discussion plan introduction target market distributionpromotionpricingproduct env. factors

Discussion Plan

Introduction

Target Market

Distribution PromotionPricingProduct

Env. Factors

Marketing Mix + Environment

Customer

Product

Distribution

PricePromotion

Political, Legal, and Regulatory Forces

Technological Forces

Social Forces

Competitive & Economic Forces

Exchange Relationship

• The act of giving up one thing, in return for something else

• Examples:– Money, credit for work, labor, time– Goods, services, recognition

• Marketing is about creating perceived value, not just value, for the exchange to occur

"First get your facts; then you can distort them at your leisure."Mark Twain

Utility Theory

• Can the product satisfy a human…– Needs and Wants

• Four Types of Utility– Place: Where I want it?– Time: When I want it?– Ownership: Can I legally use it?

• Receipts

– Form: Was it produced the way I want it?• Automobiles: CD Players, tires, etc.

Example

Functions of Marketing

• Market Research– Trends in purchasing habits

• Carbohydrate tendencies, clothing colors

– Targeting a different audience with the same product • Trying to achieve form utility

Research Grading Storage Transport Purchase Finance

Market Research

• Instinct + Research = A powerful Combination• A systematic, objective process of getting

information about potential customers to guide marketing decisions

• Two types of Data

Market Research

• Primary Data– Observed, recorded,

collected directly – Polls, surveys,

ethnographic (passive, open ended, videotaped)

– Very Costly ($20,000 at some points)

• Secondary Data– Information compiled in or

outside of company in order to change the current situation

– Census bureau, general databases about consumer trends,


• Grading– Grading Products

• Beef, steel, fruit subject to federal grading• Nutrition Facts

– Labels to show quality and type



• Storage– Holding products at the warehouse for a certain

period of time• Milk: Needed year round• Christmas Chocolates: Seasonal



• Transport– Logistical Process moving products to the location to

achieve place and time utility



• Purchase– Buying Behavior– Making the right products, at the right price, in the

perfect location, available



• Financing– Buying on Credit, or facilitating the purchase

• “No Payments for 6 months”• “No Interest”• Free Delivery


"Marketing is not an event, but a process . . . It has a beginning, a middle, but never an end, for it is a process. You improve it, perfect it, change it, even pause it. But you never stop it completely."Jay Conrad Levinson

Customer Relationship Mgmt.

• Using information about the customer to create marketing strategies that develop and sustain desirable customer relationships

• How can a company accomplish this?

“The lifetime value of a Taco Bell customer is approximately $12,000…a Lexus customer…about $600,000."Libby Estell

Customer Relationship Mgmt.

• Using information about the customer to create marketing strategies that develop and sustain desirable customer relationships

• How can a company accomplish this?– Survey (Hotel, Vodafone promotion)– Communication (Websites, fax, email, personal)

• Personal Attention• Listen 2/3 of the time, speak 1/3 of the time

– Appreciation Gifts“The lifetime value of a Taco Bell customer is approximately $12,000…a Lexus customer…about $600,000."Libby Estell

Discussion Plan

Introduction

Target Market


Env. Factors

Selecting the Target Market

• Market– Group of people who have a need, purchasing power,

and desire/authority to spend money on goods, services and ideas

• Customer vs. Consumer: When a niño wants a toy

• Target Market– Specific group of consumers on whose needs and

wants a company focuses its efforts.

"In marketing I've seen only one strategy that can't miss -- and that is to market to your best customers first, your best prospects second and the rest of the world last."John Romero

Example

Market Segmentation

• Firm divides the total market into groups of people that have similar product needs

• Market Segment– Person, group, or organization with similar

characteristics, and similar needs/desires• Proctor and Gamble spends $46 million to promote to the

Hispanic population in the United States. Ads places in Telemundo Networks

• US Presidential Candidates speaking in Spanish– (Market Research Trends)

Selecting a Target Market

• Total Market Approach– Firms try to appeal to everyone and assume that all

buyers have similar needs

• What are some general product examples?

Company Single Mktg. StrategyTotal Target

Market

Market Segmentation

• Concentration Approach– Company develops one marketing strategy for a

single market segment• Ability to specialize on one segment, or reach a segment

ignored by other portions of the industry

• Multi Segment Approach– Marketers aim its efforts at two or more segments,

with a strategy for each

Market Segmentation

• Concentration Approach:

• Multi Segment Approach

Single Mktg. Strategy1 2

3 4

Single Target Market

Market Strategy 1

Market Strategy 2

2

3 4

1

Multiple Target Markets

Niche Marketing Issues

• Can the target market afford our product?• Can we reasonably expect to promote to them?• Is there a need in this market for the product?• Is our product good enough to serve this

purpose?• What is the competition level?• Will this niche market lead to larger markets

down the road?

