Mkt201rev Fall

What Is Marketing?
Marketing is a process by which companies create value for customers and build strong customer relationships to capture value from customers in return
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall
Chapter 9- slide 1
Understanding the Marketplace and Customer Needs

Customer Needs, Wants, and Demands
Chapter 9- slide 2
Designing a Customer-Driven Marketing Strategy

Marketing Management Orientations
Production concept is the idea that consumers will favor products that are available or highly affordable For example, Lenovo dominates the highly competitive, price-sensitive Chinese PC market through low labor costs, high production efficiency and Copyright 2010 Pearson Education, Inc. Chapter 9- slide 3 mass Hall Publishing as Prenticedistribution.
Product concept is the idea that consumers will favor products that offer the most quality, performance, and features. Organization should therefore devote its energy to making continuous product improvements. Societal marketing concept is the idea that a company should make good marketing decisions by considering consumers wants, the companys Copyright 2010 Pearson Education, Inc. Chapter 9- slide requirements, consumers long-term 4 Publishing as Prentice Hall
Marketing Management Orientations
Selling concept is the idea that consumers will not buy enough of the firms products unless it undertakes a large scale selling and promotion effort Marketing concept is the idea that achieving organizational goals depends on knowing the needs and wants of the target markets and delivering the desired Copyright 2010 Pearson Education, Inc. satisfactions better than competitors5 do Chapter 9- slide Publishing as Prentice Hall
Building Customer Relationships

The Changing Nature of Customer Relationships
Relating with more carefully selected customers uses selective relationship management to target fewer, more profitable customers Relating more deeply and interactively by incorporating more interactive two way relationships through blogs, Websites, online communities and social networks
Chapter 9- slide 6
Capturing Value from Customers

Creating Customer Loyalty and Retention
Customer lifetime value is the value of the entire stream of purchases that the customer would make over a lifetime of patronage
Chapter 9- slide 7
Customer relationship groups Contd

Butterflies True friends
Good fit between companys Good fit between companys offerings and customers needs; offerings and customers needs; high profit potential highest profit potential Profitable but, not loyal As, stock market investors
Strangers
Both profitable and loyal
Barnacles
Little fit between companys offerings and customers needs ;lowest profit potential Low profitable and little loyal Do not invest in them
Limited fit between companys offerings and customers needs; low profit potential Highly loyal but not profitable
Chapter 9- slide 8
Strategic planning is the process of developing and maintaining a strategic fit between the organizations goals and capabilities and its changing marketing opportunities
Stars are high-growth, high-share businesses or products requiring heavy investment to finance rapid growth. They will eventually turn into cash cows. Ex: Good morning soap , Toshiba laptops Cash cows are low-growth, high-share businesses or products that are established and successful SBUs requiring less investment to maintain market share. Ex: Lux soap , Toshiba Televisions
Chapter 9- slide 9
2-13
Companywide Strategic Planning: Marketings Role The Boston Group Approach
Defining
Analyzing the Current Business Portfolio

Question marks are low-share business units in high-growth markets requiring a lot of cash to hold their share Ex: good morning shampoo , if Toshiba introduced mobiles Dogs are low-growth, low-share businesses and products that may generate enough cash to maintain themselves but do not promise to be large sources of cash Ex: Good morning oil for hair , Sony Photo Cameras
2-14
Chapter 9- slide 10
Companywide Strategic Planning

Developing Strategies for Growth and Downsizing
Chapter 9- slide 11
Product/market expansion grid is a tool for identifying company growth opportunities through market penetration, market development, product development, or diversification
Chapter 9- slide 12

Market penetration is a growth strategy increasing sales to current market segments without changing the product.
You can improve in advertising, prices, service, menu selection or store design might encourage customers to go to the shop more often r stay there longer.
Ex: Starbucks added drive through windows to its stores, Starbucks offers wireless Internet access in most of its stores. Ex: MC Donald's changed the interior to let customers stay there longer .
Chapter 9- slide 13

Market development is a growth strategy that identifies
and develops new market segments for current products Ex: new demographic mkts: Starbucks may think of encouraging seniors to visit it. On the run is attracting females to buy oriental sweets for occasions. Mc Donalds introduced Breakfast for professionals who work at 6 am La poire opening in universities targeting students (MSA) Ex: new geographic mkts: Starbucks is expanding in USA and globally in china and Egypt Dreamland is entering the Sudan market of real estate.
Chapter 9- slide 14

