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ObjectivesCourse OrganizationTasks of MarketingMajor Concepts&Tools of MarketingMarketplace OrientationsMarketings Responses to New ChallengesDefining MarketingMarketing is a societal process by which individuals and groups obtain what they need and want through creating,offering,and freely exchanging products and services of value with others.-Philip Kotler(p.7)Simple Marketing SystemIndustry(a collection of sellers)Market(a collection of Buyers)Goods/servicesMoneyCommunicationInformationProduction ConceptProduct ConceptSelling ConceptMarketing ConceptConsumers prefer products that are widely available and inexpensive Consumers favor products that offer the most quality,performance,or innovative featuresConsumers will buy products only ifthe company aggressivelypromotes/sells these productsFocuses on needs/wants of target markets&delivering value better than competitorsCompany Orientations Towards the MarketplaceObjectivesDefine value&satisfaction-understand how to deliver themThe nature of high-performance businessesHow to attract&retain customersImproving customer profitabilityTotal quality managementResourcesOrganizationandaligning.High Performance BusinessProcessesBy improving critical business.Stake-holdersSet strategies to satisfy key.Satisfied Customers:Are loyal longerBuy more(new products&upgrades)Spread favorable word-of-mouthAre more brand loyal(less price sensitive)Offer feedbackReduce transaction costsInactive orex-customersCustomer DevelopmentPartnersAdvocatesClientsRepeatcustomersFirst-timecustomersSuspectsProspectsDisqualifiedprospectsCustomer/Product Profitability AnalysisP1HighlyprofitableproductP2ProfitableproductP3LosingproductP4Mixed-bagproductProducts+Highprofitcustomer+-Mixed-bagMixed-bagcustomercustomer+-LosingcustomerC1C2C3CustomersObjectivesCorporate and division strategic planingBusiness unit planningThe marketing processProduct level planningThe marketing planMarket-Oriented Strategic PlanningObjectivesSkillsResourcesOpportunitiesMarket-Oriented Strategic PlanningObjectivesSkillsResourcesOpportunitiesProfitandGrowthCorporate Headquarters PlanningDefine the corporate missionEstablish strategic business units(SBUs)Assign resources to SBUsPlan new business,downsize older businessesThe Marketing PlanObjectivesComponents of a marketing information systemCriteria of good marketing researchDecision support systems for marketing managementDemand measurement and forecastA marketing information system(MIS)marketing information system(MIS)consists of people,equipment,and procedures to gather,sort,analyze,evaluate,and distribute needed,timely,and accurate information to marketing decision makers.A marketing intelligence systemmarketing intelligence system is a set of procedures and sources used by managers to obtain everyday information about developments in the marketing environment.Research ApproachesBehavioralFocus-groupSurveyExperimentalObservationalSecondary-Data SourcesInternal SourcesGovernment PublicationsPeriodicals and BooksCommercial DataOn-LineAssociationsBusiness InformationGood Marketing Research:Is scientificIs creativeUses multiple methodsRealizes the interdependence of models&dataAcknowledges the cost&value of informationMaintains“healthy”skepticismIs ethicalDemandMarketDemandCompanyDemandEstimating Current DemandTotal Market PotentialArea Market PotentialIndustry SalesMarket ShareEstimating Future DemandSurvey of Buyers IntentionsComposite of Sales Force OpinionExpert OpinionPast Sales AnalysisMarket Test MethodObjectivesTracking&Identifying Opportunities in the MacroenvironmentDemographic,Economic,Natural,Technological,Political,&Cultural DevelopmentsMacroenvironmental ForcesWorld trade enablersAsian economic powerRise of trade blocsInternational monetary crisesUse of barter&countertradeMove towards market economies“Global”lifestylesMacroenvironmental ForcesOpening of“new”marketsEmerging transnational firmsCross-border strategic alliancesRegional ethnic&religious