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  • 1. PowerPoint by Milton M. Pressley Creative Assistance by D. Carter and S. Koger 1-1www.bookfiesta4u.com
  • 2. Chapter 1Defining Marketing for the21st Centuryby PowerPoint by Milton M. Pressley University of New Orleans 1-2 www.bookfiesta4u.com
  • 3. Kotler onMarketingThe future is not ahead of us. It has already happened. Unfortunately, it is unequally distributed among companies, industries and nations. 1-3 www.bookfiesta4u.com
  • 4. Chapter ObjectivesIn this chapter we will address the followingquestions: What is the new economy like? What are the tasks of marketing? What are the major concepts and tools of marketing? What orientations do companies exhibit in the marketplace? How are companies and marketers responding to the new challenges? 1-4 www.bookfiesta4u.com
  • 5. The New EconomySubstantial increase in buying powerA greater variety of goods and servicesA greater amount of information aboutpractically anythingA greater ease in interacting and placingand receiving ordersAn ability to compare notes on productsand services 1-5 www.bookfiesta4u.com
  • 6. The New EconomyWebsites can provide companies withpowerful new information and saleschannels.Companies can collect fuller and richerinformation about markets, customers,prospects and competitors.Companies can facilitate and speed upcommunications among employees.Companies can have 2-way 2-communication with customers andprospects 1-6 www.bookfiesta4u.com
  • 7. The New EconomyCompanies can send ads, coupons,samples, information to targetedcustomers.Companies can customize offerings andservices to individual customers.The Internet can be used as acommunication channel for purchasing,training, and recruiting.Companies can improve logistics andoperations for cost savings whileimproving accuracy and service quality. 1-7 www.bookfiesta4u.com
  • 8. The three major challenges faced bybusinesses today are globalization,advances in technology, and deregulation.Which of these affords the greatestopportunity for established businesses?Which affords the greatestopportunities for newbusinesses? Why? 1-8 www.bookfiesta4u.com
  • 9. Marketing TaskTen rules of radical marketing The CEO must own the marketing function. Make sure the marketing department starts small and flat and stays small and flat. Get face to face with the people who matter most – the customers. Use market research cautiously. Hire only passionate missionaries. 1-9 www.bookfiesta4u.com
  • 10. Marketing Task Love and respect your customers. Create a community of consumers. Rethink the marketing mix. Celebrate common sense. Be true to the brand.Three stages of marketing practice Entrepreneurial Marketing Formulated Marketing Intrepreneurial Marketing 1-10 www.bookfiesta4u.com
  • 11. The Scope of Marketing Marketing: typically seen as the task of creating, promoting, and delivering goods and services to consumers and businesses. 1-11 www.bookfiesta4u.com
  • 12. 1. Negative A major part of the market dislikes the demand product and may even pay a price toTable 1.1 avoid it—vaccinations, dental work, it—Demand vasectomies, and gallbladder operations, for instance. Employers haveStates and a negative demand for ex-convicts and ex-Marketing alcoholics as employees. The marketing task is to analyze why the marketTasks dislikes the product and whether a marketing program consisting of product redesign, lower prices, and more positive promotion can change beliefs and attitudes. 2. No demand Target consumers may be unaware of or uninterested in the product. Farmers may not be interested in a new farming method, and college students may not be interested in foreign-language foreign- courses. The marketing task is to find ways to connect the benefits of the product with people’s natural needs and interests. See text for complete table 1-12 www.bookfiesta4u.com
  • 13. Can you name a category ofproducts for which your negativefeelings have softened?What precipitatedthis change? 1-13 www.bookfiesta4u.com
  • 14. The Scope of MarketingPlaces GoodsProperties ServicesOrganizations ExperiencesInformation EventsIdeas Persons 1-14 www.bookfiesta4u.com
  • 15. The DecisionsMarketers MakeConsumer MarketsBusiness MarketsGlobal MarketsNonprofit andGovernmental Markets 1-15 www.bookfiesta4u.com
  • 16. Marketing Concepts and Tools Defining Marketing Marketing Marketing management Core Marketing Concepts Target Markets and Segmentation 1-16 www.bookfiesta4u.com
  • 17. Figure 1-1: A Simple Marketing System 1-17 www.bookfiesta4u.com
  • 18. Marketing Concepts and Tools Marketplace, Marketspace, and Metamarket 1-18 www.bookfiesta4u.com
  • 19. Marketing Concepts and ToolsMarketers and ProspectsNeeds, Wants, and DemandsProduct, Offering, and BrandValue and Satisfaction Customer value triad Value Value = Benefits / Costs = (Functional benefits + Emotional benefits) / (Monetary costs + Time costs + Energy costs + Psychic costs) 1-19 www.bookfiesta4u.com
  • 20. Marketing Concepts and Tools Exchange and Transactions Exchange Transaction Barter Transfer Behavioral response 1-20 www.bookfiesta4u.com
  • 21. Marketing Concepts and Tools Relationships and Networks Relationship marketing Marketing network Marketing Channels Supply Chain Competition 1-21 www.bookfiesta4u.com
  • 22. Marketing Concepts and Tools Brand competition Industry competition Form competition Generic competitionMarketing environment Task environment Broad environmentMarketing Program Marketing program Marketing mix 1-22 www.bookfiesta4u.com
  • 23. Company OrientationsToward the Marketplace Production Concept Product concept Selling Concept Marketing Concept 1-23 www.bookfiesta4u.com
  • 24. Company OrientationsToward the Marketplace Target Market Customer Needs Stated needs Real needs Unstated needs Delight needs Secret needs 1-24 www.bookfiesta4u.com
  • 25. Company OrientationsToward the Marketplace Integrated Marketing External marketing Internal marketing 1-25 www.bookfiesta4u.com
  • 26. Company OrientationsToward the Marketplace Profitability Sales decline Slow growth Changing buying patterns Increasing competition Increasing marketing expenditures 1-26 www.bookfiesta4u.com
  • 27. Company OrientationsToward the Marketplace Societal Marketing Concept Cause- Cause-related marketing 1-27 www.bookfiesta4u.com
  • 28. Can you identify the trends that havemade the marketing concept, thecustomer concept, and the societalmarketing concept more attractivemodels for contemporarymarketing managers? 1-28 www.bookfiesta4u.com
  • 29. How Business andMarketing are Changing Customers Brand manufacturers Store- Store-based retailers 1-29 www.bookfiesta4u.com
  • 30. How Business and Marketing are ChangingCompany responses and adjustments Reengineering Partner- Partner-suppliers Outsourcing Market- Market-centered E-commerce Global and local Benchmarking Decentralized Alliances 1-30 www.bookfiesta4u.com
  • 31. How Business and Marketing are ChangingMarketer Responsesand Adjustments Customer relationship Integrated marketing marketing communications Customer lifetime value Channels as partners Customer share Every employee a Target marketing marketer Customization Model- Model-based decision Customer database making 1-31 www.bookfiesta4u.com
  • 32. Chapter 2Adapting Marketing To TheNew Economyby PowerPoint by Milton M. Pressley University of New Orleans 1-32 www.bookfiesta4u.com
  • 33. Kotler onMarketingThe Internet willcreate new winnersand bury thelaggards. 1-33 www.bookfiesta4u.com
  • 34. Chapter ObjectivesIn this chapter, we will address thefollowing questions: What are the major forces driving the New Economy? How are business and marketing practices changing as a result of the New Economy? How are marketers using the Internet, customer databases, and customer relationship management in the New Economy? 1-34 www.bookfiesta4u.com
  • 35. Adapting Marketing to the New Economy Major Drivers of the New Economy Digitization and Connectivity Disintermediation and Reintermediation Customization and Customerization 1-35 www.bookfiesta4u.com
  • 36. Procter & Gamble’s Reflect.com site allows customers to design their own beauty products 1-36 www.bookfiesta4u.com
  • 37. Adapting Marketing to the New Economy Industry ConvergenceHow Business Practices are Changing Organize by product units to organize by customer segments Shift focus from profitable transactions to customer lifetime value Shift focus from financial scorecard to also focusing on the marketing scorecard Shift focus from shareholders to stakeholders 1-37 www.bookfiesta4u.com
  • 38. Table 2-1: Old Economy vs. New EconomyOld Economy New EconomyOrganize by product units Organize by customer segmentsFocus on profitable transactions Focus on customer lifetime valueLook primarily at financial Look also at marketing scorecardscorecard Focus on stakeholdersFocus on shareholders Everyone does the marketingMarketing does the marketing Build brands through behaviorBuild brands through advertising Focus on customer retention andFocus on customer acquisition growthNo customer satisfaction Measure customer satisfaction andmeasurement retention rateOverpromise, underdeliver Underpromise, overdeliver 1-38 www.bookfiesta4u.com
  • 39. Adapting Marketing to the New Economy Everyone does the marketing Build brands through performance, not just advertising Customer retention rather than customer acquisition From none to in-depth customer in- satisfaction measurement From over-promise, under-deliver to over- under- under- under-promise, over-deliver over- The New Hybrid 1-39 www.bookfiesta4u.com
  • 40. Adapting Marketing to the New EconomyHow Marketing Practicesare Changing: E-Business E- E-business E-commerce E-purchasing E-marketingInternet Domains: B2C(Business to Customer) 1-40 www.bookfiesta4u.com
  • 41. Customers can shop online at Calyx and Corolla or ask for a catalog and shop by phone 1-41 www.bookfiesta4u.com
  • 42. Adapting Marketing to the New Economy Internet Domains: B2B (Business to Business) 1-42 www.bookfiesta4u.com
  • 43. Figure 2-1:The Supplier-CustomerRelationship:Traditional andNew EconomyStructures 1-43 www.bookfiesta4u.com
  • 44. www.transora.com: global online marketplace for the consumer packaged goods industry 1-44 www.bookfiesta4u.com
  • 45. Adapting Marketing to the New Economy Internet Domains: C2C (Consumer to Consumer) Internet Domains: C2B (Customer to Business) Pure Click vs. Brick and Click Companies Pure- Pure-click companies 1-45 www.bookfiesta4u.com
  • 46. CarPoint, leading metamediary for car buying, is a pure click company: It exists only on the Web. 1-46 www.bookfiesta4u.com
  • 47. Adapting Marketing to the New Economy Brick and Click companies 1-47 www.bookfiesta4u.com
  • 48. Which is more important fordeveloping an e-presence: the agility e-of a pure click company, or the welldefined and readily identifiableresources of a traditionalbrick and mortarcompany? 1-48 www.bookfiesta4u.com
  • 49. Adapting Marketing to the New EconomyHow Marketing Practices are Changing:Setting Up Web Sites Designing an Attractive Website Seven elements of effective sites Context Content Community Customization Communication Connection Commerce 1-49 www.bookfiesta4u.com
  • 50. Would you be willing to give up one ormore of the seven elements of an effectiveweb site in order to speed the deploymentof a new company e-commerce site? e-What would the expected trade-offs be trade-between an effective siteand an early webpresence? 1-50 www.bookfiesta4u.com
  • 51. Attracting and Keeping VisitorsTable 2-2: 2- How can we get more prospects to know and visit our site?Setting How can we use marketing to spread word-of-mouth? word-of-Up a How can we convert visitors into repeaters?Dot-Dot-com How do we make our site more experiential and real?Presence How can we build a strong relationship with our customers? How can we build a customer community? How can we capture and exploit customer data for up-selling up- and cross-selling? cross- How much should we spend on building and marketing our site? Advertising on the Internet What are the various ways that we can advertise on the Internet? How do we choose the right sites for placing our ads or sponsorship? See text for complete table 1-51 www.bookfiesta4u.com
  • 52. Adapting Marketing to the New Economy Context factors Content factors Getting feedback 1-52 www.bookfiesta4u.com
  • 53. Adapting Marketing to the New Economy Placing Ads and Promotions Online Banner ads Sponsorships Microsite Interstitials Browser ads Alliances and affiliate programs Push 1-53 www.bookfiesta4u.com
  • 54. Infogate.com “pushes” targeted content and ads to those who are interested in a product or product category 1-54 www.bookfiesta4u.com
  • 55. Adapting Marketing to the New Economy Building a Revenue and Profit Model Advertising income Sponsorship income Membership and subscriptions Profile income Product and service sales Transaction commission and fees Market research/information Referral income 1-55 www.bookfiesta4u.com
  • 56. Adapting Marketing to the New EconomyHow Marketing Practices are Changing:Customer Relationship Marketing Reduce rate of customer defection Increase longevity of customer relationship Enhance growth potential through cross-selling and up-selling cross- up- Make low profit customers more profitable or terminate them 1-56 www.bookfiesta4u.com
  • 57. Adapting Marketing to the New Economy Focus disproportionate effort on high value customers 1-57 www.bookfiesta4u.com
  • 58. Table 2-3: Mass Marketing vs. One-to-One MarketingMass Marketing One-to-One Marketing One-to-Average customer Individual customerCustomer anonymity Customer profileStandard product Customized marketMass production offeringMass distribution Customized productionMass advertising Individualized distributionMass promotion Individualized messageOne-One-way message Individualized incentivesEconomies of scale Two- Two-way messagesShare of market Economies of scopeAll customers Share of customerCustomer attraction Profitable customers Customer retention 1-58 www.bookfiesta4u.com
  • 59. Adapting Marketing to the New Economy Four steps for One-to-One Marketing One-to- Don’t go after everyone, identify prospects. Define customers by their needs and their value to the company. Individual interaction with customers builds stronger relationships. Customize messages, services, and products for each customer. 1-59 www.bookfiesta4u.com
  • 60. Adapting Marketing to the New Economy Customer Databases and Database Marketing Customer mailing list Business database 1-60 www.bookfiesta4u.com
  • 61. Adapting Marketing to the New EconomyData Warehouses and Data Mining Using the database To identify prospects To determine target market To deepen customer loyalty To reactivate customer purchases To avoid serious customer mistakes The Downside of Database Marketing 1-61 www.bookfiesta4u.com
  • 62. Chapter 3Building CustomerSatisfaction, Value, andRetentionby PowerPoint by Milton M. Pressley University of New Orleans 1-62 www.bookfiesta4u.com
  • 63. Kotler onMarketingIt is no longerenough to satisfycustomers. You mustdelight them. 1-63 www.bookfiesta4u.com
  • 64. Chapter ObjectivesIn this chapter, we will address thefollowing questions: What are customer value and satisfaction, and how can companies deliver them? What makes a high-performance business? high- How can companies both attract and retain customers? How can companies improve both customer and company profitability? How can companies deliver total quality? 1-64 www.bookfiesta4u.com
  • 65. Defining Customer Value and Satisfaction Customer Perceived Value (CPV) Total customer value Total customer cost 1-65 www.bookfiesta4u.com
  • 66. Figure 3-1:Determinantsof CustomerDeliveredValue 1-66 www.bookfiesta4u.com
  • 67. Defining Customer Value and Satisfaction Total Customer Satisfaction Satisfaction Customer Expectations Delivering High Customer Value Value proposition Value- Value-delivery system Measuring Satisfaction 1-67 www.bookfiesta4u.com
