市场营销学(英文) 429页

Kotler on Marketing The most important thing is to forecast where customers are moving, and be in front of them. Chapter Objectives CASE 1 M arketing, or not? (1)Some conceptual theory about marketing (2) 1912, J．E．Hegertg (3)1931,American Marketing Association， (A．M．A)。 (4)Market revolution after second word war 1.1.1 History and Development of Marketing 1.1.2 Introduction of Philip Kotler 菲利普•科特勒 Philip Kotler is one of the world' leading authorities on marketing. He is the distinguished professor of International Marketing at the Kellogg School of Management, Northwestern University. 菲利普.科特勒(Philip Kotler) 4 Ps： Product Price Place Promotion 1.1.3 Marketing people are involved in marketing 10 types of entities: Goods Service Experiences Events Persons Places Properties Organizations Information ideas 1.1.4 Marketing Task Ten rules of radical marketing – The CEO must own the marketing function. – Make sure the marketing department starts small and flat and stays small and flat. – Get face to face with the people who matter most – the customers. – Use market research cautiously. – Hire only passionate missionaries. – Love and respect your customers. – Create a community of consumers. – Rethink the marketing mix. – Celebrate common sense. – Be true to the brand. w Three stages of marketing practice – Entrepreneurial Marketing – Formulated Marketing – Intrepreneurial Marketing 1.2.1 New Economy 企业 消费者 1.2 New Economy and Definition of Marketing A Simple Marketing System 简单市场系统 1.2.2 The Scope of Marketing wMarketing: typically seen as the task of creating, promoting, and delivering goods and services to consumers and businesses. Demand States and Marketing Tasks 1. Negative demand A major part of the market dislikes the product and may even pay a price to avoid it—vaccinations, dental work, vasectomies, and gallbladder operations, for instance. Employers have a negative demand for ex- convicts and alcoholics as employees. The marketing task is to analyze why the market dislikes the product and whether a marketing program consisting of product redesign, lower prices, and more positive promotion can change beliefs and attitudes. 2. No demand Target consumers may be unaware of or uninterested in the product. Farmers may not be interested in a new farming method, and college students may not be interested in foreign-language courses. The marketing task is to find ways to connect the benefits of the product with people’s natural needs and interests. See text for complete table 1.2.3 The Decisions Marketers Make w Consumer Markets w Business Markets w Global Markets w Nonprofit and Governmental Markets Marketing Concepts and Tools w Defining Marketing – Marketing – Marketing management w Core Marketing Concepts – Target Markets and Segmentation Old Economy New Economy Organize by product units Focus on profitable transactions Look primarily at financial scorecard Focus on shareholders Marketing does the marketing Build brands through advertising Focus on customer acquisition No customer satisfaction measurement Over promise, under deliver Organize by customer segments Focus on customer lifetime value Look also at marketing scorecard Focus on stakeholders Everyone does the marketing Build brands through behavior Focus on customer retention and growth Measure customer satisfaction and retention rate Under promise, over deliver 1.2.4 Definition of Marketing a. Distinguish from Sales b. Relations with Promotion c. And dealing d. Definition of Marketing 2.1.1 Simple Response Model 2.1.2 Model of Buying Behavior Buyer’s decision process Problem recognition Information search Evaluation Decision Postpurchase behavior Other stimuli Economic Technological Political Cultural Buyer’s characteristics Cultural Social Personal Psychological Buyer’s decisions Product choice Brand choice Dealer choice Purchase timing Purchase amount Marketing stimuli Product Price Place Promotion w Consumer Behavior w Cultural Factors – Culture • Subcultures • Diversity marketing • Social class 2.1.3 Influencing Buyer Behavior Characteristics of Major U.S. Social Classes See text for complete table 1. Upper Uppers (less than 1%) The social elite who live on inherited wealth. They give large sums to charity, run the debutante balls, maintain more than one home, and send their children to the finest schools. They are a market for jewelry, antiques, homes, and vacations. They often buy and dress conservatively. Although small as a group, they serve as a reference group to the extent that their consumption decisions are imitated by the other social classes. 2. Lower Uppers (about 2%) Persons, usually from the middle class, who have earned high income or wealth through exceptional ability in the professions or business. They tend to be active in social and civic affairs and to buy the symbols of status for themselves and their children. They include the nouveau riche, whose pattern of conspicuous consumption is designed to impress those below them. Cultural Factors Culture Subculture Social Class Buyer Social Factors Reference Groups Roles & StatusesFamily w Social Factors – Reference Groups • Reference groups • Membership groups • Primary groups • Secondary groups • Aspirational groups • Dissociative groups • Opinion leader • Secondary groups • Aspirational groups • Dissociative groups • Opinion leader • Family – Family of orientation – Family of procreation • Roles and Statuses – Role – Status Influencing Buyer Behavior w Personal Factors – Age and Stage in the Life Cycle • Family life cycle – Occupation and Economic Circumstances Influencing Buyer Behavior Influences on Consumer Behavior Personal Influences Age and Family Life Cycle Stage Lifestyle Occupation & Economic Circumstances Personality & Self-Concept Stages in the Family Life Cycle See text for complete table 1. Bachelor stage: Young, single, not living at home Few financial burdens. Fashion opinion leaders. Recreation oriented. Buy: basic home equipment, furniture, cars, equipment for the mating game; vacations. 