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Understanding

Marketing

Definition
The process by which
companies create value for
customers and build strong
customer relationships in
order to capture value from
customers in return.

Marketing is managing
profitable customer
relationships.

Always low on prices. Always!


Make a dream come true today
be direct
think out of a bun
finger lickin good
Companies know if they take
care of their customers, market
share and profits will follow.

Peter Drucker
Goal of all organizations is to

gain and retain customers


Innovation and marketing are the

only two ways to achieve the


goal
The rest only adds cost

What Can Be Marketed?


Places

Goods

Services

Properties

Experiences Organizations
Events

Persons

Information

Ideas

Identifying customer needs

Designing goods and


services that meet those
needs

Communicating information
about those goods and
services to prospective

Making the goods or services


available at times and places that
meet customers needs

Pricing goods and services to


reflect costs, competition, and
customers ability to buy

Providing for the necessary


service and follow-up to ensure
customer satisfaction after the
purchase

Marketing is....
getting the right products to
the right people at the right
price and at the right place
and time with the right
promotion

More simply:
Marketing is the
delivery of customer
satisfaction at a profit.

Marketing Strategy and the


Marketing Mix
Guided by marketing strategy, the
company designs an integrated
marketing mix made up of factors under
its control product, price, place, and
promotion. To find the best marketing
strategy and mix, the company engages
in marketing analysis, planning,
implementation, and control. Through
these activities, the company watches
and adapts to the actors and forces in the
marketing environment.

Customer Driven
Marketing Strategy
Market segmentation: dividing a market
into distinct groups of buyers who have
distinct needs, characteristics, or
behavior and who might require separate
products or marketing programs
(geographic, demographic,
psychographic, and behavioral factors)
Market segment: a group of consumers
who respond in a similar way to a given
set of marketing efforts. Expensive car
buyers. Cost sensitive buyers.

Market Targeting: The process


of evaluating each market
segments attractiveness and
selecting one or more
segments to enter.
A company should target
segments in which it can
profitably generate the greatest
customer value and sustain it
over time.

Niche Marketing
When a company decides to serve only
one or few special segments or market
niches, it is involved in niche marketing.
Such nichers specialize in serving
customer segments that major
competitors overlook or ignore.
Ferrari 1500 cars in US.
Ferrari Superamerica $287,020
Ferrari FXX super sports car $ 2 million
Jones Soda

Market Differentiation &


Positioning
Actually differentiating the market offering to
create superior customer value.
Arranging for a product to occupy a clear,
distinctive, and desirable place relative to
competing products in the minds of target
consumers.
BMW: the ultimate driving machine
Ford: built for the road ahead
Mastercard: priceless experience
Charging low prices than competitors do or by
offering more benefits to justify higher prices.
If a company promises greater value, it must
deliver greater value.

Integrated Marketing Mix


The set of controllable tactical marketing
tools product, price, place and promotion
that the firm blends to produce the response
it wants in the target market.
Product: goods n services
Price: amount of money consumers have to
pay to obtain the product
Place: includes activities to make the
product available to target consumers.
Promotion: includes activities that
communicate the merits of the product and
persuade target customers to buy it.

Managing the Marketing Effort


Marketing management functions: analysis,
planning, implementation, and control.
Analysis: The company must analyze its
markets and marketing environment to find
attractive opportunities and identify
environmental threats.
Planning: Involves deciding on marketing
strategies that will help the company attain its
overall objective.
Implementation: addresses who, where, when
and how actions
Doing the right thing Doing things right

What is a product?
Anything that can be offered to a market
for attention, acquisition, use, or
consumption that might satisfy a want or
need.
Include physical objects, services,
events, persons, places, organizations,
ideas, or mixes of these entities. iPod,
Camry, BigMac. Doctors advice, vacation
service, financial services.
Service is any activity or benefit that one
party can offer to another that is
essentially intangible and does not result
in the ownership of anything.

