1-39Customer retention ratherCustomer retention ratherthan customer acquisitionthan customer acquisitionFrom none to inFrom none to in--depth customerdepth customersatisfaction measurementsatisfaction measurementFrom overFrom over--promise, underpromise, under--deliver todeliver tounderunder--promise, overpromise, over--deliverdeliverThe New HybridThe New Hybrid
How Marketing PracticesHow Marketing Practicesare Changing: Eare Changing: E--BusinessBusinessEE--businessbusinessAdapting Marketing to theNew Economywww.bookfiesta4u.com1-40EE--businessbusinessEE--commercecommerceEE--purchasingpurchasingEE--marketingmarketingInternet Domains: B2CInternet Domains: B2C(Business to Customer)(Business to Customer)
Customers can shop online at Calyx and Corolla orCustomers can shop online at Calyx and Corolla orask for a catalog and shop by phoneask for a catalog and shop by phonewww.bookfiesta4u.com1-41
Adapting Marketing to theNew EconomyInternet Domains: B2BInternet Domains: B2B(Business to Business)(Business to Business)www.bookfiesta4u.com1-42
www.transora.com: global online marketplace forwww.transora.com: global online marketplace forthe consumer packaged goods industrythe consumer packaged goods industrywww.bookfiesta4u.com1-44
Adapting Marketing to theNew EconomyInternet Domains: C2CInternet Domains: C2C(Consumer to Consumer)(Consumer to Consumer)Internet Domains: C2BInternet Domains: C2Bwww.bookfiesta4u.com1-45Internet Domains: C2BInternet Domains: C2B(Customer to Business)(Customer to Business)Pure Click vs. Brick andPure Click vs. Brick andClick CompaniesClick CompaniesPurePure--click companiesclick companies
CarPoint, leading metamediary for car buying, is a pureCarPoint, leading metamediary for car buying, is a pureclick company: It exists only on the Web.click company: It exists only on the Web.www.bookfiesta4u.com1-46
Adapting Marketing to theNew EconomyBrick and Click companiesBrick and Click companieswww.bookfiesta4u.com1-47
Which is more important forWhich is more important fordeveloping an edeveloping an e--presence: the agilitypresence: the agilityof a pure click company, or the wellof a pure click company, or the wellwww.bookfiesta4u.com1-48of a pure click company, or the wellof a pure click company, or the welldefined and readily identifiabledefined and readily identifiableresources of a traditionalresources of a traditionalbrick and mortarbrick and mortarcompany?company?
Adapting Marketing to theNew EconomyHow Marketing Practices are Changing:How Marketing Practices are Changing:Setting Up Web SitesSetting Up Web SitesDesigning an Attractive WebsiteDesigning an Attractive WebsiteSeven elements of effective sitesSeven elements of effective siteswww.bookfiesta4u.com1-49Seven elements of effective sitesSeven elements of effective sitesContextContextContentContentCommunityCommunityCustomizationCustomizationCommunicationCommunicationConnectionConnectionCommerceCommerce
Would you be willing to give up one orWould you be willing to give up one ormore of the seven elements of an effectivemore of the seven elements of an effectiveweb site in order to speed the deploymentweb site in order to speed the deploymentwww.bookfiesta4u.com1-50of a new company eof a new company e--commerce site?commerce site?What would the expected tradeWhat would the expected trade--offs beoffs bebetween an effective sitebetween an effective siteand an early weband an early webpresence?presence?
Attracting and Keeping VisitorsAttracting and Keeping VisitorsHow can we get more prospects to know and visit our site?How can we get more prospects to know and visit our site?How can we use marketing to spread wordHow can we use marketing to spread word--ofof--mouth?mouth?How can we convert visitors into repeaters?How can we convert visitors into repeaters?How do we make our site more experiential and real?How do we make our site more experiential and real?How can we build a strong relationship with our customers?How can we build a strong relationship with our customers?How can we build a customer community?How can we build a customer community?How can we capture and exploit customer data for upHow can we capture and exploit customer data for up--sellingsellingTable 2Table 2--2:2:SettingSettingUp aUp aDotDot--comcomPresencePresencewww.bookfiesta4u.com1-51How can we capture and exploit customer data for upHow can we capture and exploit customer data for up--sellingsellingand crossand cross--selling?selling?How much should we spend on building and marketing ourHow much should we spend on building and marketing oursite?site?Advertising on the InternetAdvertising on the InternetWhat are the various ways that we can advertise on theWhat are the various ways that we can advertise on theInternet?Internet?How do we choose the right sites for placing our ads orHow do we choose the right sites for placing our ads orsponsorship?sponsorship?See text for complete table
Adapting Marketing to theNew EconomyPlacing Ads and Promotions OnlinePlacing Ads and Promotions OnlineBanner adsBanner adsSponsorshipsSponsorshipsMicrositeMicrositewww.bookfiesta4u.com1-53MicrositeMicrositeInterstitialsInterstitialsBrowser adsBrowser adsAlliances and affiliateAlliances and affiliateprogramsprogramsPushPush
Infogate.com “pushes” targeted content and ads to thoseInfogate.com “pushes” targeted content and ads to thosewho are interested in a product or product categorywho are interested in a product or product categorywww.bookfiesta4u.com1-54
Adapting Marketing to theNew EconomyBuilding a Revenue and Profit ModelBuilding a Revenue and Profit ModelAdvertising incomeAdvertising incomeSponsorship incomeSponsorship incomeMembership andMembership andsubscriptionssubscriptionswww.bookfiesta4u.com1-55Membership andMembership andsubscriptionssubscriptionsProfile incomeProfile incomeProduct and serviceProduct and servicesalessalesTransaction commissionTransaction commissionand feesand feesMarket research/informationMarket research/informationReferral incomeReferral income
Adapting Marketing to theNew EconomyHow Marketing Practices are Changing:How Marketing Practices are Changing:Customer Relationship MarketingCustomer Relationship MarketingReduce rate of customer defectionReduce rate of customer defectionIncrease longevity ofIncrease longevity ofwww.bookfiesta4u.com1-56Increase longevity ofIncrease longevity ofcustomer relationshipcustomer relationshipEnhance growth potentialEnhance growth potentialthrough crossthrough cross--selling and upselling and up--sellingsellingMake low profit customers more profitableMake low profit customers more profitableor terminate themor terminate them
Adapting Marketing to theNew EconomyFocus disproportionate effortFocus disproportionate efforton high value customerson high value customerswww.bookfiesta4u.com1-57
Table 2-3: Mass Marketing vs.One-to-One MarketingMass MarketingMass Marketing OneOne--toto--One MarketingOne MarketingAverage customerAverage customerCustomer anonymityCustomer anonymityStandard productStandard productMass productionMass productionMass distributionMass distributionIndividual customerIndividual customerCustomer profileCustomer profileCustomized marketCustomized marketofferingofferingCustomized productionCustomized productionwww.bookfiesta4u.com1-58Mass distributionMass distributionMass advertisingMass advertisingMass promotionMass promotionOneOne--way messageway messageEconomies of scaleEconomies of scaleShare of marketShare of marketAll customersAll customersCustomer attractionCustomer attractionIndividualized distributionIndividualized distributionIndividualized messageIndividualized messageIndividualized incentivesIndividualized incentivesTwoTwo--way messagesway messagesEconomies of scopeEconomies of scopeShare of customerShare of customerProfitable customersProfitable customersCustomer retentionCustomer retention
Adapting Marketing to theNew EconomyFour steps for OneFour steps for One--toto--One MarketingOne MarketingDon’t go after everyone,Don’t go after everyone,identify prospects.identify prospects.Define customers by their needsDefine customers by their needswww.bookfiesta4u.com1-59Define customers by their needsDefine customers by their needsand their value to the company.and their value to the company.Individual interaction with customersIndividual interaction with customersbuilds stronger relationships.builds stronger relationships.Customize messages, services, andCustomize messages, services, andproducts for each customer.products for each customer.