2. Newly married couples: Young, no children Highest purchase rate and highest average purchase of durables: cars, appliances, furniture, vacations. 3. Full nest I: Youngest child under six Home purchasing at peak. Liquid assets low. Interested in new products, advertised products. Buy: washers, dryers, TV, baby food, chest rubs and cough medicines, vitamins, dolls, wagons, sleds, skates. 4. Full nest II: Youngest child six or over Financial position better. Less influenced by advertising. Buy larger-size packages, multiple-unit deals. Buy: many foods, cleaning materials, bicycles, music lessons, pianos. – Personality and Self-Concept • Personality • Brand personality – Sincerity – Excitement – Competence – Sophistication – Ruggedness • Self-concept – Person’s actual self-concept – Ideal self-concept – Others’ self-concept Influencing Buyer Behavior The VALS segmentation system: An 8-part typology • Groups with High Resources 1. Actualizers 2. Fulfilleds 3. Achievers 4. Experiencers • Groups with Lower Resources 1. Believers 2. Strivers 3. Makers 4. Strugglers Psychological Factors Perception Learning Beliefs & Attitudes Motivation w Psychological Factors – Motivation • Motive – Freud’s Theory • Laddering • Projective techniques Influencing Buyer Behavior w Ernest Dichter’s research found: – Consumers resist prunes because prunes are wrinkled looking and remind people of old age. – Men smoke cigars as an adult version of thumb sucking. – Women prefer vegetable shortening to animal fats because the latter arouse a sense of guilt over killing animals. – Women don’t trust cake mixes unless they require adding an egg, because this helps them feel they are giving “birth.” Influencing Buyer Behavior Maslow’s Hierarchy of Needs Physical needs (food, water, shelter)1 Safety needs (security, protection)2 Social needs (sense of belonging, love)3 Esteem needs (self-esteem, recognition) 4 Self- actualization (self-development and realization) 5 – Herzberg’s Theory • Dissatisfiers • Satisfiers Influencing Buyer Behavior w Perception – Selective attention • People are more likely to notice stimuli than relate to a current need • People are more likely to notice stimuli than they anticipate • People are more likely to notice stimuli whose deviations are large in relation to the normal size of the stimuli – Selective distortion – Selective retention Influencing Buyer Behavior – Learning • Drive • Cues • Discrimination – Beliefs and Attitudes • Belief – Spreading activation • Attitude Influencing Buyer Behavior 2.1.4 Four Types of Buying Behavior Complex Buying Behavior Dissonance- Reducing Buying Behavior Variety- Seeking Behavior Habitual Buying Behavior Significant differences between brands Few differences between brands High Involvement Low Involvement 2.2.1 Consumer Buying Process Information search Evaluation of alternatives Purchase decision Post purchase behavior w How marketers learn about the stages: – Introspective method – Retrospective method – Prospective method – Prescriptive method w Understanding by mapping the customer’s – Consumption system – Customer activity cycle – Customer scenario w Metamarket w Metamediaries 2.2.2 Stages in the Buying Decision Process w Problem recognition w Information search – Personal sources – Commercial sources – Public sources – Experiential sources Stages of the Buying Decision Process Five-Stage Model of the Consumer Buying Process Successive Sets Involved in Customer Decision Making 2.2.3 Decision Making Sets Total Set Aware- ness Set Consid- eration Set Choice Set Decision 2.2.4 Steps Between Evaluation of Alternatives and a Purchase Decision Purchase decision Unanticipated situational factors Attitude of others Purchase intention w Evaluation of Alternatives – Potential Attributes of interest • Cameras • Hotels • Mouthwash • Tires – Brand beliefs – Brand image The Buying Decision Process A Consumer’s Brand Beliefs about Computers Computer Attribute Memory Capacity Graphics Capability Size and Weight Price A 10 8 6 4 B 8 9 8 3 C 6 8 10 5 D 4 3 7 8 – Strategies designed to stimulate interest in a computer • Redesign the computer • Alter beliefs about the brand • Alter beliefs about competitors’ brands • Alter the importance weights • Call attention to neglected attributes • Shift the buyer’s ideas The Buying Decision Process w Purchase Decision Steps Between Evaluation of Alternatives and a purchase decision The Buying Decision Process – Informediaries • Consumer Reports • Zagats – Unanticipated situational factors – Perceived risk – Brand decision – Vendor decision – Quantity decision – Timing decision – Payment-method decision The Buying Decision Process w