Fourth Edition Copyright ©2003 Prentice Hall, Inc. PART 4........................ Understanding Principles of Marketing.

Fourth EditionFourth Edition

Copyright ©2003 Prentice Hall, Inc.Copyright ©2003 Prentice Hall, Inc.

PART 4 . . . . . . . . . . . . . . . . . . . . . . . .PART 4 . . . . . . . . . . . . . . . . . . . . . . . .Understanding Principles of MarketingUnderstanding Principles of Marketing

Copyright ©2003 Prentice Hall, Inc.Copyright ©2003 Prentice Hall, Inc. 10 - 10 - 22

Chapter 10Chapter 10

Understanding Marketing Processes and Consumer

Behavior

Understanding Marketing Processes and Consumer

Behavior


Marketing process affects your daily lives

Discussion: what did you have breakfast today (coffee, cornflakes..). Why?

What did you stop to take? Why

Should be guided to marketing mix.


What Is Marketing?

““Planning and executing the conception, pricing, Planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual services to create exchanges that satisfy individual and organizational objectives”and organizational objectives”

““Planning and executing the conception, pricing, Planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual services to create exchanges that satisfy individual and organizational objectives”and organizational objectives”

Finding a need and filling it!Finding a need and filling it!Finding a need and filling it!Finding a need and filling it!

OROR


The Influence of MarketingPermeates Everyday Life

Goods

Consumer

Industrial

Services

Ideas Relationship marketing Relationship marketing emphasizes lasting emphasizes lasting relationships with relationships with

customers and supplierscustomers and suppliers


Products classification

Consumer goods: Products purchased by consumers for personal consumption or use. (durable and non-durable)

Industrial goods: Products purchased by companies to produce other products.

Services: Intangibles, such as time, expertise, experiences, that can be purchased.


CompetitiveEnvironment

Political& Legal

Environment

Social &Cultural

Environment

Economic Environment

Technological Environment

The External EnvironmentShapes Marketing Programs

The Firm & It's Marketing Plan Plans Strategies Decisions


Substitute product competition

Brand competition

International competition

The Competitive EnvironmentDrives Marketing Decisions


The Competitive EnvironmentDrives Marketing Decisions

Substitute product competition: Products that are dissimilar from those of competitors (appear to be different), but can fulfill the same need (e.g. television and computer games are very different from one another, but both fulfill the need for entertainment).

Brand competition: Occurs between similar products (e.g. Zest bar soap and Irish Spring bar soap; KFC and MacDonald foods).

International competition: matches the products of domestic marketers against those of foreign competitors


Marketing MixThe “Four P’s”

(Distribution)(Distribution)

roductroductroductroduct

ricingricingricingricing

romotionromotionromotionromotion

lacelacelacelace


Marketing MixThe “Four P’s”

Product: The good, service, or idea that is marketed to fill consumer wants and needs. Improving existing products and developing new products are among the marketer’s most important tasks.

Product differentiation: Differentiation is a source of competitive advantage.

Pricing: Selecting the most appropriate price at which to sell a product. Lower prices generally lead to higher sales volume, while higher prices generally lead to higher profits per unit.

Promotion: Techniques for communicating information about products. This is clearly the most visible element of the marketing mix.

Place (distribution): Determining the most effective and efficient way to get products from producers to consumers. Channels of distribution.


The Promotional Mix

Advertising

Personal Selling

Sales Promotions

Public Relations


The Promotional Mix

Advertising: Any form of paid, non-personal communication used by an identified sponsor to persuade or inform potential buyers about a product (e.g. Pepsi used Brittany Spears to advertise its products during the 2002 Super Bowl game.)

Personal selling: Person-to-person sales. Industrial goods receive the bulk of personal selling (e.g. Boeing uses personal selling to promote its fighter jets to the military).

Sales promotion: One-time direct inducements\incentives to buyers, including free gifts, coupons, and package inserts (e.g. Clinique cosmetics company periodically offers gift-with-purchase promotions through department stores).

Public relations: All communication efforts directed at building goodwill (e.g. Ronald McDonald House). Publicity is not paid for by the firm, and the firm does not control its content, so it can sometimes backlash.


