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Chapter1Chapter 1 DefiningMarketingfortheDefining Marketing for the 2121stst CenturyCentury byby www.bookfiesta4u.comPowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans Chapter1Chapter 1 DefiningMarketingfortheDefining Marketing for the 2121stst CenturyCentury byby www.bookfiesta4u.comPowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans
ThefutureisnotaheadThe future is not ahead ofus.Ithasalreadyof us. It has already happened.happened. Kotler on Marketing www.bookfiesta4u.com1-3 happened.happened. Unfortunately,itisUnfortunately, it is unequallydistributedunequally distributed amongcompanies,among companies, industriesandnations.industries and nations. ThefutureisnotaheadThe future is not ahead ofus.Ithasalreadyof us. It has already happened.happened. Kotler on Marketing www.bookfiesta4u.com1-3 happened.happened. Unfortunately,itisUnfortunately, it is unequallydistributedunequally distributed amongcompanies,among companies, industriesandnations.industries and nations.
Chapter Objectives I IIn nn t tth hhi iis ss c cch hha aap ppt tte eer rr w wwe ee w wwi iil lll ll a aad ddd ddr rre ees sss ss t tth hhe ee f ffo ool lll llo oow wwi iin nng gg q qqu uue ees sst tti iio oon nns ss:
:: Wh WhWhat atat i iis ss t tth hhe ee n nne eew ww e eec ccon ononom omomy yy l lli iik kke ee? ?? Wh WhWh at atat ar arare ee t tth hhe ee t ttas asask kks ss of ofof m mmar arark kke eet tti iin nng? g?g? Wh WhWhat atat
ar arare ee t tth hhe ee t ttas asask kks ss of ofof m mmar arark kke eet tti iin nng? g?g? Wh WhWhat atat ar arare ee t tth hhe ee m mmaj ajajor oror c ccon ononc cce eep ppt tts ss an anand dd t ttool oolools ss ofof m mmar arark kke
eet tti iin nng? g?g? Wh WhWhat atat or orori iie een nnt ttat atati iion onons ss d ddo c o co com omomp ppan anani iie ees ss e eexh xhxhi iib bbi iit tt iin nn tth hhe ee m mmar arark kke eet ttp ppl llac acace ee? ?? H HHow owow ar arare ee
c ccom omomp ppan anani iie ees ss an anand dd m mmar arark kke eet tte eer rrs ss r rre ees ssp ppon onond ddi iin nng g tg to oo t tth hhe ee n nne eew ww c cch hhal alall lle een nnge geges ss? ?? www.bookfiesta4u.com
The New Economy SubstantialincreaseinbuyingpowerSubstantial increase in buying power AgreatervarietyofgoodsandservicesA greater variety of goods and services AgreateramountofinformationaboutA greater amount of information about tillthiti ll thi www.bookfiesta4u.com1-5 practicallyanythingpractically anything AgreatereaseininteractingandplacingA greater ease in interacting and placing andreceivingordersand receiving orders AnabilitytocomparenotesonproductsAn ability to compare notes on products andservicesand services The New Economy SubstantialincreaseinbuyingpowerSubstantial increase in buying power AgreatervarietyofgoodsandservicesA greater variety of goods and services AgreateramountofinformationaboutA greater amount of information about tillthiti ll thi www.bookfiesta4u.com1-5 practicallyanythingpractically anything AgreatereaseininteractingandplacingA greater ease in interacting and placing andreceivingordersand receiving orders AnabilitytocomparenotesonproductsAn ability to compare notes on products andservicesand services
The New Economy We WeWeb bbs ssi iit tte ees ss c cca aan nn p ppr rro oov vvi iid dde ee c cco oom mmp ppa aan nni iie ees ss wwi iit tth hh p ppo oow wwe eer rrf ffu uul ll n nne eew ww i iin nnf ffo oor rrm mma aat
tti iio oon nn a aan nnd dd s ssa aal lle ees ss c cch hha aan nnn nne eel lls ss. .. C CCo oom mmp ppa aan nni iie ees ss c cca aan nn c cco ool lll lle eec cct tt f ffu uul lll lle eer rr a aan nnd dd rri iic
cch hhe eer rr www.bookfiesta4u.com informationaboutmarkets,customers,information about markets, customers,,,, , prospectsandcompetitors.prospects and competitors. CompaniescanfacilitateandspeedupCompanies can facilitate and speed up communicationsamongemployees.communications among employees. Companiescanhave2Companies can have 2--wayway communicationwithcustomersandcommunication with customers and prospectsprospects
The New Economy C CCo oom mmp ppa aan nni iie ees ss c cca aan nn s sse een nnd dd a aad dds ss, ,, c cco oou uup ppo oon nns ss, ,, s ssa aam mmp ppl lle ees ss, ,, i iin nnf ffo oor rrm mma aat tti iio oon nn t
tto oo t tta aar rrg gge eet tte eed dd c ccu uus sst tto oom mme eer rrs ss. .. C CCo oom mmp ppa aan nni iie ees ss c cca aan nn c ccu uus sst tto oom mmi iiz zze ee o oof fff ffe eer rri iin nng ggs ss aan nnd dd
www.bookfiesta4u.com servicestoindividualcustomers.services to individual customers. TheInternetcanbeusedasaThe Internet can be used as a communicationchannelforpurchasing,communication channel for purchasing, training,andrecruiting.training, and recruiting. CompaniescanimprovelogisticsandCompanies can improve logistics and operationsforcostsavingswhileoperations for cost savings while improvingaccuracyandservicequality.improving accuracy and service quality.
ThethreemajorchallengesfacedbyThe three major challenges faced by businessestodayareglobalization,businesses today are globalization, advancesintechnology,andderegulation.advances in technology, and deregulation. www.bookfiesta4u.comgy,ggy, g WhichoftheseaffordsthegreatestWhich of these affords the greatest opportunityforopportunity for establishedestablished businesses?businesses? WhichaffordsthegreatestWhich affords the greatest opportunitiesforopportunities for newnew businesses?Why?businesses? Why? ThethreemajorchallengesfacedbyThe three major challenges faced by businessestodayareglobalization,businesses today are globalization, advancesintechnology,andderegulation.advances in technology, and deregulation. www.bookfiesta4u.comgy,ggy, g WhichoftheseaffordsthegreatestWhich of these affords the greatest opportunityforopportunity for establishedestablished businesses?businesses? WhichaffordsthegreatestWhich affords the greatest opportunitiesforopportunities for newnew businesses?Why?businesses? Why?
Marketing Task T TTe een nn r rru uul lle ees ss o oof ff r rra aad ddi iic cca aal ll m mma aar rrk kke eet tti iin nng gg T TTh hhe ee C CCE EEO OO m mmu uus sst tt o oow wwn nn t tth hhe ee m mma
aar rrk kke eet tti iin nng gg ffu uun nnc cct tti iio oon nn. .. M MMa aak kke ee s ssu uur rre ee t tth hhe ee m mma aar rrk kke eet tti iin nng gg d dde eep ppa aar rrt ttm mme een nnt tt sst tta aar rrt tts ss
smallandflatandstayssmallandflat.small and flat and stays small and flat. GetfacetofacewiththepeoplewhomatterGet face to face with the people who matter mostmost thecustomers.the customers. Usemarketresearchcautiously.Use market research cautiously. Hireonlypassionatemissionaries.Hire only passionate missionaries. www.bookfiesta4u.com
Marketing Task Loveandrespectyourcustomers.Love and respect your customers. Createacommunityofconsumers.Create a community of consumers. Rethinkthemarketingmix.Rethink the marketing mix. Celebratecommonsense.Celebrate common sense. www.bookfiesta4u.com1-10 Betruetothebrand.Be true to the brand. ThreestagesofmarketingpracticeThree stages of marketing practice EntrepreneurialMarketingEntrepreneurial Marketing FormulatedMarketingFormulated Marketing IntrepreneurialMarketingIntrepreneurial Marketing Marketing Task Loveandrespectyourcustomers.Love and respect your customers. Createacommunityofconsumers.Create a community of consumers. Rethinkthemarketingmix.Rethink the marketing mix. Celebratecommonsense.Celebrate common sense. www.bookfiesta4u.com1-10 Betruetothebrand.Be true to the brand. ThreestagesofmarketingpracticeThree stages of marketing practice EntrepreneurialMarketingEntrepreneurial Marketing FormulatedMarketingFormulated Marketing IntrepreneurialMarketingIntrepreneurial Marketing
The Scope of Marketing Marketing:typicallyseenastheMarketing: typically seen as the taskofcreating,promoting,andtask of creating, promoting, and deliveringgoodsandservicestodelivering goods and services to dbid b i www.bookfiesta4u.com1-11 consumersandbusinesses.consumers and businesses. The Scope of Marketing Marketing:typicallyseenastheMarketing: typically seen as the taskofcreating,promoting,andtask of creating, promoting, and deliveringgoodsandservicestodelivering goods and services to dbid b i www.bookfiesta4u.com1-11 consumersandbusinesses.consumers and businesses.
1 11. .. N NNe eeg gga aat tti iiv vve ee d dde eem mma aan nnd dd Table 1.1 Demand States and Marketing Tasks A AA m mma aaj jjo oor rr p ppa aar rrt tt o oof ff t tth hhe ee m mma aar rrk kke eet tt ddi iis ssl lli iik kke ees
ss tth hhe ee p ppr rro ood ddu uuc cct tt a aan nnd dd m mma aay yy e eev vve een nn p ppa aay yy aa ppr rri iic cce ee tto oo a aav vvo ooi iid dd i iit tt va aac ccc cci iin nna aat tti iio oon nns ss, ,, d dde
een nnt tta aal ll wwo oor rrk kk, ,, vv vva aas sse eec cct tto oom mmi iie ees ss, ,, a aan nnd dd g gga aal lll llb bbl lla aad ddd dde eer rr o oop ppe eer rra aat tti iio oon nns ss, ,, f ffo oor rr i iin nns sst
tta aan nnc cce ee. .. EEm mmp ppl llo ooy yye eer rrs ss hha aav vve ee a aa n nne eeg gga aat tti iiv vve ee d dde eem mma aan nnd dd f ffo oor rr e eex xx-cco oon nnv vvi iic cct tts ss aan nnd dd a aal llc cco
ooh hho ool lli iic ccs ss a aas ss e eem mmp ppl llo ooy yye eee ees ss. .. TTh hhe ee mma aar rrk kke eet tti iin nng gg t tta aas ssk kk i iis ss t tto oo a aan nna aal lly yyze zeze w wwh hhy yy t tth hhe ee mma
aar rrk kke eet tt d ddi iis ssl lli iik kke ees ss t tth hhe ee p ppr rro ood ddu uuc cct tt a aan nnd dd wwh hhe eet tth hhe eer rr aa m mma aar rrk kke eet tti iin nng gg p ppr rro oog ggr rra aam mm c cco oon nns
ssi iis sst tti iin nng gg oof ff p ppr rro ood ddu uuc cct tt r rre eed dde ees ssi iig ggn nn, ,, l llo oow wwe eer rr ppr rri iic cce ees ss, ,, aan nnd dd m mmo oor rre ee p ppo oos ssi iit tti iiv vve ee p ppr rro
oom mmo oot tti iio oon nn cca aan nn cch hha aan nng gge ee morepositivepromotioncanchangemore positive promotion can change beliefsandattitudes.beliefs and attitudes. 2.Nodemand2. No demand TargetconsumersmaybeunawareoforTarget consumers may be un aware of or uninterestedintheproduct.Farmersuninterested in the product. Farmers maynotbeinterestedinanewfarmingmay not be interested in a new farming method,andcollegestudentsmaynotmethod, and college students may not beinterestedinforeignbe interested in foreign--languagelanguage courses.Themarketingtaskistofindcourses. The marketing task is to find waystoconnectthebenefitsoftheways to connect the benefits of the productwithpeople snaturalneedsandproduct with people s natural needs and interests.interests. See text for complete table www.bookfiesta4u.com
CanyounameacategoryofCan you name a category of productsforwhichyournegativeproducts for which your negative feelingshavesoftened?feelings have softened? www.bookfiesta4u.comfeelingshavesoftened?feelings have softened? WhatprecipitatedWhat precipitated thischange?this change? CanyounameacategoryofCan you name a category of productsforwhichyournegativeproducts for which your negative feelingshavesoftened?feelings have softened? www.bookfiesta4u.comfeelingshavesoftened?feelings have softened? WhatprecipitatedWhat precipitated thischange?this change?
The Scope of Marketing PlacesPlaces PropertiesProperties OrganizationsOrganizations GoodsGoods ServicesServices ExperiencesExperiences www.bookfiesta4u.com1-14 OrganizationsOrganizations InformationInformation IdeasIdeas ExperiencesExperiences EventsEvents PersonsPersons The Scope of Marketing PlacesPlaces PropertiesProperties OrganizationsOrganizations GoodsGoods ServicesServices ExperiencesExperiences www.bookfiesta4u.com1-14 OrganizationsOrganizations InformationInformation IdeasIdeas ExperiencesExperiences EventsEvents PersonsPersons
The Decisions Marketers Make ConsumerMarketsConsumer Markets BusinessMarketsBusiness Markets GlobalMarketsGlobal Markets www.bookfiesta4u.com1-15 GlobalMarketsGlobal Markets NonprofitandNonprofit and GovernmentalMarketsGovernmental Markets The Decisions Marketers Make ConsumerMarketsConsumer Markets BusinessMarketsBusiness Markets GlobalMarketsGlobal Markets www.bookfiesta4u.com1-15 GlobalMarketsGlobal Markets NonprofitandNonprofit and GovernmentalMarketsGovernmental Markets
Marketing Concepts and Tools DefiningMarketingDefining Marketing MarketingMarketing MarketingmanagementMarketing management www.bookfiesta4u.com1-16 MarketingmanagementMarketing management CoreMarketingConceptsCore Marketing Concepts TargetMarketsandTarget Markets and SegmentationSegmentation Marketing Concepts and Tools DefiningMarketingDefining Marketing MarketingMarketing MarketingmanagementMarketing management www.bookfiesta4u.com1-16 MarketingmanagementMarketing management CoreMarketingConceptsCore Marketing Concepts TargetMarketsandTarget Markets and SegmentationSegmentation
Figure 1-1: A Simple Marketing System www.bookfiesta4u.com1-17 Figure 1-1: A Simple Marketing System www.bookfiesta4u.com1-17
Marketing Concepts and Tools Marketplace,Marketplace, Marketspace,Marketspace, andand www.bookfiesta4u.com1-18 andand MetamarketMetamarket Marketing Concepts and Tools Marketplace,Marketplace, Marketspace,Marketspace, andand www.bookfiesta4u.com1-18 andand MetamarketMetamarket
Marketing Concepts and Tools MarketersandProspectsMarketers and Prospects Needs,Wants,andDemandsNeeds, Wants, and Demands Product,Offering,andBrandProduct, Offering, and Brand www.bookfiesta4u.com1-19 ValueandSatisfactionValue and Satisfaction CustomervaluetriadCustomer value triad ValueValue Value=Benefits/Costs=Value = Benefits / Costs = (Functionalbenefits+Emotionalbenefits)/(Functional benefits ) / (Monetarycosts+Timecosts+Energycosts+(Monetary costs + Time + Psychiccosts)Psychic costs) Marketing Concepts and Tools MarketersandProspectsMarketers and Prospects Needs,Wants,andDemandsNeeds, Wants, and Demands Product,Offering,andBrandProduct, Offering, and Brand www.bookfiesta4u.com1-19 ValueandSatisfactionValue and Satisfaction CustomervaluetriadCustomer value triad ValueValue Value=Benefits/Costs=Value = Benefits / Costs = (Functionalbenefits+Emotionalbenefits)/(Functional benefits ) / (Monetarycosts+Timecosts+Energycosts+(Monetary costs + Time + Psychiccosts)Psychic costs)
+ Emotional benefits costs + Energy costs
+ Emotional benefits costs + Energy costs
Marketing Concepts and Tools ExchangeandTransactionsExchange and Transactions ExchangeExchange TiT i www.bookfiesta4u.com1-20 TransactionTransaction BarterBarter TransferTransfer BehavioralresponseBehavioral response Marketing Concepts and Tools ExchangeandTransactionsExchange and Transactions ExchangeExchange TiT i www.bookfiesta4u.com1-20 TransactionTransaction BarterBarter TransferTransfer BehavioralresponseBehavioral response
Marketing Concepts and Tools RelationshipsandNetworksRelationships and Networks RelationshipmarketingRelationship marketing MkikM k i k www.bookfiesta4u.com1-21 Marketing networkMarketing network MarketingChannelsMarketing Channels SupplyChainSupply Chain CompetitionCompetition Marketing Concepts and Tools RelationshipsandNetworksRelationships and Networks RelationshipmarketingRelationship marketing MkikM k i k www.bookfiesta4u.com1-21 Marketing networkMarketing network MarketingChannelsMarketing Channels SupplyChainSupply Chain CompetitionCompetition
Marketing Concepts and Tools Brand competitionBrand competition Industry competitionIndustry competition FormcompetitionForm competition GenericcompetitionGeneric competition www.bookfiesta4u.com1-22 GenericcompetitionGeneric competition MarketingenvironmentMarketing environment TaskenvironmentTask environment BroadenvironmentBroad environment MarketingProgramMarketing Program Marketing programMarketing program Marketing mixMarketing mix Marketing Concepts and Tools Brand competitionBrand competition Industry competitionIndustry competition FormcompetitionForm competition GenericcompetitionGeneric competition www.bookfiesta4u.com1-22 GenericcompetitionGeneric competition MarketingenvironmentMarketing environment TaskenvironmentTask environment BroadenvironmentBroad environment MarketingProgramMarketing Program Marketing programMarketing program Marketing mixMarketing mix
Company Orientations Toward the Marketplace ProductionConceptProduction Concept ProductconceptProduct concept www.bookfiesta4u.com1-23 SellingConceptSelling Concept MarketingConceptMarketing Concept Company Orientations Toward the Marketplace ProductionConceptProduction Concept ProductconceptProduct concept www.bookfiesta4u.com1-23 SellingConceptSelling Concept MarketingConceptMarketing Concept
Company Orientations Toward the Marketplace TargetMarketTarget Market CustomerNeedsCustomer Needs www.bookfiesta4u.com1-24 StatedneedsStated needs RealneedsReal needs Unstated needsUnstated needs DelightneedsDelight needs SecretneedsSecret needs Company Orientations Toward the Marketplace TargetMarketTarget Market CustomerNeedsCustomer Needs www.bookfiesta4u.com1-24 StatedneedsStated needs RealneedsReal needs Unstated needsUnstated needs DelightneedsDelight needs SecretneedsSecret needs
Company Orientations Toward the Marketplace IntegratedMarketingIntegrated Marketing ExternalmarketingExternal marketing www.bookfiesta4u.com1-25 InternalmarketingInternal marketing Company Orientations Toward the Marketplace IntegratedMarketingIntegrated Marketing ExternalmarketingExternal marketing www.bookfiesta4u.com1-25 InternalmarketingInternal marketing
Company Orientations Toward the Marketplace ProfitabilityProfitability SalesdeclineSales decline Slow growthSlow growth www.bookfiesta4u.com1-26 Slow growthSlow growth Changing buying patternsChanging buying patterns Increasing competitionIncreasing competition Increasing marketingIncreasing marketing expendituresexpenditures Company Orientations Toward the Marketplace ProfitabilityProfitability SalesdeclineSales decline Slow growthSlow growth www.bookfiesta4u.com1-26 Slow growthSlow growth Changing buying patternsChanging buying patterns Increasing competitionIncreasing competition Increasing marketingIncreasing marketing expendituresexpenditures
Company Orientations Toward the Marketplace SocietalMarketingConceptSocietal Marketing Concept CauseCause--relatedmarketingrelated marketing www.bookfiesta4u.com1-27 Company Orientations Toward the Marketplace SocietalMarketingConceptSocietal Marketing Concept CauseCause--relatedmarketingrelated marketing www.bookfiesta4u.com1-27
CanyouidentifythetrendsthathaveCan you identify the trends that have madethemarketingconcept,themade the marketing concept, the dhild h i l www.bookfiesta4u.comcustomerconcept,andthesocietalcustomer concept, and the soci etal marketingconceptmoreattractivemarketing concept more attractive modelsforcontemporarymodels for contemporary marketingmanagers?marketing managers? CanyouidentifythetrendsthathaveCan you identify the trends that have madethemarketingconcept,themade the marketing concept, the dhild h i l www.bookfiesta4u.comcustomerconcept,andthesocietalcustomer concept, and the soci etal marketingconceptmoreattractivemarketing concept more attractive modelsforcontemporarymodels for contemporary marketingmanagers?marketing managers?
How Business and Marketing are Changing CustomersCustomers BrandmanufacturersBrand manufacturers www.bookfiesta4u.com1-29 StoreStore--basedretailersbased retailers How Business and Marketing are Changing CustomersCustomers BrandmanufacturersBrand manufacturers www.bookfiesta4u.com1-29 StoreStore--basedretailersbased retailers
How Business and Marketing are Changing CompanyresponsesandadjustmentsCompany responses and adjustments ReengineeringReengineering OtiO t i PartnerPartner--supplierssuppliers MarketMarket--centeredcentered www.bookfiesta4u.com1-30 OutsourcingOutsourcing EE--commercecommerce BenchmarkingBenchmarking AlliancesAlliances MarketMarket--centeredcentered GlobalandlocalGlobal and local DecentralizedDecentralized How Business and Marketing are Changing CompanyresponsesandadjustmentsCompany responses and adjustments ReengineeringReengineering OtiO t i PartnerPartner--supplierssuppliers MarketMarket--centeredcentered www.bookfiesta4u.com1-30 OutsourcingOutsourcing EE--commercecommerce BenchmarkingBenchmarking AlliancesAlliances MarketMarket--centeredcentered GlobalandlocalGlobal and local DecentralizedDecentralized
How Business and Marketing are Changing MarketerResponsesMarketer Responses andAdjustmentsand Adjustments CustomerrelationshipCustomer relationship marketingmarketing IntegratedmarketingIntegrated marketing iatii ati www.bookfiesta4u.com1-31 marketingmarketing CustomerlifetimevalueCustomer lifetime value CustomershareCustomer share TargetmarketingTarget marketing CustomizationCustomization CustomerdatabaseCustomer database communicationscommunications Channels as partnersChannels as partners Every employeeaEvery employee a marketermarketer ModelModel--baseddecisionbased decision makingmaking How Business and Marketing are Changing MarketerResponsesMarketer Responses andAdjustmentsand Adjustments CustomerrelationshipCustomer relationship marketingmarketing IntegratedmarketingIntegrated marketing iatii ati www.bookfiesta4u.com1-31 marketingmarketing CustomerlifetimevalueCustomer lifetime value CustomershareCustomer share TargetmarketingTarget marketing CustomizationCustomization CustomerdatabaseCustomer database communicationscommunications Channels as partnersChannels as partners Every employeeaEvery employee a marketermarketer ModelModel--baseddecisionbased decision makingmaking
Chapter2Chapter 2 AdaptingMarketingToTheAdapting Marketing To The NewEconomyNew Economy byby www.bookfiesta4u.comPowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans Chapter2Chapter 2 AdaptingMarketingToTheAdapting Marketing To The NewEconomyNew Economy byby www.bookfiesta4u.comPowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans
TheInternetwillThe Internet will createnewwinnerscreate new winners dbhd b h Kotler on Marketing www.bookfiesta4u.com1-33 andburytheand bury the laggards.laggards. TheInternetwillThe Internet will createnewwinnerscreate new winners dbhd b h Kotler on Marketing www.bookfiesta4u.com1-33 andburytheand bury the laggards.laggards.
Chapter Objectives Inthischapter,wewilladdresstheIn this chapter, we will address the followingquestions:following questions: WhatarethemajorforcesdrivingtheNewWhat are the major forces driving the New Economy?Economy? www.bookfiesta4u.com1-34 yy HowarebusinessandmarketingpracticesHow are business and marketing practices changingasaresultoftheNewEconomy?changing as a result of the New Economy? HowaremarketersusingtheInternet,How are marketers using the Internet, customerdatabases,andcustomercustomer databases, and customer relationshipmanagementintheNewrelationship management in the New Economy?Economy? Chapter Objectives Inthischapter,wewilladdresstheIn this chapter, we will address the followingquestions:following questions: WhatarethemajorforcesdrivingtheNewWhat are the major forces driving the New Economy?Economy? www.bookfiesta4u.com1-34 yy HowarebusinessandmarketingpracticesHow are business and marketing practices changingasaresultoftheNewEconomy?changing as a result of the New Economy? HowaremarketersusingtheInternet,How are marketers using the Internet, customerdatabases,andcustomercustomer databases, and customer relationshipmanagementintheNewrelationship management in the New Economy?Economy?
Adapting Marketing to the New Economy MajorDriversoftheNewEconomyMajor Drivers of DigitizationandConnectivityDigitization and DisintermediationandDisintermediation and www.bookfiesta4u.com1-35 DisintermediationandDisintermediation and ReintermediationReintermediation CustomizationandCustomization and CustomerizationCustomerization Adapting Marketing to the New Economy MajorDriversoftheNewEconomyMajor Drivers of DigitizationandConnectivityDigitization and DisintermediationandDisintermediation and www.bookfiesta4u.com1-35 DisintermediationandDisintermediation and ReintermediationReintermediation CustomizationandCustomization and CustomerizationCustomerization
the New Economy Connectivity
the New Economy Connectivity
Procter&Gamble sReflect.comsiteallowscustomersProcter & Gamble s Reflect.com site al lows customers todesigntheirownbeautyproductsto design their own beauty products www.bookfiesta4u.com1-36 Procter&Gamble sReflect.comsiteallowscustomersProcter & Gamble s Reflect.com site al lows customers todesigntheirownbeautyproductsto design their own beauty products www.bookfiesta4u.com1-36
Adapting Marketing to the New Economy IndustryConvergenceIndustry Convergence HowBusinessPracticesareChangingHow Business Practices are Changing OrganizebyproductunitstoorganizebyOrganize by product units to organize by www.bookfiesta4u.com1-37 customersegmentscustomer segments ShiftfocusfromprofitabletransactionstoShift focus from profitable transactions to customerlifetimevaluecustomer lifetime value ShiftfocusfromfinancialscorecardtoalsoShift focus from financial scorecard to also focusingonthemarketingscorecardfocusing on the marketing scorecard ShiftfocusfromshareholderstostakeholdersShift focus from shareholders to stakehold ers Adapting Marketing to the New Economy IndustryConvergenceIndustry Convergence HowBusinessPracticesareChangingHow Business Practices are Changing OrganizebyproductunitstoorganizebyOrganize by product units to organize by www.bookfiesta4u.com1-37 customersegmentscustomer segments ShiftfocusfromprofitabletransactionstoShift focus from profitable transactions to customerlifetimevaluecustomer lifetime value ShiftfocusfromfinancialscorecardtoalsoShift focus from financial scorecard to also focusingonthemarketingscorecardfocusing on the marketing scorecard ShiftfocusfromshareholderstostakeholdersShift focus from shareholders to stakehold ers
Table 2-1: Old Economy vs. New Economy O OOl lld dd E EEc cco oon nno oom mmy yy N NNe eew ww E EEc cco oon nno oom mmy yy O OOr rrg gga aan nni iize zeze b bby yy p ppr rro ood ddu uuc cct tt u uun nni iit tts ss F FFo ooc ccu uus ss o
oon nn p ppr rro oof ffi iit tta aab bbl lle ee t ttr rra aan nns ssa aac cct tti iio oon nns ss L LLo ooo ook kk p ppr rri iim mma aar rri iil lly yy a aat tt f ffi iin nna aan nnc cci iia aal ll s ssc cco oor rre eec
cca aar rrd dd F FFo ooc ccu uus ss o oon nn s ssh hha aar rre eeh hho ool lld dde eer rrs ss M MMa aar rrk kke eet tti iin nng gg d ddo ooe ees ss t tth hhe ee m mma aar rrk kke eet tti iin nng gg B BBu uui iil lld
dd b bbr rra aan nnd dds ss t tth hhr rro oou uug ggh hh a aad ddv vve eer rrt tti iis ssi iin nng gg F FFo ooc ccu uus ss o oon nn c ccu uus sst tto oom mme eer rr a aac ccq qqu uui iis ssi iit tti iio oon nn N NNo
oo c ccu uus sst tto oom mme eer rr s ssa aat tti iis ssf ffa aac cct tti iio oon nn m mme eea aas ssu uur rre eem mme een nnt tt O OOv vve eer rrp ppr rro oom mmi iis sse ee, ,, u uun nnd dde eer rrd dde eel lli iiv vve
eer rr O OOr rrg gga aan nni iize zeze b bby yy c ccu uus sst tto oom mme eer rr sse eeg ggm mme een nnt tts ss F FFo ooc ccu uus ss o oon nn c ccu uus sst tto oom mme eer rr lli iif ffe eet tti iim mme ee vva aal llu
uue ee L LLo ooo ook kk a aal lls sso oo a aat tt m mma aar rrk kke eet tti iin nng gg ssc cco oor rre eec cca aar rrd dd F FFo ooc ccu uus ss o oon nn s sst tta aak kke eeh hho ool lld dde eer rrs ss E EEv vve eer
rry yyo oon nne ee d ddo ooe ees ss t tth hhe ee m mma aar rrk kke eet tti iin nng ggg gg y yy B BBu uui iil lld dd b bbr rra aan nnd dds ss t tth hhr rro oou uug ggh hh bbe eeh hha aav vvi iio oor rr F FFo ooc
ccu uus ss o oon nn c ccu uus sst tto oom mme eer rr rre eet tte een nnt tti iio oon nn aan nnd dd g ggr rro oow wwt tth hh M MMe eea aas ssu uur rre ee c ccu uus sst tto oom mme eer rr s ssa aat tti iis ssf ffa
aac cct tti iio oon nn aan nnd dd r rre eet tte een nnt tti iio oon nn r rra aat tte ee U UUn nnd dde eer rrp ppr rro oom mmi iis sse ee, ,, o oov vve eer rrd dde eel lli iiv vve eer rr www.bookfiesta4u.com
Adapting Marketing to the New Economy EveryonedoesthemarketingEveryone does the marketing Buildbrandsthroughperformance,Build brands through performance, notjustadvertisingnot just advertising CustomerretentionratherCustomer retention rather www.bookfiesta4u.com1-39 CustomerretentionratherCustomer retention rather thancustomeracquisitionthan customer acquisition FromnonetoinFrom none to in--depthcustomerdepth customer satisfactionmeasurementsatisfaction measurement FromoverFrom over--promise,underpromise, under--delivertodeliver to underunder--promise,overpromise, over--deliverdeliver TheNewHybridThe New Hybrid Adapting Marketing to the New Economy EveryonedoesthemarketingEveryone does the marketing Buildbrandsthroughperformance,Build brands through performance, notjustadvertisingnot just advertising CustomerretentionratherCustomer retention rather www.bookfiesta4u.com1-39 CustomerretentionratherCustomer retention rather thancustomeracquisitionthan customer acquisition FromnonetoinFrom none to in--depthcustomerdepth customer satisfactionmeasurementsatisfaction measurement FromoverFrom over--promise,underpromise, under--delivertodeliver to underunder--promise,overpromise, over--deliverdeliver TheNewHybridThe New Hybrid
HowMarketingPracticesHow Marketing Practices areChanging:Eare Changing: E--BusinessBusiness EE--businessbusiness Adapting Marketing to the New Economy www.bookfiesta4u.com1-40 EE--commercecommerce EE--purchasingpurchasing EE--marketingmarketing InternetDomains:B2CInternet Domains: B2C (BusinesstoCustomer)(Business to Customer) HowMarketingPracticesHow Marketing Practices areChanging:Eare Changing: E--BusinessBusiness EE--businessbusiness Adapting Marketing to the New Economy www.bookfiesta4u.com1-40 EE--commercecommerce EE--purchasingpurchasing EE--marketingmarketing InternetDomains:B2CInternet Domains: B2C (BusinesstoCustomer)(Business to Customer)
CustomerscanshoponlineatCalyxandCorollaorCustomers can Corolla or askforacatalogandshopbyphoneask for a catalog and shop www.bookfiesta4u.com1-41 CustomerscanshoponlineatCalyxandCorollaorCustomers can Corolla or askforacatalogandshopbyphoneask for a catalog and shop www.bookfiesta4u.com1-41
shop online at Calyx and by phone shop online at Calyx and by phone
Adapting Marketing to the New Economy InternetDomains:B2BInternet Domains: B2B (BusinesstoBusiness)(Business to Business) www.bookfiesta4u.com1-42 Adapting Marketing to the New Economy InternetDomains:B2BInternet Domains: B2B (BusinesstoBusiness)(Business to Business) www.bookfiesta4u.com1-42
Figure 2-1: The SupplierCustomer Relationship: Traditional and New Economy www.bookfiesta4u.com1-43 New Economy Structures Figure 2-1: The SupplierCustomer Relationship: Traditional and New Economy www.bookfiesta4u.com1-43 New Economy Structures
www.transora.com:globalonlinemarketplaceforwww.transora.com: global online marke tplace for theconsumerpackagedgoodsindustrythe consumer packaged goods industry www.bookfiesta4u.com1-44 www.transora.com:globalonlinemarketplaceforwww.transora.com: global online marke tplace for theconsumerpackagedgoodsindustrythe consumer packaged goods industry www.bookfiesta4u.com1-44
Adapting Marketing to the New Economy InternetDomains:C2CInternet Domains: C2C (ConsumertoConsumer)(Consumer to Consumer) InternetDomains:C2BInternet Domains: C2B www.bookfiesta4u.com1-45 InternetDomains:C2BInternet Domains: C2B (CustomertoBusiness)(Customer to Business) PureClickvs.BrickandPure Click vs. Brick and ClickCompaniesClick Companies PurePure--clickcompaniesclick companies Adapting Marketing to the New Economy InternetDomains:C2CInternet Domains: C2C (ConsumertoConsumer)(Consumer to Consumer) InternetDomains:C2BInternet Domains: C2B www.bookfiesta4u.com1-45 InternetDomains:C2BInternet Domains: C2B (CustomertoBusiness)(Customer to Business) PureClickvs.BrickandPure Click vs. Brick and ClickCompaniesClick Companies PurePure--clickcompaniesclick companies
CarPoint,leadingmetamediaryforcarbuying,isapureCarPoint, leading metamediary for car buying, is a pure clickcompany:ItexistsonlyontheWeb.click company: It exists only on the Web. www.bookfiesta4u.com1-46 CarPoint,leadingmetamediaryforcarbuying,isapureCarPoint, leading metamediary for car buying, is a pure clickcompany:ItexistsonlyontheWeb.click company: It exists only on the Web. www.bookfiesta4u.com1-46
Adapting Marketing to the New Economy BrickandClickcompaniesBrick and Click companies www.bookfiesta4u.com1-47 Adapting Marketing to the New Economy BrickandClickcompaniesBrick and Click companies www.bookfiesta4u.com1-47
WhichismoreimportantforWhich is more important for developinganedeveloping an e--presence:theagilitypresence: the agility ofapureclickcompany,orthewellof a pure click company, or the well www.bookfiesta4u.comofapureclickcompany,orthewellof a pure click company, or the well definedandreadilyidentifiabledefined and readily identifiable resourcesofatraditionalresources of a traditional brickandmortarbrick and mortar company?company? WhichismoreimportantforWhich is more important for developinganedeveloping an e--presence:theagilitypresence: the agility ofapureclickcompany,orthewellof a pure click company, or the well www.bookfiesta4u.comofapureclickcompany,orthewellof a pure click company, or the well definedandreadilyidentifiabledefined and readily identifiable resourcesofatraditionalresources of a traditional brickandmortarbrick and mortar company?company?
Adapting Marketing to the New Economy HowMarketingPracticesareChanging:How Marketing Practices are Changing: SettingUpWebSitesSetting Up Web Sites DesigninganAttractiveWebsiteDesigning an Attractive Website SevenelementsofeffectivesitesSeven elements of effective sites www.bookfiesta4u.com1-49 SevenelementsofeffectivesitesSeven elements of effective sites ContextContext ContentContent CommunityCommunity CustomizationCustomization CommunicationCommunication ConnectionConnection CommerceCommerce Adapting Marketing to the New Economy HowMarketingPracticesareChanging:How Marketing Practices are Changing: SettingUpWebSitesSetting Up Web Sites DesigninganAttractiveWebsiteDesigning an Attractive Website SevenelementsofeffectivesitesSeven elements of effective sites www.bookfiesta4u.com1-49 SevenelementsofeffectivesitesSeven elements of effective sites ContextContext ContentContent CommunityCommunity CustomizationCustomization CommunicationCommunication ConnectionConnection CommerceCommerce
WouldyoubewillingtogiveuponeorWould you be willing to give up one or moreofthesevenelementsofaneffectivemore of the seven elements of an effective websiteinordertospeedthedeploymentweb site in order to speed the deployment www.bookfiesta4u.comofanewcompanyeof a new company e--commercesite?commerce site ? WhatwouldtheexpectedtradeWhat would the expected trade--offsbeoffs be betweenaneffectivesitebetween an effective site andanearlyweband an early web presence?presence? WouldyoubewillingtogiveuponeorWould you be willing to give up one or moreofthesevenelementsofaneffectivemore of the seven elements of an effective websiteinordertospeedthedeploymentweb site in order to speed the deployment www.bookfiesta4u.comofanewcompanyeof a new company e--commercesite?commerce site ? WhatwouldtheexpectedtradeWhat would the expected trade--offsbeoffs be betweenaneffectivesitebetween an effective site andanearlyweband an early web presence?presence?
T TTa aab bbl lle ee 2 22-2 22: :: S SSe eet ttt tti iin nng gg U UUp pp a aa D DDo oot tt-c cco oom mm P PPr rre ees sse een nnc cce ee A AAt ttt ttr rra aac cct tti iin nng gg a aan nnd dd K
KKe eee eep ppi iin nng gg V VVi iis ssi iit tto oor rrs ss H HHo oow ww ca cacan nn w wwe ee g gge eet tt m mmo oor rre ee p ppr rro oosp spspe eect ctcts ss t tto oo kn knkno oow ww a aan nnd dd vivisi sisit tt oou uur
rr sisit tte ee? ?? H HHo oow ww ca cacan nn w wwe ee u uuse sese m mma aar rrke keket tti iin nng gg t tto oo sp spspr rre eea aad dd w wwo oor rrd dd-o oof ff-mmo oou uut tth hh? ?? H HHo oow ww ca cacan nn w
wwe ee co cocon nnve vever rrt tt vi vivisi sisit tto oor rrs ss i iin nnt tto oo r rre eep ppe eea aat tte eer rrs? s?s? H HHo oow ww d ddo oo w wwe ee m mma aake keke o oou uur rr si sisit tte ee m mmo oor rre ee e eex xxp
ppe eer rri iie een nnt tti iia aal ll a aan nnd dd rre eea aal ll? ?? H HHo oow ww ca cacan nn w wwe ee b bbu uui iil lld dd a aa st ststr rro oon nng gg r rre eel lla aat tti iio oon nnsh shshi iip pp w wwi iit tth hh
o oou uur rr cucust ststo oom mme eer rrs? s?s? H HHo oow ww ca cacan nn w wwe ee b bbu uui iil lld dd a aa cu cucust ststo oom mme eer rr co cocom mmm mmu uun nni iit tty? y?y? H HHo oow ww ca cacan nn w wwe ee ca cacap ppt ttu uur rre ee
a aan nnd dd e eex xxp ppl llo ooi iit tt cu cucust ststo oom mme eer rr d dda aat tta aa ffo oor rr uup pp-sesel lll lli iin nng gg www.bookfiesta4u.com pppp p p gg andcrossand cross--selling?selling? HowmuchshouldwespendonbuildingandmarketingourHow much should we spend on buildin g and marketing our site?site? AdvertisingontheInternetAdvertising on the Internet Whatarethevarious ways thatwecanadvertiseontheWhat are the various ways that we can advertise on the Internet?Internet? Howdowechoosetherightsites forplacingourads orHow do we choose the right sites f or placing our ads or sponsorship?sponsorship? See text for complete table
Adapting Marketing to the New Economy ContextfactorsContext factors ContentfactorsContent factors www.bookfiesta4u.com1-52 ContentfactorsContent factors GettingfeedbackGetting feedback Adapting Marketing to the New Economy ContextfactorsContext factors ContentfactorsContent factors www.bookfiesta4u.com1-52 ContentfactorsContent factors GettingfeedbackGetting feedback
Adapting Marketing to the New Economy PlacingAdsandPromotionsOnlinePlacing Ads and Promotions Online BanneradsBanner ads SponsorshipsSponsorships www.bookfiesta4u.com1-53 MicrositeMicrosite InterstitialsInterstitials Browser adsBrowser ads AlliancesandaffiliateAlliances and affiliate programsprograms PushPush Adapting Marketing to the New Economy PlacingAdsandPromotionsOnlinePlacing Ads and Promotions Online BanneradsBanner ads SponsorshipsSponsorships www.bookfiesta4u.com1-53 MicrositeMicrosite InterstitialsInterstitials Browser adsBrowser ads AlliancesandaffiliateAlliances and affiliate programsprograms PushPush
Infogate.com pushes targetedcontentandadstothoseInfogate.com nd ads to those whoareinterestedinaproductorproductcategorywho are interested oduct category www.bookfiesta4u.com1-54 Infogate.com pushes targetedcontentandadstothoseInfogate.com nd ads to those whoareinterestedinaproductorproductcategorywho are interested oduct category www.bookfiesta4u.com1-54
pushes
targeted content a
in a product or pr pushes
targeted content a
in a product or pr
Adapting Marketing to the New Economy BuildingaRevenueandProfitModelBuilding a Revenue and Profit Model Advertising incomeAdvertising income Sponsorship incomeSponsorship income MembershipandMembership and www.bookfiesta4u.com1-55 pp subscriptionssubscriptions ProfileincomeProfile income Productand serviceProduct and service salessales TransactioncommissionTransaction commission and feesand fees Marketresearch/informationMarket research/information ReferralincomeReferral income Adapting Marketing to the New Economy BuildingaRevenueandProfitModelBuilding a Revenue and Profit Model Advertising incomeAdvertising income Sponsorship incomeSponsorship income MembershipandMembership and www.bookfiesta4u.com1-55 pp subscriptionssubscriptions ProfileincomeProfile income Productand serviceProduct and service salessales TransactioncommissionTransaction commission and feesand fees Marketresearch/informationMarket research/information ReferralincomeReferral income
Adapting Marketing to the New Economy HowMarketingPracticesareChanging:How Marketing Practices are Changing: CustomerRelationshipMarketingCustomer Relationship Marketing ReducerateofcustomerdefectionReduce rate of customer defection www.bookfiesta4u.com1-56 IncreaselongevityofIncrease longevity of customerrelationshipcustomer relationship EnhancegrowthpotentialEnhance growth potential throughcrossthrough cross--sellingandupselling and up--sellingselling MakelowprofitcustomersmoreprofitableMake low profit customers more profitable orterminatethemor terminate them Adapting Marketing to the New Economy HowMarketingPracticesareChanging:How Marketing Practices are Changing: CustomerRelationshipMarketingCustomer Relationship Marketing ReducerateofcustomerdefectionReduce rate of customer defection www.bookfiesta4u.com1-56 IncreaselongevityofIncrease longevity of customerrelationshipcustomer relationship EnhancegrowthpotentialEnhance growth potential throughcrossthrough cross--sellingandupselling and up--sellingselling MakelowprofitcustomersmoreprofitableMake low profit customers more profitable orterminatethemor terminate them
Adapting Marketing to the New Economy FocusdisproportionateeffortFocus disproportionate effort onhighvaluecustomerson high value customers www.bookfiesta4u.com1-57 Adapting Marketing to the New Economy FocusdisproportionateeffortFocus disproportionate effort onhighvaluecustomerson high value customers www.bookfiesta4u.com1-57
Table 2-3: Mass Marketing vs. One-to-One Marketing M MMa aas sss ss M MMa aar rrk kke eet tti iin nng gg O OOn nne ee-t tto oo-O OOn nne ee M MMa aar rrk kke eet tti iin nng gg A AAv vve eer rra aag gge ee c ccu uus sst tto oom mme
eer rr C CCu uus sst tto oom mme eer rr a aan nno oon nny yym mmi iit tty yy S SSt tta aan nnd dda aar rrd dd p ppr rro ood ddu uuc cct tt M MMa aas sss ss p ppr rro ood ddu uuc cct tti iio oon nn I IIn nnd ddi iiv vvi
iid ddu uua aal ll c ccu uus sst tto oom mme eer rr C CCu uus sst tto oom mme eer rr p ppr rro oof ffi iil lle ee C CCu uus sst tto oom mmi iize zezed dd m mma aar rrk kke eet tt o oof fff ffe eer rri iin nng gg MassdistributionMass distribution CustomizedproductionCustomized production
MassadvertisingMass advertising MasspromotionMass promotion OneOne--waymessageway message EconomiesofscaleEconomies of scale ShareofmarketShare of market AllcustomersAll customers CustomerattractionCustomer attraction IndividualizeddistributionIndividualized distribution IndividualizedmessageIndividualized message IndividualizedincentivesIndividualized incentives TwoTwo--waymessagesway messages EconomiesofscopeEconomies of scope ShareofcustomerShare of customer ProfitablecustomersProfitable customers CustomerretentionCustomer retention www.bookfiesta4u.com
Adapting Marketing to the New Economy FourstepsforOneFour steps for One--toto--OneMarketingOne Marketing Don t go aftereveryone,Don t go after everyone, identify prospects.identify prospects. www.bookfiesta4u.com1-59 Definecustomersby theirneedsDefine customers by their needs and theirvalue to the company.and their value to the company. IndividualinteractionwithcustomersIndividual interaction with customers buildsstrongerrelationships.builds stronger relationships. Customize messages, services, andCustomize messages, services, and productsforeach customer.products for each customer. Adapting Marketing to the New Economy FourstepsforOneFour steps for One--toto--OneMarketingOne Marketing Don t go aftereveryone,Don t go after everyone, identify prospects.identify prospects. www.bookfiesta4u.com1-59 Definecustomersby theirneedsDefine customers by their needs and theirvalue to the company.and their value to the company. IndividualinteractionwithcustomersIndividual interaction with customers buildsstrongerrelationships.builds stronger relationships. Customize messages, services, andCustomize messages, services, and productsforeach customer.products for each customer.
Adapting Marketing to the New Economy CustomerDatabasesandCustomer Databases and DatabaseMarketingDatabase Marketing CaililiC aili li www.bookfiesta4u.com1-60 Customermailing listCustomer mailing list BusinessdatabaseBusiness database Adapting Marketing to the New Economy CustomerDatabasesandCustomer Databases and DatabaseMarketingDatabase Marketing CaililiC aili li www.bookfiesta4u.com1-60 Customermailing listCustomer mailing list BusinessdatabaseBusiness database
DataWarehousesandDataMiningData Warehouses and Data Mining Using thedatabaseUsing the database ToidentifyprospectsTo identify prospects TdikT d i k Adapting Marketing to the New Economy www.bookfiesta4u.com1-61 TodeterminetargetmarketTo determine target market TodeepencustomerloyaltyTo deepen customer loyalty ToreactivatecustomerTo reactivate customer purchasespurchases ToavoidseriouscustomerTo avoid serious customer mistakesmistakes TheDownsideofDatabaseThe Downside of Database MarketingMarketing DataWarehousesandDataMiningData Warehouses and Data Mining Using thedatabaseUsing the database ToidentifyprospectsTo identify prospects TdikT d i k Adapting Marketing to the New Economy www.bookfiesta4u.com1-61 TodeterminetargetmarketTo determine target market TodeepencustomerloyaltyTo deepen customer loyalty ToreactivatecustomerTo reactivate customer purchasespurchases ToavoidseriouscustomerTo avoid serious customer mistakesmistakes TheDownsideofDatabaseThe Downside of Database MarketingMarketing
Chapter3Chapter 3 BuildingCustomerBuilding Customer Satisfaction,Value,andSatisfaction, RetentionRetention byby www.bookfiesta4u.combyby PowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of Chapter3Chapter 3 BuildingCustomerBuilding Customer Satisfaction,Value,andSatisfaction, RetentionRetention byby www.bookfiesta4u.combyby PowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of
Value, and
New Orleans Value, and
New Orleans
ItisnolongerIt is no longer enoughtosatisfyenough to satisfy tYtt Y t Kotler on Marketing www.bookfiesta4u.com1-63 customers.Youmustcustomers. You must delightthem.delight them. ItisnolongerIt is no longer enoughtosatisfyenough to satisfy tYtt Y t Kotler on Marketing www.bookfiesta4u.com1-63 customers.Youmustcustomers. You must delightthem.delight them.
Chapter Objectives Inthischapter,wewilladdresstheIn this chapter, we will address the followingquestions:following questions: Whatarecustomervalueandsatisfaction,What are customer value and satisfaction, andhowcancompaniesdeliverthem?and how can companies deliver them? WhatmakesahighWhat makes a high--performancebusiness?performance business? www.bookfiesta4u.com1-64 WhatmakesahighWhat makes a high performancebusiness?performance business? HowcancompaniesbothattractHow can companies both attract andretaincustomers?and retain customers? HowcancompaniesimprovebothcustomerHow can companies improve both customer andcompanyprofitability?and company profitability? Howcancompaniesdelivertotalquality?How can companies deliver total quality? Chapter Objectives Inthischapter,wewilladdresstheIn this chapter, we will address the followingquestions:following questions: Whatarecustomervalueandsatisfaction,What are customer value and satisfaction, andhowcancompaniesdeliverthem?and how can companies deliver them? WhatmakesahighWhat makes a high--performancebusiness?performance business? www.bookfiesta4u.com1-64 WhatmakesahighWhat makes a high performancebusiness?performance business? HowcancompaniesbothattractHow can companies both attract andretaincustomers?and retain customers? HowcancompaniesimprovebothcustomerHow can companies improve both customer andcompanyprofitability?and company profitability? Howcancompaniesdelivertotalquality?How can companies deliver total quality?
Defining Customer Value and Satisfaction CustomerPerceivedValue(CPV)Customer Perceived Value (CPV) TotalcustomervalueTotal customer value www.bookfiesta4u.com1-65 TotalcustomercostTotal customer cost Defining Customer Value and Satisfaction CustomerPerceivedValue(CPV)Customer Perceived Value (CPV) TotalcustomervalueTotal customer value www.bookfiesta4u.com1-65 TotalcustomercostTotal customer cost
Figure 3-1: Determinants of Customer Delivered Value www.bookfiesta4u.com1-66 Value Figure 3-1: Determinants of Customer Delivered Value www.bookfiesta4u.com1-66 Value
TotalCustomerSatisfactionTotal Customer Satisfaction SatisfactionSatisfaction CtEttiC t E t ti Defining Customer Value and Satisfaction www.bookfiesta4u.com1-67 CustomerExpectationsCustomer Expectations DeliveringHighCustomerValueDelivering High Customer Value ValuepropositionValue proposition ValueValue--deliverysystemdelivery system MeasuringSatisfactionMeasuring Satisfaction TotalCustomerSatisfactionTotal Customer Satisfaction SatisfactionSatisfaction CtEttiC t E t ti Defining Customer Value and Satisfaction www.bookfiesta4u.com1-67 CustomerExpectationsCustomer Expectations DeliveringHighCustomerValueDelivering High Customer Value ValuepropositionValue proposition ValueValue--deliverysystemdelivery system MeasuringSatisfactionMeasuring Satisfaction
Table 3-1: Tools for Tracking and Measuring Customer Satisfaction C CCo oom mmp ppl lla aai iin nnt tt a aan nnd dd s ssu uug ggg gge ees sst tti iio oon nn s ssy yys sst tte eem mms ss: :: A AA c ccu uus sst tto oom mme eer rr-c cce een nnt tte eer rre eed
dd o oor rrg gga aan nni iiza zazat tti iio oon nn m mma aak kke ees ss iit tt eea aas ssy yy ffo oor rr c ccu uus sst tto oom mme eer rrs ss t tto oo r rre eeg ggi iis sst tte eer rr s ssu uug ggg gge ees sst tti iio oon
nns ss a aan nnd dd cco oom mmp ppl lla aai iin nnt tts ss. .. S SSo oom mme ee c ccu uus sst tto oom mme eer rr-c cce een nnt tte eer rre eed dd c cco oom mmp ppa aan nni iie ees ss-P PP& && GG, ,, GGe een nne
eer rra aal ll E EEl lle eec cct ttr rri iic cc, ,, W WWh hhi iir rrl llp ppo ooo ool ll es sst tta aab bbl lli iis ssh hh h hho oot tt l lli iin nne ees ss wwi iit tth hh tto ool lll ll-ffr rre eee ee en nnu uum mmb
bbe eer rrs ss. .. C CCo oom mmp ppa aan nni iie ees ss a aar rre ee a aal lls sso oo u uus ssi iin nng gg W WWe eeb bb ssi iit tte ees ss aan nnd dd e ee-m mma aai iil ll f ffo oor rr q qqu uui iic cck kk,
,, t ttw wwo oo-w wwa aay yy c cco oom mmm mmu uun nni iic cca aat tti iio oon nn. .. S SSt ttu uud ddi iie ees ss s ssh hho oow ww t tth hha aat tt a aal llt tth hho oou uug ggh hh c ccu uus sst tto oom mme
eer rrs ss aar rre ee ddi iis sss ssa aat tti iis ssf ffi iie eed dd CustomerCustomer satisfactionsatisfaction surveys:surveys: StudiesshowthatalthoughcustomersaredissatisfiedStudies show that although custom ers are dissatisfied withoneoutofeveryfourpurchases,lessthan5with one out of every four purchases, le ss than 5 percentwillcomplain.Mostcustomerswillbuylessorpercent will complain. Most custom ers will buy less or switchsuppliers.Responsivecompaniesmeasureswitch suppliers. Responsive companies measure customersatisfactiondirectlybyconductingperiodiccustomer satisfaction directly b y conducting periodic surveys.Whilecollectingcustomersatisfactiondata,itsurveys. While collecting cust omer satisfaction data, it isalsousefultoaskadditionalquestionstomeasureis also useful to ask additional qu estions to measure repurchaseintentionandtomeasurethelikelihoodorrepurchase intention and to measur e the likelihood or willingnesstorecommendthecompanyandbrandtowillingness to recommend the company a nd brand to others.others. See text for complete table www.bookfiesta4u.com
WouldyoufeelmorebrandloyaltyforaWould you feel more brand loyalty for a companythattriedtoimmediatelyresolvecompany that tried to immediately resolve acomplaintviaEa complaint via E--mail,oracompanythatmail, or a company that www.bookfiesta4u.comacomplaintviaEa complaint via E mail,oracompanythatmail, or a company that hadacustomerservicerepresentativecallhad a customer service representative call withintwobusinessdaystowithin two business days to resolvetheproblemoverresolve the problem over thephone?the phone? WouldyoufeelmorebrandloyaltyforaWould you feel more brand loyalty for a companythattriedtoimmediatelyresolvecompany that tried to immediately resolve acomplaintviaEa complaint via E--mail,oracompanythatmail, or a company that www.bookfiesta4u.comacomplaintviaEa complaint via E mail,oracompanythatmail, or a company that hadacustomerservicerepresentativecallhad a customer service representative call withintwobusinessdaystowithin two business days to resolvetheproblemoverresolve the problem over thephone?the phone?
PremierDell.comisaspecialbusinessPremier Dell.com is a special business--oriente dpartoftheoriented part of the DellWebsitethatallowscustomerstointeractwithDellandDell Web site that allows cus tomers to interact with Dell and customizeallphasesofdoingbusinesswithDell.customize all phases of doing business with Dell. www.bookfiesta4u.com1-70 PremierDell.comisaspecialbusinessPremier Dell.com is a special business--oriente dpartoftheoriented part of the DellWebsitethatallowscustomerstointeractwithDellandDell Web site that allows cus tomers to interact with Dell and customizeallphasesofdoingbusinesswithDell.customize all phases of doing business with Dell. www.bookfiesta4u.com1-70
The Nature of High Performance Business HighHigh--performancebusinessperformance business www.bookfiesta4u.com1-71 The Nature of High Performance Business HighHigh--performancebusinessperformance business www.bookfiesta4u.com1-71
Figure 3-2: The High Performance Business www.bookfiesta4u.com1-72 Figure 3-2: The High Performance Business www.bookfiesta4u.com1-72
The Nature of High Performance Business StakeholdersStakeholders ProcessesProcesses ResourcesResources www.bookfiesta4u.com1-73 CorecompetencyCore competency DistinctivecapabilitiesDistinctive capabilities OrganizationandOrganizationalCultureOrganization and Organizational Culture OrganizationOrganization CorporatecultureCorporate culture Scenario analysisScenario analysis The Nature of High Performance Business StakeholdersStakeholders ProcessesProcesses ResourcesResources www.bookfiesta4u.com1-73 CorecompetencyCore competency DistinctivecapabilitiesDistinctive capabilities OrganizationandOrganizationalCultureOrganization and Organizational Culture OrganizationOrganization CorporatecultureCorporate culture Scenario analysisScenario analysis
CanyounameacompanythathasCan you name a company that has changedthepublic sperceptionofchanged the public s perception of theircorporateculture?Hasthistheir corporate culture? Has this www.bookfiesta4u.comtheircorporateculture?Hasthistheir corporate culture? Has th is effectivelyrehabilitatedthateffectively rehabilitated that company simage?company s image? CanyounameacompanythathasCan you name a company that has changedthepublic sperceptionofchanged the public s perception of theircorporateculture?Hasthistheir corporate culture? Has this www.bookfiesta4u.comtheircorporateculture?Hasthistheir corporate culture? Has th is effectivelyrehabilitatedthateffectively rehabilitated that company simage?company s image?
Delivering Customer Value and Satisfaction ValueChainValue Chain ValuechainValue chain www.bookfiesta4u.com1-75 Delivering Customer Value and Satisfaction ValueChainValue Chain ValuechainValue chain www.bookfiesta4u.com1-75
Figure 3-3: The Generic Value Chain www.bookfiesta4u.com1-76 Figure 3-3: The Generic Value Chain www.bookfiesta4u.com1-76
Delivering Customer Value and Satisfaction BenchmarksBenchmarks CoreBusinessProcessesCore Business Processes ThemarketsensingprocessThe market sensing process www.bookfiesta4u.com1-77 ThemarketsensingprocessThe market sensing process ThenewofferingrealizationprocessThe new offering realization process ThecustomeracquisitionprocessThe customer acquisition process ThecustomerrelationshipThe customer relationship managementprocessmanagement process ThefulfillmentmanagementprocessThe fulfillment management process Delivering Customer Value and Satisfaction BenchmarksBenchmarks CoreBusinessProcessesCore Business Processes ThemarketsensingprocessThe market sensing process www.bookfiesta4u.com1-77 ThemarketsensingprocessThe market sensing process ThenewofferingrealizationprocessThe new offering realization process ThecustomeracquisitionprocessThe customer acquisition process ThecustomerrelationshipThe customer relationship managementprocessmanagement process ThefulfillmentmanagementprocessThe fulfillment management process
TheValueDeliveryNetworkThe Value Delivery Network (SupplyChain)(Supply Chain) Delivering Customer Value and Satisfaction www.bookfiesta4u.com1-78 TheValueDeliveryNetworkThe Value Delivery Network (SupplyChain)(Supply Chain) Delivering Customer Value and Satisfaction www.bookfiesta4u.com1-78
Figure 3-4: Levi Strauss s ValueDelivery www.bookfiesta4u.com1-79 y Network Figure 3-4: Levi Strauss s ValueDelivery www.bookfiesta4u.com1-79 y Network
Attracting and Retaining Customers PartnerrelationshipPartner relationship management(PRM)management (PRM) ClihiC l i hi www.bookfiesta4u.com1-80 CustomerrelationshipCustomer relationship management(CRM)management (CRM) Attracting and Retaining Customers PartnerrelationshipPartner relationship management(PRM)management (PRM) ClihiC l i hi www.bookfiesta4u.com1-80 CustomerrelationshipCustomer relationship management(CRM)management (CRM)
SaturnhasgainedacustomerloyaltyrateSaturn has gained a customer loyalty rate ofmorethan60% byfundamentallyof more than 60% by fundamentally changingthebuyerchanging the buyer--sellerrelationship.seller relationship. www.bookfiesta4u.comchangingthebuyerchanging the buyer sellerrelationship.seller relationship. CanyouthinkofanothercompanythatCan you think of another company that hasmadeachangeofsimilarhas made a change of similar magnitude?Havetheymagnitude? Have they hadsimilarresults?had similar results? SaturnhasgainedacustomerloyaltyrateSaturn has gained a customer loyalty rate ofmorethan60% byfundamentallyof more than 60% by fundamentally changingthebuyerchanging the buyer--sellerrelationship.seller relationship. www.bookfiesta4u.comchangingthebuyerchanging the buyer sellerrelationship.seller relationship. CanyouthinkofanothercompanythatCan you think of another company that hasmadeachangeofsimilarhas made a change of similar magnitude?Havetheymagnitude? Have they hadsimilarresults?had similar results?
Attracting and Retaining Customers AttractingCustomersAttracting Customers ComputingtheCostofComputing the Cost of LCL C www.bookfiesta4u.com1-82 LostCustomersLost Customers CustomerchurnCustomer churn LifetimevalueLifetime value Attracting and Retaining Customers AttractingCustomersAttracting Customers ComputingtheCostofComputing the Cost of LCL C www.bookfiesta4u.com1-82 LostCustomersLost Customers CustomerchurnCustomer churn LifetimevalueLifetime value
OntheLands EndWebsite,customerscanclickaOn the Lands ick a buttontotalkwithacustomerservicerepresentativebutton vice representative www.bookfiesta4u.com1-83 OntheLands EndWebsite,customerscanclickaOn the Lands ick a buttontotalkwithacustomerservicerepresentativebutton vice representative www.bookfiesta4u.com1-83
End Web site, customers can cl to talk with a customer ser End Web site, customers can cl to talk with a customer ser
Attracting and Retaining Customers TheNeedforCustomerRetentionThe Need for Customer Retention MeasuringCustomerMeasuring Customer LifetimeValue(CLV)Lifetime Value (CLV) CtRltihiMtC t R l ti hi M t www.bookfiesta4u.com1-84 CustomerRelationshipManagementCustomer Relationship Management (CRM):TheKey(CRM): The Key CustomerequityCustomer equity ThreedriversofcustomerequityThree drivers of customer equity ValueequityValue equity Brand equityBrand equity RelationshipequityRelationship equity Attracting and Retaining Customers TheNeedforCustomerRetentionThe Need for Customer Retention MeasuringCustomerMeasuring Customer LifetimeValue(CLV)Lifetime Value (CLV) CtRltihiMtC t R l ti hi M t www.bookfiesta4u.com1-84 CustomerRelationshipManagementCustomer Relationship Management (CRM):TheKey(CRM): The Key CustomerequityCustomer equity ThreedriversofcustomerequityThree drivers of customer equity ValueequityValue equity Brand equityBrand equity RelationshipequityRelationship equity
Figure 3-5: The CustomerDevelopment Process www.bookfiesta4u.com1-85 Figure 3-5: The CustomerDevelopment Process www.bookfiesta4u.com1-85
Attracting and Retaining Customers FivelevelsofinvestmentinFive levels of investment customerrelationshipbuildingcustomer relationship BasicmarketingBasic marketing www.bookfiesta4u.com1-86 BasicmarketingBasic marketing ReactivemarketingReactive marketing AccountablemarketingAccountable marketing ProactivemarketingProactive marketing PartnershipmarketingPartnership marketing Attracting and Retaining Customers FivelevelsofinvestmentinFive levels of investment customerrelationshipbuildingcustomer relationship BasicmarketingBasic marketing www.bookfiesta4u.com1-86 BasicmarketingBasic marketing ReactivemarketingReactive marketing AccountablemarketingAccountable marketing ProactivemarketingProactive marketing PartnershipmarketingPartnership marketing
in building
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Figure 3-6: Levels of Relationship Marketing www.bookfiesta4u.com1-87 Figure 3-6: Levels of Relationship Marketing www.bookfiesta4u.com1-87
Attracting and Retaining Customers FormingStrongCustomerBonds:Forming Strong Customer Bonds: TheBasicsThe Basics CrossCross--departmentalparticipationdepartmental participation www.bookfiesta4u.com1-88 CrossCross departmentalparticipationdepartmental participation IntegratetheVoiceoftheCustomerIntegrate the Voice of the Customer intoallbusinessdecisionsinto all business decisions CreatesuperiorofferingfortheCreate superior offering for the targetmarkettarget market Attracting and Retaining Customers FormingStrongCustomerBonds:Forming Strong Customer Bonds: TheBasicsThe Basics CrossCross--departmentalparticipationdepartmental participation www.bookfiesta4u.com1-88 CrossCross departmentalparticipationdepartmental participation IntegratetheVoiceoftheCustomerIntegrate the Voice of the Customer intoallbusinessdecisionsinto all business decisions CreatesuperiorofferingfortheCreate superior offering for the targetmarkettarget market
OrganizeandmakeaccessibleaOrganize and make accessible a databaseofcustomerinformationdatabase of customer information MakeiteasyforcustomerstoMake it easy for customers to Attracting and Retaining Customers www.bookfiesta4u.com1-89 MakeiteasyforcustomerstoMake it easy for customers to reachtheappropriatepersonnelreach the appropriate personnel RewardoutstandingemployeesReward outstanding employees AddingFinancialBenefitsAdding Financial Benefits Frequencyprograms(FPs)Frequency programs (FPs) OrganizeandmakeaccessibleaOrganize and make accessible a databaseofcustomerinformationdatabase of customer information MakeiteasyforcustomerstoMake it easy for customers to Attracting and Retaining Customers www.bookfiesta4u.com1-89 MakeiteasyforcustomerstoMake it easy for customers to reachtheappropriatepersonnelreach the appropriate personnel RewardoutstandingemployeesReward outstanding employees AddingFinancialBenefitsAdding Financial Benefits Frequencyprograms(FPs)Frequency programs (FPs)
TheH.O.G.Websitepresentsthebenefitsofjoining.The H.O.G. Web site presents the be nefits of joining. www.bookfiesta4u.com1-90 TheH.O.G.Websitepresentsthebenefitsofjoining.The H.O.G. Web site presents the be nefits of joining. www.bookfiesta4u.com1-90
Attracting and Retaining Customers AddingSocialBenefitsAdding Social Benefits www.bookfiesta4u.com1-91 Attracting and Retaining Customers AddingSocialBenefitsAdding Social Benefits www.bookfiesta4u.com1-91
G GGo ooo ood dd T TTh hhi iin nng ggs ss B BBa aad dd T TTh hhi iin nng ggs ss Table 3-2: Social Actions Affecting Buyer-Seller Relationships I IIn nni iit tti iiat atate ee p ppos ososi iit tti iive veve p pph hhon onone ee c ccal alall lls ss M MMak akake
ee r rre eec ccom omomm mme een nnd ddat atati iion onons ss C CCan anand ddor oror i iin nn l llan anangu guguage ageage U UUs sse ee p pph hhon onone ee S SSh hhow owow ap apapp ppr rre eec cci iiat atati iion onon M MMak akake ee s sse eer rrvi vivic cce
ee s ssu uugge ggegges sst tti iion onons ss U UUs sse ee w w we ee p ppr rrob obobl lle eem mm-s ssol ololvi vivin nng gg l llan anangu guguage ageage gu guguage ageage G GGe eet tt t tto oo p ppr rrob obobl lle eem mms ss U UUs sse ee
j jjar arargon gongon or oror s ssh hhor orort tth hhan anand dd P PPe eer rrs sson ononal alali iit tty yy p ppr rrob obobl lle eem mms ss ai aiair rre eed dd T TTal alalk kk of ofof ou ou our rr f ffu uut ttu uur rre ee t ttoge ogeoget tth hhe eer rr
R RRou ouout tti iin nni iiz zze ee r rre ees ssp ppon onons sse ees ss A AAc ccc cce eep ppt tt r rre ees ssp ppon onons ssi iib bbi iil lli iit tty yy P PPl llan anan t tth hhe ee f ffu uut ttu uur rre ee M MMak akake ee on
ononl lly yy c ccal alall llb bbac acack kks ss M MMak akake ee j jju uus sst tti iif ffi iic ccat atati iion onons ss A AAc ccc ccom omomm mmod ododat atati iive veve llan anangu guguage ageage U UUs sse ee c ccor ororr rre ees ssp ppon onond dde een nnc cce ee W
WWai aiait tt f ffor oror m mmi iis ssu uun nnd dde eer rrs sst ttan anand ddi iin nngs gsgs W WWai aiait tt f ffor oror s sse eer rrvi vivic cce ee rre eeq qqu uue ees sst tts ss U UUs sse ee ow ow owe ee-u uus ss lle eegal galgal llan
anangu guguage ageage O OOn nnl lly yy r rre ees ssp ppon onond dd tto oo ppr rrob obobl lle eem mms ss O OOn nnl lly yy r rre ees ssp ppon onond dd tto oo ppr rrob obobl lle eem mms ss g U UUs sse ee l llon onong-w wwi iin nnd dde
eed dd c ccom omomm mmu uun nni iic ccat atati iion onons ss P PPe eer rrs sson ononal alali iit tty yy ppr rrob obobl lle eem mms ss hhi iid ddd dde een nn T TTal alalk kk ab ababou ouout tt m mmak akaki iin nng gg goodgood onon t tth hhe ee p ppas
asast tt F FFi iir rre ee d ddr rri iil lll ll an anand dd eem mme eer rrge gegen nnc ccy yy r rre ees ssp ppon onons ssi iive veven nne ees sss ss S SSh hhi iif fft tt b bbl llam amame ee R RR e ee h hh as asas h hh
t tt h hh e ee p pp as asas t tt 1-92 www.bookfiesta4u.com
Attracting and Retaining Customers AddingStructuralTiesAdding Structural Ties CreatelongCreate long--termcontractsterm contracts ChlihihCh l i hi h www.bookfiesta4u.com1-93 ChargelowerpricetohighCharge lower price to high volumecustomersvolume customers TurnproductintoTurn product into longlong--termserviceterm service Attracting and Retaining Customers AddingStructuralTiesAdding Structural Ties CreatelongCreate long--termcontractsterm contracts ChlihihCh l i hi h www.bookfiesta4u.com1-93 ChargelowerpricetohighCharge lower price to high volumecustomersvolume customers TurnproductintoTurn product into longlong--termserviceterm service
Customer Profitability, Company Profitability, and Total Quality Management MeasuringProfitabilityMeasuring Profitability www.bookfiesta4u.com1-94 ProfitablecustomerProfitable customer Customer Profitability, Company Profitability, and Total Quality Management MeasuringProfitabilityMeasuring Profitability www.bookfiesta4u.com1-94 ProfitablecustomerProfitable customer
Figure 3-7: Customer-Product Profitability Analysis www.bookfiesta4u.com1-95 Figure 3-7: Customer-Product Profitability Analysis www.bookfiesta4u.com1-95
Figure 3-8: Allocating marketing investment according to customer value www.bookfiesta4u.com1-96 Figure 3-8: Allocating marketing investment according to customer value www.bookfiesta4u.com1-96
Customer Profitability, Company Profitability, and Total Quality Management IncreasingCompanyProfitabilityIncreasing Company Profitability CtitidtC titi d t www.bookfiesta4u.com1-97 CompetitiveadvantageCompetitive advantage ImplementingTQMImplementing TQM TotalQualityManagementTotal Quality Management QualityQuality Customer Profitability, Company Profitability, and Total Quality Management IncreasingCompanyProfitabilityIncreasing Company Profitability CtitidtC titi d t www.bookfiesta4u.com1-97 CompetitiveadvantageCompetitive advantage ImplementingTQMImplementing TQM TotalQualityManagementTotal Quality Management QualityQuality
Chapter4Chapter 4 WinningMarketsThroughWinning Markets Through MarketMarket--OrientedStrategicOriented Strategic PlanningPlanning byby www.bookfiesta4u.comyy PowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans Chapter4Chapter 4 WinningMarketsThroughWinning Markets Through MarketMarket--OrientedStrategicOriented Strategic PlanningPlanning byby www.bookfiesta4u.comyy PowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans
Kotler on Marketing ItismoreimportantIt is more important todowhatisto do what is ttillihtt t i ll i ht www.bookfiesta4u.com1-99 strategicallyrightstrategically right thanwhatisthan what is immediatelyimmediately profitable.profitable. Kotler on Marketing ItismoreimportantIt is more important todowhatisto do what is ttillihtt t i ll i ht www.bookfiesta4u.com1-99 strategicallyrightstrategically right thanwhatisthan what is immediatelyimmediately profitable.profitable.
Chapter Objectives Inthischapter,weexaminetheIn this chapter, we examine the followingquestions:following questions: HowisstrategicplanningcarriedoutatHow is strategic planning carried out at thecorporateanddivisionlevels?the corporate and division levels? HowisplanningcarriedoutattheHow is planning carried out at the www.bookfiesta4u.com1 100 HowisplanningcarriedoutattheHow is planning carried out at the businessunitlevel?business unit level? WhatarethemajorstepsintheWhat are the major steps in the marketingprocess?marketing process? HowisplanningcarriedoutattheHow is planning carried out at the productlevel?product level? Whatdoesamarketingplaninclude?What does a marketing plan include? Chapter Objectives Inthischapter,weexaminetheIn this chapter, we examine the followingquestions:following questions: HowisstrategicplanningcarriedoutatHow is strategic planning carried out at thecorporateanddivisionlevels?the corporate and division levels? HowisplanningcarriedoutattheHow is planning carried out at the www.bookfiesta4u.com1 100 HowisplanningcarriedoutattheHow is planning carried out at the businessunitlevel?business unit level? WhatarethemajorstepsintheWhat are the major steps in the marketingprocess?marketing process? HowisplanningcarriedoutattheHow is planning carried out at the productlevel?product level? Whatdoesamarketingplaninclude?What does a marketing plan include?
Strategic Planning: Three Key Areas and Four Organization Levels StrategicmarketingplanStrategic marketing plan TacticalTactical marketingplanmarketing plan MarketingplanMarketing plan www.bookfiesta4u.com1-101 Strategic Planning: Three Key Areas and Four Organization Levels StrategicmarketingplanStrategic marketing plan TacticalTactical marketingplanmarketing plan MarketingplanMarketing plan www.bookfiesta4u.com1-101
Corporate and Division Strategic Planning AllcorporateheadquartersundertakeAll corporate headquarters undertake fourplanningactivitiesfour planning activities DefiningtheCorporateMissionDefining the Corporate Mission www.bookfiesta4u.com1 102 DefiningtheCorporateMissionDefining the Corporate Mission EstablishingStrategicBusinessUnits(SBUs)Establishing Strategic Business s) AssigningresourcestoeachSBUAssigning resources to each SBU Planningnewbusinesses,downsizing,orPlanning new businesses, downsizing, terminatingolderbusinessesterminating older businesses Corporate and Division Strategic Planning AllcorporateheadquartersundertakeAll corporate headquarters undertake fourplanningactivitiesfour planning activities DefiningtheCorporateMissionDefining the Corporate Mission www.bookfiesta4u.com1 102 DefiningtheCorporateMissionDefining the Corporate Mission EstablishingStrategicBusinessUnits(SBUs)Establishing Strategic Business s) AssigningresourcestoeachSBUAssigning resources to each SBU Planningnewbusinesses,downsizing,orPlanning new businesses, downsizing, terminatingolderbusinessesterminating older businesses
Units (SBU or
Units (SBU or
Corporate and Division Strategic Planning DefiningtheCorporateMissionDefining the Corporate Mission MissionstatementsdefinewhichcompetitiveMission statements define which competitive scopesthecompanywilloperateinscopes the company will operate in www.bookfiesta4u.com1 103 Industry scopeIndustry scope ProductsandapplicationsscopeProducts and applications scope CompetencescopeCompetence scope MarketMarket--segmentscopesegment scope VerticalscopeVertical scope GeographicalscopeGeographical scope Corporate and Division Strategic Planning DefiningtheCorporateMissionDefining the Corporate Mission MissionstatementsdefinewhichcompetitiveMission statements define which competitive scopesthecompanywilloperateinscopes the company will operate in www.bookfiesta4u.com1 103 Industry scopeIndustry scope ProductsandapplicationsscopeProducts and applications scope CompetencescopeCompetence scope MarketMarket--segmentscopesegment scope VerticalscopeVertical scope GeographicalscopeGeographical scope
CanyounameacompanythathasCan you name a company that has recentlychangeditsproductscoperecently changed its product scope ormarketsegmentscopeinaveryor market segment scope in a very www.bookfiesta4u.comormarketsegmentscopeinaveryor market segment scope in a very publicway?Wasthisanexpansionpublic way? Was this an expansion orcontractionofscope?or contraction of scope? CanyounameacompanythathasCan you name a company that has recentlychangeditsproductscoperecently changed its product scope ormarketsegmentscopeinaveryor market segment scope in a very www.bookfiesta4u.comormarketsegmentscopeinaveryor market segment scope in a very publicway?Wasthisanexpansionpublic way? Was this an expansion orcontractionofscope?or contraction of scope?
