Basic Marketing Concepts Overview

Marketing Review Modules Marketing Review Modules Marketing Concepts Customer Needs Industry Competition Target Marketing, Segmentation, and Marketing Research New Product Development and Sales 1-5

Basic Marketing Concepts

The Marketing Concept Profit Customer Satisfaction Customer Satisfaction Total Company Effort Total Company Effort The Marketing Concept

Utility and Marketing Exhibit 1-1 From Production From Marketing Form Task Time Place Possession Utility Value that comes from satisfying human needs Utility Value that comes from satisfying human needs 1-6

Customer Value CostsBenefits One customer’s views may vary from another customer’s view, so firm may not be able to satisfy everybody Customer value concept takes the customer’s point of view, but customers may not explicitly weigh costs and benefits

The Marketing Management Process Whole-Company Strategic Management Planning Whole-Company Strategic Management Planning Marketing Planning Marketing Planning Implement Marketing Plan(s) and Program Implement Marketing Plan(s) and Program Control Marketing Plan(s) and Program Control Marketing Plan(s) and Program Adjust Plans As Needed

The Four Ps of the Marketing Mix ProductPlace PricePromotion C

Product Physical Goods Service Features Quality Level Accessories Installation Instructions Warranty Product Lines Packaging Branding Place Objectives Channel Type Market Exposure Kinds of Middleman Kinds and Locations of Stores How to Handle Transporting and Storing Service Levels Recruiting Middlemen Managing Channels Promotion Objectives Blend Salespeople Kind Number Selection Training Motivation Advertising Targets Kinds of Ads Media Type Copy Thrust Who Prepares? Sales Promotion Publicity Price Objectives Flexibility Level over PLC Geographic Terms Discounts Allowances Four P’s Strategy Decision Areas

Marketing Strategy Planning Process Customers Company Competitors S. W. O. T. Segmentation & Targeting Differentiation & Positioning ProductPlace PromoPrice Narrowing down to focused strategy with screening criteria External Market Environment Target Market

External Factors Strategy Planning Internal Factors StrengthsOpportunities Weaknesses Threats 18-5 SWOT Analysis

Exhibit Strategy Planning for Advertising Sales Promotion Mass Selling Personal Selling Target Market Price Promotion Place Product Copy thrust Media types Kind of advertising Target audience Who will do the work? PublicityAdvertising

Exhibit Basic Promotion Methods Target Market Target Market Price Promotion Place Product Sales Promotion Sales Promotion Personal Selling Personal Selling Publicity Advertising Mass Selling Mass Selling

Pricing Objectives Exhibit Dollar or Unit Sales Growth Growth in Market Share Target Return Maximize Profits Meeting Competition Nonprice Competition Pricing Objectives Sales Oriented Profit Oriented Status Quo Oriented

Strategy Planning for Price Exhibit 16-1 Pricing objectives Target Market PricePromotionPlaceProduct Geographic term — who pays transportation and how Discounts and allowances— to whom and when Price levels over product life cycle Price flexibility 16-3

Exhibit 17-1 Markup chain in channels 17-3 Key Factors That Influence Price Setting Pricing objectives Discounts and allowances Legal environment Price flexibility Geographic pricing terms Demand Cost Price of other products in the line Competition Price settin g

ProducerWholesalerRetailer Cost = = 80% Markup = 6.00 = 20% Cost = = 90% Markup = 2.40 = 10% Cost = = 60% Markup = = 40% Exhibit Markups

Customer Needs

A Model of Buyer Behavior 5-5 Purchase Reason Time Surroundings Purchase Situation Motivation Perception Learning Attitude Personality/Lifestyle Psychological Variables Family Social Class Reference Groups Culture Social Influence Problem-Solving Process Person Does or Does Not Purchase (Response) Marketing MixesAll Other Stimuli Person Making Decision Exhibit 5-2

5-6 The PSSP Hierarchy of Needs Physiological Needs Safety Needs Social Needs Personal Needs Exhibit 5-4

