Basic Entrepreneurial
Marketing Principles
CSU Northridge
Dept. of Marketing
Franck VIGNERON
“Marketing creates Needs” ...
“Makes People Buy Things...”
?
“Marketing creates Needs” ...
“Makes People Buy Things...”
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Marketers can not create needs.
Marketers can help people articulate
their needs into wants.
Marketers can help create wants.
Marketers seek to create satisfactions
What Motivates a Consumer
to Take Action?

Needs - states of felt deprivation including physical
needs for food, social needs for belonging and
individual needs for self-expression. i.e. I am thirsty.

Wants - form that a human need takes as shaped by
culture and individual personality. i.e. I want a CocaCola.
How Do Consumers Choose
Choose Among Many Products
and Services?

Customer Value - difference between the value the
customer gains from owning and using a product and
the cost of obtaining the product.

Customer Satisfaction - depends on the product’s
perceived performance in delivering value relative to
a buyer’s expectations.

Both are closely linked to Quality and Total Quality
Management (TQM).
Customer Satisfaction

The extent to which a product’s
perceived Performance matches a
buyer’s expectations.
Expectation
Disconfirmation
Perceived
Performance
Satisfaction
Other Applications of Marketing

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Person Marketing: Mkg efforts for getting attention,
interest, and preference of a target toward a person,
e.g., Celebrities (Shaquille O’Neal) or political
candidate (Bush).
Place Marketing: Visitors, improve image, real
estate, …
Cause Marketing: “friends don’t let friends drive
drunk”
Event Marketing: Sporting, cultural or charitable
activities; Salt Lake City 2002 Winter Olympics
Organization Marketing: Navy = “let the journey
begin”
What is a “Problem”?
Problem:
perceived
difference
between an ideal
and actual state
The Ideal State

Expectations

Aspirations

Cultural basis

Effect of Changes in
Life
Basically: values, needs and goals
The Actual State

Actual Physical
Situation

External Prompts
How to “Create” Problems for
Consumers

Create new ideal state

Create dissatisfaction
with actual state
Where do People Search for
Problem Solutions?
INTERNAL
Memory /Thinking
Psychological Core
EXTERNAL
Word of mouth, media,
store visits, trial
CATALOG
The Buyer Decision Process
Need Recognition
Information Search
Evaluation of Alternatives
Purchase Decision
Postpurchase Behavior
1/ Problem Recognition
& 2/ Decision Making
Less than
Minimum
Treshold
Ideal
State
Actual
State
Intensity of
Discrepency
No Recognition
of Problem
Problem
Recognition
Greater than
Minimum
Treshold
Information
Search
Satisfactory
Internal Search?
Yes
Attributes
Post-Purchase
Evaluations
Buy
Brands
No
External
Search
Evaluate
Alternatives
A Model of Consumer Decision
Making
INPUT
PROCESS
OUTPUT
A Simple Model of Consumer Decision Making
External Influences
Input
Firm’s Marketing Efforts
1. Product
2. Promotion
3. Price
4. Channels of distribution
Sociocultural Environment
1. Family
2. Informal sources
3. Other noncommercial sources
4. Social class
5. Subculture and culture
Consumer Decision Making
Need Recognition
Process
Prepurchase Search
Evaluation of Alternatives
Psychological Field
1. Motivation
2. Perception
3. Learning
4. Personality
5. Attitudes
Experience
Postdecision Behavior
Output
Purchase
1. Trial
2. Repeat purchase
Postpurchase Evaluation
THE PLANNING PROCESS
4.
5.
3.
2.
1.
6.
Marketing Environment
Macroenvironment
Microenvironment
Company
The Marketing
Environment
Demographic
Company
Economic
Cultural
Publics
Company
Suppliers
Customers
Competitors
Natural
Political
Intermediaries
Technological
?????????????????????????????
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What the mix?
What is the MKG mix?
What are the 4 Ps?
Four Ps of Marketing
Marketing
Mix
Product
Price
Place
Target
Market
Promotion
What is a Product?
Types of
Consumer Products




Convenience
Shopping
Specialty
Unsought
GENERIC term that Includes





Goods
Services
Places
Organizations
People, etc..
Entrepreneurs vs Managers
Source: http://www.entrepreneurship-isemi.com

What is a SWOT Analysis?
5 Eyes Marketing Strategy
Past
Present
Future
Yourself
Competitors
Situation Analysis
S
Things the company does well.
W
Things the company does not do well.
O
Conditions in the external environment
that favor strengths.
T
Conditions in the external environment
that do not relate to existing strengths or
favor areas of current weakness.
SWOT



