Foundations of Marketing Thought

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

Foundations of Business Thought

Marketing by Creating Customer Value

1. 2. 3. 4. 5. 6. At bare minimum, offer products that perform Surpass customer expectations Do not price unrealistically Give guarantees Give the buyer facts Build relationships

Foundations of Business Thought

Marketing Mix
The Four Ps
Place Product

Promotion

Price

Foundations of Business Thought

The Marketing Mix Elements

Product: the physical

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

Price: list price, credit

terms, allowances, flexibility, discounts

Place: channels,
middlemen, market coverage, transportation

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

Foundations of Business Thought

PRODUCT

Foundations of Business Thought

New Product Development Process

Possibilities

Generating Ideas Screening Ideas

Business Analysis

Development

Test Marketing Commercialization

New Product

Foundations of Business Thought

The Market Research Process

1. Situation analysis /Define problem

2. Collect primary and secondary data

3. Analyze data

4. Problem Prepare report of recommended solutions

5. Follow up

Foundations of Business Thought

Selecting Target Markets

Multisegment approach

Market segmentation approach Automobiles

Concentration approach
Compact cars

Sport Utility Vehicles

Sports cars

Trucks

Luxury cars
Minivan

Foundations of Business Thought

Gillettes Product Mix

Twin TracII Atra

Depth of Product Line

Toni Right Guard Dry Idea Soft & Dry Silkience

Sensor Blades Swivel Double Edge Super Speed Lady Gillette Techmatic

Razor and blades

Toiletries

Foundations of Business Thought

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

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

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

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

all or most of a companys products.

Trade Character: a person, personified character or animal used

to identify a product or business.

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

mark or trade character that has been given legal protection.

Foundations of Business Thought

Global Brand Names

Brand
Sony

Country
Japan

Jaguar
Disney

U.S.A.
U.S.A. Switzerland Great Britain U.S.A. U.S.A. Germany

Nestle
Land Rover McDonald s Coca-Cola Mercedes Benz

Foundations of Business Thought

Product Life Cycle

Introduction Growth Maturity Decline

Industry sales

Dollars

Industry profits 0

Time

Foundations of Business Thought

Life Cycle
Rowing Machines
250 250 200 200 150 150 100 100 50 50

Thousands

1980 1980

1981 1981

1982 1982

1983 1983

1984 1984

1985 1985

1986 1986

1987 1987

1988 1988

1989 1989

Foundations of Business Thought

1990 1990

00

Extending the Product Life Cycle

The Many Uses of Baking Soda:

Cleaning Batteries Deodorizing Musty Towels Refreshing Bath Additive Denture Soak Insect Bite Care Soothing Irritated Skin Deodorizing Cutting Boards Emergency Fire Pail Freshen and Deodorize Dry Baths for Pets Cat Litter Deodorizer Cleaning Brushes and Combs Hair Care (mix with shampoo) Relief for Acid Indigestion Cleaning Coffee and Tea Pots Homemade modeling clay Make an Erupting Volcano

Foundations of Business Thought

The Names of Price

tuition

Price
fare interest wage

Foundations of Business Thought

Prestige Pricing

Foundations of Business Thought

Distribution Channel Markups

Total amount paid by consumer $84.53
Manufacturers Cost $35.00 Retailers markup (75%) $36.23

Wholesalers Markup (20%) $8.05

Manufacturers markup (15%) $5.25

Foundations of Business Thought

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

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

Foundations of Business Thought

PROMOTION

Foundations of Business Thought

2005 Annual Advertising Spending

Magazines Internet, 3.10% Radio 5.24% Outdoor, 7.19% 1.30%
Magazine, 8.60%

Business Papers 2.19% Local Radio, 2.70%

National Spot Radio, 1%

New spapers 22.22%

Sunday Magazine, 0.60% Business Publication, 1.90% Local magazine, 0.20% National Newspaper, 1.30%

Direct Mail Cable TV Network, 6.10% 19.67%

Network Radio, 0.40%

Syndicated TV , 1.60% Local Newspaper, 9.40% Spot TV, 6.30% Network TV , 9.90% FSI, 0.50%

Yellow Pages 6.09% Outdoor 0.78%

Television 23.74% Farm Publicatoins 0.17%

Miscellaneous 12.71%

Source: Advertising Age - Ad Age Dataplace February 21, 2007

Foundations of Business Thought

Leading National Advertisers 2005

Leading National Advertisers 2005 (in million)
Daimler Chrysler GlaxoSmithKline Johnson & Johnson Wall Disney Co. Fort Motor Co. AT&T Verizon Communications Time Warner General Motros Corp. Proctor & Gamble Co.

