Discussion Plan
Introduction
Target Market
Product
Distribution
Env. Factors
Pricing
Promotion
Marketing Mix + Environment
Political, Legal, and
Regulatory Forces
Social Forces
Product
Promotion
Customer
Price
Distribution
Technological
Forces
Competitive &
Economic Forces
Exchange Relationship
• The act of giving up one thing, in return for
something else
• Examples:
– Money, credit for work, labor, time
– Goods, services, recognition
• Marketing is about creating perceived value, not
just value, for the exchange to occur
"First get your facts; then you can distort them at your leisure."
Mark Twain
Utility Theory
• Can the product satisfy a human…
– Needs and Wants
• Four Types of Utility
– Place: Where I want it?
– Time: When I want it?
– Ownership: Can I legally use it?
• Receipts
– Form: Was it produced the way I want it?
• Automobiles: CD Players, tires, etc.
Example
Functions of Marketing
Research
Grading
Storage
Transport Purchase
Finance
• Market Research
– Trends in purchasing habits
• Carbohydrate tendencies, clothing colors
– Targeting a different audience with the same product
• Trying to achieve form utility
Market Research
• Instinct + Research = A powerful Combination
• A systematic, objective process of getting
information about potential customers to guide
marketing decisions
• Two types of Data
Market Research
• Primary Data
– Observed, recorded,
collected directly
– Polls, surveys,
ethnographic (passive,
open ended, videotaped)
– Very Costly ($20,000 at
some points)
• Secondary Data
– Information compiled in or
outside of company in
order to change the current
situation
– Census bureau, general
databases about consumer
trends,
Functions of Marketing
Research
Grading
Storage
Transport Purchase
• Grading
– Grading Products
• Beef, steel, fruit subject to federal grading
• Nutrition Facts
– Labels to show quality and type
Finance
Functions of Marketing
Research
Grading
Storage
Transport Purchase
Finance
• Storage
– Holding products at the warehouse for a certain
period of time
• Milk: Needed year round
• Christmas Chocolates: Seasonal
Functions of Marketing
Research
Grading
Storage
Transport Purchase
Finance
• Transport
– Logistical Process moving products to the location to
achieve place and time utility
Functions of Marketing
Research
Grading
Storage
Transport Purchase
Finance
• Purchase
– Buying Behavior
– Making the right products, at the right price, in the
perfect location, available
Functions of Marketing
Research
Grading
Storage
Transport Purchase
Finance
• Financing
– Buying on Credit, or facilitating the purchase
• “No Payments for 6 months”
• “No Interest”
• Free Delivery
"Marketing is not an event, but a process . . . It has a beginning, a middle, but never an
end, for it is a process. You improve it, perfect it, change it, even pause it. But you never
stop it completely."
Jay Conrad Levinson
Customer Relationship Mgmt.
• Using information about the customer to create
marketing strategies that develop and sustain
desirable customer relationships
• How can a company accomplish this?
“The lifetime value of a Taco Bell customer is approximately $12,000…a Lexus
customer…about $600,000."
Libby Estell
Customer Relationship Mgmt.
• Using information about the customer to create
marketing strategies that develop and sustain
desirable customer relationships
• How can a company accomplish this?
– Survey (Hotel, Vodafone promotion)
– Communication (Websites, fax, email, personal)
• Personal Attention
• Listen 2/3 of the time, speak 1/3 of the time
– Appreciation Gifts
“The lifetime value of a Taco Bell customer is approximately $12,000…a Lexus
customer…about $600,000."
Libby Estell
Discussion Plan
Introduction
Target Market
Product
Distribution
Env. Factors
Pricing
Promotion
Selecting the Target Market
• Market
– Group of people who have a need, purchasing power,
and desire/authority to spend money on goods,
services and ideas
• Customer vs. Consumer: When a niño wants a toy
• Target Market
– Specific group of consumers on whose needs and
wants a company focuses its efforts.
"In marketing I've seen only one strategy that can't miss -- and that is to market to your
best customers first, your best prospects second and the rest of the world last."
John Romero
Example
Market Segmentation
• Firm divides the total market into groups of
people that have similar product needs
• Market Segment
– Person, group, or organization with similar
characteristics, and similar needs/desires
• Proctor and Gamble spends $46 million to promote to the
Hispanic population in the United States. Ads places in
Telemundo Networks
• US Presidential Candidates speaking in Spanish
– (Market Research Trends)
Selecting a Target Market
• Total Market Approach
– Firms try to appeal to everyone and assume that all
buyers have similar needs
Company
Single Mktg. Strategy
Total Target
Market
• What are some general product examples?