Postpurchase Behavior – Postpurchase Satisfaction • Disappointed • Satisfied • Delighted w Postpurchase Actions – Postpurchase Use and Disposal The Buying Decision Process How Customers Dispose of Products w Other Models of the Buying Decision Process – Health Model • Stages of Change Model – Precontemplation – Contemplation – Preparation – Action – Maintenance – Customer Activity Cycle Model • Pre, during and post phases The Buying Decision Process Activity cycle for IBM customers in the global electronic networking capability market space Value adds for IBM customers in the global electronic networking capability market space Review w Influences on Buying Behavior w Buyer Decision Making Kotler on Marketing Today you have to run faster to stay in place. Chapter Objectives w In this chapter, we focus on two questions: – What are the key methods for tracking and identifying opportunities in the macroenvironment? – What are the key demographic, economic, natural, technological, political, and cultural developments? Analyzing Needs and Trends in the Macroenvironment w Trend w Fad wMegatrends w The substantial speedup of international transportation, communication, and financial transactions, leading to the rapid growth of world trade and investment, especially tripolar trade (North America, Western Europe, Far East) w The movement of manufacturing capacity and skills to lower cost countries. w The rising economic power of several Asian countries in world markets. w The rise of trade blocks such as the European Union and NAFTA signatories. Identifying and Responding to the Major Macroenvironment Forces w The severe debt problems of a number of countries, along with the increasing fragility of the international financial system. w The increasing use of barter to support international transactions. w The move toward market economies in formerly socialist countries along with rapid privatization of publicly owned companies. w The rapid dissemination of global lifestyles. w The gradual opening of major new markets, namely China, India, eastern Europe, the Arab countries, and Latin America. Identifying and Responding to the Major Macroenvironment Forces w The increasing tendency of multinationals to transcend their locational and national characteristics and become transnational firms. w The increasing number of cross-border corporate strategic alliances–for example, MCI and British Telecom, and Texas Instruments and Hitachi. w The increasing ethnic and religious conflicts in certain countries and regions. w The growth of global brands in autos, food, clothing, electronics. Identifying and Responding to the Major Macroenvironment Forces Demographic Environment Worldwide Population Growth Population Age Mix Ethnic Markets Household Patterns Educational Groups Geographical Shifts in Population Shift from Mass Market to Micromarkets Economic Environment Income Distribution Subsistence economies Raw-material-exporting economies Industrializing economies Industrial economies Savings, Debt, & Credit Availability Natural Environment Higher Pollution Levels Increased Costs of Energy Shortage of Raw Materials Changing Role of Government Accelerating Pace of Change Unlimited Opportunities for Innovation Increased Regulation Issues in the Technological Environment Varying R & D Budgets Political- Legal Environment Increased Legislation Special- Interest Groups Social/Cultural Environment Views That Express Values Social/Cultural Environment Review w Tracking & Identifying Opportunities in the Macroenvironment w Demographic, Economic, Natural, Technological, Political, & Cultural Developments Kotler on Marketing The most important thing is to forecast where customers are moving, and be in front of them. w In this chapter, we focus on two questions: – How do the buyers’ characteristics – cultural, social, personal, and psychological – influence buying behavior? – How does the buyer make purchasing decisions? Chapter Objectives Simple Response Model Model of Buying Behavior Buyer’s decision process Problem recognition Information search Evaluation Decision Postpurchase behavior Other stimuli Economic Technological Political Cultural Buyer’s characteristics Cultural Social Personal Psychological Buyer’s decisions Product choice Brand choice Dealer choice Purchase timing Purchase amount Marketing stimuli Product Price Place Promotion – Consumer Behavior w Cultural Factors – Culture • Subcultures • Diversity marketing • Social class Influencing Buyer Behavior Table 7.1: Characteristics of Major U.S. Social Classes See text for complete table 1. Upper Uppers (less than 1%) The social elite who live on inherited wealth. They give large sums to charity, run the debutante balls, maintain more than one home, and send their children to the finest schools. They are a market for jewelry, antiques, homes, and vacations. They often buy and dress conservatively. Although small as a group, they serve as a reference group to the extent that their consumption decisions are imitated by the other social classes. 