Key Concepts Marketing Strategy

Concepts, key terms linked to dictionary

Link to Discussion Board
What is Marketing?
Marketing is the process of planning and executing the conception, pricing, promotion
and distribution of ideas, goods and services that satisfy individual and organizational
goals. !M!
"roduct is the platform for attracting customers.
!ll organizations are in the business of attracting customers.
Can the above t#o statements be challenged$
%s marketing selling &' does it reduce the need for selling$
Discussion (opic) Challenge the above statements, using your o#n experiences as
reference.
What are markets?
*xchange, division of labor, positive sum relationships, barter, money reduces friction.
*volution of markets
+. (raditional bazaars
,. -eparation of supply and consumption
.. Mass Markets / Media
0. (arget Markets / 1iche Media
2. *lectronic Markets) Meta Markets
Evolution of the Marketing Concept
+. Production Concept
Demand for goods and services 3 -upply ... therefore consumers gladly
purchased #hat #as being produced. "roducers have a captive market.
%nvestment on increasing the efficiencies of production had the greatest
impact on company profitability. (hus smart businesses focused on
increasing productivity, rather than understanding the consumer. 4enry
5ord6s 7uote) 8(he customer can have any color car as long as it is black8
is closely identified #ith this era9 (his is appropriate for developing
countries, and evolved in the :- #ith the advent of the industrial
revolution.
,. Sales Concept
Demand ; -upply ... therefore producers had to convince consumers to
purchase their products. 5ocus of business investment starts shifting
to#ards developing a robust sales mechanism in order to communicate
#ith consumers. (he sales concept is also relevant for products consumers
do not seek out ordinarily, such as life insurance and dental treatment.
.. Marketing Concept
-upply 3 Demand ... therefore producers need to first understand #hat
consumers #anted, then produce those products, then convince consumers
to purchase those products. (arget marketing and market segmentation
became the ne# tools to increase company profitability.
0. One 2 One !elationship" Marketing Concept
(he Marketing era evolved and sa# producers further segment their
markets, targeting smaller groups of consumers #ithin those markets. <ith
the potential unleashed by the microprocessor and information technology,
#e are seeing targeting do#n to the individual, one to one. ! commonly
cited example is !mazon. 1otice, if you make a purchase from this site
=or similar> #hen you return to the site, you #ill receive recommendations
based on your previous purchases. (his presentation is based not only on
your purchases =data stored in your cookie file allo#s for this>, but on
purchases of others #ho have bought the same book and similar books.
2. #iral Marketing
!n interesting thing is occuring, as #e are no# in a net#orked economy.
&ur consumers are able to 8talk8 to each other and serve as an extended
sales force. (his lateral communication and / or transaction bet#een
customers and noncustomers can serve as an opportunity for companies
to leverage. (he pioneer of viral marketing #as 4otmail. (his <ired
article 4otMale discusses this marketing 8accident.8 !nother good
example is Bluemountain.com. -ince the receiver of the ecard has to visit
the site to access the card, this visit serves to promote the service to the
receiver.
?. Societal Marketing Concept
Companies, more a#are of society and the environment at large, promote
their affiliation #ith the environment. Ben @ Aerry6s and (he Body -hop
are examples.
Discussion (opic) %dentify other companies #ho follo# the societal marketing concept.
Discuss the merits of this type of marketing.
!elationship $ith Selling and Marketing
-elling is an aspect of marketing.
5ire versus 'eady, !im and 5ire
Marketing Mi%
Marketing Mix, also kno#n as the 5our "s
"roduct
"rice
"lace =Distribution>
"romotion
&arget Markets
&rganizations select target markets #ithin the entire marketplace using market
segmentation. (hey then develop a marketing mix to reach the target market.
Discussion (opic) %dentify the marketing mix for a product you use.
'our Cs
Macroenvironment
Customers
Competitors
Collaborators
Company
Market Planning
0 Cs) Company, Collaborators, Competition, Customers
0 "s
Market -egmentation
*valuation and Budgets
Discussion (opic) %dentify a recent marketing campaign designed to create negative
demand.
'elevant #ebsites
!merican Marketing !ssociation
*dmunds.comMeta Market
-B!) (he Marketing "lan
Link to Discussion Board
'eturn to -yllabus
&ld 1otes
Marketing Strategy( Key Concepts 2
-ection +, ,
Strategic Planning Process
+. Corporate Level
,. Business Level
.. "roduct Level
4igher levels =corporate> govern lo#er level planning processes. -trategic planning
re7uires)
+. "lanning
,. %mplementation
.. Control
Corporate Strategic Planning
+. %dentify the company6s Mission
,. %dentify -B:s =customer focused>
.. !llocate 'esources across -B:s =BCB ModelC B* ModelC "roduct Life CycleC
systems>
0. Bro#th -trategies for -B:s =intensiveC integrativeC diversification>
Mission -tatement) "urposeC BusinessC Dalues 'eason to be$ %nvisible hand etc.
"roduct (erms...outdated
(echnology (erms...outdated
Market (erms...keep in touch #ith consumer6s needs
5rom five years ago, and still relevant)
!(@( is in the communications business not the telephone business.
Disa...allo#s customers to exchange values...not credit cards
.M solves problems by putting innovation to #ork.
*xample Mission -tatements)
Mozilla.org
unicef
Ben @ Aerry6s
"epsiCo
1e# Eork -tate *ducation6s Mission
Discussion (opic) 5ind your company6s mission statement. 4o# #ell is this statement
understood among employees and customers$ *valuate the missions statements above
#ith respect to purpose, business and values.
%dentify the limiting factors #ith the BCB and B* models.
%nsead <harton !lliance.
Discussion (opic) Cite examples of strategic alliances. %dentify alliances your company
participates and #hy.
S)* Strategic Planning
"rovides the context for the preparation of the marketing plans for the units products and
services.
+. Defining Business Mission
,. !nalyzing *xternal *nvironment =&(> =economic, demographic, technology,
political, legal, socio and cultural, markets, competitors, collaborators etc.>
.. !nalyzing %nternal *nvironment =-<> =competitive advantages, vulnerabilities,
positioning>
0. Choosing &bFectives and Boals =specific, measurable, achievable and consistent>
2. Developing Business -trategies =cost leadershipC differentiationC focus>
?. "reparing "rograms
G. %mplementing "rograms =McHinsey G- 5rame#ork>
I. Bathering 5eedback and *xercising Control
%f goal is to gro# a business by +2J, #hat other data are relevant to Fudge the merits of
the goal$
Discussion (opic) Create a -<&( analysis of your o#n business =business unit>.
Marketing Plans
5ocus on product and marketC focus on detailed marketing strategies for achieving the
product6s obFectives in a target market.
Consider the difference bet#een strategic marketing and tactical marketing.
Marketing "lanning "rocess includes)
+. !nalyzing marketing opportunities
,. 'esearching and selecting target markets
.. Designing marketing strategies
0. planning marketing programs =marketing mix>
2. implementation and control
"ut another #ay)
+. -ituation !nalysis
o Corporate Capabilities and Culture
o Customer !nalysis
o Competitive !nalysis
o Collaborators
o Macro %ssues
o -<&( !nalysis
o &bFectives
o !lternative -trategies
,. !ction "lans
o *valuation and 'ecommendations
o Marketing Mix *lements ="roduct, "rice, "romotion, "lace>
.. %mplementation and *valuation
o 5orecasting and Budgeting
o Measures of *ffectiveness
Discuss Can "riceline 'emain "rofitable #ith respect to strategic planning issues.
%dentify the four Cs) Customer, collaborator, competition and company
Consider past and future gro#th strategies
Consider the four "s) "rice, "roduct, "romotion and "lace.
)usiness Markets
More sales by value in B,B than B,C.
"urchase for)
o "roduction
o 'esale
o 'edistribution
o M'& =Maintenance, 'epair and &perations> IKJ business purchases
versus ...
%n order to)
o %ncrease -ales
o Cut Costs
o Meet -ocial and Legal 'e7uirements
Customers are)
o Businesses for "rofit
o 1on"rofits
o Bovernments
Characteristics of Business Customers)
o 'isk !verse
o Hno#ledgeable
o "riceoriented
o 5e#er and Larger
o 1ature of Demand =Derived, %nelastic, 5luctuating>
o "urchase versus Lease
Buying "rocess consists of)
o "roblem 'ecognition
o Beneral 1eed Description
o "roduct -pecification
o -upplier -earch
o "roposal -olicitation
o -upplier -election
o &rder 'outine -pecification
o "erformance 'evie#
Modified depending on #hether) -traight rebuy, Modified rebuy or 1e# task.
Contrast this #ith the Consumer buying process$
<ho makes the purchasing decision$
<hat are the contextual elements that affect the decision$
<hat is included in purchase) re) customer service levels etc.