conflictGlobal brandingDemographic EnvironmentWorldwide Population GrowthPopulation Age MixEthnic MarketsHousehold PatternsEducational GroupsGeographical Shifts in PopulationShift from Mass Market to MicromarketsEconomic EnvironmentIncome DistributionSubsistence economiesRaw-material-exporting economiesIndustrializing economiesIndustrial economiesSavings,Debt,&Credit AvailabilityNaturalEnvironment Higher PollutionLevelsIncreased Costsof EnergyShortage of Raw MaterialsChanging Roleof GovernmentAccelerating Paceof ChangeUnlimited Opportunitiesfor InnovationIncreasedRegulationIssues in the TechnologicalEnvironmentVaryingR&D BudgetsPolitical-LegalEnvironmentIncreasedLegislationSpecial-InterestGroupsSocial/Cultural EnvironmentOfOfOrganizationsOrganizationsOfOfNatureNatureOfOfOneselfOneselfOfOfSocietySocietyOfOfthe Universethe UniverseOfOfOthersOthersViewsThat ExpressValuesSocial/Cultural EnvironmentObjectivesInfluences on Buying BehaviorBuyer Decision MakingSimple Response ModelStimulusOrganismResponseCultureCultural FactorsSubcultureSocial ClassBuyerSocial FactorsReferenceGroupsRoles&StatusesFamilyInfluences on Consumer BehaviorPersonal InfluencesAge and Family Life Cycle StageLifestyleOccupation&Economic CircumstancesPersonality&Self-ConceptPsychological FactorsPerceptionLearningBeliefs&AttitudesMotivationFour Types of Buying BehaviorComplexBuyingBehaviorDissonance-Reducing BuyingBehaviorVariety-SeekingBehaviorHabitualBuyingBehaviorSignificantdifferencesbetweenbrandsFewdifferencesbetweenbrandsHighInvolvementLowInvolvementTotalSetDecision Making SetsAware-nessSetConsid-erationSetChoiceSetDecisionObjectivesHow Business&Consumer Markets DifferOrganizational Buying SituationsParticipants in the Business Buying ProcessMajor Influences on Organizational BuyersBusiness Buyer Decision MakingInstitutional&Government BuyingOrganizational FactorsPurchasing-DepartmentUpgradingCross-FunctionalRolesCentralizedPurchasingDecentralized Purchasing of SmallTicket ItemsInternetPurchasingLong-TermContractsPurchasing-PerformanceEvaluation&Pro.BuyersLeanProductionProblem RecognitionGeneral Need DescriptionProduct SpecificationSupplier SearchProposal SolicitationSupplier SelectionOrder Routine SpecificationPerformance ReviewPostPurchasePurchaseInfoSearch/EvalNeedNeedRecognitionRecognitionInstitutional MarketsCaptive PatronsCaptive PatronsLow BudgetsLow BudgetsGovernment MarketsDomestic SuppliersOpen BidsCost MinimizationPublic ReviewPaperworkObjectivesIdentifying CompetitorsEvaluating CompetitorsCompetitive Intelligence SystemsCompetitive StrategiesCustomer vs.Competitor OrientationIndustry CompetitionNumber of Sellers-Degree of DifferentiationEntry,Mobility,Exit barriersCost StructureDegree of Vertical IntegrationDegree of GlobalizationAnalyzing CompetitorsCompetitorCompetitorActionsActionsObjectivesObjectivesStrengths&Strengths&WeaknessesWeaknessesReactionReactionPatternsPatternsStrategiesStrategiesCompetitors Expansion PlansMarketsProductsIndividualUsersCommercial&IndustrialEducationalPersonalComputersHardwareAccessoriesSoftwareDellHypothetical Market Structure&StrategiesMarketleaderMarketchallengerMarketfollowerExpand MarketDefend Market ShareExpand Market ShareAttack leaderStatus quoImitateMarketnicherSpecial-izeDefense StrategiesAttackerAttacker(3)(3)PreemptivePreemptivedefensedefense(4)(4)Counter-Counter-offensiveoffensivedefensedefenseDefender(1)(1)PositionPositiondefensedefense(5)Mobiledefense(2)(2)Flank defenseFlank defense(6)(6)ContractionContractiondefensedefenseAttack StrategiesAttackerDefender(3)Encirclement attack(4)Bypass attack(2)Flank attack(5)Guerilla attack(1)Frontal attackSpecific Attack StrategiesPrice-discountPrice-discountCheaper goodsCheaper goodsPrestige goodsPrestige goodsProduct proliferationProduct proliferationProduct innovationProduct innovationImproved servicesImproved servicesDistribution innovationDistribution innovationManufacturing cost reductionManufacturing cost reductionIntensive advertising promotionIntensive advertising