2. Fourth Edition Copyright ©2003 Prentice Hall, Inc. PART 4........................ Understanding Principles of Marketing

3. Copyright ©2003 Prentice Hall, Inc. 10 - 2 Chapter 10 Understanding Marketing Processes and Consumer Behavior

4. Copyright ©2003 Prentice Hall, Inc. 10 - 3 Marketing process affects your daily lives Discussion: what did you have breakfast today (coffee, cornflakes..). Why? What did you stop to take? Why Should be guided to marketing mix.

5. Copyright ©2003 Prentice Hall, Inc. 10 - 4 What Is Marketing? “Planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives” Finding a need and filling it! OR

6. Copyright ©2003 Prentice Hall, Inc. 10 - 5 The Influence of Marketing Permeates Everyday Life Goods Consumer Industrial Services Ideas Relationship marketing emphasizes lasting relationships with customers and suppliers

7. Copyright ©2003 Prentice Hall, Inc. 10 - 6 Products classification Consumer goods: Products purchased by consumers for personal consumption or use. (durable and non-durable) Industrial goods: Products purchased by companies to produce other products. Services: Intangibles, such as time, expertise, experiences, that can be purchased.

8. Copyright ©2003 Prentice Hall, Inc. 10 - 7 Competitive Environment Political & Legal Environment Social & Cultural Environment Economic Environment Technological Environment The External Environment Shapes Marketing Programs The Firm & It's Marketing Plan  Plans  Strategies  Decisions

9. Copyright ©2003 Prentice Hall, Inc. 10 - 8 Substitute product competition Brand competition International competition The Competitive Environment Drives Marketing Decisions

10. Copyright ©2003 Prentice Hall, Inc. 10 - 9 The Competitive Environment Drives Marketing Decisions Substitute product competition: Products that are dissimilar from those of competitors (appear to be different), but can fulfill the same need (e.g. television and computer games are very different from one another, but both fulfill the need for entertainment). Brand competition: Occurs between similar products (e.g. Zest bar soap and Irish Spring bar soap; KFC and MacDonald foods). International competition: matches the products of domestic marketers against those of foreign competitors

11. Copyright ©2003 Prentice Hall, Inc. 10 - 10 Marketing Mix The “Four P’s” (Distribution) roductroduct ricingricing romotionromotion lacelace

12. Copyright ©2003 Prentice Hall, Inc. 10 - 11 Marketing Mix The “Four P’s” Product: The good, service, or idea that is marketed to fill consumer wants and needs. Improving existing products and developing new products are among the marketer’s most important tasks. Product differentiation: Differentiation is a source of competitive advantage. Pricing: Selecting the most appropriate price at which to sell a product. Lower prices generally lead to higher sales volume, while higher prices generally lead to higher profits per unit. Promotion: Techniques for communicating information about products. This is clearly the most visible element of the marketing mix. Place (distribution): Determining the most effective and efficient way to get products from producers to consumers. Channels of distribution.

13. Copyright ©2003 Prentice Hall, Inc. 10 - 12 The Promotional Mix Advertising Personal Selling Sales Promotions Public Relations

14. Copyright ©2003 Prentice Hall, Inc. 10 - 13 The Promotional Mix Advertising: Any form of paid, non-personal communication used by an identified sponsor to persuade or inform potential buyers about a product (e.g. Pepsi used Brittany Spears to advertise its products during the 2002 Super Bowl game.) Personal selling: Person-to-person sales. Industrial goods receive the bulk of personal selling (e.g. Boeing uses personal selling to promote its fighter jets to the military). Sales promotion: One-time direct inducements\incentives to buyers, including free gifts, coupons, and package inserts (e.g. Clinique cosmetics company periodically offers gift-with-purchase promotions through department stores). Public relations: All communication efforts directed at building goodwill (e.g. Ronald McDonald House). Publicity is not paid for by the firm, and the firm does not control its content, so it can sometimes backlash.