Has anyone heard of Sony Playstation ?????

Niche Marketing Issues

• Can the target market afford our product?• Can we reasonably expect to promote to them?• Is there a need in this market for the product?• Is our product good enough to serve this

purpose?• What is the competition level?• Will this niche market lead to larger markets

down the road?

Basis for Segmenting Markets

• Demographic– Age, sex race, ethnicity, income, education,

occupation, family size, religion, social class– Think of your average clothing company?

• Geographic• Psychographic• Behavioristic


• Demographic• Geographic

– Climate, terrain, natural resources, population,– Montreal 40 Degrees below 0 in the winter

• Psychographic• Behavioristic


• Demographic• Geographic• Psychographic

– Lifestyles, personality, motives– Water, milk, food, in different size packaging

• Behavioristic

Example


• Demographic• Geographic• Psychographic• Behavioristic

– Consumer actions toward the product– Consumer behavior when using the product– Automobiles to get to work, for the weekend, for the

showroom with friends

Buying Behavior

• The decision processes and actions of people who purchase and use products

Psychological Variables Social Variables

Buying Behvavior: Psychological

• Perception– Selecting, organizing, and interpreting information– Influenced by motivation: E.g. buying a new laptop

• Learning• Attitude• Personality


• Perception• Learning

– Changes in behavior based on new info/experience

• Attitude• Personality


• Perception• Learning• Attitude

– Knowledge or feelings about a given issue: the world

• Personality


• Perception• Learning• Attitude• Personality

– Organizing individual´s traits, attitudes, and habits– “The clothes make the man.”

Qfoos

Buying Behavior: Social

• Reference Groups– Groups the consumer ID´s with– Family, friends, organizations

• Social Class– Ranking of people into high position of respect/status– Products can serve this purpose

• Culture– Patterns of behavior, thought, speech, acceptance

"If you talk to a man in a language he understands, that goes to his head. If you talk to him in his language, that goes to his heart."Nelson Rolihlahla Mandela

Go Tiger

Remember 1998 in France…

Discussion Plan

Introduction

Target Market


Env. Factors

Classifications: Consumer Prod.

• Convenience Products– Eggs, milk, bread, cheese– For immediate consumption– Low involvement, high brand acceptance

• Shopping Products– Furniture, sporting goods,– Comparisons, on price, quality

• Specialty Products– Ethnic foods, designer clothes or exclusive products– People will go out of their way to achieve these

products

Classifications: Industrial Prod.

• Raw materials• Equipment for Machines used in production• Accessories

– PC´s, Fax machines, etc, not part of final product

• Components and processed materials– Battery, glass, varnish, used in final product

• Supplies– Pens, paper, calculator, to make management easier

• Industrial Services– Financial, legal, security, janitors

Indentifying Products

• Branding– Naming and identifying products (may have trademark)

• Types of Brands– Manufacturer Brands: Unilever (Dove Soap)

• Ownership from production to point of purchase (POP)

– Private Distributor Brands: Gap• Ownership after purchase from manufacturer to POP

– Generic Products• No brand name, which package, lower price

Identifying Products

• Packaging– 40% of consumers will try a product based on

packaging– 2.5 seconds: amount of time spent looking– Convenience: 6.44 oz per gulp, squeeze or gulp?

• Labeling– Nutrition fact, warnings, certifications, company logo

• Quality

"First get your facts; then you can distort them at your leisure."Mark Twain

Product Life Cycle

• The lifespan of a product on the market.Introduction Growth Maturity Decline

Time

Sales Volume

Profit

Different Product Life Cycles

Time

Time

Time

Time

Sal

es

Sal

es

Sal

es

Sal

es High Learning Product:

PC´s (Dell)

Low Learning Product:

Gillette MACH 3 Razor

Fashion Product:

Skirt length, jean types, colors

Fad Products

Can´t think of anything, sorry

2 ½%Visionaries 13 ½%

Pragmatists

34%Early

majority

34%Late

majority

16%Laggards

Time of adoption innovations

Crossing the Chasm

The Chasm

Main Street

Source: Inside the Tornado, G. Moore, Harper Business, 1995. Karl Moore, McGill University

Characteristics

• Visionaries– Love Rapid Innovation– Play by their own rules,

don´t care for others opinions

– Risk takers– Motivation

• New opportunities

– Some will buy anything new, just to be the first to try it.

– Shoot for the moon• What is possible?

• Pragmatists– Love gradual innovation– Consult others for their

opinions– Conformists

• Follow the pack

– Motivation• Solving present issues

– More Analytical, less emotional

– Look for a calculator• What is most likely?

