I can’t wait to go!!!. Marketing – SM122 Product.

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I can’t wait to go!!!

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  • Marketing SM122Product

  • Consumers Have Different NeedsMarket: Aggregate of people who, as individuals or as organizations, have needs for products in a product class and who have the ability, willingness, and authority to purchase such productsSegment: Group of individuals, groups, or organizations that share one or more similar characteristics which make them have relatively similar products needs and have high probability of responding to a similar marketing mixSegmentation: Process of identifying segments or groups of people / organizations that exist within the larger market

  • How to Segment Consumer Markets

  • All Four Ps Contribute to the Whole 2003 McGraw-Hill Companies, Inc., McGraw-Hill/IrwinPosition

  • Approaches to Serving MarketsApproachMass MarketingA single marketing mix for the entire marketSegment marketingDescriptionExamplesIndividual marketingCommodity productsA single marketing mix for one segment of the market (Concentrated Marketing)Women's Workout World (exercise facilities for women); American Association for Retired Persons (lobbying and membership services for people over 50)McDonalds (Happy Meals for young children, Big Macs for Teens, Arch Deluxe for adults); Toshiba copiers (several sizes and features to meet different levels of business needs)Personalized amenities for repeat guests at Ritz-Carlton hotels; management consulting services tailored to an organizations needsA marketing mix customized for an individual or organizationSeparate marketing mixes for two or more segments of the market (Multisegment Marketing)

  • Consumers Buy Benefits Not FeaturesConsumers buy:Consistency, convenienceMcDonaldsFun, hip, coolReef Flip - Flops, Pacific Sunwear of CAAspirational, escape, illusion Jimmy Buffet, Grateful Dead, Jaguar, Maxim, CosmopolitanCleanliness, brightness, freshnessTide DetergentTimeliness, safetySwissAir, Airport Security

  • ProductThe good or service that is offered has basic functionality and features. It may be offered in one or multiple varieties.

    But, not just the good or service you offer, but a much broader definition to include warranties, after-sales service, installation, image,

  • Products are Goods and Services PureServicePureGood

  • Product LevelsCore BenefitOr Service BrandNameQualityPackaging& Labeling StylingFeaturesDelivery& CreditInstallationWarrantyAfter-SaleServiceActual/Expected ProductCore/Generic ProductAugmented Product

  • Classification of Consumer Goods

    Toothpaste, cake mix, hand soap, laundry detergentRelatively inexpensiveWidespread; many outlets Price, availability, and awareness stressedConvenienceShoppingSpecialtyUnsoughtType of Consumer GoodBasis of comparisonProductPrice Place PromotionCameras, TVs briefcases, appliances, clothingFairly expensiveLarge number of selective outletsDifferentiation from competitors stressedRolls Royce cars, Rolex watches Usually very expensiveVery limited Uniqueness of brand and status stressedBurial insurance, thesaurus Varies Often limited Awareness is essential

  • Classification of Consumer Goods

    Aware of brand, but will accept substitutesFrequent purchases; little time and effort spent shopping; routine decisionConvenienceShoppingSpecialtyUnsoughtType of Consumer GoodBasis of comparisonBrand loyalty of consumersPurchase behavior of consumersPrefer specific brands, but will accept substitutesInfrequent purchases; comparison shopping; uses decision timeVery brand loyal; will not accept substitutesInfrequent purchases; extensive time spent to decide and get the itemWill accept substitutes Very infrequent purchases; some comparison shopping

  • Diffusion or Why does everyone have (will have) an MP3 player.Time (t)Cumulative Probability of Adoption up to Time tF(t)Introduction of product1.0What happens when everybody that is going to acquire a product has it?From a presentation given by Professor David Berkowitz

  • Irwin/McGraw-Hill The McGraw-Hill Companies, Inc., 1998Consumer Life CycleSlide9-5Figure9.2Innovators (2.5%)Early Adopters (13.5%)Early Majority (34%)Late Majority (34%)Laggards (16%)

  • Bass Model of Product DiffusionSt=p *Remaining +q * Adopters Potential InnovationImitation EffectEffectwhere:St=sales at time tp=coefficient of innovationq=coefficient of imitation# Adopters=S0 + S1 + + St1Remaining=Total Potential # Adopters PotentialFrom a presentation given by Professor David Berkowitz

  • Examples of Innovation and Imitation ParametersInnovationImitation Product/parameter parameter Technology (p)(q)B&W TV0.0280.25Color TV0.0050.84Air conditioners0.0100.42Clothes dryers0.0170.36Water softeners0.0180.30Record players0.0250.65Cellular telephones0.0041.76Steam irons0.0290.33Motels0.0070.36McDonalds fast food0.0180.54Hybrid corn0.0391.01Electric blankets0.0060.24A study by Sultan, Farley, and Lehmann in 1990 suggests an average value of 0.03 for p and an average value of 0.38 for q.From a presentation given by Professor David Berkowitz

  • Irwin/McGraw-Hill The McGraw-Hill Companies, Inc., 1998The Product Life CycleSlide

    9.1DollarsTotal Market SalesTotal Market ProfitsTimeIntroductionGrowthMaturityDecline

  • Factors affecting the rate of diffusionProduct-related diffusion will be faster ifHigh relative advantage over existing productsHigh degree of compatibility with existing approachesLow complexityCan be tried on a limited basisBenefits are observable

    Market-related diffusion is influenced by Type of innovation adoption decision (eg, does it involve switching from familiar way of doing things?)Communication channels usedNature of links among market participantsNature and effect of promotional effortsFrom a presentation given by Professor David Berkowitz

  • Product Life Cycle for Wine CoolersSource:Figure drawn from Wine and Liquor Handbook statisticsMillions of dollars$1500

    $1000

    $500

  • Recording Industry Product Form Life CyclesSource:Figure drawn from Recording Industry Association of America statistics.Millions of units sold650600550500450400350300250200150100500VinylCassettesCompact disks

  • How stages of the product life cycle relate to marketing mix decisionsMarketing objectiveGain AwarenessStress differentiationMaintain brand loyaltyHarvesting, deletionProductOneMore versionsFull product lineBest sellersPriceSkimming or penetrationGain share, dealDefend share, profitStay profitablePlace (distribution)LimitedMore outletsMaximum outletsFewer outlets

    This slide relates to material on p. 43.: Indicates place where slide builds to include the corresponding point.

    : : : Summary OverviewAll of the four Ps--product, place, promotion and price--have an impact on satisfying the needs of consumers in the target market. No single area is more important than the others--they are all interconnected.Key IssuesIn developing a marketing strategy, the jobs of selecting a target market and developing the marketing mix are interrelated. The outcome of the strategy is evaluated against the objectives of the marketer. Discussion Question: Choose a product or service and discuss how the elements of the marketing mix interact with each other. For example, how do product decisions affect decisions about place, promotion, and price?Keeping in mind the marketing concept, the needs of the target market determine the nature of the marketing mix, so developing a thorough understanding of the target market leads to good strategies.

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