15. Copyright ©2003 Prentice Hall, Inc. 10 - 14 Market Segmentation & Target Marketing Market Segmentation Dividing a market into customer categories Target Marketing Selecting a category of customers with similar wants and needs who are likely to respond to the same products

16. Copyright ©2003 Prentice Hall, Inc. 10 - 15 Identifying Market Segments Psychographic Variables Geographic Variables Demographic Variables

17. Copyright ©2003 Prentice Hall, Inc. 10 - 16 Identifying Market Segments Geographic variables: The geographical units that may be considered in developing a segmentation strategy (e.g. coastal areas, rural areas, the Sun Belt). Not all products are geographically sensitive. Demographic variables: Characteristics of populations that may be considered in developing a segmentation strategy (e.g. age, income, gender, race).

18. Copyright ©2003 Prentice Hall, Inc. 10 - 17 Identifying Market Segments Psychographic variables: Consumer lifestyles, opinions, interests, and attitudes that may be considered in developing a segmentation strategy (e.g. fashion- consciousness, thrill-seeking). Psychographics can sometimes be changed by marketing efforts.

19. Copyright ©2003 Prentice Hall, Inc. 10 - 18 Consumer Behavior Psychological Influences Personal Influences Social Influences Cultural Influences Why do consumers purchase and consume products?

20. Copyright ©2003 Prentice Hall, Inc. 10 - 19 Postpurchase Evaluation Purchase Decision Evaluation of Alternatives The Consumer Buying Process Information Seeking Problem Recognition PsychologicalPersonalSocialCultural Personal & Environmental Factors ProductPricingPromotionPlace Marketing Factors

21. Copyright ©2003 Prentice Hall, Inc. 10 - 20 Organizational Markets Industrial Market Government & Institutional Market Reseller Market

22. Copyright ©2003 Prentice Hall, Inc. 10 - 21 Organizational Buying Behavior Differences in buyers Professionals Specialists Experts Differences in buyer/seller relationships

23. Copyright ©2003 Prentice Hall, Inc. 10 - 22 Product Features and Benefits Features Tangible and intangible qualities that a company builds into its products Benefits The results of using those products

24. Copyright ©2003 Prentice Hall, Inc. 10 - 23 Classifying Products Consumer Convenience Goods Shopping Goods Specialty Goods Industrial Expense Items Capital Items

25. Copyright ©2003 Prentice Hall, Inc. 10 - 24 Product Offerings Product Line A group of similar products, intended for similar buyers, who will use them in similar ways. Product Mix The total group of products that a company offers for sale.

26. Copyright ©2003 Prentice Hall, Inc. 10 - 25 Developing New Products The New Product Development Process Product Mortality Rates Strategy of introducing new products to respond quickly to customer or market changes

27. Copyright ©2003 Prentice Hall, Inc. 10 - 26 Creating Product Brands Branding Using symbols to communicate the qualities of a given product to create loyal consumers Types of Brands: National Brands Licensed Brands Private Brands

28. Copyright ©2003 Prentice Hall, Inc. 10 - 27 The World’s 10 Most Valuable Brands 1.Coca Cola 2.Microsoft 3.IBM 4.GE 5.Nokia 6.Intel 7.Disney 8.Ford 9.McDonald’s 10.AT&T Source: “The Best Global Brands,” BusinessWeek, August 6, 2001

29. Copyright ©2003 Prentice Hall, Inc. 10 - 28 The Future of Top Brands Gaining Value… Starbucks+32% Samsung+22% Financial Times+14% GE+11% Guinness+11% Losing Value… Xerox-38% Amazon.com-31% Yahoo! -31% Duracell-30% Ford-17% Source: “The Best Global Brands,” BusinessWeek, August 6, 2001

30. Copyright ©2003 Prentice Hall, Inc. 10 - 29 Product Packaging Attracts consumers Displays brand name Protects contents Supplies information Communicates features and benefits Provides features and benefits (e.g. easy pour spout)

31. Copyright ©2003 Prentice Hall, Inc. 10 - 30 The International Marketing Mix PRODUCTS PRICING PROMOTION DISTRIBUTION

32. Copyright ©2003 Prentice Hall, Inc. 10 - 31 Small Business and the Marketing Mix ProductsPricingPromotionDistribution

33. Copyright ©2003 Prentice Hall, Inc. 10 - 32 Chapter Review Define marketing Describe the forces of the external marketing environment Explain market segmentation and target marketing Describe the consumer buying process Discuss the organizational market categories

34. Copyright ©2003 Prentice Hall, Inc. 10 - 33 Chapter Review Define product and distinguish between consumer and industrial products Explain the importance of branding and packaging