TECHNISCHE UNIVERSITÄT BERLIN INSTITUT FÜR INFORMATIK HUMBOLDT-UNIVERSITÄT ZU BERLIN INSTITUT FÜR INFORMATIK TECHNICAL ENTREPRENEURSHIP Vorlesung 3 THE MARKETING Wintersemester 1999 Leitung: Prof. Dr. Miroslaw Malek Betreuer: Peter K. Ibach www.informatik.hu-berlin.de/~rok/entrepreneurship TE - III - M - 0 THE MARKETING • • • • • • • • • • • • The Marketing Concept Customer and Marketing Orientation Market Opportunity Analysis (MOA) Sources of Information for MOA Consumer Profiles Marketing Implications of Product Characteristics Profile of Competitors Marketing Mix Variables Marketing Channels Promotion Mix Tools Promotion Tools Strengths and Weaknesses Advantages and Disadvantages of Major Advertising Media TE - III - M - 1 THE MARKETING CONCEPT Customer Organizational Orientation Integration Customer Needs & Success Wants Goal Achievement TE - III - M - 2 INDICATORS OF CUSTOMER AND MARKETING ORIENTATION 1) What information do you carefully collect about the exact needs of your customer ? 2) Could you consider custom designing your services or products for smaller groups of customers ? How ? 3) Are your (nonsales) employees specifically trained to represent your company to customers ? How ? 4) Are customers contacted after the sale to determine their level of satisfaction ? How ? TE - III - M - 3 INDICATORS OF CUSTOMER AND MARKETING ORIENTATION (continued) 5) How do you convert unsatisfied customers to satisfied customers ? Do you have any strategy? 6) Is your top marketer in the company a top-level, equal team member ? 7) To what extent do you build your strategies around an in-depth understanding of your customers ? 8) To what extent are activities of different people (or departments) coordinated to ensure customer satisfaction ? TE - III - M - 4 MARKETING MANAGEMENT AND ENTREPRENEURSHIP Risk taking Organizational mission Creativity Venture idea identification, Market opportunity analysis Creating value innovation, and exploiting opportunity Business plan development Environmental scanning Marketing strategy Assembling/ integrating resources Target market Marketing objectives Marketing program Team building Managing growth Implementation/control TE - III - M - 5 THE FIVE STEPS TO ANALYZING MARKET OPPORTUNITY • 1. Identify the business environmental forces. – – – – – Economic conditions and trends Legal and regulatory situations and trends Technological positioning and trends (state of the art; related R&D) Relevant social changes Natural environment (shortages ? vulnerabilities ?) • 2. Describe the industry and its outlook. – – – – – Type of industry Size -now and in 3-5 years Types of marketing practices Major trends Implications for opportunity TE - III - M - 6 THE FIVE STEPS TO ANALYZING MARKET OPPORTUNITY (continued) • 3. Analyze the key competitors – Product description – Market positioning (relative strength and weaknesses, as seen by customers) – Market practices: channels, pricing, promotion, service – Estimated market share (if relevant) – Reactions to competition – Implications for opportunity TE - III - M - 7 THE FIVE STEPS TO ANALYZING MARKET OPPORTUNITY (continued) • 4. Create a target market profile. – – – – – – – – – Levels: generic needs, product type, specific brands End-user focus; also channel members Targeted customer profiles Who are my potential customers ? What are they like as consumers/businesspeople How do they decide to buy / not buy ? Importance of different product attributes ? What outside influences affect buying decisions? Implications for opportunity ? • 5. Set sales projections – As many formal or intuitive approaches as possible – Comparison of results – Go/ no go TE - III - M - 8 SOURCES OF INFORMATION FOR MARKET OPPORTUNITY ANALYSIS (MOAS) • Published Sources – – – – – Periodicals and newspapers Trade association reports Standardized information service reports Government documents Company reports • Personal observation – Of customers – Of competitors – Of macroenvironmental influences TE - III - M - 9 SOURCES OF INFORMATION FOR MARKET OPPORTUNITY ANALYSIS (MOAS) (continued) • Interviews with experts – – – – – Managers of suppliers Managers of trade companies Managers of trade associations Consultants Salespersons • Primary marketing research – Cross-sectional surveys – Longitudinal panels – Experiments