Managing a holistic marketing organization

creating successful long-term growth -- Chapter 22 -- summary

The modern marketing department has evolved to the years from a simple sales department to an organizational structure were marketing personnel work mainly on cross disciplinary teams.

Modern marketing departments can be organized in a number of ways. Some companies are organized by functional specialization, while others focus on geography and regionalization. Still others emphasize product and brand management or market segment management. Some companies established a matrix organization consisting of both product and market managers. Finally, some companies have strong corporate marketing, others have limited corporate marketing, and still others place marketing only in the divisions.

A fact of modern marketing organizations are marked by a strong cooperation and customer focus among the company's departments:

• marketing
• research and development
• engineering
• purchasing the line manufacturing
• operations
• finance
• accounting
• credit etc.

Companies must practice social responsibility through their legal, ethical, and social words and actions. Cause marketing can be a means for companies to productively linked social responsibility to consumer marketing programs. Social marketing is done by a nonprofit or government organization to directly address essential problem or cause.

A brilliant strategic marketing plan counts for little if it is not implemented properly. Implementing marketing plans calls for skills in recognizing and diagnosing a problem, assessing the company level where the problem exists, implementation skills, and skills in evaluating the results.

The marketing department has to monitor and control marketing activities continuously. Efficiency control focuses on finding ways to increase the efficiency of the sales force, average rising, sales promotion, and distribution. Strategic control entails a periodic reassessment of the company and its strategic approach to the marketplace using the tools of the marketing effectiveness and marketing excellence reviews, as well as the marketing audit.

Managing personal communications: direct marketing a personal selling

communicating value -- Chapter 19 -- summary

Direct marketing is an interactive marketing system that uses one or more media to effect a measurable response or transaction at any location. Direct marketing, especially electronic marketing, is showing explosive growth.

Direct marketers plan campaigns by deciding on objectives, target markets and prospects, offers, and prices. This is followed by testing and establishing measures to determine the campaign success.

Major channels for direct marketing and include face-to-face selling, direct mail, catalog marketing, telemarketing, interactive TV, websites, and mobile devices.

Interactive marketing provides marketers with opportunities for much greater interaction and individualization through well-designed websites as well as online ads and permissions.

Sales personnel serve as a companies linked to its customers. The sales rep is the company to many of its customers, and it is the rep who brings back to the company much-needed information about the customer.

Designing the salesforce requires decisions regarding objectives, strategy, structure, size, and compensation. Objectives may include prospecting, targeting, communicating, selling, servicing, information gathering, and allocating. Determining strategy requires choosing the most effective mix of selling approaches. Choosing the salesforce structure and tails dividing territories by geography, product, or market (or some combination of these). Estimating how large the salesforce needs to be involves estimating the total workload and how many sales hours will be needed. Compensating the salesforce and tails determining what types of salaries, commissions, bonuses, expense accounts, and benefits to give, and how much weight customer satisfaction should have in determining total compensation.

There are five steps involved in managing the salesforce:

1. recruiting and selecting sales Representatives
2. training the representatives and sales techniques and in the Company's products, policies, and customer satisfaction orientation
3. supervising the salesforce in helping reps to use their time efficiently
4. motivating the salesforce and balancing quotas, monetary rewards, and supplementary motivators
5. evaluating individual and group sales performance

Effective salespeople are trained in the methods of analysis and customer management, as well as they are of sales professionalism. No approach works best in all circumstances, but most trainers agree that selling is a seven step process:

1. prospecting and qualifying customers
2. pre-approach
3. approach
4. presentation and demonstration
5. overcoming objections
6. closing
7. follow-up and maintenance

Managing mass communications

communicating value -- Chapter 18 -- summary

Advertising and any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor. Advertisers include not only business firms but also charitable, nonprofit, and government agencies.

Developing an advertising program is a five step process:

1. set advertising objectives
2. establish a budget
3. she is the advertising message and creative strategy
4. decide on the media
5. evaluate communication and sales effect

Sales promotions consists of a diverse collection of incentive tools, mostly short term, designed to stimulate quicker or greater purchase of particular products or services by consumers or the trade. Sales promotion includes tools for consumer promotion, trade promotion, and business and salesforce promotion. In using sales promotion, a company must establish its objectives, select the tools, develop the program, pre-test the program, implement and control it, and evaluate the results.

Events and experiences are a means to become part of special and more personally relevant moments in consumers lives. Involvement with events can broaden and deepen the relationship of the sponsor with its target market, but only if managed properly.

Public relations (PR) involves a variety of programs designed to promote or protect a company's image or its individual products. Many companies today use marketing public relations (MPR) to support the marketing department in corporate or product promotion and image making. MPR can affect public awareness at the fraction of the cost of advertising, and is often much more credible. The main tools of PR are publications, events, news, speeches, public service activities, and identity media.

Designing and managing integrated marketing communications

communicating ideas -- Chapter 17 -- summary

Modern marketing calls for more than developing a good product, pricing it attractively, and making it accessible to target customers. Companies must also communicate with present and potential stakeholders, and with the general public.

The marketing communications mix consists of six major modes of communication:

• advertising
• sales promotion
• public-relations and publicity
• events and experiences
• direct marketing
• and personal selling

The communications process consists of nine elements:

• sender
• receiver
• message
• media
• encoding
• decoding
• response
• feedback
• and noise

To get their messages through, marketers must encode their messages in a way that takes into account how the target audience usually decode the message. They must also transmit the message through efficient media that reach the target audience and develop feedback channels to monitor response to the message. Consumer response to a communication can be often modeled in terms of a response hierarchy and "learned -- feel -- do" sequence.

Developing effective communications involves eight steps:

1. identify the target INS
2. determine the communications objectives
3. design the communications
4. select the communications channels
5. establish the total communications budget
6. decide on the communications mix
7. measure the communications results
8. manage the integrated marketing communications process

In identifying the target audience, the marketer needs to close any gap that exists between current public perception in the image sought. Communications objectives may involve category need, brand awareness, brand attitude, or brand purchase intention.

Formulating the communication requires solving three problems:

• message strategy -- what to say
• creative strategy -- how to say it
• message source -- who should say it

Communications channels may be:

• personal -- advocate, expert, and social channels
• nonpersonal -- media, atmospheres, and events

The objective and task method of setting the promotion budget, which calls upon marketers to develop their budgets by defining specific objectives, is the most desirable.

In deciding on the marketing communications mix, marketers must examine the distinct advantages and cost of each communication tool and the company's market rank. They must also consider the type of product market in which they are selling, how ready customers are to make a purchase, and the product stage in the product lifecycle. Measuring the effectiveness of the marketing communications mix involves asking members of the target odd he and its whether they recognize or recall the communication, how many times a solid, what points they recall, how they felt about the communication, and their previous and current attitudes toward the product and the company.

Managing and coordinating the entire communications process calls for integrated marketing communications (IMC) marketing communications planning that recognizes the added value of a comprehensive plan and a bodyweight sister teaching roles of a variety of communications disciplines and combines these disciplines to provide clarity, consistency, and maximum impact to the seamless integration of discrete messages.

Managing retailing, wholesaling, and logistics

Delivering value -- Chapter 16 -- summary

Retailing includes all the activities involved in selling goods or services directly to final consumers for personal, non-business use. Retailers can be understood in terms of store retailing, non-store retailing, and retail organizations.

Like products, retail store types passed through stages of growth and decline. As existing stores offer more services to remain competitive, costs and prices go up, which opens the door to new retail forms offer a mix of merchandise and services at lower prices.

The major types of retail stores are:
specialty stores
Department stores
supermarkets
convenience stores
discount stores
off-price retailers -- factory outlets, independent off-price retailers, warehouse clubs
superstores
catalog showrooms

Although most goods and services are sold through stores, nonstore retailing has been growing.

The major types of nonstore retailing are:
direct selling
multilevel network marketing
direct marketing -- e-commerce and Internet retailing
automatic vending
buying services

Although many retail stores are independently owned, an increasing number are falling under some form of corporate retailing. Retail organizations achieve many economies of scale, such as greater purchasing power, wider brand recognition, and better trained employees.

The major types of corporate retailing are:
corporate chain stores
voluntary chains
retailer cooperatives
consumer cooperatives
franchise organizations
merchandising conglomerates

Like all marketers, retailers must prepare marketing plans that include decisions on target markets, product assortment and procurement, services and store atmosphere, price, promotion, and place. These decisions must take into account major trends, such as the growth of private labels, new retail forms and combinations, growth of intertype retail competition, competition between store based and nonstore-based retailing, growth of giant retailers, decline of middle market retailers, growing investment in technology, and global presence of major retailers.

