What is Marketing? Definition: The process of planning and executing the conception, pricing,...
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What is Marketing?
Definition: The process of planning and executing the conception, pricing, promotion and distribution of goods and services to facilitate exchanges that satisfy individual and organizational objectives. (Source: American Marketing Association)
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Evolution of Marketing
ProductionEra (1800s-1920s)
Produce asmuch as possible
as there is alimitless market
Selling Era(1920s – 1970s)
Focus shiftsfrom Production
to Sales andAdvertising
Marketing Concept Era
(1950s – 2000)3 Orientations
Customer ServiceProfit
CustomerRelationship Era
(1990s – pres)
Learn as much as possible about
customersand do everything
possible tosatisfy and
exceed theirexpectations
Product AdvertisingIdentify and
Fill NeedsBuild
Relationships
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Relationship Marketing
Repeat Customers tend to:
Spend moreCost less than one time or first time customersRequire less serviceRefer other customersProvide valuable feedback
Are relationships important from the customer’s perspective? Why or why not?
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Relationship Marketing
Firms build relationships through:
Frequency Marketing (Children’s products discounts)Affinity Programs (Credit Cards)Co-branding (Smuckers and PopTarts)Co-marketing (Dell and Intel/Apple and Intel)One on one marketing (Data Mining) (Autobytel)
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Non Traditional Marketing
PersonMarketing
Cause Marketing
Event MarketingWhole FoodsWine Tasting
Place Marketing
City Festivals(Apples and Art)
OrganizationMarketing(St. Jude’s)
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Marketing: Facilitates Exchange via Utility
Time and Place: Convenience
Possession: Satisfaction
Form: Transformation
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Strategic Marketing Planning Process
1. Examine Current Market Situation: Past Performance, Competition, SWOT
2. Assess Product and Market Opportunities: Macro Analysis
3. Set Objectives
4. Develop Marketing Strategy: Segmentation, Target Market, Position Productand Develop the Marketing Mix (4 P’s)
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Examine Current SituationSWOT Analysis
Strengths: something the company either possesses or is good atdoing (e.g., assets, skills, knowledge, partnerships)
Weaknesses: an area of current or potential vulnerability
Opportunities: areas of current or potential profitability and/orgrowth that exist in the external environment
Threats: factors that exist in the external environment that havethe potential to erode an organization’s profitability and/or growth
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Assess OpportunitiesMarket Research
Data Sources: Primary and Secondary
Secondary (External): Trade Associations, AdvertisingAgencies, Professional Research Firms, Government
Primary: Company Databases, Focus Groups, SurveysObservation
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Simple Research Process
• Observation• Identification of Problem Area or Question
of Interest• Develop hypotheses• Data Collection• Interpretation of Data• Refine or develop Theory or Apply to Decision-making process
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Set Objectives Market Penetration
Increasing the use of present products in present markets
1. Increasing the rate at which present customers use the product/service (Hospitals creating wellness programs)
2. Attracting competitors’ customers
3. Attracting nonusers of the product (Profiling and contacting potential
cosmetic surgery patients)
Drs. Rodan & Fields have their own private practices, specializing in dermatologic surgery, cosmetic surgery and acne treatments. Seeing over 1,000 patients a month, Drs. Rodan and Fields developed Proactiv Solution to help relieve the endless frustration and suffering of their patients.
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Objective Market Development
1. Opening additional geographic markets
2. Attracting other market segments
Selling present products in new markets
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Objectives Product Development
Developing new products for present markets
1. Developing new product features
2. Combining quality variations
3. Brand Extension
Creating new products for new markets
Diversification
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Key Areas of Marketing
Advertising (and so much more)
Market Research
New Product Development
Product/Brand Management
Distribution Channel Management
Consumer Behavior
Public Relations
Market Management
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Develop StrategyMarket Segmentation
Process of dividing a total market into severalrelatively homogenous groups.
Examples of Segmentation Criteria: Geography, products, product usage rate, psychographic (values, lifestyles, attitudes).
