Exam2ReviewLectureNotes:Chapter5

ConsumerBehaviorandMarketingStrategyPlanning(Exhibit51)

Threekeydeterminantsofconsumerbehaviorinclude:

1.Individualconsumerfactors:economicneeds,psychologicalvariables,socialinfluences,andthepurchasesituation.

Youhavetomakeadecisionafterevaluatingallofthesevariableaboutwhetherornottobuy 2.Externalinfluencesonconsumerbehavior:likemarketingmixesandotherstimuli. 3.Theproblemsolvinganddecisionmakingprocessesconsumersgothrough.

ConsumerDecisionMakingProcess Itisageneralfivestepprocessthatmovestheconsumerfromrecognitionofaneedtotheevaluationofa

purchasedecision. Itisaguidelineforstudyinghowconsumersmakedecisions.

Exhibit6.1:ConsumerDecisionMakingProcess

NeedRecognition

Thisisthefirststageinthedecisionmakingprocess.

Resultofanimbalancebetweenactualanddesiredstates. Ex.acarthatsnotgettinggoodgasmileage

ConsumersScaleBack APewResearchCenterpollsuggestsconsumersaremorefocusedonbasicnecessities. 63%ofwomenand51%ofmenreportbuyingcheaperbrandsandincreasedshoppingatdiscountstores. Anincreasednumberofrespondentsreportedinternetasanecessity,whileadecreasednumberreported

television. NeedRecognition

Amarketingmanagersobjectiveistogetconsumerstorecognizeanimbalancebetweentheirpresentstatusand

theirpreferredstate. Advertisingandsalespromotionoftenprovidethisstimulus.

Marketinghelpsconsumersrecognizeanimbalancebetweenpresentstatusandpreferredstate. Internal

EX:Hungerandthirst External

EX:Carrecommendations Stimulus

Anyunitofinputaffectingoneormoreofthefivesenses: 1.Sight 2.Smell 3.Taste 4.Touch 5.Hearing

RecognitionofUnfulfilledWants Whenacurrentproductisntperformingproperly. Whentheconsumerisrunningoutofaproduct. Whenanotherproductseemssuperiortotheonecurrentlyused.

InformationSearch InternalInformationSearch

Recallinformationinmemory. Aninternalinformationsearchistheprocessofrecallinginformationinmemory.

Thisincludespriorexperienceorpriorknowledgeaboutaproduct. ExternalInformationSearch

Seekinformationinoutsideinenvironment. Canbeobtainedfromtwotypesofsourcesincluding:

1.Nonmarketingcontrolledsourcesincludepersonalexperience,personalsources,andpublicsources.

2.Marketingcontrolledinformationisbiasedtowardaspecificproductbecauseitoriginateswithmarketerspromotingthatproduct.

Thesesourcesincludemassmediaadvertising,salespromotion,salespeople,productlabelsandpackaging,andtheInternet.

Anexternalinformationsearchreliesoninformationintheoutsideenvironment. Thisincludespersonalandpublicreferences,advertisements,andpublicity.

EvokedSet

Theinformationsearchshouldyieldagroupofbrands,orevokedset,whicharetheconsumerspreferred

alternatives. Fromthisset,consumerswillfurtherevaluatethealternativesandmakeachoice.

EvaluationofAlternativesandPurchase

Oncetheevokedsetisconstructed,theconsumerisreadytomakeadecision. Onewaytomakeachoiceistopickproductattributesthatareimportanttohim/her,thenexcludeallproductsin

thesetthatdonothavethatattribute. Anotherwaytonarrowthenumberofchoicesistousecutoffs,orminimumormaximumlevelsofanattributethat

analternativemusthave. Manytimes,priceisanimportantcutoffattribute.

Thegoalofthemarketingmanageristodeterminewhichattributeshavethemostinfluenceonaconsumerschoice,anddesignamarketingmixthatstressesthoseattributestotheconsumer.

Asingleattribute,suchasprice,maynotalwaysexplainaconsumersevaluationofproducts. Attributesthatthemarketermayconsiderimportantarenotalwaysimportanttotheconsumer.

Brandnames,suchasJohnson&Johnson,haveasignificantimpactoverthechoiceofproducts.

Purchase

Ultimately,theconsumermustspecificallydecide:

1.Whethertobuy. 2.Whentobuy. 3.Whattobuy(producttypeandbrand). 4.Wheretobuy(typeofretailer,specificretailer,onlineorinstore). 5.Howtopay.

CognitiveDissonance

Onceapurchasedecisionismade,thenextstepintheprocessistheevaluationoftheproductafterpurchase.

Consumersexpectcertainoutcomesfromthepurchase,andhowwelltheseexpectationsaremetdeterminesthelevelofcustomersatisfaction.

Priceinfluencesthelevelofexpectationsforaproductorservice. Whenpeoplefeelinconsistencybetweentheirvaluesoropinionandtheirbehavior,theyfeelaninnertension

calledcognitivedissonance. Inpurchasedecisions,thisisalsocalledbuyersremorse.

Forexample:Whydopeoplewhohavebeenrepeatedlywarnedthatcigarettesarebadfortheirhealthcontinuetosmoke?

Becausesmokersknowonethingandfeelanotherthatscognitivedissonanceatwork. PostpurchaseBehavior

Consumerscanreducedissonanceby: Seekinginformationthatreinforcespositiveideasaboutthepurchase. Avoidinginformationthatcontradictsthepurchasedecision. Revokingtheoriginaldecisionbyreturningtheproduct.

Marketingmanagerscanhelpreducecognitivedissonancethrougheffectivecommunicationwithconsumers,suchasfollowupnotes,advertising,andguarantees.

PsychologicalInfluencesWithinanIndividual

Needs:basicforcesthatmotivateconsumerstodosomething. Wants:learnedneedsthatis,theyareneedsexpressedasadesireforaparticularneedsatisfier. Drive:astronginternalstimulusthatencouragesactiontoreduceaneed.

InClassVideo ConsumerDecisionMaking VermontTeddyBear Need:toshowloveandtobeloved BestsmallcompanyinAmerica BearGram#1seller Wearenotateddybearcompany,wearethebeargrambusiness Peoplelovethattheyaregettingaoneofakindgift Whatmotivatesconsumers?

Consumerswanttobeseenasromanticandtobeappreciatedforgivingthisgifts,theywantemotionsandfeelings

Seasonaltrends:giftgivingholidays,Vday,Christmas,Graduation Priceisntanissueduringgiftgivingholidays Mengenerallywaituntilthelastminute Emphasizeadirectconsumermarketstrategy

Developedtohelpwithproblemrecognition Fivestages:

1.Problemrecognition Topleasesomeonewithaspecialgift

2.Informationsearch Searchactivityinitiatedwhentheycall800numberandtalktoabearcounselor Radioadvertising VTBcansolveyourproblem Logontothewebsite Catalog

3.Evaluationofalternatives Someweighalternativewhiletalkingtobearcounselors

4.Purchasedecision 5.Postpurchasebehavior

Senderscontactcustomerservicetomakesurethebeargramwasdelivered Negative:beargramwaswrong,broken,etc.>disappointedcustomer Positive:rightbeararrivesontimesatisfiedcustomer

PossibleNeedsMotivatingaPersontoSomeAction(Exhibit53)

ThePSSPHierarchyofNeeds(Exhibit54)

Physiologicalneeds:themostbasicneedspeopleexperience.

EX:biologicalneedsforfood,liquid,rest,andsex. Safetyneeds:concernedwithprotectionandphysicalwellbeing.

