What is Marketing?
Definition: The process of planning and executing the
conception, pricing, promotion and distribution of goods and
services to facilitate exchanges that satisfy individual and
organizational objectives.
(Source: American Marketing Association)
Evolution of Marketing
Production
Selling Era
Era (1800s-1920s) (1920s – 1970s)
Produce as
much as possible
as there is a
limitless market
Product
Focus shifts
from Production
to Sales and
Advertising
Advertising
Marketing
Concept Era
(1950s – 2000)
3 Orientations
Customer
Service
Profit
Identify and
Fill Needs
Customer
Relationship Era
(1990s – pres)
Learn as much as
possible about
customers
and do everything
possible to
satisfy and
exceed their
expectations
Build
Relationships
Relationship Marketing
Repeat Customers tend to:
Spend more
Cost less than one time or first time customers
Require less service
Refer other customers
Provide valuable feedback
Are relationships important from the customer’s perspective? Why
or why not?
Relationship Marketing
Firms build relationships through:
Frequency Marketing (Children’s products discounts)
Affinity Programs (Credit Cards)
Co-branding (Smuckers and PopTarts)
Co-marketing (Dell and Intel/Apple and Intel)
One on one marketing (Data Mining) (Autobytel)
Non Traditional Marketing
Person
Marketing
Organization
Marketing
(St. Jude’s)
Cause Marketing
Event Marketing
Whole Foods
Wine Tasting
Place
Marketing
City Festivals
(Apples and Art)
Marketing: Facilitates Exchange via Utility
Form: Transformation
Time and Place: Convenience
Possession: Satisfaction
Strategic Marketing Planning Process
1. Examine Current Market Situation: Past Performance, Competition, SWOT
2. Assess Product and Market Opportunities: Macro Analysis
3. Set Objectives
4. Develop Marketing Strategy: Segmentation, Target Market, Position Product
and Develop the Marketing Mix (4 P’s)
Examine Current Situation
SWOT Analysis
Strengths: something the company either possesses or is good at
doing (e.g., assets, skills, knowledge, partnerships)
Weaknesses: an area of current or potential vulnerability
Opportunities: areas of current or potential profitability and/or
growth that exist in the external environment
Threats: factors that exist in the external environment that have
the potential to erode an organization’s profitability and/or growth
Assess Opportunities
Market Research
Data Sources: Primary and Secondary
Secondary (External): Trade Associations, Advertising
Agencies, Professional Research Firms, Government
Primary: Company Databases, Focus Groups, Surveys
Observation
Simple Research Process
• Observation
• Identification of Problem Area or Question
of Interest
• Develop hypotheses
• Data Collection
• Interpretation of Data
• Refine or develop Theory or Apply to
Decision-making process
Set Objectives
Market Penetration
Increasing the use of present products in present markets
1. Increasing the rate at which present customers use the
product/service (Hospitals creating wellness programs)
2. Attracting competitors’ customers
3. Attracting nonusers of the product (Profiling and contacting potential
cosmetic surgery patients)
Drs. Rodan & Fields have their own private practices,
specializing in dermatologic surgery, cosmetic surgery
and acne treatments. Seeing over 1,000 patients a month,
Drs. Rodan and Fields developed Proactiv Solution to
help relieve the endless frustration and suffering of their
patients.
Objective
Market Development
Selling present products in new markets
1. Opening additional geographic markets
2. Attracting other market segments
Objectives
Product Development
Developing new products for present markets
1.
Developing new product features
2. Combining quality variations
3. Brand Extension
Diversification
Creating new products for new markets
Key Areas of Marketing
Advertising (and so much more)
Market Research
New Product Development
Product/Brand Management
Distribution Channel Management
Consumer Behavior
Public Relations
Market Management
Develop Strategy
Market Segmentation
Process of dividing a total market into several
relatively homogenous groups.
Examples of Segmentation Criteria: Geography, products, product
usage rate, psychographic (values, lifestyles, attitudes).
