MARKETING

Advertising Objectives Budget Strategy Effectives Public Relations Role and impact Tools Advertising Advertising is any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor Advertising Developing and Advertising Programs Advertising Setting Advertising Objectives An advertising objective is a specific communication task to be accomplished with a specific target audience during a specific time Objectives are classified by primary purpose Inform Persuade Remind Advertising Setting Advertising Objectives Informative advertising is used when introducing a new product category; the objective is to build primary demand Comparative advertising directly or indirectly compares the brand with one or more other brands Persuasive advertising is important with increased competition to build selective demand Reminder advertising is important with mature products to help maintain customer relationships and keep customers thinking about the product Table 15.1 Possible Advertising Objectives Advertising Setting the Advertising Budget Factors to consider when setting the budget Product life-cycle stage Market share Competition and clutter Advertising frequency Product differentiation Amount of profit Advertising Setting the Advertising Budget Product life-cycle stage New products require larger budgets Mature brands require lower budgets Market share Building or taking market share requires larger budgets Markets with heavy competition or high advertising clutter require larger budgets Undifferentiated brands require larger budgets Advertising Setting the Advertising Budget Method of setting the budget Affordable method Percentage of sales method Competitive parity method Objectives and task method Arbitrary method Advertising Developing Advertising Strategy Advertising strategy is the strategy by which the company accomplishes its advertising objectives and consists of: Creating advertising messages Selecting advertising media Advertising Creating the Advertising Message

Advertisements need to break through the clutter: Gain attention Communicate well Advertising Creating the Advertising Message Advertisements need to be better planned, more imaginative, more entertaining, and more rewarding to consumers Advertising Creating the Advertising Message Message strategy is the general message that will be communicated to consumers Identifies consumer benefits Advertising Creating the Advertising Message Creative concept is the idea that will bring the message strategy to life and guide specific appeals to be used in an advertising campaign Characteristics of the appeals include: Meaningful Believable Distinctive Advertising Creating the Advertising Message Message execution The creative team must find the best approach, style, tone, words, and format for executing the message. Advertising Creating the Advertising Message Advertising Creating the Advertising Message Message execution also includes: Tone Positive or negative Attention-getting words Format Illustration Headline Copy Advertising Selecting Advertising Media Major steps include: Deciding on reach-frequency-impact Selecting media vehicles Deciding on media timing Advertising Selecting Advertising Media Reach is a measure of the percentage of people in the target market who are exposed to the ad campaign during a given period of time Frequency is a measure of how many times the average person in the target market is exposed to the message Impact is the qualitative value of a message exposure through a given medium Advertising Selecting Advertising Media Selecting media vehicles involves decisions presenting the media effectively and efficiently to the target customer and must consider the messages: Impact Effectiveness Cost Advertising Selecting Advertising Media When deciding on media timing, the planner must consider: Seasonality Pattern of the advertising Continuityscheduling within a given period Advertising Evaluating the Effectiveness and Return on Advertising Investment Communication effects indicate whether the ad and media are communicating the ad message well and should be tested before or after the ad runs Sales and profit effects compare past sales and profits with past expenditures or through experiments IS Advertising Wasteful

IS Advertising Wasteful Public Relations Public relations involves building good relations with the companys various publics by obtaining favorable publicity, building up a good corporate image, and handling unfavorable rumors, stories, and events Public relations is used to promote product, people, ideas, and activities Public Relations Public relations department functions include: Media relations Product publicity Counseling Lobbying Sponsor Arranging special events Public Relations The Role and Impact of Public Relations Lower cost than advertising Stronger impact on public awareness than advertising Public Relations Major Public Relations Tools Principles of MARKETING Communicating Customer Value: Integrated Marketing Communications Strategy Topic Outline The Promotion Mix Integrated Marketing Communications A View of the Communications Process Steps in Developing Effective Marketing Communication Setting the Total Promotion Budget and Mix The Promotion Mix The promotion mix is the specific blend of advertising, public relations, personal selling, and direct-marketing tools that the company uses to persuasively communicate customer value and build customer Major Promotion Tools Advertising is any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor Broadcast Print Internet Outdoor Sales promotion is the short-term incentives to encourage the purchase or sale of a product or service Discounts Coupons Displays Demonstrations Public relations involves building good relations with the companys various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events Press releases Sponsorships Special events Web pages Personal selling is the personal presentation by the firms sales force for the purpose of making sales and building customer relationships Sales presentations Trade shows Incentive programs Direct marketing involves making direct connections with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationshipsthrough the use of direct mail, telephone, direct-response television, e-mail, and the Internet to communicate directly with specific consumers Catalog Telemarketing Integrated Marketing Communications The New Marketing Communications Landscape

 Consumers are better informed More communication Less mass marketing Changing communications technology The Need for Integrated Marketing Communications Integrated marketing communications is the integration by the company of its communication channels to deliver a clear, consistent, and compelling message about the organization and its brands A View of the Communication Process Steps in Developing Effective Marketing Communication Identifying the Target market Determining the Communication Objectives Marketers seek a purchase response that results from a consumer decision-making process that includes the stages of buyer readiness Designing a Message AIDA Model Get Attention Hold Interest Arouse Desire Obtain Action Message content is an appeal or theme that will produce the desired response Rational appeal Emotional appeal Moral appeal Message Format Designing a Message Rational appeal relates to the audiences self-interest Emotional appeal is an attempt to stir up positive or negative emotions to motivate a purchase Moral appeal is directed at the audiences sense of right and proper Choosing Media Personal communication involves two or more people communicating directly with each other Face to face Phone Mail E-mail Internet chat Personal communication is effective because it allows personal addressing and feedback CHOOSING MEDIA Personal Communication Opinion leaders are people within a reference group who, because of their special skills, knowledge, personality, or other characteristics; exerts social influence on others Buzz marketing involves cultivating opinion leaders and getting them to spread information about a product or service to others in their communities Non-Personal Communication Channels Non-personal communication is media that carry messages without personal contact or feedback, including major media, atmospheres, and events that affect the buyer directly Major media include print, broadcast, display, and online media Events are staged occurrences that communicate messages to target audiences Press conferences Grand openings Exhibits Public tours Selecting the Message Source The messages impact on the target audience is affected by how the audience views the communicator Celebrities Athletes Entertainers Professionals Health care providers Collecting Feedback Involves the communicator understanding the effect on the target audience by measuring behavior resulting from the behavior Setting the Total Promotion Budget and Mix

Setting the Total Promotion Budget Affordable budget method sets the budget at an affordable level Ignores the effects of promotion on sales Percentage-of-sales method sets the budget at a certain percentage of current or forecasted sales or unit sales price Easy to use and helps management think about the relationship between promotion, selling price, and profit per unit Competitive-parity method sets the budget to match competitor outlays Represents industry standards Avoids promotion wars Objective-and-task method sets the budget based on what the firm wants to accomplish with promotion and includes: Defining promotion objectives Determining tasks to achieve the objectives Estimating costs Shaping the Overall Promotion Mix The Nature of Each Promotion Tool Advertising reaches masses of geographically dispersed buyers at a low cost per exposure, and it enables the seller to repeat a message many times Personal selling is the most effective method at certain stages of the buying process, particularly in building buyers preferences, convictions, actions, and developing customer relationships Sales promotion includes coupons, contests, cents-off deals, and premiums that attract consumer attention and offer strong incentives to purchase, and can be used to dramatize product offers and to boost sagging sales Public relations is a very believable form of promotion that includes news stories, features, sponsorships, and events Direct marketing is a non-public, immediate, customized, and interactive promotional tool that includes direct mail, catalogs, telemarketing, and online marketing Promotion Mix Strategies Integrating the Promotion Mix Checklist Socially Responsible Marketing Communication Communicate openly and honestly with consumers and resellers Avoid deceptive or false advertising Avoid bait-and-switch advertising Conform to all federal, state, and local regulations Follow rules of fair competition Do not offer bribes Do not attempt to obtain competitors trade secrets Do not disparage competitors or their products CONSUMER BUYER BEHAVIOR Consumer Markets and Consumer Buyer Behavior Topic Outline Model of Consumer Behavior Characteristics Affecting Consumer Behavior The Buyer Decision Process Model of Consumer Behavior Consumer buyer behavior refers to the buying behavior of final consumersindividuals and households who buy goods and services for personal consumption Characteristics Affecting Consumer Behavior Factors Influencing Consumer Behavior Culture is the learned values, perceptions, wants, and behavior from family and other important institutions Subcultures are groups of people within a culture with shared value systems based on common life experiences and situations Bengalis Gujaratis Punjabis Social classes are societys relatively permanent and ordered divisions whose members share similar values, interests, and behaviors Measured by a combination of occupation, income, education, wealth, and other variables Social Factors Family is the most important consumer-buying organization in society The groups, family, clubs, and organizations that a person belongs to define his/her social role and status Personal Factors Age and life-cycle stage Profession Economic situation Personality and self-concept

Occupation affects the goods and services bought by consumers Economic situation includes trends in: Lifestyle is a persons pattern of living as expressed in his or her psychographics Measures a consumers AIOs (activities, interests, opinions) to capture information about a persons pattern of acting and interacting in the environment Personality and self-concept Personality refers to the unique psychological characteristics that lead to consistent and lasting responses to the consumers environment Psychological Factors Psychological Factors Motivation A motive is a need that is sufficiently pressing to direct the person to seek satisfaction Motivation research refers to qualitative research designed to probe consumers hidden, subconscious motivations Maslows Hierarchy of Needs Perception is the process by which people select, organize, and interpret information to form a meaningful picture of the world from three perceptual processes Selective attention Selective distortion Selective retention Learning is the change in an individuals behavior arising from experience and occurs through interplay of: Psychological Factors Beliefs and Attitudes Belief is a descriptive thought that a person has about something based on: Knowledge Opinion Faith Attitudes describe a persons relatively consistent evaluations, feelings, and tendencies toward an object or idea Types of Buying Decision Behavior Types of Buying Decision Behavior Four Types of Buying Behavior The Buyer Decision Process/Buyer Decision Making Process Need Recognition Occurs when the buyer recognizes a problem or need triggered by: Internal stimuli External stimuli Information Search Sources of Information Personal sourcesfamily and friends Commercial sourcesadvertising, Internet Public sourcesmass media, consumer organizations Experiential sourceshandling, examining, using the product Evaluation of Alternatives How the consumer processes information to arrive at brand choices Purchase Decision The act by the consumer to buy the most preferred brand The purchase decision can be affected by: Attitudes of others Unexpected situational factors Post-Purchase Decision The satisfaction or dissatisfaction that the consumer feels about the purchase Relationship between: Consumers expectations Products perceived performance The larger the gap between expectation and performance, the greater the consumers dissatisfaction