promotion“Nichemanship”End-user specialistEnd-user specialistVertical-level specialistVertical-level specialistCustomer-size specialistCustomer-size specialistSpecific-customer specialistSpecific-customer specialistGeographic specialistGeographic specialistProduct or product-line specialistProduct or product-line specialistProduct-feature specialistProduct-feature specialistJob-shop specialistJob-shop specialistQuality-price specialistQuality-price specialistService specialistService specialistChannel specialistChannel specialistBalanceCompetitionCustomer+Fighter orientation+Alert+Exploit weaknesses-Reactive+ID opportunities+Long-run profit+Emerging needs&groupsObjectivesIdentifying Market SegmentsChoosing Target MarketsMarket-Segmentation ProcedureSurveyMotivationsAttitudesBehaviorAnalysisFactorsClustersProfilingBases for Segmenting Consumer MarketsOccasions,Benefits,Uses,or AttitudesBehavioralGeographicRegion,City or MetroSize,Density,ClimateDemographicAge,Gender,Family size and Life cycle,Race,Occupation,or Income.Lifestyle or PersonalityPsychographicBases for Segmenting Business MarketsDemographicOperating VariablesPurchasing ApproachesSituational FactorsPersonal Characteristics MeasurableAccessibleSubstantialDifferential Segments must be large or profitable enough to serve.Segments can be effectively reached and served.Actionable Size,purchasing power,profiles of segments can be measured.Segments must respond differently to different marketing mix elements&actions.Must be able to attract and serve the segments.Effective SegmentationAdditional Segmentation CriteriaEthical Choice of Market TargetsSegment Interrelationships&SupersegmentsSegment-by-Segment Invasion PlansIntersegment CooperationObjectivesIdentify Differentiating AttributesChoosing&Communicating Effective PositioningMarketing Strategies Along the Product Life CycleMarketing Strategy&Market EvolutionProduct DifferentiationFormFea-turesPerfor-manceQualityConform-anceQualityDura-bilityRelia-bilityRepair-abilityStyleDesignDeliveryServices DifferentiationOrderingEaseMaintenance&RepairCustomerTrainingInstallationCustomerConsultingMiscellaneousServicesDifferentiationPersonnelChannelImage DifferentiationDifferences WorthEstablishingAffordableSuperiorProfitablePreemptiveDistinctiveImportantPositioning is the act of designing the companys offering and image to occupy a distinctive place in the the target markets mind.P 298 P 298Sales&Profit Life CyclesIntroductionIntroductionGrowthGrowthMaturityMaturityDeclineDeclineTimeSales&profits($)Four IntroductoryMarketing StrategiesRapid-Rapid-skimmingskimmingstrategystrategyRapid-Rapid-penetrationpenetrationstrategystrategySlow-Slow-penetrationpenetrationstrategystrategySlow-Slow-skimmingskimmingstrategystrategyPriceLowLowHighHighPromotionHighHighLowLowMaturity StageMarket ModificationProduct ModificationMarketing-Mix ModificationDecline StageDecrease investmentResolve uncertainties-stable investmentSelective nichesHarvestingDivestingMarket EvolutionEmergenceGrowthMaturityDeclineObjectivesChallenges in New Product Development(NPD)Challenges in New Product Development(NPD)Organizational Structure&NPDOrganizational Structure&NPDStages&Management of NPDStages&Management of NPDDiffusion&Adoption of New ProductsDiffusion&Adoption of New ProductsWhy New Products Fail“Over Championing”Over Championing”Overestimated DemandOverestimated DemandPoor DesignPoor DesignPoor Marketing ExecutionPoor Marketing ExecutionHigh Development CostsHigh Development CostsStrong Competitive ReactionStrong Competitive ReactionChallenges in NPDIdea ShortageIdea ShortageFragmented MarketsFragmented MarketsSocial&Governmental ConstraintsSocial&Governmental ConstraintsCostCostCapital ShortageCapital ShortageNeed for SpeedNeed for SpeedShorter Product Life CyclesShorter Product Life CyclesProbability of SuccessProbabilityProbabilityof technicalof technicalcompletioncompletionOverallOverallprobabilityprobabilityof successof success=Probability ofProbability ofcommercializationcommercializationgiven