chapter 1 and 2 and 3 summary following slides

8/2/2019 CHAPTER 1 and 2 and 3 Summary Following Slides

1/121

MARKETING FUNDAMENTALS 1012

CHAPTER 1:

INTRODUCTION: MARKETING: CREATING EXCITEMENT AND VALUE

WHAT IS MARKETING?

Marketing:

Mkting= a discipline, philosophy, process (w. steps, objectives, m.ments,changes) dealing w. customers + their n+w

=the delivery of customer value + satisfaction at a profit a social and managerial process by which ind. + groups obtain what they n+wthru creating and exchanging prods + values w. others incl. OBJECT/ABOUT: structure, behavior, process

WHO: ind. + groupsWHERE: society + orgsWHAT: prods, n+w, demands u/standing these

HOW: creating, exchangingWHY: value reasons, not $ amounts

Busns. today have 1 thing in common: they= have strong mkt orientation;focused on customers + compets

MKT ORIENTATION: focus on customers; satisfying their n+w & deliveringvalue

Can u/stand mkting thru practice + theory to provide rules, principles, ideas,frameworks, systems, etc.

Major Areas of Mkting Focus/EVOLUTION OF MKTING:

these versions = all needed as they contribute to the evolution of mkting (allapprop. depending on context)


2/121


whatever method used, the mtking org that excels= u/standing consumer N,dvlps prods providing superior value + then prices, distributes and communicateseffectively and efficiencyCore Marketing Concepts: Markets:

Mkting addresses all of the above Exchange leads to concept of mkts set of all actual + potential buyers of a

product Mkts= groups of indivd, orgs, both actual + potential, + = various groups of

customers A simple MKTING SYSTEM (r/ship b.w. the industry + mkt) key components

w.in system:

Whole world eco consists of complex interacting sets of mkts that= linked thuexchange processes


3/121


Goals and Roal of Marketing:

Goals: attract new customers by providing value + constant delivery ofsatisfaction to maintain these customers

Max consumption, satisfaction, q.o.life, choice

Role: find out what customers n+w then attempt to satisfy these, bringbuyers + sellers together, and generate rev. for the busn

Needs, Wants + Demands:

N: something for basic survival; states of felt deprivationnecessity/essential (physical, social, individual needs) W: something of desire (mkting = n = w) based on n, yet shaped by culture,enviro + indiv. personality luxury D: collective things consumers want mkt demand for something; not justindivds.; wants backed by buying power ppl demand prods w. benefits givingmost satisfaction u/standing these provide imp. input for designing mkting strats, where thechallenge to mkting orgs = to retain customers by satisfying these N, W + D N,W, + D can be satisfied thru PRODUCTS anything offered to a mkt for

attention, use, consumption (physical objects, sevices, ppl, places)

Value, Satisfaction and Quality:

Buying choices made based on perception of value that g+s deliver Mkting= evaluated thru customer perspective i.e. do $$ = satisfaction? seeing if mkting= effective by looking at:

o CUSTOMER VALUE: diff. between the values the customer gains in owning

+ using pro, + the costs of obtaining prod often based on perceivedvalue of product

o CUSTOMER SATISFACTION: extent to which a prods perceived

performance matches buyers expectations (if they = ) closely linked to quality; implementation of TQM systems

Mkting= done so that l/term r/ships w. customers = more cost effective thantrying to obtain new customers

Exchange, Transaction and R/ships:

Mkting occurs when ppl decide to satisfy n+w thru exchange EXCHANGE= act of obtaining a desired object from someone by offering

something in return general exchange-value process core concept of mkting for it to take place, several conditions must besatisfied:

o At least 2 parties much participate/communicate + must havesomething of value to e.other

o Each party must want to deal w. the othero Each party must be able to communicate and deliver


4/121


Exchange creates value just as production creates value; giving ppl moreconsumption possibilities + actually takes places depending on parties comingto an agreement

TRANSACTION: mktings unit of measure trade between 2 parties, based onagreements more specific; seen as u.o.measure

part of R/SHIP MKTING: creating, maintaining + enhancing strong r/ships w.customers + stakeholders in+outside of busn good r/ships = profitabletransactions

Core Marketing Concepts: Marketing:

Mkts lead to overall concept of mkting process by which ppl obtain whatthey n+w by creating + exchanging prods and vales w. others

Main elements in a modern mkt system:

mkting orgs success depends on own actions + how well entire value chainserves n+w of final consumers

MARKETING MANAGEMENT

analysis, planning, implementation + control of programs designed tocreate, build + maintain beneficial exchanges w. target buyers for the

purpose of achieving org objs.

Demarketing:

When there = excss demand, demkting= neededmkting in which task= temporarily/permanently reduce demand of the mkt/ppl(to reduce or shift it; not destroy it) Mkt m.ment seeks to affect the level, timing + nature of demand that helps

the org achieve its objectives


5/121


Managing demand also invl. Managing r/ships w. customers (both attractingnew and maintaining old)

Building Profitable Customer R/ships and Excitement:

Mkting= done so that l/term r/ships w. customers = more cost effective thantrying to obtain new customers focus today to build profitable r/ships w.them (superior customer value + satisfaction)

Focus on maintaining current customers + having a l/term profitable r/shipw. them

Emotional engagement= vital in mkting creating a sense of excitement thruinvlment + interactivity

Managing the Marketing Mix:

Incls 4 Ps, ppl, process, physical evidence(other tools + techniques used inmeasures of satisfaction)

all used to infl mkts where all blended to suit mkt + compet enviro

MARKETING MANAGEMENT PHILOSOPHIES:

Mkting m.ment can be guided by these 5 diff philosophies

Prodt. Concept: philosophy that consumers favour prods that= available +highly affordableProd Concept: idea that consumers favour prod that offers most quality,performance + features, + that the org should spend energy making continuousimprovements here


6/121


Selling Concept: idea that consumers wont buy enough of orgs prods unlessorg u/takes large-scale selling + promotion effort typically w. unsoughtgoods assumes if they= coaxed into buying it, they will like it

mkting based on hard selling carries risks; focuses on sales transactionsrather than l/term r/ships + what mkt actually wants

Mkting Concept: philosophy that believes that achieving org goals depend ondetermining + satisfying customers n+w, delivering this better than compets actually produce what customers want + thereby consumers + $$$ Evolution leading to these concepts ev. reflects: knowledge, complexity,sophistication (how society operates in general), challenge, change (a given),interest

Selling + Mkting concepts= sometimes confused

o Selling : takes inside-out perspective; focusing on each stage

: also focuses heavily on customer conquest getting short-term sales w. no interest about who buys or why

o Mkting : outside-in perspective; focusing on each of its own stages: companies produce + satisfy what customers want, makingprofits: yet mkters must balance creating value and making profits

Societal Mkting: companies taking on more responsible mkting; being sociallyaware i.e. Maccas + healthy food benefits for society, not orgs improvingconsumers and societys well being while satisfying n+w of t.mkts

balance of society (human welfare), company (profits) and consumers(want satisfaction)

considering societys interest in d.making process


7/121


CHAPTER 2:

STRATEGIC MARKETING AND PLANNING

Mkting orgs must dvlp l/term strats to meet changing conditions Hard task of selecting an overall company strat for long-run survival + growth

= S.P. S.P. defines mktings role in org; where process aims to guide those in/out of

mkting org to serve customers more effectively + to maintain profitabler/ships w. them

Mkting m.ment want to design + put into action strat + mking plans that willbest achieve objts in t.mkt

STRATEGIC PLANNING:

Strategy Hierarchy:

l/term /systematic process of developing + maintaining a strategic fit b.w.the orgs goals + capabilities in the light of changing mkting opportunities

invls dvlping strat for l/term survival + growth: those that fail to plan, plan to

fail planning can yield benefits: encourages m.ment to think systematically +

sharpen objts +policies,& provides clearer performance standards of control planning also helps company anticipate + respond quickly to enviro changes +

prepare for dvlpments quickly relies/need to develop a clear:

Company Mission : What company aims to do Objectives : both mkting + financial fit w.in broader busn. plan

SBUs: synergy b.w. functional units all fits w.in overall orgs goals

Sound busn. portfolio Coord. Functional Strats

S.P.= u/taken @ a no. of levels, depending on busn size + structure


8/121


Effective strat planning assists busn to dvlp strats that will achieve l.termbalance i.e. b/w shareholder + customer value

Corporate Strat: scope of org, portfolio of busn now + future, allocation + obtainment ofresources concerned w. eco value + financing requirements of corp + returns requiredby shareholders

dvlping strengths that max synergy b.w. strat busn units i.e. tech, skills SBU: unit of busn that has own mission + objs; can be company division, prodline w.in division, or single prod/brand name

Busn Strat: diff ops usually managed as separate SBUs focus on building, defending/maintaining compet positions thry dvlpment +implementation of compet mkting strats mans @ this level must evaluate + select approp. t.mkts to compete in @ this level, synergies should be sought across mkts to capitalize oncompetencies + max effectiveness of resource allocation

Marketing Strat: planning + coord of resources to achieved desired result in mkts served

MARKETING MANAGEMENT AND PLANNING:

MARKETING PLAN:

Brief summary of whole plan, incl. main goals + recommendations actionplan w.in busn plan, detailing how l/term goals of busn= going to be achieved

Gives purpose + direction to all busn activities (roadmap for activities)

Focus on customer acquisition, retention + resources needed to implementspecific mkting functs.

