Chapter

Introduction to Marketing Strategies

What Is Marketing?

Marketing- set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.

Marketing begins with discovering unmet customer needs and continues with researching the potential market; producing a good or service capable of satisfying the targeted customers; and promoting, pricing, and distributing that good or service. Throughout the entire marketing process, a successful organization focuses on building customer relationships. The best marketers not only give consumers what they want but even anticipate consumers needs before those needs surface.

Exchange process- activity in which two or more parties give something of value to each other to satisfy perceived needs.

How Marketing Creates Utility

Utility: power of a good or service to satisfy a want or need Create time utility by making a good or service available when customers want to purchase it. Create place utility by making a product available in a location convenient for customers. Create ownership utility through an orderly transfer of goods and services from the seller to the buyer.

Evolution of the Marketing Concept

Emergence of the Marketing Concept

Marketing concept- company-wide consumer orientation to promote long-run success. Firm starts with analysis of customers needs and works backward to offer products that fulfill them. Explained by shift from sellers market in which goods and services are relatively scarce to buyers market in which they are relatively plentiful.

Not-for-Profit Marketing

20 million not-for-profits exist worldwide.

Non-Traditional Marketing

Developing a Marketing Strategy

Selecting a Target Market

Target market- group of people toward whom an organization markets its goods, services, or ideas with a strategy designed to satisfy their specific needs and preferences.

Types of Markets

consumer (B2C) product: good or service that is purchased by end users business (B2B) product: good or service purchased to be used, either directly or indirectly, in the production of other goods for resale

Marketing Mix

Marketing Mix blends the four strategies to fit the needs and preferences of a specific target market.
Product strategy involves the nature of the product and its package design, brand names, trademarks, and product image.
Distribution strategy ensures that customers receive their purchases in the proper quantities at the right times and locations. Promotional strategy blends advertising, personal selling, sales promotion, and public relations to achieve its goals of informing, persuading, and influencing purchase decisions. Pricing strategy is setting profitable and justifiable prices for the firms product offerings, sometimes subject to government scrutiny.

Marketing Mix for International Markets

Standardization- offering the same marketing mix in every market. Adaptation- developing a unique marketing mix to fit each markets local competitive conditions, consumer preferences, and government regulations. Mass customization- allows a firm to mass produce goods and services while adding unique features to individual or small groups of orders.

Marketing Research

Marketing research the process of collecting and evaluating information to support marketing decision making. AC Nielson Consumer Research Secondary data Previously published data from trade associations, advertising agencies, marketing research firms, and other sources. Primary data Data collected through observation, surveys, and other forms of observational study. Data mining computer searches of customer data to detect patterns and relationships. Business intelligence activities and technologies for gathering, storing, and analyzing data to make better competitive decisions

Market Segmentation

Market segmentation the process of dividing a total market into several relatively homogeneous groups.

How Market Segmentation Works

Segmenting Consumer Markets

Geographic Segmentation

Divides market into homogeneous groups on the basis of their locations. Divides market on the basis of various demographic or socioeconomic characteristics: gender, income, age, occupation, household size, stage in the family life cycle, education, and ethnic group Divides consumer market into groups with similar psychological characteristics, values, and lifestyles. (VALS)

Demographic Segmentation

Psychographic Segmentation

AIO statementspeoples verbal descriptions of various attitudes, interests, and opinions

Product-Related Segmentation

Divides market based on buyers relationship to the good or service.

based on benefits sought by buyers, usage rates, and loyalty levels

Segmenting Business Markets

Geographic segmentation targets geographically concentrated industries. Demographic, or customer-based, segmentation a good or service intended for a specific organizational market (i.e. healthcare). End-use segmentation focuses on the precise way a B2B purchaser will use a product.

Product Strategy

Product- a bundle of physical, service, and symbolic characteristics designed to satisfy consumer wants Product Categories:

Convenience products- items the consumer seeks to purchase frequently, immediately, and with little effort Shopping products- typically purchased only after the buyer has compared competing products in competing stores Specialty products- items a purchaser is willing to make a special effort to obtain

Product Classification

Classifying Business Goods

Installations- major capital items such as new factories, heavy equipment and machinery, and custom-made equipment Accessory equipment- includes less expensive and shorter-lived capital items than installations and involves fewer decision makers Component parts and materials- become part of a final product Raw materials- farm and natural products used in producing other final products Supplies- expense items used in a firms daily operations that do not become part of the final product

Services

Different from Goods

Intangible Perishable Difficult to standardize Service provider is the service

Brand Loyalty

Brand recognition- consumer is aware of the brand but does not have a preference for it over other brands Brand preference- consumer chooses one firms brand over a competitors Brand insistence- consumer will seek out preferred brand and accept no substitute for it (the ultimate degree of brand loyalty)

Brand Equity

Brand equity- added value that a respected and successful name gives to a product Brand awareness- product is the first one that comes to mind when a product category is mentioned

Distribution Strategy

Distribution channel: path through which productsand legal ownership of themflow from producer to consumers or business users Physical distribution: actual movement of products from producer to consumers or business users

Distribution Channels

Distribution Channels Using Marketing Intermediaries

Direct Distribution

Direct contact between producer and customer. Most common in B2B markets. Often found in the marketing of relatively expensive, complex products that may require demonstrations. Internet is helping companies distribute directly to consumer market. Producers distribute products through wholesalers and retailers. Inexpensive products sold to thousands of consumers in widely scattered locations. Lowers costs of goods to consumers by creating market utility.

Distribution Channels Using Marketing Intermediaries

Marketing Intermediaries

Non-Store Retailing

Direct response retailing Internet retailing Automatic merchandising Direct selling

Promotion

Promotion is the function of informing, persuading, and influencing a purchase decision. Integrated marketing communications (IMC) is the coordination of all promotional activities media advertising, direct mail, personal selling, sales promotion, and public relationsto produce a unified, customer-focused message.

Objectives of Promotional Strategies

Advertising Media Pie

Sales Promotion

Sales promotion consists of forms of promotion such as coupons, product samples, and rebates that support advertising and personal selling.

Personal Selling

A person-to-person promotional presentation to a potential buyer

Many companies consider personal selling the key to marketing effectiveness. A seller matches a firms goods or services to the needs of a particular client or customer. Today, sales and sales-related jobs employ about 16 million U.S. workers. Businesses often spend five to ten times as much on personal selling as on advertising.

Example: Selling to the government or military.

The Sales Process

Pricing Objectives in the Marketing Mix

Alternative Pricing Objectives

Skimming pricing

Setting an intentionally high price relative to the prices of competing products Helps marketers set a price that distinguishes a firms high-end product from those of competitors

Penetration pricing

Setting a low price as a major marketing weapon Often used with new products

Everyday low pricing and discount pricing

Maintaining continuous low prices rather than relying on short-term price-cutting tactics such as cents-off coupons, rebates, and special sales Discount pricing - businesses hope to attract customers by dropping prices for a set period of time Reducing the emphasis on price competition by matching other firms prices Concentrating marketing efforts on the product, distribution, and promotional elements of the marketing mix

Competitive pricing

Consumer Perceptions of Price

Price-quality relationships

Consumers perceptions of quality closely tied to price High price = prestige and higher quality Low price = less prestige and lower quality
Setting prices in uneven amounts or amounts that sound less than they really are
Example: $1.99 or $299

Odd pricing