2178.6 2194.2 2209.3 2278.8 2398.4 2470.8 2483.7 3493.7 4353.2 4608.8 0 1000 2000 3000 4000 5000

Source: Advertising Age - Ad Age Dataplace February 21, 2007

Foundations of Business Thought

Consumer Decision-Making Process

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

Individual & Social Factors

Personal Social Psychological Cultural

Marketing Factors
Information Search (search for store, models, prices, others opinions)
Product Place Promotion Price

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

Purchase (decision based on emotions or rationale)

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

Foundations of Business Thought

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

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

Time Magazine (1936)

Foundations of Business Thought

Sears & Roebucks 1908 The Advertising Guide

Copy reading regardless of cost should be used sparingly, as cost is always regarded.

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

Appeals to patriotism as an argument to induce buying are to be avoided.

Foundations of Business Thought

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

Letter to Sears & Roebuck

Foundations of Business Thought

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

Letter to Sears & Roebuck

Foundations of Business Thought

Can you identify the company associated with the slogan? 1. 2. 3. 4. 5. 6. 7. 8. 9. Drivers Wanted. The quicker picker upper. Breakfast of Champions. Be all that you can be. Like a Rock. Quality is Job 1. Have it your way. Think Different. Just do it.

10. Tastes great! Less filling! 11. Snap! Crackle! Pop! 12. We do chicken right. 13. Buy it, Sell it. Love it. 14. Always low prices. 15. Dress for Less. 16. Like a good neighbor. 17. Im lovin it. 18. What happens here, stays here.

Foundations of Business Thought

THE PAUSE THAT REFRESHES

Foundations of Business Thought

LSMFT

Foundations of Business Thought

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

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

- - ANON.

Foundations of Business Thought

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

Foundations of Business Thought

PLACE

Foundations of Business Thought

Marketing Channels
Consumer Products
Producer Consumer

Producer

Retailer

Consumer

Producer Agent / Broker

Wholesaler

Retailer

Consumer

Producer

Wholesaler

Retailer

Consumer

Marketing Intermediaries

Industrial Products
Producer Consumer

Producer

Wholesaler

Consumer

Marketing Intermediaries

Foundations of Business Thought

Intermediary Efficiencies
Converse Nike New Balance Adidas K Swiss

Consumer 1

Consumer 2

Consumer 3

5 PRODUCERS x 3 CONSUMERS = 15 TRANSACTIONS

Converse

Nike

New Balance

Adidas

K Swiss

FOOTLOCKER

Consumer 1

Consumer 2

Consumer 3

5 PRODUCERS + 3 CONSUMERS = 8 TRANSACTIONS

Foundations of Business Thought

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

Harley-Davidson profile*
Headquarters: Milwaukee, Wis. Employment: 4,700 Sales Sales: $1.35 billion Net income: $112.5 million Units sold: 105,104 motorcycles Foreign sales: $395 million
*1995 numbers.

60

5 5 .8 5 0 .4

Harleys back on top once again

The past decade has seen Harleys popularity leave the others in the dust.
Pe r c e n t o f U.S . Ma r ke t 1 9 8 3

50

40

30

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

20 1 2 .5 10

1 7 .6 1 5 .2 1 1 .3 8 .5 8 .5 7 .9 3 .6 2 .1 6 .6

0 Ha r le y Da v id s o n Ho n d a K a w a s a ki S u z u ki Y a ma h a O th e r s

Source: Chicago Tribune, company reports

Foundations of Business Thought