Week 3
Marketing Mix – 4P’s
Marketing Plan Elements
SWOT Analysis
S
W
O
T
Things the company does well.
Internal
Things the company does not do well.
Conditions in the external environment that
favor strengths.
External
Conditions in the external environment that
do not relate to existing strengths or favor
areas©South-Western
of currentCollege
weakness.
Publishing
Scanning the Marketing
Environment
• The process of
continually
acquiring/interpreti
ng info on the events
occurring outside
the organization to
identify and
interpret potential
trends.
Scanning the Marketing
Environment
Political and Legal Environment of Marketing
Federal Legislation
Regulate
competitive
environment
Regulate
pricing
practices
Control
false
advertising
Sherman Act
Clayton Act
Federal Trade Commission Act
Celler-Kefauver Antimerger Act
Hart-Scott-Rodino Act
Robinson-Patman Act
Wheeler-Lea Act
Regulatory Agencies
Consumer Product
Safety Commission
Federal Trade
Commission
Food & Drug
Administration
Protects consumer safety in
and around their homes
Prevents unfair methods of
competition in commerce
Enforces safety regulations for food and
drug products
Chapter 5: Developing a Global Vision
Rewards of Global Marketing
Having a global vision means…
• Recognizing and reacting to international
marketing opportunities
• Using effective global marketing strategies
• Being aware of threats from foreign
competitors
Importance of Global Marketing
to the U. S.
• U.S. exports a fifth of industrial production.
• One of every 5 jobs in U.S. is supported by exports.
• Every U.S. state has realized net employment gains directly
attributed to foreign trade.
• U.S. businesses export over $800 billion in goods.
• Exports account for 25 percent of U.S. economic growth.
• U.S. is world’s leading exporter of farm products.
• Chemicals, office machinery and computers, automobiles,
aircraft, and electrical and industrial machinery make up
almost half of all nonagricultural exports
• About half of U.S. merchandise imports are raw materials,
capital goods, and industrial products
The Fear of Trade and Globalization
• Millions of Americans
have lost jobs
• Millions fear losing jobs
• Threat of outsourcing if workers do not
accept pay cuts
• Vulnerability to operations moving offshore
Benefits of Globalization
• Expands economic freedom
• Spurs competition
• Raises productivity and living standards
• Offers access to foreign capital, global export
markets, and advanced technology
• Promotes higher labor and environmental standards
• Acts as a check on government power
Stages of Global Business
Development
1
Companies operate in one country and
sell into others
2
Set up foreign subsidiaries to handle sales
3
Operate an entire line of business in
another country
4
Virtual operation
External Environment Facing
Global Marketers
Culture
Economic and
Technological
Development
Political Structure
Demographic Makeup
Natural Resources
External Environment Facing Global
Marketers
Political Structure and Actions
Government policies
No private ownership
Minimal individual freedom
Little central government
Maximum personal freedom
Legal Considerations
Tariff
A tax levied on goods entering
a country
Quota
Limit on the amount of a
product entering a country
Boycott
Exclusion of products from
a country
Exchange Control
Foreign exchange must be
sold to a control agency
Market Grouping
Common trade alliance
Trade Agreement
An agreement to stimulate
international trade
Political and Legal Considerations
The Uruguay Round made changes in
world trading practices:
Entertainment, pharmaceuticals,
integrated circuits, and software
Financial, legal, and accounting services
Agriculture
Textiles and apparel
Created a new trade organization:
The World Trade Organization
Political and Legal Considerations
Agreements
and Organizations
CAFTA
NAFTA
European Union
Demographic Makeup
Marketing Considerations:
• Population density
• Urban or rural
• Personal income
• Age
Natural Resources
• Petroleum
• Foodstuffs
• Precious metal
• Timber
• Water
Shortages in Natural Resources
Create…
• International dependencies
• Shifts of wealth
• Inflation and recession
• Export opportunities if resources
are abundant
• Stimulus for military intervention
Global Marketing Questions
• What are our options in selling abroad?
• How difficult is global marketing?
• What are the potential risks
and returns?
Why “Go Global”?
• Earn additional profits
• Leverage a unique product or technological
advantage
• Possess exclusive market information
• Saturated domestic markets
• Excess capacity
• Utilize “economies of scale”
Risk Levels for Global Entry
Return
Risk
Entering the Global Marketplace
Export
Sell domestically produced
products to buyers in other countries
Licensing
Legal process allowing use of
manufacturing/patents/knowledge
Contract
Manufacturing
Private-label manufacturing by a
foreign country
Joint Venture
Domestic firm buys/joins a foreign
company to create new entity
Direct Investment
Active ownership of a foreign
company/manufacturing facility
Export Intermediaries
Buyer for Export
Assumes all ownership risks and
sells globally for its own account.
Export Broker
Plays the traditional broker’s role
by bringing buyer and seller
together.
Export Agent
Acts like a manufacturer’s agent
for the exporter in the foreign
market.
Global Marketing Mix
Same
Product
Change
Product
Same
Message
One Product
One Message
Product
Adaptation
Change
Message
Promotion
Adaptation
Product
Invention
Place (Distribution)
• Adequate distribution is necessary for success
in global markets
– Some countries have complicated systems
– Lack of distribution infrastructure and cultural
differences create problems
• Innovative distribution systems can create
competitive advantage
Pricing
• Must consider transportation and insurance
costs, taxes, and tariffs
• Determine what customers will spend
• Ensure that foreign buyers will
pay price
• May need to simplify a product to lower price
• Don’t assume that low-income countries are
willing to accept lower quality
The Impact of the Internet
Chapter 6: Consumer Decision Making
Understanding Consumer Behavior
Processes a consumer uses to make purchase decisions, as well as to
use and dispose of purchased goods or services, also includes factors
that influence purchase decisions and the product use.
consumers make purchase
decisions
Consumer
behavior
= HOW
consumers use and
dispose of product
Consumer Decision-Making Process
Need Recognition
Information Search
Cultural, Social,
Individual and
Psychological
Factors
affect
all steps
Evaluation
of Alternatives
Purchase
Postpurchase
Behavior
Need Recognition
Present
Status
Preferred
State
Marketing helps consumers recognize
an imbalance between
present status and preferred state.
Recognition of Unfulfilled Wants
• When a current product isn’t performing
properly
• When the consumer is running out of a
product
• When another product seems superior to the
one currently used
Information Search
Internal Information Search