Central instrument for directing + coord mkting effort short-comings of mkting plans = lack of realism, insufficient mkt +compet analysis, short-run focus

Tends to involve 4 levels of decision making: corporate, divisional, busn-unitand prod level

M.plans= designed to operate at 2 levels:


9/121


o Strategic m.plan : sets out broad objectives, using SWOTo Tactical m.plan : specific m.tactics, incl. advert themes, merch,

pricing etc.

THE MARKETING PROCESS:

R/ship between Analysis, Planning, Implementation and Control

o Analysis : provides info + evaluations needed for all other mktingactivities

o Planning : continual process to respond to changing mkt conditions;

entails choosing the MMix (4 Ps)o Implementation : turning plans into actions to achieve strat objs.o Control: measuring + evaluating results of m.plans + activities, + taking

corrective action to make sure objs= being reached

BUSN. PLAN:

Incorps. all functions i.e. production, R&D, finance, HR, IT functional unitso Plans not. v. easy to find due to compet. advant reasons

THE NATURE AND CONTENTS OF A MARKETING PLAN:

Dvlping m.plan= one of the most imp. m.ment tasks u/taken as part of themkting process dvlpment relies on analysis of industry, busn + prodsituation

Sections of a m.plan:

1) Executive Summary and Table of Contents:


10/121


Brief o.view of proposed plan, giving short summary of main goals +recommendations to grasp plans major aims

TOC= one page guide to structure, layout and content sections of plan

2) Current Marketing Situation:

Presents relevant b.ground data on the t.mkt, prod, compet,distribution + macro-enviro (SITUATIONAL ANAYSIS)

Planning tool where it= snapshot of current situation of busn + prodfinds themselves in, + picture of where it= heading

MKT SITUATION: data presented on t.mkt; size + growth of the mkt (inunits &/or $) are shown for several past yrs + by mkt & geo segments

cust. needs, perceptions + buying behavior trends= also shown in/ext. factors affecting busn

PRODUCT SITUATION: sales, prod prices, contributions margins +profits are shown for prod line for past yrs

prod= studied by looking at aspects such as prods position inprod life cycle (birth to demise; intro, growth, maturity, decline)

COMPETITIVE SITUATION: when busn u/takes investigation ofcompeting prods + busns, + described in terms of size, goals, mktshare, product quality, mkting strats + other chars that= needed tou/stand their intentions + behaviour

main aim= predict likely future mkting strats of other busns +how they may react to changes; allows busn to exploit competadvant.

DISTRIBUTION SITUATION: data presented on size + importance of eachmkting (distribution) channel

MACRO-ENVIRO SITUATION: brief summary of the broad M.E. trends-demographic, economic, technological, political/legal, socio-cultural-that bear on the prod lines future

these = outside control of busn, where focus of plan should belooking how these will create opps/threats in mkt place m.plan= created/adjusted w. these in mind

3) Opportunity and Issue Analysis: Consists of a SWOT and Issue analysis, of SWOT + issues facing prod

line SWOT: method allowing busn to make valid assessments of infls of both

in/ext. enviros on the mkting processo SW : what busn does/doesnt do as good as other busn; prod SW

(INT)o OT : busn actions that may assist it to gain compet advant;

actions w. neg impact on busn (EXT) ISSUES ANALYSIS: SWOT used to define main issues to be addressed


11/121


4) Objectives: = financial + mkting goals busn wishes to achieve, relating to mkting

function achieved thru mkting plan must be SMART FINANCIAL: increased m.share, expand sales thru export mkts,

producing net profits and net cash flow of a certain amount

MARKETING OBJECTIVES: above must be converted to M.O. reviewof prod/mkt growth options = useful

5) Marketing Strategy: game plan aimed at achieving plans objts Consists of specific strats for t.mkts, mkting mix + marketing

expenditure level

6) Action Programs: Must specify broad mkting programs designed to achieve busn objts

each element now elaborated in terms of what, when, who, how will it be done Presents special mkting programs designed to achieve busn objts

7) Projected P+L Statement: Budget made w. also forecast of expected sales volume, average price

(for revenue side), and prodt. cost, physical distribution + mkting (expense side) To est. costs, busn looks at previous costs, calculates inflation figures,

+ uses guesswork referring to trends

8) Controls: How plan will be monitored

Can incl. CONTINGENCY PLAN outlining steps that m.ment would takein response to specific adverse dvlpments allow to consider difficulties thatcould arise

Mans must assess progress + once there= sufficient info about actualperformance, then compared w. planned level

corrective action may be necessary to ensure goals= achievable reviewing objts, measuring + evaluating performance, adjustingobjts, taking action

Analysing Market Opportunities:

Invls :Analysing l/term opports in mkt as to improve busns performance

done in reference to l/term goals and present state Evaluation of opports by operating a reliable mkting info system thru

m.research (in/formal) analysing gained data gives company useful info on how sales= influenced byvarious mkting forces Consideration of mkting enviro (in/extmicro and macro) and u/standing

mkts who buy/use busns prods


12/121


Paying attention to compets, their moves + reacting quickly + decisively

Evaluating the Marketing Plan:

Invls qing: do mkting objts relate directly to companys strategic initiatives?: do the mtking objts relate directly to the companys SWOTs?

: are they SMART?IMPLEMENTING THE MARKETING PLAN:

Implementation= process that turns mkting strats + plans into mkting actionsto accomplish strat mkting objts effective Impl. can lead to compet.advant.

Invls day-day, month-month activities effectively putting plan to work who,where, when, how

Critical to success= doing things right (implementation) and doing the rightthings (strats)

Reasons for Poor Implementation:1) Isolated Planning : Planning u/taken at diff busn levels can lead to probs

i.e. not having a certain u.standing of a particular level of the busnplans maybe set by top m.ment or high-level planners who have littledirect contact w. mkters implementing plans

2) Trade-offs between L/S/Term Objts: Mkting strats often address long-runactivities, usually rewarded w. s/term performance favour towardsshort-run results, yet has consequence of hurting busns long-run strat

3) Natural Resistance to Change: New strats require new company patterns +habits, where greater difference of new to old strat = greaterimplementation resistance

i.e. trying ti impl. strat of dvlping new mkts from old prod line, est.salesforce resists strongly due to lack of familiarity w. new customers4) Lack of Financial + Marketing Integration: Lack of integration at busn strat

level disciplines of each not effectively brought together to dvlp busnstrats (dont u/stand e.other)

5) Overemphasis of the Document: Too much emphasis on the plan ratherthan to the mkting planning process

Factors for Successful Implementation:

depends on how well company blends the following 5 elements into acohesive program that supports its strats1) Action Program: sometimes planners fail to incl. enough details aboutaction required, or assume mans will deal w. details leads to poor/noimpl. Planners must prepare detailed impl. plan showing specific activities +tasks for each person, needed to put it into action who, what, howdecisions + actions will be done


13/121


2) Good Organisational Structure: Simple, flexible structure w. moderncommunication + d.making techniques

3) Effective Decision and Rewards Systems: Effective ones so that manshave incentives to achieve both l/s/term goals

4) Careful HR Planning: Busn structure must be filled with ppl w. right skils

and motivation; must recruit, allocate, dvlp + main good ppl5) Marketing Strats must fit Company Culture: CC= system of beliefs/valuesshared in org strats that dont fit this will be hard to impl.

