GENERAL PRINCIPLES OF MARKETING

TOBB ET

Assist. Prof. Dr. Berna Tar

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WHAT IS MARKETING?
Marketing is managing profitable customer relationships
Attracting new customers Retaining and growing current customers

Marketing is not synonymous with sales, advertising, or promotion

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KOTLERS SOCIAL DEFINITION

Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging needs and products and value with others.
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WHAT IS MARKETING MANAGEMENT? Marketing management is the art and science of choosing target markets and building profitable relationships with them
Creating, delivering and communicating superior customer value is key
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MANAGEMENT (AND MARKETING) ORIENTATIONS Production concept Selling concept Product concept Marketing concept Societal marketing concept
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CUSTOMER RELATIONSHIP MANAGEMENT (CRM)

CRM is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction
It costs 5 to 10 times more to attract a new customer than it does to keep a current customer satisfied Marketers must be concerned with the lifetime value of the customer
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STRATEGIC PLANNING
The process of developing and maintaining a strategic fit between the organizations goals and capabilities and its changing marketing opportunities Planning activities occur at the business unit, product, and market levels, and include:
Defining the purpose and mission Setting objectives and goals Designing the business portfolio Developing detailed marketing and departmental plans
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STRATEGIC PLANNING
Mission statements should . . .
serve as a guide for what the organization wants to accomplish be market-oriented rather than productoriented be neither too narrow, nor too broad fit with the market environment be motivating
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PLANNING MARKETING
Marketing plays a key role in the strategic planning process. Marketers must practice CRM and Partner Relationship Management.
Partnering with other departments in the company as well as other firms in the marketing system helps to build a superior value delivery-network
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MARKETING IN THE DIGITAL AGE

Major forces shaping the digital age
Digitalization and connectivity
Intranets, extranets, and the Internet

New forms of business

E-business E-commerce E-marketing

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MARKETING IN THE DIGITAL AGE

Buyer benefits of e-commerce
Convenience Easy and private Greater product access and easier selection Access to comparative information Interactive and immediate

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MARKETING IN THE DIGITAL AGE

Seller benefits of e-commerce
Reduced costs Increased speed and efficiency Flexibility Global access, global reach Relationship building

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MARKETING ENVIRONMENT
The actors and forces that affect a firms ability to build and maintain successful relationships with customers Aspects of the marketing environment
Microenvironment Macroenvironment

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MARKETING ENVIRONMENT
SWOT Analysis
Strengths Weaknesses Opportunities Threats

Responding to the environment

Reactive: Passive acceptance and adaptation Proactive: Environmental management

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MARKETING INFORMATION SYSTEM

Consists of people, equipment, and procedures that gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers

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MARKETING RESEARCH
Steps in the Marketing Research Process
Defining the problem and research objectives Developing the research plan for collecting information Implementing the research plan collecting and analyzing the data Interpreting and reporting the findings

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CONSUMER BEHAVIOR
Consumer buying behavior
Buying behavior of individuals and households that buy products for personal consumption

Consumer market
All individuals and households who buy products for personal consumption
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MODELS OF CONSUMER BEHAVIOR

Stimulus response model
Marketing and other stimuli enter the buyers black box and produce certain choice/purchase responses Marketers must figure out what is inside of the buyers black box and how stimuli are changed into responses
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FACTORS AFFECTING CONSUMER BEHAVIOR

Cultural
Culture Subculture Social class

Social
Groups Family Roles and status

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FACTORS AFFECTING CONSUMER BEHAVIOR

Personal
Age and life cycle Occupation Economic situation Life style Personality and self concept

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FACTORS AFFECTING CONSUMER BEHAVIOR

Psychological
Motivation
Maslows hierarchy of needs: Physiological, Safety, Social, Esteem, Self-actualization

Perception
Selective attention, distortion and retention

Learning
Drives, stimuli, cues, responses, and reinforcement

Beliefs and attitudes

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TYPES OF DECISION BEHAVIOR

Differences among brands Level of involvement
HH: Complex buying behavior HL: Variety seeking buying behavior LH: Dissonance-reducing buying behavior LL: Habitual buying behavior

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BUYER DECISION PROCESS

Five stages
Need recognition
Internal and external stimuli

Information search
Personal, commercial, public, experiential Word of mouth

Evaluation of alternatives Purchase decision Postpurchase behavior

Satisfaction Cognitive dissonance
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STAGES IN THE ADOPTION PROCESS

Awareness Interest Evaluation Trial Adoption

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ADOPTER CATEGORIES
Innovators Early adopters Early majority Late majority Laggards

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BUSINESS BUYER BEHAVIOR

The buying behavior of organizations that buy goods and services for use in the production of other goods and services or for the purpose of reselling or renting them to others at a profit
Sales in the business market far exceed sales in the consumer market
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BUSINESS BUYER BEHAVIOR

Business markets differ in terms of
Marketing structure and demand
Fewer but larger buyers More geographically concentrated Derived, price inelastic demand

Nature of the buying unit

More professional buyers

Decision processes
More complex buying situations Long-term relations
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BUSINESS BUYER BEHAVIOR

Major types of buying situations
Straight rebuy Modified rebuy New task

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BUSINESS BUYING PROCESS

Eight stages
Problem recognition General need description Product specification Supplier search Proposal solicitation Supplier selection Order-routine specification Performance review

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INSTITUTIONAL MARKETS
Consists of governmental units, churches, schools, prisons, hospitals, and other institutions that provide goods and services to people in their care Often characterized by low budgets and captive patrons

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MARKET SEGMENTATION
Dividing a market into groups with distinct needs, characteristics, or behavior who might require separate products or marketing mixes Segmenting consumer markets
Geographical Demographic Psychographic Behavioral

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MARKET SEGMENTATION
Segmenting business markets
Demographic Operating variables Purchasing approaches Situational factors Personal characteristics

Segmenting international markets

Geographic Economic Political and legal Cultural

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MARKET SEGMENTATION
Requirements for effective segmentation
Measurable Accessible Substantial Differentiable Actionable
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TARGET MARKETING
Evaluating market segments
Segment size and growth Segment structural attractiveness
Level of competition Substitute products Power of buyers Power of suppliers

Company objectives and resources

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TARGET MARKETING
Target marketing strategies
Undifferentiated (mass) marketing Differentiated (segmented) marketing Concentrated (niche) marketing Micromarketing (local or individual)

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POSITIONING
The place the product occupies in consumers minds relative to competing products Typically defined by consumers on the basis of important attributes Choosing a positioning strategy
Identifying possible competitive advantages Choosing the right competitive advantage 36

POSITIONING
Criteria for meaningful differences
Important Distinctive Superior Communicable Preemptive Affordable Profitable
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PRODUCTS AND SERVICES

Product: Anything offered to a market for attention, acquisition, use, or consumption that might satisfy a need or want Service: Any activity or benefit that one party offer to another that is essentially intangible and does not result in ownership of anyhting
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PRODUCTS AND SERVICES

Pure tangible goods tangible goods and intangible services pure intangible services experiences Levels of products and services
Core benefit Actual product Augmented product
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PRODUCTS AND SERVICES

Types of consumer products
Convenience
Frequent purchase Low price Widespread distribution Mass promotion

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PRODUCTS AND SERVICES

Types of consumer products
Shopping
Less frequent purchase with more effort Higher price Selective distribution Advertising and personal selling

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PRODUCTS AND SERVICES

Types of consumer products
Specialty
Special purchase effort with strong brand loyalty High price Exclusive distribution Carefully targeted promotion

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PRODUCTS AND SERVICES

Types of consumer products
Unsought
Little product awareness or negative interest Pricing varies Distribution varies Aggressive advertising and personal selling

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KEY PRODUCT DECISIONS

Individual product
Product attributes Branding Packaging Labeling Product support services

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KEY PRODUCT DECISIONS

Product line
Product line length
Line streching Line filling

Product mix
Product line width Product line depth Product line consistency
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BRANDING STRATEGY
Brand with strong equity have many powerful advantages
High consumer awareness Strong brand loyalty Helps when introducing new products Less susceptible to price competition

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KEY BRANDING DECISIONS

Brand positioning
3 levels of positioning
Product attributes Benefits Beliefs and values

Brand name selection Brand sponsorship Brand development

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SERVICES MARKETING
Characteristics of services
Intangibility Inseparability Variability Perishability

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NEW PRODUCT DEVELOPMENT

Development of original products, product improvements, product modifications, and new brands through the firms own R&D efforts New product development process
Stage 1: Idea Generation Stage 2: Idea screening
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NEW PRODUCT DEVELOPMENT

New product development process
Stage 3: Concept development and testing Stage 4: Marketing strategy development Stage 5: Business analysis Stage 6: Product development Stage 7: Test marketing Stage 8: Commercialization
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PRODUCT LIFE CYCLE

Product development Introduction Growth Maturity Decline
Except for fads, styles, and fashions
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PRICE
The amount of money charged for a product or service, or the sum of the values that consumers exchange for the benefits of having or using the product or service
Only element in the marketing mix that produces revenues The most flexible element
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PRICING CONSIDERATIONS
Marketing objectives
Market positioning Survival and leadership objectives Not-for-profit objectives

