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Company and Marketing Strategy
MARK 3336
Class # 4
9/4/14
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Topic Outline
New in Marketing Law of the Category OXO Video Marketing Strategy
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The 22 Immutable Laws of Marketing
2. The Law of the Category
If you can’t be first in a category, set up a new category you can be first in.
Lindbergh
Hinkler
Earhart
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Strategic planning is the process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities
Strategic Planning
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Companywide Strategic Planning
Steps in Strategic Planning
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Companywide Strategic Planning
The mission statement is the organization’s purpose, what it wants to accomplish in the larger environment
Market-oriented mission statement defines the business in terms of satisfying basic customer needs
Defining a Market-Oriented Mission
We help you organize the world’s information and make it
universally accessible and useful.
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Business objectives
• Build profitable customer relationships
• Invest in research
• Improve profits
• Increase market share
• Create local partnerships
• Increase promotion
Marketing objectives
Setting Company Objectives and Goals
Companywide Strategic Planning
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Planning Tools
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Planning Tools
Porter BCG GE Ansoff
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Porter: Structural Analysis of Industries
RIVALRY AMONGCOMPETITORS
THREAT OFSUBSTITUTES
THREAT OFSUBSTITUTES
THREAT OFNEW ENTRANTS
THREAT OFNEW ENTRANTS
BARGAININGPOWER OF
BUYERS
BARGAININGPOWER OF
BUYERS
BARGAININGPOWER OFSUPPLIERS
BARGAININGPOWER OFSUPPLIERS
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The Boston Consulting Group Matrix
The Boston Consulting Group (BCG) Matrix
The BCG business portfolio analysis analyzes a firm’s business units (SBUs) or products/brands as though they were a collection of separate investments.
The technique locates SBUs on a market growth-relative market share matrix. Then the SBUs are classified as either “question marks,” “stars,”“cash cows,” or “dogs.”
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12
Boston Consulting Group Matrix
Enhances multidivisional firms’ efforts to formulate strategies
Autonomous divisions (or profit centers) constitute the business portfolio
Firm’s divisions may compete in different industries requiring separate strategy
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Boston Consulting Group Matrix
Graphically portrays differences among divisions
Focuses on market share position and industry growth rate
Manage business portfolio through relative market share position and industry growth rate
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Relative market share position defined:
• Ratio of a division’s own market share in a particular industry to the market share held by the largest rival firm in that industry.
Boston Consulting Group Matrix
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Boston Consulting Group Matrix
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HIGH LOWRelative Market Share
MarketGrowth
HIGH
LOW
STARS * Market Leaders * Fast Growing * Require Investment to GrowSTRATEGY * Protect Share * Reinvest earnings through price cuts, Product Improvement, More Efficiency * Obtain Large Share of New Users
CASH COWS * Profitable Products * Generate More Cash Than Needed For Share Maintenance * Slow Sales GrowthSTRATEGY * Maintain Market Dominance * Invest in Process Technology Improvement and Price Leadership, R&D in Other Product Markets
QUESTION MARKS * Rapid Growth * Poor Profit Margins * Enormous Demand for CashSTRATEGY * Invest to Aggressively build share * Buy existing shares by acquiring
DOGS * Majority of Products fall in this category * Cost disadvantage - few growth opportunities at Reasonable Cost * Markets not GrowingSTRATEGY * Harvest: Cut back all support to maintenance * Divest (sell); Abandon (Delete from line)
Boston Consulting Group Matrix
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The G.E. Multifactor Portfolio Model
Business Position
High
Medium Low
Hig
hM
ediu
mL
owM
arke
t Attr
activ
enes
s
Market Attractiveness * Market Size * Growth Rate * Cyclicality, Seasonality * Competitive Intensity * Rate of Technological Change * Barriers to Entry * Economies of Scale * Regulatory EnvironmentBusiness Position * Market Share * Product Quality * Price Competitiveness * Brand Image * Production Strength * Financial Resources * Technological Skills * Sales Effectiveness * Distribution Capability
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General Electric’s stoplight strategy chartM
arke
t att
ract
iven
ess
Business positionStrong Medium Weak
High
Medium
Low
Green band = “Go” signal = Build Yellow band = “Caution” signal = Hold
High ov
erall
attrac
tiven
ess
overa
ll
Low ov
erall
attrac
tiven
ess
Med
ium
attrac
tiven
ess
Red band =“Stop” signal = Divest
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Prescriptive Strategies for Businesses in Different Cells
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Companywide Strategic Planning
Product/Market Expansion Grid
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Managing the Marketing Effort
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Managing the Marketing Effort
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Managing the Marketing Effort
Executive summary
Marketing situation
Threats and opportunities
Objective and issues
Marketing strategy
Action programs
Budgets
Market Planning—Parts of a Marketing Plan
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Managing the Marketing Effort
Marketing Implementation
Implementing Turns marketing plans into marketing
actions to accomplish strategic marketing objectives
Addresses who, where, when, how
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Copyright ©2014 by Pearson Education, Inc. All rights reserved
Managing the Marketing Effort
Functional organization
Geographic organization
Product management organization
Market or customer management
Marketing Department Organization
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Copyright ©2014 by Pearson Education, Inc. All rights reserved
Managing the Marketing Effort
Controlling evaluating of results taking of corrective action to achieve objectives Operating control Strategic control
Marketing Control
Copyright ©2014 by Pearson Education, Inc. All rights reserved
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Copyright ©2014 by Pearson Education, Inc. All rights reserved
Measuring and Managing Return on Marketing Investment
Return on Marketing Investment (Marketing ROI)
Return on marketing investment is net return from a marketing
investment divided by the costs of the marketing investment.
