Foundations of Marketing Thought
“You Are Who You Think You Are; So Be Careful
About Who You Think You Are”
Marketing: the process of planning and executing the
conception, pricing, promotion, and
distribution of ideas, goods, and services to
create exchanges that satisfy individual and
organizational goals.
Foundations of Business Thought
Marketing by Creating Customer Value
1.
2.
3.
4.
5.
6.
At bare minimum, offer products that perform
Surpass customer expectations
Do not price unrealistically
Give guarantees
Give the buyer facts
Build relationships
Foundations of Business Thought
Marketing Mix
The “Four Ps”
Product
Place
Promotion
Price
Foundations of Business Thought
The Marketing Mix Elements
Product: the physical
unit, package,
warranty, after-sale
service, image value,
etc.
Price: list price, credit
terms, allowances,
flexibility, discounts
Place: channels,
middlemen, market
coverage, transportation
Promotion: objectives,
personal selling,
advertising, sales
promotion, public
relations, word of mouth
Foundations of Business Thought
PRODUCT
Foundations of Business Thought
New Product Development Process
Possibilities
• Generating Ideas
• Screening Ideas
• Business Analysis
• Development
• Test Marketing
• Commercialization
New Product
Foundations of Business Thought
The Market Research Process
1. Situation analysis
/Define problem
3. Analyze
data
2. Collect primary
and secondary data
4. Problem Prepare report
of recommended solutions
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5. Follow up
Selecting Target Markets
Market segmentation approach
Automobiles
Multisegment approach
Concentration approach
Compact cars
Sport Utility
Vehicles
Sports cars
Luxury cars
Foundations of Business Thought
Twin
TracII
Atra
Sensor Blades Swivel
Double
Edge
Super
Speed
Lady
Gillette
Techmatic
Depth of Product Line
Gillette’s Product Mix
Razor and blades
Toni
Right
Guard
Dry Idea
Soft
& Dry
Silkience
Toiletries
Foundations of Business Thought
Branding Distinctions
Brand: a name, term, symbol, design or combination that identifies
a sellers product and differentiates it form its competition.
Brand Name: part of the brand that can be spoken, including
letters, words or numbers that differentiates the goods and
services of a seller from their competitors.
Brand Mark: elements of a brand that cannot be spoken; used on
all or most of a company’s products.
Trade Character: a person, personified character or animal used
to identify a product or business.
Trade Mark: exclusive right to use a brand, brand name, brand
mark or trade character that has been given legal protection.
Foundations of Business Thought
Global Brand Names
Brand
Country
Sony
Japan
Jaguar
U.S.A.
Disney
U.S.A.
Nestle
Switzerland
Land Rover
Great Britain
McDonald’
s
Coca-Cola
U.S.A.
Mercedes Benz
Germany
U.S.A.
Foundations of Business Thought
Product Life Cycle
Introduction
Growth
Maturity
Decline
Dollars
Industry sales
Industry profits
0
Time
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Life Cycle
Rowing Machines
250
250
Thousands
200
200
150
150
100
100
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1990
1990
1989
1989
1988
1988
1987
1987
1986
1986
1985
1985
1984
1984
1983
1983
1982
1982
1981
1981
00
1980
1980
50
50
Extending the Product Life Cycle
The Many Uses of Baking Soda:
Cleaning Batteries
Dry Baths for Pets
Deodorizing Musty Towels
Cat Litter Deodorizer
Refreshing Bath Additive
Cleaning Brushes and Combs
Denture Soak
Hair Care (mix with shampoo)
Insect Bite Care
Relief for Acid Indigestion
Soothing Irritated Skin
Cleaning Coffee and Tea Pots
Deodorizing Cutting Boards
Homemade modeling clay
Emergency Fire Pail
Make an Erupting Volcano
Freshen and Deodorize
Foundations of Business Thought
The Names of Price
tariff
charge
tuition
premium
cost
expenditure
figure
Price
t
paymen
dues
fee
rate
fare
interest
wage
Foundations of Business Thought
Prestige Pricing
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Distribution Channel Markups
Total amount paid by consumer $84.53
Retailer’s markup (75%)
$36.23
Manufacturer’s Cost
$35.00
Wholesaler’s Markup (20%)
Manufacturer’s markup (15%)
$8.05
$5.25
Foundations of Business Thought
Break-Even Analysis
Should Sportswear International Charge $20 or $30
for each pair of shorts?