Product development is a growth strategy that offers new or modified products to existing market segments
1. Develop new features. 2. Develop different quality levels. 3. Improve the technology. Ex: Starbucks introduced new low calorie options such as Frappuicino light blended beverages Ex; Starbucks added Chianto a chocolate beverage for non coffee drinkers. Ex: Cinnabon created small mini bites instead of big ones. Ex: Pepsi Max was introduced to the same market segment of Pepsi.
Chapter 9- slide 15
Diversification is a growth strategy through starting up or acquiring businesses outside the companys current products and markets
Ex; Ahmed Bahgat group
Chapter 9- slide 16
Managing the Marketing Effort

Marketing Analysis SWOT Analysis
Chapter 9- slide 17
Strength 1- Strength in resources ,skills or other advantages relative to competitors 2. Strong financial resources 3. Powerful brand image and market leadership 4. Strong buyer-supplier relationship 5. Ability to raise long and short term capital Weaknesses 1. Limitation of deficiencies in resources, skills, or capabilities that impedes the firm's effective performance. 2. Poor facilities, management skills and financial resources 3. Weak marketing skills and poor brand image 4. Concentration of sales in a few products or to a few customers. Opportunities 1. Major favourable situations 2. Change in competitive or regulatory circumstances 3. Technological changes and improved buyer/supplier relationship Threats 1.Major unfavourable situations in a firm's environment representing impediments to the firm's desired position 2. Entrance of new competitors 3. Slow market growth Copyright 2010 Pearson Education, Inc. 4. Technological changes Chapter 9- slide 18
Publishing as Prentice Hall
The Marketing Environment

Microenvironment consists of the actors close to the company that affect its ability to serve its customers, the company, suppliers, marketing intermediaries, customer markets, competitors, and publics
Chapter 9- slide 19
The Companys Microenvironment

The Company
Top management Finance R&D Competitors Firms must gain strategic advantage by positioning their offerings against competitors offerings
Chapter 9- slide 20

Suppliers
Provide the resources to produce goods and services Treated as partners to provide customer value Marketing Intermediaries Help the company to promote, sell and distribute its products to final buyers
Chapter 9- slide 21

Types of Marketing Intermediaries
Chapter 9- slide 22

Publics Any group that has an actual or potential interest in or impact on an organizations ability to achieve its objectives
Financial publics Media publics Government publics Citizen-action publics Local publics General public Internal publics
Chapter 9- slide 23
The Companys Macroenvironment

Demographic Environment Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics Demographic trends include age, family structure, geographic population shifts, educational characteristics, and population diversity Divorcing or separating Choosing not to marry Choosing to marrying later
Chapter 9- slide 24

Economic Environment
Economic environment consists of factors that affect consumer purchasing power and spending patterns Industrial economies are richer markets Subsistence economies consume most of their own agriculture and Copyright 2010 Pearson Education, Inc. Chapter 9- slide 25 industrial output Publishing as Prentice Hall

Natural Environment
Natural environment involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities Trends
Shortages of raw materials Increased pollution Increase government intervention Environmentally sustainable strategies Copyright 2010 Pearson Education, Inc.
Chapter 9- slide 26

Technological Environment
Most dramatic force in changing the marketplace Creates new products and opportunities Safety of new product always a concern Cultural environment consists of institutions and other forces that affect a societys basic values, perceptions, and behaviors Copyright 2010 Pearson Education, Inc.
Chapter 9- slide 27