Implementation= also affected by Marketing Department Organisation: Mkting functionaries= needed to carry out mkting analysis, planning,

implementation and control Mod mkting departments= structured in several ways:

1) Functional Organisation: Diff. mkting activities= headed by functional specialist Mkting functions= directed by separate mans who report to mkting v-

president

2) Geographic Organisation: Company selling across the country/across diff countries sales +

mkting ppl = assigned to specific countries, regions or districts

Marketingdirector/manager

Salesmanager

Advertisingmanager

M.researchmanager

C.servicemanager

New-prodmanager


Salesmanager

Advertisingmanager

M.researchmanager

C.servicemanager

New-prodmanager

Regional SalesManager (4)

District SalesManager (20)


14/121


3) Product Management Organisation:

Companies w. many diff prods/brands prod manager dvlps +implements complete strat + mkting program for a specific prod/brand i.e. P&G1929

4) Market Management Organisation: Companies that sell one prod line to many diff types of mkts w. diff

needs + preferences; where it= similar to previous org M.mans= responsible for dvlping long-range + annual plans for sales +

profits in their mkts Main advant of system= company= organized around needs of specific

customer segments

5) Virtual Organisation: Mkting + prod mans becoming part of internal cross-functional teams

+ alliance teams, and mans working closely w. any 3rd part managing its IT assetsand staff as part of an outstanding agreement

6) Combination Organisation: Large companies producing many diff prods flowing into many diff geo

+ customer mkts use some combos of above orgs Ensures each function, prod + mkt receives its share of m.ment

attention, yet can be costly + reduce flexibility

CONTROLLING AND EVALUATING PERFORMANCE:

Marketing department must practice constant mkting control due to randomsurprises that can arise during impl.

MKTING CONTROL : process of measuring + evaluating results of m.strats +plans, taking corrective action to ensure that m.objts= attained

Invls following steps:

Salespeople (200)


Salesmanager

Advertisingmanager

M.researchmanager

C.servicemanager

New-prodmanager

Prodmanagers


15/121


Set Goals Measure Performance Evaluate Performance Takecorrective action

OPERATING CONTROL : invls checking ongoing performance against annualplan + taking corrective action when necessary

purpose: to ensure company achieves the sales, profits + other goals set out inits annual plan; also determines profitability on prods, channels, etc. STRATEGIC CONTROL : invls looing @ whether the companys basic strats= well

matched to its opports & current + forecast mkting enviro major tool for S.C.= MARKETING AUDIT: comprehensive + systematic,examination of companys strats + activities to determine problem areas +opports, & to recommend a plan of action to improve the companys marketing

performance covers all major mkting areas of a busn, where m.ment decides actions

which make sense and how + when to implement them, allowing them to adaptto the mkting enviro

What do we want toachieve?

What is happening? Why is it happening? What should we doabout it?


16/121


CHAPTER 3:

THE GLOBAL MARKETING ENVIRONMENT:

MKTING ENVIRO: actors + forces outside mkting that affect mkting m.mentsability to dvlp + maintain successful transactions w. its target customers

orgs must adapt mmix to trends + dvlpments in this enviro Mkting enviro provides both O+T, and the org must use its m.research to

watch the changing enviro Made up of:

o THE MICRO-ENVIRO : forces close to org affecting its ability to serve itscustomers i.e. org, mkt channel firms, compets + publics

o THE MACRO-ENVIRO : larger societal forces that affect the wholemicro-e i.e. demographic, economic, natural, technological, political +culturalforces

THE MICRO ENVIRONMENT:

Mkting m.ment has the task of attracting + building r/ships w. customers bycreating customer value + satisf. success depends upon micro-e

The Marketing Organisation:

Mkting mans must work closely w. other departments in the org Sections i.e. finance, R&D, influence mkting departments plan + actions Orgs that adopt a mkt orientation must think customer + work together to

exceed customers expectations provide customer service


17/121


1) Suppliers:

= firms + individuals providing resources needs by busn + compets to produceg+s

Supply shortages, delays, labour strikes + other events can damaged customersatisfy. in the long run

2) Marketing Intermediaries:

Firms that help the org promote, sell + distribute its goods to final buyers,inclo Resellerso Physical Dist. Firms : warehouse, transportation + other firms that help the

org stock + move goodso Mkting Services Agencies : m.research companies, advert and m.consulting

agencies + other service providers helping org target + promote its prodsto the right mkts

o Financial Intermediaries : banks, credit + insurance companies + otherbusns helping finance transactions or insure against the risks associated w.the buyin + selling of goods need to have strong r/ships w. imp.financial institutions

3) Customers:

Mkting org must study customer mkts closely Org can operate in 5 types of customer mkts:

1. CONSUMER MKTS : individs + h.holds that buy g+s for personal or h.holdconsumption

2. BUSINESS : orgs that buy g+s for further processing/for use in theirproduction process3. RESELLER : orgs that buy g+s in order to resell them @ a profit4. GOVERNT : govent agencies that buy g+s in order to produce public

services/transfer these g+s to others who need them5. INTERNATIONAL : overseas buyers incl. consumers, producers, resellers

+ govnts

4) Competitors:

Mkting orgs must gain strategic advnt by positioning their offerings againstcompets in the minds of consumers to be successful, must provide greatercustomer value + sat than its compets

Compet m.strat = different for all orgs


18/121


Compets incl.:1. DIRECT: someone meeting the same benefit needed by customers w.

similar prod i.e. mobile phone companies2. INDIRECT: by customers w. diff prod i.e. computers +

encyclopaedias

3. POTENTIAL: someone capable of meeting benefit needed by customersi.e. educational institutions bringing in new degrees/units

4. INCIPIENT: someone who may become capable of meeting benefitneeded by customers i.e. online education

5) Publics:

= any group that has an actual/potential interest in/impact on an orgs abilityto achieve its objts

Move from the orgs macro-e to its micro-e when they take that interest orchoose to have that impact

1. FINANCIAL: infl. orgs ability to obtain funds2. MEDIA: those that carry news, features + editorial opinion i.e. tv3. GOVERNT: m.ment must take govt dvlpments into account4. CITIZEN-ACTION: consumer, enviro, minority + other public interest

groups may q an orgs mkting decisions5. LOCAL: neighbourhood residents + community protection orgs6. GENERAL: need to consider the general publics image of the org,

which affects its buying7. INTERNAL: waged, salaried + commissioned eees, volunteers, mans +

b.o.directors attitudes of these infl busn

THE MACRO ENVIRONMENT:

= everything outside the micro-e Major Forces in the Orgs Macro Environment:


19/121


Org must carefully watch + respond to these forces Also need to look at each to identify accessible segments, and be attuned to

changes in the mkt

1) Demographic:

Demography: study of human pop in terms of size, density, location, age, sex,race, occupation + other stats

Imp. as it invls ppl, who make up mkts U/standing of demo trends in domestic + intern. mkts= vital Domestic changes: age + family structure, ethnic diversity, education, shifts

in population density/dwelling forms Intern: world pop said to exceed 9 bill by 2050, Chinese mkt big industry +

growing greater

2) Economic:

= factors affecting consumer buying power + spending patterns

Have been fluctuations of eco conditions and income changes in the past Australian eco grown strongly over the yrs Diff income levels = diff. spending patterns changes in major eco variable

(income, c.o.living, interest rates etc.) have large impact on m.place orgs watch these w. help of eco forecasting w. warning, can take advant

of changes in eco enviro


20/121


3) Natural:

= invl. natural resources that= needed as inputs by mkters/which are affectedby mkting activities

RAW MATS: i.e. water, renewable resources i.e. forests + food, non-renewable i.e. oil, coal + various minerals

ENERGY: oil major problem also in world political + eco terms POLLUTION: will always damage quality of natural enviro chem. waste +

pollutants, non-biod bottles, plastics + packaging mats

4) Cultural:

Made up of institutions + other forces affecting societys basic values,

perceptions, preferences + behaviours Ppl grow up in a particular society that shapes their basic beliefs + values They absorb a world view defining their r/ships to themselves + others Persistence of cultural values, subcultures + shifts in secondary cultural

values can affect mkting conditions S.I.S.C.VALUES:

Ethical Connections infl. forming + maintaining an individuals ethicalstandards

5) Technological:

= forces that affect new technologies, creating new prod + mkt opports


21/121


Mkters need to u/stand changing technological enviros + varying ways thatnew techs can serve human needs

need to work w. R&D ppl to encourage more mkt-orientated r.search + bealert to any aspects of an innovation that might harm users/arouse opposition

6) Political Environment:

= consists of laws, govt agencies + pressure groups that infl + limit orgs +indivds in society

Mkting decisions strongly affected by dvlpments made in this enviro


22/121


CHAPTER 4:

INFORMATION MANAGEMENT AND MARKETING RESEARCH

To produce cust. value + satisfy., mkting mans need info about customers,compets, govt + other forces

Most mkting activity requires m.ment, + good u/standing of situation beingmanaged

need KNOWLEDGE of macro/micro-e, customers, capabilities + opert.constaints Mans need up-to-date info to make timely decisions Info systems now designed to meet mans needs

THE MARKETING INFORMATION SYSTEM

MIS: consists of ppl, equip + procedures to gather sort, analyse, evaluate +distribute needed, timely + accurate info to mkting decision makers