provides a measurement of the profits generated by investments in marketing activities.
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MEASURING MARKETING PERFORMANCE
What gets measured
gets managed!
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Analyzing Marketing Environment
MARK 3336
Class # 5
9/9/14
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Topic Outline
New in Marketing Law of Unpredictability Ecoist Video Analyzing the Marketing Environment
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The 22 Immutable Laws of Marketing
17. The Law of Unpredictability
Unless you write your competitors’ plans, you can’t predict the future.
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Microenvironment Macroenvironemnt
– Demographic Environment– Economic Environment– Natural Environment– Technological Environment– Political and Social Environment– Cultural Environment– Responding to the Marketing
Environment
Analyzing the Marketing Environment
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The marketing environment includes the actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with customers
The Marketing Environment
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Microenvironment consists of the actors close to the company that affect its ability to serve its customers, the company, suppliers, marketing intermediaries, customer markets, competitors, and publics
Macroenvironment consists of the larger societal forces that affect the microenvironment—demographic, economic, natural, technological, political and cultural forces
The Marketing Environment
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The Company’s Microenvironment
Entities in the Microenvironment
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The Company’s Microenvironment
The Company
Top management Finance R&D Purchasing Operations Accounting
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The Company’s Microenvironment
Suppliers
Provide the resources to produce goods and services
Treat as partners to provide customer value
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The Company’s Microenvironment
Marketing Intermediaries
Help the company to promote, sell and distribute its products to final buyers
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The Company’s Microenvironment
Types of Marketing Intermediaries
ResellersPhysical
distribution firms
Marketing services agencies
Financial intermediaries
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The Company’s Microenvironment
Competitors
Firms must gain strategic advantage by positioning their offerings against competitors’ offerings
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The Company’s Microenvironment
Publics Any group that has an actual or
potential interest in or impact on an organization’s ability to achieve its objectives
– Financial publics– Media publics– Government publics– Citizen-action publics– Local publics– General public– Internal publics
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The Company’s Microenvironment
Customers
Consumer markets Business markets Reseller markets Government markets International markets
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The Company’s Macroenvironment
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The Company’s Macroenvironment
Demographic Environment
Demography: the study of human populations-- size, density, location, age, gender, race, occupation, and other statistics
Demographic environment: involves people, and people make up markets
Demographic trends: shifts in age, family structure, geographic population, educational characteristics, and population diversity
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The Company’s Macroenvironment
Changing American Family
More people are: Divorcing or separating Choosing not to marry Choosing to marry later Marrying without intending to have children Increasing number of working women Increasing number of stay-at-home dads
Demographic Environment
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The Company’s Macroenvironment
Demographic EnvironmentGeographic Shifts in Population
Growth in U.S. West and South and decline in Midwest and Northeast
Change in where people work– Telecommuting– Home office
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The Company’s Macroenvironment
Demographic Environment
Changes in the Workforce– More educated– More white collar
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The Company’s Macroenvironment
Economic Environment
Economic environment consists of factors that affect consumer purchasing power and spending patterns
Industrial economies are richer markets Subsistence economies consume most
of their own agriculture and industrial output
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The Company’s Macroenvironment
Natural Environment
Natural environment: natural resources that are needed as inputs by marketers or that are affected by marketing activities
Trends– Increased shortages of raw materials– Increased pollution– Increased government intervention– Increased environmentally sustainable strategies
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The Company’s Macroenvironment
Technological Environment
Most dramatic force in changing the marketplace
New products, opportunities
Concern for the safety of new products
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The Company’s Macroenvironment
Political and Social Environment
Legislation regulating business– Increased legislation– Changing government
agency enforcement
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The Company’s Macroenvironment
Political and Social Environment
Increased emphasis on ethics– Socially responsible
behavior– Cause-related
marketing
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The Company’s Macroenvironment
Cultural Environment
Cultural environment consists of institutions and other forces that affect a society’s basic values, perceptions, and behaviors
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Managing Marketing Information to Gain Customer Insights
MARK 3336
Class # 6
9/11/14
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Topic Outline
New in Marketing Law of the Division Dominos Video Marketing Strategy
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The 22 Immutable Laws of Marketing
10. The Law of the Division
Over time, a product category will divide and become 2 or more categories.
