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CHINHOYI UNIVERSITY OF TECHNOLOGY SCHOOL OF BUSINESS SCIENCES AND MANAGEMENT DEPARTMENT OF INTERNATIONAL MARKETING PRINCIPLES OF MARKETING BY DR GERALD.

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Presentation on theme: "CHINHOYI UNIVERSITY OF TECHNOLOGY SCHOOL OF BUSINESS SCIENCES AND MANAGEMENT DEPARTMENT OF INTERNATIONAL MARKETING PRINCIPLES OF MARKETING BY DR GERALD."— Presentation transcript:

1 CHINHOYI UNIVERSITY OF TECHNOLOGY SCHOOL OF BUSINESS SCIENCES AND MANAGEMENT DEPARTMENT OF INTERNATIONAL MARKETING PRINCIPLES OF MARKETING BY DR GERALD MUNYORO

2 COURSE OUTLINE 1. Introduction 2. The significance of information and research in marketing 3. Consumer behaviour 4. Market segmentation 5. Product 6. Price 7. Place 8. Promotion

3 Definitions of Marketing ‘Marketing is the management process that identifies, anticipates and satisfies customer requirements profitably’ ‘Marketing is the management process that identifies, anticipates and satisfies customer requirements profitably’ The Chartered Institute of Marketing Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large American Marketing Association

4 Definitions of Marketing ‘ Marketing is a social and managerial process by which individuals and groups obtain what they want and need through creating, offering and exchanging products of value with others’ Kotler et al (2010) ‘ Marketing is a social and managerial process by which individuals and groups obtain what they want and need through creating, offering and exchanging products of value with others’ Kotler et al (2010) ‘The right product, in the right place, at the right time, and at the right price’ Adcock et al (2001)

5 The Marketing concept Choosing and targeting appropriate customers Choosing and targeting appropriate customers Positioning your offering Positioning your offering Interacting with those customers Interacting with those customers Controlling the marketing effort Controlling the marketing effort Continuity of performance Continuity of performance

6 The Marketing concept Customer focus, profits, and integration of organizational efforts. Customer focus, profits, and integration of organizational efforts. Customer orientationCustomer orientation Satisfying its customers at a profit… Satisfying its customers at a profit… Determining the needs and wants of target markets… Determining the needs and wants of target markets… Discovering the wants of a target audience and then creating the goods and services to satisfy them Discovering the wants of a target audience and then creating the goods and services to satisfy them

7 The Marketing concept According to Levitt (1960), "the organization must learn to think of itself not as producing goods or services but as buying customers, as doing the things that will make people want to do business with it." According to Levitt (1960), "the organization must learn to think of itself not as producing goods or services but as buying customers, as doing the things that will make people want to do business with it." Since its publication, corporate leaders have moved from product-orientation toward market-orientation. Since its publication, corporate leaders have moved from product-orientation toward market-orientation. Firms overemphasize the satisfaction of customer wants and needs and as a result ignore competition. Firms overemphasize the satisfaction of customer wants and needs and as a result ignore competition.

8 The Marketing concept Profitable Profitable Offensive (rather than defensive) Offensive (rather than defensive) Integrated Integrated Strategic (is future orientated) Strategic (is future orientated) Effective (gets results) Effective (gets results) Davidson (1972) Davidson (1972)

9 Marketing management process Analysis/Audit - where are we now? Analysis/Audit - where are we now? Objectives - where do we want to be? Objectives - where do we want to be? Strategies - which way is best? Strategies - which way is best? Tactics - how do we get there? Tactics - how do we get there? (Implementation - Getting there!) (Implementation - Getting there!) Control - Ensuring arrival Control - Ensuring arrival

10 Marketing planning Systematic futuristic thinking by management Systematic futuristic thinking by management better co-ordination of a company’s efforts better co-ordination of a company’s efforts development of performance standards for control development of performance standards for control sharpening of objectives and policies sharpening of objectives and policies better prepare for sudden developments better prepare for sudden developments

11 Building relationships with consumers Firms that embrace the marketing concept seek ways to build a long-term relationship with each customer. This is an important idea. Even the most innovative firm faces competition sooner or later. And trying to get new customers by taking them away from a competitor is usually more costly than retaining current customers by really satisfying their needs. Satisfied customers buy again and again. This makes their buying job easier, and it also increases the selling firm’s profits. Building mutually beneficial relationships with customers requires that everyone in an organization work together to provide customer value before and after each purchase. If there is a problem with a customer’s bill, the accounting people can’t just leave it to the salesperson to straighten it out or, even worse, act like it’s “the customer’s problem.” Rather, it’s the firm’s problem. Firms that embrace the marketing concept seek ways to build a long-term relationship with each customer. This is an important idea. Even the most innovative firm faces competition sooner or later. And trying to get new customers by taking them away from a competitor is usually more costly than retaining current customers by really satisfying their needs. Satisfied customers buy again and again. This makes their buying job easier, and it also increases the selling firm’s profits. Building mutually beneficial relationships with customers requires that everyone in an organization work together to provide customer value before and after each purchase. If there is a problem with a customer’s bill, the accounting people can’t just leave it to the salesperson to straighten it out or, even worse, act like it’s “the customer’s problem.” Rather, it’s the firm’s problem.

12 Marketing’s role in non profit organisations The marketing concept is as important for nonprofit organizations as it is for business firms. However, prior to 1970 few people in nonprofits paid attention to the role of marketing. Now marketing is widely recognized as applicable to all sorts of public and private nonprofit organizations Ñranging from government agencies, health care organizations, educational institutions, and religious groups to charities, political parties, and fine arts organizations. Some nonprofit organizations operate just like a business. For example, there may be no practical difference between thegift shop at a museum and a for-profit shop located across the street. On the other hand, some nonprofits differ from business firms in a variety of ways. As with any business firm, a nonprofit organization needs resources and support to survive and achieve its objectives. Yet support often does not come directly from those who receive the benefits the organization produces. The marketing concept is as important for nonprofit organizations as it is for business firms. However, prior to 1970 few people in nonprofits paid attention to the role of marketing. Now marketing is widely recognized as applicable to all sorts of public and private nonprofit organizations Ñranging from government agencies, health care organizations, educational institutions, and religious groups to charities, political parties, and fine arts organizations. Some nonprofit organizations operate just like a business. For example, there may be no practical difference between thegift shop at a museum and a for-profit shop located across the street. On the other hand, some nonprofits differ from business firms in a variety of ways. As with any business firm, a nonprofit organization needs resources and support to survive and achieve its objectives. Yet support often does not come directly from those who receive the benefits the organization produces.

13 Marketing Research Marketing research is the systematic gathering, recording and analyzing of data about problems relating to the marketing of goods and services. Marketing research is the systematic gathering, recording and analyzing of data about problems relating to the marketing of goods and services. A systematic inquiry whose objective is to provide information to solve managerial problems. A systematic inquiry whose objective is to provide information to solve managerial problems. Marketing research is the function that links the consumer, customer, and public to the marketer through information--information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process. Marketing research specifies the information required to address these issues, designs the method for collecting information, manages and implements the data collection process, analyzes the results, and communicates the findings and their implications. Marketing research is the function that links the consumer, customer, and public to the marketer through information--information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process. Marketing research specifies the information required to address these issues, designs the method for collecting information, manages and implements the data collection process, analyzes the results, and communicates the findings and their implications. American Marketing Association American Marketing Association

14 Marketing Research Market research will give you the data you need to identify and reach your target market at a price customers are willing to pay. Market research will give you the data you need to identify and reach your target market at a price customers are willing to pay. Research provides you with the knowledge and skills needed for the fast- paced decision-making environment. Research provides you with the knowledge and skills needed for the fast- paced decision-making environment. Applied Research Applied Research Emphasis on solving practical (specific) problemsEmphasis on solving practical (specific) problems It could be exploring opportunities alsoIt could be exploring opportunities also Rectifying an inventory system that is resulting into lost sales Rectifying an inventory system that is resulting into lost sales Opportunity to increase stockholder wealth by acquiring another firm Opportunity to increase stockholder wealth by acquiring another firm Pure Research/Basic Research Pure Research/Basic Research Emphasis on problem solving but of a general nature (not specific)Emphasis on problem solving but of a general nature (not specific) Effect of coupon as against rebate to stimulate demand Effect of coupon as against rebate to stimulate demand

