BCEN 1400Introduction to Business
Chapters 13 – 16 Marketing
The Marketing Concept is Born
• From production to selling to the marketing concept
• The Marketing Concept– Customer orientation– Service orientation– Profit orientation
• Nowadays, the buzz is customer relationship management
13-3
The Marketing Mix
Product
Marketing Program
Place
Promotion
Buy at Computers
‘R Us
Price
The Marketing Process
• Phase I– Find opportunities– Conduct research– Scan the environment– Identify a target market
• Phase II– Make a product or
service– Test market
• Phase III– Make a name– Set a price– Get it to the consumer
• Phase IV– Promote the thing– Build relationships
The Consumer
• Responds to parts of the marketing mix
• Belongs to groups
• Responds to the purchase situation
• Evaluates and makes decisions– What decisions do you make when going to the
grocery?
Ways to Segment the Consumer Market
1. Geography2. Demography3. Psychography4. By Benefits Desired5. By Volume-Based Behavior
Other Businesses
• Also make great targets
• Fewer in number– Why is this not such a bad thing?
• More rational than emotional; however, personal selling is much more important!
13-8
Top Marketing Tactics of Small Businesses
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
Web Sites Search EngineKeywords
CommunityRelations
PublicRelations/Media
Coverage
E-mail Marketing Direct Marketing
Source: Investor’s Business Daily, June 1, 2004
The Importance of Value
• Cost/price/value relationships
• Creating value in the mind of the purchaser
• The total product offer– Everything a customer evaluates when purchasing
a product
The Total Product Offer
Price Brand Name Convenience Package
Store surroundings Service Internet access Past experience
Guarantee Speed of delivery Image Reputation
Product Lines and Product Mixes
• Product Line– Products that are similar or intended for similar
customers• The Diet Coke line
• Product Mix– The combination of all product lines offered by
one manufacturer.• Coke, Diet Coke, Dasani, Fruity Sodas, etc.
Types of Products
• Convenience• Shopping• Specialty (includes luxury)• Unsought (unexpected purchases)
The Purposes of Packaging
• Packaging really is your own little salesman!– Protect goods– Attract the buyer– Provide information on what’s inside– Explain product benefits– Provide information on usage– Show price and value
Brand
• A name or symbol that distinguishes one set of products made by one vendor from another
– Trademark: protection for a brand
• Manufacturer, private, and generic brands
• Generating brand equity and co-branding
14-15
Brand Characters: Are They Real or Fake?
• Betty Crocker
• Chef Boyardee
• Uncle Ben
• Colonel Sanders
• Little Debbie
Fake
Real
Both
Real guy, fake rank
Real
Source: Fast Company, August 2004
14-16
10 Most Valuable BrandsRank Product Brand Value
(Billions)
1 Coca-Cola $67.00
2 Microsoft 56.93
3 IBM 56.20
4 GE 48.91
5 Intel 32.32
6 Nokia 30.13
7 Toyota 27.94
8 Disney 27.85
9 McDonald’s 27.50
10 Mercedes-Benz 21.80
Source: Business Week, August 7, 2006
14-17
Top 10 Favorite Mascots of America
• M&Ms figures / Mars• Doughboy / General Mills, Smucker’s• Duck / Aflac• Tony the Tiger / Kellogg• Gecko / Berkshire Hathaway’s Geico• Chester the Cheetah / Pepsi’s Frito-Lay• Energizer Bunny / Energizer Holdings• Kool-Aid Man / Kraft Foods• Trix Rabbit / General Mills• Snap, Crackle and Pop / Kellogg
Source: Forbes, January 9, 2006
14-18
New-Product Development Process
1. Idea Generation2. Screening3. Analysis
4. Development5. Testing6. Commercialize
14-19
Best Product Innovation of ALL Time
0% 10% 20% 30% 40% 50% 60% 70%
Automobile
Light Bulb
Telephone
Television
Aspirin
Source: American Demographics
% of Consumers’ Choice
The Product Life Cycle
• A model of what happens to sales and profits over time
• Includes introduction, growth, maturity, and decline
• Each stage requires different strategies.
Pricing
• Motivations behind prices– Target returns– Volume/market share– Image– Nonprofit objectives
• Skimming, penetration, EDLP, bundling, psychological pricing
14-22
Pricing Using Breakeven Analysis
Problem Should we charge $2 or $3 per unit?
Costs Total Fixed Costs $400,000
Variable Cost $ 1 per unit
Market Research Forecast
Company can sell: 290,000 boxes at $2 / unit
210,000 boxes at $3 / unit
Breakeven point = total fixed cost price - variable cost (per unit) (per unit)
$2 price = $400,000 = 400,000 units to breakeven $2 - $1
$3 price = $400,000 = 200,000 units to breakeven $3 - $1
Breakeven point = total fixed cost price - variable cost (per unit) (per unit)
$2 price = $400,000 = 400,000 units to breakeven $2 - $1
$3 price = $400,000 = 200,000 units to breakeven $3 - $1
Breakeven
Analysis
Types of Pricing Strategies
• Skimming
• Penetration
• Everyday Low Pricing
• Bundling
• Psychological
Distribution
• Why do we need marketing channels?
• Examples of intermediaries– Agents and brokers (do not take title)– Wholesaler (take title)– Retailer
Marketing Utilities
• Form• Time• Place• Possession• Information• Service
Retailing Strategies
• Retail distribution– Intensive– Selective– Exclusive
• Nonstore– Electronic– Telemarketing– Direct selling and direct marketing
Types of Transportation
• Understanding the flow of logistics
• Trains– Slow, but large shipments
• Trucks– Small shipments
• Water– Slow, inexpensive
• Air– Fast, very expensive
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