Market Segmentation & Target Marketing

Market SegmentationDividing a market into customer categories

Target MarketingSelecting a category of customers with similar wants and needs who are likely to respond to the same products


Identifying Market Segments

Psychographic Psychographic VariablesVariables

Geographic Geographic VariablesVariables

Demographic Demographic VariablesVariables



Geographic variables: The geographical units that may be considered in developing a segmentation strategy (e.g. coastal areas, rural areas, the Sun Belt). Not all products are geographically sensitive.

Demographic variables: Characteristics of populations that may be considered in developing a segmentation strategy (e.g. age, income, gender, race).



Psychographic variables: Consumer lifestyles, opinions, interests, and attitudes that may be considered in developing a segmentation strategy (e.g. fashion-consciousness, thrill-seeking). Psychographics can sometimes be changed by marketing efforts.


Consumer Behavior

Psychological Influences

Personal Influences

Social Influences

Cultural Influences

Why do Why do consumers consumers

purchase and purchase and consume consume products?products?


Postpurchase Evaluation

Purchase Decision

Evaluation of Alternatives

The Consumer Buying Process

Information Seeking

Problem Recognition

Psychological Personal Social Cultural

Personal & Environmental FactorsPersonal & Environmental Factors

Product Pricing Promotion Place

Marketing FactorsMarketing Factors


Organizational Markets

Industrial Market

Government & Institutional Market

Reseller Market


Organizational Buying Behavior

Differences in buyers

Professionals

Specialists

Experts

Differences in buyer/seller relationships


Product Features and Benefits

FeaturesFeatures

Tangible and intangible Tangible and intangible qualities that a company qualities that a company builds into its productsbuilds into its products

BenefitsBenefits

The results of using The results of using those productsthose products


Classifying Products

Consumer

Convenience Goods

Shopping Goods

Specialty Goods

Industrial

Expense Items

Capital Items


Product Offerings

Product LineProduct Line

A group of similar products, intended for similar A group of similar products, intended for similar buyers, who will use them in similar ways.buyers, who will use them in similar ways.

Product MixProduct Mix

The total group of products that a company offers The total group of products that a company offers for sale.for sale.


Developing New Products

The New Product Development Process

Product Mortality Rates

Strategy of introducing new products to respond quickly to customer or market changes


Creating Product Brands

BrandingBranding

Using symbols to communicate the qualities Using symbols to communicate the qualities of a given product to create loyal consumersof a given product to create loyal consumers

Types of Brands:Types of Brands:

National BrandsNational Brands

Licensed BrandsLicensed Brands

Private BrandsPrivate Brands


The World’s 10 Most Valuable Brands

1. Coca Cola

2. Microsoft

3. IBM

4. GE

5. Nokia

6. Intel

7. Disney

8. Ford

9. McDonald’s

10. AT&T

Source: “The Best Global Brands,” Source: “The Best Global Brands,” BusinessWeekBusinessWeek, August 6, 2001, August 6, 2001


The Future of Top Brands

Gaining Value…Gaining Value…

StarbucksStarbucks +32%+32%

SamsungSamsung +22%+22%

Financial TimesFinancial Times +14%+14%

GEGE +11%+11%

GuinnessGuinness +11%+11%

Losing Value…Losing Value…

XeroxXerox -38%-38%

Amazon.comAmazon.com -31%-31%

Yahoo! Yahoo! -31%-31%

DuracellDuracell -30%-30%

FordFord -17%-17%

Source: “The Best Global Brands,” BusinessWeek, August 6, 2001 Source: “The Best Global Brands,” BusinessWeek, August 6, 2001


Product Packaging

Attracts consumers

Displays brand name

Protects contents

Supplies information

Communicates features and benefits

Provides features and benefits (e.g. easy pour spout)


The International Marketing Mix

PRODUCTSPRODUCTS

PRICINGPRICING

PROMOTIONPROMOTIONDISTRIBUTIONDISTRIBUTION


Small Business and the Marketing Mix

ProductsProducts

PricingPricing

PromotionPromotion

DistributionDistribution


Chapter Review

Define marketing

Describe the forces of the external marketing environment

Explain market segmentation and target marketing

Describe the consumer buying process

Discuss the organizational market categories


Chapter Review

Define product and distinguish between consumer and industrial products

Explain the importance of branding and packaging

Fourth Edition Copyright ©2003 Prentice Hall, Inc. PART 4........................ Understanding Principles of Marketing.

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