15 Consumer behaviour Those activities directly involved in obtaining, consuming and disposing of products and services, including the decision processes that precede and follow these actions Those activities directly involved in obtaining, consuming and disposing of products and services, including the decision processes that precede and follow these actions ‘You cannot take the consumer for granted any more’ ‘You cannot take the consumer for granted any more’ Therefore a sound understanding of consumer behaviour is essential for the long run success of any marketing program Therefore a sound understanding of consumer behaviour is essential for the long run success of any marketing program Logical Positivism Understanding and predicting consumer behaviour Understanding and predicting consumer behaviour Cause and effect relationships that govern persuasion and/or education Cause and effect relationships that govern persuasion and/or education Post Modern – to understand consumption behaviour without any attempt to influence it Post Modern – to understand consumption behaviour without any attempt to influence it

16 Consumer behaviour “MEET THE NEW CONSUMER and smile when you do because she is your boss. It may not be the person you thought you knew. Instead of choosing from what you have to offer, she tells you what she wants. You figure it out how to give it to her.” -Fortune Editor “MEET THE NEW CONSUMER and smile when you do because she is your boss. It may not be the person you thought you knew. Instead of choosing from what you have to offer, she tells you what she wants. You figure it out how to give it to her.” -Fortune Editor A new product must satisfy consumer needs, not the needs and expectations of management A new product must satisfy consumer needs, not the needs and expectations of management Understanding and adapting to consumer motivation and behaviour is not an option – it becomes a necessity for competitive survival Understanding and adapting to consumer motivation and behaviour is not an option – it becomes a necessity for competitive survival

17 Consumer behaviour Consumer sovereignty presents a formidable challenge but skilful marketing can affect both motivation and behaviour if the product or service offered is designed to meet consumer needs and expectations. Consumer sovereignty presents a formidable challenge but skilful marketing can affect both motivation and behaviour if the product or service offered is designed to meet consumer needs and expectations. A sales success occurs because demand either exists already or is latent and awaiting activation by the right marketing offering. A sales success occurs because demand either exists already or is latent and awaiting activation by the right marketing offering.

18 Consumer behaviour Dominant forces shaping Consumer Research Dominant forces shaping Consumer Research Factors that move an economy from Production-driven to Market-driven Factors that move an economy from Production-driven to Market-driven Level of sophistication with which human behaviour is understood in psychology and other behavioural sciences Level of sophistication with which human behaviour is understood in psychology and other behavioural sciences

19 Consumer behaviour Motivational Research Motivational Research It seeks to learn what motivates people in making choices. The techniques are such as to delve into the conscious, subconscious and the unconscious. It seeks to learn what motivates people in making choices. The techniques are such as to delve into the conscious, subconscious and the unconscious. ‘women don’t buy cosmetics, they buy hope.’ ‘women don’t buy cosmetics, they buy hope.’ ‘women bake cakes out of the unconscious desire to give birth ’ ‘women bake cakes out of the unconscious desire to give birth ’

20 Consumer behaviour The advice to footwear salesmen should be ‘Don’t sell shoes – sell lovely feet’ Marketers must contend with small changing segments of highly selective buyers intent on receiving genuine value at the lowest price Marketers must contend with small changing segments of highly selective buyers intent on receiving genuine value at the lowest price All managers must become astute analysts of Consumer motivation and Behaviour All managers must become astute analysts of Consumer motivation and Behaviour Three foundations for marketing decisions Experience Experience Intuition Intuition Research Research

21 Consumer behaviour Enhancing Consumer Value-added Enhancing Consumer Value-added Marketers have to constantly innovate after understanding their consumers to strip out costs permanently by focusing on what adds value for the customer and eliminating what doesn’t. Marketers have to constantly innovate after understanding their consumers to strip out costs permanently by focusing on what adds value for the customer and eliminating what doesn’t. Individualised Marketing Individualised Marketing A very personal form of marketing that recognises, acknowledges, appreciates and serves individuals who become or are known to the marketer. A very personal form of marketing that recognises, acknowledges, appreciates and serves individuals who become or are known to the marketer. Data – based marketing; DM Data – based marketing; DM Customized marketing Customized marketing

22 Consumer behaviour Variables involved in understanding consumer behaviour Variables involved in understanding consumer behaviour Stimulus – ads, products, hungerpangs Stimulus – ads, products, hungerpangs Response – physical/mental reaction to the stimulus Response – physical/mental reaction to the stimulus Intervening variables – mood, knowledge, attitude, values, situations, etc Intervening variables – mood, knowledge, attitude, values, situations, etc

23 Overall Model of Consumer Behaviour Self-Concept & Learning Decision Processes External Influences Internal Influences Culture Subculture Demographics Social status Reference groups Family Marketing Activities Perception Learning Memory Motives Personality Emotions Attitudes Problem Recognition Information Search Alt Eval & Selection Outlet select & Purchase Postpurchase Processes

24 Marketing Environment A company’s marketing environment consists of the actors and forces outside marketing that affect marketing management’s ability to develop and maintain successful relationships with its target customers. A company’s marketing environment consists of the actors and forces outside marketing that affect marketing management’s ability to develop and maintain successful relationships with its target customers. 1). Being successful means being able to adapt the marketing mix to trends and changes this environment. 1). Being successful means being able to adapt the marketing mix to trends and changes this environment. 2). Changes in the marketing environment are often quick and unpredictable. 2). Changes in the marketing environment are often quick and unpredictable. 3). The marketing environment offers both opportunities and threats. 3). The marketing environment offers both opportunities and threats. 4). The company must use its marketing research and marketing intelligence systems to monitor the changing environment. 4). The company must use its marketing research and marketing intelligence systems to monitor the changing environment. 5). Systematic environmental scanning helps marketers to revise and adapt marketing strategies to meet new challenges and opportunities in the marketplace. 5). Systematic environmental scanning helps marketers to revise and adapt marketing strategies to meet new challenges and opportunities in the marketplace.

25 Marketing Environment Includes: Includes: Micro environment: actors close to the company that affect its ability to serve its customers.Micro environment: actors close to the company that affect its ability to serve its customers. Macro environment: larger societal forces that affect the microenvironment.Macro environment: larger societal forces that affect the microenvironment. Considered to be beyond the control of the organization. Considered to be beyond the control of the organization.

26 Marketing Environment 1. Micro Environmental The microenvironment consists of five components. The microenvironment consists of five components. The first is the organization’s internal environment—its several departments and management levels—as it affects marketing management's decision making. The first is the organization’s internal environment—its several departments and management levels—as it affects marketing management's decision making. The second component includes the marketing channel firms that cooperate to create value: the suppliers and marketing intermediaries (middlemen, physical distribution firms, marketing-service agencies, financial intermediaries). The second component includes the marketing channel firms that cooperate to create value: the suppliers and marketing intermediaries (middlemen, physical distribution firms, marketing-service agencies, financial intermediaries). The third component consists of the five types of markets in which the organization can sell: the consumer, producer, reseller, government, and international markets. The third component consists of the five types of markets in which the organization can sell: the consumer, producer, reseller, government, and international markets.