Corporate and Division Strategic Planning EstablishingStrategicBusinessUnitsEstablishing Strategic Business Units (SBUs)(SBUs) www.bookfiesta4u.com1 105 Corporate and Division Strategic Planning EstablishingStrategicBusinessUnitsEstablishing Strategic Business Units (SBUs)(SBUs) www.bookfiesta4u.com1 105
Table 4.1: Product-Oriented versus Market-Oriented Definitions of a Business C CC o oo m mm p pp a aa n nn y yy P PP r rr o oo d dd u uu c cc t tt D DD e ee f ff i ii n nn i ii t tt i ii o oo n nn M MM a aa r rr k
kk e ee t tt D DD e ee f ff i ii n nn i ii t tt i ii o oo n nn M MM i ii s ss s ss o oo u uu r rr i ii -P PP a aa c cc i ii f ff i ii c cc R RR a
aa i ii l ll r rr o oo a aa d dd W WW e ee r rr u uu n nn a aa r rr a aa i ii l ll r rr o oo a aa d dd W WW e ee a aa r rr e ee a aa p pp e ee o oo p
pp l ll e ee -a aa n nn d dd -g gg o oo o oo d dd s ss m mm o oo v vv e ee r rr X XX e ee r rr o oo x xx W WW e ee m mm a aa k kk e ee c cc o
oo p pp y yy i ii n nn g gg e ee q qq u uu i ii p pp m mm e ee n nn t tt W WW e ee h hh e ee l ll p pp i ii m mm p pp r rr o oo v vv e ee o oo f ff f
ff i ii c cc e ee p pp r rr o oo d dd u uu c cc t tt i ii v vv i ii t tt y yy S SS t tt a aa n nn d dd a aa r rr d dd O OO i ii l ll W WW e ee s ss e
ee l ll l ll g gg a aa s ss o oo l ll i ii n nn e ee W WW e ee s ss u uu p pp p pp l ll y yy e ee n nn e ee r rr g gg y yy C CC o oo l ll u uu m mm b
bb i ii a aa P PP i ii c cc t tt u uu r rr e ee s ss W WW e ee m mm a aa k kk e ee m mm o oo v vv i ii e ee s ss W WW e ee m mm a aa r rr k kk e ee t
tt e ee n nn t tt e ee r rr t tt a aa i ii n nn m mm e ee n nn t tt E EE n nn c cc y yy c cc l ll o oo p pp a aa e ee d dd i ii a aa W WW e ee s ss e
ee l ll l ll e ee n nn c cc y yy c cc l ll o oo p pp e ee d dd i ii a aa s ss W WW e ee d dd i ii s ss t tt r rr i ii b bb u uu t tt e ee I II n nn f
ff o oo r rr m mm a aa t tt i ii o oo n nn C CC a aa r rr r rr i ii e ee r rr W WW e ee m mm a aa k kk e ee a aa i ii r rr c cc o oo n nn d dd i ii t
tt i ii o oo n nn e ee r rr s ss a aa n nn d dd f ff u uu r rr n nn a aa c cc e ee s ss W WW e ee p pp r rr o oo v vv i ii d dd e ee c cc l ll i ii m
mm a aa t tt e ee c cc o oo n nn t tt r rr o oo l ll i ii n nn t tt h hh e ee h hh o oo m mm e ee www.bookfiesta4u.com
Corporate and Division Strategic Planning ThreecharacteristicsofSBUsThree characteristics of SBUs SinglebusinessorcollectionofrelatedSingle business or collection of related businessesthatcanbeplannedforseparatelybusinesses that can be planned for separa tely www.bookfiesta4u.com1 107 businessesthatcanbeplannedforseparatelybusinesses that can be planned for separa tely HasitsownsetofcompetitorsHas its own set of competitors HasamanagerwhoisresponsibleforHas a manager who is responsible for strategicplanningandprofitstrategic planning and profit Corporate and Division Strategic Planning ThreecharacteristicsofSBUsThree characteristics of SBUs SinglebusinessorcollectionofrelatedSingle business or collection of related businessesthatcanbeplannedforseparatelybusinesses that can be planned for separa tely www.bookfiesta4u.com1 107 businessesthatcanbeplannedforseparatelybusinesses that can be planned for separa tely HasitsownsetofcompetitorsHas its own set of competitors HasamanagerwhoisresponsibleforHas a manager who is responsible for strategicplanningandprofitstrategic planning and profit
TheGrowthThe Growth--ShareMatrixShare Matrix RelativemarketshareRelative market share FourCellsFour Cells QuestionMarksQuestion Marks StarsStars CashCowsCash Cows www.bookfiesta4u.com1-108 CashCowsCash Cows DogsDogs SBUStrategiesSBU Strategies SBULifecycleSBU Lifecycle TheGrowthThe Growth--ShareMatrixShare Matrix RelativemarketshareRelative market share FourCellsFour Cells QuestionMarksQuestion Marks StarsStars CashCowsCash Cows www.bookfiesta4u.com1-108 CashCowsCash Cows DogsDogs SBUStrategiesSBU Strategies SBULifecycleSBU Lifecycle
Canyougiveanexampleofa Star Can you give an example of a Star thatskipped CashCow ,andwentthat skipped Cash Cow , and went www.bookfiesta4u.comstraightto Dog status?straight to Dog status? Canyougiveanexampleofa Star Can you give an example of a Star thatskipped CashCow ,andwentthat skipped Cash Cow , and went www.bookfiesta4u.comstraightto Dog status?straight to Dog status?
Corporate and Division Strategic Planning TheGeneralElectricModelThe General Electric Model www.bookfiesta4u.com1 110 Corporate and Division Strategic Planning TheGeneralElectricModelThe General Electric Model www.bookfiesta4u.com1 110
Table 4-2: Factors underlying Market Attractiveness and Competitive Position in GE Multifactor Portfolio Model: Hydraulic-Pumps Market M MMa aar rrk kke eet tt A AAt ttt ttr rra aac cct tti iiv vve een nne ees sss ss O OOv vve eer rra aal lll ll m mma aar rrk kke eet tt s ssi iiz zze ee A AAn nnn nnu uua aal ll m mma aar rrk kke
eet tt g ggr rro oow wwt tth hh r rra aat tte ee H HHi iis sst tto oor rri iic cca aal ll p ppr rro oof ffi iit tt m mma aar rrg ggi iin nn C CCo oom mmp ppe eet tti iit tti iiv vve ee i iin nnt tte een nns ssi iit tty
yy T TTe eec cch hhn nno ool llo oog ggi iic cca aal ll r rre eeq qqu uui iir rre eem mme een nnt tts ss I IIn nnf ffl lla aat tti iio oon nna aar rry yy v vvu uul lln nne eer rra aab bbi iil lli iit tty yy E EEn nne eer rrg ggy
yy r rre eeq qqu uui iir rre eem mme een nnt tts ss E EEn nnv vvi iir rro oon nnm mme een nnt tta aal ll i iim mmp ppa aac cct tt W WWe eei iig ggh hht tt 0 00. .. 2 220 00 0 00. .. 2 220 00 0 00. .. 1
115 55 0 00. .. 1 115 55 0 00. .. 1 115 55 0 00. .. 0 005 55 0 00. .. 0 005 55 0 00 0 005 55 R RRa aat tti iin nng gg == ( (( 11-55) )) 445 554 442 224 443 332 223 33 V VVa aal llu uue
ee 0 00. .. 880 00 11. .. 00. .. 660 00 00. .. 330 00 00. .. 660 00 00. .. 115 55 00. .. 110 00 00 115 55 E EE n nn v vv i ii r rr o oo n nn m mm e ee n nn t tt a aa l ll i
ii m mm p pp a aa c cc t tt S SS o oo c cc i ii a aa l ll -p pp o oo l ll i ii t tt i ii c cc a aa l ll -l ll e ee g gg a aa l ll 0 00 . .. 0
00 5 55 M MM u uu s ss t tt b bb e ee a aa c cc c cc e ee p pp t tt a aa b bb l ll e ee 1 11 . .. 0 00 3 33 0 00 . .. 1 11 5 55 3 33 . .. 7 77 0 00 B
BB u uu s ss i ii n nn e ee s ss s ss S SS t tt r rr e ee n nn g gg t tt h hh M MM a aa r rr k kk e ee t tt s ss h hh a aa r rr e ee S SS h hh a aa r
rr e ee g gg r rr o oo w ww t tt h hh P PP r rr o oo d dd u uu c cc t tt q qq u uu a aa l ll i ii t tt y yy B BB r rr a aa n nn d dd r rr e ee p pp u
uu t tt a aa t tt i ii o oo n nn D DD i ii s ss t tt r rr i ii b bb u uu t tt i ii o oo n nn n nn e ee t tt w ww o oo r rr k kk 0 00 . .. 1 11 0 00 0
00 . .. 1 11 5 55 0 00 . .. 1 11 0 00 0 00 . .. 1 11 0 00 0 00 . .. 0 00 5 55 4 44 2 22 4 44 5 55 4 44 0 00 . .. 4 44 0 00 0 00 . .. 3 33 0 00 0 00 .
.. 4 44 0 00 0 00 . .. 5 55 0 00 0 00 . .. 2 22 0 00 See text for complete table1-111 www.bookfiesta4u.com
Corporate and Division Strategic Planning CritiqueofPortfolioModelsCritique of Portfolio Models PlanningNewBusinesses,Planning New Businesses, www.bookfiesta4u.com1 112 DownsizingOlderBusinessesDownsizing Older Businesses Corporate and Division Strategic Planning CritiqueofPortfolioModelsCritique of Portfolio Models PlanningNewBusinesses,Planning New Businesses, www.bookfiesta4u.com1 112 DownsizingOlderBusinessesDownsizing Older Businesses
Corporate and Division Strategic Planning IntensiveGrowthIntensive Growth www.bookfiesta4u.com1 113 Corporate and Division Strategic Planning IntensiveGrowthIntensive Growth www.bookfiesta4u.com1 113
Starbucks homepage:CustomerscanrequestaStarbucks
home page: Customers can request a
catalogofStarbucksproducts,subscribetoacatalog of Starbucks products, subscribe to a newsletter,andshoponlinenewsletter, and shop online www.bookfiesta4u.com1-114 Starbucks homepage:CustomerscanrequestaStarbucks home page: Customers can request a catalogofStarbucksproducts,subscribetoacatalog of Starbucks products, subscribe to a newsletter,andshoponlinenewsletter, and shop online www.bookfiesta4u.com1-114
Corporate and Division Strategic Planning IntegrativeGrowthIntegrative Growth DiversificationGrowthDiversification Growth www.bookfiesta4u.com1 115 DownsizingOlderBusinessesDownsizing Older Businesses Corporate and Division Strategic Planning IntegrativeGrowthIntegrative Growth DiversificationGrowthDiversification Growth www.bookfiesta4u.com1 115 DownsizingOlderBusinessesDownsizing Older Businesses
GiveanexampleofamarketGive an example of a market segmentwhereintegrativegrowthsegment where integrative growth wouldbepreferabletogrowthwould be preferable to growth www.bookfiesta4u.comwouldbepreferabletogrowthwould be preferable to growth throughdiversification.Explainthrough diversification. Explain whyoneapproachisbetterwhy one approach is better thantheother.than the other. GiveanexampleofamarketGive an example of a market segmentwhereintegrativegrowthsegment where integrative growth wouldbepreferabletogrowthwould be preferable to growth www.bookfiesta4u.comwouldbepreferabletogrowthwould be preferable to growth throughdiversification.Explainthrough diversification. Explain whyoneapproachisbetterwhy one approach is better thantheother.than the other.
Business Unit Strategic Planning BusinessMissionBusiness Mission SWOTAnalysisSWOT Analysis ExternalEnvironmentAnalysisExternal Environment Analysis www.bookfiesta4u.com1-117 ExternalEnvironmentAnalysisExternal Environment Analysis (OpportunityandThreatAnalysis)(Opportunity and Threat Analysis) Marketing OpportunityMarketing Opportunity BuyingopportunitymoreconvenientorBuying opportunity more convenient or efficientefficient MeettheneedformoreinformationandadviceMeet the need for more information and advic e CustomizeanofferingthatwaspreviouslyonlyCustomize an offering that was previously only availableinstandardformavailable in standard form Business Unit Strategic Planning BusinessMissionBusiness Mission SWOTAnalysisSWOT Analysis ExternalEnvironmentAnalysisExternal Environment Analysis www.bookfiesta4u.com1-117 ExternalEnvironmentAnalysisExternal Environment Analysis (OpportunityandThreatAnalysis)(Opportunity and Threat Analysis) Marketing OpportunityMarketing Opportunity BuyingopportunitymoreconvenientorBuying opportunity more convenient or efficientefficient MeettheneedformoreinformationandadviceMeet the need for more information and advic e CustomizeanofferingthatwaspreviouslyonlyCustomize an offering that was previously only availableinstandardformavailable in standard form
GivesomeexamplesofcompaniesGive some examples of companies thathavegrowntodominatetheirthat have grown to dominate their marketsegmentbyusingtechnologymarket segment by using technology www.bookfiesta4u.commarketsegmentbyusingtechnologymarket segment by using techno logy tomakebuyingopportunitiesmoreto make buying opportunities more convenientandefficient.convenient and efficient. GivesomeexamplesofcompaniesGive some examples of companies thathavegrowntodominatetheirthat have grown to dominate their marketsegmentbyusingtechnologymarket segment by using technology www.bookfiesta4u.commarketsegmentbyusingtechnologymarket segment by using techno logy tomakebuyingopportunitiesmoreto make buying opportunities more convenientandefficient.convenient and efficient.
Business Unit Strategic Planning MarketingOpportunityAnalysis(MOA)Marketing Opportunity Analysis (MOA) Can the benefitsbe articulatedto a targetCan the benefits be articulated to a targ et market?market? Can the targetmarketbe reachedwithcostCan the target market be reached with cost-www.bookfiesta4u.com1 119 gege effectivemedia andtradechannels?effective media and trade channels? Doesthe company have the criticalcapabilitiesDoes the company have the critical ca pabilities to deliverthe customerbenefits?to deliver the customer benefits? Can the company deliverthesebenefitsbetterCan the company deliver these benefits b etter than any actualorpotentialcompetitors?than any actual or potential competitors? Willtherateof returnmeetthe requiredWill the rate of return meet the required thresholdof investment?threshold of investment? Business Unit Strategic Planning MarketingOpportunityAnalysis(MOA)Marketing Opportunity Analysis (MOA) Can the benefitsbe articulatedto a targetCan the benefits be articulated to a targ et market?market? Can the targetmarketbe reachedwithcostCan the target market be reached with cost-www.bookfiesta4u.com1 119 gege effectivemedia andtradechannels?effective media and trade channels? Doesthe company have the criticalcapabilitiesDoes the company have the critical ca pabilities to deliverthe customerbenefits?to deliver the customer benefits? Can the company deliverthesebenefitsbetterCan the company deliver these benefits b etter than any actualorpotentialcompetitors?than any actual or potential competitors? Willtherateof returnmeetthe requiredWill the rate of return meet the required thresholdof investment?threshold of investment?
Figure 4-7: Opportunity and Threat Matrices www.bookfiesta4u.com1-120 Figure 4-7: Opportunity and Threat Matrices www.bookfiesta4u.com1-120
Business Unit Strategic Planning InternalEnvironmentalAnalysisInternal Environmental Analysis (Strength/WeaknessAnalysis)(Strength/Weakness Analysis) GlFiG l F i www.bookfiesta4u.com1 121 GoalFormationGoal Formation StrategicStrategic FormulationFormulation StrategyStrategy Business Unit Strategic Planning InternalEnvironmentalAnalysisInternal Environmental Analysis (Strength/WeaknessAnalysis)(Strength/Weakness Analysis) GlFiG l F i www.bookfiesta4u.com1 121 GoalFormationGoal Formation StrategicStrategic FormulationFormulation StrategyStrategy
Business Unit Strategic Planning Porter sGenericStrategiesPorter s OverallcostleadershipOverall cost www.bookfiesta4u.com1 122 DifferentiationDifferentiation FocusFocus Business Unit Strategic Planning Porter sGenericStrategiesPorter s OverallcostleadershipOverall cost www.bookfiesta4u.com1 122 DifferentiationDifferentiation FocusFocus
Generic Strategies leadership
Generic Strategies leadership
Travelocity sWebsitehelpstheconsumerplantheTravelocity s Web site helps plan the wholevacationwhole vacation flights,lodging,andcarrental.comflights, car rental.com www.bookfiesta4u.com1-123 Travelocity sWebsitehelpstheconsumerplantheTravelocity s Web site helps plan the wholevacationwhole vacation flights,lodging,andcarrental.comflights, car rental.com www.bookfiesta4u.com1-123
the consumer lodging, and the consumer lodging, and
OperationalEffectivenessandStrategyOperational Effectiveness and Strategy StrategicgroupStrategic group Business Unit Strategic Planning www.bookfiesta4u.com1 124 StrategicalliancesStrategic alliances OperationalEffectivenessandStrategyOperational Effectiveness and Strategy StrategicgroupStrategic group Business Unit Strategic Planning www.bookfiesta4u.com1 124 StrategicalliancesStrategic alliances
Business Unit Strategic Planning MarketingAlliancesMarketing Alliances ProductorservicealliancesProduct or service alliances PromotionalalliancesPromotional alliances www.bookfiesta4u.com1 125 LogisticalalliancesLogistical alliances PricingcollaborationsPricing collaborations PartnerRelationshipPartner Relationship Management,PRMManagement, PRM ProgramFormulationandProgram Formulation and ImplementationImplementation Business Unit Strategic Planning MarketingAlliancesMarketing Alliances ProductorservicealliancesProduct or service alliances PromotionalalliancesPromotional alliances www.bookfiesta4u.com1 125 LogisticalalliancesLogistical alliances PricingcollaborationsPricing collaborations PartnerRelationshipPartner Relationship Management,PRMManagement, PRM ProgramFormulationandProgram Formulation and ImplementationImplementation
Business Unit Strategic Planning FeedbackandControlFeedback and Control www.bookfiesta4u.com1 126 Business Unit Strategic Planning FeedbackandControlFeedback and Control www.bookfiesta4u.com1 126
The Marketing Process StepsinthePlanningProcessSteps in the Planning Process ThemarketingprocessThe marketing process AnalyzingMarketOpportunitiesAnalyzing Market Opportunities DevelopingMarketingStrategiesDeveloping Marketing Strategies www.bookfiesta4u.com1 127 PlanningMarketingProgramsPlanning Marketing Programs ManagingtheMarketingEffortManaging the Marketing Effort AnnualAnnual--plancontrolplan control ProfitabilitycontrolProfitability control StrategiccontrolStrategic control The Marketing Process StepsinthePlanningProcessSteps in the Planning Process ThemarketingprocessThe marketing process AnalyzingMarketOpportunitiesAnalyzing Market Opportunities DevelopingMarketingStrategiesDeveloping Marketing Strategies www.bookfiesta4u.com1 127 PlanningMarketingProgramsPlanning Marketing Programs ManagingtheMarketingEffortManaging the Marketing Effort AnnualAnnual--plancontrolplan control ProfitabilitycontrolProfitability control StrategiccontrolStrategic control
Figure 4-10: Factors Influencing Company Marketing www.bookfiesta4u.com1-128 Strategy Figure 4-10: Factors Influencing Company Marketing www.bookfiesta4u.com1-128 Strategy
Product Planning: The Nature and Contents of a Marketing Plan ContentsoftheMarketingPlanContents of the Marketing Plan ExecutiveSummaryExecutive Summary CurrentMarketingSituationCurrent Marketing Situation OidiliO i d i l i www.bookfiesta4u.com1 129 OpportunityandissueanalysisOpportunity and issue analysis ObjectivesObjectives MarketingstrategyMarketing strategy ActionprogramsAction programs FinancialprojectionsFinancial projections ImplementationcontrolsImplementation controls Product Planning: The Nature and Contents of a Marketing Plan ContentsoftheMarketingPlanContents of the Marketing Plan ExecutiveSummaryExecutive Summary CurrentMarketingSituationCurrent Marketing Situation OidiliO i d i l i www.bookfiesta4u.com1 129 OpportunityandissueanalysisOpportunity and issue analysis ObjectivesObjectives MarketingstrategyMarketing strategy ActionprogramsAction programs FinancialprojectionsFinancial projections ImplementationcontrolsImplementation controls
SampleMarketingPlan:SonicPersonalSample Marketing Plan: Sonic Personal DigitalAssistantDigital Assistant CurrentMarketingSituationCurrent Marketing Situation Product Planning: The Nature and Contents of a Marketing Plan www.bookfiesta4u.com1 130 CurrentMarketingSituationCurrent Marketing Situation OpportunityandIssueAnalysisOpportunity and Issue Analysis ObjectivesObjectives ActionProgramsAction Programs FinancialProjectionsFinancial Projections SampleMarketingPlan:SonicPersonalSample Marketing Plan: Sonic Personal DigitalAssistantDigital Assistant CurrentMarketingSituationCurrent Marketing Situation Product Planning: The Nature and Contents of a Marketing Plan www.bookfiesta4u.com1 130 CurrentMarketingSituationCurrent Marketing Situation OpportunityandIssueAnalysisOpportunity and Issue Analysis ObjectivesObjectives ActionProgramsAction Programs FinancialProjectionsFinancial Projections
ImplementationControlsImplementation Controls MarketingStrategyMarketing Strategy PositioningPositioning Product Planning: The Nature and Contents of a Marketing Plan www.bookfiesta4u.com1 131 gg ProductManagementProduct Management PricingPricing DistributionDistribution Marketing CommunicationsMarketing Communications Marketing ResearchMarketing Research ImplementationControlsImplementation Controls MarketingStrategyMarketing Strategy PositioningPositioning Product Planning: The Nature and Contents of a Marketing Plan www.bookfiesta4u.com1 131 gg ProductManagementProduct Management PricingPricing DistributionDistribution Marketing CommunicationsMarketing Communications Marketing ResearchMarketing Research
Chapter5Chapter 5 GatheringInformationandGathering Information and MeasuringMarketDemandMeasuring Market Demand byby www.bookfiesta4u.comPowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans Chapter5Chapter 5 GatheringInformationandGathering Information and MeasuringMarketDemandMeasuring Market Demand byby www.bookfiesta4u.comPowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans
Kotler on Marketing MarketingisMarketing is becomingabattlebecoming a battle www.bookfiesta4u.com1-133 gg basedmoreonbased more on informationthaninformation than onsalespower.on sales power. Kotler on Marketing MarketingisMarketing is becomingabattlebecoming a battle www.bookfiesta4u.com1-133 gg basedmoreonbased more on informationthaninformation than onsalespower.on sales power.
Chapter Objectives Inthischapter,wefocusonthefollowingIn this chapter, we focus on the following questions:questions: WhatarethecomponentsofamodernWhat are the components of a modern marketinginformationsystem?marketing information system? Whidkih?Wh i d k i h? www.bookfiesta4u.com1-134 Whatconstitutesgoodmarketingresearch?What constitutes good marketing research? HowcanmarketingdecisionsupportsystemsHow can marketing decision support systems helpmarketingmanagersmakebetterhelp marketing managers make better decisions?decisions? HowcandemandbemoreaccuratelyHow can demand be more accurately measuredandforecasted?measured and forecasted? Chapter Objectives Inthischapter,wefocusonthefollowingIn this chapter, we focus on the following questions:questions: WhatarethecomponentsofamodernWhat are the components of a modern marketinginformationsystem?marketing information system? Whidkih?Wh i d k i h? www.bookfiesta4u.com1-134 Whatconstitutesgoodmarketingresearch?What constitutes good marketing research? HowcanmarketingdecisionsupportsystemsHow can marketing decision support systems helpmarketingmanagersmakebetterhelp marketing managers make better decisions?decisions? HowcandemandbemoreaccuratelyHow can demand be more accurately measuredandforecasted?measured and forecasted?
MarketingInformationSystem(MIS)Marketing Information System (MIS) 10usefulquestionsfordeterminingthe10 useful questions for determining the informationneedsofmarketinginformation needs of marketing The Components of a Modern Marketing Information System www.bookfiesta4u.com1-135 gg managers.managers. Whatdecisionsdo youregularly make?What decisions do you regularly make? Whatinformationdo youneed to maketheseWhat information do you need to make these decisions?decisions? Whatinformationdo youregularly get?What information do you regularly get? Whatspecialstudies do youperiodically request?What special studies do you periodic ally request? MarketingInformationSystem(MIS)Marketing Information System (MIS) 10usefulquestionsfordeterminingthe10 useful questions for determining the informationneedsofmarketinginformation needs of marketing The Components of a Modern Marketing Information System www.bookfiesta4u.com1-135 gg managers.managers. Whatdecisionsdo youregularly make?What decisions do you regularly make? Whatinformationdo youneed to maketheseWhat information do you need to make these decisions?decisions? Whatinformationdo youregularly get?What information do you regularly get? Whatspecialstudies do youperiodically request?What special studies do you periodic ally request?
The Components of a Modern Marketing Information System Whatinformationwouldyou wantthat youare notWhat information would you want that yo u are not getting now?getting now? Whatinformationwouldyou wantdaily? Weekly?What information would you want daily? W eekly? Monthly? Yearly?Monthly? Yearly? www.bookfiesta4u.com1-136 y? y?y? y? Whatmagazinesandtradereportswouldyou liketoWhat magazines and trade reports would you like to seeona regularbasis?see on a regular basis? Whattopicswouldyouliketo be keptinformedof?What topics would you like to be kept i nformed of? Whatdata analysisprograms wouldyou want?What data analysis programs would you want ? Whatarethe four mosthelpfulimprovementsthatWhat are the four most helpful improvem ents that couldbe madein the presentmarketing informationcould be made in the present mark eting information system?system? The Components of a Modern Marketing Information System Whatinformationwouldyou wantthat youare notWhat information would you want that yo u are not getting now?getting now? Whatinformationwouldyou wantdaily? Weekly?What information would you want daily? W eekly? Monthly? Yearly?Monthly? Yearly? www.bookfiesta4u.com1-136 y? y?y? y? Whatmagazinesandtradereportswouldyou liketoWhat magazines and trade reports would you like to seeona regularbasis?see on a regular basis? Whattopicswouldyouliketo be keptinformedof?What topics would you like to be kept i nformed of? Whatdata analysisprograms wouldyou want?What data analysis programs would you want ? Whatarethe four mosthelpfulimprovementsthatWhat are the four most helpful improvem ents that couldbe madein the presentmarketing informationcould be made in the present mark eting information system?system?
Internal Record Systems TheOrderThe Order--toto--PaymentCyclePayment Cycle SalesInformationSystemsSales Information Systems www.bookfiesta4u.com1-137 yy Databases,DataWarehousesDatabases, Data Warehouses AndDataAnd Data--MiningMining Internal Record Systems TheOrderThe Order--toto--PaymentCyclePayment Cycle SalesInformationSystemsSales Information Systems www.bookfiesta4u.com1-137 yy Databases,DataWarehousesDatabases, Data Warehouses AndDataAnd Data--MiningMining
CanyounameacompanythatusesCan you name a company that uses targetedmailingstopromotenewtargeted mailings to promote new products,orregionalofferings?products, or regional offerings? www.bookfiesta4u.comproducts,orregionalofferings?products, or regional offerings ? CanyounameacompanythatusesCan you name a company that uses targetedmailingstopromotenewtargeted mailings to promote new products,orregionalofferings?products, or regional offerings? www.bookfiesta4u.comproducts,orregionalofferings?products, or regional offerings ?
The Marketing Intelligence System AMarketingIntelligenceSystemA Marketing Intelligence System isasetofproceduresandsourcesis a set of procedures and sources usedbymanagerstoobtainused by managers to obtain www.bookfiesta4u.com1-139 ygy g everydayinformationabouteveryday information about developmentsinthemarketingdevelopments in the marketing environment.environment. The Marketing Intelligence System AMarketingIntelligenceSystemA Marketing Intelligence System isasetofproceduresandsourcesis a set of procedures and sources usedbymanagerstoobtainused by managers to obtain www.bookfiesta4u.com1-139 ygy g everydayinformationabouteveryday information about developmentsinthemarketingdevelopments in the marketing environment.environment.
WhataresomeofthepotentialWhat are some of the potential hazardsacompanymightfacebyhazards a company might face by relyingtooheavilyondistributorsrelying too heavily on distributors www.bookfiesta4u.comrelyingtooheavilyondistributors,relying too heavily on distr ibutors, retailers,orotherretailers, or other intermediariesforintermediaries for marketintelligence?market intelligence? WhataresomeofthepotentialWhat are some of the potential hazardsacompanymightfacebyhazards a company might face by relyingtooheavilyondistributorsrelying too heavily on distributors www.bookfiesta4u.comrelyingtooheavilyondistributors,relying too heavily on distr ibutors, retailers,orotherretailers, or other intermediariesforintermediaries for marketintelligence?market intelligence?
TheMarriottVacationClubInternationalWebsiteThe Marriott Vacation Club Internatio nal Web site givesinterestedcustomerstheopportunitytosellgives interested customers the oppor tunity to sell themselvesontheMarriottofferingsthemselves on the Marriott offerings www.bookfiesta4u.com1-141 TheMarriottVacationClubInternationalWebsiteThe Marriott Vacation Club Internatio nal Web site givesinterestedcustomerstheopportunitytosellgives interested customers the oppor tunity to sell themselvesontheMarriottofferingsthemselves on the Marriott offerings www.bookfiesta4u.com1-141
CEOExpress.comisaportaltoinformationCEOExpress.com a user clicksonalistingandisthenconnectedtothatsiteclicks ected to that site www.bookfiesta4u.com1-142 CEOExpress.comisaportaltoinformationCEOExpress.com a user clicksonalistingandisthenconnectedtothatsiteclicks ected to that site www.bookfiesta4u.com1-142
is a portal to information auser on a listing and is then conn is a portal to information auser on a listing and is then conn
Table 5-1: Secondary-Data Sources SecondarySecondary-DataSourcesData Sources A.A. InternalSourcesInternal Sources CompanyprofitCompany profit--lossstatements,balanceloss statements, balance sheets,salesfigures,salessheets, sales figures, sales--callreports,call reports, invoices,inventoryrecords,andpriorinvoices, inventory records, and prior researchreports.research reports. B.B. GovernmentPublicationsGovernment Publications SiilAbfhUidSS i i l Ab f h U i d S www.bookfiesta4u.com1-143 StatisticalAbstractoftheUnitedStatesStatistical Abstract of the United States CountyandCityDataBookCounty and City Data Book IndustrialOutlookIndustrial Outlook MarketingInformationGuideMarketing Information Guide C.C. PeriodicalsandBooksPeriodicals and Books BusinessPeriodicalsIndexBusiness Periodicals Index StandardandPoor sIndustryStandard and Poor s Industry See text for complete table Table 5-1: Secondary-Data Sources SecondarySecondary-DataSourcesData Sources A.A. InternalSourcesInternal Sources CompanyprofitCompany profit--lossstatements,balanceloss statements, balance sheets,salesfigures,salessheets, sales figures, sales--callreports,call reports, invoices,inventoryrecords,andpriorinvoices, inventory records, and prior researchreports.research reports. B.B. GovernmentPublicationsGovernment Publications SiilAbfhUidSS i i l Ab f h U i d S www.bookfiesta4u.com1-143 StatisticalAbstractoftheUnitedStatesStatistical Abstract of the United States CountyandCityDataBookCounty and City Data Book IndustrialOutlookIndustrial Outlook MarketingInformationGuideMarketing Information Guide C.C. PeriodicalsandBooksPeriodicals and Books BusinessPeriodicalsIndexBusiness Periodicals Index StandardandPoor sIndustryStandard and Poor s Industry See text for complete table
Marketing Research System MarketingResearchMarketing Research SuppliersofMarketingResearchSuppliers of Marketing Research EngagingstudentsorprofessorstoEngaging students or professors to designandcarryoutprojectsdesign and carry out projects UithIttU i th I t t www.bookfiesta4u.com1-144 UsingtheInternetUsing the Internet CheckingoutrivalsChecking out rivals SyndicatedSyndicated--serviceresearchfirmsservice research firms CustommarketingresearchfirmsCustom marketing research firms SpecialtySpecialty--linemarketingresearchline marketing research firmsfirms Marketing Research System MarketingResearchMarketing Research SuppliersofMarketingResearchSuppliers of Marketing Research EngagingstudentsorprofessorstoEngaging students or professors to designandcarryoutprojectsdesign and carry out projects UithIttU i th I t t www.bookfiesta4u.com1-144 UsingtheInternetUsing the Internet CheckingoutrivalsChecking out rivals SyndicatedSyndicated--serviceresearchfirmsservice research firms CustommarketingresearchfirmsCustom marketing research firms SpecialtySpecialty--linemarketingresearchline marketing research firmsfirms
Figure 5-1: The Marketing Research Process www.bookfiesta4u.com1-145 Figure 5-1: The Marketing Research Process www.bookfiesta4u.com1-145
Marketing Research System TheMarketingResearchProcessThe Marketing Research Process Step1:DefinetheProblem,theStep 1: Define the Problem, the DecisionAlternatives,andtheDecision Alternatives, and the ResearchObjectivesResearch Objectives www.bookfiesta4u.com1-146 ResearchObjectivesResearch Objectives Step2:DeveloptheStep 2: Develop the ResearchPlanResearch Plan Data SourcesData Sources ResearchApproachesResearch Approaches ObservationalresearchObservational research FocusgroupresearchFocus group research Marketing Research System TheMarketingResearchProcessThe Marketing Research Process Step1:DefinetheProblem,theStep 1: Define the Problem, the DecisionAlternatives,andtheDecision Alternatives, and the ResearchObjectivesResearch Objectives www.bookfiesta4u.com1-146 ResearchObjectivesResearch Objectives Step2:DeveloptheStep 2: Develop the ResearchPlanResearch Plan Data SourcesData Sources ResearchApproachesResearch Approaches ObservationalresearchObservational research FocusgroupresearchFocus group research
Marketing Research System Survey research Behavioral data Experimental research ResearchInstrumentsResearch Instruments www.bookfiesta4u.com1-147 QuestionnairesQuestionnaires PsychologicaltoolsPsychological tools MechanicaldevicesMechanical devices QuantitativemeasuresQuantitative measures Marketing Research System Survey research Behavioral data Experimental research ResearchInstrumentsResearch Instruments www.bookfiesta4u.com1-147 QuestionnairesQuestionnaires PsychologicaltoolsPsychological tools MechanicaldevicesMechanical devices QuantitativemeasuresQuantitative measures
Table 5-2: Types of Questions ChildrenonlyChildren onlyNooneNo one Withwhomareyoutravelingonthisflight?With whom are you traveling on this flight?A questionwiththreeormoreanswers.A question with three or more answers. MultipleMultiple ChoiceChoice Inarrangingthistrip,didyoupersonallyphoneAmerican?In arranging this trip, did yo u personally phone American? YesNoYes No Aquestionwithtwopossibleanswers.A question with two possible answers.Dichotomous Dichotomous ExampleExampleDescriptionDescriptionNameName A.ClosedA. Closed--endQuestionsend Questions www.bookfiesta4u.com1-148 See text for complete table 1_____2_____3_____4_____5_____1_____ 2 _____ 3_____ 4_____ 5_____ Smallairlinesgenerallygivebetterservicethanlargeones.Small airlines generally gi ve better service than large ones. StronglyDisagreeNeitheragreeAgreeStronglyStrongly Disagree Neither agree Agree S trongly disagreenordisagreeagreedisagree nor disagree agree AstatementwithwhichtherespondentA statement with which the respondent showstheamountofagreement/shows the amount of agreement/ disagreement.disagreement. LikertscaleLikert scale AnorganizedtourgroupAn organized tour groupSpouseandSpouse and childrenchildren Businessassociates/friends/relativesBusiness associates/friends/relativesSpouseS pouse Table 5-2: Types of Questions ChildrenonlyChildren onlyNooneNo one Withwhomareyoutravelingonthisflight?With whom are you traveling on this flight?A questionwiththreeormoreanswers.A question with three or more answers. MultipleMultiple ChoiceChoice Inarrangingthistrip,didyoupersonallyphoneAmerican?In arranging this trip, did yo u personally phone American? YesNoYes No Aquestionwithtwopossibleanswers.A question with two possible answers.Dichotomous Dichotomous ExampleExampleDescriptionDescriptionNameName A.ClosedA. Closed--endQuestionsend Questions www.bookfiesta4u.com1-148 See text for complete table 1_____2_____3_____4_____5_____1_____ 2 _____ 3_____ 4_____ 5_____ Smallairlinesgenerallygivebetterservicethanlargeones.Small airlines generally gi ve better service than large ones. StronglyDisagreeNeitheragreeAgreeStronglyStrongly Disagree Neither agree Agree S trongly disagreenordisagreeagreedisagree nor disagree agree AstatementwithwhichtherespondentA statement with which the respondent showstheamountofagreement/shows the amount of agreement/ disagreement.disagreement. LikertscaleLikert scale AnorganizedtourgroupAn organized tour groupSpouseandSpouse and childrenchildren Businessassociates/friends/relativesBusiness associates/friends/relativesSpouseS pouse
Marketing Research System Sampling Plan Sampling unit Sample size www.bookfiesta4u.com1-149 Sampling procedure Marketing Research System Sampling Plan Sampling unit Sample size www.bookfiesta4u.com1-149 Sampling procedure
www.wansink.com is a consumer psychology Web site set up by Dr. Brian Wansink of the University of Illinois www.bookfiesta4u.com1-150 www.wansink.com is a consumer psychology Web site set up by Dr. Brian Wansink of the University of Illinois www.bookfiesta4u.com1-150
A.A.ProbabilitySampleProbability Sample SimplerandomsampleSimple random sample EverymemberofthepopulationhasanEvery memb er of the population has an equalchanceofselectionequal chance of selection StratifiedrandomStratified random samplesample ThepopulationisdividedintomutuallyThe population is divided into mutually exclusivegroups(suchasagegroups),exclusive groups (such as age groups), ddldfd d l d f Table 5-3: Probability and Nonprobability Samples www.bookfiesta4u.com1-151 andrandomsamplesaredrawnfromand random samples are drawn from eachgroupeach group Cluster(area)sampleCluster (area) sample ThepopulationisdividedintomutuallyThe p opulation is divided into mutually exclusivegroups(suchascityblocks),exclusive groups (such as city blocks), andtheresearcherdrawsasampleofand the researcher draws a sample of thegroupstointerviewthe groups to interview Continued on next slide . . . A.A.ProbabilitySampleProbability Sample SimplerandomsampleSimple random sample EverymemberofthepopulationhasanEvery memb er of the population has an equalchanceofselectionequal chance of selection StratifiedrandomStratified random samplesample ThepopulationisdividedintomutuallyThe population is divided into mutually exclusivegroups(suchasagegroups),exclusive groups (such as age groups), ddldfd d l d f Table 5-3: Probability and Nonprobability Samples www.bookfiesta4u.com1-151 andrandomsamplesaredrawnfromand random samples are drawn from eachgroupeach group Cluster(area)sampleCluster (area) sample ThepopulationisdividedintomutuallyThe p opulation is divided into mutually exclusivegroups(suchascityblocks),exclusive groups (such as city blocks), andtheresearcherdrawsasampleofand the researcher draws a sample of thegroupstointerviewthe groups to interview Continued on next slide . . .
B.B.NonprobabilityNonprobability SampleSample ConveniencesampleConvenience sample TheresearcherselectsthemostThe researcher se lects the most accessiblepopulationmembersaccessible population members JudgmentsampleJudgment sample TheresearcherselectspopulationThe researcher selec ts population bhdfb h d f Table 5-3: Probability and Nonprobability Samples (Continued) www.bookfiesta4u.com1-152 memberswhoaregoodprospectsformembers who are good prospects for accurateinformationaccurate information QuotasampleQuota sample TheresearcherfindsandinterviewsaThe researcher finds and interviews a prescribednumberofpeopleineachofprescribed number of people in each of severalcategoriesseveral categories B.B.NonprobabilityNonprobability SampleSample ConveniencesampleConvenience sample TheresearcherselectsthemostThe researcher se lects the most accessiblepopulationmembersaccessible population members JudgmentsampleJudgment sample TheresearcherselectspopulationThe researcher selec ts population bhdfb h d f Table 5-3: Probability and Nonprobability Samples (Continued) www.bookfiesta4u.com1-152 memberswhoaregoodprospectsformembers who are good prospects for accurateinformationaccurate information QuotasampleQuota sample TheresearcherfindsandinterviewsaThe researcher finds and interviews a prescribednumberofpeopleineachofprescribed number of people in each of severalcategoriesseveral categories
Marketing Research System Contact Methods Mail questionnaire Personal interviewing Arranged interviews www.bookfiesta4u.com1-153 Intercept interviews Online methods Click-stream Cookies Automated telephone surveys Marketing Research System Contact Methods Mail questionnaire Personal interviewing Arranged interviews www.bookfiesta4u.com1-153 Intercept interviews Online methods Click-stream Cookies Automated telephone surveys
Marketing Research System Step 3: Collect the Information Step 4: Analyze the I f ti www.bookfiesta4u.com1-154 Information Step 5: Present the Findings Step 6: Make the Decision Marketing Research System Step 3: Collect the Information Step 4: Analyze the I f ti www.bookfiesta4u.com1-154 Information Step 5: Present the Findings Step 6: Make the Decision
Table 5-4: The Seven Characteristics of Good Marketing Research 1.Scientific1. Scientific methodmethod EffectivemarketingresearchusestheprinciplesEffective marketing research uses the principles ofthescientificmethod:carefulobservation,of the scientific method: careful obser vation, formulationofhypotheses,prediction,andtesting.formulation of hypotheses, predict ion, and testing. 2.Research2. Research creativitycreativity Atitsbest,marketingresearchdevelopsAt its best, marketing research develops innovativewaystosolveaproblem:aclothinginnovative ways to solve a problem: a clo thing companycateringtoteenagersgaveseveralcompany catering to teenagers gave several www.bookfiesta4u.com1-155 companycateringtoteenagersgaveseveralcompany catering to teenagers gave several youngmenvideocameras,thenusedthevideosyoung men video cameras, then used the vid eos forfocusgroupsheldinrestaurantsandotherfor focus groups held in restaurants and other placesteensfrequent.places teens frequent. 3.Multiple3. Multiple methodsmethods MarketingresearchersshyawayfromoverrelianceMarketing researchers shy away from o verreliance onanyonemethod.Theyalsorecognizethevalueon any one method. They also recognize t he value ofusingtwoorthreemethodstoincreaseof using two or three methods to increase confidenceintheresults.confidence in the results. See text for complete table Table 5-4: The Seven Characteristics of Good Marketing Research 1.Scientific1. Scientific methodmethod EffectivemarketingresearchusestheprinciplesEffective marketing research uses the principles ofthescientificmethod:carefulobservation,of the scientific method: careful obser vation, formulationofhypotheses,prediction,andtesting.formulation of hypotheses, predict ion, and testing. 2.Research2. Research creativitycreativity Atitsbest,marketingresearchdevelopsAt its best, marketing research develops innovativewaystosolveaproblem:aclothinginnovative ways to solve a problem: a clo thing companycateringtoteenagersgaveseveralcompany catering to teenagers gave several www.bookfiesta4u.com1-155 companycateringtoteenagersgaveseveralcompany catering to teenagers gave several youngmenvideocameras,thenusedthevideosyoung men video cameras, then used the vid eos forfocusgroupsheldinrestaurantsandotherfor focus groups held in restaurants and other placesteensfrequent.places teens frequent. 3.Multiple3. Multiple methodsmethods MarketingresearchersshyawayfromoverrelianceMarketing researchers shy away from o verreliance
onanyonemethod.Theyalsorecognizethevalueon any one method. They also recognize t he value ofusingtwoorthreemethodstoincreaseof using two or three methods to increase confidenceintheresults.confidence in the results. See text for complete table
Marketing Research System OvercomingBarrierstotheUseofOvercoming Barriers to the Use of MarketingResearchMarketing Research AnarrowconceptionoftheresearchA narrow conception of the research www.bookfiesta4u.com1-156 UnevencaliberofresearchersUneven caliber of researchers PoorframingoftheproblemPoor framing of the problem LateandoccasionallyerroneousfindingsLate and occasionally erroneous findings PersonalityandpresentationaldifferencesPersonality and presentational differences Marketing Research System OvercomingBarrierstotheUseofOvercoming Barriers to the Use of MarketingResearchMarketing Research AnarrowconceptionoftheresearchA narrow conception of the research www.bookfiesta4u.com1-156 UnevencaliberofresearchersUneven caliber of researchers PoorframingoftheproblemPoor framing of the problem LateandoccasionallyerroneousfindingsLate and occasionally erroneous findings PersonalityandpresentationaldifferencesPersonality and presentational differences
Marketing Decision Support System MarketingDecisionSupportMarketing Decision Support System(MDSS)System (MDSS) Marketing and sales software programs www.bookfiesta4u.com1-157 software programs BRANDAID CALLPLAN DETAILER GEOLINE MEDIAC PROMOTER ADCAD CONVERSTORY Marketing Decision Support System MarketingDecisionSupportMarketing Decision Support System(MDSS)System (MDSS) Marketing and sales software programs www.bookfiesta4u.com1-157 software programs BRANDAID CALLPLAN DETAILER GEOLINE MEDIAC PROMOTER ADCAD CONVERSTORY
Table 5-5: Quantitative Tools Used in Marketing Decision Support Systems StatisticalToolsStatistical Tools 1.Multiple1. Multiple regression:regression: Astatisticaltechniqueforestimatinga bestfitting A statistical technique for estimati ng a best fitting equationshowinghowthevalueofadependentvariableequation showing how the value of a dependent variable varieswithchangingvaluesinanumberofindependentvaries with changing values in a n umber of independent variables.variables. ExampleExample:Acompanycanestimatehowunit: A company can es timate how unit salesareinfluencedbychangesinthelevelofcompanysales are influenced by changes in the level of company advertisingexpenditures,salesforcesize,andprice.advertising expenditures, sales force size, and price. 2.Discriminant2. Discriminant lil i AstatisticaltechniqueforclassifyinganobjectorA statistical technique for classif ying an object or iii i ElE l AlA l www.bookfiesta4u.com1-158 analysis:analysis: personsintotwoormorecategories.persons into two or more categ ories. ExampleExample:Alarge: A large retailchainstorecandeterminethevariablesthatretail chain store can determine the variables that discriminatebetweensuccessfulandunsuccessfulstorediscriminate between successful and unsuccessful store locations.locations. 3.Factor3. Factor analysis:analysis: AstatisticaltechniqueusedtodeterminethefewA statistical technique used to determ ine the few underlyingdimensionsofalargersetofintercorrelatedunderlying dimensions of a larg er set of intercorrelated variables.variables. ExampleExample:Abroadcastnetworkcanreducea: A broadcast net work can reduce a largesetofTVprogramsdowntoasmallsetofbasiclarge set of TV programs down to a sma ll set of basic programtypes.program types. See text for complete table Table 5-5: Quantitative Tools Used in Marketing Decision Support Systems StatisticalToolsStatistical Tools 1.Multiple1. Multiple regression:regression: Astatisticaltechniqueforestimatinga bestfitting A statistical technique for estimati ng a best fitting equationshowinghowthevalueofadependentvariableequation showing how the value of a dependent variable varieswithchangingvaluesinanumberofindependentvaries with changing values in a n umber of independent variables.variables. ExampleExample:Acompanycanestimatehowunit: A company can es timate how unit salesareinfluencedbychangesinthelevelofcompanysales are influenced by changes in the level of company advertisingexpenditures,salesforcesize,andprice.advertising expenditures, sales force size, and price.
2.Discriminant2. Discriminant lil i AstatisticaltechniqueforclassifyinganobjectorA statistical technique for classif ying an object or iii i ElE l AlA l www.bookfiesta4u.com1-158 analysis:analysis: personsintotwoormorecategories.persons into two or more categ ories. ExampleExample:Alarge: A large retailchainstorecandeterminethevariablesthatretail chain store can determine the variables that discriminatebetweensuccessfulandunsuccessfulstorediscriminate between successful and unsuccessful store locations.locations. 3.Factor3. Factor analysis:analysis: AstatisticaltechniqueusedtodeterminethefewA statistical technique used to determ ine the few underlyingdimensionsofalargersetofintercorrelatedunderlying dimensions of a larg er set of intercorrelated variables.variables. ExampleExample:Abroadcastnetworkcanreducea: A broadcast net work can reduce a largesetofTVprogramsdowntoasmallsetofbasiclarge set of TV programs down to a sma ll set of basic programtypes.program types. See text for complete table
Forecasting and Demand Measurement TheMeasuresofMarketDemandThe Measures of Market Demand Fi 5 3 Ni www.bookfiesta4u.com1-159 Figure 5-3: Ninety Types of Demand Measurement (6X5X3) Forecasting and Demand Measurement TheMeasuresofMarketDemandThe Measures of Market Demand Fi 5 3 Ni www.bookfiesta4u.com1-159 Figure 5-3: Ninety Types of Demand Measurement (6X5X3)
Which Market to Measure? Market Potential market Available market Forecasting and Demand Measurement www.bookfiesta4u.com1-160 Available market Target market (severed market) Penetrated market A Vocabulary for Demand Measurement Market Demand Market share Market penetration index Share penetration index Which Market to Measure? Market Potential market Available market Forecasting and Demand Measurement www.bookfiesta4u.com1-160 Available market Target market (severed market) Penetrated market A Vocabulary for Demand Measurement Market Demand Market share Market penetration index Share penetration index
Figure 5-4: Market Demand Functions Forecasting and Demand Measurement www.bookfiesta4u.com1-161 Figure 5-4: Market Demand Functions Forecasting and Demand Measurement www.bookfiesta4u.com1-161
CanyounameamarketsegmentCan you name a market segment withalowpenetrationindex?Awith a low penetration index? A highpenetrationindex?Canyouhigh penetration index? Can you www.bookfiesta4u.comhighpenetrationindex?Canyouhigh penetration index? Can you thinkofamarketwherethehighthink of a market where the high penetrationindexmightbeapenetration index might be a misleadingindicator?misleading indicator? CanyounameamarketsegmentCan you name a market segment withalowpenetrationindex?Awith a low penetration index? A highpenetrationindex?Canyouhigh penetration index? Can you www.bookfiesta4u.comhighpenetrationindex?Canyouhigh penetration index? Can you thinkofamarketwherethehighthink of a market where the high penetrationindexmightbeapenetration index might be a misleadingindicator?misleading indicator?
Forecasting and Demand Measurement MarketForecastMarket Forecast MarketPotentialMarket Potential ProductpenetrationProduct penetration percentagepercentage www.bookfiesta4u.com1-163 pgp g Company DemandCompany Demand Company SalesCompany Sales ForecastForecast SalesquotaSales quota SalesbudgetSales budget Company Sales PotentialCompany Sales Potential Forecasting and Demand Measurement MarketForecastMarket Forecast MarketPotentialMarket Potential ProductpenetrationProduct penetration percentagepercentage www.bookfiesta4u.com1-163 pgp g Company DemandCompany Demand Company SalesCompany Sales ForecastForecast SalesquotaSales quota SalesbudgetSales budget Company Sales PotentialCompany Sales Potential
EstimatingCurrentdemandEstimating Current demand TotalMarketPotentialTotal Market Potential AreaMarketPotentialArea Market Potential Forecasting and Demand Measurement www.bookfiesta4u.com1-164 AreaMarketPotentialArea Market Potential MarketMarket--BuildupMethodBuildup Method EstimatingCurrentdemandEstimating Current demand TotalMarketPotentialTotal Market Potential AreaMarketPotentialArea Market Potential Forecasting and Demand Measurement www.bookfiesta4u.com1-164 AreaMarketPotentialArea Market Potential MarketMarket--BuildupMethodBuildup Method
Table 5-6: Market-Buildup Method Using SIC Codes SICSIC (a)(a) AnnualAnnual SalesinSales in MillionsMillions of$of $ (b)(b) NumberofNumber of EstablishmentsEstablishments (c)(c) PotentialPotential NumberNumber ofLatheSalesof Lathe Sales Per$1MillionPer $1 Million CustomerSalesCustomer Sales MarketMarket PotentialPotential (axbxc)(a x b x c) www.bookfiesta4u.com1-165 ()( ) 25112511 11 66 1010 6060 55 22 1010 100100 25212521 11 33 55 1515 55 11 55 2525 3030 200200 Table 5-6: Market-Buildup Method Using SIC Codes SICSIC (a)(a) AnnualAnnual SalesinSales in MillionsMillions of$of $ (b)(b) NumberofNumber of EstablishmentsEstablishments (c)(c) PotentialPotential NumberNumber ofLatheSalesof Lathe Sales Per$1MillionPer $1 Million CustomerSalesCustomer Sales MarketMarket PotentialPotential (axbxc)(a x b x c) www.bookfiesta4u.com1-165 ()( ) 25112511 11 66 1010 6060 55 22 1010 100100 25212521 11 33 55 1515 55 11 55 2525 3030 200200
Forecasting and Demand Measurement Multiple-Factor Index Method www.bookfiesta4u.com1-166 BranddevelopmentBrand development index(BDI)index (BDI) Forecasting and Demand Measurement Multiple-Factor Index Method www.bookfiesta4u.com1-166 BranddevelopmentBrand development index(BDI)index (BDI)
Table 5-7: Calculating the Brand Development Index (BDI) (a)(a) PercentofPercent of U.S.BrandU.S. Brand (b)(b) PercentofPercent of U.S.CategoryU.S. Category BDIBDI TerritoryTerritory SalesSales SalesSales (a(a ¸¸¸¸¸¸¸¸ b)x100b) x 100 SeattleSeattle 3.093.09 2.712.71 114114 www.bookfiesta4u.com1-167 PortlandPortland 6.746.74 10.4110.41 6565 BostonBoston 3.493.49 3.853.85 9191 ToledoToledo .97.97 .81.81 120120 ChicagoChicago 1.131.13 .81.81 140140 BaltimoreBaltimore 3.123.12 3.003.00 104104 Table 5-7: Calculating the Brand Development Index (BDI) (a)(a) PercentofPercent of U.S.BrandU.S. Brand (b)(b) PercentofPercent of U.S.CategoryU.S. Category BDIBDI TerritoryTerritory SalesSales SalesSales (a(a ¸¸¸¸¸¸¸¸ b)x100b) x 100 SeattleSeattle 3.093.09 2.712.71 114114 www.bookfiesta4u.com1-167 PortlandPortland 6.746.74 10.4110.41 6565 BostonBoston 3.493.49 3.853.85 9191 ToledoToledo .97.97 .81.81 120120 ChicagoChicago 1.131.13 .81.81 140140 BaltimoreBaltimore 3.123.12 3.003.00 104104
Forecasting and Demand Measurement Industry Sales and Market Shares Estimating Future Demand Survey of Buyers Intentions www.bookfiesta4u.com1-168 Survey of Buyers Intentions Forecasting Purchase probability scale Forecasting and Demand Measurement Industry Sales and Market Shares Estimating Future Demand Survey of Buyers Intentions www.bookfiesta4u.com1-168 Survey of Buyers Intentions Forecasting Purchase probability scale
Forecasting and Demand Measurement Composite of Sales Force Opinions Expert Opinion Group discussion method www.bookfiesta4u.com1-169 Pooling of individual estimates Past-Sales Analysis Time-series analysis Exponential smoothing Statistical demand analysis Econometric analysis Market-Test Method Forecasting and Demand Measurement Composite of Sales Force Opinions Expert Opinion Group discussion method www.bookfiesta4u.com1-169 Pooling of individual estimates Past-Sales Analysis Time-series analysis Exponential smoothing Statistical demand analysis Econometric analysis Market-Test Method
Chapter6Chapter 6 ScanningtheMarketingScanning the Marketing EnvironmentEnvironment byby www.bookfiesta4u.comPowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans Chapter6Chapter 6 ScanningtheMarketingScanning the Marketing EnvironmentEnvironment byby www.bookfiesta4u.comPowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans
Kotler on Marketing TodayyouToday you havetorunhave to run www.bookfiesta4u.com1-171 fastertostayfaster to stay inplace.in place. Kotler on Marketing TodayyouToday you havetorunhave to run www.bookfiesta4u.com1-171 fastertostayfaster to stay inplace.in place.
Chapter Objectives Inthischapter,wefocusontwoIn this chapter, we focus on two questions:questions: WhatarethekeymethodsfortrackingandWhat are the key methods for tracking and www.bookfiesta4u.com1-172 identifyingopportunitiesintheidentifying opportunities in the macroenvironment?macroenvironment? Whatarethekeydemographic,economic,What are the key demographic, economic, natural,technological,political,andculturalnatural, technological, political, an d cultural developments?developments? Chapter Objectives Inthischapter,wefocusontwoIn this chapter, we focus on two questions:questions: WhatarethekeymethodsfortrackingandWhat are the key methods for tracking and www.bookfiesta4u.com1-172 identifyingopportunitiesintheidentifying opportunities in the macroenvironment?macroenvironment? Whatarethekeydemographic,economic,What are the key demographic, economic, natural,technological,political,andculturalnatural, technological, political, an d cultural developments?developments?
Analyzing Needs and Trends in the Macroenvironment TrendTrend FadFad www.bookfiesta4u.com1-173 MegatrendsMegatrends Analyzing Needs and Trends in the Macroenvironment TrendTrend FadFad www.bookfiesta4u.com1-173 MegatrendsMegatrends
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Thesubstantial speedupofinternationalThe substantial speedup of international transportation, communication, andfinancialtransportation, communication, and fi nancial transactions, leading to the rapid growthof worldtradetransactions, leading to t he rapid growth of world trade and investment, especially tripolartrade(Northand investment, especially tripola r trade (North America, WesternEuropeFarEast)America, Western Europe Far East) Identifying and Responding to the Major Macroenvironment Forces www.bookfiesta4u.com1-175 America, WesternEurope, FarEast)America, Western Europe, Far East) Themovementof manufacturing capacity andskillstoThe movement of manufacturing capa city and skills to lowercostcountries.lower cost countries. Therising economicpowerof severalAsian countriesThe rising economic power of sever al Asian countries inworldmarkets.in world markets. Theriseoftrade blockssuchas the EuropeanUnionThe rise of trade blocks such as the European Union and NAFTAsignatories.and NAFTA signatories. Thesubstantial speedupofinternationalThe substantial speedup of international transportation, communication, andfinancialtransportation, communication, and fi nancial transactions, leading to the rapid growthof worldtradetransactions, leading to t he rapid growth of world trade and investment, especially tripolartrade(Northand investment, especially tripola r trade (North America, WesternEuropeFarEast)America, Western Europe Far East) Identifying and Responding to the Major Macroenvironment Forces www.bookfiesta4u.com1-175 America, WesternEurope, FarEast)America, Western Europe, Far East) Themovementof manufacturing capacity andskillstoThe movement of manufacturing capa city and skills to lowercostcountries.lower cost countries. Therising economicpowerof severalAsian countriesThe rising economic power of sever al Asian countries inworldmarkets.in world markets. Theriseoftrade blockssuchas the EuropeanUnionThe rise of trade blocks such as the European Union and NAFTAsignatories.and NAFTA signatories.
Theseveredebt problemsofa numberofcountries,The severe debt problems of a number of countries, along withtheincreasing fragility of theinternationalalong with the increasing f ragility of the international financialsystem.financial system. Theincreasing useofbarterandcountertradetoThe increasing use of barter and counter trade to support internationaltransactions.support international transactions. Identifying and Responding to the Major Macroenvironment Forces www.bookfiesta4u.com1-176 pppp Themove towardmarketeconomiesin formerlyThe move toward market economies in former ly socialistcountriesalong withrapid privatizationofsocialist countries along with rapid privatization of publicly ownedcompanies.publicly owned companies. Therapid disseminationof globallifestyles.The rapid dissemination of global lifest yles. Thegradual opening of majornewmarkets, namelyThe gradual opening of major new mark ets, namely China, India, easternEurope, the Arabcountries, andChina, India, eastern Europe, the Arab countries, and LatinAmerica.Latin America. Theseveredebt problemsofa numberofcountries,The severe debt problems of a number o f countries, along withtheincreasing fragility of theinternationalalong with the increasing f ragility of the international financialsystem.financial system. Theincreasing useofbarterandcountertradetoThe increasing use of barter and counter trade to support internationaltransactions.support international transactions. Identifying and Responding to the Major Macroenvironment Forces www.bookfiesta4u.com1-176 pppp Themove towardmarketeconomiesin formerlyThe move toward market economies in former ly socialistcountriesalong withrapid privatizationofsocialist countries along with rapid privatization of publicly ownedcompanies.publicly owned companies. Therapid disseminationof globallifestyles.The rapid dissemination of global lifest yles. Thegradual opening of majornewmarkets, namelyThe gradual opening of major new mark ets, namely China, India, easternEurope, the Arabcountries, andChina, India, eastern Europe, the Arab countries, and LatinAmerica.Latin America.
Theincreasing tendency of multinationalsto transcendThe increasing tendency of mu ltinationals to transcend theirlocationalandnationalcharacteristicsandtheir locational and national charac teristics and becometransnationalfirms.become transnational firms. Theincreasing numberofcrossThe increasing number of cross--bordercorporateborder c orporate Identifying and Responding to the Major Macroenvironment Forces www.bookfiesta4u.com1-177 strategicalliancesstrategic alliances forexample, MCIandBritishfor example, MCI and British Telecom, andTexas Instruments andHitachi.Telecom, and Texas Instruments and Hita chi. Theincreasing ethnicandreligiousconflictsin certainThe increasing ethnic and relig ious conflicts in certain countriesand regions.countries and regions. Thegrowthofglobalbrandsin autos, food, clothing,The growth of global brands in aut os, food, clothing, electronics.electronics. Theincreasing tendency of multinationalsto transcendThe increasing tendency of mul tinationals to transcend theirlocationalandnationalcharacteristicsandtheir locational and national charac teristics and becometransnationalfirms.become transnational firms. Theincreasing numberofcrossThe increasing number of cross--bordercorporateborder c orporate Identifying and Responding to the Major Macroenvironment Forces www.bookfiesta4u.com1-177 strategicalliancesstrategic alliances forexample, MCIandBritishfor example, MCI and British Telecom, andTexas Instruments andHitachi.Telecom, and Texas Instruments and Hita chi. Theincreasing ethnicandreligiousconflictsin certainThe increasing ethnic and relig ious conflicts in certain countriesand regions.countries and regions. Thegrowthofglobalbrandsin autos, food, clothing,The growth of global brands in aut os, food, clothing, electronics.electronics.
DemographicEnvironmentDemographic Environment WorldwidePopulationWorldwide Population GrowthGrowth Identifying and Responding to the Major Macroenvironment Forces www.bookfiesta4u.com1-178 GrowthGrowth PopulationAgeMixPopulation Age Mix EthnicandOtherEthnic and Other MarketsMarkets DemographicEnvironmentDemographic Environment WorldwidePopulationWorldwide Population GrowthGrowth Identifying and Responding to the Major Macroenvironment Forces www.bookfiesta4u.com1-178 GrowthGrowth PopulationAgeMixPopulation Age Mix EthnicandOtherEthnic and Other MarketsMarkets
CanyouidentifyoneormoreCan you identify one or more nationswhosepopulationsholdthenations whose populations hold the promiseofhugepotentialmarketspromise of huge potential markets fd?Hhf d ? H h www.bookfiesta4u.comforconsumergoods?Howhavefor consumer goods? How have pressuresfrompotentialmarketerspressures from potential marketers totheseuntappedconsumerto these untapped consumer groupsdriventhepoliticalgroups driven the political discussiononanationaldiscussion on a national andinternationallevel?and international level? CanyouidentifyoneormoreCan you identify one or more nationswhosepopulationsholdthenations whose populations hold the promiseofhugepotentialmarketspromise of huge potential markets fd?Hhf d ? H h www.bookfiesta4u.comforconsumergoods?Howhavefor consumer goods? How have pressuresfrompotentialmarketerspressures from potential marketers totheseuntappedconsumerto these untapped consumer groupsdriventhepoliticalgroups driven the political discussiononanationaldiscussion on a national andinternationallevel?and international level?
EducationalGroupsEducational Groups HouseholdPatternsHousehold Patterns GhilShiftiG hi l Shift i Identifying and Responding to the Major Macroenvironment Forces www.bookfiesta4u.com1-180 GeographicalShiftsinGeographical Shifts in PopulationPopulation FromaMassMarketFrom a Mass Market toMicromarketsto Micromarkets EducationalGroupsEducational Groups HouseholdPatternsHousehold Patterns GhilShiftiG hi l Shift i Identifying and Responding to the Major Macroenvironment Forces www.bookfiesta4u.com1-180 GeographicalShiftsinGeographical Shifts in PopulationPopulation FromaMassMarketFrom a Mass Market toMicromarketsto Micromarkets
EconomicEnvironmentEconomic Environment IncomeDistributionIncome Distribution Identifying and Responding to the Major Macroenvironment Forces www.bookfiesta4u.com1-181 Savings,Debt,andSavings, Debt, and CreditAvailabilityCredit Availability EconomicEnvironmentEconomic Environment IncomeDistributionIncome Distribution Identifying and Responding to the Major Macroenvironment Forces www.bookfiesta4u.com1-181 Savings,Debt,andSavings, Debt, and CreditAvailabilityCredit Availability
NaturalEnvironmentNatural Environment ShortageofRawMaterialsShortage of Raw Materials IdECI d E C Identifying and Responding to the Major Macroenvironment Forces www.bookfiesta4u.com1-182 IncreasedEnergyCostIncreased Energy Cost AntiAnti--PollutionPressuresPollution Pressures ChangingRoleofGovernmentsChanging Role of Governments NaturalEnvironmentNatural Environment ShortageofRawMaterialsShortage of Raw Materials IdECI d E C Identifying and Responding to the Major Macroenvironment Forces www.bookfiesta4u.com1-182 IncreasedEnergyCostIncreased Energy Cost AntiAnti--PollutionPressuresPollution Pressures ChangingRoleofGovernmentsChanging Role of Governments
TechnologicalEnvironmentTechnological Environment AcceleratingPaceofChangeAccelerating Pace of Change Identifying and Responding to the Major Macroenvironment Forces www.bookfiesta4u.com1-183 UnlimitedOpportunitiesUnlimited Opportunities forInnovationfor Innovation TechnologicalEnvironmentTechnological Environment AcceleratingPaceofChangeAccelerating Pace of Change Identifying and Responding to the Major Macroenvironment Forces www.bookfiesta4u.com1-183 UnlimitedOpportunitiesUnlimited Opportunities forInnovationfor Innovation
VaryingR&DBudgetsVarying R&D Budgets IncreasedRegulationofIncreased Regulation of TechnologicalChangeTechnological Change Identifying and Responding to the Major Macroenvironment Forces www.bookfiesta4u.com1-184 PoliticalPolitical--LegalEnvironmentLegal Environment LegislationRegulatingLegislation Regulating BusinessBusiness GrowthofSpecialGrowth of Special--InterestInterest GroupsGroups ConsumeristmovementConsumerist movement VaryingR&DBudgetsVarying R&D Budgets IncreasedRegulationofIncreased Regulation of TechnologicalChangeTechnological Change Identifying and Responding to the Major Macroenvironment Forces www.bookfiesta4u.com1-184 PoliticalPolitical--LegalEnvironmentLegal Environment LegislationRegulatingLegislation Regulating BusinessBusiness GrowthofSpecialGrowth of Special--InterestInterest GroupsGroups ConsumeristmovementConsumerist movement
SocialSocial--CulturalCultural EnvironmentEnvironment Views of themselvesViews of themselves Identifying and Responding to the Major Macroenvironment Forces www.bookfiesta4u.com1-185 Views of themselvesViews of themselves Views of othersViews of others Views of organizationsViews of organizations Views of societyViews of society Views of natureViews of nature Views of universeViews of universe SocialSocial--CulturalCultural EnvironmentEnvironment Views of themselvesViews of themselves Identifying and Responding to the Major Macroenvironment Forces www.bookfiesta4u.com1-185 Views of themselvesViews of themselves Views of othersViews of others Views of organizationsViews of organizations Views of societyViews of society Views of natureViews of nature Views of universeViews of universe
HighPersistenceofCoreHigh Persistence of Core CulturalValuesCultural Values EitfbltE i t f b lt Identifying and Responding to the Major Macroenvironment Forces www.bookfiesta4u.com1-186 ExistenceofsubculturesExistence of subcultures SubculturesSubcultures ShiftsofSecondaryCulturalShifts of Secondary Cultural ValuesThroughTimeValues Through Time HighPersistenceofCoreHigh Persistence of Core CulturalValuesCultural Values EitfbltE i t f b lt Identifying and Responding to the Major Macroenvironment Forces www.bookfiesta4u.com1-186 ExistenceofsubculturesExistence of subcultures SubculturesSubcultures ShiftsofSecondaryCulturalShifts of Secondary Cultural ValuesThroughTimeValues Through Time
Chapter7Chapter 7 AnalyzingConsumerAnalyzing Consumer MarketsandBuyerBehaviorMarkets and Buyer Behavior byby www.bookfiesta4u.comPowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans Chapter7Chapter 7 AnalyzingConsumerAnalyzing Consumer MarketsandBuyerBehaviorMarkets and Buyer Behavior byby www.bookfiesta4u.comPowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans
Kotler on Marketing ThemostThe most importantimportant thingistothing is to www.bookfiesta4u.com1-188 forecastwhereforecast where customersarecustomers are moving,andmoving, and beinfrontofbe in front of them.them. Kotler on Marketing ThemostThe most importantimportant thingistothing is to www.bookfiesta4u.com1-188 forecastwhereforecast where customersarecustomers are moving,andmoving, and beinfrontofbe in front of them.them.
Inthischapter,wefocusontwoquestions:In this chapter, we focus on two questions: Howdothebuyers characteristicsHow do the buyers characteristics cultural,cultural, socialpersonalandpsychologicalsocial personal and psychological influenceinfluenc e Chapter Objectives www.bookfiesta4u.com1 189 social,personal,andpsychologicalsocial, personal, and psychological influenceinfl uence buyingbehavior?buying behavior? HowdoesthebuyermakepurchasingHow does the buyer make purchasing decisions?decisions? Inthischapter,wefocusontwoquestions:In this chapter, we focus on two questions: Howdothebuyers characteristicsHow do the buyers characteristics cultural,cultural, socialpersonalandpsychologicalsocial personal and psychological influenceinfluenc e Chapter Objectives www.bookfiesta4u.com1 189 social,personal,andpsychologicalsocial, personal, and psychological influenceinfl uence buyingbehavior?buying behavior? HowdoesthebuyermakepurchasingHow does the buyer make purchasing decisions?decisions?
ConsumerBehaviorConsumer Behavior CulturalFactorsCultural Factors CultureCulture SubculturesSubcultures Diversity marketingDiversity marketing Influencing Buyer Behavior www.bookfiesta4u.com1-190 y gy g SocialclassSocial class ConsumerBehaviorConsumer Behavior CulturalFactorsCultural Factors CultureCulture SubculturesSubcultures Diversity marketingDiversity marketing Influencing Buyer Behavior www.bookfiesta4u.com1-190 y gy g SocialclassSocial class
SocialFactorsSocial Factors ReferenceGroupsReference Groups ReferencegroupsReference groups MembershipgroupsMembership groups Influencing Buyer Behavior www.bookfiesta4u.com1 191 MembershipgroupsMembership groups Primary groupsPrimary groups Secondary groupsSecondary groups AspirationalgroupsAspirational groups DissociativegroupsDissociative groups OpinionleaderOpinion leader SocialFactorsSocial Factors ReferenceGroupsReference Groups ReferencegroupsReference groups MembershipgroupsMembership groups Influencing Buyer Behavior www.bookfiesta4u.com1 191 MembershipgroupsMembership groups Primary groupsPrimary groups Secondary groupsSecondary groups AspirationalgroupsAspirational groups DissociativegroupsDissociative groups OpinionleaderOpinion leader
Table 7.1: Characteristics of Major U.S. Social Classes 1.1. UpperUppersUpper Uppers (lessthan1%)(less than 1%) Thesocialelitewholiveoninheritedwealth.TheyThe social elite who live on inherite d wealth. They givelargesumstocharity,runthedebutanteballs,give large sums to charity, run the debutante balls, maintainmorethanonehome,andsendtheirmaintain more than one home, and send their childrentothefinestschools.Theyareamarketforchildren to the finest schools. They are a market for jewelry,antiques,homes,andvacations.Theyoftenjewelry, antiques, homes, and vacat ions. They often buyanddressconservatively.Althoughsmallasabuy and dress conservatively. Although small as a group,theyserveasareferencegrouptotheextentgroup, they serve as a reference grou p to the extent thattheirconsumptiondecisionsareimitatedbythethat their consumption decisions ar e imitated by the othersocialclassesother social classes www.bookfiesta4u.com1-192See text for complete table othersocialclasses.other social classes. 2.2. LowerUppersLower Uppers (about2%)(about 2%) Persons,usuallyfromthemiddleclass,whohavePersons, usually from the middle class, who have earnedhighincomeorwealththroughexceptionalearned high income or wealth through e xceptional abilityintheprofessionsorbusiness.Theytendtoability in the professions or busine ss. They tend to beactiveinsocialandcivicaffairsandtobuythebe active in social and civic affairs and to buy the symbolsofstatusforthemselvesandtheirchildren.symbols of status for themselves an d their children. Theyincludethenouveauriche,whosepatternofThey include the nouveau riche, whose p attern of conspicuousconsumptionisdesignedtoimpressconspicuous consumption is designed to impress thosebelowthem.those below them. Table 7.1: Characteristics of Major U.S. Social Classes 1.1. UpperUppersUpper Uppers (lessthan1%)(less than 1%) Thesocialelitewholiveoninheritedwealth.TheyThe social elite who live on inherite d wealth. They givelargesumstocharity,runthedebutanteballs,give large sums to charity, run the debutante balls, maintainmorethanonehome,andsendtheirmaintain more than one home, and send their childrentothefinestschools.Theyareamarketforchildren to the finest schools. They are a market for jewelry,antiques,homes,andvacations.Theyoftenjewelry, antiques, homes, and vacat ions. They often buyanddressconservatively.Althoughsmallasabuy and dress conservatively. Although small as a group,theyserveasareferencegrouptotheextentgroup, they serve as a reference grou p to the extent thattheirconsumptiondecisionsareimitatedbythethat their consumption decisions ar e imitated by the othersocialclassesother social classes www.bookfiesta4u.com1-192See text for complete table othersocialclasses.other social classes.
2.2. LowerUppersLower Uppers (about2%)(about 2%) Persons,usuallyfromthemiddleclass,whohavePersons, usually from the middle class, who have earnedhighincomeorwealththroughexceptionalearned high income or wealth through e xceptional abilityintheprofessionsorbusiness.Theytendtoability in the professions or busine ss. They tend to beactiveinsocialandcivicaffairsandtobuythebe active in social and civic affairs and to buy the symbolsofstatusforthemselvesandtheirchildren.symbols of status for themselves an d their children. Theyincludethenouveauriche,whosepatternofThey include the nouveau riche, whose p attern of conspicuousconsumptionisdesignedtoimpressconspicuous consumption is designed to impress thosebelowthem.those below them.
Secondary groupsSecondary groups AspirationalgroupsAspirational groups DissociativegroupsDissociative groups OiiladO i i l ad Influencing Buyer Behavior www.bookfiesta4u.com1 193 OpinionleaderOpinion leader Secondary groupsSecondary groups AspirationalgroupsAspirational groups DissociativegroupsDissociative groups OiiladO i i l ad Influencing Buyer Behavior www.bookfiesta4u.com1 193 OpinionleaderOpinion leader
FamilyFamily FamilyoforientationFamily of orientation FamilyofprocreationFamily of procreation RolesandStatusesRoles and Statuses Influencing Buyer Behavior www.bookfiesta4u.com1 194 RolesandStatusesRoles and Statuses RoleRole StatusStatus FamilyFamily FamilyoforientationFamily of orientation FamilyofprocreationFamily of procreation RolesandStatusesRoles and Statuses Influencing Buyer Behavior www.bookfiesta4u.com1 194 RolesandStatusesRoles and Statuses RoleRole StatusStatus
W WWi iit tth hh t tthe hehe grayi grayi graying ng ng of ofof t tthe hehe A AAm mmeri erierican cancan populpopulace, ace,ace, m mmarket arketarketers ersers have havehave begun begunbegun t tto oo s sshi hihif fft tt i iim mmages agesages andand cul culcult ttural uralural r rref efefer ererences encesences i iin nn advert advertadverti iis ssi
iing ngng f ffr rrom omom tthi hihings ngsngs t tthat hathat ar arare ee r rrel elelevant evantevant t tto oo t tthe hehe t ttw wwent ententy yy-s ssom omomet etethi hihings ngsngs tto oo thatare relevantto the twentythat are relevant to the twenty somethingstosomethi ngs to imagesofactive seniors,and soundtracksimages of active seniors, and soundtracks fromthe sixtiesand seventies.Can youfrom the sixties and seventies. Can you identify any particularidentify any particular ad campaignsthatfitad campaigns that fit thispattern?this pattern?
PersonalFactorsPersonal Factors AgeandStageintheLifeCycleAge and Stage in the Life Cycle Family lifecycleFamily life cycle Influencing Buyer Behavior www.bookfiesta4u.com1 196 y ycy yc OccupationandEconomicOccupation and Economic CircumstancesCircumstances PersonalFactorsPersonal Factors AgeandStageintheLifeCycleAge and Stage in the Life Cycle Family lifecycleFamily life cycle Influencing Buyer Behavior www.bookfiesta4u.com1 196 y ycy yc OccupationandEconomicOccupation and Economic CircumstancesCircumstances
In recentyears,many organizationshaveIn recent years, many organizations have provided televisionswith limited programming provided televisions with limited progra mming accessforuse in Kaccess for use in K--12 classrooms.Do these12 classrooms. Do th ese entitieshave a moralobligation to avoid overtentities have a moral obligation to avoid overt www.bookfiesta4u.comentitieshave a moralobligation to avoid overtentities have a moral obligation to avoid overt marketing to theircaptive audiences,oristhisamarketing to their captive audience s, or is this a valid toolforintroducing offeringsto futurevalid tool for introducing offerings to future consumers? Whatshould theconsumers? What should the responsibilitiesofthe educatorsresponsibilities of the educators be in these situations?be in these situations? In recentyears,many organizationshaveIn recent years, many organizations have provided televisionswith limited programming provided televisions with limited progra mming accessforuse in Kaccess for use in K--12 classrooms.Do these12 classrooms. Do th ese entitieshave a moralobligation to avoid overtentities have a moral obligation to avoid overt www.bookfiesta4u.comentitieshave a moralobligation to avoid overtentities have a moral obligation to avoid overt marketing to theircaptive audiences,oristhisamarketing to their captive audience s, or is this a valid toolforintroducing offeringsto futurevalid tool for introducing offerings to future consumers? Whatshould theconsumers? What should the responsibilitiesofthe educatorsresponsibilities of the educators be in these situations?be in these situations?
