A manufacturing company produces electrical insulators. if the ins.docx

A manufacturing company produces electrical insulators. if the
insulators break when in use , a short circuit is likely to occur.
to test the strength of the insulators, destructive testing is
carried out to determine how much force is required to break the
insulators. force is measured by observing the number of pounds
of force applied to the insulator before it breaks. the following
data are from 30 insulators subjected to this testing. (can you do
it in Excel)
1,870 1,728 1,656 1,610 1,634 1,784 1,522 1,696 1,592 1,662
1,866 1,764 1,734 1,662 1,734 1,774 1,550 1,756 1,762 1,866
1,820 1,744 1,788 1,688 1,810 1,752 1,680 1,810 1,652 1,736
a, At the 0.05 level of significance ,is there evidence that the
population mean force
is greater than 1,500 pounds?
b, What assumption about the population distribution is needed
in order to conduct
the t test in (a)
c, Construct a histogram boxplot , or normal probability plot to
evaluate the
assumption made i (b)
d, Do you think that the assumption needed in order to conduct
the t est in (a)
is valid ? Explain.
1
Customers, Segmentation, and Target Marketing
5
C H A P T E R
© 2014 Cengage Learning. All Rights Reserved. May not be

scanned, copied or duplicated, or posted to a publicly accessible
website, in whole or in part.
Concerned with the individuals, institutions, or groups of
individuals or institutions that have similar needs that can be
met by a particular product offering
The goal is to identify specific customer needs, then design a
marketing program that can satisfy those needs.
The firm must have a comprehensive understanding of its
current and potential customers, including their motivations,
behaviors, needs, and wants.
Segmentation is critical to the success of most firms and has
helped improve our standard of living.
Segmentation and Target Marketing
2
Often irrational and unpredictable
Can progress through five stages (see next slide)
Does not always follow these stages in sequence
Strong brand loyalty can move consumers directly from need to
purchase.
Includes parallel decisions
“What” to buy
“Where” to buy
Buyer Behavior in Consumer Markets
3

Need Recognition
Information Search
Evaluation of Alternatives
Purchase Decision
Postpurchase Evaluation
The Consumer Buying Process
(Exhibit 5.1)
4
Need
Occurs when the consumer’s existing level of satisfaction does
not equal their desired level of satisfaction
Want
A consumer’s desire for a specific product that will satisfy the
need
Demand
Occurs when a consumer’s ability and willingness to purchase a
specific product backs up their want for the product
The Consumer Buying Process:
Need Recognition
5
Many people criticize marketing as being manipulative based on

the argument that marketing activities create needs where none
previously existed. Given what you now know about the
differences between needs and wants, do you agree with these
critics? Explain.
6
Marketing activities can stimulate a desire for information
Passive information search
Active information search
Sources of information
Internal sources
External sources
Information Search
7
The amount of time, effort, and expense dedicated to
information search depends on:
Degree of risk involved in the purchase (financial risk, social
risk, emotional risk, personal risk)
Amount of expertise with the product category
Actual cost of the search (time and money)
Evoked set

A narrowed down set of alternatives that the customer is
considering
Information Search (continued)
8
Consumers evaluate products as bundles of attributes, each
having a different level of importance (e.g., brand attributes,
product features, aesthetic attributes, price)
Important considerations
Products must be in the evoked set
Consumers’ choice criteria must be understood
Marketing programs must be designed to:
Change the priority of choice criteria
Change consumers’ opinions about product or brand image
Evaluation of Alternatives
9
The intention to purchase and the act of buying are distinct
concepts. Potential intervening factors (car example):
Unforeseen circumstances
Angered by the salesperson or sales manager
Unable to obtain financing
Customer changes mind
Marketers overcome these factors by reducing the risk of

purchase, making purchase easy, or finding creative solutions to
unexpected problems.
Key issues in the purchase decision stage
Product availability
Possession utility
Purchase Decision
10
The connection between the buying process and developing
long-term customer relationships
Four possible outcomes
Delight
Satisfaction
Dissatisfaction
Cognitive dissonance (postpurchase doubt)
Cognitive dissonance is more likely to occur when:
Dollar value of the purchase increases
Opportunity costs of rejected alternatives are high
Purchase decision is emotionally involving
Postpurchase Evaluation
11
Decision-Making Complexity
The primary reason for variations in the buying process

Individual Influences
Demographics, perceptions, motives, interests, attitudes,
opinions, lifestyles, etc.
Social Influences
Culture, subculture, social class, reference groups, opinion
leaders, etc.
Situational Influences
Affect the amount of time and effort devoted to the purchase
task
Factors Affecting the Consumer Buying Process
12
Physical and Spatial Influences
Social and Interpersonal Influences
Temporal (Time) Influences
Purchase Task or Product Usage Influences
Consumer Dispositional Influences
Common Situational Influences
(Exhibit 5.2)
13
Four Types of Business Markets
Commercial markets
Reseller markets
Government markets
Institutional markets
Unique Characteristics of Business Markets