Customer satisfaction is a key to building profitable relationships with consumersto keeping and growing consumers and reaping their customer lifetime value The Buyer Decision Process for New Products Influence of Product Characteristics on Rate of Adoption ROLE OF MARKETING Role of Marketing of Financial services in the Economic Development Like Bangladesh Increase in agricultural production Development of foreign trade Market development and expansion Proper distribution Increase in national income Creating employment opportunity Facilitating competition Increase export Increasing industrial production Creation of new utility of product Maintenance of economic stability Service marketing Development of standard of living Marketing Challenges Technological advances Rapid globalization Deregulation Privatization Free market economy Growing attention to social and environmental responsibilities Greater use of marketing by nonprofit and public sector organizations Customer empowerment Companywide Strategic Planning Setting Company Objectives and Goal Designing the Business Portfolio The business portfolio is the collection of businesses and products that make up the company Portfolio analysis is a major activity in strategic planning whereby management evaluates the products and businesses that make up the company Analyzing the Current Business Portfolio Strategic business unit (SBU) is a unit of the company that has a separate mission and objectives that can be planned separately from other company businesses Company division Product line within a division Single product or bran Companywide Strategic Planning: Problems with Matrix Approaches Difficulty in defining SBUs and measuring market share and growth Time consuming Expensive Focus on current businesses, not future planning Developing Strategies for Growth and Downsizing Product/market expansion grid is a tool for identifying company growth opportunities through market penetration, market development, product development, or diversification Developing Strategies for Growth and Downsizing Product/Market Expansion Grid Strategies Developing Strategies for Growth and Downsizing Product/market expansion grid strategies Market penetration is a growth strategy increasing sales to current market segments without changing the product Market development is a growth strategy that identifies and develops new market segments for current products Product development is a growth strategy that offers new or modified products to existing market segments Diversification is a growth strategy through starting up or acquiring businesses outside the companys current products and markets Downsizing is the reduction of the business portfolio by eliminating products or business units that are not profitable or that no longer fit the companys overall strategy

Planning Marketing Partnering to Build Customer Relationships Value chain is a series of departments that carry out value-creating activities to design, produce, market, deliver, and support a firms products Value delivery network is made up of the company, suppliers, distributors, and ultimately customers who partner with each other to improve performance of the entire system Marketing Strategy and the Marketing Mix Customer-Driven Marketing Strategy Market segmentation is the division of a market into distinct groups of buyers who have distinct needs, characteristics, or behavior and who might require separate products or marketing mixes Market segment is a group of consumers who respond in a similar way to a given set of marketing efforts Customer-Centered Marketing Strategy Market targeting is the process of evaluating each market segments attractiveness and selecting one or more segments to enter Market positioning is the arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of the target consumer Developing an Integrated Marketing Mix Marketing mix is the set of controllable tactical marketing toolsproduct, price, place, and promotionthat the firm blends to produce the response it wants in the target market Managing the Marketing Effort Market PlanningParts of a Marketing Plan Marketing Implementation Implementing is the process that turns marketing plans into marketing actions to accomplish strategic marketing objectives Successful implementation depends on how well the company blends its people, organizational structure, decision and reward system, and company culture into a cohesive action plan that supports its strategies Marketing Department Organization Marketing Control Controlling is the measurement and evaluation of results and the taking of corrective action as needed Operating control Strategic control Measuring and Managing Return on Marketing Investment Return on Marketing Investment (Marketing ROI) Return on marketing investment (Marketing ROI) is the net return from a marketing investment divided by the costs of the marketing investment. Marketing ROI provides a measurement of the profits generated by investments in marketing activities. MARKETING CHANNELS The Nature and Importance of Marketing Channels How Channel Members Add Value Intermediaries offer producers greater efficiency in making goods available to target markets. Through their contacts, experience, specialization, and scale of operations, intermediaries usually offer the firm more than it can achieve on its own. Number of Channel Levels Connected by types of flows: Physical flow of products Flow of ownership Payment flow Information flow Promotion flow Channel Behavior and Organization Channel Behavior Marketing channel consists of firms that have partnered for their common good with each member playing a specialized role Channel conflict refers to disagreement over goals, roles, and rewards by channel members Horizontal conflict Vertical conflict Conventional Distributions Systems Conventional distribution systems consist of one or more independent producers, wholesalers, and retailers. Each seeks to maximize its own profits, and there is little control over the other members and no formal means for assigning roles and resolving conflict. Vertical Marketing Systems Vertical marketing systems (VMSs) provide channel leadership and consist of producers, wholesalers, and retailers acting as a unified system and consist of: Corporate marketing systems

 Contractual marketing systems Administered marketing systems Multichannel Distribution System Changing Channel Organization Disintermediation occurs when product or service producers cut out intermediaries and go directly to final buyers, or when radically new types of channel intermediaries displace traditional ones Channel Design Decisions Setting Channel Objectives Targeted levels of customer service What segments to serve Best channels to use Minimizing the cost of meeting customer service requirements Identifying Major Alternatives Types of intermediaries Number of marketing intermediaries Responsibilities of channel members Marketing Logistics and Supply Chain Management Major Logistics Functions Warehousing Decisions How many What types Location Distribution centers Transportation affects the pricing of products, delivery performance, and condition of the goods when they arrive ANALYZING THE MARKETING ENVIRONMENT Topic Outline The Companys Microenvironment The Companys Microenvironment Responding to the Marketing Environment The Marketing Environment The marketing environment includes the actors and forces outside marketing that affect marketing managements ability to build and maintain successful relationships with customersMicroenvironment consists of the actors close to the company that affect its ability to serve its customers, the company, suppliers, marketing intermediaries, customer markets, competitors, and publics. The Companys Microenvironment Actors in the Microenvironment

The Company Top management Finance R&D Purchasing Operations Accounting Suppliers Provide the resources to produce goods and services Treated as partners to provide customer value Marketing Intermediaries Help the company to promote, sell and distribute its products to final buyers Types of Marketing Intermediaries Competitors Firms must gain strategic advantage by positioning their offerings against competitors offerings Publics Any group that has an actual or potential interest in or impact on an organizations ability to achieve its objectives Financial publics Media publics

Government publics Citizen-action publics Local publics General public Internal publics

