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Tuesday afternoon. Marketing. What is Marketing?.
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Tuesday afternoon Marketing
What is Marketing? • Marketing -- The activity, set of institutions and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. – American Marketing Association’s official definition of marketing
Focus of Contemporary Marketing • Marketing today involves helping the buyer buy through: • Websites that help buyers find the best price, identify product features, and question sellers. • Blogs and social networking sites that cultivate consumer relationships.
The Customer Relationship Era • Customer Relationship Management (CRM) -- Learning as much as you can about customers and doing what you can to satisfy or exceed their expectations. • Organizations seek to enhance customer satisfaction building long-term relationships. • Disney • Celebration
The Value of Customer Relationships • On average, it costs over 10 TIMES more to acquire a new customer versus retain an existing one • A 5% gain in customer retention can result in an 80% gain in profits.
MASS MARKETING vs. RELATIONSHIP MARKETING • Mass Marketing -- Developing products and promotions to please large groups of people. • Relationship Marketing-- Rejects the idea of mass production and focuses toward custom-made goods and services for customers.
KEYS to SUCCESSFUL RELATIONSHIP MARKETING • Effective relationship marketing is built on: • Open communication • Consistently reliable service • Staying in contact with customers • Trust, honesty, and ethical behavior • Showing that you truly care
The Four P’s of Marketing • Product • Pricing • Place (Distribution) • Promotion
DEVELOPING a TOTAL PRODUCT • Total Product Offer -- Everything consumers evaluate when deciding whether to buy something • Products are evaluated on many different dimensions, both tangible and intangible. • Marketers must think like and talk to consumers to find out what’s important.
Product Mix and Product Line • Product Mix -- The combination of all product lines offered by a manufacturer or service provider. • Product Line -- A group of products that are physically similar or intended for a similar market.
A relatively inexpensive item that merits little shopping effort. (candy) Convenience Product Shopping Product A product that requires comparison shopping, because it is usually more expensive and found in fewer stores. (appliances) Specialty Product A particular item that consumers search extensively for and are reluctant to accept substitutes. (Lamborghini) Products the consumer is not knowledgeable about or aware of, may even have a negative interest. (car-towing service) Unsought Product Types of Consumer Products
The Four Stages of the Product Life Cycle • Product Life Cycle -- A theoretical look at what happens to sales and profits for a product over time. • Product Life Cycle Stages: • Introduction • Growth • Maturity • Decline
Differentiating Products • Product Differentiation -- The creation of real or perceived product differences. • Marketers use a mix of pricing, advertising and packaging to create different images.
SOME KEY FUNCTIONS of PACKAGING • To attract buyers’ attention • Protect the goods inside and be tamperproof • Describe and provide information about the product • Explain the product’s benefits • Provide warranty information and warnings • Give an indication of price, value, and uses
Understanding Branding • Brand --Name, symbol, or design that identifies the goods or services and distinguishes them from competitors’ offerings. • Brand Equity – The combination of factors (awareness, loyalty, perceived quality, images, and emotions) that people associate with a brand name. How much $$ is the brand name worth?? • Brand Loyalty -- The degree to which consumers are satisfied and are committed to further purchases.
Building Brand Awareness • Brand Awareness -- How quickly or easily a given brand name comes to mind when someone mentions a product category. • Consumers reach a point of brand preference when they prefer one brand over another. Coke over Pepsi • When consumers reach brand insistence, they will not accept substitute brands. Pizza at the shore – only from Mack and Manco’s!
Brand Associations • Brand Association -- Linking a brand to other favorable images, like celebrities or a geographic area. Tiger Woods?? • Brand Manager -- Person responsible for a particular brand and handles all the elements of the brand’s marketing mix.
Pricing Objectives • Achieving a target return on investment or profit • Building traffic • Achieving greater market share • Creating an image • Furthering social objectives both short-run and long-run
Pricing Strategies • Cost-based pricing measures cost of producing a product including materials, labor, and overhead. • Target Costing -- Making the final price of a product an input in the product development process by estimating the selling price consumers will pay. example • Competition-Based Pricing -- A strategy based on what the competition is charging for its products.
