The Catholic University of America
Department of Business and Economics
MGT 545: Marketing Management
Student Notebook
Spring 2008
Prof. Abela
Name: ________________________
Table of Contents
Introduction to Marketing ................................................................................... 2
Consumer Markets, Products and Services ..................................................... 3
Business-to-Business Markets .......................................................................... 4
Analyzing the Marketing Environment .............................................................. 6
Segmentation ...................................................................................................... 7
Positioning .......................................................................................................... 8
Place/Distribution ............................................................................................... 9
Pricing................................................................................................................ 10
Promotion .......................................................................................................... 11
Direct Marketing ................................................................................................ 12
New Product Development .............................................................................. 14
Selling ................................................................................................................ 15
Measurement ..................................................................................................... 16
1
Introduction to Marketing
Definitions
Marketing
(AMA definition)
Marketing is the activity, conducted by organizations and individuals, that operates
through a set of institutions and processes for creating, communicating, delivering, and
exchanging market offerings that have value for customers, clients, marketers, and
society at large.
(Informal definition)
- The facilitation of exchange.
Marketing Mix
- The set of controllable tactical marketing tools—product, price, place, and
promotion—that the firm blends to produce the response it wants in the target
market.
- Also sometimes includes a “fifth P”, “People” – segmentation.
Frameworks
Issues
2
Consumer Markets, Products and Services
Definitions
Need
- A deprivation of some good that inhibits the authentic human fulfillment of the
person.
Want
- A felt desire for a perceived good that may or may not contribute to the authentic
human fulfillment of the person.
Demand
- A need or want that is backed by purchasing power.
Consumer market
- All the individuals and households who buy goods and services for personal
consumption
Frameworks
Consumer buyer decision process
- Need recognition
- information search
- evaluation of alternatives
- purchase decision
- post-purchase behavior
Unique characteristics of services
- Intangible
- variable
- inseparable
- perishable
Types of product
- Convenience [toothpaste, soap, gasoline]
- Shopping [personal computer, car, airline ticket]
- Specialty [collectors item, brand]
- Unsought [insurance, tombstone]
Issues
What is the relevance of the difference between needs and wants for marketers?
-
Demand for needs is more or less fixed, while demand for wants is apparently
infinite, and subject to stimulation
Demand for needs is more stable, while demand for wants is more volatile
3
Business-to-Business Markets
Definitions
Business market
- All organizations that buy goods and services for use in the production of other
products and services that are sold, rented or supplied to others
Derived demand
- Business demand that ultimately comes from (derives from) the demand for
consumer goods
Frameworks
Characteristics of the business market:
- Fewer but larger buyers, more inelastic demand, derived demand, more decisionmakers, more complex buying decisions, etc.
Types of business market:
- Corporate, institutional, government
Types of buying situations:
- Straight rebuy, modified rebuy, new task
Participants in the business buying process:
- Buying center, users, influencers, deciders, gatekeepers
4
Market Research
Definitions
Primary data
- Information collected for the specific purpose at hand; focused on specific
requirements
Secondary data
- Information that already exists somewhere, having been collected for another
purpose; obtained more quickly, cheaply
Frameworks
Market research process
- define problem and research objectives
- examine secondary data
- generate primary data
- analyze data
- develop recommendations
- aid in implementation
Primary research contact methods
- mail
- telephone
- personal interview
- online
Issues
5
Analyzing the Marketing Environment
Definitions
Frameworks
Microenvironment
- The forces close to the company that affect its ability to serve its customers:
- the company
- suppliers
- marketing channel firms
- customers
- competitors
- the public
Macroenvironment
- The larger societal forces that affect the microenvironment:
- demographic
- economic
- natural
- technological
- political
- and cultural forces
Issues
Why do marketers need to be aware of changes in the macro and micro-environments?
-
Because they create opportunities for new products and services, and can threaten
existing products and services.
6
Segmentation
Definitions
Segmentation
- Dividing a market into distinct groups of buyers on the basis of needs,
characteristics, or behaviors who might require separate products or marketing
mixes
Targeting
- The process of evaluating each market segment's attractiveness and selecting one
or more segments to enter
Frameworks
Segmentation approaches (examples)
- Geographic, demographic, psychographic, behavioral
Requirements for effective segmentation
- Measurable, accessible, substantial, differentiable, actionable
Issues
What is the difference between segmentation and targeting? Why do we need to do both?
-
Segmentation divides up the market, targeting assesses which segment to select
Why should marketers care about segmentation?
-
Because not everyone has the same needs, and you can’t (efficiently) be
everything to everyone.
7
Positioning
Definitions
Positioning
- Arranging for a product to occupy a clear, distinctive, and desirable place relative
to competing products in the minds of target consumers. Formulating competitive
positioning for a product and a detailed marketing mix
Issues
Is there a difference between perception and reality? What are the implications for
marketers?