Market Segmentation
• Concentration Approach
– Company develops one marketing strategy for a
single market segment
• Ability to specialize on one segment, or reach a segment
ignored by other portions of the industry
• Multi Segment Approach
– Marketers aim its efforts at two or more segments,
with a strategy for each
Market Segmentation
Single
Target
Market
• Concentration Approach:
Single Mktg. Strategy
1
2
3
4
• Multi Segment Approach
Market Strategy 1
1
2
3
4
Market Strategy 2
Multiple Target Markets
Niche Marketing Issues
•
•
•
•
•
•
Has anyone
heard of Sony
Playstation
?????
Can the target market afford our product?
Can we reasonably expect to promote to them?
Is there a need in this market for the product?
Is our product good enough to serve this
purpose?
What is the competition level?
Will this niche market lead to larger markets
down the road?
Niche Marketing Issues
•
•
•
•
•
•
Can the target market afford our product?
Can we reasonably expect to promote to them?
Is there a need in this market for the product?
Is our product good enough to serve this
purpose?
What is the competition level?
Will this niche market lead to larger markets
down the road?
Basis for Segmenting Markets
• Demographic
– Age, sex race, ethnicity, income, education,
occupation, family size, religion, social class
– Think of your average clothing company?
• Geographic
• Psychographic
• Behavioristic
Basis for Segmenting Markets
• Demographic
• Geographic
– Climate, terrain, natural resources, population,
– Montreal 40 Degrees below 0 in the winter
• Psychographic
• Behavioristic
Basis for Segmenting Markets
• Demographic
• Geographic
• Psychographic
– Lifestyles, personality, motives
– Water, milk, food, in different size packaging
• Behavioristic
Example
Basis for Segmenting Markets
•
•
•
•
Demographic
Geographic
Psychographic
Behavioristic
– Consumer actions toward the product
– Consumer behavior when using the product
– Automobiles to get to work, for the weekend, for the
showroom with friends
Buying Behavior
• The decision processes and actions of people
who purchase and use products
Psychological Variables
Social Variables
Buying Behvavior: Psychological
• Perception
– Selecting, organizing, and interpreting information
– Influenced by motivation: E.g. buying a new laptop
• Learning
• Attitude
• Personality
Buying Behvavior: Psychological
• Perception
• Learning
– Changes in behavior based on new info/experience
• Attitude
• Personality
Buying Behvavior: Psychological
• Perception
• Learning
• Attitude
– Knowledge or feelings about a given issue: the world
• Personality
Buying Behvavior: Psychological
•
•
•
•
Perception
Learning
Attitude
Personality
– Organizing individual´s traits, attitudes, and habits
– “The clothes make the man.”
Qfoos
Buying Behavior: Social
• Reference Groups
– Groups the consumer ID´s with
– Family, friends, organizations
• Social Class
– Ranking of people into high position of respect/status
– Products can serve this purpose
• Culture
– Patterns of behavior, thought, speech, acceptance
"If you talk to a man in a language he understands, that goes to his head. If you talk to
him in his language, that goes to his heart."
Nelson Rolihlahla Mandela
Go Tiger
Remember 1998 in France…
Discussion Plan
Introduction
Target Market
Product
Distribution
Env. Factors
Pricing
Promotion
Classifications: Consumer Prod.
• Convenience Products
– Eggs, milk, bread, cheese
– For immediate consumption
– Low involvement, high brand acceptance
• Shopping Products
– Furniture, sporting goods,
– Comparisons, on price, quality
• Specialty Products
– Ethnic foods, designer clothes or exclusive products
– People will go out of their way to achieve these
products
Classifications: Industrial Prod.
• Raw materials
• Equipment for Machines used in production
• Accessories
– PC´s, Fax machines, etc, not part of final product
• Components and processed materials
– Battery, glass, varnish, used in final product
• Supplies
– Pens, paper, calculator, to make management easier
• Industrial Services
– Financial, legal, security, janitors
Indentifying Products
• Branding
– Naming and identifying products (may have trademark)
• Types of Brands
– Manufacturer Brands: Unilever (Dove Soap)
• Ownership from production to point of purchase (POP)
– Private Distributor Brands: Gap
• Ownership after purchase from manufacturer to POP
– Generic Products
• No brand name, which package, lower price
Identifying Products
• Packaging
– 40% of consumers will try a product based on
packaging
– 2.5 seconds: amount of time spent looking
– Convenience: 6.44 oz per gulp, squeeze or gulp?
