1. - Second Semester Plans > Ski Trip > Blue Man Group
SMG Class of 2009
"Town Hall" Meeting
Thursday, January 26
at 5:00 PM in Room 306
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> Ski Trip
> Blue Man Group
> Guest Speakers
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2. Marketing – SM122
Product

3. Consumers Have Different Needs
Market: Aggregate of people who, as individuals or as organizations, have needs for products in a product class and who have the ability, willingness, and authority to purchase such products
Segment: Group of individuals, groups, or organizations that share one or more similar characteristics which make them have relatively similar products needs and have high probability of responding to a similar marketing mix
Segmentation: Process of identifying segments or groups of people / organizations that exist within the larger market

4. How to Segment Consumer Markets
Common
Bases for
Segmenting
Markets
Geographic
Psychographic
Demographic
Behavioral /
Product
Usage

5. All Four P’s Contribute to the Whole
This slide relates to material on p. 43.
: Indicates place where slide “builds” to include the corresponding point.
Position
Product
Price
Place
Promotion
Selection of Target Market
Summary Overview
All of the four Ps--product, place, promotion and price--have an impact on satisfying the needs of consumers in the target market. No single area is more important than the others--they are all interconnected.
Key Issues
In developing a marketing strategy, the jobs of selecting a target market and developing the marketing mix are interrelated. The outcome of the strategy is evaluated against the objectives of the marketer.
Discussion Question: Choose a product or service and discuss how the elements of the marketing mix interact with each other. For example, how do product decisions affect decisions about place, promotion, and price?
Keeping in mind the marketing concept, the needs of the target market determine the nature of the marketing mix, so developing a thorough understanding of the target market leads to good strategies. : : :
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

6. Approaches to Serving Markets
Description
Examples
Mass Marketing
A single marketing mix for the entire market
Commodity products
Segment marketing
A single marketing mix for one segment of the market (Concentrated Marketing)
Women's Workout World (exercise facilities for women); American Association for Retired Persons (lobbying and membership services for people over 50)
Separate marketing mixes for two or more segments of the market (Multisegment Marketing)
McDonald’s (Happy Meals for young children, Big Macs for Teens, Arch Deluxe for adults); Toshiba copiers (several sizes and features to meet different levels of business needs)
Individual marketing
A marketing mix customized for an individual or organization
Personalized amenities for repeat guests at Ritz-Carlton hotels; management consulting services tailored to an organization’s needs

7. Consumers Buy Benefits Not Features
Consistency, convenience
McDonald’s
Fun, hip, cool
Reef Flip - Flops, Pacific Sunwear of CA
Aspirational, escape, illusion
Jimmy Buffet, Grateful Dead, Jaguar, Maxim, Cosmopolitan
Cleanliness, brightness, freshness
Tide Detergent
Timeliness, safety
SwissAir, Airport Security

8. Product
The good or service that is offered has basic functionality and features. It may be offered in one or multiple varieties.
But, not just the good or service you offer, but a much broader definition to include warranties, after-sales service, installation, image,

9. Products are Goods and Services
Pure
Service
Pure
Good

10. Actual/Expected Product
Augmented Product
Product Levels
Installation
Packaging
& Labeling
Brand
Name
Features
Delivery
& Credit
After-
Sale
Service
Core Benefit Or
Service
Quality
Styling
Warranty
Actual/Expected Product
Core/Generic Product

11. Classification of Consumer Goods
Type of Consumer Good
Basis of comparison
Convenience
Shopping
Specialty
Unsought
Toothpaste, cake mix, hand soap, laundry detergent
Relatively inexpensive
Widespread; many outlets
Price, availability, and awareness stressed
Cameras, TV’s briefcases, appliances, clothing
Fairly expensive
Large number of selective outlets
Differentiation from competitors stressed
Rolls Royce cars, Rolex watches
Usually very expensive
Very limited
Uniqueness of brand and status stressed
Burial insurance, thesaurus
Varies
Often limited
Awareness is essential
Product
Price
Place
Promotion