Table 7.2: Stages in the Family Life Cycle 1.Bachelorstage:1. Bachelor stage: Young,single,notlivingYoung, single, not living athomeat home Fewfinancialburdens.FashionopinionFew financial burdens. Fashion opinion leaders.Recreationoriented.Buy:basichomeleaders. Recreation oriented. Buy: basic home equipment,furniture,cars,equipmentfortheequipment, furniture, cars, equipment fo r the matinggame;vacations.mating game; vacations. 2.Newlymarried2. Newly married couples:couples: Young,nochildrenYoung, no children HighestpurchaserateandhighestaverageHighest purchase rate and highest average purchaseofdurables:cars,appliances,purchase of durables: cars, appliances, furniture,vacations.furniture, vacations. 3.FullnestI:3. Full nest I: Homepurchasingatpeak.Liquidassetslow.Home purchasing at peak. Liquid assets low. www.bookfiesta4u.com1-198See text for complete table 3.FullnestI:3. Full nest I: YoungestchildunderYoungest child under sixsix Homepurchasingatpeak.Liquidassetslow.Home purchasing at peak. Liquid assets low. Interestedinnewproducts,advertisedInterested in new products, advertised products.Buy:washers,dryers,TV,babyfood,products. Buy: washers, dryers, TV, baby food, chestrubsandcoughmedicines,vitamins,chest rubs and cough medicines, vitamins, dolls,wagons,sleds,skates.dolls, wagons, sleds, skates. 4.FullnestII:4. Full nest II: YoungestchildsixorYoungest child six or overover Financialpositionbetter.LessinfluencedbyFinancial position better. Less influenc ed by advertising.Buylargeradvertising. Buy larger--sizepackages,size packages, multiplemultiple--unitdeals.Buy:manyfoods,cleaningunit deals. Buy: many foods, c leaning materials,bicycles,musiclessons,pianos.materials, bicycles, music lessons, piano s. Table 7.2: Stages in the Family Life Cycle 1.Bachelorstage:1. Bachelor stage: Young,single,notlivingYoung, single, not living athomeat home Fewfinancialburdens.FashionopinionFew financial burdens. Fashion opinion leaders.Recreationoriented.Buy:basichomeleaders. Recreation oriented. Buy: basic home equipment,furniture,cars,equipmentfortheequipment, furniture, cars, equipment fo r the matinggame;vacations.mating game; vacations. 2.Newlymarried2. Newly married couples:couples: Young,nochildrenYoung, no children HighestpurchaserateandhighestaverageHighest purchase rate and highest average purchaseofdurables:cars,appliances,purchase of durables: cars, appliances, furniture,vacations.furniture, vacations. 3.FullnestI:3. Full nest I: Homepurchasingatpeak.Liquidassetslow.Home purchasing at peak. Liquid assets low. www.bookfiesta4u.com1-198See text for complete table 3.FullnestI:3. Full nest I:
YoungestchildunderYoungest child under sixsix Homepurchasingatpeak.Liquidassetslow.Home purchasing at peak. Liquid assets low. Interestedinnewproducts,advertisedInterested in new products, advertised products.Buy:washers,dryers,TV,babyfood,products. Buy: washers, dryers, TV, baby food, chestrubsandcoughmedicines,vitamins,chest rubs and cough medicines, vitamins, dolls,wagons,sleds,skates.dolls, wagons, sleds, skates. 4.FullnestII:4. Full nest II: YoungestchildsixorYoungest child six or overover Financialpositionbetter.LessinfluencedbyFinancial position better. Less influenc ed by advertising.Buylargeradvertising. Buy larger--sizepackages,size packages, multiplemultiple--unitdeals.Buy:manyfoods,cleaningunit deals. Buy: many foods, c leaning materials,bicycles,musiclessons,pianos.materials, bicycles, music lessons, piano s.
Figure 7.2: The VALS segmentation system: An 8-part typology GroupswithHighGroups with High ResourcesResources 1.1. ActualizersActualizers 2.2. FulfilledsFulfilleds 3.3. AchieversAchievers www.bookfiesta4u.com1-199 3.3. AchieversAchievers 4.4. ExperiencersExperiencers GroupswithLowerGroups with Lower ResourcesResources 1.1. BelieversBelievers 2.2. StriversStrivers 3.3. MakersMakers 4.4. StrugglersStrugglers Figure 7.2: The VALS segmentation system: An 8-part typology GroupswithHighGroups with High ResourcesResources 1.1. ActualizersActualizers 2.2. FulfilledsFulfilleds 3.3. AchieversAchievers www.bookfiesta4u.com1-199 3.3. AchieversAchievers 4.4. ExperiencersExperiencers GroupswithLowerGroups with Lower ResourcesResources 1.1. BelieversBelievers 2.2. StriversStrivers 3.3. MakersMakers 4.4. StrugglersStrugglers
SRIConsultingBusinessIntelligence sWebsiteSRI Consulting Business Intelligence s Web site www.bookfiesta4u.com1-200 SRIConsultingBusinessIntelligence sWebsiteSRI Consulting Business Intelligence s Web site www.bookfiesta4u.com1-200
PersonalityandSelfPersonality and Self--ConceptConcept PersonalityPersonality Brand personalityBrand personality SinceritySincerity ExcitementExcitement Influencing Buyer Behavior www.bookfiesta4u.com1 201 ExcitementExcitement CompetenceCompetence SophisticationSophistication RuggednessRuggedness SelfSelf--conceptconcept Person sactualselfPerson s actual self--conceptconcept IdealselfIdeal self--conceptconcept Others selfOthers self--conceptconcept PersonalityandSelfPersonality and Self--ConceptConcept PersonalityPersonality Brand personalityBrand personality SinceritySincerity ExcitementExcitement Influencing Buyer Behavior www.bookfiesta4u.com1 201 ExcitementExcitement CompetenceCompetence SophisticationSophistication RuggednessRuggedness SelfSelf--conceptconcept Person sactualselfPerson s actual self--conceptconcept IdealselfIdeal self--conceptconcept Others selfOthers self--conceptconcept
PsychologicalFactorsPsychological Factors MotivationMotivation MotiveMotive Influencing Buyer Behavior www.bookfiesta4u.com1 202 Freud sTheoryFreud s Theory LadderingLaddering ProjectivetechniquesProjective techniques PsychologicalFactorsPsychological Factors MotivationMotivation MotiveMotive Influencing Buyer Behavior www.bookfiesta4u.com1 202 Freud sTheoryFreud s Theory LadderingLaddering ProjectivetechniquesProjective techniques
ErnestDichter sresearchfound:Ernest Dichter s research found: Consumers resistprunesbecauseprunesareConsumers resist prunes because prunes are wrinkledlooking andremindpeopleof oldage.wrinkled looking and remind people of o ld age. Mensmokecigarsas an adult versionof thumbMen smoke cigars as an adult version of t humb sucking.sucking. Influencing Buyer Behavior www.bookfiesta4u.com1 203 sucking.sucking. Womenprefervegetableshortening to animalWomen prefer vegetable shortening to anima l fatsbecause the latterarouse a sense of guiltfats because the latter arouse a se nse of guilt overkilling animals.over killing animals. Womendon t trustcakemixesunless theyWomen don t trust cake mixes unless they requireadding an egg, because thishelps themrequire adding an egg, because this helps them feelthey aregiving birth. feel they are giving birth. ErnestDichter sresearchfound:Ernest Dichter s research found: Consumers resistprunesbecauseprunesareConsumers resist prunes because prunes are wrinkledlooking andremindpeopleof oldage.wrinkled looking and remind people of o ld age. Mensmokecigarsas an adult versionof thumbMen smoke cigars as an adult version of t humb sucking.sucking. Influencing Buyer Behavior www.bookfiesta4u.com1 203 sucking.sucking. Womenprefervegetableshortening to animalWomen prefer vegetable shortening to anima l fatsbecause the latterarouse a sense of guiltfats because the latter arouse a se nse of guilt overkilling animals.over killing animals. Womendon t trustcakemixesunless theyWomen don t trust cake mixes unless they requireadding an egg, because thishelps themrequire adding an egg, because this helps them feelthey aregiving birth. feel they are giving birth.
Maslow sTheoryMaslow s Theory Influencing Buyer Behavior Figure 7.3: www.bookfiesta4u.com1-204 g Maslow s Hierarchy of Needs Maslow sTheoryMaslow s Theory Influencing Buyer Behavior Figure 7.3: www.bookfiesta4u.com1-204 g Maslow s Hierarchy of Needs
Herzberg sTheoryHerzberg s Theory DissatisfiersDissatisfiers SatisfiersSatisfiers Influencing Buyer Behavior www.bookfiesta4u.com1 205 Herzberg sTheoryHerzberg s Theory DissatisfiersDissatisfiers SatisfiersSatisfiers Influencing Buyer Behavior www.bookfiesta4u.com1 205
PerceptionPerception SelectiveattentionSelective attention Peoplearemorelikely to noticestimulithanPeople are more likely to notice stimuli han relateto a currentneedrelate to a current need Peoplearemorelikely to noticestimulithanPeople are more likely to notice stimuli han Influencing Buyer Behavior www.bookfiesta4u.com1 206 Peoplearemorelikely to noticestimulithanPeople are more likely to notice stimuli han they anticipatethey anticipate Peoplearemorelikely to noticestimuliPeople are more likely to notice stimuli whosedeviationsarelargein relationto thewhose deviations are large in relation t o the normalsize of the stimulinormal size of the stimuli SelectivedistortionSelective distortion SelectiveretentionSelective retention PerceptionPerception SelectiveattentionSelective attention Peoplearemorelikely to noticestimulithanPeople are more likely to notice stimuli han relateto a currentneedrelate to a current need Peoplearemorelikely to noticestimulithanPeople are more likely to notice stimuli han Influencing Buyer Behavior www.bookfiesta4u.com1 206 Peoplearemorelikely to noticestimulithanPeople are more likely to notice stimuli han they anticipatethey anticipate Peoplearemorelikely to noticestimuliPeople are more likely to notice stimuli whosedeviationsarelargein relationto thewhose deviations are large in relation t o the normalsize of the stimulinormal size of the stimuli SelectivedistortionSelective distortion SelectiveretentionSelective retention
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LearningLearning DriveDrive CuesCues DiscriminationDiscrimination Influencing Buyer Behavior www.bookfiesta4u.com1 207 DiscriminationDiscrimination BeliefsandAttitudesBeliefs and Attitudes BeliefBelief SpreadingactivationSpreading activation AttitudeAttitude LearningLearning DriveDrive CuesCues DiscriminationDiscrimination Influencing Buyer Behavior www.bookfiesta4u.com1 207 DiscriminationDiscrimination BeliefsandAttitudesBeliefs and Attitudes BeliefBelief SpreadingactivationSpreading activation AttitudeAttitude
T TTh hhe ee p ppu uur rrc cch hha aas sse ee o oof ff a aa p ppr rro ood ddu uuc cct tt f ffr rro oom mm a aa C CCo oom mmp ppa aan nny yy AA t ttu uur rrn nns ss o oou uut tt t tto oo b bbe ee a aa
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ddu uuc cct tt, ,, w wwh hhi iic cch hh iis ss aal lls sso oo gyp,g y p , offeredbyCompanyA.Doyouassumethatyouoffered by Company A. Do you assume that you willagainhaveapositiveexperiencewithwill again have a positive experience with CompanyA soffering,ordoyouCompany A s offering, or do you lookforthe bestofbreed, look for the best of breed, regardlessofwhichregardless of which companyoffersit?company offers it?
BuyingRolesBuying Roles InitiatorInitiator InfluencerInfluencer The Buying Decision Process www.bookfiesta4u.com1 209 DeciderDecider BuyerBuyer UserUser BuyingbehaviorBuying behavior BuyingRolesBuying Roles InitiatorInitiator InfluencerInfluencer The Buying Decision Process www.bookfiesta4u.com1 209 DeciderDecider BuyerBuyer UserUser BuyingbehaviorBuying behavior
Table 7.3: Four Types of Buying Behavior HighInvolvementHigh Involvement LowInvolvementLow Involvement SignificantDifferencesSignificant Differences betweenBrandsbetween Brands ComplexbuyingComplex buying behaviorbehavior VarietyVariety--seekingseeking buyingbehaviorbuying behavior www.bookfiesta4u.com1-210 FewDifferencesbetweenFew Differences between BrandsBrands DissonanceDissonance--reducingreducing buyingbehaviorbuying behavior HabitualbuyingHabitual buying behaviorbehavior Table 7.3: Four Types of Buying Behavior HighInvolvementHigh Involvement LowInvolvementLow Involvement SignificantDifferencesSignificant Differences betweenBrandsbetween Brands ComplexbuyingComplex buying behaviorbehavior VarietyVariety--seekingseeking buyingbehaviorbuying behavior www.bookfiesta4u.com1-210 FewDifferencesbetweenFew Differences between BrandsBrands DissonanceDissonance--reducingreducing buyingbehaviorbuying behavior HabitualbuyingHabitual buying behaviorbehavior
ComplexBuyingBehaviorComplex Buying Behavior DissonanceDissonance--ReducingBuyerBehaviorReducing HabitualBuyingBehaviorHabitual Buying Behavior The Buying Decision Process www.bookfiesta4u.com1 211 ygy g VarietyVariety--SeekingBuyingBehaviorSeeking Buying ComplexBuyingBehaviorComplex Buying Behavior DissonanceDissonance--ReducingBuyerBehaviorReducing HabitualBuyingBehaviorHabitual Buying Behavior The Buying Decision Process www.bookfiesta4u.com1 211 ygy g VarietyVariety--SeekingBuyingBehaviorSeeking Buying
Buyer Behavior
Behavior Buyer Behavior
Behavior
Howmarketerslearnaboutthestages:How marketers learn about the stages: IntrospectivemethodIntrospective method RetrospectivemethodRetrospective method ProspectivemethodProspective method Stages in the Buying Decision Process www.bookfiesta4u.com1 212 PrescriptivemethodPrescriptive method Understandingbymappingthecustomer sUnderstanding by mapping the customer s Consumption systemConsumption system Customeractivity cycleCustomer activity cycle CustomerscenarioCustomer scenario MetamarketMetamarket MetamediariesMetamediaries Howmarketerslearnaboutthestages:How marketers learn about the stages: IntrospectivemethodIntrospective method RetrospectivemethodRetrospective method ProspectivemethodProspective method Stages in the Buying Decision Process www.bookfiesta4u.com1 212 PrescriptivemethodPrescriptive method Understandingbymappingthecustomer sUnderstanding by mapping the customer s Consumption systemConsumption system Customeractivity cycleCustomer activity cycle CustomerscenarioCustomer scenario MetamarketMetamarket MetamediariesMetamediaries
TheEdmunds.comhomepageshowsthevarietyofThe Edmunds.com ty of servicesthisWebcompanyoffersthoseshoppingservices this shopping foracar.for a car. www.bookfiesta4u.com1-213 TheEdmunds.comhomepageshowsthevarietyofThe Edmunds.com ty of servicesthisWebcompanyoffersthoseshoppingservices this shopping foracar.for a car. www.bookfiesta4u.com1-213
home page shows the varie Web company offers those
home page shows the varie Web company offers those
ProblemrecognitionProblem recognition InformationsearchInformation search PersonalsourcesPersonal sources Stages of the Buying Decision Process www.bookfiesta4u.com1-214 PersonalsourcesPersonal sources CommercialsourcesCommercial sources PublicsourcesPublic sources ExperientialsourcesExperiential sources Figure 7.4: Five-Stage Model of the Consumer Buying Process ProblemrecognitionProblem recognition InformationsearchInformation search PersonalsourcesPersonal sources Stages of the Buying Decision Process www.bookfiesta4u.com1-214 PersonalsourcesPersonal sources CommercialsourcesCommercial sources PublicsourcesPublic sources ExperientialsourcesExperiential sources Figure 7.4: Five-Stage Model of the Consumer Buying Process
Figure 7.5: Successive Sets Involved in Customer Decision Making www.bookfiesta4u.com1-215 Figure 7.5: Successive Sets Involved in Customer Decision Making www.bookfiesta4u.com1-215
EvaluationofAlternativesEvaluation of Alternatives PotentialAttributesofinterestPotential Attributes of interest CamerasCameras HotlHot l The Buying Decision Process www.bookfiesta4u.com1 216 HotelsHotels MouthwashMouthwash TiresTires BrandbeliefsBrand beliefs BrandimageBrand image EvaluationofAlternativesEvaluation of Alternatives PotentialAttributesofinterestPotential Attributes of interest CamerasCameras HotlHot l The Buying Decision Process www.bookfiesta4u.com1 216 HotelsHotels MouthwashMouthwash TiresTires BrandbeliefsBrand beliefs BrandimageBrand image
Table 7.4: A Consumer s Brand Beliefs about Computers C CC o oo m mm p pp u uu t tt e ee r rr A AA t tt t tt r rr i ii b bb u uu t tt e ee M MM e ee m mm o oo r rr y yy G GG r rr a aa p pp h
hh i ii c cc s ss S SS i ii ze zeze a aa n nn d dd C CC a aa p pp a aa c cc i ii t tt y yy C CC a aa p pp a aa b bb i ii l ll i ii t tt y yy W WW e ee i
ii g gg h hh t tt P PP r rr i ii c cc e ee A AA 1 11 0 00 8 88 6 66 4 44 B BB 8 88 9 99 8 88 3 33 C CC 6 66 8 88 1 11 0 00 5 55 D DD 4 44 3 33 7 77 8
88 www.bookfiesta4u.com
Strategiesdesigned to stimulateinterestinaStrategies designed to stimulate intere st in a computercomputer RedesignthecomputerRedesign the computer AlterbeliefsaboutthebrandAlter beliefs about the brand The Buying Decision Process www.bookfiesta4u.com1 218 AlterbeliefsaboutthebrandAlter beliefs about the brand Alterbeliefsaboutcompetitors brandsAlter beliefs about competitors brands AltertheimportanceweightsAlter the importance weights CallattentiontoneglectedattributesCall attention to neglected attributes Shiftthebuyer sideasShift the buyer s ideas Strategiesdesigned to stimulateinterestinaStrategies designed to stimulate interes t in a computercomputer RedesignthecomputerRedesign the computer AlterbeliefsaboutthebrandAlter beliefs about the brand The Buying Decision Process www.bookfiesta4u.com1 218 AlterbeliefsaboutthebrandAlter beliefs about the brand Alterbeliefsaboutcompetitors brandsAlter beliefs about competitors brands AltertheimportanceweightsAlter the importance weights CallattentiontoneglectedattributesCall attention to neglected attributes Shiftthebuyer sideasShift the buyer s ideas
PurchaseDecisionPurchase Decision Figure 7.6: Steps Between Evaluation of Alternatives and a purchase decision The Buying Decision Process www.bookfiesta4u.com1-219 PurchaseDecisionPurchase Decision Figure 7.6: Steps Between Evaluation of Alternatives and a purchase decision The Buying Decision Process www.bookfiesta4u.com1-219
InformediariesInformediaries ConsumerReportsConsumer Reports ZagatsZagats UnanticipatedsituationalfactorsUnanticipated situational factors PerceivedriskPerceived risk The Buying Decision Process www.bookfiesta4u.com1 220 PerceivedriskPerceived risk Brand decisionBrand decision Vendor decisionVendor decision Quantity decisionQuantity decision Timing decisionTiming decision PaymentPayment--methoddecisionmethod decision InformediariesInformediaries ConsumerReportsConsumer Reports ZagatsZagats UnanticipatedsituationalfactorsUnanticipated situational factors PerceivedriskPerceived risk The Buying Decision Process www.bookfiesta4u.com1 220 PerceivedriskPerceived risk Brand decisionBrand decision Vendor decisionVendor decision Quantity decisionQuantity decision Timing decisionTiming decision PaymentPayment--methoddecisionmethod decision
PostpurchaseBehaviorPostpurchase Behavior PostpurchaseSatisfactionPostpurchase Satisfaction DisappointedDisappointed The Buying Decision Process www.bookfiesta4u.com1 221 SatisfiedSatisfied DelightedDelighted PostpurchaseActionsPostpurchase Actions PostpurchaseUseandDisposalPostpurchase Use and Disposal PostpurchaseBehaviorPostpurchase Behavior PostpurchaseSatisfactionPostpurchase Satisfaction DisappointedDisappointed The Buying Decision Process www.bookfiesta4u.com1 221 SatisfiedSatisfied DelightedDelighted PostpurchaseActionsPostpurchase Actions PostpurchaseUseandDisposalPostpurchase Use and Disposal
Figure 7.7: How Customers Dispose of Products www.bookfiesta4u.com1-222 Figure 7.7: How Customers Dispose of Products www.bookfiesta4u.com1-222
OtherModelsoftheBuyingDecisionOther Models of the Buying Decision ProcessProcess HealthModelHealth Model StagesofChangeModelStages of Change Model The Buying Decision Process www.bookfiesta4u.com1 223 agegeage ge PrecontemplationPrecontemplation ContemplationContemplation PreparationPreparation ActionAction MaintenanceMaintenance CustomerActivityCycleModelCustomer Activity Cycle Model Pre, during andpost phasesPre, during and post phases OtherModelsoftheBuyingDecisionOther Models of the Buying Decision ProcessProcess HealthModelHealth Model StagesofChangeModelStages of Change Model The Buying Decision Process www.bookfiesta4u.com1 223 agegeage ge PrecontemplationPrecontemplation ContemplationContemplation PreparationPreparation ActionAction MaintenanceMaintenance CustomerActivityCycleModelCustomer Activity Cycle Model Pre, during andpost phasesPre, during and post phases
Figure 7.8: Activity cycle for IBM customers in the global electronic networking capability www.bookfiesta4u.com1-224 capability market space Figure 7.8: Activity cycle for IBM customers in the global electronic networking capability www.bookfiesta4u.com1-224 capability market space
Figure 7.9: Value adds for IBM customers in the global electronic networking capability www.bookfiesta4u.com1-225 capability market space Figure 7.9: Value adds for IBM customers in the global electronic networking capability www.bookfiesta4u.com1-225 capability market space
Chapter8Chapter 8 AnalyzingBusinessMarketsAnalyzing Business Markets andBusinessBuyingand Business Buying BehaviorBehavior byby www.bookfiesta4u.combyby PowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans Chapter8Chapter 8 AnalyzingBusinessMarketsAnalyzing Business Markets andBusinessBuyingand Business Buying BehaviorBehavior byby www.bookfiesta4u.combyby PowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans
Kotler on Marketing ManybusinessesMany businesses arewiselyare wisely turningtheirturning their www.bookfiesta4u.com1-227 turningtheirturning their suppliersandsuppliers and distributorsintodistributors into valuedpartners.valued partners. Kotler on Marketing ManybusinessesMany businesses arewiselyare wisely turningtheirturning their www.bookfiesta4u.com1-227 turningtheirturning their suppliersandsuppliers and distributorsintodistributors into valuedpartners.valued partners.
Chapter Objectives Inthischapter,wefocusonsixquestions:In this chapter, we focus on six questions: Whatisthebusinessmarket,andhowdoesitWhat is the business market, and how does it differfromtheconsumermarket?differ from the consumer market? WhatbuyingsituationsdoorganizationalbuyersWhat buying situations do organizational buyers face?face? www.bookfiesta4u.com1-228 Whoparticipatesinthebusinessbuyingprocess?Who participates in the business buying process? WhatarethemajorinfluencesonorganizationalWhat are the major influences on organiza tional buyers?buyers? Howdobusinessbuyersmaketheirdecisions?How do business buyers make their decisions? HowdoinstitutionsandgovernmentagenciesdoHow do institutions and government agencie s do theirbuying?their buying? Chapter Objectives Inthischapter,wefocusonsixquestions:In this chapter, we focus on six questions: Whatisthebusinessmarket,andhowdoesitWhat is the business market, and how does it differfromtheconsumermarket?differ from the consumer market? WhatbuyingsituationsdoorganizationalbuyersWhat buying situations do organizational buyers face?face? www.bookfiesta4u.com1-228 Whoparticipatesinthebusinessbuyingprocess?Who participates in the business buying process? WhatarethemajorinfluencesonorganizationalWhat are the major influences on organiza tional buyers?buyers? Howdobusinessbuyersmaketheirdecisions?How do business buyers make their decisions? HowdoinstitutionsandgovernmentagenciesdoHow do institutions and government agencie s do theirbuying?their buying?
What is Organizational Buying? OrganizationalbuyingOrganizational buying ThebusinessmarketversustheconsumerThe business market versus the consumer marketmarket www.bookfiesta4u.com1-229 marketmarket BusinessmarketBusiness market FewerbuyersFewer buyers LargerbuyersLarger buyers ClosesupplierClose supplier--customerrelationshipcustomer relationship Geographically concentratedbuyersGeographically concentrated buyers What is Organizational Buying? OrganizationalbuyingOrganizational buying ThebusinessmarketversustheconsumerThe business market versus the consumer marketmarket www.bookfiesta4u.com1-229 marketmarket BusinessmarketBusiness market FewerbuyersFewer buyers LargerbuyersLarger buyers ClosesupplierClose supplier--customerrelationshipcustomer relationship Geographically concentratedbuyersGeographically concentrated buyers
What is Organizational Buying? DeriveddemandDerived demand InelasticdemandInelastic demand www.bookfiesta4u.com1-230 Fluctuating demandFluctuating demand ProfessionalpurchasingProfessional purchasing What is Organizational Buying? DeriveddemandDerived demand InelasticdemandInelastic demand www.bookfiesta4u.com1-230 Fluctuating demandFluctuating demand ProfessionalpurchasingProfessional purchasing
BlueShieldofCalifornia smylifepathBlue Shield of California s mylifepath www.bookfiesta4u.com1-231 BlueShieldofCalifornia smylifepathBlue Shield of California s mylifepath www.bookfiesta4u.com1-231
What is Organizational Buying? Severalbuying influencesSeveral buying influences MultiplesalescallsMultiple sales calls DitdhiDi t d h i www.bookfiesta4u.com1-232 DirectedpurchasingDirected purchasing ReciprocityReciprocity LeasingLeasing What is Organizational Buying? Severalbuying influencesSeveral buying influences MultiplesalescallsMultiple sales calls DitdhiDi t d h i www.bookfiesta4u.com1-232 DirectedpurchasingDirected purchasing ReciprocityReciprocity LeasingLeasing
I IIf ff y yyo oou uu w wwe eer rre ee t tta aas ssk kke eed dd w wwi iit tth hh m mma aar rrk kke eet tti iin nng gg aa p ppr rro ood ddu uuc cct tt o oor rr s sse eer rrv vvi iic cce ee t tto oo a aan nn
o oor rrg gga aan nni iiz zza aat tti iio oon nn, ,, w wwo oou uul lld dd y yyo oou uu a aat ttt tte eem mmp ppt tt t tto oo i iin nni iit tti iia aal lll lly yy c cco oon nnt tta aac cct tt tth hhe ee wouldyouattempttoinitiallycontactthewould you attempt to initially contact the purchasingdepartmentpurchasing department,or, or potentialpotential usersusers ofyourcompany sofferings?Why?of your company s offerings? Why? WouldtheproductyouWould the product you
weresellingmakeawere selling make a difference?Why?difference? Why?
What is Organizational Buying? BuyingSituationsBuying Situations StraightrebuyStraight rebuy ModifiedrebuyModified rebuy www.bookfiesta4u.com1-234 NewTaskNew Task SystemsBuyingandSellingSystems Buying and Selling SystemsbuyingSystems buying TurnkeysolutionTurnkey solution SystemssellingSystems selling What is Organizational Buying? BuyingSituationsBuying Situations StraightrebuyStraight rebuy ModifiedrebuyModified rebuy www.bookfiesta4u.com1-234 NewTaskNew Task SystemsBuyingandSellingSystems Buying and Selling SystemsbuyingSystems buying TurnkeysolutionTurnkey solution SystemssellingSystems selling
WhataresomeofthebenefitstoanWhat are some of the benefits to an organizationthatcanbederivedorganization that can be derived fromafrom a singlesourcesolutionsingle source solution,ora, or a www.bookfiesta4u.comsystemsbuyingsystems buying arrangementwithaarrangement with a primecontractor?Whataresomeofprime contractor? What are some of thepotentialpitfalls?Whatthe potential pitfalls? What canthecompanydotocan the company do to protectitselffromprotect itself from thesehazards?these hazards? WhataresomeofthebenefitstoanWhat are some of the benefits to an organizationthatcanbederivedorganization that can be derived fromafrom a singlesourcesolutionsingle source solution,ora, or a www.bookfiesta4u.comsystemsbuyingsystems buying arrangementwithaarrangement with a primecontractor?Whataresomeofprime contractor? What are some of thepotentialpitfalls?Whatthe potential pitfalls? What canthecompanydotocan the company do to protectitselffromprotect itself from thesehazards?these hazards?
Participants in the Business Buying Process TheBuyingCenterThe Buying Center InitiatorsInitiators UsersUsers InfluencersInfluencers www.bookfiesta4u.com1-236 InfluencersInfluencers DecidersDeciders ApproversApprovers BuyersBuyers GatekeepersGatekeepers Key buying influencersKey buying MultilevelinMultilevel in--depth Participants in the Business Buying Process TheBuyingCenterThe Buying Center InitiatorsInitiators UsersUsers InfluencersInfluencers www.bookfiesta4u.com1-236 InfluencersInfluencers DecidersDeciders ApproversApprovers BuyersBuyers GatekeepersGatekeepers Key buying influencersKey buying MultilevelinMultilevel in--depth
influencers sellingdepth selling
influencers sellingdepth selling
Figure 8-1: Major Influences on Industrial Buying Behavior www.bookfiesta4u.com1-237 Figure 8-1: Major Influences on Industrial Buying Behavior www.bookfiesta4u.com1-237
Major Influences on Buying Decisions EnvironmentalFactorsEnvironmental Factors OrganizationalFactorsOrganizational Factors PurchasingPurchasing--DepartmentUpgradingDepartment Upgrading www.bookfiesta4u.com1-238 gg ppggp pg g CrossCross--FunctionalRolesFunctional Roles CentralizedPurchasingCentralized Purchasing DecentralizedPurchasingofSmallDecentralized Purchasing of Small--TicketTicket ItemsItems InternetPurchasingInternet Purchasing Major Influences on Buying Decisions EnvironmentalFactorsEnvironmental Factors OrganizationalFactorsOrganizational Factors PurchasingPurchasing--DepartmentUpgradingDepartment Upgrading www.bookfiesta4u.com1-238 gg ppggp pg g CrossCross--FunctionalRolesFunctional Roles CentralizedPurchasingCentralized Purchasing DecentralizedPurchasingofSmallDecentralized Purchasing of Small--TicketTicket ItemsItems InternetPurchasingInternet Purchasing
TheeThe e--hubPlastics.comhomepageoffersbuyersandhub Plastics.com home page offe rs buyers and sellersofplasticsamarketplaceplusnewsandsellers of plastics a marketplace plus n ews and informationinformation www.bookfiesta4u.com1-239 TheeThe e--hubPlastics.comhomepageoffersbuyersandhub Plastics.com home page offe rs buyers and sellersofplasticsamarketplaceplusnewsandsellers of plastics a marketplace plus n ews and informationinformation www.bookfiesta4u.com1-239
Covisint sWebsiteoffersbothservicesandCovisint s Web site offers both services and informationinformation www.bookfiesta4u.com1-240 Covisint sWebsiteoffersbothservicesandCovisint s Web site offers both services and informationinformation www.bookfiesta4u.com1-240
Major Influences on Buying Decisions OtherOrganizationalFactorsOther Organizational Factors LongLong--TermContractsTerm Contracts VendorVendor--managedinventorymanaged inventory CtilihtC ti l i h t www.bookfiesta4u.com1-241 ContinuousreplenishmentprogramsContinuous replenishment programs PurchasingPurchasing--PerformanceEvaluationandBuyers Performance Evaluation and Buye rs ProfessionalDevelopmentProfessional Development ImprovedSupply ChainManagementImproved Supply Chain Management LeanProductionLean Production JustJust--inin--timetime Major Influences on Buying Decisions OtherOrganizationalFactorsOther Organizational Factors LongLong--TermContractsTerm Contracts VendorVendor--managedinventorymanaged inventory CtilihtC ti l i h t www.bookfiesta4u.com1-241 ContinuousreplenishmentprogramsContinuous replenishment programs PurchasingPurchasing--PerformanceEvaluationandBuyers Performance Evaluation and Buye rs ProfessionalDevelopmentProfessional Development ImprovedSupply ChainManagementImproved Supply Chain Management LeanProductionLean Production JustJust--inin--timetime
Major Influences on Buying Decisions InterpersonalandIndividualFactorsInterpersonal and Individual Factors CulturalFactorsCultural Factors FranceFrance www.bookfiesta4u.com1-242 FranceFrance GermanyGermany JapanJapan KoreaKorea LatinAmericaLatin America Major Influences on Buying Decisions InterpersonalandIndividualFactorsInterpersonal and Individual Factors CulturalFactorsCultural Factors FranceFrance www.bookfiesta4u.com1-242 FranceFrance GermanyGermany JapanJapan KoreaKorea LatinAmericaLatin America
The Purchasing/ Procurement Process Incentiveto purchaseIncentive to purchase ThreeCompanyPurchasingOrientationsThree Company Purchasing Orientations Buying OrientationBuying Orientation www.bookfiesta4u.com1-243 CommoditizationCommoditization MultisourcingMultisourcing ProcurementOrientationProcurement Orientation Materialsrequirementplanning(MRP)Materials requirement planning (MRP) Supply ChainManagementOrientationSupply Chain Management Orientation The Purchasing/ Procurement Process Incentiveto purchaseIncentive to purchase ThreeCompanyPurchasingOrientationsThree Company Purchasing Orientations Buying OrientationBuying Orientation www.bookfiesta4u.com1-243 CommoditizationCommoditization MultisourcingMultisourcing ProcurementOrientationProcurement Orientation Materialsrequirementplanning(MRP)Materials requirement planning (MRP) Supply ChainManagementOrientationSupply Chain Management Orientation
The Purchasing/ Procurement Process TypesofPurchasingProcessesTypes of Purchasing Processes RoutineproductsRoutine products LdL d www.bookfiesta4u.com1-244 LeverageproductsLeverage products StrategicproductsStrategic products BottleneckproductsBottleneck products The Purchasing/ Procurement Process TypesofPurchasingProcessesTypes of Purchasing Processes RoutineproductsRoutine products LdL d www.bookfiesta4u.com1-244 LeverageproductsLeverage products StrategicproductsStrategic products BottleneckproductsBottleneck products
The Purchasing/ Procurement Process StagesintheBuyingProcessStages in the Buying Process ProblemRecognitionProblem Recognition GeneralNeedDescriptionandGeneral Need Description and ProductSpecificationProduct Specification www.bookfiesta4u.com1-245 pp ProductvalueanalysisProduct value analysis SupplierSearchSupplier Search VerticalhubsVertical hubs FunctionalhubsFunctional hubs DirectexternallinkstomajorsuppliersDirect external links to major suppliers BuyingalliancesBuying alliances Companybuying sitesCompany buying sites Requestforproposals(RFPs)Request for proposals (RFPs) The Purchasing/ Procurement Process StagesintheBuyingProcessStages in the Buying Process ProblemRecognitionProblem Recognition GeneralNeedDescriptionandGeneral Need Description and ProductSpecificationProduct Specification www.bookfiesta4u.com1-245 pp ProductvalueanalysisProduct value analysis SupplierSearchSupplier Search VerticalhubsVertical hubs FunctionalhubsFunctional hubs DirectexternallinkstomajorsuppliersDirect external links to major suppliers BuyingalliancesBuying alliances Companybuying sitesCompany buying sites Requestforproposals(RFPs)Request for proposals (RFPs)
Table 8.1: Buygrid Framework: Major Stages (Buyphases) of the Industrial Buying Process in Relation to Major Buying Situations (Buyclasses) BuyclassesBuyclasses NewNew ModifiedModified StraightStraight TaskTask RebuyRebuy RebuyRebuy 1.Problemrecognition1. Problem recognition YesYes MaybeMaybe NoNo 2Gldditi2 G l d d i ti YY MbM b NN www.bookfiesta4u.com1-246 2.Generalneeddescription2. General need description YesYes MaybeMaybe NoNo 3.Productspecification3. Product specification YesYes YesYes YesYes BuyphasesBuyphases 4.Suppliersearch4. Supplier search YesYes MaybeMaybe NoNo 5.Proposalsolicitation5. Proposal solicitation YesYes MaybeMaybe NoNo 6.Supplierselection6. Supplier selection YesYes MaybeMaybe NoNo 7.Order7. Order--routinespecificationroutine specification YesYes MaybeMaybe NoN o 8.Performancereview8. Performance review YesYes YesYes YesYes Table 8.1: Buygrid Framework: Major Stages (Buyphases) of the Industrial Buying Process in Relation to Major Buying Situations (Buyclasses) BuyclassesBuyclasses NewNew ModifiedModified StraightStraight TaskTask RebuyRebuy RebuyRebuy 1.Problemrecognition1. Problem recognition YesYes MaybeMaybe NoNo 2Gldditi2 G l d d i ti YY MbM b NN www.bookfiesta4u.com1-246 2.Generalneeddescription2. General need description YesYes MaybeMaybe NoNo 3.Productspecification3. Product specification YesYes YesYes YesYes BuyphasesBuyphases 4.Suppliersearch4. Supplier search YesYes MaybeMaybe NoNo 5.Proposalsolicitation5. Proposal solicitation YesYes MaybeMaybe NoNo 6.Supplierselection6. Supplier selection YesYes MaybeMaybe NoNo 7.Order7. Order--routinespecificationroutine specification YesYes MaybeMaybe NoN o 8.Performancereview8. Performance review YesYes YesYes YesYes
The Purchasing/ Procurement Process GeneralNeedDescriptionandGeneral Need Description and ProductSpecificationProduct Specification ProductvalueanalysisProduct value analysis SupplierSearchSupplier Search www.bookfiesta4u.com1-247 SupplierSearchSupplier Search VerticalhubsVertical hubs FunctionalhubsFunctional hubs DirectextranetlinkstoDirect extranet links to majorsuppliersmajor suppliers Buying alliancesBuying alliances CompanybuyingsitesCompany buying sites Requestforproposals(RFPs)Request for proposals (RFPs) The Purchasing/ Procurement Process GeneralNeedDescriptionandGeneral Need Description and ProductSpecificationProduct Specification ProductvalueanalysisProduct value analysis SupplierSearchSupplier Search www.bookfiesta4u.com1-247 SupplierSearchSupplier Search VerticalhubsVertical hubs FunctionalhubsFunctional hubs DirectextranetlinkstoDirect extranet links to majorsuppliersmajor suppliers Buying alliancesBuying alliances CompanybuyingsitesCompany buying sites Requestforproposals(RFPs)Request for proposals (RFPs)
The Purchasing/ Procurement Process ProposalSolicitationProposal Solicitation SupplierSelectionSupplier Selection www.bookfiesta4u.com1-248 The Purchasing/ Procurement Process ProposalSolicitationProposal Solicitation SupplierSelectionSupplier Selection www.bookfiesta4u.com1-248
Table 8-2: An Example of Vendor Analysis AttributesAttributes RatingScaleRating Scale ImportanceImportance WeightsWeights PoorPoor (1)(1) FairFair (2)(2) GoodGood (3)(3) ExcellentExcellent (4)(4) PricePrice .30.30 xx SupplierreputationSupplier reputation .20.20 xx www.bookfiesta4u.com1-249 SupplierreputationSupplier reputation .20.20 xx ProductreliabilityProduct reliability .30.30 xx ServicereliabilityService reliability .10.10 xx SupplierFlexibilitySupplier Flexibility .10.10 xx Totalscore:.30(4)+.20(3)+.30(4)+.10(2)+.10(3)=3.5Total score: .30(4) + .20(3) + .30(4) + .10(2) + .10(3) = 3.5 Table 8-2: An Example of Vendor Analysis AttributesAttributes RatingScaleRating Scale ImportanceImportance WeightsWeights PoorPoor (1)(1) FairFair (2)(2) GoodGood (3)(3) ExcellentExcellent (4)(4) PricePrice .30.30 xx SupplierreputationSupplier reputation .20.20 xx www.bookfiesta4u.com1-249 SupplierreputationSupplier reputation .20.20 xx ProductreliabilityProduct reliability .30.30 xx ServicereliabilityService reliability .10.10 xx SupplierFlexibilitySupplier Flexibility .10.10 xx Totalscore:.30(4)+.20(3)+.30(4)+.10(2)+.10(3)=3.5Total score: .30(4) + .20(3) + .30(4) + .10(2) + .10(3) = 3.5
The Purchasing/ Procurement Process CustomervalueassessmentCustomer value assessment RoutineRoutine--orderproductsorder products ProceduralProcedural--problemproductsproblem products PoliialPoli i al oblodobl od www.bookfiesta4u.com1-250 PoliticalPolitical--problemproductsproblem products OrderOrder--RoutineSpecificationRoutine Specification BlanketcontractBlanket contract Stocklesspurchase plansStockless purchase plans PerformanceReviewPerformance Review Buyflow mapBuyflow map The Purchasing/ Procurement Process CustomervalueassessmentCustomer value assessment RoutineRoutine--orderproductsorder products ProceduralProcedural--problemproductsproblem products PoliialPoli i al oblodobl od www.bookfiesta4u.com1-250 PoliticalPolitical--problemproductsproblem products OrderOrder--RoutineSpecificationRoutine Specification BlanketcontractBlanket contract Stocklesspurchase plansStockless purchase plans PerformanceReviewPerformance Review Buyflow mapBuyflow map
Figure 8-2: Major Influences on Industrial Buying Behavior www.bookfiesta4u.com1-251 Figure 8-2: Major Influences on Industrial Buying Behavior www.bookfiesta4u.com1-251
Institutional and Government Markets InstitutionalmarketInstitutional market www.bookfiesta4u.com1-252 Institutional and Government Markets InstitutionalmarketInstitutional market www.bookfiesta4u.com1-252
Chapter9Chapter 9 DealingwiththeDealing with the CompetitionCompetition byby www.bookfiesta4u.comPowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans Chapter9Chapter 9 DealingwiththeDealing with the CompetitionCompetition byby www.bookfiesta4u.comPowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans
Kotler on Marketing PoorfirmsignorePoor firms ignore theircompetitors;their competitors; averagefirmscopyaverage firms copy www.bookfiesta4u.com1-254 averagefirmscopyaverage firms copy theircompetitors;their competitors; winningfirmsleadwinning firms lead theircompetitors.their competitors. Kotler on Marketing PoorfirmsignorePoor firms ignore theircompetitors;their competitors; averagefirmscopyaverage firms copy www.bookfiesta4u.com1-254 averagefirmscopyaverage firms copy theircompetitors;their competitors; winningfirmsleadwinning firms lead theircompetitors.their competitors.
Chapter Objectives I IIn nn t tth hhi iis ss c cch hha aap ppt tte eer rr, ,, w wwe ee f ffo ooc ccu uus ss o oon nn f ffi iiv vve ee t tth hhi iin nng ggs ss c cco oom mmp ppa aan nni iie ees ss n nne eee eed
dd t tto oo k kkn nno oow ww a aab bbo oou uut tt t tth hhe eei iir rr c cco oom mmp ppe eet tti iit tti iio oon nn: :: Wh WhWho oo t tth hhe ee p ppr rri iim mma aar rry yy c cco oom mmp ppe eet tti iit tto oor rrs
ss a aar rre ee H HHo oow ww t tto oo a aas ssc cce eer rrt tta aai iin nn t tth hhe eei iir rr s sst ttr rra aat tte eeg ggi iie ees ss, ,, o oob bbj jje eec cct tti iiv vve ees ss, ,,h hhd ddk kk d ddi ii s
sst ttr rre een nng ggt tth hhs ss a aan nnd dd w wwe eea aak kkn nne ees sss sse ees ss, ,, a aan nnd dd r rre eea aac cct tti iio oon nn p ppa aat ttt tte eer rrn nns ss H HHo oow ww t tto oo d dde ees ssi
iig ggn nn a aa c cco oom mmp ppe eet tti iit tti iiv vve ee i iin nnt tte eel lll lli iig gge een nnc cce ee ssy yys sst tte eem mm Wh WhWhe eet tth hhe eer rr t tto oo p ppo oos ssi iit tti iio oon nn a aas ss m mma
aar rrk kke eet tt l lle eea aad dde eer rr, ,, c cch hha aal lll lle een nng gge eer rr, ,, f ffo ool lll llo oow wwe eer rr, ,, o oor rr n nni iic cch hhe eer rr H HHo oow ww t tto oo b bba aal lla aan nnc cce
ee a aa c ccu uus sst tto oom mme eer rr v vve eer rrs ssu uus ssc cco oom mmp ppe eet tti iit tto oor rr o oor rri iie een nnt tta aat tti iio oon nn www.bookfiesta4u.com
Figure 9-1: Five Forces Determining Segment Structural Attractiveness Competitive Forces Threatof:Threat of: 1.1. intensesegmentintense segment rivalryrivalry 2.2. newentrantsnew entrants www.bookfiesta4u.com1-256 2.2. newentrantsnew entrants 3.3. substituteproductssubstitute products buyers growingbuyers growing bargaining powerbargaining power suppliers growingsuppliers growing bargainingbargaining powerpower Figure 9-1: Five Forces Determining Segment Structural Attractiveness Competitive Forces Threatof:Threat of: 1.1. intensesegmentintense segment rivalryrivalry 2.2. newentrantsnew entrants www.bookfiesta4u.com1-256 2.2. newentrantsnew entrants 3.3. substituteproductssubstitute products buyers growingbuyers growing bargaining powerbargaining power suppliers growingsuppliers growing bargainingbargaining powerpower
Figure 9-2: Barriers and Profitability www.bookfiesta4u.com1-257 Figure 9-2: Barriers and Profitability www.bookfiesta4u.com1-257
GetThere.com,launchedastheInternetTravelNetworkGetThere.com, launched as the ernet Travel Network in1995,wasthefirstcompanytobooktripsoverthein 1995, was the first company to k trips over the WebWeb www.bookfiesta4u.com1-258 GetThere.com,launchedastheInternetTravelNetworkGetThere.com, launched as the ernet Travel Network in1995,wasthefirstcompanytobooktripsoverthein 1995, was the first company to k trips over the WebWeb www.bookfiesta4u.com1-258
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Identifying Competitors IndustryConceptofCompetitionIndustry Concept of Competition IndustryIndustry NumberofSellersandNumber of Sellers and DegreeofDifferentiationDegree of Differentiation PolP ol www.bookfiesta4u.com1-259 PuremonopolyPure monopoly OligopolyOligopoly PureoligopolyPure oligopoly DifferentiatedoligopolyDifferentiated oligopoly MonopolisticcompetitionMonopolistic competition PurecompetitionPure competition Identifying Competitors IndustryConceptofCompetitionIndustry Concept of Competition IndustryIndustry NumberofSellersandNumber of Sellers and DegreeofDifferentiationDegree of Differentiation PolP ol www.bookfiesta4u.com1-259 PuremonopolyPure monopoly OligopolyOligopoly PureoligopolyPure oligopoly DifferentiatedoligopolyDifferentiated oligopoly MonopolisticcompetitionMonopolistic competition PurecompetitionPure competition
Identifying Competitors Entry,Mobility,ExitBarriersEntry, Mobility, Exit Barriers Entry barriersEntry barriers Mobility barriersMobility barriers ExitbarriersExit barriers CostStructureCost Structure www.bookfiesta4u.com1-260 CostStructureCost Structure DegreeofVerticalIntegrationDegree of Vertical Integration VerticalintegrationVertical integration DegreeofGlobalizationDegree of Globalization MarketConceptofCompetitionMarket Concept of Competition Identifying Competitors Entry,Mobility,ExitBarriersEntry, Mobility, Exit Barriers Entry barriersEntry barriers Mobility barriersMobility barriers ExitbarriersExit barriers CostStructureCost Structure www.bookfiesta4u.com1-260 CostStructureCost Structure DegreeofVerticalIntegrationDegree of Vertical Integration VerticalintegrationVertical integration DegreeofGlobalizationDegree of Globalization MarketConceptofCompetitionMarket Concept of Competition
ObjectivesObjectives Figure 9-5: A Competitor s Expansion Plans Analyzing Competitors www.bookfiesta4u.com1-261 ObjectivesObjectives Figure 9-5: A Competitor s Expansion Plans Analyzing Competitors www.bookfiesta4u.com1-261
Analyzing Competitors StrengthsandWeaknessesStrengths and Weaknesses DominantDominant StrongStrong www.bookfiesta4u.com1-262 gg FavorableFavorable TenableTenable WeakWeak NonviableNonviable Analyzing Competitors StrengthsandWeaknessesStrengths and Weaknesses DominantDominant StrongStrong www.bookfiesta4u.com1-262 gg FavorableFavorable TenableTenable WeakWeak NonviableNonviable
Table 9-1: Customer s Ratings of Competitors on Key Success Factors CustomerCustomer AwarenessAwareness ProductProduct QualityQuality ProductProduct AvailabilityAvailability TechnicalTechnical AssistanceAssistance SellingSelling StaffStaff CompetitorACompetitor A EE EE PP PP GG CiBC i B GG GG EE GG EE www.bookfiesta4u.com1-263 CompetitorBCompetitor B GG GG EE GG EE CompetitorCCompetitor C FF PP GG FF FF Note:E=excellent,G=good,F=fair,P=poor.Note: E = excellent, G = good, F = fair, P = poor. Table 9-1: Customer s Ratings of Competitors on Key Success Factors CustomerCustomer AwarenessAwareness ProductProduct QualityQuality ProductProduct AvailabilityAvailability TechnicalTechnical AssistanceAssistance SellingSelling StaffStaff CompetitorACompetitor A EE EE PP PP GG CiBC i B GG GG EE GG EE www.bookfiesta4u.com1-263 CompetitorBCompetitor B GG GG EE GG EE CompetitorCCompetitor C FF PP GG FF FF Note:E=excellent,G=good,F=fair,P=poor.Note: E = excellent, G = good, F = fair, P = poor.
Analyzing Competitors ThreeVariablestoMonitorThree Variables to Monitor WhenAnalyzingCompetitors:When Analyzing Competitors: Shareof marketShare of market www.bookfiesta4u.com1-264 Shareof mindShare of mind Shareof heartShare of heart Analyzing Competitors ThreeVariablestoMonitorThree Variables to Monitor WhenAnalyzingCompetitors:When Analyzing Competitors: Shareof marketShare of market www.bookfiesta4u.com1-264 Shareof mindShare of mind Shareof heartShare of heart
Table 9-2: Market Share, Mind Share, and Heart Share MarketShareMarket Share MindShareMind Share HeartShareHeart Share 20002000 20012001 20022002 20002000 20012001 20022002 20002000 20012001 20022002 CompetitorACompetitor A 50%50% 47%47% 44%44% 60%60% 58%58% 54%54% 45%45% 42%42% 39%39% www.bookfiesta4u.com1-265 CompetitorACompetitor A 50%50% 47%47% 44%44% 60%60% 58%58% 54%54% 45%45% 42%42% 39%39% CompetitorBCompetitor B 3030 3434 3737 3030 3131 3535 4444 4747 5353 CompetitorCCompetitor C 2020 1919 1919 1010 1111 1111 1111 1111 88 Table 9-2: Market Share, Mind Share, and Heart Share MarketShareMarket Share MindShareMind Share HeartShareHeart Share 20002000 20012001 20022002 20002000 20012001 20022002 20002000 20012001 20022002 CompetitorACompetitor A 50%50% 47%47% 44%44% 60%60% 58%58% 39%39% www.bookfiesta4u.com1-265 CompetitorACompetitor A 50%50% 47%47% 44%44% 60%60% 58%58% 39%39% CompetitorBCompetitor B 3030 3434 3737 3030 3131 3535 4444 CompetitorCCompetitor C 2020 1919 1919 1010 1111 1111 1111
54%54% 45%45% 42%42% 54%54% 45%45% 42%42% 4747 5353 1111 88
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Designing The Competitive Intelligence System FourMainStepsFour Main Steps SettingUptheSystemSetting Up the System CollectingtheDataCollecting the Data www.bookfiesta4u.com1-268 gg EvaluatingandAnalyzingtheDataEvaluating and Analyzing the Data DisseminatingInformationandRespondingDisseminating Information and Responding Designing The Competitive Intelligence System FourMainStepsFour Main Steps SettingUptheSystemSetting Up the System CollectingtheDataCollecting the Data www.bookfiesta4u.com1-268 gg EvaluatingandAnalyzingtheDataEvaluating and Analyzing the Data DisseminatingInformationandRespondingDisseminating Information and Responding
Designing The Competitive Intelligence System SelectingCompetitorsSelecting Competitors CustomerValueAnalysis(CVA)Customer Value Analysis (CVA) CustomerValue = Customer BenefitsCustomer Value = Customer Benefits CustomerCostsCustomer Costs www.bookfiesta4u.com1-269 CustomerCostsCustomer Costs CustomerBenefits= product benefits, serviceCustomer Benefits = product benefits, s ervice benefits, personnelbenefits, imagebenefitsbenefits, personnel benefits, image be nefits CustomerCosts= purchase price, acquisitionCustomer Costs = purchase price, acquisi tion costs, usagecosts, maintenancecosts, ownershipcosts, usage costs, maintenance co sts, ownership costs, disposal costscosts, disposal costs Designing The Competitive Intelligence System SelectingCompetitorsSelecting Competitors CustomerValueAnalysis(CVA)Customer Value Analysis (CVA) CustomerValue = Customer BenefitsCustomer Value = Customer Benefits CustomerCostsCustomer Costs www.bookfiesta4u.com1-269 CustomerCostsCustomer Costs CustomerBenefits= product benefits, serviceCustomer Benefits = product benefits, s ervice benefits, personnelbenefits, imagebenefitsbenefits, personnel benefits, image be nefits CustomerCosts= purchase price, acquisitionCustomer Costs = purchase price, acquisi tion costs, usagecosts, maintenancecosts, ownershipcosts, usage costs, maintenance co sts, ownership costs, disposal costscosts, disposal costs
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Table 9-3: Customer Cost of Three Brands AA BB CC PricePrice $100$100 $90$ 90 $80$ 80 AcquisitioncostsAcquisition costs 1515 2525 3030 UsagecostsUsage costs 44 77 1010 www.bookfiesta4u.com1-271 MaintenanceMaintenance costscosts 22 33 77 OwnershipcostsOwnership costs 33 33 55 DisposalcostsDisposal costs 66 55 88 TotalcostsTotal costs $130$130 $135$135 $140$140 Table 9-3: Customer Cost of Three Brands AA BB CC PricePrice $100$100 $90$ 90 $80$ 80 AcquisitioncostsAcquisition costs 1515 2525 3030 UsagecostsUsage costs 44 77 1010 www.bookfiesta4u.com1-271 MaintenanceMaintenance costscosts 22 33 77 OwnershipcostsOwnership costs 33 33 55 DisposalcostsDisposal costs 66 55 88 TotalcostsTotal costs $130$130 $135$135 $140$140
Designing The Competitive Intelligence System
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ClassesofCompetitorsClasses of Competitors Strong versus WeakStrong versus Weak Designing The Competitive Intelligence System www.bookfiesta4u.com1-273 CloseversusDistantClose versus Distant Good versus Bad Good versus Bad ClassesofCompetitorsClasses of Competitors Strong versus WeakStrong versus Weak Designing The Competitive Intelligence System www.bookfiesta4u.com1-273 CloseversusDistantClose versus Distant Good versus Bad Good versus Bad
Figure 9-6: Hypothetical M k Designing Competitive Strategies www.bookfiesta4u.com1-274 Market Structure Figure 9-6: Hypothetical M k Designing Competitive Strategies www.bookfiesta4u.com1-274 Market Structure
Designing Competitive Strategies MarketMarket--LeaderStrategiesLeader Strategies ExpandingtheTotalMarketExpanding the Total Market NewUsersNew Users www.bookfiesta4u.com1-275 MarketMarket--penetrationstrategypenetration strategy NewNew--marketsegmentstrategymarket segment strategy GeographicalGeographical--expansionstrategyexpansion strategy NewUsesNew Uses MoreUsageMore Usage DefendingMarketShareDefending Market Share Designing Competitive Strategies MarketMarket--LeaderStrategiesLeader Strategies ExpandingtheTotalMarketExpanding the Total Market NewUsersNew Users www.bookfiesta4u.com1-275 MarketMarket--penetrationstrategypenetration strategy NewNew--marketsegmentstrategymarket segment strategy GeographicalGeographical--expansionstrategyexpansion strategy NewUsesNew Uses MoreUsageMore Usage DefendingMarketShareDefending Market Share
IGT shomepagefocusesoncustomerserviceIGT s home page focuses on customer service www.bookfiesta4u.com1-276 IGT shomepagefocusesoncustomerserviceIGT s home page focuses on customer service www.bookfiesta4u.com1-276
DefenseStrategiesDefense Strategies PositionDefensePosition Defense FlankDefenseFlank Defense PreemptiveDefensePreemptive Defense CounteroffensiveDefenseCounteroffensive Defense Designing Competitive Strategies www.bookfiesta4u.com1-277 MobileDefenseMobile Defense MarketbroadeningMarket broadening PrincipleoftheobjectivePrinciple of the objective PrincipleofmassPrinciple of mass MarketdiversificationMarket diversification ContractionDefenseContraction Defense PlannedcontractionPlanned contraction (Strategicwithdrawal)(Strategic withdrawal) DefenseStrategiesDefense Strategies PositionDefensePosition Defense FlankDefenseFlank Defense PreemptiveDefensePreemptive Defense CounteroffensiveDefenseCounteroffensive Defense Designing Competitive Strategies www.bookfiesta4u.com1-277 MobileDefenseMobile Defense MarketbroadeningMarket broadening PrincipleoftheobjectivePrinciple of the objective PrincipleofmassPrinciple of mass MarketdiversificationMarket diversification ContractionDefenseContraction Defense PlannedcontractionPlanned contraction (Strategicwithdrawal)(Strategic withdrawal)
Designing Competitive Strategies TwoCaseStudies:Two Case Studies: Procter&GambleProcter & Gamble andCaterpillarand Caterpillar www.bookfiesta4u.com1-278 Proctor&GambleProctor & Gamble CustomerknowledgeCustomer knowledge LongLong--termoutlookterm outlook ProductinnovationProduct innovation Quality strategyQuality strategy LineLine--extensionstrategyextension strategy Designing Competitive Strategies TwoCaseStudies:Two Case Studies: Procter&GambleProcter & Gamble andCaterpillarand Caterpillar www.bookfiesta4u.com1-278 Proctor&GambleProctor & Gamble CustomerknowledgeCustomer knowledge LongLong--termoutlookterm outlook ProductinnovationProduct innovation Quality strategyQuality strategy LineLine--extensionstrategyextension strategy
Designing Competitive Strategies BrandBrand--extensionstrategyextension strategy MultibrandstrategyMultibrand strategy Heavy advertising andHeavy advertising and media pioneermedia pioneer www.bookfiesta4u.com1-279 media pioneermedia pioneer AggressivesalesforceAggressive sales force EffectivesalespromotionEffective sales promotion CompetitivetoughnessCompetitive toughness Manufacturing efficiencyManufacturing efficiency and costcuttingand cost cutting BrandBrand--managementsystemmanagement system Designing Competitive Strategies BrandBrand--extensionstrategyextension strategy MultibrandstrategyMultibrand strategy Heavy advertising andHeavy advertising and media pioneermedia pioneer www.bookfiesta4u.com1-279 media pioneermedia pioneer AggressivesalesforceAggressive sales force EffectivesalespromotionEffective sales promotion CompetitivetoughnessCompetitive toughness Manufacturing efficiencyManufacturing efficiency and costcuttingand cost cutting BrandBrand--managementsystemmanagement system
Designing Competitive Strategies MarketMarket--ChallengerStrategiesChallenger Strategies DefiningtheStrategicObjectiveandDefining the Strategic Objective and Opponent(s)Opponent(s) www.bookfiesta4u.com1-280 pp()pp ( ) Itcan attackthe marketleaderIt can attack the market leader Itcan attackfirmsof itsownsizethatare notIt can attack firms of its own size that are not doing the job andareunderfinanceddoing the job and are underfinanced Itcan attacksmalllocalandregionalfirmsIt can attack small local and regional firms ChoosingaGeneralAttackStrategyChoosing a General Attack Strategy Designing Competitive Strategies MarketMarket--ChallengerStrategiesChallenger Strategies DefiningtheStrategicObjectiveandDefining the Strategic Objective and Opponent(s)Opponent(s) www.bookfiesta4u.com1-280 pp()pp ( ) Itcan attackthe marketleaderIt can attack the market leader Itcan attackfirmsof itsownsizethatare notIt can attack firms of its own size that are not doing the job andareunderfinanceddoing the job and are underfinanced Itcan attacksmalllocalandregionalfirmsIt can attack small local and regional firms ChoosingaGeneralAttackStrategyChoosing a General Attack Strategy
Figure 9-10: Attack Strategies www.bookfiesta4u.com1-281 Figure 9-10: Attack Strategies www.bookfiesta4u.com1-281
SwedishfirmSCA swww.libero.sesitecreatesadialoguewithSwedish firm SCA s e site creates a dialogue with expectantandnewparentsandevenallowsuserstosendexpectant and new parents allows users to send pictures,briefstories,andchildwishlisttofamilyalloverthepictures, brief and child wish list to family all over the world.world. www.bookfiesta4u.com1-282 SwedishfirmSCA swww.libero.sesitecreatesadialoguewithSwedish firm SCA s e site creates a dialogue with expectantandnewparentsandevenallowsuserstosendexpectant and new parents allows users to send pictures,briefstories,andchildwishlisttofamilyalloverthepictures, brief and child wish list to family all over the world.world. www.bookfiesta4u.com1-282
www.libero.s and even stories,
www.libero.s and even stories,
Designing Competitive Strategies ChoosingaSpecificAttackChoosing a Specific Attack StrategyStrategy PricePrice--discountdiscount Lower pricegoodsLower price goods www.bookfiesta4u.com1-283 PrestigegoodsPrestige goods ProductproliferationProduct proliferation ProductinnovationProduct innovation ImprovedservicesImproved services DistributioninnovationDistribution innovation Manufacturing costreductionManufacturing cost reduction Intensiveadvertising promotionIntensive advertising promotion Designing Competitive Strategies ChoosingaSpecificAttackChoosing a Specific Attack StrategyStrategy PricePrice--discountdiscount Lower pricegoodsLower price goods www.bookfiesta4u.com1-283 PrestigegoodsPrestige goods ProductproliferationProduct proliferation ProductinnovationProduct innovation ImprovedservicesImproved services DistributioninnovationDistribution innovation Manufacturing costreductionManufacturing cost reduction Intensiveadvertising promotionIntensive advertising promotion
Designing Competitive Strategies MarketMarket--FollowerStrategiesFollower Strategies InnovativeimitationInnovative imitation (Productimitation)(Product imitation) www.bookfiesta4u.com1-284 ProductinnovationProduct innovation FourBroad Strategies:Four Broad Strategies: CounterfeiterCounterfeiter ClonerCloner ImitatorImitator AdapterAdapter Designing Competitive Strategies MarketMarket--FollowerStrategiesFollower Strategies InnovativeimitationInnovative imitation (Productimitation)(Product imitation) www.bookfiesta4u.com1-284 ProductinnovationProduct innovation FourBroad Strategies:Four Broad Strategies: CounterfeiterCounterfeiter ClonerCloner ImitatorImitator AdapterAdapter
Designing Competitive Strategies MarketMarket--NicherStrategiesNicher Strategies Highmarginversus highHigh margin versus high volumevolume NicherSpecialistRolesNicher Specialist Roles www.bookfiesta4u.com1-285 NicherSpecialistRolesNicher Specialist Roles EndEnd--userspecialistuser specialist ValueValue--addedreselleradded reseller VerticalVertical--levelspecialistlevel specialist CustomerCustomer--sizespecialistsize specialist SpecificSpecific--customerspecialistcustomer specialist GeographicspecialistGeographic specialist ProductorproductProduct or product--lineline specialistspecialist ProductProduct--featurefeature specialistspecialist JobJob--shopspecialistshop specialist QualityQuality--pricespecialistprice specialist ServicespecialistService specialist ChannelspecialistChannel specialist Designing Competitive Strategies MarketMarket--NicherStrategiesNicher Strategies Highmarginversus highHigh margin versus high volumevolume NicherSpecialistRolesNicher Specialist Roles www.bookfiesta4u.com1-285 NicherSpecialistRolesNicher Specialist Roles EndEnd--userspecialistuser specialist ValueValue--addedreselleradded reseller VerticalVertical--levelspecialistlevel specialist CustomerCustomer--sizespecialistsize specialist SpecificSpecific--customerspecialistcustomer specialist GeographicspecialistGeographic specialist ProductorproductProduct or product--lineline specialistspecialist ProductProduct--featurefeature specialistspecialist JobJob--shopspecialistshop specialist QualityQuality--pricespecialistprice specialist ServicespecialistService specialist ChannelspecialistChannel specialist
Balancing Customer and Competitor Orientations CompetitorCompetitor--centeredcompanycentered company CustomerCustomer--centeredcompanycentered company www.bookfiesta4u.com1-286 Balancing Customer and Competitor Orientations CompetitorCompetitor--centeredcompanycentered company CustomerCustomer--centeredcompanycentered company www.bookfiesta4u.com1-286
Chapter10Chapter 10 IdentifyingMarketIdentifying Market SegmentsandSelectingSegments and Selecting TargetMarketsTarget Markets byby www.bookfiesta4u.combyby PowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans Chapter10Chapter 10 IdentifyingMarketIdentifying Market SegmentsandSelectingSegments and Selecting TargetMarketsTarget Markets byby www.bookfiesta4u.combyby PowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans
Kotler on Marketing Don tbuy Don t buy marketshare.market share. www.bookfiesta4u.com1-288 FigureoutFigure out howtoearnhow to earn it. it. Kotler on Marketing Don tbuy Don t buy marketshare.market share. www.bookfiesta4u.com1-288 FigureoutFigure out howtoearnhow to earn it. it.
Chapter Objectives Wefocusonthefollowingquestions:We focus on the following questions: HowcanacompanyHow can a company identifythesegmentsidentify the segments thatmakeupathat make up a market?market? www.bookfiesta4u.com1-289 market?market? WhatcriteriacanWhat criteria can acompanyusetoa company use to choosethemostchoose the most attractivetargetattractive target markets?markets? Chapter Objectives Wefocusonthefollowingquestions:We focus on the following questions: HowcanacompanyHow can a company identifythesegmentsidentify the segments thatmakeupathat make up a market?market? www.bookfiesta4u.com1-289 market?market? WhatcriteriacanWhat criteria can acompanyusetoa company use to choosethemostchoose the most attractivetargetattractive target markets?markets?
Target Marketing TargetmarketingrequiresmarketerstoTarget marketing requires marketers to takethreemajorsteps:take three major steps: IdentifyandprofiledistinctgroupsofbuyersIdentify and profile distinct groups of bu yers whodifferintheirneedsandpreferenceswho differ in their needs and preferences (marketsegmentation).(market segmentation). www.bookfiesta4u.com1-290 (marketsegmentation).(market segmentation). SelectoneormoremarketsegmentstoenterSelect one or more market segments to enter (markettargeting).(market targeting). Foreachtargetsegment,establishandFor each target segment, establish and communicatethekeydistinctivebenefit(s)ofcommunicate the key distinctive benefit( s) of thecompany smarketoffering(marketthe company s market offering (market positioning).positioning). Target Marketing TargetmarketingrequiresmarketerstoTarget marketing requires marketers to takethreemajorsteps:take three major steps: IdentifyandprofiledistinctgroupsofbuyersIdentify and profile distinct groups of bu yers whodifferintheirneedsandpreferenceswho differ in their needs and preferences (marketsegmentation).(market segmentation). www.bookfiesta4u.com1-290 (marketsegmentation).(market segmentation). SelectoneormoremarketsegmentstoenterSelect one or more market segments to enter (markettargeting).(market targeting). Foreachtargetsegment,establishandFor each target segment, establish and communicatethekeydistinctivebenefit(s)ofcommunicate the key distinctive benefit( s) of thecompany smarketoffering(marketthe company s market offering (market positioning).positioning).
Levels and Patterns of Market Segmentation LevelsofMarketSegmentationLevels of Market Segmentation MassmarketingMass marketing MicromarketingMicromarketing www.bookfiesta4u.com1-291 SegmentmarketingSegment marketing MarketsegmentMarket segment SectorSector FlexiblemarketofferingFlexible market offering NakedsolutionNaked solution DiscretionaryoptionsDiscretionary options Levels and Patterns of Market Segmentation LevelsofMarketSegmentationLevels of Market Segmentation MassmarketingMass marketing MicromarketingMicromarketing www.bookfiesta4u.com1-291 SegmentmarketingSegment marketing MarketsegmentMarket segment SectorSector FlexiblemarketofferingFlexible market offering NakedsolutionNaked solution DiscretionaryoptionsDiscretionary options
Levels and Patterns of Market Segmentation NicheMarketingNiche Marketing NicheNiche LocalMarketingLocal Marketing www.bookfiesta4u.com1-292 IndividualCustomerMarketingIndividual Customer Marketing MassMass--customizationcustomization ChoiceboardChoiceboard CustomerizationCustomerization SegmentsSegments IndividualsIndividuals Levels and Patterns of Market Segmentation NicheMarketingNiche Marketing NicheNiche LocalMarketingLocal Marketing www.bookfiesta4u.com1-292 IndividualCustomerMarketingIndividual Customer Marketing MassMass--customizationcustomization ChoiceboardChoiceboard CustomerizationCustomerization SegmentsSegments IndividualsIndividuals
Levels and Patterns of Market Segmentation PatternsforMarketSegmentationPatterns for Market Segmentation PreferencesegmentsPreference segments HomogeneouspreferencesHomogeneous preferences www.bookfiesta4u.com1-293 ogepoge p DiffusedpreferencesDiffused preferences ClusteredpreferencesClustered preferences NaturalmarketsegmentsNatural market segments ConcentratedmarketingConcentrated marketing Levels and Patterns of Market Segmentation PatternsforMarketSegmentationPatterns for Market Segmentation PreferencesegmentsPreference segments HomogeneouspreferencesHomogeneous preferences www.bookfiesta4u.com1-293 ogepoge p DiffusedpreferencesDiffused preferences ClusteredpreferencesClustered preferences NaturalmarketsegmentsNatural market segments ConcentratedmarketingConcentrated marketing
Levels and Patterns of Market Segmentation MarketSegmentationProcedureMarket Segmentation Procedure NeedsNeeds--based marketbased market segmentationapproachsegmentation approach www.bookfiesta4u.com1-294 MarketpartitioningMarket partitioning BrandBrand--dominantdominant hierarchyhierarchy NationNation--dominantdominant hierarchyhierarchy Levels and Patterns of Market Segmentation MarketSegmentationProcedureMarket Segmentation Procedure NeedsNeeds--based marketbased market segmentationapproachsegmentation approach www.bookfiesta4u.com1-294 MarketpartitioningMarket partitioning BrandBrand--dominantdominant hierarchyhierarchy NationNation--dominantdominant hierarchyhierarchy
ChemStation sWebsiteofferscustomerssolutionsChemStation s Web site offers customers solutions totheirproblems,notjustproducts.to their problems, not just products. www.bookfiesta4u.com1-295 ChemStation sWebsiteofferscustomerssolutionsChemStation s Web site offers customers solutions totheirproblems,notjustproducts.to their problems, not just products. www.bookfiesta4u.com1-295
Table 10-1: Steps in Segmentation Process DescriptionDescription 1.Needs1. Needs--BasedBased SegmentationSegmentation GroupcustomersintosegmentsbasedonsimilarGroup customers into segments based on s imilar needsandbenefitssoughtbycustomerinsolvingneeds and benefits sought by customer i n solving aparticularconsumptionproblem.a particular consumption problem. 2.Segment2. Segment IdentificationIdentification ForeachneedsFor each needs--basedsegment,determinewhichbased segment, determine which demographics,lifestyles,andusagebehaviorsdemographics, lifestyles, and usage beh aviors makethesegmentdistinctandidentifiablemake the segment distinct and identifiable (actionable).(actionable). 3S3 S UididiU i d i d i www.bookfiesta4u.com1-296 3.Segment3. Segment AttractivenessAttractiveness UsingpredeterminedsegmentattractivenessUsing predetermined segment attractivenes s criteria(suchasmarketgrowth,competitivecriteria (such as market growth, competit ive intensity,andmarketaccess),determinetheintensity, and market access), determine the overallattractivenessofeachsegment.overall attractiveness of each segment. 4.SegmentProfitability4. Segment Profitability Determinesegmentprofitability.Det ermine segment profitability. 5.SegmentPositioning5. Segment Positioning Foreachsegment,createa valueproposition F or each segment, create a value proposition andproductand product--pricepositioningstrategybasedonprice positioning strategy based on thatsegment suniquecustomerneedsandthat segment s unique customer needs and characteristics.characteristics. See text for complete table Table 10-1: Steps in Segmentation Process DescriptionDescription 1.Needs1. Needs--BasedBased SegmentationSegmentation GroupcustomersintosegmentsbasedonsimilarGroup customers into segments based on s imilar needsandbenefitssoughtbycustomerinsolvingneeds and benefits sought by customer i n solving aparticularconsumptionproblem.a particular consumption problem. 2.Segment2. Segment IdentificationIdentification ForeachneedsFor each needs--basedsegment,determinewhichbased segment, determine which demographics,lifestyles,andusagebehaviorsdemographics, lifestyles, and usage beh aviors makethesegmentdistinctandidentifiablemake the segment distinct and identifiable (actionable).(actionable). 3S3 S UididiU i d i d i www.bookfiesta4u.com1-296 3.Segment3. Segment AttractivenessAttractiveness UsingpredeterminedsegmentattractivenessUsing predetermined segment attractivenes
s criteria(suchasmarketgrowth,competitivecriteria (such as market growth, competit ive intensity,andmarketaccess),determinetheintensity, and market access), determine the overallattractivenessofeachsegment.overall attractiveness of each segment. 4.SegmentProfitability4. Segment Profitability Determinesegmentprofitability.Det ermine segment profitability. 5.SegmentPositioning5. Segment Positioning Foreachsegment,createa valueproposition F or each segment, create a value proposition andproductand product--pricepositioningstrategybasedonprice positioning strategy based on thatsegment suniquecustomerneedsandthat segment s unique customer needs and characteristics.characteristics. See text for complete table
Levels and Patterns of Market Segmentation EffectiveSegmentationEffective Segmentation MeasurableMeasurable SubstantialSubstantial www.bookfiesta4u.com1-297 SubstantialSubstantial AccessibleAccessible DifferentiableDifferentiable ActionableActionable Levels and Patterns of Market Segmentation EffectiveSegmentationEffective Segmentation MeasurableMeasurable SubstantialSubstantial www.bookfiesta4u.com1-297 SubstantialSubstantial AccessibleAccessible DifferentiableDifferentiable ActionableActionable
Segmenting Consumer and Business Markets BasesforSegmentingBases for Segmenting ConsumerMarketsConsumer Markets www.bookfiesta4u.com1-298 Segmenting Consumer and Business Markets BasesforSegmentingBases for Segmenting ConsumerMarketsConsumer Markets www.bookfiesta4u.com1-298
Table 10-2: Major Segmentation Variables for Consumer Markets GeographicGeographic RegionRegion Pacific,Mountain,WestNorthCentral,WestSouthPacific, Mountain, West North Central, West South Central,EastNorthCentral,EastSouthCentral,Central, East North Central, East Sout h Central, SouthAtlantic,MiddleAtlantic,NewEnglandSouth Atlantic, Middle Atlantic, New Engl and CityormetrosizeCity or metro size Under5,000;5,000Under 5,000; 5,000--20,000;20, 00020,000; 20,000--50,000;50,00050,000; 50,000-100,000;100,000100,000; 100,000--250,000;250,000250,000; 250,000--500,000;500,00 0; www.bookfiesta4u.com1-299 500,000500,000--1,000,000;1,000,0001,000,000; 1,000,000--4,000,000;4,000,0004,00 0,000; 4,000,000 oroveror over DensityDensity Urban,suburban,ruralUrban, suburban, rural ClimateClimate NorthernsouthernNorthern southern DemographicDemographic AgeAge Under6,6Under 6, 6--11,1211, 12--19,2019, 20--34,3534, 35--49,5049, 50--6 4,65+64, 65+ FamilysizeFamily size 11--2,32, 3--4,5+4, 5+ See text for complete table Table 10-2: Major Segmentation Variables for Consumer Markets GeographicGeographic RegionRegion Pacific,Mountain,WestNorthCentral,WestSouthPacific, Mountain, West North Central, West South Central,EastNorthCentral,EastSouthCentral,Central, East North Central, East Sout h Central, SouthAtlantic,MiddleAtlantic,NewEnglandSouth Atlantic, Middle Atlantic, New Engl and CityormetrosizeCity or metro size Under5,000;5,000Under 5,000; 5,000--20,000;20, 00020,000; 20,000--50,000;50,00050,000; 50,000-100,000;100,000100,000; 100,000--250,000;250,000250,000; 250,000--500,000;500,00 0; www.bookfiesta4u.com1-299 500,000500,000--1,000,000;1,000,0001,000,000; 1,000,000--4,000,000;4,000,0004,00 0,000; 4,000,000 oroveror over DensityDensity Urban,suburban,ruralUrban, suburban, rural ClimateClimate NorthernsouthernNorthern southern DemographicDemographic AgeAge Under6,6Under 6, 6--11,1211, 12--19,2019, 20--34,3534, 35--49,5049, 50--6 4,65+64, 65+ FamilysizeFamily size 11--2,32, 3--4,5+4, 5+ See text for complete table
Segmenting Consumer and Business Markets BasesforSegmentingConsumerMarketsBases for Segmenting Consumer Markets GeographicSegmentationGeographic Segmentation DemographicSegmentationDemographic Segmentation www.bookfiesta4u.com1-300 DemographicSegmentationDemographic Segmentation AgeandLifeAge and Life--CycleCycle StageStage Segmenting Consumer and Business Markets BasesforSegmentingConsumerMarketsBases for Segmenting Consumer Markets GeographicSegmentationGeographic Segmentation DemographicSegmentationDemographic Segmentation www.bookfiesta4u.com1-300 DemographicSegmentationDemographic Segmentation AgeandLifeAge and Life--CycleCycle StageStage
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eet tte eed dd b bby yy m mma aar rrk kke eet tte eer rrs ss iis ss c cco ool lll lle eeg gge ee s sst ttu uud dde een nnt tts ss. .. D DDo oo y yyo oou uu t tth hhi iin nnk kk t tth hhi iis ss iis ss collegestudents.Doyouthinkthisiscollege students. Do you think this is influencedmorebyacommoneconomicinfluenced more by a common economic
statusofthetargetgroup,geographicstatus of the target group, geographic concentrationofaspecificconcentration of a specific agegroup,orsomeage group, or some otherfactor(s)?other factor(s)?
