Marketing Management By Philip Kotler 719 Slides 1234238345990514 2

PowerPoint by Milton M. Pressley Creative Assistance by D. Carter and S. Koger 1-1www.bookfiesta4u.com

Chapter 1Defining Marketing for the21st Centuryby PowerPoint by Milton M. Pressley University of New Orleans 1-2 www.bookfiesta4u.com

Kotler onMarketingThe future is not ahead of us. It has already happened. Unfortunately, it is unequally distributed among companies, industries and nations. 1-3 www.bookfiesta4u.com

Chapter ObjectivesIn this chapter we will address the followingquestions: What is the new economy like? What are the tasks of marketing? What are the major concepts and tools of marketing? What orientations do companies exhibit in the marketplace? How are companies and marketers responding to the new challenges? 1-4 www.bookfiesta4u.com

The New EconomySubstantial increase in buying powerA greater variety of goods and servicesA greater amount of information aboutpractically anythingA greater ease in interacting and placingand receiving ordersAn ability to compare notes on productsand services 1-5 www.bookfiesta4u.com

The New EconomyWebsites can provide companies withpowerful new information and saleschannels.Companies can collect fuller and richerinformation about markets, customers,prospects and competitors.Companies can facilitate and speed upcommunications among employees.Companies can have 2-way 2-communication with customers andprospects 1-6 www.bookfiesta4u.com

The New EconomyCompanies can send ads, coupons,samples, information to targetedcustomers.Companies can customize offerings andservices to individual customers.The Internet can be used as acommunication channel for purchasing,training, and recruiting.Companies can improve logistics andoperations for cost savings whileimproving accuracy and service quality. 1-7 www.bookfiesta4u.com

The three major challenges faced bybusinesses today are globalization,advances in technology, and deregulation.Which of these affords the greatestopportunity for established businesses?Which affords the greatestopportunities for newbusinesses? Why? 1-8 www.bookfiesta4u.com

Marketing TaskTen rules of radical marketing The CEO must own the marketing function. Make sure the marketing department starts small and flat and stays small and flat. Get face to face with the people who matter most – the customers. Use market research cautiously. Hire only passionate missionaries. 1-9 www.bookfiesta4u.com

Marketing Task Love and respect your customers. Create a community of consumers. Rethink the marketing mix. Celebrate common sense. Be true to the brand.Three stages of marketing practice Entrepreneurial Marketing Formulated Marketing Intrepreneurial Marketing 1-10 www.bookfiesta4u.com

The Scope of Marketing Marketing: typically seen as the task of creating, promoting, and delivering goods and services to consumers and businesses. 1-11 www.bookfiesta4u.com

1. Negative A major part of the market dislikes the demand product and may even pay a price toTable 1.1 avoid it—vaccinations, dental work, it—Demand vasectomies, and gallbladder operations, for instance. Employers haveStates and a negative demand for ex-convicts and ex-Marketing alcoholics as employees. The marketing task is to analyze why the marketTasks dislikes the product and whether a marketing program consisting of product redesign, lower prices, and more positive promotion can change beliefs and attitudes. 2. No demand Target consumers may be unaware of or uninterested in the product. Farmers may not be interested in a new farming method, and college students may not be interested in foreign-language foreign- courses. The marketing task is to find ways to connect the benefits of the product with people’s natural needs and interests. See text for complete table 1-12 www.bookfiesta4u.com

Can you name a category ofproducts for which your negativefeelings have softened?What precipitatedthis change? 1-13 www.bookfiesta4u.com

The Scope of MarketingPlaces GoodsProperties ServicesOrganizations ExperiencesInformation EventsIdeas Persons 1-14 www.bookfiesta4u.com

The DecisionsMarketers MakeConsumer MarketsBusiness MarketsGlobal MarketsNonprofit andGovernmental Markets 1-15 www.bookfiesta4u.com

Marketing Concepts and Tools Defining Marketing Marketing Marketing management Core Marketing Concepts Target Markets and Segmentation 1-16 www.bookfiesta4u.com

Figure 1-1: A Simple Marketing System 1-17 www.bookfiesta4u.com

Marketing Concepts and Tools Marketplace, Marketspace, and Metamarket 1-18 www.bookfiesta4u.com

Marketing Concepts and ToolsMarketers and ProspectsNeeds, Wants, and DemandsProduct, Offering, and BrandValue and Satisfaction Customer value triad Value Value = Benefits / Costs = (Functional benefits + Emotional benefits) / (Monetary costs + Time costs + Energy costs + Psychic costs) 1-19 www.bookfiesta4u.com

Marketing Concepts and Tools Exchange and Transactions Exchange Transaction Barter Transfer Behavioral response 1-20 www.bookfiesta4u.com

Marketing Concepts and Tools Relationships and Networks Relationship marketing Marketing network Marketing Channels Supply Chain Competition 1-21 www.bookfiesta4u.com

Marketing Concepts and Tools Brand competition Industry competition Form competition Generic competitionMarketing environment Task environment Broad environmentMarketing Program Marketing program Marketing mix 1-22 www.bookfiesta4u.com

Company OrientationsToward the Marketplace Production Concept Product concept Selling Concept Marketing Concept 1-23 www.bookfiesta4u.com

Company OrientationsToward the Marketplace Target Market Customer Needs Stated needs Real needs Unstated needs Delight needs Secret needs 1-24 www.bookfiesta4u.com

Company OrientationsToward the Marketplace Integrated Marketing External marketing Internal marketing 1-25 www.bookfiesta4u.com

Company OrientationsToward the Marketplace Profitability Sales decline Slow growth Changing buying patterns Increasing competition Increasing marketing expenditures 1-26 www.bookfiesta4u.com

Company OrientationsToward the Marketplace Societal Marketing Concept Cause- Cause-related marketing 1-27 www.bookfiesta4u.com

Can you identify the trends that havemade the marketing concept, thecustomer concept, and the societalmarketing concept more attractivemodels for contemporarymarketing managers? 1-28 www.bookfiesta4u.com

How Business andMarketing are Changing Customers Brand manufacturers Store- Store-based retailers 1-29 www.bookfiesta4u.com

How Business and Marketing are ChangingCompany responses and adjustments Reengineering Partner- Partner-suppliers Outsourcing Market- Market-centered E-commerce Global and local Benchmarking Decentralized Alliances 1-30 www.bookfiesta4u.com

How Business and Marketing are ChangingMarketer Responsesand Adjustments Customer relationship Integrated marketing marketing communications Customer lifetime value Channels as partners Customer share Every employee a Target marketing marketer Customization Model- Model-based decision Customer database making 1-31 www.bookfiesta4u.com

Chapter 2Adapting Marketing To TheNew Economyby PowerPoint by Milton M. Pressley University of New Orleans 1-32 www.bookfiesta4u.com

Kotler onMarketingThe Internet willcreate new winnersand bury thelaggards. 1-33 www.bookfiesta4u.com

Chapter ObjectivesIn this chapter, we will address thefollowing questions: What are the major forces driving the New Economy? How are business and marketing practices changing as a result of the New Economy? How are marketers using the Internet, customer databases, and customer relationship management in the New Economy? 1-34 www.bookfiesta4u.com

Adapting Marketing to the New Economy Major Drivers of the New Economy Digitization and Connectivity Disintermediation and Reintermediation Customization and Customerization 1-35 www.bookfiesta4u.com

Procter & Gamble’s Reflect.com site allows customers to design their own beauty products 1-36 www.bookfiesta4u.com

Adapting Marketing to the New Economy Industry ConvergenceHow Business Practices are Changing Organize by product units to organize by customer segments Shift focus from profitable transactions to customer lifetime value Shift focus from financial scorecard to also focusing on the marketing scorecard Shift focus from shareholders to stakeholders 1-37 www.bookfiesta4u.com

Table 2-1: Old Economy vs. New EconomyOld Economy New EconomyOrganize by product units Organize by customer segmentsFocus on profitable transactions Focus on customer lifetime valueLook primarily at financial Look also at marketing scorecardscorecard Focus on stakeholdersFocus on shareholders Everyone does the marketingMarketing does the marketing Build brands through behaviorBuild brands through advertising Focus on customer retention andFocus on customer acquisition growthNo customer satisfaction Measure customer satisfaction andmeasurement retention rateOverpromise, underdeliver Underpromise, overdeliver 1-38 www.bookfiesta4u.com

Adapting Marketing to the New Economy Everyone does the marketing Build brands through performance, not just advertising Customer retention rather than customer acquisition From none to in-depth customer in- satisfaction measurement From over-promise, under-deliver to over- under- under- under-promise, over-deliver over- The New Hybrid 1-39 www.bookfiesta4u.com

Adapting Marketing to the New EconomyHow Marketing Practicesare Changing: E-Business E- E-business E-commerce E-purchasing E-marketingInternet Domains: B2C(Business to Customer) 1-40 www.bookfiesta4u.com

Customers can shop online at Calyx and Corolla or ask for a catalog and shop by phone 1-41 www.bookfiesta4u.com

Adapting Marketing to the New Economy Internet Domains: B2B (Business to Business) 1-42 www.bookfiesta4u.com

Figure 2-1:The Supplier-CustomerRelationship:Traditional andNew EconomyStructures 1-43 www.bookfiesta4u.com

www.transora.com: global online marketplace for the consumer packaged goods industry 1-44 www.bookfiesta4u.com

Adapting Marketing to the New Economy Internet Domains: C2C (Consumer to Consumer) Internet Domains: C2B (Customer to Business) Pure Click vs. Brick and Click Companies Pure- Pure-click companies 1-45 www.bookfiesta4u.com

CarPoint, leading metamediary for car buying, is a pure click company: It exists only on the Web. 1-46 www.bookfiesta4u.com

Adapting Marketing to the New Economy Brick and Click companies 1-47 www.bookfiesta4u.com

Which is more important fordeveloping an e-presence: the agility e-of a pure click company, or the welldefined and readily identifiableresources of a traditionalbrick and mortarcompany? 1-48 www.bookfiesta4u.com

Adapting Marketing to the New EconomyHow Marketing Practices are Changing:Setting Up Web Sites Designing an Attractive Website Seven elements of effective sites Context Content Community Customization Communication Connection Commerce 1-49 www.bookfiesta4u.com

Would you be willing to give up one ormore of the seven elements of an effectiveweb site in order to speed the deploymentof a new company e-commerce site? e-What would the expected trade-offs be trade-between an effective siteand an early webpresence? 1-50 www.bookfiesta4u.com

Attracting and Keeping VisitorsTable 2-2: 2- How can we get more prospects to know and visit our site?Setting How can we use marketing to spread word-of-mouth? word-of-Up a How can we convert visitors into repeaters?Dot-Dot-com How do we make our site more experiential and real?Presence How can we build a strong relationship with our customers? How can we build a customer community? How can we capture and exploit customer data for up-selling up- and cross-selling? cross- How much should we spend on building and marketing our site? Advertising on the Internet What are the various ways that we can advertise on the Internet? How do we choose the right sites for placing our ads or sponsorship? See text for complete table 1-51 www.bookfiesta4u.com

Adapting Marketing to the New Economy Context factors Content factors Getting feedback 1-52 www.bookfiesta4u.com

Adapting Marketing to the New Economy Placing Ads and Promotions Online Banner ads Sponsorships Microsite Interstitials Browser ads Alliances and affiliate programs Push 1-53 www.bookfiesta4u.com

Infogate.com “pushes” targeted content and ads to those who are interested in a product or product category 1-54 www.bookfiesta4u.com

Adapting Marketing to the New Economy Building a Revenue and Profit Model Advertising income Sponsorship income Membership and subscriptions Profile income Product and service sales Transaction commission and fees Market research/information Referral income 1-55 www.bookfiesta4u.com

Adapting Marketing to the New EconomyHow Marketing Practices are Changing:Customer Relationship Marketing Reduce rate of customer defection Increase longevity of customer relationship Enhance growth potential through cross-selling and up-selling cross- up- Make low profit customers more profitable or terminate them 1-56 www.bookfiesta4u.com

Adapting Marketing to the New Economy Focus disproportionate effort on high value customers 1-57 www.bookfiesta4u.com

Table 2-3: Mass Marketing vs. One-to-One MarketingMass Marketing One-to-One Marketing One-to-Average customer Individual customerCustomer anonymity Customer profileStandard product Customized marketMass production offeringMass distribution Customized productionMass advertising Individualized distributionMass promotion Individualized messageOne-One-way message Individualized incentivesEconomies of scale Two- Two-way messagesShare of market Economies of scopeAll customers Share of customerCustomer attraction Profitable customers Customer retention 1-58 www.bookfiesta4u.com

Adapting Marketing to the New Economy Four steps for One-to-One Marketing One-to- Don’t go after everyone, identify prospects. Define customers by their needs and their value to the company. Individual interaction with customers builds stronger relationships. Customize messages, services, and products for each customer. 1-59 www.bookfiesta4u.com

Adapting Marketing to the New Economy Customer Databases and Database Marketing Customer mailing list Business database 1-60 www.bookfiesta4u.com

Adapting Marketing to the New EconomyData Warehouses and Data Mining Using the database To identify prospects To determine target market To deepen customer loyalty To reactivate customer purchases To avoid serious customer mistakes The Downside of Database Marketing 1-61 www.bookfiesta4u.com

Chapter 3Building CustomerSatisfaction, Value, andRetentionby PowerPoint by Milton M. Pressley University of New Orleans 1-62 www.bookfiesta4u.com

Kotler onMarketingIt is no longerenough to satisfycustomers. You mustdelight them. 1-63 www.bookfiesta4u.com

Chapter ObjectivesIn this chapter, we will address thefollowing questions: What are customer value and satisfaction, and how can companies deliver them? What makes a high-performance business? high- How can companies both attract and retain customers? How can companies improve both customer and company profitability? How can companies deliver total quality? 1-64 www.bookfiesta4u.com

Defining Customer Value and Satisfaction Customer Perceived Value (CPV) Total customer value Total customer cost 1-65 www.bookfiesta4u.com

Figure 3-1:Determinantsof CustomerDeliveredValue 1-66 www.bookfiesta4u.com

Defining Customer Value and Satisfaction Total Customer Satisfaction Satisfaction Customer Expectations Delivering High Customer Value Value proposition Value- Value-delivery system Measuring Satisfaction 1-67 www.bookfiesta4u.com

Table 3-1: Tools for Tracking and Measuring Customer SatisfactionComplaint A customer-centered organization makes it easy for customer-and customers to register suggestions and complaints.suggestion Some customer-centered companies-P&G, General customer- companies- Electric, Whirlpool—establish hot lines with toll-free Whirlpool— toll-systems: numbers. Companies are also using Web sites and e-mail for quick, two-way communication. two- Studies show that although customers are dissatisfiedCustomer with one out of every four purchases, less than 5 percent will complain. Most customers will buy less orsatisfaction switch suppliers. Responsive companies measuresurveys: customer satisfaction directly by conducting periodic surveys. While collecting customer satisfaction data, it is also useful to ask additional questions to measure repurchase intention and to measure the likelihood or willingness to recommend the company and brand to others. See text for complete table 1-68 www.bookfiesta4u.com

Would you feel more brand loyalty for acompany that tried to immediately resolvea complaint via E-mail, or a company that E-had a customer service representative callwithin two business days toresolve the problem overthe phone? 1-69 www.bookfiesta4u.com

Premier Dell.com is a special business-oriented part of the business-Dell Web site that allows customers to interact with Dell and customize all phases of doing business with Dell. 1-70 www.bookfiesta4u.com

The Nature of HighPerformance Business High- High-performance business 1-71 www.bookfiesta4u.com

Figure 3-2: The High Performance Business 1-72 www.bookfiesta4u.com

The Nature of HighPerformance BusinessStakeholdersProcessesResources Core competency Distinctive capabilitiesOrganization and Organizational Culture Organization Corporate culture Scenario analysis 1-73 www.bookfiesta4u.com

Can you name a company that haschanged the public’s perception oftheir corporate culture? Has thiseffectively rehabilitated thatcompany’s image? 1-74 www.bookfiesta4u.com

Delivering Customer Value and Satisfaction Value Chain Value chain 1-75 www.bookfiesta4u.com

Figure 3-3: The Generic Value Chain 1-76 www.bookfiesta4u.com

Delivering Customer Value and Satisfaction BenchmarksCore Business Processes The market sensing process The new offering realization process The customer acquisition process The customer relationship management process The fulfillment management process 1-77 www.bookfiesta4u.com

Delivering Customer Value and Satisfaction The Value Delivery Network (Supply Chain) 1-78 www.bookfiesta4u.com

Figure 3-4:LeviStrauss’sValue-DeliveryNetwork 1-79 www.bookfiesta4u.com

Attracting and Retaining Customers Partner relationship management (PRM) Customer relationship management (CRM) 1-80 www.bookfiesta4u.com

Saturn has gained a customer loyalty rateof more than 60% by fundamentallychanging the buyer-seller relationship. buyer-Can you think of another company thathas made a change of similarmagnitude? Have theyhad similar results? 1-81 www.bookfiesta4u.com

Attracting and Retaining Customers Attracting Customers Computing the Cost of Lost Customers Customer churn Lifetime value 1-82 www.bookfiesta4u.com

On the Lands’ End Web site, customers can click abutton to talk with a customer service representative 1-83 www.bookfiesta4u.com

Attracting and Retaining CustomersThe Need for Customer RetentionMeasuring CustomerLifetime Value (CLV)Customer Relationship Management(CRM): The Key Customer equity Three drivers of customer equity Value equity Brand equity Relationship equity 1-84 www.bookfiesta4u.com

Figure 3-5:TheCustomer-DevelopmentProcess 1-85 www.bookfiesta4u.com

Attracting and Retaining Customers Five levels of investment in customer relationship building Basic marketing Reactive marketing Accountable marketing Proactive marketing Partnership marketing 1-86 www.bookfiesta4u.com

Figure 3-6: Levels of Relationship Marketing 1-87 www.bookfiesta4u.com

Attracting and Retaining Customers Forming Strong Customer Bonds: The Basics Cross- Cross-departmental participation Integrate the Voice of the Customer into all business decisions Create superior offering for the target market 1-88 www.bookfiesta4u.com

Attracting and Retaining Customers Organize and make accessible a database of customer information Make it easy for customers to reach the appropriate personnel Reward outstanding employees Adding Financial Benefits Frequency programs (FPs) 1-89 www.bookfiesta4u.com

The H.O.G. Web site presents the benefits of joining. 1-90 www.bookfiesta4u.com

Attracting and Retaining Customers Adding Social Benefits 1-91 www.bookfiesta4u.com

Good Things Bad ThingsTable 3-2: Initiate positive phone calls Make only callbacksSocial Actions Make recommendations Make justificationsAffecting Candor in language Accommodative languageBuyer-Seller Use phone Use correspondenceRelationships Show appreciation Wait for misunderstandings Make service suggestions Wait for service requests Use “we” problem-solving problem- Use “owe-us” legal language “owe- language Only respond to problems Get to problems Use long-winded long- Use jargon or shorthand communications Personality problems aired Personality problems hidden Talk of “our future together” Talk about making good on Routinize responses the past Accept responsibility Fire drill and emergency Plan the future responsiveness Shift blame Rehash the past 1-92 www.bookfiesta4u.com

Attracting and Retaining Customers Adding Structural Ties Create long-term contracts long- Charge lower price to high volume customers Turn product into long- long-term service 1-93 www.bookfiesta4u.com

Customer Profitability,Company Profitability, andTotal Quality Management Measuring Profitability Profitable customer 1-94 www.bookfiesta4u.com

Figure 3-7: Customer-Product Profitability Analysis 1-95 www.bookfiesta4u.com

Figure 3-8: Allocating marketing investment according to customer value 1-96 www.bookfiesta4u.com

Customer Profitability,Company Profitability, andTotal Quality Management Increasing Company Profitability Competitive advantage Implementing TQM Total Quality Management Quality 1-97 www.bookfiesta4u.com

Chapter 4Winning Markets ThroughMarket-Market-Oriented StrategicPlanningby PowerPoint by Milton M. Pressley University of New Orleans 1-98 www.bookfiesta4u.com

Kotler onMarketingIt is more importantto do what isstrategically rightthan what isimmediatelyprofitable. 1-99 www.bookfiesta4u.com

Chapter ObjectivesIn this chapter, we examine thefollowing questions: How is strategic planning carried out at the corporate and division levels? How is planning carried out at the business unit level? What are the major steps in the marketing process? How is planning carried out at the product level? What does a marketing plan include? 1-100 www.bookfiesta4u.com

Strategic Planning: Three Key Areas and Four Organization Levels Strategic marketing plan Tactical marketing plan Marketing plan 1-101 www.bookfiesta4u.com

Corporate and Division Strategic PlanningAll corporate headquarters undertakefour planning activities Defining the Corporate Mission Establishing Strategic Business Units (SBUs) Assigning resources to each SBU Planning new businesses, downsizing, or terminating older businesses 1-102 www.bookfiesta4u.com

Corporate and Division Strategic PlanningDefining the Corporate Mission Mission statements define which competitive scopes the company will operate in Industry scope Products and applications scope Competence scope Market- Market-segment scope Vertical scope Geographical scope 1-103 www.bookfiesta4u.com

Can you name a company that hasrecently changed its product scopeor market segment scope in a verypublic way? Was this an expansionor contraction of scope? 1-104 www.bookfiesta4u.com

Corporate and Division Strategic PlanningEstablishing Strategic Business Units(SBUs) 1-105 www.bookfiesta4u.com

Table 4.1: Product-Oriented versus Market-Oriented Definitions of a BusinessCompany Product Definition Market DefinitionMissouri-Missouri-Pacific We run a railroad We are a people-and- people-and-Railroad goods moverXerox We make copying We help improve office equipment productivityStandard Oil We sell gasoline We supply energyColumbia Pictures We make movies We market entertainmentEncyclopaedia We sell encyclopedias We distribute InformationCarrier We make air We provide climate conditioners and control in the home furnaces 1-106 www.bookfiesta4u.com

Corporate and Division Strategic PlanningThree characteristics of SBUs Single business or collection of related businesses that can be planned for separately Has its own set of competitors Has a manager who is responsible for strategic planning and profit 1-107 www.bookfiesta4u.com

