Ch 13

1
Ch 13 Intro to Marketing

• Most people think marketing is simply advertising
• Maybe at some point in history it was
• Now it is a integral part of the Value Chain in
  creating products and services
• Lets look at how Marketing has changed over time

2
Production Era

• 1700s end of World War II
• Marketing was product-focused
• Produce as much as you can and it will sell
• Demand outpaced supply
• Henry Ford Customers can have any color they
  want, as long as its black.

3
Selling Era

• Post World War II - 1990s
• Mad Men Era (AMC show)
• Mass production caused capacity to exceed demand
• Needed advertising to create demand
• Tell and sell
• Convince customers to buy your product

4

• History of Marketing

5
Customer Relationship Era

• 1990s today
• Learn as much as possible about your customers
  and do everything you can to meet or exceed their
  expectations
• Building long-term relationships with customers
  by offering value and providing satisfaction

6
Customer Relationship Management

• Jet Blue Airways
• Known for customer service
• Watch video
• February 14, 2007
• New FAA Rules

7
Marketing Defined (in plain English)

• Process of getting right goods or services to the
  right people at the right place, time, and price
• Helping the buyer buy
• (Which helps the seller sell)

8
4 Ps of Marketing

• Product
• Price
• Promotion
• Place
• Also called the Marketing Mix

9
Marketing Process

• Find opportunities
• Conduct market research
• Identify target markets
• Product design
• Product testing
• Determine brand name

• Design packaging
• Set a price
• Select distribution system
• Design promotional campaign
• Build a relationship with customers

10
Market Research

• Define question/determine present situation
• Collect data
• Secondary info already compiled by others
• Primary new studies you conduct yourself
• Analyze research data
• turn data into useful info
• Choose best solution
• Implement and follow-up to see how it worked

11
Target Market

• Mass marketing
• Products to please a large number of customers
• Niche marketing
• Small but profitable market segments
• One-to-one marketing
• Unique product for each customer
• Relationship marketing
• Custom-made goods and services

12
Knowledge of Consumer Behavior

• Helps in identifying target market
• Steps in Buying Decision
• 1. Recognize want/need
• 2. Search for info/choices
• 3. Evaluate alternatives
• 4. Decide whether or not to buy
• 5. Post purchase still happy with decision?

13
Buying Decision Influenced by

• Sociocultural family, peers, social class,
  culture, subculture
• Psychological perception, attitudes, learning,
  motivation
• Situational type of purchase, social
  surroundings, physical surroundings, time of day,
  how you feel, previous experiences

14
Product Development Process

• Generate ideas
• Product screening (narrow down ideas)
• Product analysis (cost estimates, sales
  forecasts)
• Develop prototype
• Test consumer reaction
• Commercialization bring product to market
• Promote product to distributors and retailers

15
Product Life Cycle

• Introduction
• Growth
• Maturity
• Decline
• 70-80 all new products fail!

16
Example of Product Development

• 3M Greptile Golf Glove

17
3M Greptile Grip Golf Glove

• What is 3M known for?
• 20 Billion global diversified corporation
• Over 50,000 products
• Creativity
• Innovation
• Technology

18

• What was 3M trying to do when it came up with the
  idea for a golf glove?
• Make use of under-utilized in-house technologies
• Turn them into niche markets

19
Identifying Target Market Segments

• Geographic
• Demographic
• Psychographic
• Benefit (what customers get out of it)
• Volume (frequency of purchase)

20

• What/who were the target markets?
• Golfers who wanted a better grip with less
  pressure
• Hot and humid areas
• Physical ailments
• Older golfers
• Dual Income No Kids (DINKs)
• Single Adults

21

• What did 3M promote as the competitive advantage
  of its glove?
• Other gloves marketed based on comfort and fit
• 3M wanted to market this glove as being able to
  improve the users game

22

• What problems did it encounter in introducing the
  glove?
• Buyer resistance to thinking of 3M as a golf
  brand (not Titleist or Foot Joy)
• Packaging problems
• Visibility of text didnt pop
• Package pillowed wouldnt stay closed
• Consumer Testing Lab said it didnt have the
  needed language on the back of the package

23

• How did 3M promote the new glove?
• Public Relations Event
• Editors of newspapers and magazines invited to
  drive golf balls off pier in NYC
• Seinfeld episode

24
Review of Marketing Process

• Find opportunities v
• Conduct market research v
• Identify target market v
• Product design v
• Product testing v
• Pick brand name v

• Design packaging v
• Set a price
• Select distribution system
• Design promotional campaign
• Build a relationship with customers

25
Pricing Objectives

• Achieving target profit
• Building traffic (loss leaders)
• Achieving greater market share
• Create an image (status, exclusivity)
• Further social objectives (affordable to lower
  income levels)

26
Pricing Strategies

• Cost plus (cost-based)
• Determine production costs, add in profit
• Target costing
• Start with desired price, back out desired
  profit, result is target cost of production
• Competition-based
• At, above, or below competitors prices