Sega shomepage:NotjustgamesSega s homepage: Not just games www.bookfiesta4u.com1-302 Sega shomepage:NotjustgamesSega s homepage: Not just games www.bookfiesta4u.com1-302
Segmenting Consumer and Business Markets LifeStageLife Stage GenderGender IncomeIncome GenerationGeneration www.bookfiesta4u.com1-303 TheDepressionCohortThe Depression Cohort TheWorldWarIICohortThe World War II Cohort ThePostThe Post--WarCohortWar Cohort LeadingLeading--EdgeEdge BabyBoomerCohortBaby Boomer Cohort TrailingTrailing--EdgeEdge BabyBoomerCohortBaby Boomer Cohort GenerationXCohortGeneration X Cohort TheGenerationYCohortThe Generation Y Cohort Segmenting Consumer and Business Markets LifeStageLife Stage GenderGender IncomeIncome GenerationGeneration www.bookfiesta4u.com1-303 TheDepressionCohortThe Depression Cohort TheWorldWarIICohortThe World War II Cohort ThePostThe Post--WarCohortWar Cohort LeadingLeading--EdgeEdge BabyBoomerCohortBaby Boomer Cohort TrailingTrailing--EdgeEdge BabyBoomerCohortBaby Boomer Cohort GenerationXCohortGeneration X Cohort TheGenerationYCohortThe Generation Y Cohort
Segmenting Consumer and Business Markets LifestageAnalyticMatrixLifestage Analytic Matrix LifestagesLifestages PhysiographicsPhysiographics EmotionaleffectsEmotional effects www.bookfiesta4u.com1-304 SocioeconomicsSocioeconomics SocialClassSocial Class PsychographicSegmentationPsychographic Segmentation LifestyleLifestyle TimeTime--constrainedconstrained multitaskingmultitasking MoneyMoney--constrainedconstrained Segmenting Consumer and Business Markets LifestageAnalyticMatrixLifestage Analytic Matrix LifestagesLifestages PhysiographicsPhysiographics EmotionaleffectsEmotional effects www.bookfiesta4u.com1-304 SocioeconomicsSocioeconomics SocialClassSocial Class PsychographicSegmentationPsychographic Segmentation LifestyleLifestyle TimeTime--constrainedconstrained multitaskingmultitasking MoneyMoney--constrainedconstrained
I IIm mmpr prprovem ovemovement entents ss i iin nn bot botboth hh t tthe hehe average averageaverage s sst ttandard andardandard of ofof l lli iivi viving ngng and andand i iin nn heal healhealt tth hh car carcare ee have havehave had hadhad pr prprof ofofound oundound ef efeff ffect ectects ss i iin nn t tthe
hehe i iindus ndusndust ttri ririal alali iiz zzed eded wworl orlorld dd duri duriduring ngng t tthe hehe l llas asast tt t ttw wwo oo generat generatgenerati iions onsons. .. O OOt tther herher tthan hanhan an increase in the average life expectancy foran increase in the average life ex pectancy for both men and women,whateffectshasthisboth men and women, what effects has this trend toward longerandtrend toward longer and healthierlivesin generalhadhealthier lives in general had on the traditionallife stageon the traditional life stage assumptionsthatmarketersassumptions that marketers make?make?
Segmenting Consumer and Business Markets PersonalityPersonality Brandpersonality examples: Brand personality SincereSincere ExcitingExciting www.bookfiesta4u.com1-306 ExcitingExciting CompetentCompetent SophisticatedSophisticated RuggedRugged ValuesValues CorevaluesCore values Segmenting Consumer and Business Markets PersonalityPersonality Brandpersonality examples: Brand personality SincereSincere ExcitingExciting www.bookfiesta4u.com1-306 ExcitingExciting CompetentCompetent SophisticatedSophisticated RuggedRugged ValuesValues CorevaluesCore values
examples:
examples:
Segmenting Consumer and Business Markets BehavioralSegmentationBehavioral Segmentation OccasionsOccasions CriticallifeeventsortransitionsCritical life events or transitions BenefitsBenefits www.bookfiesta4u.com1-307 BenefitsBenefits MobilhasidentifiedfiveMobil has identified five segmentsandtheirsizessegments and their sizes RoadWarriors16%Road Warriors 16% GenerationF27%Generation F 27% TrueBlues16%True Blues 16% HomeBodies21%Home Bodies 21% PriceShoppers20%Price Shoppers 20% Segmenting Consumer and Business Markets BehavioralSegmentationBehavioral Segmentation OccasionsOccasions CriticallifeeventsortransitionsCritical life events or transitions BenefitsBenefits www.bookfiesta4u.com1-307 BenefitsBenefits MobilhasidentifiedfiveMobil has identified five segmentsandtheirsizessegments and their sizes RoadWarriors16%Road Warriors 16% GenerationF27%Generation F 27% TrueBlues16%True Blues 16% HomeBodies21%Home Bodies 21% PriceShoppers20%Price Shoppers 20%
Segmenting Consumer and Business Markets UserStatusUser Status UsageRateUsage Rate Loyalty StatusLoyalty Status HdH d lll l www.bookfiesta4u.com1-308 HardHard--coreloyalscore loyals SplitloyalsSplit loyals ShiftingloyalsShifting loyals SwitchersSwitchers BuyerBuyer--ReadinessStageReadiness Stage AttitudeAttitude Segmenting Consumer and Business Markets UserStatusUser Status UsageRateUsage Rate Loyalty StatusLoyalty Status HdH d lll l www.bookfiesta4u.com1-308 HardHard--coreloyalscore loyals SplitloyalsSplit loyals ShiftingloyalsShifting loyals SwitchersSwitchers BuyerBuyer--ReadinessStageReadiness Stage AttitudeAttitude
Segmenting Consumer and Business Markets MultiMulti--AttributeSegmentationAttribute Segmentation (Geoclustering)(Geoclustering) FourPRIZMclustersFour PRIZM clusters www.bookfiesta4u.com1-309 AmericanDreamsAmerican Dreams RuralIndustriaRural Industria GrayPowerGray Power CountrySquiresCountry Squires TargetingMultipleTargeting Multiple SegmentsSegments Segmenting Consumer and Business Markets MultiMulti--AttributeSegmentationAttribute Segmentation (Geoclustering)(Geoclustering) FourPRIZMclustersFour PRIZM clusters www.bookfiesta4u.com1-309 AmericanDreamsAmerican Dreams RuralIndustriaRural Industria GrayPowerGray Power CountrySquiresCountry Squires TargetingMultipleTargeting Multiple SegmentsSegments
Segmenting Consumer and Business Markets BasesForSegmentingBases For Segmenting BusinessMarketsBusiness Markets www.bookfiesta4u.com1-310 Segmenting Consumer and Business Markets BasesForSegmentingBases For Segmenting BusinessMarketsBusiness Markets www.bookfiesta4u.com1-310
Table 10-3: Major Segmentation Variables for Business Markets Demographic 1. Industry: Which industries should we serve? 2. Company size: What size companies should we serve? 3. Location: What geographical areas should we serve? Operating Variables 4. Technology: What customer technologies should we focus on? 5. User or nonuser status: Should we serve heavy users, medium users, vy light users, or nonusers? 6. Customer capabilities: Should we serve customers needing many or few services? Purchasing Approaches 7. Purchasing-function organization: Should we serve companies with highly centralized or decentralized purchasing organizations? 8. Power structure: Should we serve companies that are engineering dominated, financially dominated, and so on? See text for complete table www.bookfiesta4u.com
Segmenting Consumer and Business Markets BusinessbuyersseekdifferentbenefitBusiness buyers seek different benefit bundlesbasedontheirstageinbundles based on their stage in thepurchasedecisionprocess.the purchase decision process. www.bookfiesta4u.com1-312 ppp p 1.1. FirstFirst--timeprospectstime prospects 2.2. NovicesNovices 3.3. SophisticatesSophisticates Segmenting Consumer and Business Markets BusinessbuyersseekdifferentbenefitBusiness buyers seek different benefit bundlesbasedontheirstageinbundles based on their stage in thepurchasedecisionprocess.the purchase decision process. www.bookfiesta4u.com1-312 ppp p 1.1. FirstFirst--timeprospectstime prospects 2.2. NovicesNovices 3.3. SophisticatesSophisticates
Segmenting Consumer and Business Markets Rangan,Moriarty,andSwartzstudiedaRangan, Moriarty, and Swartz studied a maturecommoditymarket,steelstamping,mature commodity market, steel stamping, andfoundfourbusinesssegmentsand found four business segments www.bookfiesta4u.com1-313 1.1. ProgrambuyersProgram buyers 2.2. RelationshipbuyersRelationship buyers 3.3. TransactionbuyersTransaction buyers 4.4. BargainhuntersBargain hunters Segmenting Consumer and Business Markets Rangan,Moriarty,andSwartzstudiedaRangan, Moriarty, and Swartz studied a maturecommoditymarket,steelstamping,mature commodity market, steel stamping, andfoundfourbusinesssegmentsand found four business segments www.bookfiesta4u.com1-313 1.1. ProgrambuyersProgram buyers 2.2. RelationshipbuyersRelationship buyers 3.3. TransactionbuyersTransaction buyers 4.4. BargainhuntersBargain hunters
Segmenting Consumer and Business Markets RackmanandVincentisproposedaRackman and Vincentis proposed a segmentationschemethatclassifiessegmentation scheme that classifies businessbuyersintothreegroupsbusiness buyers into three groups www.bookfiesta4u.com1-314 PricePrice--orientedcustomersoriented customers (transactionalselling)(transactional selling) SolutionSolution--orientedcustomersoriented customers (consultativeselling)(consultative selling) StrategicStrategic--valuecustomersvalue customers (enterpriseselling)(enterprise selling) Segmenting Consumer and Business Markets RackmanandVincentisproposedaRackman and Vincentis proposed a segmentationschemethatclassifiessegmentation scheme that classifies businessbuyersintothreegroupsbusiness buyers into three groups www.bookfiesta4u.com1-314 PricePrice--orientedcustomersoriented customers (transactionalselling)(transactional selling) SolutionSolution--orientedcustomersoriented customers (consultativeselling)(consultative selling) StrategicStrategic--valuecustomersvalue customers (enterpriseselling)(enterprise selling)
Market Targeting EvaluatingandSelectingtheMarketSegmentsEvaluating and Selecting the Market Segment s SingleSingle--SegmentConcentrationSegment Concentration SelectiveSpecializationSelective Specialization ProductSpecializationProduct Specialization www.bookfiesta4u.com1-315 pp MarketSpecializationMarket Specialization FullMarketCoverageFull Market Coverage UndifferentiatedmarketingUndifferentiated marketing DifferentiatedmarketingDifferentiated marketing Market Targeting EvaluatingandSelectingtheMarketSegmentsEvaluating and Selecting the Market Segment s SingleSingle--SegmentConcentrationSegment Concentration SelectiveSpecializationSelective Specialization ProductSpecializationProduct Specialization www.bookfiesta4u.com1-315 pp MarketSpecializationMarket Specialization FullMarketCoverageFull Market Coverage UndifferentiatedmarketingUndifferentiated marketing DifferentiatedmarketingDifferentiated marketing
Market Targeting Highercostsusing differentiatedHigher costs marketing include:marketing include: ProductmodificationcostProduct modification ManufacturingcostManufacturing cost www.bookfiesta4u.com1-316 ManufacturingcostManufacturing cost AdministrativecostAdministrative cost InventorycostInventory cost PromotioncostPromotion cost Market Targeting Highercostsusing differentiatedHigher costs marketing include:marketing include: ProductmodificationcostProduct modification ManufacturingcostManufacturing cost www.bookfiesta4u.com1-316 ManufacturingcostManufacturing cost AdministrativecostAdministrative cost InventorycostInventory cost PromotioncostPromotion cost
using differentiated cost
using differentiated cost
Market Targeting AdditionalConsiderationsAdditional Considerations EthicalChoiceofMarketTargetsEthical Choice of Market Targets SupersegmentSupersegment www.bookfiesta4u.com1-317 pgmp gm SegmentSegment--ByBy--SegmentInvasionPlansSegment Invasion Plans Market Targeting AdditionalConsiderationsAdditional Considerations EthicalChoiceofMarketTargetsEthical Choice of Market Targets SupersegmentSupersegment www.bookfiesta4u.com1-317 pgmp gm SegmentSegment--ByBy--SegmentInvasionPlansSegment Invasion Plans
Figure 10-3: Segment-by-Segment Invasion Plan www.bookfiesta4u.com1-318 Figure 10-3: Segment-by-Segment Invasion Plan www.bookfiesta4u.com1-318
IntersegmentCooperationIntersegment Cooperation Market Targeting www.bookfiesta4u.com1-319 IntersegmentCooperationIntersegment Cooperation Market Targeting www.bookfiesta4u.com1-319
Chapter11Chapter 11 PositioningandDifferentiatingPositioning and Differentiating theMarketOfferingThroughthe Market Offering Through theProductLifeCyclethe Product Life Cycle bybybyby PowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans Chapter11Chapter 11 PositioningandDifferentiatingPositioning and Differentiating theMarketOfferingThroughthe Market Offering Through theProductLifeCyclethe Product Life Cycle bybybyby PowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans
WatchtheproductWatch the product lifecycle;butmorelife cycle; but more ihhi h h Kotler on Marketing www.bookfiesta4u.blogspot.com 11-321 important,watchtheimportant, watch the marketlifecycle.market life cycle. WatchtheproductWatch the product lifecycle;butmorelife cycle; but more ihhi h h Kotler on Marketing www.bookfiesta4u.blogspot.com 11-321 important,watchtheimportant, watch the marketlifecycle.market life cycle.
Chapter Objectives Inthischapter,wefocusonthefollowingIn this chapter, we focus on the following questions:questions: HowcanthefirmchooseandcommunicateanHow can the firm choose and communicate an effectivepositioninginthemarket?effective positioning in the market? WhtthjdifftitittibtWh t th j diff ti ti tt ib t www.bookfiesta4u.blogspot.com 11-322 WhatarethemajordifferentiatingattributesWhat are the major differentiating attribu tes availabletofirms?available to firms? WhatmarketingstrategiesareappropriateatWhat marketing strategies are appropriate a t eachstageoftheproductlifecycle?each stage of the product life cycle? WhatmarketingstrategiesareappropriateatWhat marketing strategies are appropriate a t eachstageofthemarket sevolution?each stage of the market s evolution? Chapter Objectives Inthischapter,wefocusonthefollowingIn this chapter, we focus on the following questions:questions: HowcanthefirmchooseandcommunicateanHow can the firm choose and communicate an effectivepositioninginthemarket?effective positioning in the market? WhtthjdifftitittibtWh t th j diff ti ti tt ib t www.bookfiesta4u.blogspot.com 11-322 WhatarethemajordifferentiatingattributesWhat are the major differentiating attribu tes availabletofirms?available to firms? WhatmarketingstrategiesareappropriateatWhat marketing strategies are appropriate a t eachstageoftheproductlifecycle?each stage of the product life cycle? WhatmarketingstrategiesareappropriateatWhat marketing strategies are appropriate a t eachstageofthemarket sevolution?each stage of the market s evolution?
Developing and Communicating a Positioning Strategy PositioningPositioning ValuepositionValue position www.bookfiesta4u.blogspot.com 11-323 ValuepositionValue position Developing and Communicating a Positioning Strategy PositioningPositioning ValuepositionValue position www.bookfiesta4u.blogspot.com 11-323 ValuepositionValue position
Table 11.1: Examples of Value Propositions Demand States and Marketing Tasks CompanyCompany andand ProductProduct TargetTarget CustomersCustomers BenefitsBenefits PricePrice ValueValue PropositionProposition PerduePerdue (chicken)(chicken) QualityQuality-consciousconscious consumers ofconsumers of chickenchicken TendernessTenderness 10%10% premiumpremium MoretenderMore tender goldenchickenatgolden chicken at amoderatea moderate premiumpricepremium price VlV l SfS f DbiliD bili 20%20% ThfTh f www.bookfiesta4u.blogspot.com 11-324 VolvoVolvo (station(station wagon)wagon) SafetySafety-consciousconscious upscale upscale familiesfamilies DurabilityDurability andsafetyand safety 20%20% premiumpremium Thesafest,mostThe safest, most durablewagonindurable wagon in whichyourfamilywhich your family canridecan ride Domino sDomino s (pizza)(pizza) ConvenienceConvenience-mindedpizzaminded pizza loverslovers DeliveryDelivery speedandspeed and goodqualitygood quality 15%15% premiumpremium Agoodhotpizza,A good hot pizza, deliveredtoyourdelivered to your doordoorwithindoor door within 30minutes of30 minutes of ordering,ataordering, at a moderatepricemoderate price Table 11.1: Examples of Value Propositions Demand States and Marketing Tasks CompanyCompany andand ProductProduct
TargetTarget CustomersCustomers BenefitsBenefits PricePrice ValueValue PropositionProposition PerduePerdue (chicken)(chicken) QualityQuality-consciousconscious consumers ofconsumers of chickenchicken TendernessTenderness 10%10% premiumpremium MoretenderMore tender goldenchickenatgolden chicken at amoderatea moderate premiumpricepremium price VlV l SfS f DbiliD bili 20%20% ThfTh f www.bookfiesta4u.blogspot.com 11-324 VolvoVolvo (station(station wagon)wagon) SafetySafety-consciousconscious upscale upscale familiesfamilies DurabilityDurability andsafetyand safety 20%20% premiumpremium Thesafest,mostThe safest, most durablewagonindurable wagon in whichyourfamilywhich your family canridecan ride Domino sDomino s (pizza)(pizza) ConvenienceConvenience-mindedpizzaminded pizza loverslovers DeliveryDelivery speedandspeed and goodqualitygood quality 15%15% premiumpremium Agoodhotpizza,A good hot pizza, deliveredtoyourdelivered to your doordoorwithindoor door within 30minutes of30 minutes of ordering,ataordering, at a moderatepricemoderate price
Developing and Communicating a Positioning Strategy PositioningAccordingtoRiesandTroutPositioning According to Ries and Trout StrengthenowncurrentpositionStrengthen own current position Grabanunoccupied positionGrab an unoccupied position DeDe--positionposition ReRe--positionposition www.bookfiesta4u.blogspot.com 11-325 ReRe--positionposition ProductladdersProduct ladders PositioningAccordingtoTreacyandPositioning According to Treacy and WiersemaWiersema ValuedisciplinesValue disciplines ProductleaderProduct leader OperationallyexcellentfirmOperationally excellent firm CustomerintimatefirmCustomer intimate firm Developing and Communicating a Positioning Strategy PositioningAccordingtoRiesandTroutPositioning According to Ries and Trout StrengthenowncurrentpositionStrengthen own current position Grabanunoccupied positionGrab an unoccupied position DeDe--positionposition ReRe--positionposition www.bookfiesta4u.blogspot.com 11-325 ReRe--positionposition ProductladdersProduct ladders PositioningAccordingtoTreacyandPositioning According to Treacy and WiersemaWiersema ValuedisciplinesValue disciplines ProductleaderProduct leader OperationallyexcellentfirmOperationally excellent firm CustomerintimatefirmCustomer intimate firm
TreacyandWiersemaproposethatabusinessTreacy and Wiersema propose that a business shouldfollowfourrulesforsuccessshould follow four rules for success 1.1. Becomebestat one of thethreevaluedisciplines.Become best at one of the thre e value disciplines. 2.2. Achieveanadequate performancelevelAchieve an adequate performance level Developing and Communicating a Positioning Strategy www.bookfiesta4u.blogspot.com 11-326 2.2. Achieveanadequate performancelevelAchieve an adequate performance level intheother two disciplines.in the other two disciplines. 3.3. Keepimproving one s superiorpositionin thechosenKeep improving one s superior p osition in the chosen disciplineso as not to loseout to a competitor.discipline so as not to lose out to a competitor. 4.4. Keepbecoming moreadequateinthe othertwoKeep becoming more adequate in the o ther two disciplines, becausecompetitorskeepdisciplines, because competitors keep raising customers expectations.raising customers expectations. TreacyandWiersemaproposethatabusinessTreacy and Wiersema propose that a business shouldfollowfourrulesforsuccessshould follow four rules for success 1.1. Becomebestat one of thethreevaluedisciplines.Become best at one of the thre e value disciplines. 2.2. Achieveanadequate performancelevelAchieve an adequate performance level Developing and Communicating a Positioning Strategy www.bookfiesta4u.blogspot.com 11-326 2.2. Achieveanadequate performancelevelAchieve an adequate performance level intheother two disciplines.in the other two disciplines. 3.3. Keepimproving one s superiorpositionin thechosenKeep improving one s superior p osition in the chosen disciplineso as not to loseout to a competitor.discipline so as not to lose out to a competitor. 4.4. Keepbecoming moreadequateinthe othertwoKeep becoming more adequate in the o ther two disciplines, becausecompetitorskeepdisciplines, because competitors keep raising customers expectations.raising customers expectations.
Positioning:HowmanyideastoPositioning: How many ideas to promote?promote? Unique selling propositionUnique selling proposition FjitiiF j iti i Developing and Communicating a Positioning Strategy www.bookfiesta4u.blogspot.com 11-327 FourmajorpositioningerrorsFour major positioning errors 1.1. UnderpositioningUnderpositioning 2.2. OverpositioningOverpositioning 3.3. Confused positioningConfused positioning 4.4. Doubtful positioningDoubtful positioning Positioning:HowmanyideastoPositioning: How many ideas to promote?promote? Unique selling propositionUnique selling proposition FjitiiF j iti i Developing and Communicating a Positioning Strategy www.bookfiesta4u.blogspot.com 11-327 FourmajorpositioningerrorsFour major positioning errors 1.1. UnderpositioningUnderpositioning 2.2. OverpositioningOverpositioning 3.3. Confused positioningConfused positioning 4.4. Doubtful positioningDoubtful positioning
CanyouthinkofanycompaniesCan you think of any companies thatmarketthesameproductorthat market the same product or serviceofferingtoservice offering tomultiplesegmentsmultiple segmentssesusurvice offeringtoervice offering to multiplesegmentsmultiple segments ingdifferentstrategies?Arethesing different strategies? Are the differentsegmentsbeingdifferent segments being offereddifferentvalueoffered different value propositions?propositions? CanyouthinkofanycompaniesCan you think of any companies thatmarketthesameproductorthat market the same product or serviceofferingtoservice offering tomultiplesegmentsmultiple segmentssesusurvice offeringtoervice offering to multiplesegmentsmultiple segments ingdifferentstrategies?Arethesing different strategies? Are the differentsegmentsbeingdifferent segments being offereddifferentvalueoffered different value propositions?propositions?
Figure 11.1: Perceptual Map www.bookfiesta4u.blogspot.com 11-329 Figure 11.1: Perceptual Map www.bookfiesta4u.blogspot.com 11-329
Developing and Communicating a Positioning Strategy Themepark spositioningpossibilities:Theme park s positioning possibilities: AttributepositioningAttribute positioning BenefitpositioningBenefit positioning www.bookfiesta4u.blogspot.com 11-330 pgp g Useor applicationpositioningUse or application positioning UserpositioningUser positioning CompetitorpositioningCompetitor positioning Productcategory positioningProduct category positioning Quality orpricepositioningQuality or price positioning WhichPositioningtoPromote?Which Positioning to Promote? Developing and Communicating a Positioning Strategy Themepark spositioningpossibilities:Theme park s positioning possibilities: AttributepositioningAttribute positioning BenefitpositioningBenefit positioning www.bookfiesta4u.blogspot.com 11-330 pgp g Useor applicationpositioningUse or application positioning UserpositioningUser positioning CompetitorpositioningCompetitor positioning Productcategory positioningProduct category positioning Quality orpricepositioningQuality or price positioning WhichPositioningtoPromote?Which Positioning to Promote?
Table 11.2: Method for CompetitiveAdvantage Selection ( (( 1 11 ) )) ( (( 2 22 ) )) C CC o oo m mm p pp e ee t tt i ii t tt i ii v vv e ee A AA d dd v vv a aa n nn t tt a aa g gg e ee C CC o
oo m mm p pp a aa n nn y yy S SS t tt a aa n nn d dd i ii n nn g gg T TT e ee c cc h hh n nn o oo l ll o oo g gg y yy 8 88 C CC o oo s ss t tt 6 66 Q
QQ u uu a aa l ll i ii t tt y yy 8 88 S SS e ee r rr v vv i ii c cc e ee 4 44 ( (( 3 33 ) )) C CC o oo m mm p pp e ee t tt i ii t tt o oo r rr S SS t
tt a aa n nn d dd i ii n nn g gg 8 88 8 88 6 66 3 33 ( (( 4 44 ) )) I II m mm p pp o oo r rr t tt a aa n nn c cc e ee o oo f ff I II m mm p pp r rr o
oo v vv i ii n nn g gg S SS t tt a aa n nn d dd i ii n nn g gg ( (( H HH -M MM -L LL ) )) * ** L LL H HH L LL H HH ( (( 5 55 ) )) A AA f ff f
ff o oo r rr d dd a aa b bb i ii l ll i ii t tt y yy a aa n nn d dd S SS p pp e ee e ee d dd ( (( H HH -M MM -L LL ) )) L LL M MM L LL H HH H
HH = == h hh i ii g gg h hh , ,, M MM = == m mm e ee d dd i ii u uu m mm , ,, L LL = == l ll o oo w ww See text for complete table www.bookfiesta4u.blogspot.com
Adding Further Differentiation DifferentiationDifferentiation Differentiationcriteria:Differentiation criteria: ImportantImportant DititiDi ti ti www.bookfiesta4u.blogspot.com 11-332 DistinctiveDistinctive SuperiorSuperior PreemptivePreemptive AffordableAffordable ProfitableProfitable Adding Further Differentiation DifferentiationDifferentiation Differentiationcriteria:Differentiation criteria: ImportantImportant DititiDi ti ti www.bookfiesta4u.blogspot.com 11-332 DistinctiveDistinctive SuperiorSuperior PreemptivePreemptive AffordableAffordable ProfitableProfitable
Adding Further Differentiation ExceedcustomerexpectationswithaExceed customer threethree--stepprocessstep process 1.1. DefiningthecustomervaluemodelDefining the 2.2. BuildingthecustomervaluehierarchyBuilding www.bookfiesta4u.blogspot.com 11-333 2.2. BuildingthecustomervaluehierarchyBuilding BasicBasic ExpectedExpected DesiredDesired UnanticipatedUnanticipated 3.3. DecidingonthecustomervaluepackageDeciding Adding Further Differentiation ExceedcustomerexpectationswithaExceed customer threethree--stepprocessstep process 1.1. DefiningthecustomervaluemodelDefining the 2.2. BuildingthecustomervaluehierarchyBuilding www.bookfiesta4u.blogspot.com 11-333 2.2. BuildingthecustomervaluehierarchyBuilding BasicBasic ExpectedExpected DesiredDesired UnanticipatedUnanticipated 3.3. DecidingonthecustomervaluepackageDeciding
expectations with a customer value model the customer value hierarchy the customer value hierarchy
on the customer value package expectations with a customer value model the customer value hierarchy the customer value hierarchy
on the customer value package
Figure 11.2: The BCG Competitive Differentiation Tools www.bookfiesta4u.blogspot.com 11-334 Advantage Matrix Figure 11.2: The BCG Competitive Differentiation Tools www.bookfiesta4u.blogspot.com 11-334 Advantage Matrix
Table 11.3: Differentiation Variables ProductProduct ServicesServices PersonnelPersonnel ChannelChannel ImageImage FormForm OrderingOrdering easeease CompetenceCompetence CoverageCoverage SymbolsSymbols FeaturesFeatures DeliveryDelivery CourtesyCourtesy ExpertiseExpertise MediaMedia www.bookfiesta4u.blogspot.com 11-335 PerformancePerformance InstallationInstallation CredibilityCredibility Performan cePerformance AtmosphereAtmosphere ConformanceConformance CustomerCustomer trainingtraining ReliabilityReliability EventsEvents DurabilityDurability CustomerCustomer consultingconsulting ResponsiveResponsive nessness See text for complete table Table 11.3: Differentiation Variables ProductProduct ServicesServices PersonnelPersonnel ChannelChannel ImageImage FormForm OrderingOrdering easeease CompetenceCompetence CoverageCoverage SymbolsSymbols FeaturesFeatures DeliveryDelivery CourtesyCourtesy ExpertiseExpertise MediaMedia www.bookfiesta4u.blogspot.com 11-335 PerformancePerformance InstallationInstallation CredibilityCredibility Performan cePerformance AtmosphereAtmosphere ConformanceConformance CustomerCustomer trainingtraining ReliabilityReliability EventsEvents DurabilityDurability CustomerCustomer consultingconsulting ResponsiveResponsive nessness See text for complete table
Differentiation Tools ProductDifferentiationProduct FormForm FeaturesFeatures www.bookfiesta4u.blogspot.com FeaturesFeatures Differentiation Tools ProductDifferentiationProduct FormForm FeaturesFeatures www.bookfiesta4u.blogspot.com FeaturesFeatures
Differentiation 11-336 Differentiation 11-336
Table 11.4: Measuring Customer Effectiveness Value CompanyCostCompany Cost CustomerValueCustomer Value CustomerCustomer Value/CustomerValue/Customer CostCost FeatureFeature (a)(a) (b)(b) (c=b/a)(c=b/a) RR idi d $100$100 $200$200 22 www.bookfiesta4u.blogspot.com 11-337 RearRear--windowwindow defrostingdefrosting $100$100 $200$200 22 CruisecontrolCruise control 600600 600600 11 AutomaticAutomatic transmissiontransmission 800800 2,4002,400 33 Table 11.4: Measuring Customer Effectiveness Value CompanyCostCompany Cost CustomerValueCustomer Value CustomerCustomer Value/CustomerValue/Customer CostCost FeatureFeature (a)(a) (b)(b) (c=b/a)(c=b/a) RR idi d $100$100 $200$200 22 www.bookfiesta4u.blogspot.com 11-337 RearRear--windowwindow defrostingdefrosting $100$100 $200$200 22 CruisecontrolCruise control 600600 600600 11 AutomaticAutomatic transmissiontransmission 800800 2,4002,400 33
Differentiation Tools PerformanceQualityPerformance Quality ConformanceQualityConformance Quality DurabilityDurability ReliabilityReliability www.bookfiesta4u.blogspot.com 11-338 ReliabilityReliability ReparabilityReparability StyleStyle Design:TheIntegratingForceDesign: The Integrating Force ServicesDifferentiationServices Differentiation OrderingEaseOrdering Ease Differentiation Tools PerformanceQualityPerformance Quality ConformanceQualityConformance Quality DurabilityDurability ReliabilityReliability www.bookfiesta4u.blogspot.com 11-338 ReliabilityReliability ReparabilityReparability StyleStyle Design:TheIntegratingForceDesign: The Integrating Force ServicesDifferentiationServices Differentiation OrderingEaseOrdering Ease
ThehomepageforPeapod,thenation sThe home page for Peapod, the nation s largestonlinegrocerlargest online grocer www.bookfiesta4u.blogspot.com 11-339 ThehomepageforPeapod,thenation sThe home page for Peapod, the nation s largestonlinegrocerlargest online grocer www.bookfiesta4u.blogspot.com 11-339
Differentiation Tools DeliveryDelivery Quickresponse systemQuick response system InstallationInstallation CustomerTrainingCustomer Training CustomerCustomer CltiC lti www.bookfiesta4u.blogspot.com 11-340 ConsultingConsulting MaintenanceMaintenance andRepairand Repair HP sonlineHP s online supportpagesupport page Differentiation Tools DeliveryDelivery Quickresponse systemQuick response system InstallationInstallation CustomerTrainingCustomer Training CustomerCustomer CltiC lti www.bookfiesta4u.blogspot.com 11-340 ConsultingConsulting MaintenanceMaintenance andRepairand Repair HP sonlineHP s online supportpagesupport page
M MMa aan nny yy e ee-c cco oom mmm mme eer rrc cce ee v vve een nnt ttu uur rre ees ss f ffa aai iil ll b bbe eec cca aau uus sse eeo oof ff d ddi iis sst ttr rri iib bbu uut tti iio oon nn p ppr rro oob bbl lle
eem mms ss i iin nn t tth hhe ee s sso oo-cca aal lll lle eed dd l lla aas sst tt m mmi iil lle ee ( ((t tth hhe ee l llo ooc cca aal ll d ddi iis sst ttr rri iib bbu uut tti iio oon nn p ppo oor rrt tti
iio oon nn lastmile(thelocaldistributionportionlast mile (the local distribution portion ofshippingofonlinepurchases).of shipping of online purchases). CanaCan a marketingplanhelpoffsetmarketing plan help offset someofthesepotentialsome of these potential pitfalls?pitfalls?
Differentiation Tools MiscellaneousServicesMiscellaneous Services PersonnelDifferentiationPersonnel Differentiation CompetenceCompetence www.bookfiesta4u.blogspot.com 11-342 CourtesyCourtesy CreditabilityCreditability ReliabilityReliability ResponsivenessResponsiveness CommunicationCommunication Differentiation Tools MiscellaneousServicesMiscellaneous Services PersonnelDifferentiationPersonnel Differentiation CompetenceCompetence www.bookfiesta4u.blogspot.com 11-342 CourtesyCourtesy CreditabilityCreditability ReliabilityReliability ResponsivenessResponsiveness CommunicationCommunication
Differentiation Tools ChannelDifferentiationChannel Differentiation ImageDifferentiationImage Differentiation IdentityIdentity www.bookfiesta4u.blogspot.com 11-343 ImageImage Symbols,Colors,Slogans,SpecialAttributesSymbols, Colors, Slogans, Special Attribut es PhysicalplantPhysical plant EventsandSponsorshipEvents and Sponsorship UsingMultipleImageUsing Multiple Image--BuildingTechniquesBuilding Techniques Differentiation Tools ChannelDifferentiationChannel Differentiation ImageDifferentiationImage Differentiation IdentityIdentity www.bookfiesta4u.blogspot.com 11-343 ImageImage Symbols,Colors,Slogans,SpecialAttributesSymbols, Colors, Slogans, Special Attribut es PhysicalplantPhysical plant EventsandSponsorshipEvents and Sponsorship UsingMultipleImageUsing Multiple Image--BuildingTechniquesBuilding Techniques
WhichdifferentiationtoolwouldbeWhich differentiation tool would be mostusefulforadotcomstartup?most useful for a dot com startup?mostusefulforadot. comstartup?most useful for a dot.com startup? Why?Why? WhichdifferentiationtoolwouldbeWhich differentiation tool would be mostusefulforadotcomstartup?most useful for a dot com startup?mostusefulforadot. comstartup?most useful for a dot.com startup? Why?Why?
Product Life-Cycle Marketing Strategies TosaythataproducthasalifecycleassertsTo say that a product has a life cycle assert s fourthingsfour things 1.1. Productshave a limitedlife.Products have a limited life. 2.2. Productsalespass throughdistancestageseachProduct sales pass through distan ce stages each www.bookfiesta4u.blogspot.com 11-345 2.2. Productsalespass throughdistancestages, eachProduct sales pass through dist ance stages, each posing differentchallenges, opportunities, andposing different challenges, oppor tunities, and problemsto theseller.problems to the seller. 3.3. Profitsriseandfallatdifferentstagesof theProfits rise and fall at different stages of the productlifecycle.product life cycle. 4.4. Productsrequiredifferentmarketing, financial,Products require different mar keting, financial, manufacturing, purchasing, andhumanresourcemanufacturing, purchasing, and human resource strategiesin each lifestrategies in each life--cyclestage.cycle stage. Product Life-Cycle Marketing Strategies TosaythataproducthasalifecycleassertsTo say that a product has a life cycle assert s fourthingsfour things 1.1. Productshave a limitedlife.Products have a limited life. 2.2. Productsalespass throughdistancestageseachProduct sales pass through distan ce stages each www.bookfiesta4u.blogspot.com 11-345 2.2. Productsalespass throughdistancestages, eachProduct sales pass through dist ance stages, each posing differentchallenges, opportunities, andposing different challenges, oppor tunities, and problemsto theseller.problems to the seller. 3.3. Profitsriseandfallatdifferentstagesof theProfits rise and fall at different stages of the productlifecycle.product life cycle. 4.4. Productsrequiredifferentmarketing, financial,Products require different mar keting, financial, manufacturing, purchasing, andhumanresourcemanufacturing, purchasing, and human resource strategiesin each lifestrategies in each life--cyclestage.cycle stage.
Figure 11.4: Cost Product Life-Cycle Patterns Product Life-Cycle Marketing Strategies www.bookfiesta4u.blogspot.com 11-346 Figure 11.4: Cost Product Life-Cycle Patterns Product Life-Cycle Marketing Strategies www.bookfiesta4u.blogspot.com 11-346
Figure 11.5: Style, Fashion, and Fad Life Cycles Product Life-Cycle Marketing Strategies www.bookfiesta4u.blogspot.com 11-347 Figure 11.5: Style, Fashion, and Fad Life Cycles Product Life-Cycle Marketing Strategies www.bookfiesta4u.blogspot.com 11-347
MarketingStrategies:IntroductionStageMarketing Strategies: Introduction Stage ThePioneerAdvantageThe Pioneer Advantage InventorInventor ProductpioneerProduct pioneer Product Life-Cycle Marketing Strategies www.bookfiesta4u.blogspot.com 11-348 pp MarketpioneerMarket pioneer Figure 11.6: Long-Range Product Market Expansion Strategy (P = Product; M = Market) MarketingStrategies:IntroductionStageMarketing Strategies: Introduction Stage ThePioneerAdvantageThe Pioneer Advantage InventorInventor ProductpioneerProduct pioneer Product Life-Cycle Marketing Strategies www.bookfiesta4u.blogspot.com 11-348 pp MarketpioneerMarket pioneer Figure 11.6: Long-Range Product Market Expansion Strategy (P = Product; M = Market)
Product Life-Cycle Marketing Strategies
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eer rr o oof ff ppr rri iic cce ee-s sse een nns ssi iit tti iiv vve ee b bbu uuy yye eer rrs ss www.bookfiesta4u.blogspot.com 11-349
MarketingStrategies:MaturityStageMarketing Strategies: Maturity Stage MarketModificationMarket Modification Expandnumber of brand users by:Expand number of brand users by: Product Life-Cycle Marketing Strategies www.bookfiesta4u.blogspot.com 11-350 1.1. ConvertingnonusersConverting nonusers 2.2. EnteringnewmarketsegmentsEntering new market segments 3.3. Winningcompetitors customersWinning competitors customers Convincecurrentusers to increaseusage by:Convince current users to increase usage by: 1.1. UsingtheproductonmoreoccasionsUsing the product on more occasions 2.2. UsingmoreoftheproductoneachoccasionUsing more of the product on each occasi on 3.3. UsingtheproductinnewwaysUsing the product in new ways MarketingStrategies:MaturityStageMarketing Strategies: Maturity Stage MarketModificationMarket Modification Expandnumber of brand users by:Expand number of brand users by: Product Life-Cycle Marketing Strategies www.bookfiesta4u.blogspot.com 11-350 1.1. ConvertingnonusersConverting nonusers 2.2. EnteringnewmarketsegmentsEntering new market segments 3.3. Winningcompetitors customersWinning competitors customers Convincecurrentusers to increaseusage by:Convince current users to increase usage by: 1.1. UsingtheproductonmoreoccasionsUsing the product on more occasions 2.2. UsingmoreoftheproductoneachoccasionUsing more of the product on each occasi on 3.3. UsingtheproductinnewwaysUsing the product in new ways
ProductmodificationProduct modification QualityimprovementQuality improvement FeatureimprovementFeature improvement MarketingMarketing--Mix ModificationMix Modification Product Life-Cycle Marketing Strategies www.bookfiesta4u.blogspot.com 11-351 MarketingMarketing--Mix ModificationMix Modification PricesPrices DistributionDistribution AdvertisingAdvertising SalespromotionSales promotion PersonalsellingPersonal selling ServicesServices ProductmodificationProduct modification QualityimprovementQuality improvement FeatureimprovementFeature improvement MarketingMarketing--Mix ModificationMix Modification Product Life-Cycle Marketing Strategies www.bookfiesta4u.blogspot.com 11-351 MarketingMarketing--Mix ModificationMix Modification PricesPrices DistributionDistribution AdvertisingAdvertising SalespromotionSales promotion PersonalsellingPersonal selling ServicesServices
Product Life-Cycle Marketing Strategies
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f ffi iir rrm mm ss i iin nnve veves sst ttm mme een nnt tt i iin nn l llu uuc ccr rrat atati iive veve n nni iic cch hhe ees ss 4. 4.4. H HHar ararve veves sst tti iin nng gg ( (( m m mi iil llk kki iin nng ) g )g ) t tth hhe ee
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ProductLifeProduct Life--CycleConcept:CritiqueCycle Concept: Critique MarketevolutionMarket evolution Product Life-Cycle Marketing Strategies www.bookfiesta4u.blogspot.com 11-353 ProductLifeProduct Life--CycleConcept:CritiqueCycle Concept: Critique MarketevolutionMarket evolution Product Life-Cycle Marketing Strategies www.bookfiesta4u.blogspot.com 11-353
Table 11.5: Summary of Product Life-Cycle Characteristics, Objectives, and Strategies IntroductionIntroduction GrowthGrowth MaturityMaturity CharacteristicsCharacteristics SalesSales LowsalesLow sales RapidlyrisingRapidly rising salessales PeaksalesPeak sales www.bookfiesta4u.blogspot.com 11-354 CostsCosts HighcostperHigh cost per customercustomer AveragecostperAverage cost per customercustomer LowcostperLow cost per customercustomer ProfitsProfits NegativeNegative RisingprofitsRising profits HighprofitsHigh prof its CustomersCustomers FewFew GrowingNumberGrowing Number StablenumberStable number beginningtobeginning to declinedecline See text for complete table Table 11.5: Summary of Product Life-Cycle Characteristics, Objectives, and Strategies IntroductionIntroduction GrowthGrowth MaturityMaturity CharacteristicsCharacteristics SalesSales LowsalesLow sales RapidlyrisingRapidly rising salessales PeaksalesPeak sales www.bookfiesta4u.blogspot.com 11-354 CostsCosts HighcostperHigh cost per customercustomer AveragecostperAverage cost per customercustomer LowcostperLow cost per customercustomer ProfitsProfits NegativeNegative RisingprofitsRising profits HighprofitsHigh prof its CustomersCustomers FewFew GrowingNumberGrowing Number StablenumberStable number beginningtobeginning to declinedecline See text for complete table
Market Evolution DiffusedDiffused--preferencemarketoptionspreference market options AsingleA single--nichestrategyniche strategy AmultipleA multiple--nichestrategyniche strategy AmassA mass--marketstrategymarket strategy GrowthGrowth MarketMarket--growthstageoptionsgrowth stage options www.bookfiesta4u.blogspot.com 11-355 MarketMarket growthstageoptionsgrowth stage options SingleSingle--nichestrategyniche strategy MassMass--marketstrategymarket strategy MultipleMultiple--nichestrategyniche strategy MaturityMaturity Market Evolution DiffusedDiffused--preferencemarketoptionspreference market options AsingleA single--nichestrategyniche strategy AmultipleA multiple--nichestrategyniche strategy AmassA mass--marketstrategymarket strategy GrowthGrowth MarketMarket--growthstageoptionsgrowth stage options www.bookfiesta4u.blogspot.com 11-355 MarketMarket growthstageoptionsgrowth stage options SingleSingle--nichestrategyniche strategy MassMass--marketstrategymarket strategy MultipleMultiple--nichestrategyniche strategy MaturityMaturity
DeclineDecline AnExample:ThePaperAn Example: The Paper--TowelMarketTowel Market DynamicsofAttributeCompetitionDynamics of Attribute Competition CustomerexpectationsareprogressiveCustomer expectations are progressive AhdiibA h di ib Market Evolution www.bookfiesta4u.blogspot.com 11-356 Approachestodiscovernewattributes:Approaches to discover new attributes: CustomerCustomer--survey processessurvey processes IntuitiveprocessesIntuitive processes DialecticalprocessesDialectical processes NeedsNeeds--hierarchy processhierarchy process DeclineDecline AnExample:ThePaperAn Example: The Paper--TowelMarketTowel Market DynamicsofAttributeCompetitionDynamics of Attribute Competition CustomerexpectationsareprogressiveCustomer expectations are progressive AhdiibA h di ib Market Evolution www.bookfiesta4u.blogspot.com 11-356 Approachestodiscovernewattributes:Approaches to discover new attributes: CustomerCustomer--survey processessurvey processes IntuitiveprocessesIntuitive processes DialecticalprocessesDialectical processes NeedsNeeds--hierarchy processhierarchy process
Chapter12Chapter 12 DevelopingNewDeveloping New MarketOfferingsMarket Offerings byby PowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans Chapter12Chapter 12 DevelopingNewDeveloping New MarketOfferingsMarket Offerings byby PowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans
WhoshouldWho should ultimatelydesigntheultimately design the d?Thd ? Th Kotler on Marketing www.bookfiesta4u.blogspot.com 11-358 product?Theproduct? The customer,ofcourse.customer, of course. WhoshouldWho should ultimatelydesigntheultimately design the d?Thd ? Th Kotler on Marketing www.bookfiesta4u.blogspot.com 11-358 product?Theproduct? The customer,ofcourse.customer, of course.
Chapter Objectives Inthischapter,wefocusonthefollowingIn this chapter, we focus on the following questions:questions: WhatchallengesdoesacompanyfaceinWhat challenges does a company face in developingnewproducts?developing new products? WhatorganizationalstructuresareusedtoWhat organizational structures are used to ddl?d d l ? www.bookfiesta4u.blogspot.com 11-359 managenewmanage new--productdevelopment?product development? WhatarethemainstagesindevelopingnewWhat are the main stages in developing new products,andhowcantheybemanagedproducts, and how can they be managed better?better? WhatfactorsaffecttherateofdiffusionandWhat factors affect the rate of diffusion an d consumeradoptionofnewlylaunchedconsumer adoption of newly launched products?products? Chapter Objectives Inthischapter,wefocusonthefollowingIn this chapter, we focus on the following questions:questions: WhatchallengesdoesacompanyfaceinWhat challenges does a company face in developingnewproducts?developing new products? WhatorganizationalstructuresareusedtoWhat organizational structures are used to ddl?d d l ? www.bookfiesta4u.blogspot.com 11-359 managenewmanage new--productdevelopment?product development? WhatarethemainstagesindevelopingnewWhat are the main stages in developing new products,andhowcantheybemanagedproducts, and how can they be managed better?better? WhatfactorsaffecttherateofdiffusionandWhat factors affect the rate of diffusion an d consumeradoptionofnewlylaunchedconsumer adoption of newly launched products?products?
Developing New Market Offerings Six categories of new products 1. New-to-the-world products 2. New product lines www.bookfiesta4u.blogspot.com 11-360 2. New product lines 3. Additions to existing product lines 4. Improvements and revisions of existing products 5. Repositioning 6. Cost reductions Developing New Market Offerings Six categories of new products 1. New-to-the-world products 2. New product lines www.bookfiesta4u.blogspot.com 11-360 2. New product lines 3. Additions to existing product lines 4. Improvements and revisions of existing products 5. Repositioning 6. Cost reductions
Challenges in New-Product Development IncrementalinnovationIncremental innovation DisruptivetechnologiesDisruptive technologies Whydonewproductsfail?Why do new products fail? www.bookfiesta4u.blogspot.com 11-361 AhighA high--levelexecutivepushesafavoriteidealevel executive pushes a favorite id ea throughinspiteofnegativeresearchthrough in spite of negative research findings.findings. Theideaisgood,butthemarketsizeisThe idea is good, but the market size is overestimated.overestimated. Theproductisnotwelldesigned.The product is not well designed. Challenges in New-Product Development IncrementalinnovationIncremental innovation DisruptivetechnologiesDisruptive technologies Whydonewproductsfail?Why do new products fail? www.bookfiesta4u.blogspot.com 11-361 AhighA high--levelexecutivepushesafavoriteidealevel executive pushes a favorite id ea throughinspiteofnegativeresearchthrough in spite of negative research findings.findings. Theideaisgood,butthemarketsizeisThe idea is good, but the market size is overestimated.overestimated. Theproductisnotwelldesigned.The product is not well designed.
Challenges in New-Product Development TheproductisincorrectlypositionedThe product is incorrectly positioned inthemarket,notadvertisedin the market, not advertised effectively,oroverpriced.effectively, or overpriced. ThdfiliffiiTh d f il i ffi i www.bookfiesta4u.blogspot.com 11-362 TheproductfailstogainsufficientThe product fails to gain sufficient distributioncoverageorsupport.distribution coverage or support. DevelopmentcostsarehigherthanDevelopment costs are higher than expected.expected. CompetitorsfightbackharderthanCompetitors fight back harder than expected.expected. Challenges in New-Product Development TheproductisincorrectlypositionedThe product is incorrectly positioned inthemarket,notadvertisedin the market, not advertised effectively,oroverpriced.effectively, or overpriced. ThdfiliffiiTh d f il i ffi i www.bookfiesta4u.blogspot.com 11-362 TheproductfailstogainsufficientThe product fails to gain sufficient distributioncoverageorsupport.distribution coverage or support. DevelopmentcostsarehigherthanDevelopment costs are higher than expected.expected. CompetitorsfightbackharderthanCompetitors fight back harder than expected.expected.
Challenges in New-Product Development FactorsthattendtohindernewFactors that tend to hinder new--productproduct developmentdevelopment ShortageofimportantideasincertainareasShortage of important ideas in certain areas FtdktF t d k t www.bookfiesta4u.blogspot.com 11-363 FragmentedmarketsFragmented markets SocialandgovernmentalconstraintsSocial and governmental constraints CostofdevelopmentCost of development CapitalshortagesCapital shortages FasterrequireddevelopmenttimeFaster required development time ShorterproductlifecyclesShorter product life cycles Challenges in New-Product Development FactorsthattendtohindernewFactors that tend to hinder new--productproduct developmentdevelopment ShortageofimportantideasincertainareasShortage of important ideas in certain areas FtdktF t d k t www.bookfiesta4u.blogspot.com 11-363 FragmentedmarketsFragmented markets SocialandgovernmentalconstraintsSocial and governmental constraints CostofdevelopmentCost of development CapitalshortagesCapital shortages FasterrequireddevelopmenttimeFaster required development time ShorterproductlifecyclesShorter product life cycles
Organizational Arrangements NewNew--productdeploymentrequiresspecificproduct deployment requires specific criteriacriteria onecompanyestablishedtheone company established the followingacceptancecriteriafollowing acceptance criteria TheproductcanbeintroducedwithinfiveyearsThe product can be introduced within five years www.bookfiesta4u.blogspot.com 11-364 pyp y TheproducthasamarketpotentialofatleastThe product has a market potential of at lea st $50millionanda15percentgrowthrate.$50 million and a 15 percent growth rate. Theproductwouldprovideatleast30percentThe product would provide at least 30 percen t returnonsalesand40percentoninvestment.return on sales and 40 percent on investme nt. TheproductwouldachievetechnicalormarketThe product would achieve technical or mark et leadership.leadership. Organizational Arrangements NewNew--productdeploymentrequiresspecificproduct deployment requires specific criteriacriteria onecompanyestablishedtheone company established the followingacceptancecriteriafollowing acceptance criteria TheproductcanbeintroducedwithinfiveyearsThe product can be introduced within five years www.bookfiesta4u.blogspot.com 11-364 pyp y TheproducthasamarketpotentialofatleastThe product has a market potential of at lea st $50millionanda15percentgrowthrate.$50 million and a 15 percent growth rate. Theproductwouldprovideatleast30percentThe product would provide at least 30 percen t returnonsalesand40percentoninvestment.return on sales and 40 percent on investme nt. TheproductwouldachievetechnicalormarketThe product would achieve technical or mark et leadership.leadership.
BudgetingForNewProductBudgeting For New Product DevelopmentDevelopment 3M sapproach:3M s approach: Organizational Arrangements www.bookfiesta4u.blogspot.com 11-365 15%rule15% rule Eachpromising idea gets anEach promising idea gets an executivechampion executive champion ExpectsomefailuresExpect some failures GoldenStep awardshandedoutGolden Step awards handed out eachyeareach year BudgetingForNewProductBudgeting For New Product DevelopmentDevelopment 3M sapproach:3M s approach: Organizational Arrangements www.bookfiesta4u.blogspot.com 11-365 15%rule15% rule Eachpromising idea gets anEach promising idea gets an executivechampion executive champion ExpectsomefailuresExpect some failures GoldenStep awardshandedoutGolden Step awards handed out eachyeareach year
3Monline:The3MInnovationNetwork3M online: The 3M Innovation Network www.bookfiesta4u.blogspot.com 11-366 3Monline:The3MInnovationNetwork3M online: The 3M Innovation Network www.bookfiesta4u.blogspot.com 11-366
Table 12.1 Finding One Successful New Product (Starting with 64 New Ideas) StageStage NumberNumber ofIdeasof Ideas PassPass RatioRatio CostperCost per ProductIdeaProduct Idea TotalCostTotal Cost 1.Ideascreening1. Idea screening 6464 1:41:4 $1,000$ 1,000 $64,000$ 64,000 2.Concepttesting2. Concept testing 1616 1:21:2 20,00020,000 320,000320,000 www.bookfiesta4u.blogspot.com 11-367 3.Product3. Product developmentdevelopment 88 1:21:2 200,000200,000 1,600,0001,600,000 4.Testmarketing4. Test marketing 44 1:21:2 500,000500,000 2,000,0002,000,000 5.Nationallaunch5. National launch 22 1:21:2 5,000,0005,000,000 10,000,00010,000 ,000 $5,721,000$5,721,000 $13,984,000$13,984,000 Table 12.1 Finding One Successful New Product (Starting with 64 New Ideas) StageStage NumberNumber ofIdeasof Ideas PassPass RatioRatio CostperCost per ProductIdeaProduct Idea TotalCostTotal Cost 1.Ideascreening1. Idea screening 6464 1:41:4 $1,000$ 1,000 $64,000$ 64,000 2.Concepttesting2. Concept testing 1616 1:21:2 20,00020,000 320,000320,000 www.bookfiesta4u.blogspot.com 11-367 3.Product3. Product developmentdevelopment 88 1:21:2 200,000200,000 1,600,0001,600,000 4.Testmarketing4. Test marketing 44 1:21:2 500,000500,000 2,000,0002,000,000 5.Nationallaunch5. National launch 22 1:21:2 5,000,0005,000,000 10,000,00010,000 ,000 $5,721,000$5,721,000 $13,984,000$13,984,000
Organizational Arrangements OrganizingNewOrganizing New--ProductDevelopmentProduct Development ProductmanagersProduct managers NN dd www.bookfiesta4u.blogspot.com 11-368 NewNew--productmanagersproduct managers HighHigh--levelmanagementcommitteelevel management committee NewproductdepartmentNew product department VentureteamsVenture teams Organizational Arrangements OrganizingNewOrganizing New--ProductDevelopmentProduct Development ProductmanagersProduct managers NN dd www.bookfiesta4u.blogspot.com 11-368 NewNew--productmanagersproduct managers HighHigh--levelmanagementcommitteelevel management committee NewproductdepartmentNew product department VentureteamsVenture teams
StageStage--gatesystemgate system Gatekeepersmakeone ofGatekeepers make one of fourdecisions:four decisions: Organizational Arrangements www.bookfiesta4u.blogspot.com 11-369 fourdecisions:four decisions: GoGo KillKill HoldHold RecycleRecycle StageStage--gatesystemgate system Gatekeepersmakeone ofGatekeepers make one of fourdecisions:four decisions: Organizational Arrangements www.bookfiesta4u.blogspot.com 11-369 fourdecisions:four decisions: GoGo KillKill HoldHold RecycleRecycle
IdeaGenerationIdea Generation InteractingwithOthersInteracting with Others Managing the Development Process: Ideas www.bookfiesta4u.blogspot.com 11-370 gg SalesrepresentativesSales representatives IntermediariesIntermediaries ProductchampionProduct champion IdeaGenerationIdea Generation InteractingwithOthersInteracting with Others Managing the Development Process: Ideas www.bookfiesta4u.blogspot.com 11-370 gg SalesrepresentativesSales representatives IntermediariesIntermediaries ProductchampionProduct champion
TechniquesforstimulatingcreativityTechniques for stimulating creativity inindividualsandgroupsin individuals and groups AttributelistingAttribute listing Managing the Development Process: Ideas www.bookfiesta4u.blogspot.com 11-371 AttributelistingAttribute listing ForcedrelationshipsForced relationships MorphologicalanalysisMorphological analysis Reverseassumption analysisReverse assumption analysis NewcontextsNew contexts MindMind--mappingmapping TechniquesforstimulatingcreativityTechniques for stimulating creativity inindividualsandgroupsin individuals and groups AttributelistingAttribute listing Managing the Development Process: Ideas www.bookfiesta4u.blogspot.com 11-371 AttributelistingAttribute listing ForcedrelationshipsForced relationships MorphologicalanalysisMorphological analysis Reverseassumption analysisReverse assumption analysis NewcontextsNew contexts MindMind--mappingmapping
IdeaScreeningIdea Screening IdeamanagerIdea manager IdeacommitteeIdea committee Managing the Development Process: Ideas www.bookfiesta4u.blogspot.com 11-372 TwotypesoferrorsinTwo types of errors in screeningideasscreening ideas DROPDROP--errorerror GOGO--errorerror IdeaScreeningIdea Screening IdeamanagerIdea manager IdeacommitteeIdea committee Managing the Development Process: Ideas www.bookfiesta4u.blogspot.com 11-372 TwotypesoferrorsinTwo types of errors in screeningideasscreening ideas DROPDROP--errorerror GOGO--errorerror
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mmo oos sst tt r rre eec cco oog ggn nni iiz zza aab bbl lle ee n nna aam mme ees ss iin nn A AAm mme eer rri iic cca aan nn b bbu uus ssi iin nne ees sss ss. .. X XXe eer rro oox xx s ssa aaw ww t tth hhe ee ppo oot
tte een nnt tti iia aal ll o oof ff t tth hhe ee c cco oop ppy yy m mma aac cch hhi iin nne ee, ,, I IIB BBM MM a aan nnd dd E EEa aas sst ttm mma aan nn ofthecopymachine,IBMandEastmanof the copy machine, IBM and Eastman Kodakdidnot.IBMthoughtthepersonalKodak did not. IBM thought the personal computermarketwouldbeminiscule.computer market would be miniscule. CanyouthinkofanyCan you think of any drop drop--errors thattheerrors that the companydidn tsurvive?company didn t survive?
Table 12.2 Product-Idea Rating Device R RR e ee l ll a aa t tt i ii v vv e ee W WW e ee i ii g gg h hh t tt P PP r rr o oo d dd u uu c cc t tt S SS c cc o oo r rr e ee P PP r rr
o oo d dd u uu c cc t tt R RR a aa t tt i ii n nn g gg P PP r rr o oo d dd u uu c cc t tt S SS u uu c cc c cc e ee s ss s ss R RR e ee q qq u uu i ii
r rr e ee m mm e ee n nn t tt s ss ( (( a aa ) )) ( (( b bb ) )) ( (( c cc = == a aa x xx b bb ) )) U UU n nn i ii q qq u uu e ee o oo r rr s ss u uu
p pp e ee r rr i ii o oo r rr p pp r rr o oo d dd u uu c cc t tt . .. 4 44 0 00 . .. 8 88 . .. 3 33 2 22 H HH i ii g gg h hh p pp e ee r rr f ff o oo
r rr m mm a aa n nn c cc e ee t tt o oo c cc o oo s ss t tt r rr a aa t tt i ii o oo . .. 3 33 0 00 . .. 6 66 . .. 1 11 8 88 H HH i ii g gg h hh p pp
e ee r rr f ff o oo r rr m mm a aa n nn c cc e ee t tt o oo c cc o oo s ss t tt r rr a aa t tt i ii o oo . .. 3 33 0 00 . .. 6 66 . .. 1 11 8 88 H HH
i ii g gg h hh m mm a aa r rr k kk e ee t tt i ii n nn g gg d dd o oo l ll l ll a aa r rr s ss u uu p pp p pp o oo r rr t tt . .. 2 22 0 00 . .. 7 77
. .. 1 11 4 44 L LL a aa c cc k kk o oo f ff s ss t tt r rr o oo n nn g gg c cc o oo m mm p pp e ee t tt i ii t tt i ii o oo n nn . .. 1 11 0 00 . ..
5 55 . .. 0 00 5 55 T TT o oo t tt a aa l ll 1 11 . .. 0 00 0 00 . .. 6 66 9 99 s ssssssss s ssssssss R RR a aa t tt i ii n nn g gg s ss c cc a aa l ll e ee : ::
. .. 0 00 0 00 -. .. 3 33 0 00 p pp o oo o oo r rr ; ;; . .. 3 33 1 11 -. .. 6 66 0 00 f ff a aa i ii r rr ; ;; . .. 6 66 1 11 -. .. 8 88
0 00 g gg o oo o oo d dd . .. M MM i ii n nn i ii m mm u uu m mm a aa c cc c cc e ee p pp t tt a aa n nn c cc e ee r rr a aa t tt e ee : :: . .. 6 66
1 11 www.bookfiesta4u.blogspot.com
Managing the Development Process: Concept to Strategy ConceptDevelopmentandTestingConcept Development and Testing ProductideaProduct idea ProductconceptProduct concept www.bookfiesta4u.blogspot.com 11-375 ProductconceptProduct concept ConceptdevelopmentConcept development Category conceptCategory concept ProductProduct positioning mappositioning map Brand conceptBrand concept Managing the Development Process: Concept to Strategy ConceptDevelopmentandTestingConcept Development and Testing ProductideaProduct idea ProductconceptProduct concept www.bookfiesta4u.blogspot.com 11-375 ProductconceptProduct concept ConceptdevelopmentConcept development Category conceptCategory concept ProductProduct positioning mappositioning map Brand conceptBrand concept
Figure 12.3: Product and Brand www.bookfiesta4u.blogspot.com 11-376 Brand Positioning Figure 12.3: Product and Brand www.bookfiesta4u.blogspot.com 11-376 Brand Positioning
S SSo oom mme eet tti iim mme ees ss a aa n nne eew ww p ppr rro ood ddu uuc cct tt i iis ss d dde eev vve eel llo oop ppe eed dd, ,, lli iik kke ee t tth hhe ee f ffe eel llt tt--t tti iip pp p ppe een nn
a aan nnd dd t tth hhe ee w wwa aal llk kkm mma aan nn sst tty yyl lle ee p ppe eer rrs sso oon nna aal ll m mmu uus ssi iic cc d dde eev vvi iic cce ee. .. C CCo oon nns ssu uum mme eer rrs ss w wwe eer rre
een nn tt c ccl lla aam mmo oor rri iin nng gg f ffo oor rr e eei iit tth hhe eer rr o oof ff t tth hhe ees sse ee p ppr rro ood ddu uuc cct tts ss bbe eef ffo oor rre ee gpg p theycametomarket.Mostpeoplehadn tthey came to market. Most people hadn t evenconceivedofsuchanitem.Carefuleven conceived of such an item. Careful planningdevelopedmarketsplanning developed markets forthesenewlines.Canyoufor these new lines. Can you thinkofmorerecentthink of more recent examples?examples?
Managing the Development Process: Concept to Strategy ConceptTestingConcept Testing Rapid prototypingRapid prototyping VirtualrealityVirtual reality www.bookfiesta4u.blogspot.com 11-378 CustomerCustomer--drivenengineeringdriven engineering QuestionstomeasureproductdimensionsQuestions to measure product dimensions Communicability and believabilityCommunicability and believability NeedlevelNeed level GaplevelGap level NeedNeed--gapscoregap score Managing the Development Process: Concept to Strategy ConceptTestingConcept Testing Rapid prototypingRapid prototyping VirtualrealityVirtual reality www.bookfiesta4u.blogspot.com 11-378 CustomerCustomer--drivenengineeringdriven engineering QuestionstomeasureproductdimensionsQuestions to measure product dimensions Communicability and believabilityCommunicability and believability NeedlevelNeed level GaplevelGap level NeedNeed--gapscoregap score
Managing the Development Process: Concept to Strategy PerceivedvaluePerceived value PurchaseintentionPurchase intention Usertargets, purchase occasions, purchasingUser targets, purchase occasions, purch asing frequencyfrequency www.bookfiesta4u.blogspot.com 11-379 ConjointAnalysisConjoint Analysis Example:fivedesign elementsExample: five design elements ThreepackagedesignsThree package designs ThreebrandnamesThree brand names ThreepricesThree prices PossibleGoodHousekeepingsealPossible Good Housekeeping seal PossiblemoneyPossible money--backguaranteeback guarantee Managing the Development Process: Concept to Strategy PerceivedvaluePerceived value PurchaseintentionPurchase intention Usertargets, purchase occasions, purchasingUser targets, purchase occasions, purch asing frequencyfrequency www.bookfiesta4u.blogspot.com 11-379 ConjointAnalysisConjoint Analysis Example:fivedesign elementsExample: five design elements ThreepackagedesignsThree package designs ThreebrandnamesThree brand names ThreepricesThree prices PossibleGoodHousekeepingsealPossible Good Housekeeping seal PossiblemoneyPossible money--backguaranteeback guarantee
Managing the Development Process: Concept to Strategy MarketingStrategyMarketing Strategy BusinessAnalysisBusiness Analysis www.bookfiesta4u.blogspot.com 11-380 BusinessAnalysisBusiness Analysis EstimatingTotalSalesEstimating Total Sales Managing the Development Process: Concept to Strategy MarketingStrategyMarketing Strategy BusinessAnalysisBusiness Analysis www.bookfiesta4u.blogspot.com 11-380 BusinessAnalysisBusiness Analysis EstimatingTotalSalesEstimating Total Sales
Managing the Development Process: Concept to Strategy SurvivalSurvival--agedistributionage distribution EstimatingCostandProfitsEstimating Cost and Profits www.bookfiesta4u.blogspot.com 11-381 EstimatingCostandProfitsEstimating Cost and Profits Managing the Development Process: Concept to Strategy SurvivalSurvival--agedistributionage distribution EstimatingCostandProfitsEstimating Cost and Profits www.bookfiesta4u.blogspot.com 11-381 EstimatingCostandProfitsEstimating Cost and Profits
Table 12.3 Projected Five-Year-Cash-Flow Statement (in thousands of dollars) Year0Year 0 Year1Year 1 Year2Year 2 Year3Year 3 1.Salesrevenue1. Sales revenue $0$ 0 $11,889$11,889 $15,381$15,381 $19,654$19,65 4 2.Costofgoodssold2. Cost of goods sold 00 3,9813,981 5,1505,150 6,5816,581 www.bookfiesta4u.blogspot.com 11-382 3.Grossmargin3. Gross margin 00 7,9087,908 10,23110,231 13,07313,073 4.Developmentcosts4. Development costs --3,5003,500 00 00 00 5.Marketingcosts5. Marketing costs 00 8,0008,000 6,4606,460 8,2558,255 6.Allocatedoverhead6. Allocated overhead 00 1,1891,189 1,5381,538 1,9651,965 See text for complete table Table 12.3 Projected Five-Year-Cash-Flow Statement (in thousands of dollars) Year0Year 0 Year1Year 1 Year2Year 2 Year3Year 3 1.Salesrevenue1. Sales revenue $0$ 0 $11,889$11,889 $15,381$15,381 $19,654$19,65 4 2.Costofgoodssold2. Cost of goods sold 00 3,9813,981 5,1505,150 6,5816,581 www.bookfiesta4u.blogspot.com 11-382 3.Grossmargin3. Gross margin 00 7,9087,908 10,23110,231 13,07313,073 4.Developmentcosts4. Development costs --3,5003,500 00 00 00 5.Marketingcosts5. Marketing costs 00 8,0008,000 6,4606,460 8,2558,255 6.Allocatedoverhead6. Allocated overhead 00 1,1891,189 1,5381,538 1,9651,965 See text for complete table
Managing the Development Process: Concept to Strategy BreakBreak--evenanalysiseven analysis RikaliRi k al i www.bookfiesta4u.blogspot.com 11-383 RiskanalysisRisk analysis Managing the Development Process: Concept to Strategy BreakBreak--evenanalysiseven analysis RikaliRi k al i www.bookfiesta4u.blogspot.com 11-383 RiskanalysisRisk analysis
Managing The Development Process: Development to Commercialization ProductDevelopmentProduct Development QualityFunctionDeployment(QFD)Quality Function Deployment (QFD) Customerattributes(CAs)Customer attributes (CAs) EngineeringEngineering www.bookfiesta4u.blogspot.com 11-384 EngineeringEngineering attributes(EAs)attributes (EAs) Lands EndLands End JapanWebsiteJapan Web site Managing The Development Process: Development to Commercialization ProductDevelopmentProduct Development QualityFunctionDeployment(QFD)Quality Function Deployment (QFD) Customerattributes(CAs)Customer attributes (CAs) EngineeringEngineering www.bookfiesta4u.blogspot.com 11-384 EngineeringEngineering attributes(EAs)attributes (EAs) Lands EndLands End JapanWebsiteJapan Web site
Managing The Development Process: Development to Commercialization CustomertestsCustomer tests AlphatestingAlpha testing www.bookfiesta4u.blogspot.com 11-385 pgp g BetatestingBeta testing ConsumerpreferencemeasuresConsumer preference measures RankRank--orderorder PairedPaired--comparisoncomparison MonadicMonadic--ratingrating Managing The Development Process: Development to Commercialization CustomertestsCustomer tests AlphatestingAlpha testing www.bookfiesta4u.blogspot.com 11-385 pgp g BetatestingBeta testing ConsumerpreferencemeasuresConsumer preference measures RankRank--orderorder PairedPaired--comparisoncomparison MonadicMonadic--ratingrating
Managing The Development Process: Development to Commercialization MarketTestingMarket Testing ConsumerConsumer--GoodsMarketTestingGoods Market Testing www.bookfiesta4u.blogspot.com 11-386 ConsumerConsumer GoodsMarketTestingGoods Market Testing Seeksto estimatefour variablesSeeks to estimate four variables TrialTrial FirstrepeatFirst repeat AdoptionAdoption PurchasefrequencyPurchase frequency SaleswaveresearchSales wave research Managing The Development Process: Development to Commercialization MarketTestingMarket Testing ConsumerConsumer--GoodsMarketTestingGoods Market Testing www.bookfiesta4u.blogspot.com 11-386 ConsumerConsumer GoodsMarketTestingGoods Market Testing Seeksto estimatefour variablesSeeks to estimate four variables TrialTrial FirstrepeatFirst repeat AdoptionAdoption PurchasefrequencyPurchase frequency SaleswaveresearchSales wave research
Managing The Development Process: Development to Commercialization SimulatedTestMarketingSimulated Test Marketing ControlledTest MarketingControlled Test Marketing www.bookfiesta4u.blogspot.com 11-387 TestMarketsTest Markets Howmanytestcities?How many test cities? Whichcities?Which cities? Lengthoftest?Length of test? Whatinformation?What information? Whatactiontotake?What action to take? BusinessBusiness--GoodsMarketTestingGoods Market Testing Managing The Development Process: Development to Commercialization SimulatedTestMarketingSimulated Test Marketing ControlledTest MarketingControlled Test Marketing www.bookfiesta4u.blogspot.com 11-387 TestMarketsTest Markets Howmanytestcities?How many test cities? Whichcities?Which cities? Lengthoftest?Length of test? Whatinformation?What information? Whatactiontotake?What action to take? BusinessBusiness--GoodsMarketTestingGoods Market Testing
Managing The Development Process: Development to Commercialization Philips ProntoWebsitePhilips Pronto Web site CommercializationCommercialization When(Timing)When (Timing) 1.1. FirstentryFirst entry 2.2. ParallelentryParallel entry www.bookfiesta4u.blogspot.com 11-388 ppyy 3.3. Late entryLate entry Where(GeographicWhere (Geographic Strategy)Strategy) Managing The Development Process: Development to Commercialization Philips ProntoWebsitePhilips Pronto Web site CommercializationCommercialization When(Timing)When (Timing) 1.1. FirstentryFirst entry 2.2. ParallelentryParallel entry www.bookfiesta4u.blogspot.com 11-388 ppyy 3.3. Late entryLate entry Where(GeographicWhere (Geographic Strategy)Strategy)
ToWhom(TargetTo Whom (Target--MarketProspects)Market Prospects) How(IntroductoryMarketStrategy)How (Introductory Market Strategy) Criticalpathscheduling (CPS)Critical path scheduling (CPS) Managing The Development Process: Development to Commercialization www.bookfiesta4u.blogspot.com 11-389 TheiMac,launchedwithThe iMac, launched with adramaticcountdowna dramatic countdown campaigncampaign ToWhom(TargetTo Whom (Target--MarketProspects)Market Prospects) How(IntroductoryMarketStrategy)How (Introductory Market Strategy) Criticalpathscheduling (CPS)Critical path scheduling (CPS) Managing The Development Process: Development to Commercialization www.bookfiesta4u.blogspot.com 11-389 TheiMac,launchedwithThe iMac, launched with adramaticcountdowna dramatic countdown campaigncampaign
The Consumer-Adoption Process AdoptionAdoption ConsumerConsumer--adoption processadoption process ConsumerConsumer--loyalty processloyalty process www.bookfiesta4u.blogspot.com 11-390 MassMass--marketapproachmarket approach HeavyHeavy--usagetargetmarketingusage target marketing StagesintheAdoptionProcessStages in the Adoption Process InnovationInnovation Innovationdiffusion processInnovation diffusion process The Consumer-Adoption Process AdoptionAdoption ConsumerConsumer--adoption processadoption process ConsumerConsumer--loyalty processloyalty process www.bookfiesta4u.blogspot.com 11-390 MassMass--marketapproachmarket approach HeavyHeavy--usagetargetmarketingusage target marketing StagesintheAdoptionProcessStages in the Adoption Process InnovationInnovation Innovationdiffusion processInnovation diffusion process
The Consumer-Adoption Process AdoptersofnewproductsmoveAdopters of new products move throughfivestagesthrough five stages AwarenessAwareness InterestInterest www.bookfiesta4u.blogspot.com 11-391 InterestInterest EvaluationEvaluation TrialTrial AdoptionAdoption FactorsInfluencingtheAdoptionProcessFactors Influencing the Adoption Process ReadinesstoTryNewProductsandReadiness to Try New Products and PersonalInfluencePersonal Influence The Consumer-Adoption Process AdoptersofnewproductsmoveAdopters of new products move throughfivestagesthrough five stages AwarenessAwareness InterestInterest www.bookfiesta4u.blogspot.com 11-391 InterestInterest EvaluationEvaluation TrialTrial AdoptionAdoption FactorsInfluencingtheAdoptionProcessFactors Influencing the Adoption Process ReadinesstoTryNewProductsandReadiness to Try New Products and PersonalInfluencePersonal Influence
Figure 12.7: Adopter Categorization on the Basis of Relative Time of Adoption of Innovation www.bookfiesta4u.blogspot.com 11-392 Figure 12.7: Adopter Categorization on the Basis of Relative Time of Adoption of Innovation www.bookfiesta4u.blogspot.com 11-392
The Consumer-Adoption Process PersonalinfluencePersonal influence CharacteristicsoftheInnovationCharacteristics of the Innovation RelativeadvantageRelative advantage www.bookfiesta4u.blogspot.com 11-393 CompatibilityCompatibility ComplexityComplexity DivisibilityDivisibility CommunicabilityCommunicability Organizations ReadinesstoAdoptOrganizations Readiness to Adopt InnovationsInnovations The Consumer-Adoption Process PersonalinfluencePersonal influence CharacteristicsoftheInnovationCharacteristics of the Innovation RelativeadvantageRelative advantage www.bookfiesta4u.blogspot.com 11-393 CompatibilityCompatibility ComplexityComplexity DivisibilityDivisibility CommunicabilityCommunicability Organizations ReadinesstoAdoptOrganizations Readiness to Adopt InnovationsInnovations
Chapter13Chapter 13 DesigningGlobalDesigning Global MarketOfferingsMarket Offerings byby PowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans Chapter13Chapter 13 DesigningGlobalDesigning Global MarketOfferingsMarket Offerings byby PowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans
Your company does not belong in Kotler on Marketing www.bookfiesta4u.blogspot.com 11-395 not belong in markets where it cannot be the best. Your company does not belong in Kotler on Marketing www.bookfiesta4u.blogspot.com 11-395 not belong in markets where it cannot be the best.