2. Lower Uppers (about 2%) Persons, usually from the middle class, who have earned high income or wealth through exceptional ability in the professions or business. They tend to be active in social and civic affairs and to buy the symbols of status for themselves and their children. They include the nouveau riche, whose pattern of conspicuous consumption is designed to impress those below them. Culture Cultural Factors Subculture Social Class Buyer Social Factors Reference Groups Roles & StatusesFamily w Social Factors – Reference Groups • Reference groups • Membership groups • Primary groups • Secondary groups • Aspirational groups • Dissociative groups • Opinion leader Influencing Buyer Behavior • Secondary groups • Aspirational groups • Dissociative groups • Opinion leader Influencing Buyer Behavior • Family – Family of orientation – Family of procreation • Roles and Statuses – Role – Status Influencing Buyer Behavior w Personal Factors – Age and Stage in the Life Cycle • Family life cycle – Occupation and Economic Circumstances Influencing Buyer Behavior Influences on Consumer Behavior Personal Influences Age and Family Life Cycle Stage Lifestyle Occupation & Economic Circumstances Personality & Self-Concept Table 7.2: Stages in the Family Life Cycle See text for complete table 1. Bachelor stage: Young, single, not living at home Few financial burdens. Fashion opinion leaders. Recreation oriented. Buy: basic home equipment, furniture, cars, equipment for the mating game; vacations. 2. Newly married couples: Young, no children Highest purchase rate and highest average purchase of durables: cars, appliances, furniture, vacations. 3. Full nest I: Youngest child under six Home purchasing at peak. Liquid assets low. Interested in new products, advertised products. Buy: washers, dryers, TV, baby food, chest rubs and cough medicines, vitamins, dolls, wagons, sleds, skates. 4. Full nest II: Youngest child six or over Financial position better. Less influenced by advertising. Buy larger-size packages, multiple- unit deals. Buy: many foods, cleaning materials, bicycles, music lessons, pianos. – Personality and Self-Concept • Personality • Brand personality – Sincerity – Excitement – Competence – Sophistication – Ruggedness • Self-concept – Person’s actual self-concept – Ideal self-concept – Others’ self-concept Influencing Buyer Behavior Figure 7.2: The VALS segmentation system: An 8-part typology • Groups with High Resources 1. Actualizers 2. Fulfilleds 3. Achievers 4. Experiencers • Groups with Lower Resources 1. Believers 2. Strivers 3. Makers 4. Strugglers Psychological Factors Perception Learning Beliefs & Attitudes Motivation w Psychological Factors – Motivation • Motive – Freud’s Theory • Laddering • Projective techniques Influencing Buyer Behavior w Ernest Dichter’s research found: – Consumers resist prunes because prunes are wrinkled looking and remind people of old age. – Men smoke cigars as an adult version of thumb sucking. – Women prefer vegetable shortening to animal fats because the latter arouse a sense of guilt over killing animals. – Women don’t trust cake mixes unless they require adding an egg, because this helps them feel they are giving “birth.” Influencing Buyer Behavior Maslow’s Hierarchy of Needs Physical needs (food, water, shelter)1 Safety needs (security, protection)2 Social needs (sense of belonging, love)3 Esteem needs (self-esteem, recognition) 4 Self- actualization (self-development and realization) 5 – Herzberg’s Theory • Dissatisfiers • Satisfiers Influencing Buyer Behavior w Perception – Selective attention • People are more likely to notice stimuli than relate to a current need • People are more likely to notice stimuli than they anticipate • People are more likely to notice stimuli whose deviations are large in relation to the normal size of the stimuli – Selective distortion – Selective retention Influencing Buyer Behavior – Learning • Drive • Cues • Discrimination – Beliefs and Attitudes • Belief – Spreading activation • Attitude Influencing Buyer Behavior Four Types of Buying Behavior Complex Buying Behavior Dissonance- Reducing Buying Behavior Variety- Seeking Behavior Habitual Buying Behavior Significant differences between brands Few differences between brands High Involvement Low Involvement Consumer Buying Process Information search Evaluation of alternatives Purchase decision Postpurchase behavior w How marketers learn about the stages: – Introspective method – Retrospective method – Prospective method – Prescriptive method w Understanding by mapping the customer’s – Consumption system – Customer activity cycle – Customer scenario w Metamarket w Metamediaries Stages in the Buying Decision Process w Problem recognition w Information search – Personal sources – Commercial sources – Public sources – Experiential sources Stages of the Buying Decision Process Figure 7.4: Five-Stage Model of the Consumer Buying Process Figure 7.5: Successive Sets Involved in Customer Decision Making Total Set Decision Making Sets Aware- ness Set Consid- eration Set Choice Set Decision Steps Between Evaluation of Alternatives and a Purchase Decision Purchase decision Unanticipated situational factors Attitude of others Purchase intention w Evaluation of Alternatives – Potential Attributes of interest • Cameras • Hotels • Mouthwash • Tires – Brand beliefs – Brand image The Buying Decision Process Table 7.4: A Consumer’s Brand Beliefs about Computers Computer Attribute Memory Capacity Graphics Capability Size and Weight Price A 10 8 6 4 B 8 9 8 3 C 6 8 10 5 D 4 3 7 8 • Strategies designed to stimulate interest in a computer – Redesign the computer – Alter beliefs about