  • 68. Table 3-1: Tools for Tracking and Measuring Customer SatisfactionComplaint A customer-centered organization makes it easy for customer-and customers to register suggestions and complaints.suggestion Some customer-centered companies-P&G, General customer- companies- Electric, Whirlpool—establish hot lines with toll-free Whirlpool— toll-systems: numbers. Companies are also using Web sites and e-mail for quick, two-way communication. two- Studies show that although customers are dissatisfiedCustomer with one out of every four purchases, less than 5 percent will complain. Most customers will buy less orsatisfaction switch suppliers. Responsive companies measuresurveys: customer satisfaction directly by conducting periodic surveys. While collecting customer satisfaction data, it is also useful to ask additional questions to measure repurchase intention and to measure the likelihood or willingness to recommend the company and brand to others. See text for complete table 1-68 www.bookfiesta4u.com
  • 69. Would you feel more brand loyalty for acompany that tried to immediately resolvea complaint via E-mail, or a company that E-had a customer service representative callwithin two business days toresolve the problem overthe phone? 1-69 www.bookfiesta4u.com
  • 70. Premier Dell.com is a special business-oriented part of the business-Dell Web site that allows customers to interact with Dell and customize all phases of doing business with Dell. 1-70 www.bookfiesta4u.com
  • 71. The Nature of HighPerformance Business High- High-performance business 1-71 www.bookfiesta4u.com
  • 72. Figure 3-2: The High Performance Business 1-72 www.bookfiesta4u.com
  • 73. The Nature of HighPerformance BusinessStakeholdersProcessesResources Core competency Distinctive capabilitiesOrganization and Organizational Culture Organization Corporate culture Scenario analysis 1-73 www.bookfiesta4u.com
  • 74. Can you name a company that haschanged the public’s perception oftheir corporate culture? Has thiseffectively rehabilitated thatcompany’s image? 1-74 www.bookfiesta4u.com
  • 75. Delivering Customer Value and Satisfaction Value Chain Value chain 1-75 www.bookfiesta4u.com
  • 76. Figure 3-3: The Generic Value Chain 1-76 www.bookfiesta4u.com
  • 77. Delivering Customer Value and Satisfaction BenchmarksCore Business Processes The market sensing process The new offering realization process The customer acquisition process The customer relationship management process The fulfillment management process 1-77 www.bookfiesta4u.com
  • 78. Delivering Customer Value and Satisfaction The Value Delivery Network (Supply Chain) 1-78 www.bookfiesta4u.com
  • 79. Figure 3-4:LeviStrauss’sValue-DeliveryNetwork 1-79 www.bookfiesta4u.com
  • 80. Attracting and Retaining Customers Partner relationship management (PRM) Customer relationship management (CRM) 1-80 www.bookfiesta4u.com
  • 81. Saturn has gained a customer loyalty rateof more than 60% by fundamentallychanging the buyer-seller relationship. buyer-Can you think of another company thathas made a change of similarmagnitude? Have theyhad similar results? 1-81 www.bookfiesta4u.com
  • 82. Attracting and Retaining Customers Attracting Customers Computing the Cost of Lost Customers Customer churn Lifetime value 1-82 www.bookfiesta4u.com
  • 83. On the Lands’ End Web site, customers can click abutton to talk with a customer service representative 1-83 www.bookfiesta4u.com
  • 84. Attracting and Retaining CustomersThe Need for Customer RetentionMeasuring CustomerLifetime Value (CLV)Customer Relationship Management(CRM): The Key Customer equity Three drivers of customer equity Value equity Brand equity Relationship equity 1-84 www.bookfiesta4u.com
  • 85. Figure 3-5:TheCustomer-DevelopmentProcess 1-85 www.bookfiesta4u.com
  • 86. Attracting and Retaining Customers Five levels of investment in customer relationship building Basic marketing Reactive marketing Accountable marketing Proactive marketing Partnership marketing 1-86 www.bookfiesta4u.com
  • 87. Figure 3-6: Levels of Relationship Marketing 1-87 www.bookfiesta4u.com
  • 88. Attracting and Retaining Customers Forming Strong Customer Bonds: The Basics Cross- Cross-departmental participation Integrate the Voice of the Customer into all business decisions Create superior offering for the target market 1-88 www.bookfiesta4u.com
  • 89. Attracting and Retaining Customers Organize and make accessible a database of customer information Make it easy for customers to reach the appropriate personnel Reward outstanding employees Adding Financial Benefits Frequency programs (FPs) 1-89 www.bookfiesta4u.com
  • 90. The H.O.G. Web site presents the benefits of joining. 1-90 www.bookfiesta4u.com
  • 91. Attracting and Retaining Customers Adding Social Benefits 1-91 www.bookfiesta4u.com
  • 92. Good Things Bad ThingsTable 3-2: Initiate positive phone calls Make only callbacksSocial Actions Make recommendations Make justificationsAffecting Candor in language Accommodative languageBuyer-Seller Use phone Use correspondenceRelationships Show appreciation Wait for misunderstandings Make service suggestions Wait for service requests Use “we” problem-solving problem- Use “owe-us” legal language “owe- language Only respond to problems Get to problems Use long-winded long- Use jargon or shorthand communications Personality problems aired Personality problems hidden Talk of “our future together” Talk about making good on Routinize responses the past Accept responsibility Fire drill and emergency Plan the future responsiveness Shift blame Rehash the past 1-92 www.bookfiesta4u.com
  • 93. Attracting and Retaining Customers Adding Structural Ties Create long-term contracts long- Charge lower price to high volume customers Turn product into long- long-term service 1-93 www.bookfiesta4u.com
  • 94. Customer Profitability,Company Profitability, andTotal Quality Management Measuring Profitability Profitable customer 1-94 www.bookfiesta4u.com
  • 95. Figure 3-7: Customer-Product Profitability Analysis 1-95 www.bookfiesta4u.com
  • 96. Figure 3-8: Allocating marketing investment according to customer value 1-96 www.bookfiesta4u.com
  • 97. Customer Profitability,Company Profitability, andTotal Quality Management Increasing Company Profitability Competitive advantage Implementing TQM Total Quality Management Quality 1-97 www.bookfiesta4u.com
  • 98. Chapter 4Winning Markets ThroughMarket-Market-Oriented StrategicPlanningby PowerPoint by Milton M. Pressley University of New Orleans 1-98 www.bookfiesta4u.com
  • 99. Kotler onMarketingIt is more importantto do what isstrategically rightthan what isimmediatelyprofitable. 1-99 www.bookfiesta4u.com
  • 100. Chapter ObjectivesIn this chapter, we examine thefollowing questions: How is strategic planning carried out at the corporate and division levels? How is planning carried out at the business unit level? What are the major steps in the marketing process? How is planning carried out at the product level? What does a marketing plan include? 1-100 www.bookfiesta4u.com
  • 101. Strategic Planning: Three Key Areas and Four Organization Levels Strategic marketing plan Tactical marketing plan Marketing plan 1-101 www.bookfiesta4u.com
  • 102. Corporate and Division Strategic PlanningAll corporate headquarters undertakefour planning activities Defining the Corporate Mission Establishing Strategic Business Units (SBUs) Assigning resources to each SBU Planning new businesses, downsizing, or terminating older businesses 1-102 www.bookfiesta4u.com
  • 103. Corporate and Division Strategic PlanningDefining the Corporate Mission Mission statements define which competitive scopes the company will operate in Industry scope Products and applications scope Competence scope Market- Market-segment scope Vertical scope Geographical scope 1-103 www.bookfiesta4u.com
  • 104. Can you name a company that hasrecently changed its product scopeor market segment scope in a verypublic way? Was this an expansionor contraction of scope? 1-104 www.bookfiesta4u.com
  • 105. Corporate and Division Strategic PlanningEstablishing Strategic Business Units(SBUs) 1-105 www.bookfiesta4u.com
  • 106. Table 4.1: Product-Oriented versus Market-Oriented Definitions of a BusinessCompany Product Definition Market DefinitionMissouri-Missouri-Pacific We run a railroad We are a people-and- people-and-Railroad goods moverXerox We make copying We help improve office equipment productivityStandard Oil We sell gasoline We supply energyColumbia Pictures We make movies We market entertainmentEncyclopaedia We sell encyclopedias We distribute InformationCarrier We make air We provide climate conditioners and control in the home furnaces 1-106 www.bookfiesta4u.com
  • 107. Corporate and Division Strategic PlanningThree characteristics of SBUs Single business or collection of related businesses that can be planned for separately Has its own set of competitors Has a manager who is responsible for strategic planning and profit 1-107 www.bookfiesta4u.com
  • 108. The Growth-Share Matrix Growth- Relative market share Four Cells Question Marks Stars Cash Cows DogsSBU StrategiesSBU Lifecycle 1-108 www.bookfiesta4u.com
  • 109. Can you give an example of a “Star”that skipped “Cash Cow”, and wentstraight to “Dog” status? 1-109 www.bookfiesta4u.com
  • 110. Corporate and Division Strategic Planning The General Electric Model 1-110 www.bookfiesta4u.com
  • 111. Table 4-2: Factors underlying Market Attractiveness and Competitive Position in GE Multifactor Portfolio Model: Hydraulic-Pumps Market Rating = Weight (1-5) (1- Value Overall market size 0.20 4 0.80 Annual market growth rate 0.20 5 1. Historical profit margin 0.15 4 0.60 Competitive intensity 0.15 2 0.30Market Technological requirements 0.15 4 0.60Attractiveness Inflationary vulnerability 0.05 3 0.15 Energy requirements 0.05 2 0.10 Environmental impact 0.05 3 0.15 Social-political- Social-political-legal Must be acceptable 1.0 3.70 Market share 0.10 4 0.40 Share growth 0.15 2 0.30Business Product quality 0.10 4 0.40Strength Brand reputation 0.10 5 0.50 Distribution network 0.05 4 0.20 See text for complete table 1-111 www.bookfiesta4u.com
  • 112. Corporate and Division Strategic Planning Critique of Portfolio Models Planning New Businesses, Downsizing Older Businesses 1-112 www.bookfiesta4u.com
  • 113. Corporate and Division Strategic Planning Intensive Growth 1-113 www.bookfiesta4u.com
  • 114. Starbucks’ home page: Customers can request a catalog of Starbucks products, subscribe to a newsletter, and shop online 1-114 www.bookfiesta4u.com
  • 115. Corporate and Division Strategic Planning Integrative Growth Diversification Growth Downsizing Older Businesses 1-115 www.bookfiesta4u.com
  • 116. Give an example of a marketsegment where integrative growthwould be preferable to growththrough diversification. Explainwhy one approach is betterthan the other. 1-116 www.bookfiesta4u.com
  • 117. Business Unit Strategic PlanningBusiness MissionSWOT Analysis External Environment Analysis (Opportunity and Threat Analysis) Marketing Opportunity Buying opportunity more convenient or efficient Meet the need for more information and advice Customize an offering that was previously only available in standard form 1-117 www.bookfiesta4u.com
  • 118. Give some examples of companiesthat have grown to dominate theirmarket segment by using technologyto make buying opportunities moreconvenient and efficient. 1-118 www.bookfiesta4u.com
  • 119. Business Unit Strategic PlanningMarketing Opportunity Analysis (MOA) Can the benefits be articulated to a target market? Can the target market be reached with cost- cost- effective media and trade channels? Does the company have the critical capabilities to deliver the customer benefits? Can the company deliver these benefits better than any actual or potential competitors? Will the rate of return meet the required threshold of investment? 1-119 www.bookfiesta4u.com
  • 120. Figure 4-7: Opportunity and Threat Matrices 1-120 www.bookfiesta4u.com
  • 121. Business Unit Strategic PlanningInternal Environmental Analysis(Strength/Weakness Analysis)Goal FormationStrategicFormulation Strategy 1-121 www.bookfiesta4u.com
  • 122. Business Unit Strategic PlanningPorter’s Generic Strategies Overall cost leadership Differentiation Focus 1-122 www.bookfiesta4u.com
  • 123. Travelocity’s Web site helps the consumer plan thewhole vacation – flights, lodging, and car rental.com 1-123 www.bookfiesta4u.com
  • 124. Business Unit Strategic PlanningOperational Effectiveness and Strategy Strategic group Strategic alliances 1-124 www.bookfiesta4u.com
  • 125. Business Unit Strategic PlanningMarketing Alliances Product or service alliances Promotional alliances Logistical alliances Pricing collaborationsPartner RelationshipManagement, PRMProgram Formulation andImplementation 1-125 www.bookfiesta4u.com
  • 126. Business UnitStrategic Planning Feedback and Control 1-126 www.bookfiesta4u.com
  • 127. The Marketing Process Steps in the Planning Process The marketing process Analyzing Market Opportunities Developing Marketing Strategies Planning Marketing Programs Managing the Marketing Effort Annual- Annual-plan control Profitability control Strategic control 1-127 www.bookfiesta4u.com
  • 128. Figure 4-10:FactorsInfluencingCompanyMarketingStrategy 1-128 www.bookfiesta4u.com
  • 129. Product Planning: The Nature and Contents of a Marketing Plan Contents of the Marketing Plan Executive Summary Current Marketing Situation Opportunity and issue analysis Objectives Marketing strategy Action programs Financial projections Implementation controls 1-129 www.bookfiesta4u.com
  • 130. Product Planning: The Nature and Contents of a Marketing Plan Sample Marketing Plan: Sonic Personal Digital Assistant Current Marketing Situation Opportunity and Issue Analysis Objectives Action Programs Financial Projections 1-130 www.bookfiesta4u.com
  • 131. Product Planning: The Nature and Contents of a Marketing Plan Implementation Controls Marketing Strategy Positioning Product Management Pricing Distribution Marketing Communications Marketing Research 1-131 www.bookfiesta4u.com
  • 132. Chapter 5Gathering Information andMeasuring Market Demandby PowerPoint by Milton M. Pressley University of New Orleans 1-132 www.bookfiesta4u.com
  • 133. Kotler onMarketingMarketing is becoming a battle based more on information than on sales power. 1-133 www.bookfiesta4u.com
  • 134. Chapter ObjectivesIn this chapter, we focus on the followingquestions: What are the components of a modern marketing information system? What constitutes good marketing research? How can marketing decision support systems help marketing managers make better decisions? How can demand be more accurately measured and forecasted? 1-134 www.bookfiesta4u.com
  • 135. The Components of a ModernMarketing Information System Marketing Information System (MIS) 10 useful questions for determining the information needs of marketing managers. What decisions do you regularly make? What information do you need to make these decisions? What information do you regularly get? What special studies do you periodically request? 1-135 www.bookfiesta4u.com
  • 136. The Components of a ModernMarketing Information System What information would you want that you are not getting now? What information would you want daily? Weekly? Monthly? Yearly? What magazines and trade reports would you like to see on a regular basis? What topics would you like to be kept informed of? What data analysis programs would you want? What are the four most helpful improvements that could be made in the present marketing information system? 1-136 www.bookfiesta4u.com
  • 137. Internal Record Systems The Order-to-Payment Cycle Order-to- Sales Information Systems Databases, Data Warehouses And Data-Mining Data- 1-137 www.bookfiesta4u.com
  • 138. Can you name a company that usestargeted mailings to promote newproducts, or regional offerings? 1-138 www.bookfiesta4u.com
  • 139. The MarketingIntelligence SystemA Marketing Intelligence Systemis a set of procedures and sourcesused by managers to obtaineveryday information aboutdevelopments in the marketingenvironment. 1-139 www.bookfiesta4u.com
  • 140. What are some of the potentialhazards a company might face byrelying too heavily on distributors,retailers, or otherintermediaries formarket intelligence? 1-140 www.bookfiesta4u.com
  • 141. The Marriott Vacation Club International Web sitegives interested customers the opportunity to sell themselves on the Marriott offerings 1-141 www.bookfiesta4u.com
  • 142. CEOExpress.com is a portal to information–a user information–clicks on a listing and is then connected to that site 1-142 www.bookfiesta4u.com