The Growth-Share Matrix Growth- Relative market share Four Cells Question Marks Stars Cash Cows DogsSBU StrategiesSBU Lifecycle 1-108 www.bookfiesta4u.com

Can you give an example of a “Star”that skipped “Cash Cow”, and wentstraight to “Dog” status? 1-109 www.bookfiesta4u.com

Corporate and Division Strategic Planning The General Electric Model 1-110 www.bookfiesta4u.com

Table 4-2: Factors underlying Market Attractiveness and Competitive Position in GE Multifactor Portfolio Model: Hydraulic-Pumps Market Rating = Weight (1-5) (1- Value Overall market size 0.20 4 0.80 Annual market growth rate 0.20 5 1. Historical profit margin 0.15 4 0.60 Competitive intensity 0.15 2 0.30Market Technological requirements 0.15 4 0.60Attractiveness Inflationary vulnerability 0.05 3 0.15 Energy requirements 0.05 2 0.10 Environmental impact 0.05 3 0.15 Social-political- Social-political-legal Must be acceptable 1.0 3.70 Market share 0.10 4 0.40 Share growth 0.15 2 0.30Business Product quality 0.10 4 0.40Strength Brand reputation 0.10 5 0.50 Distribution network 0.05 4 0.20 See text for complete table 1-111 www.bookfiesta4u.com

Corporate and Division Strategic Planning Critique of Portfolio Models Planning New Businesses, Downsizing Older Businesses 1-112 www.bookfiesta4u.com

Corporate and Division Strategic Planning Intensive Growth 1-113 www.bookfiesta4u.com

Starbucks’ home page: Customers can request a catalog of Starbucks products, subscribe to a newsletter, and shop online 1-114 www.bookfiesta4u.com

Corporate and Division Strategic Planning Integrative Growth Diversification Growth Downsizing Older Businesses 1-115 www.bookfiesta4u.com

Give an example of a marketsegment where integrative growthwould be preferable to growththrough diversification. Explainwhy one approach is betterthan the other. 1-116 www.bookfiesta4u.com

Business Unit Strategic PlanningBusiness MissionSWOT Analysis External Environment Analysis (Opportunity and Threat Analysis) Marketing Opportunity Buying opportunity more convenient or efficient Meet the need for more information and advice Customize an offering that was previously only available in standard form 1-117 www.bookfiesta4u.com

Give some examples of companiesthat have grown to dominate theirmarket segment by using technologyto make buying opportunities moreconvenient and efficient. 1-118 www.bookfiesta4u.com

Business Unit Strategic PlanningMarketing Opportunity Analysis (MOA) Can the benefits be articulated to a target market? Can the target market be reached with cost- cost- effective media and trade channels? Does the company have the critical capabilities to deliver the customer benefits? Can the company deliver these benefits better than any actual or potential competitors? Will the rate of return meet the required threshold of investment? 1-119 www.bookfiesta4u.com

Figure 4-7: Opportunity and Threat Matrices 1-120 www.bookfiesta4u.com

Business Unit Strategic PlanningInternal Environmental Analysis(Strength/Weakness Analysis)Goal FormationStrategicFormulation Strategy 1-121 www.bookfiesta4u.com

Business Unit Strategic PlanningPorter’s Generic Strategies Overall cost leadership Differentiation Focus 1-122 www.bookfiesta4u.com

Travelocity’s Web site helps the consumer plan thewhole vacation – flights, lodging, and car rental.com 1-123 www.bookfiesta4u.com

Business Unit Strategic PlanningOperational Effectiveness and Strategy Strategic group Strategic alliances 1-124 www.bookfiesta4u.com

Business Unit Strategic PlanningMarketing Alliances Product or service alliances Promotional alliances Logistical alliances Pricing collaborationsPartner RelationshipManagement, PRMProgram Formulation andImplementation 1-125 www.bookfiesta4u.com

Business UnitStrategic Planning Feedback and Control 1-126 www.bookfiesta4u.com

The Marketing Process Steps in the Planning Process The marketing process Analyzing Market Opportunities Developing Marketing Strategies Planning Marketing Programs Managing the Marketing Effort Annual- Annual-plan control Profitability control Strategic control 1-127 www.bookfiesta4u.com

Figure 4-10:FactorsInfluencingCompanyMarketingStrategy 1-128 www.bookfiesta4u.com

Product Planning: The Nature and Contents of a Marketing Plan Contents of the Marketing Plan Executive Summary Current Marketing Situation Opportunity and issue analysis Objectives Marketing strategy Action programs Financial projections Implementation controls 1-129 www.bookfiesta4u.com

Product Planning: The Nature and Contents of a Marketing Plan Sample Marketing Plan: Sonic Personal Digital Assistant Current Marketing Situation Opportunity and Issue Analysis Objectives Action Programs Financial Projections 1-130 www.bookfiesta4u.com

Product Planning: The Nature and Contents of a Marketing Plan Implementation Controls Marketing Strategy Positioning Product Management Pricing Distribution Marketing Communications Marketing Research 1-131 www.bookfiesta4u.com

Chapter 5Gathering Information andMeasuring Market Demandby PowerPoint by Milton M. Pressley University of New Orleans 1-132 www.bookfiesta4u.com

Kotler onMarketingMarketing is becoming a battle based more on information than on sales power. 1-133 www.bookfiesta4u.com

Chapter ObjectivesIn this chapter, we focus on the followingquestions: What are the components of a modern marketing information system? What constitutes good marketing research? How can marketing decision support systems help marketing managers make better decisions? How can demand be more accurately measured and forecasted? 1-134 www.bookfiesta4u.com

The Components of a ModernMarketing Information System Marketing Information System (MIS) 10 useful questions for determining the information needs of marketing managers. What decisions do you regularly make? What information do you need to make these decisions? What information do you regularly get? What special studies do you periodically request? 1-135 www.bookfiesta4u.com

The Components of a ModernMarketing Information System What information would you want that you are not getting now? What information would you want daily? Weekly? Monthly? Yearly? What magazines and trade reports would you like to see on a regular basis? What topics would you like to be kept informed of? What data analysis programs would you want? What are the four most helpful improvements that could be made in the present marketing information system? 1-136 www.bookfiesta4u.com

Internal Record Systems The Order-to-Payment Cycle Order-to- Sales Information Systems Databases, Data Warehouses And Data-Mining Data- 1-137 www.bookfiesta4u.com

Can you name a company that usestargeted mailings to promote newproducts, or regional offerings? 1-138 www.bookfiesta4u.com

The MarketingIntelligence SystemA Marketing Intelligence Systemis a set of procedures and sourcesused by managers to obtaineveryday information aboutdevelopments in the marketingenvironment. 1-139 www.bookfiesta4u.com

What are some of the potentialhazards a company might face byrelying too heavily on distributors,retailers, or otherintermediaries formarket intelligence? 1-140 www.bookfiesta4u.com

The Marriott Vacation Club International Web sitegives interested customers the opportunity to sell themselves on the Marriott offerings 1-141 www.bookfiesta4u.com

CEOExpress.com is a portal to information–a user information–clicks on a listing and is then connected to that site 1-142 www.bookfiesta4u.com

Table 5-1: Secondary-Data SourcesSecondary-Secondary- A. Internal SourcesData Sources Company profit-loss statements, balance profit- sheets, sales figures, sales-call reports, sales- invoices, inventory records, and prior research reports. B. Government Publications • Statistical Abstract of the United States • County and City Data Book • Industrial Outlook • Marketing Information Guide C. Periodicals and Books • Business Periodicals Index • Standard and Poor’s Industry See text for complete table 1-143 www.bookfiesta4u.com

Marketing Research System Marketing Research Suppliers of Marketing Research Engaging students or professors to design and carry out projects Using the Internet Checking out rivals Syndicated- Syndicated-service research firms Custom marketing research firms Specialty- Specialty-line marketing research firms 1-144 www.bookfiesta4u.com

Figure 5-1:The Marketing Research Process 1-145 www.bookfiesta4u.com

Marketing Research System The Marketing Research Process Step 1: Define the Problem, the Decision Alternatives, and the Research Objectives Step 2: Develop the Research Plan Data Sources Research Approaches Observational research Focus group research 1-146 www.bookfiesta4u.com

Marketing Research System Survey research Behavioral data Experimental research Research Instruments Questionnaires Psychological tools Mechanical devices Quantitative measures 1-147 www.bookfiesta4u.com

Table 5-2: Types of Questions A. Closed-end Questions Closed-Name Description ExampleDichotomous A question with two possible answers. In arranging this trip, did you personally phone American? Yes NoMultipleChoice A question with three or more answers. With whom are you traveling on this flight? No one Children only Spouse Business associates/friends/relatives Spouse and An organized tour group childrenLikert scale A statement with which the respondent Small airlines generally give better service than large ones. shows the amount of agreement/ Strongly Disagree Neither agree Agree Strongly disagreement. disagree nor disagree agree 1_____ 2 _____ 3_____ 4_____ 5_____ See text for complete table 1-148 www.bookfiesta4u.com

Marketing Research System Sampling Plan Sampling unit Sample size Sampling procedure 1-149 www.bookfiesta4u.com

www.wansink.com is a consumer psychology Web site set up by Dr. Brian Wansink of the University of Illinois 1-150 www.bookfiesta4u.com

Table 5-3: Probability and Nonprobability SamplesA. Probability SampleSimple random sample Every member of the population has an equal chance of selectionStratified random The population is divided into mutuallysample exclusive groups (such as age groups), and random samples are drawn from each groupCluster (area) sample The population is divided into mutually exclusive groups (such as city blocks), and the researcher draws a sample of the groups to interview Continued on next slide . . . 1-151 www.bookfiesta4u.com

Table 5-3: Probability and Nonprobability Samples (Continued)B. Nonprobability SampleConvenience sample The researcher selects the most accessible population membersJudgment sample The researcher selects population members who are good prospects for accurate informationQuota sample The researcher finds and interviews a prescribed number of people in each of several categories 1-152 www.bookfiesta4u.com

Marketing Research System Contact Methods Mail questionnaire Personal interviewing Arranged interviews Intercept interviews Online methods Click-stream Cookies Automated telephone surveys 1-153 www.bookfiesta4u.com

Marketing Research System Step 3: Collect the Information Step 4: Analyze the Information Step 5: Present the Findings Step 6: Make the Decision 1-154 www.bookfiesta4u.com

Table 5-4: The Seven Characteristics of Good Marketing Research1. Scientific Effective marketing research uses the principlesmethod of the scientific method: careful observation, formulation of hypotheses, prediction, and testing.2. Research At its best, marketing research developscreativity innovative ways to solve a problem: a clothing company catering to teenagers gave several young men video cameras, then used the videos for focus groups held in restaurants and other places teens frequent.3. Multiple Marketing researchers shy away from overreliancemethods on any one method. They also recognize the value of using two or three methods to increase confidence in the results. See text for complete table 1-155 www.bookfiesta4u.com

Marketing Research System Overcoming Barriers to the Use of Marketing Research A narrow conception of the research Uneven caliber of researchers Poor framing of the problem Late and occasionally erroneous findings Personality and presentational differences 1-156 www.bookfiesta4u.com

Marketing Decision Support System Marketing Decision Support System (MDSS) Marketing and sales software programs BRANDAID CALLPLAN DETAILER GEOLINE MEDIAC PROMOTER ADCAD CONVERSTORY 1-157 www.bookfiesta4u.com

Table 5-5: Quantitative Tools Used in Marketing Decision Support SystemsStatistical Tools1. Multiple A statistical technique for estimating a “best fitting”regression: equation showing how the value of a dependent variable varies with changing values in a number of independent variables. Example: A company can estimate how unit Example: sales are influenced by changes in the level of company advertising expenditures, sales force size, and price.2. Discriminant A statistical technique for classifying an object oranalysis: persons into two or more categories. Example: A large Example: retail chain store can determine the variables that discriminate between successful and unsuccessful store locations.3. Factor A statistical technique used to determine the fewanalysis: underlying dimensions of a larger set of intercorrelated variables. Example: A broadcast network can reduce a Example: large set of TV programs down to a small set of basic program types. See text for complete table 1-158 www.bookfiesta4u.com

Forecasting and Demand MeasurementThe Measures of Market DemandFigure 5-3: NinetyTypes of DemandMeasurement(6X5X3) 1-159 www.bookfiesta4u.com

Forecasting andDemand Measurement Which Market to Measure? Market Potential market Available market Target market (severed market) Penetrated marketA Vocabulary for Demand Measurement Market Demand Market share Market penetration index Share penetration index 1-160 www.bookfiesta4u.com

Forecasting andDemand MeasurementFigure 5-4: Market Demand Functions 1-161 www.bookfiesta4u.com

Can you name a market segmentwith a low penetration index? Ahigh penetration index? Can youthink of a market where the highpenetration index might be amisleading indicator? 1-162 www.bookfiesta4u.com

Forecasting and Demand Measurement Market Forecast Market Potential Product penetration percentage Company Demand Company Sales Forecast Sales quota Sales budget Company Sales Potential 1-163 www.bookfiesta4u.com

Forecasting and Demand MeasurementEstimating Current demand Total Market Potential Area Market Potential Market- Market-Buildup Method 1-164 www.bookfiesta4u.com

Table 5-6: Market-Buildup Method Using SIC Codes (c) (a) Potential Annual Number Sales in (b) of Lathe Sales Market Millions Number of Per $1 Million PotentialSIC of $ Establishments Customer Sales (a x b x c)2511 1 6 10 60 5 2 10 1002521 1 3 5 15 5 1 5 25 30 200 1-165 www.bookfiesta4u.com

Forecasting and Demand Measurement Multiple-Factor Index Method Brand development index (BDI) 1-166 www.bookfiesta4u.com

Table 5-7: Calculating the Brand Development Index (BDI) (a) (b) Percent of Percent of U.S. Brand U.S. Category BDITerritory Sales Sales (a ÷ b) x 100Seattle 3.09 2.71 114Portland 6.74 10.41 65Boston 3.49 3.85 91Toledo .97 .81 120Chicago 1.13 .81 140Baltimore 3.12 3.00 104 1-167 www.bookfiesta4u.com

Forecasting and Demand Measurement Industry Sales and Market Shares Estimating Future Demand Survey of Buyers’ Intentions Forecasting Purchase probability scale 1-168 www.bookfiesta4u.com

Forecasting and Demand Measurement Composite of Sales Force Opinions Expert Opinion Group discussion method Pooling of individual estimates Past-Sales Analysis Time-series analysis Exponential smoothing Statistical demand analysis Econometric analysis Market-Test Method 1-169 www.bookfiesta4u.com

Chapter 6Scanning the MarketingEnvironmentby PowerPoint by Milton M. Pressley University of New Orleans 1-170 www.bookfiesta4u.com

Kotler onMarketingToday you have to run faster to stay in place. 1-171 www.bookfiesta4u.com

Chapter ObjectivesIn this chapter, we focus on twoquestions: What are the key methods for tracking and identifying opportunities in the macroenvironment? What are the key demographic, economic, natural, technological, political, and cultural developments? 1-172 www.bookfiesta4u.com

Analyzing Needs and Trends in the Macroenvironment Trend Fad Megatrends 1-173 www.bookfiesta4u.com

Given the definitions for fads,trends, and megatrends presented inthe text, how would you define youronline activities? Can you identifyan online trend that is likelyto grow into a megatrend? 1-174 www.bookfiesta4u.com

Identifying and Responding to the Major Macroenvironment Forces The substantial speedup of international transportation, communication, and financial transactions, leading to the rapid growth of world trade and investment, especially tripolar trade (North America, Western Europe, Far East) The movement of manufacturing capacity and skills to lower cost countries. The rising economic power of several Asian countries in world markets. The rise of trade blocks such as the European Union and NAFTA signatories. 1-175 www.bookfiesta4u.com

Identifying and Responding to the Major Macroenvironment Forces The severe debt problems of a number of countries, along with the increasing fragility of the international financial system. The increasing use of barter and countertrade to support international transactions. The move toward market economies in formerly socialist countries along with rapid privatization of publicly owned companies. The rapid dissemination of global lifestyles. The gradual opening of major new markets, namely China, India, eastern Europe, the Arab countries, and Latin America. 1-176 www.bookfiesta4u.com

Identifying and Responding to the Major Macroenvironment Forces The increasing tendency of multinationals to transcend their locational and national characteristics and become transnational firms. The increasing number of cross-border corporate cross- strategic alliances–for example, MCI and British alliances– Telecom, and Texas Instruments and Hitachi. The increasing ethnic and religious conflicts in certain countries and regions. The growth of global brands in autos, food, clothing, electronics. 1-177 www.bookfiesta4u.com

Identifying and Responding to the Major Macroenvironment Forces Demographic Environment Worldwide Population Growth Population Age Mix Ethnic and Other Markets 1-178 www.bookfiesta4u.com

Can you identify one or morenations whose populations hold thepromise of huge potential marketsfor consumer goods? How havepressures from potential marketersto these untapped consumergroups driven the politicaldiscussion on a nationaland international level? 1-179 www.bookfiesta4u.com

Identifying and Responding to the Major Macroenvironment Forces Educational Groups Household Patterns Geographical Shifts in Population From a Mass Market to Micromarkets 1-180 www.bookfiesta4u.com

Identifying and Responding to the Major Macroenvironment Forces Economic Environment Income Distribution Savings, Debt, and Credit Availability 1-181 www.bookfiesta4u.com

Identifying and Responding to the Major Macroenvironment Forces Natural Environment Shortage of Raw Materials Increased Energy Cost Anti- Anti-Pollution Pressures Changing Role of Governments 1-182 www.bookfiesta4u.com

Identifying and Responding to the Major Macroenvironment Forces Technological Environment Accelerating Pace of Change Unlimited Opportunities for Innovation 1-183 www.bookfiesta4u.com

Identifying and Responding to the Major Macroenvironment Forces Varying R&D Budgets Increased Regulation of Technological Change Political- Political-Legal Environment Legislation Regulating Business Growth of Special-Interest Special- Groups Consumerist movement 1-184 www.bookfiesta4u.com

Identifying and Responding to the Major Macroenvironment Forces Social- Social-Cultural Environment Views of themselves Views of others Views of organizations Views of society Views of nature Views of universe 1-185 www.bookfiesta4u.com

Identifying and Responding to the Major Macroenvironment Forces High Persistence of Core Cultural Values Existence of subcultures Subcultures Shifts of Secondary Cultural Values Through Time 1-186 www.bookfiesta4u.com

Chapter 7Analyzing ConsumerMarkets and Buyer Behaviorby PowerPoint by Milton M. Pressley University of New Orleans 1-187 www.bookfiesta4u.com

Kotler onMarketingThe most important thing is to forecast where customers are moving, and be in front of them. 1-188 www.bookfiesta4u.com

Chapter ObjectivesIn this chapter, we focus on two questions: How do the buyers’ characteristics – cultural, social, personal, and psychological – influence buying behavior? How does the buyer make purchasing decisions? 1-189 www.bookfiesta4u.com

Influencing Buyer Behavior Consumer BehaviorCultural Factors Culture Subcultures Diversity marketing Social class 1-190 www.bookfiesta4u.com

Influencing Buyer Behavior Social Factors Reference Groups Reference groups Membership groups Primary groups Secondary groups Aspirational groups Dissociative groups Opinion leader 1-191 www.bookfiesta4u.com

Table 7.1: Characteristics of Major U.S. Social Classes1. Upper Uppers The social elite who live on inherited wealth. They (less than 1%) give large sums to charity, run the debutante balls, maintain more than one home, and send their children to the finest schools. They are a market for jewelry, antiques, homes, and vacations. They often buy and dress conservatively. Although small as a group, they serve as a reference group to the extent that their consumption decisions are imitated by the other social classes.2. Lower Uppers Persons, usually from the middle class, who have (about 2%) earned high income or wealth through exceptional ability in the professions or business. They tend to be active in social and civic affairs and to buy the symbols of status for themselves and their children. They include the nouveau riche, whose pattern of conspicuous consumption is designed to impress those below them. See text for complete table 1-192 www.bookfiesta4u.com

Influencing Buyer Behavior Secondary groups Aspirational groups Dissociative groups Opinion leader 1-193 www.bookfiesta4u.com

Influencing Buyer Behavior Family Family of orientation Family of procreation Roles and Statuses Role Status 1-194 www.bookfiesta4u.com

With the “graying” of the American populace,marketers have begun to shift images andcultural references in advertising from thingsthat are relevant to the twenty-somethings to twenty-images of active seniors, and soundtracksfrom the sixties and seventies. Can youidentify any particularad campaigns that fitthis pattern? 1-195 www.bookfiesta4u.com

Influencing Buyer Behavior Personal Factors Age and Stage in the Life Cycle Family life cycle Occupation and Economic Circumstances 1-196 www.bookfiesta4u.com

In recent years, many organizations have“provided” televisions with limited programmingaccess for use in K-12 classrooms. Do these K-entities have a moral obligation to avoid overtmarketing to their captive audiences, or is this avalid tool for introducing offerings to futureconsumers? What should theresponsibilities of the educatorsbe in these situations? 1-197 www.bookfiesta4u.com

Table 7.2: Stages in the Family Life Cycle1. Bachelor stage: Few financial burdens. Fashion opinionYoung, single, not living leaders. Recreation oriented. Buy: basic homeat home equipment, furniture, cars, equipment for the mating game; vacations.2. Newly married Highest purchase rate and highest averagecouples: purchase of durables: cars, appliances,Young, no children furniture, vacations.3. Full nest I: Home purchasing at peak. Liquid assets low.Youngest child under Interested in new products, advertisedsix products. Buy: washers, dryers, TV, baby food, chest rubs and cough medicines, vitamins, dolls, wagons, sleds, skates.4. Full nest II: Financial position better. Less influenced byYoungest child six or advertising. Buy larger-size packages, larger-over multiple- multiple-unit deals. Buy: many foods, cleaning materials, bicycles, music lessons, pianos. See text for complete table 1-198 www.bookfiesta4u.com

