Marketing Book Notes chapter 18 Marketing Impact * The basic objective * To satisfy consumer needs as the consumers see them * Marketing’s effectiveness must be measured by how well I satisfies consumers * Many firms such as J. D. Power and Associates, marketing research firm, studies consumer satisfaction Marketing Success * Firms that fail in satisfying consumers and thus failing in making products is high * Lack of foucs on 4Ps and customer orientation * Example Cola Blak Inability to target and win over new markets is a major failure as well * Market and consumer oriented strategy planning is key to success Criticism * Macro-marketing system leads to unfair distribution of income * Helps create monopoly and monopolistic competition * However, monopolistic competition also allows for potential entry and more investment and growth.
* Based on materialistic values Logic and Creativity * Developing a good marketing strategy and turning the strategy into a marketing plan requires creative blending * Strategic * Product Physical good * Service * Warranty * Branding * Place * Channel type * Intermediaries * Etc * Promotion * Objectives * Sales people * Advertising * Publicity * Price * Objectives * Flexibility * Level over product lifecycle * Discounts * Allowances Challenges * Welcome international competition * Use technology wisely * If it ain’t broke, improve it * Change is the only thing that’s constant Summary Outline of Marketing Plan Situation Analysis * Company analysis * Objective * Resources * Product-market opportunity, ROI, profitability * Customer analysis Dimensions * Target * Size * Nature of relationship * Competitor Analysis * current or persepctive
* Context analysis * Economic * Political * cultural * Collaborator analysis Marketing Strategy * Product * Place * Promotion * Price Tactical: Chapter Summary: BS Chapter 1-3: What is marketing? Why is Marketing Important * Trendsetting * Encourages research and innovation * Important job market Micro and Macro Views * Micro view * A set of activities performed by organizations and also from a macro view as a social process * Macro view * A social process Is a social process that directs an economy’s flow of goods and services from producers to consumers in a way that effectively matches supply and demand and accomplishes the objectives of society.
* Emphasis on how the whole marketing system works * Marketing helps overcome distance between production sector and consumption sector * Discrepencies in quantity * Assortment * Separation in space * Time * Information * Values * Ownership * Players in the field * In addition to producers and consumers there are intermediaries as well * For example collaborators like advertising agencies, arketing research firms. * Through innovation, economies of scale, and specialization, marketing intermediaries are able to perform marketing functions better than producers or consumers Economy Systems * Command econmy * Government officials decide what and how much is to be produced and distributed by whom, when, to whom, and why. * Command economies are called “planned” economies * Still partially how it is operated in countries like North Korea, cuba, iran. * Market directed economy * Producers and consumers make the macro-level decisions for the whole economy * Price is measure of value Greatest freedom of choice Marketing Evolution * Look at class notes * From simple trade era- production era- sales era – marketing deparment era in the 1930s- 1960s, then in marketing company era, companies have merged with its marketing department or to say that marketing department determines many of the decision making processes * Marketing department * Oversee Research purchasing, production shipping, and sales.
* Tie together those functions] Production versus Marketing Orientation * Production orientation Making whatever products are easy ot produce and then trying to sell them. * Marketing orientation * Carry out the marketing concept * 1. Customer satisfaction, 2 total company effort, 3. Profit * Customer satisfaction guides the whole system * Work together for the different components of the company to come together and guide the whole organization. Marketing Concepts * Take customer’s point of view * Customer value reflects benefits and costs * Customers may not think about it very much * Where does competition fit? Planned Marketing Effect Total company effort to satisfy customers-> offer superior customer value -> attract customers -> satisfy customers -> retain customers -> increase sales to customers -> build profitable relationships with customers Non-Profits * Everything just said also applies to non-profits Micro-Macro Dilemma * What’s good for some firms may not be good for the economy as a whole. * Social responsibility- a firm’s obligation to improve its positive effects on society and reduce its negative effects * Marketing ethics- the moral standards that guide marketing decisions and actions Social Responsibility The marketing concept is so logical that it’s hard to argue * However there is a dilemma for micro strategy as firm interests are not always align with societal interests * Positive social responsibility seems to result in higher positive customer response. Marketing Ethics * The moral standards that guide marketing decisions and actions * Each person has their own * Honesty, responsibility, fairness, respect, citizenship. Chapter 2: Marketing Strategy Planning Marketing management process * 1. Planning marketing activites * 2. Directing * 3. Controlling
Marketing strategy * Target mix- a fairly homogenous group of customers to whom a company whishes to appeal * Marketing mix- controllable variables the company puts together to satisfy this target group Mass versus Target marketing * Production oriented managers see basically everyone as similar and resorts to mass marketing * Mass marketing aims at everyone with the same marketing mix Developing Marketing Mix * 4 ps make up the marketing mix * Product * Place * Promotion * Selling to customers * Personel selling- involves direct spoken communication * Mass selling Communicating with large number of customers at the same time * Sales promotion * Promotional activities that stimulates interest * Involves use of coupons, point of purchase materials, samples, signs, contests * Price * The point of having a marketing mix is to targeting a specific target market * E. G. parents of babies for baby diaper companies is a target market Marketing Goal * Expected profits depend on customer equity * Owners expect financial returns * Increasing financial value of a firm * Profit growth comes from customers * Customers are the key * ????? Adaptation In the Market The watch market in the US * Has shown that different trends require different marketing plans Opportunities in Marketing * Breakthrough opportunities- What ever marketer is looking for. Opportunities that help innovators develop hard-to copy marketing strategies * Competitive advantage- marketing mix that the target market sees as better than a competitor’s mix * Avoid hit or miss marketing- Should seek attractive opportunities * Differentiation- It is important that the marketing mix is distinct from and better than what is available from a competitor Market Penetration
