Ch 13 intro to marketing
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Ch 13 – Intro to Marketing. Most people think marketing is simply advertising Maybe at some point in history it was Now it is a integral part of the Value Chain in creating products and services Let’s look at how Marketing has changed over time. Production Era. 1700s – end of World War II

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Ch 13 – Intro to Marketing

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Ch 13 intro to marketing

Ch 13 – Intro to Marketing

  • Most people think marketing is simply advertising

  • Maybe at some point in history it was

  • Now it is a integral part of the Value Chain in creating products and services

  • Let’s look at how Marketing has changed over time


Production era

Production Era

  • 1700s – end of World War II

  • Marketing was product-focused

  • Produce as much as you can and it will sell

  • Demand outpaced supply

  • Henry Ford: “Customers can have any color they want, as long as it’s black.”


Selling era

Selling Era

  • Post World War II - 1990s

  • Mad Men Era (AMC show)

  • Mass production caused capacity to exceed demand

  • Needed advertising to create demand

  • “Tell and sell”

  • Convince customers to buy your product


Ch 13 intro to marketing

  • History of Marketing


Customer relationship era

Customer Relationship Era

  • 1990s – today

  • Learn as much as possible about your customers and do everything you can to meet or exceed their expectations

  • Building long-term relationships with customers by offering value and providing satisfaction


Customer relationship management

Customer Relationship Management

  • Jet Blue Airways

  • Known for customer service

  • Watch video

  • February 14, 2007

  • New FAA Rules


Marketing defined in plain english

Marketing Defined (in plain English)

  • Process of getting right goods or services to the right people at the right place, time, and price

  • Helping the buyer buy

  • (Which helps the seller sell)


4 ps of marketing

4 Ps of Marketing

  • Product

  • Price

  • Promotion

  • Place

  • Also called the “Marketing Mix”


Marketing process

Find opportunities

Conduct market research

Identify target markets

Product design

Product testing

Determine brand name

Design packaging

Set a price

Select distribution system

Design promotional campaign

Build a relationship with customers

Marketing Process


Market research

Market Research

  • Define question/determine present situation

  • Collect data

    • Secondary = info already compiled by others

    • Primary = new studies you conduct yourself

  • Analyze research data

    • turn data into useful info

  • Choose best solution

    • Implement and follow-up to see how it worked


Target market

Target Market

  • Mass marketing

    • Products to please a large number of customers

  • Niche marketing

    • Small but profitable market segments

  • One-to-one marketing

    • Unique product for each customer

  • Relationship marketing

    • Custom-made goods and services


Knowledge of consumer behavior

Knowledge of Consumer Behavior

  • Helps in identifying target market

  • Steps in Buying Decision:

  • 1. Recognize want/need

  • 2. Search for info/choices

  • 3. Evaluate alternatives

  • 4. Decide whether or not to buy

  • 5. Post purchase – still happy with decision?


Buying decision influenced by

Buying Decision Influenced by

  • Sociocultural: family, peers, social class, culture, subculture

  • Psychological: perception, attitudes, learning, motivation

  • Situational: type of purchase, social surroundings, physical surroundings, time of day, how you feel, previous experiences


Product development process

Product Development Process

  • Generate ideas

  • Product screening (narrow down # ideas)

  • Product analysis (cost estimates, sales forecasts)

  • Develop prototype

  • Test consumer reaction

  • Commercialization – bring product to market

    • Promote product to distributors and retailers


Product life cycle

Product Life Cycle

  • Introduction

  • Growth

  • Maturity

  • Decline

  • 70-80% all new products fail!


Example of product development

Example of Product Development

  • 3M Greptile Golf Glove


3m greptile grip golf glove

3M Greptile Grip Golf Glove

  • What is 3M known for?

  • $20 Billion global diversified corporation

  • Over 50,000 products

  • Creativity

  • Innovation

  • Technology


Ch 13 intro to marketing

  • What was 3M trying to do when it came up with the idea for a golf glove?

  • Make use of under-utilized in-house technologies

  • Turn them into niche markets


Identifying target market segments

Identifying Target Market Segments

  • Geographic

  • Demographic

  • Psychographic

  • Benefit (what customers get out of it)

  • Volume (frequency of purchase)


Ch 13 intro to marketing

  • What/who were the target markets?

  • Golfers who wanted a better grip with less pressure

  • Hot and humid areas

  • Physical ailments

  • Older golfers

  • Dual Income No Kids (DINKs)

  • Single Adults


Ch 13 intro to marketing

  • What did 3M promote as the competitive advantage of its glove?

  • Other gloves marketed based on comfort and fit

  • 3M wanted to market this glove as being able to improve the user’s game


Ch 13 intro to marketing

  • What problems did it encounter in introducing the glove?

  • Buyer resistance to thinking of 3M as a golf brand (not Titleist or Foot Joy)

  • Packaging problems

  • Visibility of text – didn’t pop

  • Package pillowed – wouldn’t stay closed

  • Consumer Testing Lab said it didn’t have the needed language on the back of the package


Ch 13 intro to marketing

  • How did 3M promote the new glove?

