Week 3
Jan 05, 2016
Week 3
Marketing Mix – 4P’s
Marketing Plan Elements
SWOT Analysis
©South-Western College Publishing
SSWWOOTT
Things the company does well.Things the company does well.
Things the company does not do well.Things the company does not do well.
Conditions in the external environment that favor strengths.Conditions in the external environment that favor strengths.
Conditions in the external environment that do not relate to existing strengths or favor areas of current weakness.
Conditions in the external environment that do not relate to existing strengths or favor areas of current weakness.
Internal
External
Scanning the Marketing Environment
• The process of continually acquiring/interpreting info on the events occurring outside the organization to identify and interpret potential trends.
Scanning the Marketing Environment
Political and Legal Environment of Marketing
Federal Legislation
Sherman ActClayton ActFederal Trade Commission Act Celler-Kefauver Antimerger ActHart-Scott-Rodino Act
Sherman ActClayton ActFederal Trade Commission Act Celler-Kefauver Antimerger ActHart-Scott-Rodino Act
Regulate competitive
environment
Robinson-Patman Act Robinson-Patman ActRegulate pricing
practices
Wheeler-Lea Act Wheeler-Lea ActControl
falseadvertising
Regulatory Agencies
Consumer Product Safety Commission
Consumer Product Safety Commission
Federal Trade Commission
Federal Trade Commission
Food & Drug Administration
Food & Drug Administration
Protects consumer safety in and around their homes
Prevents unfair methods ofcompetition in commerce
Enforces safety regulations for food and drug products
Chapter 5: Developing a Global Vision
Rewards of Global Marketing
Having a global vision means…• Recognizing and reacting to
international marketing opportunities
• Using effective global marketing strategies
• Being aware of threats from foreign competitors
Importance of Global Marketing to the U. S.
• U.S. exports a fifth of industrial production. • One of every 5 jobs in U.S. is supported by
exports.• Every U.S. state has realized net employment
gains directly attributed to foreign trade.• U.S. businesses export over $800 billion in goods.• Exports account for 25 percent of U.S. economic
growth.• U.S. is world’s leading exporter of farm products.• Chemicals, office machinery and computers,
automobiles, aircraft, and electrical and industrial machinery make up almost half of all nonagricultural exports
• About half of U.S. merchandise imports are raw materials, capital goods, and industrial products
The Fear of Trade and Globalization
• Millions of Americans have lost jobs
• Millions fear losing jobs
• Threat of outsourcing if workers do not accept pay cuts
• Vulnerability to operations moving offshore
Benefits of Globalization
• Expands economic freedom
• Spurs competition
• Raises productivity and living standards
• Offers access to foreign capital, global export markets, and advanced technology
• Promotes higher labor and environmental standards
• Acts as a check on government power
Stages of Global Business Development
11
22
44
33
Companies operate in one country and sell into othersCompanies operate in one country and sell into others
Set up foreign subsidiaries to handle salesSet up foreign subsidiaries to handle sales
Virtual operationVirtual operation
Operate an entire line of business in another countryOperate an entire line of business in another country
External Environment Facing
Global Marketers
Natural ResourcesNatural Resources
Demographic MakeupDemographic Makeup
Economic and Technological Development
Economic and Technological Development
CultureCulture
Political StructurePolitical Structure
External Environment Facing Global Marketers
Political Structure and Actions
No private ownershipMinimal individual freedom
Little central governmentMaximum personal freedom
Government policies
Legal ConsiderationsTariff
Quota
Boycott
Exchange Control
Market Grouping
Trade Agreement
A tax levied on goods entering a country
Limit on the amount of a product entering a country
Exclusion of products from a country
Foreign exchange must be sold to a control agency
Common trade alliance
An agreement to stimulateinternational trade
The Uruguay Round made changes inworld trading practices:
Political and Legal Considerations
Entertainment, pharmaceuticals, integrated circuits, and software
Financial, legal, and accounting services
Agriculture
Textiles and apparel
Created a new trade organization: The World Trade Organization
Political and Legal Considerations
CAFTACAFTA NAFTANAFTA European UnionEuropean Union
Agreementsand Organizations
Agreementsand Organizations
Demographic Makeup
Marketing Considerations:
• Population density
• Urban or rural
• Personal income
• Age
Natural Resources
• Petroleum
• Foodstuffs
• Precious metal
• Timber
• Water
Shortages in Natural Resources
Create…
• International dependencies
• Shifts of wealth
• Inflation and recession
• Export opportunities if resources are abundant
• Stimulus for military intervention
Global Marketing Questions
• What are our options in selling abroad?