  • 143. Table 5-1: Secondary-Data SourcesSecondary-Secondary- A. Internal SourcesData Sources Company profit-loss statements, balance profit- sheets, sales figures, sales-call reports, sales- invoices, inventory records, and prior research reports. B. Government Publications • Statistical Abstract of the United States • County and City Data Book • Industrial Outlook • Marketing Information Guide C. Periodicals and Books • Business Periodicals Index • Standard and Poor’s Industry See text for complete table 1-143 www.bookfiesta4u.com
  • 144. Marketing Research System Marketing Research Suppliers of Marketing Research Engaging students or professors to design and carry out projects Using the Internet Checking out rivals Syndicated- Syndicated-service research firms Custom marketing research firms Specialty- Specialty-line marketing research firms 1-144 www.bookfiesta4u.com
  • 145. Figure 5-1:The Marketing Research Process 1-145 www.bookfiesta4u.com
  • 146. Marketing Research System The Marketing Research Process Step 1: Define the Problem, the Decision Alternatives, and the Research Objectives Step 2: Develop the Research Plan Data Sources Research Approaches Observational research Focus group research 1-146 www.bookfiesta4u.com
  • 147. Marketing Research System Survey research Behavioral data Experimental research Research Instruments Questionnaires Psychological tools Mechanical devices Quantitative measures 1-147 www.bookfiesta4u.com
  • 148. Table 5-2: Types of Questions A. Closed-end Questions Closed-Name Description ExampleDichotomous A question with two possible answers. In arranging this trip, did you personally phone American? Yes NoMultipleChoice A question with three or more answers. With whom are you traveling on this flight? No one Children only Spouse Business associates/friends/relatives Spouse and An organized tour group childrenLikert scale A statement with which the respondent Small airlines generally give better service than large ones. shows the amount of agreement/ Strongly Disagree Neither agree Agree Strongly disagreement. disagree nor disagree agree 1_____ 2 _____ 3_____ 4_____ 5_____ See text for complete table 1-148 www.bookfiesta4u.com
  • 149. Marketing Research System Sampling Plan Sampling unit Sample size Sampling procedure 1-149 www.bookfiesta4u.com
  • 150. www.wansink.com is a consumer psychology Web site set up by Dr. Brian Wansink of the University of Illinois 1-150 www.bookfiesta4u.com
  • 151. Table 5-3: Probability and Nonprobability SamplesA. Probability SampleSimple random sample Every member of the population has an equal chance of selectionStratified random The population is divided into mutuallysample exclusive groups (such as age groups), and random samples are drawn from each groupCluster (area) sample The population is divided into mutually exclusive groups (such as city blocks), and the researcher draws a sample of the groups to interview Continued on next slide . . . 1-151 www.bookfiesta4u.com
  • 152. Table 5-3: Probability and Nonprobability Samples (Continued)B. Nonprobability SampleConvenience sample The researcher selects the most accessible population membersJudgment sample The researcher selects population members who are good prospects for accurate informationQuota sample The researcher finds and interviews a prescribed number of people in each of several categories 1-152 www.bookfiesta4u.com
  • 153. Marketing Research System Contact Methods Mail questionnaire Personal interviewing Arranged interviews Intercept interviews Online methods Click-stream Cookies Automated telephone surveys 1-153 www.bookfiesta4u.com
  • 154. Marketing Research System Step 3: Collect the Information Step 4: Analyze the Information Step 5: Present the Findings Step 6: Make the Decision 1-154 www.bookfiesta4u.com
  • 155. Table 5-4: The Seven Characteristics of Good Marketing Research1. Scientific Effective marketing research uses the principlesmethod of the scientific method: careful observation, formulation of hypotheses, prediction, and testing.2. Research At its best, marketing research developscreativity innovative ways to solve a problem: a clothing company catering to teenagers gave several young men video cameras, then used the videos for focus groups held in restaurants and other places teens frequent.3. Multiple Marketing researchers shy away from overreliancemethods on any one method. They also recognize the value of using two or three methods to increase confidence in the results. See text for complete table 1-155 www.bookfiesta4u.com
  • 156. Marketing Research System Overcoming Barriers to the Use of Marketing Research A narrow conception of the research Uneven caliber of researchers Poor framing of the problem Late and occasionally erroneous findings Personality and presentational differences 1-156 www.bookfiesta4u.com
  • 157. Marketing Decision Support System Marketing Decision Support System (MDSS) Marketing and sales software programs BRANDAID CALLPLAN DETAILER GEOLINE MEDIAC PROMOTER ADCAD CONVERSTORY 1-157 www.bookfiesta4u.com
  • 158. Table 5-5: Quantitative Tools Used in Marketing Decision Support SystemsStatistical Tools1. Multiple A statistical technique for estimating a “best fitting”regression: equation showing how the value of a dependent variable varies with changing values in a number of independent variables. Example: A company can estimate how unit Example: sales are influenced by changes in the level of company advertising expenditures, sales force size, and price.2. Discriminant A statistical technique for classifying an object oranalysis: persons into two or more categories. Example: A large Example: retail chain store can determine the variables that discriminate between successful and unsuccessful store locations.3. Factor A statistical technique used to determine the fewanalysis: underlying dimensions of a larger set of intercorrelated variables. Example: A broadcast network can reduce a Example: large set of TV programs down to a small set of basic program types. See text for complete table 1-158 www.bookfiesta4u.com
  • 159. Forecasting and Demand MeasurementThe Measures of Market DemandFigure 5-3: NinetyTypes of DemandMeasurement(6X5X3) 1-159 www.bookfiesta4u.com
  • 160. Forecasting andDemand Measurement Which Market to Measure? Market Potential market Available market Target market (severed market) Penetrated marketA Vocabulary for Demand Measurement Market Demand Market share Market penetration index Share penetration index 1-160 www.bookfiesta4u.com
  • 161. Forecasting andDemand MeasurementFigure 5-4: Market Demand Functions 1-161 www.bookfiesta4u.com
  • 162. Can you name a market segmentwith a low penetration index? Ahigh penetration index? Can youthink of a market where the highpenetration index might be amisleading indicator? 1-162 www.bookfiesta4u.com
  • 163. Forecasting and Demand Measurement Market Forecast Market Potential Product penetration percentage Company Demand Company Sales Forecast Sales quota Sales budget Company Sales Potential 1-163 www.bookfiesta4u.com
  • 164. Forecasting and Demand MeasurementEstimating Current demand Total Market Potential Area Market Potential Market- Market-Buildup Method 1-164 www.bookfiesta4u.com
  • 165. Table 5-6: Market-Buildup Method Using SIC Codes (c) (a) Potential Annual Number Sales in (b) of Lathe Sales Market Millions Number of Per $1 Million PotentialSIC of $ Establishments Customer Sales (a x b x c)2511 1 6 10 60 5 2 10 1002521 1 3 5 15 5 1 5 25 30 200 1-165 www.bookfiesta4u.com
  • 166. Forecasting and Demand Measurement Multiple-Factor Index Method Brand development index (BDI) 1-166 www.bookfiesta4u.com
  • 167. Table 5-7: Calculating the Brand Development Index (BDI) (a) (b) Percent of Percent of U.S. Brand U.S. Category BDITerritory Sales Sales (a ÷ b) x 100Seattle 3.09 2.71 114Portland 6.74 10.41 65Boston 3.49 3.85 91Toledo .97 .81 120Chicago 1.13 .81 140Baltimore 3.12 3.00 104 1-167 www.bookfiesta4u.com
  • 168. Forecasting and Demand Measurement Industry Sales and Market Shares Estimating Future Demand Survey of Buyers’ Intentions Forecasting Purchase probability scale 1-168 www.bookfiesta4u.com
  • 169. Forecasting and Demand Measurement Composite of Sales Force Opinions Expert Opinion Group discussion method Pooling of individual estimates Past-Sales Analysis Time-series analysis Exponential smoothing Statistical demand analysis Econometric analysis Market-Test Method 1-169 www.bookfiesta4u.com
  • 170. Chapter 6Scanning the MarketingEnvironmentby PowerPoint by Milton M. Pressley University of New Orleans 1-170 www.bookfiesta4u.com
  • 171. Kotler onMarketingToday you have to run faster to stay in place. 1-171 www.bookfiesta4u.com
  • 172. Chapter ObjectivesIn this chapter, we focus on twoquestions: What are the key methods for tracking and identifying opportunities in the macroenvironment? What are the key demographic, economic, natural, technological, political, and cultural developments? 1-172 www.bookfiesta4u.com
  • 173. Analyzing Needs and Trends in the Macroenvironment Trend Fad Megatrends 1-173 www.bookfiesta4u.com
  • 174. Given the definitions for fads,trends, and megatrends presented inthe text, how would you define youronline activities? Can you identifyan online trend that is likelyto grow into a megatrend? 1-174 www.bookfiesta4u.com
  • 175. Identifying and Responding to the Major Macroenvironment Forces The substantial speedup of international transportation, communication, and financial transactions, leading to the rapid growth of world trade and investment, especially tripolar trade (North America, Western Europe, Far East) The movement of manufacturing capacity and skills to lower cost countries. The rising economic power of several Asian countries in world markets. The rise of trade blocks such as the European Union and NAFTA signatories. 1-175 www.bookfiesta4u.com
  • 176. Identifying and Responding to the Major Macroenvironment Forces The severe debt problems of a number of countries, along with the increasing fragility of the international financial system. The increasing use of barter and countertrade to support international transactions. The move toward market economies in formerly socialist countries along with rapid privatization of publicly owned companies. The rapid dissemination of global lifestyles. The gradual opening of major new markets, namely China, India, eastern Europe, the Arab countries, and Latin America. 1-176 www.bookfiesta4u.com
  • 177. Identifying and Responding to the Major Macroenvironment Forces The increasing tendency of multinationals to transcend their locational and national characteristics and become transnational firms. The increasing number of cross-border corporate cross- strategic alliances–for example, MCI and British alliances– Telecom, and Texas Instruments and Hitachi. The increasing ethnic and religious conflicts in certain countries and regions. The growth of global brands in autos, food, clothing, electronics. 1-177 www.bookfiesta4u.com
  • 178. Identifying and Responding to the Major Macroenvironment Forces Demographic Environment Worldwide Population Growth Population Age Mix Ethnic and Other Markets 1-178 www.bookfiesta4u.com
  • 179. Can you identify one or morenations whose populations hold thepromise of huge potential marketsfor consumer goods? How havepressures from potential marketersto these untapped consumergroups driven the politicaldiscussion on a nationaland international level? 1-179 www.bookfiesta4u.com
  • 180. Identifying and Responding to the Major Macroenvironment Forces Educational Groups Household Patterns Geographical Shifts in Population From a Mass Market to Micromarkets 1-180 www.bookfiesta4u.com
  • 181. Identifying and Responding to the Major Macroenvironment Forces Economic Environment Income Distribution Savings, Debt, and Credit Availability 1-181 www.bookfiesta4u.com
  • 182. Identifying and Responding to the Major Macroenvironment Forces Natural Environment Shortage of Raw Materials Increased Energy Cost Anti- Anti-Pollution Pressures Changing Role of Governments 1-182 www.bookfiesta4u.com
  • 183. Identifying and Responding to the Major Macroenvironment Forces Technological Environment Accelerating Pace of Change Unlimited Opportunities for Innovation 1-183 www.bookfiesta4u.com
  • 184. Identifying and Responding to the Major Macroenvironment Forces Varying R&D Budgets Increased Regulation of Technological Change Political- Political-Legal Environment Legislation Regulating Business Growth of Special-Interest Special- Groups Consumerist movement 1-184 www.bookfiesta4u.com
  • 185. Identifying and Responding to the Major Macroenvironment Forces Social- Social-Cultural Environment Views of themselves Views of others Views of organizations Views of society Views of nature Views of universe 1-185 www.bookfiesta4u.com
  • 186. Identifying and Responding to the Major Macroenvironment Forces High Persistence of Core Cultural Values Existence of subcultures Subcultures Shifts of Secondary Cultural Values Through Time 1-186 www.bookfiesta4u.com
  • 187. Chapter 7Analyzing ConsumerMarkets and Buyer Behaviorby PowerPoint by Milton M. Pressley University of New Orleans 1-187 www.bookfiesta4u.com
  • 188. Kotler onMarketingThe most important thing is to forecast where customers are moving, and be in front of them. 1-188 www.bookfiesta4u.com
  • 189. Chapter ObjectivesIn this chapter, we focus on two questions: How do the buyers’ characteristics – cultural, social, personal, and psychological – influence buying behavior? How does the buyer make purchasing decisions? 1-189 www.bookfiesta4u.com
  • 190. Influencing Buyer Behavior Consumer BehaviorCultural Factors Culture Subcultures Diversity marketing Social class 1-190 www.bookfiesta4u.com
  • 191. Influencing Buyer Behavior Social Factors Reference Groups Reference groups Membership groups Primary groups Secondary groups Aspirational groups Dissociative groups Opinion leader 1-191 www.bookfiesta4u.com
  • 192. Table 7.1: Characteristics of Major U.S. Social Classes1. Upper Uppers The social elite who live on inherited wealth. They (less than 1%) give large sums to charity, run the debutante balls, maintain more than one home, and send their children to the finest schools. They are a market for jewelry, antiques, homes, and vacations. They often buy and dress conservatively. Although small as a group, they serve as a reference group to the extent that their consumption decisions are imitated by the other social classes.2. Lower Uppers Persons, usually from the middle class, who have (about 2%) earned high income or wealth through exceptional ability in the professions or business. They tend to be active in social and civic affairs and to buy the symbols of status for themselves and their children. They include the nouveau riche, whose pattern of conspicuous consumption is designed to impress those below them. See text for complete table 1-192 www.bookfiesta4u.com
  • 193. Influencing Buyer Behavior Secondary groups Aspirational groups Dissociative groups Opinion leader 1-193 www.bookfiesta4u.com
  • 194. Influencing Buyer Behavior Family Family of orientation Family of procreation Roles and Statuses Role Status 1-194 www.bookfiesta4u.com
  • 195. With the “graying” of the American populace,marketers have begun to shift images andcultural references in advertising from thingsthat are relevant to the twenty-somethings to twenty-images of active seniors, and soundtracksfrom the sixties and seventies. Can youidentify any particularad campaigns that fitthis pattern? 1-195 www.bookfiesta4u.com
  • 196. Influencing Buyer Behavior Personal Factors Age and Stage in the Life Cycle Family life cycle Occupation and Economic Circumstances 1-196 www.bookfiesta4u.com
  • 197. In recent years, many organizations have“provided” televisions with limited programmingaccess for use in K-12 classrooms. Do these K-entities have a moral obligation to avoid overtmarketing to their captive audiences, or is this avalid tool for introducing offerings to futureconsumers? What should theresponsibilities of the educatorsbe in these situations? 1-197 www.bookfiesta4u.com
  • 198. Table 7.2: Stages in the Family Life Cycle1. Bachelor stage: Few financial burdens. Fashion opinionYoung, single, not living leaders. Recreation oriented. Buy: basic homeat home equipment, furniture, cars, equipment for the mating game; vacations.2. Newly married Highest purchase rate and highest averagecouples: purchase of durables: cars, appliances,Young, no children furniture, vacations.3. Full nest I: Home purchasing at peak. Liquid assets low.Youngest child under Interested in new products, advertisedsix products. Buy: washers, dryers, TV, baby food, chest rubs and cough medicines, vitamins, dolls, wagons, sleds, skates.4. Full nest II: Financial position better. Less influenced byYoungest child six or advertising. Buy larger-size packages, larger-over multiple- multiple-unit deals. Buy: many foods, cleaning materials, bicycles, music lessons, pianos. See text for complete table 1-198 www.bookfiesta4u.com