• Labeling
– Nutrition fact, warnings, certifications, company logo
• Quality
"First get your facts; then you can distort them at your leisure."
Mark Twain
Product Life Cycle
• The lifespan of a product on the market.
Introduction
Growth
Maturity
Decline
Sales Volume
Profit
Time
Sales
Sales
Different Product Life Cycles
High Learning
Product:
Low Learning
Product:
PC´s (Dell)
Time
Fashion Product:
Skirt length, jean
types, colors
Time
Sales
Sales
Gillette MACH 3
Razor
Time
Fad Products
Can´t think of
anything, sorry
Time
Crossing the Chasm
Main Street
The Chasm
34%
Early
majority
2 ½%
Visionaries
13 ½%
Pragmatists
34%
Late
majority
16%
Laggards
Time of adoption innovations
Source: Inside the Tornado, G. Moore, Harper Business, 1995. Karl Moore, McGill University
Characteristics
• Visionaries
– Love Rapid Innovation
– Play by their own rules,
don´t care for others
opinions
– Risk takers
– Motivation
• New opportunities
– Some will buy anything
new, just to be the first to
try it.
– Shoot for the moon
• What is possible?
• Pragmatists
– Love gradual innovation
– Consult others for their
opinions
– Conformists
• Follow the pack
– Motivation
• Solving present issues
– More Analytical, less
emotional
– Look for a calculator
• What is most likely?
Characteristics
• Visionaries
– Love Rapid Innovation
– Play by their own rules,
don´t care for others
opinions
– Risk takers
– Motivation
• New opportunities
– Some will buy anything
new, just to be the first to
try it.
– Shoot for the moon
• What is possible?
• Pragmatists
– Love gradual innovation
– Consult others for their
opinions
– Conformists
• Follow the pack
– Motivation
• Solving present issues
– More Analytical, less
emotional
– Look for a calculator
• What is most likely?
Getting through the Bowling Alley
• Having (or acting like you have) an innovative
product that will revolutionize the world
• Product will not only the present issue, but future
issues that may arise
• Need to show understanding of industry
– Having one great product does not always work
• Spread word of mouth, show accomplishment
Crossing the Chasm
Main Street
The Chasm
34%
Early
majority
2 ½%
Visionaries
13 ½%
Pragmatists
34%
Late
majority
16%
Laggards
Time of adoption innovations
Source: Inside the Tornado, G. Moore, Harper Business, 1995. Karl Moore, McGill University
Differences between the two…
• Bowling Alley
– Avoid Competition = Niche
marketing strategy
– Value Based Pricing
maximizes profits
– Value Added Distribution =
“Customized Solutions.”
– Differentiate product for a
specific use
– Specialized, focused
approach
• Tornado
– Attack Competition = to
Increase Market Share
– Price based competition
maximizes competition
– Low Cost High Volume
Distribution = higher
exposure”
– Commoditize product =
adjust for multiple uses
– Mass communication and
world of mouth
Differences between the two…
• Bowling Alley
– Avoid Competition = Niche
marketing strategy
– Value Based Pricing
maximizes profits
– Value Added Distribution =
“Customized Solutions.”
– Differentiate product for a
specific use
– Specialized, focused
approach
• Tornado
– Attack Competition = to
Increase Market Share
– Price based competition
maximizes competition
– Low Cost High Volume
Distribution = higher
exposure”
– Commoditize product =
adjust for multiple uses
– Mass communication and
world of mouth
Differences between the two…
• Bowling Alley
– Target Audience
– Pricing
– Placement
– Product
– Promotion
• Tornado
– Attack Competition = to
Increase Market Share
– Price based competition
maximizes competition
– Low Cost High Volume
Distribution = higher
exposure”
– Commoditize product =
adjust for multiple uses
– Mass communication and
world of mouth
Post-Tornado Market Share by
Revenue
Market Standard
Follower 1
Follower 2
Other
Post-Tornado Market Share by
Profits
Market Standard
Follower 1
Follower 2
Other
“Let me tell you a little story.”