* market penetration Increase sales of a firm’s present products in its present makers * Aggressive marketing mix * Coleman got a 50 percent increase in sales of its outdoor equipment by reaching its target market with special promotional displays. Chapter 3: Evaluating Opportunities in the Changing Marketing Environment the marketing environment * Economic environment * Technological environment * Political and legal environment * Cultural and social environment Objectives * Objectives should set the goals for the firm * Objectives should align all of the different departments of the firm with the main goal of the firm. Mission statement- sets out the basic purpose for being * Company objectives should lead to marketing objectives Analyzing the competitors and the competitive environment * 1. Find target market * Define market * 2. Product place promotion price * 3. Competitive barriers * 4. Likley responses Economic and Technological Environment * The economic environment can change quite rapidly * Far reaching and require changes in marketing strategy * Inflation must be considered in strategy planning * The global economy is connected and exchange rate * Technology affects opportunities * Technology transfers are vital Nationalism can be important factor * The unification of European markets * NAFTA is building trade cooperation Legal environment * Changes in political environment often lead to changes in legal environment * Need to consider the importance of anti-monopoly laws Cultural Environment * Affects how people behave economically as well * Need to focus on country’s growth and income * Usually measured by GDP or GNI, gross national income. * Population trend has shown that population is growing faster in the south. * Baby boomers are retiring, older population is increasing * Some products are also environmentally sensitive
Strategic Buisness Unit * An organizational unit that focuses on product- markets * Produces baked goods for consumers and restaurants Chapter 4: Segmentation and Targeting, Differentiation and Positioning Markets * A generic market- market with broadly similar needs * E. G>Entertainment seekers, HDTV or a Carnival Line * Product market- market with very similar needs and sellers offering various close substitute * Camera market Product Market * 1. Product type, 2. Customer Needs, 4. Customer Types, 4. Geographic Area * Four part definition * 1. Product type Goods and or services that customers want * 2.
Customer needs refer to the needs of the product type * 3. Customer type refers to the final consumer or use of a product type * 4. Geographic area- where a firm competes or plans to compete Generic Market * Only contains customer needs, types and geographic area Targeting * Start with broad generic market * Narrow down to specific homogenous group of product market * Market segement- a homogenous group of customers who will respond the same way to a marketing mix * Good market segments are * 1. Homogenous within * 2. Heterogeneous between * 3. Substantial * 4. Oeprational Targeting approaches Single target market approach * Single target approach- segmenting the market and picking one of the homogenous segements * Segment approach is not going for smaller sales or potential lower profits * They want much larger share of the business in the markets they target * Multiple target market approach- segmenting and choosing two or more segments * Combined target approach- combining two or more submarkets into one larger target market as a basis for one strategy * Tries to increase the size of the market * Qualifying dimensions- are those relevant to including a customer type n a product market * A determining dimensions * Those that actually affect the customer’s purchase of a specific product or brand in the product-market * Keep narrowing down from all product dimensions to determining dimensions that’s product specific * Clustering techniques * Tries to find similar patterns within sets of data * Segement analysis * CRM- sutomer relationship management- * Differentiate the marketing mix- to serve the customer better * Differentiating the marketing mix is able to do a better job of meeting customer needs.
* Positioning * Important targeting technique Refers to how customers think about proposed or present brands in a market * How customers think about proposed and present brands in the market Chapter 5: Final Consumers and Buying Behaviors Discretionary Income- Determines after paying for taxes and necessities Needs- basic forces that motivates a person to do something Wants- needs that learned during ap erson’s life Drive_ strong stimulus encourages action to reduce a need Need Pyramid- * Personal needs * Self-esteem * Accomplishment * Fun * Freedom * Social needs * Love, friendship * Status * Safety needs * Protection, health Physiological needs * Food, liquid, rest, sex Perception * How we gather and interpret information * 1. Selective exposure- our eyes and minds seek out and notice only information that interests us * 2. Selective perception- we screen out or modify ideas, messages, and information * 3. Selective retention- we remember only what we want to remember Learning Process * Drive- what motivates us to do things * Cues- product, signs, ads and other stimuli in the environment * Response- an effort to satisfy a drive * Results in reinforcement * Attitude_ a person’s point of view toward something Belief- a person’s opinion about something * Expectation- An outcome or event that a person looks forward to Dimensions of a person (outside of personality) * Activities * Interests * Opinions * Demographics Empty nesters- people who are grown and are now able to spend their money in various ways Reference group- the people to whom an individual looks when forming attitutdes about a particular topic Opinion leader- is a person who influences others Culture- the whole set of beliefs, attitudes, and way of doings things for a reasonably homogenous set of people Ethnic dimensions- different ethnic groups also have different needs
Problem solving * Extensive problem solving- when people put much effort into deciding how to satisfy a need * Limited problem solving * When consumers put some effort * Routinized response behavior * Regularly selects * Low-invovlement purchases * Purchases that have little importance or relevance to customer * Dissonance- feeling uncertainty about whether correct decision was made * Adoption process- the steps individuals go through on the way to accepting or rejecting a new idea. Chapter 6: Business and Organizational Customers and Their Buying Behavior Business and organizational customers Buyers who buy for resale to produce other goods or services * Producers * Intermediaries * Goernment units * Non profit organizations Many different people influence a decision * First and foremost, their need is to satisfy supply and demand * Purchasing managers- buying specialists for their employers * Most firms have procure departments to help cut costs and provide competitive advantage Multiple buying influence * Means that several people, even management play a part in making a purchase decision * 1. Users- perhaps production line workers and their supervisors * 2. Influences- engineering and R &D 3. Buyers- the purchasing manager who have responsibility for working with suppliers and arranging the terms of sale * 4. Deciders management * 5. Gate keepers- receptionists, secretaries * When selling a good it is important to keep in mind individual needs too * Requisition- a request of buying something * The whole gamut of influences of the buying decision can be summarized as the buying center * most organizational buyers have a strong ethical code in place to not receive any gifts from suppliers vendor analysis * Many firms do vendor analysis * Formal rating of suppliers on all relevant areas of performance