Chapter Objectives I IIn nn t tth hhi iis ss c cch hha aap ppt tte eer rr, ,, w wwe ee f ffo ooc ccu uus ss o oon nn t tth hhe ee f ffo ool lll llo oow wwi iin nng gg q qqu uue ees sst tti iio oon nns ss: :: Wh
WhWhat atat f ffac acact ttor orors ss s ssh hhou ououl lld dd a c a ca com omomp ppan anany yy r rre eevi vivie eew ww b bbe eef ffor orore eed dde eec cci iid ddi iin nng gg t tto go ab o go abo go abr rroad oadoad? ?? H HHow owow c ccan anan c ccom omomp ppan anani iie ees
ss e eeval valvalu uuat atate ee an anand dd s sse eel lle eec cct tt f ffor orore eei iign gngnm mmar arark kke eet tts ss t tto e o eo en nnt tte eer rr? ?? m mmar arark kke eet tts ss t tto e o eo en nnt tte eer rr? ?? Wh WhWhat atat ar arare
ee t tth hhe ee m mmaj ajajor oror w wways aysays of ofof e een nnt tte eer rri iin nng gg a f a fa for orore eei iign gngnm mmar arark kke eet tt? ?? T TTo oo w wwh hhat atat e eext xtxte een nnt tt m mmu uus sst tt t tth hhe ee c ccom omomp
ppan anany ad y ady adap apapt tt i iit tts ssp ppr rrod ododu uuc cct tts ss an anand dd m mmar arark kke eet tti iin nng gg p ppr rrogr ogrogram amam t tto e o eo eac acach hh ffor orore eei iign gngnc ccou ououn nnt ttr rry? y?y? H HHow owow s ssh hhou ououl lld dd
t tth hhe ee c ccom omomp ppan anany yy m mman ananage ageage an anand dd or ororgan gangani iiz zze ee iit tts ssi iin nnt tte eer rrn nnat atati iion ononal alal ac acact tti iivi vivit tti iie ees ss? ?? www.bookfiesta4u.blogspot.com 11-396
Competing on a Global Basis GlobalindustryGlobal industry GlobalfirmGlobal firm www.bookfiesta4u.blogspot.com 11-397 Figure 13.1: Major Decisions in International Marketing Competing on a Global Basis GlobalindustryGlobal industry GlobalfirmGlobal firm www.bookfiesta4u.blogspot.com 11-397 Figure 13.1: Major Decisions in International Marketing
Deciding Whether To Go Abroad F FFa aac cct tto oor rrs ss d ddr rra aaw wwi iin nng gg c cco oom mmp ppa aan nni iie ees ss i iin nnt tto oo t tth hhe eei iin nnt tte eer rrn nna aat tti iio oon nna aal ll a aar rre een nna aa: ::
G GGl llob obobal alal f ffi iir rrm mms ss of ofoff ffe eer rri iin nng gg b bbe eet ttt tte eer rr p ppr rrod ododu uuc cct tts ss or oror l llow owowe eer rr p ppr rri iic cce ees ss c ccan anan at atatt ttac acack kk t tth hhe ee
c ccom omomp ppan anany y y s ss d ddom omome ees sst tti iic cc mmar arark kke eet tt. .. T TTh hhe ee c ccom omomp ppan anany d y dy di iis ssc ccove oveover rrs ss t tth hhat atat s ssom omome ee f ffor orore eei iign gngn mmar arark kke eet tts ss p
ppr rre ees sse een nnt tt h hhi iigh ghghe eer rr p ppr rrof ofofi iit tt op opopp ppor orort ttu uun nni iit tti iie ees ss t tth hhan anan t tth hhe ee d ddom omome ees sst tti iic cc m mmar arark kke eet tt. .. T TTh hhe ee c
ccom omomp ppan anany n y ny ne eee eed dds ss a l a la lar ararge geger rr c ccu uus sst ttom omome eer rr b bbas asase ee tto oo ac acach hhi iie eeve veve e eec ccon ononom omomi iie ees ss of ofof s ssc ccal alale ee. .. T TTh hhe ee c ccom omomp ppan
anany w y wy wan anant tts ss t tto oo r rre eed ddu uuc cce ee i iit tts ss d dde eep ppe een nnd dde een nnc cce eeon onon an anany yy on onone ee m mmar arark kke eet tt. .. T TTh hhe ee c ccom omomp ppan anany y y s ss c ccu uus sst
ttom omome eer rrs ss ar arare ee goi goigoin nng ab g abg abr rroad oadoadan anand dd n nne eee eed dd s sse eer rrvi vivic cci iin nng. g.g. www.bookfiesta4u.blogspot.com 11-398
Deciding Whether To Go Abroad
B BBe eef ffo oor rre ee g ggo ooi iin nng gg a aab bbr rro ooa aad dd, ,, t tth hhe ee c cco oom mmp ppa aan nny yy m mmu uus sst tt wwe eei iig ggh hh s sse eev vve eer rra aal ll r rri iis
ssk kk: :: T TTh hhe ee c ccom omomp ppan anany m y my mi iigh ghght tt n nnot otot u uun nnd dde eer rrs sst ttan anand dd f ffor orore eei iign gngn c ccu uus sst ttom omome eer rr p ppr rre eef ffe eer rre een nnc cce ees ss an anand dd f ffai
aiail ll t tto of o ofo off ffe eer rr a aa c ccom omomp ppe eet tti iit tti iive vevel lly yy at atatt ttr rrac acact tti iive veve p ppr rrod ododu uuc cct tt. .. T TTh hhe ee c ccom omomp ppan anany m y my mi iigh ghght tt n nnot otot u uun nnd dde
eer rrs sst ttan anand dd t tth hhe ee f ffor orore eei iign gngn c ccou ououn nnt ttr rry y y s ss b bbu uus ssi iin nne ees sss ss c ccu uul llt ttu uur rre ee or oror k kkn nnow owow h hhow owow t tto o do de eeal alal e eef fff ffe eec cct tti
iive vevel lly yy w wwi iit tth hh f ffor orore eei iign gngn n nnat atati iion ononal alals ss. .. T TTh hhe ee c ccom omomp ppan anany m y my mi iigh ghght tt u uun nnd dde eer rre ees sst tti iim mmat atate ee f ffor orore eei iign gngnr rre eegu gugul
llat atati iion onons ss an anand dd i iin nnc ccu uur rr u uun nne eexp xpxpe eec cct tte eed dd c ccos osost tts ss. .. T TTh hhe ee c ccom omomp ppan anany m y my mi iigh ghght tt r rre eeal alali iiz zze ee t tth hhat atat i iit tt l
llac acack kks ss m mman ananage ageager rrs ss w wwi iit tth hh i iin nnt tte eer rrn nnat atati iion ononal alal e eexp xpxpe eer rri iie een nnc cce ee. .. T TTh hhe ee f ffor orore eei iign gngn c ccou ououn nnt ttr rry yy m mmi iigh ghght
tt c cch hhan anange gege i iit tts ss c ccom omomm mme eer rrc cci iial alal l llaw awaws ss, d , d, de eeval valvalu uue ee i iit tts ss c ccu uur rrr rre een nnc ccy, y,y, or oror u uun nnd dde eer rrgo a p go a pgo a pol ololi iit tti iic ccal alal r rre eevol volvolu uut tti
iion onon an anand dd e eexp xpxpr rrop opopr rri iiat atate ee p ppr rrop opope eer rrt tty. y.y. www.bookfiesta4u.blogspot.com 11-399 c ccou ououn nnt ttr rry y y s ss b bbu uus ssi iin nne ees sss ss c ccu uul llt ttu uur rre ee or oror k kkn nnow owow h hhow owow t
tto o do de eeal alal
Table 13.1: Blunders in International Marketing H HHa aal lll llm mma aar rrk kk c cca aar rrd dds ss f ffa aai iil lle eed dd w wwh hhe een nn t tth hhe eey yy w wwe eer rre ee i iin nnt ttr rro ood ddu uuc cce eed dd i iin nn F FFr rra aan nnc
cce ee. .. TTh hhe ee FFr rre een nnc cch hh d ddi iis ssl lli iik kke ee s ssy yyr rru uup ppy yy s sse een nnt tti iim mme een nnt tt a aan nnd dd p ppr rre eef ffe eer rr w wwr rri iit tti iin nng gg t tth hhe eei
iir rr o oow wwn nn c cca aar rrd dds ss. .. P PPh hhi iil lli iip pps ss b bbe eeg gga aan nn t tto oo e eea aar rrn nn a aa p ppr rro oof ffi iit tt i iin nn J JJa aap ppa aan nn o oon nnl lly yy a
aaf fft tte eer rr i iit tt h hha aad dd r rre eed ddu uuc cce eed dd tth hhe ee ssi iize zeze oof ff i iit tts ss c cco oof fff ffe eee eem mma aak kke eer rrs ss t tto oo f ffi iit tt i iin nnt tto oo s ssm mma
aal lll lle eer rr J JJa aap ppa aan nne ees sse ee k kki iit ttc cch hhe een nns ss a aan nnd dd iit tts ss ssh hha aav vve eer rrs ss tto oo ffi iit tt s ssm mma aal lll lle eer rr J JJa aap ppa aan nne ees sse ee h
hha aan nnd dds ss. .. C CCo ooc cca aa-C CCo ool lla aa h hha aad dd t tto oo w wwi iit tth hhd ddr rra aaw ww i iit tts ss t ttw wwo oo-l lli iit tte eer rr b bbo oot ttt ttl lle ee i iin nn S SSp
ppa aai iin nn a aaf fft tte eer rr ddi iis ssc cco oov vve eer rri iin nng gg t tth hha aat tt f ffe eew ww S SSp ppa aan nni iia aar rrd dds ss o oow wwn nne eed dd r rre eef ffr rri iig gge eer rra aat tto oor rrs
ss w wwi iit tth hh l lla aar rrg gge ee e een nno oou uug ggh hh cco oom mmp ppa aar rrt ttm mme een nnt tts ss tto oo p pp g gg g ggg ggp pp a aac ccc cco oom mmm mmo ood dda aat tte ee i iit tt. .. G
GGe een nne eer rra aal ll F FFo ooo ood dds ss T TTa aan nng gg i iin nni iit tti iia aal lll lly yy f ffa aai iil lle eed dd i iin nn F FFr rra aan nnc cce ee b bbe eec cca aau uus sse ee i iit tt w wwa aas ss
ppo oos ssi iit tti iio oon nne eed dd aas ss a aa s ssu uub bbs sst tti iit ttu uut tte ee f ffo oor rr o oor rra aan nng gge ee j jju uui iic cce ee a aat tt b bbr rre eea aak kkf ffa aas sst tt. .. T TTh hhe ee F
FFr rre een nnc cch hh d ddr rri iin nnk kk lli iit ttt ttl lle ee oor rra aan nng gge ee j jju uui iic cce ee a aan nnd dd a aal llm mmo oos sst tt n nno oon nne ee a aat tt b bbr rre eea aak kkf ffa aas sst tt. ..
K KKe eel lll llo oog ggg gg s ss P PPo oop pp-T TTa aar rrt tts ss f ffa aai iil lle eed dd i iin nn B BBr rri iit tta aai iin nn b bbe eec cca aau uus sse ee t tth hhe ee p ppe eer rrc cce een nnt
tta aag gge ee oof ff BBr rri iit tti iis ssh hh h hho oom mme ees ss w wwi iit tth hh t tto ooa aas sst tte eer rrs ss w wwa aas ss s ssi iig ggn nni iif ffi iic cca aan nnt ttl lly yy l llo oow wwe eer rr t tth hha
aan nn i iin nn t tth hhe ee U UUn nni iit tte eed dd SSt tta aat tte ees ss aan nnd dd t tth hhe ee p ppr rro ood ddu uuc cct tt w wwa aas ss t tto ooo oo s ssw wwe eee eet tt f ffo oor rr B BBr rri iit tti
iis ssh hh t tta aas sst tte ees ss. .. See text for complete table www.bookfiesta4u.blogspot.com
I IIn nn t tth hhe ee e eea aar rrl lly yy 2 220 00t tth hh c cce een nnt ttu uur rry yy, ,, t tth hhe ee T TTr rra aan nns ss-A AAt ttl lla aan nnt tti iic cc c cca aab bbl lle ee a aal lll llo oow wwe eed dd
f ffo oor rr t tth hhe ee t ttr rra aan nns ssm mmi iis sss ssi iio oon nn o oof ff p pph hho oot tto oog ggr rra aap pph hhs ss i iin nn n nne eea aar rr r rre eea aal ll t tti iim mme ee. .. S SSt tti iil lll
ll i iim mma aag gge ees ss w wwe een nnt tt t tto oo p ppr rre ees sss ss s sso ooo oon nn a aaf fft tte eer rr n nne eew wws ss o oof ff e eev vve een nnt tts ss iin nn pp EuropearrivedhereintheStates.ArethereEurope arrived here in the States. Are ther e anyemergingcommunicationtechnologiesany emerging communication technologies todaythatshowsimilartoday that show similar potential?Howcanthesebepotential? How can these be harnessedtoimproveaharnessed to improve a company sglobalofferings?company s global offerings?
Deciding Which Markets to Enter
H HHo oow ww m mma aan nny yy m mma aar rrk kke eet tts ss t tto oo e een nnt tte eer rr A AAy yya aal ll a aan nnd dd Z ZZi iif ff c cco oon nnt tte een nnd dd t tth hha aat tt
a aa c cco oom mmp ppa aan nny yy ssh hho oou uul lld dd e een nnt tte eer rr f ffe eew wwe eer rr c cco oou uun nnt ttr rri iie ees ss w wwh hhe een nn: :: M MMar arark kke eet tt e een nnt ttr rry yy an anand
dd m mmar arark kke eet tt c ccos osost tts ss ar arare ee h hhi iigh ghgh P PPr rrod ododu uuc cct tt an anand dd c ccom omomm mmu uun nni iic ccat atati iion onon c ccos osost tts ss ar arare ee hhi iigh ghgh P PPop opopu uul llat atati
iion onon an anand dd i iin nnc ccom omome ee s ssi iiz zze ee an anand dd gr grgrow owowt tth hh arare ee hhi iigh ghgh i iin nn t tth hhe ee i iin nni iit tti iial alal c ccou ououn nnt ttr rri iie ees ss c cch hhos osose een nn D
DDom omomi iin nnan anant tt f ffor orore eei iign gngn f ffi iir rrm mms ss c ccan anan e ees sst ttab ababl lli iis ssh hh hhi iigh ghgh b bbar ararr rri iie eer rrs ss t tto e o eo en nnt ttr rry yy www.bookfiesta4u.blogspot.com 11-402
Deciding Which Markets to Enter RegionalfreetradezonesRegional free trade zones TheEuropeanUnionThe European Union NAFTANAFTA www.bookfiesta4u.blogspot.com 11-403 NAFTANAFTA MERCOSULMERCOSUL APECAPEC EvaluatingpotentialmarketsEvaluating potential markets PsychicproximityPsychic proximity Deciding Which Markets to Enter RegionalfreetradezonesRegional free trade zones TheEuropeanUnionThe European Union NAFTANAFTA www.bookfiesta4u.blogspot.com 11-403 NAFTANAFTA MERCOSULMERCOSUL APECAPEC EvaluatingpotentialmarketsEvaluating potential markets PsychicproximityPsychic proximity
R RRe eeg ggi iio oon nna aal ll f ffr rre eee ee t ttr rra aad dde ee z zzo oon nne ees ss o oof fff ffe eer rr m mma aan nny yy p ppo oot tte een nnt tti iia aal ll b bbe een nne eef ffi iit tts ss t tto oo
c cco oom mmp ppa aan nni iie ees ss e eex xxp ppa aan nnd ddi iin nng gg t tth hhe eei iir rr o oof fff ffe eer rri iin nng ggs ss a aab bbr rro ooa aad dd. .. C CCl lle eea aar rrl lly yy d dde eef ffi iin nne eed dd
theirofferingsabroad.Clearlydefinedtheir offerings abroad. Clearly defined nationalimport/exportpoliciesarejustonenational import/export policies are just one potentialbenefit.Canyouthinkofanypotential benefit. Can you think of any others?Whatmarketingothers? What marketing challengeswillnotbeeasedchallenges will not be eased bysuchagreements?by such agreements?
Deciding How to Enter the Market www.bookfiesta4u.blogspot.com 11-405 Figure 13.2: Five Modes of Entry into Foreign Markets Deciding How to Enter the Market www.bookfiesta4u.blogspot.com 11-405 Figure 13.2: Five Modes of Entry into Foreign Markets
IndirectanddirectexportIndirect and direct export OccasionalexportingOccasional exporting ActiveexportingActive exporting Deciding How to Enter the Market www.bookfiesta4u.blogspot.com 11-406 IndirectexportingIndirect exporting DomesticDomestic--basedexportmerchantsbased export merchants DomesticDomestic--basedexportagentsbased export agents CooperativeorganizationsCooperative organizations ExportExport--managementcompaniesmanagement companies IndirectanddirectexportIndirect and direct export OccasionalexportingOccasional exporting ActiveexportingActive exporting Deciding How to Enter the Market www.bookfiesta4u.blogspot.com 11-406 IndirectexportingIndirect exporting DomesticDomestic--basedexportmerchantsbased export merchants DomesticDomestic--basedexportagentsbased export agents CooperativeorganizationsCooperative organizations ExportExport--managementcompaniesmanagement companies
CompaniescancarryondirectCompanies can carry on direct exportinginseveralwaysexporting in several ways DomesticDomestic--basedexportbased export departmentor divisiondepartment or division Deciding How to Enter the Market www.bookfiesta4u.blogspot.com 11-407 departmentor divisiondepartment or division OverseassalesbranchorOverseas sales branch or subsidiarysubsidiary Traveling export salesTraveling export sales representativesrepresentatives ForeignForeign--baseddistributorsbased distributors oragentsor agents CompaniescancarryondirectCompanies can carry on direct exportinginseveralwaysexporting in several ways DomesticDomestic--basedexportbased export departmentor divisiondepartment or division Deciding How to Enter the Market www.bookfiesta4u.blogspot.com 11-407 departmentor divisiondepartment or division OverseassalesbranchorOverseas sales branch or subsidiarysubsidiary Traveling export salesTraveling export sales representativesrepresentatives ForeignForeign--baseddistributorsbased distributors oragentsor agents
LicensingLicensing ManagementcontractsManagement ContractmanufacturingContract Deciding How to Enter the Market www.bookfiesta4u.blogspot.com ContractmanufacturingContract FranchisingFranchising LicensingLicensing ManagementcontractsManagement ContractmanufacturingContract Deciding How to Enter the Market www.bookfiesta4u.blogspot.com ContractmanufacturingContract FranchisingFranchising
contracts manufacturing 11-408 manufacturing contracts manufacturing 11-408 manufacturing
Deciding How to Enter the Market JointventuresJoint ventures DirectinvestmentDirect investment TheInternationalizationProcessThe Internationalization Process www.bookfiesta4u.blogspot.com 11-409 JohansonandWiedersheimJohanson and Wiedersheim--PaulidentifiedPaul identified fourstagesintheinternationalizationfour stages in the internationalization process:process: No regularexportactivitiesNo regular export activities Exportvia independent representatives(agents)Export via independent representative s (agents) Establishmentof one ormoresalessubsidiariesEstablishment of one or more sales subs idiaries Establishmentof productionfacilitiesabroadEstablishment of production facilities a broad Deciding How to Enter the Market JointventuresJoint ventures DirectinvestmentDirect investment TheInternationalizationProcessThe Internationalization Process www.bookfiesta4u.blogspot.com 11-409 JohansonandWiedersheimJohanson and Wiedersheim--PaulidentifiedPaul identified fourstagesintheinternationalizationfour stages in the internationalization process:process: No regularexportactivitiesNo regular export activities Exportvia independent representatives(agents)Export via independent representative s (agents) Establishmentof one ormoresalessubsidiariesEstablishment of one or more sales subs idiaries Establishmentof productionfacilitiesabroadEstablishment of production facilities a broad
Deciding on the Marketing Program StandardizedmarketingmixStandardized AdaptedmarketingmixAdapted marketing www.bookfiesta4u.blogspot.com 11-410 Deciding on the Marketing Program StandardizedmarketingmixStandardized AdaptedmarketingmixAdapted marketing www.bookfiesta4u.blogspot.com 11-410
marketing mix mix
marketing mix mix
McDonald saroundtheworld:HungaryMcDonald s around the world: Hungary www.bookfiesta4u.blogspot.com 11-411 McDonald saroundtheworld:HungaryMcDonald s around the world: Hungary www.bookfiesta4u.blogspot.com 11-411
Deciding on the Marketing Program ProductProduct StraightextensionStraight extension www.bookfiesta4u.blogspot.com 11-412 Deciding on the Marketing Program ProductProduct StraightextensionStraight extension www.bookfiesta4u.blogspot.com 11-412
Figure 13.3: Five International Product and Promotion Strategies www.bookfiesta4u.blogspot.com 11-413 Figure 13.3: Five International Product and Promotion Strategies www.bookfiesta4u.blogspot.com 11-413
Deciding on the Marketing Program ProductadaptationProduct adaptation ProductinventionProduct invention Backward inventionBackward invention www.bookfiesta4u.blogspot.com 11-414 Forward inventionForward invention PromotionPromotion CommunicationadaptationCommunication adaptation DualadaptationDual adaptation Deciding on the Marketing Program ProductadaptationProduct adaptation ProductinventionProduct invention Backward inventionBackward invention www.bookfiesta4u.blogspot.com 11-414 Forward inventionForward invention PromotionPromotion CommunicationadaptationCommunication adaptation DualadaptationDual adaptation
Carlsberg sglobalWebsiteCarlsberg s global Web site www.bookfiesta4u.blogspot.com 11-415 Carlsberg sglobalWebsiteCarlsberg s global Web site www.bookfiesta4u.blogspot.com 11-415
Deciding on the Marketing Program PricePrice PriceescalationPrice escalation CompanieshavethreechoicesCompanies have three choices Seta uniformpriceeverywhereSet a uniform price everywhere www.bookfiesta4u.blogspot.com 11-416 Seta marketSet a market--basedpriceineachcountrybased price in each country Seta costSet a cost--basedpriceineachcountrybased price in each country TransferpriceTransfer price DumpingDumping Arm sArm s--lengthpricelength price Gray marketGray market Deciding on the Marketing Program PricePrice PriceescalationPrice escalation CompanieshavethreechoicesCompanies have three choices Seta uniformpriceeverywhereSet a uniform price everywhere www.bookfiesta4u.blogspot.com 11-416 Seta marketSet a market--basedpriceineachcountrybased price in each country Seta costSet a cost--basedpriceineachcountrybased price in each country TransferpriceTransfer price DumpingDumping Arm sArm s--lengthpricelength price Gray marketGray market
Deciding on the Marketing Program Place(distributionchannels)Place (distribution channels) Seller sinternationalmarketingSeller s international marketing headquartersheadquarters www.bookfiesta4u.blogspot.com 11-417 Figure 13.4: Whole-Channel Concept for International Marketing ChannelsbetweennationsChannels between nations ChannelswithinforeignnationsChannels within foreign nations Deciding on the Marketing Program Place(distributionchannels)Place (distribution channels) Seller sinternationalmarketingSeller s international marketing headquartersheadquarters www.bookfiesta4u.blogspot.com 11-417 Figure 13.4: Whole-Channel Concept for International Marketing ChannelsbetweennationsChannels between nations ChannelswithinforeignnationsChannels within foreign nations
O OOn nne ee o oof ff t tth hhe ee m mmo oos sst tt p ppr rro oof ffo oou uun nnd dd p ppo ool lli iit tti iic cca aal ll cch hha aan nng gge ees ss i iin nn t tth hhe ee l lla aat tte ee 2 220 00t tth hh c
cce een nnt ttu uur rry yy w wwa aas ss t tth hhe ee f ffa aal lll ll oof ff tth hhe ee i iir rro oon nn c ccu uur rrt tta aai iin nn a aan nnd dd t tth hhe ee s ssu uub bbs sse eeq qqu uue een nnt tt
oop ppe een nni iin nng gg o oof ff m mma aar rrk kke eet tts ss i iin nn E EEa aas sst tte eer rrn nn E EEu uur rro oop ppe ee H HHa aas ss tth hhi iis ss ofmarketsinEasternEurope.Hasthisof markets in Eastern Europe. Has this potentialmarketplacebeenfullypotential marketplace been fully exploitedbyAmericanexploited by American companies?Europeancompanies? European companies?Whyorcompanies? Why or whynot?why not?
Deciding on the Marketing Organization ExportdepartmentExport department InternationaldivisionInternational division GeographicalorganizationsGeographical organizations www.bookfiesta4u.blogspot.com 11-419 GeographicalorganizationsGeographical organizations WorldproductgroupsWorld product groups InternationalsubsidiariesInternational subsidiaries Deciding on the Marketing Organization ExportdepartmentExport department InternationaldivisionInternational division GeographicalorganizationsGeographical organizations www.bookfiesta4u.blogspot.com 11-419 GeographicalorganizationsGeographical organizations WorldproductgroupsWorld product groups InternationalsubsidiariesInternational subsidiaries
Deciding on the Marketing Organization GlobalorganizationGlobal organization BartlettandGhoshaldistinguishthreeBartlett and Ghoshal distinguish three organizationalstrategies:organizational strategies: www.bookfiesta4u.blogspot.com 11-420 ggg g A globalstrategy treatstheworldasa singleA global strategy treats the world as a s ingle market.market. A multinationalstrategy treatsthe worldas aA multinational strategy treats the wor ld as a portfolio ofnationalopportunities.portfolio of national opportunities. A glocal strategy standardizescertaincoreA glocal strategy standardizes certain core elementsandlocalizesotherelements.elements and localizes other elements. Deciding on the Marketing Organization GlobalorganizationGlobal organization BartlettandGhoshaldistinguishthreeBartlett and Ghoshal distinguish three organizationalstrategies:organizational strategies: www.bookfiesta4u.blogspot.com 11-420 ggg g A globalstrategy treatstheworldasa singleA global strategy treats the world as a s ingle market.market. A multinationalstrategy treatsthe worldas aA multinational strategy treats the wor ld as a portfolio ofnationalopportunities.portfolio of national opportunities. A glocal strategy standardizescertaincoreA glocal strategy standardizes certain core elementsandlocalizesotherelements.elements and localizes other elements.
Chapter14Chapter 14 SettingtheProductandSetting the Product BrandingStrategyBranding Strategy byby PowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Chapter14Chapter 14 SettingtheProductandSetting the Product BrandingStrategyBranding Strategy byby PowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New
and
Orleans and
Orleans
ThebestwaytoholdThe best way to hold customersistocustomers is to lfil fi Kotler on Marketing www.bookfiesta4u.blogspot.com 11-422 constantlyfigureoutconstantly figure out howtogivethemhow to give them moreforless.more for less. ThebestwaytoholdThe best way to hold customersistocustomers is to lfil fi Kotler on Marketing www.bookfiesta4u.blogspot.com 11-422 constantlyfigureoutconstantly figure out howtogivethemhow to give them moreforless.more for less.
Chapter Objectives Inthischapter,wefocusonthefollowingIn this chapter, we focus on the following questions:questions: Whatarethecharacteristicsofproducts?What are the characteristics of products? HowcanacompanybuildandmanageitsHow can a company build and manage its www.bookfiesta4u.blogspot.com 11-423 HowcanacompanybuildandmanageitsHow can a company build and manage its productmixandproductlines?product mix and product lines? HowcanacompanymakebetterbrandHow can a company make better brand decisions?decisions? HowcanpackagingandlabelingbeusedasHow can packaging and labeling be used as marketingtools?marketing tools? Chapter Objectives Inthischapter,wefocusonthefollowingIn this chapter, we focus on the following questions:questions: Whatarethecharacteristicsofproducts?What are the characteristics of products? HowcanacompanybuildandmanageitsHow can a company build and manage its www.bookfiesta4u.blogspot.com 11-423 HowcanacompanybuildandmanageitsHow can a company build and manage its productmixandproductlines?product mix and product lines? HowcanacompanymakebetterbrandHow can a company make better brand decisions?decisions? HowcanpackagingandlabelingbeusedasHow can packaging and labeling be used as marketingtools?marketing tools?
The Product and the Product Mix ProductProduct PhysicalgoodsPhysical goods ServicesServices ExperiencesExperiences Figure 14.1: Components of the Market Offering www.bookfiesta4u.blogspot.com 11-424 ExperiencesExperiences EventsEvents PersonsPersons PlacesPlaces PropertiesProperties OrganizationsOrganizations InformationInformation IdeasIdeas The Product and the Product Mix ProductProduct PhysicalgoodsPhysical goods ServicesServices ExperiencesExperiences Figure 14.1: Components of the Market Offering www.bookfiesta4u.blogspot.com 11-424 ExperiencesExperiences EventsEvents PersonsPersons PlacesPlaces PropertiesProperties OrganizationsOrganizations InformationInformation IdeasIdeas
The Product and the Product Mix ProductlevelsProduct levels CustomervalueCustomer value hierarchyhierarchy Figure 14.2: Five Product Levels www.bookfiesta4u.blogspot.com 11-425 yy CorebenefitCore benefit BasicproductBasic product ExpectedproductExpected product AugmentedproductAugmented product The Product and the Product Mix ProductlevelsProduct levels CustomervalueCustomer value hierarchyhierarchy Figure 14.2: Five Product Levels www.bookfiesta4u.blogspot.com 11-425 yy CorebenefitCore benefit BasicproductBasic product ExpectedproductExpected product AugmentedproductAugmented product
BabyCenterisnotjustanonlineBabyCenter merchant,it sametamediarymerchant, it www.bookfiesta4u.blogspot.com 11-426 BabyCenterisnotjustanonlineBabyCenter merchant,it sametamediarymerchant, it www.bookfiesta4u.blogspot.com 11-426
is not just an online s a metamediary is not just an online s a metamediary
The Product and the Product Mix ConsumptionsystemConsumption system PotentialproductPotential product ProducthierarchyProduct hierarchy NdfilN d f il GeneralMills Mycereal.comGeneral Mills Mycereal.com WebsiteWeb site www.bookfiesta4u.blogspot.com 11-427 NeedfamilyNeed family ProductfamilyProduct family ProductclassProduct class ProductlineProduct line ProducttypeProduct type ItemItem The Product and the Product Mix ConsumptionsystemConsumption system PotentialproductPotential product ProducthierarchyProduct hierarchy NdfilN d f il GeneralMills Mycereal.comGeneral Mills Mycereal.com WebsiteWeb site www.bookfiesta4u.blogspot.com 11-427 NeedfamilyNeed family ProductfamilyProduct family ProductclassProduct class ProductlineProduct line ProducttypeProduct type ItemItem
The Product and the Product Mix ProductsystemProduct system ProductmixProduct mix ProductclassificationsProduct classifications www.bookfiesta4u.blogspot.com 11-428 ProductclassificationsProduct classifications DurabilityandTangibilityDurability and Tangibility Classification:Classification: Nondurable goodsNondurable goods DurablegoodsDurable goods ServicesServices The Product and the Product Mix ProductsystemProduct system ProductmixProduct mix ProductclassificationsProduct classifications www.bookfiesta4u.blogspot.com 11-428 ProductclassificationsProduct classifications DurabilityandTangibilityDurability and Tangibility Classification:Classification: Nondurable goodsNondurable goods DurablegoodsDurable goods ServicesServices
The Product and the Product Mix ConsumerConsumer--GoodsClassification:Goods Classification: ConveniencegoodsConvenience goods StaplesStaples ImpulsegoodsImpulse goods www.bookfiesta4u.blogspot.com 11-429 pgp g EmergencygoodsEmergency goods Shopping goodsShopping goods HomogeneousHomogeneous shoppinggoodsshopping goods HeterogeneousHeterogeneous shoppinggoodsshopping goods Specialty goodsSpecialty goods UnsoughtgoodsUnsought goods The Product and the Product Mix ConsumerConsumer--GoodsClassification:Goods Classification: ConveniencegoodsConvenience goods StaplesStaples ImpulsegoodsImpulse goods www.bookfiesta4u.blogspot.com 11-429 pgp g EmergencygoodsEmergency goods Shopping goodsShopping goods HomogeneousHomogeneous shoppinggoodsshopping goods HeterogeneousHeterogeneous shoppinggoodsshopping goods Specialty goodsSpecialty goods UnsoughtgoodsUnsought goods
The Product and the Product Mix IndustrialIndustrial--GoodsClassificationGoods Classification MaterialsandpartsMaterials and parts FarmproductsFarm products NaturalproductsNatural products www.bookfiesta4u.blogspot.com 11-430 NaturalproductsNatural products ManufacturedManufactured materialsandpartsmaterials and parts ComponentmaterialsComponent materials ComponentpartsComponent parts CapitalitemsCapital items InstallationsInstallations EquipmentEquipment The Product and the Product Mix IndustrialIndustrial--GoodsClassificationGoods Classification MaterialsandpartsMaterials and parts FarmproductsFarm products NaturalproductsNatural products www.bookfiesta4u.blogspot.com 11-430 NaturalproductsNatural products ManufacturedManufactured materialsandpartsmaterials and parts ComponentmaterialsComponent materials ComponentpartsComponent parts CapitalitemsCapital items InstallationsInstallations EquipmentEquipment
The Product and the Product Mix SuppliesandbusinessservicesSupplies and business services MaintenanceandMaintenance and repairitemsrepair items www.bookfiesta4u.blogspot.com 11-431 Operating suppliesOperating supplies MaintenanceandMaintenance and repairservicesrepair services BusinessadvisoryBusiness advisory servicesservices The Product and the Product Mix SuppliesandbusinessservicesSupplies and business services MaintenanceandMaintenance and repairitemsrepair items www.bookfiesta4u.blogspot.com 11-431 Operating suppliesOperating supplies MaintenanceandMaintenance and repairservicesrepair services BusinessadvisoryBusiness advisory servicesservices
The Product and the Product Mix Productmix(ProductProduct mix assortment)assortment) Productmixhasacertain:Product www.bookfiesta4u.blogspot.com Productmixhasacertain:Product WidthWidth LengthLength DepthDepth ConsistencyConsistency The Product and the Product Mix Productmix(ProductProduct mix assortment)assortment) Productmixhasacertain:Product www.bookfiesta4u.blogspot.com Productmixhasacertain:Product WidthWidth LengthLength DepthDepth ConsistencyConsistency
(Product mix has a certain: 11-432 mix has a certain:
(Product mix has a certain: 11-432 mix has a certain:
Table 14.1: Product-Mix Width and Product-Line Length for Proctor& Gamble Products PRODUCTPRODUCT-ProductProduct--MixWidthMix Width DetergentsDetergents ToothpasteToothpaste DisposableDisposable BarSoapBar Soap DiapersDiapers PaperPaper TissueTissue IvorySnowIvory Snow (1930)(1930) DreftDreft Gleem(1952)Gleem (1952) Crest(1955)Crest (1955) IvoryIvory (1879)(1879) Kirk sKirk s PampersPampers (1961)(1961) LuvsLuvs CharminCharmin (1928)(1928) PuffsPuffs www.bookfiesta4u.blogspot.com 11-433 PRODUCTPRODUCT LINELINE LENGTHLENGTH DreftDreft (1933)(1933) TideTide (1946)(1946) CheerCheer (1950)(1950) Kirk sKirk s (1885)(1885) LavaLava (1893)(1893) CamayCamay (1926)(1926) LuvsLuvs (1976)(1976) PuffsPuffs (1960)(1960) BannerBanner (1982)(1982) SummitSummit (1992)(1992) See text for complete table Table 14.1: Product-Mix Width and Product-Line Length for Proctor& Gamble Products PRODUCTPRODUCT-ProductProduct--MixWidthMix Width DetergentsDetergents ToothpasteToothpaste DisposableDisposable BarSoapBar Soap DiapersDiapers PaperPaper TissueTissue IvorySnowIvory Snow (1930)(1930)
DreftDreft Gleem(1952)Gleem (1952) Crest(1955)Crest (1955) IvoryIvory (1879)(1879) Kirk sKirk s PampersPampers (1961)(1961) LuvsLuvs CharminCharmin (1928)(1928) PuffsPuffs www.bookfiesta4u.blogspot.com 11-433 PRODUCTPRODUCT LINELINE LENGTHLENGTH DreftDreft (1933)(1933) TideTide (1946)(1946) CheerCheer (1950)(1950) Kirk sKirk s (1885)(1885) LavaLava (1893)(1893) CamayCamay (1926)(1926) LuvsLuvs (1976)(1976) PuffsPuffs (1960)(1960) BannerBanner (1982)(1982) SummitSummit (1992)(1992) See text for complete table
The Product and the Product Mix ProductProduct--linedecisionsline decisions ProductProduct--lineanalysisline analysis SalesandProfitsSales and Profits www.bookfiesta4u.blogspot.com 11-434 FourtypesofFour types of productclasses:product classes: CoreproductCore product StaplesStaples SpecialtiesSpecialties ConvenienceitemsConvenience items The Product and the Product Mix ProductProduct--linedecisionsline decisions ProductProduct--lineanalysisline analysis SalesandProfitsSales and Profits www.bookfiesta4u.blogspot.com 11-434 FourtypesofFour types of productclasses:product classes: CoreproductCore product StaplesStaples SpecialtiesSpecialties ConvenienceitemsConvenience items
The Product and the Product Mix MarketprofileMarket profile www.bookfiesta4u.blogspot.com 11-435 Figure 14.4: Product Map for a Paper-Product Line The Product and the Product Mix MarketprofileMarket profile www.bookfiesta4u.blogspot.com 11-435 Figure 14.4: Product Map for a Paper-Product Line
The Product and the Product Mix ProductProduct--linelengthline length LineStretchingLine Stretching Downmarket StretchDownmarket Stretch ThihiiTh i h i i www.bookfiesta4u.blogspot.com 11-436 ThecompanymaynoticestronggrowthopportunitiesasThe company may notice strong growth opportunities as massretailersattractagrowingnumberofshoppersmass retailers attract a growing num ber of shoppers ThecompanymaywishtotieuplowerThe company may wish to tie up lower--endcompetitorse nd competitors whomightotherwisetrytomoveupmarketwho might otherwise try to move upmarket ThecompanymayfindthatthemiddlemarketisThe company may find that the middle market is stagnatingordecliningstagnating or declining UpmarketStretchUpmarket Stretch TwoTwo--Way StretchWay Stretch The Product and the Product Mix ProductProduct--linelengthline length LineStretchingLine Stretching Downmarket StretchDownmarket Stretch ThihiiTh i h i i www.bookfiesta4u.blogspot.com 11-436 ThecompanymaynoticestronggrowthopportunitiesasThe company may notice strong growth opportunities as massretailersattractagrowingnumberofshoppersmass retailers attract a growing num ber of shoppers ThecompanymaywishtotieuplowerThe company may wish to tie up lower--endcompetitorse nd competitors whomightotherwisetrytomoveupmarketwho might otherwise try to move upmarket ThecompanymayfindthatthemiddlemarketisThe company may find that the middle market is stagnatingordecliningstagnating or declining UpmarketStretchUpmarket Stretch TwoTwo--Way StretchWay Stretch
KmarthasenteredintobrandingandKmart has entered into branding and distributionagreementswithcelebritieslikedistribution agreements with celebritie s like KateSmithforwomen sapparelandMarthaKate Smith for women s apparel and Martha Stewartinhousewares,gardeningsupplies,Stewart in house wares, gardening supplies , etc.Isthisanupmarketstretch,aetc. Is this an upmarket stretch, a downmarketstretchoratwodownmarket stretch or a two--waystretchway stretch forKmart?for Kmart? KmarthasenteredintobrandingandKmart has entered into branding and distributionagreementswithcelebritieslikedistribution agreements with celebritie s like KateSmithforwomen sapparelandMarthaKate Smith for women s apparel and Martha Stewartinhousewares,gardeningsupplies,Stewart in house wares, gardening supplies , etc.Isthisanupmarketstretch,aetc. Is this an upmarket stretch, a downmarketstretchoratwodownmarket stretch or a two--waystretchway stretch forKmart?for Kmart?
The Product and the Product Mix LineFillingLine Filling JustJust--noticeablenoticeable differencedifference BranddecisionsBrand decisions Whatisbrand?What is brand? AttributesAttributes www.bookfiesta4u.blogspot.com 11-438 LineModernization,Line Modernization, featuring,andfeaturing, and pruningpruning BenefitsBenefits ValuesValues CultureCulture PersonalityPersonality UserUser The Product and the Product Mix LineFillingLine Filling JustJust--noticeablenoticeable differencedifference BranddecisionsBrand decisions Whatisbrand?What is brand? AttributesAttributes www.bookfiesta4u.blogspot.com 11-438 LineModernization,Line Modernization, featuring,andfeaturing, and pruningpruning BenefitsBenefits ValuesValues CultureCulture PersonalityPersonality UserUser
The Product and the Product Mix CommonlyusedresearchapproachesCommonly used research approaches todeterminebrandmeaning:to determine brand meaning: WordassociationsWord associations www.bookfiesta4u.blogspot.com 11-439 PersonifyingthePersonifying the brandbrand LadderinguptheLaddering up the brandessencebrand essence Brand essenceBrand essence Laddering upLaddering up The Product and the Product Mix CommonlyusedresearchapproachesCommonly used research approaches todeterminebrandmeaning:to determine brand meaning: WordassociationsWord associations www.bookfiesta4u.blogspot.com 11-439 PersonifyingthePersonifying the brandbrand LadderinguptheLaddering up the brandessencebrand essence Brand essenceBrand essence Laddering upLaddering up
The Product and the Product Mix BuildingBrandIdentityBuilding Brand Identity BrandbondingBrand bonding Brands arenot builtby advertisingBrands are not built by advertising bt by th bdib t by th b d i www.bookfiesta4u.blogspot.com 11-440 but by the brandexperiencebut by the brand experience Everyonein the company livesthe brandEveryone in the company lives the brand Threewaysto carry on internalbrandingThree ways to carry on internal branding EmployeesmustEmployees must UnderstandUnderstand Desire,andDesire, and DeliveronthebrandpromiseDeliver on the brand promise The Product and the Product Mix BuildingBrandIdentityBuilding Brand Identity BrandbondingBrand bonding Brands arenot builtby advertisingBrands are not built by advertising bt by th bdib t by th b d i www.bookfiesta4u.blogspot.com 11-440 but by the brandexperiencebut by the brand experience Everyonein the company livesthe brandEveryone in the company lives the brand Threewaysto carry on internalbrandingThree ways to carry on internal branding EmployeesmustEmployees must UnderstandUnderstand Desire,andDesire, and DeliveronthebrandpromiseDeliver on the brand promise
The Product and the Product Mix
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iin nnc ccl llu uud ddi iin nng gg c ccu uus sst tto oom mme eer rr--p ppe eer rrc cce eei iiv vve eed dd v vva aal llu uue ee, ,, ccu uus sst tto oom mme eer rr s ssa aat tti iis ssf ffa aac cct tti iio oon nn, ,, c ccu uus
sst tto oom mme eer rr s ssh hha aar rre ee o oof ff w wwa aal lll lle eet tt, ,, c ccu uus sst tto oom mme eer rr r rre eet tte een nnt tti iio oon nn, ,, aan nnd dd c ccu uus sst tto oom mme eer rr a aad ddv vvo ooc cca
aac ccy yy. .. www.bookfiesta4u.blogspot.com 11-441
The Product and the Product Mix BrandEquityBrand Equity BrandawarenessBrand awareness BrandacceptabilityBrand acceptability BrandpreferenceBrand preference www.bookfiesta4u.blogspot.com 11-442 BrandpreferenceBrand preference Aaker sfivelevelsof customerattitude:Aaker s five levels of customer attitude: Thecustomerwillchangebrands,especiallyforThe customer will change brands, especial ly for pricereasons.Nobrandloyalty.price reasons. No brand loyalty. Customerissatisfied.Noreasontochangebrands.Customer is satisfied. No reason to cha nge brands. CustomerissatisfiedandwouldincurcostbyCustomer is satisfied and would incur cost b y changingbrand.changing brand. Customervaluesthebrandandseesitasafriend.Customer values the brand and sees it as a friend. Customerisdevotedtothebrand.Customer is devoted to the brand. The Product and the Product Mix BrandEquityBrand Equity BrandawarenessBrand awareness BrandacceptabilityBrand acceptability BrandpreferenceBrand preference www.bookfiesta4u.blogspot.com 11-442 BrandpreferenceBrand preference Aaker sfivelevelsof customerattitude:Aaker s five levels of customer attitude: Thecustomerwillchangebrands,especiallyforThe customer will change brands, especial ly for pricereasons.Nobrandloyalty.price reasons. No brand loyalty. Customerissatisfied.Noreasontochangebrands.Customer is satisfied. No reason to cha nge brands. CustomerissatisfiedandwouldincurcostbyCustomer is satisfied and would incur cost b y changingbrand.changing brand. Customervaluesthebrandandseesitasafriend.Customer values the brand and sees it as a friend. Customerisdevotedtothebrand.Customer is devoted to the brand.
The Product and the Product Mix ValueofBrandEquityValue of Brand Equity Brand valuationBrand valuation Competitiveadvantages of high brandequity:Competitive advantages of high brand equ ity: ThecompanywillhavemoreleverageinbargainingwithThe company will have more leverage in bargaining with www.bookfiesta4u.blogspot.com 11-443 ThecompanywillhavemoreleverageinbargainingwithThe company will have more leverage in bargaining with distributorsandretailersbecausecustomersexpectthemdistributors and retailers bec ause customers expect them tocarrythebrand.to carry the brand. ThecompanycanchargeahigherpricethanitsThe company can charge a higher price than i ts competitorsbecausethebrandhashigherperceivedcompetitors because the brand has hi gher perceived quality.quality. ThecompanycanmoreeasilylaunchextensionsbecauseThe company can more easily launch e xtensions because thebrandnamecarrieshighcredibility.the brand name carries high credibility. Thebrandofferssomedefenseagainstpricecompetition.The brand offers some defense aga inst price competition. The Product and the Product Mix ValueofBrandEquityValue of Brand Equity Brand valuationBrand valuation Competitiveadvantages of high brandequity:Competitive advantages of high brand equ ity: ThecompanywillhavemoreleverageinbargainingwithThe company will have more leverage in bargaining with www.bookfiesta4u.blogspot.com 11-443 ThecompanywillhavemoreleverageinbargainingwithThe company will have more leverage in bargaining with distributorsandretailersbecausecustomersexpectthemdistributors and retailers bec ause customers expect them tocarrythebrand.to carry the brand. ThecompanycanchargeahigherpricethanitsThe company can charge a higher price than i ts competitorsbecausethebrandhashigherperceivedcompetitors because the brand has hi gher perceived quality.quality. ThecompanycanmoreeasilylaunchextensionsbecauseThe company can more easily launch e xtensions because thebrandnamecarrieshighcredibility.the brand name carries high credibility. Thebrandofferssomedefenseagainstpricecompetition.The brand offers some defense aga inst price competition.
ManagingBrandEquityManaging Brand Equity BrandingChallengesBranding Challenges BrandingDecision:ToBrandorNottoBrand?Branding Decision: To Brand or Not to Brand? The Product and the Product Mix www.bookfiesta4u.blogspot.com 11-444 ManagingBrandEquityManaging Brand Equity BrandingChallengesBranding Challenges BrandingDecision:ToBrandorNottoBrand?Branding Decision: To Brand or Not to Brand? The Product and the Product Mix www.bookfiesta4u.blogspot.com 11-444
Wh WhWhe een nn i iis ss a aa b bbr rra aan nnd dd m mmo oor rre ee t tth hha aan nn j jju uus sst tt a aa b bbr rra aan nnd dd? ?? H HHa aav vve ee y yyo oou uu e eev vve eer rr b bba aas sse eed dd a
aa p ppu uur rrc cch hha aas ssi iin nng gg dde eec cci iis ssi iio oon nn p ppr rri iim mma aar rri iil lly yy o oon nn t tth hhe ee b bbr rra aan nnd dd? ?? W WWa aas ss i iit tt b bbe eec cca aau uus sse ee oof ff
s sso oom mme ee p ppe eer rrc cce eei iiv vve eed dd q qqu uua aal lli iit tty yy d ddi iif fff ffe eer rre een nnc cce ee o oor rr wwa aas ss iit tt someperceivedqualitydifference,orwasitsome perceived quality difference, or was it basedontheexpectationofhowothersbased on the expectation of how others wouldseeortreatyou?Haveyoueverseenwould see or treat you? Have you ever seen someonebuyingagivensomeone buying a given brandofaniteminanbrand of an item in an attempttobeseenas cool ?attempt to be seen as cool ?
The Product and the Product Mix Brandinggivesthesellerseveraladvantages:Branding gives the seller several advantag es: Brand namemakesiteasierforthe sellertoBrand name makes it easier for the seller to processorders and trackdownproblemsprocess orders and track down problems Seller sbrandname andtrademarkprovidelegalSeller s brand name and trademark provide le galThe Product and the Product Mix Brandinggivesthesellerseveraladvantages:Branding gives the seller several advantag es: Brand namemakesiteasierforthe sellertoBrand name makes it easier for the seller to processorders and trackdownproblemsprocess orders and track down problems Seller sbrandname andtrademarkprovidelegalSeller s brand name and trademark provide le gal S SSe eel lll lle eer rr s ss b bbr rran anand dd n nnam amame ee an anand dd t ttr rrad adade eem mmar arark kk p ppr rrovi oviovid dde ee lle eegal galgal p ppr rrot otote
eec cct tti iion onon of ofof u uun nni iiq qqu uue ee p ppr rrod ododu uuc cct tt f ffe eeat atatu uur rre ees ss B BBr rran anand ddi iin nng gg gi gigive veves ss t tth hhe ee s sse eel lll lle eer rr t tth hhe ee op opopp ppor
orort ttu uun nni iit tty y ty to oo at atatt ttr rrac acact tt a l a la loyal oyaloyal an anand dd p ppr rrof ofofi iit ttab ababl lle ee s sse eet tt of ofof c ccu uus sst ttom omome eer rrs ss. .. B BBr rran anand ddi iin nng gg h hhe eel llp pps ss t
tth hhe ee s sse eel lll lle eer rr s sse eegm gmgme een nnt tt m mmar arark kke eet tts ss. .. S SSt ttr rron onong gg b bbr rran anand dds ss h hhe eel llp pp b bbu uui iil lld dd c ccor ororp ppor ororat atate ee i iim mmage ageage,
,, m mmak akaki iin nng gg i iit tt e eeas asasi iie eer rr t tto oo l llau auaun nnc cch hh n nne eew ww b bbr rran anand dds ss anand dd gaigain nn ac acacc cce eep ppt ttan ananc cce ee b bby yy d ddi iis sst ttr rri iib bbu uut ttor
orors ss an anand dd c ccon onons ssu uum mme eer rrs ss. .. www.bookfiesta4u.blogspot.com 11-446
The Product and the Product Mix BrandBrand--SponsorDecisionsSponsor Decisions ManufacturerbrandManufacturer brand DiibbdDi ib b d www.bookfiesta4u.blogspot.com 11-447 DistributorbrandDistributor brand LicensedbrandnameLicensed brand name Slotting feeSlotting fee Brand ladderBrand ladder Brand parityBrand parity The Product and the Product Mix BrandBrand--SponsorDecisionsSponsor Decisions ManufacturerbrandManufacturer brand DiibbdDi ib b d www.bookfiesta4u.blogspot.com 11-447 DistributorbrandDistributor brand LicensedbrandnameLicensed brand name Slotting feeSlotting fee Brand ladderBrand ladder Brand parityBrand parity
The Product and the Product Mix BrandBrand--NameDecisionName Decision Fouravailablestrategies:Four available strategies: IndividualnamesIndividual names www.bookfiesta4u.blogspot.com 11-448 Blanketfamily namesBlanket family names Separatefamily names forallproductsSeparate family names for all products Corporatenamecombined withCorporate name combined with individualproduct namesindividual product names The Product and the Product Mix BrandBrand--NameDecisionName Decision Fouravailablestrategies:Four available strategies: IndividualnamesIndividual names www.bookfiesta4u.blogspot.com 11-448 Blanketfamily namesBlanket family names Separatefamily names forallproductsSeparate family names for all products Corporatenamecombined withCorporate name combined with individualproduct namesindividual product names
The Product and the Product Mix DesirablequalitiesforabrandnameDesirable qualities for a brand name Itshould suggest something about the product sIt should suggest something about the product s benefitsbenefits Itshould suggest the product or servicecategoryIt should suggest the product or se rvice category www.bookfiesta4u.blogspot.com 11-449 gge pgorygge p gory Itshould suggest concrete, high imagery It should suggest concrete, high imagery qualitiesqualities Itshould beeasy to spell, pronounce, recognize,It should be easy to spell, pronoun ce, recognize, and rememberand remember Itshould bedistinctiveIt should be distinctive Itshould notcarry poor meanings inotherIt should not carry poor meanings in other countriesand languagescountries and languages The Product and the Product Mix DesirablequalitiesforabrandnameDesirable qualities for a brand name Itshould suggest something about the product sIt should suggest something about the product s benefitsbenefits Itshould suggest the product or servicecategoryIt should suggest the product or se rvice category www.bookfiesta4u.blogspot.com 11-449 gge pgorygge p gory Itshould suggest concrete, high imagery It should suggest concrete, high imagery qualitiesqualities Itshould beeasy to spell, pronounce, recognize,It should be easy to spell, pronoun ce, recognize, and rememberand remember Itshould bedistinctiveIt should be distinctive Itshould notcarry poor meanings inotherIt should not carry poor meanings in other countriesand languagescountries and languages
The Product and the Product Mix BrandbuildingtoolsBrand building tools PublicrelationsandPublic relations and pressreleasespress releases ShiS hi PublicfacilitiesPublic facilities SocialcauseSocial cause kik i www.bookfiesta4u.blogspot.com 11-450 SponsorshipsSponsorships Clubs andconsumerClubs and consumer communitiescommunities Factory visitsFactory visits TradeshowsTrade shows EventmarketingEvent marketing marketingmarketing HighvalueforHigh value for themoneythe money Founder sor aFounder s or a celebrity personalitycelebrity personality MobilephoneMobile phone marketingmarketing The Product and the Product Mix BrandbuildingtoolsBrand building tools PublicrelationsandPublic relations and pressreleasespress releases ShiS hi PublicfacilitiesPublic facilities SocialcauseSocial cause kik i www.bookfiesta4u.blogspot.com 11-450 SponsorshipsSponsorships Clubs andconsumerClubs and consumer communitiescommunities Factory visitsFactory visits TradeshowsTrade shows EventmarketingEvent marketing marketingmarketing HighvalueforHigh value for themoneythe money Founder sor aFounder s or a celebrity personalitycelebrity personality MobilephoneMobile phone marketingmarketing
Nike sarrangementwithMichaelJordanNike s arrangement with Michael Jordan hasprovidedanexcellentexampleofahas provided an excellent example of a celebrityendorsement.Canyouthinkofcelebrity endorsement. Can you think ofcelebri tyendorsement.Canyouthinkofcelebrity endorsement. Can you think of anendorsementcampaignthatbackfired?an endorsement campaign that backfired? WhatdiditcostthecompanyWhat did it cost the company intheshortterm?What,in the short term? What, ifany,havebeentheif any, have been the lastingeffects?lasting effects? Nike sarrangementwithMichaelJordanNike s arrangement with Michael Jordan hasprovidedanexcellentexampleofahas provided an excellent example of a celebrityendorsement.Canyouthinkofcelebrity endorsement. Can you think ofcelebri tyendorsement.Canyouthinkofcelebrity endorsement. Can you think of anendorsementcampaignthatbackfired?an endorsement campaign that backfired? WhatdiditcostthecompanyWhat did it cost the company intheshortterm?What,in the short term? What, ifany,havebeentheif any, have been the lastingeffects?lasting effects?
The Product and the Product Mix BrandStrategyDecisionBrand Strategy Decision FunctionalbrandFunctional brand ImagebrandImage brand www.bookfiesta4u.blogspot.com 11-452 ExperimentalExperimental brandsbrands LineExtensionsLine Extensions BrandedvariantsBranded variants Brand extensionsBrand extensions BranddilutionBrand dilution The Product and the Product Mix BrandStrategyDecisionBrand Strategy Decision FunctionalbrandFunctional brand ImagebrandImage brand www.bookfiesta4u.blogspot.com 11-452 ExperimentalExperimental brandsbrands LineExtensionsLine Extensions BrandedvariantsBranded variants Brand extensionsBrand extensions BranddilutionBrand dilution
The Product and the Product Mix Multibrands, NewBrands, andMultibrands, New Brands, and CoCo--BrandsBrands MultibrandMultibrand www.bookfiesta4u.blogspot.com 11-453 FlankerBandsFlanker Bands CoCo--branding(Dualbranding)branding (Dual branding) IngredientcoIngredient co--brandingbranding SameSame--companycocompany co--brandingbranding JointventurecoJoint venture co--brandingbranding MultisponsorcoMultisponsor co--brandingbranding The Product and the Product Mix Multibrands, NewBrands, andMultibrands, New Brands, and CoCo--BrandsBrands MultibrandMultibrand www.bookfiesta4u.blogspot.com 11-453 FlankerBandsFlanker Bands CoCo--branding(Dualbranding)branding (Dual branding) IngredientcoIngredient co--brandingbranding SameSame--companycocompany co--brandingbranding JointventurecoJoint venture co--brandingbranding MultisponsorcoMultisponsor co--brandingbranding
The Product and the Product Mix BrandAssetManagementBrand Asset Management BrandAuditingandRepositioningBrand Auditing and Repositioning www.bookfiesta4u.blogspot.com 11-454 Brand reportcardBrand report card The Product and the Product Mix BrandAssetManagementBrand Asset Management BrandAuditingandRepositioningBrand Auditing and Repositioning www.bookfiesta4u.blogspot.com 11-454 Brand reportcardBrand report card
The Product and the Product Mix PackagingandLabelingPackaging and Labeling PackagingPackaging PackagePackage PrimaryPackagePrimary Package www.bookfiesta4u.blogspot.com 11-455 ygy g SecondaryPackageSecondary Package ShippingPackageShipping Package Factorswhichhave contributedto the growing useFactors which have contributed to th e growing use ofpackaging as a marketing toolof packaging as a marketing tool SelfSelf--ServiceService ConsumeraffluenceConsumer affluence CompanyandbrandimageCompany and brand image InnovationopportunityInnovation opportunity The Product and the Product Mix PackagingandLabelingPackaging and Labeling PackagingPackaging PackagePackage PrimaryPackagePrimary Package www.bookfiesta4u.blogspot.com 11-455 ygy g SecondaryPackageSecondary Package ShippingPackageShipping Package Factorswhichhave contributedto the growing useFactors which have contributed to th e growing use ofpackaging as a marketing toolof packaging as a marketing tool SelfSelf--ServiceService ConsumeraffluenceConsumer affluence CompanyandbrandimageCompany and brand image InnovationopportunityInnovation opportunity
The Product and the Product Mix LabelingLabeling FunctionsFunctions IdentificationIdentification GradingGrading www.bookfiesta4u.blogspot.com 11-456 GradingGrading DescriptionDescription Consumeristshave lobbiedfor:Consumerists have lobbied for: OpendatingOpen dating UnitpricingUnit pricing GradelabelingGrade labeling PercentagelabelingPercentage labeling The Product and the Product Mix LabelingLabeling FunctionsFunctions IdentificationIdentification GradingGrading www.bookfiesta4u.blogspot.com 11-456 GradingGrading DescriptionDescription Consumeristshave lobbiedfor:Consumerists have lobbied for: OpendatingOpen dating UnitpricingUnit pricing GradelabelingGrade labeling PercentagelabelingPercentage labeling
Chapter15Chapter 15 DesigningandManagingDesigning and Managing ServicesServices byby PowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans Chapter15Chapter 15 DesigningandManagingDesigning and Managing ServicesServices byby PowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans
Every business is a service business. Kotler on Marketing www.bookfiesta4u.blogspot.com 11-458 Does your service put a smile on the customer s face? Every business is a service business. Kotler on Marketing www.bookfiesta4u.blogspot.com 11-458 Does your service put a smile on the customer s face?
Chapter Objectives Inthischapter,wefocusonthefollowingIn this chapter, we focus on the following questions:questions: Howareservicesdefinedandclassified?How are services defined and classified? www.bookfiesta4u.blogspot.com 11-459 Howdoservicesdifferfromgoods?How do services differ from goods? HowcanservicefirmsimprovetheirHow can service firms improve their differentiation,quality,andproductivity?differentiation, quality, and productivi ty? HowcangoodsHow can goods--producingcompaniesproducing companies improvetheircustomersupportservices?improve their customer support services? Chapter Objectives Inthischapter,wefocusonthefollowingIn this chapter, we focus on the following questions:questions: Howareservicesdefinedandclassified?How are services defined and classified? www.bookfiesta4u.blogspot.com 11-459 Howdoservicesdifferfromgoods?How do services differ from goods? HowcanservicefirmsimprovetheirHow can service firms improve their differentiation,quality,andproductivity?differentiation, quality, and productivi ty? HowcangoodsHow can goods--producingcompaniesproducing companies improvetheircustomersupportservices?improve their customer support services?
Keen.comisavirtualKeen.com is a virtual advicemarketplaceadvice marketplace The Nature of Services GovernmentsectorGovernment sector PrivatenonPrivate non--profitprofit sectorsector BusinessBusiness sectorsector www.bookfiesta4u.blogspot.com 11-460 ManufacturingManufacturing sectorsector ServiceService Keen.comisavirtualKeen.com is a virtual advicemarketplaceadvice marketplace The Nature of Services GovernmentsectorGovernment sector PrivatenonPrivate non--profitprofit sectorsector BusinessBusiness sectorsector www.bookfiesta4u.blogspot.com 11-460 ManufacturingManufacturing sectorsector ServiceService
CategoriesofServiceMixCategories of Service Mix PuretangiblegoodPure tangible good TangiblegoodwithTangible good with accompanyingservicesaccompanying services The Nature of Services www.bookfiesta4u.blogspot.com 11-461 accompanyingservicesaccompanying services HybridHybrid MajorservicewithaccompanyingMajor service with accompanying minorgoodsandservicesminor goods and services PureservicePure service CategoriesofServiceMixCategories of Service Mix PuretangiblegoodPure tangible good TangiblegoodwithTangible good with accompanyingservicesaccompanying services The Nature of Services www.bookfiesta4u.blogspot.com 11-461 accompanyingservicesaccompanying services HybridHybrid MajorservicewithaccompanyingMajor service with accompanying minorgoodsandservicesminor goods and services PureservicePure service
CharacteristicsofServicesandTheirCharacteristics of Services and Their MarketingImplicationsMarketing Implications IntangibilityIntangibility Servicepositioning strategy can beService positioning strategy can be The Nature of Services www.bookfiesta4u.blogspot.com 11-462 madetangiblethrough:made tangible through: PlacePlace PeoplePeople EquipmentEquipment CommunicationmaterialCommunication material SymbolsSymbols PricePrice CharacteristicsofServicesandTheirCharacteristics of Services and Their MarketingImplicationsMarketing Implications IntangibilityIntangibility Servicepositioning strategy can beService positioning strategy can be The Nature of Services www.bookfiesta4u.blogspot.com 11-462 madetangiblethrough:made tangible through: PlacePlace PeoplePeople EquipmentEquipment CommunicationmaterialCommunication material SymbolsSymbols PricePrice
O OOn nnl lli iin nne ee c cco oom mmp ppa aan nni iie ees ss t tth hha aat tt p ppr rro oov vvi iid dde ee s sse eer rrv vvi iic cce ees ss aar rre ee o oof fft tte een nn d ddi iir rre eec cct ttl lly yy i iim mmp
ppa aac cct tte eed dd b bby yy t tth hhe ee q qqu uua aal lli iit tty yy oof ff aa c ccu uus sst tto oom mme eer rr s ss c cco oom mmp ppu uut tte eer rr o oor rr t tth hhe ee c ccu uus sst tto oom mme eer rr
ss customerscomputerorthecustomerscustomer s computer or the customer s Internetconnection.CanyouthinkofInternet connection. Can you think of anotherservicesectorthathassolittleanother service sector that has so little controlovertheenvironmentcontrol over the environment inwhichtheirservicesin which their services areprovided?are provided?
The Nature of Services CarboneandHaeckelpurposetheCarbone and Haeckel purpose the followingforfollowing for customerexperiencecustomer experience engineeringengineering www.bookfiesta4u.blogspot.com 11-464 ggg g PerformanceandcontextcluesPerformance and context clues HumanicsHumanics MechanicsMechanics ExperienceblueprintExperience blueprint The Nature of Services CarboneandHaeckelpurposetheCarbone and Haeckel purpose the followingforfollowing for customerexperiencecustomer experience engineeringengineering www.bookfiesta4u.blogspot.com 11-464 ggg g PerformanceandcontextcluesPerformance and context clues HumanicsHumanics MechanicsMechanics ExperienceblueprintExperience blueprint
The Nature of Services InseparabilityInseparability VariabilityVariability Quality controlby:Quality control by: GoodhiringandtrainingproceduresGood hiring and training procedures ServiceblueprintService blueprint MiiM i i www.bookfiesta4u.blogspot.com 11-465 MonitoringMonitoring customercustomer satisfactionsatisfaction The Nature of Services InseparabilityInseparability VariabilityVariability Quality controlby:Quality control by: GoodhiringandtrainingproceduresGood hiring and training procedures ServiceblueprintService blueprint MiiM i i www.bookfiesta4u.blogspot.com 11-465 MonitoringMonitoring customercustomer satisfactionsatisfaction
PerishabilityPerishability Strategiesforbettermatching betweendemandandStrategies for better matching between demand and supply ina servicebusinesssupply in a service business DifferentialpricingDifferential pricing NonpeakdemandNonpeak demand CliC l i The Nature of Services www.bookfiesta4u.blogspot.com 11-466 ComplementaryservicesComplementary services ReservationsystemsReservation systems PartPart--timeemployeestime employees PeakPeak--timeefficiencytime efficiency IncreasedconsumerparticipationIncreased consumer participation SharedservicesShared services FacilitiesforfutureexpansionFacilities for future expansion PerishabilityPerishability Strategiesforbettermatching betweendemandandStrategies for better matching between demand and supply ina servicebusinesssupply in a service business DifferentialpricingDifferential pricing NonpeakdemandNonpeak demand CliC l i The Nature of Services www.bookfiesta4u.blogspot.com 11-466 ComplementaryservicesComplementary services ReservationsystemsReservation systems PartPart--timeemployeestime employees PeakPeak--timeefficiencytime efficiency IncreasedconsumerparticipationIncreased consumer participation SharedservicesShared services FacilitiesforfutureexpansionFacilities for future expansion
Marketing Strategies for Service Firms ThreeAdditionalPsThree Additional Ps PeoplePeople PhysicalPhysical www.bookfiesta4u.blogspot.com 11-467 yy evidenceevidence presentationpresentation ProcessProcess Marketing Strategies for Service Firms ThreeAdditionalPsThree Additional Ps PeoplePeople PhysicalPhysical www.bookfiesta4u.blogspot.com 11-467 yy evidenceevidence presentationpresentation ProcessProcess
Figure 15.3: Three Types of Marketing in Service Industries www.bookfiesta4u.blogspot.com 11-468 Figure 15.3: Three Types of Marketing in Service Industries www.bookfiesta4u.blogspot.com 11-468
Marketing Strategies for Service Firms ServiceCompanies facethreetasks:Service Companies face three tasks: CompetitivedifferentiationCompetitive differentiation ServicequalityService quality PdtiitP d ti it www.bookfiesta4u.blogspot.com 11-469 ProductivityProductivity ManagingdifferentiationManaging differentiation OfferingOffering Primary servicepackagePrimary service package Secondary servicefeaturesSecondary service features Marketing Strategies for Service Firms ServiceCompanies facethreetasks:Service Companies face three tasks: CompetitivedifferentiationCompetitive differentiation ServicequalityService quality PdtiitP d ti it www.bookfiesta4u.blogspot.com 11-469 ProductivityProductivity ManagingdifferentiationManaging differentiation OfferingOffering Primary servicepackagePrimary service package Secondary servicefeaturesSecondary service features
KaiserPermanenteOnlinehasKaiser Permanente Online has over30,000registeredusersover 30,000 registered users www.bookfiesta4u.blogspot.com 11-470 KaiserPermanenteOnlinehasKaiser Permanente Online has over30,000registeredusersover 30,000 registered users www.bookfiesta4u.blogspot.com 11-470
Marketing Strategies for Service Firms FasterandBetterDeliveryFaster and Better Delivery ReliabilityReliability ResilienceResilience www.bookfiesta4u.blogspot.com 11-471 InnovativenessInnovativeness ImageImage ManagingServiceQualityManaging Service Quality PerceivedservicePerceived service ExpectedserviceExpected service Marketing Strategies for Service Firms FasterandBetterDeliveryFaster and Better Delivery ReliabilityReliability ResilienceResilience www.bookfiesta4u.blogspot.com 11-471 InnovativenessInnovativeness ImageImage ManagingServiceQualityManaging Service Quality PerceivedservicePerceived service ExpectedserviceExpected service
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Marketing Strategies for Service Firms
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Fivedeterminantsof servicequalityFive determinants of service quality ReliabilityReliability ResponsivenessResponsiveness AA Marketing Strategies for Service Firms www.bookfiesta4u.blogspot.com 11-474 AssuranceAssurance EmpathyEmpathy TangiblesTangibles StrategicConceptStrategic Concept TopTop--ManagementCommitmentManagement Commitment HighStandardsHigh Standards SelfSelf--ServiceTechnologies(SSTS)Service Technologies (SSTS) Fivedeterminantsof servicequalityFive determinants of service quality ReliabilityReliability ResponsivenessResponsiveness AA Marketing Strategies for Service Firms www.bookfiesta4u.blogspot.com 11-474 AssuranceAssurance EmpathyEmpathy TangiblesTangibles StrategicConceptStrategic Concept TopTop--ManagementCommitmentManagement Commitment HighStandardsHigh Standards SelfSelf--ServiceTechnologies(SSTS)Service Technologies (SSTS)
Myalert.comprovidesaccesstoservicesMyalert.com provides access to services thatuserscanperformthemselvesthat users can perform themselves www.bookfiesta4u.blogspot.com 11-475 Myalert.comprovidesaccesstoservicesMyalert.com provides access to services thatuserscanperformthemselvesthat users can perform themselves www.bookfiesta4u.blogspot.com 11-475
Table 15.1 Customer Importance and Performance Ratings for an Auto Dealership A AA t tt t tt r rr i ii b bb u uu t tt e ee N NN u uu m mm b bb e ee r rr A AA t tt t tt r rr i ii b bb u uu t tt e ee D DD e ee s ss c
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rr i ii g gg h hh t tt t tt h hh e ee f ff i ii r rr s ss t tt t tt i ii m mm e ee F FF a aa s ss t tt a aa c cc t tt i ii o oo n nn o oo n nn c cc o
oo m mm p pp l ll a aa i ii n nn t tt s ss P PP r rr o oo m mm p pp t tt w ww a aa r rr r rr a aa n nn t tt y yy w ww o oo r rr k kk A AA b bb l ll e
ee t tt o oo d dd o oo a aa n nn y yy j jj o oo b bb n nn e ee e ee d dd e ee d dd 3 33 . .. 8 88 3 33 3 33 . .. 6 66 3 33 3 33 . .. 6 66 0 00 3 33 .
.. 5 55 6 66 2 22 . .. 6 66 3 33 2 22 . .. 7 77 3 33 3 33 . .. 1 11 5 55 3 33 . .. 0 00 0 00 See text for complete table www.bookfiesta4u.blogspot.com
Marketing Strategies for Service Firms
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nnt tt c ccu uus sst ttom omome eer rrs ss w wwi iit tth hh i iin nnc cce een nnt tti iive veves ss t tto oo s ssu uub bbs sst tti iit ttu uut tte ee t tth hhe eei iir rr owown nn llab ababor oror ffor oror c ccom omomp ppan anany yy l
llab ababor oror H HHar ararn nne ees sss ss t tth hhe ee p ppow owowe eer rr of ofof t tte eec cch hhn nnol olology ogyogy t tto oo gi gigive veve c ccu uus sst ttom omome eer rrs ss ac acacc cce ees sss ss tto oo bbe eet ttt tte eer rr s
sse eer rrvi vivic cce ee an anand dd m mmak akake ee s sse eer rrvi vivic cce ee w wwor orork kke eer rrs ss m mmor orore ee p ppr rrod ododu uuc cct tti iive veve www.bookfiesta4u.blogspot.com 11-477
Managing Product Support Services CustomershavethreeworriesCustomers have three worries Reliability andfailurefrequencyReliability and failure frequency Di diD i d i www.bookfiesta4u.blogspot.com 11-478 Downtime durationDowntime duration OutOut--ofof--pocketcostsofpocket costs of maintenanceand repairmaintenance and repair LifeLife--cyclecostcycle cost Managing Product Support Services CustomershavethreeworriesCustomers have three worries Reliability andfailurefrequencyReliability and failure frequency Di diD i d i www.bookfiesta4u.blogspot.com 11-478 Downtime durationDowntime duration OutOut--ofof--pocketcostsofpocket costs of maintenanceand repairmaintenance and repair LifeLife--cyclecostcycle cost
Managing Product Support Services To provide thebest supportforexpensiveTo provide the best support for expensive equipment, firmsoffer:equipment, firms offer: FacilitatingservicesFacilitating services ValueValue--augmentingservicesaugmenting services www.bookfiesta4u.blogspot.com 11-479 ValueValue augmentingservicesaugmenting services HermanMillerOfficeFurnitureCompanyHerman Miller Office Furniture Company offers:offers: FiveFive--yearproductwarrantiesyear product warranties QualityauditsafterinstallationQuality audits after installation GuaranteedmoveGuaranteed move--indatesin dates TradeTrade--inallowancesonsystemsproductsin allowances on systems products Managing Product Support Services To provide thebest supportforexpensiveTo provide the best support for expensive equipment, firmsoffer:equipment, firms offer: FacilitatingservicesFacilitating services ValueValue--augmentingservicesaugmenting services www.bookfiesta4u.blogspot.com 11-479 ValueValue augmentingservicesaugmenting services HermanMillerOfficeFurnitureCompanyHerman Miller Office Furniture Company offers:offers: FiveFive--yearproductwarrantiesyear product warranties QualityauditsafterinstallationQuality audits after installation GuaranteedmoveGuaranteed move--indatesin dates TradeTrade--inallowancesonsystemsproductsin allowances on systems products
Managing Product Support Services PostsaleServiceStrategyPostsale Service Strategy MajortrendsinproductsupportserviceMajor trends in product support service Lelehas noted the following:Lele has noted the following: www.bookfiesta4u.blogspot.com 11-480 Lelehas noted the following:Lele has noted the following: Equipmentmanufacturersarebuilding moreEquipment manufacturers are building more reliableandmoreeasily fixableequipmentreliable and more easily fixable equipment Customersarebecoming moresophisticatedCustomers are becoming more sophisticated about buying product supportservicesabout buying product support services Serviceunbundling Service unbundling Managing Product Support Services PostsaleServiceStrategyPostsale Service Strategy MajortrendsinproductsupportserviceMajor trends in product support service Lelehas noted the following:Lele has noted the following: www.bookfiesta4u.blogspot.com 11-480 Lelehas noted the following:Lele has noted the following: Equipmentmanufacturersarebuilding moreEquipment manufacturers are building more reliableandmoreeasily fixableequipmentreliable and more easily fixable equipment Customersarebecoming moresophisticatedCustomers are becoming more sophisticated about buying product supportservicesabout buying product support services Serviceunbundling Service unbundling
Managing Product Support Services Customersdislikedealing withmultipleCustomers dislike dealing with multiple serviceprovidershandling differenttypesservice providers handling different type s ofequipmentof equipment ThirdThird--party serviceorganizationsparty service organizations www.bookfiesta4u.blogspot.com 11-481 Servicecontracts(extended warranties)Service contracts (extended warranties) may diminishin importancemay diminish in importance CustomerservicechoicesareincreasingCustomer service choices are increasing rapidlyrapidly thisis holding downpricesandthis is holding down prices and profitsprofits Companiesareincreasing the quality ofCompanies are increasing the quality of theircallcentersandtheircustomerservicetheir call centers and their customer ser vice representatives(CSRs)representatives (CSRs) Managing Product Support Services Customersdislikedealing withmultipleCustomers dislike dealing with multiple serviceprovidershandling differenttypesservice providers handling different type s ofequipmentof equipment ThirdThird--party serviceorganizationsparty service organizations www.bookfiesta4u.blogspot.com 11-481 Servicecontracts(extended warranties)Service contracts (extended warranties) may diminishin importancemay diminish in importance CustomerservicechoicesareincreasingCustomer service choices are increasing rapidlyrapidly thisis holding downpricesandthis is holding down prices and profitsprofits Companiesareincreasing the quality ofCompanies are increasing the quality of theircallcentersandtheircustomerservicetheir call centers and their customer ser vice representatives(CSRs)representatives (CSRs)
Chapter16Chapter 16 DevelopingPriceStrategiesDeveloping andProgramsand Programs byby PowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of Chapter16Chapter 16 DevelopingPriceStrategiesDeveloping andProgramsand Programs byby PowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of
Price Strategies
New Orleans Price Strategies
New Orleans
Sellvalue,Sell value, tit i Kotler on Marketing www.bookfiesta4u.blogspot.com 11-483 notprice.not price. Sellvalue,Sell value, tit i Kotler on Marketing www.bookfiesta4u.blogspot.com 11-483 notprice.not price.
Chapter Objectives Inthischapter,wefocusonthreeIn this chapter, we focus on three questions:questions: HowshouldapricebesetonaproductorHow should a price be set on a product or serviceforthefirsttime?service for the first time? www.bookfiesta4u.blogspot.com 11-484 serviceforthefirsttime?service for the first time? HowshouldthepricebeadaptedtomeetHow should the price be adapted to meet varyingcircumstancesandopportunities?varying circumstances and opportunities? WhenshouldthecompanyinitiateapriceWhen should the company initiate a price change,andhowshoulditrespondtoachange, and how should it respond to a competitor spricechange?competitor s price change? Chapter Objectives Inthischapter,wefocusonthreeIn this chapter, we focus on three questions:questions: HowshouldapricebesetonaproductorHow should a price be set on a product or serviceforthefirsttime?service for the first time? www.bookfiesta4u.blogspot.com 11-484 serviceforthefirsttime?service for the first time? HowshouldthepricebeadaptedtomeetHow should the price be adapted to meet varyingcircumstancesandopportunities?varying circumstances and opportunities? WhenshouldthecompanyinitiateapriceWhen should the company initiate a price change,andhowshoulditrespondtoachange, and how should it respond to a competitor spricechange?competitor s price change?
Figure 16.1: Nine Price-Quality Strategies www.bookfiesta4u.blogspot.com 11-485 Figure 16.1: Nine Price-Quality Strategies www.bookfiesta4u.blogspot.com 11-485
Figure 16.2: Price Should Align with Value www.bookfiesta4u.blogspot.com 11-486 Figure 16.2: Price Should Align with Value www.bookfiesta4u.blogspot.com 11-486
Setting the Price Step1:SelectingthepricingobjectiveStep 1: Selecting the pricing objective SurvivalSurvival MaximizecurrentprofitsMaximize current profits MaximizetheirmarketshareMaximize their market share MarketMarket--penetrationpricingpenetration pricing www.bookfiesta4u.blogspot.com 11-487 MarketMarket penetrationpricingpenetration pricing Bestwhen:Best when: MarketishighlypriceMarket is highly price--sensitive,andalowpricesensitive, and a low price stimulatesmarketgrowth,stimulates market growth, ProductionanddistributioncostsfallwithinProduction and distribution costs fall wit hin accumulatedproductionexperience,andaccumulated production experience, and LowpricediscouragesactualandpotentialLow price discourages actual and potential competitioncompetition Setting the Price Step1:SelectingthepricingobjectiveStep 1: Selecting the pricing objective SurvivalSurvival MaximizecurrentprofitsMaximize current profits MaximizetheirmarketshareMaximize their market share MarketMarket--penetrationpricingpenetration pricing www.bookfiesta4u.blogspot.com 11-487 MarketMarket penetrationpricingpenetration pricing Bestwhen:Best when: MarketishighlypriceMarket is highly price--sensitive,andalowpricesensitive, and a low price stimulatesmarketgrowth,stimulates market growth, ProductionanddistributioncostsfallwithinProduction and distribution costs fall wit hin accumulatedproductionexperience,andaccumulated production experience, and LowpricediscouragesactualandpotentialLow price discourages actual and potential competitioncompetition
Manycompaniesengagein marketMany companies engage in market skimming, offeringnewproductsatskimming, offering new products at whateverpricethemarketwillbear,thenwhatever price the market will bear, then overtimedecreasingthepriceinordertoover time decreasing the price in order toove rtimedecreasingthepriceinordertoover time decreasing the price in order to gainthemaximumprofitfromeachgain the maximum profit from each marketsegment.Canyouthinkofanymarket segment. Can you think of any productsthatwouldn tfitproducts that wouldn t fit thispricingmodel?this pricing model? Whynot?Why not? Manycompaniesengagein marketMany companies engage in market skimming, offeringnewproductsatskimming, offering new products at whateverpricethemarketwillbear,thenwhatever price the market will bear, then overtimedecreasingthepriceinordertoover time decreasing the price in order toove rtimedecreasingthepriceinordertoover time decreasing the price in order to gainthemaximumprofitfromeachgain the maximum profit from each marketsegment.Canyouthinkofanymarket segment. Can you think of any productsthatwouldn tfitproducts that wouldn t fit thispricingmodel?this pricing model? Whynot?Why not?