Data Warehouses and Data MiningData Warehouses and Data MiningUsing the databaseUsing the databaseTo identify prospectsTo identify prospectsTo determine target marketTo determine target marketAdapting Marketing to theNew Economywww.bookfiesta4u.com1-61To determine target marketTo determine target marketTo deepen customer loyaltyTo deepen customer loyaltyTo reactivate customerTo reactivate customerpurchasespurchasesTo avoid serious customerTo avoid serious customermistakesmistakesThe Downside of DatabaseThe Downside of DatabaseMarketingMarketing
Chapter 3Chapter 3Building CustomerBuilding CustomerSatisfaction, Value, andSatisfaction, Value, andRetentionRetentionbybywww.bookfiesta4u.com1-62bybyPowerPoint byPowerPoint byMilton M. PressleyMilton M. PressleyUniversity of New OrleansUniversity of New Orleans
It is no longerIt is no longerenough to satisfyenough to satisfycustomers. You mustcustomers. You mustKotler onMarketingwww.bookfiesta4u.com1-63customers. You mustcustomers. You mustdelight them.delight them.
Chapter ObjectivesIn this chapter, we will address theIn this chapter, we will address thefollowing questions:following questions:What are customer value and satisfaction,What are customer value and satisfaction,and how can companies deliver them?and how can companies deliver them?What makes a highWhat makes a high--performance business?performance business?www.bookfiesta4u.com1-64What makes a highWhat makes a high--performance business?performance business?How can companies both attractHow can companies both attractand retain customers?and retain customers?How can companies improve both customerHow can companies improve both customerand company profitability?and company profitability?How can companies deliver total quality?How can companies deliver total quality?
Defining Customer Valueand SatisfactionCustomer Perceived Value (CPV)Customer Perceived Value (CPV)Total customer valueTotal customer valuewww.bookfiesta4u.com1-65Total customer costTotal customer cost
Total Customer SatisfactionTotal Customer SatisfactionSatisfactionSatisfactionCustomer ExpectationsCustomer ExpectationsDefining Customer Valueand Satisfactionwww.bookfiesta4u.com1-67Customer ExpectationsCustomer ExpectationsDelivering High Customer ValueDelivering High Customer ValueValue propositionValue propositionValueValue--delivery systemdelivery systemMeasuring SatisfactionMeasuring Satisfaction
Table 3-1: Tools for Tracking and MeasuringCustomer SatisfactionComplaintComplaintandandsuggestionsuggestionsystems:systems:A customerA customer--centered organization makes it easy forcentered organization makes it easy forcustomers to register suggestions and complaints.customers to register suggestions and complaints.Some customerSome customer--centered companiescentered companies--P&G, GeneralP&G, GeneralElectric, WhirlpoolElectric, Whirlpool——establish hot lines with tollestablish hot lines with toll--freefreenumbers. Companies are also using Web sites andnumbers. Companies are also using Web sites andee--mail for quick, twomail for quick, two--way communication.way communication.Studies show that although customers are dissatisfiedStudies show that although customers are dissatisfiedwww.bookfiesta4u.com1-68CustomerCustomersatisfactionsatisfactionsurveys:surveys:Studies show that although customers are dissatisfiedStudies show that although customers are dissatisfiedwith one out of every four purchases, less than 5with one out of every four purchases, less than 5percent will complain. Most customers will buy less orpercent will complain. Most customers will buy less orswitch suppliers. Responsive companies measureswitch suppliers. Responsive companies measurecustomer satisfaction directly by conducting periodiccustomer satisfaction directly by conducting periodicsurveys. While collecting customer satisfaction data, itsurveys. While collecting customer satisfaction data, itis also useful to ask additional questions to measureis also useful to ask additional questions to measurerepurchase intention and to measure the likelihood orrepurchase intention and to measure the likelihood orwillingness to recommend the company and brand towillingness to recommend the company and brand toothers.others.See text for complete table
Would you feel more brand loyalty for aWould you feel more brand loyalty for acompany that tried to immediately resolvecompany that tried to immediately resolvea complaint via Ea complaint via E--mail, or a company thatmail, or a company thatwww.bookfiesta4u.com1-69a complaint via Ea complaint via E--mail, or a company thatmail, or a company thathad a customer service representative callhad a customer service representative callwithin two business days towithin two business days toresolve the problem overresolve the problem overthe phone?the phone?
Premier Dell.com is a special businessPremier Dell.com is a special business--oriented part of theoriented part of theDell Web site that allows customers to interact with Dell andDell Web site that allows customers to interact with Dell andcustomize all phases of doing business with Dell.customize all phases of doing business with Dell.www.bookfiesta4u.com1-70
The Nature of HighPerformance BusinessHighHigh--performance businessperformance businesswww.bookfiesta4u.com1-71
Figure 3-2: The High Performance Businesswww.bookfiesta4u.com1-72
The Nature of HighPerformance BusinessStakeholdersStakeholdersProcessesProcessesResourcesResourceswww.bookfiesta4u.com1-73Core competencyCore competencyDistinctive capabilitiesDistinctive capabilitiesOrganization and Organizational CultureOrganization and Organizational CultureOrganizationOrganizationCorporate cultureCorporate cultureScenario analysisScenario analysis
Can you name a company that hasCan you name a company that haschanged the public’s perception ofchanged the public’s perception oftheir corporate culture? Has thistheir corporate culture? Has thiswww.bookfiesta4u.com1-74their corporate culture? Has thistheir corporate culture? Has thiseffectively rehabilitated thateffectively rehabilitated thatcompany’s image?company’s image?
Saturn has gained a customer loyalty rateSaturn has gained a customer loyalty rateof more than 60% by fundamentallyof more than 60% by fundamentallychanging the buyerchanging the buyer--seller relationship.seller relationship.www.bookfiesta4u.com1-81changing the buyerchanging the buyer--seller relationship.seller relationship.Can you think of another company thatCan you think of another company thathas made a change of similarhas made a change of similarmagnitude? Have theymagnitude? Have theyhad similar results?had similar results?