EX:health,medicine,exercise,andsecurity. Socialneeds:derivedfromapersonsinteractionswithothers.

EX:love,friendship,status,esteem,andconnectingwithothers. Personalneeds:concernedwithanindividualsneedforpersonalsatisfaction,unrelatedtowhatothersdo.

EX:personalsatisfaction,accomplishment,fun,freedom,andrelaxation. PerceptionDeterminesWhatConsumersSeeandFeel

Perceptionreferstohowpeoplegatherandinterpretinformationfromtheworldaroundthem. Marketersareverymuchinterestedintheprocessespeopleusetohandleincomingmarketingmixstimuli,

becausepeoplecantprocessalltheinformationtowhichtheyareexposedonadailybasis. Thevolumeistoogreat.

Selectiveexposuremeansthatconsumersseekoutandnoticeonlytheinformationthatintereststhem. Selectiveperceptionmeansthatpeoplescreenoutormodifyideas,messages,andinformationthatconflict

withpreviouslylearnedattitudesandbeliefs. Selectiveretentionmeansthatconsumersrememberonlywhattheyreallywanttoremember.

TheLearningProcess(Exhibit55)

Marketersunderstandthatvirtuallyallofconsumerbehaviorislearned,sotheyareveryinterestedinhowtheycan

positivelyaffectthelearningprocess. Learningisachangeinapersonsthoughtprocessescausedbypriorexperience.

Asmentionedpreviously,adriveisastronginternalstimulusthatencouragesactiontoreduceaneed. Cuesarestimuliintheenvironmentthattriggeradriveorresponse. Aresponseisanefforttosatisfyadrive. Reinforcementoccurswhentheresponseisfollowedbysatisfaction,whichreducesthedrive.

Marketersoftentrytoidentifypositivecuesorimagesthathavepositiveassociationsfromsomeothersituationandrelatethemtotheirmarketingmix.

Manyneedsareculturallylearned. PsychographicsFocusonActivities,Interests,andOpinions

Personalityandlifestylesareotherpsychologicalvariablesthataffectconsumerbehavior. Personalityaffectshowpeopleseethings.

Marketershavefounditdifficulttoincorporatepersonalityintothemarketingmix. Psychographicsorlifestyleanalysis:

Activities:identifywhatpeopledoobjectivelyobservable. Interests:tendtocreatestrongerdrivesthatmaypinpointmarketopportunities. Opinions:thewaysinwhichpeoplefeelaboutthings.

Bycombiningopinionswithinterestsandactivities,marketerscandeveloparobustviewofcertaintargetmarketsegments.

LifestyleDimensions(andsomerelateddemographicdimensions)(Exhibit56)

FamilyLifeCycleInfluencesNeeds(Exhibit57)

Thetraditionalfamilylifecycleflowfromyoungandsingle,togettingmarried,addingchildrenwhogrowupand

laterleavethehome. Increasingly,manyAmericansarechoosingnottohavechildren. Anothergrowingfamilylifecyclepatterninvolvesdivorce.

Youngpeopleandfamiliesacceptnewideas. Reallocationforteenagers. Increasingsinglesmarket. Sellingtotheemptynesters:peoplewhosechildrenaregrownandwhoarenowabletospendtheirmoneyin

otherways. AdoptionProcessSteps

Manynewproductconceptsrequireanadoptionprocess.

1.Intheawarenessstage,thepotentialcustomerfirstlearnsabouttheexistenceofaproductbutmaylackmoredetails.

2.Iftheintereststageisreached,theconsumerwillgathergeneralinformationandfactsabouttheproduct.

3.Inevaluation,theconsumergivestheproductamentaltrial,applyingittohisorherownpersonalsituation.

4.Intrial,theconsumermaybuytheproducttoexperimentwithitinuse. 5.Theconsumerultimatelymakesadecisiononeitheradoption/continueduse,orrejectionofthe

productfromfurtherconsideration. 6.Afterthedecision,thereisconfirmationwheretheadoptercontinuestorethinkthedecisionand

searchesforfurthersupportthatitwascorrect. Dissonancemaysetinafterthedecisiontensioncausedbyuncertaintyabouttherightnessofa

decision.

ConsumerBehaviorinInternationalMarkets Thelessamarketingmanagerknowsaboutthespecificsocialandintrapersonalvariablesthatshapethebehavior

oftargetcustomers,themorelikelyitisthatrelyingonintuitionorpersonalexperiencewillbemisleading.

ThisphotohelpsillustratetheculturalissuesthatMcDonaldsaddressedwhenexpandingintotheSaudi

Arabianmarketcustomersaresegregatedbysex. Failuretounderstandlocalculturalfactorscanbethedifferencebetweensuccessandfailure. Someculturalfactorsareassubtleastheyarefundamental.

LectureNotes:Chapter6

BusinessandOrganizationalCustomersABigOpportunity

Individualpeoplemakepurchasestosatisfytheirneeds,butsodoorganizations.

Theorganizationalmarketisactuallybiggerthanthefinalconsumermarket,atleastintermsofthenumberofpurchasesmade.

Theorganizationalconsumermarketisoftenreferredtoastheindustrialmarketorthebusinesstobusiness(B2B)market.

Businessandorganizationalcustomersbuyforresaleortoproduceothergoodsandservices. Therearefourmaincategoriesforthesecustomersincluding:

1.Producersofgoodsandservices:manufacturers,farmers,realestatedevelopers,etc. 2.Intermediaries:wholesalersandretailers. 3.Governmentunits,atthefederal,state,andlocallevels,aswellasforeign

governments. 4.Nonprofitorganizations:bothnationalandlocalorganizations.

BusinessProducts Areusedtomanufactureotherproducts. Theybecomepartofanotherproduct. BusinessProductsaidthenormaloperationsofanorganizationorbusiness. Areacquiredforresalewithoutanychangeinform.

*...thekeyisintendeduse* Aproductthatispurchasedforpersonaluseisconsideredaconsumergood. Ifthesameproductispurchasedforuseinabusiness,itisabusinessproduct.

Thekeyinclassificationasabusinessproductisintendeduse. ThesizeofthebusinessmarketintheU.S.andmostothercountriessubstantiallyexceedsthatoftheconsumer

market.

BusinessversusConsumerMarkets

Purchasevolume:businesscustomersbuyinlargerquantitiesthanconsumers. #ofcustomers:businessmarketershavefewercustomersthanconsumermarkets.

Anadvantageisthatitiseasiertoidentifybuyers,monitorcustomerneeds,andbuildpersonalrelationships.

Adisadvantageisthateachcustomerbecomescrucial,especiallyforthosemanufacturerswhohaveonlyonecustomer.

Locationofbuyers:businesscustomersaremoregeographicallyconcentratedthanconsumers. Distributionstructure:businessproductstypicallyhaveshorterchannelsofdistribution,anddirectchannelsare

common. Ontheotherhand,consumerproductspassthroughadistributionsystemthatmayincludetheproducer,

thewholesaler(s),andtheretailers. Natureofbuying:morepeopleareinvolvedinabusinessmarketpurchasedecisionthaninaconsumer

purchase. Representativesfromqualitycontrol,marketing,finance,andpurchasingmaybegroupedinabuying

center. Natureofbuyinginfluence:typically,morepeopleareinvolvedinasinglebusinesspurchasedecisionthanina

consumerpurchase. Typeofnegotiations:negotiationismorecommoninbusinessmarketingdecisionsandmaytakemonthstowork

outthefinalcontracts. Useofreciprocity:businesspurchasersoftenchoosetobuyfromtheirowncustomers.