*volution of Business Buying
o Develop relationships versus adversarial contest) *xtranetsC increase lock
in.
o Beographic Concentration) *cosystems
(he *volution of B,B) Lessons 5rom the !uto %ndustry
B* Blobal eLchange -ervices
Dell Medium and Large Business 4ome "age
+ealing $ith Competition
"orter6s five basic forces of competition)
1. (hreat of ne# entrants
2. 'ivalry among existing competitors
3. Bargaining po#er of suppliers
4. Bargaining po#er of buyer
5. (hreat of substitutes
<henever you make choices #ith respect to your customers =business or final
consumers>, you need to be a#are ho# your competition changes as a function of
your decisions. :nderstanding the prisoners dilemma model is useful. Clearly
your relation compared to other competitors is important =market leader versus
follo#er for instance> and the nature of the marketplace =monopoly, oligopoly and
monopolistic competition>.
Conse7uences of zero percent financing for autos$
1eed to consider competitors !1D customers for decisions.
%mportance of competitive intelligence.
Classification of competitors =brand, industry, form, generic>
Heep competitors$
%ndustry Concept of Competition)
o %mpacts of Barriers to *ntry and *xit
o 1umber of sellers and degree of competition =monopoly, oligopoly,
monopolistic competition, pure competition>
o Cost -tructure
o Degree of Dertical %ntegration
o Degree of Blobalization
1e# *ntrants)
%nnovators Dilemma
Disruptive (echnology
"riceline, *xpedia and !merican !irlines versus (ravel !gent market place.
Discussion (opic) %dentify and discuss other industries prone to disruptive
technologies.
-B!) (he Marketing "lan
(he Marketing !udit Comes of !ge
4o# to <rite a Mission -tatement
Link to discussion board
'eturn to -yllabus
Marketing Strategy( Key Concepts ,
Customers are increasingly important.
&ne of multiple stakeholders that need to be addressed
=employees, stockholders, suppliers and distributors>
Brotto "izza Mission
Corporate culture needs to be consumercentric =begins
#ith the mission>
!c7uire customers =set expectations> versus retain
customers =do expectations fit #ith reality>
"erceived value =7uality, service and value> versus
delivered value
Beat customer expectations. =delight customers>
4o# do customers perceive 7uality, ho# do you offer it
better than your competitors do$
*volution of Marketing Concept supports this)
Competition in the Marketplace increasing =and
global>
(echnology =DB and communications> allo#s
customers to learn more look at the evolution.
!elationship Marketing Management
1eed to build satisfaction through customer relationship
development activities.
'elationship Marketing, process of attracting and retaining
customers. !dd financial benefits, social benefits and
structural ties.
Lifetime Dalue of a customer versus cost of ac7uiring a
customer
Customer !c7uisition Math *xample)
Cost of -ales Call M2KK
-ucces of -ales Call) + / 2
Cost of ne# customer M,,2KK =not including overhead>
!verage Life Dalue of Customer)
!nnual Customer 'evenue) M+K,KKK
!verage Life (ime) . years
"rofit Margin) +KJ
Life (ime Dalue) M.,KKK
(his looks at averages, not at different consumers.
Do not try to satisfy all customers ... some more profitable
than others. 5ire customers, or move them to higher
profitability =increase price, reduce cost of service>. ,KIK
.K rule
Customers do not ordinarily complain, they simply do not
buy, and they may tell others9 *ncourage complaints to
filter to your company. =-ee Hellogg discussion>
Cost of lost customers$
-urveying lost customers
Discussion (opic) 4o# does your company process
customer complaints. #hat is done #ith them re) interaction
#ith customer and changing business process$
=!lternatively, as a customer, ho# have your complaints
been handled$>
%nternal marketing needs
Making Customer 'elationship Management <ork
Customer Service
Customer service comments)
<harton MB! -ite
*mail !utoresponder <harton, 4B- 'esponse, Hellog
'esponse
<harton !dcomm. taking 7uestions
the least applicantfriendly Bschool) Listed 'easons for
<harton
A:DB* (4* !DM%--%&1- &55%C*-
<hat is :p #/ Hellogg Buy$
-hanghai intervie# students helping students, serving
better than #e could.
Discussion (opic) "rovide your o#n examples of
excellent / poor customer service that have material impact
on retaining / losing customers =use examples from a
business and or customer perspective>.
Discussion (opic) 4o# does your company use its #ebsite
for customer service and / or customer relationship
building$
Marketing
Stimuli
Environmental
Stimuli
)uyer-s
Characteristics
)uyer-s +ecision
Process
)uyer-s
+ecisions
"roduct *conomic Cultural
"roblem
'ecognition
"rudct Choice
"rice (echnology -ocial
%nformation
-earch
Brand Choice
"romotion "olitical "ersonal *valuation
Dealer
Choice
"lace Cultural "sychological "urchase Decision
"urchase
(iming
"ost "urchase
Behavior
"urchase
!mount
%ntro) CBB ... 1ot Fust about changing promotions, but
entire marketing mixes.
Cultural Characteristics) Dalues, "erceptions, preferences
and behaviors =learned from family>, fundamental to
persons #ants.
Buyer behavior influenced by four factors)
cultural =culture, sub culture and social class
=ethnocentrism and patriotism>>
social =reference groups, family, and roles and
statuses>
personal =age and life cycle state, occupation,
economic circumstance, life style, personality and self
concept>
psychological =motivation =freud, maslo#, hertzberg>,
perception, learning, and beliefs and attitudes>
Do Mixed *motions and !dvertising Mix$
4o# -tore Location and "ricing -tructure !ffect -hopping
Behavior
Decision influencers =initiator, influencer, decider, buyer
and user> ... not as complex as B,B buying decision
influencers.
(ypes of Buying -ituations)
Complex Buying Behavior
Dissonance 'educing Buying Behavior
4abitual Buying Behavior
Dariety -eeking Buying Behavior
Consumer decisionmaking process)
+. 1eed 'ecognition
,. %nformation -earch
.. *valuation of !lternatives
0. "urchase Decision
2. "ost "urchase Behavior
got milk$ Change consumer attitudes about milk.
"atriotism
<harton MB! "urchase "rocess
-'% Business %ntelligence) D!L-, "sychology of Markets
Discussion (opic) <hy use iD!L- and psychographic
segmentation$ <hich marketers #ould benefit most from
iDals segmentation and #hy$
"rivacy versus :nderstanding the customer, on the net.
Eankelovich
Link to old class notes.
Link to discussion board
'eturn to -yllabus
Marketing Strategy( Key Concepts .
Marketing Mathematics
(he basic marketing math that is needed to help make
marketing decisions are belo#. (hese are critical to
understand #hen performing case analysis.
(hey include)
Break *ven !nalysis
Lifetime Dalue of the Customer
Market -egment -izing
Market Segment Si/ing
*stimate the number of customers by starting #ith the most
general population, and then reducing according to the
characteristics of the actual segment being sought.
-egment value ; 1umber of Customers x Dalue per
Customer
1umber of Customers ; "opulation x -egment -ize =J> x
-egment "enetration =J>
Customer Dalue ; Customer :sage 'ate x :nit "rice =M> x
:nit Contribution =J>
%mproving Decision Making <ith -imple Break*ven
!nalysis
!ttacking Business Decision "roblems <ith Breakeven
!nalysis
5ormula for %ncremental Break*ven !nalysis
Lifetime Dalue in 'elationship Marketing
Determining Customer Lifetime Dalue for your %nternet
Marketing "lan
(he Lifetime Dalue of a Customer
NNDiscussion (opic) !ny issues #ith respect to the above
marketing mathematics$
Marketing 0nformation Collection
Marketing %nformation -ystem)
+. %nternal records
,. marketing intelligence system
.. marketing research
+. defining problem and research obFectives
,. developing the research plan
.. collecting information
0. analyzing information
2. presenting findings
0. marketing decision support system
NNDiscussion (opic) !ssess the impact of the #eb on the
area of data gathering.
Primary research( +ata gathering1
*xample surveys)
-tanford <ebsite -urvey
<harton Matric -urvey
NNDiscussion (opic) !fter revie#ing the <harton and
-tanford surveys, discuss the goals of the surveys, in terms
of #hat each school is trying to learn. Comment on the
effectiveness of each survey.
1ote) Ooomerang is a great resource for designing online
surveys.
Balance bet#een data gathering and the need for privacy.
Aunkbusters.com) ! great site to explore your privacy
rights/issues.