Different kinds of Organizational Buys * New task buying * When a customer has a new need and wants a great deal of ifnormation * Straight rebuy * Routine purchase that has been made before * Modified rebuy * Modifications to an old rebuy Online Buying * Introduced new kinds of buying and selling * Competitive bid * Buyer specifies needs, suppliers compete for their business by offering lower prices * Reverse auctions Negotiated contract buying- means agreeing to contracts that allow for changes in the purchase arrangements Just in time delivery- reliabiltly getting produts to customers just before they need it.
Outsource- contract with an outside firm to produce goods or services rather than to produce them internally. Chapter 7- Marketing Research Marketing research- procedures that develop and analyze new information about a market Marketing information system- which is an organized way of continually gathering, accessing, and analyzing information that marketing managers need to make ongoing decisions * it is vital to have a continual flow of information * It doesn’t pay to wait Intranet- a system for linking computers within a company * Informaiton is therefore available on demand It’s a simple matter to publish new information to a website as soon as it becomes available Data warehouse- a place where databases are stored so that they are available when needed. Search engine- a computer program that helps marketing manager find information tahts needed Marketing dashboard- displays up to minute marketing data in an easy to read format Markeitng model- a statement of relationships among marketing variables * Used to predict trends or how entering a market will have an effect Sales analysis- a detail break down of sale’s analysis
A manager will compare sales data for different salespeople, products, types of customers, or channels of distribution. Marketing ‘metrics” include costs, profitability market share, can also be examined. Marketing research is guided by scientific method- a decision making approach that focuses on being objective and orderly in testing ideas before accepting them Hypohteses- educated guesses about the relationships between things or about what will happen in the future. Marketing research process- five step application of scientific method 1. Defining problem . Analyzing the situation 3. Getting problem-specific data 4. Interpreting the data 5. Solving the problem Marketing managers may must be able to explain what their problems are and what kind of problems they need to solve, they are the consumers of the research. 1. Identify the real problem area and what information is needed. It is important to therefore analyze the situation afterwards 2. Situation analysis is the informal study of what information is already available in the problem area a. Government data is free and private data is costly 3.
Problem specific data: qualitative research seeks in-depth, open ended reponses, not yes or no answers b. Focus group interview- involves interviewing 6 to 10 people in an informal group setting. Also uses open-ended questions. Group interaction c. Quantitative research- which seeks structured response that can be summarized in numbers. d. Response rate- the percentage of people contacted who didn’t complete them e. Telephone surviews fast and effective f. Personal interview surveys- more expensive but more indepth g. Observing is important- a method of collecting data- focuses on a well-defined problem.
Researchers try to use or record what the subject does naturally. h. Observation method is used to check how well a frnachisee is performing i. For example Krispy Kreme sends secret customers in. j. Consumers panels- a group of consumers who provide information on a continuing basis k. Experimental method- researchers compare the reponses of tow or more groups that are similar except on the characteristic being tested 4. Interpreting data: Analyze what it all means l. Statistical packages that analyzes the data m. Often times a population cannot be taken i. Uses sample to be representative . Validity concerns- the extent to which data measures what iti si intended to measure o. Ethic involved- a lot of times data is withheld in case of unfavorable results 5. Solving the problem p. Results to make marketing decisions Chapter 8: Product Decisions Looking at products * Look at the product through the eyes of the customers * What companies sell are pieces combined together, what they really sell are satisfaction or benefits to the customers. * Product: need-satisfying offering of a firm * Quality- a product’s ability to satisfy a customer’s needs or requirements * Overview Product idea * Physical good/service * Experience * Features * Benefits * Quality level * Installation * Instructions * Product line * Branding * Indivudal or family * Manufacturer or dealer * Packaging * Protecting * Promoting * Enahncing product * Warranty * None * Limited * Full * Extended * Product classes * Consumer product classes * Business product classes * It is important to mix blend of physical good and service * E. G. Panasonic added Plasma Concierge service to supports it product line because that was an important quality that they wanted Goods versus Services Goods are tangible * Services are not * Goods are typically mass produced in a factory far away from the customer * It is hard to achieve economies of scale with personal services Product assortment- is the set of all product lines and individual products that a firm sells * Product line is a set of individual products that are closely related * Sara lee has many product lines in its product assortment- including beverages, luncheon meats, desserts, insecticides * Individual product * A particular product within a product line Branding- Means the use of a name, term, symbol, or design Branding means the use of a name, term, symbol or design, or a combination of these * Brand name is a word letter or a group of words or letters * Trademark includes only those words, symbols or marks that are legally resgistered for use by a single company * Service mark- is the same as a trademark except that it refers to a service offering * FedEX printed in a certain way it becomes a trademark * It can be a symbol Conditions to favorable branding 1. The product is easy to label and identify by brand or trademark 2. The product quality is easy to maintain and the best value for the price 3.