Figure 7.2: The VALS segmentation system: An 8-part typologyGroups with HighResources1. Actualizers2. Fulfilleds3. Achievers4. ExperiencersGroups with LowerResources1. Believers2. Strivers3. Makers4. Strugglers 1-199 www.bookfiesta4u.com

SRI Consulting Business Intelligence’s Web site 1-200 www.bookfiesta4u.com

Influencing Buyer Behavior Personality and Self-Concept Self- Personality Brand personality Sincerity Excitement Competence Sophistication Ruggedness Self- Self-concept Person’s actual self-concept self- Ideal self-concept self- Others’ self-concept self- 1-201 www.bookfiesta4u.com

Influencing Buyer Behavior Psychological Factors Motivation Motive Freud’s Theory Laddering Projective techniques 1-202 www.bookfiesta4u.com

Influencing Buyer Behavior Ernest Dichter’s research found: Consumers resist prunes because prunes are wrinkled looking and remind people of old age. Men smoke cigars as an adult version of thumb sucking. Women prefer vegetable shortening to animal fats because the latter arouse a sense of guilt over killing animals. Women don’t trust cake mixes unless they require adding an egg, because this helps them feel they are giving “birth.” 1-203 www.bookfiesta4u.com

Influencing Buyer Behavior Maslow’s Theory Figure 7.3: Maslow’s Hierarchy of Needs 1-204 www.bookfiesta4u.com

Influencing Buyer Behavior Herzberg’s Theory Dissatisfiers Satisfiers 1-205 www.bookfiesta4u.com

Influencing Buyer Behavior Perception Selective attention People are more likely to notice stimuli than relate to a current need People are more likely to notice stimuli than they anticipate People are more likely to notice stimuli whose deviations are large in relation to the normal size of the stimuli Selective distortion Selective retention 1-206 www.bookfiesta4u.com

Influencing Buyer Behavior Learning Drive Cues Discrimination Beliefs and Attitudes Belief Spreading activation Attitude 1-207 www.bookfiesta4u.com

The purchase of a product from a Company Aturns out to be a positive experience. You arelooking for a loosely related product, which is alsooffered by Company A. Do you assume that youwill again have a positive experience withCompany A’s offering, or do youlook for the “best of breed,”regardless of whichcompany offers it? 1-208 www.bookfiesta4u.com

The Buying Decision Process Buying Roles Initiator Influencer Decider Buyer User Buying behavior 1-209 www.bookfiesta4u.com

Table 7.3: Four Types of Buying Behavior High Involvement Low InvolvementSignificant Differences Complex buying Variety- Variety-seekingbetween Brands behavior buying behaviorFew Differences between Dissonance- Dissonance-reducing Habitual buyingBrands buying behavior behavior 1-210 www.bookfiesta4u.com

The Buying Decision Process Complex Buying Behavior Dissonance- Dissonance-Reducing Buyer Behavior Habitual Buying Behavior Variety- Variety-Seeking Buying Behavior 1-211 www.bookfiesta4u.com

Stages in the Buying Decision ProcessHow marketers learn about the stages: Introspective method Retrospective method Prospective method Prescriptive methodUnderstanding by mapping the customer’s Consumption system Customer activity cycle Customer scenarioMetamarketMetamediaries 1-212 www.bookfiesta4u.com

The Edmunds.com home page shows the variety ofservices this Web company offers those shoppingfor a car. 1-213 www.bookfiesta4u.com

Stages of the Buying Decision ProcessProblem recognitionInformation search Personal sources Figure 7.4: Commercial sources Five-Stage Model of the Public sources Consumer Buying Experiential sources Process 1-214 www.bookfiesta4u.com

Figure 7.5: Successive Sets Involved in Customer Decision Making 1-215 www.bookfiesta4u.com

The Buying Decision Process Evaluation of Alternatives Potential Attributes of interest Cameras Hotels Mouthwash Tires Brand beliefs Brand image 1-216 www.bookfiesta4u.com

Table 7.4: A Consumer’s Brand Beliefs about ComputersComputer Attribute Memory Graphics Size and Capacity Capability Weight Price A 10 8 6 4 B 8 9 8 3 C 6 8 10 5 D 4 3 7 8 1-217 www.bookfiesta4u.com

The Buying Decision Process Strategies designed to stimulate interest in a computer Redesign the computer Alter beliefs about the brand Alter beliefs about competitors’ brands Alter the importance weights Call attention to neglected attributes Shift the buyer’s ideas 1-218 www.bookfiesta4u.com

The Buying Decision Process Purchase Decision Figure 7.6: Steps Between Evaluation of Alternatives and a purchase decision 1-219 www.bookfiesta4u.com

The Buying Decision Process Informediaries Consumer Reports Zagats Unanticipated situational factors Perceived risk Brand decision Vendor decision Quantity decision Timing decision Payment- Payment-method decision 1-220 www.bookfiesta4u.com

The Buying Decision Process Postpurchase Behavior Postpurchase Satisfaction Disappointed Satisfied Delighted Postpurchase Actions Postpurchase Use and Disposal 1-221 www.bookfiesta4u.com

Figure 7.7: How Customers Dispose of Products 1-222 www.bookfiesta4u.com

The Buying Decision Process Other Models of the Buying Decision Process Health Model Stages of Change Model Precontemplation Contemplation Preparation Action Maintenance Customer Activity Cycle Model Pre, during and post phases 1-223 www.bookfiesta4u.com

Figure 7.8:Activity cyclefor IBMcustomers inthe globalelectronicnetworkingcapabilitymarket space 1-224 www.bookfiesta4u.com

Figure 7.9:Value addsfor IBMcustomers inthe globalelectronicnetworkingcapabilitymarket space 1-225 www.bookfiesta4u.com

Chapter 8Analyzing Business Marketsand Business BuyingBehaviorby PowerPoint by Milton M. Pressley University of New Orleans 1-226 www.bookfiesta4u.com

Kotler onMarketingMany businesses are wisely turning their suppliers and distributors into valued partners. 1-227 www.bookfiesta4u.com

Chapter ObjectivesIn this chapter, we focus on six questions: What is the business market, and how does it differ from the consumer market? What buying situations do organizational buyers face? Who participates in the business buying process? What are the major influences on organizational buyers? How do business buyers make their decisions? How do institutions and government agencies do their buying? 1-228 www.bookfiesta4u.com

What is Organizational Buying? Organizational buyingThe business market versus the consumermarket Business market Fewer buyers Larger buyers Close supplier-customer relationship supplier- Geographically concentrated buyers 1-229 www.bookfiesta4u.com

What is Organizational Buying? Derived demand Inelastic demand Fluctuating demand Professional purchasing 1-230 www.bookfiesta4u.com

Blue Shield of California’s mylifepath 1-231 www.bookfiesta4u.com

What is Organizational Buying? Several buying influences Multiple sales calls Directed purchasing Reciprocity Leasing 1-232 www.bookfiesta4u.com

If you were tasked with marketing aproduct or service to an organization,would you attempt to initially contact thepurchasing department, or potential department,users of your company’s offerings? Why?Would the product youwere selling make adifference? Why? 1-233 www.bookfiesta4u.com

What is Organizational Buying? Buying Situations Straight rebuy Modified rebuy New Task Systems Buying and Selling Systems buying Turnkey solution Systems selling 1-234 www.bookfiesta4u.com

What are some of the benefits to anorganization that can be derivedfrom a single source solution, or a solution,systems buying arrangement with aprime contractor? What are some ofthe potential pitfalls? Whatcan the company do toprotect itself fromthese hazards? 1-235 www.bookfiesta4u.com

Participants in the Business Buying Process The Buying Center Initiators Users Influencers Deciders Approvers Buyers Gatekeepers Key buying influencers Multilevel in-depth selling in- 1-236 www.bookfiesta4u.com

Figure 8-1: Major Influences on Industrial Buying Behavior 1-237 www.bookfiesta4u.com

Major Influences on Buying DecisionsEnvironmental FactorsOrganizational Factors Purchasing- Purchasing-Department Upgrading Cross- Cross-Functional Roles Centralized Purchasing Decentralized Purchasing of Small-Ticket Small- Items Internet Purchasing 1-238 www.bookfiesta4u.com

The e-hub Plastics.com home page offers buyers and e-sellers of plastics a marketplace plus news andinformation 1-239 www.bookfiesta4u.com

Covisint’s Web site offers both services andinformation 1-240 www.bookfiesta4u.com

Major Influences on Buying Decisions Other Organizational Factors Long- Long-Term Contracts Vendor- Vendor-managed inventory Continuous replenishment programs Purchasing- Purchasing-Performance Evaluation and Buyers’ Professional Development Improved Supply Chain Management Lean Production Just-in- Just-in-time 1-241 www.bookfiesta4u.com

Major Influences on Buying DecisionsInterpersonal and Individual FactorsCultural Factors France Germany Japan Korea Latin America 1-242 www.bookfiesta4u.com

The Purchasing/Procurement Process Incentive to purchaseThree Company Purchasing Orientations Buying Orientation Commoditization Multisourcing Procurement Orientation Materials requirement planning (MRP) Supply Chain Management Orientation 1-243 www.bookfiesta4u.com

The Purchasing/Procurement ProcessTypes of Purchasing Processes Routine products Leverage products Strategic products Bottleneck products 1-244 www.bookfiesta4u.com

The Purchasing/Procurement Process Stages in the Buying Process Problem Recognition General Need Description and Product Specification Product value analysis Supplier Search Vertical hubs Functional hubs Direct external links to major suppliers Buying alliances Company buying sites Request for proposals (RFPs) 1-245 www.bookfiesta4u.com

Table 8.1: Buygrid Framework: Major Stages (Buyphases) of theIndustrial Buying Process in Relation to Major Buying Situations (Buyclasses) Buyclasses New Modified Straight Task Rebuy Rebuy 1. Problem recognition Yes Maybe No 2. General need description Yes Maybe No 3. Product specification Yes Yes YesBuyphases 4. Supplier search Yes Maybe No 5. Proposal solicitation Yes Maybe No 6. Supplier selection Yes Maybe No 7. Order-routine specification Order- Yes Maybe No 8. Performance review Yes Yes Yes 1-246 www.bookfiesta4u.com

The Purchasing/Procurement ProcessGeneral Need Description andProduct Specification Product value analysisSupplier Search Vertical hubs Functional hubs Direct extranet links to major suppliers Buying alliances Company buying sites Request for proposals (RFPs) 1-247 www.bookfiesta4u.com

The Purchasing/ Procurement ProcessProposal SolicitationSupplier Selection 1-248 www.bookfiesta4u.com

Table 8-2: An Example of Vendor AnalysisAttributes Rating Scale Importance Poor Fair Good Excellent Weights (1) (2) (3) (4)Price .30 xSupplier reputation .20 xProduct reliability .30 xService reliability .10 xSupplier Flexibility .10 xTotal score: .30(4) + .20(3) + .30(4) + .10(2) + .10(3) = 3.5 1-249 www.bookfiesta4u.com

The Purchasing/ Procurement Process Customer value assessment Routine- Routine-order products Procedural- Procedural-problem products Political- Political-problem productsOrder-Order-Routine Specification Blanket contract Stockless purchase plansPerformance Review Buyflow map 1-250 www.bookfiesta4u.com

Figure 8-2: Major Influences on Industrial Buying Behavior 1-251 www.bookfiesta4u.com

Institutional andGovernment MarketsInstitutional market 1-252 www.bookfiesta4u.com

Chapter 9Dealing with theCompetitionby PowerPoint by Milton M. Pressley University of New Orleans 1-253 www.bookfiesta4u.com

Kotler onMarketingPoor firms ignore their competitors; average firms copy their competitors; winning firms lead their competitors. 1-254 www.bookfiesta4u.com

Chapter ObjectivesIn this chapter, we focus on five thingscompanies need to know about theircompetition: Who the primary competitors are How to ascertain their strategies, objectives, strengths and weaknesses, and reaction patterns How to design a competitive intelligence system Whether to position as market leader, challenger, follower, or nicher How to balance a customer versus competitor orientation 1-255 www.bookfiesta4u.com

Competitive Forces Figure 9-1: Five Forces Determining Segment Structural AttractivenessThreat of:1. intense segment rivalry2. new entrants3. substitute products buyers’ growing bargaining power suppliers’ growing bargaining power 1-256 www.bookfiesta4u.com

Figure 9-2: Barriers and Profitability 1-257 www.bookfiesta4u.com

GetThere.com, launched as the Internet Travel Networkin 1995, was the first company to book trips over theWeb 1-258 www.bookfiesta4u.com

Identifying CompetitorsIndustry Concept of Competition Industry Number of Sellers and Degree of Differentiation Pure monopoly Oligopoly Pure oligopoly Differentiated oligopoly Monopolistic competition Pure competition 1-259 www.bookfiesta4u.com

Identifying Competitors Entry, Mobility, Exit Barriers Entry barriers Mobility barriers Exit barriers Cost Structure Degree of Vertical Integration Vertical integration Degree of GlobalizationMarket Concept of Competition 1-260 www.bookfiesta4u.com

Analyzing CompetitorsObjectives Figure 9-5: A Competitor’s Expansion Plans 1-261 www.bookfiesta4u.com

Analyzing CompetitorsStrengths and Weaknesses Dominant Strong Favorable Tenable Weak Nonviable 1-262 www.bookfiesta4u.com

Table 9-1: Customer’s Ratings of Competitors on Key Success Factors Customer Product Product Technical Selling Awareness Quality Availability Assistance StaffCompetitor A E E P P GCompetitor B G G E G ECompetitor C F P G F FNote: E = excellent, G = good, F = fair, P = poor. 1-263 www.bookfiesta4u.com

Analyzing Competitors Three Variables to Monitor When Analyzing Competitors: Share of market Share of mind Share of heart 1-264 www.bookfiesta4u.com

Table 9-2: Market Share, Mind Share, and Heart Share Market Share Mind Share Heart Share 2000 2001 2002 2000 2001 2002 2000 2001 2002Competitor A 50% 47% 44% 60% 58% 54% 45% 42% 39%Competitor B 30 34 37 30 31 35 44 47 53Competitor C 20 19 19 10 11 11 11 11 8 1-265 www.bookfiesta4u.com

Analyzing CompetitorsReaction Patterns1. If competitors are nearly identical and make their living the same way, then their competitive equilibrium is unstable.2. If a single major factor is the critical factor, then the competitive equilibrium is unstable.3. If multiple factors may be critical factors, then it is possible for each competitor to have some advantage and be differentially attractive to some customers. The more factors that may provide an advantage, the more competitors who can coexist. Competitors all have their segment, defined by the preference for the factor trade-offs trade- they offer.4. The fewer the number of critical competitive variables, the fewer the number of competitors.5. A ratio of 2 to 1 in market share between any two competitors seems to be the equilibrium point at which it is neither practical nor advantageous for either competitor to increase or decrease share. 1-266 www.bookfiesta4u.com

For many years, the major national broadcasttelevision networks shared 100% of the market, andtraded market share back and forth periodically.During the last two decades, the emergence ofnationally available cable programming, and the riseof rival broadcast networks like Fox, UPN, and WBhave increasingly cut into the market share of the“big three.” What steps would yourecommend that the “big three”networks take to stop or slowthis loss of market share? 1-267 www.bookfiesta4u.com

Designing The Competitive Intelligence SystemFour Main Steps Setting Up the System Collecting the Data Evaluating and Analyzing the Data Disseminating Information and Responding 1-268 www.bookfiesta4u.com

Designing The Competitive Intelligence SystemSelecting Competitors Customer Value Analysis (CVA) Customer Value = Customer Benefits – Customer Costs Customer Benefits = product benefits, service benefits, personnel benefits, image benefits Customer Costs = purchase price, acquisition costs, usage costs, maintenance costs, ownership costs, disposal costs 1-269 www.bookfiesta4u.com

What do you see as the potential impact of theavailability of information via the Internet on thedesign of competitive intelligence systems? Whatproblems could be caused by the inability of theaverage computer user to verify the accuracy ofdata from the web? What impact will emergingdatabase technologies liketext-text-based data mining havein competitive intelligencesystems? 1-270 www.bookfiesta4u.com

Table 9-3: Customer Cost of Three Brands A B CPrice $100 $ 90 $ 80Acquisition costs 15 25 30Usage costs 4 7 10Maintenance 2 3 7costsOwnership costs 3 3 5Disposal costs 6 5 8Total costs $130 $135 $140 1-271 www.bookfiesta4u.com

Designing The Competitive Intelligence SystemMajor Steps in Customer Value Analysis: 1. Identify the major attributes customers value. 2. Assess the quantitative importance of the different attributes. 3. Assess the companies’ and competitors’ performances on the different customer values against their rated importance. 4. Examine how customers in a specific segment rate the company’s performance against a specific major competitor on an attribute-by- attribute-by-attribute basis. 5. Monitor customer values over time. 1-272 www.bookfiesta4u.com

Designing The Competitive Intelligence System Classes of Competitors Strong versus Weak Close versus Distant “Good” versus “Bad” 1-273 www.bookfiesta4u.com

Designing Competitive Strategies Figure 9-6: Hypothetical Market Structure 1-274 www.bookfiesta4u.com

Designing Competitive StrategiesMarket-Market-Leader Strategies Expanding the Total Market New Users Market- Market-penetration strategy New- New-market segment strategy Geographical- Geographical-expansion strategy New Uses More Usage Defending Market Share 1-275 www.bookfiesta4u.com

IGT’s home page focuses on customer service 1-276 www.bookfiesta4u.com

Designing Competitive Strategies Defense Strategies Position Defense Flank Defense Preemptive Defense Counteroffensive Defense Mobile Defense Market broadening Principle of the objective Principle of mass Market diversification Contraction Defense Planned contraction (Strategic withdrawal) 1-277 www.bookfiesta4u.com

Designing Competitive StrategiesTwo Case Studies:Procter & Gambleand Caterpillar Proctor & Gamble Customer knowledge Long- Long-term outlook Product innovation Quality strategy Line- Line-extension strategy 1-278 www.bookfiesta4u.com

Designing Competitive Strategies Brand- Brand-extension strategy Multibrand strategy Heavy advertising and media pioneer Aggressive sales force Effective sales promotion Competitive toughness Manufacturing efficiency and cost cutting Brand- Brand-management system 1-279 www.bookfiesta4u.com

Designing Competitive StrategiesMarket-Market-Challenger Strategies Defining the Strategic Objective and Opponent(s) It can attack the market leader It can attack firms of its own size that are not doing the job and are underfinanced It can attack small local and regional firmsChoosing a General Attack Strategy 1-280 www.bookfiesta4u.com

Figure 9-10: Attack Strategies 1-281 www.bookfiesta4u.com

Swedish firm SCA’s www.libero.se site creates a dialogue withexpectant and new parents and even allows users to sendpictures, brief stories, and child wish list to family all over theworld. 1-282 www.bookfiesta4u.com

Designing Competitive Strategies Choosing a Specific Attack Strategy Price- Price-discount Lower price goods Prestige goods Product proliferation Product innovation Improved services Distribution innovation Manufacturing cost reduction Intensive advertising promotion 1-283 www.bookfiesta4u.com

Designing Competitive StrategiesMarket-Market-Follower Strategies Innovative imitation (Product imitation) Product innovation Four Broad Strategies: Counterfeiter Cloner Imitator Adapter 1-284 www.bookfiesta4u.com

Designing Competitive StrategiesMarket-Market-Nicher Strategies High margin versus high volume Nicher Specialist Roles End- End-user specialist Product- Product-feature Value- Value-added reseller specialist Vertical- Vertical-level specialist Job- Job-shop specialist Customer- Customer-size specialist Quality- Quality-price specialist Specific- Specific-customer specialist Service specialist Geographic specialist Channel specialist Product or product-line product- specialist 1-285 www.bookfiesta4u.com

Balancing Customer andCompetitor Orientations Competitor- Competitor-centered company Customer- Customer-centered company 1-286 www.bookfiesta4u.com

Chapter 10Identifying MarketSegments and SelectingTarget Marketsby PowerPoint by Milton M. Pressley University of New Orleans 1-287 www.bookfiesta4u.com

Kotler onMarketing“Don’t buymarket share.Figure outhow to earnit.” 1-288 www.bookfiesta4u.com

Chapter ObjectivesWe focus on the following questions: How can a company identify the segments that make up a market? What criteria can a company use to choose the most attractive target markets? 1-289 www.bookfiesta4u.com

Target MarketingTarget marketing requires marketers totake three major steps: Identify and profile distinct groups of buyers who differ in their needs and preferences (market segmentation). Select one or more market segments to enter (market targeting). For each target segment, establish and communicate the key distinctive benefit(s) of the company’s market offering (market positioning). 1-290 www.bookfiesta4u.com

Levels and Patterns of Market SegmentationLevels of Market Segmentation Mass marketing Micromarketing Segment marketing Market segment Sector Flexible market offering Naked solution Discretionary options 1-291 www.bookfiesta4u.com

Levels and Patterns ofMarket SegmentationNiche Marketing NicheLocal MarketingIndividual Customer Marketing Mass- Mass-customization Choiceboard Customerization Segments Individuals 1-292 www.bookfiesta4u.com

Levels and Patterns of Market SegmentationPatterns for Market Segmentation Preference segments Homogeneous preferences Diffused preferences Clustered preferences Natural market segments Concentrated marketing 1-293 www.bookfiesta4u.com

Levels and Patterns of Market SegmentationMarket Segmentation Procedure Needs- Needs-based market segmentation approach Market partitioning Brand- Brand-dominant hierarchy Nation- Nation-dominant hierarchy 1-294 www.bookfiesta4u.com

ChemStation’s Web site offers customers solutionsto their problems, not just products. 1-295 www.bookfiesta4u.com

Table 10-1: Steps in Segmentation Process Description1. Needs-Based Needs- Group customers into segments based on similarSegmentation needs and benefits sought by customer in solving a particular consumption problem.2. Segment For each needs-based segment, determine which needs-Identification demographics, lifestyles, and usage behaviors make the segment distinct and identifiable (actionable).3. Segment Using predetermined segment attractivenessAttractiveness criteria (such as market growth, competitive intensity, and market access), determine the overall attractiveness of each segment.4. Segment Profitability Determine segment profitability.5. Segment Positioning For each segment, create a “value proposition” and product-price positioning strategy based on product- that segment’s unique customer needs and characteristics. See text for complete table 1-296 www.bookfiesta4u.com