Sanjeev Nath
Discussion Plan
Introduction
Target Market
Product
Distribution
Env. Factors
Pricing
Promotion
Definitions
• Marketing Channels
– Group of Organizations that moves products from
their producer to their customer
• Retailer
– Intermediaries that buy produces from manufacturers,
to sell to end-user consumers (E.LeClerc)
• Wholesalers
– Intermediaries that buy from producers to sell to
retailers or other wholesalers
“The best products in the world will not be successful unless the companies make them
available where and when the customers wants to buy them.”
O.C. Ferrell and Geoffrey Hirt
Supply Chain Managment
• Long Term partnerships among marketing
channel members working together to reduce
costs, wastes, an unnecessary movement in the
entire marketing channel to satisfy customers.
• Distribution is the least flexible of the marketing
decisions. It is very difficult to change the way
products are moved, as relationships and large
quantities of resources are involved
Supply Chain Options
A
Producer
B
Producer
C
Producer
D
Producer
Agents
(Middlemen)
Wholesalers
(Middlemen)
Retailers
(Middlemen)
Consumers
Wholesalers
(Middlemen)
Retailers
(Middlemen)
Consumers
Retailers
(Middlemen)
Consumers
Consumers
Intensity of Distribution Coverage
High
Intensive
Low
Intensive
Target Audience
"Your brand's power lies in dominance. It is better to have 50% of one market, instead of
10% of five markets."
Al Ries
Intensity of Distribution Coverage
• Intensive Distribution
– Product is made available in as many outlets as
possible
• Selective Distribution
– Small number of all available outlets are used to
expose products
• Exclusive Distribution
– Manufacturer gives right to sell product in a specific
area only
Physical Distribution
• All the Activities necessary to move products
from producers to customers
• Transportation
– Shipment of products to buyers
– Railway, motor vehicles, inland waterways, pipelines,
and airways
• Warehousing
– Design and operation of facilities to receive, store,
and ship products
• Materials Handling: Supports the above
– Physical handling & movement of products
Discussion Plan
Introduction
Target Market
Product
Distribution
Env. Factors
Pricing
Promotion
Price
• The Value placed on an object exchanged
between a buyer and seller
• The most flexible variable in the marketing mix
• Goal: Maximize profits and increase market
share
Pricing Strategy
• Price Skimming
– Charging the highest possible price that customers
can conceivably pay
– Most common with new products or product
innovations (e.g. Playstation)
• Penetration Pricing
– Charging a lower price to enter the market and gain
market share immediately
– Common when expected competition will enter the
market quickly
– When the goal of the product is to put another product
out of business (e.g. Proctor and Gamble)
Example
Other Pricing Issues
• Psychological Pricing
– Encourages purchases based on emotional, rather
than rational responses to price
• Odd/Even Pricing: $9.99
• Symbolic Pricing
– Charging higher price to show higher perceived
quality
– Great for over the counter drugs or products not
commonly purchased by target audience
Methods to Determine Price
• Accounting Point of View
–
–
–
–
–
–
–
Contribution Margins
Gross Margins
Desired Profit Margin
Potential Demand
Potential Supply
Break-Even Points
Financing Issues
• External
–
–
–
–
–
Costs
Geography
Seaonsal Effects
Government Regulations
Image Creation
• What type quality are you
trying to sell?
– Competition
• Where do you want to be
in relation?
– Distribution Channels
• Store image
– Product category
awareness
“Keeping the other airlines honest”
George Wip
Discussion Plan
Introduction
Target Market
Product
Distribution
Env. Factors
Pricing
Promotion
The Promotions Mix
• Integrated Marketing Communications
– Coordinating the following elements to create a
unified, synchronized, promotions effort
Publicity
Sales
Promotion
Promotions Mix
Personal
Selling
Advertising
QFreeS
Product Life Cycle
• Marketing Job in Each segment
Introduction
Growth
Maturity
Decline
Sales Volume
Profit
Time
Product Life Cycle
• Marketing Job in Each segment
Introduction
Growth
Maturity
Decline
Time
Goal: To Inform
Goal: To
Persuade
•Magazines etc.
•Personal
•Initial Distributor Selling to
Calls
Distributors
•Promotional
Tools (samples)
•Differentiation
advertising
Goal: To Remind
•Coupons,Direct
Mail, & Discounts
Goal: To
Survive
Very little money
•Rare Salesforce
spent on ads
unless alternate
•Reminder
uses can be found
Advertising
Promotions Mix: Advertisements
• Advertising
– A paid form of non –personal communication
transmitted through a mass medium (TV, magazine,
newspaper, or online advertisements
– 58% of a 1,200 person survey said that they would try
a campaign with a “catchy advertisement.”