Wholesaling includes all the activities involved in selling goods or services to those who buy for resale or business use. Wholesalers can perform functions better and more cost effectively than the manufacturer can. These functions include selling and promoting, buying and assortment building, balk breaking, warehousing, transportation, financing, risk bearing, dissemination of market information, and provision of management services and consulting.

There are four type of wholesalers:
merchant wholesalers
brokers and agents
Manufacturers and retailers sales branches and purchasing offices
miscellaneous wholesalers such as agricultural assemblers and auction companies

Catholic retailers, wholesalers must decide on target markets, product assortment and services, price, permission, and place. The most successful wholesalers are those who adapt their services to meet suppliers and target customers needs.

Producers of physical products and services must decide on marketing logistics -- the best way to store and move goods and services to direct destinations; to coordinate the activities of suppliers, purchasing agents, manufactures, marketers, channel members, and customers. Major gains in a logistical efficiency have come from advances in information technology.

Managing value networks and channels

Delivering value -- Chapter 15 -- summary

Most producers do not sell their goods directly to final users. Between producers and final users stands one or more marketing channels, a host of marketing intermediaries performing a variety of functions.

Marketing channel decisions are among the most critical decisions facing management. The company's chosen channels profoundly affect all other marketing decisions.

Companies use intermediaries when they lack the financial resources to carry out direct marketing, when direct marketing is not feasible, and when they can earn more by doing so. The most important functions performed by intermediaries are information, permission, negotiation, ordering, financing, risk-taking, physical possession, payment, and title.

Manufacturers have many alternatives for reaching a market. They can sell direct or use 1, 2, or three level channels. Deciding which types of channel to use calls for analyzing customer needs, establishing channel objectives, and identifying and evaluating the major alternatives, including the types and numbers of intermediaries involved in the channel.

Effective channel management calls for selecting intermediaries and training and motivating them. The goal is to build a long-term partnership that will be profitable for all channel members.

Marketing channels are characterized by continuous and sometimes dramatic change. Three of the most important trends are the growth of vertical marketing systems, horizontal marketing systems, and multichannel marketing systems.

All marketing channels have the potential for conflict and competition resulting from such sources as goal incompatibility, poorly defined roles and rights, perceptual differences, and interdependent relationships. Companies can manage conflict by striving for subordinate goals, exchanging people among two or more channel levels, co-opting the support of leaders in different parts of the channel, and encouraging joint membership in and between trade associations.

Channel arrangements are up to the company, but there are certain legal and ethical issues to be considered with regards to practices such as exclusive dealing were territories, tying agreements, and dealers right.

E-commerce has grown in importance as companies have adopted "brick and click" channel systems. Channel integration must recognize the distinctive strengths of online and off-line selling and maximize their joint contributions.

Marketing Communications

Marketing communications is one of the four major elements of the company's marketing mix. Marketers must know how to use advertising, sales promotion,direct marketing, public relations, and personal selling to communicate the product's existence and value to the target customers.

The communication process itself consists of nine elements:

• sender,
  
• receiver,
  
• encoding,
  
• decoding,
  
• message,
  
• media,
  
• response,
  
• feedback,
  
• and noise.
  

Marketers must know how to get through to the target audience in the face of the audience's tendencies toward selective attention, distortion, and recall.

Developing the promotion program involves eight steps:

1. Identify the target audience and its characteristics
2. Define the communication objective
3. Design a message containing an effective content, structure, format, and
source.
4. Select both personal and non personal communication channels
5. Establish the total promotion budget
6. Divide the promotion budget among the main promotional tools
7. Monitor to see how much of the market becomes aware of the product, tries it, and is satisfied in the process. Finally,
8. Manage and coordinate all communications for consistency, good timing, and cost effectiveness.

There are several methods to developing a communication budget, to include:

• revenue/sales goals
• percent of sales
• competitive parity

Sadly, often small firms cut back on communication budgets when sales slide, which is exactly the opposite of what should happen. When entering new geographic markets, companies must allocate enough to make their presence known, or else possibly fail. EuroDisney had a difficult time during its early years, until it repositioned itself and understood the European consumer better.

How does a company decide between expenditures in advertising or in public relations?

The company must be cognizant of: (1) its goals, and (2) its opportunities for publicity and PR. In a multinational or global situation, it must also be conscious of the social norms. In the US, there is now an expectation that large companies give back to the communities, to the country, and engage in opportunities for the betterment of the societies in which they are doing business. In the US, advertising has lower credibility than publicity.

When operating outside the US, research must be conducted to understand the expectations of the consumer, of the various governments, of the norms, as well as understanding what the competition is doing, and whether it is best to take a different path, or to achieve parity by following the actions of those competitors.

Also, goals in terms of awareness, interest, evaluation, trial, and adoption need to be articulated and evaluated. The most effective and efficient route to goal achievement should be selected.

Marketing Logistics

Retailing and wholesaling consists of many organizations designed to bring goods and services from the point of production to the point of use. Retailing includes all the activities involved in selling goods or services directly to final consumers for their personal, nonbusiness use. Retailers can be classified in terms of store retailers, nonstore retailing, and retail organizations.

Wholesaling includes all the activities involved in selling goods or services to those who are buying for the purpose of resale or for business use. Wholesalers help manufacturers deliver their products efficiently to the many retailers and industrial users across the nation. Wholesalers perform many functions, including selling and promoting, buying and assortment-building, bulk-breaking, warehousing, transporting, financing, risk bearing, supplying market information, and providing management services and counseling.

The marketing concept calls for paying increased attention to marketing logistics, an area of potentially high cost savings and improved customer satisfaction. When order processors, warehouse planners, inventory managers, and transportation managers make decisions, they affect each other's costs and demand-creation capacity. The physical-distribution concept calls for treating all these decisions within a unified framework. The task becomes that of designing physical-distribution arrangements that minimize the total cost of providing a desired level of customer service.

Retail Channel Changes

During the past few decades, we have seen:

• Shortening channels (i.e., fewer channel members)
• More vertical marketing systems (VMS)
• More vertical and horizontal integration
• More direct marketing
• More power retailing (e.g., Toys R Us; Walmart)
• More “category killers” (i.e., stores with classification dominance in a particular product category (e.g., Toys R Us= toys; Barnes and Noble = books; Office Max and Office Depot = business supplies; Home Depot and Lowes = do-it-yourself merchandise)
• Greater price competition at all levels
• Proliferation of off-price and outlet malls

The next decades will be interesting. At a minimum, we will have:

• Increased use of technology
• Continued intense competition and industry shake-outs
• Continued use of self-selection and supermarket technologies (i.e., grid layout, scanner coding, shopping carts, few employees per square foot)
• Continued use of high service and narrow target marketing to differentiate to a small niche
• Continued shrinking of inventories and warehouse space

Marketing Channel Management

Value network and marketing channel decisions are among the most complex and challenging decisions facing the firm. Each channel system creates a different level of sales and costs. Once a particular marketing channel is chosen, the firm usually must adhere to it for a substantial period.

Marketing channels are characterized by continuous and sometimes dramatic change, especially with the changes brought by the growth of the Internet as a major marketing tool and channel of distribution. For example, the new competition in retailing no longer involves competition between individual firms but rather between retail systems. Three of the most significant trends are the growth of vertical, horizontal, and multichannel marketing systems. All channel systems have a potential for vertical, horizontal, and multichannel conflict stemming from such sources as goal incompatibility, unclear roles and rights, differences in perception, and high dependence.

Managing these conflicts can be sought through superordinate goals, exchange of persons, co-optation, joint membership in trade associations, diplomacy, mediation, and arbitration. Marketers should continue to explore and respond to the legal and moral issues involved in channel development decisions.

channel conflict

Channel conflict can probably never be totally avoided, as one is dealing with both organizations and individuals, each with their own idiosyncrasies and politics. However, conflict can be minimized by:
• Careful selection of channel partners
• Careful detailing and communication of expectations of each partner
• Upholding the expected standards
• Engaging in ethical decision-making

Resource Links

Best Global Brands - 2001 (http://www.businessweek.com/magazine/content/01_32/b3744001.htm) Businessweek article describing the best global brands.
Pricing Strategies (http://www.economist.com/business/displayStory.cfm?story_id=1143622) Article describing what not to do when pricing products.
Superbrands - America's Top Brands - Power Brands - Top Spending Brands (http://www.brandweek.com/brandweek/features/superbrands/superbrands.jsp) Collection of top brands organized by year and catagory
A Short Introduction to Branding: BrandSolutions, Inc (http://www.brand.com/WhatIsBrand.htm) Branding introduction and examples

Pricing Strategies

Price has become one of the more important marketing variables. Despite the increased role of nonprice factors in the modern marketing process, price is a critical marketing element, especially in markets characterized by monopolistic competition or oligopoly. In setting the price of a product, the company should follow a six-step procedure.

