Marketing management involves understanding customers and delivering superior value. The marketing concept focuses on customer needs and satisfaction over production and sales. Marketing managers must understand core concepts like customer value and exchange relationships. Their tasks include developing strategies, understanding customers, building brands, and communicating value to create long-term growth. Marketing has evolved from a production focus to today's customer-centric approaches.

1. MARKETING
MANAGEMENT
2011 Fall
- Part I -
Assoc. Prof. Dr. Şebnem Burnaz

2. Understanding
Marketing Concept and
Marketing Management
‖The aim of marketing is to know and
understand the customer so well that the
product or service fits him and sells itself.‖
Peter Drucker

3. Overview
 What is marketing?
 Why is marketing important?
 What is the scope of marketing?
 What are some fundamental
marketing concepts?
 What are the tasks necessary for
successful marketing management?

4. What is Marketing?
 Selling?
 Advertising?
 Making products available in stores?
All of the above, plus much more!

5. Marketing…is about…
 ―Identifying and meeting human and
social needs‖
 ―Meeting needs profitably‖
 ―Generating customer value at a profit‖
 ―Managing profitable customer relationships by
delivering superior value to customers‖

6. What is Marketing?
 No single correct definition or approach
 Common subject matters:
 The ability to satisfy customers,
 The identification of favorable marketing
opportunities,
 The need to create an edge over competitors,
 The capacity to make profits to enable a viable
future for the organization,
 The use of resources to maximize a business‘ market
position,
 The aim to increase market share mainly in target
markets…

7. What is Marketing?
Marketing as a Process Capture
value from
Create value for customers customers
and build customer in return
relationships
Capture
Understand Design a Construct a Build value from
the customer- marketing profitable customers
marketplace driven program relationships to create
and customer marketing that delivers and create profits and
needs&wants strategy superior customer customer
value delight quality

8. What Is Marketing?
Marketing is an organizational function and a
set of processes for creating, communicating,
and delivering value to customers and for
managing customer relationships in ways that
benefit the organization and its stakeholders

9. The ________ is the United States‘ 24th
largest advertiser with an annual budget of
more than $1 billion.
1. Procter & Gamble Company
2. Boeing Company
3. U.S. Government
4. Levi Strauss & Co.

10. Core Concepts of Marketing
Needs, wants,
and demands
Markets Products
and services
Exchange, Value and
and relationships satisfaction

11. Core Concepts of Marketing
 Need
 Needs, wants, and  State of felt deprivation
demands  Basic human requirements
 Marketing offers:  e.g. needs food
including products,  Wants
services and experiences  Needs directed to specific
objects
 Value and satisfaction  The form of needs as
 Exchange and shaped by culture and the
relationships individual
 e.g. wants a BigMac
 Markets  Demands
 Wants which are backed by
buying power

12. Core Concepts of Marketing
 Needs, wants, and  Marketing offering
demands  Combination of
 Marketing offers: products, services,
information or
products, services, experiences offered to a
experiences… market that satisfy a
 Value and satisfaction need or want.
Offer may include
 Exchange and 
services, activities,
relationships people, places,
 Markets information or ideas.

13.  Marketing myopia is
focusing only on existing
offers and losing sight
of underlying consumer
needs.
 Market offerings are
not limited to
physical products:
 UNCF markets the
idea that ―A mind is
terrible thing to
waste‖.

14. Core Concepts of Marketing
What is Marketed?
Products
Anything that can be Offered to a Market to Satisfy a Need or Want
Events Places Persons
Experiences Properties Information
Organizations Ideas
Services
Activities or Benefits Offered for Sale That Are Essentially
Intangible and Don‘t Result in the Ownership of Anything

15. Core Concepts of Marketing
 Value
 Needs, wants, and  Customers form expectations
demands regarding value
 Marketing offers:
including products,  Value:
services and experiences  the customer‘s estimate of the
product‘s overall capacity to
 Value and satisfaction satisfy his or her needs.
 Exchange and  the satisfaction of customer
relationships requirements at the lowest
possible cost
 Markets Satisfaction

16. Value - Satisfaction
 Customer benefits  Customer satisfaction
Anything desired by the The feeling that a product
customer that is received in has met or exceeded the
an exchange customer‘s expectations
 Customer costs
Anything a customer gives up
in an exchange for benefits
What is the benefit of
 Monetary price of the
benefit
a satisfied customer to
 Search costs (time and
the company?
effort) to locate the product
 Risks associated with the
exchange

17. Core Concepts of Marketing
Exchange
Needs, wants, and


 The act of obtaining a desired
demands object from someone by
 Marketing offers: offering something in return
including products,  The response may be more
services and experiences than simply buying or trading
products and services
 Value and satisfaction  One exchange is not the goal,
 Exchange and relationships with several
relationships exchanges are the goal
 Markets
 Relationships are built through
delivering value and satisfaction
 Marketing network 
consists of the company and all
its supporting stakeholders

18. Relationship Marketing
 Relationship marketing aims to build
mutually satisfying long-term
relationships with key constituents in
order to earn and retain their
businesses.

19. Managing Relationships: Customers
 Customer Relationship Management (CRM)
 Using information about customers to create
marketing strategies that develop and sustain
desirable customer relationships
 Identifying buying-behavior patterns of customers
 Using behavioral information to
focus on the most profitable customers

20. Managing Customer Relationships
Relationship Building Blocks
• AIM  to increase
Customer Customer CLV (consumer
perceived value satisfaction lifetime value)!
• The difference • The extent to • to gain a greater
between total which a product‘s proportion of an
customer value perceived existing
and total performance customer‘s
customer cost matches a purchases over a
buyer‘s long period
expectations

21. Core Concepts of Marketing
 Needs, wants, and  Market
demands  Set of actual and
 Marketing offers: potential buyers of a
including products, product
services and experiences  These buyers share a
particular need or want
 Value and satisfaction that can be satisfied
 Exchange and through exchange relshps
relationships
Marketing means
 Markets 
managing markets to
bring about profitable
customer relshps

22. A Simple Marketing System

23. Marketing defined as...
Process by which individuals and groups
obtain what they need and want through
creating and exchanging products and
value with others.
Simply put: Marketing  the delivery of
customer satisfaction at a profit.

24. ―Good marketing is no accident, but a result of careful
planning and execution…But marketing excellence is
rare and difficult to achieve. Marketing is both an ‗art‘
and a ‗science‘ –there is constant tension between the
formulated side of marketing and the creative side ‖

25. More Definitions of Marketing
(cont.)
 From the societal perspective; some marketers
describe marketing as the creation and delivery of
a standart of living.
 From the managerial perspective; marketing
(management) is the process of planning and
executing the conception, pricing, promotion and
distribution of goods and services to create
exchanges that satisfy individual and organizational
goals.

26. What Is Marketing Management?
 Marketing management is the art
and science of choosing target markets
and building profitable relationships by
getting, keeping, and growing customers through
creating, delivering, and communicating
superior customer value
 This definition must include answers to 2 questions:
 What customers will we serve?
 How can we best serve these customers?

27. Marketing Management
 Marketing management involves  managing
demand  involves managing customer
relationships
 Marketers aim to influence the level, timing and
composition of demand to meet organizational goals.
 Marketing management is concerned
 not only with finding and increasing demand,
 but also with changing or even reducing it in some
cases

28. Marketing Management
Marketing management:
 Customer management & Demand management
 Choosing a Value Proposition
The value proposition is the set of benefits
or values a company promises to deliver to
customers to satisfy their needs

29. Company Orientations towards
the Marketplace
Consumers prefer products that are
Production Concept widely available and inexpensive
Consumers favor products that
Product Concept offer the most quality, performance,
or innovative features
Consumers will buy products only if
Selling Concept the company aggressively
promotes/sells these products
Focuses on needs/ wants of target
Marketing Concept markets & delivering value
better than competitors
Focuses on delivering the desired
Societal Marketing satisfaction more effectively and efficiently
than competitors in a way that preserves or
Concept enhances the well-being of both consumer
and society

30. Marketing Concept
 Achieving organizational goals depends on
knowing the needs and wants of the target
markets and delivering the desired satisfactions
better than competitors do
 4 pillars of modern marketing :
1. Target market
2. Customer needs
3. Integrated marketing
4. Profitability through customer satisfaction

31. Marketing and Sales Concepts Contrasted
Starting
point Focus Means Ends
Existing Selling and Profits through
Factory products promotion sales volume
(a) The selling concept
Customer Integrated Profits through
Market needs marketing customer
satisfaction
(b) The marketing concept