Dependable and widespread availability is possible. When customers start using a brand, they want to be able to continue using it 4. Demand is strong enough that the market price can be high enough to make the branding effort profitable 5. There are economies of scale. If the branding is really successful, costs should drop and profits should increase 6. Favorable shelf locations or display space in stores will help. This is something retailers can control when they brand their own projects Brand familiarity * Brand familiarty- means how well customers recognize and accept a company’s brand.
The degree of brand familiarity means how well customers recognize and accept a company’s brand * Brand ejection- brand rejection means that potential customers won’t buy a brand unless its image is changed * Brand nonrecongition- means final consumers don’t recognize a brand a t all, * Even if consumers can’t recall the brand without help, they may be reminded when they see it in a store among other less familiar brands * Brand preference- which means that target customers usually choose the brand over other brands * Brand insistence- means customers insist on a frim’s branded product and are willing to search for it * Brand perefernce- which means that target customers usually choose the brand over other brands * Brand recognition means customer remembers the brand * Because its costly to build brand recognition, firms prefer to qcquire established brands rather than to build their own * Brand equity- the value of a brands’ over all strength in the market Protecting brand names Lanham Act- spells out what kinds of marks can be protected and the exact method of protecting them * Counterfeiting is accepted in some cultures, counterfeiters may make unauthorized copies * Counterfeit products cause a brand to lose sales and jeopardize its reputation * Family brand0 the same brand name for several products- or idnivdual brands for each product, Keebler snakc food products and Sear’s Kenmore appliance * Licensed brand- a well known brand that sellers pay to a fee to use * Individual brands- separate brand names for each product * Generic products- products that have no brand at all other than identification of their contents and the manufacturer or intermediary Individual Brands * Manufactuerer barnds are brands created by producers * Dealer brands, private brands are brands created by intermediaries Battle of brands * Competiton between dealer brands and manufacturer brands * Manufacturer brands were much more popular dealer brands * Dealer brands continue growing Enhancing product * Packaging- involves promoting, protecting, and enahcning the product
* Meeting customers needs Some clever packaging can add conveneicnce such as Cambpell’s Hand held soup * Packaging can also send a message, a good package can give the firm a promotional effect * Packaging can also lower distribution cost * Save space and weight so they are easier to transport * It can reduce storing costs by cutting breakage spoilage and theft * Universal product code * Identifies each product with marks readable by electronic scanner * Speed checkout process and reduce need to mark the price on every item * Excess packaiging can hurt the environment * Many firms are taking steps to preserve the environment * Federal Fair Packaging and Labeling Act * Requries consumer goods be clearly labeled in easy ot understand Warranty * Explains what the seller promises about its product US common law says that producers must stand behind their products, even if they don’t offer a specific warranty * Magnuson-Moss Act- says that producers must provide a clearly written warranty if they choose to offer any warranty * Warranty support can be costly Product classes * All products fit into one of two broad groups * Consumer products are rpoducts meant for final consumer * Business products are products meant to be used in producing other products * Consumers buy it to use in their ktichens * Food processing companies and restaurants buy it in large quantities as an ingredient in products that they sell. Consumer product classes * Convenience products Products consumer needs but isn’t willing to spend much time or effort shopping for * Staples= products brought routinely without much thought * Impulse products- products that are brought quickly * Emergency products- are products that are purchased immediately when the need is great * Shopping products are products that a customer feels are worth the time and effort to compare with competing products * Homogenous shopping products are products that consumers feel the same and wants the lowest price for example, consumers, television sets, washing machines. * Heterogeneous shopping products- products the customer sees as different and wants to inspect for quality and suitability * Specialty products What customer really wants and makes a special effort to find * Unsought products * Products that potential customers don’t yet want to know that they can buy * Reguarly un sought products- gravestone, life insurance, stay unsought but not unbought for ever
* Difference between consumer demand and business demand is derived demand * Business products derives from the demand for final consumer products * Tax treatment affects buying too * An expense item is a product whose total cost is treated as a business expense in the year its purchased * A capital item is a long-lasting product that can be used and depreciated for many years Business Product classes * Installations Buildings, land rights * Installations are boom or bust business, heavily dependent on interest rates and growth periods * Accessories * Short lived capital items- tools and equipment used in production or office activities * Raw amterials * Unprocessed expense items such as logs, iron core, and wheat * Components * Such as car parts * Supplies * Expense items that do not become part of a finished product * Professional services are specialized services that support a firm’s operations Chapter 9: Product Life cycle * Product life cycle descrbies the stages a really new product idea goes through from beginning to tend * Market introduction Consumers don’t even know the product, it takes time for customers to learn that the product is available. Most companies experience losses during the introduction stage * Market growth * Industry sales grow fast * Industry profits rise and then start falling * Toward the end of this stage when industry profits begin to decline * Market maturity * Industry sales level off and competition gets tougher * New firms may even enter at this stage * Sales decline * New products replace the old. * Product life cycles vary in length * For fashion, fads- an idea thatis only fashionable only to a certain group and these groups are very fickle about it. Product life cycles is concerned with new types of products in the market, not just what happens to an individual brand * FTC- federal government agency says that a product is only new for six months * Products move fast
