Foundations of Marketing Thought

You Are Who You Think You Are; So Be Careful

About Who You Think You Are
Marketing: the process of planning and executing the
conception, pricing, promotion, and
distribution of ideas, goods, and services to
create exchanges that satisfy individual and
organizational goals.

Foundations of Business Thought

Marketing by Creating Customer Value

1.
2.
3.
4.
5.
6.

At bare minimum, offer products that perform

Surpass customer expectations
Do not price unrealistically
Give guarantees
Give the buyer facts
Build relationships

Foundations of Business Thought

Marketing Mix
The Four Ps
Product

Place

Promotion

Price

Foundations of Business Thought

The Marketing Mix Elements

Product: the physical

unit, package,
warranty, after-sale
service, image value,
etc.

Price: list price, credit

terms, allowances,
flexibility, discounts

Place: channels,
middlemen, market
coverage, transportation

Promotion: objectives,
personal selling,
advertising, sales
promotion, public
relations, word of mouth

Foundations of Business Thought

PRODUCT

Foundations of Business Thought

New Product Development Process

Possibilities

Generating Ideas
Screening Ideas

Business Analysis

Development

Test Marketing
Commercialization

New Product

Foundations of Business Thought

The Market Research Process

1. Situation analysis
/Define problem

3. Analyze
data

2. Collect primary
and secondary data

4. Problem Prepare report

of recommended solutions

Foundations of Business Thought

5. Follow up

Selecting Target Markets

Market segmentation approach
Automobiles

Multisegment approach

Concentration approach

Compact cars

Sport Utility
Vehicles

Sports cars

Luxury cars

Foundations of Business Thought

Twin
TracII

Atra

Sensor Blades Swivel

Double
Edge

Super
Speed

Lady
Gillette

Techmatic

Depth of Product Line

Gillettes Product Mix

Razor and blades

Toni
Right
Guard
Dry Idea

Soft
& Dry
Silkience

Toiletries

Foundations of Business Thought

Branding Distinctions
Brand: a name, term, symbol, design or combination that identifies
a sellers product and differentiates it form its competition.

Brand Name: part of the brand that can be spoken, including

letters, words or numbers that differentiates the goods and
services of a seller from their competitors.

Brand Mark: elements of a brand that cannot be spoken; used on

all or most of a companys products.

Trade Character: a person, personified character or animal used

to identify a product or business.

Trade Mark: exclusive right to use a brand, brand name, brand

mark or trade character that has been given legal protection.

Foundations of Business Thought

Global Brand Names

Brand

Country

Sony

Japan

Jaguar

U.S.A.

Disney

U.S.A.

Nestle

Switzerland

Land Rover

Great Britain

McDonald
s
Coca-Cola

U.S.A.

Mercedes Benz

Germany

U.S.A.

Foundations of Business Thought

Product Life Cycle

Introduction

Growth

Maturity

Decline

Dollars

Industry sales

Industry profits
0

Time

Foundations of Business Thought

Life Cycle
Rowing Machines
250
250

Thousands

200
200
150
150
100
100

Foundations of Business Thought

1990
1990

1989
1989

1988
1988

1987
1987

1986
1986

1985
1985

1984
1984

1983
1983

1982
1982

1981
1981

00

1980
1980

50
50

Extending the Product Life Cycle

The Many Uses of Baking Soda:

Cleaning Batteries

Dry Baths for Pets

Deodorizing Musty Towels

Cat Litter Deodorizer

Refreshing Bath Additive

Cleaning Brushes and Combs

Denture Soak

Hair Care (mix with shampoo)

Insect Bite Care

Relief for Acid Indigestion

Soothing Irritated Skin

Cleaning Coffee and Tea Pots

Deodorizing Cutting Boards

Homemade modeling clay

Emergency Fire Pail

Make an Erupting Volcano

Freshen and Deodorize

Foundations of Business Thought

The Names of Price

tariff

charge

tuition
premium

cost

expenditure

figure

Price
t
paymen

dues

fee

rate

fare
interest

wage

Foundations of Business Thought

Prestige Pricing

Foundations of Business Thought

Distribution Channel Markups

Total amount paid by consumer $84.53

Retailers markup (75%)

