Marketing Management Dawn Iacobucci © 2010 South-Western, a part of Cengage Learning

What is Marketing Chapter 1

Discussion Questions What is marketing? What can marketers market? What types of decisions do marketers make?

Marketing and Exchange Marketing is an exchange between a firm and customer Company Customer The customer seeks benefits from the company, and expects to pay. The company offers benefits to its customers, and seeks profits.

Why might an exchange NOT occur? The criteria needed for an exchange to occur: –Must have something of value to exchange –Need to be able to communicate –Must be able to exchange (under 21 drinking) –Must want to exchange –At least 2 people needed for an exchange to occur

What is the long term benefit to having satisfaction in an exchange? More profitable relationship Price insensitivity Inelastic demand Loyalty

What Can We Market?

Orientations Product/Production –Build a better mousetrap Selling Orientation –Let’s make a Deal Marketing/Customer –Building relationships with the customer

Selecting a Marketing-Oriented Strategy Is Target Marketing Production-oriented manager sees everyone as basically similar and practices “mass marketing” Marketing-oriented manager sees everyone as different and practices “target marketing”

Marketing IS the Business Marketing should permeate the entire organization Chief Marketing Officers (CMO) need to show results –Quantify results when possible (e.g., market share, revenue growth, income growth, ROIM)

Marketing Framework Start with a Situational Analysis using the 5Cs

Marketing Framework Customers (for a chimps’ NPO) –Who are they? 20 to 40 years old –What are they like? Animal lovers –Do you want to draw different customers? Yes, other donors to NPO Company –What are the strengths and weaknesses?

Financial strength (Intel) Producing flexibility (DaimlerChrysler) Patents (IBM) Channel relationships (Kraft) Loyal customer base (Starbucks) Technical capability (3M) Examples of Company Strength

The One Product Henry Ford made a wonderful car - the Model A- but that's all he made. General Motors decided that many people would like something different and were willing to pay for it. Fortunately, for Ford, he caught on quickly, but Ford almost went out of business with the thinking that one model fit everyone. Examples of Company Weakness

Marketing Framework Context (for a chimps’ NPO) –What is happening in the industry that might reshape the future business? Economy—concerned with economy and job security because donors might not give Politics—unknown—Democrats and Republicans Legal—NA Technological—move more giving online Societal—more green animal habitats

Marketing Framework Collaborators (for a chimps’ NPO) –Can address the customers’ needs while strengthening B2B partnerships? Good relations with supply chain— partner with pet food stores Good relations with distribution channel members (where place ads) —broaden beyond Full Standing Inserts (FSI) in two women’s magazines (e.g., periodicals with broader demographic reach)

Marketing Framework Competitors (for a chimps’ NPO) –Who are the competitors that must be consider? Any donation behavior; other animals, health agencies, museums, and the arts Competitors’ strengths—some have very good brand names –What are their likely actions and reactions? More advertising, lobbying, solicitation.

Marketing Framework Proceed to Strategic Marketing Planning with STP

Marketing Framework Segmentation (Social network to sell travel vacation packages through testimonials and word-of-mouth—800,000 users) –Customers aren’t all the same; they vary in their preferences, needs, and resources Current customers—low 20s Non-customer—40 and older Ideal customer—mid 20s with good disposable income

Marketing Framework Targeting (sell travel vacation packages) –Attracting some of those customers makes better sense than going after others Estimate size and profitability—buyers $1,350 one trip every other year Rank desirability of segments—25 to 35 better disposable income

Marketing Framework Positioning (sell travel vacation packages) –Communicate benefits clearly to intended customers High quality and high price or low quality and low prices?—high quality, prices are high but they’re good value Distribution mass or exclusive—to succeed, need some scale, which suggests wide availability/presence and mass promotion if cheap (e-referral program)

Marketing Framework Advance to Marketing Tactics with the 4Ps

Marketing Framework Product (small attachment for cell phone which allows user to project presentations onto wall in a small boardroom) –Will customers want what the company is prepared to produce? Are we high-end or basic—high-end, innovative What are the primary features—innovative, convenient, light What are the brand associations—few because minimal awareness as yet Where are we in product life cycle—Brand new

Marketing Framework Price (small attachment for cell phone) –Will customers pay what we would like to charge? What are the customers’ price sensitivities— minimal, this is a cool business toy Offer occasional price discounts—No reason, benefits outweigh high price Beneficial to price differently from competitors— No competition yet, but keep price high to gain margin and spend on R&D.