Begins + ends with mans, + interacts w. them by:1. Assesses their info needs2. Develops the needed information3. Information analysis to make info more useful4. Distributes information to managers in right form + time


23/121


Assessing Information Needs:

Good MIS balances info mans would like to have against what they need

Need to interview mans to find out what they would like MIS must watch enviro + provide info they should have to make decisions

early warning system=called executive info system (EIS) Finally org=decide whether the benefits of having info=worth costs of

providing it

Developing Information:

Info neded by mans can be obtained from the following, then processed tobe more useful to mans:

1. Internal Records:o Info gathered from sources w.in company to evaluate performance +

detect probs + opportunitieso Used regularly for day-to-day planning, implementation + control

decisionso Can be from: accounting deparment i.e. financial statements

Operations incl. manufac +/or service fulfillment processes reports on prodt. schedules, inventories

Sales force reports on reseller reactions + compet activities.o Cheap form of information + obtained fastero Can be incomplete or in the wrong form for marketing decisions as it

contains info collected for other purposeso Sorting + presentation of most meaningful info in most timely manner=

major issue

2. Marketing Intelligence:o Everyday info about dvlpments in mkting enviro that helps mans prepare +

adjust mkting planso Also = systematic collection + analysis of publicly available info about

compets + dvlpments in mkting enviro, + also of eco, social, political +regulatory enviros

o Can be collected from own personnel, or suppliers, resellers + customers

to pass along import. Intelligence

3. Marketing Research:o Function linking consumer, customer + public to the marketer thru info

info used to identify + define mkting opports + probs; to generate, refine+ evaluate mkting actions; to monitor mkting performance; + to improveu/standing of mkting process


24/121


o As a process, it=invls the: systematic design, collection, analysis +reporting of data relevant to a specific mkting situation facing an org

o Most common activities= measurement of mkt potentionals, mkt shareanalysis, determinations of mkt characteristics, sales analysis, trends,s.term forecasting, competitive studies

Information Analysis:

Info gathered from mkting intelligence requires more analysis + sometimesmans need to apply the info to their probs + decisions

Might invl. collection of mathematical models that will help mkts makebetter decisions can help answer what ifand which is best qs

Distributing Information: Info gathered= distributed to right mkting mans @ right time Mans need routine reports for making regular planning, imple. + control

decisions Orgs often use DISTRIBUTED MKTING INFO SYSTEM in/external info can be

obtained, analysed + reported on over digital networks, even around theworld

they can obtain info from internal records/outside info services, usestatistical packages, prepare reports on word processors + communicate w.others in the network

allow mans to get the info needed directly + quickly, + tailor it to their ownneeds

THE MARKETING RESEARCH PROCESS


25/121


1. Defining the Problem:

Mkting man + researcher must work together to define probs + agree on

research objts Man best u/stands info needed; researcher u/stands mkting research (M.R.) +

how to obtain info must also define prob + suggest ways that research canhelp man make better decisions

When prob= clearly designed, must set r/objts 3 types:

A. Exploratory: M.R. to gather prelim info helping define probs betterB. Descriptive: M.R. to describe mkting probs, situations, mkts better such

as mkt potential for a prod/demographics + attitudes of consumersC. Casual: M.R. to test hypotheses about cause + effect r/ships

2. Developing the Research Plan: Invls determining info needed, dvlping plan for gathering it efficiently +

presenting the research design to mkting m.ment in the form of a plan planoutlines sources of 2ndary data + details research approaches, contactmethods, instruments to gather data, etc.

Determining Specific Information Needs- Objts translated into specific info needsi.e. sale forecasts, cons. attitudes

Gathering Secondary Information

- To meet info needs, researcher= gathers 2ndary data/primary data/both 2ndary: info that already exists; collected for another purpose lower costs, obtained quickly can provide data that individ org cannot provide on its own. i.e.

not directly available or would be too expensive to collect must be relevant, accurate, current + impartial

Primary: collected for specific purpose at hand + obtained as 2ndarysources cant provide all info needed

Planning Primary Data Collection- to ensure they provide mkting-d.makers w. relevant, accurate, unbiased

info calls for a no. of decisions on research approaches, contact methods,sampling plan + research instruments:

RESEARCH APPROACHES:

Observation Research: gathering of p.data by observing ppl, actions +situations


26/121


Survey Research: gathering descriptive info by askng ppl about theirknowledge, preferences, buying behaviour Can be Structured- formal list ofqs or Unstructured- interviewer probe respondents + guide interviewaccording to their answers can be direct or indirect

most widely used method for p.data collection; provides flexibility +quicker info + at lower cost

probs incl. ppl unwilling to respond or dont know the answer Experimental Research: suited to gather casual info + = gathering of p.data

by selecting matched groups of subjects, giving them diff treatments,controlling unrelated factors + checking for diffs in group responses tries to explain cause + effect r/ships

CONTACT METHODS:

Incl. Mail Questionaires: used to collect large info amounts at low cost, yetnot flexible + takes long to complete; response rate = low

Phone Interviewing: best for gathering info quickly yet cost= higher Personal Interviewing: takes two forms:Individual Interviewing: talking to ppl in their homes/offices/street/shopsGroup interviewing: group of ppl gathered w. moderator to talk about ap/s/org Online Survey Methods: may invl all/many approaches as above using email speed, reach, electronic data capture = good, yet dislike of unsolicited emails(spam), privacy concerns, security (cookies, viruses) = issues

SAMPLING PLANS: SAMPLE: segment of pop selected for M.R. to represent pop as whole Designing sample requires 3 decisions:

A. Who= surveyed (what sampling unit?)B. How many ppl should be surveyed (what sample size?)C. How should the ppl be chosen (what sampling procedure?)

RESEARCH INSTRUMENTS:

2 main research instruments: Questionaire: set of qs presented to a respondent for his/her answers

most common instrument, where form of q can influence the response i.e.closed/open-ended qs.

Wording + ordering of qs can influence response Mechanical Devices: ppl meters, supermarket scanners, galvanometer

measures strength of interest/emotions aroused by subjects exposure to diffstimuli

3. Presenting the Research Plan:


27/121


Invls summarizing plan in a written proposal, convering m.ment probsaddressed, research objts, sources + methods of data, + way results will helpm.ment d.making

Implementing the Research Plan:

Putting plan into action invls collecting, processing + analyzing info Data collection- carried out by the orgs research staff org keeps control

over collection process + data quality Fieldwork= closely watched so plan= implemented correctly, where data =

processd + analysed to isolate imp info + findings Researcher applies 3rd party software to tabulate results

Interpreting and Reporting the Findings: Now need to draw conclusions + report them to m.ment, & present findings=

useful in main decisions faced by m.ment Man decides what action the research suggests to be taken Mans + researches must work together when interpreting research results +

share responsibility for the research process + resulting decisions

OTHER MARKETING RESEARCH CONSIDERATIONS

Marketing Research in Small Businesses + Non-Profit Orgs:

Techniques discussed previously can be used by smaller orgs in a less formalmanner + @ little/no expense

Can conduct informal surveys + own simple experiments 2ndary data also available to them Mans must consider issues i.e. biases of using smaller samples

International Marketing Research:

Researchers here follow same steps as domestic researchers yet deal w.differing mkts in diff countries

Difficult finding good 2ndary data, + must often collect own p.data + faceother probs not foun domestically

Researching respondents often not so easy in other parts of the world i.e.language is an obstacle

Buying roles + consumer attitudes towards M.R. varies Growth in international mkting= resulted in a rapid increase in use of

international M.R.

Public Policy and Ethics in Marketing Research:


28/121


Intrusions on Consumer Privacy: legislation strengthened due to intrusions byM.R.

Misuse of Research Findings: stretch the truth or omit certain statements-provide a slant on the claim made

Codes of Practice: researcher= responsibilities to the general public, & should

make their names + addresses available to participants, & bans companiesfrom misrepresenting their database compilations activities as M.R.

CHAPTER 5:

CONSUMER MARKET BEHAVIOUR

Consumer Buying Behaviour: buying behaviour of final consumers, individs +h.holds who buy g/s for personal/h.hold consumption

Buying behave.= never simple, yet u/standing it= essential for mkting m.ment Consumer mkt: all individs/h.holds who buy/acquire g/s for personal

consumption

A MODEL OF CONSUMER BEHAVIOUR

Customers = make purchases + buying decisions every day Most mkters u/take consumer research to u/stand who, when what, how +

WHY they buy Central Q: how do consumers respond to various mkting stimuli that mkting

orgs use?need to u/stand r/s between mkting stimuli + consumer response need to figure out what is in the buyers mind


29/121


Black box= metaphor signifying that we cant see what ppl = thinking Mkter wants to u/stand how stimuli= changed into responses inside

consumers mind 1st: buyers individ chars infl. how they perceive/react tothe stimuli, 2nd: buyers decision process itself affects buyers behaviour

CHARACTERISTICS INFLUENCING CONSUMER BEHAVIOUR

2 main infls: INTERNAL: which determines our behaviour i.e. psychological +personal and EXTERNAL: represent the enviro in which the behaviour takesplace i.e. cultural + social

INTERNAL INFLUENCES:1) Psychological:

- motivated by 4 factors:


30/121


A. Motivation: a need becomes a motive when it is arouse to a sufficientlevel of intensity. It is a drive that presses to direct the person to seeksatisfaction.