technicalgiven technicalcompletioncompletionXProbability ofProbability ofeconomiceconomicsuccess givensuccess givencommercializationcommercializationXConcept Development&Testing1.Develop Product Ideas into Alternative Product Concepts2.Concept Testing-Test the ProductConcepts with Groups of Target Customers3.Choose the Best OneConsumer-Goods Market TestingSales-WaveResearchTest offering trail toa sample of consumers insuccessiveperiods.SimulatedTest MarketTest in a simulated shopping environmentto a sample of consumers.StandardTest MarketFull marketing campaignin a small number of representative cities.Controlled Test MarketA few stores that have agreed to carry newproducts for a fee.CommercializationWhenWhereWhomProductPricePlacePromotionCharacteristics of the Innovation Rate of AdoptionRelative advantageRelative advantageCompatibilityCompatibilityComplexityComplexityDivisibilityDivisibilityCommunicabilityCommunicabilityObjectivesFactors to Consider Before Going GlobalFactors to Consider Before Going GlobalSelecting Foreign MarketsSelecting Foreign MarketsForeign Market EntryForeign Market EntryProduct Adaption for Global MarketingProduct Adaption for Global MarketingManagement&Organization of Global ActivitiesManagement&Organization of Global ActivitiesMajor Decisions in International MarketingDeciding whetherto go abroadDeciding whichmarkets to enterDeciding how toenter the marketDeciding on themarketing programDeciding on themarketing organizationChallenges in Going GlobalShifting bordersShifting bordersUnstable governmentsUnstable governmentsForeign-exchangeForeign-exchangeCorruptionCorruptionTechnological piratingTechnological piratingCriteria for EntryMarket AttractivenessMarket AttractivenessRiskRiskCompetitive AdvantageCompetitive AdvantageFive Models of EntryInto Foreign MarketsDirectinvest-mentJointventuresLicensingDirectexportingIndirectExportingAmount of commitment,risk,control,and profit potentialInternationalization ProcessNo ExportExport via AgentsSales SubsidiariesProduction AbroadFive International Productand Promotion StrategiesDualadaptationPromotionProductProductadaptationAdaptAdaptproductproductStraightextensionDo not changeDo not changeproductproductDo not changeDo not changepromotionpromotionCommuni-cationadaptationAdaptAdaptpromotionpromotionDevelop newDevelop newproductproductProductinventionPricing ChallengesPrice EscalationDumping chargesGray marketsTransfer pricesWhole-channel Concept for International MarketingSellerSellers internationalmarketing headquartersChannels betweennationsChannels withinforeign nationsFinal buyersObjectivesProduct CharacteristicsProduct CharacteristicsBuilding&Managing the Product Mix&Product LinesBuilding&Managing the Product Mix&Product LinesBrand DecisionsBrand DecisionsPackaging&LabelingPackaging&LabelingSpecialty ProductsSpecialty ProductsUnsought ProductsUnsought ProductsShopping ProductsShopping ProductsBuy less frequently Gather product information Fewer purchase locations Compare for:Suitability&Quality Price&StyleConvenience ProductsConvenience Products Special purchase efforts Unique characteristics Brand identification Few purchase locations New innovations Products consumers dont want to think about.Require much advertising&personal sellingBuy frequently&immediately Low priced Many purchase locations Includes:Staple goods Impulse goods Emergency goodsConsumer-Goods ClassificationProduct MixWidthWidth-number of different product linesLengthLength-total number of itemswithin the linesDepth Depth-number of versions of each productProduct Mix-Product Mix-all the product lines offeredConsistencyProduct-Line LengthLine StretchingLine StretchingDownmarketDownmarketUpmarketUpmarketTwo-wayTwo-wayLine FillingLine FillingLine ModernizationLine ModernizationLine Featuring&Line PruningLine Featuring&Line PruningWhat is a Brand?Brand EquityNo Brand Loyalty(customer will change)Satisfied Customer(no reason to change)Satisfied&Switching CostValues the Brand(brand as friend)Devoted to BrandBrand