32. Marketing Concept
1) Target market  homogenous group of
customers to whom the company wishes to appeal
2) Customer needs
 Consumers may not be fully conscious of their needs /
it may not be easy to articulate these needs OR they
may use words that require some interpretation
 Customer-oriented thinking  to define customer
needs from the customer‘s point of view
 Sales revenue  New customers + Repeat customers
 ―Customer Retention‖ vs. ―Customer Attraction‖
 Customer value and customer satisfaction  building
blocks of customer relationship management

33. Marketing Concept
3) Integrated Marketing  Various marketing
functions must work together for customer satisfaction
(coordination of marketing mix elements: 4Ps)
 Marketing Mix  controllable variables the company
puts together to satisfy its target market(s).
Goods, services, or ideas that satisfy customer
Product needs
Decisions and actions that establish pricing
Pricing objectives and policies and set product prices
Place The ready, convenient, and timely availability
(Distribution) of products
Activities that inform customers about the
Promotion organization and its products

34. Marketing Concept - The 4 Ps

35. Marketing Concept - The 4 Ps  The 4 Cs
Marketing
Mix
Product Place
Convenience
Customer
Solution Price
Promotion
Customer
Cost Communication

36. Marketing Concept
Integrated Marketing  Marketing must be
well coordinated with other departments in
the company;
all departments have to work together to satisfy
customers‘ needs and wants
“Marketing is too important
to be left to the marketing department.”
David Packard,
Hewlett-Packard

37. Marketing Concept
4) Profitability through customer
satisfaction
 To achieve profits as a result of
creating superior customer value

38. Selling – Marketing...
―There will always be need for
some selling. But the aim of marketing
is to make selling unnecessary. The aim
of marketing is to know and understand
the customer so well that the product or
service fits him and sells itself. Ideally,
marketing should result in a customer
who is ready to buy.‖
Peter Drucker

39. Societal Marketing Concept
 Company‘s negative effects on
society
 Conflict between consumer
wants and long-term social
welfare
 The company should make good
marketing decisions by
considering consumers‘ wants,
the company‘s requirements,
consumers‘ long-term interests,
and society‘s long-run interests

40. Societal Marketing Concept
Society
(Human Welfare)
Societal
Marketing
Concept
Consumers Company
(Want Satisfaction) (Profits)

41. Evolution of Marketing Thought
 How marketing has become
“marketing” as we understand it
and apply its practices today?

42. Evolution of Marketing Thought
 Production Era (1850s-1920s)
 Industrial revolution; mass production
 Few products and little competition
 Sales Era (1920s-1950s)
 The focus was on personal selling and advertising
 Sales seen as the major means for increasing profits
 Mktg Era (1950s-present)
 Customer orientation replaced the ―hard sell‖ of the sales-led era
 Determination of the needs and wants of customers before
introducing products or services
 Relationship Marketing Era: 1990s-
 Marketing era has recently shifted from being ―transaction-based‖
 to focusing on ―relationships‖
 Both attracting and ―retaining‖ customers

43. Evolution of Marketing Thought:
New Era(s) in Marketing (The Millenium)
..from Relationship Marketing to...
 Network marketing
 E-marketing
 Community marketing
 Buzz marketing
 Digital marketing
 Mobile marketing
 ... ... ...

44. Holistic Marketing Concept
 New marketing…
 A need to think about how to operate and compete
in a new marketing environment
 Holistic marketing  based on the
development, design, and implementation of
marketing programs, processes, and activities that
recognize their breadth and interdependencies
 Premise: ―everything matters‖ with marketing!

45. Holistic Marketing

46. The New Four Ps
People
Processes
Programs
Performance

47. Marketing Management Tasks
 Develop market strategies and plans
 Capture marketing insights
 Connect with customers
 Build strong brands
 Shape market offerings
 Deliver value
 Communicate value
 Create long-term growth

48. Shifts in Marketing Management
 from marketing does the marketing  to… everyone does
the marketing
 from organizing by product units  to… organizing by
customer segments
 from making everything  to… buying more goods and
services from outside
 from using many suppliers  to… working with fewer
suppliers in a ‗partnership‘
 from relying on old market positions  to… uncovering
new ones
 from emphasizing tangible assets  to… emphasizing
intangible assets

49. Shifts in Marketing Management
 from building brands through advertising  to… building
brands through integrated communications
 from organizing by product units  to… organizing by
customer segments
 from attracting customers through stores and salespeople
 to...making products available online
 from trying to sell everyone  to... be the best firm
serving well-defined target markets
 from focusing on profitable transactions  to… focusing
on customer lifetime value
 from focusing on shareholders  to… focusing on
stakeholders

50. Marketing Management Tasks
 Developing
 Shaping the market
marketing strategies
offerings
and plans
 Delivering value
 Capturing marketing
insights  Communicating
value
 Connecting with
customers  Creating long-term
growth
 Building strong
brands

51. Strategic Marketing
Planning
―The company without a strategy is willing to try anything.‖
Michael Porter

52. Major Questions
 How does marketing affect customer
value?
 How is strategic planning carried out at
different levels of the organization?
 What is the role of marketing in the
overall strategic direction of the
company?
 What does a marketing plan include?

53. Phases of Value Creation and Delivery
Choosing the value
Providing the value
Communicating the value

54. What is the Value Chain?
The value chain is a tool to create
more customer value because every
firm is a synthesis of primary and
support activities performed to design,
produce, market, deliver, and support
its product.

55. Core Business Processes
 Market-sensing process
 New-offering realization process
 Customer acquisition process
 Customer relationship management
process
 Fulfillment management process

56. Characteristics of Core Competencies
 A source of competitive advantage
 Applications in a wide variety of
markets
 Difficult to imitate

57. Maximizing Core Competencies
 (Re)define the business concept
 (Re)shaping the business scope
 (Re)positioning the company‘s brand
identity

58. What is Holistic Marketing?
Holistic marketing sees itself as
integrating the value exploration, value
creation, and value delivery activities
with the purpose of building long-term,
mutually satisfying relationships and
co-prosperity among key stakeholders.

59. Questions to Address in Holistic
Marketing
What value opportunities are available?
How can we create new value offerings
efficiently?
How can we delivery the new offerings
efficiently?

60. Strategic Planning
 Strategic Planning  Managerial
process of developing and maintaining
a match between the organization‘s
resources and the market opportunities.
 The aim  to shape and reshape
company‘s businesses and products in
order to reach to targeted profits and
growth.

61. The Strategic Planning, Implementation,
and Control Processes

62. Steps in Strategic Planning
Business unit,
Corporate Level product,
and market
level
1) Defining the corporate mission
2) Setting objectives and goals Planning,
3) Designing business portfolio marketing,
Determining SBUs and other
Assigning resources to SBUs functional
4) Assessing growth opportunities strategies

63. Defining the Corporate Mission
 A mission statement 
a statement of the
organization‘s purpose --  ―Mission statement 
what it wants to accomplish to be guided by a
in the larger environment ―vision‖—an almost
―impossible dream‖
 A clear mission statement that provides a
 acts as ―invisible hand‖ direction for the
that guides employees to company for the next
work toward realizing the 10 to 20 years
organization‘s goals

64. Defining the Corporate Mission
 What is our business?
 Who is the customer?
 What is the value to the customer?
 What will our business be?
 What should our business be?

65. Good Mission Statements
 Focus on a limited number of goals
 Stress major policies and values
 Define major competitive spheres
 Take a long-term view
 Short, memorable, meaningful

66. What is our business:
Product Orientation vs. Market Orientation
Company Product Market
Disney We run theme parks We create fantasies—a place where
dreams come true
Xerox We make copying We improve office productivity
equipment
Columbia Pictures We make movies We entertain people
Amazon.com We sell books, videos, We make the Internet buying
CDs, toys, consumer experience fast, easy, and
electronics and other enjoyable— we‘re the place where
products online you can find and discover anything
you want to buy online
Nike We sell athletic shoes and We bring inspiration and innovation
apparel to every athlete* in the world (*if
you have a body, you are an
athlete)

67. Company Goals and Objectives
Mission  hierarchy of objectives
Mission
Statement
Marketing Marketing Marketing
Objective # 1 Objective # 2 Objective # 3
Marketing Marketing
Strategy Strategy

68. Google

69. ―We will provide branded products
and services of superior quality
and value that improve the lives
of the world's consumers, now
and for generations to come.
As a result, consumers will reward us with leadership
sales, profit, and value creation, allowing our people,
our shareholders, and the communities in which we
live and work to prosper.‖

70. Business Portfolio Analysis
Identify key businesses (SBUs)
that make up the company
Assess the attractiveness of its
various SBUs
Decide how much support
each SBU deserves

71. The Boston Consulting Group‘s
Growth-Share Matrix
20%- Stars Question marks
Market Growth Rate
?2
18%- 4
16%-
14%-
3 ? 1
12%- 5
10%-
8%- Cash cow Dogs
6%- 8
4%-
2%- 6 7
0
10x 4x 2x 1.5x 1x .5x .4x .3x .2x .1x
Relative Market Share

72. Boston Consulting Group Approach
Relative Market Share
High Low
Stars Question Marks
?
High
Market Growth Rate
• High growth & share • High growth, low share
• Profit potential • Build into Stars or phase out
• May need heavy • Require cash to hold
investment to grow market share
Cash Cows Dogs
• Low growth, high share • Low growth & share
Low
• Established, successful • Low profit potential
SBU‘s
•Produce cash

73. Boston Consulting Group Approach
and Strategies
 After the classification of SBUs  determine
what role each will play in the future
 Build  to invest more in the SBU in order to build
its share
 Hold  to invest enough just to hold at the current
level
 Harvest to increase the SBU‘s short-term cash
flow
 Divest  to sell or to liquidate the business

74. The SBU Life Cycle
SBUs have a life cycle in general:
a) Question marks
b) Stars
c) Cash cows
d) Dogs
Examine not only the business‘ current
positions, but also its moving positions.

