BCEN 1400 Introduction to Business Chapters 13 – 16 Marketing

The Marketing Concept is Born From production to selling to the marketing concept The Marketing Concept – Customer orientation – Service orientation – Profit orientation Nowadays, the buzz is customer relationship management

13-3 The Marketing Mix Product Marketing Program Place Promotion Buy at Computers ‘R Us Price

The Marketing Process Phase I – Find opportunities – Conduct research – Scan the environment – Identify a target market Phase II – Make a product or service – Test market Phase III – Make a name – Set a price – Get it to the consumer Phase IV – Promote the thing – Build relationships

The Consumer Responds to parts of the marketing mix Belongs to groups Responds to the purchase situation Evaluates and makes decisions – What decisions do you make when going to the grocery?

Ways to Segment the Consumer Market 1.Geography 2.Demography 3.Psychography 4.By Benefits Desired 5.By Volume-Based Behavior

Other Businesses Also make great targets Fewer in number – Why is this not such a bad thing? More rational than emotional; however, personal selling is much more important!

13-8 Top Marketing Tactics of Small Businesses Source: Investor’s Business Daily, June 1, 2004

The Importance of Value Cost/price/value relationships Creating value in the mind of the purchaser The total product offer – Everything a customer evaluates when purchasing a product

The Total Product Offer PriceBrand NameConveniencePackage Store surroundingsServiceInternet accessPast experience GuaranteeSpeed of deliveryImageReputation

Product Lines and Product Mixes Product Line – Products that are similar or intended for similar customers The Diet Coke line Product Mix – The combination of all product lines offered by one manufacturer. Coke, Diet Coke, Dasani, Fruity Sodas, etc.

Types of Products Convenience Shopping Specialty (includes luxury) Unsought (unexpected purchases)

The Purposes of Packaging Packaging really is your own little salesman! – Protect goods – Attract the buyer – Provide information on what’s inside – Explain product benefits – Provide information on usage – Show price and value

Brand A name or symbol that distinguishes one set of products made by one vendor from another – Trademark: protection for a brand Manufacturer, private, and generic brands Generating brand equity and co-branding

14-15 Brand Characters: Are They Real or Fake? Betty Crocker Chef Boyardee Uncle Ben Colonel Sanders Little Debbie Fake Real Both Real guy, fake rank Real Source: Fast Company, August 2004

Most Valuable Brands RankProduct Brand Value (Billions) 1Coca-Cola$ Microsoft IBM GE Intel Nokia Toyota Disney McDonald’s Mercedes-Benz21.80 Source: Business Week, August 7, 2006

14-17 Top 10 Favorite Mascots of America M&Ms figures / Mars Doughboy / General Mills, Smucker’s Duck / Aflac Tony the Tiger / Kellogg Gecko / Berkshire Hathaway’s Geico Chester the Cheetah / Pepsi’s Frito-Lay Energizer Bunny / Energizer Holdings Kool-Aid Man / Kraft Foods Trix Rabbit / General Mills Snap, Crackle and Pop / Kellogg Source: Forbes, January 9, 2006

14-18 New-Product Development Process 1.Idea Generation 2.Screening 3.Analysis 4.Development 5.Testing 6.Commercialize

14-19 Best Product Innovation of ALL Time Source: American Demographics % of Consumers’ Choice

The Product Life Cycle A model of what happens to sales and profits over time Includes introduction, growth, maturity, and decline Each stage requires different strategies.

Pricing Motivations behind prices – Target returns – Volume/market share – Image – Nonprofit objectives Skimming, penetration, EDLP, bundling, psychological pricing

14-22 Pricing Using Breakeven Analysis Problem Should we charge $2 or $3 per unit? Costs Total Fixed Costs$400,000 Costs Total Fixed Costs$400,000 Variable Cost$ 1 per unit Market Research Forecast Company can sell: 290,000 boxes at $2 / unit 210,000 boxes at $3 / unit 210,000 boxes at $3 / unit Breakeven point = total fixed cost price - variable cost price - variable cost (per unit) (per unit) (per unit) (per unit) $2 price = $400,000 = 400,000 units to breakeven $2 - $1 $2 - $1 $3 price = $400,000 = 200,000 units to breakeven $3 - $1 $3 - $1 Breakeven point = total fixed cost price - variable cost price - variable cost (per unit) (per unit) (per unit) (per unit) $2 price = $400,000 = 400,000 units to breakeven $2 - $1 $2 - $1 $3 price = $400,000 = 200,000 units to breakeven $3 - $1 $3 - $1 BreakevenAnalysis

Types of Pricing Strategies Skimming Penetration Everyday Low Pricing Bundling Psychological

Distribution Why do we need marketing channels? Examples of intermediaries – Agents and brokers (do not take title) – Wholesaler (take title) – Retailer

Marketing Utilities Form Time Place Possession Information Service

Retailing Strategies Retail distribution – Intensive – Selective – Exclusive Nonstore – Electronic – Telemarketing – Direct selling and direct marketing

Types of Transportation Understanding the flow of logistics Trains – Slow, but large shipments Trucks – Small shipments Water – Slow, inexpensive Air – Fast, very expensive