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Marketing Information and Customer Insights
Customer Insights are:
Fresh and deep insights into customers needs and wants
Difficult to obtain– Not obvious– Customers are unsure of their behavior
Better information and more effective use of existing information
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Marketing Information and Customer Insights
Customer Insights
Companies are forming customer insights teams– Include all company functional
areas– Collect information from a
wide variety of sources– Use insights to create more
value for their customers
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Marketing Information and Customer Insights
Marketing Information Systems (MIS)
Marketing information system (MIS) consists of people and procedures for:
– Assessing the information needs– Developing needed information– Helping decision makers use the information for
customer
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Marketing Information and Customer Insights
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Assessing Marketing Information Needs
MIS provides information to the company’s marketing and other managers and external partners such as suppliers, resellers, and marketing service agencies
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Assessing Marketing Information Needs
Characteristics of a Good MIS
Balancing what the information users would like to have against what they need and what is feasible to offer
User’s Needs
MIS Offerings
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Developing Marketing Information
Marketers obtain information from
Internal data
Marketing intelligence
Marketing research
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Developing Marketing Information
Internal Data
Internal databases are electronic collections of consumer and market information obtained from data sources within the company network
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Developing Marketing Information
Competitive Marketing Intelligence
Is the systematic collection and analysis
of publicly available information
about consumers, competitors
and developments in the marketplace
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Developing Marketing Information
Marketing Research
Marketing research is the systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization
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Developing Marketing Information
Steps in the Marketing Research Process
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Developing Marketing Information
Marketing ResearchDefining the Problem and Research Objectives
Exploratory research
Descriptive research
Causal research
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Developing Marketing Information
Marketing ResearchDeveloping the Research Plan
Outlines sources of existing data
Spells out the specific research approaches, contact methods, sampling plans, and instruments to gather data
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Developing Marketing Information
Marketing ResearchDeveloping the Research Plan
Management problem
Research objectives
Information needed
Budget
How the results will help management decisions
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Managing Marketing Information to Gain Customer Insights
(continued)
MARK 3336
Class #7
9/16/14
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Topic Outline
New in Marketing Dominos Video Marketing Information and Customer Insights
(continued)
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The 22 Immutable Laws of Marketing
10. The Law of the Division
Over time, a product category will divide and become 2 or more categories.
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Developing Marketing Information
Secondary data consists of information that already exists somewhere, having been collected for another purpose
Primary data consists of information gathered for the special research plan
Marketing ResearchDeveloping the Research Plan
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Advantages
Cost
Speed
Could not get data otherwise
Disadvantages
Current
Relevant
Accuracy
Impartial
Developing Marketing InformationSecondary Data
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Planning Primary Data Collection
Research approaches
Contact methods
Sampling plan
Research instruments
Marketing Research
Developing Marketing Information
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Developing Marketing Information
Observational research involves gathering primary data by observing relevant people, actions, and situations
Ethnographic research involves sending trained observers to watch and interact with consumers in their natural environment
Market ResearchResearch Approaches
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Developing Marketing Information
Market ResearchResearch Approaches
Survey research is the most widely used method and is best for descriptive information—knowledge, attitudes, preferences, and buying behavior
Flexible People can be unable or unwilling to answer Gives misleading or pleasing answers Privacy concerns
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Developing Marketing Information
Market ResearchResearch Approaches
Experimental research is best for gathering causal information—cause-and-effect relationships
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Developing Marketing Information
Market ResearchContact Approaches
Focus Groups– Six to 10 people– Trained moderator– Challenges
Expensive Difficult to generalize from small
group Consumers not always open
and honest
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Developing Marketing Information
Market ResearchOnline Contact Approaches
Internet surveys
Online panels
Online experiments
Online focus
groups
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Developing Marketing Information
Market ResearchOnline Contact Approaches
Advantages
• Low cost• Speed• Higher response rates• Good for hard to reach
groups
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Marketing Introduction
MARK 3336
Class # 3
9/2/14
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Topic Outline
New in Marketing Law of the Mind Finish 4P’s Discussion Zappos Video What Is Marketing – Pulling it all Together.