Political Environment
Political environment consists of laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society Legislation regulating business
Increased legislation Changing government agency Copyright 2010enforcement Pearson Education, Inc. Chapter 9- slide 28 Publishing as Prentice Hall
What Is a Product?
Levels of Product and Services
Core benefits represent what the buyer is really buying Actual product represents the design, brand name, and packaging that delivers the core benefit to the customer Augmented product represents additional services or benefits of the actual product
Chapter 9- slide 29
8-8
What Is a Product?
Product and Service Classifications
Chapter 9- slide 30
What Is a Product?
Capital items are industrial products that aid in the buyers production or operations Materials and parts include raw materials and manufactured materials and parts usually sold directly to industrial users Supplies and services include operating supplies, repair and maintenance items, and business services
Chapter 9- slide 31
What Is a Product?
Product and Service Classifications Convenience products are consumer products and services that the customer usually buys frequently, immediately, and with a minimum comparison and buying effort Price: low Distribution: Anywhere Promotion: Mass promotion by producer Examples: Newspapers, Candy, Fast food
Chapter 9- slide 32
What Is a Product?
Product and Service Classifications Shopping products are consumer products and services that the customer compares carefully on suitability, quality, price, and style Price: higher Price Distribution: selective distribution Promotion: Advertising+ personal selling by both producer and reseller. Examples: Furniture, Cars, Appliances
Chapter 9- slide 33
What Is a Product?
Specialty products are consumer products and services with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort Price: very high prices Distribution: Exclusive distribution Promotion: Careful targeted promotion Examples: Medical services, Designer clothes, High-end electronics
Chapter 9- slide 34
What Is a Product?
Product and Service Classifications Unsought products are consumer products that the consumer does not know about or knows about but does not normally think of buying Prices: Varies Distribution: Varies Promotion: Aggressive advertising+ personal selling by producer and reseller. Example: Life insurance, Blood donations
Chapter 9- slide 35
Product and Services Decisions

Individual Product and Service Decisions Product attributes are the benefits of the product or service Quality: Quality level is the level of quality that supports the products positioning Conformance quality is the products freedom from defects and consistency in delivering a targeted level of performance Product features are a competitive tool for differentiating a product from competitors products Style describes Copyright 2010 Pearson Education, Inc. the appearance of the product Chapter 9- slide 36
Product and Service Decisions

Individual Product and Service Decisions How we should select our brand:
It should suggest something about the products benefits and qualities. It should be easy to pronounce recognize, and remember. Should be distinctive Extendable Should translate easily to foreign language Should be capable of registration and Copyright 2010 Pearson Education, Inc. Chapter 9- slide 37 protection Publishing as Prentice Hall
Product and Services Decisions

Product Line Decisions
Product line is a group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges Product line stretching is when a company lengthens its product line beyond its current range Downward Upward Copyright 2010 Pearson Education, Inc. Chapter 9- slide 38 Publishing as Prentice Hall Combination of both

Product Line Decisions
Downward product line stretching is used by companies at the upper end of the market to plug a market hole or respond to a competitors attack Upward product line stretching is by companies at the lower end of the market to add prestige to their current products Combination line stretching is used by companies in the middle range of the market to achieve both goals of upward and downward line stretching
Chapter 9- slide 39
8-36

Product Line Decisions Product line filling occurs when companies add more items within the present range of the line More profits Satisfying dealers Excess capacity Plugging holes to fend off competitors
Chapter 9- slide 40
8-38
Services Marketing
Nature and Characteristics of a Service Intangibility refers to the fact that services cannot be seen, tasted, felt, heard, or smelled before they are purchased Inseparability refers to the fact that services cannot be separated from their providers Variability refers to the fact that service quality depends on who provides it as well as when, where, and how it is provided Perishability refers to the fact that services cannot be stored for later sale or use
Chapter 9- slide 41
8-57
Services Marketing
Marketing Strategies for Service Firms
Service-profit chain links service firm profits with employee and customer satisfaction Internal service quality Satisfied and productive service employees Greater service value Satisfied and loyal customers Healthy service profits and growth
Chapter 9- slide 42
Services Marketing
Marketing Strategies for Service Firms
Internal marketing means that the service firm must orient and motivate its customer contact employees and supporting service people to work as a team to provide customer satisfaction Internal marketing must precede external marketing
Chapter 9- slide 43
New-Product Development Process

Major Stages in New-Product Development
Chapter 9- slide 44

Idea Generation
Idea generation is the systematic search for new-product ideas Sources of new-product ideas Internal sources refer to the companys own formal research and development, management and staff, and intrapreneurial programs External sources refer to sources outside the company such as customers, competitors, distributors, suppliers, and Copyright 2010 Pearson Education, Inc. Chapter 9- slide 45 outside design firms Publishing as Prentice Hall

Idea Screening
Identify good ideas and drop poor ideas R-W-W Screening Framework:
Is it real? Can we win? Is it worth doing?
Chapter 9- slide 46

Concept Development and Testing
Product idea is an idea for a possible product that the company can see itself offering to the market Product concept is a detailed version of the idea stated in meaningful consumer terms Product image is the way consumers perceive an actual or Copyright 2010 Pearson Education, Inc. Chapter 9- slide 47 potential product Publishing as Prentice Hall