Levels and Patterns of Market SegmentationEffective Segmentation Measurable Substantial Accessible Differentiable Actionable 1-297 www.bookfiesta4u.com

Segmenting Consumer and Business MarketsBases for SegmentingConsumer Markets 1-298 www.bookfiesta4u.com

Table 10-2: Major Segmentation Variables for Consumer MarketsGeographicRegion Pacific, Mountain, West North Central, West South Central, East North Central, East South Central, South Atlantic, Middle Atlantic, New EnglandCity or metro size Under 5,000; 5,000-20,000; 20,000-50,000; 50,000- 5,000- 20,000- 50,000- 100,000; 100,000-250,000; 250,000-500,000; 100,000- 250,000- 500,000- 500,000-1,000,000; 1,000,000-4,000,000; 4,000,000 1,000,000- or overDensity Urban, suburban, ruralClimate Northern southernDemographicAge Under 6, 6-11, 12-19, 20-34, 35-49, 50-64, 65+ 6- 12- 20- 35- 50-Family size 1-2, 3-4, 5+ 3- See text for complete table 1-299 www.bookfiesta4u.com

Segmenting Consumer and Business MarketsBases for Segmenting Consumer Markets Geographic Segmentation Demographic Segmentation Age and Life-Cycle Life- Stage 1-300 www.bookfiesta4u.com

An easily identifiable demographic groupwhich is often targeted by marketers iscollege students. Do you think this isinfluenced more by a common economicstatus of the target group, geographicconcentration of a specificage group, or someother factor(s)? 1-301 www.bookfiesta4u.com

Sega’s homepage: Not just games 1-302 www.bookfiesta4u.com

Segmenting Consumer and Business Markets Life Stage Gender Income Generation The Depression Cohort The World War II Cohort The Post-War Cohort Post- Leading- Leading-Edge Baby Boomer Cohort Trailing- Trailing-Edge Baby Boomer Cohort Generation X Cohort The Generation Y Cohort 1-303 www.bookfiesta4u.com

Segmenting Consumer and Business Markets Lifestage Analytic Matrix Lifestages Physiographics Emotional effects Socioeconomics Social Class Psychographic Segmentation Lifestyle Time- Time-constrained multitasking Money- Money-constrained 1-304 www.bookfiesta4u.com

Improvements in both the average standardof living and in health care have hadprofound effects in the industrialized worldduring the last two generations. Other thanan increase in the average life expectancy forboth men and women, what effects has thistrend toward longer andhealthier lives in general hadon the traditional life stageassumptions that marketersmake? 1-305 www.bookfiesta4u.com

Segmenting Consumer and Business Markets Personality “Brand personality” examples: Sincere Exciting Competent Sophisticated Rugged Values Core values 1-306 www.bookfiesta4u.com

Segmenting Consumer and Business Markets Behavioral Segmentation Occasions Critical life events or transitions Benefits Mobil has identified five segments and their sizes Road Warriors 16% Generation F 27% True Blues 16% Home Bodies 21% Price Shoppers 20% 1-307 www.bookfiesta4u.com

Segmenting Consumer and Business Markets User Status Usage Rate Loyalty Status Hard- Hard-core loyals Split loyals Shifting loyals Switchers Buyer- Buyer-Readiness Stage Attitude 1-308 www.bookfiesta4u.com

Segmenting Consumer and Business Markets Multi- Multi-Attribute Segmentation (Geoclustering) Four PRIZM clusters American Dreams Rural Industria Gray Power Country Squires Targeting Multiple Segments 1-309 www.bookfiesta4u.com

Segmenting Consumer and Business MarketsBases For SegmentingBusiness Markets 1-310 www.bookfiesta4u.com

Table 10-3: Major Segmentation Variables for Business MarketsDemographic1. Industry: Which industries should we serve?2. Company size: What size companies should we serve?3. Location: What geographical areas should we serve?Operating Variables4. Technology: What customer technologies should we focus on?5. User or nonuser status: Should we serve heavy users, medium users, light users, or nonusers?6. Customer capabilities: Should we serve customers needing many or few services?Purchasing Approaches7. 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 1-311 www.bookfiesta4u.com

Segmenting Consumer and Business Markets Business buyers seek different benefit bundles based on their stage in the purchase decision process. 1. First-time prospects First- 2. Novices 3. Sophisticates 1-312 www.bookfiesta4u.com

Segmenting Consumer and Business Markets Rangan, Moriarty, and Swartz studied a mature commodity market, steel stamping, and found four business segments 1. Program buyers 2. Relationship buyers 3. Transaction buyers 4. Bargain hunters 1-313 www.bookfiesta4u.com

Segmenting Consumer and Business Markets Rackman and Vincentis proposed a segmentation scheme that classifies business buyers into three groups Price- Price-oriented customers (transactional selling) Solution- Solution-oriented customers (consultative selling) Strategic- Strategic-value customers (enterprise selling) 1-314 www.bookfiesta4u.com

Market TargetingEvaluating and Selecting the Market Segments Single- Single-Segment Concentration Selective Specialization Product Specialization Market Specialization Full Market Coverage Undifferentiated marketing Differentiated marketing 1-315 www.bookfiesta4u.com

Market TargetingHigher costs using differentiatedmarketing include: Product modification cost Manufacturing cost Administrative cost Inventory cost Promotion cost 1-316 www.bookfiesta4u.com

Market TargetingAdditional Considerations Ethical Choice of Market Targets Supersegment Segment-By- Segment-By-Segment Invasion Plans 1-317 www.bookfiesta4u.com

Figure 10-3: Segment-by-Segment Invasion Plan 1-318 www.bookfiesta4u.com

Market TargetingIntersegment Cooperation 1-319 www.bookfiesta4u.com

Chapter 11Positioning and Differentiatingthe Market Offering Throughthe Product Life Cycleby PowerPoint by Milton M. Pressley University of New Orleans www.bookfiesta4u.blogspot.com 11-320

Kotler onMarketingWatch the productlife cycle; but moreimportant, watch themarket life cycle. www.bookfiesta4u.blogspot.com 11-321

Chapter ObjectivesIn this chapter, we focus on the followingquestions: How can the firm choose and communicate an effective positioning in the market? What are the major differentiating attributes available to firms? What marketing strategies are appropriate at each stage of the product life cycle? What marketing strategies are appropriate at each stage of the market’s evolution? www.bookfiesta4u.blogspot.com 11-322

Developing and Communicating a Positioning Strategy Positioning Value position www.bookfiesta4u.blogspot.com 11-323

Table 11.1: Examples of Value Propositions Demand States and Marketing TasksCompanyand Target ValueProduct Customers Benefits Price PropositionPerdue Quality- Quality- Tenderness 10% More tender(chicken) conscious premium golden chicken at consumers of a moderate chicken premium priceVolvo Safety- Safety- Durability 20% The safest, most(station conscious and safety premium durable wagon inwagon) “upscale” which your family families can rideDomino’s Convenience- Convenience- Delivery 15% A good hot pizza,(pizza) minded pizza speed and premium delivered to your lovers good quality door door within 30 minutes of ordering, at a moderate price www.bookfiesta4u.blogspot.com 11-324

Developing and Communicating a Positioning Strategy Positioning According to Ries and Trout Strengthen own current position Grab an unoccupied position De- De-position Re- Re-position Product ladders Positioning According to Treacy and Wiersema Value disciplines Product leader Operationally excellent firm Customer intimate firm www.bookfiesta4u.blogspot.com 11-325

Developing and Communicating a Positioning Strategy Treacy and Wiersema propose that a business should follow four rules for success 1. Become best at one of the three value disciplines. 2. Achieve an adequate performance level in the other two disciplines. 3. Keep improving one’s superior position in the chosen discipline so as not to lose out to a competitor. 4. Keep becoming more adequate in the other two disciplines, because competitors keep raising customers’ expectations. www.bookfiesta4u.blogspot.com 11-326

Developing and Communicating a Positioning Strategy Positioning: How many ideas to promote? Unique selling proposition Four major positioning errors 1. Underpositioning 2. Overpositioning 3. Confused positioning 4. Doubtful positioning www.bookfiesta4u.blogspot.com 11-327

Can you think of any companiesthat market the same product orservice offering to multiple segmentsusing different strategies? Are thedifferent segments beingoffered different valuepropositions? www.bookfiesta4u.blogspot.com 11-328

Figure 11.1: Perceptual Map www.bookfiesta4u.blogspot.com 11-329

Developing and Communicating a Positioning Strategy Theme park’s positioning possibilities: Attribute positioning Benefit positioning Use or application positioning User positioning Competitor positioning Product category positioning Quality or price positioning Which Positioning to Promote? www.bookfiesta4u.blogspot.com 11-330

Table 11.2: Method for Competitive- Advantage Selection (1) (2) (3) (4) (5) Importance of Improving AffordabilityCompetitive Company Competitor Standing and SpeedAdvantage Standing Standing (H-M-L)* (H- (H-M-L) (H-Technology 8 8 L LCost 6 8 H MQuality 8 6 L LService 4 3 H HH=high, M=medium, L=low See text for complete table www.bookfiesta4u.blogspot.com 11-331

Adding Further Differentiation Differentiation Differentiation criteria: Important Distinctive Superior Preemptive Affordable Profitable www.bookfiesta4u.blogspot.com 11-332

Adding Further Differentiation Exceed customer expectations with a three- three-step process 1. Defining the customer value model 2. Building the customer value hierarchy Basic Expected Desired Unanticipated 3. Deciding on the customer value package www.bookfiesta4u.blogspot.com 11-333

Differentiation ToolsFigure 11.2:The BCGCompetitiveAdvantageMatrix www.bookfiesta4u.blogspot.com 11-334

Table 11.3: Differentiation VariablesProduct Services Personnel Channel ImageForm Ordering Competence Coverage Symbols easeFeatures Delivery Courtesy Expertise MediaPerformance Installation Credibility Performance AtmosphereConformance Customer Reliability Events trainingDurability Customer Responsive consulting ness See text for complete table www.bookfiesta4u.blogspot.com 11-335

Differentiation ToolsProduct Differentiation Form Features www.bookfiesta4u.blogspot.com 11-336

Table 11.4: Measuring Customer Effectiveness Value Company Cost Customer Value Customer Value/Customer CostFeature (a) (b) (c=b/a)Rear-Rear-window $100 $200 2defrostingCruise control 600 600 1Automatic 800 2,400 3transmission www.bookfiesta4u.blogspot.com 11-337

Differentiation Tools Performance Quality Conformance Quality Durability Reliability Reparability Style Design: The Integrating ForceServices Differentiation Ordering Ease www.bookfiesta4u.blogspot.com 11-338

The home page for Peapod, the nation’slargest online grocer www.bookfiesta4u.blogspot.com 11-339

Differentiation ToolsDelivery Quick response systemInstallationCustomer TrainingCustomerConsultingMaintenanceand Repair HP’s online support page www.bookfiesta4u.blogspot.com 11-340

Many e-commerce ventures fail because e-of distribution problems in the so-called so-“last mile” (the local distribution portionof shipping of online purchases). Can amarketing plan help offsetsome of these potentialpitfalls? www.bookfiesta4u.blogspot.com 11-341

Differentiation Tools Miscellaneous ServicesPersonnel Differentiation Competence Courtesy Creditability Reliability Responsiveness Communication www.bookfiesta4u.blogspot.com 11-342

Differentiation ToolsChannel DifferentiationImage Differentiation Identity Image Symbols, Colors, Slogans, Special Attributes Physical plant Events and Sponsorship Using Multiple Image-Building Techniques Image- www.bookfiesta4u.blogspot.com 11-343

Which differentiation tool would bemost useful for a dot.com startup?Why? www.bookfiesta4u.blogspot.com 11-344

Product Life-Cycle Marketing Strategies To say that a product has a life cycle asserts four things 1. Products have a limited life. 2. Product sales pass through distance stages, each posing different challenges, opportunities, and problems to the seller. 3. Profits rise and fall at different stages of the product life cycle. 4. Products require different marketing, financial, manufacturing, purchasing, and human resource strategies in each life-cycle stage. life- www.bookfiesta4u.blogspot.com 11-345

Product Life-Cycle Marketing Strategies Figure 11.4: Cost Product Life-Cycle Patterns www.bookfiesta4u.blogspot.com 11-346

Product Life-Cycle Marketing Strategies Figure 11.5: Style, Fashion, and Fad Life Cycles www.bookfiesta4u.blogspot.com 11-347

Product Life-Cycle Marketing Strategies Marketing Strategies: Introduction Stage The Pioneer Advantage Inventor Product pioneer Market pioneer Figure 11.6: Long-Range Product Market Expansion Strategy (P = Product; M = Market) www.bookfiesta4u.blogspot.com 11-348

Product Life-Cycle Marketing Strategies Marketing Strategies: Growth Stage Improve product quality and add new product features and improved styling Add new models and flanker products Enter new market segments Increase distribution coverage and enter new distribution channels Shift from product-awareness advertising to product- product- product-preference advertising Lower prices to attract next layer of price- price- sensitive buyers www.bookfiesta4u.blogspot.com 11-349

Product Life-Cycle Marketing Strategies Marketing Strategies: Maturity Stage Market Modification Expand number of brand users by: 1. Converting nonusers 2. Entering new market segments 3. Winning competitors’ customers Convince current users to increase usage by: 1. Using the product on more occasions 2. Using more of the product on each occasion 3. Using the product in new ways www.bookfiesta4u.blogspot.com 11-350

Product Life-Cycle Marketing Strategies Product modification Quality improvement Feature improvement Marketing- Marketing-Mix Modification Prices Distribution Advertising Sales promotion Personal selling Services www.bookfiesta4u.blogspot.com 11-351

Product Life-Cycle Marketing Strategies Marketing Strategies: Decline Stage 1. Increase firm’s investment (to dominate the market and strengthen its competitive position) 2. Maintain the firm’s investment level until the uncertainties about the industry are resolved. 3. Decrease the firm’s investment level selectively by dropping unprofitable customer groups, while simultaneously strengthening the firm’s investment in lucrative niches 4. Harvesting (“milking”) the firm’s investment to recover cash quickly 5. Divesting the business quickly by disposing of its assets as advantageously as possible. www.bookfiesta4u.blogspot.com 11-352

Product Life-Cycle Marketing Strategies Product Life-Cycle Concept: Critique Life- Market evolution www.bookfiesta4u.blogspot.com 11-353

Table 11.5: Summary of Product Life-Cycle Characteristics, Objectives, and Strategies Introduction Growth MaturityCharacteristicsSales Low sales Rapidly rising Peak sales salesCosts High cost per Average cost per Low cost per customer customer customerProfits Negative Rising profits High profitsCustomers Few Growing Number Stable number beginning to decline See text for complete table www.bookfiesta4u.blogspot.com 11-354

Market Evolution Diffused- Diffused-preference market options A single-niche strategy single- A multiple-niche strategy multiple- A mass-market strategy mass-Growth Market- Market-growth stage options Single- Single-niche strategy Mass- Mass-market strategy Multiple- Multiple-niche strategyMaturity www.bookfiesta4u.blogspot.com 11-355

Market Evolution Decline An Example: The Paper-Towel Market Paper-Dynamics of Attribute Competition Customer expectations are progressive Approaches to discover new attributes: Customer- Customer-survey processes Intuitive processes Dialectical processes Needs- Needs-hierarchy process www.bookfiesta4u.blogspot.com 11-356

Chapter 12Developing NewMarket Offeringsby PowerPoint by Milton M. Pressley University of New Orleans www.bookfiesta4u.blogspot.com 11-357

Kotler onMarketingWho shouldultimately design theproduct? Thecustomer, of course. www.bookfiesta4u.blogspot.com 11-358

Chapter ObjectivesIn this chapter, we focus on the followingquestions: What challenges does a company face in developing new products? What organizational structures are used to manage new-product development? new- What are the main stages in developing new products, and how can they be managed better? What factors affect the rate of diffusion and consumer adoption of newly launched products? www.bookfiesta4u.blogspot.com 11-359

Developing New Market Offerings Six categories of new products1. New-to-the-world products2. New product lines3. Additions to existing product lines4. Improvements and revisions of existing products5. Repositioning6. Cost reductions www.bookfiesta4u.blogspot.com 11-360

Challenges in New-Product Development Incremental innovation Disruptive technologiesWhy do new products fail? A high-level executive pushes a favorite idea high- through in spite of negative research findings. The idea is good, but the market size is overestimated. The product is not well designed. www.bookfiesta4u.blogspot.com 11-361

Challenges in New-Product Development The product is incorrectly positioned in the market, not advertised effectively, or overpriced. The product fails to gain sufficient distribution coverage or support. Development costs are higher than expected. Competitors fight back harder than expected. www.bookfiesta4u.blogspot.com 11-362

Challenges in New-Product DevelopmentFactors that tend to hinder new-product new-development Shortage of important ideas in certain areas Fragmented markets Social and governmental constraints Cost of development Capital shortages Faster required development time Shorter product life cycles www.bookfiesta4u.blogspot.com 11-363

Organizational ArrangementsNew-New-product deployment requires specificcriteria – one company established thefollowing acceptance criteria The product can be introduced within five years The product has a market potential of at least $50 million and a 15 percent growth rate. The product would provide at least 30 percent return on sales and 40 percent on investment. The product would achieve technical or market leadership. www.bookfiesta4u.blogspot.com 11-364

Organizational Arrangements Budgeting For New Product Development 3M’s approach: 15% rule Each promising idea gets an “executive champion” Expect some failures Golden Step awards handed out each year www.bookfiesta4u.blogspot.com 11-365

3M online: The 3M Innovation Network www.bookfiesta4u.blogspot.com 11-366

Table 12.1 Finding One Successful New Product (Starting with 64 New Ideas) Number Pass Cost perStage of Ideas Ratio Product Idea Total Cost1. Idea screening 64 1:4 $ 1,000 $ 64,0002. Concept testing 16 1:2 20,000 320,0003. Product 8 1:2 200,000 1,600,000development4. Test marketing 4 1:2 500,000 2,000,0005. National launch 2 1:2 5,000,000 10,000,000 $5,721,000 $13,984,000 www.bookfiesta4u.blogspot.com 11-367

Organizational Arrangements Organizing New-Product Development New- Product managers New- New-product managers High- High-level management committee New product department Venture teams www.bookfiesta4u.blogspot.com 11-368

Organizational Arrangements Stage- Stage-gate system Gatekeepers make one of four decisions: Go Kill Hold Recycle www.bookfiesta4u.blogspot.com 11-369

Managing the Development Process: Ideas Idea Generation Interacting with Others Sales representatives Intermediaries Product champion www.bookfiesta4u.blogspot.com 11-370

Managing the Development Process: Ideas Techniques for stimulating creativity in individuals and groups Attribute listing Forced relationships Morphological analysis Reverse assumption analysis New contexts Mind- Mind-mapping www.bookfiesta4u.blogspot.com 11-371

Managing the Development Process: Ideas Idea Screening Idea manager Idea committee Two types of errors in screening ideas DROP- DROP-error GO- GO-error www.bookfiesta4u.blogspot.com 11-372

Some of the most notable “drop-errors” have “drop-come from the most recognizable names inAmerican business. Xerox saw the potentialof the copy machine, IBM and EastmanKodak did not. IBM thought the personalcomputer market would be miniscule.Can you think of any“drop-“drop-errors” that thecompany didn’t survive? www.bookfiesta4u.blogspot.com 11-373

Table 12.2 Product-Idea Rating Device Relative Product Product Weight Score RatingProduct Success Requirements (a) (b) (c = a x b)Unique or superior product .40 .8 .32High performance to cost ratio .30 .6 .18High marketing dollar support .20 .7 .14Lack of strong competition .10 .5 .05Total 1.00 .69σσ .00- Rating scale: .00-.30 poor; .31-.60 fair; .61-.80 good. Minimum acceptance rate: .61 .31- .61- www.bookfiesta4u.blogspot.com 11-374

Managing the DevelopmentProcess: Concept to Strategy Concept Development and Testing Product idea Product concept Concept development Category concept Product– Product–positioning map Brand concept www.bookfiesta4u.blogspot.com 11-375

Figure 12.3:ProductandBrandPositioning www.bookfiesta4u.blogspot.com 11-376

Sometimes a new product is developed, likethe felt-tip pen and the “walkman” style felt-personal music device. Consumers weren’tclamoring for either of these products beforethey came to market. Most people hadn’teven conceived of such an item. Carefulplanning developed marketsfor these new lines. Can youthink of more recentexamples? www.bookfiesta4u.blogspot.com 11-377

Managing the DevelopmentProcess: Concept to Strategy Concept Testing Rapid prototyping Virtual reality Customer- Customer-driven engineering Questions to measure product dimensions Communicability and believability Need level Gap level Need- Need-gap score www.bookfiesta4u.blogspot.com 11-378

Managing the DevelopmentProcess: Concept to Strategy Perceived value Purchase intention User targets, purchase occasions, purchasing frequency Conjoint Analysis Example: five design elements Three package designs Three brand names Three prices Possible Good Housekeeping seal Possible money-back guarantee money- www.bookfiesta4u.blogspot.com 11-379

Managing theDevelopment Process: Concept to Strategy Marketing Strategy Business Analysis Estimating Total Sales www.bookfiesta4u.blogspot.com 11-380

Managing the DevelopmentProcess: Concept to Strategy Survival- Survival-age distribution Estimating Cost and Profits www.bookfiesta4u.blogspot.com 11-381

Table 12.3 Projected Five-Year-Cash-Flow Statement (in thousands of dollars) Year 0 Year 1 Year 2 Year 31. Sales revenue $ 0 $11,889 $15,381 $19,6542. Cost of goods sold 0 3,981 5,150 6,5813. Gross margin 0 7,908 10,231 13,0734. Development costs -3,500 0 0 05. Marketing costs 0 8,000 6,460 8,2556. Allocated overhead 0 1,189 1,538 1,965 See text for complete table www.bookfiesta4u.blogspot.com 11-382