  • 199. Figure 7.2: The VALS segmentation system: An 8-part typologyGroups with HighResources1. Actualizers2. Fulfilleds3. Achievers4. ExperiencersGroups with LowerResources1. Believers2. Strivers3. Makers4. Strugglers 1-199 www.bookfiesta4u.com
  • 200. SRI Consulting Business Intelligence’s Web site 1-200 www.bookfiesta4u.com
  • 201. Influencing Buyer Behavior Personality and Self-Concept Self- Personality Brand personality Sincerity Excitement Competence Sophistication Ruggedness Self- Self-concept Person’s actual self-concept self- Ideal self-concept self- Others’ self-concept self- 1-201 www.bookfiesta4u.com
  • 202. Influencing Buyer Behavior Psychological Factors Motivation Motive Freud’s Theory Laddering Projective techniques 1-202 www.bookfiesta4u.com
  • 203. Influencing Buyer Behavior Ernest Dichter’s research found: Consumers resist prunes because prunes are wrinkled looking and remind people of old age. Men smoke cigars as an adult version of thumb sucking. Women prefer vegetable shortening to animal fats because the latter arouse a sense of guilt over killing animals. Women don’t trust cake mixes unless they require adding an egg, because this helps them feel they are giving “birth.” 1-203 www.bookfiesta4u.com
  • 204. Influencing Buyer Behavior Maslow’s Theory Figure 7.3: Maslow’s Hierarchy of Needs 1-204 www.bookfiesta4u.com
  • 205. Influencing Buyer Behavior Herzberg’s Theory Dissatisfiers Satisfiers 1-205 www.bookfiesta4u.com
  • 206. Influencing Buyer Behavior Perception Selective attention People are more likely to notice stimuli than relate to a current need People are more likely to notice stimuli than they anticipate People are more likely to notice stimuli whose deviations are large in relation to the normal size of the stimuli Selective distortion Selective retention 1-206 www.bookfiesta4u.com
  • 207. Influencing Buyer Behavior Learning Drive Cues Discrimination Beliefs and Attitudes Belief Spreading activation Attitude 1-207 www.bookfiesta4u.com
  • 208. The purchase of a product from a Company Aturns out to be a positive experience. You arelooking for a loosely related product, which is alsooffered by Company A. Do you assume that youwill again have a positive experience withCompany A’s offering, or do youlook for the “best of breed,”regardless of whichcompany offers it? 1-208 www.bookfiesta4u.com
  • 209. The Buying Decision Process Buying Roles Initiator Influencer Decider Buyer User Buying behavior 1-209 www.bookfiesta4u.com
  • 210. Table 7.3: Four Types of Buying Behavior High Involvement Low InvolvementSignificant Differences Complex buying Variety- Variety-seekingbetween Brands behavior buying behaviorFew Differences between Dissonance- Dissonance-reducing Habitual buyingBrands buying behavior behavior 1-210 www.bookfiesta4u.com
  • 211. The Buying Decision Process Complex Buying Behavior Dissonance- Dissonance-Reducing Buyer Behavior Habitual Buying Behavior Variety- Variety-Seeking Buying Behavior 1-211 www.bookfiesta4u.com
  • 212. Stages in the Buying Decision ProcessHow marketers learn about the stages: Introspective method Retrospective method Prospective method Prescriptive methodUnderstanding by mapping the customer’s Consumption system Customer activity cycle Customer scenarioMetamarketMetamediaries 1-212 www.bookfiesta4u.com
  • 213. The Edmunds.com home page shows the variety ofservices this Web company offers those shoppingfor a car. 1-213 www.bookfiesta4u.com
  • 214. Stages of the Buying Decision ProcessProblem recognitionInformation search Personal sources Figure 7.4: Commercial sources Five-Stage Model of the Public sources Consumer Buying Experiential sources Process 1-214 www.bookfiesta4u.com
  • 215. Figure 7.5: Successive Sets Involved in Customer Decision Making 1-215 www.bookfiesta4u.com
  • 216. The Buying Decision Process Evaluation of Alternatives Potential Attributes of interest Cameras Hotels Mouthwash Tires Brand beliefs Brand image 1-216 www.bookfiesta4u.com
  • 217. Table 7.4: A Consumer’s Brand Beliefs about ComputersComputer Attribute Memory Graphics Size and Capacity Capability Weight Price A 10 8 6 4 B 8 9 8 3 C 6 8 10 5 D 4 3 7 8 1-217 www.bookfiesta4u.com
  • 218. The Buying Decision Process Strategies designed to stimulate interest in a computer Redesign the computer Alter beliefs about the brand Alter beliefs about competitors’ brands Alter the importance weights Call attention to neglected attributes Shift the buyer’s ideas 1-218 www.bookfiesta4u.com
  • 219. The Buying Decision Process Purchase Decision Figure 7.6: Steps Between Evaluation of Alternatives and a purchase decision 1-219 www.bookfiesta4u.com
  • 220. The Buying Decision Process Informediaries Consumer Reports Zagats Unanticipated situational factors Perceived risk Brand decision Vendor decision Quantity decision Timing decision Payment- Payment-method decision 1-220 www.bookfiesta4u.com
  • 221. The Buying Decision Process Postpurchase Behavior Postpurchase Satisfaction Disappointed Satisfied Delighted Postpurchase Actions Postpurchase Use and Disposal 1-221 www.bookfiesta4u.com
  • 222. Figure 7.7: How Customers Dispose of Products 1-222 www.bookfiesta4u.com
  • 223. The Buying Decision Process Other Models of the Buying Decision Process Health Model Stages of Change Model Precontemplation Contemplation Preparation Action Maintenance Customer Activity Cycle Model Pre, during and post phases 1-223 www.bookfiesta4u.com
  • 224. Figure 7.8:Activity cyclefor IBMcustomers inthe globalelectronicnetworkingcapabilitymarket space 1-224 www.bookfiesta4u.com
  • 225. Figure 7.9:Value addsfor IBMcustomers inthe globalelectronicnetworkingcapabilitymarket space 1-225 www.bookfiesta4u.com
  • 226. Chapter 8Analyzing Business Marketsand Business BuyingBehaviorby PowerPoint by Milton M. Pressley University of New Orleans 1-226 www.bookfiesta4u.com
  • 227. Kotler onMarketingMany businesses are wisely turning their suppliers and distributors into valued partners. 1-227 www.bookfiesta4u.com
  • 228. Chapter ObjectivesIn this chapter, we focus on six questions: What is the business market, and how does it differ from the consumer market? What buying situations do organizational buyers face? Who participates in the business buying process? What are the major influences on organizational buyers? How do business buyers make their decisions? How do institutions and government agencies do their buying? 1-228 www.bookfiesta4u.com
  • 229. What is Organizational Buying? Organizational buyingThe business market versus the consumermarket Business market Fewer buyers Larger buyers Close supplier-customer relationship supplier- Geographically concentrated buyers 1-229 www.bookfiesta4u.com
  • 230. What is Organizational Buying? Derived demand Inelastic demand Fluctuating demand Professional purchasing 1-230 www.bookfiesta4u.com
  • 231. Blue Shield of California’s mylifepath 1-231 www.bookfiesta4u.com
  • 232. What is Organizational Buying? Several buying influences Multiple sales calls Directed purchasing Reciprocity Leasing 1-232 www.bookfiesta4u.com
  • 233. If you were tasked with marketing aproduct or service to an organization,would you attempt to initially contact thepurchasing department, or potential department,users of your company’s offerings? Why?Would the product youwere selling make adifference? Why? 1-233 www.bookfiesta4u.com
  • 234. What is Organizational Buying? Buying Situations Straight rebuy Modified rebuy New Task Systems Buying and Selling Systems buying Turnkey solution Systems selling 1-234 www.bookfiesta4u.com
  • 235. What are some of the benefits to anorganization that can be derivedfrom a single source solution, or a solution,systems buying arrangement with aprime contractor? What are some ofthe potential pitfalls? Whatcan the company do toprotect itself fromthese hazards? 1-235 www.bookfiesta4u.com
  • 236. Participants in the Business Buying Process The Buying Center Initiators Users Influencers Deciders Approvers Buyers Gatekeepers Key buying influencers Multilevel in-depth selling in- 1-236 www.bookfiesta4u.com
  • 237. Figure 8-1: Major Influences on Industrial Buying Behavior 1-237 www.bookfiesta4u.com
  • 238. Major Influences on Buying DecisionsEnvironmental FactorsOrganizational Factors Purchasing- Purchasing-Department Upgrading Cross- Cross-Functional Roles Centralized Purchasing Decentralized Purchasing of Small-Ticket Small- Items Internet Purchasing 1-238 www.bookfiesta4u.com
  • 239. The e-hub Plastics.com home page offers buyers and e-sellers of plastics a marketplace plus news andinformation 1-239 www.bookfiesta4u.com
  • 240. Covisint’s Web site offers both services andinformation 1-240 www.bookfiesta4u.com
  • 241. Major Influences on Buying Decisions Other Organizational Factors Long- Long-Term Contracts Vendor- Vendor-managed inventory Continuous replenishment programs Purchasing- Purchasing-Performance Evaluation and Buyers’ Professional Development Improved Supply Chain Management Lean Production Just-in- Just-in-time 1-241 www.bookfiesta4u.com
  • 242. Major Influences on Buying DecisionsInterpersonal and Individual FactorsCultural Factors France Germany Japan Korea Latin America 1-242 www.bookfiesta4u.com
  • 243. The Purchasing/Procurement Process Incentive to purchaseThree Company Purchasing Orientations Buying Orientation Commoditization Multisourcing Procurement Orientation Materials requirement planning (MRP) Supply Chain Management Orientation 1-243 www.bookfiesta4u.com
  • 244. The Purchasing/Procurement ProcessTypes of Purchasing Processes Routine products Leverage products Strategic products Bottleneck products 1-244 www.bookfiesta4u.com
  • 245. The Purchasing/Procurement Process Stages in the Buying Process Problem Recognition General Need Description and Product Specification Product value analysis Supplier Search Vertical hubs Functional hubs Direct external links to major suppliers Buying alliances Company buying sites Request for proposals (RFPs) 1-245 www.bookfiesta4u.com
  • 246. Table 8.1: Buygrid Framework: Major Stages (Buyphases) of theIndustrial Buying Process in Relation to Major Buying Situations (Buyclasses) Buyclasses New Modified Straight Task Rebuy Rebuy 1. Problem recognition Yes Maybe No 2. General need description Yes Maybe No 3. Product specification Yes Yes YesBuyphases 4. Supplier search Yes Maybe No 5. Proposal solicitation Yes Maybe No 6. Supplier selection Yes Maybe No 7. Order-routine specification Order- Yes Maybe No 8. Performance review Yes Yes Yes 1-246 www.bookfiesta4u.com
  • 247. The Purchasing/Procurement ProcessGeneral Need Description andProduct Specification Product value analysisSupplier Search Vertical hubs Functional hubs Direct extranet links to major suppliers Buying alliances Company buying sites Request for proposals (RFPs) 1-247 www.bookfiesta4u.com
  • 248. The Purchasing/ Procurement ProcessProposal SolicitationSupplier Selection 1-248 www.bookfiesta4u.com
  • 249. Table 8-2: An Example of Vendor AnalysisAttributes Rating Scale Importance Poor Fair Good Excellent Weights (1) (2) (3) (4)Price .30 xSupplier reputation .20 xProduct reliability .30 xService reliability .10 xSupplier Flexibility .10 xTotal score: .30(4) + .20(3) + .30(4) + .10(2) + .10(3) = 3.5 1-249 www.bookfiesta4u.com
  • 250. The Purchasing/ Procurement Process Customer value assessment Routine- Routine-order products Procedural- Procedural-problem products Political- Political-problem productsOrder-Order-Routine Specification Blanket contract Stockless purchase plansPerformance Review Buyflow map 1-250 www.bookfiesta4u.com
  • 251. Figure 8-2: Major Influences on Industrial Buying Behavior 1-251 www.bookfiesta4u.com
  • 252. Institutional andGovernment MarketsInstitutional market 1-252 www.bookfiesta4u.com
  • 253. Chapter 9Dealing with theCompetitionby PowerPoint by Milton M. Pressley University of New Orleans 1-253 www.bookfiesta4u.com
  • 254. Kotler onMarketingPoor firms ignore their competitors; average firms copy their competitors; winning firms lead their competitors. 1-254 www.bookfiesta4u.com
  • 255. Chapter ObjectivesIn this chapter, we focus on five thingscompanies need to know about theircompetition: Who the primary competitors are How to ascertain their strategies, objectives, strengths and weaknesses, and reaction patterns How to design a competitive intelligence system Whether to position as market leader, challenger, follower, or nicher How to balance a customer versus competitor orientation 1-255 www.bookfiesta4u.com
  • 256. Competitive Forces Figure 9-1: Five Forces Determining Segment Structural AttractivenessThreat of:1. intense segment rivalry2. new entrants3. substitute products buyers’ growing bargaining power suppliers’ growing bargaining power 1-256 www.bookfiesta4u.com
  • 257. Figure 9-2: Barriers and Profitability 1-257 www.bookfiesta4u.com
  • 258. GetThere.com, launched as the Internet Travel Networkin 1995, was the first company to book trips over theWeb 1-258 www.bookfiesta4u.com
  • 259. Identifying CompetitorsIndustry Concept of Competition Industry Number of Sellers and Degree of Differentiation Pure monopoly Oligopoly Pure oligopoly Differentiated oligopoly Monopolistic competition Pure competition 1-259 www.bookfiesta4u.com
  • 260. Identifying Competitors Entry, Mobility, Exit Barriers Entry barriers Mobility barriers Exit barriers Cost Structure Degree of Vertical Integration Vertical integration Degree of GlobalizationMarket Concept of Competition 1-260 www.bookfiesta4u.com
  • 261. Analyzing CompetitorsObjectives Figure 9-5: A Competitor’s Expansion Plans 1-261 www.bookfiesta4u.com
  • 262. Analyzing CompetitorsStrengths and Weaknesses Dominant Strong Favorable Tenable Weak Nonviable 1-262 www.bookfiesta4u.com
  • 263. Table 9-1: Customer’s Ratings of Competitors on Key Success Factors Customer Product Product Technical Selling Awareness Quality Availability Assistance StaffCompetitor A E E P P GCompetitor B G G E G ECompetitor C F P G F FNote: E = excellent, G = good, F = fair, P = poor. 1-263 www.bookfiesta4u.com
  • 264. Analyzing Competitors Three Variables to Monitor When Analyzing Competitors: Share of market Share of mind Share of heart 1-264 www.bookfiesta4u.com
  • 265. Table 9-2: Market Share, Mind Share, and Heart Share Market Share Mind Share Heart Share 2000 2001 2002 2000 2001 2002 2000 2001 2002Competitor A 50% 47% 44% 60% 58% 54% 45% 42% 39%Competitor B 30 34 37 30 31 35 44 47 53Competitor C 20 19 19 10 11 11 11 11 8 1-265 www.bookfiesta4u.com
  • 266. Analyzing CompetitorsReaction Patterns1. If competitors are nearly identical and make their living the same way, then their competitive equilibrium is unstable.2. If a single major factor is the critical factor, then the competitive equilibrium is unstable.3. If multiple factors may be critical factors, then it is possible for each competitor to have some advantage and be differentially attractive to some customers. The more factors that may provide an advantage, the more competitors who can coexist. Competitors all have their segment, defined by the preference for the factor trade-offs trade- they offer.4. The fewer the number of critical competitive variables, the fewer the number of competitors.5. A ratio of 2 to 1 in market share between any two competitors seems to be the equilibrium point at which it is neither practical nor advantageous for either competitor to increase or decrease share. 1-266 www.bookfiesta4u.com
  • 267. For many years, the major national broadcasttelevision networks shared 100% of the market, andtraded market share back and forth periodically.During the last two decades, the emergence ofnationally available cable programming, and the riseof rival broadcast networks like Fox, UPN, and WBhave increasingly cut into the market share of the“big three.” What steps would yourecommend that the “big three”networks take to stop or slowthis loss of market share? 1-267 www.bookfiesta4u.com
  • 268. Designing The Competitive Intelligence SystemFour Main Steps Setting Up the System Collecting the Data Evaluating and Analyzing the Data Disseminating Information and Responding 1-268 www.bookfiesta4u.com