Using Breakeven Analysis • Break-Even Analysis -- The process used to determine profitability at various levels of sales. The break-even point is where revenues equals cost. • Total Fixed Costs -- All costs that remain the same no matter how much is produced or sold. • Variable Costs -- Costs that change according to the level of production. • Example
Breakeven Example • Selling price = $9 per unit • Variable costs = $5 per unit • Fixed Costs = $32,000 • How many units must be sold to breakeven? • Units = FC/(SP/unit-VC/unit) • $32,000/($9-5) = 8,000 units
Pricing Alternatives • Skimming Price Strategy -- Pricing new products high to recover costs and make high profits while competition is limited. • Penetration Price Strategy -- Pricing products low with the hope of attracting more buyers and discouraging other companies from competing in the market. • Everyday Low Pricing (EDLP) -- Setting prices lower than competitors with no special sales. • High-Low Pricing -- Using regular prices that are higher than EDLP except during special sales when they are lower. • Psychological Pricing -- Pricing products at price points that make a product seem less expensive than it is. $47 or $1.99
Marketing Intermediaries • Marketing Intermediaries -- Organizations that assist in moving goods and services from businesses to businesses (B2B) and from businesses to consumers (B2C). • They are called intermediaries because they’re in the middle of a series of firms that distribute goods.
Why Use Marketing Intermediaries? • Intermediaries perform marketing tasks faster and cheaper than most manufacturers could provide them. • Marketing intermediaries make markets more efficient by reducing transactions and contacts.
Types of Marketing Intermediaries • Agents and Brokers -- Intermediaries who bring buyers and sellers together and assist in negotiating an exchange but do not take title to the goods they offer. • Wholesaler -- An intermediary that sells products to other organizations such as retailers, manufacturers, and hospitals. • Retailer -- An organization that sells products to ultimate customers.
Channels of Distribution • A group of marketing intermediaries that join together to transport and store goods from producers to consumers.
Key Facts about Intermediaries • Marketing intermediaries can be eliminated but their activities can’t. • Intermediaries perform marketing functions faster and cheaper than other organizations can. • Marketing intermediaries add costs to products but they’re generally offset by the values they provide.
Intermediaries Help Overcome Discrepancies • Quantity: amount produced and amount end user wants to buy • Assortment:may not have the variety of all products a consumer wishes to buy • Time:product is produced at a different time than the customer wants • Space: product is produced in a different place than the consumer wants to buy
Marketing Channel Members Add Value • Quantity • Assortment • Time • Space
Non-store Retailing • Electronic Retailing -- Selling goods and services to ultimate consumers over the Internet. • Telemarketing -- The sale of goods and services via the telephone. • Vending machines, kiosks, and carts dispense convenience goods when consumers deposit sufficient funds.
Non-store Retailing, 2 • Direct Selling -- Selling goods and services to customers in their homes or workplaces. Mary Kay Cosmetics • Multilevel marketing uses salespeople who work as independent contractors. • Direct Marketing -- Any activity that directly links manufacturers or intermediaries with ultimate customers. Direct marketing is a sub-discipline and type of marketing. There are two main definitional characteristics which distinguish it from other types of marketing. The first is that it attempts to send its messages directly to consumers, without the use of intervening media. This involves commercial communication (direct mail, e-mail, telemarketing) with consumers or businesses, usually unsolicited. The second characteristic is that it is focused on driving a specific "call-to-action." This aspect of direct marketing involves an emphasis on trackable, measurable positive (but not negative) responses from consumers (known simply as "response" in the industry) regardless of medium.
Supply Chain • Supply Chain -- All the linked activities various organizations must perform to move goods and services from the source of raw materials to ultimate consumers. • Supply Chain Management -- The process of managing the movement of raw materials, parts, work in progress, finished goods, and related information through all the organizations in the supply chain.
Logistics • Logistics -- The planning, implementing and controlling of the physical flow of material, final goods and related information from points of origin to points of consumption. • Firms may outsource to companies specializing in trade compliance to determine what is needed to market products to global customers.
Logistics Applications • Inbound Logistics -- Brings raw materials, packaging, other goods and services and information from suppliers to producers. • Materials Handling -- Movement of goods within a warehouse, from warehouse to the factory floor and from the factory floor to workstations. • Outbound Logistics -- Manages the flow of finished products and information to business buyers and consumers. • Reverse Logistics -- Brings goods back to the manufacturer because of defects or for recycling.