1. Establish a marketing objective
   
2. Determine the demand schedule
   
3. Estimate how the product's costs vary at different output levels, production levels, different marketing strategies, differing marketing offers, and target costing based on market research.
   
4. Examine competitors' prices as a basis for positioning product price.
   
5. Select a pricing method, such as markup pricing, target return pricing, perceived-value pricing, value-pricing, going-rate pricing, and sealed-bid pricing.
   
6. Select the final price.

Pricing involves the customer demand schedule, the cost function, and competitors' prices. The question is how should a company integrate cost-, demand-, and competition-based pricing considerations?

In setting a price the firm will have to consider the following cost, demand-, and competition-based pricing decisions:

• Cost-based pricing decisions, using marginal analysis or break-even analysis
  
• Demand-based pricing decisions, such as type of demand for the product, changes in buyer attitude toward price with changes in the economic environment,and the elasticity of demand. And finally,
  
• Competition-based pricing decisions. To set prices effectively, an organization must be aware of the prices charged by competitors.

Price / Quality Mix

Generally, but not always, price is a signal of product quality. The reason is fairly straightforward. Most products and services, in reality, are priced on a cost plus markup basis. Thus, if the cost of goods is $10 and the target margin is 50%, the selling price is $15. And generally, adding quality to a product or service increases the cost of goods. For example, using leather as a seating material in an automobile is more expensive than using cloth. To be profitable, the company must increase its prices to recover the added cost of leather over cloth. In this way, historically, price has generally been a reliable signal of quality. Sears Roebuck built their entire mail order catalog business on “Good”, “Better”, and “Best” quality levels with corresponding increasing prices.

Service Strategies

As the United States moves increasingly toward a service economy and beyond, marketers need to know more about marketing service products. Services are activities or benefits that one party can offer to another that are essentially intangible and do not result in ownership of anything tangible. Services are intangible, inseparable, variable, and perishable. Because services generally are intangible, customers perceive them as a more risky proposition and find evaluation more difficult. Accordingly, they tend to rely more on personal references or information sources, brand reputation, and the price and/or facilities of the service provider as an indication of quality. To overcome these risks and perceptions, marketers must reduce the complexity involved with the service, stress the positive elements of tangibility in the service, make all communications with the customer very clear and unambiguous, and focus constantly on service quality.

The evidence from the PIMS project (Profit Impact of Marketing Strategy-See The PIMS Principles, Robert D. Buzzell and Bradley T. Gale, ISBN 0-02-904430-8 for details) is absolutely clear, i.e., high quality products or services are both more profitable than lower quality products or services. On page 443, Kotler says, “Every business is a service business. Does your service put a smile on the customer’s face?” Every business should be striving to produce the highest quality products and services for their customers at all times. In real life, it is not possible to substitute a little higher quality service for a little lower quality product. Customers do not make such trade-offs.

Product and Brand Strategies

Product is the first and most important element of the marketing mix. A product is anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or need. Products can be physical objects, services, people, places, organizations, and ideas. Product strategy calls for making coordinated decisions on product mixes, product lines, brands, packaging, and labeling.

Companies should develop brand policies for the individual product items in their lines. They must decide on product attributes (quality, features, design), whether to brand at all, whether to do producer or distributor branding, whether to use family brand names or individual brand names, whether to extend the brand name to new products, whether to create multiple brands, and whether to reposition any of them.

Sometimes, companies will start with a very good brand that they have invested very large sums of money into and try to “stretch” the brand to cover additional, similar or related products and/or services (also called line extension). Sometimes it can be a good idea, but sometimes it can be a very bad idea. There are no rules. When Hunt Foods, Inc. (now Conagra, Inc.) added chopped onions to their flagship brand, Hunt’s Tomato Sauce, it was a great success. But when they added tomato bits to another product, Hunt’s Tomato Sauce with Tomato Bits, they stretched the brand too far, and the product failed. Probably the best insight into this example is that housewives saw adding onions as a real benefit to themselves, but tomato bits made no difference whatsoever.

Resource Links

World Trade Organization (http://www.wto.org/) Global international organization dealing with the rules of trade between nations

Market Segmentation and Targeting (http://www.business.com/directory/advertising_and_marketing/segmentation_and_targeting/) Listing of articles related to market segmentation and targeting.

Marketing Strategies (http://www.smallbusiness-marketing-plans.com/marketing-strategies.html) Overview of general marketing strategies

Market Segmentation (http://www.businessplans.org/Segment.html) Description of the differences to consider in market segmentation

Competitive intelligence

Competitive intelligence tries to ensure that the organization has accurate and current information about its competitors and has a plan for using that information to its advantage. Competitive intelligence uses public sources to find and develop information on competition, competitors, and the market environment. Unlike business espionage, which develops information by illegal means like "hacking," competitive intelligence uses public information - information that can be legally and ethically identified and accessed.

Effective implementation of a competitive intelligence program requires not only information about the competitors, but also information on other environmental trends such as industry trends, legal and regulatory trends, international trends, technology developments, political developments and economic conditions.

New Market & Global Market Offerings

Mature and declining products must be replaced with newer products so that the organization's life cycle can be revitalized. If the firm does not obsolete its products and create new ones, its competitors surely will! Similarly, companies cannot continue to focus only on the domestic market. The approach to global markets may require any or all of market development, product development, and diversification strategies.

Positioning

Positioning is a matter of perceptions. It is how your product or service is perceived by the marketplace. Effective positioning puts you in the top of mind position among potential customers. For example, the product Nyquil was originally conceived as a daytime cough suppressant. Unfortunately, it made people drowsy. In order to recoup product development costs, the side affect of drowsiness was then transformed into a powerful positioning strategy. Nyquil became "the night time, coughing, sniffling, sneezing so you can rest" medicine. By changing its positioning, Nyquil created and owned the nighttime cold remedy market.

Finding out how consumers perceive a firm's product relative to those of competitors is essential in developing a positioning strategy. Perceptual maps can be used to try to understand consumer perceptions; a perceptual map is a two dimensional representation of the customers’ perceptions of the benefits of competitive products. However, an organization can help customers to better understand the underlying benefits of its products through the effective use of integrated marketing communications, including advertising, public relations, selling and relational behavior.

Market Segmentation and Segment Selection

Market segmentation is one of the most fundamental concepts in marketing and your choice of which approach to adopt will directly affect the impact of segmentation on your business. Market segmentation, correctly applied, is about understanding the requirements of customers and, therefore, how they decide between one offer and another. This insight is used to form groups of customers who share the same or very similar value criteria. A company is then able to determine which groups of customers it is best suited to serve and which product and service offers will both meet the requirements of its selected segments and outperform any competition. Once you identify the segments, you should select the segments whose needs the organization can best satisfy and from which the organization can generate an appropriate return on its investment.

Competition

Competition can be defined by the five competitive forces in business:

• new entrants,
  
• threat of substitution,
  
• the bargaining power of buyers,
  
• the bargaining power of suppliers,
  
• and rivalry among current competitors.

No organization exists without competitors. Effective marketing management requires an analysis of the competitive environment and an understanding of the nature and conditions of the industry rivalry.

In a competitive analysis, you should

• identify the major competitors,
  
• review their business practices,
  
• strengths, and weaknesses,
  
• and look for market opportunities for your organization within those competitive gaps.

Competition can come from many sources. Customers can compete with you by deciding to make the product that they were buying from you. Suppliers can decide to bypass you in the value chain and sell directly to your customers. The most likely source of competitive pressure can come from substitutes. Products tend to be close substitutes when there are similar product performance characteristics, similar occasions for use, or they are sold in the same geographic market.

Some examples of substitutes are email for postal service mail, or when the use of one product eliminates the need for another, such as the use of better dental products eliminates the need for frequent visits to the dentist. Of course, not purchasing a product is also a substitute, as anyone who loves chocolate will understand.

Analyzing Consumer and Business Markets' Buyer Behavior

In addition to a company's marketing mix and factors present in the external environment, a buyer is also influenced by personal characteristics and the process by which he or she makes decisions. A buyer's cultural characteristics, including values, perceptions, preferences, and behavior learned through family or other key institutions, is the most fundamental determinant of a person's wants and behavior.

The buyer's behavior is influenced by four major factors:

• cultural,
  
• social,
  
• personal,
  
• and psychological.