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The 22 Immutable Laws of Marketing
3. The Law of the Mind
It’s better to be first in the mind than to be first in the marketplace.
Mits Altair 3800Introduced in 1974
Apple Introduced in 1976
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What Is Marketing? Pulling It All Together
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Consumer Markets and Consumer Buyer Behavior
MARK 3336
Class #8
9/18/14
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Topic Outline
New in Marketing Law of Perception Goodwill Video Consumer Markets and Consumer Behavior
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The 22 Immutable Laws of Marketing
4. The Law of the Perception
Marketing is not a battle of products, it’s a battle of perceptions.
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Consumer buyer behavior : the buying behavior of final consumers, individuals and households, who buy goods and services for personal consumption
Consumer market : all of the personal consumption of final consumers
Model of Consumer Behavior
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Model of Consumer Behavior
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Characteristics Affecting Consumer Behavior
Factors Influencing Consumer Behavior
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Culture is the learned values, perceptions, wants, and behavior from family and other important institutions and is the most basic cause of a person’s wants and behavior
Characteristics Affecting Consumer Behavior
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Characteristics Affecting Consumer Behavior
Subcultures are groups of people within a culture with shared value systems based on common life experiences and situations
Hispanic American African American Asian American Cross-Cultural
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Social classes are society’s relatively permanent and ordered divisions whose members share similar values, interests, and behaviors
Measured by a combination of occupation, income, education, wealth, and other variables
Characteristics Affecting Consumer Behavior
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Major American Social Classes
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Characteristics Affecting Consumer Behavior
Membership Groups
• Groups with direct influence and to which a person belongs
Aspirational Groups
• Groups an individual wishes to belong to
Reference Groups
• Groups that form a comparison or reference in forming attitudes or behavior
Groups and Social Networks
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Characteristics Affecting Consumer Behavior
Word-of-mouth influence and buzz marketing– Opinion leaders are people
within a reference group who exert social influence on others
– Also called influentials or leading adopters
– Marketers identify them to use as brand ambassadors
Groups and Social Networks
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Characteristics Affecting Consumer Behavior
Family is the most important consumer-buying organization in society
Social roles and status are the groups, family, clubs, and organizations that a person belongs to that can define role and social status
Social Factors
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Characteristics Affecting Consumer Behavior
Age and life-cycle stage
Occupation affects the goods and services bought by consumers
Economic situation includes trends in:
Personal Factors
Personal income Savings Interest
rates
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Characteristics Affecting Consumer Behavior
Lifestyle is a person’s pattern of living as expressed in his or her psychographics
Measures a consumer’s AIOs (activities, interests, opinions) to capture information about a person’s pattern of acting and interacting in the environment
Personal Factors
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Characteristics Affecting Consumer Behavior
Personality: the unique psychological characteristics that lead to consistent and lasting responses to the consumer’s environment
Personal Factors
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Characteristics Affecting Consumer Behavior
Psychological Factors
Motivation
Perception
Learning
Beliefs and attitudes
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Characteristics Affecting Consumer Behavior
A motive is a need that is sufficiently pressing to direct the person to seek satisfaction
Motivation research refers to qualitative research designed to probe consumers’ hidden, subconscious motivations
Psychological FactorsMotivation
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Characteristics Affecting Consumer Behavior
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Characteristics Affecting Consumer Behavior
Perception is the process by which people select, organize, and interpret information to form a meaningful picture of the world from three perceptual processes– Selective attention– Selective distortion– Selective retention
Psychological Factors
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Characteristics Affecting Consumer Behavior
Selective attention is the tendency for people to screen out most of the information to which they are exposed
Selective distortion is the tendency for people to interpret information in a way that will support what they already believe
Selective retention is the tendency to remember good points made about a brand they favor and forget good points about competing brands
Psychological Factors
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Types of Buying Decision Behavior
Complex buying behavior
Dissonance-reducing buying behavior
Habitual buying behavior
Variety-seeking buying behavior
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Types of Buying Decision Behavior
Four Types of Buying Behavior
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The Buyer Decision Process
Buyer Decision Making Process consists of 5 stages:
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The Buyer Decision Process for New Products
Innovators Early Adopters Early Mainstream Late Mainstream Lagging Adopters
Differences in Innovativeness Adopter Categories
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Business Markets and Business Buying Behavior
MARK 3336
Class #9
9/23/14
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Topic Outline
New in Marketing Law of Success Eaton Video Business Markets and Business Buyer Behavior
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The 22 Immutable Laws of Marketing
18. The Law of Success
Success often leads to arrogance, and arrogance to failure.