27 Marketing Environment The fourth component consists of the competitors facing the organization. The fourth component consists of the competitors facing the organization. The fifth component consists of all the publics that have an actual or potential interest in or impact on the organization’s ability to achieve its objectives: financial, media, government, citizen action, and local, general, and internal publics. The fifth component consists of all the publics that have an actual or potential interest in or impact on the organization’s ability to achieve its objectives: financial, media, government, citizen action, and local, general, and internal publics. - So the microenvironment consists of six forces close to the company that affect its ability to serve its customers: - So the microenvironment consists of six forces close to the company that affect its ability to serve its customers: a. The company itself (including departments). a. The company itself (including departments). 1). Top management is responsible for setting the company’s mission, objectives, broad strategies, and policies. 2). Marketing managers must make decisions within the parameters established by top management. 3). Marketing managers must also work closely with other company departments. Areas such as finance, R & D, purchasing, manufacturing, and accounting all produce better results when aligned by common objectives and goals. 4). All departments must “think consumer” if the firm is to be successful. The goal is to provide superior customer value and satisfaction. 1). Top management is responsible for setting the company’s mission, objectives, broad strategies, and policies. 2). Marketing managers must make decisions within the parameters established by top management. 3). Marketing managers must also work closely with other company departments. Areas such as finance, R & D, purchasing, manufacturing, and accounting all produce better results when aligned by common objectives and goals. 4). All departments must “think consumer” if the firm is to be successful. The goal is to provide superior customer value and satisfaction..

28 Marketing Environment b. Suppliers. b. Suppliers. Suppliers are firms and individuals that provide the resources needed by the company and its competitors to produce goods and services. They are an important link in the company’s overall customer “value delivery system.” Suppliers are firms and individuals that provide the resources needed by the company and its competitors to produce goods and services. They are an important link in the company’s overall customer “value delivery system.” 1). One consideration is to watch supply availability (such as supply shortages). 1). One consideration is to watch supply availability (such as supply shortages). 2). Another point of concern is the monitoring of price trends of key inputs. Rising supply costs must be carefully monitored. 2). Another point of concern is the monitoring of price trends of key inputs. Rising supply costs must be carefully monitored.

29 Marketing Environment c. Marketing channel firms (intermediaries). c. Marketing channel firms (intermediaries). Marketing intermediaries are firms that help the company to promote, sell, and distribute its goods to final buyers. Marketing intermediaries are firms that help the company to promote, sell, and distribute its goods to final buyers. 1). Resellers 1). Resellers are distribution channel firms that help the company find customers or make sales to them. are distribution channel firms that help the company find customers or make sales to them. 2). These include wholesalers and retailers who buy and resell merchandise. 2). These include wholesalers and retailers who buy and resell merchandise. 3). Resellers often perform important functions more cheaply than the company can perform itself. However, seeking and working with resellers is not easy because of the power that some demand and use. 3). Resellers often perform important functions more cheaply than the company can perform itself. However, seeking and working with resellers is not easy because of the power that some demand and use. Physical distribution firms Physical distribution firms help the company to stock and move goods from their points of origin to their destinations. Examples would be warehouses (that store and protect goods before they move to the next destination). help the company to stock and move goods from their points of origin to their destinations. Examples would be warehouses (that store and protect goods before they move to the next destination). Marketing service agencies Marketing service agencies (such as marketing research firms, advertising agencies, media firms, etc.) help the company target and promote its products. (such as marketing research firms, advertising agencies, media firms, etc.) help the company target and promote its products. Financial intermediaries Financial intermediaries (such as banks, credit companies, insurance companies, etc.) help finance transactions and insure against risks. (such as banks, credit companies, insurance companies, etc.) help finance transactions and insure against risks.

30 Marketing Environment d. Customer markets'. Competitors'. Publics. d. Customer markets'. Competitors'. Publics. The company must study its customer markets closely since each market has its own special characteristics. These markets normally include: The company must study its customer markets closely since each market has its own special characteristics. These markets normally include: 1). Consumer markets 1). Consumer markets (individuals and households that buy goods and services for personal consumption). (individuals and households that buy goods and services for personal consumption). 2). Business markets 2). Business markets (buy goods and services for further processing or for use in their production process). (buy goods and services for further processing or for use in their production process). 3). Reseller markets 3). Reseller markets (buy goods and services in order to resell them at a profit). (buy goods and services in order to resell them at a profit). 4). Government markets 4). Government markets (agencies that buy goods and services in order to produce public services or transfer them to those that need them). (agencies that buy goods and services in order to produce public services or transfer them to those that need them). 5). International markets 5). International markets (buyers of all types in foreign countries). (buyers of all types in foreign countries).

31 Marketing Environment e. Competitors. e. Competitors. Every company faces a wide range of competitors. A company must secure a strategic advantage over competitors by positioning their offerings to be successful in the marketplace. No single competitive strategy is best for all companies. Every company faces a wide range of competitors. A company must secure a strategic advantage over competitors by positioning their offerings to be successful in the marketplace. No single competitive strategy is best for all companies.

32 Marketing Environment f. Publics f. Publics A public is any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives. A company should prepare a marketing plan for all of their major publics as well as their customer markets. Generally, publics can be identified as being: A public is any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives. A company should prepare a marketing plan for all of their major publics as well as their customer markets. Generally, publics can be identified as being: 1). Financial publics--influence the company’s ability to obtain funds. 1). Financial publics--influence the company’s ability to obtain funds. 2). Media publics--carry news, features, and editorial opinion. 2). Media publics--carry news, features, and editorial opinion. 3). Government publics--take developments into account. 3). Government publics--take developments into account. 4). Citizen-action publics--a company’s decisions are often questioned by consumer organizations. 4). Citizen-action publics--a company’s decisions are often questioned by consumer organizations. 5). Local publics--includes neighbourhood residents and community organizations. 5). Local publics--includes neighbourhood residents and community organizations. 6). General publics--a company must be concerned about the general public’s attitude toward its products and services. 6). General publics--a company must be concerned about the general public’s attitude toward its products and services. 7). Internal publics--workers, managers, volunteers, and the board of directors. 7). Internal publics--workers, managers, volunteers, and the board of directors.

33 Marketing Environment 2. MACRO ENVIRONMENT 2. MACRO ENVIRONMENT The Company’s Macro environment The Company’s Macro environment The company and all of the other actors operate in a larger macro environment of forces that shape opportunities and pose threats to the company. The company and all of the other actors operate in a larger macro environment of forces that shape opportunities and pose threats to the company. The company and all of the other actors operate in a larger macro environment of forces that’s have opportunities and pose threats to the company. There are six major forces (outlined below)in the company’s macro environment. There are six major forces (outlined below) in the company’s macro environment. The company and all of the other actors operate in a larger macro environment of forces that’s have opportunities and pose threats to the company. There are six major forces (outlined below)in the company’s macro environment. There are six major forces (outlined below) in the company’s macro environment. a. Demographic. a. Demographic. b. Economic. b. Economic. c. Natural. c. Natural. d. Technological. d. Technological. e. Political. e. Political. f. Cultural. f. Cultural.

34 Marketing Environment a. Demographic Environment a. Demographic Environment Demography Demography is the study of human populations in terms of size, density, location, age, sex, race, occupation, and other statistics. It is of major interest to marketers because it involves people and people make up markets. Demographic trends are constantly changing. Some more interesting ones are.1). The world’s population (though not all countries) rate is growing at an explosive rate that will soon exceed food supply and ability to adequately service the population. The greatest danger is in the poorest countries where poverty contributes to the difficulties. Emerging markets such as China are receiving increased attention from global marketers.2). The most important trend is the changing age structure of the population. The population is aging because of a slowdown in the birth rate (in this country) and life expectancy is increasing. is the study of human populations in terms of size, density, location, age, sex, race, occupation, and other statistics. It is of major interest to marketers because it involves people and people make up markets. Demographic trends are constantly changing. Some more interesting ones are.1). The world’s population (though not all countries) rate is growing at an explosive rate that will soon exceed food supply and ability to adequately service the population. The greatest danger is in the poorest countries where poverty contributes to the difficulties. Emerging markets such as China are receiving increased attention from global marketers.2). The most important trend is the changing age structure of the population. The population is aging because of a slowdown in the birth rate (in this country) and life expectancy is increasing. The baby boomers The baby boomers following World War II have produced a huge “bulge” in our population's age distribution. The new prime market is the middle age group (in the future it will be the senior citizen group). There are many subdivisions of this group. following World War II have produced a huge “bulge” in our population's age distribution. The new prime market is the middle age group (in the future it will be the senior citizen group). There are many subdivisions of this group. a). Generation X--this group lies in the shadow of the boomers and lack obvious distinguishing characteristics. They are a very cynical group because of all the difficulties that have surrounded and impacted their group. b). Echo boomers a). Generation X--this group lies in the shadow of the boomers and lack obvious distinguishing characteristics. They are a very cynical group because of all the difficulties that have surrounded and impacted their group. b). Echo boomers (baby boom lets) are the large growing kid and teen market. This group is used to affluence on the part of their parents (as different from the Gen Xers). One distinguishing characteristic is their utter fluency and comfort with computer, digital, and Internet technology(sometimes called Net-Gens). (baby boom lets) are the large growing kid and teen market. This group is used to affluence on the part of their parents (as different from the Gen Xers). One distinguishing characteristic is their utter fluency and comfort with computer, digital, and Internet technology(sometimes called Net-Gens).