75. Problems With Matrix Approaches
Can be Difficult, Time-Consuming, & Costly to Implement
Difficult to Define SBU‘s & Measure Market Share/ Growth
Focus on Current Businesses, But Not future Planning
Can Lead to Unwise Expansion or Diversification

76. The Strategic-Planning Gap
Desired
sales
Diversification growth
Strategic-
planning
Integrative growth gap
Sales
Intensive growth
Current
Portfolio sales
0 5 10
Time (years)

77. Planning New Business, Downsizing
Older Businesses
GROWTH STRATEGIES – 3 alternatives :
1. Intensive Growth
2. Integrative Growth
3. Diversification Growth

78. Growth Strategies: Ansoff‘s
Product/Market Expansion Grid
Existing New
products products
Existing 1. Market 3. Product
markets penetration development
New 2. Market
markets development 4. Diversification

79. Downsizing
 Some reasons that a company might want to
abandon products or markets:
 The market environment might change (making some
of the company‘s product or markets less profitable – e.g.
economic recession)
 The company may have grown too fast or entered
areas where it lacks experience
 Some of the company‘s products or business units
age and die.

80. Marketing‘s Key Role in
Strategic Planning
 Provide a guiding philosophy
 Identify attractive opportunities
 Design effective strategies
 Build strong value chains
 Form superior value delivery networks

81. The Business Unit Strategic Planning

82. The Business Unit Strategic Planning
 Business Mission  each SBU needs to define its
specific mission within the broader company
mission
 External Environment Analysis  to build a
MIS to monitor:
 Key external macroenvironment forces
 Significant microenvironment actors
 Trends and important developments  to identify
the associated opportunities and threats

83. The Business Unit Strategic Planning
 Internal Environment Analysis  Each
business needs to evaluate its internal strengths
and weaknesses periodically
 ―Checklistfor Performing Strengths/Weaknesses
Analysis‖
 Management or an outside consultant  reviews the
business‘s marketing, financial, manufacturing and
organizational competencies and rates each factor
as strength or weakness
 SWOT ANALYSIS

84. The Business Unit Strategic Planning /
Example of a Checklist
ı PERFORMANCE IMPORTANCE
Main 2nd Moderate 2nd Main High Medium Low
Strength Strength Weakness Weakness
MARKETING
Firm's reputation
Market share
Product/service quality
Pricing
Distribution
Promotion
Sales force
R&D / Innovation
Geographical location
FINANCE
High profitability
Low cost of capital
Cash flow
Financial stability
PRODUCTION
Scale economies
Capacity of meeting demand
Talented productive power
Timely production
Technical competence
ORGANIZATION
Skillful managers
Loyal employees
Entrepreneurship orientation
Flexibility degree
Rapid adaptation

85. SWOT Analysis
Marketing Analysis – SWOT Analysis

86. Market Opportunity Analysis (MOA)
 Can the benefits involved in the opportunity
be articulated convincingly to a defined
target market?
 Can the target market be located and
reached with cost-effective media and trade
channels?
 Does the company possess or have access
to the critical capabilities and resources
needed to deliver the customer benefits?

87. Market Opportunity Analysis (MOA)
 Can the company deliver the benefits better
than any actual or potential competitors?
 Will the financial rate of return meet or
exceed the company‘s required threshold for
investment?

88. Opportunity Matrix
Success Probability Opportunities
High Low
1. Company develops a more
powerful lighting system
Attractiveness
2. Company develops a device
High 1 2 for measuring the energy
efficiency of any lighting
system
3. Company develops a device
for measuring illumination
level
Low 3 4. Company develops a
4 software program to teach
lighting fundamentals to TV
studio personnel

89. Threat Matrix
Probability of Occurrence Threats
High Low
1. Competitor develops
a superior lighting
Seriousness
High system
1 2
2. Economic depression
3. Higher costs
4. Legislation to reduce
number of TV studio
Low 3 4 licenses

90. The Business Unit Strategic Planning
 Goal Formulation (Goals  objectives that are
specific with respect to magnitude and time)
 Turning objectives  into measurable goals  facilitates
management planning, implementation and control

91. The Business Unit Strategic Planning:
Strategy Formulation
Overall Cost Leadership
Differentiation
Michael Porter
Focus

92. The Marketing Process
 Analyzing marketing opportunities
 Researching and selecting target
markets
 Designing marketing strategies
 Planning marketing programs
 Organizing, implementing, controlling
the marketing effort

93. The Marketing Process
Managing the Marketing Effort

94. Managing the Marketing Effort
Marketing Functions
 Finding opportunities : the
company must analyze
• Analysis  its market & mktg
• Planning 
environment
company strengths &
• Implementation weaknesses
 current and possible mktg
• Control actions
 Avoiding threats
 Understanding strengths
 Analyzing weaknesses

95. Managing the Marketing Effort
Marketing Functions
• Analysis  Marketing planning 
involves deciding on
• Planning marketing strategies
• Implementation that will help the
company reach its
• Control strategic objectives

96. What is a Marketing Plan?
A marketing plan is the
central instrument for
directing and coordinating
the marketing effort.
It operates at a strategic and tactical
level.

97. Levels of a Marketing Plan
 Strategic  Tactical
 Target marketing  Product features
decisions  Promotion
 Value proposition  Merchandising
 Analysis of marketing  Pricing
opportunities  Sales channels
 Service

98. Marketing plan
The application of marketing resources to achieve marketing objectives
Executive Marketing Threats and
summary situation opportunities
Objective Marketing Action
and issues strategy programs
Budgets Controls

99. Managing the Marketing Effort
Marketing Functions
 The process that turns
mktg plans into mktg
• Analysis actions to accomplish
strategic mktg objectives
• Planning  Successful implementation
• Implementation depends on how well the
company blends its people,
• Control organizational structure,
decision and reward
system, and company
culture into a cohesive
action plan that supports its
strategies

100. Managing the Marketing Effort
Marketing Department Organization
Functional organization
Geographic organization
Product management organization
Market or customer management

101. Managing the Marketing Effort
Marketing Functions
 Measurement and
evaluation of the
• Analysis results of marketing
• Planning strategies
• Implementation  Checking for
differences between
• Control goals and
performance
 Taking of corrective
action as needed

102. Measuring Marketing Plan
Performance
 Sales analysis
 Market share analysis
 Marketing expense-to-sales ratio
 Financial analysis

103. Managing the Marketing Effort
 Return on marketing investment
(Marketing ROI) is the net return from a
marketing investment divided by the costs
of the marketing investment.
 provides a measurement of the profits generated
by investments in marketing activities.

104. Managing the Marketing Effort
Marketing Analysis of Company‘s Situation
Marketing Marketing Control
Planning Implementation
Measure
Results
Develop Strategic Carry Out
Plans The
Evaluate
Plans Results
Develop
Marketing Take
Plans Corrective
Action

105. Marketing Environment

106. The Marketing Environment
 Marketing Environment 
the actors and forces outside marketing that
affect marketing management‘s ability to develop
and maintain successful relationships with its
target customers.
 Microenvironment actors - forces close to
the company that affect its ability to serve its
customers.
 Macroenvironment forces - larger societal
forces that affect all the microenvironment.

