Marketing Overview (Spring 2009)

1. Marketing Overview(Spring 2009) • Marketing Concept • Marketing Planning • 3C-4P Framework • Customer Behavior • Marketing Mix

2. AMA Definition ofMarketing (2007) Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

3. More Memorable Views ofMarketing In the factory we make cosmetics. In the drugstore we sell hope (Charles Revson). People don't want to buy a quarter-inch drill. They want a quarter-inch hole!" (Ted Levitt). The aim of marketing is to make selling superfluous (Peter Drucker). “Half the money I spend on advertising is wasted; the trouble is I don't know which half."(John Wanamaker) In well-ordered states, the storekeepers and salesmen are commonly those who are weakest in bodily strength and therefore of little use for any other purpose (Plato, The Republic)

4. Company Orientations Towards the Marketplace

5. Implementing The Marketing Concept A Customer Orientation Supported by a Set of Activities, Institutions, and Processes to Facilitate the Exchanges Between Customers and the Focal Organization To Achieve Organizational Goals by Delivering Customer Value on a Sustainable Basis

6. Developing An Effective Marketing Plan Conduct a Marketing Audit/Review (3-C’s) Develop a Marketing Strategy (4-P’s) Implement Strategy via Marketing Mix Evaluate The Success of The Marketing Plan

7. Conduct Marketing Review (3-C Analysis) A. Understanding of Customer Needs, Wants, Perceptions, Preferences, Behavior, and their Trends B. Assessment of Company Capabilities and Current Marketing Position C. Analysis of Competitors’ Current Positions, Capabilities, Actions Opportunity Identification

8. Tactics and ImplementationThe Marketing Mix (Four P’s) • Product (More generally, Offering) • Price • Place • Promotion

9. 3C - 4P Framework Tactics Strategy • Product • Price • Promotion • Place • Customer • Company • Competitors

10. The 3C - 4P Framework in Value Terms Creating Value Tactics Strategy • Product • Price • Place • Promotion • Customer • Company • Competitor Communicating Value Capturing Value

11. Key Roles for Today’s Marketing Manager Develop overall marketing strategy aligned with corporate strategy Select target markets to pursue (and specify target markets not to pursue) Define the brand (particularly within target segments) Enhance customer experience and build relationships Identify and develop new businesses Articulate and measure the value of marketing investments Optimize marketing mix …

12. Develop Marketing Strategy Generic Strategies For DIFFERENTIAL ADVANTAGE * Differentiated Offerings * Cost Leadership * Special Market Focus Selection of TARGET MARKET and Development of a POSITIONING STATEMENT

13. Customer Behavior

14. The New Market Environment ECONOMY INDUSTRY COMPANY YOU Supply • Customer-centric markets • Disappearing boundaries (global, 24/7) • Product+Service combinations • Digital-Networked-Mobile • Digital+Nondigital combinations • Economies of scope • Survival of the fastest? • …… • Initiating contact • Establishing terms of trade • Exchanging value • Establishing relationships Exchange Value CUSTOMER MARKET SOCIETY Demand 14

15. Typology of Customer Behavior Customer Involvement High Low Variety Seeking Behavior Complex Buying Behavior High Perceived Differences Among Brands Habitual Buying Behavior Dissonance Reduction Behavior Low

16. The Numerous Factors InfluencingComplex Buying Behavior Department of Marketing & E-Commerce, Mitchell College of Business

17. A Marketer’s View of the Customer Decision Process Word- of- Mouth Awareness Advertising Interest Channel Decision Offering Design Action Price Satisfaction

18. $$ Spent $$$ Got Marketing Funnel(Online Example) 300 Visitors 100 Impressions (can also have multiple impressions per visitor) 5% Clickthroughs 10% Conversion to Sales 10% 1% 1% ROI

19. Product Decisions

20. Brand Equity Pyramid Resonance Judgments Feelings Performance Imagery Brand Salience Quality Credibility Reliability Durability Serviceability Personality Heritage User Situational Depth Breadth

21. Total Product Concept (TPC)

22. New Products and Corporate Strategy Markets Existing New Market Development Market Penetration Existing Products (Diversification) New Product Development New

23. Possible Business Strategies Supporting a New Product High Establish Foothold in New Market Preempt Market Segment Combat Major Competitive Entry Investment Level Offset Seasonal Cycle Business Strategy Utilize Excess Capacity Increase Market Penetration Utilize By-Products Capitalize on Existing Markets Low Source: Booz Allen & Hamilton Inc.