• How difficult is global marketing?
• What are the potential risks and returns?
Why “Go Global”?
• Earn additional profits• Leverage a unique product or
technological advantage• Possess exclusive market information• Saturated domestic markets• Excess capacity• Utilize “economies of scale”
Risk Levels for Global EntryReturn
Risk
Entering the Global Marketplace
Licensing Legal process allowing use of manufacturing/patents/knowledge
ContractManufacturing
Private-label manufacturing by a foreign country
Joint Venture Domestic firm buys/joins a foreign company to create new entity
Export Sell domestically produced
products to buyers in other countries
Direct Investment Active ownership of a foreign company/manufacturing facility
Export Intermediaries
Buyer for ExportBuyer for Export Assumes all ownership risks and sells globally for its own account.
Assumes all ownership risks and sells globally for its own account.
Export BrokerExport Broker Plays the traditional broker’s role
by bringing buyer and seller together.
Plays the traditional broker’s role by bringing buyer and seller
together.
Export AgentExport Agent Acts like a manufacturer’s agent
for the exporter in the foreignmarket.
Acts like a manufacturer’s agent for the exporter in the foreign
market.
Global Marketing Mix
One ProductOne Message
Product Adaptation
PromotionAdaptation
Product Invention
SameProduct
SameMessage
ChangeMessage
ChangeProduct
Place (Distribution)
• Adequate distribution is necessary for success in global markets– Some countries have complicated
systems– Lack of distribution infrastructure and
cultural differences create problems
• Innovative distribution systems can create competitive advantage
Pricing
• Must consider transportation and insurance costs, taxes, and tariffs
• Determine what customers will spend• Ensure that foreign buyers will
pay price• May need to simplify a product to
lower price• Don’t assume that low-income
countries are willing to accept lower quality
The Impact of the Internet
Chapter 6: Consumer Decision Making
Understanding Consumer Behavior
Consumer behavior
Consumer behavior
consumers make purchase decisions
consumers make purchase decisions
consumers use anddispose of product
consumers use anddispose of product
= HOW
Processes a consumer uses to make purchase decisions, as well as to use and dispose of purchased goods or services, also includes factors that influence purchase decisions and the product use.
Consumer Decision-Making Process
Postpurchase Behavior
Postpurchase Behavior
PurchasePurchase
Evaluation of AlternativesEvaluation
of Alternatives
Information SearchInformation Search
Need RecognitionNeed Recognition
Cultural, Social, Individual and Psychological
Factors affect
all steps
Cultural, Social, Individual and Psychological
Factors affect
all steps
Need Recognition
Marketing helps consumers recognize an imbalance between
present status and preferred state.
Present Status
Present Status
Preferred State
Preferred State
InternalStimuli
External
Stimuli
Recognition of Unfulfilled Wants
• When a current product isn’t performing properly
• When the consumer is running out of a product
• When another product seems superior to the one currently used
Information SearchInternal Information Search
Recall information in memory
External Information search
Seek information in outside environment Nonmarketing controlled Marketing controlled
External Information Searches
Need More Information
More Risk Less knowledge
Less product experienceHigh level of interestLack of confidence
Less Risk More knowledge
More product experienceLow level of interest
Confidence in decision
Need Less Information
Evaluation of Alternativesand Purchase
Evoked Set
Purchase!