Itisnotunethicalorillegalunlesstheexchangeiscoerced. Useofleasing:businessescommonlyleaseexpensiveequipmenttoreducecapitaloutflow,keepstateoftheart

products,andgaintaxadvantages. Primarypromotionalmethod:businessmarketersemphasizepersonalselling,especiallyforexpensive,

customdesignedproducts. DemandinBusinessMarkets

Businessdemandisdifferentfromconsumerdemandinthefollowingareas: 1.Thedemandforbusinessproductsisderiveddemand,meaningthatorganizationsbuyproductstobe

usedinproducingcustomerproducts. Asaresult,businessmarketersmustcarefullymonitortrendsandpatternsinfinalconsumer

marketsaswellascustomersforecasts. Demandforbusinessproductsresultsfromdemandforconsumerproducts

2.Inelasticdemandisdemandwithoutregardtoprice. Anincreaseordecreaseintheproductpricewillnotsignificantlyaffectthedemandforthe

product. Achangeinpricewillnotsignificantlyaffectthedemandforproduct

3.Jointdemandoccurswhenmultipleitemsareusedtogetherinafinalproduct. Multipleitemsareusedtogetherinmakingthefinalproduct.Demandforoneitemaffectsall.

4.Fluctuatingdemand:thedemandforbusinessproductstendstobemoreunstablethanthedemandforconsumerproducts.

Demandforbusinessproductsismorevolatilethanforconsumerproductsthusrequiringmoreplanningandexactingdetail

Asmallincreaseordecreaseinconsumerdemandcanproduceamuchlargerchangeindemandforthefacilitiesandmanufacturingequipmentneededtomaketheconsumerproduct.

Thisisknownasthemultipliereffect. TypesofBusinessProducts

1.Majorequipment:capitalgoodssuchaslargeorexpensivemachines,mainframecomputers,airplanes,and

buildings. Depreciatedovertime. Oftencustomdesigned. Personalsellingisanimportantmarketingstrategy.

2.Accessoryequipment:lessexpensiveandshorterlivedthanmajorequipment,includesfaxmachines,personalcomputers,andpowertools.

Usuallynotdepreciated. Oftenstandardizedandpurchasedbymorecustomers. Advertisingisanimportantpromotionaltool.

3.Rawmaterials:unprocessedproducts,suchasminerals,timber,wheat,corn,andfish. Becomepartoffinishedproducts. Personalsellingisthemarketingmixcomponentused. Distributionchannelsusuallydirectfromproducertobusinessuser.

4.Componentparts:finisheditemsreadyforassemblyorthatneedverylittleprocessing. Twoimportantmarketsforcomponentpartsinclude:

1)Originalequipmentmanufacturer(OEM) 2)Replacementmarket

5.Processedmaterials:useddirectlyinmanufacturingotherproducts,includessheetmetals,chemicals,andlumber.

Donotretaintheiridentityinfinalproducts. Priceandserviceareimportantfactorsinchoosingasupplier.

6.Supplies:consumableitemsthatdonotbecomepartofthefinalproduct. Shortlivesandinexpensive. Generallyfallintocategoriesofmaintenance,repair,oroperatingsupplies(MRO).

7.Businessservices:expenseitemsthatdonotbecomepartofthefinalproduct. Thisincludesjanitorial,advertising,legal,managementconsulting,marketingresearch,andmaintenance

services.

ServingSmallBusinessCustomers

MarketersfrequentlyaimtheiradvertisingandpromotionatspecificsegmentsoftheB2Bmarket,asillustratedin

thisadfromKyocera. Theadsmessagehighlightsthefactthatprintingcostscanbeaheadacheforsmallbusinesses.

Italsoemphasizesa$2,000rebate,whichhelpssmallbusinesscustomers. Duringthecurrenteconomicdownturn,watchingmarginalcostshasbecomemoreimportant. ObjectiveofBB&T:helpsmallbusinesses.

SpecificationsandQuality

Unliketheindividualconsumermarket,organizationalbuyerstendtofocusmoreonqualityandexactingpurchase

specifications. Organizationalbuyersoftenconcentrateonqualitycertificationinmakingpurchases.

ISO9000isawayforasuppliertodocumentitsqualityproceduresaccordingtointernationallyrecognizedstandards.

Purchasingspecifications:writtenorelectronicdescriptionsofwhatthefirmwantstobuy. Thespecificationsdescribetheneedstheorganizationalbuyershave. Specificationsmaybefairlysimple,ortheymaybeverydetailed.

LandsEndVideoNotes KINDSOFPURCHASES

Straightrebuy Modifiedrebuy NewTaskPurchases

BUYINGCRITERIA EconomicCriteria QualityandServiceCriteria VendorCriteria

MultipleInfluenceandRolesintheBuyingCenter

Purchasingmanagersarespecialistsinbuyingactivitiesfortheiremployers. Multiplebuyinginfluence:severalpeopleplayapartinmakingapurchasedecision.

Thecollectionoftheseinfluencesisabuyingcenterandincludes: 1.Buyers:thepurchasingmanagerswhoareresponsibleforworkingwithsuppliersand

arrangingforthetermsofthesale. **Havetheformalauthoritytodoit.**

2.Users:thepeoplewhowillactuallyusetheproduct. Theymaybeproductionworkersorsupportstaff.

3.Influencers:peoplewhoexpertiseisusedtohelpdeterminewhichproductsareneeded. Theyareoftentechnicalpeoplewhohelpwritespecifications.

4.Gatekeepers:peopleinkeypositionsintheorganizationwhocontroltheflowofinformation. Theycanincludereceptionists,secretaries,researchers,andothers.

5.Deciders:thepeopleintheorganizationwhohavethepowertoselectorapprovethesupplier. EvaluatingOrganizationalBuyingInfluences

Althoughmostbuyersinorganizationalmarketsareprofessionals,acomprehensivevendoranalysisconsidersall

influencesonpurchasedecisions. Vendoranalysisisaformalratingofsuppliersonallrelevantareasofperformance.

Thegoalistolowerthetotalcostsofapurchase. Abuyersbehaviorneedsarerelevant,too.

EX:ifabuyersmaincontactwiththesupplieristhroughasalesrepresentativewhoisuncooperative,thesupplierislessattractivetothebuyer.

Ethicalconflictsmayariseinbuyersupplierrelationships. Someorganizationshaveprovisionsintheircodesofconductgoverningtheseinteractions.

Purchasingmayalsobecentralizedinmanyorganizationsbyconcentratingthepurchasingforallbranchesatonelocation.

Thismayhelpthebuyingorganizationtomanagespendingorachieveeconomiesofscale. Requisition:arequesttobuysomethingiteventuallybecomesapurchaseorder.

Electronicrequisitionsarebecomingmorepopular.

BuyingSituations

Often,businessfirms,especiallymanufacturers,mustdecidewhethertomakesomethingorbuyitfromanoutside

supplier. Ifafirmdoesdecidetobuyaproductinsteadofmakingit,thepurchasewillbe(1)anewbuy,(2)a

modifiedrebuy,or(3)astraightrebuy. OrganizationalBuyingProcesses(Exhibit63)

Likeindividualconsumers,organizationalbuyersareproblemsolvers.

Thethreekindsofbuyingprocessthatareusefulinclude: 1.Newtaskbuyingoccurswhenacustomerorganizationhasanewneedandwantsagreat

dealofinformation. Itofteninvolves(1)settingproductspecifications,(2)evaluatingsourcesofsupply,and

(3)establishinganorderroutinetofollowinthefuture. Itrequiresinformation.