24. “Newness” of Products New to World • Repositioning • Breakthroughs - Major Product Modifications • Line Extensions • “Me Too” Products New to Company

25. 2,000 Ideas 100 Scripts 20 Pilots 5 Scheduled for prime time 1 Success Ideas for TV Series

26. Problems That Led to Successful Products I’d like to clean my oven more often, but the fumes from the oven cleaners overwhelm me The smell of my antiperspirant clashes with my perfume It’s a pain in the neck to look for a bottle opener every time you want a beer Frozen pizzas don’t taste like the ones at the pizzeria I lock my keys out of the car The cookies are crumbled and broken when I open the package

27. A Proactive Approach to New Product Development • Two key steps • Identifying and evaluating new product concepts • Developing prototypes and launching products • More detailed outline of above steps • Concept generation • Concept development and testing • Business analysis • Product design, development, and testing • Market testing • Commercialization/Life cycle management

28. Channel Decisions

29. Marketing Channels (Key concepts) • Functional view of channels • Role of intermediaries • Relationships with Channel Partners • Conflict, trust, commitment, information exchange • Customer as a member of the channel • Emerging multi-channel customer • Channel captain • Push versus Pull strategy

30. Primary Value of Intermediaries: Increased Channel Efficiency M C M C 1 2 1 4 3 4 D M M C C 5 2 5 6 7 8 6 M C M C 3 9 (a) Number of contacts (b) Number of contacts M x C = 3 x 3 = 9 M + C = 3 + 3 = 6 M = Manufacturer C = Customer D = Distributor

31. Roles of Marketing Channels:Delivering Service Output Levels Lot size (Aggregate/Disaggregate) Convenience (Spatial, Ordering, …) Waiting time Variety and assortment Personalization Service (Pre-sale and Post-sale) Support price discovery? Ensure liquidity?

32. Advertising /PR e-mail A New Kind of Shopping Behavior is Emerging Service Channels Communications Channels Transaction Channels Web Site Web Site Web Site Catalog HP Dell Telephone Telephone Fulfillment Store Store National Semiconductor Dow Chemical Service people AutobyTel Auto companies Telephone Kiosk Store Coach WalMart Sears Sales Force Sales Force

33. Multi-Channel Marketing Supply Chain New Product Development Sales Force Call Center Purchasing Web Site Third Party Logistics Providers Customers Servicing Store/ Retailers Catalog Corporate Marketing Product Divisions

34. Advertising and Promotion Decisions

35. Advertising Planning Process Advertising Strategy Target Market Brand Positioning Budget Decisions Creative Strategy Media Strategy Campaign Evaluation

36. Advertising Objectives • Create awareness (e.g., when there is low mind share) • Inform consumers • of product features and benefits • price changes • Important for building primary demand • Persuade (e.g., when there is high mind share and low market share) • Build brand preference or change buyer perceptions • especially important in competitive markets. • Remind: maintain top-of-mind awareness

37. A Key Challenge in Ad Copy Decision Making • Integrating message strategy (What to say?) and the message execution (How to say?) so they work together to enhance brand/company: • If strategy overpowers the creative idea, then the message will be dull and not remembered. • If the execution overpowers the strategy, then it may be remembered, but the intended message may have no impact.

38. Ad Execution Styles • Slice of Life: Showing “typical” person/people using product in normal setting. • Lifestyle: Showing how product fits with particular lifestyle. • Fantasy: Creates a fantasy around the product or its use. • Mood/Image: Build mood or image around product (e.g., beauty, love, serenity). • Musical: Shows someone singing about product. • Personality Symbol: Character that represents the product. • Technical Expertise: Show company expertise at making the product. • Scientific Evidence: Present survey or scientific data showing that the brand is better than other brand(s). • Testimonial: Highly believable or likeable source endorsing the product.

39. Media Decisions: Key Concepts Reach: Percentage of target market exposed to ad during a given period of time. Average Frequency: Average number of times a person in the target market is exposed to ad. Media Impact: Qualitative value of an exposure through a given medium.

40. Media Decisions: Key Concepts Amount of advertising Time • Media vehicles • Media scheduling • Continuity, flighting, pulsing 40

41. Marketers View of Pricing

42. Customer Value Potential Value Lost Value Distributed or Economic Driving Force Perceived Value Value Created Price Margin Value Added Total Cost Cost of Goods and Services Cost, Price, and Customer Value

43. Good Luck!