12. Classification of Consumer Goods
Type of Consumer Good
Basis of comparison
Convenience
Shopping
Specialty
Unsought
Aware of brand, but will accept substitutes
Frequent purchases; little time and effort spent shopping; routine decision
Prefer specific brands, but will accept substitutes
Infrequent purchases; comparison shopping; uses decision time
Very brand loyal; will not accept substitutes
Infrequent purchases; extensive time spent to decide and get the item
Will accept substitutes
Very infrequent purchases; some comparison shopping
Brand loyalty of consumers
Purchase behavior of consumers

13. Diffusion or Why does everyone have (will have) an MP3 player.
1.0
Cumulative Probability of Adoption up to Time t
What happens when everybody that is going to acquire a product has it?
F(t)
Introduction of product
Time (t)
From a presentation given by Professor David Berkowitz

14. Consumer Life Cycle Innovators (2.5%) Early Adopters (13.5%)
Slide
9-5
Consumer Life Cycle
Figure
9.2
F(t)
1.0
Innovators (2.5%)
Early Adopters (13.5%)
Early Majority (34%)
Late Majority (34%)
Laggards (16%)
Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1998 6 6 6

15. Bass Model of Product Diffusion
St = p * Remaining + q * Adopters Potential
Innovation Imitation Effect Effect
where:
St = sales at time t
p = “coefficient of innovation”
q = “coefficient of imitation”
# Adopters = S0 + S1 + • • • + St–1
Remaining = Total Potential – # Adopters Potential
From a presentation given by Professor David Berkowitz

16. Examples of Innovation and Imitation Parameters
Innovation Imitation Product/ parameter parameter Technology (p) (q)
B&W TV
Color TV
Air conditioners
Clothes dryers
Water softeners
Record players
Cellular telephones
Steam irons
Motels
McDonalds fast food
Hybrid corn
Electric blankets
A study by Sultan, Farley, and Lehmann in 1990 suggests an average value of 0.03 for p and an average value of 0.38 for q.
From a presentation given by Professor David Berkowitz

17. The Product Life Cycle Dollars Total Market Sales Total Market Profits
Slide
The Product Life Cycle
9.1
Dollars
Total Market Sales
Total Market Profits
Introduction
Growth
Maturity
Decline
Time
Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1998 5 5 5

18. Factors affecting the rate of diffusion
Product-related – diffusion will be faster if…
High relative advantage over existing products
High degree of compatibility with existing approaches
Low complexity
Can be tried on a limited basis
Benefits are observable
Market-related – diffusion is influenced by …
Type of innovation adoption decision (eg, does it involve switching from familiar way of doing things?)
Communication channels used
Nature of “links” among market participants
Nature and effect of promotional efforts
From a presentation given by Professor David Berkowitz

19. Product Life Cycle for Wine Coolers
$1500
$1000
$500
Millions of dollars
1990
1991
1992
1993
1994
1995
1989
1984
1985
1986
1987
1988
1983
1982
Source: Figure drawn from Wine and Liquor Handbook statistics

20. Recording Industry Product Form Life Cycles
650
600
550
500
450
400
350
300
250
200
150
100 50
Vinyl
Millions of units sold
Compact disks
Cassettes
1989
1991
1993
1995
1987
1977
1979
1981
1983
1985
1975
1973
Source: Figure drawn from Recording Industry Association of America statistics.

21. How stages of the product life cycle relate to marketing mix decisions
Stage of the product life cycle
Sales revenue or profit
Introduction
Growth
Maturity
Decline + –
Total industry sales revenue
Total industry profit
Marketing objective
Gain Awareness
Stress differentiation
Maintain brand loyalty
Harvesting, deletion
Competition
None
Growing
Many
Reduced
Product
One
More versions
Full product line
Best sellers
Price
Skimming or penetration
Gain share, deal
Defend share, profit
Stay profitable
Promotion
Inform, educate
Stress competitive differences
Reminder oriented
Minimal promotion
Place (distribution)
Limited
More outlets
Maximum outlets
Fewer outlets