Marketing mix strategies

Other elements Target costing

Costs
Fixed, variable, total Experience (learning) curve effects

Organizational considerations

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PRICING CONSIDERATIONS
External factors
Nature of market and demand
Types of markets
Pure competition, monopolistic competition, oligopolistic competition, pure monopoly

Consumer perceptions Price-demand relationship

Demand curve, price elasticity

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PRICING CONSIDERATIONS
External factors
Competitors costs, prices, and offers Other environmental elements
Economic conditions, government restrictions, social considerations

Market-skimming Market-penetration
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PRICING APPROACHES
Cost-based pricing-1: Cost-plus pricing
Adding a standard makeup to cost Ignores demand and competition Popular because
Simple More fair to buyers

Cost-based pricing-2: Break-even analysis and target profit pricing

Exceed the break-even unit volume to make a profit
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PRICING APPROACHES
Value-based pricing: Uses buyers perception of value rather than sellers costs to set price
Difficult to measure value Consumer attitudes may shift through time

Competition-based pricing
Going-rate pricing May price at the same level, below or above the going rate
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SUPPLY CHAIN MANAGEMENT

Value delivery network
The network made up of the company, suppliers, distributors, and ultimately customers who partner with each other to improve the performance of the entire system

Channel members are connected through a variety of flows

Physical, information, payment, promotion, ownership 58

SUPPLY CHAIN MANAGEMENT

Channel conflict
Occurs when channel members disagree on roles, activities, or rewards
Horizontal conflict Vertical conflict

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SUPPLY CHAIN MANAGEMENT

Channel design decisions
Analyze customer needs Set channel objectives Identify major alternatives
Types of intermediaries: company sales force, manufacturers agency, industrial distributors Number of intermediaries: intensive, selective, exclusive

Evaluate major alternatives Select, manage, motivate, and evaluate channel members
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SUPPLY CHAIN MANAGEMENT

Goals of the logistics system
Firms must weigh the benefits of higher service against the costs State goals in terms of a targeted level of customer service at the least cost

Major logistics functions

Warehousing Inventory management Transportation Logistics information management
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RETAILING
All activities involved in selling goods or services directly to final consumers for their personal, nonbusiness use. Types of retailers
Specialty stores Discount stores Departments stores Convenience stores Supermarkets Off-price retailers
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RETAILING
Retailers can be classified by
Amount of service
Self-service, limited service, full service

Product lines
Specialty stores, department stores, supermarkets, convenience stores, category killers

Relative price
Discount stores, off-price retailers

Organizational approach

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RETAILING
Retailer marketing decisions
Target marketing and positioning Product assortment, service mix, stores atmosphere Price Promotion Place (location)
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WHOLESALING
All activities involved in selling goods and services to those buying for resale or business use Wholesalers add value by the following functions
Selling and promoting, buying and assortment building, bulk-breaking, warehousing, transportation, financing, risk bearing, marketing information, management services and advice
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WHOLESALING
Types of wholesalers
Merchant wholesalers Brokers Agents Manufacturers and retailers branches and offices

Wholesaler marketing decisions

Target market and positioning Marketing mix decisions
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MARKETING COMMUNICATIONS MIX

The specific mix of advertising, personal selling, sales promotion, and public relations a company uses to pursue its advertising and marketing objectives Elements in the communication process
Sender, receiver, message, media Encoding, decoding, response, feedback Noise
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DEVELOPING EFFECTIVE COMMUNICATION

Identify the target audience Determine communication objectives
6 readiness stages: Awareness, knowledge, liking, preference, conviction, purchase

Design a message
AIDA Rational, emotional, moral appeals Message format: Design, layout, copy, color, shape, movement, words, sounds, voice, body language, dress etc.
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DEVELOPING EFFECTIVE COMMUNICATION

Choose the media
Personal communication channels
Face-to-face, phone, mail, and Internet chat communications Word-of-mouth influence is often critical Buzz marketing cultivates opinion leaders

Nonpersonal communication channels

Includes media, atmosphere, and events

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DEVELOPING EFFECTIVE COMMUNICATION

Select the message source
Highly credible sources are more persuasive A poor spokesperson can tarnish a brand

Collect feedback
Recognition, recall, and behavioral measures are assessed May suggest changes in product/promotion

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DEVELOPING EFFECTIVE COMMUNICATION

Setting the Total Promotional Budget
Affordability Method
Budget is set at a level that a company can afford

Percentage-of-Sales Method
Past or forecasted sales may be used

Competitive-Parity Method
Budget matches competitors outlays

Objective-and-Task Method
Specific objectives are defined; tasks required to achieve objectives are determined Costs of performing tasks are estimated, then summed to create the promotional budget
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PROMOTION TOOLS
Advertising: Any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor
Set objectives: inform, persuade, remind Set the budget: stage in PLC, competition, degree of brand differentiation Develop the advertising strategy: create ad message, select advertising media
Newspapers, radio, television, magazines, direct mail, outdoor, Internet