35 Marketing Environment c). Generational marketing is possible, however, caution must be used to avoid generational alienation. Many in the modern family now “telecommute”--work at home or in a remote office and conduct their business using fax, cell phones, modem, or the Internet. In general, the population is becoming better educated. The work force is becoming more white-collar. Products such as books and education services appeal to groups following this trend. Technical skills (such as in computers) will be a must in the future. The final demographic trend is the increasing ethnic and racial diversity of the population. Diversity is a force that must be recognized in the next decade. However, companies must recognize that diversity goes beyond ethnic heritage. One of the important markets of the future are that disabled people (a market larger any of our ethnic minority groups). c). Generational marketing is possible, however, caution must be used to avoid generational alienation. Many in the modern family now “telecommute”--work at home or in a remote office and conduct their business using fax, cell phones, modem, or the Internet. In general, the population is becoming better educated. The work force is becoming more white-collar. Products such as books and education services appeal to groups following this trend. Technical skills (such as in computers) will be a must in the future. The final demographic trend is the increasing ethnic and racial diversity of the population. Diversity is a force that must be recognized in the next decade. However, companies must recognize that diversity goes beyond ethnic heritage. One of the important markets of the future are that disabled people (a market larger any of our ethnic minority groups).

36 Marketing Environment b. Economic Environment b. Economic Environment The economic environment -includes those factors that affect consumer purchasing power and spending patterns. Major economic trends in the United States include: The economic environment -includes those factors that affect consumer purchasing power and spending patterns. Major economic trends in the United States include: 1). Personal consumption (along with personal debt) has gone up (1980s) and the early 1990s brought recession that has caused adjustments both personally and corporately in this country. Today, consumers are more careful shoppers. 1). Personal consumption (along with personal debt) has gone up (1980s) and the early 1990s brought recession that has caused adjustments both personally and corporately in this country. Today, consumers are more careful shoppers. 2). Value marketing 2). Value marketing (trying to offer the consumer greater value for their dollar) is a very serious strategy in the 1990s. Real income is on the rise again but is being carefully guarded by a value-conscious consumer. (trying to offer the consumer greater value for their dollar) is a very serious strategy in the 1990s. Real income is on the rise again but is being carefully guarded by a value-conscious consumer. 3). Income distribution 3). Income distribution is still very skewed in the U. S. and all classes have not shared in prosperity. In addition, spending patterns show that food, housing, and transportation still account for the majority of consumer dollars. It is also of note that distribution of income has created a “two-tiered market” where there are those that are affluent and less affluent. Marketers must carefully monitor economic changes so they will be able to prosper with the trend, not suffer from it. is still very skewed in the U. S. and all classes have not shared in prosperity. In addition, spending patterns show that food, housing, and transportation still account for the majority of consumer dollars. It is also of note that distribution of income has created a “two-tiered market” where there are those that are affluent and less affluent. Marketers must carefully monitor economic changes so they will be able to prosper with the trend, not suffer from it.

37 Marketing Environment c. Natural Environment c. Natural Environment The natural environment - involves natural resources that are needed as inputs by marketers or that are affected by marketing activities. During the past two decades environmental concerns have steadily grown. Some trend analysts labelled the specific areas of concern were: The natural environment - involves natural resources that are needed as inputs by marketers or that are affected by marketing activities. During the past two decades environmental concerns have steadily grown. Some trend analysts labelled the specific areas of concern were: 1). Shortages of raw materials. 1). Shortages of raw materials. Staples such as air, water, and wood products have been seriously damaged and non-renewable such as oil, coal, and various minerals have been seriously depleted during industrial expansion. Staples such as air, water, and wood products have been seriously damaged and non-renewable such as oil, coal, and various minerals have been seriously depleted during industrial expansion. 2). Increased pollution 2). Increased pollution is a worldwide problem. Industrial damage to the environment is very serious. Far- sighted companies are becoming “environmentally friendly” and are producing environmentally safe and recyclable or biodegradable goods. The public response to these companies is encouraging. However, lack of adequate funding, especially in third world countries, is a major barrier. is a worldwide problem. Industrial damage to the environment is very serious. Far- sighted companies are becoming “environmentally friendly” and are producing environmentally safe and recyclable or biodegradable goods. The public response to these companies is encouraging. However, lack of adequate funding, especially in third world countries, is a major barrier.

38 Marketing Environment 3). Government intervention 3). Government intervention In natural resource management has caused environmental concerns to be more practical and necessary in business and industry. Leadership, not punishment, seems to be the best policy for long-term results. Instead of opposing regulation, marketers should help develop solutions to the material and energy problems facing the world. In natural resource management has caused environmental concerns to be more practical and necessary in business and industry. Leadership, not punishment, seems to be the best policy for long-term results. Instead of opposing regulation, marketers should help develop solutions to the material and energy problems facing the world. 4). Environmentally sustainable strategies. 4). Environmentally sustainable strategies. The so-called green movement has encouraged or even demanded that firms produce strategies that are not only environmentally friendly but are also environmentally proactive. Firms are beginning to recognize the link between a healthy economy and a healthy environment. The so-called green movement has encouraged or even demanded that firms produce strategies that are not only environmentally friendly but are also environmentally proactive. Firms are beginning to recognize the link between a healthy economy and a healthy environment.

39 Marketing Environment d. Technological Environment d. Technological Environment The technological environment -includes forces that create new technologies, creating new product and market opportunities. The technological environment -includes forces that create new technologies, creating new product and market opportunities. 1). Technology is perhaps the most dramatic force shaping our destiny. 1). Technology is perhaps the most dramatic force shaping our destiny. 2). New technologies create new markets and opportunities.3). The following trends are worth watching 2). New technologies create new markets and opportunities.3). The following trends are worth watching a). Faster pace of technological change. Products are being technologically outdated at a rapid pace. a). Faster pace of technological change. Products are being technologically outdated at a rapid pace. b). There seems to be almost unlimited opportunities being developed daily. Consider the expanding fields of health care, the space shuttle, robotics, and biogenetic industries. b). There seems to be almost unlimited opportunities being developed daily. Consider the expanding fields of health care, the space shuttle, robotics, and biogenetic industries. c). The challenge is not only technical but also commercial--to make practical, affordable versions of products. c). The challenge is not only technical but also commercial--to make practical, affordable versions of products. d). Increased regulation. Marketers should be aware of the regulations concerning product safety, individual privacy, and other areas that affect technological changes. They must also be alert to any possible negative aspects of an innovation that might harm users or arouse opposition. d). Increased regulation. Marketers should be aware of the regulations concerning product safety, individual privacy, and other areas that affect technological changes. They must also be alert to any possible negative aspects of an innovation that might harm users or arouse opposition.