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Business Markets
Business buyer behavior refers to the buying behavior
of the organizations that buy goods and services for
use in production of other products and services that
are sold, rented, or supplied to others.
Business buying process is the process where
business buyers determine which products and
services are needed to purchase, and then find,
evaluate, and choose among alternative brands
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Business Markets Decision Process
More complex More decision
participants More professional
purchasing effort Buyer and seller more
dependent
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Business Markets Decision Process
Supplier development is the systematic development of networks of supplier-partners to ensure an appropriate and dependable supply of products and materials that companies will use in making their own products or reselling to others
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Business Buyer Behavior
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Business Buyer Behavior
Straight rebuy is a routine purchase decision such as reorder without any modification
Modified rebuy is a purchase decision that requires some research where the buyer wants to modify the product specification, price, terms, or suppliers
New task is a purchase decision that requires thorough research such as a new product
Major Types of Buying Situations
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Business Buyer Behavior
Buying center is all of the individuals and units that participate in the business decision-making process:
Users Influencers Deciders Purchasers Gatekeepers
Participants in the Business Buying Process
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Business Buyer Behavior
Users are those that will use the product or service
Influencers help define specifications and provide information for evaluating alternatives
Buyers have formal authority to select the supplier and arrange terms of purchase
Deciders have formal or informal power to select and approve final suppliers
Gatekeepers control the flow of information
Participants in the Business Buying Process
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Business Buyer Behavior
Buying center provides a major challenge
Who participates in the process– Their relative authority– What evaluation criteria each
participant uses– Informal participants
Participants in the Business Buying Process
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Business Buyer BehaviorThe Model of Business Buyer Behavior
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Business Buyer Behavior
The Buying Process
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Business Buyer Behavior
Problem recognition occurs when someone in the company recognizes a problem or need
Internal stimuli– Need for new product or production equipment
External stimuli– Idea from a trade show or advertising
The Buying Process
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Business Buyer Behavior
General need description describes the characteristics and quantity of the needed item
Product specification describes the technical criteria
Value analysis is an approach to cost reduction where components are studied to determine if they can be redesigned, standardized, or made with less costly methods of production
The Buying Process
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Business Buyer Behavior
Supplier search involves compiling a list of qualified suppliers
Proposal solicitation is the process of requesting proposals from qualified suppliers
The Buying Process
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Business Buyer Behavior
Supplier selection is the process when the buying center creates a list of desired supplier attributes and negotiates with preferred suppliers for favorable terms and conditions
Order-routine specifications is the final order with the chosen supplier and lists all of the specifications and terms of the purchase
The Buying Process
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Business Buyer Behavior
Performance review involves a critique of supplier performance to the purchase terms
The Buying Process
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Business Buyer Behavior
Online purchasing Company-buying
sites Extranets
E-Procurement
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Business Buyer Behavior
Advantages– Access to new suppliers– Lowers costs– Speeds order processing and delivery– Shares information– Sales– Service and support
Disadvantages– Can erode relationships as buyers search for new
suppliers– Security
E-Procurement
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Institutional and Government Markets
Institutional markets consist of schools, hospitals, nursing homes, and prisons that provide goods and services to people in their care
Characteristics– Low budgets– “Captive” audience
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Institutional and Government Markets
Government markets tend to favor domestic suppliers, require suppliers to submit bids,
and normally award to the lowest bidder Affected by environmental factors Non-economic factors considered
– Minority suppliers– Depressed suppliers– Small businesses
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Customer-Driven Marketing Strategy: Creating Value for Target Customers
Copyright ©2014 by Pearson Education, Inc. All rights reserved
MARK 3336
Class #10
9/25/14
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Topic Outline
New in Marketing Law of Focus Boston Harbor Cruises Video Segmentation
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The 22 Immutable Laws of Marketing
5. The Law of Focus
The most powerful concept in marketing is owning a word in the prospect’s mind.
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Customer-Driven Marketing Strategy:Creating Value for Target Customers
Topic Outline Segmentation Targeting Positioning
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Market Segmentation
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Market Segmentation
Market segmentation requires dividing a market into smaller segments with distinct needs, characteristics, or behavior that might require separate marketing strategies or mixes.