Concept Development and Testing
Concept testing refers to testing new-product concepts with groups of target consumers
Chapter 9- slide 48

Marketing Strategy Development
Marketing strategy development refers to the initial marketing strategy for introducing the product to the market Marketing strategy statement includes:
Description of the target market Value proposition Pearson Education, profit goals Copyright 2010Sales andInc. Chapter 9- slide 49

Business analysis involves a review of the sales, costs, and profit projections to find out whether they satisfy the companys objectives Product development involves the creation and testing of one or more physical versions by the R&D or engineering departments Requires an Inc. Copyright 2010 Pearson Education,increase in investment Chapter 9- slide 50

Test marketing is the stage at which the product and marketing program are introduced into more realistic marketing settings Provides the marketer with experience in testing the product and entire marketing program before full introduction Commercialization is the introduction of the new product When to launch Where to launch Copyright 2010 Pearson Education, Inc.
Chapter 9- slide 51
Product Life-Cycle Strategies

Product Life Cycle
Chapter 9- slide 52

Introduction Stage
Low sales High cost per customer Negative profits Innovators customers Few competitors e.g: online movie viewing software, GPS, hybrid cars
Chapter 9- slide 53

Introduction Stage
Marketing objectives: create product awareness and trial. Strategies: - Product: offer a basic product - Price: use-cost plus - Distribution: build selective distribution - Advertising: build product awareness among early adopters and dealers - Sales promotion: use heavy sales promotion to increase trial.
Chapter 9- slide 54

Growth Stage
Rapidly rising sales Average cost per customer Rising profits Early adapters customers Competitors are growing in number e.g:MP3 player , body splash , LCD
Chapter 9- slide 55

Growth Stage
Marketing objectives: maximize market share. Strategies: - Product: offer product extension, service warranty - Price: price to penetrate market - Distribution: build intensive distribution - Advertising: build awareness and interest in mass market - Sales promotion: reduce to take advantage of heavy consumer demand.
Chapter 9- slide 56

Maturity Stage
Peak sales Low cost per customer High profits Middle majority customers Stable number of competitors beginning to decline e.g: cars , Sodas , mobiles
Chapter 9- slide 57

Maturity Stage
Marketing objectives: maximize profit while defending market share. Strategies: - Product: diversify brand and models - Price: price to match or beat competitors - Distribution: build more intensive distribution - Advertising: stress brand differences and benefits - Sales promotion: increase to encourage brand switching
Chapter 9- slide 58

Decline Stage
Declining sales Low cost per customer Declining profit Laggards ( last group buying a product) Competitors are declining in number Copyrighte.g: videotapes , walkman , digital 2010 Pearson Education, Inc. Chapter 9- slide 59

Decline Stage
Marketing objectives: reduce expenditure and milk the brand. Strategies: - Product: phase out weak items - Price: cut price - Distribution: go selective: phase out unprofitable outlets - Advertising: reduce to level needed to retain hard-core loyals - Sales promotion: reduce to minimal level
Chapter 9- slide 60

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What Is Marketing?

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Understanding the Marketplace and Customer Needs

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Designing a Customer-Driven Marketing Strategy

Designing a Customer-Driven Marketing Strategy

Marketing Management Orientations

Designing a Customer-Driven Marketing Strategy

Building Customer Relationships

Capturing Value from Customers

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Customer relationship groups Contd

Both profitable and loyal

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Companywide Strategic Planning: Marketings Role The Boston Group Approach

Analyzing the Current Business Portfolio

Companywide Strategic Planning

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Companywide Strategic Planning

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Companywide Strategic Planning

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Companywide Strategic Planning

Companywide Strategic Planning

Companywide Strategic Planning

Managing the Marketing Effort

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

The Marketing Environment

The Companys Microenvironment

The Companys Microenvironment

The Companys Microenvironment

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

The Companys Microenvironment

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

The Companys Macroenvironment

The Companys Macroenvironment

The Companys Macroenvironment

The Companys Macroenvironment

The Companys Macroenvironment

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Product and Services Decisions

Product and Service Decisions

Product and Services Decisions

Product and Service Decisions

Product and Service Decisions

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

New-Product Development Process

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

New-Product Development Process

New-Product Development Process

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

New-Product Development Process

New-Product Development Process

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

New-Product Development Process

New-Product Development Process

New-Product Development Process

Product Life-Cycle Strategies

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall