Chapter 11 Marketing Processes and Consumer Behavior Day

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

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

What Is Marketing? 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. “ OR Finding a need and filling it! Copyright © 2005 Prentice Hall, Inc. All rights reserved. 4

Marketing History – early to mid 1900’s • This is our product. How do

Marketing History – Later 1900’s • How can we tailor our message to appeal

Marketing History –Now • How do groups define themselves? • How can we get inside their cultural definition as an active member? Ø 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. • Do all that without looking like we are doing any of it…… Copyright © 2005 Prentice Hall, Inc. All rights reserved. 8

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

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

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

The point: Marketing Mix, or The “Four P’s” roduct P eo ple lace (Distribution)

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

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

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

A Competition Analysis Matrix Customer valued attributes Us --------Competitors------- Performance codes: S=Strong, M=Medium, W=Weak

A Competition Analysis Matrix Customer Us --------Competitors-------valued Slim Gym Sports 24 hour Your attributes Center garage Quality & Features S M W Price W M S Convenience M M S Performance codes: S=Strong, M=Medium, W=Weak 19 Copyright © 2005 Prentice Hall, Inc. All rights reserved.

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

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

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

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

External Analysis: Market Segmentation • Market Segmentation Ø Dividing a market into customer categories v Current and potential • Target Marketing Ø 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……. ? Copyright © 2005 Prentice Hall, Inc. All rights reserved. • Spend our time doing what triggers their purchase Ø P, P, P, P 24

There are plenty of ways to slice the market. Use what is relevant in

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

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

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

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

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

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

Consumer behavior • Psychological Influences • Personal Influences • Social Influences • Cultural Influences

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

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

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

Organizational Markets & “buy” triggers Industrial Market Reseller Market Government and Institutional Market Copyright

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

A Competition Analysis Matrix Customer Us --------Competitors-------valued Slim Gym Sports 24 hour Your attributes Center garage Quality & Features S M W Price W M S Convenience M M S Performance codes: S=Strong, M=Medium, W=Weak 39 Copyright © 2005 Prentice Hall, Inc. All rights reserved.

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

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

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

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

Copyright © 2005 Prentice Hall, Inc. All rights reserved. IN life acti sty ve

Where the real work is done: The Marketing Mix, aka: The “Four P’s” roduct

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

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

Products in the Life Cycle Stages, Sales, Cost and Profit Copyright © 2005 Prentice

The Brand as part of the value package • Branding Ø 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 Ø distribution vs. manufacturer branding Ø How the internet has changed all this Copyright © 2005 Prentice Hall, Inc. All rights reserved. 51

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

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 Copyright © 2005 Prentice Hall, Inc. All rights reserved. 53

Jump into chapter 12: The other 3 P’s roduct P eo ple lace (Distribution)

A Competition Analysis Matrix Customer Us --------Competitors-------valued Slim Gym Sports 24 hour Your attributes Center garage Quality & Features S M W Price W M S Convenience M M S Performance codes: S=Strong, M=Medium, W=Weak 60 Copyright © 2005 Prentice Hall, Inc. All rights reserved.

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

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

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

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