Customers Customer is a person or organization that buys something from a shop/store or business Demographic Environment Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics Demographic environment is important because it involves people, and people make up markets Demographic trends include age, family structure, geographic population shifts, educational characteristics, and population diversity Growth in the rural population A changing family system The changing role of women Increasing diversity Economic Environment Economic environment consists of factors that affect consumer purchasing power and spending patterns Industrial economies are richer markets survival economies consume most of their own agriculture and industrial output Natural Environment Natural environment involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities Trends Shortages of raw materials Increased pollution Increase government intervention Technological Environment Most dramatic force in changing the marketplace Creates new products and opportunities Political Environment Political environment consists of laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society Cultural environment consists of institutions and other forces that affect a societys basic values, perceptions, and behaviors Responding to the Marketing Environment Views on Responding MARKETING RESEARCH AND INFORMATION SYSTEMS Chapter Objectives Explain the importance of information Understand marketing information systems Outline the marketing research process Discuss data collection techniques Discuss special issues in market research Marketing Information Systems: System Functions Assess information needs Develops needed information Information analysis Distributes information Assessing Information Needs Balances: What would be liked? What is needed? What is feasible? Irrelevant information Information limitations Costs of gathering, processing, storing, and delivering? Developing Information Internal Data Accounting Manufacturing Sales and marketing Customer service Research studies Quick access, less expensive

Data warehouses and data mining Marketing Intelligence Company personnel Key customers Suppliers and resellers Government agencies Competitive analysis Trade associations Internet search engines Information companies Market Research Systematic design, collection and analysis Reporting data and findings Relevant to a specific marketing situation Can be done internally or externally Information Analysis Information must be analyzed before use in decision making Advanced statistical analysis Analytical models Distributing Information Right people at right time Regular management decisions Special situations Fast availability Market Research Process: Defining Problem and Objectives Exploratory research Preliminary information Problem definition and hypothesis suggestion Descriptive research Better describe marketing problems, situations, or markets Causal research Test hypothesis of cause and effect relationships Develop the Research Plan Determine Specific Information Needs Target customer characteristics Patterns of product usage Demand factors Response of marketing channels Customer reactions Projected sales Gather Secondary Information Internal database sources Company, public, and university libraries Government and business publications Commercial data services On-line databases Internet data sources International data Advantages of Secondary Data Less time to obtain Lower cost than primary research Alternate means of access to information Benefit from resources of others Potential Problems With Secondary Data Information may not exist May not be: Relevant Accurate Current Impartial Market Research Process: Plan Primary Data Collection Research Approaches Observation Survey

 Experiment Observational Research Observing relevant people, actions, situations Mechanical observation, people meters, checkout scanners Single-source data systems Overcomes unwilling or unable problem Some things not readily observed Difficult to monitor long-term or infrequent behaviour Survey Research Questions about knowledge, attitudes preferences or buying behaviour Most widely used source of primary data due to flexibility, information type collection, and sometimes quicker than other two methods Very difficult to construct properly; Unwilling/ unable respondents; answer questions which they have no knowledge; pleasing answers Experimental Research Best suited for gathering causal information Selecting matched groups of subjects Given different experimental treatments Variables controlled Responses measured and recorded Contact Methods: Strengths and Weaknesses Mail Phone Personal Flexibility Poor Good Excellent Quantity of data collected Good Fair Excellent Control interviewer affects Excellent Fair Poor Control of sample Fair Excellent Fair Speed of data collection Poor Excellent Good Response rate Poor Good Good Cost Good Fair Poor Personal Interviewing Individual Talking with people in homes, offices, on the street, or in shopping malls ONE ON ONE Computer interviewing or computer-assisted Group Focus group Online Electronic Sampling Plans - three issues What is the sampling unit? What is the sample size? What is the sampling procedure? Market Research Process: Types of Samples Probability Samples Simple random sample Known chance Equal probability Stratified random sample Mutually exclusive groups Random sample drawn Non-probability Samples Convenience sample Select easiest population Judgement sample Select for accurate response Interviewer sets number Market Research Process: Research Instruments Questionnaire Question contribution Question form Closed-end Open-end Wording Ordering Mechanical

 People meters Checkout scanners Galvanometer Eye cameras Market Research Process: Present the Research Plan Written Research Proposal Management problems addressed by research Research objectives Information sought Sources of secondary information Methods of obtaining primary data Benefits and costs Market Research Process: Implement the Research Collect Data Company research staff Outside services Most costly and error prone process Analyze Data Isolate important information and findings Check accuracy and completeness Tabulate results Market Research Process: Interpret and Report Findings Focus on useful decision support Clear and open Discuss interpretation Team approach Ultimate decision with management Market Research Process: Other Considerations Small Business and Non-Profit Organizations Obtain good information through observation Informal surveys with convenience samples Informal focus groups Conduct simple experiments Secondary data is widely available International Marketing Research Growing due to multinationals Partnerships and alliances Difficulty in developing good samples Difficulty in reaching respondents Language translation Consumer behaviour differences Public Policy and Ethics Increasing consumer resentment Industry codes of ethics Intrusions on consumer privacy Misuse of research findings Marketing Information System: Developing Information Market Research Systematic design, collection and analysis Reporting data and findings Relevant to a specific marketing situation Can be done internally or externally Market Research Process: Defining Problem and Objectives Exploratory research Preliminary information Problem definition and hypothesis suggestion Descriptive research Better describe marketing problems, situations, or markets Causal research Test hypothesis of cause and effect relationships Market Research Process: Develop the Research Plan Determine Specific Information Needs Target customer characteristics Patterns of product usage

 Demand factors Response of marketing channels Customer reactions Projected sales Gather Secondary Information Internal database sources Company, public, and university libraries Government and business publications Commercial data services On-line databases Internet data sources International data Advantages of Secondary Data Less time to obtain Lower cost than primary research Alternate means of access to information Benefit from resources of others Potential Problems With Secondary Data Information may not exist May not be: Relevant Accurate Current Impartial Market Research Process: Plan Primary Data Collection Research Approaches Observation Survey Experiment Observational Research Observing relevant people, actions, situations Mechanical observation, people meters, checkout scanners Some things not readily observed Survey Research Questions about knowledge, attitudes preferences or buying behaviour Most widely used source of primary data due to flexibility, information type collection, and sometimes quicker than other two methods Very difficult to construct properly; Unwilling/ unable respondents; answer questions which they have no knowledge; pleasing answers Experimental Research Best suited for gathering causal information Given different experimental treatments Variables controlled Responses measured and recorded Personal Interviewing Individual Talking with people in homes, offices, on the street, or in shopping malls ONE ON ONE Computer interviewing Group Focus group Online Electronic Sampling Plans - three issues What is the sampling unit? What is the sample size? What is the sampling procedure? Probability Samples Simple random sample Equal probability Mutually exclusive groups Random sample drawn Non-probability Samples Convenience sample Select easiest population