-
Yes. Marketers must manage both perceptions and reality. People buy on
perceptions, but are satisfied by reality.
8
Place/Distribution
Definitions
Push strategy
- A promotion strategy that calls for using the sales force and trade promotion to
push the product through channels. The producer promotes the product to
wholesalers, the wholesalers promote to retailers, and the retailers promote to
consumers
Pull strategy
- A promotion strategy that calls for spending a lot on advertising and consumer
promotion to build up consumer demand. If the strategy is successful, consumers
will ask their retailers for the product, the retailers will ask the wholesalers, and
the wholesalers will ask the producers
Frameworks
Distribution strategies
- Intensive (Stocking the product in as many outlets as possible)
- Selective (The use of more than one, but fewer than all, of the intermediaries who
are willing to carry the company's products)
- Exclusive (Giving a limited number of dealers the exclusive right to distribute the
company's products in their territories)
Distributors’ responsibilities
- Break bulk
- Hold inventory
- Extend credit
- Delivery
- Gather market information
- Provide sales force
- Promotional vehicles
Issues
9
Pricing
Frameworks
Pricing approaches
- Cost-plus pricing vs. value pricing
Basic pricing strategies
- Premium, parity, discount
New product pricing strategies
- Skimming vs. penetration
Definitions
Cost-plus pricing
- Adding a standard markup to the cost of a product; should be used only when
there is no market price available.
Value pricing
- Offering the right combination of benefits at a fair price – usually the market
price.
Skimming
- Setting a high price for a new product to skim maximum revenues layer by layer
from the segments willing to pay the high price; the company makes fewer but
more profitable sales
Penetration
- Setting a low price for a new product in order to attract a large number of buyers
and a large market share
Issues
10
Promotion
Definitions
Integrated marketing communications (IMC)
- The concept under which a company carefully integrates and coordinates its many
communications channels to deliver a clear, consistent, and compelling message
about the organization and its products
Frameworks
Promotion mix
- Advertising
- Personal selling
- Public relations
- Direct marketing
- Consumer promotion
Main elements of advertising
- Objective (target, task: information, persuasion, reminder, and time)
- Strategy (what is the message, how does the media support it)
- Execution (how well—creatively, memorably—is the message executed?)
Consumer promotion tools
- Samples, coupons, rebates, premiums, price packs, contests
Issues
11
Direct Marketing
Definitions
Viral marketing
-
A strategy that encourages individuals to pass on a marketing message to others,
creating the potential for exponential growth in the message's exposure and
influence1
Frameworks
Different forms of direct marketing
- Face to face selling
- telemarketing
- direct mail
- catalog
- direct response TV
- kiosk marketing
- online marketing
Benefits of direct marketing to customers
- Convenient
- private
- broad product selection
- abundance of information
- interactive/immediate
Benefits of direct marketing to marketers
- Build consumer relationships
- reduce costs
- increase speed
- provide flexibility
- global reach
Ralph Wilson, “The Six Simple Principles of Viral Marketing,” 2000.
http://www.wilsonweb.com.
11
12
Brand Management
Definitions
Brand
- A distinguishing name and/or symbol (e.g. logo, trademark, package design)
intended to identify the goods or services of a seller or group of sellers and to
differentiate those goods or services from those of competitors
Brand equity
- The set of associations and behaviors on the part of a brand’s customers, channel
members and parent corporation that permits the brand to earn greater volume or
greater margins than it could without the brand name and that gives a strong,
sustainable and differential advantage
Frameworks
Benefits of brands to consumers
- Simplify search effort
- reduce perceived purchasing risk by providing assurance
- provide status and prestige
Issues
13
New Product Development
Frameworks
Stages in new-product development
- 1. Idea generation
- 2. idea screening
- 3. concept development and testing
- 4. marketing strategy
- 5. business analysis
- 6. product development
- 7. test marketing,
- 8. commercialization
Factors influencing new product adoption
- Relative advantage
- compatibility
- complexity
- divisibility
- communicability
Issues
14
Selling
Frameworks
Advantages of personal selling
- Probe customers to learn more about their problems
- adjust the marketing offer to fit the special needs of each customer
- negotiate terms of sale
- build long-term personal relationships with key decision makers
Selling process
- Prospecting and qualifying
- pre-approach
- approach
- presentation and demonstration
- handling objections
- closing
- follow-up
Issues
15
Measurement
Frameworks
The three types of measurable marketing impact and the benefits of each
- Consumer Attitudes (Diagnostic/ leading indicator, e.g. awareness, intention to
purchase, likeability)
- Consumer Behavior (measure of effectiveness, e.g. traffic, trial, repeat purchase)
- Company Performance (measure of efficiency, e.g. net profit, return on
investment)
Issues
16