Managing the DevelopmentProcess: Concept to Strategy Break- Break-even analysis Risk analysis www.bookfiesta4u.blogspot.com 11-383

Managing The Development Process: Development to Commercialization Product Development Quality Function Deployment (QFD) Customer attributes (CAs) Engineering attributes (EAs) Lands’ End Japan Web site www.bookfiesta4u.blogspot.com 11-384

Managing The Development Process: Development to Commercialization Customer tests Alpha testing Beta testing Consumer preference measures Rank- Rank-order Paired- Paired-comparison Monadic- Monadic-rating www.bookfiesta4u.blogspot.com 11-385

Managing The Development Process: Development to CommercializationMarket Testing Consumer- Consumer-Goods Market Testing Seeks to estimate four variables Trial First repeat Adoption Purchase frequency Sales wave research www.bookfiesta4u.blogspot.com 11-386

Managing The Development Process: Development to Commercialization Simulated Test Marketing Controlled Test Marketing Test Markets How many test cities? Which cities? Length of test? What information? What action to take? Business- Business-Goods Market Testing www.bookfiesta4u.blogspot.com 11-387

Managing The Development Process: Development to Commercialization Commercialization When (Timing) 1. First entry 2. Parallel entry Philips’ Pronto Web site 3. Late entry Where (Geographic Strategy) www.bookfiesta4u.blogspot.com 11-388

Managing The Development Process: Development to Commercialization To Whom (Target-Market Prospects) (Target- How (Introductory Market Strategy) Critical path scheduling (CPS) The iMac, launched with a dramatic countdown campaign www.bookfiesta4u.blogspot.com 11-389

The Consumer-Adoption Process Adoption Consumer- Consumer-adoption process Consumer- Consumer-loyalty process Mass- Mass-market approach Heavy- Heavy-usage target marketingStages in the Adoption Process Innovation Innovation diffusion process www.bookfiesta4u.blogspot.com 11-390

The Consumer-Adoption Process Adopters of new products move through five stages Awareness Interest Evaluation Trial AdoptionFactors Influencing the Adoption Process Readiness to Try New Products and Personal Influence www.bookfiesta4u.blogspot.com 11-391

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 Personal influenceCharacteristics of the Innovation Relative advantage Compatibility Complexity Divisibility CommunicabilityOrganizations’ Readiness to AdoptInnovations www.bookfiesta4u.blogspot.com 11-393

Chapter 13Designing GlobalMarket Offeringsby PowerPoint by Milton M. Pressley University of New Orleans www.bookfiesta4u.blogspot.com 11-394

Kotler onMarketingYour company doesnot belong inmarkets where itcannot be the best. www.bookfiesta4u.blogspot.com 11-395

Chapter ObjectivesIn this chapter, we focus on the followingquestions: What factors should a company review before deciding to go abroad? How can companies evaluate and select foreign markets to enter? What are the major ways of entering a foreign market? To what extent must the company adapt its products and marketing program to each foreign country? How should the company manage and organize its international activities? www.bookfiesta4u.blogspot.com 11-396

Competing on a Global Basis Global industry Global firm Figure 13.1: Major Decisions in International Marketing www.bookfiesta4u.blogspot.com 11-397

Deciding Whether To Go Abroad Factors drawing companies into the international arena: Global firms offering better products or lower prices can attack the company’s domestic market. The company discovers that some foreign markets present higher profit opportunities than the domestic market. The company needs a larger customer base to achieve economies of scale. The company wants to reduce its dependence on any one market. The company’s customers are going abroad and need servicing. www.bookfiesta4u.blogspot.com 11-398

Deciding Whether To Go Abroad Before going abroad, the company must weigh several risk: The company might not understand foreign customer preferences and fail to offer a competitively attractive product. The company might not understand the foreign country’s business culture or know how to deal effectively with foreign nationals. The company might underestimate foreign regulations and incur unexpected costs. The company might realize that it lacks managers with international experience. The foreign country might change its commercial laws, devalue its currency, or undergo a political revolution and expropriate property. www.bookfiesta4u.blogspot.com 11-399

Table 13.1: Blunders in International MarketingHallmark cards failed when they were introduced in France. The Frenchdislike syrupy sentiment and prefer writing their own cards.Philips began to earn a profit in Japan only after it had reduced the size ofits coffeemakers to fit into smaller Japanese kitchens and its shavers to fitsmaller Japanese hands.Coca-Coca-Cola had to withdraw its two-liter bottle in Spain after discovering two-that few Spaniards owned refrigerators with large enough compartments toaccommodate it.General Foods’ Tang initially failed in France because it was positioned asa substitute for orange juice at breakfast. The French drink little orangejuice and almost none at breakfast.Kellogg’s Pop-Tarts failed in Britain because the percentage of British Pop-homes with toasters was significantly lower than in the United States andthe product was too sweet for British tastes. See text for complete table www.bookfiesta4u.blogspot.com 11-400

In the early 20th century, the Trans-AtlanticTrans-cable allowed for the transmission ofphotographs in near real time. Still imageswent to press soon after news of events inEurope arrived here in the States. Are thereany emerging communication technologiestoday that show similarpotential? How can these beharnessed to improve acompany’s global offerings? www.bookfiesta4u.blogspot.com 11-401

Deciding Which Markets to EnterHow many markets to enter Ayal and Zif contend that a company should enter fewer countries when: Market entry and market costs are high Product and communication costs are high Population and income size and growth are high in the initial countries chosen Dominant foreign firms can establish high barriers to entry www.bookfiesta4u.blogspot.com 11-402

Deciding Which Markets to EnterRegional free trade zones The European Union NAFTA MERCOSUL APECEvaluating potential markets Psychic proximity www.bookfiesta4u.blogspot.com 11-403

Regional free trade zones offer manypotential benefits to companies expandingtheir offerings abroad. Clearly definednational import/export policies are just onepotential benefit. Can you think of anyothers? What marketingchallenges will not be easedby such agreements? www.bookfiesta4u.blogspot.com 11-404

Deciding How toEnter the Market Figure 13.2: Five Modes of Entry into Foreign Markets www.bookfiesta4u.blogspot.com 11-405

Deciding How to Enter the MarketIndirect and direct export Occasional exporting Active exporting Indirect exporting Domestic- Domestic-based export merchants Domestic- Domestic-based export agents Cooperative organizations Export- Export-management companies www.bookfiesta4u.blogspot.com 11-406

Deciding How to Enter the MarketCompanies can carry on directexporting in several ways Domestic- Domestic-based export department or division Overseas sales branch or subsidiary Traveling export sales representatives Foreign- Foreign-based distributors or agents www.bookfiesta4u.blogspot.com 11-407

Deciding How to Enter the MarketLicensing Management contracts Contract manufacturing Franchising www.bookfiesta4u.blogspot.com 11-408

Deciding How to Enter the MarketJoint venturesDirect investmentThe Internationalization Process Johanson and Wiedersheim-Paul identified Wiedersheim- four stages in the internationalization process: No regular export activities Export via independent representatives (agents) Establishment of one or more sales subsidiaries Establishment of production facilities abroad www.bookfiesta4u.blogspot.com 11-409

Deciding on the Marketing ProgramStandardized marketing mixAdapted marketing mix www.bookfiesta4u.blogspot.com 11-410

McDonald’s around the world: Hungary www.bookfiesta4u.blogspot.com 11-411

Deciding on the Marketing ProgramProduct Straight extension www.bookfiesta4u.blogspot.com 11-412

Figure 13.3: Five International Product and Promotion Strategies www.bookfiesta4u.blogspot.com 11-413

Deciding on the Marketing Program Product adaptation Product invention Backward invention Forward inventionPromotion Communication adaptation Dual adaptation www.bookfiesta4u.blogspot.com 11-414

Carlsberg’s global Web site www.bookfiesta4u.blogspot.com 11-415

Deciding on the Marketing ProgramPrice Price escalation Companies have three choices Set a uniform price everywhere Set a market-based price in each country market- Set a cost-based price in each country cost- Transfer price Dumping Arm’s- Arm’s-length price Gray market www.bookfiesta4u.blogspot.com 11-416

Deciding on theMarketing ProgramPlace (distribution channels) Seller’s international marketing headquarters Channels between nations Channels within foreign nations Figure 13.4: Whole-Channel Concept for International Marketing www.bookfiesta4u.blogspot.com 11-417

One of the most profound political changesin the late 20th century was the fall of the“iron curtain” and the subsequent openingof markets in Eastern Europe. Has thispotential marketplace been fullyexploited by Americancompanies? Europeancompanies? Why orwhy not? www.bookfiesta4u.blogspot.com 11-418

Deciding on the Marketing OrganizationExport departmentInternational division Geographical organizations World product groups International subsidiaries www.bookfiesta4u.blogspot.com 11-419

Deciding on the Marketing OrganizationGlobal organization Bartlett and Ghoshal distinguish three organizational strategies: A global strategy treats the world as a single market. A multinational strategy treats the world as a portfolio of national opportunities. A “glocal” strategy standardizes certain core elements and localizes other elements. www.bookfiesta4u.blogspot.com 11-420

Chapter 14Setting the Product andBranding Strategyby PowerPoint by Milton M. Pressley University of New Orleans www.bookfiesta4u.blogspot.com 11-421

Kotler onMarketingThe best way to holdcustomers is toconstantly figure outhow to give themmore for less. www.bookfiesta4u.blogspot.com 11-422

Chapter ObjectivesIn this chapter, we focus on the followingquestions: What are the characteristics of products? How can a company build and manage its product mix and product lines? How can a company make better brand decisions? How can packaging and labeling be used as marketing tools? www.bookfiesta4u.blogspot.com 11-423

The Product and the Product MixProduct Figure 14.1: Components Physical goods of the Market Offering Services Experiences Events Persons Places Properties Organizations Information Ideas www.bookfiesta4u.blogspot.com 11-424

The Product and the Product MixProduct levels Figure 14.2: Five Customer value Product Levels hierarchy Core benefit Basic product Expected product Augmented product www.bookfiesta4u.blogspot.com 11-425

BabyCenter is not just an online merchant, it’s a metamediary www.bookfiesta4u.blogspot.com 11-426

The Product and the Product Mix Consumption system Potential product General Mills’ Mycereal.comProduct hierarchy Web site Need family Product family Product class Product line Product type Item www.bookfiesta4u.blogspot.com 11-427

The Product and the Product Mix Product system Product mixProduct classifications Durability and Tangibility Classification: Nondurable goods Durable goods Services www.bookfiesta4u.blogspot.com 11-428

The Product and the Product MixConsumer-Consumer-Goods Classification: Convenience goods Staples Impulse goods Emergency goods Shopping goods Homogeneous shopping goods Heterogeneous shopping goods Specialty goods Unsought goods www.bookfiesta4u.blogspot.com 11-429

The Product and the Product MixIndustrial-Industrial-Goods Classification Materials and parts Farm products Natural products Manufactured materials and parts Component materials Component parts Capital items Installations Equipment www.bookfiesta4u.blogspot.com 11-430

The Product and the Product MixSupplies and business services Maintenance and repair items Operating supplies Maintenance and repair services Business advisory services www.bookfiesta4u.blogspot.com 11-431

The Product and the Product MixProduct mix (Productassortment) Product mix has a certain: Width Length Depth Consistency www.bookfiesta4u.blogspot.com 11-432

Table 14.1: Product-Mix Width and Product-Line Length for Proctor& Gamble Products Product- Product-Mix Width Disposable Paper Detergents Toothpaste Bar Soap Diapers Tissue Ivory Snow Gleem (1952) Ivory Pampers Charmin (1930) (1879) (1961) (1928) Crest (1955)PRODUCT-PRODUCT- Dreft Kirk’s Luvs PuffsLINE (1933) (1885) (1976) (1960)LENGTH Tide Lava Banner (1946) (1893) (1982) Cheer Camay Summit (1950) (1926) (1992) See text for complete table 11-433 www.bookfiesta4u.blogspot.com

The Product and the Product MixProduct-Product-line decisions Product- Product-line analysis Sales and Profits Four types of product classes: Core product Staples Specialties Convenience items www.bookfiesta4u.blogspot.com 11-434

The Product and the Product Mix Market profileFigure 14.4:Product Mapfor aPaper-ProductLine www.bookfiesta4u.blogspot.com 11-435

The Product and the Product MixProduct-Product-line length Line Stretching Downmarket Stretch The company may notice strong growth opportunities as mass retailers attract a growing number of shoppers The company may wish to tie up lower-end competitors lower- who might otherwise try to move upmarket The company may find that the middle market is stagnating or declining Upmarket Stretch Two- Two-Way Stretch www.bookfiesta4u.blogspot.com 11-436

Kmart has entered into branding anddistribution agreements with celebrities likeKate Smith for women’s apparel and MarthaStewart in house wares, gardening supplies,etc. Is this an upmarket stretch, adownmarket stretch or a two-way stretch two-for Kmart? www.bookfiesta4u.blogspot.com 11-437

The Product and the Product MixLine Filling Brand decisions Just- Just-noticeable What is brand? difference AttributesLine Modernization, Benefitsfeaturing, and Valuespruning Culture Personality User www.bookfiesta4u.blogspot.com 11-438

The Product and the Product MixCommonly used research approachesto determine brand meaning: Word associations Personifying the brand Laddering up the brand essence Brand essence Laddering up www.bookfiesta4u.blogspot.com 11-439

The Product and the Product MixBuilding Brand Identity Brand bonding Brands are not built by advertising but by the brand experience Everyone in the company lives the brand Three ways to carry on internal branding – Employees must Understand Desire, and Deliver on the brand promise www.bookfiesta4u.blogspot.com 11-440

The Product and the Product MixBuilding Brands in the new economy Heidi and Don Schultz urge companies to: Clarify the corporation’s basic values and build the corporate brand. Use brand managers to carry out the tactical work. Develop a more comprehensive brand-building plan. brand- Define the brand’s basic essence to be delivered wherever it is sold. Use the brand-value proposition as the key driver of the company’s brand- strategy, operations, services, and product development. Measure their brand-building effectiveness, not by the old measures brand- of awareness, recognition, and recall, but by a more comprehensive set of measures including customer-perceived value, customer customersatisfaction, customer share of wallet, customer retention, and customer advocacy. www.bookfiesta4u.blogspot.com 11-441

The Product and the Product MixBrand Equity Brand awareness Brand acceptability Brand preference Aaker’s five levels of customer attitude: The customer will change brands, especially for price reasons. No brand loyalty. Customer is satisfied. No reason to change brands. Customer is satisfied and would incur cost by changing brand. Customer values the brand and sees it as a friend. Customer is devoted to the brand. www.bookfiesta4u.blogspot.com 11-442

The Product and the Product MixValue of Brand Equity Brand valuation Competitive advantages of high brand equity: The company will have more leverage in bargaining with distributors and retailers because customers expect them to carry the brand. The company can charge a higher price than its competitors because the brand has higher perceived quality. The company can more easily launch extensions because the brand name carries high credibility. The brand offers some defense against price competition. www.bookfiesta4u.blogspot.com 11-443

The Product and the Product Mix Managing Brand Equity Branding Challenges Branding Decision: To Brand or Not to Brand? www.bookfiesta4u.blogspot.com 11-444

When is a brand more than just a brand?Have you ever based a purchasing decisionprimarily on the brand? Was it because ofsome perceived quality difference, or was itbased on the expectation of how otherswould see or treat you? Have you ever seensomeone buying a givenbrand of an item in anattempt to be seen as “cool”? www.bookfiesta4u.blogspot.com 11-445

The Product and the Product MixBranding gives the seller several advantages: Brand name makes it easier for the seller to process orders and track down problems Seller’s brand name and trademark provide legal protection of unique product features Branding gives the seller the opportunity to attract a loyal and profitable set of customers. Branding helps the seller segment markets. Strong brands help build corporate image, making it easier to launch new brands and gain acceptance by distributors and consumers. www.bookfiesta4u.blogspot.com 11-446

The Product and the Product MixBrand-Brand-Sponsor Decisions Manufacturer brand Distributor brand Licensed brand name Slotting fee Brand ladder Brand parity www.bookfiesta4u.blogspot.com 11-447

The Product and the Product MixBrand-Brand-Name Decision Four available strategies: Individual names Blanket family names Separate family names for all products Corporate name combined with individual product names www.bookfiesta4u.blogspot.com 11-448

The Product and the Product MixDesirable qualities for a brand name It should suggest something about the product’s benefits It should suggest the product or service category It should suggest concrete, “high imagery” qualities It should be easy to spell, pronounce, recognize, and remember It should be distinctive It should not carry poor meanings in other countries and languages www.bookfiesta4u.blogspot.com 11-449

The Product and the Product MixBrand building tools Public relations and Public facilities press releases Social cause Sponsorships marketing Clubs and consumer High value for communities the money Factory visits Founder’s or a Trade shows celebrity personality Event marketing Mobile phone marketing www.bookfiesta4u.blogspot.com 11-450

Nike’s arrangement with Michael Jordanhas provided an excellent example of acelebrity endorsement. Can you think ofan endorsement campaign that backfired?What did it cost the companyin the short term? What,if any, have been thelasting effects? www.bookfiesta4u.blogspot.com 11-451

The Product and the Product Mix Brand Strategy Decision Functional brand Image brand Experimental brands Line Extensions Branded variants Brand extensions Brand dilution www.bookfiesta4u.blogspot.com 11-452

The Product and the Product Mix Multibrands, New Brands, and Co-Brands Co- Multibrand Flanker Bands Co-branding (Dual branding) Co- Ingredient co-branding co- Same- Same-company co-branding co- Joint venture co-branding co- Multisponsor co-branding co- www.bookfiesta4u.blogspot.com 11-453

The Product and the Product Mix Brand Asset Management Brand Auditing and Repositioning Brand report card www.bookfiesta4u.blogspot.com 11-454

The Product and the Product MixPackaging and Labeling Packaging Package Primary Package Secondary Package Shipping Package Factors which have contributed to the growing use of packaging as a marketing tool Self- Self-Service Consumer affluence Company and brand image Innovation opportunity www.bookfiesta4u.blogspot.com 11-455

The Product and the Product MixLabeling Functions Identification Grading Description Consumerists have lobbied for: Open dating Unit pricing Grade labeling Percentage labeling www.bookfiesta4u.blogspot.com 11-456

Chapter 15Designing and ManagingServicesby PowerPoint by Milton M. Pressley University of New Orleans www.bookfiesta4u.blogspot.com 11-457

Kotler onMarketingEvery business is aservice business.Does your serviceput a smile on thecustomer’s face? www.bookfiesta4u.blogspot.com 11-458

Chapter ObjectivesIn this chapter, we focus on the followingquestions: How are services defined and classified? How do services differ from goods? How can service firms improve their differentiation, quality, and productivity? How can goods-producing companies goods- improve their customer support services? www.bookfiesta4u.blogspot.com 11-459

The Nature of Services Government sector Private non-profit non- sector Keen.com is a virtual Business advice marketplace sector Manufacturing sectorService www.bookfiesta4u.blogspot.com 11-460

The Nature of ServicesCategories of Service Mix Pure tangible good Tangible good with accompanying services Hybrid Major service with accompanying minor goods and services Pure service www.bookfiesta4u.blogspot.com 11-461

The Nature of ServicesCharacteristics of Services and TheirMarketing Implications Intangibility Service positioning strategy can be made tangible through: Place People Equipment Communication material Symbols Price www.bookfiesta4u.blogspot.com 11-462

Online companies that provide services areoften directly impacted by the quality of acustomer’s computer or the customer’sInternet connection. Can you think ofanother service sector that has so littlecontrol over the environmentin which their servicesare provided? www.bookfiesta4u.blogspot.com 11-463

The Nature of ServicesCarbone and Haeckel purpose thefollowing for customer experienceengineering Performance and context clues Humanics Mechanics Experience blueprint www.bookfiesta4u.blogspot.com 11-464

The Nature of ServicesInseparabilityVariability Quality control by: Good hiring and training procedures Service blueprint Monitoring customer satisfaction www.bookfiesta4u.blogspot.com 11-465

The Nature of ServicesPerishability Strategies for better matching between demand and supply in a service business Differential pricing Nonpeak demand Complementary services Reservation systems Part- Part-time employees Peak- Peak-time efficiency Increased consumer participation Shared services Facilities for future expansion www.bookfiesta4u.blogspot.com 11-466

Marketing Strategies for Service FirmsThree Additional Ps People Physical evidence presentation Process www.bookfiesta4u.blogspot.com 11-467

Figure 15.3: Three Types of Marketing in Service Industries www.bookfiesta4u.blogspot.com 11-468

Marketing Strategies for Service Firms Service Companies face three tasks: Competitive differentiation Service quality ProductivityManaging differentiation Offering Primary service package Secondary service features www.bookfiesta4u.blogspot.com 11-469

Kaiser Permanente Online has over 30,000 registered users www.bookfiesta4u.blogspot.com 11-470

Marketing Strategies for Service Firms Faster and Better Delivery Reliability Resilience Innovativeness ImageManaging Service Quality Perceived service Expected service www.bookfiesta4u.blogspot.com 11-471

FedEx and UPS have taken over much of theUS Postal Service’s business, mostly throughflexibility and innovation that the USPS can’tmatch. Can you think of another governmentalservice (anywhere in the world) where a privatecompany has been able to take the profitablesegment of a service, andleave the less profitable ormore risky segment for agovernment agency? www.bookfiesta4u.blogspot.com 11-472

Marketing Strategies for Service FirmsFive gaps that cause unsuccessfuldelivery Gap between consumer expectation and management perception Gap between management perception and service-quality service- specification Gap between service-quality service- specification and service delivery Gap between service delivery and external communications Gap between perceived service and expected service www.bookfiesta4u.blogspot.com 11-473

Marketing Strategies for Service Firms Five determinants of service quality Reliability Responsiveness Assurance Empathy Tangibles Strategic Concept Top- Top-Management Commitment High Standards Self- www.bookfiesta4u.blogspot.com Self-Service Technologies (SSTS) 11-474