Cost
Fixed $800,000
Variable $10 per short
Forecasted Sales
65,000 shorts @ $20 per short
50,000 shorts @ $30 per short
Break-Even formula
$20 price = $800,000 / ($20 - $10) = 80,000 units
$30 price = $800,000 / ($30 - $10) = 40,000 units
Foundations of Business Thought
PROMOTION
Foundations of Business Thought
1997 Annual Advertising Spending
Business Papers
2.19%
Radio
7.19%
Magazines
5.24%
New spapers
22.22%
Direct Mail
19.67%
Yellow Pages
6.09%
Television
23.74%
Outdoor
0.78%
Miscellaneous
12.71%
Farm Publicatoins
0.17%
Source: Prepared by Robert J. Coen, McCann-Erickson 1989
Foundations of Business Thought
Leading National Advertisers 1997
McDonald's Corp.
1041.7
Diageo
1206.6
PepsiCo
1244.7
Walt Disney Co.
1249.7
Sears, Roebuck & Co.
1262
Ford Motor Co.
1281.8
Chrysler Corp.
1532.4
Philip Morris Cos.
2137.8
2743.2
Procter & Gamble Co.
General Motors Corp.
3087.4
0
500
1000
1500
2000
Source: Advertising Age - Ad Age Dataplace 09/28/98
Foundations of Business Thought
2500
3000
3500
Consumer Decision-Making Process
Problem Recognition
(need to replace an old broken down
Bicycle)
Individual &
Social Factors
•Personal
•Social
•Psychological
Marketing
Factors
Information Search
(search for store, models, prices,
other’s opinions)
•Cultural
•Product
•Place
•Promotion
•Price
Evaluation of Alternatives
(Which can I afford? Which is most
reliable? What will others think?
Which performs better?)
Purchase
(decision based on emotions or
rationale)
Purchase Behavior
(Were expectations met? observe
how others react, test
performance, compare new bike to
old bike)
Foundations of Business Thought
“Having perused the 928-page ‘Golden Jubilee’ Sears, Roebuck & Co. catalog
lately mailed to 6,500,000 customers, Printer’s Ink last week marked three
lessons for the average advertiser:
(1) Though the occasion was its fiftieth anniversary, Sears devoted less than
one-tenth of one percent of the catalog to talking about itself, which might
be a good proportion to keep in mind.
(2) Though it is necessary to describe mail-order merchandise in great detail,
Sears provides more information than is ordinarily available in personal
transaction.
(3) Nowhere in the volume is merchandise represented as a means to such
ends are these:
Getting a husband.
Holding a husband.
Saving the home from wreckage.
Soothing the nerves.
Getting a date for the junior prom.
Overcoming social inferiority.
Curing a disease of the ‘housewife’s knuckles’ type.
Eliminating sleepless nights.
Preventing the baby from having to have dental plates at age
seven.
Stimulating an emotional Jag.”
Time Magazine (1936)
Foundations of Business Thought
Sears & Roebuck’s 1908 The Advertising Guide
“Copy reading ‘regardless of cost’ should be used
sparingly, as cost is always regarded.
Exaggerated claims and unrestrained superlatives
undermine customer’s confidence. Therefore avoid
free use of such expressions as BEST, FINEST,
BIGGEST, and avoid all statements the truth of
which may be questioned.
Appeals to patriotism as an argument to induce
buying are to be avoided.”
Foundations of Business Thought
“I note your suggestion that you would make an
extra pair of pants for $8.65. I am 71 years of age.