Judgement sample Select for accurate response Market Research Process: Research Instruments Questionnaire Question contribution Question form Closed-end Open-end Wording Ordering Mechanical People meters Checkout scanners Eye cameras Market Research Process: Present the Research Plan Written Research Proposal Management problems addressed by research Research objectives Information sought Sources of secondary information Methods of obtaining primary data Benefits and costs Market Research Process: Implement the Research Collect Data Company research staff Outside services Most costly and error process Analyze Data Isolate important information and findings Check accuracy and completeness Tabulate results Market Research Process: Interpret and Report Findings Focus on useful decision support Clear and open Discuss interpretation Team approach Ultimate decision with management Topic Outline What Is Marketing? Understand the Marketplace and Customer Needs Marketing Management Philosophy Marketing Management is Demand Management Function of Marketing Elements of Marketing Marketing is a process by which companies create value for customers and build strong customer relationships to capture value from customers in return. [Philip Kotler & Armstrong] Marketing is a process of planning and executing the conception, pricing, promotion and distributing of ideas, goods and services to create exchanges that satisfy individual and organizational objectives. [American Marketing Association] Customer needs, wants, and demands Market offerings Value and satisfaction Exchanges and relationships Markets Needs = Felt of deprivation Wants = Need+ Cultural and individual factors Demand = Want+ ability and willingness

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Customer Value and Satisfaction Expectations Value V=Benefit/Cost Satisfaction Product Perceived Performance and Customer Expectation PPP>CE= Highly Satisfied Customer PPP<CE= Dissatisfied Customer PPP=CE= Satisfied Customer Exchange is the act of obtaining a desired object from someone by offering something in return Markets are the set of actual and potential buyers of a product Marketing management is the art and science of choosing target markets and building profitable relationships with them What customers will we serve? How can we best serve these customers? Marketing Management is Demand Management Negative Demand No Demand Latent Demand Declining Demand Irregular Demand Full Demand Overfull Demand Unwholesome Demand Selecting Customers to Serve Market segmentation refers to dividing the markets into segments of customers. Target marketing refers to which segments to go after. Demarketing is marketing to reduce demand temporarily or permanently; the aim is not to destroy demand but to reduce or shift it Marketing Management Orientations/Philosophy Production concept is the idea that consumers will favor products that are available or highly affordable Marketing Management Philosophies The Production Concept Management focus on production and distribution efficiency Consumers favour Readily available products Affordable products Marketing Management Orientations Product concept is the idea that consumers will favor products that offer the most quality, performance, and features. Organization should therefore devote its energy to making continuous product improvements. Marketing Management Philosophies The Product Concept Consumers favour products offering Highest quality Best performance Most innovative features MARKET SEGMENTATION Market segmentation is the process that companies use to divide large heterogeneous markets into small markets that can be reached more efficiently and effectively with products and services that match their unique needs Segmenting consumer markets Segmenting business markets Segmenting international markets Requirements for effective segmentation Segmenting Consumer Markets Geographic segmentation divides the market into different geographical units such as nations, regions, states, counties, or cities Demographic segmentation divides the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality Market Segmentation Age and life-cycle stage segmentation is the process of offering different products or using different marketing approaches for different age and life-cycle groups Gender segmentation divides the market based on sex (male or female) Income segmentation divides the market into affluent or low-income consumers Psychographic segmentation divides buyers into different groups based on social class, lifestyle, or personality traits Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product

 Occasions Benefits sought User status Usage rate Loyalty status Using Multiple Segmentation Bases Multiple segmentation is used to identify smaller, better-defined target groups Geodemographic segmentation is an example of multivariable segmentation that divides groups into consumer lifestyle patterns Segmenting International markets Segmenting Business Markets Inter market segmentation divides consumers into groups with similar needs and buying behaviors even though they are located in different countries MARKET SEGMENTATION, TARGETING AND POSITIONING FOR COMPETITIVE ADVANTAGE Chapter Objectives Define the three steps of target marketing Identify the major segmentation bases for consumer and business markets Explain how to identify attractive market opportunities and choose market strategies Explain positioning and its relationship to competitive advantage Levels of Market Segmentation: Mass Marketing Mass producing, mass distributing and mass promoting the same product in the same way to all consumers Largest potential market helps lower costs equalling lower prices or higher margins Difficult to access fragmented markets Problems in selecting from multiple ad media and distribution channels Segmented Marketing Marketing recognizes buyers differ in needs, perceptions, and buying behaviours Isolate broad segments comprising a market Adapt offers to best match segment needs Market more efficiently and effectively More focus and less competition Niche Marketing Marketing that focuses on subgroups within large identifiable groups in a market Dividing a segment into sub segments Defining group with distinctive set of traits seeking special combination of benefits Price premium Few or no significant competitors Improves focus of limited resources Micromarketing Tailoring products and marketing programs to suit the tastes of specific individuals or locations Local marketing Local tailoring of brands and promotions Overcomes regional differences First-line customers Dilutes brand image and operation efficiency Logistical problems Individual marketing Tailoring products and marketing programs to the needs and preferences of individual customers Mass customization Custom-made products Self-marketing Segmenting Consumer Markets: Geographic Segmentation Divide market into separate geographic units Nations, regions provinces, cities, etc. Develop regional marketing programs Demographic Segmentation Most popular method Consumer patterns often follow their demographics Easier to measure than most segmentation variables Needed for market size and access Age and life-cycle stage Wants and needs vary with stage Guard against stereotypes Gender Buying patterns frequently follow gender