- researchers try to uncover the deeper motives for consumer prod choices+ also behaviour

- Abraham Maslows theory: human needs= arranged as hierarchy, frommost to least pressing bottom to top of importance- Ppl try to satisfy most imp. need, then next comes into play

B. Perception: process by which people select, organize + interpret info toform a meaningful whole picture of the world

- motivated person= ready to act how ppl act= infl. by their perception ofthe situation in which they find themselves ppl perceive the samesituations differently

- everyone interprets info thru their senses, yet we receive, orh + interpretthis in an individ way

Perception formed by:- Selective Exposure: mkters working to attract consumer attention need

to find stimuli which ppl notice more likely to notice those that relate

to a current need- Selective Distortion: tendency for people to adapt information to personal

meanings + own mindsettend to interpret info that will support what wealready believe mkters need to u/stand ppls mindsets + their affect ontheir interps of adverts + sales info

- Selective Retention: ppl tend to retain info that supports attitudes andbeliefs

C. Learning: changes in an individs behaviour arising from experienceoccurs thru drives, stimuli, cues, responses + reinforcement mkters canbuild demand from these

D. Beliefs and Attitudes: Belief: descriptive thought/convictions aboutsomething + invls holding an opinion.Attitude: persons relativelyconsistent evaluations, feelings + tendencies towards an object/ideaTricomponent attitude model: suggests 3 major components influencingattitude:

Cognitive: beliefs + evaluations not infl. by emotionAffective: emotional responses i.e. like/dislikeConative: intention to purchase/purchase itself


31/121


- Hard for mkters to change beliefs, yet easier to alter behave.component

2) Personal:- Buyers decisions also infl. by these 7 factors:A. Age and Life-Cycle Stage: ppl change g/f purchased over lifetime

buying shaped by family l.cycle (stages thru which families past over time)where mkters define t.mkts based on this also now catering fordifferent family types

B. Occupation: affects g/s bought i.e. bank man= ties, tradie= bootsmkters try to identify occ. groups that have above-interest in p/s

C. Education: determines social classD. Economic Situation: affects product choice mkters of income sensitive

goods must watch trends in income, savings, I.ratesE. Personality + Self Concept: P: unique psychological characteristics that

lead to relatively consistent + lasting responses to our enviro closelylinked to motivation + useful in analysing con.behaviour

Concepts related to personality/self-concept: ppls possessions reflectthem

F. Consumer Lifestyle: pattern of living as expressed in their activities,interests + opinions (AIO) it profiles a persons whole pattern of acting +interacting in the world helps u/stand changing con. Values + how theyaffect buying behaviour

EXTERNAL INFLUENCES:1) Cultural Influences

- Exert broadest + deepest infl. on con.behaviour need to u/stand:A. Culture: set of basic values, perceptions, wants + behaviors learned by a

member of society from family + other imp. institutions mkters must beaware of diff cultures in mkts + adapt mkting strats to these, + spotcultural shifts to dvlp new prods

B. Subculture: smaller groups of people w. shared value systems based oncommon life experiences + situations i.e. nationality groups, religiousgroups need to design prods + m.programs tailored to n+w of these

C. Social Class: relatively permanent + ordered divisions in society whosemembers share similar values + behaviors classes not determined by asingle factor, yet classifications dvlped ranging from occupation andeducation S.C.= imp as ppl w.in certain class tends to exhibit similar

buying behaviour

2) Social Influences3 main factors, which also affect con.responses, thus imp. for mkting strats:

3. Household Types: e.g. the family of procreation, husband-wifeinvolvement, the buyers parents family types change + infl. buyingroles + choice


32/121


4. Groups: Groups which have direct infl. + to which a person belongs= amembership group. E.g. family/religious groups some= primary or 2nd

groups; either formal/informal + high/low interactionReference groups: groups serving as in/direct pts of comparison/reference in the forming of a persons attitudes/behave level of infl.

varies b/w groupsInfl. ppl in 3 ways: expose ppl to new behaves + lifestyles, influence

ppls attitude + self concept because they want to fit in & create pressures toconform that may affect ppls prod + brand choices

Aspiration group: group where an individ wishes to belong ppl identifyw. this group yet there= no face-to-face contactOpinion leaders: need to reach these in relevant group are ppl whoposses special skills/knowledge/personality, that exert infl. on others need to try to identify their chars, determine what media they use +direct msgs @ them

5. Roles and Status: position in group can be defined by R+S: role= consists

of the activities that ppl= expected to perform according to those aroundthem, where each role will infl. some part of buying behavior

each role carries status reflecting general esteem given to it by society

Roles in the Buying Process

Mkters need to know which ppl= invled in the buying decisions + what rolethey play need to identify who occupies which role as it affects prod design+ advertising msg

People might place several roles in the decision:Initiator: person who 1st thinks of idea of buying g/s

Influencer: person whose views/advice carry weightDecider: person who makes buying decision what, how + where to buyBuyer: person who makes actual purchaseUser: person who consumes/uses p/s

TYPES OF BUYING DECISION BEHAVIOUR

Con.d.making varies w.the type of buying decision more complex ds invlmore participants + deliberations


33/121


1) Complex Buying BehaviourCon.B.B. in situations characterized by high con. invl. in purchase + signifperceived diffs among brands cons. has much to learn about prod category

2) Dissonance-reducing Buying Behaviour

Con.B.B. in situations characterized by high invl. but few perceived diffs amongbrands cons have low invl. w. most low-cost, frequently purchased prods

3) Variety-seeking Buying BehaviourCon.B.B. in situations characterized by low con. invl. but significant perceivedbrand diffs cons do a lot of brand switching for the sake of variety rather thandissatisfaction challenge to present something new to cons to encouragevariety

THE BUYER DECISION PROCESS

5 stages buyers pass thru to reach a buying decision starts/continueslong before/after purchase mkters need to focus on entire process


34/121


1) Need Recognition: cons. recognizing prob/need sense diff b/w actual +desired state can be triggered by internal stimuli where needs become a

drive, or triggered by external stimuli2) Information Search: when consumer= aroused to search for more info they

may simply have heightened attention/may go into active info searchknowledge of brands + features increases when info= obtained

3) Evaluation of Alternatives: how the consumer processes info to arrive atbrand choices rank brands + forms purchase intentions

4) Purchase Decision: when consumer buys the most preferred brand 2factors can come b/w intention + purchase decision: attitude of significantothers & unexpected situational influences i.e. loss of job

5) Post Purchase Behaviour: consumer taking further action after purchase,based on dis/satisfaction based on r/ship b/w expectations + prodsperceived performance if falls short of expectation= disappointment; ifmeets expectations= satisfaction larger gap= larger disappointment

Some sellers may understate performance levels to boost satisfaction cons=delighted w. better performance + tells others almost all major purchases result in cognitive dissonance: buyer discomfortcaused by post-purchase conflict Satisf= imp, as it = more cost effective for busns to retain current customersthen trying to obtain new mkters aim to delight customers as bad w.o.mouthtravels faster than good which can damage cons.attitudes of companies + prods

THE BUYER DECISION PROCESS FOR NEW PRODUCTS

process of how buyers approach the purchase of new prods New prods: a g/s/idea perceived by some potential customers as new Imp= how consumers learn about prods for 1st time + make decisions to adopt

them or not adoption process: mental process thru which an individ passes from 1st

learning about an innovation to final adoption adoption: decision by individ tobecome regular user of prod

Stages in the Adoption Process

Consumer goes thru 5 stages:1.Awareness: of prod but lacks info2. Interest: seeks info about product3. Evaluation: consumer considers whether trying new prod makes sense4. Trial: tries new prod on small scale to estimate value5.Adoption: decides to make full + regular use of new prod

Individual Differences in Innovativeness


35/121


Ppl differ greatly in their readiness to try new prods Ppl can be classified into the adoption cats below:

Should not be assumed that there= almost complete adoption of prods acrossevery prod category

Influence of Product Characteristics on Rate of Adoption

Chars of prod affect its rate of adoption some= fast; others take longer togain acceptance