Do not limit the S and W to the Product
Threats: focus on specific competitors
Opportunities:
• Do not describe what you will do. EG, develop a market
•
•
development strategy based on the growing senior
population
Avoid basic opportunities: population growth, economic
slow down, health consciousness, obesity rate, gaz
prices,…
Identify opportunities outside the product/consumer level
BENCHMARKING = Analyzing
Competitors
Identifying the
company’s
competitors

Assessment of strengths and weaknesses
of competitors.
Assessing competitor’s
objectives, strategies,
strengths and weaknesses,
and reaction patterns
Selecting which
competitors to
attack or avoid
Marketing Strategy and Tactics
A marketing strategy is a means by which a marketing
objective/goal is to be achieved, usually characterized by a specific
target market and a marketing program to reach it.
Marketing tactics are detailed day-to-day operational decisions
essential to the overall success of marketing strategies.
Generic Marketing
Strategies
Four Basic Types of Strategic Opportunities
M
A
R
K
E
T
P
r
e
s
e
n
t
N
e
w
PRODUCT
Present
New
Market
Penetration
Product
Development
Market
Development
Diversification
Basic Competitive Strategies
E-machines or Wal-Mart
Subaru or IBM
Overall Cost
Leadership
Focus
Differentiation
Middle of
the Road
Leica or Mephisto
Sears or Holiday Inn
Competitive Leadership
Companies Gain
Leadership Positions by
Delivering Superior Value
to their Customers
Through These
Strategies:
Operational
Excellence
Alaska Airlines/Dell
Customer
Intimacy
Ikea/VW
Product
Leadership
Intel/Sony
Competitive Marketing
Strategies
Market Leader
Market Challenger
Market Follower
Market Nicher
Developing an Effective Marketing Program

Requires analyzing marketing
problems/opportunities
This analysis has 3 steps and is grounded in
primary and secondary marketing research data
Customer
Analysis
Competitive
Analysis
Analysis of
Organization
Capabilities
Opportunity
Identification
•Product Differentiation
3 generic strategies for achieving
•Overall Cost Leadership
a differential advantage over
•Special Market Focus Offering Product
competitors
are
available:
& Low
Cost

Once an opportunity has been identified Differentiation
marketing strategy
must
be developed
Strategies Lead to Tactics
Strategy
Possible
Tactics
Direct our
promotion to
males, ages 25
to 40 years old.
Advertise in
magazines
read by this
group of
people
.
..
Advertise on
television
programs
watched by
this group
1
..
High Level Strategies
HOW ??????
Low Level Strategies
.
2
HOW ??????
3
Tactics
.
PRODUCT
Existing
1
Existing
New
Market
Penetration
NPD
High Level Strategies
Market
Market
Diversification
Development
New
PRODUCT
Low Level Strategies
2
PRICE
PLACE
PROMOTION
E.g., Quality, Branding &
Service, …
E.g., skimming, captive,
…
E.g., direct, indirect,
exclusive, hybrid, …
E.g., skimming, captive,
…
3
Tactics
STP
Segmentation Targeting & Positioning
Market Segmentation
Market Targeting
Market Positioning
Marketing Differentiation Strategy
A Undifferentiated Marketing
Company Marketing Mix
B Concentrated Marketing
Company Marketing Mix
Market
Target 1
Target 2
Target 3
C Differentiated Marketing
rketing strategies
Company Marketing Mix 1
Company Marketing Mix 2
Company Marketing Mix 3
Target 1
Target 2
Target 3
Two-Way Brand Extension: Marriott Hotels
Quality
Economy
Standard
Good
Marriott
Marquis
(Top
executives)
Price
High
Average
Fairfield Inn
Low (Vacationers)
Superior
Marriott
(Middle
managers)
Courtyard
(Salespeople)
Four Ps of Marketing
Marketing
Mix
Products
Price
Place
Target
Market
Promotion
Branding
The Sam's Club
logo used from
the 1990s until
2001.
The second Sam's Club
logo used from 20012006.
The current Sam's
Club logo used since
2006.
Managing and Building a Brand Knowledge
Perceived Meanings
Recall versus
Recognition
Brand can possess an
appealing image that
consumers value
directly
BRAND
AWARENESS
•Familiarity Liking
Expected
Performance
BRAND
ASSOCIATIONS
BRAND QUALITY
• Reason-to-Buy
• Help Process &
Retrieve Information
• Differentiate/
Position
•Create Positive
Attitudes/ Feelings
• Line Extensions
Price Sensitivity &
Purchase rate
BRAND
LOYALTY
• Create Reassurance
• Time to Respond to
Competitive Threats
• Reduced Marketing
Costs Trade leverage
Individual Product Life-Cycles Programmed to
Yield Expanding Company Sales
sales
Total Company Sales
Individual Product Sales
P1
P2
P3
P4
P5
Time
P6
P7
P8
Managing product lines and brands over time:
The Product Life Cycle (PLC)
+
Market
Introduction
Market
Growth
Market
Maturity
-
Market
Decline
+
time
Product Life-Cycle Stages and Marketing Steps
Sales
MATURITY
GROWTH
Maximize
share,
grow market
Maximize profit,
Defend Mkt Share
DECLINE
Reduce/
Delete, milk
the brand
INTRODUCTION
awareness
and trial
Launch
Product Strategies
Takeoff
Rapid Shakeout Maturity
growth
Decline
Time
Stages in the Adoption Process
Awareness
Interest
Evaluation
Trial
Adoption
Adopter Groups
2.5%
Innovators
13.5%
34%
Early
Early
Adopters Majority
34%
Late
Majority
16%
Laggards
Elements of the MKG Mix
that compose a cohesive MKG program
Marketing
manager
Product
Price
Features
Brand name
Packaging
Service
Warranty
List price
Discounts
Allowances
Credit items
Payment period
Place
Promotion
Advertising
Personal selling
Sales promotion
Publicity
Outlets
Channels
Coverage
Transportation
Stock level
Cohesive marketing mix
Promotion
Promotion
Product
Price
Place
Place
MKG PLAN

