Marketing

Brief Overview of Marketing _ Peter Drucker on Marketing Marketing is so basic that it cannot be considered a separate function. It is the whole business seen from the point of view of its final result, that is, from the customer’s point of view... Business success is not determined by the producer, but by the customer. Readings » » Engineering Your Start-Up, Chapters 9 &10 Marketing Management by Philip Kotler, Prentice-Hall, 1997 (9th Edition) – Basis for many aspects and illustrations of this presentation Marketing and Selling Concept Marketing and Selling Concept The selling concept What is wrong with this picture' The marketing concept preferred for success The Role of Marketing in the Firm The Role of Marketing in the Firm Marketing and the Creation of Value Marketing and the Creation of Value The Competing Network Viewpoint Marketing Mix- The Tools This relationship is termed a “Value-Delivery” Network The Four P’s of Marketing The Marketing Environment BCG Growth-Share Matrix (per Kotler) Pursuing market opportunities Startups are involved with “stars”, almost by definition, but the products themselves need not be viewed as “novel” in all respects. Demand and Product Life Cycles Characteristics of the product life cycle The demand for computing power has been satisfied by different technologies, each of which has, in turn, run its course. Repeat Purchases The Competitive Cycle Need to be prepared for competitors entering the marketplace. How long do you have before they do' Maximum Profitability and the Life Cycle Income over product lifetime Idealized (Dp -development, I/G- Intro./Growth, M- Maturity, D-Decline) More typical for high-tech. When to Use Different Marketing Tools Top Advertisers (according to Advertising Age) l l l l l l l l l 1. Procter & Gamble 2.. Philip Morris 3. General Motors 4. Time-Warner 5. Walt Disney 6. Sears Roebuck 7. Chrysler 8. Pepsico 9. Johnson & Johnson l l l l l l l 14. McDonald’s 18. Sony 23. Anheuser-Busch 28. Kmart 34. IBM 40. US Government 58. Hasbro Watch that message! Burger King introduced “Herb” the Nerd, who never tried Burger King » Left impression of nerdy clientele l Marketing objectives over the product life cycle l “Sometimes you gotta break the Rules” » Parents unhappy l Missed the point of why B.K. instead of MacDonald’s Marketing strategies over the product life cycle l Case Study SNAPPLE Beverages Started in 1970’s as New York area healthfood distributor supplier » Chain stores looking for high shelf charges which small companies could not pay l l l Moved into delis & convenience stores Went national in 1992 Used performance and demand created on c-store (convenience store) level to leverage its way into major national chains Marketing Over a Consumer Product Lifecycle Awareness of Competitor Strategies Dell is shown by Kotler to be pursuing two new markets-peripheral hardware and commercial accounts. How does this impact a startup in these areas' The mechanics of setting a price •The objective may be growth, profit, or survival. • Subject to law of supply and demand- can a company estimate its demand curve' (Customer demand) • Need to have a good supply curve estimate (Costs). • Need to know about competitor’s pricing and options.(Competitor prices). • The 3 C’s define possible range, but can opt for markup, return, value pricing (Lexus, Southwest Airlines, Taco Bell opted for latter), going rate, sealed bid. Pricing Strategies Customer Cost vs. Value Consumer optimizes on some basis - need to know what that is. •Looking for Total Delivered Value •Less recognizedlooking for low personal cost - hassle factor Factors in Selecting Goods and Services Marketing of Goods and Services - inherently different. There is Real Competition in Service Industries l l l Search Qualities - Those that can be evaluated rationally before purchase Experience Qualities - The consumer decides on the basis of first purchase Credence Qualities - Customer is not able to quantitatively evaluate product even after first purchase, but just has a certain level of comfort l Airlines - Southwest (no frills) vs. traditional airlines l Telecommunications - Sprints old pin drop ads (quality) vs. low cost carriers Marketing: Industrial vs. Consumer Markets Consumer vs. Industrial Market Channels Consumer Manufacturer Wholesaler Retailer Consumer Industrial Manufacturer Manufacturer’s Rep Industrial Customer Industrial Distributor Influences on Industrial Buying Behavior Consumer Selection Sequence How do you get your product known and thus considered' How do you establish its relative value ' (Need key attributes) Repositioning a Product and Company Targeting Market Segments A marketer needs to be keenly aware of the demographics of a potential market. Communication is often targeted to “micromarkets”. Designing products or campaigns for the “average” consumer can be a big mistake. Who was the target market segment' What periodicals would you choose for this advertising' How could you get more information to decide which to choose' Product Differentiation in a single company Product Positioning Different Attribute Scales Elements of Marketing Research You will perform market research in this course. The trick is not to define the research too narrowly or too broadly. Marketing Research: Who Does It' l Marketing Research: What Information is Sought' l l l l l l l l In-house (especially large consumer products companies, e.g., P&G) Business Schools