Getting through the Bowling Alley

• Having (or acting like you have) an innovative product that will revolutionize the world

• Product will not only the present issue, but future issues that may arise

• Need to show understanding of industry– Having one great product does not always work

• Spread word of mouth, show accomplishment

2 ½%Visionaries 13 ½%

Pragmatists

34%Early

majority

34%Late

majority

16%Laggards

Time of adoption innovations

Crossing the Chasm

The Chasm

Main Street

Source: Inside the Tornado, G. Moore, Harper Business, 1995. Karl Moore, McGill University

Differences between the two…

• Bowling Alley– Avoid Competition = Niche

marketing strategy– Value Based Pricing

maximizes profits– Value Added Distribution =

“Customized Solutions.”– Differentiate product for a

specific use– Specialized, focused

approach

• Tornado– Attack Competition = to

Increase Market Share– Price based competition

maximizes competition– Low Cost High Volume

Distribution = higher exposure”

– Commoditize product = adjust for multiple uses

– Mass communication and world of mouth

Differences between the two…

• Bowling Alley

– Target Audience

– Pricing

– Placement

– Product

– Promotion

• Tornado– Attack Competition = to

Increase Market Share– Price based competition

maximizes competition– Low Cost High Volume

Distribution = higher exposure”

– Commoditize product = adjust for multiple uses

– Mass communication and world of mouth

Post-Tornado Market Share by Revenue

Market Standard

Follower 1

Follower 2

Other

Post-Tornado Market Share by Profits

Market Standard

Follower 1

Follower 2

Other

“Let me tell you a little story.”

Sanjeev Nath

Discussion Plan

Introduction

Target Market


Env. Factors

Definitions

• Marketing Channels– Group of Organizations that moves products from

their producer to their customer

• Retailer– Intermediaries that buy produces from manufacturers,

to sell to end-user consumers (E.LeClerc)

• Wholesalers– Intermediaries that buy from producers to sell to

retailers or other wholesalers“The best products in the world will not be successful unless the companies make them available where and when the customers wants to buy them.”

O.C. Ferrell and Geoffrey Hirt

Supply Chain Managment

• Long Term partnerships among marketing channel members working together to reduce costs, wastes, an unnecessary movement in the entire marketing channel to satisfy customers.

• Distribution is the least flexible of the marketing decisions. It is very difficult to change the way products are moved, as relationships and large quantities of resources are involved

Supply Chain Options

ConsumersRetailers

(Middlemen)Wholesalers(Middlemen)

Agents(Middlemen)

ProducerA

ConsumersRetailers

(Middlemen)Wholesalers(Middlemen)

Producer

ConsumersRetailers

(Middlemen)Producer

ConsumersProducer

B

C

D

Intensity of Distribution Coverage

High Intensive

Low Intensive

Target Audience

"Your brand's power lies in dominance. It is better to have 50% of one market, instead of 10% of five markets."Al Ries

Intensity of Distribution Coverage

• Intensive Distribution– Product is made available in as many outlets as

possible

• Selective Distribution– Small number of all available outlets are used to

expose products

• Exclusive Distribution– Manufacturer gives right to sell product in a specific

area only

Physical Distribution

• All the Activities necessary to move products from producers to customers

• Transportation– Shipment of products to buyers– Railway, motor vehicles, inland waterways, pipelines,

and airways

• Warehousing– Design and operation of facilities to receive, store,

and ship products

• Materials Handling: Supports the above– Physical handling & movement of products

Discussion Plan

Introduction

Target Market


Env. Factors

Price

• The Value placed on an object exchanged between a buyer and seller

• The most flexible variable in the marketing mix• Goal: Maximize profits and increase market

share

Pricing Strategy

• Price Skimming– Charging the highest possible price that customers

can conceivably pay– Most common with new products or product

innovations (e.g. Playstation)

• Penetration Pricing – Charging a lower price to enter the market and gain

market share immediately– Common when expected competition will enter the

market quickly– When the goal of the product is to put another product

out of business (e.g. Proctor and Gamble)

Example

Other Pricing Issues

• Psychological Pricing– Encourages purchases based on emotional, rather

than rational responses to price

• Odd/Even Pricing: $9.99• Symbolic Pricing

– Charging higher price to show higher perceived quality

– Great for over the counter drugs or products not commonly purchased by target audience

Methods to Determine Price

• Accounting Point of View– Contribution Margins– Gross Margins– Desired Profit Margin– Potential Demand– Potential Supply– Break-Even Points– Financing Issues

• External– Costs– Geography– Seaonsal Effects– Government Regulations– Image Creation

• What type quality are you trying to sell?

– Competition• Where do you want to be

in relation?