The Buying Center
Hard and Soft Costs
Reciprocity
Mutual Dependence
Buyer Behavior in Business Markets
14
Problem Recognition
Develop Product Specifications
Vendor Identification and Qualification
Solicitation of Proposals or Bids
Vendor Selection
Order Processing
Vendor Performance Review
The Business Buying Process
15
The process of dividing the total market for a particular product
or product category into relatively homogeneous segments or
groups
Should create groups where members are similar to each other
but dissimilar to other groups
Involves the fundamental decision of whether to segment at all
Typically allows firms to be more successful
Market Segmentation
16

Involves no segmentation whatsoever
Is an undifferentiated approach
Works best when the needs of an entire market are
homogeneous
Is efficient from a production standpoint
Results in lower marketing costs
Is inherently risky and vulnerable to competitors
Traditional Segmentation:
Mass Marketing
17
Involves dividing the total market into groups of customers
having relatively common or homogenous needs and developing
a strategy to pursue one or more of these groups
Multisegment Approach
Attracting buyers in more than one segment by offering a
variety of products that appeal to different needs
Market Concentration
Focusing on a single market segment and attempting to gain
maximum share in that segment
Differentiated Marketing
18

Focuses marketing efforts on one small, well-defined market
segment or niche that has a unique, specific set of needs
Requires that firms understand and meet the needs of target
customers so completely that the firm’s substantial share of the
segment makes it highly profitable
Niche Marketing
19
One-to-One Marketing
Involves creating an entirely unique product offering for each
customer
Mass Customization
An extension of one-to-one marketing
Refers to providing unique solutions to individual customers on
a mass scale
Permission Marketing
Customers choose to become a member of the firm’s target
market
Key advantage: Customers are already interested in the product
offering
Individualized Segmentation Approaches
20

Many consumers and consumer advocates are critical of
individualized segmentation approaches due to personal privacy
concerns. Where do you stand on this issue? What are the
benefits and risks associated with individualized segmentation?
21
Involves selecting the most relevant characteristics to identify
and define the target market or market segment
Successful market segments must fulfill five criteria
Identifiable and measurable
Substantial
Accessible
Responsive
Viable and sustainable
Avoid ethically sensitive, but legal, segments
Avoid segments that do not match the firm’s expertise
Identifying Market Segments
22
Segmenting Consumer Markets (see Exhibit 5.3)
Behavioral segmentation
Demographic segmentation
Psychographic segmentation
Geographic segmentation

Segmenting Business Markets
Type of organization
Organizational characteristics
Benefits sought or buying process
Personal and psychological characteristics
Relationship intensity
Market Segmentation in Consumer and Business Markets
23
Benefit Segmentation of the
Snack Food Market (Exhibit 5.4)
24
Innovators
Thinkers
Achievers
Experiencers
VALS Consumer Profiles
(Exhibit 5.5)
25
Believers
Strivers
Makers
Survivors

Target Marketing Strategies
(Exhibit 5.6)
26
The key to targeting noncustomers lies in understanding the
reasons why they do not buy, and then finding ways to remove
these obstacles.
Removing obstacles to purchase, whether they exist in product
design, affordability, distribution convenience, or product
awareness, is a major strategic issue in developing an effective
marketing program.
Targeting Noncustomers
27
The size of the consuming population over the age of 50
continues to grow. What are some of the current ethical issues
involved in targeting this age group? As this group gets older,
will these issues become more or less important? Explain.
28

Strategic Marketing Planning
2
C H A P T E R
Situation Analysis
An in-depth analysis of the organization’s internal and external
environments
Marketing Plan
A written document that provides the blueprint or outline of the
organization’s marketing activities, including the
implementation, evaluation, and control of those activities
Explains how the organization will achieve its goals and
objectives
Serves as a “road map” for implementing the marketing strategy
Instructs employees as to their roles and functions
Provides specifics regarding the allocation of resources,
specific marketing tasks, responsibilities of individuals, and the
timing of marketing activities
The Strategic Planning Process
2

The Strategic Planning Process
(Exhibit 2.1)
3
Mission Statement
Answers… “What business are we in?”
Clear and concise
Explains the organization’s reason for existence
Vision Statement
Answers… “What do we want to become?”
Tends to be future oriented
Represents where the organization is headed
Organizational Mission versus Organizational Vision
4
Five basic questions to be answered
Who are we?
Who are our customers?
What is our operating philosophy?
What are our core competencies or competitive advantages?
What are our responsibilities with respect to being a good

steward of our human, financial, and environmental resources?
Mission Width and Stability
Width – too broad or too narrow?
Stability – frequency of modifications
Customer-Focused Mission Statements
Southwest Airlines
Ben and Jerry’s 3-Part Mission Statement
Tylenol
The American Red Cross
Elements of the Mission Statement
5
The Best Mission Statements
(Exhibit 2.2)
6
The central means for:
Utilizing and integrating the organization’s resources
Carrying out the organization’s mission
Achieving the organization’s desired goals and objectives
Leverages the firm’s capabilities that give it a competitive, or
differential, advantage
Determines the nature and future direction of each business unit
Essentially the same as corporate strategy in small businesses
Corporate or Business-Unit Strategy
7