2.Astraightrebuyisaroutinerepurchasethatusesexistingsupplierstofillastandardorder. Theyoftenuseecommerceordersystems.

3.Amodifiedrebuyistheinbetweenprocess. Somereviewofthebuyingprocessisdonebutnotasmuchasinanewtaskbuy.

MajorSourcesofInformationUsedbyOrganizationalBuyers(Exhibit64)

Anewtaskbuystartswithauserwhobecomesawareofaneedandbeginsresearchingsolutions. Eventhoughawidevarietyofinformationsourcesareavailable,businessbuyerswillusethesourcesthey

trust. Tobuildtrust,amarketermustmakesureitsinformationisreliable.

Onesourceofinformationcomesfromthemarketingfirm. Thisincludespersonalinformationthatcomesfromtalkingtothesellingfirmspersonnel.

Inaddition,thefirmproducesinformationthatappearsinprintformonpaperoronline. Buyerswillalsoturntosourcesofinformationoutsidethedirectcontroloftheseller.

ThesecanbepersonalsourcesorImpersonalsources BuyerSellerRelationshipsinBusinessMarkets

RelationshipsbetweenbuyersandsellersintheB2Bmarketmaybecasual,armslengthrelationships,orthey

canbeclose,longlastingpartnerships. Marketersshouldknowthedegreeofclosenessthatisappropriateforagivenrelationship.

Closerelationshipsbetweenbuyersandsellersmayproducemutualbenefits. Thebestrelationshipsinvolverealpartnershipswheretheresmutualtrustandalongtermoutlook. Closelytiedfirmsoftensharetasksatlowercostthanwouldbepossibleworkingatarmslength.

Closerelationshipsmaynotmakesense. Theycanreduceabuyersflexibilityandleverage. Somepurchasesaresimplytoosmallortooinfrequent. Somepurchasesrequiresomuchspecialattentionthattherelationshipwouldneverbeprofitableforthe

seller. RelationshipsHaveManyDimensions(Exhibit65)

Cooperationtreatsproblemsatjoinresponsibilities.

Thebuyerandsellerworktogethertoachievebothmutualandindividualobjectives. Bothsidesareinvolvedinproblemresolution.

Boththesupplierandthebuyerbenefitwhentheycanshareinformation. Typesofsharedinformationmayinclude:

Itincludestheexchangeofproprietarycostdata,discussionofdemandforecasts,andjoinworkonnewproductdesigns.

Itisfastandeasytoupdatetheinformation. Itsavestime. Itcanleadtobetterdecisions,reduceduncertaintyaboutthefuture,andbetterplanning.

Eventhoughsharedinformationisuseful,itmayberiskyifthereisapossibilitythatoneofthepartnerswillmisuseit.

DynamicsofBuyerSellerRelationships Theremaybeanimbalanceofpowerfavoringoneofthepartners.

Apowerfulcustomermaycontroltherelationship. Althoughamarketingmanagermaywanttoworkinacooperativepartnership,thatmaybe

impossiblewithlargecustomerswhohavethepowertodictatehowtherelationshipwillwork. Buyersmaystilluseseveralsourcestoreducetheirrisk.

Buyersoftenlookforseveraldependablesourcesofsupplytoprotectthemselvesfromunpredictableevents.

Buyingvariationsbycustomertype. TheGovernmentMarket

Governmentbuyerstypicallyusecompetitivebiddingandapprovedsupplierlists,andputlegalconstraintsonthe

latitudeofindividualbuyers. Thesizeanddiversityofthegovernmentmarketmakeitanattractivetarget. Governmentbuyersarerestrainedbypurchasingregulations,andcompetitivebidsmayberequired. Forroutinepurchases,agovernmentunitcanprepareanapprovedsupplierlist. Governmentpublicationshelpmarketerstolearnwhatgovernmentwantstobuy. Indealingwithforeigngovernments,informationislessavailable,andtheremaybesignificant

obstaclesthatfavoradomesticsupplier. Isitunethicaltobuyhelpindealingwithforeigngovernments?

Notinsomecountries. IntheU.S.,theForeignCorruptPracticesAct(FCPA)prohibitsU.S.firmsfrompayingbribes

toforeignofficials.

LectureNotes:Chapter7 EffectiveMarketingRequiresGoodInformation

Marketinginformationisneededtoinformmanagersaboutalldecisionsmadeinthedevelopmentofmarketing

strategy. Marketingmanagersmaywanttogatherinformationaboutanyoftheelementsinourmarketingstrategyplanning

model. Forexample,indevelopingstrategy,amarketingmanagermayfinditusefultolearnmoreaboutcustomer

attitudestowardthecompanysbrandname. Oramarketingmanagermaywanttoknowthepricesbeingchargedbycompetitors.

Amarketingmanagermightwanttotestwhethertheuseofadvertisingontelevision,inmagazines,orontheInternetwouldbemosteffectiveinbuildingawarenesswithaparticulartargetmarketing.

Orthemarketingmanagermaywanttoknowhowwellaparticularproductissellingthrougheachofthecompanysprimarychannelsofdistribution.

MarketingInformationInputstoMarketingStrategyPlanningDecisions(Exhibit71)

Twomajorelementsrelatingtomarketinginformationare(1)marketinginformationsystems,and(2)marketing

research. Marketinginformationsystems,andtheircomponents,ensuretheavailabilityandaccessibilityof

information,aswellasthetoolstoanalyzetheinformation. Manyfirmsrelyonmarketingresearch,whetherinhouseorcontracted,togetanswerstospecific

questions. MarketingDecisionSupportSystems

Aninteractive,flexiblecomputerizedinformationsystemthatenablesmanagerstoobtainandmanipulateinformationastheyaremakingdecisions.

Characteristicsinclude: 1.Interactive 2.Flexible 3.DiscoveryOriented 4.Accessible

EffectiveResearchRequiresCooperation

Sometimesdevelopingagoodrelationshipisdifficult,becausethemarketingmanagerandtheresearchcomefrom

somewhatdifferentprofessionalworlds. Marketingmanagersneedresearchbecausetheyhaveproblemstheywanttosolve,buttheysometimes

havetroubleexplainingwhattheyneedtoaresearcher. Ontheotherhand,researcherswhoareveryskilledinthetechnicalaspectsofmarketingresearchmay

notcompletelyunderstandthedecisionsituationfacingthemanager. Mostlargecompanieshaveaseparatemarketingresearchdepartmenttoplanandmanageresearchprojects.

MarketingDecisionSupportSystems

ThefastestgrowinguseofDSSsisfordatabasemarketing.

Itisusuallythekeytoolforsuccessfulonetoonemarketing,whichreliesonveryspecificinformationaboutamarket.

TheRoleofMarketingResearch Marketingresearch:theprocessofplanning,collecting,andanalyzingdatarelevanttoamarketingdecision.

Itprovidesdataontheeffectivenessofthemarketingmixandinsightsfornecessarychanges. Itisamaindatasourceformanagementinformationsystemsanddecisionsupportsystems.

TheRoleofMarketingResearch Marketingresearchhasthreerolesincluding:

1.Descriptive:gatheringandprescribingfactualstatements. Whatisthehistoricsalestrendintheindustry?Whatareconsumersattitudestowardaproduct?

2.Diagnostic:explainingdata. Whatwastheimpactonsalesafterachangeinthepackagedesign?