  • 269. Designing The Competitive Intelligence SystemSelecting Competitors Customer Value Analysis (CVA) Customer Value = Customer Benefits – Customer Costs Customer Benefits = product benefits, service benefits, personnel benefits, image benefits Customer Costs = purchase price, acquisition costs, usage costs, maintenance costs, ownership costs, disposal costs 1-269 www.bookfiesta4u.com
  • 270. What do you see as the potential impact of theavailability of information via the Internet on thedesign of competitive intelligence systems? Whatproblems could be caused by the inability of theaverage computer user to verify the accuracy ofdata from the web? What impact will emergingdatabase technologies liketext-text-based data mining havein competitive intelligencesystems? 1-270 www.bookfiesta4u.com
  • 271. Table 9-3: Customer Cost of Three Brands A B CPrice $100 $ 90 $ 80Acquisition costs 15 25 30Usage costs 4 7 10Maintenance 2 3 7costsOwnership costs 3 3 5Disposal costs 6 5 8Total costs $130 $135 $140 1-271 www.bookfiesta4u.com
  • 272. Designing The Competitive Intelligence SystemMajor Steps in Customer Value Analysis: 1. Identify the major attributes customers value. 2. Assess the quantitative importance of the different attributes. 3. Assess the companies’ and competitors’ performances on the different customer values against their rated importance. 4. Examine how customers in a specific segment rate the company’s performance against a specific major competitor on an attribute-by- attribute-by-attribute basis. 5. Monitor customer values over time. 1-272 www.bookfiesta4u.com
  • 273. Designing The Competitive Intelligence System Classes of Competitors Strong versus Weak Close versus Distant “Good” versus “Bad” 1-273 www.bookfiesta4u.com
  • 274. Designing Competitive Strategies Figure 9-6: Hypothetical Market Structure 1-274 www.bookfiesta4u.com
  • 275. Designing Competitive StrategiesMarket-Market-Leader Strategies Expanding the Total Market New Users Market- Market-penetration strategy New- New-market segment strategy Geographical- Geographical-expansion strategy New Uses More Usage Defending Market Share 1-275 www.bookfiesta4u.com
  • 276. IGT’s home page focuses on customer service 1-276 www.bookfiesta4u.com
  • 277. Designing Competitive Strategies Defense Strategies Position Defense Flank Defense Preemptive Defense Counteroffensive Defense Mobile Defense Market broadening Principle of the objective Principle of mass Market diversification Contraction Defense Planned contraction (Strategic withdrawal) 1-277 www.bookfiesta4u.com
  • 278. Designing Competitive StrategiesTwo Case Studies:Procter & Gambleand Caterpillar Proctor & Gamble Customer knowledge Long- Long-term outlook Product innovation Quality strategy Line- Line-extension strategy 1-278 www.bookfiesta4u.com
  • 279. Designing Competitive Strategies Brand- Brand-extension strategy Multibrand strategy Heavy advertising and media pioneer Aggressive sales force Effective sales promotion Competitive toughness Manufacturing efficiency and cost cutting Brand- Brand-management system 1-279 www.bookfiesta4u.com
  • 280. Designing Competitive StrategiesMarket-Market-Challenger Strategies Defining the Strategic Objective and Opponent(s) It can attack the market leader It can attack firms of its own size that are not doing the job and are underfinanced It can attack small local and regional firmsChoosing a General Attack Strategy 1-280 www.bookfiesta4u.com
  • 281. Figure 9-10: Attack Strategies 1-281 www.bookfiesta4u.com
  • 282. Swedish firm SCA’s www.libero.se site creates a dialogue withexpectant and new parents and even allows users to sendpictures, brief stories, and child wish list to family all over theworld. 1-282 www.bookfiesta4u.com
  • 283. Designing Competitive Strategies Choosing a Specific Attack Strategy Price- Price-discount Lower price goods Prestige goods Product proliferation Product innovation Improved services Distribution innovation Manufacturing cost reduction Intensive advertising promotion 1-283 www.bookfiesta4u.com
  • 284. Designing Competitive StrategiesMarket-Market-Follower Strategies Innovative imitation (Product imitation) Product innovation Four Broad Strategies: Counterfeiter Cloner Imitator Adapter 1-284 www.bookfiesta4u.com
  • 285. Designing Competitive StrategiesMarket-Market-Nicher Strategies High margin versus high volume Nicher Specialist Roles End- End-user specialist Product- Product-feature Value- Value-added reseller specialist Vertical- Vertical-level specialist Job- Job-shop specialist Customer- Customer-size specialist Quality- Quality-price specialist Specific- Specific-customer specialist Service specialist Geographic specialist Channel specialist Product or product-line product- specialist 1-285 www.bookfiesta4u.com
  • 286. Balancing Customer andCompetitor Orientations Competitor- Competitor-centered company Customer- Customer-centered company 1-286 www.bookfiesta4u.com
  • 287. Chapter 10Identifying MarketSegments and SelectingTarget Marketsby PowerPoint by Milton M. Pressley University of New Orleans 1-287 www.bookfiesta4u.com
  • 288. Kotler onMarketing“Don’t buymarket share.Figure outhow to earnit.” 1-288 www.bookfiesta4u.com
  • 289. Chapter ObjectivesWe focus on the following questions: How can a company identify the segments that make up a market? What criteria can a company use to choose the most attractive target markets? 1-289 www.bookfiesta4u.com
  • 290. Target MarketingTarget marketing requires marketers totake three major steps: Identify and profile distinct groups of buyers who differ in their needs and preferences (market segmentation). Select one or more market segments to enter (market targeting). For each target segment, establish and communicate the key distinctive benefit(s) of the company’s market offering (market positioning). 1-290 www.bookfiesta4u.com
  • 291. Levels and Patterns of Market SegmentationLevels of Market Segmentation Mass marketing Micromarketing Segment marketing Market segment Sector Flexible market offering Naked solution Discretionary options 1-291 www.bookfiesta4u.com
  • 292. Levels and Patterns ofMarket SegmentationNiche Marketing NicheLocal MarketingIndividual Customer Marketing Mass- Mass-customization Choiceboard Customerization Segments Individuals 1-292 www.bookfiesta4u.com
  • 293. Levels and Patterns of Market SegmentationPatterns for Market Segmentation Preference segments Homogeneous preferences Diffused preferences Clustered preferences Natural market segments Concentrated marketing 1-293 www.bookfiesta4u.com
  • 294. Levels and Patterns of Market SegmentationMarket Segmentation Procedure Needs- Needs-based market segmentation approach Market partitioning Brand- Brand-dominant hierarchy Nation- Nation-dominant hierarchy 1-294 www.bookfiesta4u.com
  • 295. ChemStation’s Web site offers customers solutionsto their problems, not just products. 1-295 www.bookfiesta4u.com
  • 296. Table 10-1: Steps in Segmentation Process Description1. Needs-Based Needs- Group customers into segments based on similarSegmentation needs and benefits sought by customer in solving a particular consumption problem.2. Segment For each needs-based segment, determine which needs-Identification demographics, lifestyles, and usage behaviors make the segment distinct and identifiable (actionable).3. Segment Using predetermined segment attractivenessAttractiveness criteria (such as market growth, competitive intensity, and market access), determine the overall attractiveness of each segment.4. Segment Profitability Determine segment profitability.5. Segment Positioning For each segment, create a “value proposition” and product-price positioning strategy based on product- that segment’s unique customer needs and characteristics. See text for complete table 1-296 www.bookfiesta4u.com
  • 297. Levels and Patterns of Market SegmentationEffective Segmentation Measurable Substantial Accessible Differentiable Actionable 1-297 www.bookfiesta4u.com
  • 298. Segmenting Consumer and Business MarketsBases for SegmentingConsumer Markets 1-298 www.bookfiesta4u.com
  • 299. Table 10-2: Major Segmentation Variables for Consumer MarketsGeographicRegion Pacific, Mountain, West North Central, West South Central, East North Central, East South Central, South Atlantic, Middle Atlantic, New EnglandCity or metro size Under 5,000; 5,000-20,000; 20,000-50,000; 50,000- 5,000- 20,000- 50,000- 100,000; 100,000-250,000; 250,000-500,000; 100,000- 250,000- 500,000- 500,000-1,000,000; 1,000,000-4,000,000; 4,000,000 1,000,000- or overDensity Urban, suburban, ruralClimate Northern southernDemographicAge Under 6, 6-11, 12-19, 20-34, 35-49, 50-64, 65+ 6- 12- 20- 35- 50-Family size 1-2, 3-4, 5+ 3- See text for complete table 1-299 www.bookfiesta4u.com
  • 300. Segmenting Consumer and Business MarketsBases for Segmenting Consumer Markets Geographic Segmentation Demographic Segmentation Age and Life-Cycle Life- Stage 1-300 www.bookfiesta4u.com
  • 301. An easily identifiable demographic groupwhich is often targeted by marketers iscollege students. Do you think this isinfluenced more by a common economicstatus of the target group, geographicconcentration of a specificage group, or someother factor(s)? 1-301 www.bookfiesta4u.com
  • 302. Sega’s homepage: Not just games 1-302 www.bookfiesta4u.com
  • 303. Segmenting Consumer and Business Markets Life Stage Gender Income Generation The Depression Cohort The World War II Cohort The Post-War Cohort Post- Leading- Leading-Edge Baby Boomer Cohort Trailing- Trailing-Edge Baby Boomer Cohort Generation X Cohort The Generation Y Cohort 1-303 www.bookfiesta4u.com
  • 304. Segmenting Consumer and Business Markets Lifestage Analytic Matrix Lifestages Physiographics Emotional effects Socioeconomics Social Class Psychographic Segmentation Lifestyle Time- Time-constrained multitasking Money- Money-constrained 1-304 www.bookfiesta4u.com
  • 305. Improvements in both the average standardof living and in health care have hadprofound effects in the industrialized worldduring the last two generations. Other thanan increase in the average life expectancy forboth men and women, what effects has thistrend toward longer andhealthier lives in general hadon the traditional life stageassumptions that marketersmake? 1-305 www.bookfiesta4u.com
  • 306. Segmenting Consumer and Business Markets Personality “Brand personality” examples: Sincere Exciting Competent Sophisticated Rugged Values Core values 1-306 www.bookfiesta4u.com
  • 307. Segmenting Consumer and Business Markets Behavioral Segmentation Occasions Critical life events or transitions Benefits Mobil has identified five segments and their sizes Road Warriors 16% Generation F 27% True Blues 16% Home Bodies 21% Price Shoppers 20% 1-307 www.bookfiesta4u.com
  • 308. Segmenting Consumer and Business Markets User Status Usage Rate Loyalty Status Hard- Hard-core loyals Split loyals Shifting loyals Switchers Buyer- Buyer-Readiness Stage Attitude 1-308 www.bookfiesta4u.com
  • 309. Segmenting Consumer and Business Markets Multi- Multi-Attribute Segmentation (Geoclustering) Four PRIZM clusters American Dreams Rural Industria Gray Power Country Squires Targeting Multiple Segments 1-309 www.bookfiesta4u.com
  • 310. Segmenting Consumer and Business MarketsBases For SegmentingBusiness Markets 1-310 www.bookfiesta4u.com
  • 311. Table 10-3: Major Segmentation Variables for Business MarketsDemographic1. Industry: Which industries should we serve?2. Company size: What size companies should we serve?3. Location: What geographical areas should we serve?Operating Variables4. Technology: What customer technologies should we focus on?5. User or nonuser status: Should we serve heavy users, medium users, light users, or nonusers?6. Customer capabilities: Should we serve customers needing many or few services?Purchasing Approaches7. Purchasing-function organization: Should we serve companies with highly centralized or decentralized purchasing organizations?8. Power structure: Should we serve companies that are engineering dominated, financially dominated, and so on? See text for complete table 1-311 www.bookfiesta4u.com
  • 312. Segmenting Consumer and Business Markets Business buyers seek different benefit bundles based on their stage in the purchase decision process. 1. First-time prospects First- 2. Novices 3. Sophisticates 1-312 www.bookfiesta4u.com
  • 313. Segmenting Consumer and Business Markets Rangan, Moriarty, and Swartz studied a mature commodity market, steel stamping, and found four business segments 1. Program buyers 2. Relationship buyers 3. Transaction buyers 4. Bargain hunters 1-313 www.bookfiesta4u.com
  • 314. Segmenting Consumer and Business Markets Rackman and Vincentis proposed a segmentation scheme that classifies business buyers into three groups Price- Price-oriented customers (transactional selling) Solution- Solution-oriented customers (consultative selling) Strategic- Strategic-value customers (enterprise selling) 1-314 www.bookfiesta4u.com
  • 315. Market TargetingEvaluating and Selecting the Market Segments Single- Single-Segment Concentration Selective Specialization Product Specialization Market Specialization Full Market Coverage Undifferentiated marketing Differentiated marketing 1-315 www.bookfiesta4u.com
  • 316. Market TargetingHigher costs using differentiatedmarketing include: Product modification cost Manufacturing cost Administrative cost Inventory cost Promotion cost 1-316 www.bookfiesta4u.com
  • 317. Market TargetingAdditional Considerations Ethical Choice of Market Targets Supersegment Segment-By- Segment-By-Segment Invasion Plans 1-317 www.bookfiesta4u.com
  • 318. Figure 10-3: Segment-by-Segment Invasion Plan 1-318 www.bookfiesta4u.com
  • 319. Market TargetingIntersegment Cooperation 1-319 www.bookfiesta4u.com
  • 320. Chapter 11Positioning and Differentiatingthe Market Offering Throughthe Product Life Cycleby PowerPoint by Milton M. Pressley University of New Orleans www.bookfiesta4u.blogspot.com 11-320
  • 321. Kotler onMarketingWatch the productlife cycle; but moreimportant, watch themarket life cycle. www.bookfiesta4u.blogspot.com 11-321
  • 322. Chapter ObjectivesIn this chapter, we focus on the followingquestions: How can the firm choose and communicate an effective positioning in the market? What are the major differentiating attributes available to firms? What marketing strategies are appropriate at each stage of the product life cycle? What marketing strategies are appropriate at each stage of the market’s evolution? www.bookfiesta4u.blogspot.com 11-322
  • 323. Developing and Communicating a Positioning Strategy Positioning Value position www.bookfiesta4u.blogspot.com 11-323
  • 324. Table 11.1: Examples of Value Propositions Demand States and Marketing TasksCompanyand Target ValueProduct Customers Benefits Price PropositionPerdue Quality- Quality- Tenderness 10% More tender(chicken) conscious premium golden chicken at consumers of a moderate chicken premium priceVolvo Safety- Safety- Durability 20% The safest, most(station conscious and safety premium durable wagon inwagon) “upscale” which your family families can rideDomino’s Convenience- Convenience- Delivery 15% A good hot pizza,(pizza) minded pizza speed and premium delivered to your lovers good quality door door within 30 minutes of ordering, at a moderate price www.bookfiesta4u.blogspot.com 11-324
  • 325. Developing and Communicating a Positioning Strategy Positioning According to Ries and Trout Strengthen own current position Grab an unoccupied position De- De-position Re- Re-position Product ladders Positioning According to Treacy and Wiersema Value disciplines Product leader Operationally excellent firm Customer intimate firm www.bookfiesta4u.blogspot.com 11-325
  • 326. Developing and Communicating a Positioning Strategy Treacy and Wiersema propose that a business should follow four rules for success 1. Become best at one of the three value disciplines. 2. Achieve an adequate performance level in the other two disciplines. 3. Keep improving one’s superior position in the chosen discipline so as not to lose out to a competitor. 4. Keep becoming more adequate in the other two disciplines, because competitors keep raising customers’ expectations. www.bookfiesta4u.blogspot.com 11-326
  • 327. Developing and Communicating a Positioning Strategy Positioning: How many ideas to promote? Unique selling proposition Four major positioning errors 1. Underpositioning 2. Overpositioning 3. Confused positioning 4. Doubtful positioning www.bookfiesta4u.blogspot.com 11-327