40 Marketing Environment e. Political Environment e. Political Environment The political environment The political environment includes laws, government agencies, and pressure groups that influence and limit various organizations and individuals in a given society. Various forms of legislation regulate business. includes laws, government agencies, and pressure groups that influence and limit various organizations and individuals in a given society. Various forms of legislation regulate business. 1). Governments develop public policy to guide commerce--sets of laws and regulations limiting business for the good of society as a whole. 2). Almost every marketing activity is subject to a wide range of laws and regulations. Some trends in the political environment include: - Increasing legislation to: - Increasing legislation to: a). Protect companies from each other. a). Protect companies from each other. b). Protecting consumers from unfair business practices. b). Protecting consumers from unfair business practices. c). Protecting interests of society against unrestrained business behaviour. c). Protecting interests of society against unrestrained business behaviour.

41 Marketing Environment -Changing government agency enforcement. New laws and their enforcement will continue or increase. -Changing government agency enforcement. New laws and their enforcement will continue or increase. 3). Increased emphasis on ethics and socially responsible actions. Socially responsible firms actively seek out ways to protect the long-run interests of their consumers and the environment. 3). Increased emphasis on ethics and socially responsible actions. Socially responsible firms actively seek out ways to protect the long-run interests of their consumers and the environment. a). Enlightened companies encourage their managers to look beyond regulation and “do the right thing.” a). Enlightened companies encourage their managers to look beyond regulation and “do the right thing.” b). Recent scandals have increased concern about ethics and social responsibility. b). Recent scandals have increased concern about ethics and social responsibility. c). The boom in e-commerce and Internet marketing has created a new set of social and ethical issues. Concerns are Privacy, Security, Access by vulnerable or unauthorized groups. c). The boom in e-commerce and Internet marketing has created a new set of social and ethical issues. Concerns are Privacy, Security, Access by vulnerable or unauthorized groups.

42 Marketing Environment f. Cultural Environment f. Cultural Environment The cultural environment The cultural environment is made up of institutions and other forces that affect society’s basic values, perceptions, preferences, and behaviours. Certain cultural characteristics can affect marketing decision- making. Among the most dynamic cultural characteristics are: is made up of institutions and other forces that affect society’s basic values, perceptions, preferences, and behaviours. Certain cultural characteristics can affect marketing decision- making. Among the most dynamic cultural characteristics are: 1). Persistence of cultural values. People’s core beliefs and values have a high degree of persistence. 1). Persistence of cultural values. People’s core beliefs and values have a high degree of persistence. Core beliefs and values are passed on from parents to children and are reinforced by schools, churches, business, and government. Secondary beliefs and values are more open to change. Core beliefs and values are passed on from parents to children and are reinforced by schools, churches, business, and government. Secondary beliefs and values are more open to change. 2). Shifts in secondary cultural values. Since secondary cultural values and beliefs are open to change, marketers want to spot them and be able to capitalize on the change potential. Society’s major cultural views are expressed in: 2). Shifts in secondary cultural values. Since secondary cultural values and beliefs are open to change, marketers want to spot them and be able to capitalize on the change potential. Society’s major cultural views are expressed in: a). People’s views of themselves. People vary in their emphasis on serving themselves versus serving others. In the 1980s, personal ambition and materialism increased dramatically, with significant implications for marketing. The leisure industry was a chief beneficiary. a). People’s views of themselves. People vary in their emphasis on serving themselves versus serving others. In the 1980s, personal ambition and materialism increased dramatically, with significant implications for marketing. The leisure industry was a chief beneficiary. b). People’s views of others. Observers have noted a shift from a “me-society” to a “we- society.” Consumers are spending more on products and services that will improve their lives rather than their image. b). People’s views of others. Observers have noted a shift from a “me-society” to a “we- society.” Consumers are spending more on products and services that will improve their lives rather than their image.

43 Marketing Environment c). People’s views of organizations. c). People’s views of organizations. People are willing to work for large organizations but expect them to become increasingly socially responsible. Many companies are linking themselves to worthwhile causes. Honesty in appeals is a must. People are willing to work for large organizations but expect them to become increasingly socially responsible. Many companies are linking themselves to worthwhile causes. Honesty in appeals is a must. d). People’s views of society. d). People’s views of society. This orientation influences consumption patterns. “Buy American” versus buying abroad is an issue that will continue into the next decade. This orientation influences consumption patterns. “Buy American” versus buying abroad is an issue that will continue into the next decade. e). People’s view of nature. e). People’s view of nature. There is a growing trend toward people’s feeling of mastery over nature through technology and the belief that nature is bountiful. However, nature is finite. Love of nature and sports associated with nature are expected to be significant trends in the next several years. There is a growing trend toward people’s feeling of mastery over nature through technology and the belief that nature is bountiful. However, nature is finite. Love of nature and sports associated with nature are expected to be significant trends in the next several years. f). People’s views of the universe. f). People’s views of the universe. Studies of the origin of man, religion, and thought-provoking ad campaigns are on the rise. Currently, Americans are on a spiritual journey. This will probably take the form of “spiritual individualism.” Studies of the origin of man, religion, and thought-provoking ad campaigns are on the rise. Currently, Americans are on a spiritual journey. This will probably take the form of “spiritual individualism.”

44 MARKETING MIX The term "marketing-mix," was first coined by Neil Borden, the president of the American Marketing Association in It is still used today to make important decisions that lead to the execution of a marketing plan. The various approaches that are used have evolved over time, especially with the increased use of technology. The term "marketing-mix," was first coined by Neil Borden, the president of the American Marketing Association in It is still used today to make important decisions that lead to the execution of a marketing plan. The various approaches that are used have evolved over time, especially with the increased use of technology. Usually referring to E. Jerome McCarthy's 4 P classification for developing an effective marketing strategy, which encompasses: product, price, place (distribution) and promotion. When it's a consumer-centric marketing mix, it has been extended to include three more Ps: people, process and physical evidence, and three Cs: cost, consumer and competitor. Depending on the industry and the target of the marketing plan, marketing managers will take various approaches to each of the four Ps. Usually referring to E. Jerome McCarthy's 4 P classification for developing an effective marketing strategy, which encompasses: product, price, place (distribution) and promotion. When it's a consumer-centric marketing mix, it has been extended to include three more Ps: people, process and physical evidence, and three Cs: cost, consumer and competitor. Depending on the industry and the target of the marketing plan, marketing managers will take various approaches to each of the four Ps. Combination of marketing elements used in the sale of a particular product. The marketing elements center around four distinct functions, sometimes called the Four Ps: product, price, place (of distribution), and promotion. All these functions are considered in planning a marketing strategy, and any one may be enhanced, deducted, or changed in some degree in order to create the strategy necessary to efficiently and effectively sell a product. Combination of marketing elements used in the sale of a particular product. The marketing elements center around four distinct functions, sometimes called the Four Ps: product, price, place (of distribution), and promotion. All these functions are considered in planning a marketing strategy, and any one may be enhanced, deducted, or changed in some degree in order to create the strategy necessary to efficiently and effectively sell a product.

45 PRODUCT Defining “Product”-Anything that you can “sell” Defining “Product”-Anything that you can “sell” Product Product Anything offered to a market for attention, acquisition, use, or consumption that might satisfy a need or want.Anything offered to a market for attention, acquisition, use, or consumption that might satisfy a need or want. Service Service Any activity or benefit that one party can offer to another that is essentially intangible and does not result in ownership of anything.Any activity or benefit that one party can offer to another that is essentially intangible and does not result in ownership of anything.