the brand – Alter beliefs about competitors’ brands – Alter the importance weights – Call attention to neglected attributes – Shift the buyer’s ideas The Buying Decision Process w Purchase Decision Figure 7.6: Steps Between Evaluation of Alternatives and a purchase decision The Buying Decision Process – Informediaries • Consumer Reports • Zagats – Unanticipated situational factors – Perceived risk – Brand decision – Vendor decision – Quantity decision – Timing decision – Payment-method decision The Buying Decision Process w Postpurchase Behavior – Postpurchase Satisfaction • Disappointed • Satisfied • Delighted w Postpurchase Actions – Postpurchase Use and Disposal The Buying Decision Process Figure 7.7: How Customers Dispose of Products w Other Models of the Buying Decision Process – Health Model • Stages of Change Model – Precontemplation – Contemplation – Preparation – Action – Maintenance – Customer Activity Cycle Model • Pre, during and post phases The Buying Decision Process Figure 7.8: Activity cycle for IBM customers in the global electronic networking capability market space Figure 7.9: Value adds for IBM customers in the global electronic networking capability market space Review w Influences on Buying Behavior w Buyer Decision Making Kotler on Marketing It is more important to do what is strategically right than what is immediately profitable. Chapter Objectives w In this chapter, we examine the following questions: – How is strategic planning carried out at the corporate and division levels? – How is planning carried out at the business unit level? – What are the major steps in the marketing process? – How is planning carried out at the product level? – What does a marketing plan include? Chapter Objectives wMarket Segmentation w Levels and Patterns of Market Segmentation w Segmenting Consumer Markets w Segmenting Business Markets wMarket Targeting w Summary Strategic Planning: Three Key Areas and Four Organization Levels w Strategic marketing plan w Tactical marketing plan wMarketing plan Market-Oriented Strategic Planning Objectives Skills Resources Opportunities Market-Oriented Strategic Planning Objectives Skills Resources Opportunities Profit and Growth Corporate Headquarters Planning w Define the corporate mission w Establish strategic business units (SBUs) w Assign resources to SBUs w Plan new business, downsize older businesses Strategic-Planning, Implementation, and Control Process Measuring results Diagnosing results Taking corrective action Corporate planning Division planning Business planning Product planning Organizing Implementing Good Mission Statements: Limited number of goals Stress major policies & values Define competitive scopes The Boston Consulting Group’s Growth-Share Matrix M ar ke t G ro w th R at e 3 ? Question marks ? ?? 2 1 Cash cow 6 Dogs 8 7 Relative Market Share Stars 5 4 Market Attractiveness: Competitive- Position Portfolio Classification Relief valve Flexible diaphragms Fuel pumps Aerospace fittings Clutches Hydraulic pumps Joints The Strategic-Planning Gap Desired sales Integrative growth Intensive growth Current portfolio Three Intensive Growth Strategies: Ansoff’s Product/Market Expansion Grid 4. Diversification2. Market development New markets 1. Market penetration Existing markets Existing products 3. Product development New products 1 4 2 3 Opportunity Matrix 1. Company develops a more powerful lighting system 2. Company develops a device for measuring the energy efficiency of any lighting system 3. Company develops a device for measuring illumination level 4. Company develops a software program to teach lighting fundamentals to TV studio personnel Threat Matrix 1. Competitor develops a superior lighting system 2. Major prolonged economic depression 3. Higher costs 4. Legislation to reduce number of TV studio licenses 1 4 2 3 The McKinsey 7-S Framework Skills Shared values Staff Style Strategy Structure Systems Sell the product The Value-Delivery Process Make the product ProcureDesign product Make Price Sell Advertise/ promote Distribute Service Choose the Value Provide the Value Communicate the Value (a) Traditional physical process sequence (b) Value creation & delivery sequence Strategic marketing Tactical marketing The Marketing Plan Competitors Marketing intermediaries PublicsSuppliers Factors Influencing Company Marketing Strategy Mark eti ng inf or mati on sy ste m Marketing planning system Marketing organization system Mar ke tin g or ga niz ati on an d im ple men tat ion Product Promotion Place PriceTarget customers Table 4.1: Product-Oriented versus Market-Oriented Definitions of a Business Company Product Definition Market Definition Missouri-Pacific Railroad We run a railroad We are a people-and- goods mover Xerox We make copying equipment We help improve office productivity Standard Oil We sell gasoline We supply energy Columbia Pictures We make movies We market entertainment Encyclopaedia We sell encyclopedias We distribute Information Carrier We make air conditioners and furnaces We provide climate control in the home Table 4-2: Factors underlying Market Attractiveness and Competitive Position in GE Multifactor Portfolio Model: Hydraulic-Pumps Market Market Attractiveness Overall market size Annual market growth rate Historical profit margin Competitive intensity Technological requirements Inflationary vulnerability Energy requirements Environmental impact Social-political-legal Weight 0.20 0.20 0.15 0.15 0.15 0.05 0.05 0.05 Must be acceptable 1.0 Rating = (1-5) 4 5 4 2 4 3 2 3 Value 0.80 1. 