Marketing Framework Place (small attachment for cell phone) –Where and how will customers purchase the market offering? Will we be extensive or selective— Extensive Use more pull or push—Pull Any conflicts to resolve—Still forging relationships

Marketing Framework Promotion (small attachment for cell phone) –What can we tell the customers or do for them to entice them to purchase? Our marketing communications (advertising) goals—Search engines, get into Sharper image How to measure ad effectiveness—Click- throughs How to budget across IMC—Aim for Business Week, Forbes

Framework Considerations 5 Cs, STP and 4 Ps are interdependent –Marketers must understand how one decision impacts other decisions The 5 Cs are in flux –Marketers must consistently monitor and adjust strategy accordingly

Consumer Product Classes Homogeneous Heterogeneous Shopping Products Specialty Products Convenience Products Impulse Emergency New Unsought Regularly Unsought Unsought Products Staples

Problem Solving Continuum Routinized Response Behavior Low involvement Frequently purchased Inexpensive Little risk Little information needed Limited Problem Solving Extensive Problem Solving High involvement Infrequently purchased Expensive High risk Much information desired Low involvementHigh involvement

Business Product Classes – How They Are Defined Installations; important capital items Accessories; short lived capital items Raw Materials; unprocessed expense items Component Parts & Materials; expense items that become a part of the final product MRO Supplies Professional Services Business Product Classes

Little None Little Straight Rebuy Organizational Buying Processes Characteristics Time required Multiple influences Review of suppliers Information needed Type of Process Much New-Task Buying Much New-Task Buying Medium Some Modified Rebuy Much New-Task Buying Little None Little Straight Rebuy

Types of Shopping

Multiple Influence and Roles in the Buying Center Gatekeepers Deciders (power to select & approve suppliers) Deciders (power to select & approve suppliers) Influencers (write technical specifications ) Influencers (write technical specifications ) Users Buyers (work with suppliers & arrange terms of sale) Buyers (work with suppliers & arrange terms of sale) Buying Center

Purchase Decision Making

Two Models for How Buyers Decide Lexicographic method –Compare brands by most important attribute; brands that make the cut go into consideration set; then compare on next important attribute, etc. Average method –One attribute can’t make or break a brand –If a brand is strong on one attribute and average on another, it will still dominate a brand that was average on all of its attributes

This Book… Assumes global customers Assumes omnipresence of the Internet Gives fresh, fun examples Trains you to think like a marketer Defines terms as necessary Offers lists of factors to consider Gives “how to” guidance when feasible

This Book… Each chapter opens with the Marketing Framework to maintain a focus on the big picture while also highlighting key concepts and tools about to be covered.

This Book… Begins each chapter with coverage of “What” is the topic and “Why” it should matter to you Every chapter then addresses the question of “How do I do this successfully?”

Book Layout

Study Question 1 Marketers try to figure out what _____ want and then they try to figure out how to provide it and make money doing so. –a. business owners –b. advertisers –c. customers –d. companies

Study Question 2 Marketers help/work with all of the following EXCEPT –a. athletes. –b. department stores. –c. hotels. –d. All can be helped by marketers.

Study Question 3 Which of the following is NOT part of the 5Cs? –a. context –b. corporation –c. customer –d. competitors

Study Question 4 What order is correct for a situation analysis? –a. 5Cs, 4Ps, STP –b. 5Cs, STP, 4Ps –c. 4Ps, 5Cs, STP –d. STP, 5Cs, 4Ps

Study Question 5 B2B marketers have said there are three kinds of purchases - new buy, modified rebuy, and –a. alternate rebuy. –b. convenience rebuy. –c. old buy. –d. straight rebuy.