$36.23

Manufacturers Cost
$35.00

Wholesalers Markup (20%)

Manufacturers markup (15%)

$8.05

$5.25

Foundations of Business Thought

Break-Even Analysis
Should Sportswear International Charge $20 or $30
for each pair of shorts?
Cost
Fixed $800,000
Variable $10 per short
Forecasted Sales
65,000 shorts @ $20 per short
50,000 shorts @ $30 per short

Break-Even formula
$20 price = $800,000 / ($20 - $10) = 80,000 units
$30 price = $800,000 / ($30 - $10) = 40,000 units

Foundations of Business Thought

PROMOTION

Foundations of Business Thought

1997 Annual Advertising Spending

Business Papers
2.19%

Radio
7.19%

Magazines
5.24%

New spapers
22.22%

Direct Mail
19.67%

Yellow Pages
6.09%

Television
23.74%
Outdoor
0.78%

Miscellaneous
12.71%

Farm Publicatoins
0.17%

Source: Prepared by Robert J. Coen, McCann-Erickson 1989

Foundations of Business Thought

Leading National Advertisers 1997

McDonald's Corp.

1041.7

Diageo

1206.6

PepsiCo

1244.7

Walt Disney Co.

1249.7

Sears, Roebuck & Co.

1262

Ford Motor Co.

1281.8

Chrysler Corp.

1532.4

Philip Morris Cos.

2137.8
2743.2

Procter & Gamble Co.

General Motors Corp.

3087.4
0

500

1000

1500

2000

Source: Advertising Age - Ad Age Dataplace 09/28/98

Foundations of Business Thought

2500

3000

3500

Consumer Decision-Making Process

Problem Recognition
(need to replace an old broken down
Bicycle)

Individual &
Social Factors
Personal
Social
Psychological

Marketing
Factors
Information Search
(search for store, models, prices,
others opinions)

Cultural

Product
Place
Promotion
Price

Evaluation of Alternatives
(Which can I afford? Which is most
reliable? What will others think?
Which performs better?)

Purchase
(decision based on emotions or
rationale)

Purchase Behavior
(Were expectations met? observe
how others react, test
performance, compare new bike to
old bike)

Foundations of Business Thought

Having perused the 928-page Golden Jubilee Sears, Roebuck & Co. catalog
lately mailed to 6,500,000 customers, Printers Ink last week marked three
lessons for the average advertiser:

(1) Though the occasion was its fiftieth anniversary, Sears devoted less than
one-tenth of one percent of the catalog to talking about itself, which might
be a good proportion to keep in mind.
(2) Though it is necessary to describe mail-order merchandise in great detail,
Sears provides more information than is ordinarily available in personal
transaction.
(3) Nowhere in the volume is merchandise represented as a means to such
ends are these:
Getting a husband.
Holding a husband.
Saving the home from wreckage.
Soothing the nerves.
Getting a date for the junior prom.
Overcoming social inferiority.
Curing a disease of the housewifes knuckles type.
Eliminating sleepless nights.
Preventing the baby from having to have dental plates at age
seven.
Stimulating an emotional Jag.

Time Magazine (1936)

Foundations of Business Thought

Sears & Roebucks 1908 The Advertising Guide

Copy reading regardless of cost should be used

sparingly, as cost is always regarded.

Exaggerated claims and unrestrained superlatives

undermine customers confidence. Therefore avoid
free use of such expressions as BEST, FINEST,
BIGGEST, and avoid all statements the truth of
which may be questioned.

Appeals to patriotism as an argument to induce

buying are to be avoided.