27
Break-Even Analysis

• Total Costs Total Variable Costs Total Fixed
  Costs
• TVC VC/unit x units
• TFC lump sum over certain time period
• To find quantity to produce to break even
• Total Revenue Total Cost

28

• Total Revenue Price x Units
• Total Cost TVC TFC
• At Breakeven Point TR TC
• (PxQ) (VCxQ) TFC
• (PxQ) (VCxQ) TFC
• Q(P VC) TFC
• Q TFC/(P VC)

29
Example

• Price 5 per unit
• VC/unit 1
• TFC 100,000
• BEP 100,000/(5-1) 25,000 units
• Proof TR 5 x 25,000 units 125,000
• TC (1x 25,000 units)100,000125,000

30
Other Pricing Strategies

• Skimming
• Penetration
• Everyday low pricing
• High-low pricing
• Psychological
• Demand-oriented pricing

31
Review of Marketing Process

• Find opportunities v
• Conduct market research v
• Identify target market v
• Product design v
• Product testing v
• Pick brand name v

• Design packaging v
• Set a price v
• Select distribution system
• Design promotional campaign
• Build a relationship with customers

32
Distribution Place in 4Ps

• Moving goods from producers to businesses (B2B)
• Moving goods from businesses to consumers (B2C)
• Marketing intermediaries (middlemen) make this
  movement happen
• Channel of distribution manufacturers to
  wholesalers to retailers to consumers

33
Wholesalers

• Full service wholesalers perform all
  distribution functions (transport, sort, sell,
  advertise, etc.)
• Limited-function wholesalers
• Rack jobbers
• Cash-and-carry wholesalers
• Drop shippers

34
Types of Retailers - Stores

• Department store
• Discount store
• Supermarket
• Warehouse club

• Convenience store
• Category killer
• Outlet store
• Specialty store

35
Nonstore Retailing

• Internet
• Telemarketing
• Vending Machines, Kiosks, Carts
• Direct selling (sell at home - Tupperware)
• Multilevel marketing (recruit others to sell)
• Direct mail advertisements, catalogs

36
Links between Manufacturers, Wholesalers, and
Retailers

• Corporate distribution systems
• Contractual distribution systems
• Administered distribution systems
• Supply chain management firms like Li Fung

37
Logistics Physical flow of materials and
finished goods

• Inbound logistics
• Materials handling
• Outbound logistics
• Reverse logistics
• Third Party Logistics - UPS

38
Transportation

• Railroad
• Trucks
• Pipeline
• Ships
• Airplanes

39
Evaluate Transportation Options

• Cost
• Speed
• On-time dependability
• Flexibility handling products
• Frequency of shipments
• Reach

40
Review of Marketing Process

• Find opportunities v
• Conduct market research v
• Identify target market v
• Product design v
• Product testing v
• Pick brand name v

• Design packaging v
• Set a price v
• Select distribution system v
• Design promotional campaign
• Build a relationship with customers

41
Traditional Methods of Product Promotion

• TV, Radio, Print Advertising
• Personal Selling
• Public Relations
• Sales Promotions
• Product Placement

42
New Strategies

• How To Sell Soap
• Old model of advertising is about reaching
  individual consumers
• Future strategies should focus on getting
  consumers to spread the message themselves
• Social network sites mean people are more
  connected than ever
• Twitter

43
Airlines Use of Social Media

• Delta searches for complaints wants to resolve
  problems quickly rather than let them spread
  virally
• YouTube video United Breaks Guitars
• Complaining via internet sometimes gets better
  results because reservation agents arent
  empowered to solve problems out of the box

44
Social Media No Brainer for B2C but B2B?

• 24 B2B companies using Facebook
• 36 plan to try in coming year
• Looking to interact with workers who make buying
  decisions for their companies
• Give advice, share info to show off expertise
• Run special marketing contests on sites
• Use social media to find out whats being said
  about them

45
LinkedIn to Post Product Reviews

• Companies that allow products to be reviewed will
  be able to include note in their ads that product
  has been recommended on LinkedIn
• Advantage LinkedIn recommender is real person
  users can evaluate recommendation based on that
  persons real-world experience
• Companies would have to set up company profile
  pages and add products first

46
Target Marketing

• Targeted ads Google collects data about websites
  people visit and uses it to show them ads
  tracking people online to profit from their
  actions
• Contextual targeting selling ads based only on
  the name or content of a page
• Behavioral targeting identifies specific users
  and their interests

47
Lululemons Promotional Strategy

• High end womens athletic wear
• Does not use traditional strategy of hiring
  sports celebrities to model its outfits
• Spends almost nothing on advertising beyond
  occasional print ads in yoga and running
  magazines
• Recruits fitness instructors to wear Lululemon
  clothes and hold classes in Lululemon stores
• Objective promote good health (not make a
  profit)