Dr. Thomas Eppel - Management 1 Chapter 13,14 : Marketing


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Dr. Thomas Eppel - Management 1 Chapter 13,14 : Marketing

  1. 1. Marketing: Introduction, Products, Pricing Chapters 13 and 14
  2. 2. Overview <ul><li>Introduction to Marketing </li></ul><ul><ul><li>Four P’s of Marketing </li></ul></ul><ul><ul><li>Marketing Research </li></ul></ul><ul><ul><li>Market Segmentation </li></ul></ul><ul><li>Products </li></ul><ul><ul><li>Types of Products </li></ul></ul><ul><ul><li>Product Development </li></ul></ul><ul><li>Packaging and Branding </li></ul><ul><li>Pricing </li></ul>
  4. 4. The Four P’s of Marketing <ul><li>P roduct </li></ul><ul><li>P lace </li></ul><ul><li>P rice </li></ul><ul><li>P romotion </li></ul>
  5. 5. What Is Marketing? <ul><li>Marketing : The activity, set of institutions and processes for creating, communicating, delivering, and exchanging offerings with value for customers, clients, partners, and society at large </li></ul>
  6. 6. Four Eras of U.S. Marketing <ul><li>Production Era </li></ul><ul><li>Selling Era </li></ul><ul><li>Marketing Concept Era </li></ul><ul><li>Customer Relationship Era </li></ul>
  7. 7. The Production and Selling Eras <ul><li>The general philosophy was “Produce what you can because the market is limitless” </li></ul><ul><li>After mass production, the focus turned from production to persuasion </li></ul>
  8. 8. The Marketing Concept Era <ul><li>After WWII, a consumer spending boom developed </li></ul><ul><li>Businesses knew they needed to be responsive to consumers if they wanted their business </li></ul>
  9. 9. Applying the Marketing Concept <ul><li>The Marketing Concept includes three parts: </li></ul><ul><ul><li>Customer Orientation : Finding out what customers want and then providing it </li></ul></ul><ul><ul><li>Service Orientation : Making sure everyone in an organization is committed to customer satisfaction </li></ul></ul><ul><ul><li>Profit Orientation : Focusing on the goods and services that will earn the most profit </li></ul></ul>
  10. 10. The Customer Relationship Era <ul><li>Customer Relationship Management (CRM) : Learning as much as you can about customers and doing what you can to satisfy or exceed their expectations </li></ul><ul><li>Organizations seek to enhance customer satisfaction building long-term relationships </li></ul><ul><li>Today firms like Priceline and Travelocity use CRM that allow customers to build a relationship with the suppliers </li></ul>
  11. 11. Developing a Product <ul><li>Product : A good, service, or idea that satisfies a consumer’s want or need </li></ul><ul><li>Test Marketing : Testing product concepts among potential product users </li></ul><ul><li>Brand Name : A word, letter, or a group of words or letters that differentiates one seller’s goods from a competitor’s </li></ul>
  12. 12. Pricing and Placing a Product <ul><li>Pricing products depends on many factors: </li></ul><ul><ul><li>Competitors’ prices </li></ul></ul><ul><ul><li>Production costs </li></ul></ul><ul><ul><li>Distribution </li></ul></ul><ul><ul><li>High or low price strategies </li></ul></ul><ul><li>Middlemen are important in place strategies because getting a product to consumers is critical </li></ul>
  13. 13. Promoting the Product <ul><li>Promotion : All the techniques sellers use to inform people about their products and motivate them to purchase those products </li></ul><ul><li>Promotion includes: </li></ul><ul><ul><li>Advertising </li></ul></ul><ul><ul><li>Personal selling </li></ul></ul><ul><ul><li>Public relations </li></ul></ul><ul><ul><li>Viral marketing </li></ul></ul><ul><ul><li>Sales promotions </li></ul></ul>
  15. 15. Searching for Information <ul><li>Marketing Research : Analyzing markets to determine challenges and opportunities, and finding the information needed to make good decisions </li></ul><ul><li>Research is used to identify products consumers have used in the past and what they want in the future </li></ul><ul><li>Research uncovers market trends and attitudes held by company insiders and stakeholders </li></ul>
  16. 16. Collecting Secondary Research Data <ul><li>Secondary Data : Existing data that has previously been collected by sources like the government </li></ul><ul><li>Secondary data incurs no expense and is usually easily accessible </li></ul><ul><li>Secondary data doesn’t always provide all the needed information for marketers </li></ul>