Foundations of Business Thought

I note your suggestion that you would make an

extra pair of pants for $8.65. I am 71 years of age.
The undertaker would charge me $35.00 for a
burial suit. I would get to wear that but once. You
are charging me $28.75 for a suit. I am pretty sure
I will get to wear that a number of times, before
being buried in it, so I am saving the difference in
cost (I am not Scotch). Now as to the extra pair of
pants. I will not need them where I am going.

Letter to Sears & Roebuck

Foundations of Business Thought

I am a lonely school teacher in the dismal hills of

Idaho. Would you be kind enough to do your
share in assisting a poor forlorn teacher in her
future happiness by sending this man which you
advertised in your latest edition?
If at the present time this particular man is not in
stock, I leave the responsibility of choosing my
future mate up to you.

Letter to Sears & Roebuck

Foundations of Business Thought

Can you identify the company associated with the slogan?

1.
2.
3.
4.
5.
6.

Drivers Wanted.
7. Have it your way.
The quicker picker upper. 8. Think Different.
Breakfast of Champions.
9. Just do it.
Be all that you can be.
10. Tastes great! Less filling!
Like a Rock.
11. Snap! Crackle! Pop!
Quality is Job 1.
12. We do chicken right.

Foundations of Business Thought

THE PAUSE THAT

REFRESHES

Foundations of Business Thought

LSMFT

Foundations of Business Thought

The codfish lays ten thousand eggs,

the homely hen lays one.
The codfish never cackles
to tell you what shes done.

And so we scorn the codfish,

while the humble hen we prize,
which only goes to show you
that it pays to advertise.

- - ANON.

Foundations of Business Thought

HOT CROSS BUNS, HOT CROSS BUNS,

ONE A PENNY, TWO A PENNY,
HOT CROSS BUNS,
IF YOUR DAUGHTERS DONT LIKE THEM,
GIVE THEM TO YOUR SONS,
ONE A PENNY, TOW A PENNY,
HOT CROSS BUNS.

Foundations of Business Thought

PLACE

Foundations of Business Thought

Marketing Channels
Consumer Products
Producer

Consumer

Producer
Producer
Producer

Agent /
Broker

Retailer

Consumer

Wholesaler

Retailer

Consumer

Wholesaler

Retailer

Consumer

Marketing Intermediaries

Industrial Products
Producer
Producer

Consumer
Wholesaler

Marketing Intermediaries

Foundations of Business Thought

Consumer

Intermediary Efficiencies
Converse

Nike

Consumer 1

New Balance

Consumer 2

Adidas

K Swiss

Consumer 3

5 PRODUCERS x 3 CONSUMERS = 15 TRANSACTIONS

Converse

Nike

New Balance

Adidas

K Swiss

FOOTLOCKER

Consumer 1

Consumer 2

Consumer 3

5 PRODUCERS + 3 CONSUMERS = 8 TRANSACTIONS

Foundations of Business Thought

Hog heaven
Harley-Davidson is feeling the wind in its face once again. A waiting list of two years to purchase a
new hog has the motorcycle-maker ready to build a manufacturing plant in Kansas City, Mo.

Harley-Davidson
profile*
Headquarters:
Milwaukee, Wis.
Employment:
4,700 Sales
Sales:
$1.35 billion
Net income:
$112.5 million
Units sold:
105,104 motorcycles
Foreign sales:
$395 million

60

5 5 .8

Harleys back on top once again

5 0 .4

The past decade has seen Harleys

popularity leave the others in the dust.

50

40
Pe r c e n t o f U.S . Ma r ke t 1 9 8 3
30

Pe r c e n t o f U.S . Ma r ke t 1 9 9 5

1 7 .6

20

1 5 .2
1 2 .5

1 1 .3
8 .5

10

8 .5 7 .9

6 .6
3 .6

2 .1

*1995 numbers.

Ha r le y Da v id s o n

Ho n d a

K a w a s a ki

Source: Chicago Tribune, company reports

Foundations of Business Thought

S u z u ki

Y a ma h a

O th e r s