3.Predictive:addresswhatifquestions. Whatifquestions,suchashowcandescriptiveanddiagnosticresearchbeusedtopredictthe

resultsofaplannedmarketingdecision? ManagementUsesofMarketingResearch

Improvethequalityofdecisionmaking. Traceproblems. Focusonkeepingexistingcustomers. Understandthemarketplace. Alertthemtomarketplacetrends. Gaugethevalueofgoodsandservices,andthelevelofcustomersatisfaction.

ChangesAreUnderWayinMarketingInformationSystems

Marketingmanagersneedinformationabout(1)customersandtheirresponsestothemarketingmix,(2)targeting

andsegmentation,(3)competitors,and(4)themarketingenvironment. Thealsoneedinformationthatwillallowthemtododetailedcostanalysisforthepurposeof

implementationandcontrol. Marketinginformationsystems(MIS)helpmakethisinformationavailableandaccessible.

BigDataExplosionBusinessestodayareawashindatasetstoolargetoworkwithusingconventionaldatabasemanagementtools.

AnMISallowsamanagertogetmoreinformation,faster,andeasier,bymakingitreadilyavailableinaneasytouseformat.

AnMISorganizesincomingdatainadatawarehouse. Intranet:asystemforlinkingcomputerswithinacompanythatworksliketheInternet.

Anintranetiseasilyaccessibleandisalsoeasytoupdate.

ElementsofaCompleteMarketingInformationSystem(Exhibit72)

InformationsourcesforanMISmayincludeformalmarketingresearchstudies,aswellaspreviouslypublished

internalorexternaldataandthisinformationiscollectedandstoredina.. Datawarehouse:aplacewheredatabasesarestoredsothattheyareavailablewhenneeded.

SomeMISshaveadecisionsupportsystem(DSS)thatputsmanagersonline. Fromthedatawarehouse,otherelementsoftheMISallowmarketingmanagerstoaskquestionsandseek

answers. Decisionsupportsystem(DSS):acomputerprogramthatmakesiteasyforamarketingmanagertogetand

useinformationwhileheorsheismakingdecisions. Marketingdashboard:computerdisplayofuptotheminutemarketingdatainaneasytoreadformat

customizedtothemanagersareaofresponsibility. Marketingmodel:astatementofrelationshipsamongmarketingvariables.

Itallowsamanagertoseehowanswerstoquestionsmightchangeinvariouswhatifsituations. Allofthisinformationfeedsintothedecisionthatmarketingmanagersmakeandultimately influencesimportantoutcomesofthedecisionwhichbecomefeedbacktotheprocess.

Thedatabaseiscontinuallyrefreshedwithnewinformation,makingitanuptotheminutemanagementtool.

FiveStepScientificApproachtoMarketingResearchProcess(Exhibit73)

Scientificmethod:adecisionmakingapproachthatisobjectiveandorderlyintestingideasbeforeaccepting

them. Hypothesis:educatedguessesaboutlikelycausesandeffectsthatcanbemeasuredobjectivelytohelpeliminate

unnecessaryrisktaking.

Themarketingresearchprocessisafivestepapplicationofthescientificmethod. Step1isdefiningtheproblem.

Themanagerandtheresearcherdeterminethekeydecisionissuesrequiringinformation. Step2isanalyzingthesituation.

Aninformalstudyofinformationthatisalreadyavailableintheproblemarea. Step3isgettingproblemspecificdata.

Thecollectionofdatathatiscustomizedtothedecisionmarketersuniqueneeds. Step4isinterpretingthedata.

Theprocessofgettingmeaningfromthecollecteddataitisatransformationofrawdatatousefulinformation.

Step5issolvingtheproblem. Thedeliveryofrecommendationstothemarketingmanager,whoisultimatelyresponsiblefor

implementingtherecommendations. Themarketingmanagermayfindthatatanystep,asolutionmightbeidentifiedtheearlyidentificationofa

solutioncansavetimeandmoney. Goodmarketingresearchrequirescooperationbetweenresearchersandmarketingmanagers.

Researchersmustbesuretheirresearchfocusesonrealproblems. DefiningtheProblemStep1

Thisisthemostimportantandoftenthemostdifficultstepintheresearchprocess.

Often,theresearchmusthelpthemanagertofleshouttherealproblemfacingtheorganizationandthetypesofinformationneededtosolvetheproblem.

Findingtherightproblemlevelalmostsolvestheproblem,inmanycases. Inordertofindtherightproblem,themarketingstrategyplanningframeworkcanbeuseful.

Dontconfuseproblemswithsymptoms. Keyperformanceindicatorsinmarketingmaybesymptomsofothermorefundamentalproblems.

Settingresearchobjectivesmayrequiremoreunderstanding. Theresearcherandmanagercandevelopalistofresearchquestionsthataremostimportant. Asingleresearchprojectmaynotbeadequateforansweringallofthequestions.

AnalyzingtheSituationStep2

Situationanalysisisbasicallyaninformalstudyinanswertothequestion,Whatinformationdowealready

haveintheproblemarea? Situationanalysishelpseducatearesearcher,byprovidingbackgroundaboutunfamiliarproblemareas.

Thesituationanalysismayuncoverinformationthatleadstoanearlyidentificationofasolution,oritmayhelptodeterminewhatothertypesofinformationarereallynecessary.

SourcesofSecondaryandPrimaryData(Exhibit74)

Asituationanalysisusuallyincorporatessecondarydata,whichmayprovidetheanswers,oratleastsome

background,relevanttotheresearchproblem. Secondarydata:informationthathasalreadybeencollectedorpublished. Primarydata:informationspecificallycollectedtosolveacurrentproblem. Muchsecondarydataisavailable.

ExamplesofsecondarydatasourcesfrominsidethecompanymightbedatafromtheMIS,financialinformationfromtheaccountingdepartment,orreportsfromthefieldsalesforce.

Informationfromoutsidethecompanymightincludegovernmentinformation,tradeassociationstudies,orinformationavailableinmagazinesorjournalarticles.

SearchtheInternetforinformation. SearchenginesmaymissimportantdatabasesavailableontheInternet. SpecialinterestdiscussiongroupsornewsgroupsontheWebshareinformationontopicsofspecific

interest. Governmentdataisinexpensiveandavailableindigitalorprintedform.

Mostcountrieswithadvancedeconomieshavegovernmentagenciesthathelpresearchersgetthedatatheyneed.

Primarydatamaybeobtainedthroughobservationorquestioning. SourcesofSecondaryData

Secondarydataisdatapreviouslycollectedforanypurposeotherthantheoneathand.

AdvantagesofSecondaryData Savestimeifontarget. Aidsindeterminingdirectionforprimarydatacollection. Pinpointsthekindsofpeopletoapproach. Servesasabasisofcomparisonforotherdata.

DisadvantagesofSecondaryData Maynotgiveadequatedetailedinformation. Maynotbeontargetwiththeresearchproblem. Qualityandaccuracyofdatamayposeaproblem.

TheNewAgeofSecondaryInformation:TheInternet TherapiddevelopmentoftheInternethaseliminatedmuchofthedrudgeryassociatedwiththecollectionof

secondarydata. Gatheringsecondarydatahastraditionallybeenatediousboringjob.

Theresearcheroftenhadtowritetogovernmentagencies,tradeassociations,orothersecondarydataprovidersandthenwaitdaysorweeksforareplythatmightnevercome.

PrimaryData Primarydata:informationcollectedforthefirsttimethatisusedforsolvingtheparticularproblemunder

investigation. Advantagesinclude:

Answersaspecificresearchquestion. Themainadvantageofprimarydataisthattheywillansweraspecificresearchquestionthat

secondarydatacannotanswer. Theinformationisproprietary.