Business markets consist of individuals and organizations that buy goods for purposes of further production, resale, or redistribution. Businesses (including government and nonprofit organizations) are a market for raw and manufactured materials and parts, installations, accessory equipment, and supplies and services. The variables impacting the business buyer are similar to those of the consumer buyer in some ways but very different in others. In general, the business buyer is much more technical, price-oriented, educated for the job, and risk-averse than the consumer buyer. In addition, with the business-buying environment, there is more concern for the status and power of potential vendors, and persuasiveness and empathy play relatively lower roles. Consumer and business markets and buying behavior have to be understood before sound marketing plans can be developed.

Measuring Demand & Scanning the Environment

Marketing information is a critical element in effective marketing as a result of the trend toward global marketing, the transition from buyer needs to buyer wants, and the transition from price to non-price competition.

All firms operate some form of marketing information system that may consist of four subsystems:

• an internal records system,
  
• a marketing intelligence system,
  
• marketing research,
  
• and a Marketing Decision Support System (MDSS marketing system).

These systems allow marketing managers to estimate current and future demand.

Change in the macroenvironment is the primary basis for market opportunity. Organizations/firms must start the search for opportunities and possible threats with their macroenvironment. The macroenvironment consists of all the actors and forces that affect the organization's operations and performance. They need to understand the trends and megatrends characterizing the current macroenvironment. This is critical to identify and respond to unmet needs and trends in the marketplace.

The macroenvironment consists of six major forces:

• demographic,
  
• economic,
  
• natural,
  
• technological,
  
• political/legal,
  
• and social/cultural.

Strategic Market Planning

A major challenge for marketing-oriented companies as they respond to the rapidly changing marketplace is to engage continuously in market-oriented strategic planning. They must learn how to develop and maintain a viable fit among their objectives, resources, skills, and opportunities.

Corporate strategic planning involves four planning activities.

1. Develop a clear sense of the company's mission in terms of its industry scope, products and applications scope, competence scope, market segment scope, vertical scope, and geographical scope.

2. Identify the company's strategic business units (SBUs).

3. Allocate resources to the various SBUs based on their market attractiveness and business strength.

4. Expanding present businesses and develop new products to fill the strategic planning gap.

Marketing plans focus on a product/market and consist of the detailed marketing strategies and programs for achieving the product's objectives in a target market.


The marketing planning process consists of five steps:

1. analyzing market opportunities;
2. researching and selecting target markets;
3. designing market strategies;
4. planning marketing programs;
5. and organizing, implementing, and controlling the marketing effort.

The resulting document consists of an:

• executive summary,
• current market situation,
• opportunity and issue analysis,
• objectives,
• marketing strategy,
• action programs,
• projected profit and loss statement,
• and controls.

developing pricing strategies and programs

shaping the market offerings -- Chapter 14 -- summary



Despite the increased role of nonprice factors and modern marketing, price remains a critical element of the marketing mix. Price is the only element that produces revenue; the others produce costs.



In setting pricing policy, a company follows a six step procedure.

1. selecting the pricing objective
2. estimating the demand curve
3. estimate how its costs vary at different levels of output, different levels of accumulated product should experience, and differentiated marketing offers
4. examines competitors costs, prices, and offers
5. selects a pricing method
6. then selects the final price

Companies do not usually set a single price, but rather a pricing structure that reflects variations in geographical demand and costs, market segment requirements, purchase timing, order levels, and other factors. Several price adaptation strategies are available:

• geographical pricing
• price discounts and allowances
• promotional pricing
• discriminatory pricing

After developing pricing strategies, firms often face situations in which they need to change prices. A price decrease might be brought about by excess plant capacity, declining market share, a desire to dominate the market through lower costs, or economic recession. A price increase might be brought about by cost inflation or over demand. Companies must carefully manage customer perceptions in raising prices.



Companies must anticipate competitor price changes and prepare contingent response. A number of responses are possible in terms of maintaining or changing price or quality.



The firms facing our competitors price change must try to understand the competitors and tend and the likely duration of the change. Strategy often depends on whether a firm is producing homogeneous or nonhomogeneous products. Market leaders attacked by lower-priced competitors can choose to maintain price, raise the perceived quality of their product, reduced price, increase price and improve quality, or launch a lower-priced fighter line.





Technorati Tags: marketing, management, pricing

Powered by ScribeFire.

designing and managing services

shaping the market offerings -- Chapter 13 -- summary



A service is any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. It may or may not be tied to a physical product.



Services are in tangible, inseparable, variable, and perishable. Each characteristic poses challenges and require certain strategies. Marketers must find ways to give tangibility to intangibles; to increase the productivity of service providers; to increase and standardize the quality of the service provided; and to match the supply of services with market demand.



In the past service industries lagged behind manufacturing firms in adopting and using marketing concepts and tools, but the situation has not changed. Service marketing must be done holistically. It calls not only for external marketing but also for internal marketing community employees, and interactive marketing to emphasize the importance of both high-tech and high-touch.



Customers expectations play a critical role in their service experiences and evaluations. Companies must manage service quality by understanding the effects of each service encounter.



Top service companies excel at the following practices:

• a strategic concept
• history of top management commitment to quality
• hi standards
• self-service technologies
• systems for monitoring service performance and customer complaints
• emphasis on employee satisfaction

To brand a service organization effectively, the company must differentiate its brand through primary and secondary service features and develop appropriate brand strategies. Effective branding programs for services often employ multiple brand elements. They also develop brand hierarchies and portfolios and establish an image dimensions to reinforce or complement service offerings.



Even product-based companies must provide post purchase service. To provide the best support, and manufacturer must identify the services customers value most and the relative importance. The service mix includes both pre-sale services (facilitating and value augmenting services) and post sales services (customer service departments, repair and maintenance services).





Technorati Tags: management, marketing, services

Powered by ScribeFire.

setting product strategy

shaping the market offerings -- chapter 12-- summary



Product is the first and most important element of the marketing mix.Product strategy calls for making coordinated decisions on product mixes, product lines, brands, and packaging and labeling.



And planting its market offering, the marketer needs to think through the five levels of the product:

• the core benefit
• the basic product
• the expected product
• the augmented product
• the potential product

Products can be classified in several ways. In terms of durability and reliability, products can be non-durable goods, durable goods, or services. In the consumer goods category, products are convenience goods, shopping goods, specialty goods, or unsought goods. In the industrial goods category, products fall into one of three categories: materials and parts, capital items, or supplies and business services.



Brands can be differentiated on the basis of a number of different product or service dimensions;

• product form
• features
• performance
• conformance
• durability
• reliability
• repair ability
• style and design
• service dimensions
• delivery
• installation
• customer training
• customer consulting
• maintenance and repair

Most companies sell more than one product. In product mix can be classified according to wait, length, death, and consistency. These four dimensions are the tools for developing the company's marketing strategy and deciding which product lines to grow, maintain, harvest, and divest. To analyze a product line and decide how many resources should be invested in that line, product line managers need to look at sales and profits and market profile.



A company can change the product component of its marketing mix by lengthening its product via line stretching or line filling, by modernizing its products, by featuring certain products, and by pruning its products to eliminate the least profitable.



Brands are often sold or marketed jointly with other brands. Ingredient brands and co-brands can add value assuming they have equity and are perceived as fitting appropriately.



Physical products have to be packaged and labeled. Well-designed packages can create convenience value for customers and promotional value for producers. In effect, they can act as "five second commercials" for the product. Warranties and guarantees can offer further assurance to the consumer.

How to derive fresh consumer insights

How to derive fresh consumer insights to differentiate products and services.

If companies examined customers and tire experience with a product or service -- the consumption chain -- they can uncover opportunities to position their offerings in ways that neither they nor their competitors thought possible. Here is a thought provoking list of questions marketers can use to help them identify new, customer base points of differentiation.

• How do people become aware of their need for your product and service?
• How do consumers find your offering?
• How do consumers make their final selection?
• How do consumers order and purchase your product or service?
• What happens when your product or service is delivered?
• How is your product installed?
• How is your product or service paid for?
• How is your product stored?
• How is your product moved around?
• What is the consumer really using your product for?
• What do consumers need help with when they use your product?
• What about returns or exchanges?
• How is your product repaired or service?
• What happens when your product is disposed of or no longer used?

Tapping into global markets

creating successful long-term growth -- Chapter 21 -- summary

Despite the many challenges in the international arena:

• shifting borders
• unstable government
• foreign exchange problems
• corruption
• technological pirating
  
  

Companies selling in global industries need to internationalize their operations. Companies cannot simply stay domestic and expect to maintain their markets.