* A new product will move through stages of life scycle depending on certain characteristics * Comparative advantage * Compatible with the values and experiences of target customers * Early birds usually make profits * Firms must use marketing mixes that will make the most of the market growth stage when prfoits are highest * During growth stage competitors rapidly introduce new products * Fashion * Fashion related products havevery short fashion cycles * Takes about 2 weeks for a new concept to having items on the rack. Planning the cycle affects strategy planning * Fad * Is an idea thati s fashionable only to a certain groups who are enthusiastic about it * Lord of reings plastic figure or Toymax paintball pack are fads but do well during a short lived cycle * New products sales may not take off. * Even small advantages can make a big difference. * Simply more successful at promotion * How to revamp product cycle * Improve product * Make a new one * E. g. Tide has continued to change * Focused on changes in features * Product improvement can extend the cycle. * E. g. develop new strategies * Teflon resin was used as cookware lining * However found new uses Phasing out dying products * New products * New I nmany ways * Making an easier to grip Gatorade is new * FTC * Controls how long an item can be called new * New item development * 1. Idea generation * Formulate procedure to generate a continuous flow of ideas * Ideas can come from company’s own sales or production staff * Firms clso use reverse engineering * 2. Screening * Swot analysis product market screening criteria * Thorough understanding of compnay’s objectives along with strength and weaknesses anlaysis * A good idea should eventually lead to a product that will give the firm a competitive * Safety must be considered Consumper product safety act * Encourage safety in product design and better quality control. * Product liability must also be considered * ROI return on investment is also an important part * 3. Idea evalaution * Concept testing * Getting reactions from customers about how well a new-product idea fits their needs
* Product planners must think about also size of potential markets * 4. Development * Product ideas that survive screening must be analyzed further * Computer aided design, designers can develop lifelike 3-D colors * 5. Commercialization * Putting a product on the market is expensive * Culture of innovation is very important For example Google allows its employees of freedom to spend 20 percent of time working on new ideas * Product managers * Manage specific products formerly handeld by an advertising manager * Their major responsibility is promotion * Several product managers serve under marketing manager * Managing product quality * Total quality management * Philosophy that everyone in the company is concerned with the quality of the product * The idea of identifying customer needs and doint things right the first time is obvious * Continuous improvement * Sorting things that have gone right and things gone wrong. * Saly the dragons first * Pareto chart- a graph that shows the number of times a problem cause occurs Chapter 16 Pricing Price is the maount of money that is charged for something of value * Objectives * 1. How flexible prices will be * 2. Level of prices over the product life cycle * 3. To whom and when discounts nad allowances will be given * 4. How transportation costs will be handeled * Pricing has many dimensions * Price equals something of value * Almost every business transaction in our modern economy involves an exchange of money the Price for something * Pricing objectives should flow from and fit in with company level and marketing objectives * Direct effect on pricing policies as wwel las method used to set prices * Ojbectives oriented Profit oriented * Target return * Maximize return
* As much profit as possible * Sales oriented * Dollar or unit sales growth * Growth in market share * Seeks some level unit of sales dollar sales * Without referring to profit * Many firms seek to gain a specified share of a market * Better economies of scale * The hope is that future volume will satisfy sacrificing some profit in the shrot run * Status quo oriented * Meeting competition * Nonprice competititon * Administered prices * Sonciously set price * Instead of letting daily market forces decide their prices * Most firms set their own prices * Price flexibility One price policy means offering the same price to all customers who purchase produts under sessentially same conditions * Flexible price policy * Means offering same product and quantities to different customers at different prices * Most airlines set a very high list price * Travelers who plan ahead * And then offer at different prices * Too much price cutting however erodes profits * Price level policies * Marketing managers must conscious set price-elvel policy * Skimming policy tries to sell to the top at a high price before aiming at price sensitive customers * Skimming makes money if * Market introduction stage and there are very few substitutes * Customers are not price sensitive * Price skimming usually involves a slow reduction in price overtime. Penetration * Tries to sell the whole market at one low price * This approach might be wise when the elite market is small * This is when the whole demand curve is fairly elastic. * Sony relied on penetration strategy when it battled with Toshiba to introduce next generation optical disk player * Sony had a clear lead and Toshiba threw in the towel on HD products * Low prices do attract customers * Marketers often use introductory price dealing to speed new products onto a market and get customers to try them. * Better product might set a price level thati s low relative to competitors when selling to retailers
* Discount policies Most price structures are built arounda base price or list price * Basic list prices are prices final customers or users normally asked to pay for products * Discounts * Are reduction from list price by a seller to buyers who either give up some marketing function or provide the function themselves * Quantity discounts * Offered to encourage customers to buy in larger amounts * Cumulative quantity discounts * Apply to purchases over a given period * Encourage repeat buying by reducing customers cost for additional * Lowe s might want to give this to contrators * Non cumulative quantity discounts * Apply only to individual orders Seasonal discounts offered to buyers to buy earlier than present demand * Net means that payment for the face value is due immediately * Credit sales are also important to offer credit discounts * Trade discount is a list price reduction given to channel members for the job they are going to do. * Sale price * TEMPORARY DISCOUNT FROM LIST PRICE * Sale pricing encourage immediate buying * Customers give up convenience of buying when they want to buy and buy when the seller wants to sale * Everyday low pricing * Setting a low list price rather than relying on frequient sales. * Allowances * Like discounts are given to final customers or channel members for oding something or accepting less of something * Advertising allowances, giving cuts to retailers to do local advertising * Stocking allowance Given to an intermediary to get shelf space for a product * A producer might offer a retailer cash or free merchandise to stock a new item * Push allowance, PMS * A salesclerk might earn 5 dollars for each model sold * Trade in allowance * Price reduction given for used products when similar products are bought * Retailers are willing to redeem coupons because it increases sales and are paid for handling * Rebates * Refunds to paid to consumers after the purchase