Income Affluent to restricted incomes Psychographic Segmentation Lifestyle Reflected in purchases Personality Express who they are Behavioral Segmentation Divide market into groups based on consumer knowledge, attitude, use, or response to a product Occasions By occasions when buyers get the idea to buy, actually make the purchase, or use the item Benefits sought Major benefits, people seeking, brands deliver User status Non-, ex-, potential, first-time, regular Usage rate Light - medium - heavy Heavy users may dominate total market Loyalty status Toward brand, store, and/or company Frequent buyers may not be loyal habit, indifference, low price, product unavailability Multiple Segmentation Bases Multiple bases used to better identify segments Geodemographic segmentation Segmenting Business Markets Business demographics Operating characteristics Purchasing approaches Situational factors Personal characteristics Plus consumer market variables Segmenting International Markets Geographic location Economic factors Political and legal Cultural factors Intermarket (global) segmentation common needs and buying behavior Market Targeting: Evaluating Market Segments Segment size and growth Segment structural attractiveness Company objectives and resources Positioning Competitively: Product Positioning Defined by consumers on important attributes Place product occupies in mind relative to competing products Information overload Simplify evaluation Position happens - planned or not Positioning Strategies Product attributes Benefits offered Usage occasions Classes of users Directly against or away from competitor Different product class Possible Competitive Advantages Product differentiation Service differentiation Personnel differentiation Image differentiation Selecting Competitive Advantage How many differences to promote? Over positioning, under positioning, confused positioning

Which differences to promote? Important, distinctive, superior, communicable, pre-emptive, affordable, profitable Communicating and Delivering the Chosen Position Concrete action Easier to develop than implement Positions can be quickly lost NEW-PRODUCT DEVELOPMENT AND PRODUCT LIFE-CYCLE STRATEGIES Two ways to obtain new products Acquisition refers to the buying of a whole company, a patent, or a license to produce someone elses product New product development refers to original products, product improvements, product modifications, and new brands developed from the firms own research and development New-Product Development Reasons for new product failure Major Stages in New-Product Development Idea Generation Idea generation is the systematic search for new-product ideas Sources of new-product ideas Internal External Internal sources refer to the companys own formal research and development, management and staff, and entrepreneurial programs External sources refer to sources outside the company such as customers, competitors, distributors, suppliers, University and research institutes, Business consultant and advertising agencies, other sources. Idea Screening Identify good ideas and drop poor ideas R-W-W Screening Framework: Is it real? Can we win? Is it worth doing? Concept Development and Testing Product idea is an idea for a possible product that the company can see itself offering to the market Product concept is a detailed version of the idea stated in meaningful consumer terms Product image is the way consumers perceive an actual or potential product Concept testing refers to testing new-product concepts with groups of target consumers Marketing Strategy Development Marketing strategy development refers to the initial marketing strategy for introducing the product to the market Marketing strategy statement includes: Description of the target market Value proposition Sales and profit goals Business analysis involves a review of the sales, costs, and profit projections to find out whether they satisfy the companys objectives Product development involves the creation and testing of one or more physical versions by the R&D or engineering departments Requires an increase in investment Test marketing is the stage at which the product and marketing program are introduced into more realistic marketing settings Provides the marketer with experience in testing the product and entire marketing program before full introduction Types of Test Markets Advantages of simulated test markets Less expensive than other test methods Faster Restricts access by competitors Disadvantages Not considered as reliable and accurate due to the controlled setting

Commercialization is the introduction of the new product When to launch Where to launch Planned market Rollout Successful new-product development should be: Customer centered Team centered Systematic New-Product Development Strategies

Customer-centered new product development focuses on finding new ways to solve customer problems and create more customer satisfying experiences Begins and ends with solving customer problems Sequential new-product development is a development approach where company departments work closely together individually to complete each stage of the process before passing it along to the next department or stage Increased control in risky or complex projects Slow Team-based new-product development is a development approach where company departments work closely together in cross-functional teams, overlapping in the product-development process to save time and increase effectiveness Systematic new-product development is an innovative development approach that collects, reviews, evaluates, and manages new-product ideas Creates an innovation-oriented culture Yields a large number of new-product ideas Product Life-Cycle Strategies Product development Sales are zero and investment costs mount Introduction Slow sales growth and profits are nonexistent Growth Rapid market acceptance and increasing profits. Maturity Slowdown in sales growth and profits level off or decline Decline Sales fall off and profits drop Fads are temporary periods of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity Introduction Stage Slow sales growth Little or no profit High distribution and promotion expense Growth Stage Sales increase New competitors enter the market Price stability or decline to increase volume Consumer education Profits increase Promotion and manufacturing costs gain economies of scale Maturity Stage Slowdown in sales Many suppliers Substitute products Overcapacity leads to competition Increased promotion and R&D to support sales and profits Maturity Stage Modifying Strategies Market modifying Product modifying Marketing mix modifying Decline Stage Maintain the product Harvest the product Drop the product Summary of Product Life Cycle Additional Product and Service Considerations Product Decisions and Social Responsibility Public policy and regulations regarding developing and dropping products, patents, quality, and safety International Product and Service MarketingChallenges Determining what products and services to introduce in which countries Standardization versus customization Packaging and labeling Customs, values, laws PRICING: UNDERSTANDING AND CAPTURING CUSTOMER VALUE