I. EXECUTIVE SUMMARY
•

Recommend Alternative(s)
The goals to be achieved through the marketing plan in such areas as customer
satisfaction, sales volume or market share
Overall Strategies & STP - used to achieve the objectives
VI. ACTION PROGRAMS
•
•

Evaluate Potential Strategic Alternatives
V. MARKETING STRATEGIES
•

External Analysis: Opportunities & Threats
IV. MARKETING OBJECTIVES
•

Internal Analysis: Strengths & Weaknesses
III. ISSUE ANALYSIS
•
•

A stimulating summary of the marketing plan
II. CURRENT MKG SITUATION
•
•

Memo
4P’s - that will be used to achieve the objectives
Programs that pinpoint who is responsible for the marketing activities and that establish
budgets and timetables for executing the MKG strategies
VII. CONTROLS
•
Procedures for monitoring the plan over time and for taking corrective action if needed
New Products from Sony
1975: Betamax
VCR has initial
success but loses
out to bettermarketed VHS
VCRs.
1955: First
Japanese
transistor radio
starts its
record of
successes.
1946: Sony
founded in
bombed-out
store. Its rice
cooker never gets
to market.
1950s
1968: Its Trinitron
TV becomes and
remains the
standard for color
TV quality.
1982: Compact- disc
player becomes first
digital consumer
electronics product
1979: Walkman
revolutionizes
personal stereo
tape players.
2000s:
•MD Walkman
•Cyber Shot
•DVD Handycam
1995: PlayStation
video-game system
captures 80% of U.S.
32-bit market.
1985: 8mm
Handycam
arrives.
1960s
1970s
1980s
1990s
2000s
Strategic Roles of Most Successful New Products
Strategic Role
Externally
driven
Internally
driven
Defend market
share position
Establish foothold
in new market
Preempt market
segment
Maintain position as
product innovator
Exploit technology
in new way
Capitalize on
distribution strengths
Provide a cash
generator
Use excess or
off-season capacity
Percentage of responses
0
10%
20%
30%
40%
50%
Major Stages in New-Product
Development (Fig. 9.1)
Marketing
Strategy
Concept
Development
and Testing
Idea
Screening
Idea
Generation
Business
Analysis
Product
Development
Test
Marketing
Commercialization
The Research Process
STEP1: Defining the Problem and Research Objectives
STEP 2: Developing the Research Plan
STEP 3: Implementing the Research Plan
STEP 4: Interpreting and Reporting the Findings
Secondary
Data
Data that has been collected
for reasons other than the
specific research project at
hand.
Primary
Research
Original research
undertaken by individual
researchers or
organizations to meet
specific objectives.
Designing Primary Research
Quanti
Research
Quali
Research

Quantitative studies more likely for
collecting descriptive information.
• Qualitative studies may be used to get
new ideas.
Marketing Research Process
Step 1. Defining the Problem & Research Objectives
Types & Levels of Information Needed
–
Exploratory
Research
Descriptive
Research
Causal
Research
Gathers preliminary information
that will help define the problem
and suggest hypotheses.
•Describes such things as market
potential for a product or attitudes
and demographics of consumers
who buy the product.
•Test hypotheses about causeand-effect relationships.
preliminary information: identify
issues
problem definition
first stage of descriptive or
causal research
–
–
–
–
–
–
–
expand understanding of factors
describe phenomenon
representative sample
test cause and effect hypothesis
experimentation
New Product Pricing Strategies
Market Skimming


Setting a High Price
for a New Product to
“Skim” Maximum
Revenues from the
Target Market.
Results in Fewer,
But More Profitable
Sales.