0.60 0.30 0.60 0.15 0.10 0.15 3.70 Business Strength Market share Share growth Product quality Brand reputation Distribution network 0.10 0.15 0.10 0.10 0.05 4 2 4 5 4 0.40 0.30 0.40 0.50 0.20 See text for complete table Product Planning: The Nature and Contents of a Marketing Plan w Contents of the Marketing Plan – Executive Summary – Current Marketing Situation – Opportunity and issue analysis – Objectives – Marketing strategy – Action programs – Financial projections – Implementation controls w Sample Marketing Plan: Sonic Personal Digital Assistant – Current Marketing Situation – Opportunity and Issue Analysis – Objectives – Action Programs – Financial Projections Product Planning: The Nature and Contents of a Marketing Plan – Implementation Controls – Marketing Strategy • Positioning • Product Management • Pricing • Distribution • Marketing Communications • Marketing Research Product Planning: The Nature and Contents of a Marketing Plan Learning Objectives w To understand the objectives and usefulness of market segmentation w To know the approaches to market segmentation using different segmentation criteria to define target groups w To learn the ways of selecting target markets Target Marketing Target marketing requires marketers to take three major steps: – Identify and profile distinct groups of buyers who differ in their needs and preferences (market segmentation). – Select one or more market segments to enter (market targeting). – For each target segment, establish and communicate the key distinctive benefit(s) of the company’s market offering (market positioning). Market Segmentation ... is the process of subdividing a market into distinct subsets of customers that behave in the same way or have similar needs Significance of market segmentation w Analyze and identify the market opportunities w Develop the market for the middle-small enterprises w Utilize the resource effectively to improve the competency wMeet the needs effectively Market Segmentation Procedure w Needs-based market segmentation approach wMarket partitioning – Brand-dominant hierarchy – Nation-dominant hierarchy Description 1. Needs-Based Segmentation Group customers into segments based on similar needs and benefits sought by customer in solving a particular consumption problem. 2. Segment Identification For each needs-based segment, determine which demographics, lifestyles, and usage behaviors make the segment distinct and identifiable (actionable). 3. Segment Attractiveness Using predetermined segment attractiveness criteria (such as market growth, competitive intensity, and market access), determine the overall attractiveness of each segment. 4. Segment Profitability Determine segment profitability. 5. Segment Positioning For each segment, create a “value proposition” and product-price positioning strategy based on that segment’s unique customer needs and characteristics. Table : Steps in Segmentation Process Levels and Patterns of Market Segmentation w Effective Segmentation – Measurable – Substantial – Accessible – Differentiable – Actionable Criteria for Market Segmentation wGeographic segmentation wDemographic segmentation w Psychographic segmentation wBehaviour segmentation wBenefit segmentation Table 2: Major Segmentation Variables for Consumer Markets Geographic Region Pacific, Mountain, West North Central, West South Central, East North Central, East South Central, South Atlantic, Middle Atlantic, New England City or metro size Under 5,000; 5,000-20,000; 20,000-50,000; 50,000- 100,000; 100,000-250,000; 250,000-500,000; 500,000-1,000,000; 1,000,000-4,000,000; 4,000,000 or over Density Urban, suburban, rural Climate Northern southern Table 2: Major Segmentation Variables for Consumer Markets Demographic Age Family size Under 6, 6-11, 12-19, 20-34, 35-49, 50-64, 65+ 1-2, 3-4, 5+ Gender Income Occupation Education Male,female Under$10000;$10000-$30000;$30000- $50000;$50000 and over Farmers, Students, Managers, Officials Grade school or less, high school graduate, college graduate Religion Nationality Family life cycle Catholic, Protestant, Jewish, Muslim, other North American, South American,British, Japan Segmenting Consumer and Business Markets w Bases for Segmenting Consumer Markets – Geographic Segmentation – Demographic Segmentation – Psychographic Segmentation Psychographic Segmentation w ... is based on attitudes, values and lifestyle w ... is measured through extensive item batteries which cover activities, interests and opinions (AIO-studies) w lifestyle surveys, – the Values and Life Styles (VALS) by SRI International Psychographic Profiles of Porsche’s American Customers Category % of all owners Top Guns 27% Driven and ambitious; care about power and control; expect to be noticed Elitists 24% Old money; a car—even an expensive one—is just a car, not an extension of one’s personality Proud Patrons 23% Ownership is what counts; a car is a trophy, a reward for working hard; being noticed doesn’t matter Bon Vivants 17% Cosmopolitan jet setters and thrill seekers; car heightens excitement Fantasists 9% Car represents a form of escape; don’t care about impressing others; may even feel guilty about