Myalert.com provides access to services that users can perform themselves www.bookfiesta4u.blogspot.com 11-475

Table 15.1 Customer Importance and Performance Ratings for an Auto Dealership Mean MeanAttribute Importance PerformanceNumber Attribute Description Rating Rating 1 Job done right the first time 3.83 2.63 2 Fast action on complaints 3.63 2.73 3 Prompt warranty work 3.60 3.15 4 Able to do any job needed 3.56 3.00 See text for complete table www.bookfiesta4u.blogspot.com 11-476

Marketing Strategies for Service Firms Satisfying Customer Complaints Satisfying Employees As Well As Customers Managing Productivity Seven approaches to improving service productivity: Have service providers work more skillfully Increase the quantity of service by surrendering some quality “Industrialize the service” by adding equipment and standardizing production Reduce or make obsolete the need for a service by inventing a product solution Design a more effective service Present customers with incentives to substitute their own labor for company labor Harness the power of technology to give customers access to better service and make service workers more productive www.bookfiesta4u.blogspot.com 11-477

Managing Product Support ServicesCustomers have three worries Reliability and failure frequency Downtime duration Out-of- Out-of-pocket costs of maintenance and repairLife-Life-cycle cost www.bookfiesta4u.blogspot.com 11-478

Managing Product Support ServicesTo provide the best support for expensiveequipment, firms offer: Facilitating services Value- Value-augmenting servicesHerman Miller Office Furniture Companyoffers: Five- Five-year product warranties Quality audits after installation Guaranteed move-in dates move- Trade- Trade-in allowances on systems products www.bookfiesta4u.blogspot.com 11-479

Managing Product Support ServicesPostsale Service StrategyMajor trends in product support service Lele has noted the following: Equipment manufacturers are building more reliable and more easily fixable equipment Customers are becoming more sophisticated about buying product support services “Service unbundling” www.bookfiesta4u.blogspot.com 11-480

Managing ProductSupport ServicesCustomers dislike dealing with multipleservice providers handling different typesof equipment Third- Third-party service organizationsService contracts (extended warranties)may diminish in importanceCustomer service choices are increasingrapidly–rapidly–this is holding down prices andprofitsCompanies are increasing the quality oftheir call centers and their customer servicerepresentatives (CSRs) www.bookfiesta4u.blogspot.com 11-481

Chapter 16Developing Price Strategiesand Programsby PowerPoint by Milton M. Pressley University of New Orleans www.bookfiesta4u.blogspot.com 11-482

Kotler onMarketingSell value,not price. www.bookfiesta4u.blogspot.com 11-483

Chapter ObjectivesIn this chapter, we focus on threequestions: How should a price be set on a product or service for the first time? How should the price be adapted to meet varying circumstances and opportunities? When should the company initiate a price change, and how should it respond to a competitor’s price change? www.bookfiesta4u.blogspot.com 11-484

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

Setting the PriceStep 1: Selecting the pricing objective Survival Maximize current profits Maximize their market share Market- Market-penetration pricing Best when: Market is highly price-sensitive, and a low price price- stimulates market growth, Production and distribution costs fall within accumulated production experience, and Low price discourages actual and potential competition www.bookfiesta4u.blogspot.com 11-487

Many companies engage in “marketskimming,” offering new products atwhatever price the market will bear, thenover time decreasing the price in order togain the maximum profit from eachmarket segment. Can you think of anyproducts that wouldn’t fitthis pricing model?Why not? www.bookfiesta4u.blogspot.com 11-488

Maytag’s homepage presents its “corporate family of brands” www.bookfiesta4u.blogspot.com 11-489

Setting the PriceStep 2: Determining Demand Price sensitivity Total Cost of Ownership (TCO) www.bookfiesta4u.blogspot.com 11-490

Setting the PriceTom Nagle offers this list of factors associatedwith lower price sensitivity The product is more distinctive Buyers are less aware of substitutes Buyers cannot easily compare the quality of substitutes The expenditure is a smaller part of the buyer’s total income The expenditure is small compared to the total cost of the end product Part of the cost is borne by another party The product is used in conjunction with assets previously bought The product is assumed to have more quality, prestige, or exclusiveness Buyers cannot store the product www.bookfiesta4u.blogspot.com 11-491

Setting the PriceEstimating Demand CurvesPrice Elasticity of Demand Inelastic Elastic Price indifference band www.bookfiesta4u.blogspot.com 11-492

Setting the PriceStep 3: Estimating Cost Types of Cost and Levels of Production Fixed costs (overhead) Variable cost Total cost Average cost Accumulated Production Experience curve (Learning curve) www.bookfiesta4u.blogspot.com 11-493

Setting the Price Differentiated Marketing Offers Activity- Activity-based cost (ABC) accounting Target costingStep 4: Analyzing Competitors’Cost, Prices, and Offers www.bookfiesta4u.blogspot.com 11-494

Setting the PriceStep 5: Selecting a Pricing Method Markup Pricing Unit Cost = variable cost + (fixed cost/unit sales) Markup price Markup price= unit cost/ (1 – desired return on sales) Target- Target-Return Pricing Target- Target-return price = unit cost + (desired return X investment capital)/unit sales www.bookfiesta4u.blogspot.com 11-495

Setting the Price Break- Break-even volumeBreak-Break-even volume = fixed cost / (price – variable cost) Perceived- Perceived-Value Pricing Perceived value Price buyers Figure 16.8: Break-Even Chart for Determining Target-Return Price and Value buyers Break-Even Volume Loyal buyers Value-in- Value-in-use price www.bookfiesta4u.blogspot.com 11-496

Setting the PriceValue Pricing Everyday low pricing (EDLP) High- High-low pricingGoing-Going-Rate PricingAuction-Auction-Type Pricing English auctions (ascending bids) Dutch auctions (descending bids) Sealed- Sealed-bid auctionsGroup Pricing www.bookfiesta4u.blogspot.com 11-497

Table 16.1: Effect of Different Bids on Expected Profit Probability of GettingCompany’s Company’s Award with Bid Profit This Bid Expected (Assumed) Profit $ 9,500 $ 100 0.81 $ 81 10,000 600 0.36 216 10,500 1,100 0.09 99 11,000 1,600 0.01 16 www.bookfiesta4u.blogspot.com 11-498

volumebuy.com: group or pool pricing www.bookfiesta4u.blogspot.com 11-499

Some large entities, both public and private,currently bid online for many products and services.Do you think there will be a market for consumers tobid on electrical power, like major corporateelectricity users do? What about oilfor heating? Can you think of anyother products or services with apotential online auctionmarket for home users? www.bookfiesta4u.blogspot.com 11-500

Setting the PriceStep 6: Selecting the Final Price Psychological Pricing Reference price Gain-and-Risk- Gain-and-Risk-Sharing Pricing Influence of the Other Marketing Elements Brands with average relative quality but high relative advertising budgets charged premium prices Brands with high relative quality and high relative advertising budgets obtained the highest prices The positive relationship between high advertising budgets and high prices held most strongly in the later stages of the product life cycle for market leaders www.bookfiesta4u.blogspot.com 11-501

Setting the Price Brands with average relative quality but high relative advertising budgets charged premium prices Brands with high relative quality and high relative advertising budgets obtained the highest prices The positive relationship between high advertising budgets and high prices held most strongly in the later stages of the product life cycle for market leadersCompany Pricing PoliciesImpact of Price on Other Parties www.bookfiesta4u.blogspot.com 11-502

Adapting the PriceGeographical Pricing (Cash,Countertrade, Barter) Countertrade Barter Compensation deal Buyback arrangement Offset Price Discounts and Allowances www.bookfiesta4u.blogspot.com 11-503

Table 16.2: Price Discounts and AllowancesCash Discount: A price reduction to buyers who pay bills promptly. A typical example is “2/10, net 30,” which means that payment is due within 30 days and that the buyer can deduct 2 percent by paying the bill within 10 days.Quantity Discount: A price reduction to those who buy large volumes. A typical example is “$10 per unit for less than 100 units; $9 per unit for 100 or more units.” Quantity discounts must be offered equally to all customers and must not exceed the cost savings to the seller. They can be offered on each order placed or on the number of units ordered over a given period. See text for complete table www.bookfiesta4u.blogspot.com 11-504

Adapting the PricePromotional Pricing Loss- Loss-leader pricing Special- Special-event pricing Cash rebates Low- Low-interest financing Longer payment terms Warranties and service contracts Psychological discounting www.bookfiesta4u.blogspot.com 11-505

Adapting the PriceDiscriminatory Pricing Customer segment pricing Product- Product-form pricing Image pricing Channel pricing Location pricing Time pricing Yield pricing www.bookfiesta4u.blogspot.com 11-506

Adapting the PriceProduct-Product-mix pricing Product- Product-Line Pricing Optional- Optional-Feature Pricing Captive- Captive-Product Pricing Captive products Two- Two-Part Pricing By-Product Pricing By- Product- Product-Bundling Pricing Pure bundling Mixed bundling www.bookfiesta4u.blogspot.com 11-507

personify.com provides software that helps Web merchants find target customers www.bookfiesta4u.blogspot.com 11-508

Initiating and Responding to Price Changes Initiating Price Cuts Drive to dominate the market through lower costs Low quality trap Fragile-market- Fragile-market-share trap Shallow- Shallow-pockets trap www.bookfiesta4u.blogspot.com 11-509

Table 16.3: Marketing-Mix AlternativesStrategic Options Reasoning Consequences1. Maintain price and Firm has higher Smaller market share. perceived quality. customer loyalty. It is Lowered profitability. Engage in selective willing to lose poorer customer pruning. customers to competitors.2. Raise price and Raise price to cover Smaller market share. perceived quality. rising costs. Improve Maintained quality to justify higher profitability. prices.3. Maintain price and It is cheaper to Smaller market share. raise perceived maintain price and Short- Short-term decline in quality. raise perceived quality. profitability. Long-term Long- increase in profitability. See text for complete table www.bookfiesta4u.blogspot.com 11-510

Initiating and Responding to Price Changes Table 16.4: Profits Before and After a Price Increase Before AfterPrice $ 10 $10.10 (a 1 percent price increase)Units sold 100 100Revenue $1000 $1010Costs -970 -970Profit $ 30 $ 40 (a 33 1/3 percent profit increase) www.bookfiesta4u.blogspot.com 11-511

Initiating and Responding to Price Changes Initiating Price Increases Cost inflation Anticipatory pricing Overdemand Delayed quotation pricing Escalator clauses Unbundling Reduction of discounts www.bookfiesta4u.blogspot.com 11-512

Initiating and Responding to Price ChangesPossible responses to higher costs or overhead withoutraising prices include: Shrinking the amount of product instead of raising the price Substituting less expensive materials or ingredients Reducing or removing product features Removing or reducing product services, such as installation or free delivery Using less expensive packaging material or larger package sizes Reducing the number of sizes and models offered Creating new economy brands www.bookfiesta4u.blogspot.com 11-513

Initiating and Responding to Price Changes Reactions to Price Changes Customer Reactions Competitor Reactions Responding to Competitors’ Price Changes Maintain price Maintain price and add value Reduce price Increase price and improve quality Launch a low-price fighter line low- www.bookfiesta4u.blogspot.com 11-514

Chapter 17Designing and ManagingValue Networks andMarketing Channelsby PowerPoint by Milton M. Pressley University of New Orleans www.bookfiesta4u.blogspot.com 11-515

Kotler onMarketingEstablish channels fordifferent target marketsand aim for efficiency,control, andadaptability. www.bookfiesta4u.blogspot.com 11-516

Chapter ObjectivesIn this chapter, we focus on the followingchannel questions from the viewpoint of themanufacturers: What is the value network and marketing channel system? What work is performed by marketing channels? What decisions do companies face in designing, managing, evaluating, and modifying their channels? What trends are taking place in channel dynamics? How can channel conflict be managed? www.bookfiesta4u.blogspot.com 11-517

What is a Value Network andMarketing-Channel System? Value Network Marketing channel www.bookfiesta4u.blogspot.com 11-518

Oracle’s home page www.bookfiesta4u.blogspot.com 11-519

What is a Value Network andMarketing-Channel System? “Go-to- “Go-to-market” or hybrid channels IBM’s sales force sells to large accounts, outbound telemarketing sells to medium-sized accounts, direct mail medium- sells to small accounts, retailers sell to still smaller accounts, and the Internet to sell specialty items Charles Schwab enables its customers to do transactions in branch offices, over the phone, or via the Internet Staples markets through traditional retail, direct-response direct- Internet site, virtual malls, and 30,000 linked affiliated sites www.bookfiesta4u.blogspot.com 11-520

What is a Value Network andMarketing-Channel System? Channel integration characteristics: Ability to order a product online, and pick it up at a convenient retail location Ability to return an online-ordered online- product to a nearby store Right to receive discounts based on total of online and off-line purchases off- www.bookfiesta4u.blogspot.com 11-521

What Work is Performed by Marketing Channels? Many producers lack the financial resources to carry out direct marketing In some cases direct marketing simply is not feasible Producers who do establish their own channels can often earn a greater return by increasing their investment in their main business. www.bookfiesta4u.blogspot.com 11-522

Figure 17.1:How aDistributorEffects anEconomy ofEffort www.bookfiesta4u.blogspot.com 11-523

As more retailers develop a web presence, theyoften move from a “brick-and-mortar” to a “brick-and-“click-and-“click-and-mortar” business model wherecustomers expect channel integration. Can youidentify any potential problems for thesecompanies? Can you identify any uniquemarketing opportunitiesthat such a change wouldoffer these companies? www.bookfiesta4u.blogspot.com 11-524

What Work is Performed by Marketing Channels? Channel Functions and Flows Key functions include: Gather information about potential and current customers, competitors, and others Develop and disseminate persuasive communications to stimulate purchasing Reach agreements on price and other terms so that transfer of ownership or possession can be effected Place orders with manufacturers www.bookfiesta4u.blogspot.com 11-525

What Work is Performed by Marketing Channels? Acquire funds to finance inventories at different levels in the marketing channel Assume risk connected with carrying out channel work Provide for the successive storage and movement of physical products Provide for buyers’ payment of their bills through banks and other financial institutions Oversee actual transfer of ownership from one organization or person to another www.bookfiesta4u.blogspot.com 11-526

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? Forward flow Backward flow www.bookfiesta4u.blogspot.com 11-528

What Work is Performed by Marketing Channels? Channel levels Zero- Zero-level channel (a.k.a. direct-marketing direct- channel) One- One-level channel Two- Two-level channel Three- Three-level channel Reverse- Reverse-flow channel Service Sector Channels Information Highway Channels www.bookfiesta4u.blogspot.com 11-529

The advent of print media, the telephone,radio, television, and the Internet have allprovided new ways for marketers to get theirmessage to their intended audience. Asvarious technologies advance, theseinformation channels offer more precisedelivery of a message. Canyou identify an emerginginformation distributionchannel? www.bookfiesta4u.blogspot.com 11-530

The People’s Bank Internet site www.bookfiesta4u.blogspot.com 11-531

Channel-Design Decisions Push strategy Pull strategy Designing a channel system involves four steps: Analyzing customer needs Establishing channel objectives Identifying major channel alternatives Evaluating major channel alternatives www.bookfiesta4u.blogspot.com 11-532

Channel-Design Decisions Analyze Customers’ Desired Service Output Levels Lot size Waiting time Spatial convenience Product variety Service backup www.bookfiesta4u.blogspot.com 11-533

Channel-Design Decisions Establish Objectives and Constraints Identify Major Channel Alternatives Types of Intermediaries Number of Intermediaries Exclusive distribution Exclusive dealing Selective distribution Intensive distribution www.bookfiesta4u.blogspot.com 11-534

Channel-Design Decisions Terms and Responsibilities of Channel Members Price policy Conditions of sale Distributors’ territorial rights Evaluate the Major Alternatives Economic Criteria www.bookfiesta4u.blogspot.com 11-535

Figure 17.4: The Value-Adds versus Costs of Different Channels www.bookfiesta4u.blogspot.com 11-536

Channel-Design Decisions Channel advantage Control and Adaptive Criteria Figure 17.5: Break-even Cost Chart www.bookfiesta4u.blogspot.com 11-537

Channel-Management Decisions Selecting Channel Members Training Channel Members Motivating Channel Members Producers can use: Coercive power Reward power Legitimate power Expert power Referent power www.bookfiesta4u.blogspot.com 11-538

Channel-Management Decisions Distribution programming Distributor- Distributor-relations planningEvaluating Channel MembersModifying Channel Arrangements www.bookfiesta4u.blogspot.com 11-539

Channel DynamicsVertical Marketing Systems Conventional marketing channel Vertical marketing systems (VMS) Corporate and Administered VMS Corporate VMS Administered VMS www.bookfiesta4u.blogspot.com 11-540

Channel DynamicsContractual VMS Wholesaler- Wholesaler-sponsored voluntary chains Retailer cooperatives Franchise organizationsManufacturer-Manufacturer-sponsored retailer franchiseManufacturer-Manufacturer-sponsored wholesalerfranchiseService-firm-Service-firm-sponsored retailer franchise www.bookfiesta4u.blogspot.com 11-541

Channel Dynamics The New Competition in RetailingHorizontal Marketing SystemsMultichannel Marketing Systems www.bookfiesta4u.blogspot.com 11-542

Channel DynamicsRoles of Individual Firms Insiders Strivers Complementers Transients Outside innovators www.bookfiesta4u.blogspot.com 11-543

Channel DynamicsConflict, Cooperation, and Competition Types of Conflict and Competition Vertical channel conflict Horizontal channel conflict Multichannel conflict Causes of Channel Conflict Goal incompatibility Unclear roles and rights Differences in perception www.bookfiesta4u.blogspot.com 11-544

Channel DynamicsBy adding new channels, a company facesthe possibility of channel conflict whichmay include: Conflict between the national account managers and field sales force Conflict between the field sales force and the telemarketers Conflict between the field sales force and the dealers www.bookfiesta4u.blogspot.com 11-545

Channel DynamicsManaging Channel Conflict Diplomacy Mediation ArbitrationLegal and Ethical Issuesin Channel Distribution Exclusive distribution Exclusive dealing Tying agreements www.bookfiesta4u.blogspot.com 11-546

Chapter 18Managing Retailing,Wholesaling, and MarketLogisticsby PowerPoint by Milton M. Pressley University of New Orleans www.bookfiesta4u.blogspot.com 11-547

Kotler onMarketingSuccessful “go-to-market” strategiesrequire integratingretailers, wholesalers,and logisticalorganizations. www.bookfiesta4u.blogspot.com 11-548

Chapter ObjectivesIn this chapter, we focus on the followingquestions about each marketingintermediary: What major types of organizations occupy this sector? What marketing decisions do organizations in this sector make? What are the major trends in this sector? www.bookfiesta4u.blogspot.com 11-549

RetailingTypes of Retailers Retail life cycle www.bookfiesta4u.blogspot.com 11-550

Table 18.1: Major Retailer TypesSpecialty Store: Narrow product line with a deep assortment. A clothing storewould be a single-line store; a men’s clothing store would be a limited-line single- limited-store; and a men’s custom-shirt store would be a superspecialty store. custom-Examples: Athlete’s Foot, Tall Men, The Limited, The Body Shop.Department Store: Several product lines—typically clothing, home lines—furnishings, and household goods—with each line operated as a separate goods—department managed by specialist buyers or merchandisers. Examples: Examples:Sears, JCPenney, Nordstrom, Bloomingdale’s.Supermarket: Relatively large, low-cost, low-margin, high volume, self- low- low- self-service operation designed to serve total needs for food, laundry, andhousehold products. Examples: Kroger, Food Emporium, Jewel. Examples:Convenience Store: Relatively small store located near residential area,open long hours, seven days a week, and carrying a limited line of high- high-turnover convenience products at slightly higher prices, plus takeoutsandwiches, coffee, soft drinks. Examples: 7-Eleven, Circle K. Examples: 7- See text for complete table www.bookfiesta4u.blogspot.com 11-551

RetailingLevels of Service Wheel-of- Wheel-of-retailing Four levels of service: Self- Self-service Self- Self-selection Limited service Full service www.bookfiesta4u.blogspot.com 11-552

Figure 18.1:RetailPositioningMap www.bookfiesta4u.blogspot.com 11-553

Retailing Nonstore retailing Categories of nonstore retailing Direct selling Direct marketing Telemarketing Television direct-response marketing direct- Electronic shopping Automatic vending Buying serviceCorporate Retailing www.bookfiesta4u.blogspot.com 11-554

Table 18.2: Major Types of Retail OrganizationsCorporate Chain Store: Two or more outlets commonly owned andcontrolled, employing central buying and merchandising, and selling similarlines of merchandise. Their size allows them to buy in large quantities at lowerprices, and they can afford to hire corporate specialists to deal with pricing,promotion, merchandising, inventory control, and sales forecasting.Examples:Examples: Tower Records, GAP, Pottery Barn.Voluntary Chain: A wholesaler-sponsored group of independent retailers wholesaler-engaged in bulk buying and common merchandising. Examples: Independent Examples:Grovers Alliance (IGA), True Value Hardware.Retailer Cooperative: Independent retailers who set up a central buyingorganization and conduct joint promotion efforts. Examples: Associated Examples:Grocers, ACE Hardware.Consumer Cooperative: A retail firm owned by its customers. In consumer Cooperative:coops residents contribute money to open their own store, vote on its policies,elect a group to manage it, and receive patronage dividends. See text for complete table www.bookfiesta4u.blogspot.com 11-555

RetailingMarketing DecisionsTarget MarketProduct Assortment and Procurement Breadth Depth www.bookfiesta4u.blogspot.com 11-556

RetailingProduct-Product-differentiation Strategy Possibilities Feature exclusive national brands that are not available at competing retailers Feature mostly private branded merchandise Feature blockbuster distinctive merchandise events Feature surprise or ever-changing merchandise ever- Feature the latest or newest merchandise first Offer merchandise customizing services Offer a highly targeted assortment www.bookfiesta4u.blogspot.com 11-557