46 What is a product? Products, Services, and Experiences Products, Services, and Experiences Market offerings, pure tangible goods, pure services, experiencesMarket offerings, pure tangible goods, pure services, experiences Levels of Product and Services Levels of Product and Services Core benefit, actual product, and augmented productCore benefit, actual product, and augmented product Product and Service Classifications Product and Service Classifications Consumer productsConsumer products Industrial productsIndustrial products

47 Core... Actual... Augmented product

48 Types of Consumer Products Convenience Convenience Shopping Shopping Specialty Specialty Unsought Unsought

49 Convenience Frequent purchases bought with minimal buying effort and little comparison shopping Frequent purchases bought with minimal buying effort and little comparison shopping Low price Low price Widespread distribution Widespread distribution Mass promotion by producer Mass promotion by producer

50 Shopping Less frequent purchases requiring more shopping effort and price, quality, and style comparisons. Less frequent purchases requiring more shopping effort and price, quality, and style comparisons. Higher than convenience good pricing Higher than convenience good pricing Selective distribution in fewer outlets Selective distribution in fewer outlets Advertising and personal selling by producer and reseller Advertising and personal selling by producer and reseller

51 Speciality Strong brand preference and loyalty, requires special purchase effort, little brand comparisons, and low price sensitivity Strong brand preference and loyalty, requires special purchase effort, little brand comparisons, and low price sensitivity High price High price Exclusive distribution Exclusive distribution Carefully targeted promotion by producers and resellers Carefully targeted promotion by producers and resellers

52 Unsought Little product awareness and knowledge (or if aware, sometimes negative interest) Little product awareness and knowledge (or if aware, sometimes negative interest) Pricing varies Pricing varies Distribution varies Distribution varies Aggressive advertising and personal selling by producers and resellers Aggressive advertising and personal selling by producers and resellers

53 Types of Consumer Products

54

55 Industrial goods Materials and parts Materials and parts Farm productsFarm products Natural productsNatural products Component materialsComponent materials Component partsComponent parts Capital items Capital items InstallationsInstallations EquipmentEquipment Supplies and business services Supplies and business services Maintenance and repairMaintenance and repair Advisory servicesAdvisory services

56 Industrial goods Installations - major capital items, such as new factories, heavy equipment and machinery, and custom-made equipment. Installations - major capital items, such as new factories, heavy equipment and machinery, and custom-made equipment. Accessory equipment - includes less expensive and shorter-lived capital items than installations and involves fewer decision makers. Accessory equipment - includes less expensive and shorter-lived capital items than installations and involves fewer decision makers. Component parts and materials - become part of a final product. Component parts and materials - become part of a final product. Raw materials - farm and natural products used in producing other final products. Raw materials - farm and natural products used in producing other final products. Supplies - expense items used in a firm’s daily operation that do not become part of the final product. Supplies - expense items used in a firm’s daily operation that do not become part of the final product.

57 Product Classifications Durability and tangibility Nondurable Nondurable TangibleTangible Rapidly consumedRapidly consumed Example: MilkExample: Milk Durable Durable TangibleTangible Lasts a long timeLasts a long time Example: OvenExample: Oven Services Services IntangibleIntangible Example: Tax preparationExample: Tax preparation

58 Product mix dimensions Width: number of product linesWidth: number of product lines Length: total number of items in mixLength: total number of items in mix Depth: number of product variantsDepth: number of product variants Consistency: degree to which product lines are relatedConsistency: degree to which product lines are related

59 New Product Development Expensive, time-consuming, and risky. Expensive, time-consuming, and risky. Only 1/3 of new products become success stories. Only 1/3 of new products become success stories. Each step requires a “go or no-go” decision. Each step requires a “go or no-go” decision.

60 New Product Development

61 New Product Development Stages Stage 1: Generating ideas for new offerings Stage 1: Generating ideas for new offerings Stage 2: Idea Screening Stage 2: Idea Screening Stage 3: Concept development and business analysis phase Stage 3: Concept development and business analysis phase Stage 4: Product development Stage 4: Product development Stage 5: Test marketing Stage 5: Test marketing Stage 6: Commercialization Stage 6: Commercialization

62 Causes of New Product Failures Overestimation of Market Size Overestimation of Market Size Product Design Problems Product Design Problems Product Incorrectly Positioned, Priced or Advertised Product Incorrectly Positioned, Priced or Advertised Costs of Product Development Costs of Product Development Competitive Actions Competitive Actions To create successful new products, the company must: To create successful new products, the company must: understand it’s customers, markets and competitors understand it’s customers, markets and competitors develop products that deliver superior value to customers. develop products that deliver superior value to customers.

63 Generating ideas for new offerings Systematic Search for New Product Ideas Systematic Search for New Product Ideas Internal sources Internal sources Customers Customers Competitors Competitors Distributors Distributors Suppliers Suppliers

64 Screening Process to spot good ideas and drop poor ones Process to spot good ideas and drop poor ones Criteria Criteria Market Size Market Size Product Price Product Price Development Time & Costs Development Time & Costs Manufacturing Costs Manufacturing Costs Rate of Return Rate of Return

65 Concept development and business analysis phase 1) Develop Product Ideas into Alternative Product Concepts. 1) Develop Product Ideas into Alternative Product Concepts. 2) Concept Testing - Test the Product Concepts with Groups of Target Customers. 2) Concept Testing - Test the Product Concepts with Groups of Target Customers. 3) Choose the Best One 3) Choose the Best One

66 Product development Business Analysis Business Analysis -Review of Product Sales, Costs, -Review of Product Sales, Costs, and Profits Projections to See if and Profits Projections to See if They Meet Company Objectives They Meet Company Objectives If Yes, Move to Product Development If Yes, Move to Product Development

67 Test marketing Standard Test Market Standard Test Market Full marketing campaign in a small number of representative cities. Full marketing campaign in a small number of representative cities. Controlled Test Market Controlled Test Market A few stores that have agreed to carry new products for a fee. A few stores that have agreed to carry new products for a fee. Simulated Test Market Simulated Test Market Test in a simulated shopping environment to a sample of consumers. Test in a simulated shopping environment to a sample of consumers.

68 Commercialization LAUNCHING NEW PRODUCTS IN THE MARKET LAUNCHING NEW PRODUCTS IN THE MARKET -Unleashing the Power of Branding through Trademarks -Unleashing the Power of Branding through Trademarks

69 The Stages of the Product Life Cycle DevelopmentDevelopment Introduction/LaunchIntroduction/Launch GrowthGrowth MaturityMaturity SaturationSaturation DeclineDecline WithdrawalWithdrawal

70

71 The Product Development Stage Initial Ideas – possibly large number Initial Ideas – possibly large number May come from any of the following – May come from any of the following – Market research – identifies gaps in the marketMarket research – identifies gaps in the market Monitoring competitorsMonitoring competitors Planned research and development (R&D)Planned research and development (R&D) Luck or intuition – stumble across ideas?Luck or intuition – stumble across ideas? Creative thinking – inventions, hunches?Creative thinking – inventions, hunches? Futures thinking – what will people be using/wanting/needing 5,10,20 years hence?Futures thinking – what will people be using/wanting/needing 5,10,20 years hence?

72 Product Development Stage New ideas/possible inventionsNew ideas/possible inventions Market analysis – is it wanted? Can it be produced at a profit? Who is it likely to be aimed at?Market analysis – is it wanted? Can it be produced at a profit? Who is it likely to be aimed at? Product Development and refinementProduct Development and refinement Test Marketing – possibly local/regionalTest Marketing – possibly local/regional Analysis of test marketing results and amendment of product/production processAnalysis of test marketing results and amendment of product/production process Preparations for launch – publicity, marketing campaignPreparations for launch – publicity, marketing campaign

73 Introduction Stage Full-Scale Launch of New Products Advertising and promotion campaignsAdvertising and promotion campaigns Target campaign at specific audience?Target campaign at specific audience? Monitor initial salesMonitor initial sales Maximise publicityMaximise publicity High cost/low salesHigh cost/low sales Length of time – type of productLength of time – type of product High failure rates High failure rates Little competition Little competition Frequent product modification Frequent product modification Limited distribution Limited distribution High marketing and production costs High marketing and production costs Negative profits Negative profits Promotion focuses on awareness and information Promotion focuses on awareness and information Intensive personal selling to channels Intensive personal selling to channels