107. The Marketing Environment
Demographic- Marketing Technological-
Economic Intermediaries Natural
Environment Environment
Product
Profitable
Suppliers Place Customer Price Publics
Relshps.
Promotion
Political- Social-
Legal Competitors Cultural
Environment Environment

108. The Microenvironment
Customer Markets
Company
Internal
Environment

109. The Microenvironment:
Company‘s Internal Environment
 Functional areas inside a company that have an
impact on the marketing department‘s plans
 Top management  responsible for setting
company‘s mission, objectives, broad strategies and
policies
 Marketing managers;
 make decisions within the parameters
established by top management
 must also work closely with other company
departments

110. The Microenvironment:
Suppliers
 Firms and individuals providing resources to the
company and its competitors to produce goods
and services.
 Important link in the company‘s overall
customer ―value delivery system‖
 to watch supply availability
 to monitor price trends of key inputs

111. The Microenvironment:
Intermediaries
 Firms that help the company to promote, sell,
and distribute its goods to final buyers
 Resellers
 Physical distribution firms
 Marketing service agencies
 Financial intermediaries

112. The Microenvironment:
Customer Markets
 Consumer markets  Individuals & households that
buy goods & services for personal consumption
 Business markets  Buy goods & services for
further processing in their production process
 Resellers markets  Buy goods & services in order
to resell them at a profit
 Government markets  Buy goods & services in
order to produce public services or transfer them to
those that need them
 International markets  Buyers of all types in
foreign countries

113. The Microenvironment:
Competitors
 Every company faces a wide range of
competitors.
 A company must secure a strategic advantage
over competitors to be successful in the
marketplace.
 No single competitive strategy is best for all
companies

114. The Microenvironment:
Publics
 Any group that has actual or potential interest
in or impact on an organization‘s ability to
achieve its objectives.
 Financial publics (banks, stockholders)
 Media publics (newsp.,magazines, radio&TV)
 Government publics
 Citizen-action publics (consumer org.,
environmental groups
 Local publics
 General publics
 Internal publics

115. The Macroenvironment
 Demographic
 Economic
 Natural
 Technological
 Political-Legal
 Social-Cultural

116. Demographic Environment
Worldwide Population Growth
Age Structure of the Population
Household Patterns
Geographical Shifts in Population
Educational Groups
Shift from Mass Market to Micromarkets
Ethnic Markets

117. Economic Environment
Economic
Development
Key
Changes in Income Economic
Concerns for
Marketers
Changing Consumer
Spending Patterns

118. Economic Environment
Income Distribution
Subsistence economies  The vast majority of people engage in simple
agriculture, consume most of their output and barter the rest for simple goods
and services.
Raw-material-exporting economies  are rich in one or more natural
resources but poor in other respects. Much of their revenue comes from
exporting these resources.
Industrializing economies  Manufacturing accounts for 10 to 20% of
gross domestic product. Industrialization creates a new rich class and a small
but growing middle class, both demanding new types of goods.
Industrial economies  are major exporters of manufactured goods and
investment funds. They buy manufactured goods from one another & export them
to other types of economies in exchange for raw materials & semi-finished goods.
Savings, Debt, & Credit Availability

119. Natural Environment
Shortages of
Raw Materials
Factors
Increased Energy Affecting Increased
Costs the Pollution
Natural
Environment
Changing Role of
Governments

120. Technological Environment
Accelerating Pace Unlimited Opportunities
of Change for Innovation
Issues in the Technological
Environment
Varying Increased
R & D Budgets Regulation

121. Legal Environment
Includes laws, government agencies, etc. that influence
& limit organizations/individuals in a given society
Growth of
Legislation
Special-
Regulating
Interest
Business
Groups

122. Social/Cultural Environment
People‘s View of
Themselves
People‘s View of People‘s View of
the Universe Cultural Values Others
of a
People‘s View of Society
People‘s View of
Nature
Organizations
People‘s View
of Society

123. Understanding Markets
through Marketing
Information Systems
Marketing is becoming a battle based more
on information than on sales power

124. Major Questions
 What are the components of a modern
marketing information system?
 What are useful internal records?
 What makes up a marketing intelligence
system?
 How can companies accurately measure
and forecast demand?

125. Importance of Market Information
 Companies need information about their
marketing environment, competition, customer needs
 Reasons for the need for real-time market
information
 Global marketing
 Buyer needs & wants
 Price competition vs. nonprice competition
 Companies with superior information;
 choose its markets better
 develop better offerings
 execute better marketing planning

126. The Marketing Information System
 A marketing information system (MkIS)
 consists of people, equipment, and procedures
 to gather, sort, analyze, evaluate, and distribute
 needed, timely, and accurate info. to marketing
decision makers.
 The MkIS helps managers to:
1. Assess information needs,
2. Develop needed information,
3. Distribute information.

127. The Marketing Information System

128. Useful questions to determine 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 studies do you periodically request?
 What information would you want that you are
not getting now?
 What are the four most helpful improvements
that could be made in the present marketing
information system?

129. Functions of a MkIS:
Developing Information
Information Needed by Managers Can be Obtained From:
Computerized Collection of Information
Internal Data from Data Sources (i.e. accounting)
within the Company.
Marketing Collection and Analysis of Publicly
Available Information about Competitors
Intelligence and the Marketing Environment
Design, Collection, Analysis, and
Marketing Reporting of Data about a Specific
Research Marketing Situation Facing the
Organization.

130. Internal Record System
 Consists of computerized collections of info.
obtained from data sources within the company
(internal data);
 Includes reports on orders, sales, prices, costs,
inventory levels, receivables, payables, etc.
 ―opportunities‖ and ―problems‖ can be determined by
analyzing these information
 Can usually be accessed more quickly and cheaply
 May be incomplete or data may be in the wrong
form.

131. Internal Record System
 The order-to-payment cycle
 Sales representatives, dealers, and customers
send orders to the firm
 The sales department prepares invoices, transmits
copies to various departments, and back-orders
out-of-stock items
 Shipped items generate shipping and billing
documents that go to various departments.
 Sales Information Systems
 Marketing managers need timely and accurate
reports on current sales.

132. Marketing Intelligence System
 A set of procedures and sources used by
managers to obtain everyday information about
developments in the marketing environment
 Competitive info. gathering sources:
 Company sales representatives
 Suppliers, resellers, customers (―mystery shoppers‖)
 Annual reports, speeches, press releases, and
advertisements
 Business publications, web pages
 Trade show exhibits
 Outside companies (e.g. mktg research company)

133. Sources of Competitive Information
 Independent customer goods and service
review forums
 Distributor or sales agent feedback sites
 Combination sites offering customer reviews
and expert opinions
 Customer complaint sites
 Public blogs

134. Steps to Quality Marketing Intelligence
 Train sales force to scan for new developments
 Motivate channel members to share intelligence
 Hire external experts to collect intelligence
 Network externally
 Utilize a customer advisory panel
 Utilize government data sources
 Purchase information

135. Additional Information
Forecasting and Demand Measurement
 Which market to measure?
 Potential market
 Available market
 Target market
 Penetrated market

136. A Vocabulary for Demand Measurement
Market Demand
Market Forecast
Market Potential
Company Demand
Company Sales Forecast
Company Sales Potential

137. Demand Measurement
 Market demand—the total volume for a
product that would be bought by a defined
customer group in a defined geographical area in
a defined time period in a defined marketing
environment under a defined marketing
program.
 Market potential—the limit approached by
market demand as industry marketing
expenditures approach infinity for a given
marketing environment.

138. Market Demand Functions

139. Company Demand and Sales Forecast
 Company demand—the company‘s
estimated share of market demand at
alternative levels of company marketing effort
in a given time period.
 Company sales forecast—the expected
level of company sales based on a chosen
marketing plan and an assumed marketing
environment.

140. Estimating Current Demand
 Total market potential—the maximum
number of sales that might be available to all of
the industry‘s firms during a given period, under
a given level of industry marketing effort and
environmental conditions.
 Area market potential—the market potential
of a specific location:
 Market buildup method
 Multiple-factor method

141. Estimating Current Demand:
Total Market Potential
 Calculations
 Multiple potential number
of buyers by average
quantity each purchases
times price
 Chain-ratio method

142. Estimating Current Demand:
Area Market Potential
Market-Buildup

143. Estimating Current Demand:
Area Market Potential
Multiple-Factor Index

144. Sales Forecasting Techniques
 Time Series Methods  Correlational
 Naive Forecasting Methods
 Trend Analysis  Simple regression
 Linear trends  Multiple regression
Non-linear trends
Judgemental


 Seasonal adjustments
Methods
 Moving Averages
 Jury of Executive
 Exponential
Opinion
Smoothing
 Sales Force
Composite

145. Marketing Research System
 Marketing research  the systematic
design, collection, analysis, and reporting of
data and findings relevant to a specific
marketing situation facing an organization.
 Market research  research into a
particular market !
 just one component of mktg research

146. Examples of research

147. Types of research
• Quantitative Research: Seeks to quantify the data
and typically applies some form of statistical analysis.
 It is based on large number of representative sample
 Data collection is structured
 Recommend a final course of action
• Qualitative Research: The main objective is to gain
qualitative understanding of the underlying reasons &
motives.
 It is based on large number of representative sample
 Sample consists of small number of nonrepresentative cases.
 Data collection is unstructured
 Data analysis is nonstatistical
 It is possible to develop an initial understanding

148. Types of Marketing Research Firms
Syndicated
Custom
Specialty-line

149. The Marketing Research Process
Defining the Implementing
the research
problem and Developing the
plan: collecting
research research plan the data
objectives
Implementing
Interpreting the research
and reporting plan: analyzing
the findings the data

151. Step 1: Defining the Problem &
Research Objectives
Example: ABC Airlines Case
 ABC Airlines is constantly looking for new ways to
serve the needs of air travelers:
 One manager came up with the idea of offering
phone service to passengers.
 The other managers got excited about this idea
and agreed that it should be researched further.
 The marketing manager volunteered to do
some preliminary research
 The marketing manager then asked the company‘s
research manager to find out how air travelers
would respond to this new service.