Purchase Situation Social Influences Psychological Variables Need-want Awareness Information Search Set Criteria Decide on Solution Purchase Product Routinized Response Postpone Decision Postpurchase Evaluation Response Feedback of information as attitudes Person making decision Marketing mixes All other stimuli Exhibit The Consumer Problem Solving Process

Exhibit Levels of Problem Solving Extensive Problem Solving Limited Problem Solving Routinized Response Behavior Involvement Continuum Low InvolvementHigh Involvement Low involvement Frequently purchased Inexpensive Little risk Little information needed High involvement Infrequently purchased Expensive High risk Much information desired

Industry Competition

The Competitive Environment Information on Competitors Competitive Barriers Competitive Rivals Competitor Analysis Kinds of Markets Key Concepts in the Competitive Environment 4-6

Exhibit 12-1 Conven- tional offerings Single- and limited- line stores Expanded assortment and service Specialty shops and department stores Expanded assortment and/or reduced margins/service Supermarkets, discount houses, mass-merchandisers, supercenters Added convenience higher margins less assortment Telephone/mail order, vending machines, door-to-door, convenience stores, electronic shopping Expanded assortment reduced margins more information Internet 12-4 Types of Retailers

Types of Wholesalers Exhibit Does wholesaler own the products? Limited-function merchant Wholesalers Service merchant wholesalers Agent middlemen How many functions does the wholesaler provide? All the functions Some functions Yes (merchant wholesaler)No (agent middleman)

Manufacturer or producer Consumer Procter & Gamble Del Monte NissanCitibank Wholesaler Retailer Wholesaler Retailer 10-5 Exhibit 10-2 Four Examples of Basic Channels of Distribution for Consumer Products

Target Marketing, Segmentation & Marketing Research

Market Segmentation

Marketing Information Systems 7-3 Exhibit 7-1 Market Research Studies Internal Data Sources External Data Sources Databases Decision Support System (DSS) Marketing Manager Decisions Outcomes Marketing Models Information Technology Specialists Inputs ? Answers New Information Feedback Informatio n Sources Questions and Answers Decisio n Maker Result s

Defining the Problem Analyzing the Situation Getting Problem- Specific Data Inter- preting Data Solving the Problem Early Identification of Solution Feedback to Previous Steps 7-4 Exhibit 7-2 Marketing Research Process

Secondary Data Sources Inside Company Outside Company Observation Questioning Primary Data Sources All Data Sources 7-5 Exhibit 7-3 Sources of Data

Product Development

Exhibit 13-7 Time The Adoption Curve Percent Adoption Innovators (3-5%) Early Adopters (10-15%) Early Majority (34%) Late Majority (34%) Laggards/ Nonadopters (5-16%)

The Adoption Curve Innovators: First to Adopt, Eager to Try Young, Well-Educated, Mobile Seek Info from non-salesperson Sources Early Adopters Opinion Leaders Greater Contact with Salespeople Word-of-Mouth

The Adoption Curve Early Majority: Avoid Risk, Try Only if Others Have Usually are Not Opinion Leaders Late Majority: Cautious About New Ideas, Older and More Set in Their Ways More Subject to Peer Pressure

The Adoption Curve Laggards: Suspicious of New Ideas Do Things the Way that They Have Always Been Done

The Product Life Cycle 9-3 Exhibit 9-1 Total Industry Profit + – $ 0 Market Introduction Market Growth Market Maturity Sales Decline Time Total Industry Sales

PlaceProductPricePromotion Brand Type of Brand: Individual or family Manufacturer or dealer Product Idea Physical good/service Features Quality level Accessories Installation Instructions Product line Warranty None, full, or limited Package Protection, Promotion, or both Target Market 8-3 Exhibit 8-1 Defining “Product”

The Transporting Function Modes of Transportation Water Air Rail Truck Pipeline

Push-Pull Strategies Exhibit 13-6 Wholesaler Promotion Push Wholesaler Promotion Push Retailer Promotion Push Final Consumer Pull Business Customer Pull Promotion to Business Customers Promotion to Final Customers Promotion to Channel Members Producer’s Promotion Blend Personal Selling, Sales Promotion, Advertising, Publicity 13-13