Marketing Research Firms (e.g., see www.asiresearch.com) Economic/Market trends Demand analysis, pricing analysis Product design, test marketing Distribution channels Promotion, Advertising Strategies Buying Behavior (brand awareness, preferences) l On-line services (e.g., AOL) Secondary Sources of Data l l Research Approaches l l Internal Company Files Government Publications (e.g., U.S. Industrial Outlook, Marketing Information Guide) Periodicals and Books (e.g., Advertising Age, The Economist, Chemical and Engineering News, Sloan Management Review) l l l l Commercial (e.g., AC Nielsen, Arbitron) Observational (send observers to relevant market, trade shows, etc.) Focus Group - Group of people invited to discuss a product or service. Survey - Descriptive research, perceptions; broad spectrum of input Experimental research - e.g., offer different prices or products on different days Marketing Surveys l Questionnaire - Can be open- or closed- ended - Requires pre-testing Statistical Analysis of Survey Data l Multiple Regression » Sales = f (ad $, sales force, price) l Need a sampling plan (to whom is the survey to be administered') lContact l l Discriminant Analysis Factor Analysis » Statistical method - looks for correlated attributes of products method l (personal' phone' mail') Cluster Analysis » Used to identify distinct market segments Statistical Analysis of Survey Data (Continued) l What is measured on surveys' l Demographics » Age, education, income, occupation, family size, dwelling, geography, city size, stage in life cycle, ethnic group, other. Conjoint Analysis » Statistical method - tries to relate product attributes to consumer utility l Identified groups -Examples » SKIPPIES - School Kids with Income and Purchasing Power » MOBYS- Mother Older, Baby Younger » WOOFS - Well-Off Older Folks l Multidimensional Scaling » Various methods used to develop perceptual maps of products l Buying Behavior Models » Logit, Probit, BRANDAID - explore factors which influence buying behavior Other Possible Survey Information l l Markets are not uniform The heavy user half of the market consumes a disproportionate share of the product. How do you find this segment' How should you direct your marketing efforts' Activities (work, hobbies, sports, vacation, entertainment, clubs) Interests (family, home, job , community, recreation, fashion, food) • Opinions (themselves, social issues, politics, business, economics, education, the future, culture) Attribute Characterization l Actual Map and Distances l Can characterize different products in the same market by asking the extent to which pairs are similar or dissimilar (scale from “very similar” to “very different”) Use Multidimensional Scaling Techniques to extract relevant perception variables which explain differences; position product accordingly. vs. Reconstructed Map A Sample Perceptual Map Can’t Lose Touch with Customers l What Other Information to Gather' l The l l 1992 - 90% of teens thought clothes were cool 1995 - Only 63% thought they were cool. Others thought that they “promote a straight, white lame lifestyle” » Response was to try to reposition themselves as “cool” l l Attributes and their importance Brand awareness and ratings (what is viewed as the competition') Product usage patterns (how much would be bought how frequently at what price') Attitudes towards product category (is this product essential' a luxury' a menace') vs. Relative Product Positioning l Typical format for survey questions I prefer to talk with an operator rather than a computerized voice recording when I call about service » Select the choice which reflects most closely your opinion regarding this statement – Strongly agree – agree – neither agree nor disagree – disagree – Strongly disagree More Survey Questions l What is your opinion concerning the importance of post-purchase service' » Extremely important, very important, somewhat important, not very important, Not at all important. l Assessing The Business Market Demographics » Industry, company size, location l Operating Environment » Technologies, customer capabilities l If this product were offered at a price of $x, I would » Definitely buy, probably buy, not sure, probably not buy, definitely not buy l Purchasing approaches » Nature of relationship, purchasing criteria l Situational Factors » Urgency of orders, size of orders Assignment l Marketing a New Product l l l Conduct market research on your product ideas. Act in the role of marketing consultants Develop a survey for your “product” » Discuss the elements of the survey (what to ask, whom to ask) and pretest in section Administer to class the next week Typical Survey Summary l Assignments Week of March 13 - Each group will use another group as a focus group (Ta’s will coordinate schedules). Week of March 20 - Consumer surveys will be administered in class. April 6 - Results of marketing research presented (e.g., estimates of sales volumes, pricing, target markets, distribution channels, advertising strategy. l l Focus Groups l l l l l l Typically 6 to 10 consumers selected target audience One moderator, to keep discussion focused and moving Relatively unstructured, designed to promote free discussion of general class of products, working toward specific May wish to bring some samples of product or competing products Take ample notes Designed to help you » Design bigger customer survey » Catalyze some rethinking of the product and how it is presented