Some useful secondary resource sites on the $e2(
Business %nformation
Cyberatlas.com, Commerce1et, !merican Marketing
!ssociation, ! Business 'esearchers %nterests, Bloomberg,
C/1et, *DB!', 4oover6s, 1ational (rade Data Bank,
"ublic 'egister6s !nnual 'eport -ervice
Bovernment
Census Bureau, 5ed<orld, (homas
%nternational
(he *lectronic *mbassy, %(rade, (he :nited 1ations
1on "rofit
%dealist.org, %nternet 1on "rofit Center, 1onprofit 'esource
Center
%mportance of demand analysis, market demand, product
demand, expansible markets.
Macroenvironment
Demographic
*conomic
natural
technological
political/legal
social/cultural
interrelationships
5aith "opcorn6s (rends
-ierra Club
Creative Destruction) (he *ssence of Capitalism
'elevant HP< !rticle)
'ole "laying) ! Method to 5orecast Decisions
'ole "laying as a 5orecasting (ool
Marketing -cience Meets 4olly#ood
5orecasting in Conflicts) 4o# to predict #hat your
opponenet #ill do.
Making CD -ales 'ing
*thical %nspirations for Marketing Managers
Link to discussion board
'eturn to -yllabus
Marketing Strategy( Key Concepts 3
"roduct scope) goods, services, experiences, events,
persons, places, properties, organizations, information and
ideas.
"roduct Levels)
+. Core Benefits
,. Basic "roduct) to satisfy core benefit sought
.. *xpected "roduct) meet buyers expectations for
product
5ocus of competition in LDC
0. !ugmented "roduct) exceed expectations
5ocus of competition in developed countries
2. "otential "roduct) future possibilities
Competitive pressures push competition at the augmented
level, features at the augmented level become expected
features, as the market adopts ne# features, further
heightening competition. (his leaves room to develop
stripped do#n products for price conscious market.
Delight Customers by exceeding expectations.
"roduct 4ierarchy)
+. 1eed 5amily
,. "roduct 5amily
.. "roduct Class
0. "roduct Line
2. "roduct (ype
?. Brand
G. %tem
"roduct Classifications) Different types of goods re7uire
different marketing mixes to be successful.
+. Durable Boods
,. 1on Durable Boods
.. -ervices
%nnovation of batteries$
Consumer Boods Classification)
Convenience) "ackaging is important to sell the
product. Consumers #ill accept a substitute. Marketers
focus on intense distribution, time utility. Convenience
products can be categorized into staple =milk>, impulse
=not intended prior to shopping trip>.
Shopping) Consumers expend considerable effort
planning and making purchase decisions =i.e.,
appliances, stereos, cameras>. Consumers are not
particularly brand loyal. 1eed producer intermediary
cooperation, high margins, less outlets than
convenience goods. :se of sales personnel,
communication of competitive advantage, branding,
advertising, customer service etc. !ttribute based =1on
"rice Competition>, product #ith the best set of
attributes is bought. %f product attributes are Fudged to
be similar, then priced based.
Specialty) Buyer kno#s #hat they #ant and #ill not
accept a substitute, %* Mercedes. Do not compare
alternatives. Brand, store and person loyal. <ill pay a
premium if necessary. 1eed reminder advertising.
Unsought) -udden problem to resolve, products to
#hich consumers are una#are, products that people do
not necessary think of purchasing. :mbrellas, 5uneral
"lots, *ncyclopedia99
%ndustrial Boods Classification)
Production Goods
o 'a# Materials)
o Component parts) becomes part of the physical
product) %ntel, Bore
o "rocess materials) not readily identifiable part of
the production of other products
Support Goods
o MaFor *7uipment)
o !ccessory *7uipment) desk tops and tools
o Consumable -upplies) %* "aper, pencils or ink
cartridges
o BusinesstoBusiness services) 5inancial, legal
marketing research etc.
%f an organization is marketing more than one product, it
has a product mix.
Product itema single product
Product lineall items of the same type
Product mixtotal group of products that an
organization markets
Depth measures the Q of products that are offered #ithin
each product line. -atisfies several consumer segments for
the same product, maximizes shelf space, discourages
competitors, covers a range of prices and sustains dealer
support. 4igh cost in inventory etc.
Width measures the Q of product lines a company offers.
*nables a firm to diversify products, appeals to different
consumer needs and encourages one stop shopping.
"roduct Line Decisions)
Cannibalization and consumer movement issues
%nternal =company> versus external =market>
needs/decisions
Coke 4unts for (alent ro 'e*stablish %ts Marketing Might
Brand
<hat is Branding$ <hy Brand$
Definition)
! name, term, design, symbol or any other feature that
identifies one seller6s good or service as distinct from
anotherRs.
Brand name is that part that can be spoken, including
letters, #ords and Qs, %* G:".
Brand names simplify shopping, guarantee a certain
level of 7uality and allo# for selfexpression.
Brand markelements of the brand that cannot not be
spoken, %* symbol/ logo
Trade Character %* 'onald McDonald, "illsbury
Doughboy
Trade mark legal designation that the o#ner has
exclusive rights to the brand or part of a brand.
Tradename(he full legal name of the organization. %*
5ord, not the name for a specific product.
"rovides benefits to buyers and sellers
&O )*4E!(
4elp buyers identify the product that they like/dislike.
%dentify marketer
4elps reduce the time needed for purchase.
4elps buyers evaluate 7uality of products especially if
unable to Fudge a products characteristics.
4elps reduce buyerRs perceived risk of purchase.
Buyer may derive a psychological re#ard from
o#ning the brand, %* 'olex or Mercedes.
&O SE55E!(
Differentiate product offering from competitors
4elps segment market by creating tailored images
Brand identifies the companies products making
repeat purchases easier for customers
'educe price comparisons
Brand helps firm introduce a ne# product that carries
the name of one or more of its existing products...half
as much as using a ne# brand, lo#er co. designs,
advertising and promotional costs
*asier cooperation #ith intermediaries #ith #ell
kno#n brands
5acilitates promotional efforts
4elps foster brand loyalty helping to stabilize market
share.
5irms may be able to charge a premium for the brand.
Branding versus (actical "romotions$
Brand *7uity =Customer *7uity>
&perating profits expected profits for generic M) +K Most
Daluable
-hare of Mind, !ttitudes ; %mage"o#er. Landor !ssociates
Brand a#areness ; considered set
Brand a#areness)
+. #ithin relevant market=s>
,. #ith influencers
.. #ith entire market
(he Best Blobal Brands) 4andout
%nterbrand) Best Blobal Brand
Brand 1ame Decisions)
%ndividual 1ames) "rocter and Bamble, (ide, Cheer,
Bold
5amily 1ames) B*, !(@(, and -ears
(rade name #ith individual product name) Hraft
"roducts
M5 Brand versus "rivate Brand$
Selecting a )rand 6ame
Criteria for choosing a name, some issues to consider)
*asy for customers to say, spell and recall =inc.
international ppl>
%ndicate products maFor benefits
-hould be distinctive
Compatible #ith all products in product line
:sed and recognized in all types of media
-ingle and multiple #ords Bic, Dodge Brand Caravan,
%BM "C =letters>, or a combination Mazda 'LG
!vailability, already over 0KK car 8name plates8, this
makes it difficult to select a ne# one.
:se #ords of no meaning to avoid negative
connotation, Hodak, *xxon
Can be created internally by the organization, or by a
consultancy
Legal restrictions, i.e. 5ood products must adhere to
the 1utrition Labeling and *ducation !ct, +SSK...May
I +SS0
Blobal translations $
(he Brand "yramid)
+. 5eatures) tangible characteristics of product
,. 5unctional Benefits) benefits to consumer for brand
features
.. *motional 'e#ards) psychological or emotional
benefits received by using brand6s product$
0. Dalues) #hat are the values of the typical loyal
customer for this brand$
2. "ersonality) #hat #ords #ould you use to describe
brand if it #ere a person$
1ameLab
Domain 1ames) 4ighFacking issues$ =4ighFacked Domain
and 1e# Domain>) 4elp9 %6ve Lost My Domain 1ame9
Discussion (opic) %nvestigate the above issues to determine
#ho has rights to the use of a domain name.
&nline brand investment versus offline brand investment
"ampers
Discussion (opic) Discuss the challenges of branding on
the #eb, ho# are "ampers developing a branding strategy$
!rthur !ndersen changes name to !ndersen
!ccenture no# a clear #inner #ithout !ndersen name
%s there a #indo# of confusion$
!ndersen, !ccenture
Discussion (opic) Discuss the evolution of the value of the
brand) !ndersen
Brand Licensing
Discussion (opic) Discuss the role the corporate logo plays
in branding. Cite logos and their inherent value. Discuss
logos #hich have changed, and #hy$
Packaging
Consists of a products physical container, label and/or
insert.
!pproximately +KJ of product selling cost.
Development of a container and a graphic design for a
product. Can affect purchase decisions %* pump dispenser
on a tube of toothpaste.