  • Public Relations Event

  • Editors of newspapers and magazines invited to drive golf balls off pier in NYC

  • Seinfeld episode


Review of marketing process

Find opportunities √

Conduct market research √

Identify target market √

Product design √

Product testing √

Pick brand name √

Design packaging √

Set a price

Select distribution system

Design promotional campaign

Build a relationship with customers

Review of Marketing Process


Pricing objectives

Pricing Objectives

  • Achieving target profit

  • Building traffic (loss leaders)

  • Achieving greater market share

  • Create an image (status, exclusivity)

  • Further social objectives (affordable to lower income levels)


Pricing strategies

Pricing Strategies

  • Cost plus (cost-based)

    • Determine production costs, add in profit

  • Target costing

    • Start with desired price, back out desired profit, result is “target” cost of production

  • Competition-based

    • At, above, or below competitor’s prices


Break even analysis

Break-Even Analysis

  • Total Costs = Total Variable Costs + Total Fixed Costs

  • TVC = VC/unit x # units

  • TFC = lump sum over certain time period

  • To find quantity to produce to break even

  • Total Revenue = Total Cost


Ch 13 intro to marketing

  • Total Revenue = Price x # Units

  • Total Cost = TVC + TFC

  • At Breakeven Point: TR = TC

  • (PxQ) = (VCxQ) + TFC

  • (PxQ) – (VCxQ) = TFC

  • Q(P – VC) = TFC

  • Q = TFC/(P – VC)


Example

Example

  • Price = $5 per unit

  • VC/unit = $1

  • TFC = $100,000

  • BEP = $100,000/($5-$1) = 25,000 units

  • Proof: TR = $5 x 25,000 units = $125,000

  • TC = ($1x 25,000 units)+$100,000=$125,000


Other pricing strategies

Other Pricing Strategies

  • Skimming

  • Penetration

  • Everyday low pricing

  • High-low pricing

  • Psychological

  • Demand-oriented pricing


Review of marketing process1

Find opportunities √

Conduct market research √

Identify target market √

Product design √

Product testing √

Pick brand name √

Design packaging √

Set a price √

Select distribution system

Design promotional campaign

Build a relationship with customers

Review of Marketing Process


Distribution place in 4ps

Distribution = Place in 4Ps

  • Moving goods from producers to businesses (B2B)

  • Moving goods from businesses to consumers (B2C)

  • Marketing intermediaries (middlemen) make this movement happen

  • Channel of distribution – manufacturers to wholesalers to retailers to consumers


Wholesalers

Wholesalers

  • Full service wholesalers – perform all distribution functions (transport, sort, sell, advertise, etc.)

  • Limited-function wholesalers:

  • Rack jobbers

  • Cash-and-carry wholesalers

  • Drop shippers


Types of retailers stores

Types of Retailers - Stores

  • Department store

  • Discount store

  • Supermarket

  • Warehouse club

  • Convenience store

  • Category killer

  • Outlet store

  • Specialty store


Nonstore retailing

Nonstore Retailing

  • Internet

  • Telemarketing

  • Vending Machines, Kiosks, Carts

  • Direct selling (sell at home - Tupperware)

  • Multilevel marketing (recruit others to sell)

  • Direct mail – advertisements, catalogs


Links between manufacturers wholesalers and retailers

Links between Manufacturers, Wholesalers, and Retailers

  • Corporate distribution systems

  • Contractual distribution systems

  • Administered distribution systems

  • Supply chain management firms like Li & Fung


Logistics physical flow of materials and finished goods

Logistics: Physical flow of materials and finished goods

  • Inbound logistics

  • Materials handling

  • Outbound logistics

  • Reverse logistics

  • Third Party Logistics - UPS


Transportation

Transportation

  • Railroad

  • Trucks

  • Pipeline

  • Ships

  • Airplanes


Evaluate transportation options

Evaluate Transportation Options

  • Cost

  • Speed

  • On-time dependability

  • Flexibility handling products

  • Frequency of shipments

  • Reach


Review of marketing process2

Find opportunities √

Conduct market research √

Identify target market √

Product design √

Product testing √

Pick brand name √

Design packaging √

Set a price √

Select distribution system √

Design promotional campaign

Build a relationship with customers

Review of Marketing Process


Traditional methods of product promotion

Traditional Methods of Product Promotion

  • TV, Radio, Print Advertising

  • Personal Selling

  • Public Relations

  • Sales Promotions

  • Product Placement


New strategies

New Strategies

  • How To Sell Soap

  • Old model of advertising is about reaching individual consumers

  • Future strategies should focus on getting consumers to spread the message themselves

  • Social network sites mean people are more connected than ever

  • Twitter


Airlines use of social media

Airlines Use of Social Media

  • Delta searches for complaints – wants to resolve problems quickly rather than let them spread virally

  • YouTube video “United Breaks Guitars”

  • Complaining via internet sometimes gets better results because reservation agents aren’t empowered to solve problems out of the box


Social media no brainer for b2c but b2b

Social Media: No Brainer for B2C but B2B?

  • 24% B2B companies using Facebook

  • 36% plan to try in coming year

  • Looking to interact with workers who make buying decisions for their companies

  • Give advice, share info to show off expertise

  • Run special marketing contests on sites

  • Use social media to find out what’s being said about them


Linkedin to post product reviews

LinkedIn to Post Product Reviews

  • Companies that allow products to be reviewed will be able to include note in their ads that product has been recommended on LinkedIn

  • Advantage: LinkedIn recommender is “real” person; users can evaluate recommendation based on that person’s real-world experience

  • Companies would have to set up company profile pages and add products first


Target marketing

Target Marketing

  • Targeted ads: Google collects data about websites people visit and uses it to show them ads – tracking people online to profit from their actions

  • Contextual targeting – selling ads based only on the name or content of a page

  • Behavioral targeting – identifies specific users and their interests


Lululemon s promotional strategy

Lululemon’s Promotional Strategy

  • High end women’s athletic wear

  • Does not use traditional strategy of hiring sports celebrities to model its outfits

  • Spends almost nothing on advertising beyond occasional print ads in yoga and running magazines

  • Recruits fitness instructors to wear Lululemon clothes and hold classes in Lululemon stores

  • Objective = promote good health (not make a profit)


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