Dataarecurrent. Sourceofdataisknown. Secrecycanbemaintained.

DisadvantagesofPrimaryData Primarydatacanbeveryexpensive.

Thecostofprimarydatamayrangefromafewthousanddollarsforalimitedsurveytoseveralmillionforanationwidestudy.

Tosavemoney,firmsmay: Cutbackonthenumberofinterviews,anduseInternetstudiesinstead. Usepiggybackstudiesbygatheringdataontwodifferentprojectsusingone

questionnaire. Disadvantagesareusuallyoffsetbytheadvantagesofprimarydata.

SurveyResearch Surveyresearch:themostpopulartechniqueforgatheringprimarydata,inwhicharesearcherinteractswith

peopletoobtainfacts,opinions,andattitudes. FormsofSurveyResearch

1.Inhomepersonalinterviews:providehighqualityinformation,butareexpensivebecauseoftraveltimeandmileagecostsfortheinterviewer.

NotapopularsurveytoolintheU.S.andEurope. 2.MallInterceptinterviews:conductedinshoppingmallsorinamarketingresearchofficeinthemall.

Surveysmustbebrief. Itishardtogetarepresentativesampleofthepopulation.

However,probingispossible. 3.Telephoneinterviews:costlessandprovideoneofthebestsamplesofanytraditionalsurveyprocedure.

Manyfacilitiesfortelephoneinterviewsutilizecomputerassistedinterviewing,whereinformationisdirectlyinputintoacomputerapplication.

ThefederalDoNotCalllawdoesnotapplytosurveyresearch. 4.Mailsurveys:benefitsarethelowcost,eliminationofinterviews,centralizedcontrol,andanonymityfor

respondents. However,mailquestionnairesusuallyproducelowresponserates.

Consequently,theresultingsamplemaynotrepresentthesurveyedpopulation. Mailpanels,consistingofasampleofhouseholdsrecruitedtoparticipateforagivenperiod,yieldresponse

ratesof70%. 5.Executiveinterviews:involvesinterviewingbusinesspeopleattheirofficesregardingindustrialproductsor

services. Thistypeofinterviewingisexpensive,duetotheprocessoffinding,qualifying,andinterviewing

respondents. 6.Focusgroups:atypeofpersonalinterviewing,characterizedbyseventotenpeoplegatheredinameeting

place. Theinteractionprovidesgroupdynamics,withaninterplayofresponsesyieldingricherinformationthan

individualinterviews.

GettingProblemSpecificDataStep3

Therearetwobasicmethodsofcollectingprimarydata.

1.Observing. 2.Questioning.

Itcanrangefromqualitativetoquantitativeresearch. Qualitativeresearchseeksindepth,openendedresponses,notyesornoanswers.

Theresearchertriestogetpeopletosharetheirthoughtsonatopicwithoutgivingthemmanydirectionsorguidelinesaboutwhattosay.

ObservationResearch Observationresearchisthesystematicprocessofrecordingthebehavioralpatternsofpeople,objects,and

occurrenceswithoutquestioningthem. Itreliesonfourtypesofobservationincluding:

1.Peoplewatchingpeople. 2.Peoplewatchinganactivity. 3.Machineswatchingpeople. 4.Machineswatchingactivity.

ObservationalSituations

Observationalresearchdependsonwatchingwhatpeopledo.

Itmaybeconductedbyhumanobserversormachines. AnalyzingtheData

Crosstabulation:amethodofanalyzingdatathatletstheanalystlookattheresponsestoonequestioninrelationtotheresponsestooneormoreotherquestions.

Afterthedataiscollected,thenextstepistoanalyzedata. Thepurposeofdataanalysisistointerpretanddrawconclusionsfromthecollecteddata.

Dataisorganizedbyonewayfrequencycounts,crosstabulations,andmoresophisticatedstatisticalanalysis. Onewayfrequencytablesrecordtheresponsestoaquestion.

Theyprovideageneralpictureofthestudysresults. Acrosstabulationlooksattheassociationsbetweencertainresponses,suchasassociationbetweengenderand

productchoice.

InterpretingtheDataStep4(Exhibit76)

Dataanalysisandinterpretationfollowdatacollection,anditanswersthequestion,Whatdoesitreallymean? Quantitativeanalysisisfacilitatedbytheuseofstatisticalpackages:easytousecomputerprogramsthat

analyzedata. Dataanalysiscanbeeithersimpleorcomplex.

Oneofthemostpopularanalyticalapproachesiscrosstabulation. Thetableshowsthecombinedresponsesfortwoquestions:

1.Whatisyourhouseholdincome? 2.DoesyourhomehavebroadbandInternetservice?

Amongpeoplewithahouseholdincomeofmorethan$75,000,72.4%havebroadbandInternetservice. Amongpeoplewithahouseholdincomelessthan$30,000,thepercentageofpeoplewithbroadband

Internetserviceisonly23.7%. Therefore,thecrosstabulationanalysisshowsthathouseholdswithhigherincomesaremuch

morelikelytohavebroadbandInternetservice. KeyConcernsinDataInterpretation

Thefirstquestionamarketingresearchermustansweris,Isyoursamplereallyrepresentativeofthepopulation?

Population:thetotalgroupofinteresttotheresearcherormarketingmanager. Sample:asmallergroupselectedtorepresentthepopulation.

Thekeyhereistoensurethatthesampleselectedrepresentsthelargerpopulation. ChatterontheInternetnotrepresentativebutcanbeuseful.

Researchresultsarenotexact. Confidenceinterval:therangeoneithersideofanestimatethatislikelytocontainthetrue

populationvalue. Validityproblemscandestroyresearch.

Validity:theextenttowhichdatameasureswhatitisintendedtomeasure. Poorinterpretationcanalsodestroyresearch. Problemscanariseiftheresearcherdoesnotunderstandthemanagementproblem,sothemarketingmanager

andresearchershouldworktogetherclosely. Ethicsinvolvedininterpretingandpresentingresults.

Themostcommonethicalissuesconcerndecisionstowithholdcertaininformationabouttheresearch.

SolvingtheProblemStep5

Inthislaststepoftheresearchprocess,managersusetheresearchresultstomakemarketingdecisions. Researchersandmanagersarefascinatedbytheinterestingtidbitsofinformationthatcomefromtheresearch

processandtheyareexcitediftheresearchrevealssomethingtheydidntknowbefore. Ifresearchdoesnthaveactionimplications,ithaslittlevalueandsuggestpoorplanningbythe

researcherandthemanager. Whentheresearchprocessisfinished,themarketingmanagershouldbeabletoapplythefindingsin

marketingstrategyplanningthechoiceofatargetmarketorthemixofthefourPs. Iftheresearchdoesntprovideinformationtohelpguidethesedecisions,thecompanyhaswasted

researchtimeandmoney. PreparingandPresentingtheReport

Concisestatementoftheresearchobjectives. Explanationofresearchdesign. Summaryofmajorfindings. Conclusionwithrecommendations.

FollowingUp Thefinalstepinthemarketingresearchprocessistofollowup.

Theresearchershoulddeterminewhymanagementdidordidnotcarryouttherecommendationsofthereport.

Weretherecommendationsfollowed? Wassufficientdecisionmakinginformationincludedinthereport? Whatcouldhavebeendonetomakethereportmoreusefultomanagement?

InternationalMarketingResearch

Marketingresearchcontributestointernationalmarketingsuccess.