Copyright ©2014 by Pearson Education, Inc. All rights reserved
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Market Segmentation
Segmenting consumer markets Segmenting business markets Segmenting international markets Requirements for effective segmentation
Copyright ©2014 by Pearson Education, Inc. All rights reserved
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Market Segmentation
Segmenting Consumer Markets
Geographic segmentation
Demographic segmentation
Psychographic segmentation
Behavioral segmentation
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Market Segmentation
Geographic segmentation divides the market into different geographical units such as nations, regions, states, counties, or cities
Segmenting Consumer Markets
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Geographic Segmentation
Good Starting Point for Segmentation Because…– Data is Relatively Easy to Obtain– Less Expensive– Quick Snapshot of a Market– Populations Can Be Sampled & Accurately
Projected
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Market Segmentation
Demographic segmentation divides the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality
Segmenting Consumer Markets
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Demographic/Socioeconomic Segmentation
Demographics– Human populations and their vital statistics
Socioeconomics– Economics and social-class variables
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4 Major Demographic Segmentation Approaches– Market Size Factors– Age & Stage– Men & Women– Race, Nationality, & Religion
3 Major Socioeconomic Segmentation Approaches– Monetary Factors– Homeownership Factors– Social Class & Geodemographic Clustering
Demographic/Socioeconomic Segmentation
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Sources of Demographic/Socioeconomic Data– Low-cost Library Sources
US Statistical Abstract State & Metropolitan Area Handbooks County & City Databooks Statistical Reference Index, Statistical Handbook Series CACI’s Sourcebooks Donnelley’s Market Profile Analysis
Demographic/Socioeconomic Segmentation
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Sources of Demographic/Socioeconomic Data– Other Low-Cost Sources
Census Bureau (www.census.gov)– AMERICAN FACTFINDER
State and Local Agencies– HOUSTON-GALVESTON AREA COUNCIL
Universities– UT POPULATION CENTER, TEXAS A&M TEXAS STATE
DATA CENTER Other Sources
Demographic/Socioeconomic Segmentation
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Market Segmentation
Psychographic segmentation
divides buyers into different groups based on social class, lifestyle, or personality traits
Segmenting Consumer Markets
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Psychographic Segmentation
3 Main Types of Psychographic Segmentation– Lifestyle Segmentation– Social/Value Segmentation– Personality Segmentation
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Psychographic Segmentation
Advantages of Psychographics– Target Market Identification– Understanding Consumer Behavior– Strategic Marketing
Product, Price, Place, Promotion– Minimizing Risk
Limitations of Psychographics– Data Collection & Analysis– Cost Factors
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Market Segmentation
Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product
Occasions Benefits sought User status Usage rate Loyalty status
Segmenting Consumer Markets
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Behavioral Segmentation
Importance of Product Usage2 Components of Product Usage
– Usage Frequency– Usage Variety
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Behavioral Segmentation
Advantages of Behavioral Segmentation– Useful Dimension for Understanding Consumer or
Industrial Markets– Can Increase Consumption among Heavy Users
in Moderately Competitive Markets– Increase Consumption among Light and Medium
Users in Highly Competitive Markets– Possible to Attract Non-Users or Neglected
Segments
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Behavioral Segmentation
Limitations of Behavioral Segmentation– Product Usage Segments are Often Difficult to
Explain through Traditional Demographics– Problems with Targeting Heavy Users
Competition for this segment can be great All heavy users are not purchasers for same reasons Often are not brand loyal
– Definitional Problems
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Market Segmentation
Multiple segmentation is used to identify smaller, better-defined target groups
PRIZM NE classifies every American household into 66 unique segments organized into 14 different social groups.