TE - III - M - 10 Proportion of eventual adopters TYPES OF ADOPTERS BY ADOPTION TIME REQUIRED Innovators Early adopters Early majority Late majority Laggards Time to adoption decision TE - III - M - 11 COMPARATIVE PROFILES OF THE CONSUMER INNOVATOR AND THE LATER ADOPTER Characteristic Innovator Product interest More Noninnovator (or later adopter) Less Opinion leadership More Less Personality Dogmatism Social character Category width Open-minded Inner-directed Broad categorizer Closed-minded Other-directed Narrow categorizer Venturesome More Less Perceived risk Less More Purchase and consumption traits Brand loyalty Deal proneness Usage Less More More More Less Less TE - III - M - 12 COMPARATIVE PROFILES OF THE CONSUMER INNOVATOR AND THE LATER ADOPTER (contin.) Characteristic Innovator Noninnovator (or later adopter) Media habits Total magazine exposure More Special-interest magazines More Television Less Social characteristics social integration Social striving (e.g., social, physical, and occupational mobility) Group memberships Demographic characteristics Age Income Education Occupational status Less Less More More Less More More Less Less Younger More More More Older Less Less Less TE - III - M - 13 MARKETING IMPLICATIONS OF IMPORTANT PRODUCT VENTURE CHARACTERISTICS Characteristic Marketing action Relative advantage Clearly and credibly communicate the product's advantage. Obtain third-party/professional/ objective endorsements. Price the product to "deliver" benefits quickly. Compatibility Complexity Develop an understanding of customer lifestyles, behavior, etc., to minimize the required adaption. Make the product fit in with related products. Make the product/brand fit customer's social situation . Make the product readily understandable. Strive to make the product user friendly. Make the product at a complexity level not exceeding that of substitutes. TE - III - M - 14 MARKETING IMPLICATIONS OF IMPORTANT PRODUCT VENTURE CHARACTERISTICS (contin.) Characteristic Marketing action Testability Offer money-back guarantee (reduce the cost/risk of trial). Make small quantities free or at low price. Provide incentives to encourage trial. Offer special incentives for durable items (test drives for autos, etc.) Observability Encourage visible use by customers. Make it easy for others to perceive the product/brand. Create incentives for customers to encourage friends to consider trial. TE - III - M - 15 Factors influencing the marketing strategy of key competitors Key competitor’s financial size and strength Key competitor’s objectives Key competitor’s marketing strategy Target market’s requirements Key competitor’s technical, marketing and management capabilities Profile of Competitors • • • • • • Mission and business objectives Market position and sales trends Management capabilities and limitations Target market strategies Marketing objectives Marketing strategies and tactics TE - III - M - 16 MARKETING MIX VARIABLES Product Distribution Price Features Types of channels/ List price middlemen Promotion blend Advertising Media Timing Quality Store/distributor location Credit terms Personal selling Training Motivation Allocation Packaging Storage Discounts Sales promotion Branding Transportation and Selection and logistics allowances Services Service levels Flexibility Guarantees Assortment TE - III - M - 17 Promotion Publicity CUSTOMER PERCEPTION HIERARCHY Customer product perception Benefits / satisfactions Tangible attributes Quality Packaging Style Branding Other features Extended product Warranties Promotion Company image TE - III - M - 18 Distribution convenience NEW PRODUCT DEVELOPMENT PROCESS Business Strategy Product/service development Idea generation Idea screening and evaluation Product/service testing Business analysis Market entry TE - III - M - 19 ALTERNATIVE MARKETING CHANNELS Manufacturers / producers Agents / brokers Wholesalers /distributors Retailers Retailers Consumers and organizational end-users TE - III - M - 20 Channel design decisions and decision criteria Design stages Identification of channel alternatives Evaluation and selection of channel(s) to be used Selection of channel participants Decision criteria Intensity of distribution Access to end-user Prevailing distribution practices Necessary activities and functions