Levels of Product and


Services
3 levels: each level adds to customer
value
The core benefit. E.g. Blackberry
Actual product: features, design, quality
level, a brand image, and packaging. E.g.
Blackberry: actual product, its name,
parts, styling, features, and packaging.
Augmented product. Offer consumer
services and benefits. (warranty,
instructions, quick repair and
maintenance when needed)

Product and Service


Classification
Consumer Product: product bought by
final consumer for personal consumption
Include:
Convenience product: that the customer
usually buys frequently, immediately, and
with a minimum comparison and buying
effort: soap, candy, newspaper, fastfood.
Shopping product: that the customer
usually buy carefully on suitability,
quality, price, and style: furniture,
clothing, appliances, hotel, travel service.

Specialty product: consumer product


with unique characteristics or brand
identification for which a significant
group of buyers is willing to make a
special purchase effort: Ferrari FXX,
Boss, BB, Disney.
Unsought product: consumer product
that the consumer either does not
know about or knows about but does
not normally think of buying: life
insurance, blood donations, living
funeral service.

Industrial Product
Product bought by individuals and
organizations for further processing or
for use in conducting a business.
Materials and parts (wheat, cotton,
livestock, crude petroleum) (iron, cement,
wires, tires, motors)
Capital items (buildings, generators,
trucks etc)
Supplies and services (lubricants, coal,
paper, pencils, paints, brooms,
conservancy items

Product and Service Decision

Individual product
decisions
Product line decisions
Product mix decisions.

Individual Product Decisions


Product attributes: benefits that a product will
offer.
Quality: freedom from defects characteristics
of a product or service that bear on its ability to
satisfy stated or implied customer needs
Siemens defines quality this way: Quality is
when our customers come back and our
products dont
Two dimensions: performance quality Rolls
Royce, Rolex, Marriot Renaissance.
Conformance quality consistence in delivering
a target level of performance: Chevrolet

Product features: are a competitive


tool for differentiating the
companys product from
competitors product.
Product style and design: style is
appearance of product. Design
contributes to a products
usefulness as well as its looks.
Swiffer CarpetflickU Shaped lock
by Kryptonite.

Branding
Brand is a name, term, sign, symbol, or
design, or a combination of these, that
identifies the maker or seller of a product
or service.
212 Men, Swatch etc
Hardly anything goes unbranded
Branding helps consumer identify
products that might benefit them. Say
something about quality and
consistency.
Building and managing brands are the
marketers most important tasks.

Packaging
Involves designing and producing the container
or wrapper for a product.
Cluttered shelves, attracting attention,
describing the product, to making the sale.
300 items per minute. 60 % of all purchases are
made on impulse.
Poorly designed packages can cost companies.
Heinz bottle design.
Chip Ahoy by Kraft Foods
Juice packs
Product safety
Environmental concerns

Labeling
Labels: tags attached to
products. Identifies the product
or brand, Frooti stamped on
orange, zenith etc.
Who made it, where it was
made, when it was made, its
contents, how it is to be used,
how to use it safely.

Product Line Decisions


Product line: a group of products that are
closely related because they function in a
similar manner, are sold to the same
customer groups, are marketed through
the same types of outlets, or fall within
given price range. E.g. Nike, Nestle
Product line-length: the number of items
in the product line. BMW 3 series, 5, 7
series.
Downward: DaimlerChrysler Mercedes CClass. Toyota, Nissan, Honda luxury cars.

Marriot Example
Renaissance Hotels & Resorts: top
executives
Marriot: upper and middle managers
Courtyard: salespeople & road warriors
Fairfield: vacationers and business
travelers on tight budgets.
ExecuStay: temporary housing for 30
days
Residence Inn: for people who travel for a
living

Product Mix Decisions


The set of all product lines and items that a
particular seller offers for sale.
Colgate: oral care, personal care, home care,
and pet nutrition.
Four dimensions: width, length, depth, and
consistency.
Width: number of different product lines.
Length: the total number of items the company
carries within its product line. 3 M markets
60,000 products, Wal Mart stocks 100 -12000
items, GE manufactures 250,000 items.