Maytag shomepagepresentsitsMaytag s homepage presents its corporatefamilyofbrands corporate family of brands www.bookfiesta4u.blogspot.com 11-489 Maytag shomepagepresentsitsMaytag s homepage presents its corporatefamilyofbrands corporate family of brands www.bookfiesta4u.blogspot.com 11-489
Setting the Price Step2:DeterminingDemandStep 2: Determining Demand PricesensitivityPrice sensitivity TotalCostofOwnership(TCO)Total Cost of Ownership (TCO) www.bookfiesta4u.blogspot.com 11-490 Setting the Price Step2:DeterminingDemandStep 2: Determining Demand PricesensitivityPrice sensitivity TotalCostofOwnership(TCO)Total Cost of Ownership (TCO) www.bookfiesta4u.blogspot.com 11-490
Setting the Price TomNagle offersthis listoffactorsassociatedTom Nagle offers this list of factors a ssociated with lower pricesensitivitywith lower price sensitivity TheproductismoredistinctiveThe product is more distinctive BuyersarelessawareofsubstitutesBuyers are less aware of substitutes BuyerscannoteasilycomparethequalityofsubstitutesBuyers cannot easily compare the q uality of substitutes Thdiillfhb liTh di i ll f h b l i www.bookfiesta4u.blogspot.com 11-491 Theexpenditureisasmallerpartofthebuyer stotalincomeThe expenditure is a smaller part of the buyer s total income TheexpenditureissmallcomparedtothetotalcostoftheendThe expenditure is small compar ed to the total cost of the end productproduct PartofthecostisbornebyanotherpartyPart of the cost is borne by another party TheproductisusedinconjunctionwithassetspreviouslyboughtThe product is used in conj unction with assets previously bought Theproductisassumedtohavemorequality,prestige,orThe product is assumed to have mor e quality, prestige, or exclusivenessexclusiveness BuyerscannotstoretheproductBuyers cannot store the product Setting the Price TomNagle offersthis listoffactorsassociatedTom Nagle offers this list of factors a ssociated with lower pricesensitivitywith lower price sensitivity TheproductismoredistinctiveThe product is more distinctive BuyersarelessawareofsubstitutesBuyers are less aware of substitutes BuyerscannoteasilycomparethequalityofsubstitutesBuyers cannot easily compare the q uality of substitutes Thdiillfhb liTh di i ll f h b l i www.bookfiesta4u.blogspot.com 11-491 Theexpenditureisasmallerpartofthebuyer stotalincomeThe expenditure is a smaller part of the buyer s total income TheexpenditureissmallcomparedtothetotalcostoftheendThe expenditure is small compar ed to the total cost of the end productproduct PartofthecostisbornebyanotherpartyPart of the cost is borne by another party TheproductisusedinconjunctionwithassetspreviouslyboughtThe product is used in conj unction with assets previously bought Theproductisassumedtohavemorequality,prestige,orThe product is assumed to have mor e quality, prestige, or exclusivenessexclusiveness BuyerscannotstoretheproductBuyers cannot store the product
Setting the Price EstimatingDemandCurvesEstimating Demand PriceElasticityofDemandPrice Elasticity InelasticInelastic ElasticElastic www.bookfiesta4u.blogspot.com 11-492 PriceindifferencebandPrice indifference Setting the Price EstimatingDemandCurvesEstimating Demand PriceElasticityofDemandPrice Elasticity InelasticInelastic ElasticElastic www.bookfiesta4u.blogspot.com 11-492 PriceindifferencebandPrice indifference
Curves of Demand
band Curves of Demand
band
Setting the Price Step3:EstimatingCostStep 3: Estimating Cost TypesofCostandLevelsofProductionTypes of Cost and Levels of Production Fixedcosts (overhead)Fixed costs (overhead) ViabltV iabl t www.bookfiesta4u.blogspot.com 11-493 VariablecostVariable cost TotalcostTotal cost AveragecostAverage cost AccumulatedProductionAccumulated Production Experiencecurve(Learning curve)Experience curve (Learning curve) Setting the Price Step3:EstimatingCostStep 3: Estimating Cost TypesofCostandLevelsofProductionTypes of Cost and Levels of Production Fixedcosts (overhead)Fixed costs (overhead) ViabltV iabl t www.bookfiesta4u.blogspot.com 11-493 VariablecostVariable cost TotalcostTotal cost AveragecostAverage cost AccumulatedProductionAccumulated Production Experiencecurve(Learning curve)Experience curve (Learning curve)
Setting the Price DifferentiatedMarketingOffersDifferentiated Marketing Offers ActivityActivity--basedcost (ABC)accountingbased cost (ABC) accounting TargetcostingTarget costing Step4:AnalyzingCompetitors Step 4: Analyzing Competitors www.bookfiesta4u.blogspot.com 11-494 Step4:AnalyzingCompetitorsStep 4: Analyzing Competitors Cost,Prices,andOffersCost, Prices, and Offers Setting the Price DifferentiatedMarketingOffersDifferentiated Marketing Offers ActivityActivity--basedcost (ABC)accountingbased cost (ABC) accounting TargetcostingTarget costing Step4:AnalyzingCompetitors Step 4: Analyzing Competitors www.bookfiesta4u.blogspot.com 11-494 Step4:AnalyzingCompetitorsStep 4: Analyzing Competitors Cost,Prices,andOffersCost, Prices, and Offers
Setting the Price Step5:SelectingaPricingMethodStep 5: Selecting a Pricing MarkupPricingMarkup Pricing UnitCost=Unit Cost = variablecost+(fixedcost/unitsales)variable cost + (fixed www.bookfiesta4u.blogspot.com 11-495 MarkuppriceMarkup price Markupprice=Markup price= unitcost/(1unit cost/ (1 desiredreturnonsales)desired TargetTarget--ReturnPricingReturn Pricing TargetTarget--returnprice=return price = unitcost+(desiredreturnXinvestmentcapital)/unitsalesunit X investment capital)/unit sales Setting the Price Step5:SelectingaPricingMethodStep 5: Selecting a Pricing MarkupPricingMarkup Pricing UnitCost=Unit Cost = variablecost+(fixedcost/unitsales)variable cost + (fixed www.bookfiesta4u.blogspot.com 11-495 MarkuppriceMarkup price Markupprice=Markup price= unitcost/(1unit cost/ (1 desiredreturnonsales)desired TargetTarget--ReturnPricingReturn Pricing TargetTarget--returnprice=return price = unitcost+(desiredreturnXinvestmentcapital)/unitsalesunit X investment capital)/unit sales
Method cost/unit sales)
return on sales) cost + (desired return Method cost/unit sales)
return on sales) cost + (desired return
Setting the Price B BBr rre eea aak kk-e eev vve een nn v vvo ool llu uum mme eeB BBr rre eeak akak--e eeve veven nn vol volvolu uum mme ee = f = f= fi iixe xexed dd c ccos osost tt / // ( (( p ppr rri iic cce ee var varvari iiab
ababl lle ee ccos osost tt) )) P PPe eer rrc cce eei iiv vve eed dd-V VVa aal llu uue ee P PPr rri iic cci iin nng gg P PPe eer rrc cce eei iive veved dd val valvalu uue ee P PPr rri iic cce ee b bbu uuye
yeyer rrs ss Figure 16 8: Break-EvChart for en www.bookfiesta4u.blogspot.com 11-496 PricebuyersPrice buyers ValuebuyersValue buyers LoyalbuyersLoyal buyers ValueValue--inin--usepriceuse price Figure 16.8: Break-Even Chart for Determining Target-Return Price and Break-Even Volume
Setting the Price ValuePricingValue Pricing Everyday lowpricing (EDLP)Everyday low pricing (EDLP) HighHigh--lowpricinglow pricing GoingGoing--RatePricingRate Pricing www.bookfiesta4u.blogspot.com 11-497 GoingGoing RatePricingRate Pricing AuctionAuction--TypePricingType Pricing Englishauctions(ascending bids)English auctions (ascending bids) Dutch auctions(descending bids)Dutch auctions (descending bids) SealedSealed--bidauctionsbid auctions GroupPricingGroup Pricing Setting the Price ValuePricingValue Pricing Everyday lowpricing (EDLP)Everyday low pricing (EDLP) HighHigh--lowpricinglow pricing GoingGoing--RatePricingRate Pricing www.bookfiesta4u.blogspot.com 11-497 GoingGoing RatePricingRate Pricing AuctionAuction--TypePricingType Pricing Englishauctions(ascending bids)English auctions (ascending bids) Dutch auctions(descending bids)Dutch auctions (descending bids) SealedSealed--bidauctionsbid auctions GroupPricingGroup Pricing
Table 16.1: Effect of Different Bids on Expected Profit Company sCompany s BidBid Company sCompany s ProfitProfit ProbabilityProbability ofGettingof Getting AwardwithAward with ThisBidThis Bid (Assumed)(Assumed) ExpectedExpected ProfitProfit www.bookfiesta4u.blogspot.com 11-498 $9,500$ 9,500 $100$ 100 0.810.81 $81$ 81 10,00010,000 600600 0.360.36 216216 10,50010,500 1,1001,100 0.090.09 9999 11,00011,000 1,6001,600 0.010.01 1616 Table 16.1: Effect of Different Bids on Expected Profit Company sCompany s BidBid Company sCompany s ProfitProfit ProbabilityProbability ofGettingof Getting AwardwithAward with ThisBidThis Bid (Assumed)(Assumed) ExpectedExpected ProfitProfit www.bookfiesta4u.blogspot.com 11-498 $9,500$ 9,500 $100$ 100 0.810.81 $81$ 81 10,00010,000 600600 0.360.36 216216 10,50010,500 1,1001,100 0.090.09 9999 11,00011,000 1,6001,600 0.010.01 1616
volumebuy.com:grouporpoolpricingvolumebuy.com: group or pool pricing www.bookfiesta4u.blogspot.com 11-499 volumebuy.com:grouporpoolpricingvolumebuy.com: group or pool pricing www.bookfiesta4u.blogspot.com 11-499
S SSo oom mme ee l lla aar rrg gge ee e een nnt tti iit tti iie ees ss, ,, b bbo oot tth hh p ppu uub bbl lli iic cc a aan nnd dd p ppr rri iiv vva aat tte ee, ,, c ccu uur rrr rre een nnt ttl lly yy b bbi iid
dd o oon nnl lli iin nne ee f ffo oor rr m mma aan nny yy p ppr rro ood ddu uuc cct tts ss a aan nnd dd sse eer rrv vvi iic cce ees ss. .. D DDo oo y yyo oou uu t tth hhi iin nnk kk t tth hhe eer rre ee w wwi iil
lll ll b bbe ee a aa m mma aar rrk kke eet tt f ffo oor rr c cco oon nns ssu uum mme eer rrs ss tto oo yy bidonelectricalpower,likemajorcorporatebid on electrical power, like major corpo rate electricityusersdo?Whataboutoilelectricity users do? What about oil forheating?Canyouthinkofanyfor heating? Can you think of any otherproductsorserviceswithaother products or services with a potentialonlineauctionpotential online auction marketforhomeusers?market for home users?
Setting the Price Step6:SelectingtheFinalPriceStep 6: Selecting the Final Price PsychologicalPricingPsychological Pricing ReferencepriceReference price GainGain--andand--RiskRisk--SharingPricingSharing Pricing InfluenceoftheOtherMarketingElementsInfluence of the Other Marketing Elements www.bookfiesta4u.blogspot.com 11-501 InfluenceoftheOtherMarketingElementsInfluence of the Other Marketing Elements Brands withaveragerelativequality buthigh relativeBrands with average relative qua lity but high relative advertising budgetschargedpremiumpricesadvertising budgets charged premium price s Brands withhigh relativequality andhigh relativeBrands with high relative quality and high relative advertising budgetsobtained thehighest pricesadvertising budgets obtained the hi ghest prices ThepositiverelationshipbetweenhighadvertisingThe positive relationship between hig h advertising budgets andhigh pricesheld moststrongly in the laterbudgets and high prices held most strongly in the later stagesof the product lifecyclefor marketleadersstages of the product life cycle for market leaders Setting the Price Step6:SelectingtheFinalPriceStep 6: Selecting the Final Price PsychologicalPricingPsychological Pricing ReferencepriceReference price GainGain--andand--RiskRisk--SharingPricingSharing Pricing InfluenceoftheOtherMarketingElementsInfluence of the Other Marketing Elements www.bookfiesta4u.blogspot.com 11-501 InfluenceoftheOtherMarketingElementsInfluence of the Other Marketing Elements Brands withaveragerelativequality buthigh relativeBrands with average relative qua lity but high relative advertising budgetschargedpremiumpricesadvertising budgets charged premium price s Brands withhigh relativequality andhigh relativeBrands with high relative quality and high relative advertising budgetsobtained thehighest pricesadvertising budgets obtained the hi ghest prices ThepositiverelationshipbetweenhighadvertisingThe positive relationship between hig h advertising budgets andhigh pricesheld moststrongly in the laterbudgets and high prices held most strongly in the later stagesof the product lifecyclefor marketleadersstages of the product life cycle for market leaders
Setting the Price B BBr rran anand dds ss w wwi iit tth hh ave aveaver rrage ageage r rre eel llat atati iive veve q qqu uual alali iit tty yy b bbu uut tt hhi iigh ghgh rre eel llat atati iive veve ad adadve vever rrt tti iis ssi iin nng gg b bbu uud
ddge geget tts ss c cch hhar ararge geged dd p ppr rre eem mmi iiu uum mm p ppr rri iic cce ees ss B BBr rran anand dds ss w wwi iit tth hh h hhi iigh ghgh r rre eel llat atati iive veve q qqu uual alali iit tty yy an anand dd h
hhi iigh ghgh rre eel llat atati iive veve ad adadve vever rrt tti iis ssi iin nng gg b bbu uud ddge geget tts ss ob obobt ttai aiain nne eed dd t tth hhe ee h hhi iigh ghghe ees sst tt ppr rri iic cce ees ss T TTh hhe ee p ppos ososi iit
tti iive veve r rre eel llat atati iion onons ssh hhi iip pp b bbe eet ttw wwe eee een nn h hhi iigh ghgh ad adadve vever rrt tti iis ssi iin nng gg T TTh hhe ee p ppos ososi iit tti iive veve r rre eel llat atati iion onons ssh hhi iip pp
b bbe eet ttw wwe eee een nn h hhi iigh ghgh ad adadve vever rrt tti iis ssi iin nng gg b bbu uud ddge geget tts ss an anand dd h hhi iigh ghgh p ppr rri iic cce ees ss h hhe eel lld dd m mmos osost tt s sst ttr rron onongl glgly yy iin nn
tth hhe ee llat atate eer rr s sst ttage ageages ss of ofof t tth hhe ee p ppr rrod ododu uuc cct tt l lli iif ffe ee c ccyc ycycl lle ee f ffor oror m mmar arark kke eet tt lle eead adade eer rrs ss C CCo oom mmp ppa aan nny yy
P PPr rri iic cci iin nng gg P PPo ool lli iic cci iie ees ss I IIm mmp ppa aac cct tt o oof ff P PPr rri iic cce ee o oon nn O OOt tth hhe eer rr P PPa aar rrt tti iie ees ss www.bookfiesta4u.blogspot.com 11-502
Adapting the Price GeographicalPricing(Cash,Geographical Pricing (Cash, Countertrade,Barter)Countertrade, Barter) CountertradeCountertrade www.bookfiesta4u.blogspot.com 11-503 BarterBarter CompensationdealCompensation deal BuybackarrangementBuyback arrangement OffsetOffset PriceDiscountsandAllowancesPrice Discounts and Allowances Adapting the Price GeographicalPricing(Cash,Geographical Pricing (Cash, Countertrade,Barter)Countertrade, Barter) CountertradeCountertrade www.bookfiesta4u.blogspot.com 11-503 BarterBarter CompensationdealCompensation deal BuybackarrangementBuyback arrangement OffsetOffset PriceDiscountsandAllowancesPrice Discounts and Allowances
Table 16.2: Price Discounts and Allowances CashDiscount:Cash Discount: ApricereductiontobuyerswhopaybillsA price reduction to buyers who pay bills promptly.Atypicalexampleis 2/10,net30, promptly. A typical example is 2/10, net 30, whichmeansthatpaymentisduewithin30which means that payment is due within 30 daysandthatthebuyercandeduct2days and that the buyer can deduct 2 percentbypayingthebillwithin10days.percent by paying the bill within 10 days. QuantityDiscount:Quantity Discount: ApricereductiontothosewhobuylargeA price red uction to those who buy large volumes.Atypicalexampleis $10perunitvolumes. A typical example is $10 per unit www.bookfiesta4u.blogspot.com 11-504 forlessthan100units;$9perunitfor100orfor less than 100 units; $9 per unit for 10 0 or moreunits. Quantitydiscountsmustbemore units. Quantity discounts must be offeredequallytoallcustomersandmustoffered equally to all customers and must notexceedthecostsavingstotheseller.not exceed the cost savings to the seller. TheycanbeofferedoneachorderplacedorThey can be offered on each order placed or onthenumberofunitsorderedoveragivenon the number of units ordered over a given period.period. See text for complete table Table 16.2: Price Discounts and Allowances CashDiscount:Cash Discount: ApricereductiontobuyerswhopaybillsA price reduction to buyers who pay bills promptly.Atypicalexampleis 2/10,net30, promptly. A typical example is 2/10, net 30, whichmeansthatpaymentisduewithin30which means that payment is due within 30 daysandthatthebuyercandeduct2days and that the buyer can deduct 2 percentbypayingthebillwithin10days.percent by paying the bill within 10 days. QuantityDiscount:Quantity Discount: ApricereductiontothosewhobuylargeA price red uction to those who buy large volumes.Atypicalexampleis $10perunitvolumes. A typical example is $10 per unit www.bookfiesta4u.blogspot.com 11-504 forlessthan100units;$9perunitfor100orfor less than 100 units; $9 per unit for 10 0 or moreunits. Quantitydiscountsmustbemore units. Quantity discounts must be offeredequallytoallcustomersandmustoffered equally to all customers and must notexceedthecostsavingstotheseller.not exceed the cost savings to the seller. TheycanbeofferedoneachorderplacedorThey can be offered on each order placed or onthenumberofunitsorderedoveragivenon the number of units ordered over a given period.period. See text for complete table
Adapting the Price PromotionalPricingPromotional Pricing LossLoss--leaderpricingleader pricing SpecialSpecial--eventpricingevent pricing ChbC h b www.bookfiesta4u.blogspot.com 11-505 CashrebatesCash rebates LowLow--interestfinancinginterest financing LongerpaymenttermsLonger payment terms WarrantiesandservicecontractsWarranties and service contracts PsychologicaldiscountingPsychological discounting Adapting the Price PromotionalPricingPromotional Pricing LossLoss--leaderpricingleader pricing SpecialSpecial--eventpricingevent pricing ChbC h b www.bookfiesta4u.blogspot.com 11-505 CashrebatesCash rebates LowLow--interestfinancinginterest financing LongerpaymenttermsLonger payment terms WarrantiesandservicecontractsWarranties and service contracts PsychologicaldiscountingPsychological discounting
Adapting the Price DiscriminatoryPricingDiscriminatory Pricing CustomersegmentpricingCustomer segment pricing ProductProduct--formpricingform pricing www.bookfiesta4u.blogspot.com 11-506 ImagepricingImage pricing ChannelpricingChannel pricing LocationpricingLocation pricing TimepricingTime pricing YieldpricingYield pricing Adapting the Price DiscriminatoryPricingDiscriminatory Pricing CustomersegmentpricingCustomer segment pricing ProductProduct--formpricingform pricing www.bookfiesta4u.blogspot.com 11-506 ImagepricingImage pricing ChannelpricingChannel pricing LocationpricingLocation pricing TimepricingTime pricing YieldpricingYield pricing
Adapting the Price ProductProduct--mixpricingmix pricing ProductProduct--LinePricingLine Pricing OptionalOptional--FeaturePricingFeature Pricing CaptiveCaptive--ProductPricingProduct Pricing www.bookfiesta4u.blogspot.com 11-507 pp gg CaptiveproductsCaptive products TwoTwo--PartPricingPart Pricing ByBy--ProductPricingProduct Pricing ProductProduct--BundlingPricingBundling Pricing PurebundlingPure bundling MixedbundlingMixed bundling Adapting the Price ProductProduct--mixpricingmix pricing ProductProduct--LinePricingLine Pricing OptionalOptional--FeaturePricingFeature Pricing CaptiveCaptive--ProductPricingProduct Pricing www.bookfiesta4u.blogspot.com 11-507 pp gg CaptiveproductsCaptive products TwoTwo--PartPricingPart Pricing ByBy--ProductPricingProduct Pricing ProductProduct--BundlingPricingBundling Pricing PurebundlingPure bundling MixedbundlingMixed bundling
personify.comprovidessoftwarethathelpspersonify.com provides software that helps WebmerchantsfindtargetcustomersWeb merchants find target customers www.bookfiesta4u.blogspot.com 11-508 personify.comprovidessoftwarethathelpspersonify.com provides software that helps WebmerchantsfindtargetcustomersWeb merchants find target customers www.bookfiesta4u.blogspot.com 11-508
Initiating and Responding to Price Changes InitiatingPriceCutsInitiating Price Cuts DrivetodominatethemarketDrive to dominate the market www.bookfiesta4u.blogspot.com 11-509 throughlowercoststhrough lower costs LowqualitytrapLow quality trap FragileFragile--marketmarket--sharetrapshare trap ShallowShallow--pocketstrappockets trap Initiating and Responding to Price Changes InitiatingPriceCutsInitiating Price Cuts DrivetodominatethemarketDrive to dominate the market www.bookfiesta4u.blogspot.com 11-509 throughlowercoststhrough lower costs LowqualitytrapLow quality trap FragileFragile--marketmarket--sharetrapshare trap ShallowShallow--pocketstrappockets trap
Table 16.3: Marketing-Mix Alternatives StrategicOptionsStrategic Options ReasoningReasoning ConsequencesConsequences 1.Maintainpriceand1. Maintain price and perceivedquality.perceived quality. EngageinselectiveEngage in selective customerpruning.customer pruning. FirmhashigherFirm has higher customerloyalty.Itiscustomer loyalty. It is willingtolosepoorerwilling to lose poorer customerstocustomers to competitors.competitors. Smallermarketshare.Smaller market share. Loweredprofitability.Lowered profitability. 2.Raisepriceand2. Raise price and RaisepricetocoverRaise price to cover Smallerm arketshare.Smaller market share. www.bookfiesta4u.blogspot.com 11-510 pp perceivedquality.perceived quality. 3.Maintainpriceand3. Maintain price and raiseperceivedraise perceived quality.quality. pp risingcosts.Improverising costs. Improve qualitytojustifyhigherquality to justify higher prices.prices. ItischeapertoIt is cheaper to maintainpriceandmaintain price and raiseperceivedquality.raise perceived quality. MaintainedMaintained profitability.profitability. Smallermarketshare.Smaller market share. ShortShort--termdeclineinterm decline in profitability.Longprofitability. Long--termterm increaseinincrease in profitability.profitability. See text for complete table Table 16.3: Marketing-Mix Alternatives StrategicOptionsStrategic Options ReasoningReasoning ConsequencesConsequences 1.Maintainpriceand1. Maintain price and perceivedquality.perceived quality. EngageinselectiveEngage in selective customerpruning.customer pruning. FirmhashigherFirm has higher customerloyalty.Itiscustomer loyalty. It is willingtolosepoorerwilling to lose poorer customerstocustomers to competitors.competitors. Smallermarketshare.Smaller market share. Loweredprofitability.Lowered profitability. 2.Raisepriceand2. Raise price and RaisepricetocoverRaise price to cover Smallerm arketshare.Smaller market share. www.bookfiesta4u.blogspot.com 11-510 pp perceivedquality.perceived quality. 3.Maintainpriceand3. Maintain price and raiseperceivedraise perceived quality.quality. pp risingcosts.Improverising costs. Improve
qualitytojustifyhigherquality to justify higher prices.prices. ItischeapertoIt is cheaper to maintainpriceandmaintain price and raiseperceivedquality.raise perceived quality. MaintainedMaintained profitability.profitability. Smallermarketshare.Smaller market share. ShortShort--termdeclineinterm decline in profitability.Longprofitability. Long--termterm increaseinincrease in profitability.profitability. See text for complete table
Table 16.4: Profits Before and After a Price Increase BeforeBefore AfterAfter PricePrice $10$ 10 $10.10$10.10 (a1percentpriceincrease)(a ase) UnitssoldUnits sold 100100 100100 Initiating and Responding to Price Changes www.bookfiesta4u.blogspot.com 11-511 RevenueRevenue $1000$1000 $1010$1010 CostsCosts --970970 --970970 ProfitProfit $30$ 30 $40$ 40 (a331/3percentprofit(a 33 1/3 increase)increase) Table 16.4: Profits Before and After a Price Increase BeforeBefore AfterAfter PricePrice $10$ 10 $10.10$10.10 (a1percentpriceincrease)(a ase) UnitssoldUnits sold 100100 100100 Initiating and Responding to Price Changes www.bookfiesta4u.blogspot.com 11-511 RevenueRevenue $1000$1000 $1010$1010 CostsCosts --970970 --970970 ProfitProfit $30$ 30 $40$ 40 (a331/3percentprofit(a 33 1/3 increase)increase)
1 percent price incre
percent profit
1 percent price incre
percent profit
Initiating and Responding to Price Changes InitiatingPriceIncreasesInitiating Price Increases CostinflationCost inflation AnticipatorypricingAnticipatory pricing www.bookfiesta4u.blogspot.com 11-512 AnticipatorypricingAnticipatory pricing OverdemandOverdemand DelayedquotationpricingDelayed quotation pricing EscalatorclausesEscalator clauses UnbundlingUnbundling ReductionofdiscountsReduction of discounts Initiating and Responding to Price Changes InitiatingPriceIncreasesInitiating Price Increases CostinflationCost inflation AnticipatorypricingAnticipatory pricing www.bookfiesta4u.blogspot.com 11-512 AnticipatorypricingAnticipatory pricing OverdemandOverdemand DelayedquotationpricingDelayed quotation pricing EscalatorclausesEscalator clauses UnbundlingUnbundling ReductionofdiscountsReduction of discounts
Initiating and Responding to Price Changes Possibleresponsesto highercosts oroverhead withoutPossible responses to higher cos ts or overhead without raising pricesinclude:raising prices include: ShrinkingtheamountofproductinsteadofraisingthepriceShrinking the amount of product instead of raising the price SubstitutinglessexpensivematerialsoringredientsSubstituting less expensive materia ls or ingredients www.bookfiesta4u.blogspot.com 11-513 SubstitutinglessexpensivematerialsoringredientsSubstituting less expensive materia ls or ingredients ReducingorremovingproductfeaturesReducing or removing product features Removingorreducingproductservices,suchasinstallationRemoving or reducing product s ervices, such as installation orfreedeliveryor free delivery UsinglessexpensivepackagingmaterialorlargerpackageUsing less expensive packaging m aterial or larger package sizessizes ReducingthenumberofsizesandmodelsofferedReducing the number of sizes and models of fered CreatingneweconomybrandsCreating new economy brands Initiating and Responding to Price Changes Possibleresponsesto highercosts oroverhead withoutPossible responses to higher cos ts or overhead without raising pricesinclude:raising prices include: ShrinkingtheamountofproductinsteadofraisingthepriceShrinking the amount of product instead of raising the price SubstitutinglessexpensivematerialsoringredientsSubstituting less expensive materia ls or ingredients www.bookfiesta4u.blogspot.com 11-513 SubstitutinglessexpensivematerialsoringredientsSubstituting less expensive materia ls or ingredients ReducingorremovingproductfeaturesReducing or removing product features Removingorreducingproductservices,suchasinstallationRemoving or reducing product s ervices, such as installation orfreedeliveryor free delivery UsinglessexpensivepackagingmaterialorlargerpackageUsing less expensive packaging m aterial or larger package sizessizes ReducingthenumberofsizesandmodelsofferedReducing the number of sizes and models of fered CreatingneweconomybrandsCreating new economy brands
Initiating and Responding to Price Changes ReactionstoPriceChangesReactions to Price Changes CustomerReactionsCustomer Reactions CompetitorReactionsCompetitor Reactions www.bookfiesta4u.blogspot.com 11-514 RespondingtoCompetitors PriceResponding to Competitors Price ChangesChanges MaintainpriceMaintain price MaintainpriceandaddvalueMaintain price and add value ReducepriceReduce price IncreasepriceandimprovequalityIncrease price and improve quality Launch a lowLaunch a low--pricefighterlineprice fighter line Initiating and Responding to Price Changes ReactionstoPriceChangesReactions to Price Changes CustomerReactionsCustomer Reactions CompetitorReactionsCompetitor Reactions www.bookfiesta4u.blogspot.com 11-514 RespondingtoCompetitors PriceResponding to Competitors Price ChangesChanges MaintainpriceMaintain price MaintainpriceandaddvalueMaintain price and add value ReducepriceReduce price IncreasepriceandimprovequalityIncrease price and improve quality Launch a lowLaunch a low--pricefighterlineprice fighter line
Chapter17Chapter 17 DesigningandManagingDesigning and Managing ValueNetworksandValue Networks and MarketingChannelsMarketing Channels bybybyby PowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans Chapter17Chapter 17 DesigningandManagingDesigning and Managing ValueNetworksandValue Networks and MarketingChannelsMarketing Channels bybybyby PowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans
Establish channels for different target markets and aim for efficiency, Kotler on Marketing www.bookfiesta4u.blogspot.com 11-516 and aim for efficiency, control, and adaptability. Establish channels for different target markets and aim for efficiency, Kotler on Marketing www.bookfiesta4u.blogspot.com 11-516 and aim for efficiency, control, and adaptability.
Chapter Objectives I IIn nn t tth hhi iis ss c cch hha aap ppt tte eer rr, ,, w wwe ee f ffo ooc ccu uus ss o oon nn t tth hhe ee f ffo ool lll llo oow wwi iin nng gg c cch hha aan nnn nne eel ll q qqu uue ees
sst tti iio oon nns ss f ffr rro oom mm t tth hhe ee v vvi iie eew wwp ppo ooi iin nnt tt oof ff tth hhe ee m mma aan nnu uuf ffa aac cct ttu uur rre eer rrs ss: :: Wh WhWha aat tt i iis ss t tth hhe ee v vva aal
llu uue ee n nne eet ttw wwo oor rrk kk a aan nnd dd m mma aar rrk kke eet tti iin nng gg c cch hha aan nnn nne eel ll s ssy yys sst tte eem mm? ?? Wh WhWha aat tt w wwo oor rrk kk i iis ss p ppe eer rrf ffo oor
rrm mme eed dd b bby yy m mma aar rrk kke eet tti iin nng ggy yyg gg p ppc cch hha aan nnn nne eel lls ss? ?? Wh WhWha aat tt d dde eec cci iis ssi iio oon nns ss d ddo oo c cco oom mmp ppa aan nni iie ees ss
f ffa aac cce ee iin nnd dde ees ssi iig ggn nni iin nng gg, ,, m mma aan nna aag ggi iin nng gg, ,, e eev vva aal llu uua aat tti iin nng gg, ,, a aan nnd ddm mmo ood ddi iif ffy yyi iin nng gg t tth hhe eei iir rr c cch
hha aan nnn nne eel lls ss? ??
Wh WhWha aat tt t ttr rre een nnd dds ss a aar rre ee t tta aak kki iin nng gg p ppl lla aac cce ee i iin nn c cch hha aan nnn nne eel lld ddy yyn nna aam mmi iic ccs ss? ??
H HHo oow ww c cca aan nn c cch hha aan nnn nne eel ll c cco oon nnf ffl lli iic cct tt b bbe ee m mma aan nna aag gge eed dd? ?? www.bookfiesta4u.blogspot.com 11-517
What is a Value Network and Marketing-Channel System? ValueNetworkValue Network Marketing channelMarketing channel www.bookfiesta4u.blogspot.com 11-518 Marketing channelMarketing channel What is a Value Network and Marketing-Channel System? ValueNetworkValue Network Marketing channelMarketing channel www.bookfiesta4u.blogspot.com 11-518 Marketing channelMarketing channel
Oracle shomepageOracle s home www.bookfiesta4u.blogspot.com Oracle shomepageOracle s home www.bookfiesta4u.blogspot.com
page 11-519 page 11-519
What is a Value Network and Marketing-Channel System?
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lle eer rrs ss s sse eel lll ll t tto oo s sst tti iil lll ll s ssm mma aal lll lle eer rr aac ccc cco oou uun nnt tts ss, ,, a aan nnd dd t tth hhe ee I IIn nnt tte eer rrn nne eet tt t tto oo s sse eel lll ll
s ssp ppe eec cci iia aal llt tty yy i iit tte eem mms ss C CCh hha aar rrl lle ees ss S SSc cch hhw wwa aab bb e een nna aab bbl lle ees ss i iit tts ss c ccu uus sst tto oom mme eer rrs ss t tto oo d ddo
oo t ttr rra aan nns ssa aac cct tti iio oon nns ss iin nn b bbr rra aan nnc cch hh o oof fff ffi iic cce ees ss, ,, o oov vve eer rr t tth hhe ee p pph hho oon nne ee, ,, o oor rr v vvi iia aa t tth hhe ee I IIn
nnt tte eer rrn nne eet tt S SSt tta aap ppl lle ees ss m mma aar rrk kke eet tts ss t tth hhr rro oou uug ggh hh t ttr rra aad ddi iit tti iio oon nna aal ll r rre eet tta aai iil ll, ,, d ddi iir rre eec cct tt--
rre ees ssp ppo oon nns sse ee I IIn nnt tte eer rrn nne eet tt s ssi iit tte ee, ,, v vvi iir rrt ttu uua aal ll m mma aal lll lls ss, ,, a aan nnd dd 3 330 00, ,, 0 000 000 00 l lli iin nnk kke eed dd a aaf fff ffi
iil lli iia aat tte eed dd ssi iit tte ees ss www.bookfiesta4u.blogspot.com 11-520
What is a Value Network and Marketing-Channel System? Channel integrationcharacteristics:Channel integration characteristics: Abilitytoorderaproductonline,andAbility to order a product online, and pickitupataconvenientretaillocationpick it up at a convenient retail location www.bookfiesta4u.blogspot.com 11-521 pickitupataconvenientretaillocationpick it up at a convenient retail location AbilitytoreturnanonlineAbility to return an online--orderedordered producttoanearbystoreproduct to a nearby store RighttoreceivediscountsbasedonRight to receive discounts based on totalofonlineandofftotal of online and off--linepurchasesline purchases What is a Value Network and Marketing-Channel System? Channel integrationcharacteristics:Channel integration characteristics: Abilitytoorderaproductonline,andAbility to order a product online, and pickitupataconvenientretaillocationpick it up at a convenient retail location www.bookfiesta4u.blogspot.com 11-521 pickitupataconvenientretaillocationpick it up at a convenient retail location AbilitytoreturnanonlineAbility to return an online--orderedordered producttoanearbystoreproduct to a nearby store RighttoreceivediscountsbasedonRight to receive discounts based on totalofonlineandofftotal of online and off--linepurchasesline purchases
What Work is Performed by Marketing Channels?
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tt m mmar arark kke eet tti iin nng gg I II n nn s ssom omome ee c ccas asase ees ss d ddi iir rre eec cct tt m mmar arark kke eet tti iin nng gg I IIn nn s ssom omome ee c ccas asase ees ss d ddi iir rre eec cct tt
m mmar arark kke eet tti iin nng gg s ssi iim mmp ppl lly yy i iis ss n nnot otot f ffe eeas asasi iib bbl lle ee P PPr rrod ododu uuc cce eer rrs ss w wwh hho oo d ddo oo e ees sst ttab ababl lli iis ssh hh t tth hhe
eei iir rr ow owown nn c cch hhan anann nne eel lls ss c ccan anan of ofoft tte een nn e eear ararn nn a gr a gra gre eeat atate eer rr r rre eet ttu uur rrn nn bby yy i iin nnc ccr rre eeas asasi iin nng gg t tth hhe eei iir rr i iin nnve
veves sst ttm mme een nnt tt i iin nn t tth hhe eei iir rr m mmai aiain nn b bbu uus ssi iin nne ees sss ss. .. www.bookfiesta4u.blogspot.com 11-522
Figure 17.1: How a Distributor Effects an Economy of Effort www.bookfiesta4u.blogspot.com 11-523 Figure 17.1: How a Distributor Effects an Economy of Effort www.bookfiesta4u.blogspot.com 11-523
A AAs ss m mmo oor rre ee r rre eet tta aai iil lle eer rrs ss d dde eev vve eel llo oop pp a aa w wwe eeb bb p ppr rre ees sse een nnc cce ee, ,, tth hhe eey yy o oof fft tte een nn m mmo oov vve ee f ffr rro
oom mm a aa b bbr rri iic cck kk-a aan nnd dd-m mmo oor rrt tta aar rr tto oo aa c ccl lli iic cck kk-a aan nnd dd--m mmo oor rrt tta aar rr b bbu uus ssi iin nne ees sss ss m
mmo ood dde eel ll w wwh hhe eer rre ee c ccu uus sst tto oom mme eer rrs ss e eex xxp ppe eec cct tt c cch hha aan nnn nne eel ll i iin nnt tte eeg ggr rra aat tti iio oon nn. .. CCa aan nn yyo oou uu customersexpectchannelintegration.Canyoucustomers expect channel integration. Ca n you identifyanypotentialproblemsfortheseidentify any potential problems for these companies?Canyouidentifyanyuniquecompanies? Can you identify any unique
marketingopportunitiesmarketing opportunities thatsuchachangewouldthat such a change would offerthesecompanies?offer these companies?
What Work is Performed by Marketing Channels? ChannelFunctionsandFlowsChannel Functions and Flows Keyfunctionsinclude:Key functions include: GatherinformationaboutpotentialandGather information about potential and www.bookfiesta4u.blogspot.com 11-525 currentcustomers, competitors, andotherscurrent customers, competitors, and othe rs Developand disseminatepersuasiveDevelop and disseminate persuasive communicationsto stimulatepurchasingcommunications to stimulate purchasing ReachagreementsonpriceandothertermssoReach agreements on price and other terms so thattransferof ownershiporpossession can bethat transfer of ownership or possess ion can be effectedeffected PlaceorderswithmanufacturersPlace orders with manufacturers What Work is Performed by Marketing Channels? ChannelFunctionsandFlowsChannel Functions and Flows Keyfunctionsinclude:Key functions include: GatherinformationaboutpotentialandGather information about potential and www.bookfiesta4u.blogspot.com 11-525 currentcustomers, competitors, andotherscurrent customers, competitors, and othe rs Developand disseminatepersuasiveDevelop and disseminate persuasive communicationsto stimulatepurchasingcommunications to stimulate purchasing ReachagreementsonpriceandothertermssoReach agreements on price and other terms so thattransferof ownershiporpossession can bethat transfer of ownership or possess ion can be effectedeffected PlaceorderswithmanufacturersPlace orders with manufacturers
What Work is Performed by Marketing Channels? Acquirefundsto financeinventoriesat differentAcquire funds to finance inventories at different levelsinthe marketing channellevels in the marketing channel Assume riskconnectedwithAssume risk connected with carrying out channel workcarrying out channel work www.bookfiesta4u.blogspot.com 11-526 carrying out channel workcarrying out channel work Provideforthe successivestorageProvide for the successive storage and movementof physicalproductsand movement of physical products Provideforbuyers paymentof theirbillsProvide for buyers payment of their bills through banks andotherfinancialinstitutionsthrough banks and other financial ins titutions Overseeactualtransferof ownershipfromoneOversee actual transfer of ownership from one organizationor person to anotherorganization or person to another What Work is Performed by Marketing Channels? Acquirefundsto financeinventoriesat differentAcquire funds to finance inventories at different levelsinthe marketing channellevels in the marketing channel Assume riskconnectedwithAssume risk connected with carrying out channel workcarrying out channel work www.bookfiesta4u.blogspot.com 11-526 carrying out channel workcarrying out channel work Provideforthe successivestorageProvide for the successive storage and movementof physicalproductsand movement of physical products Provideforbuyers paymentof theirbillsProvide for buyers payment of their bills through banks andotherfinancialinstitutionsthrough banks and other financial ins titutions Overseeactualtransferof ownershipfromoneOversee actual transfer of ownership from one organizationor person to anotherorganization or person to another
Figure 17.2: Five Marketing Flows in the Marketing Channel for Forklift Trucks www.bookfiesta4u.blogspot.com 11-527 Figure 17.2: Five Marketing Flows in the Marketing Channel for Forklift Trucks www.bookfiesta4u.blogspot.com 11-527
What Work is Performed by Marketing Channels? ForwardflowForward flow BkdflB k d fl www.bookfiesta4u.blogspot.com 11-528 BackwardflowBackward flow What Work is Performed by Marketing Channels? ForwardflowForward flow BkdflB k d fl www.bookfiesta4u.blogspot.com 11-528 BackwardflowBackward flow
What Work is Performed by Marketing Channels? ChannellevelsChannel levels ZeroZero--levelchannel(a.k.a.directlevel channel (a.k.a. direct--marketingmarketin g channel)channel) OneOne--levelchannellevel channel www.bookfiesta4u.blogspot.com 11-529 OneOne--levelchannellevel channel TwoTwo--levelchannellevel channel ThreeThree--levelchannellevel channel ReverseReverse--flowchannelflow channel ServiceSectorChannelsService Sector Channels InformationHighwayChannelsInformation Highway Channels What Work is Performed by Marketing Channels? ChannellevelsChannel levels ZeroZero--levelchannel(a.k.a.directlevel channel (a.k.a. direct--marketingmarketin g channel)channel) OneOne--levelchannellevel channel www.bookfiesta4u.blogspot.com 11-529 OneOne--levelchannellevel channel TwoTwo--levelchannellevel channel ThreeThree--levelchannellevel channel ReverseReverse--flowchannelflow channel ServiceSectorChannelsService Sector Channels InformationHighwayChannelsInformation Highway Channels
T TTh hhe ee a aad ddv vve een nnt tt o oof ff p ppr rri iin nnt tt m mme eed ddi iia aa, ,, t tth hhe ee t tte eel lle eep pph hho oon nne ee, ,, r rra aad ddi iio oo, ,, t tte eel lle eev vvi iis ssi iio oon nn,
,, a aan nnd dd t tth hhe ee I IIn nnt tte eer rrn nne eet tt hha aav vve ee aal lll ll p ppr rro oov vvi iid dde eed dd n nne eew ww w wwa aay yys ss f ffo oor rr m mma aar rrk kke eet tte eer rrs ss tto oo gge
eet tt tth hhe eei iir rr m mme ees sss ssa aag gge ee t tto oo t tth hhe eei iir rr i iin nnt tte een nnd dde eed dd a aau uud ddi iie een nnc cce ee. .. AAs ss messagetotheirintendedaudience.Asmessage to their intended audience. As varioustechnologiesadvance,thesevarious technologies advance, these informationchannelsoffermorepreciseinformation channels offer more precise deliveryofamessage.Candelivery of a message. Can youidentifyanemergingyou identify an emerging informationdistributioninformation distribution channel?channel?
ThePeople sBankInternetsiteThe People s Bank Internet site www.bookfiesta4u.blogspot.com 11-531 ThePeople sBankInternetsiteThe People s Bank Internet site www.bookfiesta4u.blogspot.com 11-531
Channel-Design Decisions Push strategyPush strategy PullstrategyPull strategy DesigningachannelsystemDesigning a channel system ilfi l f www.bookfiesta4u.blogspot.com 11-532 involvesfoursteps:involves four steps: Analyzing customerneedsAnalyzing customer needs Establishing channel objectivesEstablishing channel objectives Identifying majorchannelalternativesIdentifying major channel alternatives Evaluating majorchannel alternativesEvaluating major channel alternatives Channel-Design Decisions Push strategyPush strategy PullstrategyPull strategy DesigningachannelsystemDesigning a channel system ilfi l f www.bookfiesta4u.blogspot.com 11-532 involvesfoursteps:involves four steps: Analyzing customerneedsAnalyzing customer needs Establishing channel objectivesEstablishing channel objectives Identifying majorchannelalternativesIdentifying major channel alternatives Evaluating majorchannel alternativesEvaluating major channel alternatives
Channel-Design Decisions AnalyzeCustomers DesiredAnalyze Customers Desired ServiceOutputLevelsService Output Levels LotsizeLot size www.bookfiesta4u.blogspot.com 11-533 LotsizeLot size WaitingtimeWaiting time SpatialconvenienceSpatial convenience ProductvarietyProduct variety ServicebackupService backup Channel-Design Decisions AnalyzeCustomers DesiredAnalyze Customers Desired ServiceOutputLevelsService Output Levels LotsizeLot size www.bookfiesta4u.blogspot.com 11-533 LotsizeLot size WaitingtimeWaiting time SpatialconvenienceSpatial convenience ProductvarietyProduct variety ServicebackupService backup
Channel-Design Decisions EstablishObjectivesandConstraintsEstablish Objectives and Constraints IdentifyMajorChannelAlternativesIdentify Major Channel Alternatives TypesofIntermediariesTypes of Intermediaries www.bookfiesta4u.blogspot.com 11-534 TypesofIntermediariesTypes of Intermediaries NumberofIntermediariesNumber of Intermediaries ExclusivedistributionExclusive distribution ExclusivedealingExclusive dealing SelectivedistributionSelective distribution IntensivedistributionIntensive distribution Channel-Design Decisions EstablishObjectivesandConstraintsEstablish Objectives and Constraints IdentifyMajorChannelAlternativesIdentify Major Channel Alternatives TypesofIntermediariesTypes of Intermediaries www.bookfiesta4u.blogspot.com 11-534 TypesofIntermediariesTypes of Intermediaries NumberofIntermediariesNumber of Intermediaries ExclusivedistributionExclusive distribution ExclusivedealingExclusive dealing SelectivedistributionSelective distribution IntensivedistributionIntensive distribution
Channel-Design Decisions TermsandResponsibilitiesofTerms and Responsibilities of ChannelMembersChannel Members PricepolicyPrice policy www.bookfiesta4u.blogspot.com 11-535 Conditionsof saleConditions of sale Distributors territorialrightsDistributors territorial rights EvaluatetheMajorAlternativesEvaluate the Major Alternatives EconomicCriteriaEconomic Criteria Channel-Design Decisions TermsandResponsibilitiesofTerms and Responsibilities of ChannelMembersChannel Members PricepolicyPrice policy www.bookfiesta4u.blogspot.com 11-535 Conditionsof saleConditions of sale Distributors territorialrightsDistributors territorial rights EvaluatetheMajorAlternativesEvaluate the Major Alternatives EconomicCriteriaEconomic Criteria
Figure 17.4: The Value-Adds versus Costs of Different Channels www.bookfiesta4u.blogspot.com 11-536 Figure 17.4: The Value-Adds versus Costs of Different Channels www.bookfiesta4u.blogspot.com 11-536
Channel-Design Decisions Channel advantageChannel advantage ControlandAdaptiveCriteriaControl and Adaptive Criteria www.bookfiesta4u.blogspot.com 11-537 Figure 17.5: Break-even Cost Chart Channel-Design Decisions Channel advantageChannel advantage ControlandAdaptiveCriteriaControl and Adaptive Criteria www.bookfiesta4u.blogspot.com 11-537 Figure 17.5: Break-even Cost Chart
Channel-Management Decisions SelectingChannelMembersSelecting Channel Members TrainingChannelMembersTraining Channel Members MotivatingChannelMembersMotivating Channel Members www.bookfiesta4u.blogspot.com 11-538 MotivatingChannelMembersMotivating Channel Members Producerscanuse:Producers can use: CoercivepowerCoercive power RewardpowerReward power LegitimatepowerLegitimate power ExpertpowerExpert power ReferentpowerReferent power Channel-Management Decisions SelectingChannelMembersSelecting Channel Members TrainingChannelMembersTraining Channel Members MotivatingChannelMembersMotivating Channel Members www.bookfiesta4u.blogspot.com 11-538 MotivatingChannelMembersMotivating Channel Members Producerscanuse:Producers can use: CoercivepowerCoercive power RewardpowerReward power LegitimatepowerLegitimate power ExpertpowerExpert power ReferentpowerReferent power
Channel-Management Decisions DistributionprogrammingDistribution programming DistributorDistributor--relationsplanningrelations planning www.bookfiesta4u.blogspot.com 11-539 DistributorDistributor relationsplanningrelations planning EvaluatingChannelMembersEvaluating Channel Members ModifyingChannelArrangementsModifying Channel Arrangements Channel-Management Decisions DistributionprogrammingDistribution programming DistributorDistributor--relationsplanningrelations planning www.bookfiesta4u.blogspot.com 11-539 DistributorDistributor relationsplanningrelations planning EvaluatingChannelMembersEvaluating Channel Members ModifyingChannelArrangementsModifying Channel Arrangements
Channel Dynamics VerticalMarketingSystemsVertical Marketing Systems Conventionalmarketing channelConventional marketing channel Verticalmarketing systems(VMS)Vertical marketing systems (VMS) www.bookfiesta4u.blogspot.com 11-540 CorporateandAdministeredVMSCorporate and Administered VMS CorporateVMSCorporate VMS AdministeredVMSAdministered VMS Channel Dynamics VerticalMarketingSystemsVertical Marketing Systems Conventionalmarketing channelConventional marketing channel Verticalmarketing systems(VMS)Vertical marketing systems (VMS) www.bookfiesta4u.blogspot.com 11-540 CorporateandAdministeredVMSCorporate and Administered VMS CorporateVMSCorporate VMS AdministeredVMSAdministered VMS
Channel Dynamics ContractualVMSContractual VMS WholesalerWholesaler--sponsoredvoluntary chainssponsored voluntary chains RetailercooperativesRetailer cooperatives FhiiiF hi i i www.bookfiesta4u.blogspot.com 11-541 FranchiseorganizationsFranchise organizations ManufacturerManufacturer--sponsoredretailerfranchisesponsored retailer franchise ManufacturerManufacturer--sponsoredwholesalersponsored wholesaler franchisefranchise ServiceService--firmfirm--sponsoredretailerfranchisesponsored retailer franchise Channel Dynamics ContractualVMSContractual VMS WholesalerWholesaler--sponsoredvoluntary chainssponsored voluntary chains RetailercooperativesRetailer cooperatives FhiiiF hi i i www.bookfiesta4u.blogspot.com 11-541 FranchiseorganizationsFranchise organizations ManufacturerManufacturer--sponsoredretailerfranchisesponsored retailer franchise ManufacturerManufacturer--sponsoredwholesalersponsored wholesaler franchisefranchise ServiceService--firmfirm--sponsoredretailerfranchisesponsored retailer franchise
Channel Dynamics TheNewCompetitioninRetailingThe New Competition in Retailing HorizontalMarketingSystemsHorizontal Marketing Systems www.bookfiesta4u.blogspot.com 11-542 HorizontalMarketingSystemsHorizontal Marketing Systems MultichannelMarketingSystemsMultichannel Marketing Systems Channel Dynamics TheNewCompetitioninRetailingThe New Competition in Retailing HorizontalMarketingSystemsHorizontal Marketing Systems www.bookfiesta4u.blogspot.com 11-542 HorizontalMarketingSystemsHorizontal Marketing Systems MultichannelMarketingSystemsMultichannel Marketing Systems
Channel Dynamics RolesofIndividualFirmsRoles of Individual Firms InsidersInsiders StriversStrivers www.bookfiesta4u.blogspot.com 11-543 StriversStrivers ComplementersComplementers TransientsTransients OutsideinnovatorsOutside innovators Channel Dynamics RolesofIndividualFirmsRoles of Individual Firms InsidersInsiders StriversStrivers www.bookfiesta4u.blogspot.com 11-543 StriversStrivers ComplementersComplementers TransientsTransients OutsideinnovatorsOutside innovators
Channel Dynamics Conflict,Cooperation,andCompetitionConflict, Cooperation, and Competition TypesofConflictandCompetitionTypes of Conflict and Competition Verticalchannel conflictVertical channel conflict HitalhlflitH i tal h l fli t www.bookfiesta4u.blogspot.com 11-544 Horizontalchannel conflictHorizontal channel conflict MultichannelconflictMultichannel conflict CausesofChannelConflictCauses of Channel Conflict GoalincompatibilityGoal incompatibility Unclearrolesand rightsUnclear roles and rights DifferencesinperceptionDifferences in perception Channel Dynamics Conflict,Cooperation,andCompetitionConflict, Cooperation, and Competition TypesofConflictandCompetitionTypes of Conflict and Competition Verticalchannel conflictVertical channel conflict HitalhlflitH i tal h l fli t www.bookfiesta4u.blogspot.com 11-544 Horizontalchannel conflictHorizontal channel conflict MultichannelconflictMultichannel conflict CausesofChannelConflictCauses of Channel Conflict GoalincompatibilityGoal incompatibility Unclearrolesand rightsUnclear roles and rights DifferencesinperceptionDifferences in perception
Channel Dynamics Byaddingnewchannels,acompanyfacesBy adding new channels, a company faces thepossibilityofchannelconflictwhichthe possibility of channel conflict which mayinclude:may include: CflitbtthatialtC fli t b t th ati al t www.bookfiesta4u.blogspot.com 11-545 ConflictbetweenthenationalaccountConflict between the national account managersandfieldsalesforcemanagers and field sales force ConflictbetweenthefieldsalesConflict between the field sales forceandthe telemarketersforce and the telemarketers ConflictbetweenthefieldsalesConflict between the field sales forceandthe dealersforce and the dealers Channel Dynamics Byaddingnewchannels,acompanyfacesBy adding new channels, a company faces thepossibilityofchannelconflictwhichthe possibility of channel conflict which mayinclude:may include: CflitbtthatialtC fli t b t th ati al t www.bookfiesta4u.blogspot.com 11-545 ConflictbetweenthenationalaccountConflict between the national account managersandfieldsalesforcemanagers and field sales force ConflictbetweenthefieldsalesConflict between the field sales forceandthe telemarketersforce and the telemarketers ConflictbetweenthefieldsalesConflict between the field sales forceandthe dealersforce and the dealers
Channel Dynamics ManagingChannelConflictManaging Channel Conflict DiplomacyDiplomacy MediationMediation ArbitrationArbitration www.bookfiesta4u.blogspot.com 11-546 ArbitrationArbitration LegalandEthicalIssuesLegal and Ethical Issues inChannelDistributionin Channel Distribution ExclusivedistributionExclusive distribution ExclusivedealingExclusive dealing Tying agreementsTying agreements Channel Dynamics ManagingChannelConflictManaging Channel Conflict DiplomacyDiplomacy MediationMediation ArbitrationArbitration www.bookfiesta4u.blogspot.com 11-546 ArbitrationArbitration LegalandEthicalIssuesLegal and Ethical Issues inChannelDistributionin Channel Distribution ExclusivedistributionExclusive distribution ExclusivedealingExclusive dealing Tying agreementsTying agreements
Chapter18Chapter 18 ManagingRetailing,Managing Retailing, Wholesaling,andMarketWholesaling, and Market LogisticsLogistics bybybyby PowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans Chapter18Chapter 18 ManagingRetailing,Managing Retailing, Wholesaling,andMarketWholesaling, and Market LogisticsLogistics bybybyby PowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans
Successful go-tomarket strategies require integrating Kotler on Marketing www.bookfiesta4u.blogspot.com 11-548 require integrating retailers, wholesalers, and logistical organizations. Successful go-tomarket strategies require integrating Kotler on Marketing www.bookfiesta4u.blogspot.com 11-548 require integrating retailers, wholesalers, and logistical organizations.
Chapter Objectives Inthischapter,wefocusonthefollowingIn this chapter, we focus on the questionsabouteachmarketingquestions about each marketing intermediary:intermediary: www.bookfiesta4u.blogspot.com 11-549 WhatmajortypesoforganizationsWhat major types of organizations occupythissector?occupy this sector? WhatmarketingdecisionsdoWhat marketing decisions do organizationsinthissectormake?organizations in this sector make? Whatarethemajortrendsinthissector?What are the major trends in this Chapter Objectives Inthischapter,wefocusonthefollowingIn this chapter, we focus on the questionsabouteachmarketingquestions about each marketing intermediary:intermediary: www.bookfiesta4u.blogspot.com 11-549 WhatmajortypesoforganizationsWhat major types of organizations occupythissector?occupy this sector? WhatmarketingdecisionsdoWhat marketing decisions do organizationsinthissectormake?organizations in this sector make? Whatarethemajortrendsinthissector?What are the major trends in this
following
sector? following
sector?
Retailing TypesofRetailersTypes of Retailers RetaillifecycleRetail life cycle www.bookfiesta4u.blogspot.com 11-550 ycyc Retailing TypesofRetailersTypes of Retailers RetaillifecycleRetail life cycle www.bookfiesta4u.blogspot.com 11-550 ycyc
Table 18.1: Major Retailer Types S SSp ppe eec cci iia aal llt tty yy S SSt tto oor rre ee: :: N NNa aar rrr rro oow ww p ppr rro ood ddu uuct ctct l lli iin nne ee w wwi iit tth hh a aa d dde eee eep pp a aasso ssossor rrt ttm mme een nnt
tt. .. AA clclo oot tth hhi iin nng gg ststo oor rre ee w wwo oou uul lld dd b bbe ee a aa si sisin nng ggl lle ee-l lli iin nne ee st ststo oor rre ee; ;; a aa m mme een nn s ss cl clclo oot tth hhi iin nng gg st
ststo oor rre ee w wwo oou uul lld dd b bbe ee a aa lli iim mmi iit tte eed dd-lli iin nne ee st ststo oor rre ee; ;; a aan nnd dd a aa m mme een nn s ss cu cucust ststo oom mm-sh shshi iir rrt tt st ststo oor
rre ee w wwo oou uul lld dd b bbe ee a aa su susup ppe eer rrsp spspe eeci cicia aal llt tty yy ststo oor rre ee. .. E EEx xxa aam mmp ppl lle ees: s:s: A AAt tth hhl lle eet tte ee s ss F FFo ooo oot tt, ,, T TTa aal lll ll
M MMe een nn, ,, T TTh hhe ee L LLi iim mmi iit tte eed dd, ,, T TTh hhe ee B BBo ood ddy yy S SSh hho oop pp. .. D DDe eep ppa aar rrt ttm mme een nnt tt S SSt tto oor rre ee: :: s tty yyp ppi iica cacal lll lly yy cl
clclo oot tth hhi iin nng gg, ,, hho oom mme ee S SSe eeve vever rra aal ll p ppr rro ood ddu uuct ctct l lli iin nne ees s w wwi iit tth hh e eea aach chch l lli iin nne ee o oop ppe eer rra aat tte eed dd a aas ss aa
sesep ppa aar rra aat tte ee f ffu uur rrn nni iish shshi iin nng ggs, s,s, a aan nnd dd h hho oou uuse seseh hho ool lld dd g ggo ooo ood dds d dde eep ppa aar rrt ttm mme een nnt tt m mma aan nna aag gge eed dd b bby yy sp spspe
eeci cicia aal lli iist stst b bbu uuy yye eer rrs ss o oor rr m mme eer rrch chcha aan nnd ddi iise seser rrs. s.s. EExa xaxam mmp ppl lle ees ss: :: S SSe eea aar rrs, s,s, JC JCJCP PPe een nnn nne eey yy N NNo oor rrd ddst ststr rro oom mm B
BBl llo ooo oom mmi iin nng ggd dda aal lle ee s. s.s. S SSe eea aar rrs, s,s, JC JCJCP PPe een nnn nne eey yy, ,, N NNo oor rrd ddst ststr rro oom mm, ,, B BBl llo ooo oom mmi iin nng ggd dda aal lle ee s. s.s. S SSu uup ppe
eer rrm mma aar rrk kke eet tt: :: R RRe eel lla aat tti iive vevel lly yy l lla aar rrg gge ee, ,, l llo oow ww-co cocost stst, ,, l llo oow ww-m mma aar rrg ggi iin nn, ,, h hhi iig ggh hh vo vovol llu uum mme ee, ,, sesel
llf ff-se seser rrvi vivice cece o oop ppe eer rra aat tti iio oon nn d dde eesi sisig ggn nne eed dd t tto oo se seser rrve veve t tto oot tta aal ll n nne eee eed dds ss f ffo oor rr f ffo ooo ood dd, ,, l lla aau uun
nnd ddr rry yy, ,, aan nnd ddh hho oou uuse seseh hho ool lld dd p ppr rro ood ddu uuct ctcts. s.s. E EExa xaxam mmp ppl lle ees ss: :: K KKr rro oog gge eer rr, ,, F FFo ooo ood dd E EEm mmp ppo oor rri iiu uum mm, ,, Je JeJew wwe eel ll.
.. C CCo oon nnv vve een nni iie een nnc cce ee S SSt tto oor rre ee: :: R RRe eel lla aat tti iive vevel lly yy sm smsma aal lll ll st ststo oor rre ee l llo ooca cacat tte eed dd n nne eea aar rr r rre eesi sisid dde een nnt tti
iia aal ll aar rre eea aa, ,, o oop ppe een nn l llo oon nng gg h hho oou uur rrs, s,s, se seseve veven nn d dda aay yys ss a aa w wwe eee eek, k,k, a aan nnd dd ca cacar rrr rry yyi iin nng gg a aa l lli iim mmi iit tte
eed dd l lli iin nne ee oof ff hhi iig ggh hh-t ttu uur rrn nno oove vever rr co cocon nnve veven nni iie een nnce cece p ppr rro ood ddu uuct ctcts ss a aat tt sl slsli iig ggh hht ttl lly yy h hhi iig ggh hhe eer rr p ppr rri iice
ceces, s,s, p ppl llu uus ss t tta aake kekeo oou uut ttsa sasan nnd ddw wwi iich chche ees, s,s, co cocof fff ffe eee ee, ,, so sosof fft tt d ddr rri iin nnks. ks.ks. E EExa xaxam mmp ppl lle ees ss: :: 7 77-E EEl lle eeve veven nn, ,, C CCi iir
rrcl clcle ee K KK. .. See text for complete table www.bookfiesta4u.blogspot.com
Retailing LevelsofServiceLevels of Service WheelWheel--ofof--retailingretailing Fourlevelsof service:Four levels of service: www.bookfiesta4u.blogspot.com 11-552 Fourlevelsof service:Four levels of service: SelfSelf--serviceservice SelfSelf--selectionselection LimitedserviceLimited service FullserviceFull service Retailing LevelsofServiceLevels of Service WheelWheel--ofof--retailingretailing Fourlevelsof service:Four levels of service: www.bookfiesta4u.blogspot.com 11-552 Fourlevelsof service:Four levels of service: SelfSelf--serviceservice SelfSelf--selectionselection LimitedserviceLimited service FullserviceFull service
Figure 18.1: Retail Positioning Map www.bookfiesta4u.blogspot.com 11-553 Figure 18.1: Retail Positioning Map www.bookfiesta4u.blogspot.com 11-553
Retailing NonstoreretailingNonstore retailing Categoriesof nonstore retailingCategories of nonstore retailing DirectsellingDirect selling DirectmarketingDirect marketing TlktiT l k ti www.bookfiesta4u.blogspot.com 11-554 TelemarketingTelemarketing TelevisiondirectTelevision direct--responsemarketingresponse marketing ElectronicshoppingElectronic shopping AutomaticvendingAutomatic vending BuyingserviceBuying service CorporateRetailingCorporate Retailing Retailing NonstoreretailingNonstore retailing Categoriesof nonstore retailingCategories of nonstore retailing DirectsellingDirect selling DirectmarketingDirect marketing TlktiT l k ti www.bookfiesta4u.blogspot.com 11-554 TelemarketingTelemarketing TelevisiondirectTelevision direct--responsemarketingresponse marketing ElectronicshoppingElectronic shopping AutomaticvendingAutomatic vending BuyingserviceBuying service CorporateRetailingCorporate Retailing
Table 18.2: Major Types of Retail Organizations C CCo oor rrp ppo oor rra aat tte ee C CCh hha aai iin nn S SSt tto oor rre ee: :: T TTw wwo oo o oor rr m mmo oor rre ee o oou uut ttl lle eet tts ss co cocom mmm mmo oon nnl lly yy o oow wwn nne eed
dd aan nnd ddco cocon nnt ttr rro ool lll lle eed dd, ,, e eem mmp ppl llo ooy yyi iin nng gg ce cecen nnt ttr rra aal ll b bbu uuy yyi iin nng gg a aan nnd dd m mme eer rrch chcha aan nnd ddi iisi sisin nng gg, ,, a aan nnd dd sesel
lll lli iin nng gg sisim mmi iil lla aar rrl lli iin nne ees ss o oof ff m mme eer rrch chcha aan nnd ddi iise sese. .. T TTh hhe eei iir rr si sisize zeze a aal lll llo oow wws ss t tth hhe eem mm t tto oo b bbu uuy yy i iin
nn l lla aar rrg gge ee q qqu uua aan nnt tti iit tti iie ees ss aat tt llo oow wwe eer rrp ppr rri iice ceces, s,s, a aan nnd dd t tth hhe eey yy ca cacan nn a aaf fff ffo oor rrd dd t tto oo h hhi iir rre ee co cocor rrp ppo
oor rra aat tte ee sp spspe eeci cicia aal lli iist ststs ss t tto oo d dde eea aal ll wwi iit tth hh ppr rri iici cicin nng gg, ,, p ppr rro oom mmo oot tti iio oon nn, ,, m mme eer rrch chcha aan nnd ddi iisi sisin nng gg, ,, i iin nnve
veven nnt tto oor rry yy co cocon nnt ttr rro ool ll, ,, a aan nnd dd sa sasal lle ees ss f ffo oor rre eeca cacast ststi iin nng gg. .. E EExa xaxam mmp ppl lle ees ss: :: T TTo oow wwe eer rr R RRe eeco cocor rrd dds, s,s, G GGA AAP PP, ,,
P PPo oot ttt tte eer rry yy B BBa aar rrn nn. .. V VVo ool llu uun nnt tta aar rry yy C CCh hha aai iin nn: :: A AA w wwh hho ool lle eesa sasal lle eer rr-sp spspo oon nnso sosor rre eed dd g ggr rro oou uup pp o oof
ff i iin nnd dde eep ppe een nnd dde een nnt tt rre eet tta aai iil lle eer rrs ss d ddi ii b bbl llk kk b bb i ii d dd ch chch d ddi iisi sisi E EEl ll IId dd dd e een nng gga aag gge eed dd i iin nn
b bbu uul llk kk b bbu uuy yyi iin nng gg a aan nnd dd co cocom mmm mmo oon nn m mme eer rrch chcha aan nnd ddi iisi sisin nng gg. .. E EExa xaxam mmp ppl lle ees ss: :: IIn nnd dde eep ppe een nnd dde een nnt tt G GGr rro oove vever
rrs ss A AAl lll lli iia aan nnce cece ( (( I IIG GGA AA) )) , ,, T TTr rru uue ee V VVa aal llu uue ee H HHa aar rrd ddw wwa aar rre ee. .. R RRe eet tta aai iil lle eer rr C CCo ooo oop ppe eer rra aat tti iiv vve
ee: :: I IIn nnd dde eep ppe een nnd dde een nnt tt r rre eet tta aai iil lle eer rrs ss w wwh hho oo se seset tt u uup pp a aa ce cecen nnt ttr rra aal ll bbu uuy yyi iin nng ggo oor rrg gga aan nni iiza zazat tti iio oon nn
a aan nnd dd co cocon nnd ddu uuct ctct j jjo ooi iin nnt tt p ppr rro oom mmo oot tti iio oon nn e eef fff ffo oor rrt tts. s.s. E EExa xaxam mmp ppl lle ees ss: :: A AAsso ssossoci cicia aat tte eed ddG GGr rro ooce cecer rrs, s,s, A AAC CCE
EE H HHa aar rrd ddw wwa aar rre ee. .. C CCo oon nns ssu uum mme eer rr C CCo ooo oop ppe eer rra aat tti iiv vve ee: :: A AA r rre eet tta aai iil ll f ffi iir rrm mm o oow wwn nne eed dd b bby yy i iit tts ss
cu cucust ststo oom mme eer rrs. s.s. IIn nn cocon nnsu susum mme eer rrco cocoo oop pps ss r rre eesi sisid dde een nnt tts ss co cocon nnt ttr rri iib bbu uut tte ee m mmo oon nne eey yy t tto oo o oop ppe een nn t tth hhe eei iir rr o oow
wwn nn st ststo oor rre ee, ,, vo vovot tte ee oon nn iit tts ss ppo ool lli iici cicie ees, s,s, e eel lle eect ctct a aa g ggr rro oou uup pp t tto oo m mma aan nna aag gge ee i iit tt, ,, a aan nnd dd r rre eece cecei iive
veve p ppa aat ttr rro oon nna aag gge ee d ddi iivi vivid dde een nnd dds. s.s. See text for complete table www.bookfiesta4u.blogspot.com
Retailing MarketingDecisionsMarketing Decisions TargetMarketTarget Market www.bookfiesta4u.blogspot.com 11-556 ProductAssortmentandProcurementProduct Assortment and Procurement BreadthBreadth DepthDepth Retailing MarketingDecisionsMarketing Decisions TargetMarketTarget Market www.bookfiesta4u.blogspot.com 11-556 ProductAssortmentandProcurementProduct Assortment and Procurement BreadthBreadth DepthDepth
Retailing ProductProduct--differentiationStrategyPossibilitiesdifferentiation Strategy Possi bilities Featureexclusivenationalbrandsthat arenotFeature exclusive national brands that ar e not availableatcompeting retailersavailable at competing retailers Featuremostly privatebrandedmerchandiseFeature mostly private branded merchandise www.bookfiesta4u.blogspot.com 11-557 Featuremostly privatebrandedmerchandiseFeature mostly private branded merchandise FeatureblockbusterdistinctivemerchandiseeventsFeature blockbuster distinctive merc handise events FeaturesurpriseoreverFeature surprise or ever--changing merchandisechanging mercha ndise FeaturethelatestornewestmerchandisefirstFeature the latest or newest merchandise f irst Offermerchandisecustomizing servicesOffer merchandise customizing services Offera highly targetedassortmentOffer a highly targeted assortment Retailing ProductProduct--differentiationStrategyPossibilitiesdifferentiation Strategy Possi bilities Featureexclusivenationalbrandsthat arenotFeature exclusive national brands that ar e not availableatcompeting retailersavailable at competing retailers Featuremostly privatebrandedmerchandiseFeature mostly private branded merchandise www.bookfiesta4u.blogspot.com 11-557 Featuremostly privatebrandedmerchandiseFeature mostly private branded merchandise FeatureblockbusterdistinctivemerchandiseeventsFeature blockbuster distinctive merc handise events FeaturesurpriseoreverFeature surprise or ever--changing merchandisechanging mercha ndise FeaturethelatestornewestmerchandisefirstFeature the latest or newest merchandise f irst Offermerchandisecustomizing servicesOffer merchandise customizing services Offera highly targetedassortmentOffer a highly targeted assortment
W WWa aal ll--M MMa aar rrt tt h hha aas ss f ffo oor rr t tth hhe ee f ffi iir rrs sst tt t tti iim mme ee m mmo oov vve eed dd iin nnt tto oo t tth hhe ee n nnu uum mmb bbe eer rr o oon nne ee p ppo
oos ssi iit tti iio oon nn o oon nn F FFo oor rrt ttu uun nne ee m mma aag gga aaz zzi iin nne ee s ss F FFo oor rrt ttu uun nne ee 5 550 000 00 l lli iis sst tt, ,, p ppa aas sss ssi iin nng gg uup pp
h hh i ii G GGM MM d ddE EE H HHh hh suchcompaniesasGMandExxon.Howhassuch companies as GM and Exxon. How has theirtargetmarketidentificationhelpedputtheir target market identification helpe d put themintothisposition?Whatcanthem into this position? What can WalWal--Mart schiefrivals,Mart s chief rivals, KK--MartandTarget,doMart and Target, do totrytoclosethegap?to try to close the gap?
Retailing MerchandisemanagersMerchandise managers Directproduct profitability (DPP)Direct product profitability (DPP) ServicesandStoreAtmosphereServices and Store Atmosphere Prepurchaseservicesincludeaccepting telephonePrepurchase services include acceptin g telephone and mailorders, etc.and mail orders, etc. www.bookfiesta4u.blogspot.com 11-559 and mailorders, etc.and mail orders, etc. PostpurchaseservicesincludeshippingPostpurchase services include shipping and delivery, etc.and delivery, etc. Ancillary servicesincludegeneralinformation,Ancillary services include general inf ormation, checkcashing, parking, etc.check cashing, parking, etc. PriceDecisionPrice Decision HighHigh--markup, lower volumemarkup, lower volume LowLow--markup, highvolumemarkup, high volume Retailing MerchandisemanagersMerchandise managers Directproduct profitability (DPP)Direct product profitability (DPP) ServicesandStoreAtmosphereServices and Store Atmosphere Prepurchaseservicesincludeaccepting telephonePrepurchase services include acceptin g telephone and mailorders, etc.and mail orders, etc. www.bookfiesta4u.blogspot.com 11-559 and mailorders, etc.and mail orders, etc. PostpurchaseservicesincludeshippingPostpurchase services include shipping and delivery, etc.and delivery, etc. Ancillary servicesincludegeneralinformation,Ancillary services include general inf ormation, checkcashing, parking, etc.check cashing, parking, etc. PriceDecisionPrice Decision HighHigh--markup, lower volumemarkup, lower volume LowLow--markup, highvolumemarkup, high volume
Retailing PromotionDecisionPromotion Decision PlaceDecisionPlace Decision GeneralbusinessdistrictsGeneral business districts www.bookfiesta4u.blogspot.com 11-560 GeneralbusinessdistrictsGeneral business districts RegionalshoppingcentersRegional shopping centers CommunitycentersCommunity centers Stripmalls(a.k.a.shoppingstrips)Strip malls (a.k.a. shopping strips) AlocationwithinalargerstoreA location within a larger store Retailing PromotionDecisionPromotion Decision PlaceDecisionPlace Decision GeneralbusinessdistrictsGeneral business districts www.bookfiesta4u.blogspot.com 11-560 GeneralbusinessdistrictsGeneral business districts RegionalshoppingcentersRegional shopping centers CommunitycentersCommunity centers Stripmalls(a.k.a.shoppingstrips)Strip malls (a.k.a. shopping strips) AlocationwithinalargerstoreA location within a larger store
Retailing TrendsinRetailingTrends in Retailing 1.1. NewretailformsandcombinationsNew retail forms and combinations 2.2. GrowthofintertypecompetitionGrowth of intertype competition 3.3. GrowthofgiantretailersGrowth of giant retailers www.bookfiesta4u.blogspot.com 11-561 3.3. GrowthofgiantretailersGrowth of giant retailers 4.4. GrowinginvestmentintechnologyGrowing investment in technology 5.5. GlobalpresenceofmajorretailersGlobal presence of major retailers 6.6. Sellinganexperience,notjustgoodsSelling an experience, not just goods 7.7. CompetitionbetweenstoreCompetition between store--basedbased andnonand non--storestore--basedretailingbased retailing Retailing TrendsinRetailingTrends in Retailing 1.1. NewretailformsandcombinationsNew retail forms and combinations 2.2. GrowthofintertypecompetitionGrowth of intertype competition 3.3. GrowthofgiantretailersGrowth of giant retailers www.bookfiesta4u.blogspot.com 11-561 3.3. GrowthofgiantretailersGrowth of giant retailers 4.4. GrowinginvestmentintechnologyGrowing investment in technology 5.5. GlobalpresenceofmajorretailersGlobal presence of major retailers 6.6. Sellinganexperience,notjustgoodsSelling an experience, not just goods 7.7. CompetitionbetweenstoreCompetition between store--basedbased andnonand non--storestore--basedretailingbased retailing
H HHo oow ww h hha aav vve ee t tth hhe ee t tte eel lle eev vvi iis ssi iio oon nn a aag gge ee, ,, t tth hhe ee i iin nnf ffo oor rrm mma aat tti iio oon nn a aag gge ee, ,, a aan
nnd dd t tth hhe ee e eem mme eer rrg gge een nnc cce ee oof ff aa w wwo oor rrl lld dd c cco oon nns ssu uum mme eer rr c ccu uul llt ttu uur rre ee a aaf fff ffe eec cct tte eed dd m mma aar rrk kke eet tt worldconsumercultureaffectedmarketworld consumer culture affected market
targetingdecisionsofretailers?Whattargeting decisions of retailers? What effectdoyouthinktradeentitieslikeeffect do you think trade entities like NAFTAandtheEuropeanNAFTA and the European UnionhavehadUnion have had onretailing?on retailing?