Attracting and RetainingCustomersAttracting CustomersAttracting CustomersComputing the Cost ofComputing the Cost ofLost CustomersLost Customerswww.bookfiesta4u.com1-82Lost CustomersLost CustomersCustomer churnCustomer churnLifetime valueLifetime value
On the Lands’ End Web site, customers can click aOn the Lands’ End Web site, customers can click abutton to talk with a customer service representativebutton to talk with a customer service representativewww.bookfiesta4u.com1-83
Attracting and RetainingCustomersThe Need for Customer RetentionThe Need for Customer RetentionMeasuring CustomerMeasuring CustomerLifetime Value (CLV)Lifetime Value (CLV)Customer Relationship ManagementCustomer Relationship Managementwww.bookfiesta4u.com1-84Customer Relationship ManagementCustomer Relationship Management(CRM): The Key(CRM): The KeyCustomer equityCustomer equityThree drivers of customer equityThree drivers of customer equityValue equityValue equityBrand equityBrand equityRelationship equityRelationship equity
Attracting and RetainingCustomersFive levels of investment inFive levels of investment incustomer relationship buildingcustomer relationship buildingBasic marketingBasic marketingwww.bookfiesta4u.com1-86Basic marketingBasic marketingReactive marketingReactive marketingAccountable marketingAccountable marketingProactive marketingProactive marketingPartnership marketingPartnership marketing
Figure 3-6: Levels of Relationship Marketingwww.bookfiesta4u.com1-87
Attracting and RetainingCustomersForming Strong Customer Bonds:Forming Strong Customer Bonds:The BasicsThe BasicsCrossCross--departmental participationdepartmental participationwww.bookfiesta4u.com1-88CrossCross--departmental participationdepartmental participationIntegrate the Voice of the CustomerIntegrate the Voice of the Customerinto all business decisionsinto all business decisionsCreate superior offering for theCreate superior offering for thetarget markettarget market
Organize and make accessible aOrganize and make accessible adatabase of customer informationdatabase of customer informationMake it easy for customers toMake it easy for customers toAttracting and RetainingCustomerswww.bookfiesta4u.com1-89Make it easy for customers toMake it easy for customers toreach the appropriate personnelreach the appropriate personnelReward outstanding employeesReward outstanding employeesAdding Financial BenefitsAdding Financial BenefitsFrequency programs (FPs)Frequency programs (FPs)
The H.O.G. Web site presents the benefits of joining.The H.O.G. Web site presents the benefits of joining.www.bookfiesta4u.com1-90
Attracting and RetainingCustomersAdding Social BenefitsAdding Social Benefitswww.bookfiesta4u.com1-91
Table 3-2:Social ActionsAffectingBuyer-SellerRelationshipsGood ThingsGood Things Bad ThingsBad ThingsInitiate positive phone callsInitiate positive phone callsMake recommendationsMake recommendationsCandor in languageCandor in languageUse phoneUse phoneShow appreciationShow appreciationMake service suggestionsMake service suggestionsUse “we” problemUse “we” problem--solvingsolvinglanguagelanguageMake only callbacksMake only callbacksMake justificationsMake justificationsAccommodative languageAccommodative languageUse correspondenceUse correspondenceWait for misunderstandingsWait for misunderstandingsWait for service requestsWait for service requestsUse “oweUse “owe--us” legal languageus” legal languageOnly respond to problemsOnly respond to problemswww.bookfiesta4u.com1-92languagelanguageGet to problemsGet to problemsUse jargon or shorthandUse jargon or shorthandPersonality problems airedPersonality problems airedTalk of “our future together”Talk of “our future together”Routinize responsesRoutinize responsesAccept responsibilityAccept responsibilityPlan the futurePlan the futureOnly respond to problemsOnly respond to problemsUse longUse long--windedwindedcommunicationscommunicationsPersonality problems hiddenPersonality problems hiddenTalk about making good onTalk about making good onthe pastthe pastFire drill and emergencyFire drill and emergencyresponsivenessresponsivenessShift blameShift blameRehash the pastRehash the past
Attracting and RetainingCustomersAdding Structural TiesAdding Structural TiesCreate longCreate long--term contractsterm contractsCharge lower price to highCharge lower price to highwww.bookfiesta4u.com1-93Charge lower price to highCharge lower price to highvolume customersvolume customersTurn product intoTurn product intolonglong--term serviceterm service
Chapter 4Chapter 4Winning Markets ThroughWinning Markets ThroughMarketMarket--Oriented StrategicOriented StrategicPlanningPlanningbybywww.bookfiesta4u.com1-98bybyPowerPoint byPowerPoint byMilton M. PressleyMilton M. PressleyUniversity of New OrleansUniversity of New Orleans
Kotler onMarketingIt is more importantIt is more importantto do what isto do what isstrategically rightstrategically rightwww.bookfiesta4u.com1-99strategically rightstrategically rightthan what isthan what isimmediatelyimmediatelyprofitable.profitable.
Chapter ObjectivesIn this chapter, we examine theIn this chapter, we examine thefollowing questions:following questions:How is strategic planning carried out atHow is strategic planning carried out atthe corporate and division levels?the corporate and division levels?How is planning carried out at theHow is planning carried out at thewww.bookfiesta4u.com1-100How is planning carried out at theHow is planning carried out at thebusiness unit level?business unit level?What are the major steps in theWhat are the major steps in themarketing process?marketing process?How is planning carried out at theHow is planning carried out at theproduct level?product level?What does a marketing plan include?What does a marketing plan include?
Strategic Planning: Three Key Areasand Four Organization LevelsStrategic marketing planStrategic marketing planTacticalTactical marketing planmarketing planMarketing planMarketing planwww.bookfiesta4u.com1-101
Corporate and DivisionStrategic PlanningAll corporate headquarters undertakeAll corporate headquarters undertakefour planning activitiesfour planning activitiesDefining the Corporate MissionDefining the Corporate Missionwww.bookfiesta4u.com1-102Defining the Corporate MissionDefining the Corporate MissionEstablishing Strategic Business Units (SBUs)Establishing Strategic Business Units (SBUs)Assigning resources to each SBUAssigning resources to each SBUPlanning new businesses, downsizing, orPlanning new businesses, downsizing, orterminating older businessesterminating older businesses
Corporate and DivisionStrategic PlanningDefining the Corporate MissionDefining the Corporate MissionMission statements define which competitiveMission statements define which competitivescopes the company will operate inscopes the company will operate inwww.bookfiesta4u.com1-103Industry scopeIndustry scopeProducts and applications scopeProducts and applications scopeCompetence scopeCompetence scopeMarketMarket--segment scopesegment scopeVertical scopeVertical scopeGeographical scopeGeographical scope
Can you name a company that hasCan you name a company that hasrecently changed its product scoperecently changed its product scopeor market segment scope in a veryor market segment scope in a verywww.bookfiesta4u.com1-104or market segment scope in a veryor market segment scope in a verypublic way? Was this an expansionpublic way? Was this an expansionor contraction of scope?or contraction of scope?
Corporate and DivisionStrategic PlanningEstablishing Strategic Business UnitsEstablishing Strategic Business Units(SBUs)(SBUs)www.bookfiesta4u.com1-105
Table 4.1: Product-Oriented versus Market-OrientedDefinitions of a BusinessCompanyCompany Product DefinitionProduct Definition Market DefinitionMarket DefinitionMissouriMissouri--PacificPacificRailroadRailroadWe run a railroadWe run a railroad We are a peopleWe are a people--andand--goods movergoods moverXeroxXerox We make copyingWe make copyingequipmentequipmentWe help improve officeWe help improve officeproductivityproductivityStandard OilStandard Oil We sell gasolineWe sell gasoline We supply energyWe supply energywww.bookfiesta4u.com1-106Columbia PicturesColumbia Pictures We make moviesWe make movies We market entertainmentWe market entertainmentEncyclopaediaEncyclopaedia We sell encyclopediasWe sell encyclopedias We distribute InformationWe distribute InformationCarrierCarrier We make airWe make airconditioners andconditioners andfurnacesfurnacesWe provide climateWe provide climatecontrol in the homecontrol in the home
Corporate and DivisionStrategic PlanningThree characteristics of SBUsThree characteristics of SBUsSingle business or collection of relatedSingle business or collection of relatedbusinesses that can be planned for separatelybusinesses that can be planned for separatelywww.bookfiesta4u.com1-107businesses that can be planned for separatelybusinesses that can be planned for separatelyHas its own set of competitorsHas its own set of competitorsHas a manager who is responsible forHas a manager who is responsible forstrategic planning and profitstrategic planning and profit
Can you give an example of a “Star”Can you give an example of a “Star”that skipped “Cash Cow”, and wentthat skipped “Cash Cow”, and wentstraight to “Dog” status?straight to “Dog” status?www.bookfiesta4u.com1-109straight to “Dog” status?straight to “Dog” status?
