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Chapter 1Chapter 1
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Marketing DefinedMarketing Defined
The process of creating, distributing, promoting,The process of creating, distributing, promoting,
and pricing goods, services and ideas to facilitateand pricing goods, services and ideas to facilitate
satisfying exchange relationships in a dynamicsatisfying exchange relationships in a dynamic
environment.environment. ProductsProducts
Can be goods, services and ideasCan be goods, services and ideas
Design product to satisfy a need/wantDesign product to satisfy a need/want
DistributionDistribution
Make available at right place and timeMake available at right place and time
PromotionPromotion
Advertising, sales, PR, promotion, etc.Advertising, sales, PR, promotion, etc.
PricePrice
Acceptable price to create valueAcceptable price to create value
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OrganizationsOrganizations
Customer FocusCustomer Focus Target group -- target audienceTarget group -- target audience
Differentiated products and messagesDifferentiated products and messages
Consumer research -- market from a differentialConsumer research -- market from a differentialadvantageadvantage
Define business in terms of customer needsDefine business in terms of customer needs IBM sells problem solving/uncertainty reductionIBM sells problem solving/uncertainty reduction
Revlon sells hopeRevlon sells hope
Customers buy solutions, not productsCustomers buy solutions, not products
Must bring customer satisfaction in line with otheMust bring customer satisfaction in line with othe
company goals & capabilities -- realisticcompany goals & capabilities -- realistic
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Core Concepts ofCore Concepts of
MarketingMarketing Needs, wants, demandsNeeds, wants, demands
Needs -- state of felt deprivation -- dont create needsNeeds -- state of felt deprivation -- dont create needs
Wants -- specific satisfiers -- shaped by culture andWants -- specific satisfiers -- shaped by culture andindividual experience -- we can influence wantsindividual experience -- we can influence wants
Demands -- wants backed by buying power --demandsDemands -- wants backed by buying power --demandsoften for a group of benefits and may be addressed byoften for a group of benefits and may be addressed bya number of needs/wantsa number of needs/wants
Basic needs are relatively few -- usually have manyBasic needs are relatively few -- usually have manywants -- and limited demandwants -- and limited demand
ProductsProducts Anything that satisfies a need or wantAnything that satisfies a need or want
We buy the service/benefit -- sell the serviceWe buy the service/benefit -- sell the service
Marketing myopia -- focus on the product versusMarketing myopia -- focus on the product versuscustomer needcustomer need
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Core Concepts ofCore Concepts of
MarketingMarketing Value, cost and satisfactionValue, cost and satisfaction
Value is consumers estimate of products capacityValue is consumers estimate of products capacity
to satisfy a need or want --versus the costto satisfy a need or want --versus the cost
Cost is part of the need-satisfaction equationCost is part of the need-satisfaction equation
Often more emotionally driven than rationalOften more emotionally driven than rational
Exchanges & transactionsExchanges & transactions Exchanges -- the act of obtaining desired objectsExchanges -- the act of obtaining desired objects
by offering something in returnby offering something in return Transactions -- actual trade of value between twoTransactions -- actual trade of value between two
or more partiesor more parties
Agreement reached -- the eventAgreement reached -- the event
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Core Concepts ofCore Concepts of
MarketingMarketing Relationship MarketingRelationship Marketing
Built over timeBuilt over time
Centers on mutual benefitsCenters on mutual benefits
Extremely valuable assetExtremely valuable asset Markets -- the set of actual and potential buyersMarkets -- the set of actual and potential buyers
of a productof a product Centralized of decentralizedCentralized of decentralized
Exist wherever something of value is desiredExist wherever something of value is desired
Driven by a set of customers versus a set of suppliersDriven by a set of customers versus a set of suppliers[industries][industries]
Potential customers share a particular need or want --Potential customers share a particular need or want --and may be able and willing to purchase/exchangeand may be able and willing to purchase/exchange
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Core Concepts ofCore Concepts of
MarketingMarketing Marketers -- people seeking a resource fromMarketers -- people seeking a resource from
someone else and willing to offer somethingsomeone else and willing to offer something
of value in exchangeof value in exchange
Marketing -- working the exchangeMarketing -- working the exchange The one with the greatest desire to make theThe one with the greatest desire to make the
exchange is the marketerexchange is the marketer
Normally a company serving end-users in the faceNormally a company serving end-users in the faceof competitionof competition
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Company OrientationsCompany Orientations
Toward MarketplaceToward Marketplace Production conceptProduction concept -- emphasis placed on-- emphasis placed on
production and distribution efficiency.production and distribution efficiency.
Contends the customer will buy products thatContends the customer will buy products that
are widely available at low costare widely available at low cost Product conceptProduct concept -- holds that consumers will-- holds that consumers will
favor products that offer the most quality,favor products that offer the most quality,
performance, or innovative features --performance, or innovative features --
marketing myopiamarketing myopia Selling conceptSelling concept -- responds to overcapacity ---- responds to overcapacity --
sell what they make rather than make what thesell what they make rather than make what the
market wantsmarket wants
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Company OrientationsCompany Orientations
Toward MarketplaceToward Marketplace Marketing conceptMarketing concept -- the key to achieving-- the key to achieving
organizational goals consists in:organizational goals consists in: determining needs and wants of target marketsdetermining needs and wants of target markets
delivering the desired satisfactions moredelivering the desired satisfactions more
effectively and efficiently than competitorseffectively and efficiently than competitors
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Support firms (e.g.,ad agency)
Competitors
Customers
Channel
firms
Thefirm
MARKETING
Production
Finance/
accounting
R&D
Personnel
The Environment
The BoundaryThe Boundary
Spanning Role ofSpanning Role of
MarketingMarketing
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Factors InfluencingFactors Influencing
Marketing StrategyMarketing StrategyDemographic/
economic
environment
Political/
legal
environment
Socio/
cultural
environment
Technological/
physical
environment
Suppliers Publics
Competitors
Marketing
Intermediaries
Marketin
g
inform
ation
syste
m
Marketing
Planning
system
Marke
ting
organiza
tiona
nd
imple
menta
tions
ystem
Marketing
controlsystem
PlaceTarget
Customers Price
Promotion
Product
h
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The Four PsThe Four PsComponents of theComponents of the
Marketing MixMarketing Mix
ProductProductProduct variety
Quality
Design
Features
Brand name
Packaging
Sizes
Services
Warranties
Returns
PricePriceList Price
Discounts
Allowances
Payment period
Credit terms
PromotionPromotionSales PromotionAdvertising
Sales force
Public relations
Direct Marketing
PlacePlaceChannels
Coverage
Assortments
Locations
Inventory
Transport
Marketing
Mix
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Marketing-MixMarketing-Mix
StrategyStrategy
Advertising
Sales force
Publicrelations
Direct mail,telemarketing,and Internet
SalesPromotion
CompanyOffering Mix
Promotion Mix
ProductsServicesPrices
Distributionchannels
TargetCustomers
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Chapter 2Chapter 2
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Creating CustomerCreating Customer
ValueValue
Relative
Price
Relative BenefitDrs. Michael & George Belch, 1994. All rights reserved.
High "Rip-off" Expensive Premium
Equal Bad Buy M.O.R. Good Buy
Low Ecomomy Inexpensive Bargain
Low Equal High
Alternative Value States
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The Planning ProcessThe Planning Process Define missionDefine mission
Examine internal environmentExamine internal environment
Examine external environmentExamine external environment Set corporate and business unitSet corporate and business unit
goals & objectivesgoals & objectives
Design programsDesign programs ImplementImplement
Examine feedback and provideExamine feedback and provide
controlcontrol
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Market-OrientedMarket-Oriented
Strategic PlanningStrategic Planning The managerial process of developingThe managerial process of developing
and maintaining a viable fit betweenand maintaining a viable fit between
thethe organizations objectives, skills,organizations objectives, skills,and resourcesand resources and itsand its changing marketchanging market
opportunities.opportunities.
Aim is toAim is to shape and reshapeshape and reshape
companyscompanys business and productsbusiness and products toto
yield target profits and growth.yield target profits and growth.