  17. 17. Collecting Primary Research Data <ul><li>Primary Data : In-depth information gathered by marketers from their own research </li></ul><ul><li>Telephone, online and mail surveys, personal interviews, and focus groups are ways to collect primary data </li></ul>
  18. 18. Focus Groups <ul><li>Focus Group : A group of people who meet under the direction of a discussion leader to communicate opinions </li></ul>
  19. 19. Ways to Find Out What Consumers Think <ul><li>Conduct informal consumer surveys </li></ul><ul><li>Host a customer focus group </li></ul><ul><li>Listen to competitor’s customers </li></ul><ul><li>Survey your sales force </li></ul><ul><li>Become a “phantom” customer </li></ul>
  20. 20. Scanning the Marketing Environment <ul><li>Environmental Scanning : The process of identifying factors that affect marketing success </li></ul><ul><li>Factors involved in the environmental scan include: </li></ul><ul><ul><li>Global factors </li></ul></ul><ul><ul><li>Technological factors </li></ul></ul><ul><ul><li>Sociocultural factors </li></ul></ul><ul><ul><li>Competitive factors </li></ul></ul><ul><ul><li>Economic factors </li></ul></ul>
  21. 21. The Marketing Environment
  22. 22. The Consumer and B2B Market <ul><li>Consumer Market : All the individuals or households that want goods and services for personal use and have the resources to buy them </li></ul><ul><li>Business-to-Business (B2B) : Individuals and organizations that buy goods and services to use in production or to sell, rent, or supply to others </li></ul>
  24. 24. Marketing to Consumers <ul><li>The size and diversity of the consumer market forces marketers to decide which groups they want to serve </li></ul><ul><li>Market Segmentation : Divides the total market into groups with similar characteristics </li></ul><ul><li>Target Marketing : Selecting which segments an organization can serve profitably </li></ul>
  25. 25. Segmenting the Consumer Market <ul><li>Geographic Segmentation : Dividing the market by cities, counties, states, or regions </li></ul><ul><li>Demographic Segmentation : Dividing the market by age, income, education, and other demographic variables </li></ul><ul><li>Psychographic Segmentation : Dividing the market by group values, interests, and opinions </li></ul>
  26. 26. Segmenting the Consumer Market (cont.) <ul><li>Benefit Segmentation : Dividing the market according to product benefits the customer prefers </li></ul><ul><li>Volume (Usage) Segmentation : Dividing the market by the volume of product use </li></ul>
  27. 27. Marketing to Small Segments <ul><li>Niche Marketing : Identifies small but profitable market segments and designs or finds products for them </li></ul><ul><li>One-to-One Marketing : Developing a unique mix of goods and services for each individual consumer </li></ul>
  28. 28. Mass Marketing vs. Relationship Marketing <ul><li>Mass Marketing : Developing products and promotions to please large groups of people </li></ul><ul><li>Relationship Marketing : Rejects the idea of mass production and focuses toward custom-made goods and services for customers </li></ul>
  29. 29. The Consumer Decision Making Process and Outside Influences
  30. 30. Business-to-Business Market (B2B) <ul><li>B2B marketers include: </li></ul><ul><ul><li>Manufacturers </li></ul></ul><ul><ul><li>Wholesalers and retailers </li></ul></ul><ul><ul><li>Hospitals, schools and charities </li></ul></ul><ul><ul><li>Government </li></ul></ul><ul><li>Products are often sold and resold several times before reaching final consumers </li></ul>
  31. 31. B2B Market Differences <ul><li>There are relatively few customers </li></ul><ul><li>Customers tend to be large buyers </li></ul><ul><li>Markets are geographically concentrated </li></ul><ul><li>Buyers are more rational than emotional </li></ul><ul><li>Sales are direct </li></ul><ul><li>Promotions focus heavily on personal selling </li></ul>
  32. 32. PRODUCTS
  33. 33. Developing Value <ul><li>According to the American Marketing Association , value is a foundation of marketing </li></ul><ul><li>Value : Good quality at a fair price </li></ul><ul><li>Adapting products to new markets is an ongoing challenge </li></ul><ul><li>Product development is a key activity in any modern business </li></ul>