  • 328. Can you think of any companiesthat market the same product orservice offering to multiple segmentsusing different strategies? Are thedifferent segments beingoffered different valuepropositions? www.bookfiesta4u.blogspot.com 11-328
  • 329. Figure 11.1: Perceptual Map www.bookfiesta4u.blogspot.com 11-329
  • 330. Developing and Communicating a Positioning Strategy Theme park’s positioning possibilities: Attribute positioning Benefit positioning Use or application positioning User positioning Competitor positioning Product category positioning Quality or price positioning Which Positioning to Promote? www.bookfiesta4u.blogspot.com 11-330
  • 331. Table 11.2: Method for Competitive- Advantage Selection (1) (2) (3) (4) (5) Importance of Improving AffordabilityCompetitive Company Competitor Standing and SpeedAdvantage Standing Standing (H-M-L)* (H- (H-M-L) (H-Technology 8 8 L LCost 6 8 H MQuality 8 6 L LService 4 3 H HH=high, M=medium, L=low See text for complete table www.bookfiesta4u.blogspot.com 11-331
  • 332. Adding Further Differentiation Differentiation Differentiation criteria: Important Distinctive Superior Preemptive Affordable Profitable www.bookfiesta4u.blogspot.com 11-332
  • 333. Adding Further Differentiation Exceed customer expectations with a three- three-step process 1. Defining the customer value model 2. Building the customer value hierarchy Basic Expected Desired Unanticipated 3. Deciding on the customer value package www.bookfiesta4u.blogspot.com 11-333
  • 334. Differentiation ToolsFigure 11.2:The BCGCompetitiveAdvantageMatrix www.bookfiesta4u.blogspot.com 11-334
  • 335. Table 11.3: Differentiation VariablesProduct Services Personnel Channel ImageForm Ordering Competence Coverage Symbols easeFeatures Delivery Courtesy Expertise MediaPerformance Installation Credibility Performance AtmosphereConformance Customer Reliability Events trainingDurability Customer Responsive consulting ness See text for complete table www.bookfiesta4u.blogspot.com 11-335
  • 336. Differentiation ToolsProduct Differentiation Form Features www.bookfiesta4u.blogspot.com 11-336
  • 337. Table 11.4: Measuring Customer Effectiveness Value Company Cost Customer Value Customer Value/Customer CostFeature (a) (b) (c=b/a)Rear-Rear-window $100 $200 2defrostingCruise control 600 600 1Automatic 800 2,400 3transmission www.bookfiesta4u.blogspot.com 11-337
  • 338. Differentiation Tools Performance Quality Conformance Quality Durability Reliability Reparability Style Design: The Integrating ForceServices Differentiation Ordering Ease www.bookfiesta4u.blogspot.com 11-338
  • 339. The home page for Peapod, the nation’slargest online grocer www.bookfiesta4u.blogspot.com 11-339
  • 340. Differentiation ToolsDelivery Quick response systemInstallationCustomer TrainingCustomerConsultingMaintenanceand Repair HP’s online support page www.bookfiesta4u.blogspot.com 11-340
  • 341. Many e-commerce ventures fail because e-of distribution problems in the so-called so-“last mile” (the local distribution portionof shipping of online purchases). Can amarketing plan help offsetsome of these potentialpitfalls? www.bookfiesta4u.blogspot.com 11-341
  • 342. Differentiation Tools Miscellaneous ServicesPersonnel Differentiation Competence Courtesy Creditability Reliability Responsiveness Communication www.bookfiesta4u.blogspot.com 11-342
  • 343. Differentiation ToolsChannel DifferentiationImage Differentiation Identity Image Symbols, Colors, Slogans, Special Attributes Physical plant Events and Sponsorship Using Multiple Image-Building Techniques Image- www.bookfiesta4u.blogspot.com 11-343
  • 344. Which differentiation tool would bemost useful for a dot.com startup?Why? www.bookfiesta4u.blogspot.com 11-344
  • 345. Product Life-Cycle Marketing Strategies To say that a product has a life cycle asserts four things 1. Products have a limited life. 2. Product sales pass through distance stages, each posing different challenges, opportunities, and problems to the seller. 3. Profits rise and fall at different stages of the product life cycle. 4. Products require different marketing, financial, manufacturing, purchasing, and human resource strategies in each life-cycle stage. life- www.bookfiesta4u.blogspot.com 11-345
  • 346. Product Life-Cycle Marketing Strategies Figure 11.4: Cost Product Life-Cycle Patterns www.bookfiesta4u.blogspot.com 11-346
  • 347. Product Life-Cycle Marketing Strategies Figure 11.5: Style, Fashion, and Fad Life Cycles www.bookfiesta4u.blogspot.com 11-347
  • 348. Product Life-Cycle Marketing Strategies Marketing Strategies: Introduction Stage The Pioneer Advantage Inventor Product pioneer Market pioneer Figure 11.6: Long-Range Product Market Expansion Strategy (P = Product; M = Market) www.bookfiesta4u.blogspot.com 11-348
  • 349. Product Life-Cycle Marketing Strategies Marketing Strategies: Growth Stage Improve product quality and add new product features and improved styling Add new models and flanker products Enter new market segments Increase distribution coverage and enter new distribution channels Shift from product-awareness advertising to product- product- product-preference advertising Lower prices to attract next layer of price- price- sensitive buyers www.bookfiesta4u.blogspot.com 11-349
  • 350. Product Life-Cycle Marketing Strategies Marketing Strategies: Maturity Stage Market Modification Expand number of brand users by: 1. Converting nonusers 2. Entering new market segments 3. Winning competitors’ customers Convince current users to increase usage by: 1. Using the product on more occasions 2. Using more of the product on each occasion 3. Using the product in new ways www.bookfiesta4u.blogspot.com 11-350
  • 351. Product Life-Cycle Marketing Strategies Product modification Quality improvement Feature improvement Marketing- Marketing-Mix Modification Prices Distribution Advertising Sales promotion Personal selling Services www.bookfiesta4u.blogspot.com 11-351
  • 352. Product Life-Cycle Marketing Strategies Marketing Strategies: Decline Stage 1. Increase firm’s investment (to dominate the market and strengthen its competitive position) 2. Maintain the firm’s investment level until the uncertainties about the industry are resolved. 3. Decrease the firm’s investment level selectively by dropping unprofitable customer groups, while simultaneously strengthening the firm’s investment in lucrative niches 4. Harvesting (“milking”) the firm’s investment to recover cash quickly 5. Divesting the business quickly by disposing of its assets as advantageously as possible. www.bookfiesta4u.blogspot.com 11-352
  • 353. Product Life-Cycle Marketing Strategies Product Life-Cycle Concept: Critique Life- Market evolution www.bookfiesta4u.blogspot.com 11-353
  • 354. Table 11.5: Summary of Product Life-Cycle Characteristics, Objectives, and Strategies Introduction Growth MaturityCharacteristicsSales Low sales Rapidly rising Peak sales salesCosts High cost per Average cost per Low cost per customer customer customerProfits Negative Rising profits High profitsCustomers Few Growing Number Stable number beginning to decline See text for complete table www.bookfiesta4u.blogspot.com 11-354
  • 355. Market Evolution Diffused- Diffused-preference market options A single-niche strategy single- A multiple-niche strategy multiple- A mass-market strategy mass-Growth Market- Market-growth stage options Single- Single-niche strategy Mass- Mass-market strategy Multiple- Multiple-niche strategyMaturity www.bookfiesta4u.blogspot.com 11-355
  • 356. Market Evolution Decline An Example: The Paper-Towel Market Paper-Dynamics of Attribute Competition Customer expectations are progressive Approaches to discover new attributes: Customer- Customer-survey processes Intuitive processes Dialectical processes Needs- Needs-hierarchy process www.bookfiesta4u.blogspot.com 11-356
  • 357. Chapter 12Developing NewMarket Offeringsby PowerPoint by Milton M. Pressley University of New Orleans www.bookfiesta4u.blogspot.com 11-357
  • 358. Kotler onMarketingWho shouldultimately design theproduct? Thecustomer, of course. www.bookfiesta4u.blogspot.com 11-358
  • 359. Chapter ObjectivesIn this chapter, we focus on the followingquestions: What challenges does a company face in developing new products? What organizational structures are used to manage new-product development? new- What are the main stages in developing new products, and how can they be managed better? What factors affect the rate of diffusion and consumer adoption of newly launched products? www.bookfiesta4u.blogspot.com 11-359
  • 360. Developing New Market Offerings Six categories of new products1. New-to-the-world products2. New product lines3. Additions to existing product lines4. Improvements and revisions of existing products5. Repositioning6. Cost reductions www.bookfiesta4u.blogspot.com 11-360
  • 361. Challenges in New-Product Development Incremental innovation Disruptive technologiesWhy do new products fail? A high-level executive pushes a favorite idea high- through in spite of negative research findings. The idea is good, but the market size is overestimated. The product is not well designed. www.bookfiesta4u.blogspot.com 11-361
  • 362. Challenges in New-Product Development The product is incorrectly positioned in the market, not advertised effectively, or overpriced. The product fails to gain sufficient distribution coverage or support. Development costs are higher than expected. Competitors fight back harder than expected. www.bookfiesta4u.blogspot.com 11-362
  • 363. Challenges in New-Product DevelopmentFactors that tend to hinder new-product new-development Shortage of important ideas in certain areas Fragmented markets Social and governmental constraints Cost of development Capital shortages Faster required development time Shorter product life cycles www.bookfiesta4u.blogspot.com 11-363
  • 364. Organizational ArrangementsNew-New-product deployment requires specificcriteria – one company established thefollowing acceptance criteria The product can be introduced within five years The product has a market potential of at least $50 million and a 15 percent growth rate. The product would provide at least 30 percent return on sales and 40 percent on investment. The product would achieve technical or market leadership. www.bookfiesta4u.blogspot.com 11-364
  • 365. Organizational Arrangements Budgeting For New Product Development 3M’s approach: 15% rule Each promising idea gets an “executive champion” Expect some failures Golden Step awards handed out each year www.bookfiesta4u.blogspot.com 11-365
  • 366. 3M online: The 3M Innovation Network www.bookfiesta4u.blogspot.com 11-366
  • 367. Table 12.1 Finding One Successful New Product (Starting with 64 New Ideas) Number Pass Cost perStage of Ideas Ratio Product Idea Total Cost1. Idea screening 64 1:4 $ 1,000 $ 64,0002. Concept testing 16 1:2 20,000 320,0003. Product 8 1:2 200,000 1,600,000development4. Test marketing 4 1:2 500,000 2,000,0005. National launch 2 1:2 5,000,000 10,000,000 $5,721,000 $13,984,000 www.bookfiesta4u.blogspot.com 11-367
  • 368. Organizational Arrangements Organizing New-Product Development New- Product managers New- New-product managers High- High-level management committee New product department Venture teams www.bookfiesta4u.blogspot.com 11-368
  • 369. Organizational Arrangements Stage- Stage-gate system Gatekeepers make one of four decisions: Go Kill Hold Recycle www.bookfiesta4u.blogspot.com 11-369
  • 370. Managing the Development Process: Ideas Idea Generation Interacting with Others Sales representatives Intermediaries Product champion www.bookfiesta4u.blogspot.com 11-370
  • 371. Managing the Development Process: Ideas Techniques for stimulating creativity in individuals and groups Attribute listing Forced relationships Morphological analysis Reverse assumption analysis New contexts Mind- Mind-mapping www.bookfiesta4u.blogspot.com 11-371
  • 372. Managing the Development Process: Ideas Idea Screening Idea manager Idea committee Two types of errors in screening ideas DROP- DROP-error GO- GO-error www.bookfiesta4u.blogspot.com 11-372
  • 373. Some of the most notable “drop-errors” have “drop-come from the most recognizable names inAmerican business. Xerox saw the potentialof the copy machine, IBM and EastmanKodak did not. IBM thought the personalcomputer market would be miniscule.Can you think of any“drop-“drop-errors” that thecompany didn’t survive? www.bookfiesta4u.blogspot.com 11-373
  • 374. Table 12.2 Product-Idea Rating Device Relative Product Product Weight Score RatingProduct Success Requirements (a) (b) (c = a x b)Unique or superior product .40 .8 .32High performance to cost ratio .30 .6 .18High marketing dollar support .20 .7 .14Lack of strong competition .10 .5 .05Total 1.00 .69σσ .00- Rating scale: .00-.30 poor; .31-.60 fair; .61-.80 good. Minimum acceptance rate: .61 .31- .61- www.bookfiesta4u.blogspot.com 11-374
  • 375. Managing the DevelopmentProcess: Concept to Strategy Concept Development and Testing Product idea Product concept Concept development Category concept Product– Product–positioning map Brand concept www.bookfiesta4u.blogspot.com 11-375
  • 376. Figure 12.3:ProductandBrandPositioning www.bookfiesta4u.blogspot.com 11-376
  • 377. Sometimes a new product is developed, likethe felt-tip pen and the “walkman” style felt-personal music device. Consumers weren’tclamoring for either of these products beforethey came to market. Most people hadn’teven conceived of such an item. Carefulplanning developed marketsfor these new lines. Can youthink of more recentexamples? www.bookfiesta4u.blogspot.com 11-377
  • 378. Managing the DevelopmentProcess: Concept to Strategy Concept Testing Rapid prototyping Virtual reality Customer- Customer-driven engineering Questions to measure product dimensions Communicability and believability Need level Gap level Need- Need-gap score www.bookfiesta4u.blogspot.com 11-378
  • 379. Managing the DevelopmentProcess: Concept to Strategy Perceived value Purchase intention User targets, purchase occasions, purchasing frequency Conjoint Analysis Example: five design elements Three package designs Three brand names Three prices Possible Good Housekeeping seal Possible money-back guarantee money- www.bookfiesta4u.blogspot.com 11-379
  • 380. Managing theDevelopment Process: Concept to Strategy Marketing Strategy Business Analysis Estimating Total Sales www.bookfiesta4u.blogspot.com 11-380
  • 381. Managing the DevelopmentProcess: Concept to Strategy Survival- Survival-age distribution Estimating Cost and Profits www.bookfiesta4u.blogspot.com 11-381
  • 382. Table 12.3 Projected Five-Year-Cash-Flow Statement (in thousands of dollars) Year 0 Year 1 Year 2 Year 31. Sales revenue $ 0 $11,889 $15,381 $19,6542. Cost of goods sold 0 3,981 5,150 6,5813. Gross margin 0 7,908 10,231 13,0734. Development costs -3,500 0 0 05. Marketing costs 0 8,000 6,460 8,2556. Allocated overhead 0 1,189 1,538 1,965 See text for complete table www.bookfiesta4u.blogspot.com 11-382
  • 383. Managing the DevelopmentProcess: Concept to Strategy Break- Break-even analysis Risk analysis www.bookfiesta4u.blogspot.com 11-383
  • 384. Managing The Development Process: Development to Commercialization Product Development Quality Function Deployment (QFD) Customer attributes (CAs) Engineering attributes (EAs) Lands’ End Japan Web site www.bookfiesta4u.blogspot.com 11-384
  • 385. Managing The Development Process: Development to Commercialization Customer tests Alpha testing Beta testing Consumer preference measures Rank- Rank-order Paired- Paired-comparison Monadic- Monadic-rating www.bookfiesta4u.blogspot.com 11-385
  • 386. Managing The Development Process: Development to CommercializationMarket Testing Consumer- Consumer-Goods Market Testing Seeks to estimate four variables Trial First repeat Adoption Purchase frequency Sales wave research www.bookfiesta4u.blogspot.com 11-386
  • 387. Managing The Development Process: Development to Commercialization Simulated Test Marketing Controlled Test Marketing Test Markets How many test cities? Which cities? Length of test? What information? What action to take? Business- Business-Goods Market Testing www.bookfiesta4u.blogspot.com 11-387