Customerneedsandinterests,aswellassegmentingdimensionsandotherenvironmentalfactors,maybeconsiderablydifferentinforeignmarkets.

Decisionsmadewithoutsoundmarketingresearchareladenwithrisk. Inmanycountriesitisdifficultforaforeignertogatheraccurateinformation. Marketersdealingininternationalmarketswouldbewelladvisedtoavoidmistakesbyusinglocalresearchers. Ifafirmisengagedinsimilarresearchprojectsinvariousoverseasmarkets,somecoordinationand

standardizationmakessense.

LectureNotes:Chapter8 ProductDecisionsforMarketingStrategyPlanning(Exhibit81)

Productmeanstheneedsatisfyingofferingofafirm. Theproductideaencompassesmanyattributesofaphysicalgoodorservice:(1)itsfeatures,(2)benefits,(3)

qualitylevel,aswellasitsaccessories,installationrequirements,andinstructions. Anyproductmustalsobepositionedrelativetotheotherofferingsoftheorganizationinitsproductline.

Brandingisakeyproductstrategyarea. Marketersneedtodecidewhattypesofbrandstheywishtoproduce.

Thepackageismorethanjustameansofprotectingtheproduct. Itcanhelptopromotetheproductorenhanceitsuse.

Marketersmustdecideiftheywanttoofferproductwarranties,andiftheydo,howextensivethewarrantieswillbe.

Thetypeofconsumer(productclass)thatwilluseitdeterminesifaproductisaconsumer WhatIsaProduct?

ProductisthestartingpointoftheMarketingMix. Price,distribution,andpromotionstrategiescannotbedetermineduntilthefirmhasaproducttosell. Aproductiseverything,bothfavorableandunfavorable,thatapersonreceivesinanexchange. Wellconceivedprice,distribution,andpromotionstrategieshavelittlevaluewithoutastrongproductoffering.

Exhibit101:CampbellsProductLinesandProductMix

AllofCampbellsproductsconstituteitsproductmix.

Eachproductintheproductmixmayrequireaseparatemarketingstrategy. Insomecases,productlinesandmixessharesomemarketingstrategycomponents.

BenefitsofProductLines 1.Advertisingeconomies:productlinesprovideeconomiesofscaleinadvertising. 2.Packageuniformity:packagesintheproductlinemayhaveacommonlookbutmaintaintheirindividual

identities. 3.Standardizedcomponents:reductionsinmanufacturingandinventorycosts. 4.Efficientsalesanddistribution:aproductlineenablesafullrangeofchoicestocustomers,andasaresult,

betterdistributionandretailcoverage. 5.Equivalentquality:allproductsinalineareperceivedashavingsimilarquality.

ProductQualityandCustomerNeeds Fromamarketingperspective,qualitymeansaproductsabilitytosatisfyacustomersneedsorrequirements. Qualitymaybeabsoluteorrelative,butinallcasesthecustomersexpectationsforqualityinagivenproductform

thebasisfordetermininghowtoachievecustomersatisfaction.

InthisadforVolvotrucks,Volvopromisestomeettheneedsthattruckershaveforhighfuelefficiencyand

performance. NotethattheadfeaturesbothatollfreetelephonenumberandaWebsitesothatinterested

consumerscaneasilycontactVolvoinordertolearnmore. Branding

Typesofbrandinginclude: 1.BrandName:thatpartofabrandthatcanbespoken,includingletters,words,andnumbers. 2.BrandMark:theelementsofabrandthatcannotbespoken. 3.BrandEquity:thevalueofcompanyandbrandnames. 4.GlobalBrand:abrandwhereatleastathirdoftheearningscomefromoutsideitshomecountry.

RecognizedTrademarksandSymbolsHelpinPromotion(Exhibit83)

Brandingmeanstheuseofaname,term,symbol,ordesigntoidentifyaproduct.

Somecompaniesuseacombinationofsomeorallofthesewhenbranding. Abrandnameisaword,letter,oragroupofwordsorletters. Atrademarkincludesonlythosewords,symbols,ormarksthatarelegallyregisteredforusebyasinglecompany. Aservicemarkisatrademarkthatreferstoaserviceoffering. Brandsmeetneeds.

EX:brandsmakeshoppingeasierbecauseconsumerscanidentifylevelsofqualitywithspecificproductsandshortenthetimeneededforinformationsearch.

Brandingalsohelpsmarketersbecauseitcan: Reducesellingtimeandcost. Improvethecompanysimage.

ConditionsFavorabletoBranding

Theproductiseasytolabelandidentifybybrandortrademark. Theproductqualityiseasytomaintainandisthebestvaluefortheprice. Dependableandwidespreadavailabilityispossible. Demandisstrongenoughthatthemarketpricecanbehighenoughtomakethebrandingeffortprofitable. Thereareeconomiesofscale.

Ifbrandingisreallysuccessful,costsshoulddropandprofitsshouldincrease. Favorableshelflocationsordisplayspaceinstoreswillhelp.

AchievingBrandFamiliarityIsNotEasy

Brandfamiliaritymeanshowwellcustomersrecognizeandacceptacompanysbrand.

Thefivelevelsofbrandfamiliaritythatareusefulforstrategyplanninginclude: 1.Brandrejectionmeansthatpotentialcustomerswontbuyabrandunlessitsimageis

changed. 2.Brandnonrecognitionmeansfinalconsumersdontrecognizeabrandatall,eventhough

middlemenmayuseitforidentificationandinventorycontrol. 3.Brandrecognitionmeansthatcustomersrememberthebrand. 4.Brandpreferencemeansthattargetcustomersusuallychoosethebrandoverotherbrands. 5.Brandinsistencemeanscustomersinsistonafirmsbrandedproductandarewillingto

searchforit. BenefitsofBranding

Brandinghasthreemainpurposes: 1.Productidentification

*Themostimportantpurpose* 2.Repeatsales 3.Newproductsales.

Thetermbrandequityreferstothevalueofcompanyandbrandnames. Thetermglobalbrandreferstoabrandthatobtainsatleastathirdofitsearningsfromoutsideitshomecountry,

isrecognizableoutsideitshomebaseofcustomers,andhaspubliclyavailablemarketingandfinancialdata. Brandloyalty,aconsistentpreferenceforonebrandoverallothers,isquitehighinsomeproductcategories.

TopTenGlobalBrands

TraderJoesTheBrand

About80%oftheitemsofferedatTraderJoesareprivatelabel. TraderJoesoffersseveralsubbrandswithintheTraderJoesfamily,suchasTraderMingsforChinesefoodand

TraderDarwinsforvitamins. TraderJoespurchasesdirectlyformthemanufacturerandshipsdirectlytoitsdistributioncenters,wheremanyof

theproductsareportionedandpackaged. Cobranding

Cobrandingisplacingtwoormorebrandnamesonaproductoritspackage.

Ingredientbrandingidentifiesthebrandofapartthatmakesuptheproduct. EX:IntelinDellcomputers,CoachinteriorsinLincolnautomobiles.

Cooperativebrandingoccurswhentwobrandsreceiveequaltreatment. EX:promotionalcontestsponsoredbyRamadaInns,AmericanExpress,andContinentalAirlines.

Complementarybrandingreferstoproductsadvertisedormarketedtogethertosuggestusage. Thebenefitsofcobrandinginclude:

Enhancementofprestigeorvalueofaproduct. Increasedmarketpresenceinmarketswithlittleornomarketshare.

CharacteristicsofaGoodBrandName(Exhibit84)

Arespectednamebuildsbrandequitythevalueofthebrandsoverallstrengthinthemarket.