Wholesaling Wholesalers functions:Wholesalers functions: Selling andpromotingSelling and promoting Buying andassortmentbuildingBuying and assortment building BulkbreakingBulk breaking WarehousingWarehousing www.bookfiesta4u.blogspot.com 11-563 gg TransportationTransportation FinancingFinancing RiskbearingRisk bearing MarketinformationMarket information Managementservicesand counselingManagement services and counseling TheGrowthandTypesofWholesalingThe Growth and Types of Wholesaling Wholesaling Wholesalers functions:Wholesalers functions: Selling andpromotingSelling and promoting Buying andassortmentbuildingBuying and assortment building BulkbreakingBulk breaking WarehousingWarehousing www.bookfiesta4u.blogspot.com 11-563 gg TransportationTransportation FinancingFinancing RiskbearingRisk bearing MarketinformationMarket information Managementservicesand counselingManagement services and counseling TheGrowthandTypesofWholesalingThe Growth and Types of Wholesaling
Table 18.3: Major Wholesaler Types M MMe eer rrc cch hha aan nnt tt W WWh hho ool lle ees ssa aal lle eer rrs ss: :: I IIn nnd dde eep ppe een nnd dde een nnt ttl lly yy o oow wwn nne eed dd b bbu uus ssi iin nne ees sss sse ees ss tth hha aat
tt tta aak kke ee t tti iit ttl lle ee t tto oo t tth hhe ee m mme eer rrc cch hha aan nnd ddi iis sse ee t tth hhe eey yy h hha aan nnd ddl lle ee. .. T TTh hhe eey yy a aar rre ee c cca aal lll lle eed dd j
jjo oob bbb bbe eer rrs ss, ,, d ddi iis sst ttr rri iib bbu uut tto oor rrs ss, ,, o oor rr m mmi iil lll ll s ssu uup ppp ppl lly yy h hho oou uus sse ees ss a aan nnd dd f ffa aal lll ll i iin nnt tto oo t ttw
wwo oo c cca aat tte eeg ggo oor rri iie ees ss: :: ffu uul lll ll s sse eer rrv vvi iic cce ee a aan nnd dd l lli iim mmi iit tte eed dd s sse eer rrv vvi iic cce ee. .. F FFu uul lll ll-S SSe eer rrv vvi iic
cce ee W WWh hho ool lle ees ssa aal lle eer rrs ss: :: C CCa aar rrr rry yy s sst tto ooc cck kk, ,, m mma aai iin nnt tta aai iin nn a aa s ssa aal lle ees ss ffo oor rrc cce ee, ,, oof fff ffe eer rr c ccr rre eed
ddi iit tt, ,, m mma aak kke ee d dde eel lli iiv vve eer rri iie ees ss, ,, a aan nnd dd p ppr rro oov vvi iid dde ee m mma aan nna aag gge eem mme een nnt tt a aas sss ssi iis sst tta aan nnc cce ee. .. TTh hhe eer rre
ee , ,, , ,, p ppg gg a aar rre ee t ttw wwo oo t tty yyp ppe ees ss o oof ff f ffu uul lll ll-s sse eer rrv vvi iic cce ee w wwh hho ool lle ees ssa aal lle eer rrs ss: :: ( (( 1 11) )) W WWh
hho ool lle ees ssa aal lle ee mme eer rrc cch hha aan nnt tts ss s sse eel lll ll p ppr rri iim mma aar rri iil lly yy t tto oo r rre eet tta aai iil lle eer rrs ss a aan nnd dd p ppr rro oov vvi iid dde ee a aa f ffu
uul lll ll r rra aan nng gge ee o oof ff s sse eer rrv vvi iic cce ees ss. .. GGe een nne eer rra aal ll-m mme eer rrc cch hha aan nnd ddi iis sse ee w wwh hho ool lle ees ssa aal lle eer rrs ss c cca aar rrr rry yy
s sse eev vve eer rra aal ll m mme eer rrc cch hha aan nnd ddi iis sse ee l lli iin nne ees ss. .. GGe een nne eer rra aal ll-l lli iin nne ee w wwh hho ool lle ees ssa aal lle eer rrs ss c cca aar rrr rry yy o oon
nne ee o oor rr t ttw wwo oo l lli iin nne ees ss. .. S SSp ppe eec cci iia aal llt tty yy w wwh hho ool lle ees ssa aal lle eer rrs ss cca aar rrr rry yy o oon nnl lly yy p ppa aar rrt tt o oof ff a aa l lli iin
nne ee. .. ( (( 2 22) )) I IIn nnd ddu uus sst ttr rri iia aal ll d ddi iis sst ttr rri iib bbu uut tto oor rrs ss s sse eel lll ll t tto oo m mma aan nnu uuf ffa aac cct ttu uur rre eer rrs ss r rra aat tth hhe eer
rr t tth hha aan nn t tto oo r rre eet tta aai iil lle eer rrs ss a aan nnd dd p ppr rro oov vvi iid dde ee s sse eev vve eer rra aal ll s sse eer rrv vvi iic cce ees ss ca aar rrr rry yyi iin nng gg sst tto ooc cck kk, ,,
co oof fff ffe eer rri iin nng gg c ccr rre eed ddi iit tt, ,, a aan nnd dd p ppr rro oov vvi iid ddi iin nng gg d dde eel lli iiv vve eer rry yy. .. See text for complete table www.bookfiesta4u.blogspot.com
Wholesaling WholesalerMarketingDecisionsWholesaler Marketing Decisions TargetMarketTarget Market ProductAssortmentandServicesProduct Assortment and Services www.bookfiesta4u.blogspot.com 11-565 ProductAssortmentandServicesProduct Assortment and Services PriceDecisionPrice Decision PromotionDecisionPromotion Decision PlaceDecisionPlace Decision Wholesaling WholesalerMarketingDecisionsWholesaler Marketing Decisions TargetMarketTarget Market ProductAssortmentandServicesProduct Assortment and Services www.bookfiesta4u.blogspot.com 11-565 ProductAssortmentandServicesProduct Assortment and Services PriceDecisionPrice Decision PromotionDecisionPromotion Decision PlaceDecisionPlace Decision
McKessonoffersonlinesupplymanagementMcKesson offers online supply management www.bookfiesta4u.blogspot.com 11-566 McKessonoffersonlinesupplymanagementMcKesson offers online supply management www.bookfiesta4u.blogspot.com 11-566
Wholesaling TrendsinWholesalingTrends in Wholesaling NarusandAndersonidentifiedfourwaystoNarus and Anderson identified four ways to strengthenrelationshipswithmanufacturersstrengthen relationships with manufactur ers Sought clearagreementabout theirexpectedSought clear agreement about their expecte d functionin the marketing channelfunction in the marketing channel www.bookfiesta4u.blogspot.com 11-567 functionin the marketing channelfunction in the marketing channel Gainedinsightinto the manufacturers Gained insight into the manufacturers requirementsby visiting theirplantsrequirements by visiting their plants FulfilledcommitmentsbyFulfilled commitments by meeting volumetargetsmeeting volume targets IdentifiedandofferedvalueIdentified and offered value--addedadded servicesto help theirsuppliersservices to help their suppliers Wholesaling TrendsinWholesalingTrends in Wholesaling NarusandAndersonidentifiedfourwaystoNarus and Anderson identified four ways to strengthenrelationshipswithmanufacturersstrengthen relationships with manufactur ers Sought clearagreementabout theirexpectedSought clear agreement about their expecte d functionin the marketing channelfunction in the marketing channel www.bookfiesta4u.blogspot.com 11-567 functionin the marketing channelfunction in the marketing channel Gainedinsightinto the manufacturers Gained insight into the manufacturers requirementsby visiting theirplantsrequirements by visiting their plants FulfilledcommitmentsbyFulfilled commitments by meeting volumetargetsmeeting volume targets IdentifiedandofferedvalueIdentified and offered value--addedadded servicesto help theirsuppliersservices to help their suppliers
Market Logistics S SSu uup ppp ppl lly c y cy ch hhai aiain nn m mman ananage ageagem mme een nnt tt ( (( S SSC CCM MM) )) V VVal alalu uue ee n nne eet ttw wwor orork kk D DDe eem mman anand dd c cch hhai aiain nn p ppl llan
anann nni iin nng gg M MMar arark kke eet tt l llogi ogiogis sst tti iic ccs ss M MMa aar rrk kke eet tt l llo oog ggi iis sst tti iic ccs ss p ppl lla aan nnn nni iin nng gg h hha aas ss f ffo oou uur rr s sst
tte eep pps ss: :: D DDe eec cci iid ddi iin nng gg on onon t tth hhe ee c ccom omomp ppan anany yy s ss val valvalu uue ee D DDe eec cci iid ddi iin nng gg on onon t tth hhe ee c ccom omomp ppan anany yy s ss val valvalu uue
eep ppr rrop opopos ososi iit tti iion onon t tto oo i iit tts ss c ccu uus sst ttom omome eer rrs ss D DDe eec cci iid ddi iin nng gg on onon t tth hhe ee b bbe ees sst tt c cch hhan anann nne eel ll d dde ees ssi iign
gngn an anand dd n nne eet ttw wwor orork kk s sst ttr rrat atate eegy gygy f ffor oror r rre eeac acach hhi iin nng gg t tth hhe ee c ccu uus sst ttom omome eer rrs ss D DDe eeve vevel llop opopi iin nng gg op opope eer rrat atati iion ononal alal
e eexc xcxce eel lll lle een nnc cce ee i iin nn s ssal alale ees ss ffor orore eec ccas asast tti iin nng, g,g, w wwar arare eeh hhou ouous sse ee m mman ananage ageagem mme een nnt tt, ,, t ttr rran anans ssp ppor orort ttat atati iion onon mman ananage ageagem mme een
nnt tt, ,, an anand dd m mmat atate eer rri iial alals ss m mman ananage ageagem mme een nnt tt I IIm mmp ppl lle eem mme een nnt tti iin nng gg t tth hhe ee s ssol ololu uut tti iion onon w wwi iit tth hh t tth hhe ee b bbe ees
sst tt i iin nnf ffor ororm mmat atati iion onon s ssy yys sst tte eem mms ss, ,, e eeq qqu uui iip ppm mme een nnt tt, ,, p ppol ololi iic cci iie ees ss, ,, an anand dd p ppr rroc ococe eed ddu uur rre ees ss I IIn nnt tte eeg
ggr rra aat tte eed dd l llo oog ggi iis sst tti iic ccs ss s ssy yys sst tte eem mms ss ( (( I IIL LLS SS) )) www.bookfiesta4u.blogspot.com 11-568
TheIKEAThe IKEA--USAhomepageUSA home page www.bookfiesta4u.blogspot.com 11-569 TheIKEAThe IKEA--USAhomepageUSA home page www.bookfiesta4u.blogspot.com 11-569
Market Logistics MarketMarket--logisticsObjectiveslogistics Objectives MarketMarket--logisticsDecisionslogistics Decisions OrderProcessingOrder Processing www.bookfiesta4u.blogspot.com 11-570 OrderOrder--toto--paymentcyclepayment cycle WarehousingWarehousing StoragewarehousesStorage warehouses DistributionwarehousesDistribution warehouses AutomatedwarehousesAutomated warehouses Market Logistics MarketMarket--logisticsObjectiveslogistics Objectives MarketMarket--logisticsDecisionslogistics Decisions OrderProcessingOrder Processing www.bookfiesta4u.blogspot.com 11-570 OrderOrder--toto--paymentcyclepayment cycle WarehousingWarehousing StoragewarehousesStorage warehouses DistributionwarehousesDistribution warehouses AutomatedwarehousesAutomated warehouses
InventoryInventory Inventory costincreasesat an accelerating rateInventory cost increases erating rate asthe customerservicelevelapproaches 100%as the customer service level s 100% Market Logistics www.bookfiesta4u.blogspot.com 11-571 asthe customerservicelevelapproaches 100%as the customer service level s 100% Order(reorder)pointOrder (reorder) point OrderOrder--processing costsprocessing costs InventoryInventory--carrying costscarrying costs InventoryInventory Inventory costincreasesat an accelerating rateInventory cost increases erating rate asthe customerservicelevelapproaches 100%as the customer service level s 100% Market Logistics www.bookfiesta4u.blogspot.com 11-571 asthe customerservicelevelapproaches 100%as the customer service level s 100% Order(reorder)pointOrder (reorder) point OrderOrder--processing costsprocessing costs InventoryInventory--carrying costscarrying costs
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Figure 18.2: Determining Optimal Order Quantity www.bookfiesta4u.blogspot.com 11-572 Figure 18.2: Determining Optimal Order Quantity www.bookfiesta4u.blogspot.com 11-572
Market Logistics JustJust--InIn--Timeproduction (JIT)Time production (JIT) TransportationTransportation ContainerizationContainerization www.bookfiesta4u.blogspot.com 11-573 PiggybackPiggyback FishybackFishyback TrainshipTrainship AirtruckAirtruck PrivatecarrierPrivate carrier ContractcarrierContract carrier CommoncarrierCommon carrier Market Logistics JustJust--InIn--Timeproduction (JIT)Time production (JIT) TransportationTransportation ContainerizationContainerization www.bookfiesta4u.blogspot.com 11-573 PiggybackPiggyback FishybackFishyback TrainshipTrainship AirtruckAirtruck PrivatecarrierPrivate carrier ContractcarrierContract carrier CommoncarrierCommon carrier
The1The 1--800800--Flowers.comsitemakesFlowers.com site makes onlineorderingeasyonline ordering easy www.bookfiesta4u.blogspot.com 11-574 The1The 1--800800--Flowers.comsitemakesFlowers.com site makes onlineorderingeasyonline ordering easy www.bookfiesta4u.blogspot.com 11-574
Market Logistics O OOr rrg gga aan nni iiz zza aat tti iio oon nna aal ll L LLe ees sss sso oon nns ss C CCom omomp ppan anani iie ees ss s ssh hhou ououl lld dd ap apapp ppoi oioin nnt tt a s a sa se een nni iior oror vi vivic cce eep ppr rre
ees ssi iid dde een nnt tt of ofof l llogi ogiogis sst tti iic ccs ss t tto oo b bbe ee t tth hhe ee s ssi iin nngl glgle ee p ppoi oioin nnt tt ofofc ccon onont ttac acact tt f ffor oror al alall ll l llogi ogiogis sst tti iic ccal alal e eel
lle eem mme een nnt tts ss T TTh hhe ee s sse een nni iior oror vi vivic cce ee p ppr rre ees ssi iid dde een nnt tt of ofof l llogi ogiogis sst tti iic ccs ss s ssh hhou ououl lld dd hhol olold dd p ppe eer rri iiod ododi iic cc
m mme eee eet tti iin nngs gsgs w wwi iit tth hh s ssal alale ees ss an anand dd op opope eer rrat atati iion onons ss p ppe eeop opopl lle ee t tto r o ro re eevi vivie eew ww i iin nnve veven nnt ttor orory, y,y, e eet ttc cc. .. N NNe eew ww
s ssof ofoft ttw wwar arare ee an anand dd s ssys ysyst tte eem mms ss ar arare ee t tth hhe ee k kke eey yy tto oo ac acach hhi iie eevi vivin nng gg c ccom omomp ppe eet tti iit tti iive vevel lly yy s ssu uup ppe eer rri iior oror l llogi ogiogis
sst tti iic ccs ssp ppe eer rrf ffor ororm mman ananc cce ee i iin nn t tth hhe ee f ffu uut ttu uur rre ee www.bookfiesta4u.blogspot.com 11-575
Chapter19Chapter 19 ManagingIntegratedManaging Integrated MarketingCommunicationsMarketing Communications byby PowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans Chapter19Chapter 19 ManagingIntegratedManaging Integrated MarketingCommunicationsMarketing Communications byby PowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans
Integrated marketing communications is a f l ki h Kotler on Marketing www.bookfiesta4u.blogspot.com 11-577 way of looking at the whole marketing process from the viewpoint of the customer. Integrated marketing communications is a f l ki h Kotler on Marketing www.bookfiesta4u.blogspot.com 11-577 way of looking at the whole marketing process from the viewpoint of the customer.
Chapter Objectives Inthischapter,wefocusonthreemajorIn this chapter, we focus on three major questions:questions: Howdoescommunicationwork?How does communication work? www.bookfiesta4u.blogspot.com 11-578 WhatarethemajorstepsindevelopinganWhat are the major steps in developing an integratedmarketingcommunicationsintegrated marketing communications program?program? WhoshouldberesponsibleformarketingWho should be responsible for marketing communicationplanning?communication planning? Chapter Objectives Inthischapter,wefocusonthreemajorIn this chapter, we focus on three major questions:questions: Howdoescommunicationwork?How does communication work? www.bookfiesta4u.blogspot.com 11-578 WhatarethemajorstepsindevelopinganWhat are the major steps in developing an integratedmarketingcommunicationsintegrated marketing communications program?program? WhoshouldberesponsibleformarketingWho should be responsible for marketing communicationplanning?communication planning?
Marketing Communications Mix AdvertisingAdvertising SalesPromotionSales Promotion www.bookfiesta4u.blogspot.com 11-579 PublicRelationsandPublicityPublic Relations and Publicity PersonalSellingPersonal Selling DirectandInteractiveMarketingDirect and Interactive Marketing Marketing Communications Mix AdvertisingAdvertising SalesPromotionSales Promotion www.bookfiesta4u.blogspot.com 11-579 PublicRelationsandPublicityPublic Relations and Publicity PersonalSellingPersonal Selling DirectandInteractiveMarketingDirect and Interactive Marketing
Table 19.1: Common Communication Platforms AdvertisingAdvertising SalesSales PromotionPromotion PublicPublic RelationsRelations PersonalPersonal SellingSelling DirectDirect MarketingMarketing PrintandPrint and broadcastadsbroadcast ads Contests,Contests, games,games, sweepstakes,sweepstakes, lotterieslotteries Press kitsPress kits SalesSales presentationpresentation CatalogsCatalogs The Communication Process www.bookfiesta4u.blogspot.com 11-580 PackagingPackaging-outerouter Premiums andPremiums and giftsgifts SpeechesSpeeches SalesSales meetingsmeetings MailingsMailings PackagingPackaging insertsinserts SamplingSampling SeminarsSeminars IncentiveIncentive programsprograms TelemarketingTelemarketing MotionMotion picturespictures Fairs andFairs and tradeshowstrade shows AnnualreportsAnnual reports SamplesSamples ElectronicElectronic shoppingshopping See text for complete table Table 19.1: Common Communication Platforms AdvertisingAdvertising SalesSales PromotionPromotion PublicPublic RelationsRelations PersonalPersonal SellingSelling DirectDirect MarketingMarketing PrintandPrint and broadcastadsbroadcast ads Contests,Contests, games,games, sweepstakes,sweepstakes, lotterieslotteries Press kitsPress kits SalesSales presentationpresentation CatalogsCatalogs The Communication Process www.bookfiesta4u.blogspot.com 11-580
PackagingPackaging-outerouter Premiums andPremiums and giftsgifts SpeechesSpeeches SalesSales meetingsmeetings MailingsMailings PackagingPackaging insertsinserts SamplingSampling SeminarsSeminars IncentiveIncentive programsprograms TelemarketingTelemarketing MotionMotion picturespictures Fairs andFairs and tradeshowstrade shows AnnualreportsAnnual reports SamplesSamples ElectronicElectronic shoppingshopping See text for complete table
Figure 19.1: Elements in the Communication Process www.bookfiesta4u.blogspot.com 11-581 Figure 19.1: Elements in the Communication Process www.bookfiesta4u.blogspot.com 11-581
The Communication Process TargetaudiencemaynotreceivetheTarget audience may not receive the intendedmessageforanyofthreeintended message for any of three reasons:reasons: www.bookfiesta4u.blogspot.com 11-582 reasons:reasons: SelectiveattentionSelective attention SelectivedistortionSelective distortion SelectiveretentionSelective retention The Communication Process TargetaudiencemaynotreceivetheTarget audience may not receive the intendedmessageforanyofthreeintended message for any of three reasons:reasons: www.bookfiesta4u.blogspot.com 11-582 reasons:reasons: SelectiveattentionSelective attention SelectivedistortionSelective distortion SelectiveretentionSelective retention
The Communication Process FiskeandHartleyhaveoutlinedFiske and Hartley have outlined factorsthatinfluencefactors that influence communication:communication: www.bookfiesta4u.blogspot.com 11-583 ThegreatertheinfluenceoftheThe greater the influence of the communicationsource,thegreaterthecommunication source, the greater the effectontherecipienteffect on the recipient CommunicationeffectsaregreatestCommunication effects are greatest whentheyareinlinewithexistingwhen they are in line with existing opinions,beliefs,anddispositionsopinions, beliefs, and dispositions The Communication Process FiskeandHartleyhaveoutlinedFiske and Hartley have outlined factorsthatinfluencefactors that influence communication:communication: www.bookfiesta4u.blogspot.com 11-583 ThegreatertheinfluenceoftheThe greater the influence of the communicationsource,thegreaterthecommunication source, the greater the effectontherecipienteffect on the recipient CommunicationeffectsaregreatestCommunication effects are greatest whentheyareinlinewithexistingwhen they are in line with existing opinions,beliefs,anddispositionsopinions, beliefs, and dispositions
The Communication Process
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Figure 19.2: Steps in Developing Effective Communication www.bookfiesta4u.blogspot.com 11-585 Figure 19.2: Steps in Developing Effective Communication www.bookfiesta4u.blogspot.com 11-585
Developing Effective Communications IdentifytheTargetAudienceIdentify the Target Audience ImageanalysisImage analysis Familiarity scaleFamiliarity scale www.bookfiesta4u.blogspot.com 11-586 yy Favorability scaleFavorability scale NeverNever HeardofHeard of HeardofHeard of OnlyOnly KnowaKnow a LittleBitLittle Bit Knowa FairKnow a Fair AmountAmount KnowKnow VeryWellVery Well VeryVery UnfavorableUnfavorable SomewhatSomewhat UnfavorableUnfavorable IndifferentIndifferent SomewhatSomewhat FavorableFavorable VeryVery favorablefavorable Developing Effective Communications IdentifytheTargetAudienceIdentify the Target Audience ImageanalysisImage analysis Familiarity scaleFamiliarity scale www.bookfiesta4u.blogspot.com 11-586 yy Favorability scaleFavorability scale NeverNever HeardofHeard of HeardofHeard of OnlyOnly KnowaKnow a LittleBitLittle Bit Knowa FairKnow a Fair AmountAmount KnowKnow VeryWellVery Well VeryVery UnfavorableUnfavorable SomewhatSomewhat UnfavorableUnfavorable IndifferentIndifferent SomewhatSomewhat FavorableFavorable VeryVery favorablefavorable
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ooc ccc cca aas ssi iio oon nn. .. WhilesomecompanieshaveusedsucheventstoWhile some companies have used such events to launchsuccessful,longlaunch successful, long--runningcampaigns,othersrunning cam paigns, others haveseenlittlebenefitfromtheseads.Canyouhave seen little benefit from these ads. Can you rememberthenameofthefirmremember the name of the firm whosecriticallyacclaimedwhose critically acclaimed SuperbowladfeaturedSuperbowl ad featured cowboysherdingcats?cowboys herding cats?
Figure 19.3: Familiarity-Favorability Analysis www.bookfiesta4u.blogspot.com 11-588 Figure 19.3: Familiarity-Favorability Analysis www.bookfiesta4u.blogspot.com 11-588
Developing Effective Communications SemanticdifferentialSemantic differential DevelopingasetofrelevantdimensionsDeveloping a set of relevant ReducingthesetofrelevantdimensionsReducing the set of relevant AdministeringtheinstrumenttoaAdministering the instrument to a www.bookfiesta4u.blogspot.com 11-589 sampleofrespondentssample of respondents AveragingtheresultsAveraging the results CheckingontheimagevarianceChecking on the image variance Developing Effective Communications SemanticdifferentialSemantic differential DevelopingasetofrelevantdimensionsDeveloping a set of relevant ReducingthesetofrelevantdimensionsReducing the set of relevant AdministeringtheinstrumenttoaAdministering the instrument to a www.bookfiesta4u.blogspot.com 11-589 sampleofrespondentssample of respondents AveragingtheresultsAveraging the results CheckingontheimagevarianceChecking on the image variance
dimensions dimensions
dimensions dimensions
Developing Effective Communications DeterminetheCommunicationObjectiveDetermine the Communication Objective CognitiveCognitive www.bookfiesta4u.blogspot.com 11-590 AffectiveAffective BehavioralBehavioral ResponseResponse--hierarchymodelshierarchy models Developing Effective Communications DeterminetheCommunicationObjectiveDetermine the Communication Objective CognitiveCognitive www.bookfiesta4u.blogspot.com 11-590 AffectiveAffective BehavioralBehavioral ResponseResponse--hierarchymodelshierarchy models
Figure 19.5: Response Hierarchy Models www.bookfiesta4u.blogspot.com 11-591 Figure 19.5: Response Hierarchy Models www.bookfiesta4u.blogspot.com 11-591
Developing Effective Communications HierarchyHierarchy--ofeffectsmodelof effects model AwarenessAwareness KnowledgeKnowledge www.bookfiesta4u.blogspot.com 11-592 LikingLiking PreferencePreference ConvictionConviction PurchasePurchase Developing Effective Communications HierarchyHierarchy--ofeffectsmodelof effects model AwarenessAwareness KnowledgeKnowledge www.bookfiesta4u.blogspot.com 11-592 LikingLiking PreferencePreference ConvictionConviction PurchasePurchase
Developing Effective Communications DesigntheMessageDesign the Message AIDAmodelAIDA model GainGain attentionattention www.bookfiesta4u.blogspot.com 11-593 HoldHold interestinterest ArouseArouse desiredesire ElicitElicit actionaction MessageContentMessage Content RationalappealsRational appeals EmotionalappealsEmotional appeals MoralappealsMoral appeals Developing Effective Communications DesigntheMessageDesign the Message AIDAmodelAIDA model GainGain attentionattention www.bookfiesta4u.blogspot.com 11-593 HoldHold interestinterest ArouseArouse desiredesire ElicitElicit actionaction MessageContentMessage Content RationalappealsRational appeals EmotionalappealsEmotional appeals MoralappealsMoral appeals
Developing Effective Communications MessageStructureMessage Structure MessageFormatMessage Format www.bookfiesta4u.blogspot.com 11-594 MessageSourceMessage Source Factorsunderlying sourcecredibilityFactors underlying source credibility ExpertiseExpertise TrustworthinessTrustworthiness PrincipleofcongruityPrinciple of congruity Developing Effective Communications MessageStructureMessage Structure MessageFormatMessage Format www.bookfiesta4u.blogspot.com 11-594 MessageSourceMessage Source Factorsunderlying sourcecredibilityFactors underlying source credibility ExpertiseExpertise TrustworthinessTrustworthiness PrincipleofcongruityPrinciple of congruity
bmwfilmsbmwfilms.com.com www.bookfiesta4u.blogspot.com 11-595 bmwfilmsbmwfilms.com.com www.bookfiesta4u.blogspot.com 11-595
Developing Effective Communications SelecttheCommunicationChannelsSelect the Communication Channels PersonalCommunicationChannelsPersonal Communication Channels www.bookfiesta4u.blogspot.com 11-596 PersonalCommunicationChannelsPersonal Communication Channels AdvocatechannelsAdvocate channels ExpertchannelsExpert channels SocialchannelsSocial channels Developing Effective Communications SelecttheCommunicationChannelsSelect the Communication Channels PersonalCommunicationChannelsPersonal Communication Channels www.bookfiesta4u.blogspot.com 11-596 PersonalCommunicationChannelsPersonal Communication Channels AdvocatechannelsAdvocate channels ExpertchannelsExpert channels SocialchannelsSocial channels
Developing Effective Communications StepstostimulatepersonalinfluencechannelsSteps to stimulate personal influence cha nnels toworkonthecompanies behalfto work on the companies behalf Devoteextra effortto influentialindividualsandDevote extra effort to influential i ndividuals and companiescompanies www.bookfiesta4u.blogspot.com 11-597 Createopinion leadersby providing the product atCreate opinion leaders by providin g the product at attractivetermsto certainpeopleattractive terms to certain people Workthroughcommunity influentialssuchas localWork through community influentials s uch as local diskjockeys, classpresidents, andpresidentsofdisk jockeys, class presidents, and presidents of women s organizationswomen s organizations Useinfluentialorbelievablepeoplein testimonialUse influential or believable people in testimonial advertisingadvertising Developadvertising withhigh conversationvalue Develop advertising with high conversati on value Developing Effective Communications StepstostimulatepersonalinfluencechannelsSteps to stimulate personal influence cha nnels toworkonthecompanies behalfto work on the companies behalf Devoteextra effortto influentialindividualsandDevote extra effort to influential i ndividuals and companiescompanies www.bookfiesta4u.blogspot.com 11-597 Createopinion leadersby providing the product atCreate opinion leaders by providin g the product at attractivetermsto certainpeopleattractive terms to certain people Workthroughcommunity influentialssuchas localWork through community influentials s uch as local diskjockeys, classpresidents, andpresidentsofdisk jockeys, class presidents, and presidents of women s organizationswomen s organizations Useinfluentialorbelievablepeoplein testimonialUse influential or believable people in testimonial advertisingadvertising Developadvertising withhigh conversationvalue Develop advertising with high conversati on value
Developing Effective Communications DevelopwordDevelop word--ofof--mouthreferralchannels to buildmouth referral channe ls to build businessbusiness Establishan electronicforumEstablish an electronic forum UseviralmarketingUse viral marketing www.bookfiesta4u.blogspot.com 11-598 NonpersonalCommunicationChannelsNonpersonal Communication Channels MediaMedia AtmospheresAtmospheres EventsEvents SocialSocial--structureview of interpersonalstructure view of interpersonal communicationcommunication LiaisonLiaison BridgeBridge Developing Effective Communications DevelopwordDevelop word--ofof--mouthreferralchannels to buildmouth referral channe ls to build businessbusiness Establishan electronicforumEstablish an electronic forum UseviralmarketingUse viral marketing www.bookfiesta4u.blogspot.com 11-598 NonpersonalCommunicationChannelsNonpersonal Communication Channels MediaMedia AtmospheresAtmospheres EventsEvents SocialSocial--structureview of interpersonalstructure view of interpersonal communicationcommunication LiaisonLiaison BridgeBridge
Developing Effective Communications EstablishtheTotalMarketingEstablish the Total Marketing CommunicationsbudgetCommunications budget www.bookfiesta4u.blogspot.com 11-599 gg AffordableMethodAffordable Method PercentagePercentage--ofof--SalesMethodSales Method CompetitiveCompetitive--ParityMethodParity Method Developing Effective Communications EstablishtheTotalMarketingEstablish the Total Marketing CommunicationsbudgetCommunications budget www.bookfiesta4u.blogspot.com 11-599 gg AffordableMethodAffordable Method PercentagePercentage--ofof--SalesMethodSales Method CompetitiveCompetitive--ParityMethodParity Method
Developing Effective Communications ObjectiveObjective--andand--TaskMethodTask Method EstablishthemarketEstablish the market--sharegoalshare goal DeterminethepercentageofthemarketthatshouldbeDetermine the percentage of the marke t that should be reachedbyadvertisingreached by advertising www.bookfiesta4u.blogspot.com 11-600 DeterminethepercentageofawareprospectsthatshouldDetermine the percentage of aware prospects that should bepersuadedtotrythebrandbe persuaded to try the brand Determinethenumberofadvertisingimpressionsper1Determine the number of advertising impressions per 1 percenttrialratepercent trial rate DeterminethenumberofgrossratingpointsthatwouldDetermine the number of gross rating points that would havetobepurchasedhave to be purchased DeterminethenecessaryadvertisingbudgetonthebasisofDetermine the necessary advertis ing budget on the basis of theaveragecostofbuyingagrossratingpointthe average cost of buying a gross rating point Developing Effective Communications ObjectiveObjective--andand--TaskMethodTask Method EstablishthemarketEstablish the market--sharegoalshare goal DeterminethepercentageofthemarketthatshouldbeDetermine the percentage of the marke t that should be reachedbyadvertisingreached by advertising www.bookfiesta4u.blogspot.com 11-600 DeterminethepercentageofawareprospectsthatshouldDetermine the percentage of aware prospects that should bepersuadedtotrythebrandbe persuaded to try the brand Determinethenumberofadvertisingimpressionsper1Determine the number of advertising impressions per 1 percenttrialratepercent trial rate DeterminethenumberofgrossratingpointsthatwouldDetermine the number of gross rating points that would havetobepurchasedhave to be purchased DeterminethenecessaryadvertisingbudgetonthebasisofDetermine the necessary advertis ing budget on the basis of theaveragecostofbuyingagrossratingpointthe average cost of buying a gross rating point
Deciding on the Marketing Communications Mix ThePromotionaltoolsThe Promotional tools AdvertisingAdvertising GeneralQualities:General Qualities: PublicpresentationPublic presentation www.bookfiesta4u.blogspot.com 11-601 PublicpresentationPublic presentation PervasivenessPervasiveness AmplifiedexpressivenessAmplified expressiveness ImpersonalityImpersonality SalesPromotionSales Promotion Benefits:Benefits: CommunicationCommunication IncentiveIncentive InvitationInvitation Deciding on the Marketing Communications Mix ThePromotionaltoolsThe Promotional tools AdvertisingAdvertising GeneralQualities:General Qualities: PublicpresentationPublic presentation www.bookfiesta4u.blogspot.com 11-601 PublicpresentationPublic presentation PervasivenessPervasiveness AmplifiedexpressivenessAmplified expressiveness ImpersonalityImpersonality SalesPromotionSales Promotion Benefits:Benefits: CommunicationCommunication IncentiveIncentive InvitationInvitation
Deciding on the Marketing Communications Mix PublicRelationsandPublicityPublic Relations and Publicity Distinctivequalities:Distinctive qualities: HighcredibilityHigh credibility www.bookfiesta4u.blogspot.com 11-602 AbilitytocatchbuyersoffguardAbility to catch buyers off guard DramatizationDramatization PersonalSellingPersonal Selling Distinctivequalities:Distinctive qualities: PersonalconfrontationPersonal confrontation CultivationCultivation ResponseResponse Deciding on the Marketing Communications Mix PublicRelationsandPublicityPublic Relations and Publicity Distinctivequalities:Distinctive qualities: HighcredibilityHigh credibility www.bookfiesta4u.blogspot.com 11-602 AbilitytocatchbuyersoffguardAbility to catch buyers off guard DramatizationDramatization PersonalSellingPersonal Selling Distinctivequalities:Distinctive qualities: PersonalconfrontationPersonal confrontation CultivationCultivation ResponseResponse
Deciding on the Marketing Communications Mix DirectMarketingDirect Marketing Distinctivequalities:Distinctive qualities: www.bookfiesta4u.blogspot.com 11-603 Distinctivequalities:Distinctive qualities: NonpublicNonpublic CustomizedCustomized UpUp--toto--datedate InteractiveInteractive Deciding on the Marketing Communications Mix DirectMarketingDirect Marketing Distinctivequalities:Distinctive qualities: www.bookfiesta4u.blogspot.com 11-603 Distinctivequalities:Distinctive qualities: NonpublicNonpublic CustomizedCustomized UpUp--toto--datedate InteractiveInteractive
Deciding on the Marketing Communications Mix FactorsinsettingtheMarketingFactors in setting the Marketing CommunicationsMixCommunications Mix TypeofProductMarketType of Product Market www.bookfiesta4u.blogspot.com 11-604 TypeofProductMarketType of Product Market Advertising srolein business markets:Advertising s role in business markets: AdvertisingcanprovideanintroductiontotheAdvertising can provide an introduction to the companyanditsproductscompany and its products Iftheproductembodiesnewfeatures,advertisingcanIf the product embodies new features , advertising can explainthemexplain them ReminderadvertisingismoreeconomicalthansalesReminder advertising is more economica l than sales callscalls Deciding on the Marketing Communications Mix FactorsinsettingtheMarketingFactors in setting the Marketing CommunicationsMixCommunications Mix TypeofProductMarketType of Product Market www.bookfiesta4u.blogspot.com 11-604 TypeofProductMarketType of Product Market Advertising srolein business markets:Advertising s role in business markets: AdvertisingcanprovideanintroductiontotheAdvertising can provide an introduction to the companyanditsproductscompany and its products Iftheproductembodiesnewfeatures,advertisingcanIf the product embodies new features , advertising can explainthemexplain them ReminderadvertisingismoreeconomicalthansalesReminder advertising is more economica l than sales callscalls
Deciding on the Marketing Communications Mix AdvertisementsofferingbrochuresandAdvertisements offering brochures and carryingthecompany sphonenumberarecarrying the company s phone number are aneffectivewaytogenerateleadsforsalesan effective way to generate leads for sale s representatives.representatives. www.bookfiesta4u.blogspot.com 11-605 representatives.representatives. SalesrepresentativescanusetearsheetsofSales representatives can use tear sheets of thecompany sadstolegitimizetheirthe company s ads to legitimize their companyandproducts.company and products. AdvertisingcanremindcustomersofhowtoAdvertising can remind customers of how to usetheproductandreassurethemaboutuse the product and reassure them about theirpurchase.their purchase. Deciding on the Marketing Communications Mix AdvertisementsofferingbrochuresandAdvertisements offering brochures and carryingthecompany sphonenumberarecarrying the company s phone number are aneffectivewaytogenerateleadsforsalesan effective way to generate leads for sale s representatives.representatives. www.bookfiesta4u.blogspot.com 11-605 representatives.representatives. SalesrepresentativescanusetearsheetsofSales representatives can use tear sheets of thecompany sadstolegitimizetheirthe company s ads to legitimize their companyandproducts.company and products. AdvertisingcanremindcustomersofhowtoAdvertising can remind customers of how to usetheproductandreassurethemaboutuse the product and reassure them about theirpurchase.their purchase.
Deciding on the Marketing Communications Mix Levittfoundthat:Levitt found that: Corporateadvertising that can builduptheCorporate advertising that can build up th e company sreputationwillhelp the salescompany s reputation will help the sales representativesrepresentatives www.bookfiesta4u.blogspot.com 11-606 representativesrepresentatives SalesrepresentativesfromwellSales representatives from well--knownfirmsknown firms havean edge, buta highly effectivepresentationhave an edge, but a highly effecti ve presentation froma lesserknowncompany s rep canfrom a lesser known company s rep can overcomethat edgeovercome that edge Company reputationhelps most whentheCompany reputation helps most when the productiscomplexproduct is complex Deciding on the Marketing Communications Mix Levittfoundthat:Levitt found that: Corporateadvertising that can builduptheCorporate advertising that can build up th e company sreputationwillhelp the salescompany s reputation will help the sales representativesrepresentatives www.bookfiesta4u.blogspot.com 11-606 representativesrepresentatives SalesrepresentativesfromwellSales representatives from well--knownfirmsknown firms havean edge, buta highly effectivepresentationhave an edge, but a highly effecti ve presentation froma lesserknowncompany s rep canfrom a lesser known company s rep can overcomethat edgeovercome that edge Company reputationhelps most whentheCompany reputation helps most when the productiscomplexproduct is complex
Deciding on the Marketing Communications Mix GaryLilienfoundthat:Gary Lilien found that: Theaverageindustrialcompany sets itsThe average industrial company sets its marketing budget at 7 percentofsalesmarketing budget at 7 percent of sales Industrialcompaniesspenta higherIndustrial companies spent a higher--thanthan-www.bookfiesta4u.blogspot.com 11-607 Industrialcompaniesspenta higherIndustrial companies spent a higher--thanthan-averageamount on advertising iftheirproductsaverage amount on advertising if the ir products had higherquality, uniqueness, or purchasehad higher quality, uniqueness, or pur chase frequency, or iftherewascustomergrowthfrequency, or if there was customer growth Industrialcompaniesset a higherIndustrial companies set a higher--thanthan--averag eaverage marketing budget whentheircustomersweremarketing budget when their customers wer e moredispersedor thecustomergrowthratewasmore dispersed or the customer growth ra te was higherhigher Deciding on the Marketing Communications Mix GaryLilienfoundthat:Gary Lilien found that: Theaverageindustrialcompany sets itsThe average industrial company sets its marketing budget at 7 percentofsalesmarketing budget at 7 percent of sales Industrialcompaniesspenta higherIndustrial companies spent a higher--thanthan-www.bookfiesta4u.blogspot.com 11-607 Industrialcompaniesspenta higherIndustrial companies spent a higher--thanthan-averageamount on advertising iftheirproductsaverage amount on advertising if the ir products had higherquality, uniqueness, or purchasehad higher quality, uniqueness, or pur chase frequency, or iftherewascustomergrowthfrequency, or if there was customer growth Industrialcompaniesset a higherIndustrial companies set a higher--thanthan--averag eaverage marketing budget whentheircustomersweremarketing budget when their customers wer e moredispersedor thecustomergrowthratewasmore dispersed or the customer growth ra te was higherhigher
Deciding on the Marketing Communications Mix EffectivelytrainedconsumersalesforcecanEffectively n makefourimportantcontributions:make four important www.bookfiesta4u.blogspot.com 11-608 IncreasedstockpositionIncreased stock position Enthusiasm buildingEnthusiasm building Missionary sellingMissionary selling Key accountmanagementKey account management BuyerBuyer--ReadinessStageReadiness Stage Deciding on the Marketing Communications Mix EffectivelytrainedconsumersalesforcecanEffectively n makefourimportantcontributions:make four important www.bookfiesta4u.blogspot.com 11-608 IncreasedstockpositionIncreased stock position Enthusiasm buildingEnthusiasm building Missionary sellingMissionary selling Key accountmanagementKey account management BuyerBuyer--ReadinessStageReadiness Stage
trained consumer sales force ca contributions:
trained consumer sales force ca contributions:
Figure 19.6: Cost-Effectiveness of Different Promotional Tools www.bookfiesta4u.blogspot.com 11-609 Figure 19.6: Cost-Effectiveness of Different Promotional Tools www.bookfiesta4u.blogspot.com 11-609
Deciding on the Marketing Communications Mix ProductLifeProduct Life--CycleStageCycle Stage MeasuretheMeasure the www.bookfiesta4u.blogspot.com 11-610 MeasuretheMeasure the Communications ResultCommunications Result Deciding on the Marketing Communications Mix ProductLifeProduct Life--CycleStageCycle Stage MeasuretheMeasure the www.bookfiesta4u.blogspot.com 11-610 MeasuretheMeasure the Communications ResultCommunications Result
WhiletraditionalcommunicationmethodsWhile traditional communication methods makemeasurementofresultsdifficult,make measurement of results difficult, Internetcommunicationsofferdifferent,Internet communications offer different, moreimmediatemeasuresHowcanmore immediate measures How canmoreimmediatemeasures. Howcanmore immediate measures. How can analysisofwebsitevisitors behaviorbeanalysis of web site visitors behavior be usedtoevaluatetheeffectivenessused to evaluate the effectiveness ofacompany smarketingof a company s marketing communicationsstrategy?communications strategy? WhiletraditionalcommunicationmethodsWhile traditional communication methods makemeasurementofresultsdifficult,make measurement of results difficult, Internetcommunicationsofferdifferent,Internet communications offer different, moreimmediatemeasuresHowcanmore immediate measures How canmoreimmediatemeasures. Howcanmore immediate measures. How can analysisofwebsitevisitors behaviorbeanalysis of web site visitors behavior be usedtoevaluatetheeffectivenessused to evaluate the effectiveness ofacompany smarketingof a company s marketing communicationsstrategy?communications strategy?
Managing the Integrated Marketing Communications Process IntegratedMarketingCommunicationsIntegrated Marketing Communications (IMC)(IMC) www.bookfiesta4u.blogspot.com 11-612 (IMC)(IMC) Managing the Integrated Marketing Communications Process IntegratedMarketingCommunicationsIntegrated Marketing Communications (IMC)(IMC) www.bookfiesta4u.blogspot.com 11-612 (IMC)(IMC)
Chapter20Chapter 20 ManagingAdvertising,SalesManaging Advertising, Sales Promotion,PublicRelations,Promotion, Public Relations, andDirectMarketingand Direct Marketing bybybyby PowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans Chapter20Chapter 20 ManagingAdvertising,SalesManaging Advertising, Sales Promotion,PublicRelations,Promotion, Public Relations, andDirectMarketingand Direct Marketing bybybyby PowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans
ThebestadvertisingThe best advertising isdonebysatisfiedis done by satisfied Kotler on Marketing www.bookfiesta4u.blogspot.com 11-614 customers.customers. ThebestadvertisingThe best advertising isdonebysatisfiedis done by satisfied Kotler on Marketing www.bookfiesta4u.blogspot.com 11-614 customers.customers.
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tth hhe ee p ppo oot tte een nnt tti iia aal ll oof ffp ppu uub bbl lli iic cc r rre eel lla aat tti iio oon nns ss a aan nnd dd p ppu uub bbl lli iic cci iit tty yy? ?? H HHo oow ww c cca aan nn c cco oom mmp
ppa aan nni iie ees ss u uus sse ee i iin nnt tte eeg ggr rra aat tte eed dd ddi iir rre eec cct ttm mma aar rrk kke eet tti iin nng gg f ffo oor rr c cco oom mmp ppe eet tti iit tti iiv vve ee a aad ddv vva aan nnt tta aag gge
ee? ?? H HHo oow ww c cca aan nn c cco oom mmp ppa aan nni iie ees ss d ddo oo e eef fff ffe eec cct tti iiv vve ee e ee-m mma aar rrk kke eet tti iin nng gg? ?? www.bookfiesta4u.blogspot.com 11-615
Developing and Managing an Advertising Program SettingtheAdvertisingObjectivesSetting the Advertisinggoal(Objective)Advertising goal www.bookfiesta4u.blogspot.com 11-616 Figure 20.1: The Five Ms of Advertising Developing and Managing an Advertising Program SettingtheAdvertisingObjectivesSetting the Advertisinggoal(Objective)Advertising goal www.bookfiesta4u.blogspot.com 11-616 Figure 20.1: The Five Ms of Advertising
Advertising Objectives (Objective)
Advertising Objectives (Objective)
Developing and Managing an Advertising Program AdvertisingobjectivesatdifferentstagesinAdvertising objectives at different stages in HierarchyofEffectsHierarchy of Effects InformativeadvertisingInformative advertising www.bookfiesta4u.blogspot.com 11-617 InformativeadvertisingInformative advertising PersuasiveadvertisingPersuasive advertising ReminderadvertisingReminder advertising ReinforcementadvertisingReinforcement advertising BrandequityBrand equity Developing and Managing an Advertising Program AdvertisingobjectivesatdifferentstagesinAdvertising objectives at different stages in HierarchyofEffectsHierarchy of Effects InformativeadvertisingInformative advertising www.bookfiesta4u.blogspot.com 11-617 InformativeadvertisingInformative advertising PersuasiveadvertisingPersuasive advertising ReminderadvertisingReminder advertising ReinforcementadvertisingReinforcement advertising BrandequityBrand equity
Developing and Managing an Advertising Program DecidingontheAdvertisingBudgetDeciding on the Advertising Budget FivefactorstoconsiderwhensettingtheFive factors to consider when setting the advertisingbudget:advertising budget: www.bookfiesta4u.blogspot.com 11-618 advertisingbudget:advertising budget: Stageinthe product lifecycleStage in the product life cycle Marketshareandconsumer baseMarket share and consumer base CompetitionandclutterCompetition and clutter Advertising frequencyAdvertising frequency ProductsubstitutabilityProduct substitutability Developing and Managing an Advertising Program DecidingontheAdvertisingBudgetDeciding on the Advertising Budget FivefactorstoconsiderwhensettingtheFive factors to consider when setting the advertisingbudget:advertising budget: www.bookfiesta4u.blogspot.com 11-618 advertisingbudget:advertising budget: Stageinthe product lifecycleStage in the product life cycle Marketshareandconsumer baseMarket share and consumer base CompetitionandclutterCompetition and clutter Advertising frequencyAdvertising frequency ProductsubstitutabilityProduct substitutability
Developing and Managing an Advertising Program ChoosingtheAdvertisingMessageChoosing the Advertising Message MessagegenerationMessage generation MessageevaluationMessage evaluation MessageexecutionMessage execution RationalpositioningRational positioning www.bookfiesta4u.blogspot.com 11-619 and selectionand selection Twedtratesmessageson:Twedt rates messages on: DesirabilityDesirability ExclusivenessExclusiveness BelievabilityBelievability CreativebriefCreative brief Positioning statementPositioning statement EmotionalpositioningEmotional positioning SocialresponsibilitySocial responsibility reviewreview Developing and Managing an Advertising Program ChoosingtheAdvertisingMessageChoosing the Advertising Message MessagegenerationMessage generation MessageevaluationMessage evaluation MessageexecutionMessage execution RationalpositioningRational positioning www.bookfiesta4u.blogspot.com 11-619 and selectionand selection Twedtratesmessageson:Twedt rates messages on: DesirabilityDesirability ExclusivenessExclusiveness BelievabilityBelievability CreativebriefCreative brief Positioning statementPositioning statement EmotionalpositioningEmotional positioning SocialresponsibilitySocial responsibility reviewreview
EthicalFunds homepageEthical Funds homepage www.bookfiesta4u.blogspot.com 11-620 EthicalFunds homepageEthical Funds homepage www.bookfiesta4u.blogspot.com 11-620
Deciding on Media and Measuring Effectiveness DecidingonReach,Frequency,andDeciding on Reach, Frequency, and ImpactImpact MediaselectionMedia selection www.bookfiesta4u.blogspot.com 11-621 Howmanyexposures,E*,willproduceHow many exposures, E*, will produce audienceawarenessA*dependsontheaudience awareness A* depends on the exposures :exposures : Reach(R)Reach (R) Frequency (F)Frequency (F) Impact(I)Impact (I) Deciding on Media and Measuring Effectiveness DecidingonReach,Frequency,andDeciding on Reach, Frequency, and ImpactImpact MediaselectionMedia selection www.bookfiesta4u.blogspot.com 11-621 Howmanyexposures,E*,willproduceHow many exposures, E*, will produce audienceawarenessA*dependsontheaudience awareness A* depends on the exposures :exposures : Reach(R)Reach (R) Frequency (F)Frequency (F) Impact(I)Impact (I)
Figure 20.2: Relationship Among Trial, Awareness, and the Exposure Function www.bookfiesta4u.blogspot.com 11-622 Figure 20.2: Relationship Among Trial, Awareness, and the Exposure Function www.bookfiesta4u.blogspot.com 11-622
Deciding on Media and Measuring Effectiveness TotalNumberofExposures(E)Total Number of Exposures (E) E=RxFE = R x F whereR=reach,F=frequencywhere R = reach, F = frequency www.bookfiesta4u.blogspot.com 11-623 KnownasGrossRatingPoints(GRP)Known as Gross Rating Points WeightedNumberofExposures(WE)Weighted Number of Exposures WE=RxFxIWE = R x F x I whereR=reach,F=frequency,where R = reach, F = frequency, I=averageimpactI = average impact Deciding on Media and Measuring Effectiveness TotalNumberofExposures(E)Total Number of Exposures (E) E=RxFE = R x F whereR=reach,F=frequencywhere R = reach, F = frequency www.bookfiesta4u.blogspot.com 11-623 KnownasGrossRatingPoints(GRP)Known as Gross Rating Points WeightedNumberofExposures(WE)Weighted Number of Exposures WE=RxFxIWE = R x F x I whereR=reach,F=frequency,where R = reach, F = frequency, I=averageimpactI = average impact
(GRP) (WE)
(GRP) (WE)
Deciding on Media and Measuring Effectiveness ChoosingAmongMajorMediaTypesChoosing Among Major Media Types Table 20.1: Profiles of Media Types MediumMedium AdvantagesAdvantages LimitationsLimitations NewspapersNewspapers Flexibility;timeliness;goodFlexibility; timeliness; good Sh ortlife;poorreproductionShort life; poor reproduction www.bookfiesta4u.blogspot.com 11-624 NewspapersNewspapers Flexibility;timeliness;goodFlexibility; timeliness; good localmarketcoverage;broadlocal market coverage; broad acceptance;highbelievabilityacceptance; high believability Shortlife;poorreproductionShort life; poor reproduction quality;small passalong quality; small passalong audienceaudience TelevisionTelevision Combines sight,sound,andCombines sight, sound, and motion;appealingtothemotion; appealing to the senses;highattention;highsenses; high attention; high reachreach Highabsolutecost;highHigh absolute cost; high clutter;fleetingexposure;clutter; fleeting exposure; less audienceselectivityless audience selectivity DirectmailDirect mail Audienceselectivity;flexibility;Audience selectivity; flex ibility; noadcompetitionwithintheno ad competition within the samemedium;personalizationsame medium; personalization Relativelyhighcost; junkRelatively high cost; junk mail imagemail image See text for complete table Deciding on Media and Measuring Effectiveness ChoosingAmongMajorMediaTypesChoosing Among Major Media Types Table 20.1: Profiles of Media Types MediumMedium AdvantagesAdvantages LimitationsLimitations NewspapersNewspapers Flexibility;timeliness;goodFlexibility; timeliness; good Sh ortlife;poorreproductionShort life; poor reproduction www.bookfiesta4u.blogspot.com 11-624 NewspapersNewspapers Flexibility;timeliness;goodFlexibility; timeliness; good localmarketcoverage;broadlocal market coverage; broad acceptance;highbelievabilityacceptance; high believability Shortlife;poorreproductionShort life; poor reproduction quality;small passalong quality; small passalong audienceaudience TelevisionTelevision Combines sight,sound,andCombines sight, sound, and motion;appealingtothemotion; appealing to the senses;highattention;highsenses; high attention; high reachreach Highabsolutecost;highHigh absolute cost; high clutter;fleetingexposure;clutter; fleeting exposure; less audienceselectivityless audience selectivity DirectmailDirect mail Audienceselectivity;flexibility;Audience selectivity; flex ibility; noadcompetitionwithintheno ad competition within the samemedium;personalizationsame medium; personalization Relativelyhighcost; junkRelatively high cost; junk mail imagemail image See text for complete table
Deciding on Media and Measuring Effectiveness Mediaplannersconsider:Media planners consider: TargetTarget--audiencemediahabitsaudience media habits ProductcharacteristicsProduct characteristics www.bookfiesta4u.blogspot.com 11-625 MessagecharacteristicsMessage characteristics CostCost NewMediaNew Media AdvertorialsAdvertorials InfomercialsInfomercials Deciding on Media and Measuring Effectiveness Mediaplannersconsider:Media planners consider: TargetTarget--audiencemediahabitsaudience media habits ProductcharacteristicsProduct characteristics www.bookfiesta4u.blogspot.com 11-625 MessagecharacteristicsMessage characteristics CostCost NewMediaNew Media AdvertorialsAdvertorials InfomercialsInfomercials
MoremanufacturersareusingnewMore manufacturers are using new technologiestomovetoward masstechnologies to move toward mass customization intheirproductcustomization in their productcustomizationintheirprodu ctcustomization in their product offerings.Haveyouseenasimilarofferings. Have you seen a similar moveamongmarketers?move among marketers? MoremanufacturersareusingnewMore manufacturers are using new technologiestomovetoward masstechnologies to move toward mass customization intheirproductcustomization in their productcustomizationintheirprodu ctcustomization in their product offerings.Haveyouseenasimilarofferings. Have you seen a similar moveamongmarketers?move among marketers?
Earthlink:HighEarthlink: High--speedspeed InternetServiceInternet Service ProviderProvider www.bookfiesta4u.blogspot.com 11-627 Earthlink:HighEarthlink: High--speedspeed InternetServiceInternet Service ProviderProvider www.bookfiesta4u.blogspot.com 11-627
Deciding on Media and Measuring Effectiveness AllocatingtheBudgetAllocating the Budget Audiencesizemeasures:Audience size measures: www.bookfiesta4u.blogspot.com 11-628 CirculationCirculation AudienceAudience EffectiveaudienceEffective audience EffectiveadEffective ad--exposedaudienceexposed audience Deciding on Media and Measuring Effectiveness AllocatingtheBudgetAllocating the Budget Audiencesizemeasures:Audience size measures: www.bookfiesta4u.blogspot.com 11-628 CirculationCirculation AudienceAudience EffectiveaudienceEffective audience EffectiveadEffective ad--exposedaudienceexposed audience
Deciding on Media and Measuring Effectiveness DecidingonMediaTimingDeciding CarryoverCarryover HabitualHabitual www.bookfiesta4u.blogspot.com Figure 20.3: Classification of Advertising Timing Patterns behaviorbehavior Deciding on Media and Measuring Effectiveness DecidingonMediaTimingDeciding CarryoverCarryover HabitualHabitual www.bookfiesta4u.blogspot.com Figure 20.3: Classification of Advertising Timing Patterns behaviorbehavior
on Media Timing 11-629
on Media Timing 11-629
Deciding on Media and Measuring Effectiveness BuyerturnoverBuyer turnover PurchasefrequencyPurchase frequency Forgetting rateForgetting rate ContinuityContinuity www.bookfiesta4u.blogspot.com 11-630 ContinuityContinuity ConcentrationConcentration FlightingFlighting PulsingPulsing DecidingonGeographicalAllocationDeciding on Geographical Allocation Areasof dominant influence(ADIs)orAreas of dominant influence (ADIs) or designatedmarketing areas(DMAs)designated marketing areas (DMAs) Deciding on Media and Measuring Effectiveness BuyerturnoverBuyer turnover PurchasefrequencyPurchase frequency Forgetting rateForgetting rate ContinuityContinuity www.bookfiesta4u.blogspot.com 11-630 ContinuityContinuity ConcentrationConcentration FlightingFlighting PulsingPulsing DecidingonGeographicalAllocationDeciding on Geographical Allocation Areasof dominant influence(ADIs)orAreas of dominant influence (ADIs) or designatedmarketing areas(DMAs)designated marketing areas (DMAs)
Deciding on Media and Measuring Effectiveness EvaluatingAdvertisingEffectivenessEvaluating Advertising Effectiveness CommunicationCommunication--EffectResearchEffect Research Copy testingCopy testing Consumer feedbackmethodConsumer feedback method www.bookfiesta4u.blogspot.com 11-631 Consumer feedbackmethodConsumer feedback method Examplequestions:Example questions: Whatisthemainmessageyougetfromthisad?What is the main message you get from this ad ? Whatdoyouthinktheywantyoutoknow,believe,What do you think they want you to know, b elieve, ordo?Howlikelyisitthatthisadwillinfluenceyouor do? How likely is it that this ad will influence you toundertaketheimpliedaction?to undertake the implied action? Whatworkswellintheadandwhatworkspoorly?What works well in the ad and what works po orly? Howdoestheadmakeyoufeel?How does the ad make you feel? WhereisthebestplacetoreachyouwiththisWhere is the best place to reach you with thi s message?message? Deciding on Media and Measuring Effectiveness EvaluatingAdvertisingEffectivenessEvaluating Advertising Effectiveness CommunicationCommunication--EffectResearchEffect Research Copy testingCopy testing Consumer feedbackmethodConsumer feedback method www.bookfiesta4u.blogspot.com 11-631 Consumer feedbackmethodConsumer feedback method Examplequestions:Example questions: Whatisthemainmessageyougetfromthisad?What is the main message you get from this ad ? Whatdoyouthinktheywantyoutoknow,believe,What do you think they want you to know, b elieve, ordo?Howlikelyisitthatthisadwillinfluenceyouor do? How likely is it that this ad will influence you toundertaketheimpliedaction?to undertake the implied action? Whatworkswellintheadandwhatworkspoorly?What works well in the ad and what works po orly? Howdoestheadmakeyoufeel?How does the ad make you feel? WhereisthebestplacetoreachyouwiththisWhere is the best place to reach you with thi s message?message?
Deciding on Media and Measuring Effectiveness
P PPor orort ttf ffol ololi iio oo t tte ees sst tt L LLab ababor ororat atator orory yy t tte ees sst tt Table 20.2: Advertising Research Techniques F FFo oor rr P PPr rri iin nnt tt A AAd dds ss. .. S SSt tta aar rrch chch a aan nnd dd
G GGa aal lll llu uup pp & && R RRo oob bbi iin nnso soson nn, ,, I IIn nnc. c.c. a aar rre ee t ttw wwo oo wwi iid dde eel lly yy uuse sesed ddp ppr rri iin nnt tt p ppr rre eet tte eest ststi iin nng gg se seser rrvi vivice ceces. s.s.
T TTe eest stst a aad dds ss a aar rre ee p ppl lla aace ceced dd i iin nn m mma aag gga aazi zizin nne ees, s,s, wwh hhi iic cch hh aar rre ee t tth hhe een nn ci cicir rrcu cucul lla aat tte eed dd t tto oo co cocon nnsu susum
mme eer rrs. s.s. T TTh hhe eese sese co cocon nnsu susum mme eer rrs ss a aar rre ee co cocon nnt tta aact ctcte eed dd lla aat tte eer rr aan nnd dd i iin nnt tte eer rrvi vivie eew wwe eed dd. .. R RRe eeca cacal lll ll a aan nnd dd r rre
eeco cocog ggn nni iit tti iio oon nn t tte eest ststs ss a aar rre ee u uuse sesed dd t tto oo d dde eet tte eer rrm mmi iin nne ee a aad ddve vever rrt tti iisi sisin nng gg e eef fff ffe eect ctcti iive veven nne eess. ss.ss. F FFo oor
rr B BBr rro ooa aad ddc cca aas sst tt A AAd dds ss. .. I IIn nn-h hho oom mme ee t tte ees sst tts ss: :: A AA vi vivid dde eeo oot tta aap ppe ee i iis ss t tta aake keken nn iin nnt tto oo tth hhe ee h hho
oom mme ees ss o oof ff t tta aar rrg gge eet tt co cocon nnsu susum mme eer rrs, s,s, w wwh hho oo t tth hhe een nn vi vivie eew ww t tth hhe ee co cocom mmm mme eer rrci cicia aal lls. s.s. T TTr rra aai iil lle eer rr t tte ees sst
tt: :: I IIn nn a aa t ttr rra aai iil lle eer rr i iin nn a aa sh shsho oop ppp ppi iin nng gg ce cecen nnt tte eer rr, ,, sh shsho oop ppp ppe eer rrs ss a aar rre ee shsho oow wwn nn tth hhe ee p ppr rro ood ddu uuct
ctcts ss a aan nnd dd g ggi iive veven nn a aan nn o oop ppp ppo oor rrt ttu uun nni iit tty yy t tto oo se sesel lle eect ctct a aa se seser rri iie ees ss o oof ff b bbr rra aan nnd dds. s.s. TTh hhe eey yy t tth hhe een nn
vi vivie eew ww co cocom mmm mme eer rrci cicia aal lls ss a aan nnd dd a aar rre ee g ggi iive veven nn co cocou uup ppo oon nns ss t tto oo b bbe ee u uuse sesed dd iin nn tth hhe ee sh shsho oop ppp ppi iin nng gg ce cecen nnt
tte eer rr. .. R RRe eed dde eem mmp ppt tti iio oon nn r rra aat tte ees ss i iin nnd ddi iica cacat tte ee co cocom mmm mme eer rrci cicia aal lls s s i iin nnf ffl llu uue een nnce cece oon nn p ppu uur rrch chcha aase sese b bbe eeh hha
aavi vivio oor rr. .. www.bookfiesta4u.blogspot.com See text for complete table 11-632
Deciding on Media and Measuring Effectiveness SalesSales--EffectResearchEffect Research Shareof advertising expendituresShare of advertising Shareof voiceShare of voice www.bookfiesta4u.blogspot.com 11-633 Figure 20.4: Formula for Measuring Sales Impact of Advertising Shareof consumers minds andheartsShare of consumers Shareof marketShare of market HistoricalapproachHistorical approach ExperimentaldesignExperimental design Deciding on Media and Measuring Effectiveness SalesSales--EffectResearchEffect Research Shareof advertising expendituresShare of advertising Shareof voiceShare of voice www.bookfiesta4u.blogspot.com 11-633 Figure 20.4: Formula for Measuring Sales Impact of Advertising Shareof consumers minds andheartsShare of consumers Shareof marketShare of market HistoricalapproachHistorical approach ExperimentaldesignExperimental design
expenditures
minds and hearts
expenditures
minds and hearts
Sales Promotion PromotionoffersincentivetobuyPromotion offers incentive to buy ConsumerpromotionConsumer promotion TdtiT d ti www.bookfiesta4u.blogspot.com 11-634 TradepromotionTrade promotion SalesSales--forcepromotionforce promotion PurposeofSalesPromotionPurpose of Sales Promotion Sales Promotion PromotionoffersincentivetobuyPromotion offers incentive to buy ConsumerpromotionConsumer promotion TdtiT d ti www.bookfiesta4u.blogspot.com 11-634 TradepromotionTrade promotion SalesSales--forcepromotionforce promotion PurposeofSalesPromotionPurpose of Sales Promotion
ManycompaniesofferfreesamplesaspartMany companies offer free samples as part ofapromotionalcampaign.Thisapproachof a promotional campaign. This approach extendsbeyondthegrocerystoreorretailextends beyond the grocery store or retail outletintolargeorganizationslikeoutlet into large organizations like universities.Canyouidentifyanyproductsuniversities. Can you identify any product s orservicesthatareprovidedor services that are provided tostudentsorfacultyatto students or faculty at yourschoolaspartofayour school as part of a promotionalcampaign?promotional campaign? ManycompaniesofferfreesamplesaspartMany companies offer free samples as part ofapromotionalcampaign.Thisapproachof a promotional campaign. This approach extendsbeyondthegrocerystoreorretailextends beyond the grocery store or retail outletintolargeorganizationslikeoutlet into large organizations like universities.Canyouidentifyanyproductsuniversities. Can you identify any product s orservicesthatareprovidedor services that are provided tostudentsorfacultyatto students or faculty at yourschoolaspartofayour school as part of a promotionalcampaign?promotional campaign?
Sales Promotion MajorDecisionsinSalesPromotionMajor Decisions in Sales Promotion EstablishingObjectivesEstablishing Objectives www.bookfiesta4u.blogspot.com 11-636 SelectingConsumerSelecting Consumer--PromotionToolsPromotion Tools ManufacturerpromotionsManufacturer promotions RetailerpromotionsRetailer promotions Sales Promotion MajorDecisionsinSalesPromotionMajor Decisions in Sales Promotion EstablishingObjectivesEstablishing Objectives www.bookfiesta4u.blogspot.com 11-636 SelectingConsumerSelecting Consumer--PromotionToolsPromotion Tools ManufacturerpromotionsManufacturer promotions RetailerpromotionsRetailer promotions
Table 20.3: Major Consumer-Promotion Tools S SSa aam mmp ppl lle ees ss: :: O OOf fff ffe eer rr o oof ff a aa f ffr rre eee ee a aam mmo oou uun nnt tt o oof ff a aa p ppr rro ood ddu uuct ctct o oor rr se seser rrvi vivice cece d dde eel lli
iive vever rre eed dd ddo ooo oor rr tto oo d ddo ooo oor rr, ,, se sesen nnt tt i iin nn t tth hhe ee m mma aai iil ll, ,, p ppi iicke ckecked dd u uup pp i iin nn a aa st ststo oor rre ee, ,, a aat ttt tta aach chche eed
dd t tto oo a aan nno oot tth hhe eer rr ppr rro ood ddu uuct ctct, ,, oor rr f ffe eea aat ttu uur rre eed dd i iin nn a aan nn a aad ddve vever rrt tti iisi sisin nng gg o oof fff ffe eer rr. .. C CCo oou uup ppo oon nns
ss: :: C CCe eer rrt tti iif ffi iica cacat tte ees ss e een nnt tti iit ttl lli iin nng gg t tth hhe ee b bbe eea aar rre eer rr t tto oo a aa st ststa aat tte eed dd sa sasavi vivin nng gg oon nn tth hhe ee p ppu uur rrch chcha
aase sese o oof ff a aa sp spspe eeci cicif ffi iic cc p ppr rro ood ddu uuct ctct: :: m mma aai iil lle eed dd, ,, e een nncl clclo oose sesed dd i iin nn o oot tth hhe eer rr p ppr rro ood ddu uuct ctcts ss oor rr a aat ttt tta aach
chche eed dd t tto oo t tth hhe eem mm, ,, o oor rr i iin nnse seser rrt tte eed dd i iin nn m mma aag gga aazi zizin nne ees ss a aan nnd dd n nne eew wwsp spspa aap ppe eer rr aad dds. s.s. C CCa aas ssh hh R RRe eef
ffu uun nnd dd O OOf fff ffe eer rrs ss ( (( r rre eeb bba aat tte ees ss) )) : :: P PPr rro oovi vivid dde ee a aa p ppr rri iice cece r rre eed ddu uuct ctcti iio oon nn a aaf fft tte eer rr ppu uur rrch chcha aase sese
h hh h hh h hh i iil llsh shsh d dd ci cicif ffi ii d dd ffr rra aat tth hhe eer rr t tth hha aan nn a aat tt t tth hhe ee r rre eet tta aai iil ll sh shsho oop pp: :: co cocon nnsu susum mme eer rr se sesen nnd dds
ss a aa sp spspe eeci cicif ffi iie eed dd p ppr rro ooo oof ff oof ffff p ppu uur rrch chcha aase sese t tto oo t tth hhe ee m mma aan nnu uuf ffa aact ctctu uur rre eer rr w wwh hho oo r rre eef ffu uun nnd dds
s s p ppa aar rrt tt o oof ff t tth hhe ee p ppu uur rrch chcha aase sese ppr rri iice cece bby yy m mma aai iil ll. .. P PPr rri iic cce ee P PPa aac cck kks ss ( (( c cce een nnt tts ss-o oof fff ff d dde
eea aal lls ss) )): :: O OOf fff ffe eer rrs ss t tto oo co cocon nnsu susum mme eer rrs ss o oof ff sa sasavi vivin nng ggs ss oof fff ff tth hhe ee r rre eeg ggu uul lla aar rr p ppr rri iice cece o oof ff a aa p ppr rro
ood ddu uuct ctct, ,, f ffl lla aag ggg gge eed dd o oon nn t tth hhe ee l lla aab bbe eel ll o oor rr p ppa aacka ckackag gge ee. .. A AA rre eed ddu uuce ceced dd-ppr rri iice cece p ppa aack ckck i iis ss a aa si sisin nng
ggl lle ee p ppa aacka ckackag gge ee so sosol lld dd a aat tt a aa r rre eed ddu uuce ceced dd p ppr rri iice cece ( (( su susuch chch a aas ss t ttw wwo oo ffo oor rr tth hhe ee ppr rri iice cece o oof ff o oon nne ee) ))
. .. A AA b bba aan nnd dde eed dd p ppa aack ckck i iis ss t ttw wwo oo r rre eel lla aat tte eed dd p ppr rro ood ddu uuct ctcts ss b bba aan nnd dde eed dd t tto oog gge eet tth hhe eer rr (( susuch chch aas ss aa
t tto ooo oot tth hhb bbr rru uush shsh a aan nnd dd t tto ooo oot tth hhp ppa aast stste ee) )) . .. See text for complete table www.bookfiesta4u.blogspot.com
Coolsavings.com shomepageCoolsavings.com s home page www.bookfiesta4u.blogspot.com 11-638 Coolsavings.com shomepageCoolsavings.com s home page www.bookfiesta4u.blogspot.com 11-638
Table 20.4: Major Trade-Promotion Tools iceifffrofr ntffthelistpriceoneachnSales Promotion SelectingTradeSelecting Trade--PromotionToolsPromotion Tools s areeingtofeatures ind, iPrPrce--Off(oOff(of--invoiceofinvoice ooff--list):list): AstraightdiscouoA s traight discout off the list price on each casepurchasedduringastatedtimeperiod.case purchased during a stated time period. pgpp g p Allowance:Allowance: Anamountofferedinreturnfortheretailer gAn amount offered in r eturn for the retailer agreeing to feature themanufacturer s products insomeway.Anthe manufacturer s products in some way. An a dvertisingallowanceadvertising allowance compensates retailers foradvertisingthemanufacturer s product.Acompensates retaile rs for advertising the manufacturer s product. A displaydisplay allowanceallowance compensates themforcarryingaspecialproductdisplay.compensates them for carrying a special product display. FreeGoods:Free Goods: Offers ofextracases ofmerchandisetointermediaries whobuyOf fers of extra cases of merchandise to intermediaries who buy acertainquantityorwhofeatureacertainflavororsize.a certain quantity or who featu re a certain flavor or size. Source:Source: Formoreinformation,seeBetsySpethman, TradePromotionRedefeFor more i nformation, see Betsy Spethman, Trade Promotion Redefned, Brandweek,March13,1995,pp.25Brandweek, March 13, 1995, pp. 25--32.32. Table 20.4: Major Trade-Promotion Tools iceifffrofr ntffthelistpriceoneachnSales Promotion SelectingTradeSelecting Trade--PromotionToolsPromotion Tools s areeingtofeatures ind, iPrPrce--Off(oOff(of--invoiceofinvoice ooff--list):list): AstraightdiscouoA s traight discout off the list price on each casepurchasedduringastatedtimeperiod.case purchased during a stated time period. pgpp g p Allowance:Allowance: Anamountofferedinreturnfortheretailer gAn amount offered in r eturn for the retailer agreeing to feature themanufacturer s products insomeway.Anthe manufacturer s products in some way. An a dvertisingallowanceadvertising allowance compensates retailers foradvertisingthemanufacturer s product.Acompensates retaile rs for advertising the manufacturer s product. A displaydisplay allowanceallowance compensates themforcarryingaspecialproductdisplay.compensates them for carrying a special product display. FreeGoods:Free Goods: Offers ofextracases ofmerchandisetointermediaries whobuyOf fers of extra cases of merchandise to intermediaries who buy acertainquantityorwhofeatureacertainflavororsize.a certain quantity or who featu re a certain flavor or size. Source:Source: Formoreinformation,seeBetsySpethman, TradePromotionRedefeFor more i nformation, see Betsy Spethman, Trade Promotion Redefned, Brandweek,March13,1995,pp.25Brandweek, March 13, 1995, pp. 25--32.32. www.bookfiesta4u.blogspot.com
Sales Promotion
S SSe eel lle eec cct tti iin nng gg B BBu uus ssi iin nne ees sss ss-a aan nnd dd S SSa aal lle ees ss-F FFo oor rrc cce ee-P PPr rro oom mmo oot tti iio oon nn T TTo ooo ool lls ss
Table 20.5: Major Business-and Sales-Force-Promotion Tools T TTr rra aad dde ee S SSh hho oow wws ss a aan nnd dd C CCo oon nnv vve een nnt tti iio oon nns ss: :: I IIn nnd ddu uust ststr rry yy a aasso ssossoci cicia aat tti iio oon nns ss o oor rrg gga aan nni iize zeze aan nnn nnu uua
aal ll ttr rra aad dde ee sh shsho oow wws ss a aan nnd dd co cocon nnve veven nnt tti iio oon nns. s.s. B BBu uusi sisin nne eess ssss m mma aar rrke keket tte eer rrs ss m mma aay yy sp spspe een nnd dd a aas ss m mmu uuch chch aas ss
335 55 p ppe eer rrce cecen nnt tt o oof ff t tth hhe eei iir rr a aan nnn nnu uua aal ll p ppr rro oom mmo oot tti iio oon nn b bbu uud ddg gge eet tt o oon nn t ttr rra aad dde ee sh shsho oow wws. s.s. O OOve vever rr
55, ,, 660 000 00 ttr rra aad dde ee sh shsh t ttke kekel lld dd i ii i ii t ttl ll8 880 00 i iil lll lli ii ttt tt dd sh shsho oow wws ss t tta aake keke p ppl lla aace cece e eeve vever rry yy y yye eea aar rr, ,,
d ddr rra aaw wwi iin nng gg a aap ppp ppr rro oox xxi iim mma aat tte eel lly yy 8 880 00 m mmi iil lll lli iio oon nn aat ttt tte een nnd dde eee ees. s.s. T TTr rra aad dde ee sh shsho oow ww a aat ttt tte een nnd dda aan
nnce cece ca cacan nn r rra aan nng gge ee f ffr rro oom mm a aa f ffe eew ww t tth hho oou uusa sasan nnd dd p ppe eeo oop ppl lle ee tto oo oove vever rr 770 00, ,, 000 000 00 f ffo oor rr l lla aar rrg gge ee sh shsho oow
wws ss h hhe eel lld dd b bby yy t tth hhe ee r rre eest ststa aau uur rra aan nnt tt o oor rr h hho oot tte eel ll-m mmo oot tte eel ll i iin nnd ddu uust ststr rri iie ees. s.s. PPa aar rrt tti iici cicip ppa aat tti iin
nng gg ve veven nnd ddo oor rrs ss e eex xxp ppe eect ctct se seseve vever rra aal ll b bbe een nne eef ffi iit tts, s,s, i iin nncl clclu uud ddi iin nng gg g gge een nne eer rra aat tti iin nng gg n nne eew ww sa sasal lle ees ss lle eea
aad dds, s,s, m mma aai iin nnt tta aai iin nni iin nng gg cu cucust ststo oom mme eer rr co cocon nnt tta aact ctcts, s,s, i iin nnt ttr rro ood ddu uuci cicin nng gg n nne eew ww p ppr rro ood ddu uuct ctcts, s,s, m mme eee eet tti iin nng gg
nne eew ww cu cucust ststo oom mme eer rrs, s,s, se sesel lll lli iin nng gg m mmo oor rre ee t tto oo p ppr rre eese sesen nnt tt cu cucust ststo oom mme eer rrs, s,s, a aan nnd dd e eed ddu uuca cacat tti iin nng gg cucust ststo oom mme eer rrs ss
wwi iit tth hh p ppu uub bbl lli iica cacat tti iio oon nns, s,s, vi vivid dde eeo oos, s,s, a aan nnd dd o oot tth hhe eer rr a aau uud ddi iio oovi vivisu susua aal ll m mma aat tte eer rri iia aal lls. s.s. S SSa aal lle ees ss C
CCo oon nnt tte ees sst tts ss: :: A AA sa sasal lle ees ss co cocon nnt tte eest stst a aai iim mms ss a aat tt i iin nnd ddu uuci cicin nng gg t tth hhe ee sa sasal lle ees ss f ffo oor rrce cece oor rr dde eea aal lle eer rrs
ss t tto oo i iin nncr crcre eea aase sese t tth hhe eei iir rr sa sasal lle ees ss r rre eesu susul llt tts ss o oove vever rr a aa st ststa aat tte eed dd p ppe eer rri iio ood dd, ,, w wwi iit tth hh p ppr rri iize zezes ss
(( mmo oon nne eey yy, ,, ttr rri iip pps, s,s, g ggi iif fft tts, s,s, o oor rr p ppo ooi iin nnt tts) s)s) g ggo ooi iin nng gg t tto oo t tth hho oose sese w wwh hho oo su susucce cceccee eed dd. .. www.bookfiesta4u.blogspot.com See text for complete table
Sales Promotion DevelopingtheProgramDeveloping the Program IncentiveConsiderationsIncentive Considerations SizeofincentiveSize of incentive ConditionsforparticipationConditions for participation www.bookfiesta4u.blogspot.com 11-641 DurationofpromotionDuration of promotion DistributionvehicleDistribution vehicle Presenting,Implementing,Controlling,Presenting, Implementing, Controlling, andEvaluatingtheProgramand Evaluating the Program LeadtimeLead time SellSell--intimein time Sales Promotion DevelopingtheProgramDeveloping the Program IncentiveConsiderationsIncentive Considerations SizeofincentiveSize of incentive ConditionsforparticipationConditions for participation www.bookfiesta4u.blogspot.com 11-641 DurationofpromotionDuration of promotion DistributionvehicleDistribution vehicle Presenting,Implementing,Controlling,Presenting, Implementing, Controlling, andEvaluatingtheProgramand Evaluating the Program LeadtimeLead time SellSell--intimein time
Public Relations PublicPublic PublicRelationsPublic Relations PublicRelationsDepartmentPublic Relations Department FunctionsInclude:Functions Include: www.bookfiesta4u.blogspot.com 11-642 FunctionsInclude:Functions Include: PressrelationsPress relations ProductpublicityProduct publicity CorporatecommunicationCorporate communication LobbyingLobbying CounselingCounseling Public Relations PublicPublic PublicRelationsPublic Relations PublicRelationsDepartmentPublic Relations Department FunctionsInclude:Functions Include: www.bookfiesta4u.blogspot.com 11-642 FunctionsInclude:Functions Include: PressrelationsPress relations ProductpublicityProduct publicity CorporatecommunicationCorporate communication LobbyingLobbying CounselingCounseling
Public Relations MarketingPublicRelations(MPR)Marketing Public Relations (MPR) Publicityvs.MPRPublicity vs. MPR MPRassistsinthefollowingtasks:MPR assists in the following tasks: Assisting inthe launch of newproductsAssisting in the launch of new products www.bookfiesta4u.blogspot.com 11-643 Assisting inrepositioning a matureproductAssisting in repositioning a mature produ ct Building interestin a product categoryBuilding interest in a product category Influencing specifictargetgroupsInfluencing specific target groups Defending products that haveDefending products that have encounteredpublic problemsencountered public problems Building the corporateimageina wayBuilding the corporate image in a way thatreflectsfavorably on itsproductsthat reflects favorably on its products Public Relations MarketingPublicRelations(MPR)Marketing Public Relations (MPR) Publicityvs.MPRPublicity vs. MPR MPRassistsinthefollowingtasks:MPR assists in the following tasks: Assisting inthe launch of newproductsAssisting in the launch of new products www.bookfiesta4u.blogspot.com 11-643 Assisting inrepositioning a matureproductAssisting in repositioning a mature produ ct Building interestin a product categoryBuilding interest in a product category Influencing specifictargetgroupsInfluencing specific target groups Defending products that haveDefending products that have encounteredpublic problemsencountered public problems Building the corporateimageina wayBuilding the corporate image in a way thatreflectsfavorably on itsproductsthat reflects favorably on its products
Public Relations M MMa aaj jjo oor rr D DDe eec cci iis ssi iio oon nns ss i iin nn M MMa aar rrk kke eet tti iin nng gg P PPR RR Table 20.6: Major Tools in Marketing PR P PPu uub bbl lli iic cca aat tti iio oon nns ss: :: C CCo oom mmp ppa aan nni iie
ees ss r rre eel lly yy e eex xxt tte een nnsi sisive vevel lly yy o oon nn p ppu uub bbl lli iish shshe eed dd m mma aat tte eer rri iia aal lls ss tto oo rre eea aach chcha aan nnd dd i iin nnf ffl llu uue een nnce cece t tth hhe
eei iir rr t tta aar rrg gge eet tt m mma aar rrke keket tts. s.s. T TTh hhe eese sese i iin nncl clclu uud dde ee a aan nnn nnu uua aal ll r rre eep ppo oor rrt tts, s,s, bbr rro ooch chchu uur rre ees, s,s, a aar rrt tti iicl clcle ees, s,s,
co cocom mmp ppa aan nny yy n nne eew wws ssl lle eet ttt tte eer rrs ss a aan nnd dd m mma aag gga aazi zizin nne ees, s,s, a aan nnd dd a aau uud ddi iio oovi vivisu susua aal ll mma aat tte eer rri iia aal lls. s.s. a aar rrt tti
iicl clcle ees, s,s, co cocom mmp ppa aan nny yy n nne eew wws ssl lle eet ttt tte eer rrs ss a aan nnd dd m mma aag gga aazi zizin nne ees, s,s, a aan nnd dd a aau uud ddi iio oovi vivisu susua aal ll mma aat tte eer rri iia aal lls. s.s. E
EEv vve een nnt tts ss: :: C CCo oom mmp ppa aan nni iie ees ss ca cacan nn d ddr rra aaw ww a aat ttt tte een nnt tti iio oon nn t tto oo n nne eew ww p ppr rro ood ddu uuct ctcts ss o oor rr o oot tth hhe eer rr cocom mmp
ppa aan nny yy a aact ctcti iivi vivit tti iie ees ss b bby yy a aar rrr rra aan nng ggi iin nng gg sp spspe eeci cicia aal ll e eeve veven nnt tts ss l lli iike keke n nne eew wws ss co cocon nnf ffe eer rre een nnce ceces, s,s, sesem mmi iin
nna aar rrs, s,s, o oou uut tti iin nng ggs, s,s, t ttr rra aad dde ee sh shsho oow wws, s,s, e eex xxh hhi iib bbi iit tts, s,s, co cocon nnt tte eest ststs ss a aan nnd dd co cocom mmp ppe eet tti iit tti iio oon nns, s,s, a aan nnd dd
aan nnn nni iive vever rrsa sasar rri iie ees ss t tth hha aat tt w wwi iil lll ll r rre eea aach chch t tth hhe ee t tta aar rrg gge eet tt p ppu uub bbl lli iics. cs.cs. S SSp ppo oon nns sso oor rrs ssh hhi iip pps ss: :: C CCo
oom mmp ppa aan nni iie ees ss ca cacan nn p ppr rro oom mmo oot tte ee t tth hhe eei iir rr b bbr rra aan nnd dds ss a aan nnd dd co cocor rrp ppo oor rra aat tte ee nna aam mme ee b bby yy sp spspo oon nnso sosor rri iin
nng gg sp spspo oor rrt tt a aan nnd dd cu cucul llt ttu uur rra aal ll e eeve veven nnt tts ss a aan nnd dd h hhi iig ggh hhl lly yy r rre eeg gga aar rrd dde eed dd cacau uuse seses. s.s. N NNe eew wws ss: :: O OOn nne ee o oof
ff t tth hhe ee m mma aaj jjo oor rr t tta aasks skssks o oof ff P PPR RR p ppr rro oof ffe eessi ssissio oon nna aal lls ss i iis ss t tto oo f ffi iin nnd dd o oor rr crcre eea aat tte ee f ffa aavo vovor rra aab bbl lle
ee n nne eew wws ss a aab bbo oou uut tt t tth hhe ee co cocom mmp ppa aan nny yy, ,, i iit tts ss p ppr rro ood ddu uuct ctcts, s,s, a aan nnd dd i iit tts ss p ppe eeo oop ppl lle ee, ,, aan nnd dd gge eet tt tth hhe
ee m mme eed ddi iia aa t tto oo a aacce cceccep ppt tt p ppr rre eess ssss r rre eel lle eea aase seses ss a aan nnd dd a aat ttt tte een nnd dd p ppr rre eess ssss co cocon nnf ffe eer rre een nnce ceces. s.s. www.bookfiesta4u.blogspot.com See text for complete table
Public Relations EstablishingtheMarketingObjectivesEstablishing the Marketing Objectives MPRcan:MPR can: www.bookfiesta4u.blogspot.com 11-645 BuildawarenessBuild awareness BuildcreditabilityBuild creditability HolddownpromotionalcostHold down promotional cost Public Relations EstablishingtheMarketingObjectivesEstablishing the Marketing Objectives MPRcan:MPR can: www.bookfiesta4u.blogspot.com 11-645 BuildawarenessBuild awareness BuildcreditabilityBuild creditability HolddownpromotionalcostHold down promotional cost
Public Relations Thomas L. Harrisoffersthe following suggestions:Thomas L. Harris offers the follow ing suggestions: BuildmarketplaceexcitementbeforemediaadvertisingBuild marketplace excitement befor e media advertising breaksbreaks BuildacorecustomerbaseBuild a core customer base BuildaoneBuild a one--toto--onerelationshipwithconsumersone relationship with cons umers www.bookfiesta4u.blogspot.com 11-646 TurnsatisfiedcustomersintoadvocatesTurn satisfied customers into advocates InfluencetheinfluentialsInfluence the influentials ChoosingMessagesandVehiclesChoosing Messages and Vehicles EventCreationEvent Creation ImplementingthePlanandEvaluatingImplementing the Plan and Evaluating ResultsResults Public Relations Thomas L. Harrisoffersthe following suggestions:Thomas L. Harris offers the follow ing suggestions: BuildmarketplaceexcitementbeforemediaadvertisingBuild marketplace excitement befor e media advertising breaksbreaks BuildacorecustomerbaseBuild a core customer base BuildaoneBuild a one--toto--onerelationshipwithconsumersone relationship with cons umers www.bookfiesta4u.blogspot.com 11-646 TurnsatisfiedcustomersintoadvocatesTurn satisfied customers into advocates InfluencetheinfluentialsInfluence the influentials ChoosingMessagesandVehiclesChoosing Messages and Vehicles EventCreationEvent Creation ImplementingthePlanandEvaluatingImplementing the Plan and Evaluating ResultsResults
Direct Marketing DirectDirect--OrderMarketingOrder Marketing CustomerRelationshipMarketingCustomer Relationship Marketing TheGrowthofDirectMarketingThe Growth of Direct Marketing www.bookfiesta4u.blogspot.com 11-647 TheGrowthofDirectMarketingThe Growth of Direct Marketing MarketDemassificationMarket Demassification TheBenefitsofDirectMarketingThe Benefits of Direct Marketing IntegratedDirectMarketingIntegrated Direct Marketing Direct Marketing DirectDirect--OrderMarketingOrder Marketing CustomerRelationshipMarketingCustomer Relationship Marketing TheGrowthofDirectMarketingThe Growth of Direct Marketing www.bookfiesta4u.blogspot.com 11-647 TheGrowthofDirectMarketingThe Growth of Direct Marketing MarketDemassificationMarket Demassification TheBenefitsofDirectMarketingThe Benefits of Direct Marketing IntegratedDirectMarketingIntegrated Direct Marketing
Direct Marketing MajorChannelsforDirectMarketingMajor Channels for Direct Marketing FaceFace--ToTo--FaceSellingFace Selling DiMilDi M il www.bookfiesta4u.blogspot.com 11-648 DirectMailDirect Mail NewFormsof MailDeliveryNew Forms of Mail Delivery FaxmailFax mail EE--mailmail VoicemailVoice mail Direct Marketing MajorChannelsforDirectMarketingMajor Channels for Direct Marketing FaceFace--ToTo--FaceSellingFace Selling DiMilDi M il www.bookfiesta4u.blogspot.com 11-648 DirectMailDirect Mail NewFormsof MailDeliveryNew Forms of Mail Delivery FaxmailFax mail EE--mailmail VoicemailVoice mail
Direct Marketing Directmarketing has passedthrougha numberDirect marketing has passed ber ofstages:of stages: CarpetbombingCarpet bombing DatabasemarketingDatabase marketing InteractivemarketingInteractive marketing RealReal--timepersonalizedmarketingtime personalized marketing www.bookfiesta4u.blogspot.com 11-649 RealReal timepersonalizedmarketingtime personalized marketing LifetimevaluemarketingLifetime value marketing ConstructingaDirectConstructing a Direct--MailCampaignMail Campaign ObjectivesObjectives TargetMarketsandProspectsTarget Markets and Prospects OfferElementsOffer Elements Testing ElementsTesting Elements Measuring Campaign Success: LifetimeValueMeasuring Campaign Success: e Direct Marketing Directmarketing has passedthrougha numberDirect marketing has passed ber ofstages:of stages: CarpetbombingCarpet bombing DatabasemarketingDatabase marketing InteractivemarketingInteractive marketing RealReal--timepersonalizedmarketingtime personalized marketing www.bookfiesta4u.blogspot.com 11-649 RealReal timepersonalizedmarketingtime personalized marketing LifetimevaluemarketingLifetime value marketing ConstructingaDirectConstructing a Direct--MailCampaignMail Campaign ObjectivesObjectives TargetMarketsandProspectsTarget Markets and Prospects OfferElementsOffer Elements Testing ElementsTesting Elements Measuring Campaign Success: LifetimeValueMeasuring Campaign Success: e
through a num
Lifetime Valu through a num
Lifetime Valu
Direct Marketing CatalogMarketingCatalog Marketing TelemarketingandMTelemarketing and M--CommerceCommerce InboundtelemarketingInbound telemarketing www.bookfiesta4u.blogspot.com 11-650 Outbound telemarketingOutbound telemarketing Fourtypes oftelemarketing:Four types of telemarketing: TelesalesTelesales TelecoverageTelecoverage TeleprospectingTeleprospecting CustomerserviceandtechnicalsupportCustomer service and technical support Direct Marketing CatalogMarketingCatalog Marketing TelemarketingandMTelemarketing and M--CommerceCommerce InboundtelemarketingInbound telemarketing www.bookfiesta4u.blogspot.com 11-650 Outbound telemarketingOutbound telemarketing Fourtypes oftelemarketing:Four types of telemarketing: TelesalesTelesales TelecoverageTelecoverage TeleprospectingTeleprospecting CustomerserviceandtechnicalsupportCustomer service and technical support
Direct Marketing OtherMediaforDirectOther Media for Direct--ResponseMarketingResponse Marketing DirectDirect--responseadvertisingresponse advertising AtAt--homeshopping channelshome shopping channels www.bookfiesta4u.blogspot.com 11-651 AtAt--homeshopping channelshome shopping channels VideotextandinteractiveTVVideotext and interactive TV KioskMarketingKiosk Marketing Direct Marketing OtherMediaforDirectOther Media for Direct--ResponseMarketingResponse Marketing DirectDirect--responseadvertisingresponse advertising AtAt--homeshopping channelshome shopping channels www.bookfiesta4u.blogspot.com 11-651 AtAt--homeshopping channelshome shopping channels VideotextandinteractiveTVVideotext and interactive TV KioskMarketingKiosk Marketing
Direct Marketing EE--MarketingMarketing PermissionMarketingPermission Marketing LevelsofPermissionMarketing:Levels of Permission Marketing: No permissionlevelNo permission level LowpermissionlevelLow permission level www.bookfiesta4u.blogspot.com 11-652 LowpermissionlevelLow permission level MediumpermissionlevelMedium permission level HighpermissionlevelHigh permission level TransactionlevelTransaction level EE--MarketingGuidelinesMarketing Guidelines GivethecustomerareasontorespondGive the customer a reason to respond PersonalizethecontentofyourePersonalize the content of your e--mailsmails OffersomethingthecustomercouldnotgetviadirectmailOffer something the customer coul d not get via direct mail Makeiteasyforthecustomerto unsubscribe Make it easy for the customer to unsubscribe Direct Marketing EE--MarketingMarketing PermissionMarketingPermission Marketing LevelsofPermissionMarketing:Levels of Permission Marketing: No permissionlevelNo permission level LowpermissionlevelLow permission level www.bookfiesta4u.blogspot.com 11-652 LowpermissionlevelLow permission level MediumpermissionlevelMedium permission level HighpermissionlevelHigh permission level TransactionlevelTransaction level EE--MarketingGuidelinesMarketing Guidelines GivethecustomerareasontorespondGive the customer a reason to respond PersonalizethecontentofyourePersonalize the content of your e--mailsmails OffersomethingthecustomercouldnotgetviadirectmailOffer something the customer coul d not get via direct mail Makeiteasyforthecustomerto unsubscribe Make it easy for the customer to unsubscribe
Chapter21Chapter 21 ManagingTheSalesForceManaging The Sales byby PowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Chapter21Chapter 21 ManagingTheSalesForceManaging The Sales byby PowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New
Force
Orleans Force
Orleans
The successful salesperson cares first Kotler on Marketing www.bookfiesta4u.blogspot.com 11-654 for the customer, second for the products. The successful salesperson cares first Kotler on Marketing www.bookfiesta4u.blogspot.com 11-654 for the customer, second for the products.