In deciding to go abroad, a company needs to define its international marketing objectives and policies. The company must determine whether to mark and the few countries or many countries. They must decide which countries to consider. In general, the candidate countries should be rated on three criteria: market attractiveness, risk, and competitive advantage. Developing countries offer a unique set of opportunities and risks.

Once accompanied his side to a particular country, it must determine the best mood of entry. Its broad choices are indirect exporting, direct exporting, licensing, joint ventures, and direct investment. Each succeeding strategy involves more commitment, risk, control, and profit potential.

In deciding on the marketing program, a company must decide how much to adapt its marketing program (product, communications, distribution, and price) to local conditions. At the product level, firms can pursue a strategy of straight extension, product adaptation, or product invention. At the communication level, firms may choose communication adaptation or dual adaptation. At the price level, firms may encounter price escalation in gray markets. At the distribution level, firms need to take a whole channel view of the challenge of distributing products to the final users. In creating all elements of the marketing program, firms must be aware of the cultural, social, political, technological, environmental, and legal limitations they face in other countries.

Country of origin perceptions can affect consumers and businesses alike. Managing this perceptions and the most advantageous way possible is an important marketing priority.

Depending on the level of international involvement, companies manage their international marketing activity in three ways: through export departments, international divisions, or a global organization.

Introducing new market offerings

creating successful long-term growth -- Chapter 20 -- summary



Once the company has stagnated the market, chosen its target customer groups and identified their needs, and determine its desired market positioning, it is ready to develop and launch appropriate new products. Marketing should participate with other departments and every stage of new product development.



Successful new product development requires the company to establish an effective organization for managing the development process. Companies can choose to use product managers, new product managers, new product committees, new product departments, or new product venture teams. Increasingly, companies are adopting cross functional teams and developing multiple product concepts.



Eight stages are involved in the new product development process:

• idea generation
• screening
• concept development and testing
• market strategy development
• business analysis
• product development
• market testing
• commercialization.
  
  

At each stage, the company must determine whether the idea should be dropped or move to the next stage.



The consumer adoption process is the process by which consumers learn about new products, try them, and adopt or reject them. Today many marketers are targeting heavy users and early adopters of new products, because both groups can be reached I specific media and tend to be opinion leaders. The consumer adoption process is influenced by many factors beyond the marketers control, including consumers and organizations willingness to try new products, personal influences, and the characteristics of the new product or innovation.

dealing with competition

Chapter 11 -- summary



To prepare an effective marketing strategy, a company must study competitors as well as actual potential customers. Companies need to identify competitors strategies, objectives, strength, and weaknesses.



A company to close its competitors are they seeking to satisfy same customers and needs and making similar offers. A company should also pay attention to latent competitors,

who may offer new or other ways to satisfy the same needs. A company should identify competitors by using both the industry and market based analysis.

A market leader has the largest market share in the relevant product market. To remain dominant, the leader looks for ways to expand total market demand, attempts to protect its current market share, and perhaps tries to increase its market share.

A market challenger attacks the market leader and other competitors in an aggressive bid for more market share. Challengers can choose from five types of general attack; challengers must also choose specific attack strategies.

A market follower is a runner up firm that is willing to maintain its market share and not rock the boat. A follower can play the role of counterfeiter, cloner, imitator, or adapter.

A market nicher serves small market segment not being served by larger firms. The key to nichemanship is specialization. Nichers develop offerings to fully meet a certain group of customers needs, commanding a premium price in the process.

As important as a competitive orientation is in today's global market, companies should not ever do the emphasis on competitors. They should maintain a good balance of consumer and competitor monitoring.

crafting the brand positioning

Chapter 10 -- summary

Deciding on positioning requires the determination of a frame of reference -- identifying the target market and the nature of the competition -- and the ideal point of parity and points of difference brand associations.to determine the proper competitive frame of reference, one must understand consumer behavior in the considerations consumers use in making brand choices.

Point of difference are those associations unique to the brand that are also strongly held and favorably evaluated by consumers.

Point of parity are those associations not necessarily unique to the brand but perhaps shared with other brands.

Category point of parity associations are associations consumer view as being necessary to a legitimate incredible product offering within a certain category.

Competitive point of parity associations are designed to negate competitors points of difference.

The key to competitive advantages product differentiation. A market offering can be differentiated along five dimensions:

1. product
   
2. services
3. personnel
4. Channel
5. image

Because economic conditions change and competitive activity varies, companies normally find it necessary to be formulate their marketing strategy several times during a product's lifecycle. Technologies, product forms, and brands also exhibit lifecycles with distinct stages. The general sequence of stages in a lifecycle is introduction, growth, maturity, and decline. The majority of products today or in the maturity stage.

Each stage of the product lifecycle calls for different marketing strategies. The introduction stage is marked by slow growth in minimal profits. If successful, the product enters a gross stage marked by rapid sales growth and increasing profits. There follows a maturity stage in which sales growth slows and profits stabilize. Finally, the product enters a decline stage. The company's task is to identify the truly weak products; develop a strategy for each one; and phase out weak products in a way that minimizes the hardship to company profits, employees, and customers.

Like products, markets evolve through four stages:

1. emergence
2. growth
3. maturity
4. decline
   
   

creating brand equity

Chapter 9 -- summary

A brand is a name, term, signed, symbol, or design, or some combination of these elements, intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competitors. The different components of a brand -- brand names, logos, symbols, etc. are brand elements.

Brands offer a number of benefits to customers and firms. Brands are valuable intangible assets that need to be managed carefully. The key to branding is that consumers perceive differences among brands in a product category.

Brand equity should be defined in terms of marketing affects uniquely attributed to a brand. That is, brand equity relates to the fact that different outcomes result in the marketing of a product or service because of its brand, as compared to the results if that same product or service was not identified by that brand.

Building brand equity depends on three main factors:

1. the initial choices for the brand elements or identities making up the brand
2. the way the brand is integrated into the supporting marketing program
3. associations and directly transferred to the brand by linking the brand to some other entity

Brand equity needs to be measured in order to be managed well. Brand audits are in-depth examinations of the health of a brand and can be used to set strategic direction for the brand. Tracking studies involve information collected from consumers on a routine basis over time and provide valuable tactical insights into the short-term effectiveness of marketing programs and activities. Brand audits measure "where the brand has been," and tracking studies measure "where the brand is now" and whether marketing programs are having the intended effect.

A branding strategy for a firm identifies which brand elements a firm chooses to apply across the various products it sells. And a brand extension, a firm uses an established brand name to introduce a new product. Potential extensions must be judged by how effectively they leverage existing brand equity to a new product, as well as how effectively the extension, in turn, contributes to the equity of the existing parent brand.

Brands can play a number of different roles within the brand portfolio. Brands may expand coverage, provide protection, extended image, or fulfill that it a variety of other roles for the firm. Each brand-name product must have a well-defined positioning. In that way, Brands can maximize coverage and minimize overlap and us optimize the portfolio.

Identifying market segments and targets

-- Continued...



Sequential segmentation

business buyers seek different benefit bundles based on their stage in the purchase decision process.

1.first time prospects

2. Novices

3.sophisticates



One proposed segmentation scheme classifieds business buyers into three groups, each warranting a different type of selling:

1. price oriented customers (transactional selling) -- wanting value through lowest price

2.solution oriented customers (consultants selling) -- want value through more benefits and advice

3.strategic value customers (price selling) -- want value through the supplier tell investing in purchasing and the customers business



Market targeting

once the firm has identified its market segment opportunities, and it has to decide how many and which ones to target.



Effective segmentation criteria

to be useful, market segments must rate favorably on five key criteria:



Measurable -- the size, purchasing power, and characteristics of the segments can be measured

substantial -- the segments are large and profitable enough to serve

accessible -- the segments can be effectively reached and served

differentiable -- the segments are conceptually distinguishable and respond differently to different marketing mix elements and programs

actionable -- effective programs can be formulated for tracking and serving the segments



Evaluating and selecting the market segments



When evaluating different market segments, the firm must look for two factors: the segments overall attractiveness and the company's objectives and resources.

After evaluating different segments, the company can consider the five patterns of target market selection:

single segment concentration

selective specialization

product specialization

market specialization

full market coverage in paragraph

Major segmentation variables for business markets

Major segmentation variables for business markets



Demographic

1. industry: which industries should we serve?

2. Company size: what size company should we serve?

3. Location: what geographical area should we serve?



Operating variables

4. Technology: what customer technology should be focused on?

5. User a nonuser status: should we serve heavy users, medium users, light users, or new users?

6. Customer capabilities: should we serve customers needing many or few services?



Purchasing approaches

7. purchasing function organization: should we serve companies with highly centralized or decentralized purchasing organizations?