Recall information in memory
External Information search

Seek information in outside environment


Nonmarketing controlled
Marketing controlled
External Information Searches
Need Less
Information
Less Risk
More knowledge
More product experience
Low level of interest
Confidence in decision
Need More
Information
More Risk
Less knowledge
Less product experience
High level of interest
Lack of confidence
Evaluation of Alternatives
and Purchase
Evoked Set
Analyze product attributes
Use cutoff criteria
Rank attributes by
importance
Purchase!
Consumer Decision-Making
Process
Need
1
Recognition
Information
Search
2
Evaluate
3
Alternatives
PSYCHOLOGICAL
Purchase
4
SOCIAL
CULTURAL
INDIVIDUAL
Consumer postpurchase evaluation
process
Marketers can minimize cognitive dissonance through:



Effective Communication Follow-up
Guarantees, Warranties
Service during and after the sale
Consumer Buying Decisions and
Consumer Involvement
Routine
Response
Behavior
Less
Involvement
Limited
Decision
Making
Extensive
Decision
Making
More
Involvement
Five Factors of Consumer
Involvement
1. Level of consumer involvement
2. Length of time to make decision
3. Cost of good or service
4. Degree of information search
5. Number of alternatives considered
Continuum of Consumer Buying
Decisions
Routine Response Behavior
•
•
•
•
•
Little involvement in selection process
Frequently purchased low cost goods
May stick with one brand
Buy first/evaluate later
Quick decision
Limited Decision Making
•
•
•
•
Low levels of involvement
Low to moderate cost goods
Evaluation of a few alternative brands
Short to moderate time to decide
Extensive Decision Making
•
•
•
•
•
High levels of involvement
High cost goods
Evaluation of many brands
Long time to decide
May experience cognitive dissonance
Factors Determining
the Level of Consumer Involvement
Previous Experience
Interest
Perceived Risk of Negative
Consequences
Situation
Social Visibility
Marketing Implications of Involvement
High-involvement
purchases require:
Extensive and informative
promotion to target market
Low-involvement
purchases require:
In-store promotion,
eye-catching package
design, and good displays.
Coupons, cents-off,
2-for-1 offers
Factors Influencing Buying Decisions
Cultural
Factors
Individual
Factors
Social
Factors
Psychological
Factors
CONSUMER
DECISIONMAKING
PROCESS
BUY /
DON’T BUY
Components of Culture
Sets of values, norms, attitudes, and other
meaningful symbols that shape human
behavior and the artifacts, or products, of
that behavior as they are transmitted from
one generation to the next.
•
•
•
•
•
•
•
Values
Language
Myths
Customs
Rituals
Laws
Material artifacts
It is…
Pervasive
Functional
Learned
Dynamic
Value
Enduring belief that a specific mode of
conduct is personally or socially preferable
to another mode of conduct.
American Values
•
•
•
•
•
•
Success
Materialism
Freedom
Progress
Youth
Capitalism
Subculture
A homogeneous group of people who share
elements of the overall culture as well as
unique elements of their own group.
Social Class
A group of people in a society who are
considered nearly equal in status or
community esteem, who regularly socialize
among themselves both formally and
informally, and who share behavioral norms.
•
•
•
•
•
Occupation
Income
Education
Wealth
Other variables
1.
Indicates which medium to use for advertising
2.
Helps determine the best distribution for products
Social Class and Education
Source: U.S. Census, available at http://www.pbs.org/peoplelikeus/resources/stats.html, May 2005.
Social Influences on
Consumer Buying Decisions
Identify and understand the social
factors that affect consumer buying
decisions.
• Reference groups
• Opinion leaders
• Family members
Reference Groups
Primary
Direct
Secondary
Reference
Groups
Aspirational
Indirect
Nonaspirational
Social Factors
Direct
Reference
Groups
Opinion
Leaders
Primary
Indirect
Secondary
Aspirational
People
you know
Nonaspirational
Celebrities
Socialization Process
Family
Initiators
Decision Makers
Influencers
Consumers
Purchasers
Relationships among Purchasers and
Consumers in the Family
Individual Influences on
Consumer Buying Decisions
•
•
•
•
Gender
Age
Life cycle
Personality, selfconcept
• Lifestyle
•
•
•
•
Perception
Motivation
Learning
Beliefs & Attitudes
Marketing Implications of Perception
• Important attributes
• Price
• Brand names
• Quality and reliability
• Threshold level of perception
• Product or repositioning changes
• Foreign consumer perception
• Subliminal perception
Motivation: Maslow’s Hierarchy of
Needs
Discussion Wrap Up
• Assignments due next week
• Review schedule