Using Multiple Segmentation Bases
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Market Segmentation
Consumer and business marketers use many of the same variables to segment their markets
Additional variables include: Customer operating characteristics Purchasing approaches Situational factors Personal characteristics
Segmenting Business Markets
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Market Segmentation
Segmenting International Markets
Geographic location
Economic factors
Political-legal factors
Cultural factors
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Market Segmentation
Intermarket segmentation divides consumers into groups with similar needs and buying behaviors even though they are located in different countries
Segmenting International Markets
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Market Segmentation
To be useful, market segments must be:Requirements for Effective Segmentation
Measurable Accessible
Substantial Differentiable
Actionable
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Market Targeting
Segment size and growth Segment structural attractiveness Company objectives and resources
Evaluating Market Segments
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Market Targeting
Target market consists of a set of buyers who share common needs or characteristics that the company decides to serve
Selecting Target Market Segments
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Market Targeting
Undifferentiated marketing targets the whole market with one offer• Mass marketing• Focuses on common needs rather
than what’s different
Target Marketing Strategies
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Market Targeting
Differentiated marketing targets several different market segments and designs separate offers for each
Goal is to achieve higher sales and stronger position
More expensive than undifferentiated marketing
Target Marketing Strategies
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Market Targeting
Concentrated marketing
targets a small share of a
large market Limited company
resources Knowledge of the market More effective and
efficient
Target Marketing Strategies
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Market Targeting
Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations
Local marketing Individual marketing
Target Market Strategies
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Market Targeting
Local marketing involves tailoring brands and promotion to the needs and wants of local customer groups
Cities Neighborhoods Stores
Target Market Strategies
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Market Targeting
Individual marketing involves tailoring products and marketing programs to the needs and preferences of individual customers
Also known as:– One-to-one marketing– Mass customization
Target Market Strategies
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Market Targeting
Depends on: Company resources Product variability Product life-cycle stage Market variability Competitor’s marketing strategies
Choosing a Target Market
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Differentiation and Positioning
Product position is the way the product is defined by consumers on important attributes—the place the product occupies in consumers’ minds relative to competing products
Perceptions Impressions Feelings
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Differentiation and Positioning
Identifying a set of possible competitive advantages to build a position
Choosing the right competitive advantages Selecting an overall positioning strategy Communicating and delivering the chosen
position to the market
Choosing a Differentiation and Positioning Strategy
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Differentiation and Positioning
Competitive advantage is an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices
Identifying Possible Value Differences and Competitive Advantages
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Differentiation and Positioning
Identifying a set of possible competitive advantages to build a position by providing superior value from:
Choosing the Right Competitive Advantage
Product differentiation
Service differentiation
Channel differentiation
People differentiation
Image differentiation
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Differentiation and Positioning
Choosing the Right Competitive Advantage
Difference to promote should be:
Important Distinctive Superior
Communicable Preemptive Affordable
Profitable
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Differentiation and Positioning
To (target segment and need) our (brand) is (concept) that (point of difference)
Example, for Evernote: “To busy multitaskers who need help remembering things, Evernote is a digital content management application that makes it easy to capture and remember moments and ideas from your everyday life using your computer, phone, table, and the Web.”
Developing a Positioning Statement
Don’t use this! The authors are close to right, but a better templateappears on the following page.
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Product Positioning
Creating a Positioning Statement:
For (target), (product, brand, service, company) is the (competitive qualifier) that (single or short list of truly distinctive benefits).
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Product Positioning
Creating a Positioning Statement:
For competitive skiers who love to run moguls, the new XYZ variable stiffness ski is the first and only model of competitive ski that can be switched from flexible for control on mogul terrain, to stiff for speed on flat terrain, at the push of a button.
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Communication and Delivering the Chosen Position
Choosing the positioning is often easier than implementing the position.
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Segmentation and PositioningHow does a business select a Target and
Positioning/Value Proposition?
MARK 3336
Class #11
9/30/14
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Positioning
Need Segment X
Represents 5% of total Market
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Positioning Simulation
Perceptor Model: Urban Where you position your product vis-à-vis the
competition and the consumer’s ideal want has an impact on your market share and profitability.
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Positioning Simulation
New Product (Chardonnay) Exercise
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Positioning Simulation
Here is what you know about the category: Divides into 3 consumer segments, each
representing the following % of market demand:– Segment 1 = 20%– Segment 2 = 30%– Segment 3 = 50%
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Positioning Simulation
There are currently 3 brands of Chardonnay in the market: Highway 1, Oak Barrel, and Winter Creek. Research has shown that two product attributes determine most brand preference in this category: price and strength of flavor and aroma.
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Positioning Simulation
Your marketing research department informs you that the average price for a bottle of chardonnay is $7.75. They also tell you that the average price for the competitors is:– Highway 1 $3.50– Oak Barrel $8.00– Winter Creek $12.00
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Positioning Simulation
Last year the marketing research department did a survey where they obtained some important information. First, for each of the 3 consumer segments, they were able to identify an ideal preferred price, meaning a price the typical consumer in that segment would want to pay for a bottle of chardonnay. The results were as follows:– Segment 1 ideal price $11.00– Segment 2 ideal price $4.00– Segment 3 ideal price $9.00
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Positioning Simulation
Another important piece of information the marketing research department was able to identify in this survey was that consumers’ rating of the 3 competitors on the attribute of flavor and aroma strength was as follows (a rating of 1.0 =‘s very light, 10.0 =‘s very intense):– Highway 1 3.0– Oak Barrel 8.5– Winter Creek 3.0
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Positioning Simulation
The last piece of information relates to the 3 segment’s ideal desired flavor/aroma intensity level for chardonnay (a rating of 1.0 =‘s very light, 10.0 =‘s very intense):– Segment 1 2.5– Segment 2 4.0– Segment 3 7.0
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Positioning Simulation
What price and flavor/aroma strength positioning would you adopt for your new chardonnay?
Fill in your recommendation on the input form and complete your 2 dimension positioning map.