5 chars imp in infl. innovations rate of adoption mkters need to researchthese when dvlping new prod + mkting program1. Relative Advantage: degree to which an innov. appears superior to

existing prods2. Compatibility: innov. fits values + experiences of potential cons3. Complexity: innov. is difficult to u/stand or use4. Divisibility: innov. may be tried on a limited basis5. Communicability: results of using innov. can be observed/described

to others

CONSUMER BEHAVIOUR ACROSS INTERNATIONAL BORDERS

For companies operating in various countries, u/standing + serving the needsof consumers can be difficult

Values, customs, attitudes + behaviours of consumers vary greatly


36/121


Int. mkters must u/stand differences + adjust prods + mkting programsaccordingly

Can incl. physical differences i.e. small hands for Japanese consumers ofRemington prods, also body posture + gestures = diff in differing countries

Failing to u/stand differences can result in disaster

Mkters need to decide on degree to which they will adapt their prods +programs to meet these diff. cultures + needs

Either want to standardize offerings to simplify ops or adapt + satisfycustomers challenge to mkters

CHAPTER 8:

PRODUCTS: GOODS, SERVICES AND EXPERIENCES

Have decided on our t.mkts external opportunities Now focusing to tailor our mkting program internal capabilities 1st need to make decisions on what we = offering to segment/s Success = achieved by dvlping innovative prods + mkting it to approp. t.mkt Need to look at products effective prod concept = 1st step in m.mix

planning

WHAT IS A PRODUCT?

PRODUCT: anything offered to a mkt for attention, acquisition, use +consumption which may satisfy a n+w physical, service, ppl, places, orgs +ideas

Prods used over extended period of time = durable prod Prods consumed in single use/few usage occasions = referred to as non-

durable prods There = few so-called pure versions of either g/s, yet some = almost pure

versions most mkt offerings lie on a continuum between the two extremes


37/121


@ physical end, there = prods w. little/no service; @ other end = prodsexperienced during their delivery i.e. cruise ship

Almost pure services = activities/benefits offered for sale which =intangible, inseparable from consumer, perishable in that they =experimental, & dont result in ownership of anything

Mkting mans need to think about their prod offerings on 3 levels:


38/121


o Core Product- The problem-solving services or core benefits thatconsumers = really looking for when they buy a prod

addresses q: what is the buyer really buying, where core prod stands@ centre of the total prod when designing prods, mkters must 1st define core of benefits the prodwill provide to consumers

o Actual- a prods parts, styling, features, brand name, packaging + otherattributes that combine to deliver core prod benefits mkters invled in prod planning must build actual prod around core prod

o Augmented- Additional customer services + benefits built around the core+ actual prods

to consumer, augmentations become imp part of the total prod today most competition takes place at this level, where in some cases,companies may strip away augm. elements, thus enabling the firm tomeet requirements of mkt segments seeking value but @ lower price

Example- Qantas flighto Core product- time critical transporto Actual product- In-flight services, duty free shopping, meals, seat

allocation, flight booking system, schedules and safety recordo

Augmented product- Qantas club, car rental bookings, fly-drive packages,frequent flyer points, tours and priority baggage

PRODUCT CLASSIFICATIONS:

In seeking to dvlp mkting strats for p/s, mkters have dvlped several prod-classification schemes

1st prod may be viewed as in 2 broad classes based on types of consumersusing them: CONSUMER and BUSINESS-TO-BUSINESS (B2B)

B2B prods = mkted by one busn/govnt institution to another + involve mainlyindustrial prods i.e. chems + raw mats

Consumer Products:

Bought by final customers for personal consumption prods can be brokendown into convenience, shopping, specialty + unsought prods

o Convenience products - G+S that a customer buys frequently, immediately,w. minimal comparison + buying effort

- Usually low priced + widely available i.e. milk, bread


39/121


- Can be further divided into:- Staples-bought on a regular basis i.e. toothpaste- Impulse- bought w. little planning or search i.e. chocolate + gum- Emergency products- bought when the need is urgent i.e. umbrella in rain

o Shopping products - G+S that the customer, in the process of selection +purchase, compares on the basis of suitability, quality, price + style- Consumer spends considerable amount of time + effort gathering info +making comparisons i.e. furniture + clothing- Can be divided into:- Uniform- when prods = the same quality, price + perceived valuecompared i.e. dry cleaning services- Non-uniform- when prods = of differing qualities i.e. when buying clothing,the style, cut + fit = more imp. than the price

o Specialty products - G+S w. unique chars or brand identification for which

a signif group of buyers = willing to make a special purchase effort i.e.Rolex watch or a BMW

- Buyers dont normally compare these prods, but invest only the timeneeded to reach dealers carrying the wanted prods

o Unsought products - G+S that the consumer either does not know about orknows about but doesnt think of buying i.e. brand new technology(cameras) + life insurance

- prods = unsought until consumer = made aware of the need they satisfy either thru mkting commun. or because opinion leaders have convinced themit = worth buying


40/121


Business-to-Business Products (B2B):

= goods bought by individs + orgs for further processing or for use inconducting a busn.

Distinction between B2B + consumer good = based on purpose for which it =purchased

i.e. a lawn mower bought to mow the home lawn = consumer product,whereas, a mower bought from a lawn mowing busn = B2B prod

B2B prod can be classified according to how they enter prodt process +according to what they cost 3 groups of B2B prods:

o Materials + Parts: industrial goods that enter the mans prodcompletely, incl. raw mats & manuf. mats + parts

raw mats: farm prods i.e. veggies, + natural prods i.e. fisheach mkted differently

manuf.m+p incl. component mats i.e. cement processedfurther + component parts i.e. (tyres) enter finished prodcompletely w. no change to form

o Capital Items: industrial g+s that enter the finished prod partly, incl.installations + accessory equip.

Installations: buildings + fixed equip i.e. lifts Accessory equip: portable factory equip + tools + office equip

do not become part of the finished prod yet rather simply aid inthe prod process

o Supplies + Services: B2B g+s that dont enter the finished prod @ all

Supplies: operating supplies (coal, pencils) + maintenance +repair items (nails, brooms)

Services: maintenance + repair services (window cleaning,computer m+r) + busn. advisory services

SERVICES

(or service orgs): Any activity or benefit that one party can offer toanother that is essentially intangible + does not result in the ownership ofanything

Modern economies depend increasingly on the sale of services + mkting hasrisen to the many challenges that managing such S.orgs present

Services = responsible for over 70% of total value added + over 80% of totalemployment in Aust.

As manuf. industy has declines in modern ecos, service sectors i.e.communications + energy have grown, often due to outsourcing

Service Characteristics:

Some services = highly capital intensive, while others = more ppl based


41/121


Several factors = cited as distinguishing almost pure s from g (below) Also additional classification schemes that = imp (further on) services

performed on: physical objects, intangible assets, on the mind or requiringconsumers physical presence

1. Intangibility of Services- Almost pure services, such as a haircut, may bedistinguished from almost pure goods, such as coffee, in that there is nophysical element some services have no physical form, which may make ithard for consumers to make comparisons between services + cant judgeperformance until service = over

2. High invl. + Personal Nature of Services

3. Variability of Service Encounters- Almost pure services i.e. restaurant orcruise line experience, invl. interaction between a patron/guest + c.servicepersonnel. There is the potential for service variability in what have been

termed moments of truthservices that = ppl-based= more prone to vagaries of human nature, wherein such service encounters, r/ships b/w operatives + customers = imp. +become part of sellers motivation to provide good services technology seen as means of reducing service variability

4. Synchronous Delivery + Consumption- Almost pure services i.e. learning-to-drive session/aerobics instruction session, require those involved in theservice encounter to interact in real time as the service is consumed anyone servicing a client must react immediately to requirements of

individ customer consumer expectations about speed of delivery = increasing

5. Perishability- Almost pure services, such as a rock concert, may bedistinguished from almost pure goods, such as coffee, in that there is nostored physical inventory. Once the concert is over, there is only the memoryof it there = no equivalent of the inventory of finished goods in the case ofmost services

Service Quality Measures:

because consuming services mostly invls ppl in service encounters, +because of experimental nature of services, special measures i.e. use of

mystery shoppers = needed to measure service quality (SERVQUAL) Measuring services can be difficult, as they = experiential in nature invl.ppl in service encounters + special measures to asses quality

SERVQUAL: attributes of delivery perceived by customers that can bemanaged incl. tangibles (physical appearance), competence, credibility,responsiveness

The mkter has a role to pre-empt mismatch between expectations +experience by managing prod (both good + service component)


42/121


Notion of total quality now sees operatives empowered to stop movingconveyor belts/send back component failing to meet requirements, evenrefunding customers in cases of failed services