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Corporate MissionCorporate Mission
StatementStatement A comprehensive statement whichA comprehensive statement which
defines the purpose and nature of andefines the purpose and nature of anorganization of people.organization of people.
In business, the needs of the customerIn business, the needs of the customerare its basis.are its basis.
It should be future-oriented andIt should be future-oriented and
provide direction. It helps select theprovide direction. It helps select thebest strategies from amongbest strategies from amongalternatives. It provides focus andalternatives. It provides focus andconcentration.concentration.
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Benefits of MissionBenefits of Mission
StatementStatement Orients toward futureOrients toward future Provides overall grand strategyProvides overall grand strategy
Infers which businesses we will not be inInfers which businesses we will not be in Provides directionProvides direction Helps in selection among alternateHelps in selection among alternate
strategiesstrategies
Differentiates usDifferentiates us Positions usPositions us Allows concentration of resources on aAllows concentration of resources on a
market nichemarket niche
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Elements of a MissionElements of a Mission
StatementStatement Reflect the history of the companyReflect the history of the company Reflect current preferences of the owners/managersReflect current preferences of the owners/managers Recognize influences of the market environmentRecognize influences of the market environment
Consider corporate resourcesConsider corporate resources Base on distinctive competenciesBase on distinctive competencies Define the competitive scopeDefine the competitive scope
Industry scopeIndustry scope
Products and applicationsProducts and applications
CompetenciesCompetencies Market-segment scopeMarket-segment scope
Vertical scopeVertical scope
Geographical scopeGeographical scope
...and express the corporate vision in an exciting, positive way...and express the corporate vision in an exciting, positive way
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The MarketingThe Marketing
Planning ProcessPlanning Process
3. Determine3. Determine
2. Identify Target
Markets2. Identify Target
Markets
5. Develop Programs to
Implement the
Marketing Mix
5. Develop Programs to
Implement the
Marketing Mix
6. Implement the
Programs6. Implement the
Programs
7. Establish Control &
Evaluation Criteria7. Establish Control &
Evaluation Criteria
8. Implement Control
& Evaluation
Procedures
8. Implement Control
& Evaluation
Procedures
1. Analyze Present
Marketing Situation1. Analyze Present
Marketing Situation
4. Select the
Appropriate
Marketing Mix
4. Select the
Appropriate
Marketing Mix
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1. Analyze present Marketing Situation
EXTERNALANALYSIS INTERNAL ANALYSIS
Market Size and growthCompetitorsBuying practicesPolitical/ legal environmentTechnological environmentIndustry past performance
Present& potential
Financial resourcesProduction capabilities & capacityEngineering and R&D capabilitiesMarketing capabilities
Corporate mission & objectivesDistribution capabilitiesCostsTop management style
The MarketingThe Marketing
Planning ProcessPlanning Process
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Specifically define-segmentSpecifically define-segment
Geographically locateGeographically locate
Determine size and growthDetermine size and growth
Estimate resistance to be encounteredEstimate resistance to be encountered
Assess your ability to overcomeAssess your ability to overcomeresistance expectedresistance expected
2. Identify Target Markets
The MarketingThe Marketing
Planning ProcessPlanning Process
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TYPICAL MARKETINGOBJECTIVES
Sales volume figure
Sales growth rate
Market share
Market penetration
Return on investment
Company image
Social responsibility
CRITERIA FOR EFFECTIVEOBJECTIVES
Consistent with corporateobjectives
Realistic
Attainable Measurable
Specific
Not mutually exclusive
3. Determine Marketing Objectives
The MarketingThe Marketing
Planning ProcessPlanning Process
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4. Select the Appropriate Marketing Mix
Product/Service Strategy--Specifications, Branding Product
Line, Product Support Activities, Packaging
Distribution Strategy--Channels, Types of Middlemen,
Warehousing, Inventory, Transportation
Promotion Strategy--Personal Selling, Sales PromotionsAdvertising, Public Relations, Direct Marketing
Pricing Strategy--List & Net Prices, Discounts, Rebates,
Freight, Bidding, Leasing
The Marketing PlanningThe Marketing Planning
ProcessProcess
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Determine required mix activitiesDetermine required mix activities Estimate time required for each activityEstimate time required for each activity
Arrange activities in a logical sequenceArrange activities in a logical sequence
Combine activities into programCombine activities into program
Establish dates for start & completion of each activityEstablish dates for start & completion of each activity Assign responsibility for the performance of each activityAssign responsibility for the performance of each activity
Determine costs and budgetsDetermine costs and budgets
5. & 6. Develop and Implement Marketing
Programs to Carry Out Marketing Mix
The MarketingThe Marketing
Planning ProcessPlanning Process
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The MarketingThe Marketing
Planning ProcessPlanning Process7. & 8. Establish Control and Evaluation
Criteria & Implement Procedures
s Identify key performance areas
s Set performance standards
s Measure performance results
s Compare results with standards
s Identify discrepancies
s Diagnose causes of discrepancies
s
Determine corrective action
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Contents of aContents of a
Marketing PlanMarketing Plan Executive SummaryExecutive Summary
Summary of goalsSummary of goals
Recommendations of actionRecommendations of action
Consider writing lastConsider writing last
Current Marketing SituationCurrent Marketing Situation Market situationMarket situation
Product situationProduct situation Competitive situationCompetitive situation
Distribution situationDistribution situation
Macroenvironment situationMacroenvironment situation
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Contents of aContents of a
Marketing PlanMarketing PlanThreats & OpportunitiesThreats & Opportunities
Strengths & weaknesses -- internalStrengths & weaknesses -- internal
Opportunities & threats -- externalOpportunities & threats -- external
Issues analysis -- competition,Issues analysis -- competition,
environment, economics, etc.environment, economics, etc.
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Contents of aContents of a
Marketing PlanMarketing Plan ObjectivesObjectives
Financial objectives -- profits, sales,Financial objectives -- profits, sales,etc.etc.
Marketing objectives -- growth, share,Marketing objectives -- growth, share,awareness, image, distribution, etc.awareness, image, distribution, etc.
Marketing StrategyMarketing Strategy Integration of all toolsIntegration of all tools
Strategies for target marketsStrategies for target markets Marketing mixMarketing mix
Expenditures, how support goals, etc.Expenditures, how support goals, etc.
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Contents of aContents of a
Marketing PlanMarketing Plan Action ProgramsAction Programs
Tactics of the planTactics of the plan
Who, what, when, howWho, what, when, how
muchmuch Budgets -- projectedBudgets -- projected
profit/lossprofit/loss
ControlsControls
Financial goalFinancial goalperformanceperformance
Awareness, attitudes,Awareness, attitudes,
trial, repeat, adoptiontrial, repeat, adoption
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Chapter 3Chapter 3
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The MarketingThe Marketing
Information SystemInformation System Assessing information needsAssessing information needs
What are we trying to solve?What are we trying to solve?
Get only what we needGet only what we need
Developing informationDeveloping information
Internal recordsInternal records
Marketing intelligenceMarketing intelligence
Marketing researchMarketing research
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The MarketingThe Marketing
Information SystemInformation System Internal RecordsInternal Records Financial records, sales data, orders, shipments, warranty cards. etc.Financial records, sales data, orders, shipments, warranty cards. etc.
Reveal market saturation, decay in absence of advertising, origin ofReveal market saturation, decay in absence of advertising, origin ofsales, profile of customer, etc.sales, profile of customer, etc.