Wal-Wal-Mart has for the first time moved intothe number one position on Fortunemagazine’s “Fortune 500” list, passing upsuch companies as GM and Exxon. How hastheir target market identification helped putthem into this position? What canWal-Wal-Mart’s chief rivals,K-Mart and Target, doto try to close the gap? www.bookfiesta4u.blogspot.com 11-558

Retailing Merchandise managers Direct product profitability (DPP)Services and Store Atmosphere Prepurchase services include accepting telephone and mail orders, etc. Postpurchase services include shipping and delivery, etc. Ancillary services include general information, check cashing, parking, etc.Price Decision High- High-markup, lower volume Low- Low-markup, high volume www.bookfiesta4u.blogspot.com 11-559

RetailingPromotion DecisionPlace Decision General business districts Regional shopping centers Community centers Strip malls (a.k.a. shopping strips) A location within a larger store www.bookfiesta4u.blogspot.com 11-560

Retailing Trends in Retailing1. New retail forms and combinations2. Growth of intertype competition3. Growth of giant retailers4. Growing investment in technology5. Global presence of major retailers6. Selling an experience, not just goods7. Competition between store-based store- and non-store-based retailing non-store- www.bookfiesta4u.blogspot.com 11-561

How have the “television age,” the“information age,” and the emergence of aworld consumer culture affected markettargeting decisions of retailers? Whateffect do you think trade entities likeNAFTA and the EuropeanUnion have hadon retailing? www.bookfiesta4u.blogspot.com 11-562

Wholesaling Wholesalers’ functions: Selling and promoting Buying and assortment building Bulk breaking Warehousing Transportation Financing Risk bearing Market information Management services and counselingThe Growth and Types of Wholesaling www.bookfiesta4u.blogspot.com 11-563

Table 18.3: Major Wholesaler TypesMerchant Wholesalers: Independently owned businesses that taketitle to the merchandise they handle. They are called jobbers,distributors,distributors, or mill supply houses and fall into two categories: fullservice and limited service.Full-Full-Service Wholesalers: Carry stock, maintain a sales force, offer Wholesalers:credit, make deliveries, and provide management assistance. Thereare two types of full-service wholesalers: (1) Wholesale merchants full-sell primarily to retailers and provide a full range of services. General- General-merchandise wholesalers carry several merchandise lines. General-General-line wholesalers carry one or two lines. Specialty wholesalers carryonly part of a line. (2) Industrial distributors sell to manufacturersrather than to retailers and provide several services—carrying stock, services—offering credit, and providing delivery. See text for complete table www.bookfiesta4u.blogspot.com 11-564

WholesalingWholesaler Marketing Decisions Target Market Product Assortment and Services Price Decision Promotion Decision Place Decision www.bookfiesta4u.blogspot.com 11-565

McKesson offers online supply management www.bookfiesta4u.blogspot.com 11-566

WholesalingTrends in Wholesaling Narus and Anderson identified four ways to strengthen relationships with manufacturers Sought clear agreement about their expected function in the marketing channel Gained insight into the manufacturers’ requirements by visiting their plants Fulfilled commitments by meeting volume targets Identified and offered value-added value- services to help their suppliers www.bookfiesta4u.blogspot.com 11-567

Market LogisticsSupply chain management (SCM)Value networkDemand chain planningMarket logistics Market logistics planning has four steps: Deciding on the company’s value proposition to its customers Deciding on the best channel design and network strategy for reaching the customers Developing operational excellence in sales forecasting, warehouse management, transportation management, and materials management Implementing the solution with the best information systems, equipment, policies, and proceduresIntegrated logistics systems (ILS) www.bookfiesta4u.blogspot.com 11-568

The IKEA-USA home page IKEA- www.bookfiesta4u.blogspot.com 11-569

Market LogisticsMarket-Market-logistics ObjectivesMarket-Market-logistics Decisions Order Processing Order-to- Order-to-payment cycle Warehousing Storage warehouses Distribution warehouses Automated warehouses www.bookfiesta4u.blogspot.com 11-570

Market LogisticsInventory Inventory cost increases at an accelerating rate as the customer service level approaches 100% Order (reorder) point Order- Order-processing costs Inventory- Inventory-carrying costs www.bookfiesta4u.blogspot.com 11-571

Figure 18.2: Determining Optimal Order Quantity www.bookfiesta4u.blogspot.com 11-572

Market Logistics Just-In- Just-In-Time production (JIT)Transportation Containerization Piggyback Fishyback Trainship Airtruck Private carrier Contract carrier Common carrier www.bookfiesta4u.blogspot.com 11-573

The 1-800-Flowers.com site makes 1-800-online ordering easy www.bookfiesta4u.blogspot.com 11-574

Market LogisticsOrganizational Lessons Companies should appoint a senior vice president of logistics to be the single point of contact for all logistical elements The senior vice president of logistics should hold periodic meetings with sales and operations people to review inventory, etc. New software and systems are the key to achieving competitively superior logistics performance in the future www.bookfiesta4u.blogspot.com 11-575

Chapter 19Managing IntegratedMarketing Communicationsby PowerPoint by Milton M. Pressley University of New Orleans www.bookfiesta4u.blogspot.com 11-576

Kotler onMarketingIntegrated marketingcommunications is away of looking at thewhole marketingprocess from theviewpoint of thecustomer. www.bookfiesta4u.blogspot.com 11-577

Chapter ObjectivesIn this chapter, we focus on three majorquestions: How does communication work? What are the major steps in developing an integrated marketing communications program? Who should be responsible for marketing communication planning? www.bookfiesta4u.blogspot.com 11-578

Marketing Communications MixAdvertisingSales PromotionPublic Relations and PublicityPersonal SellingDirect and Interactive Marketing www.bookfiesta4u.blogspot.com 11-579

The Communication Process Table 19.1: Common Communication PlatformsAdvertising Sales Public Personal Direct Promotion Relations Selling MarketingPrint and Contests, Press kits Sales Catalogsbroadcast ads games, presentation sweepstakes, lotteriesPackaging-Packaging- Premiums and Speeches Sales Mailingsouter gifts meetingsPackaging Sampling Seminars Incentive Telemarketinginserts programsMotion Fairs and Annual reports Samples Electronicpictures trade shows shopping See text for complete table www.bookfiesta4u.blogspot.com 11-580

Figure 19.1: Elements in the Communication Process www.bookfiesta4u.blogspot.com 11-581

The Communication ProcessTarget audience may not receive theintended message for any of threereasons: Selective attention Selective distortion Selective retention www.bookfiesta4u.blogspot.com 11-582

The Communication ProcessFiske and Hartley have outlinedfactors that influencecommunication: The greater the influence of the communication source, the greater the effect on the recipient Communication effects are greatest when they are in line with existing opinions, beliefs, and dispositions www.bookfiesta4u.blogspot.com 11-583

The Communication ProcessCommunication can produce the most effectiveshifts on unfamiliar, lightly felt, peripheral issuesthat do not lie at the core of the recipient’s valuesystem.Communication is more likely to be effective if thesource is believed to have expertise, high status,objectivity, or likeability, but particularly if thesource has power and can be identified with.The social context, group, or reflective group willmediate the communication and influence whetheror not the communication is accepted. www.bookfiesta4u.blogspot.com 11-584

Figure 19.2: Stepsin DevelopingEffectiveCommunication www.bookfiesta4u.blogspot.com 11-585

Developing Effective CommunicationsIdentify the Target Audience Image analysis Familiarity scaleNever Heard of Know a Know a Fair KnowHeard of Only Little Bit Amount Very Well Favorability scaleVery Somewhat Indifferent Somewhat VeryUnfavorable Unfavorable Favorable favorable www.bookfiesta4u.blogspot.com 11-586

Some companies spend a significant portion oftheir advertising budget on a single high profileevent. In recent years, commercial time during theSuperbowl broadcast has become such an occasion.While some companies have used such events tolaunch successful, long-running campaigns, others long-have seen little benefit from these ads. Can youremember the name of the firmwhose critically acclaimedSuperbowl ad featuredcowboys herding cats? www.bookfiesta4u.blogspot.com 11-587

Figure 19.3: Familiarity-Favorability Analysis www.bookfiesta4u.blogspot.com 11-588

Developing Effective CommunicationsSemantic differential Developing a set of relevant dimensions Reducing the set of relevant dimensions Administering the instrument to a sample of respondents Averaging the results Checking on the image variance www.bookfiesta4u.blogspot.com 11-589

Developing Effective CommunicationsDetermine the Communication Objective Cognitive Affective Behavioral Response- Response-hierarchy models www.bookfiesta4u.blogspot.com 11-590

Figure 19.5: Response Hierarchy Models www.bookfiesta4u.blogspot.com 11-591

Developing Effective Communications Hierarchy- Hierarchy-of effects model Awareness Knowledge Liking Preference Conviction Purchase www.bookfiesta4u.blogspot.com 11-592

Developing Effective CommunicationsDesign the Message AIDA model Gain attention Hold interest Arouse desire Elicit action Message Content Rational appeals Emotional appeals Moral appeals www.bookfiesta4u.blogspot.com 11-593

Developing Effective Communications Message Structure Message Format Message Source Factors underlying source credibility Expertise Trustworthiness Principle of congruity www.bookfiesta4u.blogspot.com 11-594

bmwfilms.com www.bookfiesta4u.blogspot.com 11-595

Developing Effective CommunicationsSelect the Communication Channels Personal Communication Channels Advocate channels Expert channels Social channels www.bookfiesta4u.blogspot.com 11-596

Developing Effective CommunicationsSteps to stimulate personal influence channelsto work on the companies’ behalf Devote extra effort to influential individuals and companies Create opinion leaders by providing the product at attractive terms to certain people Work through community influentials such as local disk jockeys, class presidents, and presidents of women’s organizations Use influential or believable people in testimonial advertising Develop advertising with high “conversation value” www.bookfiesta4u.blogspot.com 11-597

Developing Effective Communications Develop word-of-mouth referral channels to build word-of- business Establish an electronic forum Use viral marketingNonpersonal Communication Channels Media Atmospheres Events Social- Social-structure view of interpersonal communication Liaison Bridge www.bookfiesta4u.blogspot.com 11-598

Developing Effective CommunicationsEstablish the Total MarketingCommunications budget Affordable Method Percentage-of- Percentage-of-Sales Method Competitive- Competitive-Parity Method www.bookfiesta4u.blogspot.com 11-599

Developing Effective CommunicationsObjective-and-Objective-and-Task Method Establish the market-share goal market- Determine the percentage of the market that should be reached by advertising Determine the percentage of aware prospects that should be persuaded to try the brand Determine the number of advertising impressions per 1 percent trial rate Determine the number of gross rating points that would have to be purchased Determine the necessary advertising budget on the basis of the average cost of buying a gross rating point www.bookfiesta4u.blogspot.com 11-600

Deciding on the Marketing Communications Mix The Promotional tools Advertising General Qualities: Public presentation Pervasiveness Amplified expressiveness Impersonality Sales Promotion Benefits: Communication Incentive Invitation www.bookfiesta4u.blogspot.com 11-601

Deciding on the Marketing Communications Mix Public Relations and Publicity Distinctive qualities: High credibility Ability to catch buyers off guard Dramatization Personal Selling Distinctive qualities: Personal confrontation Cultivation Response www.bookfiesta4u.blogspot.com 11-602

Deciding on the Marketing Communications Mix Direct Marketing Distinctive qualities: Nonpublic Customized Up-to-date Up-to- Interactive www.bookfiesta4u.blogspot.com 11-603

Deciding on the Marketing Communications MixFactors in setting the MarketingCommunications Mix Type of Product Market Advertising’s role in business markets: Advertising can provide an introduction to the company and its products If the product embodies new features, advertising can explain them Reminder advertising is more economical than sales calls www.bookfiesta4u.blogspot.com 11-604

Deciding on the Marketing Communications Mix Advertisements offering brochures and carrying the company’s phone number are an effective way to generate leads for sales representatives. Sales representatives can use tear sheets of the company’s ads to legitimize their company and products. Advertising can remind customers of how to use the product and reassure them about their purchase. www.bookfiesta4u.blogspot.com 11-605

Deciding on the Marketing Communications Mix Levitt found that: Corporate advertising that can build up the company’s reputation will help the sales representatives Sales representatives from well-known firms well- have an edge, but a highly effective presentation from a lesser known company’s rep can overcome that edge Company reputation helps most when the product is complex www.bookfiesta4u.blogspot.com 11-606

Deciding on the Marketing Communications Mix Gary Lilien found that: The average industrial company sets its marketing budget at 7 percent of sales Industrial companies spent a higher-than- higher-than- average amount on advertising if their products had higher quality, uniqueness, or purchase frequency, or if there was customer growth Industrial companies set a higher-than-average higher-than- marketing budget when their customers were more dispersed or the customer growth rate was higher www.bookfiesta4u.blogspot.com 11-607

Deciding on the Marketing Communications Mix Effectively trained consumer sales force can make four important contributions: Increased stock position Enthusiasm building Missionary selling Key account management Buyer- Buyer-Readiness Stage www.bookfiesta4u.blogspot.com 11-608

Figure 19.6: Cost-Effectiveness of Different Promotional Tools www.bookfiesta4u.blogspot.com 11-609

Deciding on the Marketing Communications Mix Product Life-Cycle Stage Life- Measure the Communications’ Result www.bookfiesta4u.blogspot.com 11-610

While traditional communication methodsmake measurement of results difficult,Internet communications offer different,more immediate measures. How cananalysis of web site visitors’ behavior beused to evaluate the effectivenessof a company’s marketingcommunications strategy? www.bookfiesta4u.blogspot.com 11-611

Managing the Integrated Marketing Communications Process Integrated Marketing Communications (IMC) www.bookfiesta4u.blogspot.com 11-612

Chapter 20Managing Advertising, SalesPromotion, Public Relations,and Direct Marketingby PowerPoint by Milton M. Pressley University of New Orleans www.bookfiesta4u.blogspot.com 11-613

Kotler onMarketingThe best advertisingis done by satisfiedcustomers. www.bookfiesta4u.blogspot.com 11-614

Chapter ObjectivesIn this chapter, we focus on the followingquestions: What steps are involved in developing an advertising program? What explains the growing use of sales promotion, and how are sales-promotion sales- decisions made? How can companies exploit the potential of public relations and publicity? How can companies use integrated direct marketing for competitive advantage? How can companies do effective e-marketing? e- www.bookfiesta4u.blogspot.com 11-615

Developing and Managing an Advertising Program Setting the Advertising Objectives Advertising goal (Objective)Figure 20.1:The Five Ms ofAdvertising www.bookfiesta4u.blogspot.com 11-616

Developing and Managing an Advertising Program Advertising objectives at different stages in Hierarchy of Effects Informative advertising Persuasive advertising Reminder advertising Reinforcement advertising Brand equity www.bookfiesta4u.blogspot.com 11-617

Developing and Managing an Advertising ProgramDeciding on the Advertising Budget Five factors to consider when setting the advertising budget: Stage in the product life cycle Market share and consumer base Competition and clutter Advertising frequency Product substitutability www.bookfiesta4u.blogspot.com 11-618

Developing and Managing an Advertising ProgramChoosing the Advertising Message Message generation Message execution Message evaluation Rational positioning and selection Emotional positioning Twedt rates messages on: Social responsibility Desirability review Exclusiveness Believability Creative brief Positioning statement www.bookfiesta4u.blogspot.com 11-619

Ethical Funds’ homepage www.bookfiesta4u.blogspot.com 11-620

Deciding on Media andMeasuring EffectivenessDeciding on Reach, Frequency, andImpact Media selection How many exposures, E*, will produce audience awareness A* depends on the exposures’: Reach (R) Frequency (F) Impact (I) www.bookfiesta4u.blogspot.com 11-621

Figure 20.2: Relationship Among Trial, Awareness, and the Exposure Function www.bookfiesta4u.blogspot.com 11-622

Deciding on Media andMeasuring Effectiveness Total Number of Exposures (E) E=RxF where R = reach, F = frequencyKnown as Gross Rating Points (GRP) Weighted Number of Exposures (WE) WE = R x F x I where R = reach, F = frequency, I = average impact www.bookfiesta4u.blogspot.com 11-623

Deciding on Media and Measuring Effectiveness Choosing Among Major Media Types Table 20.1: Profiles of Media TypesMedium Advantages LimitationsNewspapers Flexibility; timeliness; good Short life; poor reproduction local market coverage; broad quality; small “passalong” acceptance; high believability audienceTelevision Combines sight, sound, and High absolute cost; high motion; appealing to the clutter; fleeting exposure; senses; high attention; high less audience selectivity reachDirect mail Audience selectivity; flexibility; Relatively high cost; “junk no ad competition within the mail” image same medium; personalization See text www.bookfiesta4u.blogspot.com for complete table 11-624

Deciding on Media andMeasuring Effectiveness Media planners consider: Target- Target-audience media habits Product characteristics Message characteristics Cost New Media Advertorials Infomercials www.bookfiesta4u.blogspot.com 11-625

More manufacturers are using newtechnologies to move toward “masscustomization” in their productofferings. Have you seen a similarmove among marketers? www.bookfiesta4u.blogspot.com 11-626

Earthlink: High-speed Internet Service High-Provider www.bookfiesta4u.blogspot.com 11-627

Deciding on Media andMeasuring Effectiveness Allocating the Budget Audience size measures: Circulation Audience Effective audience Effective ad-exposed audience ad- www.bookfiesta4u.blogspot.com 11-628

Deciding on Media and Measuring EffectivenessDeciding on Media Timing Carryover Habitual behavior Figure 20.3: Classification of Advertising Timing Patterns www.bookfiesta4u.blogspot.com 11-629

Deciding on Media andMeasuring Effectiveness Buyer turnover Purchase frequency Forgetting rate Continuity Concentration Flighting PulsingDeciding on Geographical Allocation Areas of dominant influence (ADIs) or designated marketing areas (DMAs) www.bookfiesta4u.blogspot.com 11-630

Deciding on Media andMeasuring EffectivenessEvaluating Advertising Effectiveness Communication- Communication-Effect Research Copy testing Consumer feedback method Example questions: What is the main message you get from this ad? What do you think they want you to know, believe, or do? How likely is it that this ad will influence you to undertake the implied action? What works well in the ad and what works poorly? How does the ad make you feel? Where is the best place to reach you with this message? www.bookfiesta4u.blogspot.com 11-631

Deciding on Media and Measuring Effectiveness Portfolio test Laboratory test Table 20.2: Advertising Research TechniquesFor Print Ads. Starch and Gallup & Robinson, Inc. are two widely usedprint pretesting services. Test ads are placed in magazines, which arethen circulated to consumers. These consumers are contacted later andinterviewed. Recall and recognition tests are used to determineadvertising effectiveness.For Broadcast Ads. In-home tests: A videotape is taken into the In- tests:homes of target consumers, who then view the commercials.Trailer test: In a trailer in a shopping center, shoppers are shown the test:products and given an opportunity to select a series of brands. Theythen view commercials and are given coupons to be used in theshopping center. Redemption rates indicate commercials’ influence onpurchase behavior. See www.bookfiesta4u.blogspot.com text for complete table 11-632

Deciding on Media andMeasuring Effectiveness Sales- Sales-Effect Research Share of advertising expenditures Share of voice Share of consumers’ minds and hearts Share of market Historical approach Figure 20.4: Experimental design Formula for Measuring Sales Impact of Advertising www.bookfiesta4u.blogspot.com 11-633

Sales Promotion Promotion offers incentive to buy Consumer promotion Trade promotion Sales- Sales-force promotionPurpose of Sales Promotion www.bookfiesta4u.blogspot.com 11-634

Many companies offer free samples as partof a promotional campaign. This approachextends beyond the grocery store or retailoutlet into large organizations likeuniversities. Can you identify any productsor services that are providedto students or faculty atyour school as part of apromotional campaign? www.bookfiesta4u.blogspot.com 11-635

Sales PromotionMajor Decisions in Sales Promotion Establishing Objectives Selecting Consumer-Promotion Tools Consumer- Manufacturer promotions Retailer promotions www.bookfiesta4u.blogspot.com 11-636

Table 20.3: Major Consumer-Promotion ToolsSamples: Offer of a free amount of a product or service delivered door todoor, sent in the mail, picked up in a store, attached to another product, orfeatured in an advertising offer.Coupons: Certificates entitling the bearer to a stated saving on thepurchase of a specific product: mailed, enclosed in other products orattached to them, or inserted in magazines and newspaper ads.Cash Refund Offers (rebates): Provide a price reduction after purchaserather than at the retail shop: consumer sends a specified “proof ofpurchase” to the manufacturer who “refunds” part of the purchase price bymail.Price Packs (cents-off deals): Offers to consumers of savings off the (cents-regular price of a product, flagged on the label or package. A reduced-price reduced-pack is a single package sold at a reduced price (such as two for the priceof one). A banded pack is two related products banded together (such as atoothbrush and toothpaste). See text for complete table www.bookfiesta4u.blogspot.com 11-637

Coolsavings.com’s home page www.bookfiesta4u.blogspot.com 11-638

Sales Promotion Selecting Trade-Promotion Tools Trade- Table 20.4: Major Trade-Promotion ToolsPrice-Off(off-Price-Off(off-invoice or off-list): A straight discount off the list price on each off-case purchased during a stated time period.Allowance: An amount offered in return for the retailer’s agreeing to featurethe manufacturer’s products in some way. An advertising allowancecompensates retailers for advertising the manufacturer’s product. A displayallowance compensates them for carrying a special product display.Free Goods: Offers of extra cases of merchandise to intermediaries who buya certain quantity or who feature a certain flavor or size.Source: For more information, see Betsy Spethman, “Trade Promotion Redefined,”Brandweek, March 13, 1995, pp. 25-32. 25- www.bookfiesta4u.blogspot.com 11-639