Corporate and DivisionStrategic PlanningThe General Electric ModelThe General Electric Modelwww.bookfiesta4u.com1-110
Corporate and DivisionStrategic PlanningCritique of Portfolio ModelsCritique of Portfolio ModelsPlanning New Businesses,Planning New Businesses,www.bookfiesta4u.com1-112Downsizing Older BusinessesDownsizing Older Businesses
Corporate and DivisionStrategic PlanningIntensive GrowthIntensive Growthwww.bookfiesta4u.com1-113
Starbucks’ home page: Customers can request aStarbucks’ home page: Customers can request acatalog of Starbucks products, subscribe to acatalog of Starbucks products, subscribe to anewsletter, and shop onlinenewsletter, and shop onlinewww.bookfiesta4u.com1-114
Give an example of a marketGive an example of a marketsegment where integrative growthsegment where integrative growthwould be preferable to growthwould be preferable to growthwww.bookfiesta4u.com1-116would be preferable to growthwould be preferable to growththrough diversification. Explainthrough diversification. Explainwhy one approach is betterwhy one approach is betterthan the other.than the other.
Business UnitStrategic PlanningBusiness MissionBusiness MissionSWOT AnalysisSWOT AnalysisExternal Environment AnalysisExternal Environment Analysiswww.bookfiesta4u.com1-117External Environment AnalysisExternal Environment Analysis(Opportunity and Threat Analysis)(Opportunity and Threat Analysis)Marketing OpportunityMarketing OpportunityBuying opportunity more convenient orBuying opportunity more convenient orefficientefficientMeet the need for more information and adviceMeet the need for more information and adviceCustomize an offering that was previously onlyCustomize an offering that was previously onlyavailable in standard formavailable in standard form
Give some examples of companiesGive some examples of companiesthat have grown to dominate theirthat have grown to dominate theirmarket segment by using technologymarket segment by using technologywww.bookfiesta4u.com1-118market segment by using technologymarket segment by using technologyto make buying opportunities moreto make buying opportunities moreconvenient and efficient.convenient and efficient.
Business UnitStrategic PlanningMarketing Opportunity Analysis (MOA)Marketing Opportunity Analysis (MOA)Can the benefits be articulated to a targetCan the benefits be articulated to a targetmarket?market?Can the target market be reached with costCan the target market be reached with cost--www.bookfiesta4u.com1-119Can the target market be reached with costCan the target market be reached with cost--effective media and trade channels?effective media and trade channels?Does the company have the critical capabilitiesDoes the company have the critical capabilitiesto deliver the customer benefits?to deliver the customer benefits?Can the company deliver these benefits betterCan the company deliver these benefits betterthan any actual or potential competitors?than any actual or potential competitors?Will the rate of return meet the requiredWill the rate of return meet the requiredthreshold of investment?threshold of investment?
Figure 4-7: Opportunity and Threat Matriceswww.bookfiesta4u.com1-120
Travelocity’s Web site helps the consumer plan theTravelocity’s Web site helps the consumer plan thewhole vacationwhole vacation –– flights, lodging, and car rental.comflights, lodging, and car rental.comwww.bookfiesta4u.com1-123
Operational Effectiveness and StrategyOperational Effectiveness and StrategyStrategic groupStrategic groupBusiness UnitStrategic Planningwww.bookfiesta4u.com1-124Strategic alliancesStrategic alliances
Business UnitStrategic PlanningMarketing AlliancesMarketing AlliancesProduct or service alliancesProduct or service alliancesPromotional alliancesPromotional alliancesLogistical alliancesLogistical allianceswww.bookfiesta4u.com1-125Logistical alliancesLogistical alliancesPricing collaborationsPricing collaborationsPartner RelationshipPartner RelationshipManagement, PRMManagement, PRMProgram Formulation andProgram Formulation andImplementationImplementation
Business UnitStrategic PlanningFeedback and ControlFeedback and Controlwww.bookfiesta4u.com1-126
The Marketing ProcessSteps in the Planning ProcessSteps in the Planning ProcessThe marketing processThe marketing processAnalyzing Market OpportunitiesAnalyzing Market OpportunitiesDeveloping Marketing StrategiesDeveloping Marketing Strategieswww.bookfiesta4u.com1-127Planning Marketing ProgramsPlanning Marketing ProgramsManaging the Marketing EffortManaging the Marketing EffortAnnualAnnual--plan controlplan controlProfitability controlProfitability controlStrategic controlStrategic control
Product Planning: The Nature andContents of a Marketing PlanContents of the Marketing PlanContents of the Marketing PlanExecutive SummaryExecutive SummaryCurrent Marketing SituationCurrent Marketing SituationOpportunity and issue analysisOpportunity and issue analysiswww.bookfiesta4u.com1-129Opportunity and issue analysisOpportunity and issue analysisObjectivesObjectivesMarketing strategyMarketing strategyAction programsAction programsFinancial projectionsFinancial projectionsImplementation controlsImplementation controls
Sample Marketing Plan: Sonic PersonalSample Marketing Plan: Sonic PersonalDigital AssistantDigital AssistantCurrent Marketing SituationCurrent Marketing SituationProduct Planning: The Nature andContents of a Marketing Planwww.bookfiesta4u.com1-130Current Marketing SituationCurrent Marketing SituationOpportunity and Issue AnalysisOpportunity and Issue AnalysisObjectivesObjectivesAction ProgramsAction ProgramsFinancial ProjectionsFinancial Projections
Implementation ControlsImplementation ControlsMarketing StrategyMarketing StrategyPositioningPositioningProduct Planning: The Nature andContents of a Marketing Planwww.bookfiesta4u.com1-131PositioningPositioningProduct ManagementProduct ManagementPricingPricingDistributionDistributionMarketing CommunicationsMarketing CommunicationsMarketing ResearchMarketing Research
Chapter 5Chapter 5Gathering Information andGathering Information andMeasuring Market DemandMeasuring Market Demandbybywww.bookfiesta4u.com1-132PowerPoint byPowerPoint byMilton M. PressleyMilton M. PressleyUniversity of New OrleansUniversity of New Orleans
Kotler onMarketingMarketing isMarketing isbecoming a battlebecoming a battlewww.bookfiesta4u.com1-133becoming a battlebecoming a battlebased more onbased more oninformation thaninformation thanon sales power.on sales power.
Chapter ObjectivesIn this chapter, we focus on the followingIn this chapter, we focus on the followingquestions:questions:What are the components of a modernWhat are the components of a modernmarketing information system?marketing information system?What constitutes good marketing research?What constitutes good marketing research?www.bookfiesta4u.com1-134What constitutes good marketing research?What constitutes good marketing research?How can marketing decision support systemsHow can marketing decision support systemshelp marketing managers make betterhelp marketing managers make betterdecisions?decisions?How can demand be more accuratelyHow can demand be more accuratelymeasured and forecasted?measured and forecasted?
Marketing Information System (MIS)Marketing Information System (MIS)10 useful questions for determining the10 useful questions for determining theinformation needs of marketinginformation needs of marketingThe Components of a ModernMarketing Information Systemwww.bookfiesta4u.com1-135information needs of marketinginformation needs of marketingmanagers.managers.What decisions do you regularly make?What decisions do you regularly make?What information do you need to make theseWhat information do you need to make thesedecisions?decisions?What information do you regularly get?What information do you regularly get?What special studies do you periodically request?What special studies do you periodically request?