What Is a Price? Price is the amount of money charged for a product or service. It is the sum of all the values that consumers give up in order to gain the benefits of having or using a product or service. Price is the only element in the marketing mix that produces revenue; all other elements represent costs Factors to Consider When Setting Prices Customer Perceptions of Value Understanding how much value consumers place on the benefits they receive from the product and setting a price that captures that value Value-based pricing uses the buyers perceptions of value, not the sellers cost, as the key to pricing. Price is considered before the marketing program is set. Value-based pricing is customer driven Cost-based pricing is product driven

Good-value pricing offers the right combination of quality and good service at a fair price Existing brands are being redesigned to offer more quality for a given price or the same quality for a lower price Everyday low pricing (EDLP) involves charging a constant everyday low price with few or no temporary price discounts High-low pricing involves charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items Value-added pricing attaches value-added features and services to differentiate offers, support higher prices, and build pricing power Pricing power is the ability to escape price competition and to justify higher prices and margins without losing market share Cost-based pricing involves setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for its effort and risk Company and Product Costs Cost-based pricing adds a standard markup to the cost of the product Company and Product Costs Types of costs Fixed costs are the costs that do not vary with production or sales level Rent Heat Interest Executive salaries Variable costs are the costs that vary with the level of production Packaging Raw materials Total costs are the sum of the fixed and variable costs for any given level of production Average cost is the cost associated with a given level of output Costs at Different Levels of Production Costs as a Function of Production Experience Experience or learning curve is when average cost falls as production increases because fixed costs are spread over more units Cost-Plus Pricing Cost-plus pricing adds a standard markup to the cost of the product Benefits Sellers are certain about costs Prices are similar in industry and price competition is minimized Consumers feel it is fair Disadvantages Ignores demand and competitor prices Break-Even Analysis and Target Profit Pricing Break-even pricing is the price at which total costs are equal to total revenue and there is no profit Target profit pricing is the price at which the firm will break even or make the profit its seeking Break-Even Analysis and Target Profit Pricing Considerations in Setting Price Other Internal and External Considerations Affecting Price Decisions Customer perceptions of value set the upper limit for prices, and costs set the lower limit Companies must consider internal and external factors when setting prices

Target costing starts with an ideal selling price based on consumer value considerations and then targets costs that will ensure that the price is met Organizational considerations include: Who should set the price Who can influence the price The Market and Demand Before setting prices, the marketer must understand the relationship between price and demand for its products The demand curve shows the number of units the market will buy in a given period at different prices Normally, demand and price are inversely related Higher price = lower demand For prestige (luxury) goods, higher price can equal higher demand when consumers perceive higher prices as higher quality Price elasticity of demand illustrates the response of demand to a change in price Inelastic demand occurs when demand hardly changes when there is a small change in price Elastic demand occurs when demand changes greatly for a small change in price Price elasticity of demand = % change in quantity demand % change in price Other Internal and External Considerations Competitor's Strategies Comparison of offering in terms of customer value Strength of competitors Competition pricing strategies Customer price sensitivity PRODUCT, SERVICES, AND BRANDS: BUILDING CUSTOMER VALUE Products, Services, and Branding Strategy Products, Services, and Experiences A Product is anything that can be offered in a market for attention, acquisition, use, or consumption that might satisfy a need or want [cqvRb I Afvei mw c~iY KiZ cvi Ggb wKQz hv gbvhvM AvKlY, ARb, eenvi

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Levels of Product and Services Product and Service Classifications Consumer products are products and services for personal consumption Classified by how consumers buy them Convenience products Shopping products Specialty products Unsought products Convenience products are consumer products and services that the customer usually buys frequently, immediately, and with a minimum comparison and buying effort Newspapers Candy Fast food Shopping products are consumer products and services that the customer compares carefully on suitability, quality, price, and style Furniture Cars Appliances Specialty products are consumer products and services with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort Medical services Designer clothes High-end electronics Unsought products are consumer products that the consumer does not know about or knows about but does not normally think of buying Life insurance Blood donations Industrial products are products purchased for further processing or for use in conducting a business Classified by the purpose for which the product is purchased Materials and parts Capital Supplies and services Capital items are industrial products that aid in the buyers production or operations Materials and parts include raw materials and manufactured materials and parts usually sold directly to industrial users Supplies and services include operating supplies, repair and maintenance items, and business services Organizations, Persons, Places, and Ideas

Organization marketing consists of activities undertaken to create, maintain, or change attitudes and behavior of target consumers toward an organization Person marketing consists of activities undertaken to create, maintain, or change attitudes and behavior of target consumers toward particular people Place marketing consists of activities undertaken to create, maintain, or change attitudes and behavior of target consumers toward particular places Social marketing is the use of commercial marketing concepts and tools in programs designed to influence individuals behavior to improve their well-being and that of society Product and Service Decisions Individual Product and Service Decisions Product attributes are the benefits of the product or service Quality Features Style and design Product quality includes level and consistency Quality level is the level of quality that supports the products positioning Product features are a competitive tool for differentiating a product from competitors products Product features are assessed based on the value to the customer versus the cost to the company Style describes the appearance of the product Design contributes to a products usefulness as well as to its looks Brand is the name, term, sign, or designor a combination of thesethat identifies the maker or seller of a product or service Packaging involves designing and producing the container or wrapper for a product Labels identify the product or brand, describe attributes, and provide promotion Product support services augment actual products Product Line Decisions A product line is 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 ranges Product line length is the number of items in the product line Line stretching Line filling Product Mix Decisions Product mix consists of all the products and items that a particular seller offers for sale Width Length Depth Consistency Branding Strategy: Building Strong Brands Brand represents the consumers perceptions and feelings about a product and its performance. It is the companys promise to deliver a specific set of features, benefits, services, and experiences consistently to the buyers Brand Positioning Brand strategy decisions include: Product attributes Product benefits Product beliefs and values Brand Name Selection Desirable qualities 1. Suggest benefits and qualities 2. Easy to pronounce, recognize, and remember 3. Distinctive 4. Extendable 5. Translatable for the global economy 6. Capable of registration and legal protection Brand Sponsorship Manufacturers brand Private brand Licensed brand Co-brand Brand Development Strategies Services Marketing Types of Service Industries Government