– Infomercials: 30 minute paid advertisements
• Cost to produce 30sec. Ad: $343,000
• Cost to produce 20min infomercial: $125,000- $600,000
– Product placements in movies
"Television is chewing gum for the eyes."
Frank Lloyd Wright
Example
Promotions Mix: Personal Selling
• Direct, two way communication with buyers and
potential buyers
• Great for certain types of products
– Large, expensive (Car, house, applicances)
• Extremely flexible
– Increased information, price adjustments, pressure
• Most costly form of promotion
• Types of Sales People
Order Taker:
Retail sales and cashiers
Creative Salespeople: Support Salespeople:
Furniture, car, insurance
Customer Educators/Those
Who don´t take orders
Promotions Mix: Publicity
• Non-personal communication transmitted
through the mass media but not paid for directly
by the firm
• Message is transmitted in news story format
– Increases the need for a public relations department
• Different to Advertising
Advertising
Persuasive/Informative
Desires to you want to act
Payment for target audience
Publicity
Infomative
Does not
Free
Sales Promotion
• Involves direct inducements offering added
value or some other incentive for buyers to enter
into an exchange
– Coupons, Deals, Premiums, Contests, Sweepstakes,
Samples, Continuity Programs, Point of Purchase
Displays, Rebates, Product Placement
• For your exam, we will only focus on the following 5…
Five Kinds of Sales Promotions
Types
Objectives
Advantages
Deals
Increase trials
& competition
Reduce Customer
Risk Level
Consumers Wait to
buy, Value decreased
Earn Multiple
Purchases
Increase usage of
product
Sales drop after the
promotional tactic
Encourage
Product Trial
Reduce Customer
Risk Level
High Internal Costs
Repeat
Purchases
Improve Loyalty
High Internal Costs
Encourage
Product Trials
Product is easy to see
Retailers may not offer
optimal positions
Sweep-
Stakes
Samples
Continuity
Programs
Point of
Purchase
Display
Disadvantages
Push or Pull Strategy
• Push Strategy
– Attempting to motivate intermediaries to force
customers to buy products
– Uses promotions, incentives, anything to increase
sales
• Pull Strategy
– Promotions to create customer demand so consumer
force a company to make it more available
– Any company that starts building once the order is
placed
Location, Location, Location
• Location of the store
– What type of area?
– What type indirect traffic is there?
– What other stores are in the area?
• Location of the product in the store
–
–
–
–
Easy Access to product (easy to see)
Next to products of similar quality?
Promotional location?
Is the product a want or a need?
You know this company, you
don´t know that you know…
Discussion Plan
Introduction
Target Market
Product
Distribution
Env. Factors
Pricing
Promotion
Environmental Factors
Political, Legal, and Regulatory Forces
Social Forces
• Laws, and regulators´ interpretation of laws; law
enforcement and regulatory activities; regulatory
bodies, legislators, and legislation, and political
actions of interest groups.
• E.g. USA = no cigarette advertising
Technological
Forces
Competitive &
Economic Forces
Example
Environmental Factors
Political, Legal, and
Regulatory Forces
Social Forces
• The public´s opinions and attitudes toward
issues such as living standards, ethics,
environment, lifestyle, and quality of life.
• E.g. safer toys for children, low fat/low
carbohydrate foods, and breath mints.
Technological
Forces
Competitive &
Economic Forces
Environmental Factors
Political, Legal, and
Regulatory Forces
Social Forces
• Competitive relationships, unemployment,
purchasing power, and general economic
conditions
• E.g. prosperity, recession, depression, recovery,
product shortages, and inflation).
» You will learn Porter´s Five Forces in other classes
Technological
Forces
Competitive & Economic Forces
Environmental Factors
Political, Legal, and
Regulatory Forces
Social Forces
• Computers another technological advances that
improve distribution, promotion, and newproduct development
• E.g. The internet, cell phones, airplanes
Technological Forces
Competitive &
Economic Forces
Marketing Mix + Environment
Political, Legal, and
Regulatory Forces
Social Forces
Product
Promotion
Customer
Price
Distribution
Technological
Forces
Competitive &
Economic Forces