owning car Description Source: ALEX III Taylor, „Porsche Slices up its Buyers“, Fortune, 16 January 1995, p. 24 Backer Spielvogel & Bates’ Global Scan (BSB Global Scan ) w ... encompasses 18 countries, mostly in the Triad w The researchers studied – consumer attitudes & values, – media viewership/readership, – buying patterns, – product use. w 5 global psychographic segments represent 95% of the adult populations in the countries surveyed. The Target Groups of BSB’s Global Scan D’arcy Massius Benton & Bowles’ Euroconsumer Study w ... focuses on Europe w ... identified four lifestyle groups: – Successful idealists – Affluent materialists – Comfortable belongers – Disaffected survivors Behaviour and Benefit Segmentation w Behaviour segmentation Focus on whether & how much people buy or use a product; • usage rates: heavy , medium, light users, nonusers • user status: potential users, nonusers, ex-users, regulars, first timers & users of competitors’ products w Benefit segmentation Today, consumers basic needs are fulfilled. Therefore, consumers seek additional value from purchase decisions Table 3: Major Segmentation Variables for Business Markets Demographic 1. Industry: Which industries should we serve? 2. Company size: What size companies should we serve? 3. Location: What geographical areas should we serve? Operating Variables 4. Technology: What customer technologies should we focus on? 5. User or nonuser status: Should we serve heavy users, medium users, light users, or nonusers? 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 dominated, and so on? Segmenting Consumer and Business Markets – Business buyers seek different benefit bundles based on their stage in the purchase decision process. 1. First-time prospects 2. Novices 3. Sophisticates Segmenting Consumer and Business Markets – Rangan, Moriarty, and Swartz studied a mature commodity market, steel stamping, and found four business segments 1. Program buyers 2. Relationship buyers 3. Transaction buyers 4. Bargain hunters Segmenting Consumer and Business Markets – Rackman and Vincentis proposed a segmentation scheme that classifies business buyers into three groups • Price-oriented customers (transactional selling) • Solution-oriented customers (consultative selling) • Strategic-value customers (enterprise selling) Targeting After markets have been segmented, targeting aims at evaluating and comparing the indentified segments in order to select one or more as prospect(s) with the highest potential. Criteria for Targeting qCurrent size of the segment & growth potential qPotential competition qCompatibility & feasibility Selecting a Target Market Strategy w standardized marketing – mass marketing, the same marketing mix for a broad market of potential buyers w concentrated marketing – targeted at a single segment of the global market w differentiated marketing – 2 or more different segments Summary w Corporate and division strategic planing w Business unit planning w The marketing process w Product level planning w The marketing plan Summary w segmentation aims at identifying similarities and differences of potential customers. w targeting: The market segments are evaluated and compared and an appropriate targeting strategy is developed. Lecture One： Differentiation and Product Life-Cycle Strategy Kotler on Marketing ★ Watch the product life cycle; but more important, watch the market life cycle. Objectives w In this Lecture, we focus on the following questions: ◆ What are the major differentiation attributes available to firms? ◆ How many stages in the product life-cycle, and what factors determine the division? ◆ What marketing strategies are appropriate at each stage of the product life-cycle? What is STP? ☆ Marketing Management——Philip. Kotler w Segmenting —— determining the segmental variables and the segmental markets w Targeting —— evaluating each market segment’s attractiveness and select one or more segments to enter. w Positioning —— delivering a central idea about a company or an offering to the target market w The role of STP—— Product differentiating ■ Differentiating Strategy What is the Differentiation? wDifferentiation—the process of adding a set of meaningful and valued differences to distinguish the company's offering from competitors' offerings. Differentiation criteria: • Important • Distinctive • Superior • Preemptive • Affordable • Profitable Case: Sony Company w As soon as Sony develops a new product, it might assemble up to three teams to view the new product as if it were a competitor's ◆ the first team thinks of minor improvements; ◆ the second team thinks of major improvements; ◆ the third team thinks of ways to make the product obsolete. Exceed customer expectations with a three-step process w Defining the customer value model w Building the customer value hierarchy ● Basic ● Expected ● Desired ● Unanticipated w Deciding on the customer value package Boston Consulting Group (BCG) wThe BCG Competitiv e Advantage Matrix Differentiating Tools w Product Differentiation w Services Differentiation w Personnel Differentiation w Channel Differentiation w Image Differentiation Table 5-1: Differentiation Variables Product Services Personnel Channel Image Form Ordering ease Competence Coverage Symbols Features Delivery Courtesy Expertise Media Performance Installation Credibility Performance