 Private not-for-profit organizations Business services Nature and Characteristics of a Service Marketing Strategies for Service Firms In addition to traditional marketing strategies, service firms often require additional strategies Service-profit chain Internal marketing Interactive marketing Service-profit chain links service firm profits with employee and customer satisfaction Internal service quality Satisfied and productive service employees Greater service value Satisfied and loyal customers Healthy service profits and Internal marketing means that the service firm must orient and motivate its customer contact employees and supporting service people to work as a team to provide customer satisfaction Internal marketing must precede external marketing Interactive marketing means that service quality depends heavily on the quality of the buyerseller interaction during the service encounter Service differentiation Service quality Service productivity Managing service differentiation creates a competitive advantage from the offer, delivery, and image of the service Offer can include distinctive features Delivery can include more able and reliable customer contact people, environment, or process Image can include symbols and branding Managing service quality provides a competitive advantage by delivering consistently higher quality than its competitors Service quality always varies depending on interactions between employees and customers Managing service productivity refers to the cost side of marketing strategies for service firms Employee recruiting, hiring, and training strategies Service quantity and quality strategies

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I get a lot of searches for different industries looking for useful marketing ideas. One of the terms I see show up now and again is Bank Marketing Ideas. I cant help but wonder how fierce the competition in the banking industry is. The whole banking system is set up cleverly to make a lot of money. That is, if you have customers.

Every bank needs a sign

Whoever implemented the first digital time / temperature sign at a bank was a genius. That person deserves a medal. I mean really, they do. Every day on the way to and from work you look to see the time and outdoor temperature. It just so happens you also see the name of the bank displaying the sign, reinforcing its brand recognition. Although, displaying the time in military time (where the day starts at 00:00 and ends at 23:59) and the temperature in Celsius (most Americans dont know what that is) would be a more unconventional marketing idea. That would cause people to stop and think for a second. That would be reason enough for someone to talk about what they just saw. The effects might be minimal, but you never know. It would be fun to watch people drive by staring at the sign (with your brand on it). To go even further, why not put up a daily trivia question? Or a random daily fact. People might even drive by your bank every day just to read the trivia question!

Free money
People love free money, almost as much as they love air. In Seth Godins book, Free Prizes, he told a bank advertising manager to slip a few $100s into the ATM. People would talk then. Mission accomplished. Imagine someone pulls up to the ATM at midnight on a Saturday on his way to the next watering hole and he requests $40 and gets $120 instead. Would he go to the bar and promptly tell everyone? How much would you want to bet the bar clears out and a mass of people start withdrawing from that machine? I am willing to bet that each $50-100 you put in the pile to replace a $20 would be redeemed in the astronomical charges implemented at the only machine in town dispensing cash at 4 a.m. on a Saturday.

Stop with the fees already

Banks charge way too many fees, for everything. In a room with 100 people in it, not one would suggest otherwise. Set yourself apart from the crowd and stop charging fees. Maybe you opt out of fees and opt into advertising services like credit help, financial counseling or long-term planning and management of money. Perhaps you break all the rules and say no one will ever be charged a fee so long as they accept advertisements about these great services you can offer them. What kind of marketing idea generator said its OK to add random fees to a bunch of different accounts and then promptly remove them with no questions asked when a customer asks what they are for? I mean, if the person whose job it is to dispense and receive monies can simply remove the fee on a whim, that fee should not be there. But I am willing to bet that people are happy when those fees are removed and do not report the devious nature of the fee to others. On the other hand, all of those people who dont know how to check their accounts or balance checkbooks simply get feed to death.

Please upgrade your website

If Mint.com can offer a free budgeting service and attract thousands of people by crunching numbers and displaying them in charts, so can you. Mint.com makes money by referring people to credit card and mortgage companies. I would use a budgeting service if my bank offered it. A lot of the people who use my bank would too. Other people who dont use my bank would consider switching or opt in to the free service because of the reputable brand. The problem with Mint.com is that it is not a Wells Fargo, US Bank or JP Morgan. Imagine how many people would be willing to give you a platform to help market other products and services to others. Remember it is always good to promote your competition as long at it is on your terms.

Invest in the community

If your bank supports a nonprofit or charity people can relate to, then you will have more customers just because people want to believe they are part of a good cause. People are emotional. Stories of helping others and photos of people in need play to our emotions and we want to help. Not only that, but once something has reached our emotions, we remember it. If your bank donates a percentage to schools, homeless shelters or dog rescue, potential customers will remember you and maybe even switch to your banking services. And I mean really donate, not just donate a lump sum and then spend twice as much telling everyone about it. For example, how about using the save your change program to match donations to a school? Some banks have the save your change program where if you spend $2.12 on something they round up to $3 and put the .88 in a savings account for you. For every individual participant, save the change adds up to about $200-300 a year in savings. If my bank offered to match that savings from my save the change participation and donate it all to a local school, animal shelter or whatever, I would probably do it, gladly. I can just picture schools rallying all the parents to switch banks and sign up for your save the change and donate program.

Give out candy and dog treats

My girlfriend always talks about it whenever she goes through a drive-thru of any kind and the person at the window gives her dog a treat. Her cat was even offered a treat once. Kids love to go to the bank with Mom and Dad if they get a piece of candy from the teller. Use this idea and expand on it because adults like free treats too. Maybe on Fridays, everyone or selected people who use the drive-thru get a $5 gas card or a coupon for a free coffee. Or maybe they are offered a special such as a savings account with no minimum balance or the interest waved from their credit card for one month. Or maybe every single person who goes through the drive-thru gets a piece of Godiva chocolate no matter what day it is. People like to be surprised for the better, not that they just incurred $300 in overdraft fees. Use your imagination.