•
•
•
Use Under These
Conditions:
Product’s Quality and Image
Must Support Its Higher Price.
Costs Can’t be so High that
They Cancel the Advantage of
Charging More.
Competitors Shouldn’t be Able
to Enter Market Easily and
Undercut the High Price.
New Product Pricing Strategies

Market Penetration •

Setting a Low Price for a
New Product in Order to
“Penetrate” the Market
Quickly and Deeply.

Attract a Large Number of
Buyers and Win a Larger
Market Share.
•
•
Use Under These Conditions:
Market Must be Highly PriceSensitive so a Low Price Produces
More Market Growth.
Production/ Distribution Costs Must
Fall as Sales Volume Increases.
Must Keep Out Competition &
Maintain Its Low Price Position or
Benefits May Only be Temporary.
Communication Mix Strategies
Pull Strategy
Strategy that
Calls for
Spending A Lot
on Advertising
and Consumer
Promotion to
Build Up (Pull)
Consumer
Demand.
Strategy
Selected
Depends on:
Type of
ProductMarket &
Product LifeCycle Stage
Push Strategy
Strategy that
Calls for Using
the Salesforce
and Trade
Promotion to
Push the Product
Through the
Channels.
Continuum of Possible Channel-Target Market Relationships
Many
Outlets
Intensive
Distribution
Cigarettes
Chewing Gum
Auto Parts
Dry Cleaners
Selective
Distribution
Men’s Suits
Exclusive
Distribution
Machinery
Automobiles
Rolls Royce
Dealer
• Intensive Distribution: Maximise the number of points of sale
• Selective Distribution: Evaluate sales potential, competency and location
• Exclusive Distribution: Agreement to sell on a specific area
One
Outlet
The Promotional Mix
PR
Advertising
Sales
Promotion
Direct
MKG
Personal
Selling
Product
Place
Price
(Distribution)
Advertising Strategies
Promotion
4P’s
Place
The Marketing Communications
Mix (Promotion Mix)
Advertising
Personal Selling
Advertising Strategies
Any Paid Form of Nonpersonal
Presentation by an Identified
Sponsor.
Personal Presentations by
a Firm’s Sales Force.
Sales Promotion
Short-term Incentives to
Encourage Sales.
Public Relations
Building Good Relations with
Various Publics by Obtaining
Favorable Publicity.
Direct Marketing
Direct Communications With
Individuals to Obtain an
Immediate Response.
Basic Communication Model
Sender
(Source)
Message
Channel
(Medium)
Feedback
Advertising Strategies
Receiver
(Consumer)
What are the 4 main Com Objectives?




I…
P…
R…
C…
Setting Communication
Objectives
Informative Advertising
Inform Consumers or
Build Primary Demand
i.e CD Players
Persuasive Advertising
Build Selective Demand
i.e Sony CD Players
Advertising Objective
Specific Communication Task
Accomplished with a Specific
Target Audience
During a Specific Period of Time
Comparison Advertising
Reminder Advertising
Compares One Brand to
Another
i.e. Avis vs. Hertz
Keeps Consumers Thinking
About a Product
i.e. Coca-Cola
Changes in Advertising Objectives during the
Product Life Cycle
Sales
PreIntroduction
Introduction
Growth
Time
Define
objectives and
plan the
promotional
campaign
General
promotion
objective
Advertising
strategy
Develop
product
awareness,
stimulate
generic
demand, and
attract
distributors
Maturity
and
Create product Maintain
brand
acceptance and enhance
loyalty
convert
brand
and
preference if buyers
distributors of
there are
competitive
competitive
brands
products
Reminder and
Screen concepts,primary demand Extensive
emotional
create
advertising to get advertising
expenditures
advertising and
advertisements, potential
promotions to
and plan media purchasers to try emphasizing
advantages
of
the
promote repeat
selection
the product. trade product and
purchases and
advertising to
differentiate
introduce product brand
brands
Advertising Strategies
Decline
Minimal
expenditures
just enough to
phase product
out
Minimal
advertising
expenditures
emphasizing low
price to reduce
inventory