8. Power structure: should we serve companies that are engineering dominated, financially dominant, and so on?

9. Nature of existing relationships: should we serve companies with which we have strong relationships or simply go after the most desirable companies?

10. General purchase policies: should we serve companies that prefer leasing? Service contracts? Systems purchases? Sealed bidding?

11. Purchasing criteria: should we serve companies that are seeking quality? Service? Price?



Situational factors

12. Urgency: should we serve companies that need quick and sudden delivery or service?

13. Specific application: should we focus on certain applications of our product rather than all applications?

14. Size of order: should we focus on large or small orders?



Personal characteristics

15. Buyer seller similarity: should we serve companies whose people and values are similar to ours?

16. Attitudes toward risk: should we serve risk-taking or risk avoiding customers?

17. Loyalty: should we serve companies that show high loyalty to their suppliers?

Levels of market segmentation

Massmarketing -- seller engages in the mass production, mass distribution, and mass promotion of one product for our buyers.



Argument for massmarketing -- creates largest potential market, which leads to the lowest costs, which in turn can lead to lower prices or higher margins

argument against massmarketing -- increasing splintering of the market. Diverse advertising and distribution channels increases difficulty and expense is to reach mass audiences.



Most companies are turning to micro marketing at one of four levels:

• segments
• niches
• local areas
• individuals
  
  

Marketers do not create the segments -- the marketers task is to identify the segments and decide which ones to target.



Flexible market offering -- consists of two parts: a naked solution containing the product and service elements at all segment members value, and discretionary options that some segment members value



Market segments can be defined in many different ways.

Identify preference segments.

Homogeneous preferences -- market where all the consumers have roughly the same preferences

diffused preferences -- consumers vary greatly in their preferences

clustered preferences -- market reveals distinct preference clusters, called natural market segments



Niche marketing -- narrowly define customer group seeking a distinctive mix of benefits. Globalization has facilitated niche marketing.



Marketers usually identify niches by dividing a segment into sub segments. As marketing efficiency increases, niches that were seemingly too small may become more profitable.



Local marketing -- marketing programs tailored to the needs and wants of local customer groups such as trading areas, neighborhoods, and individual stores.



Local marketing reflects a growing trend called grassroots marketing. Marketing activities concentrate on getting as close and personally relevant to individual customers as possible. A large part of local, grassroots marketing is experimental marketing, which promotes a product or service not just by communicating its features and benefits, but also connecting it with unique and interesting experiences.



Customerization -- ultimate level of segmentation leads to segments of one, customized marketing for one-to-one marketing. Combines optionally driven mass customization with customized marketing in a way that empowers consumers to design a product and service offering of their choice.



Segmenting consumer markets



Geographic segmentation -- geographical units such as nations, states, regions, counties, cities, neighborhoods

demographic segmentation -- variables such as age, family size, family lifecycle, gender, income, occupation, education, religion, race, generation, nationality, and social class

psychographic segmentation -- the science of using psychology and demographics to better understand consumer. Buyers are divided into different groups on the basis of psychological/personality traits, lifestyle, or values

behavioral segmentation -- buyers are divided in groups on the basis of their knowledge of, attitude toward, use of, or response to product



Bases for segmenting business markets

business markets can be segmented with some of the same variables used in consumer market segmentation, but business marketers also use other variables.



cont ....

Connecting with the customer

Identifying market segments and targets



Marketing concepts -- Chapter 8



Target marketing involves three activities:

• market segmentation
• market targeting
• market positioning
  
  

Markets can be targeted at four levels:

• segments -- large, identifiable groups within a market
• niches -- narrowly defined groups
• local areas -- grassroots marketing for treating areas, neighborhoods, and individual stores
• individuals
  
  

More companies now practice individual and Mass customization. The future is likely to see more self marketing, a form of marketing in which individual consumers take the initiative and designing products and brands.



There are two bases for segmenting consumer markets:

• consumer characteristics
• consumer responses
  
  

Major segmentation variables for consumer markets are geographic, demographic, psychographic, and behavioral. These variables can be used singly or in combination.



Business marketers use all these variables along with operating variables, purchasing approaches, and situational factors.



To be useful, market segments must be measurable, substantial, accessible, differentiable, and actionable.



A firm has to evaluate the various segments and decide how many and which ones to target:

• a single segment
• several segments
• specific product
• a specific market
• full market
  
  

If it serves the full market, it must choose between differentiated and undifferentiated marketing. Firms must also monitor segment relationships, and seek economies of scope and the potential for marketing to super segments. They should develop segment by segment and invasion plans. Marketers must choose target markets in a socially responsible manner.

marketing concepts unit 1 - summary

Global Marketing Management -



Today's marketplace is driven by a variety of factors --your customers, your
competition, technology, and the market forces affecting your industry
on a global scale. To survive, you must constantly rethink and reinvent
your company's approach to and relationship with its critically
important customers.

Global Marketing Management focuses on competitive strategy,
particularly in a global context. Issues include understanding
customers, value delivery, relationship management, and communication
strategy.

Strategic Market Planning

A major challenge for marketing-oriented companies as they respond
to the rapidly changing marketplace is to engage continuously in
market-oriented strategic planning. They must learn how to develop and
maintain a viable fit among their objectives, resources, skills, and
opportunities. Corporate strategic planning involves four planning
activities.

1. Develop a clear sense of the company's mission in terms of its
   industry scope, products and applications scope, competence scope,
   market segment scope, vertical scope, and geographical scope.
   
2. Identify the company's strategic business units (SBUs).
   
   
3. Allocate resources to the various SBUs based on their market attractiveness and business strength.
   
   
4. Expanding present businesses and develop new products to fill the strategic planning gap.

Marketing plans focus on a product/market and consist of the
detailed marketing strategies and programs for achieving the product's
objectives in a target market. The marketing planning process consists
of five steps: analyzing market opportunities; researching and
selecting target markets; designing market strategies; planning
marketing programs; and organizing, implementing, and controlling the
marketing effort. The resulting document consists of and executive
summary, current market situation, opportunity and issue analysis,
objectives, marketing strategy, action programs, projected profit and
loss statement, and controls.

Measuring Demand & Scanning the Environment

Marketing information is a critical element in effective marketing
as a result of the trend toward global marketing, the transition from
buyer needs to buyer wants, and the transition from price to non-price
competition. All firms operate some form of marketing information
system that may consist of four subsystems: an internal records system,
a marketing intelligence system, marketing research, and a Marketing
Decision Support System (MDSS marketing system). These systems allow
marketing managers to estimate current and future demand.

Change in the macroenvironment is the primary basis for market
opportunity. Organizations/firms must start the search for
opportunities and possible threats with their macroenvironment. The
macroenvironment consists of all the actors and forces that affect the
organization's operations and performance. They need to understand the
trends and megatrends characterizing the current macroenvironment. This
is critical to identify and respond to unmet needs and trends in the
marketplace. The macroenvironment consists of six major forces:
demographic, economic, natural, technological, political/legal, and
social/cultural.

Analyzing Consumer and Business Markets' Buyer Behavior

In addition to a company's marketing mix and factors present in the
external environment, a buyer is also influenced by personal
characteristics and the process by which he or she makes decisions. A
buyer's cultural characteristics, including values, perceptions,
preferences, and behavior learned through family or other key
institutions, is the most fundamental determinant of a person's wants
and behavior. The buyer's behavior is influenced by four major factors:
cultural, social, personal, and psychological.

Business markets consist of individuals and organizations that buy
goods for purposes of further production, resale, or redistribution.
Businesses (including government and nonprofit organizations) are a
market for raw and manufactured materials and parts, installations,
accessory equipment, and supplies and services. The variables impacting
the business buyer are similar to those of the consumer buyer in some
ways but very different in others. In general, the business buyer is
much more technical, price-oriented, educated for the job, and
risk-averse than the consumer buyer. In addition, with the
business-buying environment, there is more concern for the status and
power of potential vendors, and persuasiveness and empathy play
relatively lower roles. Consumer and business markets and buying
behavior have to be understood before sound marketing plans can be
developed.

Analyzing business markets

Marketing concepts -- Chapter 7 -- summary



Organizational buying is the decision-making process by which formal organizations establish the need for purchased products and services, then identify, a vitally, and choose among alternative brands and suppliers. The business market consists of all the organizations that acquire goods and services used in the production of other products or services that are sold, rented, or supplied others.