Chapter Objectives Inthischapter,weanswerthefollowingIn this chapter, we answer the following questions:questions: WhatdecisionsdocompaniesfaceinWhat decisions do companies face in designingasalesforce?designing a sales force? www.bookfiesta4u.blogspot.com 11-655 Howdocompaniesrecruit,select,train,How do companies recruit, select, train, supervise,motivate,andevaluateasalessupervise, motivate, and evaluate a sales force?force? HowcansalespeopleimprovetheirskillsinHow can salespeople improve their skills in selling,negotiation,andcarryingonselling, negotiation, and carrying on relationshipmarketing?relationship marketing? Chapter Objectives Inthischapter,weanswerthefollowingIn this chapter, we answer the following questions:questions: WhatdecisionsdocompaniesfaceinWhat decisions do companies face in designingasalesforce?designing a sales force? www.bookfiesta4u.blogspot.com 11-655 Howdocompaniesrecruit,select,train,How do companies recruit, select, train, supervise,motivate,andevaluateasalessupervise, motivate, and evaluate a sales force?force? HowcansalespeopleimprovetheirskillsinHow can salespeople improve their skills in selling,negotiation,andcarryingonselling, negotiation, and carrying on relationshipmarketing?relationship marketing?
Sales Representative RobertMcMurry ssalesRobert McMurry s sales representativetypes:representative types: DelivererDeliverer OdtkO d t k www.bookfiesta4u.blogspot.com 11-656 OrdertakerOrder taker MissionaryMissionary TechnicianTechnician DemandcreatorDemand creator SolutionvendorSolution vendor Sales Representative RobertMcMurry ssalesRobert McMurry s sales representativetypes:representative types: DelivererDeliverer OdtkO d t k www.bookfiesta4u.blogspot.com 11-656 OrdertakerOrder taker MissionaryMissionary TechnicianTechnician DemandcreatorDemand creator SolutionvendorSolution vendor
Designing the Sales Force SalesSales--ForceObjectivesandStrategyForce Objectives and Strategy CommontasksforsalespeopleCommon tasks for salespeople ProspectingProspecting www.bookfiesta4u.blogspot.com 11-657 TargetingTargeting CommunicatingCommunicating SellingSelling InformationgatheringInformation gathering AllocatingAllocating Designing the Sales Force SalesSales--ForceObjectivesandStrategyForce Objectives and Strategy CommontasksforsalespeopleCommon tasks for salespeople ProspectingProspecting www.bookfiesta4u.blogspot.com 11-657 TargetingTargeting CommunicatingCommunicating SellingSelling InformationgatheringInformation gathering AllocatingAllocating
Designing the Sales Force LeveragedsalesforceLeveraged sales force Direct(company) salesforceDirect (company) sales force ContractualsalesforceContractual sales force www.bookfiesta4u.blogspot.com 11-658 SalesSales--ForceStructureForce Structure Designing the Sales Force LeveragedsalesforceLeveraged sales force Direct(company) salesforceDirect (company) sales force ContractualsalesforceContractual sales force www.bookfiesta4u.blogspot.com 11-658 SalesSales--ForceStructureForce Structure
Table 21.1: Sales-Force Structures T TTe eer rrr rri iit tto oor rri iia aal ll: :: E EEa aach chch sa sasal lle ees ss r rre eep ppr rre eese sesen nnt tta aat tti iive veve i iis ss a aassi ssissig ggn nne eed dd a aan nn e eex xxcl clclu uusi sisive veve tte
eer rrr rri iit tto oor rry yy. .. TTh hhi iis ss sa sasal lle ees ss st ststr rru uuct ctctu uur rre ee r rre eesu susul llt tts ss i iin nn a aa cl clcle eea aar rr d dde eef ffi iin nni iit tti iio oon nn o oof ff r rre eesp spspo
oon nnsi sisib bbi iil lli iit tti iie ees. s.s. IIt tt iin nncr crcre eea aase seses ss tth hhe ee r rre eep pp s ss i iin nnce cecen nnt tti iive veve t tto oo cu cucul llt tti iiva vavat tte ee l llo ooca cacal ll b bbu uusi sisin nne eess
ssss a aan nnd dd p ppe eer rrso soson nna aal ll t tti iie ees. s.s. T TTr rra aave vevel ll eex xxp ppe een nnse seses ss a aar rre ee r rre eel lla aat tti iive vevel lly yy l llo oow ww b bbe eeca cacau uuse sese e eea aach chch r
rre eep pp t ttr rra aave vevel lls ss w wwi iit tth hhi iin nn a aa sm smsma aal lll ll a aar rre eea aa. .. T TTe eer rrr rri iit tto oor rry yy s ssi iize zeze: :: T TTe eer rrr rri iit tto oor rri iie ees ss ca cacan nn
b bbe ee d dde eesi sisig ggn nne eed dd t tto oo p ppr rro oovi vivid dde ee e eeq qqu uua aal ll sa sasal lle ees ss ppo oot tte een nnt tti iia aal ll o oor rr e eeq qqu uua aal ll w wwo oor rrkl klklo ooa aad dd. .. T
TTe eer rrr rri iit tto oor rri iie ees ss o oof ff e eeq qqu uua aal ll p ppo oot tte een nnt tti iia aal ll p ppr rro oovi vivid dde ee e eea aach chch rre eep pp wwi iit tth hh tth hhe ee sa sasam mme ee i iin nnco cocom mme
ee o oop ppp ppo oor rrt ttu uun nni iit tti iie ees ss a aan nnd dd p ppr rro oovi vivid dde ee t tth hhe ee co cocom mmp ppa aan nny yy w wwi iit tth hh a aa mme eea aan nns ss tto oo l llt tt f ff T TTi iit tt
i ii l llb bbd ddsi sisi d ddt tt lli ii tth hh lle eeva vaval llu uua aat tte ee p ppe eer rrf ffo oor rrm mma aan nnce cece. .. T TTe eer rrr rri iit tto oor rri iie ees ss ca cacan nn a aal llso soso b bbe ee d dde eesi sisig ggn
nne eed dd t tto oo e eeq qqu uua aal lli iize zeze tth hhe ee sasal lle ees ss w wwo oor rrkl klklo ooa aad dd so soso t tth hha aat tt e eea aach chch r rre eep pp ca cacan nn co cocove vever rr t tth hhe ee t tte eer rrr
rri iit tto oor rry yy a aad dde eeq qqu uua aat tte eel lly yy. .. T TTe eer rrr rri iit tto oor rry yy s ssh hha aap ppe ee: :: T TTe eer rrr rri iit tto oor rri iie ees ss a aar rre ee f ffo oor rrm mme eed dd b bby yy
co cocom mmb bbi iin nni iin nng gg sm smsma aal lll lle eer rr uun nni iit tts, s,s, susuch chch aas ss co cocou uun nnt tti iie ees ss o oor rr st ststa aat tte ees, s,s, u uun nnt tti iil ll t tth hhe eey yy a aad ddd dd u uup pp
t tto oo a aa t tte eer rrr rri iit tto oor rry yy o oof ff a aa g ggi iive veven nn p ppo oot tte een nnt tti iia aal ll oor rr w wwo oor rrkl klklo ooa aad dd. .. C CCo oom mmp ppa aan nni iie ees ss ca cacan nn u
uuse sese co cocom mmp ppu uut tte eer rr p ppr rro oog ggr rra aam mms ss t tto oo d dde eesi sisig ggn nn tte eer rrr rri iit tto oor rri iie ees ss tth hha aat tt o oop ppt tti iim mmi iize zeze su susuch chch cr crcri iit tte eer rri
iia aa a aas ss co cocom mmp ppa aact ctctn nne eess, ss,ss, e eeq qqu uua aal lli iiza zazat tti iio oon nn o oof ff w wwo oor rrkl klklo ooa aad dd oor rr sasal lle ees ss p ppo oot tte een nnt tti iia aal ll, ,, a aan nnd dd m mmi
iin nni iim mma aal ll t ttr rra aave vevel ll t tti iim mme ee. .. See text for complete table www.bookfiesta4u.blogspot.com
Designing the Sales Force SalesSales--ForceSizeForce Size Workloadapproach:Workload approach: Customersaregrouped into size classesCustomers are grouped into size classes DesirablecallfrequenciesareDesirable call frequencies are www.bookfiesta4u.blogspot.com 11-660 DesirablecallfrequenciesareDesirable call frequencies are establishedforeach classestablished for each class Thenumber of accounts in eachsizeclassisThe number of accounts in each size class is multipliedby thecorresponding callfrequencymultiplied by the corresponding call frequency Theaveragenumber of callsa salesThe average number of calls a sales representativecan makeperyearisdeterminedrepresentative can make per year is det ermined Thetotalnumber of salesrepresentativesThe total number of sales representatives neededisdeterminedneeded is determined Designing the Sales Force SalesSales--ForceSizeForce Size Workloadapproach:Workload approach: Customersaregrouped into size classesCustomers are grouped into size classes DesirablecallfrequenciesareDesirable call frequencies are www.bookfiesta4u.blogspot.com 11-660 DesirablecallfrequenciesareDesirable call frequencies are establishedforeach classestablished for each class Thenumber of accounts in eachsizeclassisThe number of accounts in each size class is multipliedby thecorresponding callfrequencymultiplied by the corresponding call frequency Theaveragenumber of callsa salesThe average number of calls a sales representativecan makeperyearisdeterminedrepresentative can make per year is det ermined Thetotalnumber of salesrepresentativesThe total number of sales representatives neededisdeterminedneeded is determined
T TTh hhe ee I IIn nnt tte eer rrn nne eet tt h hha aas ss a aal lll llo oow wwe eed dd m mma aan nny yy c cco oom mmp ppa aan nni iie ees ss tto oo ssh hhi iif fft tt s ssa aal lle ees ss s ssu uup ppp ppo oor rrt
tt f ffo oor rr s ssm mma aal lll ll a aac ccc cco oou uun nnt tts ss t tto oo e ee-c cco oom mmm mme eer rrc cce ee ssi iit tte ees ss a aan nnd dd a aaw wwa aay yy f ffr rro oom mm s ssa aal lle ees ss p
ppe eer rrs sso oon nnn nne eel ll. .. A AAd ddd ddi iit tti iio oon nna aal lll lly yy, ,, mma aan nny yy r rre eeg ggu uul lla aar rrl lly yy o ooc ccc ccu uur rrr rri iin nng gg f ffu uun nnc cct tti iio oon nns ss h hha
aav vve ee b bbe eec cco oom mme ee dlliihid ll i i h iautomated,allowingcustomerswithanysizeautomated, allowing cus tomers with any size organizationtouseweborganization to use web--basedsystemstoplaceordersbased syst ems to place orders andsubmitwarrantyrequests.Canyouthinkofanyand submit warranty requests. Can you think of any otherareaswhereInternetother areas where Internet--basedbased technologiescouldchangethetechnologies could change the wayasalesforceinteractsway a sales force interacts withtheircustomers?with their customers?
Designing the Sales Force SalesSales--ForceCompensationForce Compensation FourComponents:Four Components: FixedamountFixed amount www.bookfiesta4u.blogspot.com 11-662 VariableamountVariable amount ExpenseallowancesExpense allowances BenefitsBenefits Designing the Sales Force SalesSales--ForceCompensationForce Compensation FourComponents:Four Components: FixedamountFixed amount www.bookfiesta4u.blogspot.com 11-662 VariableamountVariable amount ExpenseallowancesExpense allowances BenefitsBenefits
Managing the Sales Force RecruitingandSelectingRepsRecruiting and Selecting Reps TrainingSalesRepsTraining Sales Reps www.bookfiesta4u.blogspot.com 11-663 Managing the Sales Force RecruitingandSelectingRepsRecruiting and Selecting Reps TrainingSalesRepsTraining Sales Reps www.bookfiesta4u.blogspot.com 11-663
Managing the Sales Force TrainingProgramsHaveSeveralGoalsTraining Programs Have Several Goals Salesrepresentativesneed to:Sales representatives need to: KnowandidentifywiththecompanyKnow and identify with the company www.bookfiesta4u.blogspot.com 11-664 KnowandidentifywiththecompanyKnow and identify with the company Knowthecompany sproductsKnow the company s products Knowcustomers andcompetitors characteristicsKnow customers and competitors characteristi cs KnowhowtomakeeffectivesalespresentationsKnow how to make effective sales presentat ions UnderstandfieldproceduresandresponsibilitiesUnderstand field procedures and respon sibilities Managing the Sales Force TrainingProgramsHaveSeveralGoalsTraining Programs Have Several Goals Salesrepresentativesneed to:Sales representatives need to: KnowandidentifywiththecompanyKnow and identify with the company www.bookfiesta4u.blogspot.com 11-664 KnowandidentifywiththecompanyKnow and identify with the company Knowthecompany sproductsKnow the company s products Knowcustomers andcompetitors characteristicsKnow customers and competitors characteristi cs KnowhowtomakeeffectivesalespresentationsKnow how to make effective sales presentat ions UnderstandfieldproceduresandresponsibilitiesUnderstand field procedures and respon sibilities
Managing the Sales Force SupervisingSalesRepsSupervising Sales Reps NormsforCustomerCallsNorms for Customer Calls NormsforProspectCallsNorms for Prospect Calls www.bookfiesta4u.blogspot.com 11-665 NormsforProspectCallsNorms for Prospect Calls UsingSalesTimeEfficientlyUsing Sales Time Efficiently Managing the Sales Force SupervisingSalesRepsSupervising Sales Reps NormsforCustomerCallsNorms for Customer Calls NormsforProspectCallsNorms for Prospect Calls www.bookfiesta4u.blogspot.com 11-665 NormsforProspectCallsNorms for Prospect Calls UsingSalesTimeEfficientlyUsing Sales Time Efficiently
DAASolutions homepagedescribesitsDAA Solutions home page describes its DesignDesign--toto--Order®SoftwareapplicationOrder® Software application www.bookfiesta4u.blogspot.com 11-666 DAASolutions homepagedescribesitsDAA Solutions home page describes its DesignDesign--toto--Order®SoftwareapplicationOrder® Software application www.bookfiesta4u.blogspot.com 11-666
Managing the Sales Force TimeTime--andand--dutyanalysisduty analysis PreparationPreparation TravelTravel www.bookfiesta4u.blogspot.com 11-667 FoodandbreaksFood and breaks WaitingWaiting SellingSelling AdministrationAdministration Managing the Sales Force TimeTime--andand--dutyanalysisduty analysis PreparationPreparation TravelTravel www.bookfiesta4u.blogspot.com 11-667 FoodandbreaksFood and breaks WaitingWaiting SellingSelling AdministrationAdministration
CompanyWebsiteasaprospectingtoolCompany Web site as a prospecting tool www.bookfiesta4u.blogspot.com 11-668 CompanyWebsiteasaprospectingtoolCompany Web site as a prospecting tool www.bookfiesta4u.blogspot.com 11-668
Managing the Sales Force MotivatingSalesRepsMotivating Sales Reps Churchill,Ford,&WalkerChurchill, Ford, & Walker MotivationModel:Motivation Model: Salesmanagers must be abletoSales managers must be able to www.bookfiesta4u.blogspot.com 11-669 Salesmanagers must be abletoSales managers must be able to convincesalespeoplethat they can sellconvince salespeople that they can sell moreby working harderor beingmore by working harder or being trainedto work smartertrained to work smarter Salesmanagers must be abletoSales managers must be able to convincesalespeoplethat therewardsconvince salespeople that the rewards forbetterperformanceareworththefor better performance are worth the extra effortextra effort Managing the Sales Force MotivatingSalesRepsMotivating Sales Reps Churchill,Ford,&WalkerChurchill, Ford, & Walker MotivationModel:Motivation Model: Salesmanagers must be abletoSales managers must be able to www.bookfiesta4u.blogspot.com 11-669 Salesmanagers must be abletoSales managers must be able to convincesalespeoplethat they can sellconvince salespeople that they can sell moreby working harderor beingmore by working harder or being trainedto work smartertrained to work smarter Salesmanagers must be abletoSales managers must be able to convincesalespeoplethat therewardsconvince salespeople that the rewards forbetterperformanceareworththefor better performance are worth the extra effortextra effort
Managing the Sales Force SalesQuotasSales Quotas SupplementaryMotivatorsSupplementary Motivators SalesmeetingsSales meetings www.bookfiesta4u.blogspot.com 11-670 SalescontestsSales contests EvaluatingSalesRepresentativesEvaluating Sales Representatives SourcesofInformationSources of Information FormalEvaluationFormal Evaluation Managing the Sales Force SalesQuotasSales Quotas SupplementaryMotivatorsSupplementary Motivators SalesmeetingsSales meetings www.bookfiesta4u.blogspot.com 11-670 SalescontestsSales contests EvaluatingSalesRepresentativesEvaluating Sales Representatives SourcesofInformationSources of Information FormalEvaluationFormal Evaluation
Table 21.2: Form for Evaluating Sales Representative s Performance Territory:MidlandSalesTerritory: Midland Sales Representative:JohnSmithRepresentative: John Smith 19991999 20002000 20012001 20022002 1.NetsalesproductA1. Net sales product A $251,300$251,300 $253,200$253,200 $270, 000$270,000 $263,100$263,100 2.NetsalesproductB2. Net sales product B 423,200423,200 439,200439,200 553,90055 3,900 561,900561,900 3Ntlttl3 N t l t t l 674500674 500 692400692 400 823900823 900 825000825 000 www.bookfiesta4u.blogspot.com 11-671 See text for complete table 3.Netsalestotal3. Net sales total 674,500674,500 692,400692,400 823,900823,900 8 25,000825,000 4.PercentofquotaproductA4. Percent of quota product A 95.695.6 92.092.0 88.088.0 84.784.7 5.PercentofquotaproductB5. Percent of quota product B 120.4120.4 122.3122.3 134. 9134.9 130.8130.8 6.GrossprofitsproductA6. Gross profits product A $50,260$50,260 $50,640$50,640 $ 54,000$54,000 $52,620$52,620 7.GrossprofitsproductB7. Gross profits product B 42,32042,320 43,92043,920 55,39 055,390 56,19056,190 8.Grossprofitstotal8. Gross profits total 92,58092,580 94,56094,560 109,390109,3 90 108,810108,810 Table 21.2: Form for Evaluating Sales Representative s Performance Territory:MidlandSalesTerritory: Midland Sales Representative:JohnSmithRepresentative: John Smith 19991999 20002000 20012001 20022002 1.NetsalesproductA1. Net sales product A $251,300$251,300 $253,200$253,200 $270, 000$270,000 $263,100$263,100 2.NetsalesproductB2. Net sales product B 423,200423,200 439,200439,200 553,90055 3,900 561,900561,900 3Ntlttl3 N t l t t l 674500674 500 692400692 400 823900823 900 825000825 000 www.bookfiesta4u.blogspot.com 11-671 See text for complete table 3.Netsalestotal3. Net sales total 674,500674,500 692,400692,400 823,900823,900 8 25,000825,000 4.PercentofquotaproductA4. Percent of quota product A 95.695.6 92.092.0 88.088.0 84.784.7 5.PercentofquotaproductB5. Percent of quota product B 120.4120.4 122.3122.3 134. 9134.9 130.8130.8 6.GrossprofitsproductA6. Gross profits product A $50,260$50,260 $50,640$50,640 $ 54,000$54,000 $52,620$52,620 7.GrossprofitsproductB7. Gross profits product B 42,32042,320 43,92043,920 55,39 055,390 56,19056,190 8.Grossprofitstotal8. Gross profits total 92,58092,580 94,56094,560 109,390109,3 90 108,810108,810
Principles of Personal Selling www.bookfiesta4u.blogspot.com 11-672 Figure 21.3: Managing the Sales Force: Improving Effectiveness Principles of Personal Selling www.bookfiesta4u.blogspot.com 11-672 Figure 21.3: Managing the Sales Force: Improving Effectiveness
Principles of Personal Selling ProfessionalismProfessionalism SalesSales--orientedapproachoriented approach CtC t itdhi t d h www.bookfiesta4u.blogspot.com 11-673 CustomerCustomer--orientedapproachoriented approach Rackham squestions for prospectsRackham s questions for prospects SituationquestionsSituation questions ProblemquestionsProblem questions ImplicationquestionsImplication questions NeedNeed--payoffquestionspayoff questions Principles of Personal Selling ProfessionalismProfessionalism SalesSales--orientedapproachoriented approach CtC t itdhi t d h www.bookfiesta4u.blogspot.com 11-673 CustomerCustomer--orientedapproachoriented approach Rackham squestions for prospectsRackham s questions for prospects SituationquestionsSituation questions ProblemquestionsProblem questions ImplicationquestionsImplication questions NeedNeed--payoffquestionspayoff questions
Figure 21.4: Major Steps in Effective Selling www.bookfiesta4u.blogspot.com 11-674 Figure 21.4: Major Steps in Effective Selling www.bookfiesta4u.blogspot.com 11-674
Principles of Personal Selling MajorStepsinanEffectiveSalesProcess:Major Steps in an Effective Sales Process: Prospecting andQualifyingProspecting and Qualifying PreapproachPreapproach www.bookfiesta4u.blogspot.com 11-675 ApproachApproach PresentationandDemonstrationPresentation and Demonstration Overcoming ObjectionsOvercoming Objections ClosingClosing FollowFollow--up andMaintenanceup and Maintenance Principles of Personal Selling MajorStepsinanEffectiveSalesProcess:Major Steps in an Effective Sales Process: Prospecting andQualifyingProspecting and Qualifying PreapproachPreapproach www.bookfiesta4u.blogspot.com 11-675 ApproachApproach PresentationandDemonstrationPresentation and Demonstration Overcoming ObjectionsOvercoming Objections ClosingClosing FollowFollow--up andMaintenanceup and Maintenance
iPhysicianNet shomepageshowsiPhysicianNet s home page shows avideodetailingsessiona video detailing session www.bookfiesta4u.blogspot.com 11-676 iPhysicianNet shomepageshowsiPhysicianNet s home page shows avideodetailingsessiona video detailing session www.bookfiesta4u.blogspot.com 11-676
Principles of Personal Selling NegotiationNegotiation WhentonegotiateWhen to negotiate Whenfactorsbear not only onprice,When factors bear not only on price, bt alalitofvib t al alit of vi www.bookfiesta4u.blogspot.com 11-677 but also on quality of servicebut also on quality of service Whenbusinessriskcannot be accuratelyWhen business risk cannot be accurately predeterminedpredetermined Whena long periodof timeisrequiredtoWhen a long period of time is required to producethe itemspurchasedproduce the items purchased Whenproduction is interruptedfrequentlyWhen production is interrupted frequently becauseofnumerouschange ordersbecause of numerous change orders Principles of Personal Selling NegotiationNegotiation WhentonegotiateWhen to negotiate Whenfactorsbear not only onprice,When factors bear not only on price, bt alalitofvib t al alit of vi www.bookfiesta4u.blogspot.com 11-677 but also on quality of servicebut also on quality of service Whenbusinessriskcannot be accuratelyWhen business risk cannot be accurately predeterminedpredetermined Whena long periodof timeisrequiredtoWhen a long period of time is required to producethe itemspurchasedproduce the items purchased Whenproduction is interruptedfrequentlyWhen production is interrupted frequently becauseofnumerouschange ordersbecause of numerous change orders
Figure 21.5: The Zone Agreement www.bookfiesta4u.blogspot.com 11-678 Figure 21.5: The Zone Agreement www.bookfiesta4u.blogspot.com 11-678
Principles of Personal Selling FormulatingaNegotiationFormulating a Negotiation SttSt t www.bookfiesta4u.blogspot.com 11-679 StrategyStrategy Principles of Personal Selling FormulatingaNegotiationFormulating a Negotiation SttSt t www.bookfiesta4u.blogspot.com 11-679 StrategyStrategy
Table 21.3: Classic Bargaining Tactics ActingCrazyActing Crazy PutonagoodshowbyvisiblydemonstratingyourPut on a good sh ow by visibly demonstrating your emotionalcommitmenttoyourposition.Thisemotional commitment to your position. Thi s increasesyourcredibilityandmaygivetheopponentincreases your credibility and may give the opponent ajustificationtosettleonyourterms.a justification to settle on your terms. BigPotBig Pot Leaveyourselfalotofroomtonegotiate.MakehighLeave yourself a lot of room to negotiate. Make high demandsatthebeginning.Aftermakingdemands at the beginning. After making concessions,youwillstillendupwithalargerpayoffconcessions, you will still end up with a larger payoff www.bookfiesta4u.blogspot.com 11-680 See text for complete table concessions,youwillstillendupwithalargerpayoffconcessions, you will still end up with a larger payoff thanifyoustartedtoolow.than if you started too low. GetaPrestigiousGet a Prestigious AllyAlly TheallycanbeapersonoraprojectthatisThe ally can be a person or a project that is prestigious.Youtrytogettheopponenttoacceptprestigious. You try to get the oppone nt to accept lessbecausetheperson/objectheorshewillbeless because the person/object he or she will be involvedwithisprestigious.involved with is prestigious. TheWellIsDryThe Well Is Dry TakeastandandtelltheopponentyouhavenomoreTake a stan d and tell the opponent you have no more concessionstomake.concessions to make. Table 21.3: Classic Bargaining Tactics ActingCrazyActing Crazy PutonagoodshowbyvisiblydemonstratingyourPut on a good sh ow by visibly demonstrating your emotionalcommitmenttoyourposition.Thisemotional commitment to your position. Thi s increasesyourcredibilityandmaygivetheopponentincreases your credibility and may give the opponent ajustificationtosettleonyourterms.a justification to settle on your terms. BigPotBig Pot Leaveyourselfalotofroomtonegotiate.MakehighLeave yourself a lot of room to negotiate. Make high demandsatthebeginning.Aftermakingdemands at the beginning. After making concessions,youwillstillendupwithalargerpayoffconcessions, you will still end up with a larger payoff www.bookfiesta4u.blogspot.com 11-680 See text for complete table concessions,youwillstillendupwithalargerpayoffconcessions, you will still end up with a larger payoff thanifyoustartedtoolow.than if you started too low. GetaPrestigiousGet a Prestigious AllyAlly TheallycanbeapersonoraprojectthatisThe ally can be a person or a project that is prestigious.Youtrytogettheopponenttoacceptprestigious. You try to get the oppone nt to accept lessbecausetheperson/objectheorshewillbeless because the person/object he or she will be involvedwithisprestigious.involved with is prestigious. TheWellIsDryThe Well Is Dry TakeastandandtelltheopponentyouhavenomoreTake a stan d and tell the opponent you have no more
concessionstomake.concessions to make.
Principles of Personal Selling RelationshipMarketingRelationship Marketing www.bookfiesta4u.blogspot.com 11-681 Principles of Personal Selling RelationshipMarketingRelationship Marketing www.bookfiesta4u.blogspot.com 11-681
F FFo oor rr m mma aan nny yy o oor rrg gga aan nni iiz zza aat tti iio oon nns ss, ,, r rre eel lla aat tti iio oon nns ssh hhi iip pp m mma aar rrk kke eet tti iin nng gg iis ss m mmo oor rre ee i iim mmp ppo oor
rrt tta aan nnt tt t tth hha aan nn a aan nny yy i iin nnd ddi iiv vvi iid ddu uua aal ll t ttr rra aan nns ssa aac cct tti iio oon nn, ,, b bbe eec cca aau uus sse ee t tth hhe ees sse ee l llo oon nng gg-t tte
eer rrm mm r rre eel lla aat tti iio oon nns ssh hhi iip pps ss c cca aan nn yyi iie eel lld dd g ggr rre eea aat tte eer rr o oov vve eer rra aal lll ll p ppr rro oof ffi iit tta aab bbi iil lli iit tty yy. .. W WWo oou uul
lld dd i iit tt b bbe ee e eea aas ssi iie eer rr tto oo gpyg p y convinceacompanytoenterintoalongtermconvince a company to enter into a long term suppliersupplier--customerrelationshipifyouofferedthemcustomer relationship if y ou offered them savingsthroughverticalintegrationsavings through vertical integration ofproductofferingsof product offerings,or, or easeofuseease of use derivedfromabroadrangeofderived from a broad range of productofferingsproduct offerings??
Chapter22Chapter 22 ManagingtheTotalManaging the Total MarketingEffortMarketing Effort byby PowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans Chapter22Chapter 22 ManagingtheTotalManaging the Total MarketingEffortMarketing Effort byby PowerPointbyPowerPoint by MiltonM.PressleyMilton M. Pressley UniversityofNewOrleansUniversity of New Orleans
ThemarketingThe marketing organizationwillhaveorganization will have toredefineitsrolefromto redefine its role from ii Kotler on Marketing www.bookfiesta4u.blogspot.com 11-684 managingcustomermanaging customer interactionstointeractions to integratingandintegrating and managingallthemanaging all the company scustomercompany s customer-facingprocesses.facing processes. ThemarketingThe marketing organizationwillhaveorganization will have toredefineitsrolefromto redefine its role from ii Kotler on Marketing www.bookfiesta4u.blogspot.com 11-684 managingcustomermanaging customer interactionstointeractions to integratingandintegrating and managingallthemanaging all the company scustomercompany s customer-facingprocesses.facing processes.
Chapter Objectives I IIn nn t tth hhi iis ss c cch hha aap ppt tte eer rr, ,, w wwe ee f ffo ooc ccu uus ss o oon nn t tth hhe ee f ffo ool lll llo oow wwi iin nng gg q qqu uue ees sst tti iio oon nns ss: :: Wh
WhWha aat tt a aar rre ee t tth hhe ee t ttr rre een nnd dds ss i iin nn c cco oom mmp ppa aan nny yy o oor rrg gga aan nni iiz zza aat tti iio oon nn? ?? H HHo oow ww a aar rre ee m mma aar rrk kke eet tti
iin nng gg a aan nnd dd s ssa aal lle ees ss o oor rrg gga aan nni iiz zze eed dd iin nnc cco oom mmp ppa aan nni iie ees ss? ?? c cco oom mmp ppa aan nni iie ees ss? ?? Wh WhWha aat tt s sst tte eep pps ss c
cca aan nn a aa c cco oom mmp ppa aan nny yy t tta aak kke ee t tto oo b bbu uui iil lld dd aa sst ttr rro oon nng gge eer rr c ccu uus sst tto oom mme eer rr f ffo ooc ccu uus sse eed dd c ccu uul llt ttu uur rre
ee? ?? H HHo oow ww c cca aan nn a aa c cco oom mmp ppa aan nny yy i iim mmp ppr rro oov vve ee i iit tts ss m mma aar rrk kke eet tti iin nng gg-i iim mmp ppl lle eem mme een nnt tta aat tti iio oon nn s
ssk kki iil lll lls ss? ?? Wh WhWha aat tt t tto ooo ool lls ss a aar rre ee a aav vva aai iil lla aab bbl lle ee t tto oo h hhe eel llp pp c cco oom mmp ppa aan nni iie ees ss m mmo oon nni iit tto oor rr a aan
nnd dd i iim mmp ppr rro oov vve ee t tth hhe eei iir rr m mma aar rrk kke eet tti iin nng gg aac cct tti iiv vvi iit tti iie ees ss? ?? www.bookfiesta4u.blogspot.com 11-685
Trends in Company Organization MainresponsesofcompaniestoaMain responses of companies to a changingenvironmentchanging environment ReengineeringReengineering MergingMerging www.bookfiesta4u.blogspot.com 11-686 ReengineeringReengineering OutsourcingOutsourcing BenchmarkingBenchmarking SupplierpartneringSupplier partnering CustomerpartneringCustomer partnering MergingMerging GlobalizingGlobalizing FlatteningFlattening FocusingFocusing EmpoweringEmpowering Trends in Company Organization MainresponsesofcompaniestoaMain responses of companies to a changingenvironmentchanging environment ReengineeringReengineering MergingMerging www.bookfiesta4u.blogspot.com 11-686 ReengineeringReengineering OutsourcingOutsourcing BenchmarkingBenchmarking SupplierpartneringSupplier partnering CustomerpartneringCustomer partnering MergingMerging GlobalizingGlobalizing FlatteningFlattening FocusingFocusing EmpoweringEmpowering
O OOu uut tts sso oou uur rrc cci iin nng gg c cca aan nn s ssa aav vve ee c cco oom mmp ppa aan nni iie ees ss m mmo oon nne eey yy bby yy p ppa aas sss ssi iin nng gg o oon nn t tto oo a aan nno oot tth hhe eer
rr f ffi iir rrm mm t tth hhe ee o oov vve eer rrh hhe eea aad dd i iin nnv vvo ool llv vve eed dd w wwi iit tth hh m mma aai iin nnt tta aai iin nni iin nng gg s ssp ppe eec cci iia aal lli iiz zze eed dd sst tta aaf
fff ff involvedwithmaintainingspecializedstaffinvolved with maintaining specialized sta ff positions,oreliminatingtheneedtomaintainpositions, or eliminating the need to ma intain specializedequipmentthatdoesnotdirectlyspecialized equipment that does not direc tly supporttheircorebusiness.support their core business. WhatarethepotentialrisksWhat are the potential risks associatedwithoutsourcing?associated with outsourcing?
TheEvolutionoftheThe Evolution of the MarketingDepartmentMarketing Department Marketing Organization www.bookfiesta4u.blogspot.com 11-688 Figure 22.1: Stages in the Evolution of the Marketing Department TheEvolutionoftheThe Evolution of the MarketingDepartmentMarketing Department Marketing Organization www.bookfiesta4u.blogspot.com 11-688 Figure 22.1: Stages in the Evolution of the Marketing Department
Marketing Organization SSimpleSalesDepartmentimple Sales Department SalesDepartmentWithAncillarySales Department With Ancillary MarketingFunctionsMarketing Functions SeparateMarketingDepartmentSeparate Marketing Department www.bookfiesta4u.blogspot.com 11-689 SeparateMarketingDepartmentSeparate Marketing Department ModernMarketingDepartment/Modern Marketing Department / EffectiveMarketingCompanyEffective Marketing Company ProcessProcess--AndOutcomeAnd Outcome--BasedCompanyBased Company Marketing Organization SSimpleSalesDepartmentimple Sales Department SalesDepartmentWithAncillarySales Department With Ancillary MarketingFunctionsMarketing Functions SeparateMarketingDepartmentSeparate Marketing Department www.bookfiesta4u.blogspot.com 11-689 SeparateMarketingDepartmentSeparate Marketing Department ModernMarketingDepartment/Modern Marketing Department / EffectiveMarketingCompanyEffective Marketing Company ProcessProcess--AndOutcomeAnd Outcome--BasedCompanyBased Company
Marketing Organization OrganizingtheMarketingDepartmentOrganizing the Marketing Department FunctionalOrganizationFunctional Organization FieldsalesField sales CustomerserviceCustomer service ProductmanagementProduct management www.bookfiesta4u.blogspot.com 11-690 GeographicOrganizationGeographic Organization Area marketspecialistArea market specialist Marketing Organization OrganizingtheMarketingDepartmentOrganizing the Marketing Department FunctionalOrganizationFunctional Organization FieldsalesField sales CustomerserviceCustomer service ProductmanagementProduct management www.bookfiesta4u.blogspot.com 11-690 GeographicOrganizationGeographic Organization Area marketspecialistArea market specialist
OrganizingamarketingorganizationOrganizing a marketing organization geographicallycanallowmarketingmanagersgeographically can allow marketing manage rs tofocusonregionalandculturaldifferencesinto focus on regional and cultural diffe rences in theirmarketsegments.Whatarethereasonstheir market segments. What are the reasons whygeographicalsegmentationmightbeabadwhy geographical segmentation might be a b ad idea?Whatcouldbedonetoidea? What could be done to minimizetheseproblemsinminimize these problems in geographicallyorganizedgeographically organized marketingdepartments?marketing departments? OrganizingamarketingorganizationOrganizing a marketing organization geographicallycanallowmarketingmanagersgeographically can allow marketing manage rs tofocusonregionalandculturaldifferencesinto focus on regional and cultural diffe rences in theirmarketsegments.Whatarethereasonstheir market segments. What are the reasons whygeographicalsegmentationmightbeabadwhy geographical segmentation might be a b ad idea?Whatcouldbedonetoidea? What could be done to minimizetheseproblemsinminimize these problems in geographicallyorganizedgeographically organized marketingdepartments?marketing departments?
KrispyKreme sWebsitepromotesnewstoreopeningsKrispy Kreme s Web site promotes new sto re openings www.bookfiesta4u.blogspot.com 11-692 KrispyKreme sWebsitepromotesnewstoreopeningsKrispy Kreme s Web site promotes new sto re openings www.bookfiesta4u.blogspot.com 11-692
Marketing Organization ProductProduct--or Brandor Brand--ManagementOrganizationManagement Organization Productandbrandmanagershavethesetasks:Product and brand managers have these tasks: DevelopalongDevelop a long--rangeandcompetitivestrategyfortherange and competitive strategy for the productproduct PreparinganannualmarketingplanandsalesforecastPreparing an annual marketing plan a nd sales forecast WorkingwithadvertisingandmerchandisingagenciestoWorking with advertising and merch andising agencies to www.bookfiesta4u.blogspot.com 11-693 WorkingwithadvertisingandmerchandisingagenciestoWorking with advertising and merch andising agencies to developcopy,programs,andcampaignsdevelop copy, programs, and campaigns StimulatingsupportoftheproductamongthesalesforceandStimulating support of the prod uct among the sales force and distributorsdistributors Gatheringcontinuousintelligenceontheproduct sGathering continuous intelligence on th e product s performance,customeranddealerattitudes,andnewperformance, customer and dealer at titudes, and new problemsandopportunitiesproblems and opportunities InitiatingproductimprovementstomeetchangingmarketInitiating product improvements t o meet changing market needsneeds Marketing Organization ProductProduct--or Brandor Brand--ManagementOrganizationManagement Organization Productandbrandmanagershavethesetasks:Product and brand managers have these tasks: DevelopalongDevelop a long--rangeandcompetitivestrategyfortherange and competitive strategy for the productproduct PreparinganannualmarketingplanandsalesforecastPreparing an annual marketing plan a nd sales forecast WorkingwithadvertisingandmerchandisingagenciestoWorking with advertising and merch andising agencies to www.bookfiesta4u.blogspot.com 11-693 WorkingwithadvertisingandmerchandisingagenciestoWorking with advertising and merch andising agencies to developcopy,programs,andcampaignsdevelop copy, programs, and campaigns StimulatingsupportoftheproductamongthesalesforceandStimulating support of the prod uct among the sales force and distributorsdistributors Gatheringcontinuousintelligenceontheproduct sGathering continuous intelligence on th e product s performance,customeranddealerattitudes,andnewperformance, customer and dealer at titudes, and new problemsandopportunitiesproblems and opportunities InitiatingproductimprovementstomeetchangingmarketInitiating product improvements t o meet changing market needsneeds
Figure 22.3: The Product Manager s Interactions www.bookfiesta4u.blogspot.com 11-694 Figure 22.3: The Product Manager s Interactions www.bookfiesta4u.blogspot.com 11-694
Marketing Organization Pearsonand Wilson sfivesteps to makethePearson and Wilson s five steps to make the productproduct--managementsystemworkbettermanagement system work better Clearlydelineatethelimitsofmanager sroleClearly delineate the limits of manager s role BuildastrategyBuild a strategy--developmentdevelopment--andand--reviewprocessrevie w process www.bookfiesta4u.blogspot.com 11-695 BuildastrategyBuild a strategy developmentdevelopment andand reviewprocessreview p rocess TakeintoaccountareasofpotentialconflictTake into account areas of potential confli ct SetupaformalprocessthatforcestotheSet up a formal process that forces to the topallconflicttop all conflict--ofof--interestsituationsinterest situations EstablishasystemformeasuringresultsEstablish a system for measuring results Marketing Organization Pearsonand Wilson sfivesteps to makethePearson and Wilson s five steps to make the productproduct--managementsystemworkbettermanagement system work better Clearlydelineatethelimitsofmanager sroleClearly delineate the limits of manager s role BuildastrategyBuild a strategy--developmentdevelopment--andand--reviewprocessrevie w process www.bookfiesta4u.blogspot.com 11-695 BuildastrategyBuild a strategy developmentdevelopment andand reviewprocessreview p rocess TakeintoaccountareasofpotentialconflictTake into account areas of potential confli ct SetupaformalprocessthatforcestotheSet up a formal process that forces to the topallconflicttop all conflict--ofof--interestsituationsinterest situations EstablishasystemformeasuringresultsEstablish a system for measuring results
Marketing Organization A Second Alternativeisto switchfromA Second Alternative is productmanagersto product teamsproduct managers to product VerticalproductteamVertical product team TriangularproductteamTriangular product team www.bookfiesta4u.blogspot.com 11-696 HorizontalproductteamHorizontal product team ThirdAlternative: BrandAssetThird Alternative: Brand Asset ManagementTeam(BAMT)Management Team (BAMT) Marketing Organization A Second Alternativeisto switchfromA Second Alternative is productmanagersto product teamsproduct managers to product VerticalproductteamVertical product team TriangularproductteamTriangular product team www.bookfiesta4u.blogspot.com 11-696 HorizontalproductteamHorizontal product team ThirdAlternative: BrandAssetThird Alternative: Brand Asset ManagementTeam(BAMT)Management Team (BAMT)
to switch from teams
to switch from teams
Figure 22.5: Managing Through www.bookfiesta4u.blogspot.com Figure 22.5: Managing Through www.bookfiesta4u.blogspot.com
Teams at Kraft 11-697 Teams at Kraft 11-697
Marketing Organization MarketMarket--Management/CustomerManagement/Customer ManagementOrganizationManagement Organization MarketMarket--managementOrganizationmanagement Organization MarketsmanagerMarkets manager www.bookfiesta4u.blogspot.com 11-698 MarketsmanagerMarkets manager CustomerCustomer--managementOrganizationmanagement Organization ProductProduct--Management/Management/ MarketMarket--ManagementOrganizationManagement Organization Marketing Organization MarketMarket--Management/CustomerManagement/Customer ManagementOrganizationManagement Organization MarketMarket--managementOrganizationmanagement Organization MarketsmanagerMarkets manager www.bookfiesta4u.blogspot.com 11-698 MarketsmanagerMarkets manager CustomerCustomer--managementOrganizationmanagement Organization ProductProduct--Management/Management/ MarketMarket--ManagementOrganizationManagement Organization
Marketing Organization CorporateCorporate--DivisionalOrganizationDivisional Organization No corporatemarketingNo corporate marketing ModeratemarketingModerate marketing Strong corporatemarketingStrong corporate marketing MarketingRelationsWithOtherMarketing Relations With Other www.bookfiesta4u.blogspot.com 11-699 gg DepartmentsDepartments R&DR&D EngineeringandPurchasingEngineering and Purchasing ManufacturingandOperationsManufacturing and Operations FinanceFinance AccountingandCreditAccounting and Credit Marketing Organization CorporateCorporate--DivisionalOrganizationDivisional Organization No corporatemarketingNo corporate marketing ModeratemarketingModerate marketing Strong corporatemarketingStrong corporate marketing MarketingRelationsWithOtherMarketing Relations With Other www.bookfiesta4u.blogspot.com 11-699 gg DepartmentsDepartments R&DR&D EngineeringandPurchasingEngineering and Purchasing ManufacturingandOperationsManufacturing and Operations FinanceFinance AccountingandCreditAccounting and Credit
Marketing Organization BuildingaCompanywideMarketingBuilding a Companywide Marketing OrientationOrientation TransformingintoatruemarketTransforming into a true market--drivendriven firmrequires:firm requires: www.bookfiesta4u.blogspot.com 11-700 firmrequires:firm requires: Developing a companywidepassionforcustomersDeveloping a companywide passion for cu stomers Organizing aroundcustomersegmentsOrganizing around customer segments insteadof aroundproductsinstead of around products Developing a deep understanding of customersDeveloping a deep understanding of cus tomers through qualitativeandquantitativeresearchthrough qualitative and quantitative r esearch Marketing Organization BuildingaCompanywideMarketingBuilding a Companywide Marketing OrientationOrientation TransformingintoatruemarketTransforming into a true market--drivendriven firmrequires:firm requires: www.bookfiesta4u.blogspot.com 11-700 firmrequires:firm requires: Developing a companywidepassionforcustomersDeveloping a companywide passion for cu stomers Organizing aroundcustomersegmentsOrganizing around customer segments insteadof aroundproductsinstead of around products Developing a deep understanding of customersDeveloping a deep understanding of cus tomers through qualitativeandquantitativeresearchthrough qualitative and quantitative r esearch
Marketing Organization WhatstepscanaCEOtaketocreateamarketWhat steps can a CEO take to create a market andcustomerfocusedcompany?and customer focused company? 1.1. ConvinceseniormanagementoftheneedConvince senior management of the need 2.2. AppointaseniormarketingofficerandAppoint a senior marketing officer and amarketingtaskforcea marketing task force 3.3. GetoutsidehelpandguidanceGet outside help and guidance 4.4. Changethecompany srewardmeasurementandsystemChange the company s reward measure ment and system www.bookfiesta4u.blogspot.com 11-701 4.4. ChangethecompanysrewardmeasurementandsystemChange the company s reward meas urement and system 5.5. HirestrongmarketingtalentHire strong marketing talent 6.6. DevelopstronginDevelop strong in--housemarketingtrainingprogramshouse marke ting training programs 7.7. InstallamodernmarketingplanningsystemInstall a modern marketing planning sy stem 8.8. EstablishanannualmarketingEstablish an annual marketing excellencerecognitionprogramexcellence recognition program 9.9. ShiftfromadepartmentfocustoaShift from a department focus to a processprocess--outcomefocusoutcome focus 10.10. EmpowertheemployeesEmpower the employees Marketing Organization WhatstepscanaCEOtaketocreateamarketWhat steps can a CEO take to create a market andcustomerfocusedcompany?and customer focused company? 1.1. ConvinceseniormanagementoftheneedConvince senior management of the need 2.2. AppointaseniormarketingofficerandAppoint a senior marketing officer and amarketingtaskforcea marketing task force 3.3. GetoutsidehelpandguidanceGet outside help and guidance 4.4. Changethecompany srewardmeasurementandsystemChange the company s reward measure ment and system www.bookfiesta4u.blogspot.com 11-701 4.4. ChangethecompanysrewardmeasurementandsystemChange the company s reward meas urement and system 5.5. HirestrongmarketingtalentHire strong marketing talent 6.6. DevelopstronginDevelop strong in--housemarketingtrainingprogramshouse marke ting training programs 7.7. InstallamodernmarketingplanningsystemInstall a modern marketing planning sy stem 8.8. EstablishanannualmarketingEstablish an annual marketing excellencerecognitionprogramexcellence recognition program 9.9. ShiftfromadepartmentfocustoaShift from a department focus to a processprocess--outcomefocusoutcome focus 10.10. EmpowertheemployeesEmpower the employees
StrategicinnovationStrategic innovation Injecting More CreativityInjecting More Creativity Into the OrganizationInto the Organization Marketing Organization www.bookfiesta4u.blogspot.com 11-702 StrategicinnovationStrategic innovation resource:Brighthouseresource: Brighthouse StrategicinnovationStrategic innovation Injecting More CreativityInjecting More Creativity Into the OrganizationInto the Organization Marketing Organization www.bookfiesta4u.blogspot.com 11-702 StrategicinnovationStrategic innovation resource:Brighthouseresource: Brighthouse
Marketing Implementation ThomasBonoma sfoursetsofskillsforThomas Bonoma s four sets of skills for implementingmarketingprogramsimplementing marketing programs DiagnosticskillsDiagnostic skills Identificationof company levelIdentification of company level ImplementationskillsImplementation skills www.bookfiesta4u.blogspot.com 11-703 EvaluationskillsEvaluation skills AprimohelpscompaniesAprimo helps companies managethe manage the businessofmarketing business of marketing Marketing Implementation ThomasBonoma sfoursetsofskillsforThomas Bonoma s four sets of skills for implementingmarketingprogramsimplementing marketing programs DiagnosticskillsDiagnostic skills Identificationof company levelIdentification of company level ImplementationskillsImplementation skills www.bookfiesta4u.blogspot.com 11-703 EvaluationskillsEvaluation skills AprimohelpscompaniesAprimo helps companies managethe manage the businessofmarketing business of marketing
Evaluation and Control Table 22.1: Types of Marketing Control TypeofType of ControlControl PrimePrime ResponsibilityResponsibility PurposeOfPurpose Of ControlControl ApproachesApproaches I.AnnualI. Annual--planplan controlcontrol TopmanagementTop management MiddleMiddle ToexamineTo examine whetherthewhether the Sales analysisSales analysis MarketMarket--shareshare www.bookfiesta4u.blogspot.com 11-704 MiddleMiddle managementmanagement plannedresultsplanned results arebeingare being achievedachieved MarketMarket shareshare analysisanalysis SalesSales--toto--expenseexpense ratiosratios FinancialanalysisFinancial analysis MarketMarket--basedbased scorecardanalysisscorecard analysis See text for complete table Evaluation and Control Table 22.1: Types of Marketing Control TypeofType of ControlControl PrimePrime ResponsibilityResponsibility PurposeOfPurpose Of ControlControl ApproachesApproaches I.AnnualI. Annual--planplan controlcontrol TopmanagementTop management MiddleMiddle ToexamineTo examine whetherthewhether the Sales analysisSales analysis MarketMarket--shareshare www.bookfiesta4u.blogspot.com 11-704 MiddleMiddle managementmanagement plannedresultsplanned results arebeingare being achievedachieved MarketMarket shareshare analysisanalysis SalesSales--toto--expenseexpense ratiosratios FinancialanalysisFinancial analysis MarketMarket--basedbased scorecardanalysisscorecard analysis See text for complete table
Evaluation and Control AnnualAnnual--PlanControlPlan Control SalesAnalysisSales Analysis SalesvarianceanalysisSales variance analysis www.bookfiesta4u.blogspot.com 11-705 Figure 22.7: The Control Process ysys MicrosalesanalysisMicrosales analysis Evaluation and Control AnnualAnnual--PlanControlPlan Control SalesAnalysisSales Analysis SalesvarianceanalysisSales variance analysis www.bookfiesta4u.blogspot.com 11-705 Figure 22.7: The Control Process ysys MicrosalesanalysisMicrosales analysis
Evaluation and Control MarketMarket--ShareAnalysisShare Analysis OverallmarketshareOverall market share ServedmarketshareServed market share www.bookfiesta4u.blogspot.com 11-706 RelativemarketshareRelative market share MarketingExpenseMarketing Expense--ToTo--SalesAnalysisSales Analysis Evaluation and Control MarketMarket--ShareAnalysisShare Analysis OverallmarketshareOverall market share ServedmarketshareServed market share www.bookfiesta4u.blogspot.com 11-706 RelativemarketshareRelative market share MarketingExpenseMarketing Expense--ToTo--SalesAnalysisSales Analysis
Evaluation and Control FinancialAnalysisFinancial Analysis www.bookfiesta4u.blogspot.com 11-707 Evaluation and Control FinancialAnalysisFinancial Analysis www.bookfiesta4u.blogspot.com 11-707
Evaluation and Control MarketMarket--BasedScorecardAnalysisBased Scorecard Analysis CustomerCustomer--performancescorecardperformance scorecard StakeholderStakeholder--performancescorecardperformance scorecard www.bookfiesta4u.blogspot.com 11-708 StakeholderStakeholder--performancescorecardperformance scorecard ProfitabilityControlProfitability Control MarketingMarketing--ProfitabilityAnalysisProfitability Analysis Evaluation and Control MarketMarket--BasedScorecardAnalysisBased Scorecard Analysis CustomerCustomer--performancescorecardperformance scorecard StakeholderStakeholder--performancescorecardperformance scorecard www.bookfiesta4u.blogspot.com 11-708 StakeholderStakeholder--performancescorecardperformance scorecard ProfitabilityControlProfitability Control MarketingMarketing--ProfitabilityAnalysisProfitability Analysis
Table 22.2: A Simplified Profit-and-Loss Statement SalesSales $60,000$60,000 CostofgoodssoldCost of goods sold 39,00039,000 GrossmarginGross margin $21,000$21,000 ExpensesExpenses www.bookfiesta4u.blogspot.com 11-709 ExpensesExpenses SalariesSalaries $9,300$9,300 RentRent 3,0003,000 SuppliesSupplies 3,5003,500 15,80015,800 NetprofitNet profit $5,200$5,200 Table 22.2: A Simplified Profit-and-Loss Statement SalesSales $60,000$60,000 CostofgoodssoldCost of goods sold 39,00039,000 GrossmarginGross margin $21,000$21,000 ExpensesExpenses www.bookfiesta4u.blogspot.com 11-709 ExpensesExpenses SalariesSalaries $9,300$9,300 RentRent 3,0003,000 SuppliesSupplies 3,5003,500 15,80015,800 NetprofitNet profit $5,200$5,200
Table 22.3: Mapping Natural Expenses into Functional Expenses NaturalNatural PackingandPacking and BillingandBilling and Step1: Identifying FunctionalExpensesStep 1: Identifying Functional Expenses Evaluation and Control www.bookfiesta4u.blogspot.com 11-710 NaturalNatural AccountsAccounts TotalTotal SellingSelling AdvertisingAdvertising PackingandPacking and DeliveryDelivery BillingandBilling and CollectingCollecting SalariesSalaries $9,300$9,300 $5,100$5,100 $1,200$1,200 $1,400$1,400 $1,600$1,60 0 RentRent 3,0003,000 400400 2,0002,000 600600 SuppliesSupplies 3,5003,500 400400 1,5001,500 1,4001,400 200200 $15,800$15,800 $5,500$5,500 $3,100$3,100 $4,800$4,800 $2,400$2,400 Table 22.3: Mapping Natural Expenses into Functional Expenses NaturalNatural PackingandPacking and BillingandBilling and Step1: Identifying FunctionalExpensesStep 1: Identifying Functional Expenses Evaluation and Control www.bookfiesta4u.blogspot.com 11-710 NaturalNatural AccountsAccounts TotalTotal SellingSelling AdvertisingAdvertising PackingandPacking and DeliveryDelivery BillingandBilling and CollectingCollecting SalariesSalaries $9,300$9,300 $5,100$5,100 $1,200$1,200 $1,400$1,400 $1,600$1,60 0 RentRent 3,0003,000 400400 2,0002,000 600600 SuppliesSupplies 3,5003,500 400400 1,5001,500 1,4001,400 200200 $15,800$15,800 $5,500$5,500 $3,100$3,100 $4,800$4,800 $2,400$2,400
Table 22.4: Bases for Allocating Functional Expenses to Channels PackingPacking andand BillingandBilling and Step2: Assigning FunctionalExpensestoStep 2: Assigning Functional Expenses Marketing EntitiesMarketing Entities Evaluation and Control www.bookfiesta4u.blogspot.com 11-711 ChannelTypeChannel Type SellingSelling AdvertisingAdvertising andand DeliveryDelivery BillingandBilling and CollectingCollecting HardwareHardware 200200 5050 5050 5050 GardenSupplyGarden Supply 6565 2020 2121 2121 DepartmentstoresDepartment stores 1010 3030 99 99 275275 100100 8080 8080 FunctionalexpenseFunctional expense $5,500$5,500 $3,100$3,100 $4,800$4,800 0$2,400 %No.ofUnits% No. of Units 275275 100100 8080 8080 EqualsEquals $20$ 20 $31$ 31 $60$ 60 $30$ 30 Table 22.4: Bases for Allocating Functional Expenses to Channels PackingPacking andand BillingandBilling and Step2: Assigning FunctionalExpensestoStep 2: Assigning Functional Expenses Marketing EntitiesMarketing Entities Evaluation and Control www.bookfiesta4u.blogspot.com 11-711 ChannelTypeChannel Type SellingSelling AdvertisingAdvertising andand DeliveryDelivery BillingandBilling and CollectingCollecting HardwareHardware 200200 5050 5050 5050 GardenSupplyGarden Supply 6565 2020 2121 2121 DepartmentstoresDepartment stores 1010 3030 99 99 275275 100100 8080 8080 FunctionalexpenseFunctional expense $5,500$5,500 $3,100$3,100 $4,800$4,800 0$2,400 %No.ofUnits% No. of Units 275275 100100 8080 8080 EqualsEquals $20$ 20 $31$ 31 $60$ 60 $30$ 30
to
$2,40
to
$2,40
Table 22.5: Profit-and-Loss Statements for Channels HardwareHardware GardenGarden SupplySupply Dept.Dept. StoresStores WholeWhole CompanyCompany SalesSales $30,000$30,000 $10,000$10,000 $20,000$20,000 $60,000$60,000 Evaluation and Control Step3: Preparing a ProfitStep 3: Preparing a Profit--andand--LossStatementLoss Sta tement forEachMarketing Entityfor Each Marketing Entity www.bookfiesta4u.blogspot.com 11-712 SalesSales $30,000$30,000 $10,000$10,000 $20,000$20,000 $60,000$60,000 Costofgoods soldCost of goods sold 19,50019,500 6,5006,500 13,00013,000 39,00039 ,000 Gross marginGross margin $10,500$10,500 $3,500$ 3,500 $7,000$ 7,000 $21,000$21,0 00 ExpensesExpenses Selling($20percall)Selling ($20 per call) $4,000$ 4,000 $1,300$ 1,300 $200$ 200 $5,500$ 5,500 Advertising($31perAdvertising ($31 per advertisement)advertisement) 1,5501,550 620620 930930 3,1003,100 See text for complete table Table 22.5: Profit-and-Loss Statements for Channels HardwareHardware GardenGarden SupplySupply Dept.Dept. StoresStores WholeWhole CompanyCompany SalesSales $30,000$30,000 $10,000$10,000 $20,000$20,000 $60,000$60,000 Evaluation and Control Step3: Preparing a ProfitStep 3: Preparing a Profit--andand--LossStatementLoss Sta tement forEachMarketing Entityfor Each Marketing Entity www.bookfiesta4u.blogspot.com 11-712 SalesSales $30,000$30,000 $10,000$10,000 $20,000$20,000 $60,000$60,000 Costofgoods soldCost of goods sold 19,50019,500 6,5006,500 13,00013,000 39,00039 ,000 Gross marginGross margin $10,500$10,500 $3,500$ 3,500 $7,000$ 7,000 $21,000$21,0 00 ExpensesExpenses Selling($20percall)Selling ($20 per call) $4,000$ 4,000 $1,300$ 1,300 $200$ 200 $5,500$ 5,500 Advertising($31perAdvertising ($31 per advertisement)advertisement) 1,5501,550 620620 930930 3,1003,100 See text for complete table
Evaluation and Control DetermineCorrectiveActionDetermine Corrective Action DirectVersusFullCostingDirect Versus Full Costing DirectcostsDirect costs TraceablecommoncostsTraceable common costs NontraceablecommoncostNontraceable common cost ActivityActivity--basedCostAccounting (ABC)based Cost www.bookfiesta4u.blogspot.com 11-713 ActivityActivity--basedCostAccounting (ABC)based Cost EfficiencycontrolEfficiency control Marketing ControllerMarketing Controller SalesSales--ForceEfficiencyForce Efficiency Advertising EfficiencyAdvertising Efficiency SalesSales--PromotionEfficiencyPromotion Efficiency DistributionEfficiencyDistribution Efficiency Evaluation and Control DetermineCorrectiveActionDetermine Corrective Action DirectVersusFullCostingDirect Versus Full Costing DirectcostsDirect costs TraceablecommoncostsTraceable common costs NontraceablecommoncostNontraceable common cost ActivityActivity--basedCostAccounting (ABC)based Cost www.bookfiesta4u.blogspot.com 11-713 ActivityActivity--basedCostAccounting (ABC)based Cost EfficiencycontrolEfficiency control Marketing ControllerMarketing Controller SalesSales--ForceEfficiencyForce Efficiency Advertising EfficiencyAdvertising Efficiency SalesSales--PromotionEfficiencyPromotion Efficiency DistributionEfficiencyDistribution Efficiency
Accounting (ABC) Accounting (ABC)
Accounting (ABC) Accounting (ABC)
Evaluation and Control StrategiccontrolStrategic control TheMarketingEffectivenessReviewThe Marketing Effectiveness Review TheMarketingAuditThe Marketing Audit www.bookfiesta4u.blogspot.com 11-714 gg Marketing audit s fourMarketing audit s four characteristics:characteristics: ComprehensiveComprehensive SystematicSystematic IndependentIndependent PeriodicPeriodic Evaluation and Control StrategiccontrolStrategic control TheMarketingEffectivenessReviewThe Marketing Effectiveness Review TheMarketingAuditThe Marketing Audit www.bookfiesta4u.blogspot.com 11-714 gg Marketing audit s fourMarketing audit s four characteristics:characteristics: ComprehensiveComprehensive SystematicSystematic IndependentIndependent PeriodicPeriodic
Table 22.6: Components of a Marketing Audit PartI.MarketingEnvironmentAuditPart I. Marketing Environment Audit MacroenvironmentMacroenvironment A.DemographicA. Demographic Whatmajordemographic developments andtrends poseWhat major demographic developments and trends pose opportunities orthreats tothis company?Whatactions hasopportunities or threats t o this company? What actions has thecompanytakeninresponsetothesedevelopments andthe company taken in response to these developments and trends?trends? B.EconomicB. Economic Whatmajordevelopments inincome,prices,savings,andWhat majo r developments in income, prices, savings, and www.bookfiesta4u.blogspot.com 11-715 creditwillaffectthecompany?Whatactions has thecredit will affect the company? Wh at actions has the companybeentakinginresponsetothesedevelopmentscompany been taking in response to these developments andtrends?and trends? C.EnvironmentalC. Environmental Whatis theoutlook forthecostandavailabilityofnat uralWhat is the outlook for the cost and availability of natural resources andenergyneededbythecompany?Whatresources and energy needed by the com pany? What concerns havebeenexpressedaboutthecompany s roleconcerns have been expressed about the company s role inpollutionandconservation,andwhatsteps has thein pollution and conservation, an d what steps has the companytaken?company taken? See text for complete table Table 22.6: Components of a Marketing Audit PartI.MarketingEnvironmentAuditPart I. Marketing Environment Audit MacroenvironmentMacroenvironment A.DemographicA. Demographic Whatmajordemographic developments andtrends poseWhat major demographic developments and trends pose opportunities orthreats tothis company?Whatactions hasopportunities or threats t o this company? What actions has thecompanytakeninresponsetothesedevelopments andthe company taken in response to these developments and trends?trends? B.EconomicB. Economic Whatmajordevelopments inincome,prices,savings,andWhat majo r developments in income, prices, savings, and www.bookfiesta4u.blogspot.com 11-715 creditwillaffectthecompany?Whatactions has thecredit will affect the company? Wh at actions has the companybeentakinginresponsetothesedevelopmentscompany been taking in response to these developments andtrends?and trends? C.EnvironmentalC. Environmental Whatis theoutlook forthecostandavailabilityofnat uralWhat is the outlook for the cost and availability of natural resources andenergyneededbythecompany?Whatresources and energy needed by the com pany? What concerns havebeenexpressedaboutthecompany s roleconcerns have been expressed about the company s role inpollutionandconservation,andwhatsteps has thein pollution and conservation, an d what steps has the companytaken?company taken? See text for complete table
Evaluation and Control TheMarketingExcellenceReviewThe Marketing Excellence Review www.bookfiesta4u.blogspot.com 11-716 Evaluation and Control TheMarketingExcellenceReviewThe Marketing Excellence Review www.bookfiesta4u.blogspot.com 11-716
Table 22.7: The Marketing Excellence Review: Best Practices PoorPoor GoodGood ExcellentExcellent ProductProduct--DrivenDriven MarketMarket--DrivenDriven MarketMarket--DrivenDriv en MassMass--MarketOrientedMarket Oriented SegmentOrientedSegment Oriented NicheOri entedandNiche Oriented and CustomerOrientedCustomer Oriented ProductOfferProduct Offer AugmentedProductOfferAugmented Product Offer OrientedO riented www.bookfiesta4u.blogspot.com 11-717 ProductOfferProduct Offer AugmentedProductOfferAugmented Product Offer OrientedO riented AverageProductQualityAverage Product Quality BetterThanAverageBetter Than Averag e CustomerSolutionsCustomer Solutions OfferOffer AverageServiceQualityAverage Service Quality BetterThanAverageBetter Than Averag e LegendaryLegendary EndEnd--ProductOrientedProduct Oriented CoreCore--ProductOrientedProduct Oriente d LegendaryLegendary See text for complete table Table 22.7: The Marketing Excellence Review: Best Practices PoorPoor GoodGood ExcellentExcellent ProductProduct--DrivenDriven MarketMarket--DrivenDriven MarketMarket--DrivenDriv en MassMass--MarketOrientedMarket Oriented SegmentOrientedSegment Oriented NicheOri entedandNiche Oriented and CustomerOrientedCustomer Oriented ProductOfferProduct Offer AugmentedProductOfferAugmented Product Offer OrientedO riented www.bookfiesta4u.blogspot.com 11-717 ProductOfferProduct Offer AugmentedProductOfferAugmented Product Offer OrientedO riented AverageProductQualityAverage Product Quality BetterThanAverageBetter Than Averag e CustomerSolutionsCustomer Solutions OfferOffer AverageServiceQualityAverage Service Quality BetterThanAverageBetter Than Averag e LegendaryLegendary EndEnd--ProductOrientedProduct Oriented CoreCore--ProductOrientedProduct Oriente d LegendaryLegendary See text for complete table
Evaluation and Control TheEthicalandSocialResponsibilityThe Ethical and Social Responsibility ReviewReview www.bookfiesta4u.blogspot.com 11-718 ReviewReview Evaluation and Control TheEthicalandSocialResponsibilityThe Ethical and Social Responsibility ReviewReview www.bookfiesta4u.blogspot.com 11-718 ReviewReview
Loads of Management Stuff at www.bookfiesta4u.blogspot.comwww.bookfiesta4u.blogspot.com www.bookfiesta4u.blogspot.com 11-719 Loads of Management Stuff at www.bookfiesta4u.blogspot.comwww.bookfiesta4u.blogspot.com www.bookfiesta4u.blogspot.com 11-719