Marketing Intelligence SystemMarketing Intelligence System Environmental surveillance -- everyday flow of information toEnvironmental surveillance -- everyday flow of information tomanagementmanagement
Internal and external sourcesInternal and external sources
Sales forceSales force
Distributors, retailersDistributors, retailers
Purchased information -- Nielson, IRIPurchased information -- Nielson, IRI
Published data -- trends, trade associations, economic forecastsPublished data -- trends, trade associations, economic forecasts Can be gathered formally and informallyCan be gathered formally and informally
Key is to make it available for decisionsKey is to make it available for decisions
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Analyzing theAnalyzing the
MacroenvironmentMacroenvironment Marketing EnvironmentMarketing Environment
Forces and factors that are external to the company:Forces and factors that are external to the company: Largely uncontrollableLargely uncontrollable
Potentially relevantPotentially relevant Environmental ThreatsEnvironmental Threats
Unfavorable trend or disturbanceUnfavorable trend or disturbance
Lead to major impact on company, product or brandLead to major impact on company, product or brand
Must forecast character & degree of impactMust forecast character & degree of impact
Marketing OpportunityMarketing Opportunity Potentially favorable trend or actionsPotentially favorable trend or actions
Constant monitoring to identify potential opportunity --Constant monitoring to identify potential opportunity --trackingtracking
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Tracking MajorTracking Major
Environmental ForcesEnvironmental Forces Monitor Six Major ForcesMonitor Six Major Forces
Demographic EnvironmentDemographic Environment
Economic EnvironmentEconomic Environment
Natural EnvironmentNatural Environment
Technological EnvironmentTechnological Environment
Political EnvironmentPolitical Environment
Cultural EnvironmentCultural Environment
Deciphering and responding to theseDeciphering and responding to theseforces is criticalforces is critical
Each provides threats & opportunitiesEach provides threats & opportunities
10 Megatrends10 Megatrends
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10 Megatrends10 Megatrends
Shaping the ConsumerShaping the Consumer
LandscapeLandscape Aging boomersAging boomers
Delayed retirementDelayed retirement
Changing nature ofChanging nature ofworkwork
Greater educationalGreater educational
attainmentattainment
Labor shortagesLabor shortages
IncreasedIncreased
immigrationimmigration
Rising HispanicRising Hispanic
influenceinfluence
Shifting birth trendsShifting birth trends
WideningWidening
geographicgeographicdifferencesdifferences
Changing ageChanging age
structurestructure
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DemographicDemographic
EnvironmentEnvironment Study of populations: size, density, location,Study of populations: size, density, location,
age, sex, occupation, etc.age, sex, occupation, etc. The Baby BoomThe Baby Boom
Worldwide population explosionWorldwide population explosion Highest growth -- poorest countriesHighest growth -- poorest countries
Population age mixPopulation age mix Baby boomersBaby boomers Generation XGeneration X
EthnicityEthnicity Salad bowl vs. melting potSalad bowl vs. melting pot Micro-marketingMicro-marketing
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DemographicDemographic
EnvironmentEnvironment Study of populations: size, density,Study of populations: size, density,
location, age, sex, occupation, etc.location, age, sex, occupation, etc.
EducationEducation Americans becoming more educatedAmericans becoming more educated
FamilyFamilyTypical family rarely existsTypical family rarely exists
Geographic shiftsGeographic shifts Mobility from technologyMobility from technology
Shift from mass to micromarketsShift from mass to micromarkets
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Economic EnvironmentEconomic Environment Income DistributionIncome Distribution
Track income &Track income &changes in spendingchanges in spending
Four structures:Four structures: Subsistence economySubsistence economy Raw material exportingRaw material exporting
economyeconomy IndustrializingIndustrializing
economieseconomies Industrial economiesIndustrial economies
Spending PatternsSpending Patterns SavingsSavings
DebtDebt
Credit availabilityCredit availability
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Economic EnvironmentEconomic EnvironmentsU. S. moving to two-tieredU. S. moving to two-tiered
economyeconomy
Income rising slowly for some --Income rising slowly for some --BoomersBoomers
Effecting retailing patterns --Effecting retailing patterns --
retailers in the middle beingretailers in the middle being
squeezed outsqueezed out
Effecting product offerings, etc.Effecting product offerings, etc.
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Natural EnvironmentNatural Environment Poses opportunities & threatsPoses opportunities & threats
Shortage of raw materialsShortage of raw materials
Increased cost of energyIncreased cost of energy Increased levels of pollution --Increased levels of pollution --
opportunitiesopportunities
Changing role of government inChanging role of government in
environmental protectionenvironmental protection
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TechnologicalTechnological
EnvironmentEnvironment Accelerating pace of changeAccelerating pace of change
Must be fast, lean, entrepreneurial -- able toMust be fast, lean, entrepreneurial -- able to
move quicklymove quickly
Allows new levels of mobilityAllows new levels of mobility
Unlimited innovation opportunitiesUnlimited innovation opportunities
High cost of R & D for technological innovationHigh cost of R & D for technological innovation
High risk factors lead to minor improvementsHigh risk factors lead to minor improvements
vs. new productsvs. new products
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Political EnvironmentPolitical Environment LegislationLegislation
Attempts to protect companies from each otherAttempts to protect companies from each other
Attempts to protect consumers from unfair and dangerousAttempts to protect consumers from unfair and dangerous
practicespractices Sometimes to protect communities or society as a wholeSometimes to protect communities or society as a whole
EnforcementEnforcement Effect of laws depends on power put behind theEffect of laws depends on power put behind the
enforcement agency -- FDA, FTC, etc.enforcement agency -- FDA, FTC, etc.
Varies with sitting political party/budgetsVaries with sitting political party/budgets Public interest groupsPublic interest groups
Can be more powerful than legislationCan be more powerful than legislation
Employ sophisticated tools/marketingEmploy sophisticated tools/marketing
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Cultural EnvironmentCultural Environment Core cultural values -- high persistenceCore cultural values -- high persistence
Relatively enduringRelatively enduring
Key consideration in positioning a productKey consideration in positioning a product
Examples: work ethic, marriage, honesty, rootsExamples: work ethic, marriage, honesty, roots
SubculturesSubcultures Homogeneous ethnic or lifestyle groups within the larger cultuHomogeneous ethnic or lifestyle groups within the larger cultu
Share common beliefs, behaviors -- cannot type-cast too narShare common beliefs, behaviors -- cannot type-cast too nar
Examples: seniors, teenagers, Catholics, RepublicansExamples: seniors, teenagers, Catholics, Republicans
Secondary cultural values -- shift through timSecondary cultural values -- shift through tim How people see themselves & othersHow people see themselves & others
How see organizations & societyHow see organizations & society
How see natureHow see nature
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Chapter 4Chapter 4
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The MarketingThe Marketing
Information SystemInformation System Marketing ResearchMarketing Research
Systematic design, collection, analysis and reporting of dataSystematic design, collection, analysis and reporting of dataand findings relevant to a specific marketing situation facingand findings relevant to a specific marketing situation facingthe companythe company
Formal gathering processFormal gathering process
Used in a variety of ways:Used in a variety of ways: Planning -- understanding the marketPlanning -- understanding the market
Product -- design alternatives, features, names, packageProduct -- design alternatives, features, names, package
Price -- appropriate range, skim/penetrate, price vs. qualityPrice -- appropriate range, skim/penetrate, price vs. quality
Promotion -- pre-test ads, post-test, media mix, premiums, etc.Promotion -- pre-test ads, post-test, media mix, premiums, etc.
Place -- type of dealers, retail movement, channel inducements,Place -- type of dealers, retail movement, channel inducements,stocking goodsstocking goods
Control -- sales/market share, sales vs. potential, new programControl -- sales/market share, sales vs. potential, new programeffectiveness, imageeffectiveness, image
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The MarketingThe Marketing
Information SystemInformation System
The Marketing Research ProcessThe Marketing Research Process
Collecting the InformationCollecting the Information
Secondary data -- data collected from otherSecondary data -- data collected from othersources for other reasonssources for other reasons
must be in a useable formmust be in a useable form
must be relevant, accurate, current, impartialmust be relevant, accurate, current, impartial
available from trade associations, Governmentavailable from trade associations, Government
sources, etc.sources, etc. Role of InternetRole of Internet
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The MarketingThe Marketing
Information SystemInformation System Collecting the Information(cont.)Collecting the Information(cont.)
Primary data --Primary data -- research approachesresearch approaches
Exploratory ResearchExploratory Research
Observational research -- actual behaviorsObservational research -- actual behaviors Focus-group research -- discuss aspects of aFocus-group research -- discuss aspects of a
problem : 6 - 10 people with moderator --problem : 6 - 10 people with moderator --
qualitative vs. quantitativequalitative vs. quantitative
Causal Research -- experimental design to testCausal Research -- experimental design to test
cause & effectcause & effect Descriptive Research -- survey research --Descriptive Research -- survey research --
measure peoples knowledge, beliefs, attitudesmeasure peoples knowledge, beliefs, attitudes
preferences, etc.preferences, etc.
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The MarketingThe Marketing
Information SystemInformation System Collecting the Information (cont.)Collecting the Information (cont.)
Research instruments:Research instruments: Questionnaires -- requires professional expertise,Questionnaires -- requires professional expertise,
testing/debuggingtesting/debugging Mechanical InstrumentsMechanical Instruments
Sampling plan:Sampling plan: Target populationTarget population Sample sizeSample size Sampling procedures -- random, stratified, clusterSampling procedures -- random, stratified, cluster
Contact methods:Contact methods: Direct mailDirect mail TelephoneTelephone PersonalPersonal
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Market DemandMarket Demand Two types of demandTwo types of demand
ExpansibleExpansible
Non-expansibleNon-expansible
Total market demandTotal market demand
Total volume bought by a defined consumer groupTotal volume bought by a defined consumer group Defined geographic area in a defined time periodDefined geographic area in a defined time period
Defined marketing environment and defined level and mix of industryDefined marketing environment and defined level and mix of industrymarket effortmarket effort
Market minimumMarket minimum
Market potentialMarket potential
s Primary demandPrimary demand
s Selective demandSelective demand
The Boston ConsultingT e Boston onsu t ng
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Stars Question Marks
Cash Cows Dogs
Mark
etGrowth
Rate
20%
18%
16%
14%12%
10%
8%
6%
4%
2%
Relative Market Share
10x 4x 2x 1x 0.2x 0.4x 0.1x
The Boston ConsultingT e Boston onsu t ngGroups Growth-ShareGroups Growth-Share
MatrixMatrix
1
2
3
4
5
6 78
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Chapter 5Chapter 5
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Factors AffectingFactors Affecting
Consumer SatisfactionConsumer SatisfactionConsumer
Psychology
Perspective
Prior
ExpectationsProduct
Performance
Confirmation/
Disconfirmation
Consumer
Satisfaction/
Dissatisfaction
Marketing
Management
Perspective
Drs. Michael & George Belch, 1994. All rights reserved.
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Tracking CustomerTracking Customer
SatisfactionSatisfaction Critical is done on regular basisCritical is done on regular basis Several methods availableSeveral methods available
Complaint & suggestion systemsComplaint & suggestion systems
Customer satisfaction surveysCustomer satisfaction surveys Ask the customerAsk the customer TelephoneTelephone Mail out surveysMail out surveys Exit interviewsExit interviews
Ghost shopping -- retail outletsGhost shopping -- retail outlets
Lost customer analysisLost customer analysis Tracking research very affordableTracking research very affordable Can also get competitive information at the sameCan also get competitive information at the same
timetime
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Porters Value ChainPorters Value Chain
Support ActivitiesSupport Activities Firm InfrastructureFirm Infrastructure
Human ResourceHuman Resource
ManagementManagement
Technology DevelopmentTechnology Development
ProcurementProcurement
Primary ActivitiesPrimary Activities Inbound LogisticsInbound Logistics
OperationsOperations
Outbound LogisticsOutbound Logistics
Marketing & SalesMarketing & Sales
ServiceService
Margin -- endMargin -- end
resultresult Primary steps toPrimary steps to
create customercreate customersatisfaction: bringsatisfaction: bring
materials in, operatematerials in, operate
on them, send themon them, send them
out, market them,out, market them,
service themservice them
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Customer RetentionCustomer Retention
AftermarketingAftermarketing
Markets are maturing & flattening outMarkets are maturing & flattening out
Products are also maturing -- approaching parity qualityProducts are also maturing -- approaching parity quality
Marketplace grown more complexMarketplace grown more complex
Marketers are increasingly distanced from their customersMarketers are increasingly distanced from their customers multiplicity of channelsmultiplicity of channels
Become more reliant on intermediaries to deliver customerBecome more reliant on intermediaries to deliver customer
satisfactionsatisfaction
channels are the only contact with the customerchannels are the only contact with the customer
Customer retention will be key to success in the marketCustomer retention will be key to success in the market
placeplace
Terry G. Vavra, Ph.D.
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Customer RetentionCustomer Retention
AftermarketingAftermarketing Requires shift in focus by organizationRequires shift in focus by organization
place emphasis on retention vs. new customer acquisitionplace emphasis on retention vs. new customer acquisition
Establishing and maintaining a detailed customerEstablishing and maintaining a detailed customerbasebase
Blueprinting customer contactsBlueprinting customer contacts Conducting customer satisfaction surveysConducting customer satisfaction surveys Analyzing informal customer communicationsAnalyzing informal customer communications Formulating & managing formal communicationsFormulating & managing formal communications
programsprograms Hosting special customer events or programsHosting special customer events or programs Identifying and reclaiming lost customersIdentifying and reclaiming lost customers
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Customer RetentionCustomer Retention
Acquisition of customers can cost 5 timesAcquisition of customers can cost 5 times
more than retaining current customers.more than retaining current customers.
The average customer loses 10% of itsThe average customer loses 10% of its
customers each year.customers each year.
A 5% reduction to the customer defectionA 5% reduction to the customer defection
rate can increase profits by 25% to 85%.rate can increase profits by 25% to 85%.
The customer profit rate increases over theThe customer profit rate increases over the
life of a retained customer.life of a retained customer.
i C
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Herrington CustomerHerrington Customer
Satisfaction HierarchySatisfaction Hierarchy
Customer
is an Integral
Team Member
Dedicate Resources to
Understanding Customer
Basic Support Services(Billing, Schedule, Service)
Meet Core Capabilities
(Product Must Work)
Drs.. Michael & George Belch, 1994. All rights reserved.
Two-way Relationship
(Employees Listen to Customer)
T l Q li
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Total QualityTotal Quality
MarketingMarketing
Customer PerceptionCustomer Perception Every Company ActivityEvery Company Activity Total Employee CommitmentTotal Employee Commitment High-Quality PartnersHigh-Quality Partners Quality Can Always Be ImprovedQuality Can Always Be Improved May Require Quantum LeapsMay Require Quantum Leaps
Quality Does Not Cost MoreQuality Does Not Cost More Necessary But Not SufficientNecessary But Not Sufficient Cannot Save Poor ProductCannot Save Poor Product
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Chapter 6Chapter 6
Stages in the PurchaseStages in the Purchase
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Stages in the PurchaseStages in the Purchase
Decision ProcessDecision Process
Problem
recognition
Information
search
Alternative
evaluation
Purchase
decision
Postpurchase
evaluation
C BC B
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Consumer BuyerConsumer Buyer
BehaviorBehavior Need to understand target consumerNeed to understand target consumer
Who they areWho they are
Objectives in relation to your productObjectives in relation to your product
Where & how often they purchaseWhere & how often they purchase
Where they are in the buying processWhere they are in the buying process
And more...And more...
Need to understand what drives the purchase processNeed to understand what drives the purchase process The stepsThe steps
The influencesThe influences CultureCulture
SocialSocial PersonalPersonal PsychologicalPsychological
Th B i D i iTh B i D i i
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The Buying DecisionThe Buying Decision
ProcessProcess Researching the buying decision processResearching the buying decision process
Interview recent purchasers of your productInterview recent purchasers of your product
Interview people who didnt buyInterview people who didnt buy
Interview people who are thinking about buyingInterview people who are thinking about buying
The purchase decisionThe purchase decision Brand decisionBrand decision
Vendor decisionVendor decision
Quantity decisionQuantity decision
Timing decisionTiming decision
Payment method decisionPayment method decision Postpurchase behaviorPostpurchase behavior
Relationship marketingRelationship marketing
Reinforce the decisionReinforce the decision
Th B i D i iTh B i D i i
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The Buying DecisionThe Buying Decision
ProcessProcess Different buying roles people take on for differentDifferent buying roles people take on for different
buying decisionsbuying decisions InitiatorInitiator BuyerBuyer
InfluencerInfluencer UserUser
DeciderDecider Various stages customer goes through & tools usedVarious stages customer goes through & tools used
Must know where customer is in the processMust know where customer is in the process
Match tools to the customers buying stageMatch tools to the customers buying stage
Types of buying behaviorTypes of buying behavior Complex buying behaviorComplex buying behavior
Dissonance reducing buying behaviorDissonance reducing buying behavior
Habitual buying behaviorHabitual buying behavior
Variety seeking buying behaviorVariety seeking buying behavior
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Chapter 7Chapter 7
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Industrial BuyingIndustrial Buying
Decision ProcessDecision Process
Evaluate product
and supplier
performance
Negotiate a purchase order
Information search and
evaluation of suppliers
Determine product
specifications
Need recognition
iff i
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Key Differences Business/Key Differences Business/
Consumer MarketsConsumer Markets
Market Structure and DemandMarket Structure and Demand
Fewer buyersFewer buyers
Larger buyersLarger buyers
Close supplier-customer relationshipClose supplier-customer relationship
Geographically concentrated buyersGeographically concentrated buyers
Derived demand -- for OEMsDerived demand -- for OEMs
Inelastic demandInelastic demand
Fluctuating demandFluctuating demand
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Key Differences Business/Key Differences Business/
Consumer MarketsConsumer Markets Nature of the buying unitNature of the buying unit
Professional purchasing proceduresProfessional purchasing procedures
Several buying influencesSeveral buying influences Direct buying, reciprocity, leasingDirect buying, reciprocity, leasing
Human element still enters in -- notHuman element still enters in -- not
totally rational/professionaltotally rational/professional
ey erencesey erencesiB i /
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yyBusiness/Business/
Consumer MarketsConsumer Markets Types of buying decisionsTypes of buying decisions Buying decisions are often complexBuying decisions are often complex
Large amounts of moneyLarge amounts of money
Technical specificationsTechnical specifications
Interaction/coordination of more peopleInteraction/coordination of more people
Three basic types of buysThree basic types of buys
Straight rebuyStraight rebuy
Modified rebuyModified rebuy
New task -- where most marketing effort focused --New task -- where most marketing effort focused --creating:creating:
B i / CB siness/ Cons mer
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Business/ ConsumerBusiness/ Consumer
MarketsMarkets
The Decision ProcessThe Decision Process More formalizedMore formalized
Often detailed written proceduresOften detailed written procedures
Buying decision more dependent on buyer/sellerBuying decision more dependent on buyer/sellerrelationshiprelationship
Both buyer and seller have fewer options to goBoth buyer and seller have fewer options to go
somewhere elsesomewhere else
Process often done with RFPProcess often done with RFP
Specifications, pricingSpecifications, pricing Delivery/service termsDelivery/service terms
Payment termsPayment terms
QuantityQuantity
B i / CBusiness/ Consumer
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Business/ ConsumerBusiness/ Consumer
MarketsMarkets Who makes the decisionWho makes the decision
Understanding the decision influencers is criticalUnderstanding the decision influencers is critical
Often not apparent who real call-maker isOften not apparent who real call-maker is
Must understand:Must understand: Who are the real decision makersWho are the real decision makers What decisions do they makeWhat decisions do they make What is their level of influenceWhat is their level of influence What evaluation criteria do they useWhat evaluation criteria do they use
Gatekeepers are difficult to identify -- influence aGatekeepers are difficult to identify -- influence a
no decision, but cant say yesno decision, but cant say yes Never under-estimate the purchasing agentNever under-estimate the purchasing agent
Never under-estimate the financial officerNever under-estimate the financial officer
Build relationships up and down the organizationBuild relationships up and down the organization
B i / CBusiness/ Consumer
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Business/ ConsumerBusiness/ Consumer
MarketsMarkets
Role of marketing mix elements vary:Role of marketing mix elements vary:
Personal sellingPersonal selling
TelemarketingTelemarketing
Direct mailDirect mail
Trade showsTrade shows
Media advertisingMedia advertising
Publicity/Public RelationsPublicity/Public Relations Seminars/SymposiaSeminars/Symposia
InternetInternet
f iOf C t B i
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Of Concern to BusinessOf Concern to Business
MarketersMarketers
Who are the major decisionWho are the major decision
participants?participants?
What decisions do they influence?What decisions do they influence? What is their level of influence?What is their level of influence?
What evaluation criteria do theyWhat evaluation criteria do they
use?use?
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Chapter 8Chapter 8
Targeting andTargeting and
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a ge g a dg g
PositioningPositioning
Market
Segmentation
Market
Targeting
Market
Positioning
1. Identify
segmentation
variables and
segment the
market
2. Develop
profiles ofresulting
segments
3. Evaluate the
attractiveness
of each
segment.
4. Select the
targetsegments
5. Identify possible
positioningconcepts for each
target segment
6. Select, develop,
and communi-
cate the chosenpositioning
concept
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Market SegmentationMarket Segmentation
Segmentation: the sub-dividing ofSegmentation: the sub-dividing of
a market into homogeneousa market into homogeneous
subsets of consumers -- the subsetsubsets of consumers -- the subset
may be reached with a distinctmay be reached with a distinct
marketing mix.marketing mix.
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Market SegmentationMarket Segmentation
Must be:Must be:
MeasurableMeasurable
AccessibleAccessible
SubstantialSubstantial
ResponsiveResponsive
Benefits:Benefits:
Can spot & compare marketingCan spot & compare marketingopportunitiesopportunities
Use to allocate/prioritize fundsUse to allocate/prioritize funds
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Segmentation StrategySegmentation Strategy
Key take-aways:Key take-aways: Allows company to match strengths of product andAllows company to match strengths of product and
resources with needs/wants of a target consumerresources with needs/wants of a target consumer
Helps determine positioning strategyHelps determine positioning strategy
Allows concentration of resources -- strength inAllows concentration of resources -- strength in
select area[s]select area[s]
Allows company with limited resources to competeAllows company with limited resources to compete
with larger firms -- niche marketingwith larger firms -- niche marketing
Can limit the organizations opportunities -- andCan limit the organizations opportunities -- and
increase vulnerabilities [can over-segment/over-increase vulnerabilities [can over-segment/over-
target]target]
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Market SegmentationMarket Segmentation
Must decide if will segment or notMust decide if will segment or not Undifferentiated MarketingUndifferentiated Marketing
One consistent productOne consistent product
One marketing mixOne marketing mix Mass target marketMass target market
Differentiated MarketingDifferentiated Marketing Operate in one or several segments for its productOperate in one or several segments for its product
Separate products for eachSeparate products for each
Separate marketing programs for eachSeparate marketing programs for each
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Market SegmentationMarket Segmentation
Movement to increased segmentation --Movement to increased segmentation --
micro-marketing -- niche marketingmicro-marketing -- niche marketing
Few truly mass productsFew truly mass products STP marketing:STP marketing: SSegmenting,egmenting,TTargeting,argeting,
PPositioningositioning
Target MarketTarget Market
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Target MarketTarget Market
SelectionSelection
Identify the appropriate targetingIdentify the appropriate targeting
strategystrategy
Determine which segmentationDetermine which segmentationvariables to usevariables to use
Develop market segment profilesDevelop market segment profiles
Evaluate relevant market segmentsEvaluate relevant market segments Select specific target market[s]Select specific target market[s]
Major SegmentationMajor Segmentation
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Demographic VariablesAge Occupation
Gender Family Size
Race Family life cycle
Ethnicity Religion
Income Social class
Education
Psychographic VariablesPersonality attributes
Motives
Lifestyles
Geographic VariablesRegion State Size
Urban, suburban Market density
& rural Climate
City size Terrain
County size
Education
Behavioristic VariablesVolume usage
End use
Benefit expectations
Brand loyalty
Price sensitivity