  • 388. Managing The Development Process: Development to Commercialization Commercialization When (Timing) 1. First entry 2. Parallel entry Philips’ Pronto Web site 3. Late entry Where (Geographic Strategy) www.bookfiesta4u.blogspot.com 11-388
  • 389. Managing The Development Process: Development to Commercialization To Whom (Target-Market Prospects) (Target- How (Introductory Market Strategy) Critical path scheduling (CPS) The iMac, launched with a dramatic countdown campaign www.bookfiesta4u.blogspot.com 11-389
  • 390. The Consumer-Adoption Process Adoption Consumer- Consumer-adoption process Consumer- Consumer-loyalty process Mass- Mass-market approach Heavy- Heavy-usage target marketingStages in the Adoption Process Innovation Innovation diffusion process www.bookfiesta4u.blogspot.com 11-390
  • 391. The Consumer-Adoption Process Adopters of new products move through five stages Awareness Interest Evaluation Trial AdoptionFactors Influencing the Adoption Process Readiness to Try New Products and Personal Influence www.bookfiesta4u.blogspot.com 11-391
  • 392. Figure 12.7: Adopter Categorization on the Basis of Relative Time of Adoption of Innovation www.bookfiesta4u.blogspot.com 11-392
  • 393. The Consumer-Adoption Process Personal influenceCharacteristics of the Innovation Relative advantage Compatibility Complexity Divisibility CommunicabilityOrganizations’ Readiness to AdoptInnovations www.bookfiesta4u.blogspot.com 11-393
  • 394. Chapter 13Designing GlobalMarket Offeringsby PowerPoint by Milton M. Pressley University of New Orleans www.bookfiesta4u.blogspot.com 11-394
  • 395. Kotler onMarketingYour company doesnot belong inmarkets where itcannot be the best. www.bookfiesta4u.blogspot.com 11-395
  • 396. Chapter ObjectivesIn this chapter, we focus on the followingquestions: What factors should a company review before deciding to go abroad? How can companies evaluate and select foreign markets to enter? What are the major ways of entering a foreign market? To what extent must the company adapt its products and marketing program to each foreign country? How should the company manage and organize its international activities? www.bookfiesta4u.blogspot.com 11-396
  • 397. Competing on a Global Basis Global industry Global firm Figure 13.1: Major Decisions in International Marketing www.bookfiesta4u.blogspot.com 11-397
  • 398. Deciding Whether To Go Abroad Factors drawing companies into the international arena: Global firms offering better products or lower prices can attack the company’s domestic market. The company discovers that some foreign markets present higher profit opportunities than the domestic market. The company needs a larger customer base to achieve economies of scale. The company wants to reduce its dependence on any one market. The company’s customers are going abroad and need servicing. www.bookfiesta4u.blogspot.com 11-398
  • 399. Deciding Whether To Go Abroad Before going abroad, the company must weigh several risk: The company might not understand foreign customer preferences and fail to offer a competitively attractive product. The company might not understand the foreign country’s business culture or know how to deal effectively with foreign nationals. The company might underestimate foreign regulations and incur unexpected costs. The company might realize that it lacks managers with international experience. The foreign country might change its commercial laws, devalue its currency, or undergo a political revolution and expropriate property. www.bookfiesta4u.blogspot.com 11-399
  • 400. Table 13.1: Blunders in International MarketingHallmark cards failed when they were introduced in France. The Frenchdislike syrupy sentiment and prefer writing their own cards.Philips began to earn a profit in Japan only after it had reduced the size ofits coffeemakers to fit into smaller Japanese kitchens and its shavers to fitsmaller Japanese hands.Coca-Coca-Cola had to withdraw its two-liter bottle in Spain after discovering two-that few Spaniards owned refrigerators with large enough compartments toaccommodate it.General Foods’ Tang initially failed in France because it was positioned asa substitute for orange juice at breakfast. The French drink little orangejuice and almost none at breakfast.Kellogg’s Pop-Tarts failed in Britain because the percentage of British Pop-homes with toasters was significantly lower than in the United States andthe product was too sweet for British tastes. See text for complete table www.bookfiesta4u.blogspot.com 11-400
  • 401. In the early 20th century, the Trans-AtlanticTrans-cable allowed for the transmission ofphotographs in near real time. Still imageswent to press soon after news of events inEurope arrived here in the States. Are thereany emerging communication technologiestoday that show similarpotential? How can these beharnessed to improve acompany’s global offerings? www.bookfiesta4u.blogspot.com 11-401
  • 402. Deciding Which Markets to EnterHow many markets to enter Ayal and Zif contend that a company should enter fewer countries when: Market entry and market costs are high Product and communication costs are high Population and income size and growth are high in the initial countries chosen Dominant foreign firms can establish high barriers to entry www.bookfiesta4u.blogspot.com 11-402
  • 403. Deciding Which Markets to EnterRegional free trade zones The European Union NAFTA MERCOSUL APECEvaluating potential markets Psychic proximity www.bookfiesta4u.blogspot.com 11-403
  • 404. Regional free trade zones offer manypotential benefits to companies expandingtheir offerings abroad. Clearly definednational import/export policies are just onepotential benefit. Can you think of anyothers? What marketingchallenges will not be easedby such agreements? www.bookfiesta4u.blogspot.com 11-404
  • 405. Deciding How toEnter the Market Figure 13.2: Five Modes of Entry into Foreign Markets www.bookfiesta4u.blogspot.com 11-405
  • 406. Deciding How to Enter the MarketIndirect and direct export Occasional exporting Active exporting Indirect exporting Domestic- Domestic-based export merchants Domestic- Domestic-based export agents Cooperative organizations Export- Export-management companies www.bookfiesta4u.blogspot.com 11-406
  • 407. Deciding How to Enter the MarketCompanies can carry on directexporting in several ways Domestic- Domestic-based export department or division Overseas sales branch or subsidiary Traveling export sales representatives Foreign- Foreign-based distributors or agents www.bookfiesta4u.blogspot.com 11-407
  • 408. Deciding How to Enter the MarketLicensing Management contracts Contract manufacturing Franchising www.bookfiesta4u.blogspot.com 11-408
  • 409. Deciding How to Enter the MarketJoint venturesDirect investmentThe Internationalization Process Johanson and Wiedersheim-Paul identified Wiedersheim- four stages in the internationalization process: No regular export activities Export via independent representatives (agents) Establishment of one or more sales subsidiaries Establishment of production facilities abroad www.bookfiesta4u.blogspot.com 11-409
  • 410. Deciding on the Marketing ProgramStandardized marketing mixAdapted marketing mix www.bookfiesta4u.blogspot.com 11-410
  • 411. McDonald’s around the world: Hungary www.bookfiesta4u.blogspot.com 11-411
  • 412. Deciding on the Marketing ProgramProduct Straight extension www.bookfiesta4u.blogspot.com 11-412
  • 413. Figure 13.3: Five International Product and Promotion Strategies www.bookfiesta4u.blogspot.com 11-413
  • 414. Deciding on the Marketing Program Product adaptation Product invention Backward invention Forward inventionPromotion Communication adaptation Dual adaptation www.bookfiesta4u.blogspot.com 11-414
  • 415. Carlsberg’s global Web site www.bookfiesta4u.blogspot.com 11-415
  • 416. Deciding on the Marketing ProgramPrice Price escalation Companies have three choices Set a uniform price everywhere Set a market-based price in each country market- Set a cost-based price in each country cost- Transfer price Dumping Arm’s- Arm’s-length price Gray market www.bookfiesta4u.blogspot.com 11-416
  • 417. Deciding on theMarketing ProgramPlace (distribution channels) Seller’s international marketing headquarters Channels between nations Channels within foreign nations Figure 13.4: Whole-Channel Concept for International Marketing www.bookfiesta4u.blogspot.com 11-417
  • 418. One of the most profound political changesin the late 20th century was the fall of the“iron curtain” and the subsequent openingof markets in Eastern Europe. Has thispotential marketplace been fullyexploited by Americancompanies? Europeancompanies? Why orwhy not? www.bookfiesta4u.blogspot.com 11-418
  • 419. Deciding on the Marketing OrganizationExport departmentInternational division Geographical organizations World product groups International subsidiaries www.bookfiesta4u.blogspot.com 11-419
  • 420. Deciding on the Marketing OrganizationGlobal organization Bartlett and Ghoshal distinguish three organizational strategies: A global strategy treats the world as a single market. A multinational strategy treats the world as a portfolio of national opportunities. A “glocal” strategy standardizes certain core elements and localizes other elements. www.bookfiesta4u.blogspot.com 11-420
  • 421. Chapter 14Setting the Product andBranding Strategyby PowerPoint by Milton M. Pressley University of New Orleans www.bookfiesta4u.blogspot.com 11-421
  • 422. Kotler onMarketingThe best way to holdcustomers is toconstantly figure outhow to give themmore for less. www.bookfiesta4u.blogspot.com 11-422
  • 423. Chapter ObjectivesIn this chapter, we focus on the followingquestions: What are the characteristics of products? How can a company build and manage its product mix and product lines? How can a company make better brand decisions? How can packaging and labeling be used as marketing tools? www.bookfiesta4u.blogspot.com 11-423
  • 424. The Product and the Product MixProduct Figure 14.1: Components Physical goods of the Market Offering Services Experiences Events Persons Places Properties Organizations Information Ideas www.bookfiesta4u.blogspot.com 11-424
  • 425. The Product and the Product MixProduct levels Figure 14.2: Five Customer value Product Levels hierarchy Core benefit Basic product Expected product Augmented product www.bookfiesta4u.blogspot.com 11-425
  • 426. BabyCenter is not just an online merchant, it’s a metamediary www.bookfiesta4u.blogspot.com 11-426
  • 427. The Product and the Product Mix Consumption system Potential product General Mills’ Mycereal.comProduct hierarchy Web site Need family Product family Product class Product line Product type Item www.bookfiesta4u.blogspot.com 11-427
  • 428. The Product and the Product Mix Product system Product mixProduct classifications Durability and Tangibility Classification: Nondurable goods Durable goods Services www.bookfiesta4u.blogspot.com 11-428
  • 429. The Product and the Product MixConsumer-Consumer-Goods Classification: Convenience goods Staples Impulse goods Emergency goods Shopping goods Homogeneous shopping goods Heterogeneous shopping goods Specialty goods Unsought goods www.bookfiesta4u.blogspot.com 11-429
  • 430. The Product and the Product MixIndustrial-Industrial-Goods Classification Materials and parts Farm products Natural products Manufactured materials and parts Component materials Component parts Capital items Installations Equipment www.bookfiesta4u.blogspot.com 11-430
  • 431. The Product and the Product MixSupplies and business services Maintenance and repair items Operating supplies Maintenance and repair services Business advisory services www.bookfiesta4u.blogspot.com 11-431
  • 432. The Product and the Product MixProduct mix (Productassortment) Product mix has a certain: Width Length Depth Consistency www.bookfiesta4u.blogspot.com 11-432
  • 433. Table 14.1: Product-Mix Width and Product-Line Length for Proctor& Gamble Products Product- Product-Mix Width Disposable Paper Detergents Toothpaste Bar Soap Diapers Tissue Ivory Snow Gleem (1952) Ivory Pampers Charmin (1930) (1879) (1961) (1928) Crest (1955)PRODUCT-PRODUCT- Dreft Kirk’s Luvs PuffsLINE (1933) (1885) (1976) (1960)LENGTH Tide Lava Banner (1946) (1893) (1982) Cheer Camay Summit (1950) (1926) (1992) See text for complete table 11-433 www.bookfiesta4u.blogspot.com
  • 434. The Product and the Product MixProduct-Product-line decisions Product- Product-line analysis Sales and Profits Four types of product classes: Core product Staples Specialties Convenience items www.bookfiesta4u.blogspot.com 11-434
  • 435. The Product and the Product Mix Market profileFigure 14.4:Product Mapfor aPaper-ProductLine www.bookfiesta4u.blogspot.com 11-435
  • 436. The Product and the Product MixProduct-Product-line length Line Stretching Downmarket Stretch The company may notice strong growth opportunities as mass retailers attract a growing number of shoppers The company may wish to tie up lower-end competitors lower- who might otherwise try to move upmarket The company may find that the middle market is stagnating or declining Upmarket Stretch Two- Two-Way Stretch www.bookfiesta4u.blogspot.com 11-436
  • 437. Kmart has entered into branding anddistribution agreements with celebrities likeKate Smith for women’s apparel and MarthaStewart in house wares, gardening supplies,etc. Is this an upmarket stretch, adownmarket stretch or a two-way stretch two-for Kmart? www.bookfiesta4u.blogspot.com 11-437
  • 438. The Product and the Product MixLine Filling Brand decisions Just- Just-noticeable What is brand? difference AttributesLine Modernization, Benefitsfeaturing, and Valuespruning Culture Personality User www.bookfiesta4u.blogspot.com 11-438
  • 439. The Product and the Product MixCommonly used research approachesto determine brand meaning: Word associations Personifying the brand Laddering up the brand essence Brand essence Laddering up www.bookfiesta4u.blogspot.com 11-439
  • 440. The Product and the Product MixBuilding Brand Identity Brand bonding Brands are not built by advertising but by the brand experience Everyone in the company lives the brand Three ways to carry on internal branding – Employees must Understand Desire, and Deliver on the brand promise www.bookfiesta4u.blogspot.com 11-440
  • 441. The Product and the Product MixBuilding Brands in the new economy Heidi and Don Schultz urge companies to: Clarify the corporation’s basic values and build the corporate brand. Use brand managers to carry out the tactical work. Develop a more comprehensive brand-building plan. brand- Define the brand’s basic essence to be delivered wherever it is sold. Use the brand-value proposition as the key driver of the company’s brand- strategy, operations, services, and product development. Measure their brand-building effectiveness, not by the old measures brand- of awareness, recognition, and recall, but by a more comprehensive set of measures including customer-perceived value, customer customer- satisfaction, customer share of wallet, customer retention, and customer advocacy. www.bookfiesta4u.blogspot.com 11-441
  • 442. The Product and the Product MixBrand Equity Brand awareness Brand acceptability Brand preference Aaker’s five levels of customer attitude: The customer will change brands, especially for price reasons. No brand loyalty. Customer is satisfied. No reason to change brands. Customer is satisfied and would incur cost by changing brand. Customer values the brand and sees it as a friend. Customer is devoted to the brand. www.bookfiesta4u.blogspot.com 11-442
  • 443. The Product and the Product MixValue of Brand Equity Brand valuation Competitive advantages of high brand equity: The company will have more leverage in bargaining with distributors and retailers because customers expect them to carry the brand. The company can charge a higher price than its competitors because the brand has higher perceived quality. The company can more easily launch extensions because the brand name carries high credibility. The brand offers some defense against price competition. www.bookfiesta4u.blogspot.com 11-443
  • 444. The Product and the Product Mix Managing Brand Equity Branding Challenges Branding Decision: To Brand or Not to Brand? www.bookfiesta4u.blogspot.com 11-444
  • 445. When is a brand more than just a brand?Have you ever based a purchasing decisionprimarily on the brand? Was it because ofsome perceived quality difference, or was itbased on the expectation of how otherswould see or treat you? Have you ever seensomeone buying a givenbrand of an item in anattempt to be seen as “cool”? www.bookfiesta4u.blogspot.com 11-445