"ackaging 5unctions include)
"rotect product and maintain functional form, %* milk.
5oil shop lifting
&ffer convenience, :sage
"romote product by communicating features 8last 2
seconds of mktg8, Campbells red labels...
Develop reusable package for alternative use.
-egmentation, tailored to a specific group
"ackaging decision serve the channel members and the
final consumer.
Costho# much are customers #illing to pay for the
packaging$
"reprinted cost, use :"C codes
Must comply #ith the 5D! packaging regulations.
Make product tampering evident to the reseller and
customer, cost benefit #ith liability
1eed to consider consistency among package
designs5amily packaging...category
consistent..."ringles
1eed to inform potential buyers of ne# products
content, features, uses, advantages and hazards.
1eed to create a desirable image through color etc.
Can be designed to appear taller or shorter =thin
vertical lines for taller> "eople associate specific
colors #ith certain feelings, 'ed #ith fire. Do not
package meet in green99
Must meet the needs of resellerstransportation,
storage and handling.
*nvironmental responsibility.
CD "acking %ssues
!&L "ackaging
Labeling
Product Positioning and Product !epositioning
Definition)
(his refers to a place a product offering occupies in
consumers6 minds on important attributes, relative to
competing offerings.
4o# ne# and current items in the product mix are
perceived, in the minds of the consumer, therefore
reemphasizing the importance of perception99
1e# "roductneed to communicate benefits
*stablished "roductsneed to reinforce benefits
0deal Characteristics
1eed to introduce products that possess characteristics that
the target market most desires, ideal. "roduct positioning is
crucial.
Consumers desires refer to the attributes consumers #ould
like the products to possess%D*!L "&%1(-.
<henever a group of consumers has a distinctive 8ideal8
for a product category, they represent a potential target
market segment.
! firm does #ell if its attributes =of the product> are
perceived by consumers as being close to their ideal. (he
obFective is to be 8more ideal8 than the competitors.
*ach product must provide some uni7ue combination of
ne# features desired by the target market.
%nstead of allo#ing the customer to position products
independently, marketers try to influence and shape
consumers concepts and perceptions.
Marketers can use perception maps.
E%isting Products
-un (an Lotion *xample)
^
|
|
Old Position | New Position
|
|
|
Glamour--------------------------------------------------Health
|
|
|
|
|
|
|
(raditional sun tan lotion positioned as aiding in getting a
very glamorous deep tan etc.
Dermatologist reports...skin cancer etc.
Lifestyle needs change, move to more health conscious
society
1eed to reposition sun tan lotion as a healthy #ay to be
exposed to the sun.
(arget market has shifted from the left 7uartile to the right
7uartile as far as needs are concerned.
-un tan marketers need to do same as far as changing
consumers perception for the product.
4o#$
Change "romotion) 8(an don6t Burn8 (he -t. (ropez
(an vs. :ltra -#eat "roof -erious tan for...Be -un
-mart
Change "roduct) -unscreen and sunless tanning agent.
)MW positions on afforda2ility
^
Very a!e
| "e#us$in!initi
| %er&edes
| '%(
|
|
|
)hea*--------------------------------------------------+#*ensi,e
|
|
|
|
|
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|
Very -nsa!e
BM<, to reposition up to the left
Due to the exchange rate, Lexus moves to the right
<hy did they reposition$
-afety
!ffordability
Competitors include %nfiniti, Lexus, Mercedes Benz and
!urora
%f you already have a brand in the market, must be sure to
avoid cannibalization. !ttributes and brand image should
give a product distinct appeal.
6e$ Product Positioning
<hen developing a ne# product, a company should
identify all the features that are offered by all its maFor
competitors.
-econd, identify important features/benefits used in making
purchase decisions.
Determine the overall ranking of features by importance
and relate the importance of each feature to its
8uni7ueness8) #hat are the uni7ue selling points =:-"s>.
5or example, you #ouldn6t buy a spreadsheet program that
if it didn6t perform basic math, so basic math is very
important.
4o#ever since every spreadsheet has that itRs an 8important
fundamental feature8, instead of an 8important
differentiating feature8.
(he other side #ould be a spreadsheet that displays all
numbers in binary =K+> instead of 8normal8 numbers =KS>.
(his is uni7ue but not important.
(he evaluation becomes a , x , matrix #ith uni7ueness on
the Laxis and importance on the Eaxis.
^
. /m*ortant to 0% 1to&23ro2er4 .
%ath !un&tions | /m*ort 5ata
|
|
|
|
|
-----------------------------------------------------------ni6ue
|
|
|
|
|
|
| .
'inary 5ata
%f the feature is in the upper right hand corner then you
probably have a #inning feature =:-">.
(his is kno#n as feature positioning, as opposed to product
positioning. &ne can then see #hat type of customer needs
the important =and perhaps uni7ue> features.
%f your spreadsheet accepts continuous data in realtime
=such as stock market data> #hile *xcel doesn6t, you6d
position your spreadsheet as a 8realtime spreadsheet #ith
all calculations needed by <all -treet.8
%ts a claim that tells something uni7ue about your product,
#ho it6s for, and by implication, that *xcel can6t do it.
Product 5ife Cycle
"opularized by (heodore Levitt, +S?2
"LC can be applied to)
product category =<atch>
product style =Digital>
a product item/brand =(imex>
5our -tages to the "roduct Life Cycle)
+. %ntroduction
,. Bro#th
.. Maturity
0. Decline
(he follo#ing material refers to the "LC as far as the
product category is concerned unless other#ise stated.
0ntroduction
5ailure rate for ne# products can range from ?KJSKJ,
depending on the industry. ! product does not have to be an
entirely ne# product, can be a ne# model =car>, a ne#
product for the company, or repositioning a product to a
ne# market.
Marketing Mi% MM" considerations
1eed to build channels of distribution/selective distribution
Dealers offered promotional assistance to support the
product...":-4 strategy.
Develop primary demand/pioneering information,
communications should stress the benefits of the product to
the consumer, as opposed to the brand name of the
particular product, since there #ill be little competition at
this stage and you need to educate consumers of the
product6s benefits.
Price skimming...set a high price in order to recover
developmental costs as soon as possible.
Price penetration...set a lo# price in order to avoid
encouraging competitors to enter the market, also helps
increase demand and therefore allo#s the company to take
advantage of economies of scale.
7ro$th
1eed to encourage strong brand loyaltyC competitors are
entering the market place. "rofits begin to decline late in
the gro#th stage.
May need to pursue further segmentation.
MM considerations
May need to perform some type of product modification to
correct #eak or omitted attributes in the product.
1eed to build brand loyalty =selective demand>,
communications should stress the brand of the product,
since consumers are more a#are of the products benefits
and there is more competition, must differentiate your
offering from your competitors.
May begin to move to#ard intensive distributionthe
product is more acceptedC therefore intermediaries are more
inclined to risk accepting the product.
"rice dealing/cutting or meeting competition, especially if
previously adopted a price skimming strategy.
Maturity
-ales curve peakssevere competition, consumers are no#
experienced specialists.
MM Considerations
! product may be reFuvenated through a change in the
packaging, ne# models or aesthetic changes.
!dvertising focuses on differentiating a brand, sales
promotion aimed at customer =":LL> and reseller =":-4>.
Move to more intense distribution
"rice dealing/cutting or meeting competition
"rovides company #ith a large, loyal group of stable
customers. Benerally cash co#s that can support other
products.
-trategies during maturity include)
Modification of product...use line extensions
'eposition "roduct
<eaker competition #ill have left the market place.
+ecline
-ales fall off rapidly. Can be caused by ne# technology or
a social trend.
Can Fustify continuing #ith the product as long as it
contributes to profits or enhances the effectiveness of the
product mix.
1eed to decide to eliminate or reposition to extend its life.
MM Considerations
-ome competition drop out
1eed to time and execute properly the introduction,
alteration and termination of a product.
Cannibalization strategies to introduce ne# products.
1eed to manage product mix through their respective life
cycles. <hen to decide to introduce ne# =modified>
products that compete #ith the current product offering.
<ith hightech products, need to consider introducing ne#
=and competing> products as the existing product is still in
the gro#th stage of its life cycle.
+ifferent types of 5ife Cycle Curves
5ad Curve
5leeting fashions vs. lasting shifts in consumer
preference. Cannot differentiate bet#een the t#o using
usual marketing tools like focus groups.
84and anyone a hula hoop, and they6ll have fun #ith
itat first8
-easonal Curve
Life cycles that vary by season, clothing etc.
+eveloping and Managing Products
(o compete effectively and achieve goals of an
organization, the organization must be able to adFust its
product mix.
1eed to understand competition and customer attitudes and
preferences.
&ime% &urns do$n the S$atch
+SI,, (imex turned do#n the opportunity to market
8-#atches8.