Depth: the number of versions offered of


each product in the line. Colgate
toothpastes 11 varieties: Colgate Total,
Colgate Tartar Control, Colgate 2 in 1,
Colgate Cavity Protection, Colgate
Sensitive, Colgate Fresh Confidence,
Colgate Max Fresh, Colgate Simply White,
Colgate Sparkling White, Colgate Kids
Toothpaste, Colgate Baking Soda.
Consistency: refers to how closely related
the various product lines are in end use,
production requirements, distribution
channels.

Branding Strategy
Major asset of a company.
Are more than names and symbols. They
represent consumers perceptions and
feeling about a product and its
performance. Brands exist in the minds
of consumers.
Real power: to capture consumer
preference and loyalty.
Coca-Cola, Tide, Nike, Harley-Davidson,
Disney forge deep connections with
customers.

Powerful brand has high brand equity.


The positive differential effect that knowing
the brand name has on customer response
to the product or service.
To what extent people are willing to pay
more for the brand.
A brand with strong brand equity is a very
valuable asset. Brand valuation is the
process of estimating the total financial
value of a brand. Coca-Cola $67 billion,
Microsoft $ 57 billion, IBM $ 56 billion.
Brand can: provide competitive advantage.
Brand awareness and loyalty. Bargaining
with resellers. Brand extensions launch.
Protection against fierce price competition.
Profitable customer relationship.

Branding Strategies
Brand positioning:
Position product in target
customers mind
Product Attributes
Desirable benefits Volvo, FedEx,
Lexus, Nike
Strong beliefs and values strong
brands engage customers on a
deep, emotional level (empower
socially)

Brand name selection:


Good name can add to product success
Should relate to product benefits and
qualities Lexus, Jaguar, Swift, Off!,
Knorr, Haleeb, MilkPack
Easy to pronounce: IBM, AT & T, Voda
fone, KFC, Burger King
Distinct, Z-4, GTR, Oracle
Brand name identified with product
category: Xerox, Kleenex, Scotch Tape,
Formica, Fiberglass

Brand Sponsorship
A product may be launched
as:
Manufacturers brand
Private brand
Licensed brand
Co-brand

Brand Development
Line extensions: Extending an existing
brand name to new forms, colors, sizes,
ingredients, or flavor of an existing
product: Nestle Pure Life
Coke: Diet Coke, Diet Coke with Splenda,
Coca Cola Zero
Diet Cherry Coke, Diet Coke with Lemon,
Diet Coke with Lime, Diet Coke Black
Cherry Vanilla, Caffeine Free Diet Coke
Coca Cola C 2.

Brand Extensions
Extending an existing brand
name to a new product category
Kimberly Clark Huggies
Brand: Shampoos, Lotions,
Baby Wash
Brinks Brinks Home Security
System

Multi Brands
New Brands
Additional Brands in the same
category
P& G: different features for
different buyers
Existing wane new brands
needed
Matsushita Panasonic,
Technics, JVC, Quasar

Product Life Cycle


Product launch happy life
Cover costs
Earn profits
Length not know in advance
Coca-Cola, Gillette, Budweiser,
American Express, Wells-Fargo,
and Tabasco

PLC S Curve

Introduction Stage
Product launch
Takes time
Slow growth
Negative profits
High promotion and
distribution cost

Growth Stage
Product, if satisfies market, enters
growth stage
Sales climb quickly
Early adopters continue, new join
through favorable word of mouth
New competitors enter market
Competition increase in sale points
Spread of sales, unit cost reduces
Sustain rapid growth
New market segments
Prices may be lowered to attract more
customers (iPod)

Maturity
At some point sale slows down, product
enters maturity stage
Lasts longer
Marketing management most of the time
deals with mature products
More producers selling the same product
Greater competition
Prices down, increase in sales promotion
Drop in profit
Well established competitors stay

Maturity
Product manager should modify
market, product and marketing mix
Market: increase consumption of
product, new users, present users
Product: quality, features, style
(milk pak, Honda City)
Four Ps

Decline Stage
Eventually dip
Oat meal, VHS tapes, VCR, Tape recorders
Reasons: technology, consumer tastes,
increased competition, profits decline,
withdrawal from market
Furthermore:
Weak product costly to firm
Management time
Price adjustments
Advertising/sales efforts
Reputation of other co products affected
Old Spice/ co can sell brands