The Components of a ModernMarketing Information SystemWhat information would you want that you are notWhat information would you want that you are notgetting now?getting now?What information would you want daily? Weekly?What information would you want daily? Weekly?Monthly? Yearly?Monthly? Yearly?www.bookfiesta4u.com1-136Monthly? Yearly?Monthly? Yearly?What magazines and trade reports would you like toWhat magazines and trade reports would you like tosee on a regular basis?see on a regular basis?What topics would you like to be kept informed of?What topics would you like to be kept informed of?What data analysis programs would you want?What data analysis programs would you want?What are the four most helpful improvements thatWhat are the four most helpful improvements thatcould be made in the present marketing informationcould be made in the present marketing informationsystem?system?
Internal Record SystemsThe OrderThe Order--toto--Payment CyclePayment CycleSales Information SystemsSales Information Systemswww.bookfiesta4u.com1-137Sales Information SystemsSales Information SystemsDatabases, Data WarehousesDatabases, Data WarehousesAnd DataAnd Data--MiningMining
Can you name a company that usesCan you name a company that usestargeted mailings to promote newtargeted mailings to promote newproducts, or regional offerings?products, or regional offerings?www.bookfiesta4u.com1-138products, or regional offerings?products, or regional offerings?
The MarketingIntelligence SystemA Marketing Intelligence SystemA Marketing Intelligence Systemis a set of procedures and sourcesis a set of procedures and sourcesused by managers to obtainused by managers to obtainwww.bookfiesta4u.com1-139used by managers to obtainused by managers to obtaineveryday information abouteveryday information aboutdevelopments in the marketingdevelopments in the marketingenvironment.environment.
What are some of the potentialWhat are some of the potentialhazards a company might face byhazards a company might face byrelying too heavily on distributors,relying too heavily on distributors,www.bookfiesta4u.com1-140relying too heavily on distributors,relying too heavily on distributors,retailers, or otherretailers, or otherintermediaries forintermediaries formarket intelligence?market intelligence?
The Marriott Vacation Club International Web siteThe Marriott Vacation Club International Web sitegives interested customers the opportunity to sellgives interested customers the opportunity to sellthemselves on the Marriott offeringsthemselves on the Marriott offeringswww.bookfiesta4u.com1-141
CEOExpress.com is a portal to informationCEOExpress.com is a portal to information––a usera userclicks on a listing and is then connected to that siteclicks on a listing and is then connected to that sitewww.bookfiesta4u.com1-142
Table 5-1: Secondary-Data SourcesSecondarySecondary--Data SourcesData SourcesA.A. Internal SourcesInternal SourcesCompany profitCompany profit--loss statements, balanceloss statements, balancesheets, sales figures, salessheets, sales figures, sales--call reports,call reports,invoices, inventory records, and priorinvoices, inventory records, and priorresearch reports.research reports.B.B. Government PublicationsGovernment Publications•• Statistical Abstract of the United StatesStatistical Abstract of the United Stateswww.bookfiesta4u.com1-143•• Statistical Abstract of the United StatesStatistical Abstract of the United States•• County and City Data BookCounty and City Data Book•• Industrial OutlookIndustrial Outlook•• Marketing Information GuideMarketing Information GuideC.C. Periodicals and BooksPeriodicals and Books•• Business Periodicals IndexBusiness Periodicals Index•• Standard and Poor’s IndustryStandard and Poor’s IndustrySee text for complete table
Marketing Research SystemMarketing ResearchMarketing ResearchSuppliers of Marketing ResearchSuppliers of Marketing ResearchEngaging students or professors toEngaging students or professors todesign and carry out projectsdesign and carry out projectsUsing the InternetUsing the Internetwww.bookfiesta4u.com1-144Using the InternetUsing the InternetChecking out rivalsChecking out rivalsSyndicatedSyndicated--service research firmsservice research firmsCustom marketing research firmsCustom marketing research firmsSpecialtySpecialty--line marketing researchline marketing researchfirmsfirms
Marketing Research SystemThe Marketing Research ProcessThe Marketing Research ProcessStep 1: Define the Problem, theStep 1: Define the Problem, theDecision Alternatives, and theDecision Alternatives, and theResearch ObjectivesResearch Objectiveswww.bookfiesta4u.com1-146Research ObjectivesResearch ObjectivesStep 2: Develop theStep 2: Develop theResearch PlanResearch PlanData SourcesData SourcesResearch ApproachesResearch ApproachesObservational researchObservational researchFocus group researchFocus group research
Table 5-2: Types of QuestionsChildren onlyChildren onlyNo oneNo oneWith whom are you traveling on this flight?With whom are you traveling on this flight?A question with three or more answers.A question with three or more answers.MultipleMultipleChoiceChoiceIn arranging this trip, did you personally phone American?In arranging this trip, did you personally phone American?Yes NoYes NoA question with two possible answers.A question with two possible answers.DichotomousDichotomousExampleExampleDescriptionDescriptionNameNameA. ClosedA. Closed--end Questionsend Questionswww.bookfiesta4u.com1-148See text for complete table1_____ 2 _____ 3_____ 4_____ 5_____1_____ 2 _____ 3_____ 4_____ 5_____Small airlines generally give better service than large ones.Small airlines generally give better service than large ones.Strongly Disagree Neither agree Agree StronglyStrongly Disagree Neither agree Agree Stronglydisagree nor disagree agreedisagree nor disagree agreeA statement with which the respondentA statement with which the respondentshows the amount of agreement/shows the amount of agreement/disagreement.disagreement.Likert scaleLikert scaleAn organized tour groupAn organized tour groupSpouse andSpouse andchildrenchildrenBusiness associates/friends/relativesBusiness associates/friends/relativesSpouseSpouse
Marketing Research SystemSampling PlanSampling unitSample sizewww.bookfiesta4u.com1-149Sampling procedure
www.wansink.com is a consumer psychologyWeb site set up by Dr. Brian Wansink of theUniversity of Illinoiswww.bookfiesta4u.com1-150
A.A.Probability SampleProbability SampleSimple random sampleSimple random sample Every member of the population has anEvery member of the population has anequal chance of selectionequal chance of selectionStratified randomStratified randomsamplesampleThe population is divided into mutuallyThe population is divided into mutuallyexclusive groups (such as age groups),exclusive groups (such as age groups),and random samples are drawn fromand random samples are drawn fromTable 5-3: Probability and Nonprobability Sampleswww.bookfiesta4u.com1-151and random samples are drawn fromand random samples are drawn fromeach groupeach groupCluster (area) sampleCluster (area) sample The population is divided into mutuallyThe population is divided into mutuallyexclusive groups (such as city blocks),exclusive groups (such as city blocks),and the researcher draws a sample ofand the researcher draws a sample ofthe groups to interviewthe groups to interviewContinued on next slide . . .