152. Defining the Problem & Research Objectives
Example: ABC Airlines Case (cont.)
 Research Problem ?
 “to find out everything about air travelers’ need” – too broad!
 “to find out if enough passengers aboard a B-747 flying
between East Coast and West Coast would be willing to pay $
25” to make a phone call so that the company would break
even on the cost of offering this service” – too narrow!
 Research Problem is finally defined as: “Will offering an in-
flight phone service create enough incremental preference
and profit for ABC Airlines to justify its cost against other
possible investments that the company might make?”

153. Defining the Problem & Research Objectives
Example: ABC Airlines Case (cont.)
 Research Objectives:
 What are the main reasons that airline passengers
might place phone calls while flying?
 What kinds of passengers would be the most likely
to make phone calls?
 How many passengers are likely to make phone
calls, given different price levels?
 How many extra customers might choose this
company because of this new service?
 How important will phone service be relative to
other factors? (such as flight schedules, food quality,
baggage handling, etc.)

154. Defining the Problem & Research
Objectives
•Sheds light on problem - suggest
Exploratory solutions or new ideas.
•Gathers preliminary information
Research that will help define the problem
and suggest hypotheses
•Ascertain magnitudes
Descriptive •Describes things as market
Research potential for a product or the
demographics and consumers’
attitudes.
•Test cause- and-effect
Causal relationships.
Research •Tests hypotheses about cause-
and-effect relationships.

155. Step 2: Developing the Research Plan
Data Research
Sources Approach
Research Sampling
Instruments Plan
Contact
Methods

156. Developing the Research Plan:
Data Sources
both must
be:
Data that were
collected for another Relevant Data gathered for
purpose, and already a specific purpose
exist somewhere Accurate or for a specific
research project
(+)Obtained more quikcly Current
/ at lower cost
(-)Might not be Impartial
usable data.

157. A classification of marketing research data

158. Developing the Research Plan
Secondary Data Collection
 Internal Sources
 Company profit-loss statements, balance sheets,
sales figures, sales-call reports, invoices, inventory
records, and prior research reports.
 Government Publications
 Statistical Abstract
 County and City Data Book
 Industrial Outlook
 Marketing Information Guide
 Periodicals and Books
 Business Periodicals Index
 Standard and Poor‘s Industry
 On-Line Databases (e.g. Lexis-Nexis, Compuserve, Dialog)

159. Applications of Secondary Data
 Demand Estimation
 Monitoring the environment
 Segmentation and Targeting

160. Sources of Secondary Data (examples)
 ESOMAR website - www.esomar.org
 founded in 1948
 4,400 members in 100 countries
 mission : "ESOMAR is the world organisation for enabling better
research into markets, consumers and societies."
 the aim is to promote the value of market and opinion research in
illuminating real issues and bringing about effective decision-
making.
 creates and manages a comprehensive programme of industry-
specific and thematic conferences, publications and
communications
 www.arastirmacilar.org in Turkey
(TÜAD – Türkiye Araştırmacılar Derneği)
 Other useful sources:
 AMA website – www.marketingpower.com
 AMS website – www.ams-web.org
 www.trendwatching.com

161. Research Approaches
Observation Ethnographic
research
Focus Group
In-depth Interview
Projective techniques
Survey
Experimentation

162. Developing the Research Plan:
Contact Methods
 Mail
 Telephone
 Personal (arranged or intercept interviews)
 Individual or group interviewing
 CAPI and CATI
 On-line (Internet research)
 the data are not representative of a target population
 people in the target market who do not use the Internet
or who don‘t want to answer a questionnaire can bias the
results.

163. Pros and Cons of Online Research
Advantages Disadvantages
 Inexpensive  Small samples
 Fast  Skewed samples
 Accuracy of data  Technological
 Versatility problems
 Inconsistencies

164. Developing the Research Plan:
Sampling Plan
Sample -
representative
segment of the
How should the Who is to be
population
sample be surveyed?
chosen? (Sampling
(Sampl.procedure) Unit)
How many
should be
surveyed?
(Sample size)

165. Developing the Research Plan:
Research Instruments
 Questionnaires  Technological
devices
 What questions to
ask?  Galvanometers
 Form of each  Tachistoscope
question?  Eye cameras
 Closed-end  Audiometers
 Open-end  GPS
 Wording?
 Ordering?

166. Questionnaire Do‘s and Don‘ts
 Ensure questions are  Avoid negatives
free of bias  Avoid hypotheticals
 Make questions simple  Avoid words that could be
 Make questions specific misheard
 Avoid jargon  Use response bands
 Avoid sophisticated  Use mutually exclusive
words categories
 Avoid ambiguous words  Allow for ―other‖ in fixed
response questions

167. Additional Information:
Question Types - Dichotomous
In arranging this trip, did you contact ABC
Airlines?
 Yes  No

168. Question Types – Multiple Choice
With whom are you traveling on this trip?
 No one
 Spouse
 Spouse and children
 Children only
 Business associates/friends/relatives
 An organized tour group

169. Question Types – Likert Scale
Indicate your level of agreement with the
following statement: Small airlines generally
give better service than large ones.
 Strongly disagree
 Disagree
 Neither agree nor disagree
 Agree
 Strongly agree

170. Question Types – Semantic Differential
ABC Airlines
Large ………………………………...…….Small
Experienced………………….….Inexperienced
Modern……………………….…..Old-fashioned

171. Question Types – Importance Scale
Airline food service is _____ to me.
 Extremely important
 Very important
 Somewhat important
 Not very important
 Not at all important

172. Question Types – Rating Scale
ABC Airlines‘ food service is _____.
 Excellent
 Very good
 Good
 Fair
 Poor

173. Question Types – Intention to Buy Scale
How likely are you to purchase tickets on
ABC Airlines if in-flight Internet access were
available?
 Definitely buy
 Probably buy
 Not sure
 Probably not buy
 Definitely not buy

174. Qualitative Techniques
Word Association
Sentence completion
Third person technique
Visualization
Brand Personification
Laddering

175. Characteristics of Good Marketing
Research
 Scientific method
 Research creativity
 Multiple methods
 Interdependence
 Value and cost of information
 Healthy skepticism
 Ethical marketing

176. Analyzing Marketing Information
 Information gathered in internal databases and
through marketing intelligence and marketing
research  may require more analysis
 Managers may need help in applying the info. to
their mktg problems and decisions
 Marketing decision support sysytems (MDSS) 
―coordinated collection of data, systems, tools and
techniques with supporting software and hardware, by
which an organization gathers and interprets relevant
information from business and environment and turns it
into a basis for marketing action‖
 marketing and sales software programs
 decision models

177. Interpreting and Reporting Findings
Researcher should present important findings that are
useful in the major decisions faced by management.
Step 1. Interpret the Findings
Step 2. Draw Conclusions
Step 3. Report to Management

178. Appendices--
Marketing metrics are the set of
measures that helps marketers
quantify, compare, and interpret
marketing performance.

179. Marketing Metrics
External Internal
 Awareness  Awareness of goals
 Market share  Commitment to goals
 Relative price  Active support
 Number of complaints  Resource adequacy
 Customer satisfaction  Staffing levels
 Distribution  Desire to learn
 Total number of  Willingness to change
customers  Freedom to fail
 Loyalty  Autonomy

180. Marketing-Mix Modeling
Marketing-mix models analyze data
from a variety of sources, such as
retailer scanner data, company
shipment data, pricing, media, and
promotion spending data, to
understand more precisely the effects
of specific marketing activities.

181. Marketing Measurement Pathway

182. Marketing Dashboard

183. Example of some Customer-Performance
Scorecard Measures
 % of new customers to average #
 % of lost customers to average #
 % of win-back customers to average #
 % of customers in various levels of satisfaction
 % of customers who would repurchase
 % of target market members with brand recall
 % of customers who say brand is most preferred

184. Analyzing Consumer
Markets and
Buyer Behavior
―The most important ingredient in the success of an
organization is a satisfied customer‖

186. Consumer Buying Behavior
The central question for marketers :
―How do consumers respond
to various marketing efforts
the company might use?”