StrategiesBrandExtensionNewBrand NameProduct CategoryLineExtensionExistingExistingMultibrandsNewNewBrandsGood Brand Names:SuggestProductBenefitsDistinctiveLack PoorForeignLanguageMeaningsSuggestProductQualitiesEasy to:PronounceRecognizeRememberWhy Package Crucial as a Marketing ToolSelf-serviceSelf-serviceConsumer affluenceConsumer affluenceCompany&brand imageCompany&brand imageOpportunity for innovationOpportunity for innovationLabelsIdentifyIdentifyDescribeDescribePromotePromoteObjectivesService Definitions&ClassificationsService Definitions&ClassificationsHow Services Differ GoodsHow Services Differ GoodsImproving Service Differentiation,Quality,&ProductivityImproving Service Differentiation,Quality,&ProductivityImproving Customer Support ServicesImproving Customer Support ServicesCategories of Service MixPurePureServiceServiceTangibleTangibleGoodGoodw/w/ServicesServicesMajorMajorServiceServicew/Goodsw/GoodsHybridHybridPurePureTangibleTangibleGoodGoodServicesInseparabilityServices cannotbe separatedfrom theirprovidersPerishabilityServices cannotbe stored forlater sale or useIntangibilityServices cannotbe seen,tasted,felt,heard,orsmelled beforepurchaseVariabilityQuality ofservices dependson who providesthem and when,where,and howServicesInseparabilityIncreaseproductivity ofprovidersPerishabilityMatch supplyand demandIntangibilityUse cues tomake it tangibleVariabilityStandardizeserviceproduction&deliveryService DifferentiationOfferDeliveryImageDeterminants of Service QualityReliabilityReliabilityResponsivenessResponsivenessAssuranceAssuranceEmpathyEmpathyTangiblesTangiblesServiceExcellenceStrategic ConceptStrategic ConceptTop-Management CommitmentTop-Management CommitmentHigh StandardsHigh StandardsMonitoring SystemsMonitoring SystemsSatisfying Customer ComplaintsSatisfying Customer ComplaintsSatisfying Both Employees&CustomersSatisfying Both Employees&CustomersManaging ProductivityManaging ProductivityComplaint ResolutionHiring Criteria&Training for EmployeesHiring Criteria&Training for EmployeesDevelop Guidelines for FairnessDevelop Guidelines for FairnessRemove Complaint BarriersRemove Complaint BarriersAnalyze Types&Sources of ComplaintsAnalyze Types&Sources of ComplaintsObjectivesSetting the PriceSetting the PriceAdapting the PriceAdapting the PriceInitiating&Responding to Price ChangesInitiating&Responding to Price ChangesTypes of CostsTotal CostsSum of the Fixed and Variable Costs for a Given Level of ProductionFixed Costs(Overhead)Costs that dontvary with sales or production levels.Executive SalariesRent Variable CostsCosts that do varydirectly with the level of production.Raw materialsPricing MethodsMarkup PricingMarkup PricingTarget Return PricingTarget Return PricingPerceived Value PricingPerceived Value PricingValue PricingValue PricingGoing-Rate PricingGoing-Rate PricingSealed-Bid PricingSealed-Bid PricingSome important pricing definitionsUtility:The attribute that makes Utility:The attribute that makes it capable of want satisfactionit capable of want satisfactionValue:The worth in terms of Value:The worth in terms of other productsother productsPrice:The monetary medium of Price:The monetary medium of exchange.exchange.Value ExampleValue Example:Caterpillar CaterpillarTractor is Tractor is$100,000$100,000 vs.Market vs.Market$90,000$90,000$90,000 if equal$90,000 if equal 7,000 extra durable 7,000 extra durable 6,000 reliability 6,000 reliability 5,000 service 5,000 service 2,000 2,000 warranty warranty$110,000 in benefits-$110,000 in benefits-$10,000 discount!$10,000 discount!Psychological PricingMost Attractive?Most Attractive?Better Value?Better Value?Psychological reason to price Psychological reason to price this way?this way?A32 oz.$2.19B26 oz.$1.99Assume Equal QualityDiscriminatory PricingObjectivesWork Performed by Marketing ChannelsWork Performed by Marketing ChannelsChannel-Design DecisionsChannel-Design DecisionsChannel-Management DecisionsChannel-Management Decisi
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