2. PowerPoint Presentation by Charlie Cook Copyright © 2005 Prentice Hall, Inc. All rights reserved. Chapter 11 Marketing Processes and Consumer Behavior Day 3

3. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–2 MPC’s deeper offerings: Dr. Judee Timm Busi 50 introduction to Marketing  Flow of goods from producer to consumer  Consumer behavior  Marketing research  Sales management techniques Busi 36 Introduction to International Marketing  Market entry strategies  Foreign market analysis  The “Four P’s”

4. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–3 Key Topics Marketing: Definition, History, Role The marketing plan External marketing research  The external marketing environment  Segmentation and target marketing  Competition analysis  The buying process - Consumers and Organizations Product, our first “P”

5. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–4 What Is Marketing? Finding a need and filling it! OR American Marketing Association definition: “Marketing is an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders. “

6. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–5 Marketing History This is our product. How do we market it? - 1900  Think Bayer aspirin How can we tailor our product to appeal to certain groups? How can we market it in that ways that will get buyers’ attention? - 1980  Think leg-warmers What do groups identify with? How can we get inside their culture? How can we build a relationship with our brand? How can we be at the center of their community? What value can we offer that they will pay for? –Now  Think I-Pod

7. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–6 This is our product. How do we make people buy it?  Got a headache yet? Got a headache yet? Marketing History – early to mid 1900’s

8. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–7 How can we tailor our message to appeal to certain groups? Branding and demographic affiliation Marketing History – Later 1900’s

9. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–8 Marketing History –Now How do groups define themselves? How can we get inside their cultural definition as an active member?  Relationship marketing How can we be at the center of their community? Standing out in a sea of media clutter without being clutter ala Honda, Geico, etc.being Honda Do all that without looking like we are doing any of it……

10. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–9 Song’s failure Why did Song fail?  Review Review  Link to news story Link to news story  Where is Song now? Where is Song now?  www.flysong.com Modern marketing : Emotional Branding Setting the course  Link to news story Link to news story

11. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–10 Marketing’s role in the firm Strategic direction  The marketing plan Products offered Pricing Placement  Distribution decisions Promotion  Communications

12. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–11 The Influence of Marketing Permeates Everyday Life – Name the P’s! Goods & services you can buy Why is this one more expensive than that one? Location and availability of goods The stories we take in: is it your style of theirs?

13. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–12 The Marketing Plan External analysis  Competition analysis  Market segmentation Internal analysis  S.W.O.T., and finding our purpose Marketing Strategy  Mission, objectives,  Target markets, our positioning  Product, Price, Place, Promotion Financials and controls  Measurements and control plans

14. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–13 The point: Marketing Mix, or The “Four P’s” (Distribution) roductroduct ricerice romotionromotion lacelace PeoplePeoplePeoplePeople PeoplePeoplePeoplePeople What is our “Value proposition”?

15. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–14 The External Marketing Environment Figure 10–1 An environmental scan considers these factors’ relative importance to the decision at hand. Changes here are great resources for spotting opportunity.

16. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–15 The Competitive Environment Who are they? How do they compete? Substitute product competition Brand competition International competition Cooperation vs. Cannibalization

17. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–16 External Analysis: Basic Competitor Analysis Who are our competitors?  Brand, Substitute, international What drives customers’ decisions between us?  What do they do better than us?  Where are we about the same?  What do they do worse than us? What opportunities and threats does this knowledge reveal?

18. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–17 Pick a company! Mine: an exercise facility in the new Marina development Yours:  From your earlier mission exercise?  Taco Bell’s Alvarado street location?  You in your quest for the perfect career?

19. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–18 A Competition Analysis Matrix Customer valued attributes Us---------------Competitors-------------- Performance codes: S=Strong, M=Medium, W=Weak

20. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–19 A Competition Analysis Matrix Customer valued attributes Us---------------Competitors-------------- Slim GymSports Center 24 hourYour garage Quality & Features SMW PriceWMS Convenience MMS Performance codes: S=Strong, M=Medium, W=Weak

21. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–20 Positioning – Looking for our position in the competitive marketplace 1)Select Two key attributes to check 2)Build the Matrix 3)Plot competitors on the matrix 4)Find opportunity 5)Try again with another pair of attributes Attribute 2 Weak Strong Attribute 1 Weak Strong

22. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–21 Positioning – Quality vs. price Price Expensive Cheap Quality/Features Weak Strong G SC 24 1)Cheap and good aren’t feasible. 2)Expensive and crummy aren’t so good either. 3)Where should we fit in?

23. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–22 Positioning – Quality vs. Convenience Convenience Weak Strong Quality/Features Weak Strong G SC 24 1)Inconvenient and high quality would get beat by SC 2)Is there room for a convenience advantage?

24. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–23 Positioning – Quality vs. Convenience Convenience Weak Strong Price Expensive Cheap G SC 24 1)Inconvenient and high quality would get beat by SC 2)Is there room for a convenience advantage?

25. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–24 External Analysis: Market Segmentation Spend our time doing what triggers their purchase  P, P, P, P Market Segmentation  Dividing a market into customer categories  Current and potential Target Marketing  Selecting a category of customers with similar wants and needs who are likely to respond to the same approach Which segment should we target with our new…….?

26. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–25 There are plenty of ways to slice the market. Use what is relevant in each case. Psychographic Variables Geographic Variables Demographic Variables

27. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–26 Geographic marketing segmentation eg:

28. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–27 Demographic Segmentation Table 10–1

29. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–28 Psychographic Segmentation Examples Shopping profile  Big money spender, internet shopper, pays bills on time, pays late, loyal one-card customer  Sell them your credit card. Political Opinion Holders  Party membership, Magazines subscribed to, Donations history  Solicit donations and votes from them.  Tailor the message

30. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–29 Current Segmentation & Targeting Techno Extensive data banks are used to focus on very narrow segments.  Link to “Narrowcasting” Link to “Narrowcasting” Minimizes clutter Saves money What else…..

31. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–30 Slim Gym’s Customer Segmentation Analysis Geographic  Where do your customers live? Demographic  Age, ethnicity, earnings, sex, single, etc. Psychographic  Lifestyles & interests  Attitudes Who can we serve profitably?  Now and into the future

32. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–31 Ranking Segments by Profitability Low Potential Value, High Current Value High Potential Value, High Current Value Low Potential Value, Low Current Value High Potential Value, Low Current Value Should you spend money here? Grow these customers Keep and grow these customers Keep these customers Current Value Future Value

33. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–32 Market Segmentation Matrix

34. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–33 Consumer behavior Psychological Influences Personal Influences Social Influences Cultural Influences

35. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–34 The Consumer Buying Process Figure 10–2 I am sure gaining weight now that I commute daily. Hey Frank, How do you stay in shape? I could: Keep growing Buy equipment Get a closer job Join a gym Join Slim Gym, Today! Boy, I feel great!

36. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–35 The buying process with product class Convenience goods  Grab & go Shopping goods  Compare similar brands Specialty goods  Only one specific item will do

37. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–36 Organizational Buying Behavior Industrial, Resale, Government Differences in buyers  Professionals  Specialists  Experts in various ways Differences in buyer/seller relationships  Trust & Long term partner  Solve problems  Ease of doing business  I won’t get fired……

38. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–37 Organizational Markets & “buy” triggers Industrial Market Government and Institutional Market Reseller Market

39. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–38 What shall we do after the research? External analysis  Competition analysis  Market segmentation Internal analysis  S.W.O.T., and finding our purpose Marketing Strategy  Mission, objectives,  Target markets, our positioning  Product, Price, Place, Promotion Financials and controls  Measurements and control plans Align strategies with our mission Identify profitable target markets Position ourselves Using the marketing mix  Working out the 4 P’s.

40. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–39 A Competition Analysis Matrix Customer valued attributes Us---------------Competitors-------------- Slim GymSports Center 24 hourYour garage Quality & Features SMW PriceWMS Convenience MMS Performance codes: S=Strong, M=Medium, W=Weak

41. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–40 Positioning – Quality vs. price Price Expensive Cheap Quality/Features Weak Strong G SC 24 1)Cheap and good aren’t feasible isn’t good for us. 2)Expensive and crummy isn’t good for customers. 3)Where should we fit in?

42. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–41 Positioning – Quality vs. Convenience Convenience Weak Strong Quality/Features Weak Strong G SC 24 1)Inconvenient and high quality would get beat by SC 2)Is there room for a convenience advantage?

43. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–42 Positioning – Price vs. Convenience Convenience Weak Strong Price Expensive Cheap G SC 24 1)Cheap and convenient would go directly against G 2)Expensive and less than convenient also have direct competitors 3)Where should we be?

44. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–43 Positioning – Quality vs. Convenience Convenience Weak Strong Quality Weak Strong G SC 24 1)Inconvenient and high quality would get beat by SC 2)Is there room for a convenience advantage?

45. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–44 Market Segmentation Matrix Commuters Community Residents Local Workforce Active lifestyle INactive lifestyle

46. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–45 Where the real work is done: The Marketing Mix, aka: The “Four P’s” (Distribution) roductroduct ricerice romotionromotion lacelace PeoplePeoplePeoplePeople PeoplePeoplePeoplePeople

47. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–46 The Value Package (think: the whole product that is purchased) All the attributes of the relationship that come with purchase  Features, benefits, & price sure but also:  Ease of doing business  Timely delivery  Support service  How important is this stuff in a world of product parity?

48. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–47 Classifying Products Consumer  Convenience Goods  Shopping Goods  Specialty Goods Industrial  Profit Items  Expense Items  Capital Items

49. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–48 Idea generation Idea screening Concept development and testing Business analysis Market testing Technical implementation (organizing) Commercialization  http://en.wikipedia.org/wiki/Product_development http://en.wikipedia.org/wiki/Product_development REPEAT: When do we start? Developing New Products

50. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–49 Developing New Products The New Product Development Process Product Mortality Rates Strategy of introducing new products to respond quickly to customer or market changes Parallel development, planned obsolescence

51. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–50 Products in the Life Cycle Stages, Sales, Cost and Profit Figure 10–4

52. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–51 The Brand as part of the value package Branding  Using symbols to communicate the qualities of a given product to create loyal consumers What does the brand do to the consumer’s purchasing decision? Brand loyalty vs. Price loyalty  distribution vs. manufacturer branding  How the internet has changed all this

53. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–52 Product Offerings: Leveraging the Brand Product Line  A group of similar products, intended for similar buyers, who will use them in similar ways.  Hair care products, Floor care products, Car care products, sandwich spreads, etc. Product Mix  The group of product lines that a company offers for sale.  All of the above are a firm’s product mix Increase product lines to:  Increase sales, leverage branding  Decrease focus, dilute branding  Hey, wait is that good or bad?

54. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–53 Product Packaging: Product AND Promotion Attracts consumers Displays brand name Protects contents Supplies information Communicates features and benefits Provides features and benefits (e.g. easy pour spout) Environmental implications

55. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–54 The Promotional Mix Advertising Personal Selling Sales Promotions Public Relations

56. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–55 The International Marketing Mix PRODUCTS PRICING PROMOTION DISTRIBUTION

57. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–56 Small Business and the Marketing Mix Products Pricing Promotion Distribution

58. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–57 Chapter Review Define marketing. Describe the forces of the external marketing environment. Explain market segmentation and target marketing. Describe the consumer buying process. Discuss the organizational market categories.

59. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–58 Chapter Review (cont’d) Define product and distinguish between consumer and industrial products. Explain the importance of branding and packaging.

60. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–59 Jump into chapter 12: The other 3 P’s(Distribution) roductroduct ricerice romotionromotion lacelace PeoplePeoplePeoplePeople PeoplePeoplePeoplePeople

61. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–60 A Competition Analysis Matrix Customer valued attributes Us---------------Competitors-------------- Slim GymSports Center 24 hourYour garage Quality & Features SMW PriceWMS Convenience MMS Performance codes: S=Strong, M=Medium, W=Weak

62. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–61 Positioning – Quality vs. price Price Expensive Cheap Quality/Features Weak Strong G SC 24 1)Cheap and good aren’t feasible isn’t good for us. 2)Expensive and crummy isn’t good for customers. 3)Where should we fit in?

63. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–62 Positioning – Quality vs. Convenience Convenience Weak Strong Quality/Features Weak Strong G SC 24 1)Inconvenient and high quality would get beat by SC 2)Is there room for a convenience advantage?

64. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–63 Positioning – Price vs. Convenience Convenience Weak Strong Price Expensive Cheap G SC 24 1)Cheap and convenient would go directly against G 2)Expensive and less than convenient also have direct competitors 3)Where should we be?

65. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–64 Positioning – Quality vs. Convenience Convenience Weak Strong Quality Weak Strong G SC 24 1)Inconvenient and high quality would get beat by SC 2)Is there room for a convenience advantage?

66. Copyright © 2005 Prentice Hall, Inc. All rights reserved.10–65 Market Segmentation Matrix Commuters Community Residents Local Workforce Active lifestyle INactive lifestyle