187. Model of Buyer Behavior
Marketing and Buyer’s Black Box Buyer Responses
Other Stimuli
Buyer Characteristics Product Choice
Marketing Cultural
Product Social Brand Choice
Price Personal Dealer Choice
Psychological
Place
Promotion
Other Purchase Timing
Buyer Decision Process Purchase Amount
Economic Problem recognition
Technological Information search
Political Evaluation
Decision
Cultural Postpurchase behavior

188. Factors Influencing Consumer
Behavior
Cultural
Social
Personal
•Age and Psycho-
•Culture •Reference life-cycle logical
groups
•Occupation •Motivation
•Sub- •Economic •Perception BUYER
culture •Family situation •Learning
•Lifestyle •Beliefs and
•Roles attitudes
•Social •Personality
and and
class status self-concept

189. Factors Influencing
Consumer Behavior:Cultural
• Culture
Cultural Forms a person‘s wants and behavior
•Culture • Subculture
Groups with shared value systems
•Subculture
• Social Class
Society‘s divisions who share values,
•Social class interests and behaviors

190. Factors Influencing
Consumer Behavior:Cultural
• Subculture
Groups with shared value systems
Cultural
e.g. Hispanic subculture in the US
•Culture
•Subculture
•Social class

191. Factors Influencing
Consumer Behavior:Cultural
• Culture
Cultural Forms a person‘s wants and behavior
• Subculture
•Culture Groups with shared value systems
•Subculture • Social Class
Society‘s divisions who share values,
•Social class interests and behaviors

192. Factors Influencing
Consumer Behavior:Cultural
• Social Class
Cultural Society‘s divisions who share values,
interests and behaviors
•Culture
 Measured by a combination of
occupation, income, education, wealth,
•Subculture
and other variables
 Turkey  introduced first by PIAR
•Social class  SES analyses (www.arastirmacilar.org)

193. Factors Influencing Consumer
Behavior: Social
• Reference Groups
• Membership
Social
• Aspirational
• Opinion Leaders
•Reference • Buzz marketing
groups
• Family
•Family • Many influencers
• Buyers vs. users
•Roles & status
• Roles and Status

194. Factors Influencing Consumer
Behavior: Social (cont.)
• Ref. Groups : have a direct or
indirect influence on the
person’s attitudes or behavior
Social
• Membership Groups  groups
•Reference to which a person belongs
groups
• primary groups
• secondary groups
•Family
• Aspirational Groups  groups
•Roles & status to which a person would like to
belong

195. Factors Influencing Consumer
Behavior: Social (cont.)
• Opinion Leader person
within a reference group
who exert influence on
Social others
•Reference • Also called influentials or
groups
leading adopters
• offers advice or information about
•Family a specific product or product
category,
•Roles & status • can be found in all social classes

196. Groups and Social Networks
 Online Social Networks /
online communities where
people socialize or exchange
information and opinions
 blogs, social networking sites
(facebook), virtual worlds
(second life)

197. Factors Influencing Consumer
Behavior: Social (cont.)
• The most important consumer-
buying organization in the
society
Social
• Roles and relative influence of
•Reference family members in buying
groups decisions
• Buying roles vary in different
countries and social classes
•Family
• Buying roles change with evolving
life-styles
•Roles & status • joint decision making
• women arising as active buyers
• increasing role of children

198. Factors Influencing Consumer
Behavior: Social (cont.)
• The person‘s position in each
group  can be defined in
Social terms of both role and status:
•Reference • A Role  consists of the
groups activities that a person is
expected to perform according to
•Family the people around him
• Each role  carries a status
•Roles & status • A Status  is the general
esteem given a role by society

199. Factors Influencing Consumer
Behavior: Personal
• Family Life Cycle  stages
throughout which families pass as they
Personal mature over time
•Age and
life-cycle 1. bachelor stage
2. newly married couples, no children
•Occupation
3. full nest 1; youngest child under 6
•Economic 4. full nest 2; youngest child 6 or over
situation
5. full nest 3; older married couples with
•Lifestyle dependent children
•Personality 6. empty nest 1; older married couples no
and children with them
self-concept 7. empty nest 1; older married couples no
children at home; retired
8. solitary survivor, working
9. solitary survivor, retired

200. Stages in Family Life Cycle
1. Bachelor stage: Few financial burdens. Fashion opinion leaders.
Young, single, not living Recreation oriented. Buy: basic home equipment,
at home furniture, cars, equipment for the mating game;
vacations.
2. Newly married Highest purchase rate and highest average
couples: purchase of durables: cars, appliances, furniture,
Young, no children vacations.
3. Full nest I: Home purchasing at peak. Liquid assets low.
Youngest child under six Interested in new products, advertised 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 by
Youngest child six or over advertising. Buy larger-size packages, multiple-unit
deals. Buy: many foods, cleaning materials,
bicycles, music lessons, pianos.
See text for complete table

201. Factors Influencing Consumer
Behavior: Personal (cont.)
• Consumption patterns often
Personal shaped by:
•Age and
life-cycle • occupation &
•Occupation
•Economic
• economic circumstances:
situation
•Lifestyle • spendable income,
•Personality • savings and assets,
and • debts,
self-concept
• attitudes towards spending &
saving.

202. Factors Influencing Consumer
Behavior: Personal (cont.)
• Consumption patterns often
Personal shaped by:
•Age and
life-cycle • occupation &
•Occupation
•Economic
• economic circumstances:
situation
•Lifestyle • spendable income,
•Personality • savings and assets,
and • debts,
self-concept
• attitudes towards spending &
saving.

203. Factors Influencing Consumer
Behavior: Personal (cont.)
• Lifestyle  a person‘s pattern of
living as expressed in his activities,
Personal
interests and opinions
•Age and • Psychographics  technique of
life-cycle measuring lifestyles and developing lifestyle
•Occupation classifications
•Economic • Major dimensions measured are:
situation • Activities (work, hobbies, social
•Lifestyle events, entertainment, shopping,
sports,vacation)
•Personality
and • Interests (family, home, job,
self-concept recreation, fashion, food, media,
achievements)
• Opinions (themselves, social issues,
politics, business, economics, products,
future)

204. The VALS segmentation system:
An 8-part typology

205. AIOs and Lifestyle Dimensions

206. Excerpts from AIO Inventory
Instructions: Please read each statement and place an “x” in the box that best
indicates how strongly you “agree” or “disagree” with the statement.
Agree Disagree
Completely Completely
I feel that my life is moving faster and faster,
sometimes just too fast. [1] [2] [3] [4] [5] [6] [7]
If I could consider the “pluses” and “minuses,”
[1] [2] [3] [4] [5] [6] [7]
technology has been good for me.
[1] [2] [3] [4] [5] [6] [7]
I find that I have to pull myself away from e-mail.
Given my lifestyle, I have more of a shortage of [1] [2] [3] [4] [5] [6] [7]
time than money.
I like the benefits of the Internet, but I often don’t [1] [2] [3] [4] [5] [6] [7]
have the time to take advantage of them.

207. Factors Influencing Consumer
Behavior: Personal (cont.)
• Personality  a person‘s unique
characteristics that lead to relatively
Personal consistent and lasting responses to the
environment
•Age and
life-cycle • Brand personality  specific mix of
human traits that may be attributable to a
• Occupation particular brand
•Economic • Self-concept  the self image or general
situation
picture that people have of themselves
•Lifestyle • Person‘s actual self-concept  how she views
•Personality herself
and • Ideal self-concept  how she would like to view
self-concept herself
• Others‘ self-concept  how she thinks others see
her

208. Factors Influencing Consumer
Behavior: Psychological
• Freud’s Theory : Psychological
forces shaping people‘s behavior 
largely unconscious
Psychological • A person cannot understand fully his/her
own motivations
•Motivation
• Motivation research  looks for hidden and
subconscious motivation
•Perception • in-depth interviews / laddering
• projective techniques (i.e. word association,
•Learning sentence completion, picture interpretation,
role playing)
•Beliefs &
attitudes
• Maslow’s Theory : Maslow ordered
needs based on how pressing they are
to the consumer

209. Psychological Factors
Motivation
 A motive is a need that is sufficiently
pressing to direct the person to seek
satisfaction
 Motivation research is based on
Freud. Looks for hidden and
subconscious motivation
 Maslow ordered needs based on how
pressing they are to the consumer
226

210. Factors Influencing Consumer
Behavior: Psychological(cont)
• 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.‖