Compared to consumer markets, business markets generally have fewer and larger buyers, a closer customer supplier relationship, and more geographically concentrated buyers. Demand in the business market is derived from demand in the consumer market and fluctuates with the business cycle. Nonetheless, the total demand for many business goods and services is quite price-inelastic. Business marketers need to be aware of the role of professional purchasers and their influencers, the need for multiple sales calls, and the importance of direct purchasing, reciprocity, and leasing.



The buying center is the decision-making unit of a buying organization. It consists of:

• initiators
• users
• influencers
• deciders
• approvers
• buyers
• gatekeepers
  
  

To influence these parties, marketers must be aware of environmental, organizational, interpersonal, and individual factors.



Business marketers must form strong bonds and relationships with their customers and provide them added value. Some customers, however, may prefer more of a transactional relationship.



The institutional market consists of schools, hospitals, nursing homes, prisons, and other institutions that provide goods and services to people in their care. Buyers for government organizations tend to require a great deal of paperwork from their vendors and to favor open bidding and domestic companies. Suppliers must be prepared to adapt their offers to the special needs and procedures found in institutional and government markets.

Analyzing consumer markets

Marketing concepts -- Chapter 6 -- summary



Consumer behavior is influenced by three factors:

• cultural -- culture, subculture, and social class
• social -- reference groups, family, and social roles and statuses
• personal -- age, stage in life cycle, occupation, economic circumstances, lifestyle, personality, and his self-concept
  
  

Research into all these factors can provide marketers with clues to reach and serve consumers more effectively.



Four main psychological processes affect consumer behavior:

• motivation
• perception
• learning
• memory
  
  

To understand how consumers actually make buying decisions, marketers must identify who makes and has input into the buying decision; people can be inhibitors, influencers, deciders, buyers, or users. Different marketing campaigns might be targeted to each type of person.



The typical buying process consists of the following sequence of events:

• problem recognition
• information search
• evaluation of alternatives
• purchase decision
• post purchase behavior
  
  

The marketers job is to understand the behavior at each stage. The attitudes of others, unanticipated situational factors, and perceived risk may all affect the decision to buy, as will consumers level of post-purchase satisfaction and post purchase actions on the part of the company.

Conducting marketing research and forecasting demand

Marketing concepts -- Chapter 4



Summary



Companies can conduct their own marketing research or hire other companies to do it for them. Good marketing research is characterized by:

• the scientific method
• creativity
• multiple research methods
• accurate model building
• cost-benefit analysis
• healthy skepticism
• ethical focus
  
  

The marketing research process consists of:

• defining the problem and research objective
• developing the research plan
• collecting the information
• analyzing the information
• presenting the findings to management
• making the decisions
  
  

In conducting research, firms must decide whether to collector and data or use data of the arty exists. They must also decide which research approach and which research instruments to use.

Research approaches -- observational, focus group, survey, behavioral data, experimental

research instruments -- questionnaires, mechanical instruments

in addition, they must decide on a sampling plan or contact method.



Analysis should ensure that the company achieves the sales, profits, and other goals established in its annual plan.

The main tools are:

• sales analysis
• market share analysis
• marketing and expense to sales analysis
• financial analysis of the marketing plan
  
  

Profitability analysis seeks to measure and control the profitability of various products, territories, customer groups, trade channels, and order sizes. An important part of controlling for profitability is assigning costs and generating profit and loss statements.



There are two types of demand: market demand and company demand.



To estimate current demand, companies attempt to:

• determined total market potential
• area market potential
• industry sales
• market share
  
  

To estimate future demand:

• Company survey buyer's intentions
• solicit their sales force input
• gather expert opinions
• engage in market testing.
  
  

Mathematical models, advanced statistical techniques, and computerized data collection procedures are essential to all types of demand and sales forecasting.

Capturing market insights

Marketing information systems (MIS) -- consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision-makers.



Components of a modern marketing information system

• internal records and marketing intelligence
• the order to payment cycle 
• sales, inventory, and restocking information systems
• databases, data warehousing, and data mining
  
  

The marketing intelligence system -- is a set of procedures and sources for managers use to obtain everyday information about developments in the marketing environment.



A company can take several steps to improve the quality of its marketing intelligence:

• train and motivate the sales force to spot and report new developments
• motivate distributors, retailers, and other intermediaries to pass along important intelligence
• external networking
• customer advisory panels
• take advantage of government data resources
• purchase information from outside suppliers
• online customer feedback systems to collect competitive intelligence
  
  

Four main ways marketers can find relevant online information:



Independent customer goods and service review forums such as:

epinions.com

rateital.com

consumerreview.com

bizrate.com



distributor or sales agent feedback sites such as:

Amazon.com

elance.com



commerce sites offering customer reviews and expert opinions:

zdnet.com



customer complaint cites:

planetfeedback.com

complaints.com

Marketing concepts -- Chapter 3 summary

To carry out their analysis, planning, implementation, and control responsibilities, marketing managers need a marketing information system (MIS). The role of the MIS is to assess the managers information needs, develop the needed information, and distribute the information in a timely manner.

An MIS has three components:

* an internal records system -- which includes information on
the order to payment cycle and sales reporting systems
* a marketing and intelligent system -- set of procedures and
sources used by managers to obtain everyday information about pertinent
developments in the marketing environment
* marketing research systems -- that allow for the systematic
design, collection, analysis, and reporting of data and findings relevant to a
specific marketing situation.

Within the rapidly changing global picture, marketers must
monitor six major environmental forces:

* demographic
* economic
* social/cultural
* natural
* technological
* political/legal

And the demographic environment, marketers must be aware of:

* worldwide population growth
* changing mixes of ages
* ethnic composition
* educational levels
* rise of nontraditional families
* large geographic shifts in population
* the steady increase in micro marketing

In the economic arena, marketers need to focus on income
distribution and levels of savings, debt, and credit availability.

And the social/cultural arena, marketers must understand
people's view of themselves, others, organizations, society, nature, and the
universe. In this market products that
correspond to society's core and secondary values, and address the needs of
different subcultures within a society.

In the natural environment, marketers need to be aware of
raw material shortages, increased energy costs and pollution levels, and the
changing role of governments and environmental protection.

In the technological arena, marketers should take account of
the accelerated pace of technological change, opportunities for innovation,
varying R&D budgets, and the increased governmental regulation brought
about by technological change.


And the political/legal environment, marketers must work
within many laws regulating business practices and with various special
interest groups.

Marketing Management - Chapter 2 - Summary

Strong companies develop superior capabilities and managing core business processes such as new product realization, inventory management, and customer acquisition and retention. Managing these core processes effectively means creating a marketing network in which the company works closely with all parties in the production and distribution chain, from suppliers of raw materials to retail distributors. Companies no longer compete -- marketing networks do.



According to one view, holistic marketing maximizes value exploration by understanding the relationships between the customer's cognitive space, the company's competence space, and the collaborators resource space; maximize its value creation by identifying new customer benefits from the customer's cognitive space, utilizing core competencies from its business domain, and selecting and managing business partners from collaborated networks; and maximizes value delivery by becoming proficient at customer relationship management, internal resource management, and business partnership management.



Market oriented strategic planing is the managerial process of developing and maintaining a viable fit between the organization's objectives, skills, and resources and its changing market opportunities. The aim of strategic planning is to shape the company's businesses and products so that they yield target profits and growth. Strategic planning takes place at four levels: corporate, division, business unit, and product.



The corporate strategy establishes the framework within which the divisions and business units prepare their strategic plans. Setting a corporate strategy and tails for activities: defining the corporate mission, establishing strategic business units, assigning resources to each SBU based on its market attractiveness and business strength, and planning new businesses and downsizing older businesses.



Strategic planning for individual businesses entails the following activities: defining the business mission, analyzing external opportunities and threats, analyzing internal strengths and weaknesses, formulating goals, formulating strategy, formulating supporting programs, implementing the programs, and gathering feedback and exercising control.



Each product level within a business unit must develop a marketing plan for achieving its goals. The marketing plan is one of the most important outputs of the marketing process.

Marketing management -- Chapter 2

Value creation and delivery sequence

• choose the value
• customer segmentation
• market selection/focus
• value positioning
• provide the value
• product development
• service development
• pricing
• sourcing/making
• distributing/servicing
• communicate the value
• salesforce
• sales promotion
• advertising
  
  

The value chain -- a tool for identifying ways to create more customer value. The value chain identifies nine strategically relevant activities that create value and cost a specific business. These nine value creating activities consist of five primary activities and four support activities.



