BCEN 1400Introduction 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. Geography2. Demography3. Psychography4. By Benefits Desired5. 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

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

Web Sites Search EngineKeywords

CommunityRelations

PublicRelations/Media

Coverage

E-mail Marketing Direct Marketing

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

Price Brand Name Convenience Package

Store surroundings Service Internet access Past experience

Guarantee Speed of delivery Image Reputation

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

14-16

10 Most Valuable BrandsRank Product Brand Value

(Billions)

1 Coca-Cola $67.00

2 Microsoft 56.93

3 IBM 56.20

4 GE 48.91

5 Intel 32.32

6 Nokia 30.13

7 Toyota 27.94

8 Disney 27.85

9 McDonald’s 27.50

10 Mercedes-Benz 21.80

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 Generation2. Screening3. Analysis

4. Development5. Testing6. Commercialize

14-19

Best Product Innovation of ALL Time

0% 10% 20% 30% 40% 50% 60% 70%

Automobile

Light Bulb

Telephone

Television

Aspirin

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

Variable Cost $ 1 per unit

Market Research Forecast

Company can sell: 290,000 boxes at $2 / unit

210,000 boxes at $3 / unit

Breakeven point = total fixed cost price - variable cost (per unit) (per unit)

$2 price = $400,000 = 400,000 units to breakeven $2 - $1

$3 price = $400,000 = 200,000 units to breakeven $3 - $1

Breakeven point = total fixed cost price - variable cost (per unit) (per unit)

$2 price = $400,000 = 400,000 units to breakeven $2 - $1

$3 price = $400,000 = 200,000 units to breakeven $3 - $1

Breakeven

Analysis

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