Major SegmentationMajor Segmentation
VariablesVariables
Target MarketTarget Market
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Target MarketTarget Market
SelectionSelection Evaluate relevant market segmentsEvaluate relevant market segments
Segment size and growthSegment size and growth Current dollar salesCurrent dollar sales
Projected sales growthProjected sales growth Expected profit margins by segmentExpected profit margins by segment
Company objectives and resourcesCompany objectives and resources Core business strengthsCore business strengths Depth of resourcesDepth of resources
Segment structural attractivenessSegment structural attractiveness Competitive assessmentCompetitive assessment Cost estimatesCost estimates
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Chapter 9Chapter 9
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Brand DecisionsBrand Decisions
What is a brand ? -- a name, term,What is a brand ? -- a name, term,
design, or any other feature thatdesign, or any other feature that
identifies one sellers good or serviceidentifies one sellers good or service
as distinct from those of theas distinct from those of the
competitioncompetition
Have consumer franchiseHave consumer franchise
Simplify consumers choiceSimplify consumers choice Command consumer loyaltyCommand consumer loyalty
Th W ld 10 M tTh W ld 10 M t
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Rank Brand
6. Nokia7. McDonald's8. Disney9. Toyota
10. Marlboro
The Worlds 10 MostThe Worlds 10 Most
Valuable BrandsValuable BrandsRank Brand
1. Coca-Cola2. Microsoft3. IBM4. GE
5. Intel
Source:Business Week, 2005
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Brand DecisionsBrand Decisions
Levels of brand meaningLevels of brand meaning
AttributesAttributes
BenefitsBenefits -- link attribute perception to-- link attribute perception to
product benefits -- need satisfiersproduct benefits -- need satisfiers
ValuesValues -- what communicates about-- what communicates about
buyers valuesbuyers values
PersonalityPersonality -- what we aspire to be -- how-- what we aspire to be -- how
we want to be perceivedwe want to be perceived
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Emotional
Bonding
Personality
Attributes
Hierarchy of BrandHierarchy of Brand
BondingBonding
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Brand DecisionsBrand Decisions Brand equityBrand equity
AwarenessAwareness
PreferencePreference
LoyaltyLoyalty
Brand portfoliosBrand portfolios Measurement of brand equity -- the price premiumMeasurement of brand equity -- the price premium
it will bringit will bring Value of a brand -- competitive advantagesValue of a brand -- competitive advantages
Reduced marketing costsReduced marketing costs
Higher trade leverageHigher trade leverage Higher pricesHigher prices
Can launch brand extensionsCan launch brand extensions
Defense against price competitionDefense against price competition
Contributors to BrandContributors to Brand
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Contributors to BrandContributors to Brand
Image & EquityImage & Equity
Product Performance Packaging Distribution
Advertising Promotions Sales literature Word of mouth Competition
Personnel Policies Facilities Perceptions Experiencethe net present value of experience
Major BrandingMajor Branding
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Major BrandingMajor Branding
DecisionsDecisions Branding decisionBranding decision
BrandBrand
Non-brandNon-brand
Brand-sponsor decisionBrand-sponsor decision Manufacturers brandManufacturers brand
Private brandPrivate brand
Licensed brandLicensed brand
Brand repositioningBrand repositioning
Brand strategyBrand strategy New brandsNew brands Brand extensionsBrand extensions
Line extensionsLine extensions
Brand StrategyBrand Strategy
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Brand StrategyBrand Strategy
DecisionsDecisions Line extension -- existing brand nameLine extension -- existing brand name
extended to new sizes, flavorsextended to new sizes, flavors
Brand extension -- brand name extended toBrand extension -- brand name extended tonew product categoriesnew product categories
Multi-brands -- new brand names introducedMulti-brands -- new brand names introducedinto same product categoryinto same product category
New brands -- new brand name for a newNew brands -- new brand name for a newcategory of productcategory of product
Six Steps to Building aSix Steps to Building a
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1. Assess current brand status1. Assess current brand status
2. Determine what we can stand for2. Determine what we can stand for
3. Develop positioning platform3. Develop positioning platform4. Forge a personality4. Forge a personality
5. Manage brand identity contact5. Manage brand identity contact
6. Mind the brands identity6. Mind the brands identity
Six Steps to Building aSix Steps to Building a
BrandBrand
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Conducting a BrandConducting a Brand
AuditAudit What is our top-of-mind awareness?What is our top-of-mind awareness?
What are our attribute ratings?What are our attribute ratings?
Do we have a clear mind association?Do we have a clear mind association? How do we score on product/ serviceHow do we score on product/ service
performance?performance?
How are we doing on customerHow are we doing on customer
complaints- and what do we do withcomplaints- and what do we do with
them?them?
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The Brands IdentityThe Brands Identity
Brand name associationBrand name association
Brand name meaningBrand name meaning
Brand iconBrand icon Brands current positioningBrands current positioning
Current strategic personalityCurrent strategic personality
Brands overall identity-- theBrands overall identity-- the
essenceessence
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What Can WeWhat Can We
Stand For?Stand For?
Strengths &Strengths &
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Strengths &Strengths &
Weaknesses AnalysisWeaknesses Analysis
Update S.W.O.TUpdate S.W.O.T
Determine potentialDetermine potential
opportunitiesopportunities Research findings as inputResearch findings as input
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Competitive AnalysisCompetitive Analysis
Who are all direct competitors?Who are all direct competitors?
What are their strengths andWhat are their strengths and
weaknesses?weaknesses? What is the level of intensity ofWhat is the level of intensity of
competition?competition?
What are our opportunities withinWhat are our opportunities withinthe competitive set?the competitive set?
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Develop PositioningDevelop Positioning
PlatformPlatform
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Forge A PersonalityForge A Personality
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Brand PersonalityBrand Personality
Who would this brand be if itWho would this brand be if it
were human?were human?
The strategic expansion of theThe strategic expansion of the
brands positioning.brands positioning.
Where do BrandWhere do BrandP liti CP liti C
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Personalities ComePersonalities Come
From?From? The founders- AppleThe founders- Apple The owner- United AirlinesThe owner- United Airlines
Product Performance- LysolProduct Performance- Lysol
Advertising- Federal ExpressAdvertising- Federal Express
Brands users- American Express; The GapBrands users- American Express; The Gap
Bank of AmericaBank of America
Icons- Wells Fargo; Prudential; TravelersIcons- Wells Fargo; Prudential; Travelers
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Manage BrandManage Brand
ContactsContacts
The Core of BrandThe Core of Brand
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IdentityIdentity
Brand Name
TOTAL BRAND
IDENTITY
TOTAL BRAND
IDENTITY
Marketing
Communications
Logo/Graphic
System
Promotion/
Merchandising
Selling
Strategies
Product/ Service
Performance
BRAND
ESSENCE
Brand Positioning
Strategic Personality
The Four Sources of BrandThe Four Sources of Brand
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MessagesMessages
Planned messagesPlanned messages
Product messagesProduct messages
Service messagesService messages
Unplanned messagesUnplanned messages
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Mind The BrandsMind The Brands
IdentityIdentity
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The Brand TriadThe Brand Triad
The three identities:The three identities:
The customersThe customers
The marketersThe marketersThe brandsThe brands
Th B d T i d C tTh B d T i d C t
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The Brand Triad Cont..The Brand Triad Cont..
The customer must:The customer must:
Be clear about what he/she needsBe clear about what he/she needs
Buy it when its deliveredBuy it when its delivered
Ideally remain loyal to the brand that gets it rightIdeally remain loyal to the brand that gets it right
The marketer must:The marketer must:
Read the customer and understand needs/wantsRead the customer and understand needs/wants
Manage the brand to deliver desired benefitsManage the brand to deliver desired benefits
The brand must:The brand must:
Be likableBe likable Be accessibleBe accessible
Be credibleBe credible
Be relevantBe relevant
Be loyal to its customersBe loyal to its customers
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Chapter 10Chapter 10
Differentiating &Differentiating &
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gg
PositioningPositioning
Differentiation -- a way to set yourself apartDifferentiation -- a way to set yourself apart
from the competition.from the competition.
Differentiation allows for price premiumDifferentiation allows for price premium
based on the extra value perceived by thebased on the extra value perceived by thecustomer -- the position in the mindcustomer -- the position in the mind
Four broad ways to differentiate:Four broad ways to differentiate: BetterBetter
NewerNewer FasterFaster
CheaperCheaper
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PositioningPositioning
Positioning starts with a product. A piece ofPositioning starts with a product. A piece of
merchandise, a service, a company, anmerchandise, a service, a company, an
institution, or even a personinstitution, or even a person
But positioning is not what you do to a product.But positioning is not what you do to a product.Positioning is what you do to the mind of thePositioning is what you do to the mind of the
prospect. That is, you position the product inprospect. That is, you position the product in
the mind of the prospect.the mind of the prospect.