211. Maslow‘s Hierarchy of Needs

212. Factors Influencing Consumer
Behavior: Psychological(cont)
• Perception  process by which
people select, organize and interpret
information to form a meaningful
Psychological
picture of the world
•Motivation
1.Selective attention  tendency of people
•Perception to eliminate most of the information to
which they are exposed
•Learning 2.Selective distortion  to interpret
•Beliefs & information in a way that will support what
attitudes they already believe
3.Selective retention  to retain only part
of the information to which they are
exposed

213. Factors Influencing Consumer
Behavior: Psychological(cont)
• Learning  changes in a person‘s
behavior, arising from experience
Psychological • Learning occurs through the interplay
of: drives, stimuli, cues, responses and
•Motivation reinforcement
•Perception
• A drive: strong internal stimulus that calls
•Learning for action
• Cues: minor stimuli that determine when,
•Beliefs & where and how the person responds
attitudes • If the experience is rewarding  the
response will be positively reinforced

214. Factors Influencing Consumer
Behavior: Psychological(cont)
• Through doing and learning 
people acquire beliefs and
Psychological attitudes  have influence on
buying behavior
•Motivation
• A Belief  descriptive thought that a
•Perception person holds about something
•Learning
• An Attitude  a person‘s consistently
•Beliefs & favorable or unfavorable evaluations,
attitudes
feelings and tendencies toward an
object or idea

215. Factors Influencing Consumer
Behavior: Psychological(cont)
• Through doing and learning 
people acquire beliefs and
Psychological attitudes  have influence on
buying behavior
•Motivation
• A Belief  descriptive thought that a
•Perception person holds about something
•Learning
• An Attitude  a person‘s consistently
•Beliefs & favorable or unfavorable evaluations,
attitudes
feelings and tendencies toward an
object or idea

216. The Buying Decision
Process
• Marketers have to identify:
• Who makes the buying decision
• The types of buying decisions
• The steps in the buying process

217. Buying Roles –
Who makes the buying decision
• Initiator  who first gives the idea of
buying the product or service
• Influencer  whose view or advice influences
the decision
• Decider  who decide on any component
of buying decision
• Buyer  who makes the actual purchase
• User  who uses the product or sevice
purchased

218. Types of Buying Behavior
High Low
Involvement Involvement
Significant Complex Variety-
differences
between Buying Seeking
brands Behavior Behavior
Few Dissonance- Habitual
differences Reducing Buying Buying
between
brands Behavior Behavior

219. Stages of the Buying Decision
Process
Purchase
Decision
Evaluation Postpurchase
of Alternatives Behavior
Information
Search
Problem
Recognition

220. The Buyer Decision Process
Stage 1. Problem Recognition
Buyer
Needs Arising from:
State where the recognizes Internal Stimuli
buyer’s needs are
(hunger)
fulfilled and the a problem
or
buyer is satisfied. or External Stimuli
a need (friends)

221. The Buyer Decision Process
Stage 2. Information Search
Personal Sources •Family, friends, neighbors
•Most effective source of
information
Commercial Sources •Advertising, salespeople
•Receives most information
from these sources
Public Sources •Mass Media
•Consumer-rating groups
•Handling the product
Experiential Sources •Examining the product
•Using the product

222. The Buyer Decision Process
Successive Sets Involved in Customer Decision Making

223. The Buyer Decision Process
Stage 3. Evaluation of Alternatives
Consumer May Use Careful
Calculations & Logical Thinking
Consumers May Buy on Impulse and
Rely on Intuition
Consumers May Make Buying Decisions
on Their Own.
Consumers May Make Buying Decisions
Only After Consulting Others.
Marketers must study buyers to find out how they
evaluate brand alternatives

224. Consumer Evaluation Process
• The consumer is trying to satisfy a need
• The consumer is looking for certain benefits from the
product solution
• The consumer sees each product as a ―bundle of
attributes‖
• The attributes of interest to buyers vary by product
• Consumers differ as to which product attributes they see
as most relevant and the importance they attach to each
attribute

225. Consumer Evaluation Process (cont.)
• The consumer develops ―a set of brand beliefs‖ about
where each brand stands on each attribute (see table, next
page)
• The set of beliefs about a brand make up “brand
image‖
• The consumer arrives at attitudes (judgments
/preferences) toward different brands through an
attribute evaluation procedure.

226. Example: A Consumer’s Brand Beliefs
about Computers
Attribute
Computer 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
Computer A: 0.4(10)+0.3(8)+0.2(6)+0.1(4) = 8.0
Choice will be made based on the ―highest perceived value‖

227. Consumer Evaluation Process (cont.)
• Strategies designed to influence buyer decisions:
• Redesign the product – real positioning
• Alter beliefs about the brand – psychological positioning
• Alter beliefs about competitors‘ brands – competitive
positioning
• Alter the importance weights
• Call attention to neglected attributes
• Shift the buyer‘s ideas

228. The Buyer Decision Process
Stage 4. Purchase Decision

229. The Buyer Decision Process
Stage 5. Postpurchase Behavior
Satisfied Customer!
Consumer’s
Expectations of Product’s Performance ---
Product’s Perceived
Performance.
Dissatisfied Customer

230. Buyer Decision Process for
New Products
 New Products
 Good, service or idea that is perceived by
customers as new.
 Stages in the Adoption Process
 Marketers should help consumers move
through these stages.
247

231. Stages in the Adoption Process
Awareness: Consumer is aware of
product, but lacks information.
Interest: Consumer seeks
Information about new product.
Evaluation: Consumer considers
trying new product.
Trial: Consumer tries new
product on a small scale.
Adoption: Consumer decides
to make regular use of product.

232. Buyer Decision Process for
New Products
 Individual Differences in Innovativeness:
 Consumers can be classified into five
adopter categories, each of which behaves
differently toward new products
249

233. Adopter Categories
Percentage of Adopters
Early Majority Late Majority
Innovators
Early
34% 34% Laggards
Adopters
13.5% 16%
2.5%
Early Time of Adoption Late
250

234. Buyer Decision Process for
New Products
 Product Characteristics influencing the adoption rate:
 Relative Advantage  Is the innovation superior to
existing products?
 Compatibility  Does the innovation fit the values
and experience of the target market?
 Complexity  Is the innovation difficult to
understand or use?
 Divisibility  Can the innovation be used on a trial
basis?
 Communicability  Can results be easily observed
or described to others?

235. Buyer Decision Process for
New Products
 International Consumer Behavior
 Values, attitudes and behaviors differ greatly in other
countries.
 Physical differences exist which require changes in
the marketing mix.
 Customs vary from country to country.
 Marketers must decide the degree to which they will
adapt their marketing efforts.

236. Analyzing Business
Markets and Business
Buyer Behavior

237. Many businesses
are wisely turning
their suppliers
and distributors
into ―valued
partners‖.

238. Business Markets
 Business Market  all the organizations
that buy goods and services to use in the
production of other products and services
that are sold/rented or supplied to others.
 Business buying  decision making process by which
business buyers establish the need for purchased
products and services and identify, evaluate and choose
among alternative brands and suppliers

239. Characteristics of Business
Markets
Marketing Structure Contain fewer, but
and Demand larger buyers
Customers are more
geographically concentrated
Buyer demand is derived from
final consumer demand
Demand is often more
inelastic

240. Characteristics of Business
Markets
Nature of the Buying Unit
Business and the Decision Process
buying
involves a
more Business
professional purchases In business
purchasing involve more buying,
effort. buyers multiple
sales calls
are required.

241. Characteristics of Business
Markets
Types of Decisions and the
Business Decision Process
buyers
usually face Business
more buying In business
complex process is buying,
buying more buyers and
decisions. formalized. sellers work
more closely
together.

242. Model of Business Buyer
Behavior
The Environment The Buying Buyer Responses
Organization
Product or
Marketing
service choice
Stimuli: The buying
•Product center
•Price Supplier Choice
•Place
Buying decision Order Quantities
•Promotion
process
Other Stimuli: Delivery terms
•Economic (Interpersonal and and times
•Technological individual influences)
•Political Service terms
•Cultural (Organizational
•Competitive Influences) Payment

243. Major Types of Buying
Situations
New Task Buying
Involved Decision
Modified Rebuy
Making
Straight Rebuy

244. Participants in the Business
Buying Process
Initiators
Users
Decision
making unit of Influencers
a buying
Roles Include organization
Factors
is called Deciders
Situational
Unexpected
Buying
Center
Gatekeepers Approvers
Buyers

245. Major Influences on Business
Buying Behavior

246. Problem Recognition
General Need Description
Product Specification
-Product value analysis-
Stages of Supplier Search
Business
Buying Proposal Solicitation
Process
Supplier Selection*
Order Routine Specification
Performance Review

247. *Example -- Supplier Analysis
Rating Scale
Attributes Importance Poor Fair Good Excellent
Weights (1) (2) (3) (4)
Price .30 x
Supplier reputation .20 x
Product reliability .30 x
Service reliability .10 x
Supplier flexibility .10 x
Total score: .30(4) + .20(3) + .30(4) + .10(2) + .10(3) = 3.5

248. Buygrid Framework
Major Stages (Buyphases) of Business Buying Process in
Relation to Major Buying Situations (Buyclasses)
Buyclasses
New Modified Straigh
t
Task Rebuy Rebuy
1. Problem recognition Yes Maybe No
2. General need Yes Maybe No
description
3. Product specification Yes Yes Yes
Buyphases 4. Supplier search Yes Maybe No
5. Proposal solicitation Yes Maybe No
6. Supplier selection Yes Maybe No
7. Order-routine Yes Maybe No
specification
8. Performance review Yes Yes Yes

249. Dealing with
Competition
Poor firms ignore their competitors;
Average firms copy their competitors;
Winning firms lead their competitors.