Sales Promotion Selecting Business-and Business- Sales-Force- Sales-Force-Promotion Tools Table 20.5: Major Business-and Sales-Force-Promotion ToolsTrade Shows and Conventions: Industry associations organize annual tradeshows and conventions. Business marketers may spend as much as 35percent of their annual promotion budget on trade shows. Over 5,600 tradeshows take place every year, drawing approximately 80 million attendees.Trade show attendance can range from a few thousand people to over 70,000for large shows held by the restaurant or hotel-motel industries. Participating hotel-vendors expect several benefits, including generating new sales leads,maintaining customer contacts, introducing new products, meeting newcustomers, selling more to present customers, and educating customers withpublications, videos, and other audiovisual materials.Sales Contests: A sales contest aims at inducing the sales force or dealersto increase their sales results over a stated period, with prizes (money, trips,gifts, or points) going to those who succeed. See text for complete table www.bookfiesta4u.blogspot.com 11-640

Sales PromotionDeveloping the Program Incentive Considerations Size of incentive Conditions for participation Duration of promotion Distribution vehiclePresenting, Implementing, Controlling,and Evaluating the Program Lead time Sell- Sell-in time www.bookfiesta4u.blogspot.com 11-641

Public RelationsPublicPublic RelationsPublic Relations DepartmentFunctions Include: Press relations Product publicity Corporate communication Lobbying Counseling www.bookfiesta4u.blogspot.com 11-642

Public RelationsMarketing Public Relations (MPR) Publicity vs. MPR MPR assists in the following tasks: Assisting in the launch of new products Assisting in repositioning a mature product Building interest in a product category Influencing specific target groups Defending products that have encountered public problems Building the corporate image in a way that reflects favorably on its products www.bookfiesta4u.blogspot.com 11-643

Public Relations Major Decisions in Marketing PR Table 20.6: Major Tools in Marketing PRPublications: Companies rely extensively on published materials to reachand influence their target markets. These include annual reports, brochures,articles, company newsletters and magazines, and audiovisual materials.Events: Companies can draw attention to new products or other companyactivities by arranging special events like news conferences, seminars,outings, trade shows, exhibits, contests and competitions, and anniversariesthat will reach the target publics.Sponsorships: Companies can promote their brands and corporate nameby sponsoring sport and cultural events and highly regarded causes.News: One of the major tasks of PR professionals is to find or createfavorable news about the company, its products, and its people, and get themedia to accept press releases and attend press conferences. See www.bookfiesta4u.blogspot.com text for complete table 11-644

Public RelationsEstablishing the Marketing Objectives MPR can: Build awareness Build creditability Hold down promotional cost www.bookfiesta4u.blogspot.com 11-645

Public Relations Thomas L. Harris offers the following suggestions: Build marketplace excitement before media advertising breaks Build a core customer base Build a one-to-one relationship with consumers one-to- Turn satisfied customers into advocates Influence the influentialsChoosing Messages and Vehicles Event CreationImplementing the Plan and EvaluatingResults www.bookfiesta4u.blogspot.com 11-646

Direct Marketing Direct- Direct-Order Marketing Customer Relationship MarketingThe Growth of Direct Marketing Market DemassificationThe Benefits of Direct MarketingIntegrated Direct Marketing www.bookfiesta4u.blogspot.com 11-647

Direct MarketingMajor Channels for Direct Marketing Face-To- Face-To-Face Selling Direct Mail New Forms of Mail Delivery Fax mail E-mail Voice mail www.bookfiesta4u.blogspot.com 11-648

Direct Marketing Direct marketing has passed through a number of stages: Carpet bombing Database marketing Interactive marketing Real- Real-time personalized marketing Lifetime value marketingConstructing a Direct-Mail Campaign Direct- Objectives Target Markets and Prospects Offer Elements Testing Elements Measuring Campaign Success: Lifetime Value www.bookfiesta4u.blogspot.com 11-649

Direct MarketingCatalog Marketing Telemarketing and M-Commerce M- Inbound telemarketing Outbound telemarketing Four types of telemarketing: Telesales Telecoverage Teleprospecting Customer service and technical support www.bookfiesta4u.blogspot.com 11-650

Direct Marketing Other Media for Direct-Response Marketing Direct- Direct- Direct-response advertising At- At-home shopping channels Videotext and interactive TVKiosk Marketing www.bookfiesta4u.blogspot.com 11-651

Direct MarketingE-Marketing Permission Marketing Levels of Permission Marketing: No permission level Low permission level Medium permission level High permission level Transaction level E-Marketing Guidelines Give the customer a reason to respond Personalize the content of your e-mails e- Offer something the customer could not get via direct mail Make it easy for the customer to “unsubscribe” www.bookfiesta4u.blogspot.com 11-652

Chapter 21Managing The Sales Forceby PowerPoint by Milton M. Pressley University of New Orleans www.bookfiesta4u.blogspot.com 11-653

Kotler onMarketingThe successfulsalesperson cares firstfor the customer,second for theproducts. www.bookfiesta4u.blogspot.com 11-654

Chapter ObjectivesIn this chapter, we answer the followingquestions: What decisions do companies face in designing a sales force? How do companies recruit, select, train, supervise, motivate, and evaluate a sales force? How can salespeople improve their skills in selling, negotiation, and carrying on relationship marketing? www.bookfiesta4u.blogspot.com 11-655

Sales Representative Robert McMurry’s sales representative types: Deliverer Order taker Missionary Technician Demand creator Solution vendor www.bookfiesta4u.blogspot.com 11-656

Designing the Sales Force Sales- Sales-Force Objectives and Strategy Common tasks for salespeople Prospecting Targeting Communicating Selling Information gathering Allocating www.bookfiesta4u.blogspot.com 11-657

Designing the Sales Force Leveraged sales force Direct (company) sales force Contractual sales force Sales- Sales-Force Structure www.bookfiesta4u.blogspot.com 11-658

Table 21.1: Sales-Force StructuresTerritorial: Each sales representative is assigned an exclusive territory. Thissales structure results in a clear definition of responsibilities. It increases therep’s incentive to cultivate local business and personal ties. Travel expensesare relatively low because each rep travels within a small area.Territory size: Territories can be designed to provide equal sales potentialor equal workload. Territories of equal potential provide each rep with thesame income opportunities and provide the company with a means toevaluate performance. Territories can also be designed to equalize the salesworkload so that each rep can cover the territory adequately.Territory shape: Territories are formed by combining smaller units, such ascounties or states, until they add up to a territory of a given potential orworkload. Companies can use computer programs to design territories thatoptimize such criteria as compactness, equalization of workload or salespotential, and minimal travel time. See text for complete table www.bookfiesta4u.blogspot.com 11-659

Designing the Sales Force Sales- Sales-Force Size Workload approach: Customers are grouped into size classes Desirable call frequencies are established for each class The number of accounts in each size class is multiplied by the corresponding call frequency The average number of calls a sales representative can make per year is determined The total number of sales representatives needed is determined www.bookfiesta4u.blogspot.com 11-660

The Internet has allowed many companies to shiftsales support for small accounts to e-commerce sites e-and away from sales personnel. Additionally, manyregularly occurring functions have becomeautomated, allowing customers with any sizeorganization to use web-based systems to place orders web-and submit warranty requests. Can you think of anyother areas where Internet-based Internet-technologies could change theway a sales force interactswith their customers? www.bookfiesta4u.blogspot.com 11-661

Designing the Sales Force Sales- Sales-Force Compensation Four Components: Fixed amount Variable amount Expense allowances Benefits www.bookfiesta4u.blogspot.com 11-662

Managing the Sales Force Recruiting and Selecting Reps Training Sales Reps www.bookfiesta4u.blogspot.com 11-663

Managing the Sales ForceTraining Programs Have Several Goals Sales representatives need to: Know and identify with the company Know the company’s products Know customers’ and competitors’ characteristics Know how to make effective sales presentations Understand field procedures and responsibilities www.bookfiesta4u.blogspot.com 11-664

Managing the Sales ForceSupervising Sales RepsNorms for Customer Calls Norms for Prospect Calls Using Sales Time Efficiently www.bookfiesta4u.blogspot.com 11-665

DAA Solutions’ home page describes itsDesign-to-Design-to-Order® Software application www.bookfiesta4u.blogspot.com 11-666

Managing the Sales Force Time-and- Time-and-duty analysis Preparation Travel Food and breaks Waiting Selling Administration www.bookfiesta4u.blogspot.com 11-667

Company Web site as a prospecting tool www.bookfiesta4u.blogspot.com 11-668

Managing the Sales Force Motivating Sales Reps Churchill, Ford, & Walker Motivation Model: Sales managers must be able to convince salespeople that they can sell more by working harder or being trained to work smarter Sales managers must be able to convince salespeople that the rewards for better performance are worth the extra effort www.bookfiesta4u.blogspot.com 11-669

Managing the Sales Force Sales Quotas Supplementary Motivators Sales meetings Sales contests Evaluating Sales Representatives Sources of Information Formal Evaluation www.bookfiesta4u.blogspot.com 11-670

Table 21.2: Form for Evaluating Sales Representative’s PerformanceTerritory: Midland SalesRepresentative: John Smith 1999 2000 2001 20021. Net sales product A $251,300 $253,200 $270,000 $263,1002. Net sales product B 423,200 439,200 553,900 561,9003. Net sales total 674,500 692,400 823,900 825,0004. Percent of quota product A 95.6 92.0 88.0 84.75. Percent of quota product B 120.4 122.3 134.9 130.86. Gross profits product A $50,260 $50,640 $54,000 $52,6207. Gross profits product B 42,320 43,920 55,390 56,1908. Gross profits total 92,580 94,560 109,390 108,810 See text for complete table www.bookfiesta4u.blogspot.com 11-671

Principles of Personal Selling Figure 21.3: Managing the Sales Force: Improving Effectiveness www.bookfiesta4u.blogspot.com 11-672

Principles of Personal SellingProfessionalism Sales- Sales-oriented approach Customer- Customer-oriented approach Rackham’s questions for prospects Situation questions Problem questions Implication questions Need- Need-payoff questions www.bookfiesta4u.blogspot.com 11-673

Figure 21.4:Major Steps inEffectiveSelling www.bookfiesta4u.blogspot.com 11-674

Principles of Personal SellingMajor Steps in an Effective Sales Process: Prospecting and Qualifying Preapproach Approach Presentation and Demonstration Overcoming Objections Closing Follow- Follow-up and Maintenance www.bookfiesta4u.blogspot.com 11-675

iPhysicianNet’s home page showsa video detailing session www.bookfiesta4u.blogspot.com 11-676

Principles of Personal SellingNegotiation When to negotiate When factors bear not only on price, but also on quality of service When business risk cannot be accurately predetermined When a long period of time is required to produce the items purchased When production is interrupted frequently because of numerous change orders www.bookfiesta4u.blogspot.com 11-677

Figure 21.5: The Zone Agreement www.bookfiesta4u.blogspot.com 11-678

Principles of Personal Selling Formulating a Negotiation Strategy www.bookfiesta4u.blogspot.com 11-679

Table 21.3: Classic Bargaining TacticsActing Crazy Put on a good show by visibly demonstrating your emotional commitment to your position. This increases your credibility and may give the opponent a justification to settle on your terms.Big Pot Leave yourself a lot of room to negotiate. Make high demands at the beginning. After making concessions, you will still end up with a larger payoff than if you started too low.Get a Prestigious The ally can be a person or a project that isAlly prestigious. You try to get the opponent to accept less because the person/object he or she will be involved with is prestigious.The Well Is Dry Take a stand and tell the opponent you have no more concessions to make. See text for complete table www.bookfiesta4u.blogspot.com 11-680

Principles of Personal SellingRelationship Marketing www.bookfiesta4u.blogspot.com 11-681

For many organizations, relationship marketing ismore important than any individual transaction,because these long-term relationships can yield long-greater overall profitability. Would it be easier toconvince a company to enter into a long termsupplier-supplier-customer relationship if you offered themsavings through vertical integrationof product offerings, or ease of use offerings,derived from a broad range ofproduct offerings? offerings? www.bookfiesta4u.blogspot.com 11-682

Chapter 22Managing the TotalMarketing Effortby PowerPoint by Milton M. Pressley University of New Orleans www.bookfiesta4u.blogspot.com 11-683

Kotler onMarketingThe marketingorganization will haveto redefine its role frommanaging customerinteractions tointegrating andmanaging all thecompany’s customercustomer-facing processes. www.bookfiesta4u.blogspot.com 11-684

Chapter ObjectivesIn this chapter, we focus on the followingquestions: What are the trends in company organization? How are marketing and sales organized in companies? What steps can a company take to build a stronger customer focused culture? How can a company improve its marketingmarketing- implementation skills? What tools are available to help companies monitor and improve their marketing activities? www.bookfiesta4u.blogspot.com 11-685

Trends in Company OrganizationMain responses of companies to achanging environment Reengineering Merging Outsourcing Globalizing Benchmarking Flattening Supplier partnering Focusing Customer partnering Empowering www.bookfiesta4u.blogspot.com 11-686

Outsourcing can save companies money bypassing on to another firm the overheadinvolved with maintaining specialized staffpositions, or eliminating the need to maintainspecialized equipment that does not directlysupport their core business.What are the potential risksassociated with outsourcing? www.bookfiesta4u.blogspot.com 11-687

Marketing Organization The Evolution of theMarketing Department Figure 22.1: Stages in the Evolution of the Marketing Department www.bookfiesta4u.blogspot.com 11-688

Marketing OrganizationSimple Sales DepartmentSales Department With AncillaryMarketing FunctionsSeparate Marketing DepartmentModern Marketing Department /Effective Marketing CompanyProcess-Process-And Outcome-Based Company Outcome- www.bookfiesta4u.blogspot.com 11-689

Marketing OrganizationOrganizing the Marketing Department Functional Organization Field sales Customer service Product management Geographic Organization Area market specialist www.bookfiesta4u.blogspot.com 11-690

Organizing a marketing organizationgeographically can allow marketing managersto focus on regional and cultural differences intheir market segments. What are the reasonswhy geographical segmentation might be a badidea? What could be done tominimize these problems ingeographically organizedmarketing departments? www.bookfiesta4u.blogspot.com 11-691

Krispy Kreme’s Web site promotes new store openings www.bookfiesta4u.blogspot.com 11-692

Marketing OrganizationProduct- Brand-Product- or Brand-Management Organization Product and brand managers have these tasks: Develop a long-range and competitive strategy for the long- product Preparing an annual marketing plan and sales forecast Working with advertising and merchandising agencies to develop copy, programs, and campaigns Stimulating support of the product among the sales force and distributors Gathering continuous intelligence on the product’s performance, customer and dealer attitudes, and new problems and opportunities Initiating product improvements to meet changing market needs www.bookfiesta4u.blogspot.com 11-693

Figure 22.3:The ProductManager’sInteractions www.bookfiesta4u.blogspot.com 11-694

Marketing Organization Pearson and Wilson’s five steps to make the product- product-management system work better Clearly delineate the limits of manager’s role Build a strategy-development-and-review process strategy-development-and- Take into account areas of potential conflict Set up a formal process that forces to the top all conflict-of-interest situations conflict-of- Establish a system for measuring results www.bookfiesta4u.blogspot.com 11-695

Marketing OrganizationA Second Alternative is to switch fromproduct managers to product teams Vertical product team Triangular product team Horizontal product teamThird Alternative: Brand AssetManagement Team (BAMT) www.bookfiesta4u.blogspot.com 11-696

Figure 22.5: Managing Through Teams at Kraft www.bookfiesta4u.blogspot.com 11-697

Marketing OrganizationMarket-Market-Management/CustomerManagement Organization Market- Market-management Organization Markets manager Customer- Customer-management OrganizationProduct-Product-Management/Market-Market-Management Organization www.bookfiesta4u.blogspot.com 11-698

Marketing Organization Corporate- Corporate-Divisional Organization No corporate marketing Moderate marketing Strong corporate marketingMarketing Relations With OtherDepartments R&D Engineering and Purchasing Manufacturing and Operations Finance Accounting and Credit www.bookfiesta4u.blogspot.com 11-699

Marketing OrganizationBuilding a Companywide MarketingOrientation Transforming into a true market-driven market- firm requires: Developing a companywide passion for customers Organizing around customer segments instead of around products Developing a deep understanding of customers through qualitative and quantitative research www.bookfiesta4u.blogspot.com 11-700

Marketing OrganizationWhat steps can a CEO take to create a marketand customer focused company?1. Convince senior management of the need2. Appoint a senior marketing officer and a marketing task force3. Get outside help and guidance4. Change the company’s reward measurement and system5. Hire strong marketing talent6. Develop strong in-house marketing training programs in-7. Install a modern marketing planning system8. Establish an annual marketing excellence recognition program9. Shift from a department focus to a process- process-outcome focus10. Empower the employees www.bookfiesta4u.blogspot.com 11-701

Marketing Organization Injecting More Creativity Into the OrganizationStrategic innovationresource: Brighthouse www.bookfiesta4u.blogspot.com 11-702

Marketing ImplementationThomas Bonoma’s four sets of skills forimplementing marketing programs Diagnostic skills Identification of company level Implementation skills Evaluation skills Aprimo helps companies “manage the business of marketing” www.bookfiesta4u.blogspot.com 11-703

Evaluation and Control Table 22.1: Types of Marketing ControlType of Prime Purpose OfControl Responsibility Control ApproachesI. Annual-plan Annual- Top management To examine Sales analysiscontrol Middle whether the Market- Market-share management planned results analysis are being Sales-to- Sales-to-expense achieved ratios Financial analysis Market- Market-based scorecard analysis See text for complete table www.bookfiesta4u.blogspot.com 11-704

Evaluation and ControlAnnual-Annual-Plan Control Sales Analysis Sales variance analysis Microsales analysis Figure 22.7: The Control Process www.bookfiesta4u.blogspot.com 11-705

Evaluation and ControlMarket-Market-Share Analysis Overall market share Served market share Relative market shareMarketing Expense-To-Sales Analysis Expense-To- www.bookfiesta4u.blogspot.com 11-706

Evaluation and ControlFinancial Analysis www.bookfiesta4u.blogspot.com 11-707

Evaluation and Control Market- Market-Based Scorecard Analysis Customer- Customer-performance scorecard Stakeholder- Stakeholder-performance scorecard Profitability Control Marketing- Marketing-Profitability Analysis www.bookfiesta4u.blogspot.com 11-708

Table 22.2: A Simplified Profit-and-Loss Statement Sales $60,000 Cost of goods sold 39,000 Gross margin $21,000 Expenses Salaries $9,300 Rent 3,000 Supplies 3,500 15,800 Net profit $5,200 www.bookfiesta4u.blogspot.com 11-709

Evaluation and Control Step 1: Identifying Functional Expenses Table 22.3: Mapping Natural Expenses into Functional ExpensesNatural Packing and Billing andAccounts Total Selling Advertising Delivery CollectingSalaries $9,300 $5,100 $1,200 $1,400 $1,600Rent 3,000 — 400 2,000 600Supplies 3,500 400 1,500 1,400 200 $15,800 $5,500 $3,100 $4,800 $2,400 www.bookfiesta4u.blogspot.com 11-710

Evaluation and Control Step 2: Assigning Functional Expenses to Marketing Entities Table 22.4: Bases for Allocating Functional Expenses to Channels Packing and Billing andChannel Type Selling Advertising Delivery CollectingHardware 200 50 50 50Garden Supply 65 20 21 21Department stores 10 30 9 9 275 100 80 80Functional expense $5,500 $3,100 $4,800 $2,400% No. of Units 275 100 80 80Equals $ 20 $ 31 $ 60 $ 30 www.bookfiesta4u.blogspot.com 11-711

Evaluation and Control Step 3: Preparing a Profit-and-Loss Statement Profit-and- for Each Marketing Entity Table 22.5: Profit-and-Loss Statements for Channels Garden Dept. Whole Hardware Supply Stores CompanySales $30,000 $10,000 $20,000 $60,000Cost of goods sold 19,500 6,500 13,000 39,000Gross margin $10,500 $ 3,500 $ 7,000 $21,000ExpensesSelling ($20 per call) $ 4,000 $ 1,300 $ 200 $ 5,500Advertising ($31 peradvertisement) 1,550 620 930 3,100 See text for complete table www.bookfiesta4u.blogspot.com 11-712

Evaluation and Control Determine Corrective Action Direct Versus Full Costing Direct costs Traceable common costs Nontraceable common cost Activity- Activity-based Cost Accounting (ABC)Efficiency control Marketing Controller Sales- Sales-Force Efficiency Advertising Efficiency Sales- Sales-Promotion Efficiency Distribution Efficiency www.bookfiesta4u.blogspot.com 11-713

Evaluation and Control Strategic control The Marketing Effectiveness Review The Marketing Audit Marketing audit’s four characteristics: Comprehensive Systematic Independent Periodic www.bookfiesta4u.blogspot.com 11-714

Table 22.6: Components of a Marketing AuditPart I. Marketing Environment AuditMacroenvironmentA. Demographic What major demographic developments and trends pose opportunities or threats to this company? What actions has the company taken in response to these developments and trends?B. Economic What major developments in income, prices, savings, and credit will affect the company? What actions has the company been taking in response to these developments and trends?C. Environmental What is the outlook for the cost and availability of natural resources and energy needed by the company? What concerns have been expressed about the company’s role in pollution and conservation, and what steps has the company taken? See text for complete table www.bookfiesta4u.blogspot.com 11-715

Evaluation and Control The Marketing Excellence Review www.bookfiesta4u.blogspot.com 11-716

Table 22.7: The Marketing Excellence Review: Best PracticesPoor Good ExcellentProduct-Product-Driven Market-Driven Market- Market-Driven Market-Mass-Market OrientedMass- Segment Oriented Niche Oriented and Customer OrientedProduct Offer Augmented Product Offer OrientedAverage Product Quality Better Than Average Customer Solutions OfferAverage Service Quality Better Than Average LegendaryEnd-End-Product Oriented Core-Product Oriented Core- Legendary See text for complete table www.bookfiesta4u.blogspot.com 11-717

Evaluation and Control The Ethical and Social Responsibility Review www.bookfiesta4u.blogspot.com 11-718

Loads of Management Stuff atwww.bookfiesta4u.blogspot.com www.bookfiesta4u.blogspot.com 11-719

Marketing Management By Philip Kotler 719 Slides 1234238345990514 2

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Marketing Management By Philip Kotler 719 Slides 1234238345990514 2 — Presentation Transcript