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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
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
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
slide18
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)
slide20
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
slide21
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
slide22
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
slide23
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
slide28
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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