74 Growth Offered in more sizes, flavors, options Increased consumer awarenessIncreased consumer awareness Revenues increase-Initial healthy profitsRevenues increase-Initial healthy profits Costs - fixed costs/variable costs, profits may be madeCosts - fixed costs/variable costs, profits may be made Monitor market – competitors reaction?Monitor market – competitors reaction? Increasing rate of sales-Sales rise Increasing rate of sales-Sales rise Entrance of competitors Entrance of competitors Market consolidation Market consolidation Promotion emphasizes brand ads Promotion emphasizes brand ads Goal is wider distribution Goal is wider distribution Prices normally fall Prices normally fall Development costs are recovered Development costs are recovered

75 Maturity Many consumer products are in Maturity Stage Sales reach peakSales reach peak Declining sales growth -Prices and profits fallDeclining sales growth -Prices and profits fall Cost of supporting the product declinesCost of supporting the product declines Ratio of revenue to cost highRatio of revenue to cost high Sales growth likely to be lowSales growth likely to be low Market share may be highMarket share may be high Competition likely to be greaterCompetition likely to be greater Price elasticity of demand?Price elasticity of demand? Monitor market – changes/amendments/new strategies?Monitor market – changes/amendments/new strategies? Saturated markets Saturated markets Extending product line Extending product line Stylistic product changes Stylistic product changes Heavy promotions to dealers and consumers Heavy promotions to dealers and consumers Marginal competitors drop out Marginal competitors drop out Niche marketers emerge Niche marketers emerge

76 Saturation New entrants likely to mean market is ‘flooded’ New entrants likely to mean market is ‘flooded’ Necessity to develop new strategies becomes more pressing: Necessity to develop new strategies becomes more pressing: Searching out new markets:Searching out new markets: Linking to changing fashions Linking to changing fashions Seeking new or exploiting market segments Seeking new or exploiting market segments Linking to joint ventures – media/music, etc. Linking to joint ventures – media/music, etc. Developing new usesDeveloping new uses Focus on adapting the productFocus on adapting the product Re-packaging or formatRe-packaging or format Improving the standard or qualityImproving the standard or quality Developing the product rangeDeveloping the product range

77 Decline and Withdrawal Rate of decline depends on change in tastes or adoption of substitute products Product outlives/outgrows its usefulness/valueProduct outlives/outgrows its usefulness/value Fashions changeFashions change Technology changesTechnology changes Sales decline -Long-run drop in salesSales decline -Long-run drop in sales Large inventories of unsold itemsLarge inventories of unsold items Cost of supporting starts to rise too farCost of supporting starts to rise too far Elimination of all nonessential marketing expensesElimination of all nonessential marketing expenses Decision to withdraw may be dependent on availability of new products and whether fashions/trends will come around again?Decision to withdraw may be dependent on availability of new products and whether fashions/trends will come around again?

78 MANAGING THE PRODUCT LIFE CYCLE Modifying the Product Modifying the Product - Alter product quality - Alter product quality -Enhance performance -Enhance performance -Change appearance -Change appearance Modifying the Market Modifying the Market -Finding New Users -Finding New Users -Increase use -Increase use -Create new use situations -Create new use situations

79 EXTENDING THE PRODUCT LIFE CYCLE Repositioning Reacting to a Competitor’s Position-never compete Reacting to a Competitor’s Position-never compete head on head on Catching a Rising Trend-baby aspirin is now low dose Catching a Rising Trend-baby aspirin is now low dose aspirin to reduce heart attacks aspirin to reduce heart attacks Changing the Value Offered Changing the Value Offered Trading Up-add bells & whistles to raise price Trading Up-add bells & whistles to raise price Trading Down- remove bells & whistles to lower price Trading Down- remove bells & whistles to lower price Downsizing-reduce contents but maintain price Downsizing-reduce contents but maintain price

80 Five Profiles of Product Adopters

81 The Boston Matrix A means of analysing the product portfolio and informing decision making about possible marketing strategiesA means of analysing the product portfolio and informing decision making about possible marketing strategies Developed by the Boston Consulting Group – a business strategy and marketing consultancy in 1968Developed by the Boston Consulting Group – a business strategy and marketing consultancy in 1968 Links growth rate, market share and cash flowLinks growth rate, market share and cash flow

82 Classifies Products into four simple categories Stars – products in markets experiencing high growth rates with a high or increasing share of the market Stars – products in markets experiencing high growth rates with a high or increasing share of the market - Potential for high revenue growth - Potential for high revenue growth Cash Cows: Cash Cows: High market shareHigh market share Low growth markets – maturity stage of PLCLow growth markets – maturity stage of PLC Low cost supportLow cost support High cash revenue – positive cash flowsHigh cash revenue – positive cash flows

83 Classifies Products into four simple categories Dogs: Dogs: Products in a low growth marketProducts in a low growth market Have low or declining market share (decline stage of PLC)Have low or declining market share (decline stage of PLC) Associated with negative cash flowAssociated with negative cash flow May require large sums of money to supportMay require large sums of money to support Is your product starting to embarrass your company? Is your product starting to embarrass your company?

84 Classifies Products into four simple categories Problem Child: Problem Child: Products having a low market share in a high growth market Products having a low market share in a high growth market Need money spent to develop them Need money spent to develop them May produce negative cash flow May produce negative cash flow Potential for the future? Potential for the future? Problem children – worth spending good money on? Problem children – worth spending good money on?

85 Implications Dogs: Dogs: Are they worth persevering with?Are they worth persevering with? How much are they costing?How much are they costing? Could they be revived in some way?Could they be revived in some way? How much would it cost to continue to support such products?How much would it cost to continue to support such products? How much would it cost to remove from the market?How much would it cost to remove from the market?

86 Implications Problem Children: Problem Children: What are the chances of these products securing a hold in the market?What are the chances of these products securing a hold in the market? How much will it cost to promote them to a stronger position?How much will it cost to promote them to a stronger position? Is it worth it?Is it worth it?

87 Implications Stars: Stars: Huge potentialHuge potential May have been expensive to developMay have been expensive to develop Worth spending money to promoteWorth spending money to promote Consider the extent of their product life cycle in decision makingConsider the extent of their product life cycle in decision making

88 Implications Cash Cows: Cash Cows: Cheap to promoteCheap to promote Generate large amounts of cash – use for further R&D?Generate large amounts of cash – use for further R&D? Costs of developing and promoting have largely goneCosts of developing and promoting have largely gone Need to monitor their performance – the long term?Need to monitor their performance – the long term? At the maturity stage of the PLC?At the maturity stage of the PLC?

89 Product Identification Branding and trademarks are keys to success in business and in the global market Branding and trademarks are keys to success in business and in the global market The AMA definition of a brand: The AMA definition of a brand: “A name, term, sign, symbol, or design, or a combination of these, intended to identify the goods or services of one seller or group of sellers and to differentiate them from the competition.” “A name, term, sign, symbol, or design, or a combination of these, intended to identify the goods or services of one seller or group of sellers and to differentiate them from the competition.”

90 What is Branding Branding -- is the process by which the name or the identify of an owner, a company/enterprise or organization, is communicated. Branding -- is the process by which the name or the identify of an owner, a company/enterprise or organization, is communicated. Branding allows a company to differentiate its products and services from the competition by creating a bond with its customers. It aims to create customer loyalty. Branding allows a company to differentiate its products and services from the competition by creating a bond with its customers. It aims to create customer loyalty. This way, a company takes a position in the marketplace. This way, a company takes a position in the marketplace.

91 What is Branding Brand - name, term, sign, symbol, design, or some combination that identifies the products of one firm and differentiates them from competitors’ offerings. Brand - name, term, sign, symbol, design, or some combination that identifies the products of one firm and differentiates them from competitors’ offerings. Brand name - part of the brand consisting of words or letters included in a name used to identify and distinguish the firm’s offerings from those of competitors. Brand name - part of the brand consisting of words or letters included in a name used to identify and distinguish the firm’s offerings from those of competitors. Trademark - brand that has been given legal protection granted solely to the brand’s owner. Trademark - brand that has been given legal protection granted solely to the brand’s owner.