* They are very large but consumers often forget * List price may depend on who pays for shipping * FOB or free on board This means that seller mpays the cost of loading the products onto some vehicle then title the product passes to the buyer. * Buyer pays for freight * FOB shipping point pricing simplifies the seller’s pricing, but it may narrow the market * Zone pricing menas making an average freight charge to all buyers within specific geographic areas, the seller pays the actual freight charges and bills each customer for an average charge * Uniform delivered pricing * Making an average freight charge to all buyers * Freight absorption pricing * Absorbing freight cost so that firm’s delivered price meets that of the nearest competitor * Value pricing Setting fair price ofr a marketing mix that really gives the target market superior customer value * Its focused on good reputation and delivering on promises * Gives customers pleasant surprises * Whole marketing mixes are not the same * Then you can have pricing options * Tiffanys is one of the most expensive jewelry stores in the world * Meeting competitor’s prices may be necessary * In a mature market where there is downward pressure on both prices and profit margins, firms need to offer value prices * Value pricing fits with market oriented strategy planning * Unfair pricing policies * Unfair trade practice acts put a lower limit on prices, especially at the wholesale and retail levels * They have been passed in more than half the states * Seling below cost in these states is illegal Wholesalers and retailers are usually required to take a certain minimum percentage markup over merchandise plsu transportation cost * Practical effort is to protect certain foodretailers from ruinous competition
* Anti dumping * Pricing of a product in a foreign market is below cost of producing it or at a pricel owerin the domestic market. * High prices is ok * Pholy list prices * Are prices customers are shown to be discounted from the list * Price fixing * Competing marketing mix is quite similar when there’s pressure to make agreements with competitors. * Producers may set minimum retial prices * U. S. antimonopoly laws ban price discccrimnation * Price discrimination, selling same products to different buyers at different prices if it injures competitition * Robinson Patman Act Allows price differences if there are cost differences, say for larger quantity shipments or intermediaries * Justification has to be developed before different prices are set. * Price setting * Some firms and most retailers and wholesalers set prices by a markup * Markup percent means percentage f selling price that is added to the cost to get slelling price. * Markups are related to gross margins * Many intermediaries sleect a standard markup and then apply it to all their products * This makes pricing easier * How does a manger decide on a standard markup in the first place? * Set close to the firm’s gross margin * Markup chain * The sequence of markups firm use at different levels in a channel determines the price structure in the whole channel. The markup is figured onth eselling price at each level of the channel.
* Producer-> whole saler-> retailer * An important idea here is the stockturn rate * The number of times the average inventory is sold in a year * Average cost pricing means adding a reasonable markup to the average cost of a product * However it does not take into account cost variations at different levels of output. * Easy to incur loses * Breakeven analysis can evaluate possible prices * Break-even analysis evaluates whether the firm will be able to break even cover all of its costs with a particular price. * Breakeven point- the quantity where the firm’s total cost will equal to its total revenue. BEP= total fixed cost/ fixed cost contribution per unit * The best pricing tool marketers have for looking at costs and revenue at the same time is marginal analysis * Focuses on the changes in total revenue and total cost from selling one more unit to find the most profitable price and quantity. * Pricing strategies continued * Leader pricing * Setting very low pricing is used to promote value give an image of low prices * Bait pricing * Setting some very low prices to attract customers but trying to sell more expensive models once they get to your store * Phscological pricing * A range of pricing that potential customers see as the same * Odd even pricing * Setting pricing that ends in certain numbers * Products selling below 50 often end in 99. * Price lining * Setting a few price levels for a product line and then marking all the items at these prices. * Demand backward pricing ASetting an acceptable final consumer pricing and working backward to what a producer can charge
* Prestige pricing * Setting a rather high price to suggest high quality of status * Full line pricing * Setting prices for a whole line of products * How do this depends on two basic situations a firm is facing. * Complementary product pricing and bundle pricing, setting one price for a set of prdoucts * Bid pricing means offering a specific price for each possible job rather than setting a price that applies for all customers * Easy for buyer harder for seller * Hard to figure out specs or costs * Profit maximization objective seeks to get as much profit as possible Chapter 10, 11 Marketing Strategy Planning Decisions For Place Managers think about Place * Making goods and services vailable in the right quantities and locations * Channel of distribution * Any series of firms or individuals also consider hwo to manage relations among channel members to reduce conflict and improve cooperation * This chapter concludes by considering the desired level of market exposure as well as pproaches for reahing customers in international markets * Place decisions are guided by ideal place objectives * All marketing managers want to be sure that their goods and services are vaialbe in the right quantities and locations * Channel system may be direct or indirect Most basic place decisions is to handle the whole distribution job themselves * Many firms prefer to work directly with final customer * One of the most basic Place decisions producers make is whether to handle the whole distribution job themselves, or use wholesalers retailers and other specialists.