– Distribution Channels• Store image

– Product category awareness

“Keeping the other airlines honest”George Wip

Discussion Plan

Introduction

Target Market


Env. Factors

The Promotions Mix

• Integrated Marketing Communications– Coordinating the following elements to create a

unified, synchronized, promotions effort

Promotions Mix

Publicity

Advertising

Personal Selling

Sales Promotion

QFreeS

Product Life Cycle

• Marketing Job in Each segmentIntroduction Growth Maturity Decline

Time

Sales Volume

Profit

Product Life Cycle

• Marketing Job in Each segmentIntroduction Growth Maturity Decline

Time

Goal: To Inform

•Magazines etc.

•Initial DistributorCalls

•PromotionalTools (samples)

Goal: To Persuade

•PersonalSelling to Distributors

•Differentiationadvertising

Goal: To Remind

•Coupons,DirectMail, & Discounts

•Rare Salesforce

•Reminder Advertising

Goal: To Survive

Very little moneyspent on ads

unless alternateuses can be found

Promotions Mix: Advertisements

• Advertising– A paid form of non –personal communication

transmitted through a mass medium (TV, magazine, newspaper, or online advertisements

– 58% of a 1,200 person survey said that they would try a campaign with a “catchy advertisement.”

– Infomercials: 30 minute paid advertisements• Cost to produce 30sec. Ad: $343,000• Cost to produce 20min infomercial: $125,000- $600,000

– Product placements in movies

"Television is chewing gum for the eyes."Frank Lloyd Wright Example

Promotions Mix: Personal Selling

• Direct, two way communication with buyers and potential buyers

• Great for certain types of products– Large, expensive (Car, house, applicances)

• Extremely flexible– Increased information, price adjustments, pressure

• Most costly form of promotion• Types of Sales People

Order Taker:Retail sales and cashiers

Creative Salespeople:Furniture, car, insurance

Support Salespeople:Customer Educators/Those

Who don´t take orders

Promotions Mix: Publicity

• Non-personal communication transmitted through the mass media but not paid for directly by the firm

• Message is transmitted in news story format– Increases the need for a public relations department

• Different to Advertising

Advertising PublicityPersuasive/Informative InfomativeDesires to you want to act Does notPayment for target audience Free

Sales Promotion

• Involves direct inducements offering added value or some other incentive for buyers to enter into an exchange– Coupons, Deals, Premiums, Contests, Sweepstakes,

Samples, Continuity Programs, Point of Purchase Displays, Rebates, Product Placement

• For your exam, we will only focus on the following 5…

Five Kinds of Sales Promotions

Types Objectives Advantages Disadvantages

Deals

Sweep-

Stakes

Samples

Continuity

Programs

Point of PurchaseDisplay

High Internal Costs

High Internal Costs

Sales drop after the promotional tactic

Consumers Wait to buy, Value decreased

Retailers may not offer optimal positions

Reduce Customer Risk Level

Increase usage of product

Reduce Customer Risk Level

Improve Loyalty

Product is easy to see

Encourage Product Trial

Earn Multiple Purchases

Increase trials & competition

Repeat Purchases

Encourage Product Trials

Push or Pull Strategy

• Push Strategy– Attempting to motivate intermediaries to force

customers to buy products– Uses promotions, incentives, anything to increase

sales

• Pull Strategy– Promotions to create customer demand so consumer

force a company to make it more available– Any company that starts building once the order is

placed

Location, Location, Location

• Location of the store– What type of area?– What type indirect traffic is there?– What other stores are in the area?

• Location of the product in the store– Easy Access to product (easy to see)– Next to products of similar quality?– Promotional location?– Is the product a want or a need?

You know this company, you don´t know that you know…

Discussion Plan

Introduction

Target Market


Env. Factors

Environmental Factors

• Laws, and regulators´ interpretation of laws; law enforcement and regulatory activities; regulatory bodies, legislators, and legislation, and political actions of interest groups.

• E.g. USA = no cigarette advertising



Social Forces


Example




Social Forces


• The public´s opinions and attitudes toward issues such as living standards, ethics, environment, lifestyle, and quality of life.

• E.g. safer toys for children, low fat/low carbohydrate foods, and breath mints.


• Competitive relationships, unemployment, purchasing power, and general economic conditions

• E.g. prosperity, recession, depression, recovery, product shortages, and inflation).

» You will learn Porter´s Five Forces in other classes



Social Forces



• Computers another technological advances that improve distribution, promotion, and new-product development

• E.g. The internet, cell phones, airplanes



Social Forces


Marketing Mix + Environment

Customer

Product

Distribution

PricePromotion



Social Forces


discussion plan introduction target market distributionpromotionpricingproduct env. factors

Documents

functions of marketing

types of data slide

recognition marketing

marketing decisions

mark twain slide

jay conrad levinson

market research primary

right products