92 What is Branding A way by which companies launch and sell goods & services. A way by which companies launch and sell goods & services. A brand name is sometimes made of a part or the totality of a trademark name A brand name is sometimes made of a part or the totality of a trademark name It communicates the essence of a products or its line, including why it is great and how it is better than all competing products. It communicates the essence of a products or its line, including why it is great and how it is better than all competing products. It reflects in general a prestigious (aesthetic) image in order to attract more consumers. It reflects in general a prestigious (aesthetic) image in order to attract more consumers.

93 Brands can convey six levels of meaning AttributesAttributes BenefitsBenefits ValuesValues CultureCulture PersonalityPersonality UserUser

94 Brand identity decisions include NameName LogoLogo ColorsColors TaglineTagline SymbolSymbol Consumer experiences create brand bonding, brand advertising does not. Consumer experiences create brand bonding, brand advertising does not.

95 Brand Categories Manufacturer’s brand - brand offered and promoted by a manufacturer. Examples: Tide, Jockey, Gatorade, Swatch, and Reebok. Manufacturer’s brand - brand offered and promoted by a manufacturer. Examples: Tide, Jockey, Gatorade, Swatch, and Reebok. Private or store brand - brand that is not linked to the manufacturer but instead carries a wholesaler’s or retailer’s label. Examples: Sears’ DieHard batteries and Wal-Mart’s Ol’Roy dog food & Member’s Mark brand Private or store brand - brand that is not linked to the manufacturer but instead carries a wholesaler’s or retailer’s label. Examples: Sears’ DieHard batteries and Wal-Mart’s Ol’Roy dog food & Member’s Mark brandWal-Mart’s Family branding strategy - a single brand name used for several related products. Examples: KitchenAid, Johnson & Johnson, Hewlett-Packard, and Dole Family branding strategy - a single brand name used for several related products. Examples: KitchenAid, Johnson & Johnson, Hewlett-Packard, and Dole Individual branding strategy - giving each product within a line a different name. Examples: Procter & Gamble products Tide, Cheer, and Dash. Individual branding strategy - giving each product within a line a different name. Examples: Procter & Gamble products Tide, Cheer, and Dash.Procter & Gamble Procter & Gamble

96 Brand Loyalty Brand recognition - consumer is aware of the brand but does not have a preference for it over other brands. Brand recognition - consumer is aware of the brand but does not have a preference for it over other brands. Brand preference - consumer chooses one firm’s brand over a competitor’s. Brand preference - consumer chooses one firm’s brand over a competitor’s. Brand insistence - consumer will seek out preferred brand and accept no substitute for it. Brand insistence - consumer will seek out preferred brand and accept no substitute for it. Brand equity - added value that a respected and successful name gives to a product. Brand equity - added value that a respected and successful name gives to a product. Brand awareness - product is the first one that comes to mind when a product category is mentioned. Brand awareness - product is the first one that comes to mind when a product category is mentioned.

97 Packages and Labels Important in product identification and play an important role in a firm’s overall product strategy. Important in product identification and play an important role in a firm’s overall product strategy. Choosing right package is especially important in international marketing. Choosing right package is especially important in international marketing. Must meet legal requirements of all countries in which product is sold. Must meet legal requirements of all countries in which product is sold. Universal Product Code - bar code read by optical scanner. Universal Product Code - bar code read by optical scanner. Universal Product Code Universal Product Code

98 SUCCESSFUL BRANDING Attracts / catches the consumers Marketers should attempt to create or facilitate awareness, acceptability, preference, and loyalty among consumers. Marketers should attempt to create or facilitate awareness, acceptability, preference, and loyalty among consumers. Valuable and powerful brands enjoy high levels of brand loyalty. Valuable and powerful brands enjoy high levels of brand loyalty. Attracts / catches the consumers Attracts / catches the consumers Developing a brand is part of every strategic business plan Developing a brand is part of every strategic business plan Target what customers care about: articulate precise values and qualities that are relevant and of direct interest Target what customers care about: articulate precise values and qualities that are relevant and of direct interest Emphasize features that are both important to consumer and quite differentiated from competitors Emphasize features that are both important to consumer and quite differentiated from competitors Communicate constant innovating brand image at all levels of operation Communicate constant innovating brand image at all levels of operation Aaker identified five levels of customer attitudes toward brands: Aaker identified five levels of customer attitudes toward brands: Will change brands, especially for price. No brand loyalty.Will change brands, especially for price. No brand loyalty. Satisfied -- has no reason to change.Satisfied -- has no reason to change. Satisfied -- switching would incur costs.Satisfied -- switching would incur costs. Values brand, sees it as a friend.Values brand, sees it as a friend. Devoted to the brand.Devoted to the brand.

99 Brand Decions Key Challenges Key Challenges To brand or not To brand or not Brand sponsor Brand sponsor Brand name Brand name Brand strategy Brand strategy Brand repositioning Brand repositioning Advantages of branding Advantages of branding Facilitates order processingFacilitates order processing Trademark protectionTrademark protection Aids in segmentationAids in segmentation Enhances corporate imageEnhances corporate image Branded goods are desired by retailers and distributorsBranded goods are desired by retailers and distributors

100 Key Challenges Brand sponsor: Brand sponsor: Options include: Options include: Manufacturer (national) brandManufacturer (national) brand Distributor (reseller, store, house, private) brandDistributor (reseller, store, house, private) brand Licensing the brand nameLicensing the brand name Brand name: Strong brand names: Brand name: Strong brand names: Suggest benefitsSuggest benefits Suggest product qualitiesSuggest product qualities Are easy to say, recognize, and rememberAre easy to say, recognize, and remember Are distinctiveAre distinctive Should not carry poor meanings in other languagesShould not carry poor meanings in other languages

101 Key Challenges Brand strategy Brand strategy Varies by type of brand Varies by type of brand Functional brandsFunctional brands Image brandsImage brands Experiential brandsExperiential brands Line extensions Line extensions Brand extensions Brand extensions Multibrands Multibrands New brands New brands Co-branding Co-branding

102 Key Challenges Brand repositioning Brand repositioning A brand report card can be used to audit a brand’s strengths and weaknesses. A brand report card can be used to audit a brand’s strengths and weaknesses. Changes in preferences or the presence of a new competitor may indicate a need for brand repositioning. Changes in preferences or the presence of a new competitor may indicate a need for brand repositioning.

103 Packaging and Labeling Packaging and Labeling Packaging and Labeling Packaging includes: Packaging includes: The primary packageThe primary package The secondary packageThe secondary package The shipping packageThe shipping package Many factors have influenced the increased use of packaging as a marketing tool. Many factors have influenced the increased use of packaging as a marketing tool. Developing an effective package: Developing an effective package: Determine the packaging conceptDetermine the packaging concept Determine key package elementsDetermine key package elements Testing:Testing: Engineering tests Engineering tests Visual tests Visual tests Dealer tests Dealer tests Consumer tests Consumer tests

104 Packaging and Labeling Labeling functions: Labeling functions: Identifies the product or brandIdentifies the product or brand May identify product gradeMay identify product grade May describe the productMay describe the product May promote the productMay promote the product Legal restrictions impact packaging for many products. Legal restrictions impact packaging for many products.

105 What is a Trademark? A BRAND NAME - A KIND OF VISIT CARD THAT PROMOTES THE IMAGE OF A COMPANY AND ITS RANGE OF GOODS & SERVICES. A BRAND NAME - A KIND OF VISIT CARD THAT PROMOTES THE IMAGE OF A COMPANY AND ITS RANGE OF GOODS & SERVICES. “A sign distinguishing goods or services produced or sold by one enterprise (from those of other enterprises)”. “A sign distinguishing goods or services produced or sold by one enterprise (from those of other enterprises)”.

106 Types of Trademarks? Trade marks: to distinguish goods Trade marks: to distinguish goods Service marks: to distinguish services Service marks: to distinguish services Collective marks: to distinguish goods or services by members of an association Collective marks: to distinguish goods or services by members of an association Certification marks Certification marks Well-known marks: benefit from stronger protection Well-known marks: benefit from stronger protection Tradename (Brand name) Tradename (Brand name)


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