Analyze product attributesAnalyze product attributes
Rank attributes byimportance
Rank attributes byimportance
Use cutoff criteriaUse cutoff criteria
Consumer Decision-Making Process
CU
LTU
RA
L SO
CIA
L
PSYCHOLOGICAL
INDIVIDUAL
Need Recognition
1 InformationSearch
2 EvaluateAlternatives
3 Purchase 4
Consumer postpurchase evaluation process
Marketers can minimize cognitive dissonance through: Effective Communication Follow-up Guarantees, Warranties Service during and after the sale
Consumer Buying Decisions andConsumer Involvement
More Involvement
LessInvolvement
RoutineResponseBehavior
RoutineResponseBehavior
LimitedDecisionMaking
LimitedDecisionMaking
ExtensiveDecisionMaking
ExtensiveDecisionMaking
Five Factors of Consumer Involvement
1. Level of consumer involvement1. Level of consumer involvement
2. Length of time to make decision2. Length of time to make decision
3. Cost of good or service3. Cost of good or service
4. Degree of information search4. Degree of information search
5. Number of alternatives considered5. Number of alternatives considered
Continuum of Consumer Buying Decisions
Routine Response Behavior
• Little involvement in selection process
• Frequently purchased low cost goods• May stick with one brand• Buy first/evaluate later• Quick decision
Limited Decision Making
• Low levels of involvement• Low to moderate cost goods• Evaluation of a few alternative
brands• Short to moderate time to decide
Extensive Decision Making
• High levels of involvement• High cost goods• Evaluation of many brands• Long time to decide• May experience cognitive dissonance
Factors Determining the Level of Consumer
Involvement
SituationSituation
Social VisibilitySocial Visibility
InterestInterest
Perceived Risk of Negative Consequences
Perceived Risk of Negative Consequences
Previous ExperiencePrevious Experience
Marketing Implications of Involvement
High-involvement purchases require:High-involvement purchases require:
Extensive and informative promotion to target market
Extensive and informative promotion to target market
Low-involvement purchases require:Low-involvement
purchases require:
In-store promotion, eye-catching package design, and good displays.Coupons, cents-off,2-for-1 offers
In-store promotion, eye-catching package design, and good displays.Coupons, cents-off,2-for-1 offers
Factors Influencing Buying Decisions
Social Factors
Individual Factors
Psycho-logical Factors
Cultural Factors
CONSUMERDECISION-
MAKINGPROCESS
BUY /
DON’T BUY
Components of Culture
Sets of values, norms, attitudes, and other meaningful symbols that shape human behavior and the artifacts, or products, of that behavior as they are transmitted from one generation to the next.
• Values• Language• Myths• Customs• Rituals• Laws • Material artifacts
It is…PervasiveFunctionalLearnedDynamic
Value
Enduring belief that a specific mode of conduct is personally or socially preferable to another mode of conduct.
American Values• Success• Materialism• Freedom• Progress• Youth• Capitalism
Subculture
A homogeneous group of people who share elements of the overall culture as well as unique elements of their own group.
Social Class
A group of people in a society who are considered nearly equal in status or community esteem, who regularly socializeamong themselves both formally and informally, and who share behavioral norms.
• Occupation• Income• Education• Wealth• Other variables
1. Indicates which medium to use for advertising
2. Helps determine the best distribution for products
Social Class and Education
Source: U.S. Census, available at http://www.pbs.org/peoplelikeus/resources/stats.html, May 2005.
Social Influences on Consumer Buying Decisions
Identify and understand the social factors that affect consumer buying decisions.
• Reference groups• Opinion leaders• Family members
Reference Groups
Reference Groups
Direct
Indirect
Primary
Secondary
Aspirational
Nonaspirational
Social Factors
Direct IndirectReferenceGroups Primary Secondary Aspirational Nonaspirational
OpinionLeaders
Peopleyou know
Socialization Process
Family
Celebrities
Initiators Decision Makers Consumers
Influencers Purchasers
Relationships among Purchasers and Consumers in the Family
Individual Influences onConsumer Buying Decisions
• Gender• Age • Life cycle• Personality, self-
concept• Lifestyle
• Perception• Motivation• Learning• Beliefs & Attitudes
Marketing Implications of Perception
• Important attributes
• Price
• Brand names
• Quality and reliability
• Threshold level of perception
• Product or repositioning changes
• Foreign consumer perception
• Subliminal perception
Motivation: Maslow’s Hierarchy of Needs
Discussion Wrap Up
• Assignments due next week• Review schedule