* Direct marketing- direct communications between a seller and individual customer using a promotion method other than face to face personal selling * Direct marketing- primarily concerned with the Promotion era not Place distributions * Consumer products * Indirect marketing is a lot of times the way to go * Consumers are spread around in geographic areas or they like to only go to one distribution chanel to buy * Direct distribution usually requires a significant investment in facilities, people and information technology. * Intermediaries may supply needed information For example, most consumers don’t know how much about the wide variety of home nad auto insurance policies available. * Intermediaries quantity assortment and regrouping * Accumulating involves collecting products from many small producers * Accumulating is very important in certain situations where there are small producers * Bulk-breaking involves divindg larger quantities into smaller quantities as products get closer to the final market. * Sorting means separating products into grades and qualities desired by different target markets * Assorting means putting together a variety of Products to give atarget market what it wants. * Channel relationships must be managed * Specialists make channel more efficient Prdouct market commitment- with all members focusing on the same target market at the end of channel and hsaring the various marketing fucntions in appropriate ways. * Specialization can make a channel more efficient- but not if the specialists are so indpenedent that the channel t * Vertical conflict * Between firms at different levels in channel distribution * Horizontal conflicts * Occur between firms at the same level in the channel of distribution
* Channel captain- a manager who helps direct the activities of a whole channel and tries to avoid or solve channel conflicts * Somestimes producers lead channel distribution * Sometimes retailers lead channel distribution Vertical marketing systems * Are channel systems in which the whole channel focuses on the same target market at the end of the cannel. * Corporate channel systems- corporate ownership all along the channel we might say that the firm is going direct * Vertical integration acquiring firms at different levels of channel activity * Contractual channel systems- the channel members agree by contract to cooperate with each other * With both of these system, the members retain some of the flexibility of the traditional channel system. * Contractual channel systems- the channel members agree by contract to cooperate with each other. Best channel should achieve market exposure * Ideal market exposure makes a product available widely enough to satisfy target customer’s needs but not exceed them * Intensive distribution is selling a product through all responsible and suitable wholesalers and retailers who will stock the product * Selective distribution is selling through only those itnermediaries who will give special attention * Avoid selling to wholesalers that place orders that are too small, too many returns, not in position to do a good job * 80/20 rule, 80 percent of a company’s sales often come from only 20 percent of the customers until it becomes more selective *
Exclusive distribution is good in the beginning but later on they may want to carry more retails * Vertical arrangements may not be legal, a firm has to be able to legally justify any exclusive arragnements. * Exclusive is selling through one intermediary in a particular geographic area. * Consumer products such as batteries are fit towards intensive distribution * Impulse buys are things like batteries. * Trying to achieve the desired degree of market exposure can lead to complex channels of distribution * Firms may need different channels to reach different segments of a broad product-market or to be sure they reach each segment. * Multichannel distribution Occurs when a producer uses several competing channels to reach the same target market. * Reverse channels * Channels used to retrieve products that customers no longer want * Exporting often comes first * Some companies get into international marketing just by exporting * Selling some of what the firm produces to foreign markets * Licensing means selling the right to use some process, trademark patent or other right for a fee or royalty. * Management contracting means that seller provides only management and marketing skills * International markets * Exporting, * Selling of what some firm produces * Get rid fo excess inventory * Why some early efforts are not satisfactory * Joint venture A domestic firm enters into a partnership with a foreign firm * Licensing * Selling right to use some process trademark patent or other right for a royalty or fee * Management contracting
* Selelr provides only management and marketing skills others own production and distribution faicilites * Direct investment * Means a parent firm has a dividison in a foreign market * Gives the parent firm complete control of marketing strategy planning. * Physical distribution Logistics * Logisticis is the transporting, storing, and handling of goods in ways that match target customer’s needs with a firm’s marketing mix * Physical distribution is another name for logistics Customer service level how rapidly and dependably a firm can deliver what they the customers want * Toyota wants to have enough wind hsields delivered to make ars that day. * Physical distribution should be invisible to consumers * Only get their attention is something goes wrong. * Many firms trying to address these complications with e commerce. * Improve service levels and cut costs at the same time. * Physical distribution concept that all transporting storing and product handling activities of a business and whole cahnnel system should be coordinated as one system that seeks to minimize the cost ofdtribution for a given customer service level. * Decide what service level to offer Total distribution cost approach involves evaluating each possible PD system and identifying all the costs of each alternative. * Approach uses the tools of cost accounting and economics. * Coordinating logistics acitviites among firsm * PD functions shared affects the other three Ps especially Price. * If firms in the channel do not plan and coordinate how they will share PD activities, PD is likely to be a source of conflict rather than a basis for competitive advantage. * Supply chain * The complete set of firms and facilities logistics * Internet websites take orders that they can’t fulfill. * Transporting is the marketing function of moving goods Transportin can be costly * Limit the target markets a marketing manager can serve * Governments may influence transportation