B.B.NonprobabilityNonprobabilitySampleSampleConvenience sampleConvenience sample The researcher selects the mostThe researcher selects the mostaccessible population membersaccessible population membersJudgment sampleJudgment sample The researcher selects populationThe researcher selects populationmembers who are good prospects formembers who are good prospects forTable 5-3: Probability and Nonprobability Samples(Continued)www.bookfiesta4u.com1-152members who are good prospects formembers who are good prospects foraccurate informationaccurate informationQuota sampleQuota sample The researcher finds and interviews aThe researcher finds and interviews aprescribed number of people in each ofprescribed number of people in each ofseveral categoriesseveral categories
Marketing Research SystemStep 3: Collect theInformationStep 4: Analyze theInformationwww.bookfiesta4u.com1-154InformationStep 5: Present theFindingsStep 6: Make theDecision
Table 5-4: The Seven Characteristics of GoodMarketing Research1. Scientific1. ScientificmethodmethodEffective marketing research uses the principlesEffective marketing research uses the principlesof the scientific method: careful observation,of the scientific method: careful observation,formulation of hypotheses, prediction, and testing.formulation of hypotheses, prediction, and testing.2. Research2. ResearchcreativitycreativityAt its best, marketing research developsAt its best, marketing research developsinnovative ways to solve a problem: a clothinginnovative ways to solve a problem: a clothingcompany catering to teenagers gave severalcompany catering to teenagers gave severalwww.bookfiesta4u.com1-155company catering to teenagers gave severalcompany catering to teenagers gave severalyoung men video cameras, then used the videosyoung men video cameras, then used the videosfor focus groups held in restaurants and otherfor focus groups held in restaurants and otherplaces teens frequent.places teens frequent.3. Multiple3. MultiplemethodsmethodsMarketing researchers shy away from overrelianceMarketing researchers shy away from overrelianceon any one method. They also recognize the valueon any one method. They also recognize the valueof using two or three methods to increaseof using two or three methods to increaseconfidence in the results.confidence in the results.See text for complete table
Marketing Research SystemOvercoming Barriers to the Use ofOvercoming Barriers to the Use ofMarketing ResearchMarketing ResearchA narrow conception of the researchA narrow conception of the researchwww.bookfiesta4u.com1-156Uneven caliber of researchersUneven caliber of researchersPoor framing of the problemPoor framing of the problemLate and occasionally erroneous findingsLate and occasionally erroneous findingsPersonality and presentational differencesPersonality and presentational differences
Table 5-5: Quantitative Tools Used in Marketing DecisionSupport SystemsStatistical ToolsStatistical Tools1. Multiple1. Multipleregression:regression:A statistical technique for estimating a “best fitting”A statistical technique for estimating a “best fitting”equation showing how the value of a dependent variableequation showing how the value of a dependent variablevaries with changing values in a number of independentvaries with changing values in a number of independentvariables.variables. ExampleExample: A company can estimate how unit: A company can estimate how unitsales are influenced by changes in the level of companysales are influenced by changes in the level of companyadvertising expenditures, sales force size, and price.advertising expenditures, sales force size, and price.2. Discriminant2. Discriminantanalysis:analysis:A statistical technique for classifying an object orA statistical technique for classifying an object orpersons into two or more categories.persons into two or more categories. ExampleExample: A large: A largewww.bookfiesta4u.com1-158analysis:analysis: persons into two or more categories.persons into two or more categories. ExampleExample: A large: A largeretail chain store can determine the variables thatretail chain store can determine the variables thatdiscriminate between successful and unsuccessful storediscriminate between successful and unsuccessful storelocations.locations.3. Factor3. Factoranalysis:analysis:A statistical technique used to determine the fewA statistical technique used to determine the fewunderlying dimensions of a larger set of intercorrelatedunderlying dimensions of a larger set of intercorrelatedvariables.variables. ExampleExample: A broadcast network can reduce a: A broadcast network can reduce alarge set of TV programs down to a small set of basiclarge set of TV programs down to a small set of basicprogram types.program types.See text for complete table
Forecasting andDemand MeasurementThe Measures of Market DemandThe Measures of Market DemandFigure 5-3: Ninetywww.bookfiesta4u.com1-159Figure 5-3: NinetyTypes of DemandMeasurement(6X5X3)
Which Market toMeasure?MarketPotential marketAvailable marketForecasting andDemand Measurementwww.bookfiesta4u.com1-160Available marketTarget market(severed market)Penetrated marketA Vocabulary for Demand MeasurementMarket DemandMarket shareMarket penetration indexShare penetration index
Can you name a market segmentCan you name a market segmentwith a low penetration index? Awith a low penetration index? Ahigh penetration index? Can youhigh penetration index? Can youwww.bookfiesta4u.com1-162high penetration index? Can youhigh penetration index? Can youthink of a market where the highthink of a market where the highpenetration index might be apenetration index might be amisleading indicator?misleading indicator?
Estimating Current demandEstimating Current demandTotal Market PotentialTotal Market PotentialArea Market PotentialArea Market PotentialForecasting and DemandMeasurementwww.bookfiesta4u.com1-164Area Market PotentialArea Market PotentialMarketMarket--Buildup MethodBuildup Method
Table 5-6: Market-Buildup Method Using SIC CodesSICSIC(a)(a)AnnualAnnualSales inSales inMillionsMillionsof $of $(b)(b)Number ofNumber ofEstablishmentsEstablishments(c)(c)PotentialPotentialNumberNumberof Lathe Salesof Lathe SalesPer $1 MillionPer $1 MillionCustomer SalesCustomer SalesMarketMarketPotentialPotential(a x b x c)(a x b x c)www.bookfiesta4u.com1-165SICSIC of $of $ EstablishmentsEstablishments Customer SalesCustomer Sales (a x b x c)(a x b x c)2511251111 66 1010 606055 22 1010 10010025212521 11 33 55 151555 11 55 25253030 200200
Forecasting and DemandMeasurementMultiple-Factor IndexMethodwww.bookfiesta4u.com1-166Brand developmentBrand developmentindex (BDI)index (BDI)
Table 5-7: Calculating the BrandDevelopment Index (BDI)(a)(a)Percent ofPercent ofU.S. BrandU.S. Brand(b)(b)Percent ofPercent ofU.S. CategoryU.S. Category BDIBDITerritoryTerritory SalesSales SalesSales (a(a ÷÷÷÷÷÷÷÷ b) x 100b) x 100SeattleSeattle 3.093.09 2.712.71 114114www.bookfiesta4u.com1-167PortlandPortland 6.746.74 10.4110.41 6565BostonBoston 3.493.49 3.853.85 9191ToledoToledo .97.97 .81.81 120120ChicagoChicago 1.131.13 .81.81 140140BaltimoreBaltimore 3.123.12 3.003.00 104104
Forecasting and DemandMeasurementIndustry Sales and Market SharesEstimating Future DemandSurvey of Buyers’ Intentionswww.bookfiesta4u.com1-168Survey of Buyers’ IntentionsForecastingPurchase probability scale
Forecasting and DemandMeasurementComposite of Sales Force OpinionsExpert OpinionGroup discussion methodPooling of individual estimateswww.bookfiesta4u.com1-169Pooling of individual estimatesPast-Sales AnalysisTime-series analysisExponential smoothingStatistical demand analysisEconometric analysisMarket-Test Method
Chapter 6Chapter 6Scanning the MarketingScanning the MarketingEnvironmentEnvironmentbybywww.bookfiesta4u.com1-170PowerPoint byPowerPoint byMilton M. PressleyMilton M. PressleyUniversity of New OrleansUniversity of New Orleans
Kotler onMarketingToday youToday youhave to runhave to runfaster to stayfaster to staywww.bookfiesta4u.com1-171faster to stayfaster to stayin place.in place.
Chapter ObjectivesIn this chapter, we focus on twoIn this chapter, we focus on twoquestions:questions:What are the key methods for tracking andWhat are the key methods for tracking andwww.bookfiesta4u.com1-172What are the key methods for tracking andWhat are the key methods for tracking andidentifying opportunities in theidentifying opportunities in themacroenvironment?macroenvironment?What are the key demographic, economic,What are the key demographic, economic,natural, technological, political, and culturalnatural, technological, political, and culturaldevelopments?developments?
Analyzing Needs and Trends inthe MacroenvironmentTrendTrendFadFadMegatrendsMegatrendswww.bookfiesta4u.com1-173MegatrendsMegatrends
Given the definitions for fads,Given the definitions for fads,trends, and megatrends presented intrends, and megatrends presented inthe text, how would you definethe text, how would you define youryourwww.bookfiesta4u.com1-174the text, how would you definethe text, how would you define youryouronline activities? Can you identifyonline activities? Can you identifyan online trend that is likelyan online trend that is likelyto grow into a megatrend?to grow into a megatrend?