Ries and TroutRies and Trout
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PositioningPositioning
Developing a strategyDeveloping a strategy
What position do we holdWhat position do we hold
What position do we want to holdWhat position do we want to hold
Who is the competitionWho is the competition
Can we competeCan we compete
Can we implementCan we implement
Approaches toApproaches toPositioning a ProductPositioning a Product
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Positioning a ProductPositioning a Product
or Serviceor Service By product or service attributesBy product or service attributes
By price/qualityBy price/quality
By use or applicationBy use or application By product classBy product class
By product or service userBy product or service user
By benefitBy benefit
By imageBy image
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PositioningPositioning
Determining strategyDetermining strategy
Identify competitorsIdentify competitors
Assess perception of consumersAssess perception of consumers
Determine competitors positionsDetermine competitors positions
Analyze preferencesAnalyze preferences
Position decisionPosition decision
ImplementImplement Monitor and evaluateMonitor and evaluate
Assessing & Building aAssessing & Building a
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ReputationReputation
Key Questions to Ask:Key Questions to Ask: Whose minds really matter? Whose opinions will influence our reputation?Whose minds really matter? Whose opinions will influence our reputation?
How visible and credible are we relative to the competition?How visible and credible are we relative to the competition?
What factors within our control offer the greatest potential for shaping ourWhat factors within our control offer the greatest potential for shaping ourcorporate position?corporate position?
Does our organization have meaningful, believable, unique, andDoes our organization have meaningful, believable, unique, andsustainable advantages over other firms?sustainable advantages over other firms?
Are our products, product line and corporate positioning strategies andAre our products, product line and corporate positioning strategies andtactics consistent with one another and mutually reinforcing?tactics consistent with one another and mutually reinforcing?
Should we work toward a global image or tailor our positioning to meet theShould we work toward a global image or tailor our positioning to meet theneeds of different market segments?needs of different market segments?
What combination of communication tactics should be used to enhanceWhat combination of communication tactics should be used to enhance
the visibility and credibility of our organization?the visibility and credibility of our organization?
Corporate Positioning:Corporate Positioning:Alternative PositioningAlternative Positioning
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Alternative PositioningAlternative Positioning
StrategiesStrategies
Market LeaderMarket Leader Biggest & most secureBiggest & most secure
Quality LeaderQuality Leader Best/most reliable products & servicesBest/most reliable products & services
Value LeaderValue Leader Greatest benefits relative to priceGreatest benefits relative to price
Service LeaderService Leader Most responsive to customers probleMost responsive to customers problem Technology LeaderTechnology Leader Leader in developing new technologiesLeader in developing new technologies
applying innovationsapplying innovations
Relationship Leader Most Committed to the customers sucRelationship Leader Most Committed to the customers suc
Prestige LeaderPrestige Leader Most exclusive and/or unique imageMost exclusive and/or unique image
Knowledge LeaderKnowledge Leader The best functional, industry or technicThe best functional, industry or technic
expertiseexpertise
Bargain LeaderBargain Leader The lowest priceThe lowest price
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Positioning CriteriaPositioning Criteria
Important -- deliver a highly valued benefitImportant -- deliver a highly valued benefit
Distinctive -- competitors dont offer, or weDistinctive -- competitors dont offer, or we
offer in more distinctive wayoffer in more distinctive way
Superior -- either real or perceivedSuperior -- either real or perceived Communicable -- visibleCommunicable -- visible
Preemptive -- competitors cant easily copyPreemptive -- competitors cant easily copy
Affordable -- target buyers must be able to payAffordable -- target buyers must be able to pay
the differencethe difference Profitable -- must be profitable to the companyProfitable -- must be profitable to the company
Difficulty inDifficulty in
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yy
PositioningPositioning
Mind defends itself:Mind defends itself:
Selective exposureSelective exposure
Selective attentionSelective attention Selective retentionSelective retention
Difficulty inDifficulty in
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yy
PositioningPositioning
How to get through:How to get through:
Keep it simpleKeep it simple
Complex productsComplex products Confusing productsConfusing products
Positioning: over simplifyPositioning: over simplify
Focus on one attribute/benefitFocus on one attribute/benefit
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Need to RepositionNeed to Reposition
When companies lose their marketsWhen companies lose their markets
When companies leave their marketsWhen companies leave their markets Consumers dont automatically acceptConsumers dont automatically accept
New products may weaken imageNew products may weaken image
Get back to basicsGet back to basics
When markets leave companiesWhen markets leave companies
Technology shiftTechnology shift
Change in consumer preferencesChange in consumer preferences
NEED LINKAGE IN REPOSITIONING
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The Product Life CycleThe Product Life Cycle Asserts that a product will go through different stagesAsserts that a product will go through different stages
in its lifein its life New stages of buyer interest & requirementNew stages of buyer interest & requirement
Changes in competitionChanges in competition
Economic changesEconomic changes Must plan successive strategies for each stage of theMust plan successive strategies for each stage of the
products lifeproducts life Strive to extend the products life and profitabilityStrive to extend the products life and profitability PLC asserts:PLC asserts:
Products have a limited lifeProducts have a limited life
Products rise and fall at different stagesProducts rise and fall at different stages
Different speed of movement across different productDifferent speed of movement across different productcategoriescategories
Different Forms ofDifferent Forms ofProduct Life CycleProduct Life Cycle
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Product Life CycleProduct Life Cycle
Product categoryProduct category Have the longest life cyclesHave the longest life cycles
Product formsProduct forms More analogous to the standardMore analogous to the standard
BrandsBrands Can be short or long lifeCan be short or long life
Some brands go on foreverSome brands go on forever
Product rejuvenationProduct rejuvenation
Product can go through several life cyclesProduct can go through several life cycles Done by marketing, repositioning, productDone by marketing, repositioning, product
enhancementenhancement
The Product Life Cycle: AThe Product Life Cycle: AReference Chart on Managing itsReference Chart on Managing its
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g gg g
Constantly Changing PhasesConstantly Changing Phases
TIME
SALE
S
Develo
pmen
t Growth
Compe
titio
n
SaturationDeclin
e
Source: Dr. Chester R. Wasson 1971
e ro uc e yc e: e erencee ro uc e yc e: e erenceChart on Managing its ConstantlyChart on Managing its Constantly
Changing PhasesChanging Phases
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Changing PhasesC a g g ases
STRATEGYOBJECTIVE
Toaw
anad
No
The PLC MaturityThe PLC Maturity
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StageStage Most products are in maturity stage in matureMost products are in maturity stage in mature
marketsmarkets Must manage slower growth over longer timeMust manage slower growth over longer time Three phases of maturity:Three phases of maturity:
GrowthGrowth StableStable
DecayingDecaying
Alternate strategiesAlternate strategies Market modification -- convert new users, enter newMarket modification -- convert new users, enter new
segments, steal competitors customerssegments, steal competitors customers Product modification -- Quality/feature improvementProduct modification -- Quality/feature improvement
Marketing mix modification -- price, distribution,Marketing mix modification -- price, distribution,promotion, sales, servicepromotion, sales, service
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Chapter 11Chapter 11
Analyzing theAnalyzing the
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CompetitionCompetition Why study competition?Why study competition?