(imex #as resting on its laurels, simple lo# cost #atches.
Digital revolutionized industry technological change,
(imex stuck #ith analog.
DD !"T #$$P UP WT% W&TC%$S $'"(UT"!
)*"+ & )U!CT"!&( "B,$CT T" & )&S%"!
&CC$SS"*-.
1o# consumer o#ns 2 #atches up from +.2 .K years ago
=emphasizing fashion need>. (imex has ac7uired Buess and
Monet Ae#ellers =distribution outlets> in an effort respond
to change.
"roduct mix)
Dressy #atches to <alt Disney Character #atches, %ndigo.
1o# have +,2KK styles, .KK in +SGK.
+eveloping 6e$ Products
1eed to develop ne# products. ! ne# product can be)
Continuous %nnovation...1o ne# buyer behavior to
learn, i.e. products not previously marketed by the
firm, but by others
Dynamic Continuous %nnovation...minor education
needed for consumers to adopt product
Discontinuous %nnovation...entirely ne# consumption
patterns
+#+ Standard
DDD !ssociation
Discussion (opic) Discuss the evolution of the DDD
standard and its importance in ne# product
development.
5or a ne# product to succeed it must have)
desirable attributes
be uni7ue
have its features communicated to the consumer =mkt
support necessary>
Developing ne# products is expensive and risky.
5ailure not to introduce ne# products is also risky. %*
(imex above
5irms develop ne# products in three #ays)
By ac7uisition, i.e. (imex bought Buess and Monet
Ae#ellers in +SS,, bringing in ne# products to their
product mix.
!c7uiring patents, licensing technology
%nternal development, this is #hat #e are going to
focus on.
!bout ,KH ne# products a year launched) about G2J are
brand extensions.
Why 6e$ Products 'ail
Lack of differentiating advantage
"oor marketing plan
"oor timing
(arget market too small
"oor product 7uality
1o access to market
Seven phases to ne$ product development(
+. 1e# "roduct -trategy Development
&nly a fe# ideas are good enough to reach
commercialization. %deas can be generated by chance,
or by systematic approach and by company culture
=.M>. 1eed a purposeful, focused effort to identify
ne# #ays to serve a market. 1e# opportunities appear
from the changes in the environment.
,. %dea Beneration
Continuous systematic search for ne# product
opportunities.
o +arketing oriented sourcesidentify
opportunities based on consumer needs, lab
research is directed to satisfy that research. +
IKKQs, research etc.
o (a.oratory oriented sourcesidentify
opportunities based on pure research or applied
research.
o ntra/irm devisesbrain storming, incentives and
re#ards for ideas. .Ms "ost it, from choir
practice. 4e#lett "arkards lab is open ,0 hrs.
day. !nalyzing existing products, reading trade
publications.
Brainstorming /or your group pro0ect. deas
should not .e critici1ed2 no matter ho3 o//4.eat
they are.
.. "roduct -creening and *valuation
1e# product check listC list ne# product attributes
considered most important and compare each #ith
these attributes. Check list is standardized and allo#s
ideas to be compared.
Beneral characteristics, Marketing Characteristics
and "roduction Characteristics.
%deas #ith the greatest potential are selected for
further research.
Do they match the organizations goals =-ome
companies have many patents that they have not
exploited for this very reason.>
Look at companiesR ability to produce and market the
product.
1eed to look at the nature and #ants of the buyers and
possible environmental changes.
Concept (esting
-ample of potential buyers is presented #ith the
product idea through a #ritten or oral description to
determine the attitudes and initial buying intentions.
ConFoint !nalysis to see feature tradeoffs.
(his is done before investing considerable sums of
money and resources in 'esearch and Development.
Can better understand product attributes and the
benefits customers feel are most important.
<ould you buy the product$
<ould you replace your current brand #ith the ne#
product$
<ould this product meet real needs$
0. Business !nalysis
!nalyze potential contribution to sales, costs and
profits.
Does the product fit into the current product mix$
<hat kind of environmental and competitive changes
can be anticipated$
4o# #ill these changes effect sales etc.$
!re the internal resources ade7uate$
Cost and time line of ne# facilities etc.$
%s financing available$
-ynergies #ith distribution channel etc.
M%- to determine the market potential sales etc.
"atentability should be determined, last +G years, +0
years for a pharmaceutical product.
5ind out if it is technically feasible to produce the ne#
product.
%f you can produce the ne# product at a lo# enough
cost so as to be able to make a profit.
2. "roduct Development
Develop a prototype, #orking model, lab test etc.
!ttributes that consumers have identified that they
#ant must be communicated through the design of the
product.
?. (est Marketing
Can observe actual consumer behavior.
Limited introduction in geographical areas chosen to
represent intended market.
!im is to determine the reaction of probable buyers.
%t is the sample launch of the Marketing Mix.
Determine to go ahead, modify product, modify
marketing plan or drop the product.
"'&- are)
o Lessens the risk of product failure.
o 'educes the risk of loss of credibility or
undercutting a profitable product.
o Can determine the #eaknesses in the MM and
make adFustments.
o Can also vary parts of the MM during the test
market.
o 1eed to select the appropriate MM and check the
validity.
C&1- are)
o (est market is expensive.
o 5irm6s competitors may interfere.
o Competitors may copy the product and rush it
out. %* Clorox detergent #ith bleach "@B. 8%n a
live test you6ve tipped your hand, and believe me,
the competition is going to come after you.
:nless you have patented chemistry, they can rip
you off and beat you to a national launch8
Director of Marketing at Billette6s "ersonnel
division.
!lternatively can use a simulated test market. 5ree
samples offered in the mall, taken home and
intervie#ed over the telephone later.
G. Commercialization
Corresponds to introduction stage of the "roduct Life
Cycle.
"lans for fullscale marketing and manufacturing must
be refined and settled.
1eed to analyze the results of the test market to
determine any changes in the marketing mix.
1eed to make decisions regarding #arranties etc
=reduces consumers risk>. <arranties can offer a
competitive advantage.
-pend alot of Ms on advertising, personnel etc.
Combined #ith capital expenditure makes
commercialization very expensive.
1eed to consider)
the speed of acceptance among consumers and
channel membersC
intensity of distribution,
production capabilities,
promotional capabilities,
prices,
competition,
time period to profitability and commercialization
costs.
)uyers- Product 8doption Process
+. !#areness
Buyers become a#are of the product
,. %nterest
Buyers seek information and is receptive to learning
about product
.. *valuation
Buyers consider product benefits and determines
#hether to try it
0. (rial
Buyers examine, test or try the product to determine
usefulness relative to needs
2. !doption
Buyers purchase the product and can be expected to
use it #hen the need for the general type of product
arises.
'ate of adoption depends on consumer traits as #ell as the
product and the firm6s marketing efforts.
+iffusion Process
(he manner in #hich different members of the target
market often accept and purchase a product =go through the
adoption process>
+. %nnovators
(echnosavvies first customers to buy a product, ,.2 J
of consumers
,. *arly !dopters
(end to be opinion leaders. !dopt ne# products but
use discretion, +..2J
.. *arly MaFority
.0J of consumers, first part of the mass market to buy
the product
0. Late MaFority
Less cosmopolitan and responsive to change, .0J
2. Laggards
"rice conscious, suspicious of change, +?J, do not
adopt until the product has reached maturity.
%mplications to marketers, company must promote product
to create #idespread a#areness of existence and benefits.
"roduct and physical distribution must be linked to patterns
of adoption and repeat purchase.
Discussion topic) Discuss the differences in the ne#
product development process for digital goods versus
tangible goods, consider intellectual property issues,
standards issues etc$
!elevant Kno$ledge9Wharton 8rticles
Corporate -ponsorships of -tadiums and &ther %nstitutions
DonRt !l#ays "ay &ff
-#itching names, effect of brand. Dalue to stadiums, value
to customers$
4o# to Heep &thers 5rom 'ipping &ff Eour %deas
"oachers !re &ut to "lunder Eour %ntellectual "roperty Can
you Do !nything$
%ntellectual "roperty) <%"&
%ntellectual "roperty and the 1ational %nformation
%nfrastructure
Link to discussion board
'eturn to -yllabus
Marketing Strategy( Key Concepts :
Market 5ocus) Domestic versus %nternational
"rotectionism versus open markets$
<ho6s -tandards to adopt, home country or host country$
-hould company play by host rules or try to change them$
:nions, *nvironmentalists
B<B) 5ree (rade area *: to impose tariffs to protect steel
market
-ome risks include)
changing borders
unstable governments
foreign exchange issues =devaluations etc$>
technology pirating
adaption costs for product and communication strategy
-teps to consider)
determine the international market environment
=economic, political, legal and cultural>C international
trade system
fe# versus many countries, percentage of sales
determine #hich market to enter, risk versus rate of
return
ho# to enter the market$ exporting, licensing, Foint
ventures and direct investment
adaption of 0 "s$) (ext Books9
organizational structure for international business$
*conomist) March ,nd, ,KK, )(he -hort !rm of the La#
Discussion (opic) Discuss the complications of removing
bribery from international transactions. <hat are the
outcomes for economies$
%nternational marketing is not al#ays about going
overseas$
Las Degas$
Beneral %nternational Links)
Babel 5ish
:- Depts. of Commerce %nternational (rade
!dministration, *xport%mport Bank of the :nited -tates,
(he Bureau of *xport !dministration
Links to (rade !lliances)
<(& / B!((, 1!5(!, *: for the :-, *uropean :nion
&nline
Links for Bribery Discussion)
&*CD) &rganisation for *conomic Co&peration and
Development, 5oreign Corrupt "ractices !ct, (ransparency
%nternational, -hell) Management "rimers
Services
!ll products include a service component.