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Different Types of Markets: National and International
GovernmentMarket
(e.g. Military)
ConsumerMarket
Business toBusiness
Market(e.g., Oakland
University
Proctor and Gamble
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Develop StrategyMarket Coverage
Undifferentiated: One size fits all
Differentiated: Variety of Products to Several Customer Groups
Concentrated: Narrow target market (Focus on primary segment)
Oink Oink, Inc. (roasted pig ears)
Gap Maternity, Baby Gap, Gap Kids, Women, Men, Gap Body
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Marketing 4 P’s (Key Marketing Mix Decisions and Strategy)
Product: Type, Attributes, Package Design, Brand, Warranties
Place (Distribution): Choice of and availability at POS (point of sale) locations
Price: Discount Pricing, Value Pricing, Skimming Pricing
Promotion: Coupons, Rebates, Samples
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Marketing 4 Ps: Product
Differentiated or Standardized (e.g., commodities)
Product Line and Mix
Product Life Cycle
Product Identification: Branded versus non branded
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Product: Line (Set of Related Products) and Mix (Assortment of Products)
Coca Cola Kraft Foods
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Product: Life Cycle
IntroductionThe product is developed for
a particular market and introducedto that market
GrowthKnowledge of
product increasesand sales increase
MaturitySales volumespeak and sales
level off
DeclineSales volumes decreaseand demand for product
declines. Text-messaging
devices
Personal Computers
Typewriters
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Brand
Name, term, sign, symbol or design that identifies the products of a firm and distinguishes them from competitive offerings.
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Brands
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Top 10 Global Brands (Based on Economic Power)
1. Coca Cola (United States)2. Microsoft (United States)3. IBM (United States)4. GE (United States)5. Intel (United States)6. Nokia (Finland)7. Disney (United States)8. McDonalds (United States)9. Toyota (Japan)10.Marlboro (United States)11.Mercedes-Benz (Germany)
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Brand
Brand Loyalty: recognition, preference, insistence
Brand Equity: Added value that a widely respected,Highly successful name gives to a product in theMarketplace.
Awareness Loyalty Perceived quality Images
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“Levels” of Branding
National Brands
Private Labels
Generic Products
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Family of Brands
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Trends in Branding
Authenticity – Good performance and good deeds pay off BUT consumers must sense that the actions are sincere and not a PR stunt
Experience - the experience conveys the essence of the brand
Neuromarketing – strengthen emotional bonds to the product
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Trends in Branding
Advertainment - to reach TV-shy youngsters, build the message in what they are watching/doing
Multi-constituency – Realize that multiple stakeholders are involved with brand (customers and non customers)
Letting-go - Brands will create social and cultural values; customers must have input in shaping brand image
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Promotions
Purpose: Informing, persuading and influencing a purchase decision
Five Key Promotional Objectives
1.Differentiate the Product (e.g., comparison)2.Accentuate Product Value (e.g., warranties)3.Provide Information (e.g., describe features)4.Stabilize Sales (e.g., even out cyclicality)5. Increase Sales (e.g., coupons)
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Promotional Mix
Advertising
Personal Selling
Sales Promotion
Public Relations
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Advertising (Effectiveness versus Control)
Consider
Market Reach
Credibility
Cost
Detail
• Word of Mouth
• Online and Interactive (engagement rings)
• Outdoor (billboards)
• Media
• Direct Mail
• Sponsorship
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Pricing Strategy
Four Pricing Objectives
1.Profitability
2.Volume
3.Meeting Competition
4.Prestige$15.00 ($5.00 per unit)
$2.49 (.83 per unit)
$2.40 per unit
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Breakeven Analysis
Breakeven Point (in units) Total Fixed Costs
Contribution to Fixed Costs per Unit(Price per unit – Variable Cost per Unit)
=
Breakeven point (in dollars) = Total Fixed Costs
1 – (Variable Cost per Unit)/Price
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Dog Shirts
Total Fixed Costs (USAIIR): $60,000
Variable Cost per Unit: $2.00
Possible Price: $7.00
What is the breakeven point in units and dollars?
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Breakeven Analysis
Total Revenue
Total Cost