ProtectingBrandNames&Trademarks

Registeringbrandnamesandtrademarksisimportantbecauseitmeansthatnooneelsecanusethemwithout

specificauthorizationfromtheowner. U.S.commonlawandcivillawprotecttherightsoftrademarkandbrandnameowners. TheLanhamAct(1946)spellsoutwhatkindsofmarks(includingbrandnames)canbeprotectedandtheexact

methodofprotectingthem. Abrandcanbearealassettoacompany,buteachcompanymustprotectitsown.

Ifabrandbecomesagenericdescriptivewordforaproductcategory,protectionislostandthebrandbecomespublicproperty.

Evenifbrandsareregistered,counterfeitingisacceptedinsomecultures,especiallyindevelopingnations. Manypopularbrandedproducts,suchasLevisjeansandRolexwatches,havebeencopiedwithout

authorization. Weakregulationinmanydevelopingcountriesmakesitdifficultforcompaniestoprotecttheirbrandsfrom

counterfeits. WhatKindofBrandtoUse?

Afamilybrandisthesamebrandnameusedforseveralproducts,suchasSunkist,whichoperatesonfreshfruit,

juice,vitamins,andsoftdrinks. Usingafamilybrandisagoodapproachiftheindividualproductsareofasimilarquality.

Aspecialcaseoffamilybrandingisalicensedbrand,awellknownbrandthatsellerspayafeetouse. Individualbrandsmaybeusedforoutsideandinsidecompetition.

Whenacompanymakesveryunrelatedproductsthatrequireaseparateidentitytoavoidconfusion,developingindividualbrandsforeachcanbeagoodidea.

Somecompaniesdevelopseveralversionsofaproductsuchastoothpaste,eachwithauniquepositioninthemarket.

Genericbrandsareproductsthathavenobrandatallotherthantheidentificationoftheircontents. Theycanbeimportant,lowcostalternativesforconsumers,suchasinthemarketforprescriptiondrugs.

WhoShouldDotheBranding?

Inadditiontothetypeofbrand,thebrandscreationandownershiparealsopartoftheoverallproductstrategy.

Manufacturerbrandsarebrandscreatedbyproducers. Manufacturerbrandsaresometimescallednationalbrandsbecauseoftheirwideappeal.

Dealerbrandsarealsocalledprivatebrands. Intermediaries,suchaswholesalersandretailers,createthesebrands.

Thebattleofthebrandsisacompetitionbetweenmanufactureranddealerbrands. Manyretailershaveexpandedthelinesofproductssoldundertheirstorebrands,whilereducing

theamountofspacegiventomanufacturerbrands. Whoswinningthebattleofbrands?

Thebigwinneristheconsumer,whobenefitsfromgreaterchoiceandmoreintensepricecompetition.

Trademarks Atrademarkistheexclusiverighttouseabrand.

Othersareprohibitedtousewithoutpermission. Manypartsofabrandandassociatedsymbolsqualifyfortrademarkprotection.

Trademarkrightcomesfromuseratherthanregistration. Torenewthetrademark,thecompanymustproveuseofthemark. Rightcontinueforaslongasthemarkisused. Trademarklawappliestotheonlineworld.

Aservicemarkperformsthesamefunctionforservices. Partsofabrandorotherproductidentificationmayqualifyfortrademarkprotection. Companiesthatfailtoprotectfacetheriskofproductnamesbecominggeneric.

Thislistincludesaspirin,cellophane,thermos,monopoly,cola,andshreddedwheat. PackagingPromotes,Protects,andEnhances

Goodpackagingmakesproductseasiertoidentifyandpromotesthebrand. Packagingcanenhancetheproduct.

Itcandomorethancontainandprotecttheproduct. Thepackagecanmaketheproducteasiertouseorsafertouse. Itcanalsodetershopliftingandcanalsobedesignedtoachieveecologicalobjectives.

Packagingsendsamessage. Creativeuseofdesigninpackagingcanvisuallyhelptotietheproducttootherelementsofthe

promotionmix. Theyconveyinformation,suchasthenutritionalinformationonfoodproducts. Itcanalsopromotethebrandatthepointofpurchaseorinuse.

Packagingmaylowerdistributioncosts. Goodpackagessavespaceandweightsotheyareeasiertotransport,handle,anddisplace. Inhelpingdistributorsandendsaleretailers,goodpackagesaremorewelcomebythese

intermediaries.

FunctionsofPacking Functionsofpackagingareto::

1.Containandprotectproducts. 2.Promoteproducts. 3.Facilitatestorage,use,andconvenience.

*firstthreearethemostimportant* 4.Facilitaterecycling..

WhatIsSociallyResponsiblePackaging? 1.Packagingcanhurttheenvironment.

Ecologicalconcernsarebecomingmoreprominentinpackagingdecisions. Producershavebeencriticizedfordevelopingpackagesthatharmtheenvironment. Otherscontentthatmanufacturersdonotdiscloseallofthepossibleharmfuleffectsoftheir

products. 2.TheFederalFairPackagingandLabelingAct(196^)requiresthatconsumergoodsbeclearlylabeledin

easytounderstandterms,togiveconsumersmoreinformation. Thelawalsocallsonindustrytotrytoreducethenumberofpackagesizesandmakelabelsmoreuseful.

3.Ethicalissuesremain,andexamplesofsuchissuesareeasytofind. Somecompanieshavebeenaccusedofdesigningpackagesthatconcealdownsizedproducts. Dealerbrandedproductsareoftenpackagedtolookverysimilartomanufacturerbrands.

GlobalIssuesinPackaging 1.Themajorlabelingconcernispropertranslationofingredient,promotional,andinstructionalinformationon

labels. 2.Packageaestheticsareimportantfromaculturalperspective.

EX:colorsmayhavedifferentconnotationsindifferentcountries. Packagesizeisinfluencedbyavailabilityofrefrigeration,amountofstoragespace,andeventhe

purchasingpowerofbuyers. 3.Extremeclimatesconsiderationsandlongdistanceshippingnecessitatesturdierpackages.

Packagesmayneedalongershelflife ProductClassesHelpPlanMarketingStrategies

Consumerproductsareproductsmeantforthefinalconsumer. Businessproductsareproductsmeantforuseinproducingotherproducts.

*Itispossiblethatsomeproductsmightbeinbothgroups.* Sellingthesameproducttofinalconsumersandbusinesscustomersrequires(atleast)twodifferentstrategies.

TypesofProducts

Productscanbeclassifiedaseitherbusinessorconsumerproducts.

Theclassificationasabusinessorconsumerproductdependsonthebuyersintentions.

TypesofConsumerProducts

Thisapproachclassifiesproductsbyhowmucheffortisusedtoshopforthem.

TypesofConsumerProducts

Productsandservicesthatfallintoeachoftheconsumerproductcategoriesinclude:

ConvenienceProduct:candy,softdrinks,deodorant,aspirin,hardware,anddrycleaning. ShoppingProduct:homogenousshoppingproductssuchaswashers,dryers,andtelevisions.

Decisionsarebasedonthelowestpricedbrandwiththedesiredfeatures. Heterogeneousshoppingproductsareessentiallydifferent,forexamplefurniture,clothing,

housing,universities,etc. Decisionsarehighlyindividualandbasedonfindingthebestproductforme.

SpecialtyProduct:finewatches,expensiveautomobiles,andgourmetrestaurants. UnsoughtProduct:newproducts,insurance,burialplots,andencyclopedias.