Manuf. + their channel partners = now take greater care + responsibility toensure goods = fit for purpose, and so, too, do those orgs mkting services

Service orgs place great emphasis on eee evaluation, training + motivation aspart of an internal mkting program

I.mkting invles one part of a mkting org mkting its capabilities to anotherpart of the org

EXTENDING THE CLASSIFICATION OF GOODS + SERVICES

Events, ppl, ideas, causes + other services = marked as prods

Event marketing- combines elements of mkting goods w. those of services,particularly the experiential aspects of sporting, entertainment + other

staged events delivered over a period of time i.e. the Olympic Gamescombining elements of the physical w. those of a service the experience isthe prod on offer w. events

Person marketing- People such as athletes need to be marketed before theycan be used for endorsements. Politicians, musicians etc. = also prods whichcan marketed promoted to life the ppl-drawing power of the things theyrepresent

Political marketing- Politicians market themselves, as well as political

ideologies and their political parties. We dont buy them but we give themattention and vote for them pollie parties adopt many mkting researchtechniques used in the commercial world to see how well their mkting strats= working

Cause and Cause-Related marketing- Marketing an idea or social cause, suchas nuclear-free living or catching public transport to and from work ensureswe feel positively towards it + give it support ppl might adopt behaviour associated w. these ideas + promote them to

others c related mkting: positioning a brand by telling customers that part of

the selling price = given to charity/as a good cause some might argue that such activities = cause-exploitive mkting, that

companies = riding on the back of genuine causes + events

Non-profit marketing- Involves activities by orgs not motivated by profitwhich ultimately lead to a donation, bequest or some other contribution i.e.RSPCA, Salvos


43/121


Experiences- Adding value for customers buying p+s thru c participation +connection by managing the environmental aspects of the r/ship i.e. TV +movie advertising entertainment i.e. Idol = mkted as a prod merchandise associated w.almost pure services earns a great deal of revenue

experiences = personal, existing only in the mind of an individ who hasbeen engaged on an emotional, physical, intellectual/spiritual level increasing, experiences = main reason why ppl sometimes return to buyprods

INDIVIDUAL PRODUCT DECISIONS

Looks @ decisions relating to dvlpment + mkting of individ prods:

Product Attribute Decisions (QUALITY, FEATURES, DESIGN) Dvlping p/s invls. defining the benefits that will be offered to the m.place

these = communicated + delivered by prod attributes i.e. quality, features +design

Decisions about these greatly affect consumer reactions to a prod

1. Product quality- The ability of a prod to perform its functions; it includesthe prods durability, reliability, precision, ease of operation + repair, +other valued attributes

quality = one of mkters major positioning tools + has 2 dimensions: level +consistency from mkting p.o.view, quality should be measured in terms of buyers

perceptions high quality can mean consistently delivering targeted level of quality toconsumers, where companies should strive for high levels of qualityconsistency companies now viewing quality as an investment + holding quality effortsaccountable for bottom-line results TQM- total quality management is a system which is aimed at achieving nodefects through observation and immediate rectification


44/121


2. Product features- Features = competitive tool for differentiating thecompanys prod from competitors prods i.e. cars being the 1st to intro a needed + valued new feature = one best way tocompete

company can identify new features + decide which ones to add to prodsby surveying buyers who have used prod, providing company w. rich list ofideas company can then assess each features customer value vs.company cost

3.Product design - the process of designing a prods style + function: creatinga prod that = attractive; easy, safe, + inexpensive to use and service; +simple and economical to produce + distribute i.e. fuel efficient cars

good design can attract attention, improve prod performance, cutproduction costs + give prod strong compet advant. In t.market

Branding (EQUITY, STRATEGY) A brand = a name, term, sign, symbol or design, or a combo of these intended

to identify the g/s of one seller + to differentiate them from theircompetitors can have attributes, benefits, values + personality

Can add value to prods, where dvlping branded prod requires great deal ofl.term mkting investment, esp. for advert, promotion + packaging

Powerful brand names have consumer franchise: they gain brand recognition+ can ultimately command strong consumer loyalty those companies w. ac.franchise = insulated from compets promotional strats have high brandequity

Brand = sellers promise to deliver consistently a specific set of features,benefits + services to buyers best brands convey a warranty of quality

Challenge of branding = dvlp a deep set of meanings for the brand, wheremkters must decide on the below levels at which they will build brandsidentity most lasting meanings of a brand = its values + personality

o Attributes: A brand first brings to mind certain product attributes i.e.Mercedes-Benz suggests such attributes as well engineered, well built,high prestige, fast, expensive and high resale value

o Benefits: Customers do not buy attributes; they buy benefits attributes

then must be translated into functional + emotional benefits. Theattribute well built might translate into the functional + emotionalbenefit, I am safe in the event of an accident

o Values: A brand also says something about the buyers values i.e.Mercedes-Benz buyers value high performance, safety + prestige


45/121


A brand marketer must identify the specific groups of car buyers whosevalues coincide w. the delivered benefit package

o Personality: A brand also projects a personality. Motivation researcherssometimes ask, If this brand were a person, what kind of person would it

be? Consumers might visualise a Mercedes-Benz motor car as being awealthy, middle-aged business executivethe brand w. attract people whose actual/desired self-image matchesthe brands image

Brand equity- The value of a brand, based on the extent to which it has highbrand loyalty, name awareness, perceived quality, strong brand associations+ other assets i.e. patents, trademarks + channel r/ships i.e. Microsoft +Coca-Cola

o Brand w. strong brand equity = valuable asset; can be bought/sold fora price

o Measuring actual equity = difficult, yet brands = seen as majorenduring assets of a company, outlasting the companys specific prods+ facilities

o The basic asset underlying brand equity = customer equity suggeststhat mkting strat should focus on extending loyal customer lifetimevale, w. brand m.ment serving as a major mkting tool

Major Brand Decisions1) TO BRAND OR NOT TO BRAND: Company needs to decided whether to brand prod

Some prods today = generic, w. no brand, where they = less expensiveversions of common prods i.e. 40% lower than national brands Buyers benefit from branding in many ways, telling buyer about prod quality,

also increases shoppers efficiency + attention to new prods that mightbenefit them

Also gives seller advents: makes it easier for seller to process orders + trackdown probs, can also led to more consistent prod quality, increasesinnovation i.e. trying to be better than competitors by finding new featuresto differentiate prods, + increases shopper efficiency as it provides more infoabout prods + where to find them

2) BRAND NAME SELECTION: Difficult task, where it needs to be carefully chosen, where it infl. prods

success Many large mkting companies have formal brand-name selection process Need to review prod + its benefits, t.mkt + proposed mkting strats

3) BRAND SPONSOR DECISION: 4 sponsorship options: manufacturers brand(aka national brand),


46/121


house/private label (sold thru intermediaries), mixed brand strat (sellingoutput under both own names + private labels) & co-branding (2 well knownbrands = combined on one prod)

oManufacturers Brand VS. Private Labels:

manuf. brand= brand created + owned by the producer of a p/sprivate brand= brand created + owned by a reseller of a p/s often hard toest. + costly to stock + promote some companies = decreasing no. of private labels in favour of major brandsto reposition themselves in fashion, national brands = dominate, yet private labels increasing

o Licensing:

name + character licensing = big busn in recent yrs

o Co-branding:

practice of using est. brand names of 2 diff. companies on same prod

4) BRAND STRATEGY: entails decisions on line + brand extensions, multibrands + new brands Have 4 choices when it comes to brand strategy (above)

o Brand Repositioning:

because of compet action/due to implementation of a new strat, a mktermight need to change both prod + its image to better meet customer

expectations with its brand(s) mkters should consider repositioning existing brands before introducting newones

Packaging

activities of designing + producing container/wrapper for a prod Can incl. prods primary container, secondary package thrown away before

using + shipping packaging


47/121


Labelling

Labels = may range from simple tags attached to prods to complex graphicsthat = part of the package

They = consist of printed info appearing on/with the package

They identify, grad, describe + promote prod Imp. that they dont mislead customers or fail to describe imp. aspects i.e.

ingredient content

Product-support services

C.service = another element of prod strategy, where prod-s-s = used bycompanies as tool in gaining compet advant

Companies should design its prod-s-s to meet needs of t.consumers 1st step = deciding which prod-s-s to offer = determne both services values by

t.consumers + the relative imp. of these services Given imp. of c.service as a mkting tool, many companies have set up strong

c.service ops to handle complaints + adjustments etc.

PRODUCT LINE DECISIONS

P.Line = group of prods that = closely related because they function in asimilar manner, sold to same customer groups, mkted thru same types ofoutlets or fall w.in given price range

In dvlping P.L.S, mkters face no. of decisions on P.L.Length + Featuring

Product Line Length

Line = too short if man can increase profits by adding items; too long if mancan increase profits by dropping items

Length = infl. by company objts Must plan P.L. growth carefully Can systematically increase P.L. in 2 ways: stretching/filling its line STRETCHING: occurs when company lengthens prod line beyond current

range; can be stretched down/up-wards, or both Companies initially locate @ high end of mkt + later stretch lines downward Downward stretch done for many reasons: may find faster growth taking

place at low end, or may have intended to start high then go low, or mayhave been attacked at high end + now gone low

Downward stretching carries risk: low-end item might provoke compets tocounteract by moving into the higher end, or companys dealer may not bewilling/able to handle lower-end prods

Upwards= usually done, as busn may be attracted by faster growth rate orhigher margins at the higher end, or may want to position themselves as full-line manufacturers

Upward = sometimes done in order to add prestige to current prods


48/121


Can also be risky as compets @ this end may strike back by entering lowerend of mkt, or companys salesppl + distributors may lack talent + training toserve this higher end of mkt

2 way stretch can also be done FILLING: lengthening line by adding more items w.in current range of line

Also done for reaching extra profits, trying to satisfy dealers etc. Can be overdone if results in cannibalization + customer confusion, therefore

need to ensure new items = noticeably different from current items

PRODUCT MIX DECISIONS

P.M.= set of all prod lines + items that seller offers for sale to buyers Each prod line consists of several sub-lines P.M. can be described as having a certain breadth, length, depth +

consistency breadth: no. of diff P.L. the company carries length: total no. of items company carries depth: no. of versions offered of each prod in the line counting no. of versions w.in each brand, can calculate average depth of

P.M. The 4 dimensions provide handles for defining the companys prod strat Company can increase busn in 4 ways:

o Add new P.L., widening its P.M.o Can lengthen its existing P.L. to become more full-line companyo Can add more prod versions to each prod to deepen its P.M.o Can pursuer more P.L. consistency or less depending on whether it wants

to have a strong reputation in a single/several fields

INTERNATIONAL PRODUCT DECISIONS

Int. mkters face special prod + packaging decisions Must figure out what prods to intro in which countries Need to decide how much to standardize/adapt prods for world mkts helps

dvlp consistent worldwide image, + reduce operating costs, & adaptation ofprods = useful in responding to customers who have diff cultural beliefs,attitudes etc.

Packaging issues can be subtle i.e. names, labels + colours may not translateeasily from one country to another

Need to adapt packaging to meet specific regulations regarding packagedesign/label contents i.e. some countries ban foreign language on labels


49/121


Companies often required to adapt packaging to serve unique needs +requirements of specific int. mkts

Overall, whether domestic/int., prod strat calls for complex decisions on

multiple levels These decisions need to be made not only w. a full u/standing of consumer

wants + compets strats, but also w. increasing attention to growing publicpolicy affecting pro + packaging decisions

CHAPTER 9:

NEW PRODUCTS

Company has to be good @ dvlping new prods must also manage them inface of changing tastes, compets etc.

Every prod goes thru life cycle (LC) LC presents 2 major challenges asprods eventually decline, firm must find new prods to replace old (NEW

PROD-DVLPMENT PROB) & also firm needing to u/stand how prods age + adaptits m.strats as prods pass thru LC stages (PROB OF PLC STRATS)

WHAT IS A NEW PRODUCT?

NEW PRODS: original prods, prod improvements, pro mods + new brands thatorgs dvlp thru their own R+D efforts


50/121


Diff cats of new prods:o New to the world- This category representsinventions. The product is new

to the world. For example, the first car, palm pilot, laser printer,antibiotic.

o New category entries- Products that take the firm into a category which is

new to it. Here products are not new to the world. For example, Johnson& Johnsons first insect spray, Hewlett-Packards first Internet server.

oAdditions to product lines- This category represents products that are line

extensions in the firms current markets. For example, Cascade lightbeer, BMW 4WD vehicle, Canon digital camera.

o Product improvements- This category represents existing products that

have been made better. Almost every product in the marketplace hasbeen or will be improved once or several times in the course of its lifecycle.

o Repositioning- This category is reserved for products that are re-targeted

for a new application or to a new user. A classic example is the Arm and

Hammer baking soda that was repositioned several times from baking, todeodorant, fridge deodorant and carpet cleaner.

o Variations of the above- Variations such as new to the country, new to thechannel, packaging improvements and different methods of manufacturingare not commonly accepted as new products.

NEW PRODUCT DEVELOPMENT STRATEGY:

Given rapid changes in tastes, compets etc., customers want + expect new +improved prods that compets will do its best to provide every companyneeds a new PDprogram

Company can obtain prods in 2 ways:o Acquisition: buying a whole company, patent or licence to produce

someone elses prodo New prod dvlpment: the dvlpment of original prods, prod improvements,

prod modifications + new brands thru companys own R&D efforts The costs of dvlping + introducing major new prods have climbed, where

many large companies have decided to grow by acquiring existing companies,prods + brands rather than innovate

New-Product Success and Failure:

Innovation can be v.risky E.g. of costly prod failures: Decores Hold That Colour shampoo, Maccas

grilled chicken burger, Cokes New Coke New prods continue to fail @ disturbing rate est. that of 2500 new prods

intro each yr, some 90% survived less than 3 yrs 7eral reasons why prods fail:

o No perceived need/inferior prodo Wrong timing


51/121


o Poor m.research + implementationo Lack of supporto Forecasting erroro Competitive responseo Changes in consumer tastes

o Changes in environment Because of high failure rate, companies = anxious to learn how to improve

chances of NP success one way = identify successful NP + find out whatthey have in common

Successful prods are uniquely superior, have higher quality, new features +higher value in use those w. high prod advant succeed 98% of time

Other way = having well defined prod concept prior to dvlpment, in whichcompany carefully defines + assesses t.mkt, prod requirements + benefitsbefore preceeding

Success also enhanced by strong m.ment commitment to dvlping new busn,

along w. factors of l/term perspective, u/standing consumers, mkts +compets, + provide customers w. superior value Future may be difficult for success keen compet has led to increasing mkt

fragmentation, prods must meet growing social + govnt constraints i.e.ecological standards costs of finding, dvlping + launching new prods willrise because of rising manuf., media + distribution costs

THE NEW-PRODUCT DILEMMA:

Obvious of prob that busns must dvlp new prods, but odds weigh heavilyagainst success much of solution lies in strong NP planning

Top m.ment = ultimately accountable for orgs NP success record, where theymust define the busn domains + prod categories that company wants toemphasise

Top m.ment must decide how much to budget for NP dvlpment NP dvlpment work also invls setting up effective org structures for nurturing +

handling new prods Most common org arrangement:

o Product managers: close to mkt + compets; ideally situated to find + dvlpNP opports; yet always busy + thus give little thought to new prods otherthan brand modification; also lack certain skills

o NP managers: report to group prod-mans tend to think in terms of prodmods + line extensions limited to current prod + mkts

o NP committees: review + approve new prod proposals usually consistingof reps from mtking, manuf, finance etc.

o NP departments: normally headed by man who has substantial authority +

access to top m.ment mainly generate + screen new ideas, working w.R+D, + carrying out field testing


52/121


o NP venture teams: group brought together from various operatingdepartments + charged w. dvlping specific prod/busn

Successful NP dvlpment requires total company effort: most successful makeconsistent commitment of resources to NP dvlpments, design NP strat linkedto strat. planning process, + set up formal org arrangements for managing NP

dvlpment process

Decision Dimensions:

To succeed, NP mans must orchestrate, for there = rarely simple NPprocedure

NPD field normally has fact that all pro innovations must be followed thruor pushed thru

Innovations invling change, means we have to overcome embedded humantraits that resist change

Other prob incl. conflicting set of m.ment demands that prod innovators mustcomply w.

Innovators dilemma in the light of management demands First, theproduct must have some valuable attributes that meet end-users needs, thenit must be high on design quality, low in production cost (compared withcompetitors) and, finally, it must get to market quickly.

NP mans ultimate task = optimize set of r/ships between superior value, +optimal time, cost + quality

THE NEW PRODUCT DEVELOPMENT PROCESS

Process for finding + growing NP consists of 8 major steps:

Ideas Generation:

systematic search for NP ideas done to gather large no. of ideas Company must usually generate many ideas to find few good ones Top m.ment should define carefully its NP dvlpment strat, stating which

prods + mkts to emphasise, + what company want from new prods i.e. high

cash flow Must indicate effort to be devoted to dvlping original prods, changing existing

ones + imitating compets To obtain flow of NP ideas, company can tap many idea sources i.e.:

o Internal sources: 5

chapter 1 and 2 and 3 summary following slides

Documents