%ntangible =associate #/ tangible representation>
%nseparable =influence providers>
"erishable =influence demand>
Dariable =standardization issues>
Beneral Marketing %ssues)
*xternal Marketing
%nternal Marketing
%nteractive Marketing
. additional "s
"eople
"hysical *vidence
"rocesses
5ocus)
-earch Tualities) Boods =clothing, Fe#elery>
*xperience Tualities
Credence Tualities) -ervices =medical, auto repair,
legal services>
!elevant Kno$ledge9Wharton 8rticles
"rescription Drug Coverage for -eniors 5aces :ncertain
5uture
! Live Baby or Eour Money Back
"oachers !re &ut to "lunder Eour %ntellectual "roperty U
Can Eou Do !nything$
*thical -tandards for Blobal Corporations$
*thical %nspiration for Marketing Managers
! -earch for BoogleRs -uccess (urns :p (#o <ords) (rust
and (echnology
Link to discussion board
'eturn to -yllabus
Marketing Strategy( Key Concepts ;
<hat is price$
"rice is the value exchanged for the product.
*conomic =inc. barter>
5reedom of Choice =lockin, opportunity cost>
"rivacy
*volution of pricing mechanisms) 5ixed versus variable)
Chapt. , Digital Dar#inism.
"ioneer of fixed pricing) !aron Montgomery <ard
&nly element of the MM that is given in return
0mportance of the economic aspect of" Price to the Marketer
&ften the only element the marketer can change
7uickly in response to demand shifts.
'elates directly to total revenue (' ; "rice N Ttty
"rofits ; (' (C
effects profit directly through price, and indirectly by
effecting the 7tty sold, and effects total costs through
its impact on the 7tty sold, =ie economies of scale>
Can use price symbolically, emphasize 7uality or
bargain =signal value>.
Deflationary pressures, consumers very price
conscious.
-ix step process)
+. *stablish marketing obFectives
o survival =short term>
o profit max.
o revenue max. =yield management pricingC
dynamic pricing>
o gro#th max. =penetration pricing ... 8free8>
o market skimming
o product7uality leadership =signaling effect$>
,. Demand schedule) elastic versus inelastic demand
issues =priceline>
"ercent change in 7uantity demanded relative to the
percent change in price.
J change in Ttty demanded

J change in price
<e are no# looking at the actual impact on demand as
price varies. $lastic demand is more sensitive to price
than inelastic demand.
*lastic demand, greater than+ =+>
%nelastic demand, less than + =+>
:nitary demand, e7ual to +
&l3ays take the a.solute values
0nelastic +emand
7|8
| 8
| 8
| 8
| 8
|-----------9tty
7
Elastic +emand
7|8
| 8
| 8
| 8
| 8
|-----------9tty
7
(' ; "rice N Ttty
%f demand is elastic then change in price causes an
opposite change in the total revenue.
%f demand is inelastic then change in price causes the
same change in the total revenue1
(he less elastic the demand, the more beneficial it is
for the seller to increase price.
.. Cost issues) different levels of product =learning curve
issues>, =dis>economies of scale, fixed/variable,
breakeven issues, marginal analysis
Marginal !nalysis)
<hat happens to the costs and revenues as production
increases by one unit. (his #ill determine at #hich
point profit #ill be maximized. 1eed to distinguish
bet#een)
5ixed Costs
!verage 5ixed Costs, 5C/units produced
Dariable Costs =materials labor etc.>
!verage Dariable Cost, DC/:nit produced
(otal Cost ; =!5CV!DC>NT((E
+arginal cost ; the extra cost to the firm for
producing one more unit.
+arginal revenue ; the extra revenue #ith the sale of
one additional unit.
M' MC tells us if it is profitable to produce one
more unit.
"rofit maximization at M' ; MC
(o produce/sell more units than the point M' ; MC
the additional cost of producing one more unit is
greater than the additional revenue from selling one
more unit. !t any point prior to M' ; MC, M' #ill
be greater than MC, therefore the additional revenue
from selling one more unit #ill be greater than the
additional cost of producing one more unit, therefore
forgoing the opportunity to generate additional profits.
(herefore M' ; MC ; "rofit MaximizationC assuming
all products are sold.
Due to the environment, it is difficult to predict costs
and revenues etc.
Cost structures can influence pricing obFective) high
lo# fixed variable makeup has significant impact on
contribution margins.
0. Competitors pricing
2. "ricing method)
o Cost "lus)
Buarantees contribution
simple to calculate
not optimal
o Competition
par #ith market
price #ar implications$
not optimal
o Dalue
optimal
difficult to determine
?. 5inal price selection) odd / even etc.
5inancing issues.
Lifecycle "ricing issues. *specially #/ services, t#o tier
pricing etc.
"rice -egmentation/Discrimination) Darying prices due to
market conditions, different consumers)
8cost to serve8 are different
value of product are different
service demands differ
Methods of segmentation/discrimination)
"rice negotiation =second hand car examples, online
auctions>
Beography
"rice and 7uantity discounts) seasonal discounts, trade
discounts, tradeins
"romotion pricing) loss leader =lockin etc.>, special
event, rebates, lo# interest financing, #arranties
Discriminatory pricing) customer segment pricing,
product form pricing, time pricing
"roduct mix pricing) line pricing, optional feature, t#o
part pricing, product bundling
"roduct bundling) office suite etc.
"rice changing issues =reducing or increasing> also relevant
for establishing a price, at above or belo# market)
Customer reactions
Competitor reactions
Collaborator reactions
Bame theory implications of adopting prices in competitive
markets.
-ignal value of price changes to competitors and
customers.
"rice transparency issues for establishing and changing
prices.
Dealing #ith competitor price changes.
Discussion (opic) <hat are the potential long run
conse7uences of a price promotion designed to attract
competitors customers$
Discussion (opic) 'elate examples of products that are
8free8 ... and if they are free, #hat is the obFective of the
company$
Discussion (opic) !ccess *bay and describe your
experiences as a buyer / seller. <hat type of products
#ould #ork #ell under a dynamic pricing model$ Does the
life cycle stage of a product impact its attractiveness for
dynamic pricing$
!elevant Kno$ledge 9 Wharton 8rticles
<ill Consumers Be <illing to "ay for (heir 5ormerly 5ree
Lunch on the %nternet$
Can "riceline 'emain "rofitable$
1e# %nternet "ricing Models Bring "ain, and 5ortune, to
'etailers
%s the "rice 'ight$ !sk Aay <alker
4o# -tore Location and "ricing -tructure !ffect -hopping
Behavior
Link to discussion board
'eturn to -yllabus
Marketing Strategy( Key Concepts <
Channel Selection 0ssues
:se intermediaries #ho perform functions more efficiently. 5unctions include)
information flo#
promotion
negotiation
ordering
financing
risk taking
physical possession
payment and title
(#o key issues to support intermediaries
%mprove exchange efficiency =2 mf. and 2 customers ; ,2 transactions #ith no
intermediaryC +K transactions #ith one intermediary>
specialize in functions listed above
(ypes of utility provided by intermediaries)
(ime
"lace
"ossession
5orm
Channel decisions include)
direct selling versus using + or , or more intermediaries
Manufacturer 3 Consumer
Manufacturer 3 'etailer 3 Consumer
Manufacturer 3 <holesaler 3 'etailer 3 Consumer
Manufacturer 3 Distributor 3 <holesaler 3 'etailer 3 Consumer
*xamples
analyze customers6 desired service outputs =size, #aiting time, spatial
convenience, support etc.>
channel obFectives and constraints =based on product characteristics,
intermediaries, environment and competitors channels>
buyer behavior =consumer and channel>
buyer demographics
identify channel alternatives =exclusive =BM<> vs. selective =clothes lines> vs.
intensive =orange Fuice>>
competitors6 channels
channel terms and responsibilities
Channel incentives =trade promotions etc.>
evaluate channel by economic, adaptive and control criteria
Direct to market ;
Breater fixed cost
Breater effectiveness / control over contacts
Breater control over targeting
%ndirect to market ;
Breater variable cost
Less control / responsibility
Breater coverage
Hno#ledge of customer #ithin channel
%ssues in selecting channel partners)
<hat role do partner play$
<hat margin do #e give$
Can / do they carry competing / complementary product, private labels
4o# do #e incentivize
Do they pass on price cuts$
4o# do #e control for cannibalization #/ other channels =direct>$
Lockin to channel decisions
Channel decisions impact on other elements of the mix
Life cycle issues change channel strategy.