All business functions must support the organization’s mission
and goals.
Functional objectives should be expressed in clear, simple
terms.
All functional objectives should be reconsidered for each
planning period.
Functional Goals and Objectives
8
Functional strategies are designed to integrate efforts focused
on achieving the area’s stated objectives.
The strategy must:
Fit the needs and purposes of the functional area
Be realistic with the organization’s resources and environment
Be consistent with the organization’s mission goals, and
objectives.
The effects of each functional strategy must be evaluated.
Functional Strategy
9
Involves activities that execute the functional strategy
Functional plans have two target markets:

External market
Internal market
A company must rely on its internal market – its employees –
for a functional strategy to be implemented successfully.
Implementation
10
Defend or contradict this statement:
Developing marketing strategy is more important than
implementing marketing strategy because if the strategy is
flawed, its implementation doesn’t matter.
11
Designed to keep planned activities on target with goals and
objectives
Coordination and open communication among functional areas
are critical issues
Evaluation and control is both an ending and beginning
Occurs after a strategy has been implemented
Serves as the beginning point for planning in the next cycle
Evaluation and Control
12

Detailed formulation of the actions needed to carry out the
marketing program; an action document – the handbook for
marketing implementation, evaluation, and control
Not the same as a business plan
Requires a great deal of information from many different
sources
Should be well organized. A good marketing plan outline is:
Comprehensive
Flexible
Consistent
Logical
The Marketing Plan
13
Executive Summary
Synopsis of the major aspects of the marketing plan
Situation Analysis
Internal environment
Customer environment
External environment
SWOT Analysis
Strengths, weaknesses, opportunities, threats
Analysis of the SWOT matrix
Developing competitive advantages
Establishing a strategic focus
Marketing Plan Structure
(Exhibit 2.3)

14
Marketing Goals and Objectives
Formal statements of desired and expected outcomes of the
marketing plan
Goals
Broad, simple statements of what is to be accomplished
Objectives
More specific performance targets
Marketing Strategy
Primary (and secondary) target market
The marketing program
Branding and positioning strategy
(Exhibit 2.3) (continued)
15
Marketing Implementation
What specific marketing activities will be undertaken?
How will these activities be performed?
When will these activities be performed?
Who is responsible for the completion of these activities?
How will the completion of planned activities be monitored?
How much will these activities cost?
Evaluation and Control
Formal marketing control
Informal marketing control
Financial assessments

(Exhibit 2.3) (continued)
16
Plan ahead
Revise, then revise again
Be creative
Use common sense and judgment
Think ahead to implementation
Update regularly
Communicate to others
Tips for Using the Marketing Plan Structure
17
A good marketing plan will:
Explain both the present and future situations of the
organization
Specify the outcomes that are expected
Describe the specific actions that are to take place
Identify the resources that will be needed
Permit the monitoring of each action and its results
Communicating the strategy to top executives is paramount.
Purposes and Significance of the Marketing Plan
18

In many organizations, marketing does not have a place of
importance in the organizational hierarchy. Why do you think
this happens? What are the consequences for a firm that gives
little importance to marketing relative to other business
functions?
19
Top managers ask two questions:
Will the marketing plan achieve the desired marketing, business
unit, and corporate goals and objectives?
Are there alternative uses of resources that would better meet
the firm’s objectives?
The marketing plan is most often prepared by the marketing
manager, brand manager, or product manager.
The final approval of the marketing plan lies with the President,
Chairperson, or CEO
Organizational Aspects of the Marketing Plan
20
Obstacles to Developing Marketing Plans (Exhibit 2.4)

21
Changes in the focus and content of strategic plans over the last
two decades:
Renewed emphasis on the customer
Advent of balanced strategic planning
These changes require a shift in focus
From products to the requirements of specific target market
segments
From customer transactions to customer relationships
From competition to collaboration
Maintaining Customer Focus and Balance in Strategic Planning
22
Puts customer needs and wants first
Focuses on long-term, value-added relationships
Focuses on understanding customers in ways that enhance
sustainable competitive advantages
Instills a corporate culture that places customers at the top of
the organizational hierarchy
Finds ways to cooperate with suppliers and competitors to serve
customers more effectively and efficiently
Customer-Focused Strategic Planning
23

Traditional versus Market-Oriented Structures (Exhibit 2.5)
24
Traditional planning approaches do not capture value created by
the organization’s intangible assets (relationships, processes,
human resources, innovation, information)
Advocated strongly by Kaplan & Norton with their creation of
the Balanced Performance Scorecard
Aligns four complementary perspectives
Financial indicators
Customers
Internal processes
Learning and growth
Balanced Strategic Planning
25
The Balanced Performance Scorecard (Exhibit 2.6)
26

Translate the Strategy into Operational Terms
Align the Organization to Strategy
Make Strategy Everyone’s Everyday Job
Make Strategy a Continual Process
Mobilize Change through Executive Leadership
How Successful Firms Use the Balanced Scorecard
27
What are some of the potential difficulties in approaching
strategic planning from a balanced perspective? Isn’t financial
performance still the most important perspective to take in
planning? Explain.
28

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