  34. 34. Developing a Total Product <ul><li>Total Product Offer : Everything consumers evaluate when deciding whether to buy something </li></ul><ul><li>Products are evaluated on many different dimensions, both tangible and intangible </li></ul><ul><li>Marketers must think like and talk to consumers to find out what’s important </li></ul>
  35. 35. Potential Components of a Total Product Offer
  36. 36. Understanding Product Lines <ul><li>Product Line : A group of products that are physically similar or intended for a similar market </li></ul><ul><li>Product lines often include competing brands like: </li></ul><ul><ul><li>M&Ms </li></ul></ul><ul><ul><li>Peanut M&Ms </li></ul></ul><ul><ul><li>Mint M&Ms </li></ul></ul><ul><ul><li>Dark Chocolate M&Ms </li></ul></ul>
  37. 37. The Product Mix <ul><li>Product Mix : The combination of all product lines offered by a manufacturer or service provider </li></ul><ul><li>Product mixes like Proctor & Gamble ’s can be extensive: </li></ul><ul><ul><li>Laundry detergent </li></ul></ul><ul><ul><li>Cosmetics </li></ul></ul><ul><ul><li>Diapers </li></ul></ul><ul><ul><li>Potato chips </li></ul></ul><ul><ul><li>Bar soap </li></ul></ul>
  38. 38. iPod Product Line
  39. 39. Apple: Product Mix
  40. 40. Differentiating Products <ul><li>Product Differentiation : The creation of real or perceived product differences </li></ul><ul><li>Marketers use a mix of pricing, advertising and packaging to create different images. Examples include: </li></ul><ul><ul><li>Bottled water </li></ul></ul><ul><ul><li>Aspirin </li></ul></ul><ul><ul><li>Fast-food </li></ul></ul><ul><ul><li>Laundry detergent </li></ul></ul><ul><ul><li>Shampoo </li></ul></ul>
  41. 41. Classifying Consumer Goods and Services <ul><li>Convenience Goods and Services : Products consumers purchase frequently with minimal effort. These include: </li></ul><ul><ul><li>Candy and snacks </li></ul></ul><ul><ul><li>Gas </li></ul></ul><ul><ul><li>Milk and eggs </li></ul></ul>
  42. 42. Classifying Shopping Goods and Services <ul><li>Shopping Goods and Services : Products consumers buy only after comparing value, quality, price, and styles. These include: </li></ul><ul><ul><li>Clothes and shoes </li></ul></ul><ul><ul><li>Appliances and furniture </li></ul></ul><ul><ul><li>Childcare </li></ul></ul><ul><ul><li>Home remodeling </li></ul></ul>
  43. 43. Classifying Specialty Goods and Services <ul><li>Specialty Goods and Services : Products with unique characteristics and brand identity </li></ul><ul><li>These include: </li></ul><ul><ul><li>Tiffany jewelry </li></ul></ul><ul><ul><li>Rolex watches </li></ul></ul><ul><ul><li>Lamborghini automobiles </li></ul></ul><ul><ul><li>Ritz Carlton Hotels </li></ul></ul>
  44. 44. Classifying Unsought Goods and Services <ul><li>Unsought Goods and Services : Products consumers aren’t aware of or haven’t thought of buying until they need them. These include: </li></ul><ul><ul><li>Car-towing services </li></ul></ul><ul><ul><li>Funeral services </li></ul></ul><ul><ul><li>Renter’s insurance </li></ul></ul>
  45. 45. Classifying Industrial Goods and Services <ul><li>Industrial Goods : Products used in the production of other products and sold in the B2B market </li></ul><ul><li>Industrial goods include: </li></ul><ul><ul><li>Installations </li></ul></ul><ul><ul><li>Capital items </li></ul></ul><ul><ul><li>Accessory equipment </li></ul></ul><ul><ul><li>Supplies </li></ul></ul><ul><ul><li>Service </li></ul></ul>
  47. 47. Some Key Functions of Packaging <ul><li>To attract buyers’ attention </li></ul><ul><li>Protect the goods inside and be tamperproof </li></ul><ul><li>Describe and provide information about the product </li></ul><ul><li>Explain the product’s benefits </li></ul><ul><li>Provide warranty information and warnings </li></ul><ul><li>Give an indication of price, value, and uses </li></ul>
  48. 48. Understanding Branding <ul><li>Brand : Name, symbol, or design that identifies the goods or services and distinguishes them from competitors’ offerings </li></ul><ul><li>Trademark : A brand that has exclusive legal protection for both its brand name and design </li></ul>
  49. 49. Key Brand Categories <ul><li>Manufacturers’ Brands : Brand names of manufacturers that distribute products nationally </li></ul><ul><li>Dealer (Private-Label) Brands : Products that carry a retailer’s or distributor’s brand name instead of a manufacturer’s </li></ul>