* Railroads are still the workhorse of the US transportation system * Flexibility and speed of trucks make them better at moving small quantities for shorter distances. * Pipeline and rail are cheap * Turck and air are high * Total cost of airlines may be lower though * Containerization, grouping individual items into economical shipping quantity and sealing them into protective ocntainers for transit. * Some containers are as large as truck bodies. * Piggyback service- laoding truck trailers onto railcars * Storing Storing is the marketing function of holding goods so they’re vailable when needed * Inveotry amount of goods being stored * Storing varies the channel system * Major function of some intermediaries * Goods are stored at a cost * Storing can increase value of goods, but storing always involves costs too * Interest expense, cost of storage facilities, handling costs, costs of damage products, costs of risks, costs of inventory * Specialized storing facilities may be required * Private warehouses * Public warehouses * Distribution center * Special kind of warehouse designed to speed the flow of goods and avoid unnecessary storing costs. Chapter 12 Retailer’s strategy * Discussion of strategy planning for retailers * Retailers must create a marketing mix that provides value for a target market * Retailing covers all the activites involved in the sale of products to final consumers * Retailers range from large chains of specialized stores to individual merchants like woman who sells baskets from aon open stall * Retailers deal directly with final consumers
* Retailers whole offering is its product. * Consumers have reasons to buy * Whole offering * Including assortment of goods and serices * Advise from salespeople or a website * Convenience of shopping * Hours its available Needs from retailer * Convenience * Product selection * Special services * Fairness in dealings * Helpful information * Prices * Social image * Shopping atmosphere * Strategy requires carefully set policies * Retailer should consciously make decision that set policies on all of the preceding issues. * Consumer relate to segementation and position * Different types of retailers emphasize different strategies * General stores * Which carried eanything they could sell in volume were the main retailers in the United States. * Single line and limited line stores * Specialize in certain lines of related products rather than a wide assortment * Specialty shop A type of conventional limited line store- usually small and has adistinct personality * Sell shopping products such as high quality goods, exclusive clothing, cameras, or even antqiues. * Mass merchandising concept * Which says that retailers should offer low prices to get faster turn over rates and greater sales volume * Supermarkets have started this * Discount houses offered hard goods at substantial price cuts to customers who would go to discounter’s low rent store pay cash and take care of service or repair problems. * Mass merchandisers are large self service stores with many department that emphasize soft goods and staples * Walmart and target have checkout counters in front and little sales help on the flore. * They grow rapidly * Supercenter All items that consuers purchase routinely * Meijer * Target * Walmart * Single line mass merchandisers are coming strong * Toys R Us, Ikea, Home Depot, Best Buy , and Staples attract large number of customers with their large assortment and lwo prices in a specific product category * Convenience fodo stores are a convience oriented variation fo the conventional limited line food stores. * Automatic vending * Is selling and delivering products through vending machines
* Vending machine sales account for only about 1. 5 percent of toal us sales * Door to door selling, telephone and direct mail retailing allow for scustomers to shop at home. * Retailing on the internet Internet usage continues to rise and consumer and e commerce purchases have grown at a fast rate. * Internet consuemrs cant really inspect a product. * The costs are sometimes misleading * Retailers are refining their online efforts * Supplement their stores and other promotion and to test online retail foremat. * Retailers take a strong multichannel approach and use their websites to complement their stores or catalogs. * Wheel of retailing theory * Says that new types of retailers enter the market as low status low margin and low price * Involve into conventional retailers * Scrambleed merchandising, carrying products that they can sell profitabily * Most retialers face competitive pressure A large number of retailers suggest that the field of retailing is a small business * Cooperative chains are retailer sponsored groups, formed by independent retailers * Voluntary chains are wholesaler sponsored groups that work with independent retailers * Franchinse operation franchisor develops a good marketing strategy and retail frachise holders carry out the strategy with their own units. * Each frachinse holder benefits from its relationship wit htel arger company Promotion * Communciating information between seller and potential buyer * Personal selling- involves direct spoken communication * Mass selling is communicating with large number of potential customers at the same time * Advertising is any paid for of non personal presentation of ideas, goods, or services. Publicity unpaid presentation * Sales promotion * Refer to promotion activities other than advertising publicity and personal selling * Advertising managers * Manage their companys mass selling effort * Public relations * Communication with non customers * Sales promotion manager * Should * Integrated marketing communications * The intentional coordination of every communication from affirm to a target customer. * Overall objective is to affect behavior * Promotion objectives must be clearly defined * Informing persuading, and reminding * Source- encoding – message channel – decoding- receiver- feedback * Message channel the carrier of message
Cite this Marketing 101 Book Notes
Marketing 101 Book Notes. (2016, Dec 06). Retrieved from https://graduateway.com/marketing-101-book-notes/