The substantial speedup of internationalThe substantial speedup of internationaltransportation, communication, and financialtransportation, communication, and financialtransactions, leading to the rapid growth of world tradetransactions, leading to the rapid growth of world tradeand investment, especially tripolar trade (Northand investment, especially tripolar trade (NorthAmerica, Western Europe, Far East)America, Western Europe, Far East)Identifying and Responding to theMajor Macroenvironment Forceswww.bookfiesta4u.com1-175America, Western Europe, Far East)America, Western Europe, Far East)The movement of manufacturing capacity and skills toThe movement of manufacturing capacity and skills tolower cost countries.lower cost countries.The rising economic power of several Asian countriesThe rising economic power of several Asian countriesin world markets.in world markets.The rise of trade blocks such as the European UnionThe rise of trade blocks such as the European Unionand NAFTA signatories.and NAFTA signatories.
The severe debt problems of a number of countries,The severe debt problems of a number of countries,along with the increasing fragility of the internationalalong with the increasing fragility of the internationalfinancial system.financial system.The increasing use of barter and countertrade toThe increasing use of barter and countertrade tosupport international transactions.support international transactions.Identifying and Responding to theMajor Macroenvironment Forceswww.bookfiesta4u.com1-176support international transactions.support international transactions.The move toward market economies in formerlyThe move toward market economies in formerlysocialist countries along with rapid privatization ofsocialist countries along with rapid privatization ofpublicly owned companies.publicly owned companies.The rapid dissemination of global lifestyles.The rapid dissemination of global lifestyles.The gradual opening of major new markets, namelyThe gradual opening of major new markets, namelyChina, India, eastern Europe, the Arab countries, andChina, India, eastern Europe, the Arab countries, andLatin America.Latin America.
The increasing tendency of multinationals to transcendThe increasing tendency of multinationals to transcendtheir locational and national characteristics andtheir locational and national characteristics andbecome transnational firms.become transnational firms.The increasing number of crossThe increasing number of cross--border corporateborder corporatestrategic alliancesstrategic alliances––for example, MCI and Britishfor example, MCI and BritishIdentifying and Responding to theMajor Macroenvironment Forceswww.bookfiesta4u.com1-177strategic alliancesstrategic alliances––for example, MCI and Britishfor example, MCI and BritishTelecom, and Texas Instruments and Hitachi.Telecom, and Texas Instruments and Hitachi.The increasing ethnic and religious conflicts in certainThe increasing ethnic and religious conflicts in certaincountries and regions.countries and regions.The growth of global brands in autos, food, clothing,The growth of global brands in autos, food, clothing,electronics.electronics.
Demographic EnvironmentDemographic EnvironmentWorldwide PopulationWorldwide PopulationGrowthGrowthIdentifying and Responding to theMajor Macroenvironment Forceswww.bookfiesta4u.com1-178GrowthGrowthPopulation Age MixPopulation Age MixEthnic and OtherEthnic and OtherMarketsMarkets
Can you identify one or moreCan you identify one or morenations whose populations hold thenations whose populations hold thepromise of huge potential marketspromise of huge potential marketsfor consumer goods? How havefor consumer goods? How havewww.bookfiesta4u.com1-179for consumer goods? How havefor consumer goods? How havepressures from potential marketerspressures from potential marketersto these untapped consumerto these untapped consumergroups driven the politicalgroups driven the politicaldiscussion on a nationaldiscussion on a nationaland international level?and international level?
Educational GroupsEducational GroupsHousehold PatternsHousehold PatternsGeographical Shifts inGeographical Shifts inIdentifying and Responding to theMajor Macroenvironment Forceswww.bookfiesta4u.com1-180Geographical Shifts inGeographical Shifts inPopulationPopulationFrom a Mass MarketFrom a Mass Marketto Micromarketsto Micromarkets
Economic EnvironmentEconomic EnvironmentIncome DistributionIncome DistributionIdentifying and Responding to theMajor Macroenvironment Forceswww.bookfiesta4u.com1-181Savings, Debt, andSavings, Debt, andCredit AvailabilityCredit Availability
Natural EnvironmentNatural EnvironmentShortage of Raw MaterialsShortage of Raw MaterialsIncreased Energy CostIncreased Energy CostIdentifying and Responding to theMajor Macroenvironment Forceswww.bookfiesta4u.com1-182Increased Energy CostIncreased Energy CostAntiAnti--Pollution PressuresPollution PressuresChanging Role of GovernmentsChanging Role of Governments
Technological EnvironmentTechnological EnvironmentAccelerating Pace of ChangeAccelerating Pace of ChangeIdentifying and Responding to theMajor Macroenvironment Forceswww.bookfiesta4u.com1-183Unlimited OpportunitiesUnlimited Opportunitiesfor Innovationfor Innovation
Varying R&D BudgetsVarying R&D BudgetsIncreased Regulation ofIncreased Regulation ofTechnological ChangeTechnological ChangeIdentifying and Responding to theMajor Macroenvironment Forceswww.bookfiesta4u.com1-184PoliticalPolitical--Legal EnvironmentLegal EnvironmentLegislation RegulatingLegislation RegulatingBusinessBusinessGrowth of SpecialGrowth of Special--InterestInterestGroupsGroupsConsumerist movementConsumerist movement
SocialSocial--CulturalCulturalEnvironmentEnvironmentViews of themselvesViews of themselvesIdentifying and Responding to theMajor Macroenvironment Forceswww.bookfiesta4u.com1-185Views of themselvesViews of themselvesViews of othersViews of othersViews of organizationsViews of organizationsViews of societyViews of societyViews of natureViews of natureViews of universeViews of universe
High Persistence of CoreHigh Persistence of CoreCultural ValuesCultural ValuesExistence of subculturesExistence of subculturesIdentifying and Responding to theMajor Macroenvironment Forceswww.bookfiesta4u.com1-186Existence of subculturesExistence of subculturesSubculturesSubculturesShifts of Secondary CulturalShifts of Secondary CulturalValues Through TimeValues Through Time
Chapter 7Chapter 7Analyzing ConsumerAnalyzing ConsumerMarkets and Buyer BehaviorMarkets and Buyer Behaviorbybywww.bookfiesta4u.com1-187PowerPoint byPowerPoint byMilton M. PressleyMilton M. PressleyUniversity of New OrleansUniversity of New Orleans
Kotler onMarketingThe mostThe mostimportantimportantthing is tothing is towww.bookfiesta4u.com1-188forecast whereforecast wherecustomers arecustomers aremoving, andmoving, andbe in front ofbe in front ofthem.them.
In this chapter, we focus on two questions:In this chapter, we focus on two questions:How do the buyers’ characteristicsHow do the buyers’ characteristics –– cultural,cultural,social, personal, and psychologicalsocial, personal, and psychological –– influenceinfluenceChapter Objectiveswww.bookfiesta4u.com1-189social, personal, and psychologicalsocial, personal, and psychological –– influenceinfluencebuying behavior?buying behavior?How does the buyer make purchasingHow does the buyer make purchasingdecisions?decisions?