The undertaker would charge me $35.00 for a
burial suit. I would get to wear that but once. You
are charging me $28.75 for a suit. I am pretty sure
I will get to wear that a number of times, before
being buried in it, so I am saving the difference in
cost (I am not Scotch). Now as to the extra pair of
pants. I will not need them where I am going.”
Letter to Sears & Roebuck
Foundations of Business Thought
“I am a lonely school teacher in the dismal hills of
Idaho. Would you be kind enough to do your
share in assisting a poor forlorn teacher in her
future happiness by sending this man which you
advertised in your latest edition?
If at the present time this particular man is not in
stock, I leave the responsibility of choosing my
future mate up to you.”
Letter to Sears & Roebuck
Foundations of Business Thought
Can you identify the company associated with the slogan?
1.
2.
3.
4.
5.
6.
Drivers Wanted.
7. Have it your way.
The quicker picker upper. 8. Think Different.
Breakfast of Champions.
9. Just do it.
Be all that you can be.
10. Tastes great! Less filling!
Like a Rock.
11. Snap! Crackle! Pop!
Quality is Job 1.
12. We do chicken right.
Foundations of Business Thought
THE PAUSE THAT
REFRESHES
Foundations of Business Thought
LSMFT
Foundations of Business Thought
The codfish lays ten thousand eggs,
the homely hen lays one.
The codfish never cackles
to tell you what she’s done.
And so we scorn the codfish,
while the humble hen we prize,
which only goes to show you
that it pays to advertise.
- - ANON.
Foundations of Business Thought
HOT CROSS BUNS, HOT CROSS BUNS,
ONE A PENNY, TWO A PENNY,
HOT CROSS BUNS,
IF YOUR DAUGHTERS DON’T LIKE THEM,
GIVE THEM TO YOUR SONS,
ONE A PENNY, TOW A PENNY,
HOT CROSS BUNS.
Foundations of Business Thought
PLACE
Foundations of Business Thought
Marketing Channels
Consumer Products
Producer
Consumer
Producer
Producer
Producer
Agent /
Broker
Retailer
Consumer
Wholesaler
Retailer
Consumer
Wholesaler
Retailer
Consumer
Marketing Intermediaries
Industrial Products
Producer
Producer
Consumer
Wholesaler
Marketing Intermediaries
Foundations of Business Thought
Consumer
Intermediary Efficiencies
Converse
Nike
Consumer 1
New Balance
Consumer 2
Adidas
K Swiss
Consumer 3
5 PRODUCERS x 3 CONSUMERS = 15 TRANSACTIONS
Converse
Nike
New Balance
Adidas
K Swiss
FOOTLOCKER
Consumer 1
Consumer 2
Consumer 3
5 PRODUCERS + 3 CONSUMERS = 8 TRANSACTIONS
Foundations of Business Thought
Hog heaven
Harley-Davidson is feeling the wind in its face once again. A waiting list of two years to purchase a
new “hog” has the motorcycle-maker ready to build a manufacturing plant in Kansas City, Mo.
Harley-Davidson
profile*
Headquarters:
Milwaukee, Wis.
Employment:
4,700 Sales
Sales:
$1.35 billion
Net income:
$112.5 million
Units sold:
105,104 motorcycles
Foreign sales:
$395 million
60
5 5 .8
Harley’s back on top once again
5 0 .4
The past decade has seen Harley’s
popularity leave the others in the dust.
50
40
Pe r c e n t o f U.S . Ma r ke t 1 9 8 3
30
Pe r c e n t o f U.S . Ma r ke t 1 9 9 5
1 7 .6
20
1 5 .2
1 2 .5
1 1 .3
8 .5
10
8 .5 7 .9
6 .6
3 .6
2 .1
0
*1995 numbers.
Ha r le y Da v id s o n
Ho n d a
K a w a s a ki
Source: Chicago Tribune, company reports
Foundations of Business Thought
S u z u ki
Y a ma h a
O th e r s