Evaluate advertising campaign: communication effectiveness (recall, awareness, preference) and effects of sales

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PROMOTION TOOLS
Advertising
Reaches large, geographically dispersed audiences, often with high frequency Low cost per exposure, though overall costs are high Consumers perceive advertised goods as more legitimate Dramatizes company/brand Builds brand image; may stimulate short-term sales Impersonal; one-way communication 73

PROMOTION TOOLS
Personal selling
Most effective tool for building buyers preferences, convictions, and actions Personal interaction allows for feedback and adjustments Relationship-oriented Buyers are more attentive Sales force represents a long-term commitment Most expensive of the promotional tools
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PROMOTION TOOLS
Sales promotion
May be targeted at the trade or ultimate consumer Makes use of a variety of formats: premiums, coupons, contests, etc. Attracts attention, offers strong purchase incentives, dramatizes offers, boosts sagging sales Stimulates quick response Short-lived Not effective at building long-term brand preferences

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SALES PROMOTION
Short-term incentives to encourage the purchase of a product or service Consumer promotion tools
Samples, premiums, cash refunds (rebates), patronage rewards, price packs (cents-off deals), point-of-purchase communications, advertising specialties, contests, games, and sweepstakes

Trade promotion tools

Discounts, allowances, free goods, puch money, specialty advertising items
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PROMOTION TOOLS
Public Relations
Highly credible Many forms: news stories, news features, events and sponsorships, etc. Reaches many prospects missed via other forms of promotion Dramatizes company or benefits Often the most underused element in the promotional mix
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PUBLIC RELATIONS
Press relations Lobbying Product publicity Investor relations Public affairs

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PROMOTION TOOLS
Direct marketing
Many forms: Telephone marketing, direct mail, online marketing, etc. Four distinctive characteristics:
Nonpublic Immediate Customized Interactive

Well-suited to highly targeted marketing efforts

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PROMOTION TOOLS
Promotion Mix Strategies
Push strategy
Trade promotions and personal selling efforts push the product through the distribution channels

Pull strategy
Producers use advertising and consumer sales promotions to generate strong consumer demand for products

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SOCIALLY RESPONSIBLE COMMUNICATIONS

Advertising and Sales Promotion
Avoid false and deceptive advertising Trade promotions cannot favor certain customers over others Use advertising to promote socially responsible programs and actions

Personal Selling
Salespeople must follow the rules of fair competition Three day cooling-off rule protects ultimate consumers from high pressure tactics Business-to-business selling
Bribery, industrial espionage, and making false and disparaging 81 statements about a competitor are forbidden

MANAGING THE SALES FORCE

Salesperson: An individual acting for a company by prospecting, communicating, servicing, and information gathering Traits of successful salespeople
Enthusiasm, patience, initiative, self-confidence, job commitment, customer orientation, independent, self-motivated, excellent listener, friendly, persistent, attentive, honest, internally motivated, relationship oriented, disciplined, hardworking, team players

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PERSONAL SELLING PROCESS

Prospecting and qualifying Preapproach Approach Presentation and demonstration Handling objections Closing Follow-up
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DIRECT MARKETING
Forms of direct marketing
Face-to-face selling Telemarketing Direct-mail marketing Catalog marketing Kiosk marketing Online marketing Direct-response TV marketing
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COMPETITIVE ANALYSIS
The process of identifying key competitors; assessing their objectives, strategies, strengths, and weaknesses, are reaction patterns; and selecting which competitors to attack or avoid Basic competitive strategies
Cost leadership Differentiation Focus

Competitive positions
Leader, challenger (full frontal and indirect attacks), follower, nicher
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GLOBAL MARKETPLACE
A global firm is a firm that, by operating in more than one country, gains R&D, production, marketing, and financial advantages in its costs and reputation that are not available to purely domestic competitors International marketing decisions
Looking at the global marketing environment, deciding whether to go international, deciding which markets to enter, deciding how to enter the market (export, joint venture, direct investment), deciding on the global marketing program (standardized or adapted marketing mix), global promotion, pricing, and distribution strategies
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SOCIAL CRITICISMS OF MARKETING

Marketings impact on individual consumers
High prices Deceptive practices High-pressure selling Unsafe products Planned obsolescence Poor service to disadvantaged consumers Too mush materialism False needs Too few social goods Cultural pollution Too much political power

Marketings impact on the society as a whole

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ENLIGHTENED MARKETING
Consumer-oriented marketing Innovative marketing Value marketing Sense-of-mission marketing Societal marketing
Companies make marketing decisions by considering consumers wants, the companys requirements, consumers long-run interests, and societys long-run interests
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