Table 7.1: Characteristics of Major U.S. Social Classes1.1. Upper UppersUpper Uppers(less than 1%)(less than 1%)The social elite who live on inherited wealth. TheyThe social elite who live on inherited wealth. Theygive large sums to charity, run the debutante balls,give large sums to charity, run the debutante balls,maintain more than one home, and send theirmaintain more than one home, and send theirchildren to the finest schools. They are a market forchildren to the finest schools. They are a market forjewelry, antiques, homes, and vacations. They oftenjewelry, antiques, homes, and vacations. They oftenbuy and dress conservatively. Although small as abuy and dress conservatively. Although small as agroup, they serve as a reference group to the extentgroup, they serve as a reference group to the extentthat their consumption decisions are imitated by thethat their consumption decisions are imitated by theother social classes.other social classes.www.bookfiesta4u.com1-192See text for complete tableother social classes.other social classes.2.2. Lower UppersLower Uppers(about 2%)(about 2%)Persons, usually from the middle class, who havePersons, usually from the middle class, who haveearned high income or wealth through exceptionalearned high income or wealth through exceptionalability in the professions or business. They tend toability in the professions or business. They tend tobe active in social and civic affairs and to buy thebe active in social and civic affairs and to buy thesymbols of status for themselves and their children.symbols of status for themselves and their children.They include the nouveau riche, whose pattern ofThey include the nouveau riche, whose pattern ofconspicuous consumption is designed to impressconspicuous consumption is designed to impressthose below them.those below them.
FamilyFamilyFamily of orientationFamily of orientationFamily of procreationFamily of procreationRoles and StatusesRoles and StatusesInfluencing Buyer Behaviorwww.bookfiesta4u.com1-194Roles and StatusesRoles and StatusesRoleRoleStatusStatus
With the “graying” of the American populace,With the “graying” of the American populace,marketers have begun to shift images andmarketers have begun to shift images andcultural references in advertising from thingscultural references in advertising from thingsthat are relevant to the twentythat are relevant to the twenty--somethings tosomethings towww.bookfiesta4u.com1-195that are relevant to the twentythat are relevant to the twenty--somethings tosomethings toimages of active seniors, and soundtracksimages of active seniors, and soundtracksfrom the sixties and seventies. Can youfrom the sixties and seventies. Can youidentify any particularidentify any particularad campaigns that fitad campaigns that fitthis pattern?this pattern?
Personal FactorsPersonal FactorsAge and Stage in the Life CycleAge and Stage in the Life CycleFamily life cycleFamily life cycleInfluencing Buyer Behaviorwww.bookfiesta4u.com1-196Family life cycleFamily life cycleOccupation and EconomicOccupation and EconomicCircumstancesCircumstances
In recent years, many organizations haveIn recent years, many organizations have“provided” televisions with limited programming“provided” televisions with limited programmingaccess for use in Kaccess for use in K--12 classrooms. Do these12 classrooms. Do theseentities have a moral obligation to avoid overtentities have a moral obligation to avoid overtwww.bookfiesta4u.com1-197entities have a moral obligation to avoid overtentities have a moral obligation to avoid overtmarketing to their captive audiences, or is this amarketing to their captive audiences, or is this avalid tool for introducing offerings to futurevalid tool for introducing offerings to futureconsumers? What should theconsumers? What should theresponsibilities of the educatorsresponsibilities of the educatorsbe in these situations?be in these situations?
Table 7.2: Stages in the Family Life Cycle1. Bachelor stage:1. Bachelor stage:Young, single, not livingYoung, single, not livingat homeat homeFew financial burdens. Fashion opinionFew financial burdens. Fashion opinionleaders. Recreation oriented. Buy: basic homeleaders. Recreation oriented. Buy: basic homeequipment, furniture, cars, equipment for theequipment, furniture, cars, equipment for themating game; vacations.mating game; vacations.2. Newly married2. Newly marriedcouples:couples:Young, no childrenYoung, no childrenHighest purchase rate and highest averageHighest purchase rate and highest averagepurchase of durables: cars, appliances,purchase of durables: cars, appliances,furniture, vacations.furniture, vacations.3. Full nest I:3. Full nest I: Home purchasing at peak. Liquid assets low.Home purchasing at peak. Liquid assets low.www.bookfiesta4u.com1-198See text for complete table3. Full nest I:3. Full nest I:Youngest child underYoungest child undersixsixHome purchasing at peak. Liquid assets low.Home purchasing at peak. Liquid assets low.Interested in new products, advertisedInterested in new products, advertisedproducts. Buy: washers, dryers, TV, baby food,products. Buy: washers, dryers, TV, baby food,chest rubs and cough medicines, vitamins,chest rubs and cough medicines, vitamins,dolls, wagons, sleds, skates.dolls, wagons, sleds, skates.4. Full nest II:4. Full nest II:Youngest child six orYoungest child six oroveroverFinancial position better. Less influenced byFinancial position better. Less influenced byadvertising. Buy largeradvertising. Buy larger--size packages,size packages,multiplemultiple--unit deals. Buy: many foods, cleaningunit deals. Buy: many foods, cleaningmaterials, bicycles, music lessons, pianos.materials, bicycles, music lessons, pianos.
Figure 7.2: The VALS segmentation system:An 8-part typologyGroups with HighGroups with HighResourcesResources1.1. ActualizersActualizers2.2. FulfilledsFulfilleds3.3. AchieversAchieverswww.bookfiesta4u.com1-1993.3. AchieversAchievers4.4. ExperiencersExperiencersGroups with LowerGroups with LowerResourcesResources1.1. BelieversBelievers2.2. StriversStrivers3.3. MakersMakers4.4. StrugglersStrugglers
SRI Consulting Business Intelligence’s Web siteSRI Consulting Business Intelligence’s Web sitewww.bookfiesta4u.com1-200
Personality and SelfPersonality and Self--ConceptConceptPersonalityPersonalityBrand personalityBrand personalitySinceritySincerityExcitementExcitementInfluencing Buyer Behaviorwww.bookfiesta4u.com1-201ExcitementExcitementCompetenceCompetenceSophisticationSophisticationRuggednessRuggednessSelfSelf--conceptconceptPerson’s actual selfPerson’s actual self--conceptconceptIdeal selfIdeal self--conceptconceptOthers’ selfOthers’ self--conceptconcept
Ernest Dichter’s research found:Ernest Dichter’s research found:Consumers resist prunes because prunes areConsumers resist prunes because prunes arewrinkled looking and remind people of old age.wrinkled looking and remind people of old age.Men smoke cigars as an adult version of thumbMen smoke cigars as an adult version of thumbsucking.sucking.Influencing Buyer Behaviorwww.bookfiesta4u.com1-203sucking.sucking.Women prefer vegetable shortening to animalWomen prefer vegetable shortening to animalfats because the latter arouse a sense of guiltfats because the latter arouse a sense of guiltover killing animals.over killing animals.Women don’t trust cake mixes unless theyWomen don’t trust cake mixes unless theyrequire adding an egg, because this helps themrequire adding an egg, because this helps themfeel they are giving “birth.”feel they are giving “birth.”
PerceptionPerceptionSelective attentionSelective attentionPeople are more likely to notice stimuli thanPeople are more likely to notice stimuli thanrelate to a current needrelate to a current needPeople are more likely to notice stimuli thanPeople are more likely to notice stimuli thanInfluencing Buyer Behaviorwww.bookfiesta4u.com1-206People are more likely to notice stimuli thanPeople are more likely to notice stimuli thanthey anticipatethey anticipatePeople are more likely to notice stimuliPeople are more likely to notice stimuliwhose deviations are large in relation to thewhose deviations are large in relation to thenormal size of the stimulinormal size of the stimuliSelective distortionSelective distortionSelective retentionSelective retention
LearningLearningDriveDriveCuesCuesDiscriminationDiscriminationInfluencing Buyer Behaviorwww.bookfiesta4u.com1-207DiscriminationDiscriminationBeliefs and AttitudesBeliefs and AttitudesBeliefBeliefSpreading activationSpreading activationAttitudeAttitude