250. Competitive Forces
5 Forces Determining Attractiveness
of a Market/Market Segment
Threat of:
1. intense segment
rivalry
2. new entrants
3. substitute
products
4. buyers’ growing
bargaining power
5. suppliers’
growing
bargaining
power

251. Threat of New Entrants
 New entrants mean downward pressure on
prices and reduced profitability
 Barriers to entry determines the extent of
threat of new industry entrants

252. Barriers to Entry
 Economies of Scale
 Decline in per-unit product costs as the absolute volume of
production per period increases
 Product differentiation
 The extent of a product‘s perceived uniqueness
 Capital requirements
 Required investment for manufacturing, R&D, advertising,
field sales and service, etc.
 Switching costs
 Costs related to making a change in suppliers or products

253. Barriers to Entry (cont.)
 Distribution channels
 Are there current distribution channels available with
capacity
 Government policy
 Are there regulations in place that restrict competitive entry?
 Cost advantages
 Access to raw materials, large pool of low-cost labor,
favorable locations, and government subsidies
 Competitor response
 How will the market react in anticipation of increased
competition within a given market

254. Threat of Substitute Products
 Availability of substitute products places limits
on the prices market leaders can charge
 High prices induce buyers to switch to the
substitute

255. Bargaining Power of Buyers
 Buyers seek to pay the lowest possible price
 Buyers have leverage over suppliers when
 They purchase in large quantities (enhances supplier
dependence on buyer)
 Suppliers‘ products are commodities
 Product represents significant portion of buyer‘s costs
 Buyer is willing and able to achieve backward
integration

256. Bargaining Power of Buyers
(cont.)
―We do not quibble or argue with anyone‘s
right to sing what they want, to print
what they want, and say what they want.
But we reserve the right to sell what we
want.‖
Wal-Mart‘s response to the accusation of
using its financial power to dictate what is
appropriate music and art

257. Bargaining Power of
Suppliers
 When suppliers have leverage, they can raise
prices high enough to affect the profitability
of their customers
 Leverage accrues when;
 Suppliers are large and few in number
 Supplier‘s products are critical inputs, are highly
differentiated, or carry switching costs
 Few substitutes exist
 Suppliers are willing and able to sell product
themselves

258. Rivalry among Competitors
 Refers to all actions taken by firms in the
industry to improve their positions and gain
advantage over each other
 Price competition
 Advertising battles
 Product positioning
 Differentiation

259. Identifying Competitors
 Company‘s actual and potential competitors
 A company is more likely to be hurt by
emerging competitors or new technologies
 ―Competitor myopia‖  a focus on current
competitors rather than latent ones
 Competition from both ―industry‖ and
―marketing‖ point of views

260. Identifying Competitors:
Industry Concept of Competition
 An Industry  group of firms that offer a
product or class of products that are close
substitutes for each other
 Industries are classified according to:
 Number of sellers - Degree of differentiaiton,
 Presence or absence of entry, mobility, and exit
barriers,
 Cost Structure,
 Degree of Vertical Integration,
 Degree of Globalization

261. Industry Concept of Competition
(cont.)
 Types of industry structure:
 Pure monopoly  only one firm provides a product in a
certain area or country
 Oligopoly  a small number of large firms produce products
that range from highly differentiated to standardized
 pure oligopoly -- the same commodity
 Monopolistic competition  many competitors able to
differentiate their offers
 Pure competition  offering the same product (no basis for
differentiation; prices will be similar)

262. Industry Concept of Competition
(cont.)
 Major entry barriers:
 high capital requirements
 economies of scale, patents and licensing
requirements,
 scarce locations, raw materials, or distributors
 Major exit barriers:
 legal or moral obligations to customers/employees,
 government restrictions,
 emotional barriers

263. Identifying Competitors:
Market Concept of Competition
 The industry approach  looking at
companies making the same product
 The market approach  looking at
companies that satisfy the same customer
need
 gives the opportunity to define a broader set of
actual and potential competitors & enables the
company to make long run strategic planning
The key to identify competitors  to link
industry and market concepts of competition

264. Market Concept of Competition
Competitor Map – Eastman Kodak

265. Analyzing Competitors
Objectives
Strategies
Competitor
Actions
Reaction
Patterns Strengths &
Weaknesses

266. Analyzing Competitors:
Strategic Groups in a Major Appliance
Industry
High
Group A
•Narrow line
•Lower mfg. cost
•Very high service Group C
Quality
•High price •Moderate line
•Medium mfg. cost
Group B •Medium service
•Full line •Medium price
•Low mfg. cost
•Good service
•Medium price Group D
•Broad line
Low •Medium mfg. cost
•Low service
•Low price
High Low
Vertical Integration

267. Analyzing Competitors:
Competitor’s Expansion Plans

268. Analyzing Competitors:
Strenghts & Weaknesses
 Collecting information on each competitor‘s
business:
 data on sales,
 mkt share,
 profit margin,
 ROI,
 new investments,
 capacity utilization, etc.
 By using the info. gathered  the company will
decide whom to attack in the marketplace

269. Analyzing Competitors
 3 variables to monitor when analyzing competitors:
 Market share  competitor‘s share of the target market
 Mind share  the percentage of customers who named the
competitor in responding to the statement ―Name the first
company that comes to mind in this industry.‖
 Heart share  the percentage of customers who named the
competitor in responding to the statement ―Name the first
company from which you would prefer to buy the product.‖

270. Designing Competitive
Intelligence System
1. Setting Up the System
2. Collecting the Data
 Salesforce, marketing channels, suppliers, MR firms,
trade assoc.
 Observing competitors
 Published data
 Online services
3. Evaluating and Analyzing the Data
4. Disseminating Information and Responding

271. Selecting Competitors
 Major Steps in Customer Value Analysis
 Identify the major attributes customers value
 Assess the quantitative importance of the different
attributes
 Assess the company‘s and competitors‘ performance on
the different customer values against their rated
importance
 Examine how customers rate the company‘s
performance against a specific major competitor on an
attribute-by-attribute basis
 Monitor customer values over time

272. Designing Competitive Strategies:
Hypothetical Market Structure & Strategies
Market
nicher
Market Market Market
leader challenger follower
40% 30% 20% 10%
Expand Market Attack leader Imitate Specialize
Defend Market Share Status quo
Expand Market Share

273. Market-Leader Strategies
1. Expanding the Total Market
 New Users
 Market-penetration strategy
 New-market segment strategy
 Geographical-expansion strategy
 New Uses
 More Usage
2. Defending Market Share
3. Expanding Market Share

274. Market-Leader Strategies:
Defense Strategies

275. Market-Leader Strategies:
Expanding Market Share

276. 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 firms
 Choosing a General Attack Strategy

277. Market-Challenger
Strategies: Attack Strategies

278. Specific Attack Strategies
 Price-discount
 Lower price goods
 Prestige goods
 Product proliferation
 Product innovation
 Improved services
 Distribution innovation
 Manufacturing cost reduction
 Intensive advertising promotion

279. Market-Follower Strategies
 Product imitation Product imitation vs. product
innovation
 4 broad strategies:
 Counterfeiter
 Cloner
 Imitator
 Adapter

280. Market-Nicher Strategies
Nicher Specialist Roles:
 End-user specialist  Product or product-line
 Value-added reseller specialist
 Vertical-level specialist  Product-feature specialist
 Customer-size specialist  Job-shop specialist
 Specific-customer specialist  Quality-price specialist
 Geographic specialist  Service specialist
 Channel specialist

281. Balance to be “market-
driven”!
Customer Competition
+ Identify opp.
+ Long-run profit + Fighter orientation
+ Constant Alert
+ Emerging needs & groups + Exploit weaknesses
- Too Reactive