Revenue-cost analysis Time horizon for development Control considerations Legal constraints Channel availability Market coverage Capability Intermediary’s needs Functionsprovided Availability TE - III - M - 21 PROMOTION MIX TOOLS Advertising Personal selling Print ads Broadcast ads Billboard ads Packaging logos and information In-person sales presentations Telemarketing Sales promotion The promotion mix Publicity Print media news stories Broadcast media news stories Annual reports Speeches by employees Games, contests Free samples Trade shows Couponing Trading stamps Price promotion Signs and displays TE - III - M - 22 PROMOTION TOOL’S STRENGTHS AND WEAKNESSES Criteria Cost per Audience member Sales Advertising promotion Publicity Personal selling Low Low Very low Very high Confined to target markets Poor to good Good Moderate Very good Deliver a Complicated message Poor to good Poor Poor to good Very good None None Low to moderate Very good Low Low High Moderate to high Interchange with audiences Credibility TE - III - M - 23 ADVANTAGES AND DISADVANTAGES OF MAJOR ADVERTISING MEDIA Media Advantages Disadvantages Reaches large audiences Has visual and audio capabilities Provides great flexibility in getting attention Short lead time needed to place ad Magazines Reach of issues is high for demographic and geographic segments and High-quality production journals Ad lasts as long as magazines or journal is kept Issues are often read by more than one person Credibility of magazine or journal can benefit ad Relatively inexpensive Outdoor advertising Many repeat exposures Television TE - III - M - 24 Not easy to reach specific markets Total cost is high relative to other media Requires production specialists Short exposure time Must place ad well in advance of Publication Provide limited flexibility in gaining attention Provide incomplete control over location of ad in issue Only very limited message possible Cannot reach well-defined target markets ADVANTAGES AND DISADVANTAGES OF MAJOR ADVERTISING MEDIA (continued) Media Advantages Disadvantages Audio capability Low cost relative to costs of the other media Short lead time needed to place ad Can reach demographic and geographic segments Reaches large audiences Reaches audiences in cars News- Reach large audiences papers Can reach segments by locale Short lead time needed to place ad Credibility of newspaper can benefit ad Direct Provides great flexibility in reaching target market segments mail No clutter from competing ads Easy to personalize copy and layout Radio TE - III - M - 25 No visual capability Short exposure time Provides little flexibility in gaining attention May be relatively expensive Provide little flexibility for use of creativity Limited reproduction quality (e.g., little or no use of color) Short life carries over to ad Easily thrown away as "junk mail" Obtaining appropriate mailing lists can be expensive CONDITIONS SUGGESTING PERSONAL SELLING AS A MAJOR ELEMENT OF THE MARKETING MIX Mix area Characteristics Product or service Complex products requiring customer application assistance (computers, pollution control systems, steam turbines) Major purchase decisions, such as food items purchased by supermarket chains Features and performance of the product requiring personal demonstration and trial by the customer (private aircraft) Channels Channel system relatively short and direct to endusers channel intermediaries Personal selling needed in "pushing" product through channel Channel intermediaries available to perform personal selling function for supplier with limited resources and experience (brokers or manufacturer's agents) TE - III - M - 26 CONDITIONS SUGGESTING PERSONAL SELLING AS A MAJOR ELEMENT OF THE MARKETING MIX (continued). Mix area Characteristics Price Final price negotiated between buyer and seller (appliances, automobiles, real estate) Selling price or quantity purchased enable an adequate margin to support selling expenses (traditional department store compared to discount house) Advertising Advertising media do not provide effective link with market targets Information needed by buyer cannot be provided entirely through advertising and sales promotion (life insurance) Number and dispersion of customers will not enable acceptable advertising economies TE - III - M - 27