1. Principles of Marketing - SS2014 - University of Siegen - Paul Marx: Chapter1. Introduction to Marketing

1. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”Jun.-Prof. Dr. Paul Marx | Universität Siegen WIRTSCHAFTSWISSENSCHAFTEN WIRTSCHAFTSINFORMATIK | WIRTSCHAFTSRECHT Juniorprofessur für Betriebswirtschaftslehre, insb. Marketing Jun.-Prof. Dr. Paul Marx | Universität Siegen MARKETING PRINCIPLES OF 1 LECTURE. THEME 1: INTRODUCTION TO MARKETING SUMMER SEMESTER 2014 JUN.-PROF. DR. PAUL MARX

2. Jun.-Prof. Dr. Paul Marx | University of Siegen Lecture “Principles of Marketing”Jun.-Prof. Dr. Paul Marx | Universität Siegen Vorlesung “Marketing” 2 1. Introduction to Marketing contents - Definition of marketing - Evolution of the concept of marketing - Scope of marketing - Application domain of marketing concepts - Determining the relevant market

3. Jun.-Prof. Dr. Paul Marx | University of Siegen Lecture “Principles of Marketing”Jun.-Prof. Dr. Paul Marx | Universität Siegen Vorlesung “Marketing” 3 Marketing:  what is it all about?

4. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” MARKETING: THE WORD 4 mar･ket･ing [ˈmɑːkɪtɪŋ]   noun A non-finite verb form (gerund) of to mar･ket [‘ma:rkit]  verb ( markets, marketing , marketed ) [ with obj. ] Verbalised substantive of mar･ket [‘ma:rkit]  noun                      mar･ket･ing ! Activities in the market

5. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” “Marketing is the process by which companies createcustomer interest in products or services. It generatesthe strategy that underlies sales techniques, businesscommunication, and business development. It is anintegrated process through which companies buildstrong customer relationships and create value fortheir customers and for themselves.” — Wikipedia DEFINITION OF MARKETING Jun.-Prof. Dr. Paul Marx | Universität Siegen Vorlesung “Marketing” 5 “Marketing is not only much broader than selling; it is not a specialized activity at all. It encompasses the entire business. It is the whole business seen from the point of view of the final result, that is, from the customer’s point of view. Concern and responsibility for marketing must therefore permeate all areas of the enterprise.” –Peter Drucker “Marketing is the social process by which individualsand groups obtain what they need and want throughcreating and exchanging products and value withothers.” — Philip Kotler “Marketing is the process whereby society, to supply its consumption needs, evolves distributive systems composed of participants, who, interacting under constraints – technical (economic) and ethical (social) – create the transactions or flows which resolve market separations and result in exchange and consumption.” – Bartles “Marketing is any contact that your business has withanyone who isn’t a part of your business. Marketing isalso the truth made fascinating. Marketing is the art ofgetting people to change their minds. Marketing is anopportunity for you to earn profits with your business, achance to cooperate with other businesses in yourcommunity or your industry and a process of buildinglasting relationships.” — Jay Conrad Levinson “Marketing is getting someone who has a need to know, like and trust you.” — Jon Jantsch (of Duct Tape Marketing fame) “Marketing is “The management process responsible for identifying, anticipating and satisfying customer requirements profitably.” — The Chartered Institute of Marketing “Marketing is the process of anticipating, managing, and satisfying the demand for products, services, and ideas.” — Wharton School, University of Pennsylvania “Marketing is everything.”   — Regis McKenna

6. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” MARKETING: THE OFFICIAL DEFINITION BY AMA 6 Marketing ! is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. American Marketing Association (AMA), est. in 2007 Source: http://www.marketingpower.com/aboutama/pages/definitionofmarketing.aspx

7. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” MARKETING: THE OFFICIAL DEFINITION BY AMA 7 Source: http://www.marketingpower.com/Community/ARC/Pages/Additional/Definition/default.aspx

8. Jun.-Prof. Dr. Paul Marx | University of Siegen Lecture “Principles of Marketing”Jun.-Prof. Dr. Paul Marx | Universität Siegen Vorlesung “Marketing” 8 Evolution of Marketing:  how the main marketing concepts emerged?

9. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” EVOLUTION OF MARKETING 9 “In building our new temple of knowledge we bury the foundations of the old with scarcely a thought as to their ability to support the new edifice. If we are wrong then, surely, the whole structure is liable to topple about our ears.” ! “… in creating our vision of the future perhaps what we need most of all is a greater awareness of our past” Michael J. Baker (1995): The Future of Marketing

10. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” THE BEGINNING OF THE 20TH CENTURY Wertheim department store in Berlin 1897 10 Assembly line workers 1900 “Inventions”: Trademarks Advertising Focus: Production Distribution Situation: Seller’s market Price competition Technological, demographic, political and regulatory, social, economic, and cultural factors technological progress, industrialization rapid population growth (almost tripled over 100 years), concentration of the population in fast-growing urban areas transport infrastructure development (rail, motor, waterways) ! Market trends seller’s market (excess demand) mass production leveraging economies of scale improved product turnaround time production-oriented approach with focus on production methods marketing as a distribution function avg.costs production output X1 Xopt

11. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” 1950–1960S 11 “Inventions”: Marketing mix Push- & Pull- Strategy Focus: Product Sales Consumer Situation: Market saturation Buyer’s market Technological, demographic, political and regulatory, social, economic, and cultural factors reconstruction after World War II: German Economic Miracle middle-class society: mass consumption as life style baby-boom (a family with children as a society model) immigration wave (refugees from the east, migrant workers) Market trends market saturation → Buyer’s market (excess supply) marketing as a “bottleneck managing function” sales orientation and product orientation (in terms of quality) systematization of sales instruments through the so called “4P’s”: product, price, promotion, place (a.k.a. “marketing mix”) 1969: the first marketing chair in Germany (Meffert) companies set up marketing departments

12. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” MARKET AS A BOTTLENECK FOR AN ENTERPRISE (IN THE TRANSITION FROM SELLER’S TO BUYER’S MARKET) 12 Criteria Seller’s market Buyer’s market Stage of economic development Deficit economy Affluent society Supply – Demand   relation Demand > Supply Consumers more active than suppliers Supply > Demand Suppliers more active than consumers Bottleneck areas   of an enterprise Procurement and/or production Sales, i. e. customers Key focus of company’s efforts Rational expansion of procurement and production capacities,   (physical) distribution of goods Stimulation of demand and creation of preferences for the company’s offering Source: based on Zentes/Swoboda 2001,p. 261. FROM TO TRANSITION MARKETING = BOTTLENECK MANAGING FUNCTION

13. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” PUSH VS. PULL   (ADVERTISING) STRATEGY 13 PullPush Producer Retailer Consumer Producer Retailer Consumer

14. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” MARKETING MIX (4 P’S) 14 Pricing policy: Pricing (price of cost coverage, penetration, skimming, etc.) Recommended retail / wholesale prices Discounts / cash discounts, etc. Seasonality Bundling Price discrimination … Distribution policy: Distribution channels Market coverage (full, selective, exclusive) Inventory / Logistics / Transport Order processing Returns handling ... Communications policy: Promotion strategy (push, pull, etc.) Advertising channels Personal selling & sales force Sales promotions Public relations & publicity Marketing communications budget ... Marketing Mix ≈ ! Determining and finding the right balance between marketing tools Product policy: Functionality / customer needs Marking: trademarks / labels / quality seals Quality / properties / style Safety Packaging Guarantee / service Assortment / program / accessories ... marketing manager = “mixer of ingredients”

15. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” “Inventions”: Segmentation Consumer behavior Focus: Marketing =   management function Situation: Market saturation Buyer’s market Technological, demographic, political and regulatory, social, economic, and cultural factors decline in the birth rate inflation, zero growth recessions following the oil crises of 1973, 1979 criticism of excessive consumption (esp. Erich Fromm, Herbert Marcuse) Market trends enterprises with no or an underdeveloped marketing function were on the losing side after both oil crises procurement marketing transition from selling to marketing concept marketing as an integrated mindset,   marketing management 1970S 15 Sonntagsfahrverbot in Nov-Dez 1973

16. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” 16 easter island - 1722 • population of 2000 • 64 square miles • 1,400 miles from the nearest inhabitable place • 2,000 miles from the nearest continent no trees 200 giant statues 30ft high 80 tons how? the original settlers arrived in massive canoes the island they found was covered in trees survive thrive finite resources 3. you can’t survive 1. too much of this... 2. this all disappears... there are over 700 unfinished statues on easter island they kept making them right until the trees ran out... Source: Willshire, John V. (2012): Make Things People Want or Make People Want Things? PROCUREMENT MARKETING

17. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” ENHANCED UNDERSTANDING OF MARKETING 17 company customerssuppliers procurement marketing sales marketing

18. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” POSSIBLE ATTITUDES IN EXCHANGE PROCESSES WITH CUSTOMERS 18 product & production orientation maximizing production output marketing orientation business philosophy   that promotes a consumer-oriented mindset across the entire company sales orientation selling and promotion

19. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” SALES MARKETING VS. MARKETING ORIENTATION 19 sales orientation MeansMain focus Goals firm’s products driving   sales selling and promotion consumers’   needs and wants customer satisfaction integrated marketing efforts Source: based on Kotler, P. (1982): Marketing-Management, 4. edition., Stuttgart, p.34. marketing orientation

20. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” SALES MARKETING VS. MARKETING ORIENTATION 20 „Selling focuses on the needs of the seller, marketing on the needs of the buyer. Selling is preoccupied with the seller’s need to convert the product into cash, marketing with the idea of satisfying the needs of the customer by means of the product and the whole cluster of things associated with creating, delivering, and, finally, consuming it.“ ! Theodore Levitt

21. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” MARKETING BECOMES A MANAGEMENT FUNCTION 21 Personal Produktion Marketing BeschaffungF&E Finanzierung Marketing as an equal   functional unit Marketing silo

22. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” “Inventions”: SWOT & portfolio analysis, Complaint-Mngmt Focus: Competition, Stakeholder Situation: Market saturation, Buyer’s market Technological, demographic, political and regulatory, social, economic, and cultural factors changed consumer and environmental behavior competitive pressure, esp. from Japan developments in telecommunication technology Market trends global corporations triad market (US, EU, Japan) fight for survival in the long-run   → advanced consideration of corporate environment  → focus on competition  → strategic marketing  → relationship marketing buzzwords: competitive advantage, positioning, stakeholder, complaint management 1980S 22

23. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” TRANSACTION MARKETING VS. RELATIONSHIP MARKETING 23 Source: based on Bruhn (2001), S. 12. criteria transaction marketing relationship marketing time frame short-term long-term marketing object product and/or service product and/or service  AND  consumer marketing objective customer acquisition customer acquisition customer retention & loyalty customer recovery marketing strategy presentation of products and services maintaining dialogue with the customer performance indicators profit margin of profit turnover costs additionally: customer contribution margin customer value FROM TO TRANSITION

24. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” REACH OF THE MARKETING CONCEPT 24 company ! ! employees customerssuppliers other exchange partner Procurement Marketing sales marketing corporate social responsibility internal marketing competitive environment society

25. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” TOOLS OF STRATEGIC MARKETING (AN INCOMPLETE OVERVIEW) 25 these tools will be considered in detail … a little bit later Toshiba Toshiba new Compaq Sanyo AST exec. TI IBM Dell Distinctiveness (Attribute 1) Elegance (Attribute 2) Factor 1 (Design) Factor 2 PRODUCT LIFE CYCLE SWOT & PORTFOLIO ANALYSIS

26. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” THE HYPE CYCLE (ADOPTION OF NEW TECHNOLOGY) 26 time visibility technology trigger peak of inflated expectations trough of disillusionment slope of enlightenm ent plateau of productivity Source: Fenn, Jackie and Mark Time (2008): “Understanding Gartner's Hype Cycles”, Harvard Business Press

27. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” “Inventions”: Multy-Channel-Mkg. CSR SEO,SEM Long Tail Focus: Environment, Networking, eCommerce Situation: Paradoxical competition, Power of consumers Technological, demographic, political and regulatory, social, economic, and cultural factors rapid progress in microchip and information technology elimination of borders and single currency in EU globalization Market trends migration of business to online channels almost absolute transparency in the market hyper, i.e., paradoxical competition  “the next provider is just a click away” consumer → prosumer orientation on consumer behavior micro segmentation / customization marketing = market-oriented philosophy of doing business 1990S–2000S 27

28. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” LONG TAIL 28 #ofunitssold products Source: based on Anderson (2004), “The Long Tail” shelf space 1.500 Games 65.000   movies 75.000 movies & TV shows 720.000 Apps 28.000.000 songs 30.000.000 songs 2.500.000  books “Businesses with distribution power can sell a greater volume of otherwise hard to find items at small volumes than of popular items at large volumes” Anderson 2004

29. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” Personal Produktion Marketing BeschaffungF&E Finanzierung MARKETING BECOMES A PHILOSOPHY OF CUSTOMER DRIVEN MANAGEMENT 29 Focus on the customer Source: based on Kotler/Bliemel (2001),p. 43 Kunde Personal Produktion Finanzierung Beschaffung F&E M A R K E T I N G Production Finance Procurem ent HR R&D Customer Marketing as an equal   management unit

30. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” “Marketing is so basic that it cannot be considered a separate function… It is the whole business seen from the point of view of its final result, that is, from the customer’s point of view” Peter Drucker MARKETING BECOMES A PHILOSOPHY OF CUSTOMER DRIVEN MANAGEMENT 30 “Marketing ist die bewusst marktorientierte Führung des gesamten Unternehmens” Heribert Meffert Kunde Personal Produktion Finanzierung Beschaffung F&E M A R K E T I N G Production Finance Procurem ent HR R&D Customer Focus on the customer * Marketing means deliberate market-oriented   corporate governance

31. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” “Inventions”: Social-Media-Mkg. Recommender systems, Big Data Focus: ! ? Technological, demographic, political and regulatory, social, economic, and cultural factors progress in mobile and data processing technologies migration of social activities to online social networks ! Market trends increasing market complexity and market dynamics “glassy” (transparent) consumers customization and personalization of services (re-)targeting at the individual level information overload 2010S 31 https://history.google.com/history/ Situation: Paradoxical competition, Power of consumers

32. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” OF MARKETING 32

33. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” 1950s distribution function 1960s bottleneck management 1970s management function 1980s strategic marketing 1990s market-oriented management concept 2000s multioptional cross-linked relationship m. 2010s social media marketing; big data era focus time EVOLUTION OF MARKETING AN OVERVIEW 33 Enterprise Consumer Trade Competition Environment Networks ? Seller’smarket,massproduction focus:advertising marketsaturation→buyer’smarket salesandcustomerorientation Informationtechnology→  hyper/paradoxicalcompetition consumerbehavior Continuing stagnation of markets;   Changed environmental view and consumer behavior long-term orientation on all market participants functionalview  ofmarketing Source:basedonMeffert(1994)

34. Jun.-Prof. Dr. Paul Marx | University of Siegen Lecture “Principles of Marketing”Jun.-Prof. Dr. Paul Marx | Universität Siegen Vorlesung “Marketing” 34 Modern Marketing:  how do we understand it now?

35. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” APPROACHES TO UNDERSTANDING MODERN MARKETING 35 Marketing as a mindset / philosophy consequent alignment of all managerial decisions with consumers’ needs and wants ! Marketing as a management concept set of methods and instruments to support effective decision-making ! Marketing as a social technology coherent use of marketing tools to create consumer preferences and competitive advantages

36. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” DIFFERENTIATION OF MARKETING 36 by objects consumer goods marketing capital goods marketing services marketing media marketing by problem areas international marketing relationship marketing social media marketing by type of entities commercial marketing non-commercial marketing education marketing Examples

37. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” MARKETING SYSTEM 37 analysis consumer behavior, market research development of strategies, definition of goals, implementation, monitoring of performance strategic marketing instruments products, innovation, brands, pricing, advertising, distribution FUNCTIONS CONCEPTS

38. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” “Girls fall in love with what they hear. Boys fall in love with what they see. That's why girls wear make up; and boys lie.” House M.D. quoting Wiz Khalifa DEFINITION OF MARKETING BY AMA 38 Marketing ! is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. American Marketing Association (AMA), est. in 2007 Source: http://www.marketingpower.com/aboutama/pages/definitionofmarketing.aspx

39. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” THE ESSENCE OF MARKETING 39 primary objective of marketing:   create value for customers ! marketing involves an exchange and enduring relationships between buyers and sellers or between other parties marketing has an impact on the firm, its suppliers, its customers, and others affected by the firm’s choices processes involved include:  creating, communicating, delivering, and exchanging offerings RELEVANT FOR EXAM Companies are not in business to create things ! but they are in business to create customers

40. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” MARKETING: A VERY PARSIMONIOUS SUMMARY Value & Quality Satisfaction Profit Consumer

41. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” MARKETING: A VERY PARSIMONIOUS SUMMARY Value & Quality Satisfaction Profit Needs Wants Preferences Utility function Attitudes Intentions Motives Involvement Beliefs Emotions Lifestyle Habits Buying behavior ... Trust & Loyalty Consumer Consumers Producers Suppliers Middlemen Resellers Brokers Retailers Shareholders Society …

42. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” THE ESSENCE OF MARKETING 42

43. Jun.-Prof. Dr. Paul Marx | University of Siegen Lecture “Principles of Marketing”Jun.-Prof. Dr. Paul Marx | Universität Siegen Vorlesung “Marketing” 43 MARKETing  what is my target market? determining market boundaries and structure

44. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” WHAT IS MARKET? 44 “Marketing means deliberate market-oriented corporate governance” Heribert Meffert Marketing as “market-oriented management of the entire company” requires an understanding of what a market is.

45. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” WHAT IS MARKET? 45 Market     is any structure that allows buyers and sellers to exchange any type of goods, services and information. In terms of Marketing:  A market is made up of all actual and potential buyers and sellers of mutually substitutable goods. There are two roles in markets, buyers and sellers. The market facilitates trade and enables the distribution and allocation of resources in a society. Markets allow any tradable item to be evaluated and priced.

46. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”Jun.-Prof. Dr. Paul Marx | Universität Siegen Vorlesung “Marketing” (1) At least two parties are involved (2) Each party must possess something that has value for the other (3) Each party must communicate with the other and be able to transfer   the object of exchange (4) Each party must be able to accept or reject the offer EXCHANGE IN TERMS OF MARKETING 46 Market! is any structure that allows buyers and sellers to exchange any type of goods, services and information. “Marketing is a human activity directed at satisfying needs and wants through   an exchange process.” Philip Kotler

47. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” RELEVANT MARKET 47 Market structuring Defining the relevant market from a provider’s perspective ! Partitioning the Market market strategy budget consumers product competitors marketing mix The definition of the relevant market impacts ALL managerial decisions Defining groups of substitute product and/or potential competitors Reducing heterogeneity of possible relevant exchange processes between customers and providers

48. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” RELEVANT MARKET 48 fruit market (total): 5% banana market: 50% Market Share of Chiquita

49. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing”Jun.-Prof. Dr. Paul Marx | University of Siegen Lecture “Principles of Marketing” RELEVANT MARKET 49 “We used to believe that we were active in the biscuits market. Biscuits, however, are not a market at all, but rather they are a product. Actually, we are active in the market for food that is not eaten from a plate.” ! Werner Bahlsen (1987) Markets do not exist objectively; rather, a market depends on   a company’s design and concept of it “Markets are created by companies”

50. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” POSSIBLE OBJECTS FOR DEFINING THE RELEVANT MARKET 50 Provider: Definition of the market by groups of providers eg., chemical market as the market served by chemical companies Products: Definition of the market by certain product groups eg., the market for long-distance traveling Needs: Definition of the market by certain customer needs eg., the market for entertainment and leisure activities Buyer: Definition of the market by certain customer groups eg., the market of affluent private customers, business travelers

51. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” DEFINING THE RELEVANT MARKET 51 product What type of products and/or services do we offer? What needs they satisfy? What benefits they provide? geography Does the market have local, regional, national or international boundaries? time Is the market limited in time? Are there time boundaries? Is there seasonality? When defining the boundaries of the relevant market,   the following market dimensions must should be considered:

52. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” objective vs subjective DEFINING THE RELEVANT MARKET 52 product What type of products and/or services do we offer? What needs they satisfy? What benefits they provide? When defining the boundaries of the relevant market,   the following market dimensions must should be considered:

53. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” Product- based market partitioning BENEFIT-ORIENTED VS. PRODUCT-ORIENTED MARKET PARTITIONING 53 Transport Document processing Education ... Product-oriented market partitioning Railways Software Books Smartphones Benefit-oriented market partitioning Market for... Market for... Market for... Market for...

54. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” 54 Product- based market partitioning CASE EXAMPLE: PRODUCT-BASED MARKET PARTITIONING FOR DIET COKE Diet Coke Pepsi Light Club Cola Light Low calorie cola Orange sodas Lemon sodas Apple juice Mineral waterBeer Milk Soft Drinks Beverages

55. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” CASE EXAMPLE: PRODUCT-BASED MARKET PARTITIONING FOR DIET COKE Product- based market partitioning

56. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” eg.: - in summer: football tickets, Cola, children’s chewing gum, less TV; - length of the product life cycle, technological transformations, positioning and repositioning DEFINING THE RELEVANT MARKET 56 product What type of products and/or services do we offer? time Is the market limited in time? Are there time boundaries? Is there seasonality? When defining the boundaries of the relevant market,   the following market dimensions must should be considered:

57. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” DEFINING THE RELEVANT MARKET 57 product Welche Art von Leistungen werden im Markt angeboten? time Ist der Markt zeitlich begrenzt? When defining the boundaries of the relevant market,   the following market dimensions must should be considered: geography Does the market have local, regional, national or international boundaries? local, regional, national, international, global, … BUT! two products are substitutes only when they both are available for consumers market barriers Economic (eg., transport costs) Protectionist trade barriers   (eg., import and export restrictions, country-  specific technical norms -> adaptation,   customer behavior a-la „buy Britisch“)

58. Jun.-Prof. Dr. Paul Marx | University of Siegen “Principles of Marketing” DEFINING THE RELEVANT MARKET 58 product What type of products and/or services do we offer? What needs they satisfy? What benefits they provide? geography Does the market have local, regional, national or international boundaries? time Is the market limited in time? Are there time boundaries? Is there seasonality? When defining the boundaries of the relevant market,   the following market dimensions must should be considered:

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1. Principles of Marketing - SS2014 - University of Siegen - Paul Marx: Chapter1. Introduction to Marketing