The primary activities cover the sequence of:

• inbound logistics -- bringing materials into the business
• operations -- converting them into final products
• outbound logistics -- shipping out final products
• marketing and sales -- marketing the products
• service -- ongoing service activities
  
  

The support activities are handled in certain specialized departments, these activities include:

• procurement
• technology development
• human resource management
• firm infrastructure
  
  

A firm success depends not only on how well each department performs its work, but on how well the various departmental activities are coordinated to conduct core business processes. These core business processes include:

• the market sensing process -- all the activities involved in gathering market intelligence, coordinating it within the organization, and acting on information
• new offering realization process -- all the activities involved in researching, developing, and launching new high-quality offerings quickly and within budget
• customer acquisition process -- all the activities involved in defining target markets and prospecting for new customers
• customer relationship management process -- all the activities involved in building deeper understanding, relationships, and offerings to individual customers
• the fullfillment management process -- all the activities involved in receiving and approving orders, shipping the goods on time, and collecting payment
  
  

Core competency has three characteristics:

• it is a source of competitive advantage in that it makes a significant contribution to perceived customer benefits
• it has applications in a wide variety of markets
• difficult for competitors to imitate
  
  

The holistic marketing framework is designed to address three key management questions:

• value exploration -- How can a company identify new value opportunities?
• Value creation -- How can a company efficiently create more promising new value offerings?
• Value delivery -- How can a company used its capabilities and infrastructure to deliver the new value offerings more efficiently?
  
  

Value exploration

developing a strategy requires an understanding of the relationships and interactions among three spaces:

• the customer's cognitive space -- reflects existing and latent needs and includes dimensions such as the need for participation, stability, freedom, and change
• the company's competence space -- described in terms of breadth, broad versus focused scope of business; and depth, physical versus knowledge-based capabilities
• the collaborators resource space -- involves horizontal partnerships, where companies choose partners based on their ability to exploit related market opportunities, and vertical partnerships, where companies choose partners based on their ability to serve their value creation
  
  

Value creation

marketers need to:

• identify new customer benefits from the customers view
• utilize core competencies from its business domain
  
  
• select and manage business partners from its collaborative of networks
  
  

Business realignment may be necessary to maximize core competencies. It involves three steps;

• (re) defining the business concept (the big idea)
• (re) shaping the business scope (the lines of business)
• (re) positioning the company's brand identity (how customers see the company)
  
  

Value delivery

company must become proficient at:

• customer relationship management -- allows company to discover who they are, how they behave, what they need and want
• internal resource management -- allows company to respond effectively, and a great major business processes, such as order processing, General ledger, payroll, production
• business partnership management -- allows company to handle complex relationships with trading partners to sores, process, deliver products
  
  

Strategic planing -- calls for action in three key areas:

• managing a company's businesses as an investment portfolio
• assessing each business is stirring by considering the market's growth rate and companies position in that market
• establishing the strategy -- developing the game plan for achieving its long-run objectives
  
  

Four main organizational levels:

• corporate level
• division level
• business unit level
• product level
  
  

Corporate headquarters -- responsible for designing a corporate strategic plan to guide the whole enterprise; decision making for allocation of resources into divisions

division level -- establishes plans covering the allocation of funds to each business unit within the division

business unit level -- develop strategic plans to carry out the business unit into a profitable future

product level -- product lines, brands, business unit develops marketing plans for achieving its objectives in the product market



Marketing plan -- the central instrument for directing and coordinating the marketing effort. The marketing plan operates at two levels: strategic and tactical.



The strategic marketing plan -- lays out the target markets and the value proposition that will be offered, based on analysis of the best market opportunities

the tactical marketing plan -- specifies the marketing tactics, including product features, promotion, merchandising, pricing, sales channels, and service.



Corporate and division strategic planning



Corporate headquarters undertake before planning activities:

• defining the corporate mission
• establishing strategic business units
• assigning resources to each SBU
• assessing growth opportunities
  
  

To define its mission, the company should address these classic questions:

what is our business?

Who is the customer?

What is of value to the customer?

What will I business be?

What should our business be?



Mission statements -- guides geographically dispersed employees to work independently and yet collectively toward realizing the organizational goals, to be shared with managers, employees and in some cases customers. Provides a shared sense of purpose, direction, and opportunity.



Good Mission statements have three major characteristics:

• focus on a limited number of goals
• stress the company's major policies and now use
• define major competitive spheres within which the company will operate
  
  

A business can be defined in terms of three dimensions:

• customer groups
• customer needs
• technology
  
  

Strategic business units (SBUs) have three characteristics:

• it is a single business or collection of related businesses that can be planned separately from the rest of the company
• it has its own set of competitors
• it has a manager who is responsible for strategic planing and profit performance and controls most of the factors affecting profit
  
  

Assessing growth opportunities -- involves planning new businesses, downsizing, terminating older businesses

intensive opportunities -- further growth within current businesses

integrative opportunities -- identifying opportunities to build or acquire businesses that are related to the current business

diversification opportunities -- identifying opportunities to add attractive businesses that are on related to current businesses



Intensive growth

Market penetration strategies -- the company first considers whether it could gain more market share with its current products and their current markets

market development strategy -- company considers whether it can find or develop new markets for its current products

product development strategy -- company considers whether it can develop new products of potential interest to its current markets

diversification strategy -- company reviews opportunities to develop new products for new markets



Organization and organizational culture

organization -- consists of its structures, policies, and corporate culture

corporate culture -- the shared experiences, stories, police come and norms that characterize an organization



Scenario analysis -- consists of developing plausible representation of a firm's possible future that make different assumptions about forces driving the market and include different uncertainties





The business mission

each business unit needs to define its specific mission within the broader company mission.

• External and internal opportunities and threats analysis
• goal formulation
• strategy formulation
• program formulation
• implementation
• feedback and control
  
  

SWOT analysis -- but overall a violation of a company strengths, weaknesses, opportunities, and threats. It involves monitoring the external and internal marketing environment

external environment analysis -- the business unit has to monitor key macro environment forces such as:

• demographic
• economic
• natural
• technological
• legal
• social
• cultural
  
  

micro environment actors consist of:

• customers
• competitors
• suppliers
• distributors
• dealers
  
  

For each trend or development, management needs to identify the associated opportunities and threats.



Marketing opportunity -- is an area of buyer need an interest in which there is a high probability that a company can profitably satisfy that need.

There are three main sources of market opportunities:

• fulfilling supply of products with high demand/short supply
• supply existing products or services in a new or superior way
• creating new products or services
  
  

To evaluate opportunities, companies can use the market opportunity analysis (MOA) to determine the attractiveness and probability of success:

• can the benefits involved in the opportunity be articulated convincingly to a defined target market(s)?
• Can the target market relocated and reached with cost-effective media and trade channels?
• Does the company possess or have access to the critical capabilities and resources needed to deliver the customer benefits?
• Can a company deliver the benefits better than any actual or potential competitors?
• Will the financial rate of return meet or exceed the companies required threshold for investment?
  
  

Environmental threat -- challenges posed by an unfavorable trend or development that would lead, in the absence of defensive marketing action, to lower sales or profit



Internal environment analysis can identify strengths and weaknesses, performance, and importance in the areas of marketing, finance, manufacturing, and organization skills.



Goal formulation -- managers use the term goals to describe objectives that are specific with respect to magnitude and time. Most business units pursue a mix of objectives including:

• profitability
• sales growth
• market share improvement
• risk containment
• innovation
• reputation
  
  

The business unit sets these objectives and then manages by objectives (MBO). For an MBO system to work, the units objectives must meet for criteria:

• arranged hierarchically from most to least important
• objectives should be stated quantitatively whenever possible
• goals must be realistic
• objectives must be consistent
  
  

Trade-offs to consider --

• short-term profit versus long-term growth
• deep penetration of existing markets versus developing new markets
• profit goals versus nonprofit goals
• high growth versus low risk
  
  

Strategic formulation

Porters generic strategies

• overall cost leadership
• differentiation
• focus on narrow market segments
  
  

Strategic alliances

product or service alliances -- 1 company licenses another to produce its product, were two companies jointly market their complementary products or new product

promotional alliances -- 1 company agrees to carry a promotion for another company's product or service

logistics alliances -- 1 company offers logistical services for another company's product

pricing collaborations -- 1 a more companies join a special pricing collaboration



Marketing plan -- is a written document that summarizes what the marketer has learned about the marketplace and indicates how the firm plans to reach its marketing objectives



Contents of the marketing plan:

• executive summary and table of contents
• situation analysis
• marketing strategy
• financial projections
• implementation controls
  
  

In The value delivery process involves choosing (or identifying), providing (or delivering), and communicating with superior value. The value chain is a tool for identifying key activities that create value and costs in the specific business.