Different Types of Markets: National and International
Proctor and Gamble
Business to
Business
Market
Consumer
Market
(e.g., Oakland
University
Government
Market
(e.g. Military)
Develop Strategy
Market Coverage
Undifferentiated: One size fits all
Oink Oink, Inc. (roasted pig ears)
Differentiated: Variety of Products to Several Customer Groups
Gap Maternity, Baby Gap, Gap Kids, Women, Men, Gap Body
Concentrated: Narrow target market (Focus on primary segment)
Marketing 4 P’s
(Key Marketing Mix Decisions and Strategy)
Product: Type, Attributes, Package Design, Brand,
Warranties
Place (Distribution): Choice of and availability at POS
(point of sale) locations
Price: Discount Pricing, Value Pricing, Skimming Pricing
Promotion: Coupons, Rebates, Samples
Marketing 4 Ps: Product
Differentiated or Standardized (e.g., commodities)
Product Line and Mix
Product Life Cycle
Product Identification: Branded versus non branded
Product: Line (Set of Related Products) and
Mix (Assortment of Products)
Coca Cola
Kraft Foods
Product: Life Cycle
Growth
Knowledge of
product increases
and sales increase
Maturity
Sales volumes
peak and sales
level off
Personal Computers
Text-messaging
devices
Decline
Sales volumes decrease
and demand for product
declines.
Typewriters
Introduction
The product is developed for
a particular market and introduced
to that market
Brand
Name, term, sign, symbol or design that
identifies the products of a firm and
distinguishes them from competitive offerings.
Brands
Top 10 Global Brands
(Based on Economic Power)
1. Coca Cola (United States)
2. Microsoft (United States)
3. IBM (United States)
4. GE (United States)
5. Intel (United States)
6. Nokia (Finland)
7. Disney (United States)
8. McDonalds (United States)
9. Toyota (Japan)
10.Marlboro (United States)
11.Mercedes-Benz (Germany)
Brand
Brand Loyalty: recognition, preference, insistence
Brand Equity: Added value that a widely respected,
Highly successful name gives to a product in the
Marketplace.
Awareness
Loyalty
Perceived quality Images
“Levels” of Branding
National Brands
Private Labels
Generic Products
Family of Brands
Trends in Branding
Authenticity – Good performance and good deeds pay off BUT
consumers must sense that the actions are sincere and not a PR stunt
Experience - the experience conveys the essence of the brand
Neuromarketing – strengthen emotional bonds to the product
Trends in Branding
Advertainment - to reach TV-shy youngsters, build the message in what
they are watching/doing
Multi-constituency – Realize that multiple stakeholders are involved with
brand (customers and non customers)
Letting-go - Brands will create social and cultural values; customers must
have input in shaping brand image
Promotions
Purpose: Informing, persuading and influencing a
purchase decision
Five Key Promotional Objectives
1. Differentiate the Product (e.g., comparison)
2. Accentuate Product Value (e.g., warranties)
3. Provide Information (e.g., describe features)
4. Stabilize Sales (e.g., even out cyclicality)
5. Increase Sales (e.g., coupons)
Promotional Mix
Advertising
Personal Selling
Sales Promotion
Public Relations
Advertising
(Effectiveness versus Control)
Consider
Market Reach
Credibility
Cost
Detail
• Word of Mouth
• Online and Interactive
(engagement rings)
• Outdoor (billboards)
• Media
• Direct Mail
• Sponsorship
Pricing Strategy
Four Pricing Objectives
1. Profitability
$2.40 per unit
2. Volume
$2.49 (.83 per unit)
3. Meeting Competition
4. Prestige
$15.00 ($5.00 per unit)
Breakeven Analysis
Breakeven Point (in units) =
Total Fixed Costs
Contribution to Fixed Costs per Unit
(Price per unit – Variable Cost per Unit)
Breakeven point (in dollars) =
Total Fixed Costs
1 – (Variable Cost per Unit)/Price
Dog Shirts
Total Fixed Costs (USAIIR): $60,000
Variable Cost per Unit: $2.00
Possible Price: $7.00
What is the breakeven point in units and dollars?
Breakeven Analysis
Total Revenue
Total Cost