  • 446. The Product and the Product MixBranding gives the seller several advantages: Brand name makes it easier for the seller to process orders and track down problems Seller’s brand name and trademark provide legal protection of unique product features Branding gives the seller the opportunity to attract a loyal and profitable set of customers. Branding helps the seller segment markets. Strong brands help build corporate image, making it easier to launch new brands and gain acceptance by distributors and consumers. www.bookfiesta4u.blogspot.com 11-446
  • 447. The Product and the Product MixBrand-Brand-Sponsor Decisions Manufacturer brand Distributor brand Licensed brand name Slotting fee Brand ladder Brand parity www.bookfiesta4u.blogspot.com 11-447
  • 448. The Product and the Product MixBrand-Brand-Name Decision Four available strategies: Individual names Blanket family names Separate family names for all products Corporate name combined with individual product names www.bookfiesta4u.blogspot.com 11-448
  • 449. The Product and the Product MixDesirable qualities for a brand name It should suggest something about the product’s benefits It should suggest the product or service category It should suggest concrete, “high imagery” qualities It should be easy to spell, pronounce, recognize, and remember It should be distinctive It should not carry poor meanings in other countries and languages www.bookfiesta4u.blogspot.com 11-449
  • 450. The Product and the Product MixBrand building tools Public relations and Public facilities press releases Social cause Sponsorships marketing Clubs and consumer High value for communities the money Factory visits Founder’s or a Trade shows celebrity personality Event marketing Mobile phone marketing www.bookfiesta4u.blogspot.com 11-450
  • 451. Nike’s arrangement with Michael Jordanhas provided an excellent example of acelebrity endorsement. Can you think ofan endorsement campaign that backfired?What did it cost the companyin the short term? What,if any, have been thelasting effects? www.bookfiesta4u.blogspot.com 11-451
  • 452. The Product and the Product Mix Brand Strategy Decision Functional brand Image brand Experimental brands Line Extensions Branded variants Brand extensions Brand dilution www.bookfiesta4u.blogspot.com 11-452
  • 453. The Product and the Product Mix Multibrands, New Brands, and Co-Brands Co- Multibrand Flanker Bands Co-branding (Dual branding) Co- Ingredient co-branding co- Same- Same-company co-branding co- Joint venture co-branding co- Multisponsor co-branding co- www.bookfiesta4u.blogspot.com 11-453
  • 454. The Product and the Product Mix Brand Asset Management Brand Auditing and Repositioning Brand report card www.bookfiesta4u.blogspot.com 11-454
  • 455. The Product and the Product MixPackaging and Labeling Packaging Package Primary Package Secondary Package Shipping Package Factors which have contributed to the growing use of packaging as a marketing tool Self- Self-Service Consumer affluence Company and brand image Innovation opportunity www.bookfiesta4u.blogspot.com 11-455
  • 456. The Product and the Product MixLabeling Functions Identification Grading Description Consumerists have lobbied for: Open dating Unit pricing Grade labeling Percentage labeling www.bookfiesta4u.blogspot.com 11-456
  • 457. Chapter 15Designing and ManagingServicesby PowerPoint by Milton M. Pressley University of New Orleans www.bookfiesta4u.blogspot.com 11-457
  • 458. Kotler onMarketingEvery business is aservice business.Does your serviceput a smile on thecustomer’s face? www.bookfiesta4u.blogspot.com 11-458
  • 459. Chapter ObjectivesIn this chapter, we focus on the followingquestions: How are services defined and classified? How do services differ from goods? How can service firms improve their differentiation, quality, and productivity? How can goods-producing companies goods- improve their customer support services? www.bookfiesta4u.blogspot.com 11-459
  • 460. The Nature of Services Government sector Private non-profit non- sector Keen.com is a virtual Business advice marketplace sector Manufacturing sectorService www.bookfiesta4u.blogspot.com 11-460
  • 461. The Nature of ServicesCategories of Service Mix Pure tangible good Tangible good with accompanying services Hybrid Major service with accompanying minor goods and services Pure service www.bookfiesta4u.blogspot.com 11-461
  • 462. The Nature of ServicesCharacteristics of Services and TheirMarketing Implications Intangibility Service positioning strategy can be made tangible through: Place People Equipment Communication material Symbols Price www.bookfiesta4u.blogspot.com 11-462
  • 463. Online companies that provide services areoften directly impacted by the quality of acustomer’s computer or the customer’sInternet connection. Can you think ofanother service sector that has so littlecontrol over the environmentin which their servicesare provided? www.bookfiesta4u.blogspot.com 11-463
  • 464. The Nature of ServicesCarbone and Haeckel purpose thefollowing for customer experienceengineering Performance and context clues Humanics Mechanics Experience blueprint www.bookfiesta4u.blogspot.com 11-464
  • 465. The Nature of ServicesInseparabilityVariability Quality control by: Good hiring and training procedures Service blueprint Monitoring customer satisfaction www.bookfiesta4u.blogspot.com 11-465
  • 466. The Nature of ServicesPerishability Strategies for better matching between demand and supply in a service business Differential pricing Nonpeak demand Complementary services Reservation systems Part- Part-time employees Peak- Peak-time efficiency Increased consumer participation Shared services Facilities for future expansion www.bookfiesta4u.blogspot.com 11-466
  • 467. Marketing Strategies for Service FirmsThree Additional Ps People Physical evidence presentation Process www.bookfiesta4u.blogspot.com 11-467
  • 468. Figure 15.3: Three Types of Marketing in Service Industries www.bookfiesta4u.blogspot.com 11-468
  • 469. Marketing Strategies for Service Firms Service Companies face three tasks: Competitive differentiation Service quality ProductivityManaging differentiation Offering Primary service package Secondary service features www.bookfiesta4u.blogspot.com 11-469
  • 470. Kaiser Permanente Online has over 30,000 registered users www.bookfiesta4u.blogspot.com 11-470
  • 471. Marketing Strategies for Service Firms Faster and Better Delivery Reliability Resilience Innovativeness ImageManaging Service Quality Perceived service Expected service www.bookfiesta4u.blogspot.com 11-471
  • 472. FedEx and UPS have taken over much of theUS Postal Service’s business, mostly throughflexibility and innovation that the USPS can’tmatch. Can you think of another governmentalservice (anywhere in the world) where a privatecompany has been able to take the profitablesegment of a service, andleave the less profitable ormore risky segment for agovernment agency? www.bookfiesta4u.blogspot.com 11-472
  • 473. Marketing Strategies for Service FirmsFive gaps that cause unsuccessfuldelivery Gap between consumer expectation and management perception Gap between management perception and service-quality service- specification Gap between service-quality service- specification and service delivery Gap between service delivery and external communications Gap between perceived service and expected service www.bookfiesta4u.blogspot.com 11-473
  • 474. Marketing Strategies for Service Firms Five determinants of service quality Reliability Responsiveness Assurance Empathy Tangibles Strategic Concept Top- Top-Management Commitment High Standards Self- www.bookfiesta4u.blogspot.com Self-Service Technologies (SSTS) 11-474
  • 475. Myalert.com provides access to services that users can perform themselves www.bookfiesta4u.blogspot.com 11-475
  • 476. Table 15.1 Customer Importance and Performance Ratings for an Auto Dealership Mean MeanAttribute Importance PerformanceNumber Attribute Description Rating Rating 1 Job done right the first time 3.83 2.63 2 Fast action on complaints 3.63 2.73 3 Prompt warranty work 3.60 3.15 4 Able to do any job needed 3.56 3.00 See text for complete table www.bookfiesta4u.blogspot.com 11-476
  • 477. Marketing Strategies for Service Firms Satisfying Customer Complaints Satisfying Employees As Well As Customers Managing Productivity Seven approaches to improving service productivity: Have service providers work more skillfully Increase the quantity of service by surrendering some quality “Industrialize the service” by adding equipment and standardizing production Reduce or make obsolete the need for a service by inventing a product solution Design a more effective service Present customers with incentives to substitute their own labor for company labor Harness the power of technology to give customers access to better service and make service workers more productive www.bookfiesta4u.blogspot.com 11-477
  • 478. Managing Product Support ServicesCustomers have three worries Reliability and failure frequency Downtime duration Out-of- Out-of-pocket costs of maintenance and repairLife-Life-cycle cost www.bookfiesta4u.blogspot.com 11-478
  • 479. Managing Product Support ServicesTo provide the best support for expensiveequipment, firms offer: Facilitating services Value- Value-augmenting servicesHerman Miller Office Furniture Companyoffers: Five- Five-year product warranties Quality audits after installation Guaranteed move-in dates move- Trade- Trade-in allowances on systems products www.bookfiesta4u.blogspot.com 11-479
  • 480. Managing Product Support ServicesPostsale Service StrategyMajor trends in product support service Lele has noted the following: Equipment manufacturers are building more reliable and more easily fixable equipment Customers are becoming more sophisticated about buying product support services “Service unbundling” www.bookfiesta4u.blogspot.com 11-480
  • 481. Managing ProductSupport ServicesCustomers dislike dealing with multipleservice providers handling different typesof equipment Third- Third-party service organizationsService contracts (extended warranties)may diminish in importanceCustomer service choices are increasingrapidly–rapidly–this is holding down prices andprofitsCompanies are increasing the quality oftheir call centers and their customer servicerepresentatives (CSRs) www.bookfiesta4u.blogspot.com 11-481
  • 482. Chapter 16Developing Price Strategiesand Programsby PowerPoint by Milton M. Pressley University of New Orleans www.bookfiesta4u.blogspot.com 11-482
  • 483. Kotler onMarketingSell value,not price. www.bookfiesta4u.blogspot.com 11-483
  • 484. Chapter ObjectivesIn this chapter, we focus on threequestions: How should a price be set on a product or service for the first time? How should the price be adapted to meet varying circumstances and opportunities? When should the company initiate a price change, and how should it respond to a competitor’s price change? www.bookfiesta4u.blogspot.com 11-484
  • 485. Figure 16.1: Nine Price-Quality Strategies www.bookfiesta4u.blogspot.com 11-485
  • 486. Figure 16.2: Price Should Align with Value www.bookfiesta4u.blogspot.com 11-486
  • 487. Setting the PriceStep 1: Selecting the pricing objective Survival Maximize current profits Maximize their market share Market- Market-penetration pricing Best when: Market is highly price-sensitive, and a low price price- stimulates market growth, Production and distribution costs fall within accumulated production experience, and Low price discourages actual and potential competition www.bookfiesta4u.blogspot.com 11-487
  • 488. Many companies engage in “marketskimming,” offering new products atwhatever price the market will bear, thenover time decreasing the price in order togain the maximum profit from eachmarket segment. Can you think of anyproducts that wouldn’t fitthis pricing model?Why not? www.bookfiesta4u.blogspot.com 11-488
  • 489. Maytag’s homepage presents its “corporate family of brands” www.bookfiesta4u.blogspot.com 11-489
  • 490. Setting the PriceStep 2: Determining Demand Price sensitivity Total Cost of Ownership (TCO) www.bookfiesta4u.blogspot.com 11-490
  • 491. Setting the PriceTom Nagle offers this list of factors associatedwith lower price sensitivity The product is more distinctive Buyers are less aware of substitutes Buyers cannot easily compare the quality of substitutes The expenditure is a smaller part of the buyer’s total income The expenditure is small compared to the total cost of the end product Part of the cost is borne by another party The product is used in conjunction with assets previously bought The product is assumed to have more quality, prestige, or exclusiveness Buyers cannot store the product www.bookfiesta4u.blogspot.com 11-491
  • 492. Setting the PriceEstimating Demand CurvesPrice Elasticity of Demand Inelastic Elastic Price indifference band www.bookfiesta4u.blogspot.com 11-492
  • 493. Setting the PriceStep 3: Estimating Cost Types of Cost and Levels of Production Fixed costs (overhead) Variable cost Total cost Average cost Accumulated Production Experience curve (Learning curve) www.bookfiesta4u.blogspot.com 11-493
  • 494. Setting the Price Differentiated Marketing Offers Activity- Activity-based cost (ABC) accounting Target costingStep 4: Analyzing Competitors’Cost, Prices, and Offers www.bookfiesta4u.blogspot.com 11-494
  • 495. Setting the PriceStep 5: Selecting a Pricing Method Markup Pricing Unit Cost = variable cost + (fixed cost/unit sales) Markup price Markup price= unit cost/ (1 – desired return on sales) Target- Target-Return Pricing Target- Target-return price = unit cost + (desired return X investment capital)/unit sales www.bookfiesta4u.blogspot.com 11-495
  • 496. Setting the Price Break- Break-even volumeBreak-Break-even volume = fixed cost / (price – variable cost) Perceived- Perceived-Value Pricing Perceived value Price buyers Figure 16.8: Break-Even Chart for Determining Target-Return Price and Value buyers Break-Even Volume Loyal buyers Value-in- Value-in-use price www.bookfiesta4u.blogspot.com 11-496
  • 497. Setting the PriceValue Pricing Everyday low pricing (EDLP) High- High-low pricingGoing-Going-Rate PricingAuction-Auction-Type Pricing English auctions (ascending bids) Dutch auctions (descending bids) Sealed- Sealed-bid auctionsGroup Pricing www.bookfiesta4u.blogspot.com 11-497
  • 498. Table 16.1: Effect of Different Bids on Expected Profit Probability of GettingCompany’s Company’s Award with Bid Profit This Bid Expected (Assumed) Profit $ 9,500 $ 100 0.81 $ 81 10,000 600 0.36 216 10,500 1,100 0.09 99 11,000 1,600 0.01 16 www.bookfiesta4u.blogspot.com 11-498
  • 499. volumebuy.com: group or pool pricing www.bookfiesta4u.blogspot.com 11-499
  • 500. Some large entities, both public and private,currently bid online for many products and services.Do you think there will be a market for consumers tobid on electrical power, like major corporateelectricity users do? What about oilfor heating? Can you think of anyother products or services with apotential online auctionmarket for home users? www.bookfiesta4u.blogspot.com 11-500
  • 501. Setting the PriceStep 6: Selecting the Final Price Psychological Pricing Reference price Gain-and-Risk- Gain-and-Risk-Sharing Pricing Influence of the Other Marketing Elements Brands with average relative quality but high relative advertising budgets charged premium prices Brands with high relative quality and high relative advertising budgets obtained the highest prices The positive relationship between high advertising budgets and high prices held most strongly in the later stages of the product life cycle for market leaders www.bookfiesta4u.blogspot.com 11-501
  • 502. Setting the Price Brands with average relative quality but high relative advertising budgets charged premium prices Brands with high relative quality and high relative advertising budgets obtained the highest prices The positive relationship between high advertising budgets and high prices held most strongly in the later stages of the product life cycle for market leadersCompany Pricing PoliciesImpact of Price on Other Parties www.bookfiesta4u.blogspot.com 11-502
  • 503. Adapting the PriceGeographical Pricing (Cash,Countertrade, Barter) Countertrade Barter Compensation deal Buyback arrangement Offset Price Discounts and Allowances www.bookfiesta4u.blogspot.com 11-503
  • 504. <