  50. 50. Key Brand Categories (cont.) <ul><li>Generic Goods : Non-branded products that sell at a discount compared to manufacturers’ or dealers’ brands </li></ul><ul><li>Knockoff Brands : Illegal copies of national brands </li></ul>
  51. 51. Establishing Brand Equity and Loyalty <ul><li>Brand Equity : The combination of factors (awareness, loyalty, perceived quality, images, and emotions) that people associate with a brand name </li></ul><ul><li>Brand Loyalty : The degree to which consumers are satisfied and are committed to further purchases </li></ul>
  52. 52. Building Brand Awareness <ul><li>Brand Awareness : How quickly or easily a given brand name comes to mind when someone mentions a product category </li></ul><ul><li>Consumers reach a point of brand preference when they prefer one brand over another </li></ul><ul><li>When consumers reach brand insistence, they will not accept substitute brands </li></ul>
  53. 53. Building Brand Associations <ul><li>Brand Association : Linking a brand to other favorable images, like celebrities or a geographic area </li></ul><ul><li>Brand Manager : Person responsible for a particular brand and handles all the elements of the brand’s marketing mix </li></ul>
  55. 55. The New Product Development Process
  56. 56. iPod Launch
  57. 57. IDEO
  58. 58. Bringing New Products to the Market <ul><li>Product Screening : Reduces the number of new products a firm is working on to focus on the most promising </li></ul><ul><li>Product Analysis : Focuses on the cost estimates and sales forecasts to get an idea of potential profitability </li></ul>
  59. 59. Bringing New Products to the Market (cont.) <ul><li>Concept Testing : Takes a product idea to consumers to test reactions </li></ul><ul><li>Commercialization : Promoting the product to distributors and retailers and developing the promotional campaign </li></ul>
  60. 60. The Four Stages of a Product Life Cycle <ul><li>Product Life Cycle : A theoretical look at what happens to sales and profits for a product over time </li></ul><ul><li>Product Life Cycle Stages: </li></ul><ul><ul><li>Introduction </li></ul></ul><ul><ul><li>Growth </li></ul></ul><ul><ul><li>Maturity </li></ul></ul><ul><ul><li>Decline </li></ul></ul>
  61. 61. Sales and Profits During the Product Life Cycle
  62. 62. PRICING
  63. 63. Pricing Objectives <ul><li>Achieving a target return on investment or profit </li></ul><ul><li>Building traffic </li></ul><ul><li>Achieving greater market share </li></ul><ul><li>Creating an image </li></ul><ul><li>Furthering social objectives both short-run and long-run </li></ul>
  64. 64. Pricing Strategies <ul><li>Cost-based pricing measures cost of producing a product including materials, labor, and overhead </li></ul><ul><li>Target Costing : Making the final price of a product an input in the product development process by estimating the selling price consumers will pay </li></ul><ul><li>Competition-Based Pricing : A strategy based on what the competition is charging for its products </li></ul>
  65. 65. Using Break-Even Analysis <ul><li>Break-Even Analysis : The process used to determine profitability at various levels of sales. The break-even point is where revenues equals cost </li></ul><ul><li>Total Fixed Costs : All costs that remain the same no matter how much is produced or sold </li></ul><ul><li>Variable Costs : Costs that change according to the level of production </li></ul>
  66. 66. Pricing Alternatives <ul><li>Skimming Price Strategy : Pricing new products high to recover costs and make high profits while competition is limited </li></ul><ul><li>Penetration Price Strategy : Pricing products low with the hope of attracting more buyers and discouraging other companies from competing in the market </li></ul><ul><li>Everyday Low Pricing (EDLP) : Setting prices lower than competitors with no special sales </li></ul>
  67. 67. Pricing Strategies of Retailers <ul><li>High-Low Pricing : Using regular prices that are higher than EDLP except during special sales when they are lower </li></ul><ul><li>Psychological Pricing : Pricing products at price points that make a product seem less expensive than it is </li></ul>
  68. 68. SUMMARY
  69. 69. Summary <ul><li>Products </li></ul><ul><ul><li>Value of products </li></ul></ul><ul><ul><li>Product mix and product line </li></ul></ul><ul><ul><li>Types of products </li></ul></ul><ul><li>New Product Development </li></ul><ul><ul><li>Product life cycle </li></ul></ul><ul><li>Packaging and Branding </li></ul><ul><li>Pricing </li></ul>