*arly stage) -pecialized channels
Bro#th stage) !lternative channels
Maturity stage) Mass channels
*arly stage) high control, service and delivered price
Later stage) increasing conflict, range of providers, complexity of channel
Channel member relationships
%mpact of trade promotions) distortion effects$
Oero sum 'elationship #/ channel members$
1eed to build symbiotic relationships #ith channel members.
Channel modification issues
(rends include vertical, horizontal and multichannel conflict.
%nternet has had significant impact re) building ne# channels and changing industries
through disintermediation and information flo# issues.
Legal and ethical issues)
*xclusive dealing
*xclusive territories
(ying agreements
Dealers6 rights
!etailing
'etailing includes all interactions #/ final customer
-tore retailing =specialty, department stores, supermarkets, convenience,
superstores, discount stores, #arehouse stores, hypermarkets and catalog
sho#rooms>
1onstore retailing =direct selling, direct mail billing, catalogs, #eb, vending
machines>
'etail organizations =corporate chains, voluntary chains / retailer cooperatives,
consumer cooperatives, franchises, independents>
'etail life cycle
<heel of retailing
'etail market planning)
target audiences
product) assortment and service
product) positioning =Hmart vs. <al Mart and (arget>
product) services and store atmospherics
product) symbiotic relationships
pricing
promotion
place
'etailing trends)
ne# forms
shortening life cycles
non store gro#th
intertype competition, polarity, category killers
onestop shopping
global expansion
stores as meeting places
Wholesaling
<holesaling includes all interactions #/ intermediaries buying for resale or business use.
5unctions include)
selling and promotion
buying and assortmentbuilding
bulkbreaking
#arehousing
transporting
financing
risk bearing
supplying market information
<holesalers comprise four groups)
merchant #holesalers =take possession, full service vs. limited service>
agents and brokers =do not take possession, paid commission>
manufacturers6 and retailers6 branches
miscellaneous #holesalers =e.g. agricultural, bulk chemicals>
%ncreasing importance of logistics, and providing a system#ide approach at reducing
costs.
Logistics decisions)
order processing =shorten order to remittance cycle>
#arehousing
inventory
transportation =rail, air, trucks, #ater#ays, and pipelines>
%nteresting sites)
Carmax.com for used cars
!mazon.com for used books
1apster and Bnutella for music
Discussion (opic) %mpact of channel members creating a market for used product. %s this
good or bad for the market, ho# does it impact the value of the ne# product$
!elevant Kno$ledge 9 Wharton 8rticles
HmartRs ,KEear %dentity Crisis
(aking -tock of -upermarket 'etail "erformance
"ayfor"erformance (rade "romotions Can *ase 5riction Bet#een Manufacturers and
'etailers
Christmas *tailers) <ill %t Be 4o4o or -o-o$
Making the Case for &utside -ales 'eps
4o# -tore Location and "ricing -tructure !ffect -hopping Behavior
!dd relevant #ebsites
Link to discussion board
'eturn to -yllabus
Marketing Strategy( Key Concepts =
+irect and Online Marketing
!n interactive system that creates a measurable response =variable cost versus fixed cost
of marketing> and / or transaction.
Boal to develop relationships #ith customers.
'apid gro#th rate.
catalog and direct mail sales gro#ing about GJ annually =retail sales P .J>
internet gro#th rates =Cyberatlas is a great resource for the number>
Bro#th due to innovations in)
technology) databases =data mining and #arehouses> / communication systems
tollfree telephone services
payment systems =credit cards and smart cards>
"rovides continuity, better timing, testability and privacy. Can benefit both customers and
business #ith highly targeted and efficient exchanges.
Database marketing to support direct marketing. Companies can use their databases to)
identify prospects
differentiate offers
cross sell products
build loyalty
reactivate customer purchases
%ssues #ith direct marketing include)
+. annoyance
,. deception and fraud
.. privacy
MaFor direct marketing channels)
5aceto5ace
Direct Mail =inc. voicemail and email, bills, fax>
Catalog Marketing =inc. CDs>
(elemarketing =use of computers / cell phones =contextual marketing>
(D =direct response advertising / infomercials / shopping channels>
Hiosks =and vending machines>
&nline =permission based marketing>
&nline marketing is the most recent evolution of direct marketing. (his can create
channel conflict.
E>Commerce Marketing
-ession +) %ntroduction
-ession ,) !spect of <<< as a Medium
-ession .) Markets and "ricing Models and Digital *conomics
-ession 0) !dvertising
-ession 2) *tailing
-ession ?) %ntegrated Marketing and Communications
Direct Marketing !ssociation
!dd relevant #ebsites
!elevant Kno$ledge 9 Wharton 8rticles
<ill Consumers Be <illing to "ay for (heir 5ormerly 5ree Lunch on the %nternet$
(he Cell "hone as Marketing (ool) <ill Consumers !ns#er the Call$
Clicking <ith Customers) 1e# Challenges in &nline Conversion
<hy Aob -earching is the -econd Most "opular !ctivity on the %nternet
!re (here Lessons to Be Learned from %nternet "orn -ites$
1e# %nternet "ricing Models Bring "ain, and 5ortune, to 'etailers
(hree Marketing Lessons from the Love Bug
4o# Companies -ponsor, Listen in and Learn 5rom Chat 'ooms
%s Eour <ebsite <orking <ell for Eou$ Check its e"erformance
4o# to Heep Customers %n Line for Eour &nline Business
4it and Miss) <hy 4igh (raffic -treams 1eed not Lead to More &nline Business
-tephen HingRs 1ovel %dea) <ill %t Change the "ublishing %ndustry$
Christmas *tailers) <ill %t Be 4o4o or -o-o$
! -earch for BoogleRs -uccess (urns :p (#o <ords) (rust and (echnology
Link to discussion board
'eturn to -yllabus
Marketing Strategy( Key Concepts ?@
got milk$
Definition)
(o communicate #ith individuals, groups or organizations
to directly or indirectly facilitate exchanges by informing
and persuading one or more audiences to accept an
organization6s products.
Companies must communicate #ith their customers, this
communication should not be left to chance.
Design communication to your specific target audience)
(arget Market
"art of (arget Market
Different stakeholders of your organization.
"romotion) 5ourth element of the marketing mix. 1eed to
make sure the goals of promotion are integrated #ith other
"s.
1eed to design a communications strategy, that integrates
the promotion mix)
advertising) paid form of non personal communication
about an organization or its products that is
transmitted to a target audience through a medium)
:-) +SSK, M+.I b, ,KKK M.,K b =approx>, #orld#ide,
MGIK b. %n :-, ,2J promotional budget
sales promotion) materials that act as a direct
inducement, offering adding value, or incentive for the
product, to resellers, sales people or consumers) trade
promotions ; 0GJ of promotional budget, consumer
promotions ; ,IJ
public relations / publicity) ne#s story form about an
organization or its products or both, through a medium
at no charge
personal selling) personal communication in an
exchange situation
direct marketing
%ncreasing importance of %ntegrated Marketing
Communications ... <hy$
(he fourth " the critical "$
Communications process consists of)
+. sender
,. encoding
.. message
0. media
2. decoding
?. receiver
G. response
I. feedback
S. noise
1eed to identify and understand the target audience, from
the perspective of information processing)
+. selective attention
,. distortion
.. recall
0. contextual issues
-teps of the promotional program)
+. %dentify target audience and characteristics, and
perception of product, context etc.
,. Define communications obFectives =not a#are,
a#areness, interest, evaluation, trial, adoption>.
