1. McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 17-1 Mkt 340/Principles of Advertising Class 2

2. McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 17-2 The Marketing Concept n Coordinating the total resources of an organization n Toward the identification and satisfaction of customer needs and wants n In a way planned to enhance profits and/or success. n “Find (or create) a need and fill it (at a profit).

3. McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 17-3 Marketing involves stimulating and managing exchanges. The Marketer -- The Initiator The Thing Offered -- Value/Benefit The Target Market -- The Receiver Price The Marketing Exchange Model

4. McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 17-4 Difference between Marketing and Selling n Selling is Self-Focused > producing a product and then trying to persuade customers to purchase it -- in effect, trying to alter consumer demand. It is internally focused. n Marketing is Customer-Focused >determining customer wants and then developing a product to satisfy that need and still yield a satisfactory profit. It is externally focused.

5. McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 17-5 Selling vs. Marketing Customers Promotion Message Media Product Product Promotion Message Media Customers Selling: Self-Focused Marketing: Customer-Focused

6. McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 17-6 Recent Refinements of the Marketing Concept n Quality >Quality is defined by customers. >TQM - Total Quality Management. >ROQ - Return on Quality analysis. n Relationships >An attempt to build personal, long-term bonds with customers. >Relationship marketing has expanded to include all groups an organization interact with: suppliers, employees, unions, government, and even competitors.

7. McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 17-7 Recent Refinements of the Marketing Concept (Con’t.): n Mass Customization >An attempt to provide affordable products customized to come as close as possible to meeting the needs of individual customers. >This is made possible because of advances in information and production technology. n Value Creation >An attempt to assess what customers value in a product. >Value means more than money to customers. >Value is a concept unique to each individual.

8. McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 17-8 n Return on Marketing Investment >Traditionally, the cost of marketing has been treated as an expense. >Since marketing can represent at least 50% of all corporate costs, it is now being looked at as an investment. n Societal Marketing Concept >Does the Marketing Concept conflict with the best interests of society? >Involves broadly defining customer and taking a long-term view of customers satisfaction. Recent Refinements of the Marketing Concept (Con’t.):

9. McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 17-9 Step One The Target Market -- Needs, Wants, Expectations Step Two The Positioning -- The Story Brand Image & Competitive Advantage Step Three “The 4 P’s” Product ---- Price ---- Place ---- Promotion The Marketing Mix

10. McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 17-10 n Promotion is the component of a firm’s marketing mix that informs, persuades, and reminds the market regarding the firm and/or its products. n It includes all the means by which a company communicates with customers. n Persuasion means to influence feelings, beliefs, or behavior. >It is an attempt to shift or change the demand curve for a firm’s goods or services. Promotion versus Marketing

11. McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 17-11 The Promotion Mix Components Advertising Public Publicity Personal Sales RelationsSellingPromotions n Name some Promotion Mix Objectives. >Increase sales, votes, desired behaviors, etc. >Create awareness, preference, loyalty >Identify prospects (sales leads) >Encourage/discourage trial, retrial >Recruit and support middlemen and sales dpt. >Hurt competitors Promotion/Communications Mix

12. McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 17-12 How Does Promotion Mix Persuade? n Each component >Provides awareness >Provides information >Differentiates the product from competition >Makes the perceived value = price >Reduces cognitive dissonance

13. McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 17-13 Promotion Mix Components Defined n Advertising: Any paid-for type of non-personal communication by an identified sponsor. >Business-to-Consumer vs. Business-to-Business >Product vs. Corporate vs. Institutional >Local vs. Regional vs. National vs. International >Indirect Response vs. Direct response n Public relations: A planned communication effort intended to make the firm appear as a good corporate citizen. n Publicity: A special form of public relations that involves creating positive newsworthy stories about an firm and/or its products. >News releases, featured articles and video segments >Press conferences >Product placement in movies and TV

14. McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 17-14 Promotion Mix Components Defined (continued) n Personal selling: The direct presentation of a product to a prospective customer by a representative of the selling organization. n Sales promotion: Demand-stimulating activity designed to supplement advertising and facilitate personal selling.

15. McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 17-15 Integrated Marketing Communications (IMC) n The promotional mix components are coordinated in a strategy called Integrated Marketing Communications (IMC) – Also called a Campaign. n When designing the IMC effort, five things should be considered: >The Target Audience >The Promotional Objective >The Nature of the Product >Stage in the Product’s Life Cycle >Funds Available for Promotion

16. McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 17-16 Exercise Advertising - Public Relations - Publicity - Personal Selling - Sales Promotions n How would you classify the following: >McDonald’s uses billboards to promote its free fries with a Big Mac purchase. >A Honda salesperson calls you about a new model that coming out soon. >Channel 5 news has a story about Energizer Battery’s new ad campaign. It features a commercial with the Energizer rabbit. >Quaker Oats mails a 50 cents-off coupons to 500,000 homes in L.A. county. >Kool-Aid donates two cases to a little league baseball team to use in a fundraiser.