Support/explain your decision.
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Chardonnay Exercise
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Chardonnay Exercise
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Chardonnay Exercise
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Product, Services, and Brands: Building Customer Value
MARK 3336
Class #13
10/7/14
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The 22 Immutable Laws of Marketing
The Law of Line Extension– The is an irresistible urge to expand the equity of
the brand
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Topic Outline
New in Marketing Law of Line Extension Boston Video Product, Services, and Branding Strategy
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Product, Services, and Branding Strategy
Product, Services, and Experiences Product and Services Decisions Services Marketing Branding Strategy: Building Strong Brands
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What Is a Product?
Consumer products are products and services for personal consumption
Classified by how consumers buy them– Convenience products– Shopping products– Specialty products– Unsought products
Product and Service Classifications
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What Is a Product?
Convenience products
consumer products and services that the customer usually buys frequently, immediately, and with a minimum comparison and buying effort– Newspapers– Candy– Fast food
Product and Service Classifications
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What Is a Product?
Shopping products
consumer products and services that the customer compares carefully on suitability, quality, price, and style– Furniture– Cars– Appliances
Product and Service Classifications
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What Is a Product?
Specialty products
consumer products and services with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort
Medical services Designer clothes High-end electronics
Product and Service Classifications
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What Is a Product?
Unsought products
consumer products that the consumer does not know about or knows about but does not normally think of buying
Life insurance Funeral services Blood donations
Product and Service Classifications
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What Is a Product?
Industrial products
products purchased for further processing or for use in conducting a business
Classified by the purpose for which the product is purchased
– Materials and parts– Capital items– Supplies and services
Product and Service Classifications
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What Is a Product?
Materials and parts include raw materials and manufactured materials and parts usually sold directly to industrial users
Capital items are industrial products that aid in the buyer’s production or operations
Supplies and services include operating supplies, repair and maintenance items, and business services
Product and Service Classifications
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What Is a Product?
Organization marketing
Person marketing
Place marketing
Social marketing
Organizations, Persons, Places, and Ideas
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Product and Service Decisions
Brand is the name, term, sign, or design—or a combination of these—that identifies the maker or seller of a product or service
Individual Product and Service Decisions
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Product and Service Decisions
Packaging involves designing and producing the container or wrapper for a product
Labels identify the product or brand, describe attributes, and provide promotion
Individual Product and Service Decisions
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Product and Service Decisions
Product support services augment actual products
Individual Product and Service Decisions
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Product and Service Decisions
Product line is a group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges
Product Line Decisions
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Product and Service Decisions
Product line length is the number of items in the product line
Line stretching Line filling
Product Line Decisions
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Product and Service Decisions
Product mix consists of all the products and items that a particular seller offers for sale
Width Length Depth Consistency
Product Mix Decisions
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Services Marketing
Government Private not-for-profit organizations Business services
Types of Service Industries
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Brand Strategy and Brand Equity
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Brand Strategy and Brand Equity
Brand Equitycan explain
the difference
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Branding Strategy: Building Strong Brands
Brand equity
The differential effect that knowing the
brand name has on customer response to
the product or its marketing.
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Branding Strategy: Building Strong Brands
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Branding Strategy: Building Strong Brands
Brand strategy decisions include: Product attributes Product benefits Product beliefs and values
Brand Positioning
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Branding Strategy: Building Strong Brands
Desirable qualities
1. Suggest benefits and qualities
2. Easy to pronounce, recognize, and remember
3. Distinctive
4. Extendable
5. Translatable for the global economy
6. Capable of registration and legal protection
Brand Name Selection
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Branding Strategy: Building Strong Brands
Manufacturer’s brand
Private brand
Licensed brand
Co-brand
Brand Sponsorship
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Branding Strategy: Building Strong Brands
Brand Development Strategies
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Interbrand Best Global Brands
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Company 1996 2013
Marlboro $44,614 **
Coco-Cola $43,427 $79,213
McDonald's $18,920 $41,992
IBM $18,491 $78,808
Disney $15,358 $28,147
Kodak $13,267 *
Kellogg's $11,409 $12,987
Budweiser $11,026 $12,614
Nescafe $10,527 $10,651
Intel $10,499 $37,257
Gillette $10,292 $25,105
Motorola $9,624 **
GE $9,304 $46,947
Pepsi $8,895 $17,892
Sony $8,800 $8,408
Hewlett-Packard $8,111 $25,843
Nike $7,267 $17,085
Microsoft $5,634 $59,546
Apple $98,316
Google $93,291
* Dropped from top 100 in 2008** Dropped from top 100 in 2011
Numbers are in $millions