-eeking cognitive, affective or behavioral response
.. message)
+. content =rational / emotional / moral>
,. structure =one or t#o sided>
.. format =headline, copy, sound>
0. source =trusted / likable / expert>
0. select media =communications channels>
2. establish budget =affordable / J sales / competitive /
obFective and task>
Consider)
push versus pull
stage of purchase process
stage of product life cycle
product complexity and risk
market position
8dvertising
1eed to consider the follo#ing issues #hen considering
#hether to advertise)
Does the product possess uni7ue, important features to
focus on :ni7ue -elling "oint =:-">
!re the hidden 7ualities important to the buyers
%s the general demand trend for the product ade7uate
%s the market potential for the product ade7uate
%s the competitive environment favorable
%s the organization able and #illing to spend the
re7uired money to launch an advertising campaign
%ssues to consider for advertisers)
'each) national, regional, local
audience) industrial, consumer
product) product, brand, institution
obFectives) a#areness, interest, evaluation, trial,
adoption =inform, persuade or remind>
Decision making for advertising)
+. obFectives setting
,. budget decision =stage in product life cycle, market
share, competition and clutter, needed fre7uency,
product substitutability>
.. message decision
o message generation
o message evaluation and selection ... :-" $
o message execution) structure depending on media
=print) headline, illustrations, sub headline, body
copy, signature>
defined obFective, defined product positioning,
build product differentiation, consistent through
campaign, strong integration, appropriate target
market, simple product centered message,
positioning of brand name #ithin message
o social responsibility issues ... a #ider context of
evaluation
0. media decision
o reach =Q of ppl exposed at least once>, fre7uency
=total number of times reached> and impact
=7uality of impact>
o media types =(D =,,J>, 1e#spaper =,.J>,
Direct Mail =,KJ>, &utdoor, Magazines =?J>,
'adio =GJ>, <<<>
o Media Dehicles =programs, <-A, Eahoo, Dogue>)
cpm relevant market etc.
o media timing
o geographic allocation) national versus spot
buying
2. ad effectiveness evaluation
:seful advertising links) adforum, !dvertising !ge,
tb#a/chiat/day, 5allon, &rganic, Mad Dogs and
*nglishmen
!fter revie#ing 1et'atings, discuss the state of advertising
on the #eb.
Sales Promotion
-horterterm tools to stimulate demand =consumer, trade
and orgs. sales force.>
"otential impact on brand and shift demand$
-ales "romotion spend exceeds advertising spend and is
gro#ing faster ... #hy$
Consumer promotional tools include)
samples
Coupons =redemption rates $>
rebates
cash refunds
product #arranties =high risk items>
premiums =McDonalds>
prizes
fre7uent user programs
free trials
point of purchase displays
Discussion (opic) (ake a look at -#eepstakesbuilder) <hat
roles does a service like this provide for #ebsites$ <hy
#ould #ebsites participate$
(rade promotional tools include)
reduced price
advertising support
free goods
push money
Pu2lic !elations
Can build a#areness and preference in the marketplace,
repositioning products, and defending them.
(ools include)
ne#s
speeches
events
public service activities
"roactive versus reactive approach$
Media relations
Dealing #ith bad publicity$
Sales
1eed to determine salesforce)
obFectivesC prospecting, communicating, selling,
servicing, information gathering
strategies) solo, team
structure) territory =size / shape>, product, customer
size
compensation) salary, commission, bonus, expenses
"ersonal selling includes)
+. prospecting and 7ualifying
,. preapproach) learn about prospect
.. approach) greeting
0. presentation) tell the story
2. overcoming obFections
?. closing
G. follo#up and maintenance
%mportance of negotiations
-tandards versus flexibility
'elationship management versus single transaction
(echnologies impact on selling$ =Hno#ledge of customer /
C'M / flexibility>
!elevant Kno$ledge 9 Wharton 8rticles
Corporate -ponsorships of -tadiums and &ther %nstitutions DonRt !l#ays "ay &ff
Do Mixed *motions and !dvertising Mix$
(he Cell "hone as Marketing (ool) <ill Consumers !ns#er the Call$
4o# and <hen !dvertising <orks
(echnology is Changing the !dvertising Business
"ayfor"erformance (rade "romotions Can *ase 5riction Bet#een Manufacturers and
'etailers
Link to discussion board
'eturn to -yllabus

Social Marketing
Social marketing is the planning and implementation of
programs designed to bring about social change using
concepts from commercial marketing.
Among the important marketing concepts are:
The ultimate objective of marketing is to influence
action;
Action is undertaken whenever target audiences
believe that the benefits they receive will be greater
than the costs they incur;
Programs to influence action will be more effective if
they are based on an understanding of the target
audience's own perceptions of the proposed
echange;
Target audiences are seldom uniform in their
perceptions and!or likely responses to marketing
efforts and so should be partitioned into segments;
"arketing efforts must incorporate all of the #$ Ps%#
i.e.:
o &reate an enticing "Product" 'i.e.% the
package of benefits associated with the
desired action(;
o "inimi)e the "Price" the target audience
believes it must pay in the echange;
o "ake the echange and its opportunities
available in "Places" that reach the audience
and fit its lifestyles;
o Promote the echange opportunity with
creativity and through channels and tactics
that maimi)e desired responses;
*ecommended behaviors always have competition
which must be understood and addressed;
The marketplace is constantly changing and so
program effects must be regularly monitored and
management must be prepared to rapidly alter
strategies and tactics.
These key concepts can be abbreviated as follows:
Action is the objective
The target audience is the
focus
The echange is critical
+egment markets
,se all four Ps
Analy)e and beware of
competition
"onitor and be fleible
home about us social marketing success stories
conferences related sites working papers
search employment listings register
Key concepts
Hey concepts of importance for utilising market information and market research)
C8SE CO6CEP&S
(he article discusses the continued opportunities that exist for nofrills air travel,
allo#ing examination of market segmentation opportunities and the processes that
may be involved in gathering Aualitative and Auantitative data on business and
leisure travelers. 5urther, there is opportunity to discuss the different research
methodologies that could be employed and the arguments for the creation of an
effective marketing information system.
CB8P&E! CO6CEP&S
+arketing n/ormation System
(he system consists of people, technology, and processes to gather, sort, analyse,
and disseminate information in a timely and accurate form for marketing decision
makers. %nterestingly the elements identified for a marketing information system are
the same as for any other type of management information system. (he uni7ueness
of a marketing information system is the focus on marketing orientated information.
Developing n/ormation
(he information re7uired by marketing professionals from a marketing information
system, as described in 5igure I.+ on p..+G, emphasizes internal company records,
marketing intelligence, and market research. (he information analysis system,
typically driven by specialist computer technology, processes data to produce
meaningful and useful information.
De/ining the +arket
! market is termed by many as a place #here buyers and sellers communicated in
the process of buying and selling goods. (raditionally the place of such exchanges
#ould be physical in nature but due to developments in technology the location for
many markets is also becoming virtual.
&ssessing Current +arket Demand
Marketing professionals need to be able to assess three aspects of current market
demand) total market demandC area market demandC and actual sales and market
share. (he measurement process is currently driven by online marketing database
systems #hich are developed through dedicated market assessment organisations or
by the actual buyers and sellers #ithin an industry. (he gathering and distribution of
information is no# becoming more timely and responsive due to computer
net#orks and buyer/supplier net#orks in both consumer and business markets.
)orecasting )uture Demand
Market estimates are needed in order to Fudge future sales and market potential in
countries, regions, cities and to#ns. (his enables many organisations to allocate
marketing budgets more cost effectively amongst chosen locations.
Key
conc
epts
Hey concepts relevant to learning)
C8SE CO6CEP&S
(he case looks for an application of marketing services to the
entertainment industry, in particular multiscreen cinema theatres. (he
specific characteristics of the cinema service are indicated, re7uiring
the suggestions of alternative marketing strategies for the use of
cinema venues. <hile the case provides a :- perspective on the
problems, there is certainly applicability to the :H and lessons that
can be learnt. %t is important for students to be able to dra# upon these
distinctions and perhaps suggest strategies for differentiation.
CB8P&E! CO6CEP&S
!ature and Characteristics o/ a Service
! service in the context of learning is 7uite intangible in nature but
#ith measurable outcomes from the process of service offering. (he
learning market re7uires high levels of differentiation and
responsiveness to changing needs.
+arketing Strategies /or a Service )irm
!n acceptance and drive to#ards interactive marketing initiative in
the pursuit of both responsiveness and the ability to adapt. %nteractive
marketing offers a shift to#ards more real time changes in service
marketing.
+anaging Di//erentiation and Change
&nline learning provides an ideal platform for both dynamic and
fluid approaches to#ards service delivery. (he complexity of
cyberspace also provides an infrastructure enabling both 7uality and
differentiation.
nternational Services +arketing
(he global communications channel of the %nternet offers
unprecedented opportunities for service marketing initiatives.
(echnology driven service marketing initiative can be easily adapted
virtually real time for market segments and cultural diversity.
Computer +ediated Communications
Marketing services on the %nternet needs to accept and harness the
ne# modes of communications. 4ypermedia tools are anticipated to
radically change current marketing service initiatives through the
mode and speed of communications.