Have to growHave to grow
Mature markets-- mature productsMature markets-- mature products
Battle for share -- take from your competitorsBattle for share -- take from your competitors
Shape your product positionShape your product position Need to track latent competitors as well as directNeed to track latent competitors as well as direct
competitioncompetition Need to be able to strike a balance betweenNeed to be able to strike a balance between
competitor and customer orientationcompetitor and customer orientation Need to understand how to build an intelligenceNeed to understand how to build an intelligence
system to monitor competitive movementsystem to monitor competitive movement
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Competitor AnalysisCompetitor Analysis
Identifying
CompetitorsDetermining
Objectives
Identifying
StrategiesAssessing Strengths
& Weaknesses
Estimating
Reaction Patterns
Selecting Those
To Attack/Avoid
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Developing a CompetitiveDeveloping a Competitive
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AnalysisAnalysis
Identifying the competitorsIdentifying the competitors Competitors include:Competitors include:
Products that compete directlyProducts that compete directly
Products that meet the same needProducts that meet the same need Latent competition may be more dangerous than directLatent competition may be more dangerous than direct
Competition may be classified by industry or byCompetition may be classified by industry or by
productproduct
Industry competition -- all firms that offer a productIndustry competition -- all firms that offer a product
or products that are close substitutes for each otheror products that are close substitutes for each other
Developing aDeveloping a
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Competitive AnalysisCompetitive Analysis Identifying the competitorsIdentifying the competitors
Market concept of competition -- all firms that offer a product orMarket concept of competition -- all firms that offer a product orproducts that satisfy the same customer needproducts that satisfy the same customer need
Define by the customer servedDefine by the customer served Mapping -- product/market battlefieldMapping -- product/market battlefield
Battle for the mindBattle for the mind Determining competitors objectivesDetermining competitors objectives
ProfitProfit
Market shareMarket share
Service leadershipService leadership
Quality leadershipQuality leadership
Global leadershipGlobal leadership Technological leadershipTechnological leadership
Objectives determine how they set strategy and respond to attackObjectives determine how they set strategy and respond to attack
Developing a CompetitiveDeveloping a Competitive
AnalysisAnalysis
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AnalysisAnalysis
Identifying Competitors strategiesIdentifying Competitors strategies
Closest competitors -- chasing same targetClosest competitors -- chasing same target
consumer with same strategyconsumer with same strategy
PositioningPositioning PricePrice
Quality, etcQuality, etc..
Strategic mapping -- track changing customerStrategic mapping -- track changing customer
needs & wants, and how competition isneeds & wants, and how competition is
changing to meet themchanging to meet them Competition can reshape consumers wants --Competition can reshape consumers wants --
change the standardchange the standard
Developing aDeveloping a
Competitive AnalysisCompetitive Analysis
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Competitive AnalysisCompetitive Analysis
Assessing strengths & weaknessesAssessing strengths & weaknesses Benchmarking -- identify the top performers in theBenchmarking -- identify the top performers in the
category & measure against their strengthscategory & measure against their strengths
Mapping -- track -- build a matrixMapping -- track -- build a matrix
SalesSales Market shareMarket share Profit margins, ROI, new products, etcProfit margins, ROI, new products, etc
Sources of informationSources of information Secondary data, personal contact, observation, hearsaySecondary data, personal contact, observation, hearsay
Primary research -- tracking studiesPrimary research -- tracking studies Monitoring -- share of market, mind, heartMonitoring -- share of market, mind, heart
Share of mind & heart should lead to share of market andShare of mind & heart should lead to share of market andprofitabilityprofitability
Developing aDeveloping a
C titi A l iC titi A l i
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Competitive AnalysisCompetitive Analysis
BenchmarkingBenchmarking Determine functions to benchmarkDetermine functions to benchmark
Identify key performance variablesIdentify key performance variables
Measure performance in best-in-classMeasure performance in best-in-class
companiescompanies
Measure the companys performanceMeasure the companys performance
Specify actions and programs to close the gapSpecify actions and programs to close the gap
Implement and monitor resultsImplement and monitor results
Designing MarketingDesigning MarketingS i
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StrategiesStrategies
Strategy selection dependent on organizationsStrategy selection dependent on organizationsposition in the market:position in the market: Market leaderMarket leader
Market challengerMarket challenger
Market followerMarket follower
Market nicherMarket nicher
Each position has its challenges andEach position has its challenges andopportunities -- and available strategies:opportunities -- and available strategies:
Increase share in the market we are inIncrease share in the market we are in Be content where we are -- short termBe content where we are -- short term
Know we are sliding -- manage accordinglyKnow we are sliding -- manage accordingly
Try to expand total marketTry to expand total market
Market LeaderMarket LeaderS i
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StrategiesStrategies
Expand total marketExpand total market New usersNew users
New usesNew uses
More usageMore usage
Expanding market shareExpanding market share
Profitability related to marketProfitability related to marketshareshare
Market share -- cost vs. valueMarket share -- cost vs. value
Defending market shareDefending market share
Must constantly innovateMust constantly innovate
Determine which terrain toDetermine which terrain to
defenddefend
Key strategic alternativesKey strategic alternatives Position defensePosition defense
Preemptive defensePreemptive defense
CounteroffensiveCounteroffensive
MarketMarket
broadening/diversificationbroadening/diversification
Consolidation defenseConsolidation defense
Market ChallengerMarket Challenger
iS i
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StrategiesStrategies
Two alternativesTwo alternatives
Can attack theCan attack the
leader & othersleader & others
for sharefor share
Can play ball --Can play ball --
not rock the boatnot rock the boat
Market ChallengerMarket Challenger
S iSt t i
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StrategiesStrategies Attack strategiesAttack strategies
Price discountPrice discount
Cheaper goodsCheaper goods
Prestige goodsPrestige goods
Product proliferationProduct proliferation
Product innovationProduct innovation
Improved serviceImproved service
Distribution innovationDistribution innovation
Manufacturing efficienciesManufacturing efficiencies Intensive advertising &Intensive advertising &
promotionpromotion
Market FollowerMarket Follower
S iSt t i
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StrategiesStrategies
Requires specific strategy to be effectiveRequires specific strategy to be effective
Often, more profitable to followOften, more profitable to follow
"Followership" often not profitable if below"Followership" often not profitable if below
the number 2 or 3 sharethe number 2 or 3 share Strategies for followersStrategies for followers
Cloner -- follow closely the product and marketingCloner -- follow closely the product and marketing
mix of the leadermix of the leader
Imitator-- copies some things, maintains someImitator-- copies some things, maintains somedifferentiationdifferentiation
Adapter -- builds on leaderAdapter -- builds on leader
Market NicherMarket Nicher
S iSt t i
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StrategiesStrategies
Leader in a small industry/marketLeader in a small industry/market
Can be very profitableCan be very profitable Know their market wellKnow their market well
Meet needs betterMeet needs better
Usually sell at high margins -- high valueUsually sell at high margins -- high value
Market NicherMarket Nicher
St t iSt t i
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StrategiesStrategies The ideal nicheThe ideal niche
Sufficient sizeSufficient size
Growth potentialGrowth potential
Negligible interest to majorsNegligible interest to majors
Firm has required resources & skills to meet needs of theFirm has required resources & skills to meet needs of theniche marketniche market
Can defend against attack with goodwillCan defend against attack with goodwill
Key is specialization -- do better than any one elseKey is specialization -- do better than any one else
Multiple nicher vs. singleMultiple nicher vs. single Effective market entry strategyEffective market entry strategy
Specialist Roles ForSpecialist Roles ForMarket NichersMarket Nichers
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Market NichersMarket Nichers
End-use specialistEnd-use specialist
Vertical-level specialistVertical-level specialist
Customer-size specialistCustomer-size specialist
Specific-customer specialistSpecific-customer specialist
Geographic specialistGeographic specialist
Product or feature specialistProduct or feature specialist
Quality-price specialistQuality-price specialist
Service specialistService specialist
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Chapter 12Chapter 12
Wh t i P d t?Wh t i P d t?
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What is a Product?What is a Product?
Anything that can be offered for attention,Anything that can be offered for attention,
acquisition, use or consumption that might satisfy aacquisition, use or consumption that might satisfy a
need or want -- can be physical objects, services,need or want -- can be physical objects, services,
places, organizations, persons or ideas.places, organizations, persons or ideas.
Marketing focuses on the product benefit -- not theMarketing focuses on the product benefit -- not theattributeattribute
Marketing cannot make up for a bad product -- canMarketing cannot make up for a bad product -- can
sell it once! In fact, good marketing will hasten asell it once! In fact, good marketing will hasten a
bad products deathbad products death
P d t Cl ifi tiP d t Cl ifi ti
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Product ClassificationsProduct Classifications
Three classificationsThree classifications
Non-durable goodsNon-durable goo
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