Atmosphere Conformance Customer Training Reliability Events Durability Customer consulting Responsiveness Reliability Maintenance and repair Communication Reparability Miscellaneous Style Design Product Differentiation w Form w Features w Performance w Conformance w Durability w Reliability w Reparability w Style w Design Case w1. McDonald's add a number of Play Lands at the restaurants in U.S. and Mexico to cater to the young. w2. The Nongfu Garden （农夫果 园） Services Differentiation w Ordering ease w Delivery w Installation w Customer training w Customer consulting w Maintenance and repair w Miscellaneous Cases w1. Canon Company w2. Hair Electric Co. Personnel Differentiation w Competence (IBM——profession) w Courtesy (McDonald ) w Credibility w Reliability w Responsiveness w Communication (Disney——upbeat) Channel Differentiation w Coverage w Expertise w Performance e.g. Dell & Avon Image Differentiation w Identity w Image ◆ Symbols, Colors, Slogans, Special Attributes ◆ Physical plant ◆ Events and Sponsorship ◆ Using Multiple Image-Building Techniques ■ Product Life-Cycle Marketing Strategies The Meanings of PLC 1. Products have a limited life. 2. Product sales pass through distance stages, each posing different challenges, opportunities, and problems to the seller. 3. Profits rise and fall at different stages of the product life cycle. 4. Products require different marketing, financial, manufacturing, purchasing, and human resource strategies in each life-cycle stage The Stages of PLC w Introduction Stage w Growth Stage wMaturity Stage w Decline Stage The General Shape of PLC Figure 5-1：Sales and Profit life cycles Sales Profits Sales and profits($) Development Introduction Growth Maturity Decline Figure 5-2: Alternate Patterns of Product Life- Cycle Three Special Categories of PLC Figure 5-3: Style, Fashion, and Fad Life Cycles Marketing strategies: Introduction stage w Profits：negative or low w Prices: high w Costs: high ◆ Reasons: 1. Informing potential consumers 2. Inducing product trial 3. Securing distribution in retail outlets wThe Pioneer Advantage First-mover advantages ◆ Those products that came out six months late but on budget earned an average of 33% less profit in the first five years ◆ Products that came out on time but 50% over budget cut their profits by only 4%. e.g. Amazon. com; Campbell, Coca-Cola, Xerox wThe Competitive Cycle ◆ sole supplier, ◆ competitive penetration ◆ share stability ◆ commodity competition ◆ withdrawal Marketing strategies: Growth stage wMarketing Strategies: ◆ Improve product quality and add new product features and improved styling ◆ Add new models and flanker products ◆ Enter new market segments ◆ Increase distribution coverage and enter new distribution channels ◆ Shift from product-awareness advertising to product-preference advertising ◆ Lower prices to attract next layer of price-sensitive buyers Case： w Starbucks Coffee ◆ Flank defenses strategy 1. Trying to push out innovative non-coffee- related products, such as Tiazzi and ice cream 2. Selling its premium beans in supermarket 3. Getting into the restaurant business Marketing Strategies: Maturity Stage w Three phases in maturity stage: ◆Growth phase: the sales growth rate starts to decline ◆Stable phase: sales flatten on a per capita basis ◆Decaying phase: the absolute level of sales starts to decline Marketing Strategies: Maturity Stage w Market Modification Volume = number of brand users × usage rate per user ◆ Expand number of brand users by: 1. Converting nonusers 2. Entering new market segments 3. Winning competitors’ customers ◆ Convince current users to increase usage by: 1. Using the product on more occasions 2. Using more of the product on each occasion 3. Using the product in new ways Marketing Strategies: Maturity Stage w Product Modification ◆ Quality improvement Becoming “stronger”, “bigger” and “better” ◆ Feature improvement. Adding the new features such as size, weight, materials, additives and accessories to expand the product's versatility, safety or convenience. Case: The Failure of the New Coke w Battered by competition from the sweeter Pepsi-Cola, Coca-Cola decided in 1985 to replace its old formula with a sweeter variation, dubbed the New Coke. Coca- Cola spent $4 million on market research. Blind taste tests showed that Coke drinkers preferred the new, sweeter formula, but the launch of New Coke provoked a national uproar. Market researchers had measured the taste but had failed to measure the emotional attachment consumers had to Coca-Cola. There were angry letters, formal protests, and even lawsuit threats, to force the retention of "The Real Thing." Ten weeks later, the company withdrew New Coke and reintroduced its century-old formula as "Classic Coke," giving the old formula even stronger status in the marketplace. Marketing Strategies: Maturity Stage wMarketing－Mix Modification ◆ Prices ◆ Distribution ◆ Advertising ◆ Sales promotion ◆ Personal selling ◆ Services Marketing strategies: Decline stage ◆ Increase firm’s investment (to dominate the market and strengthen its competitive position) ◆ Maintain the firm’s investment level until the uncertainties about the industry are resolved. ◆ Decrease the firm’s investment level selectively by dropping unprofitable customer groups, while simultaneously strengthening the firm’s investment in lucrative niches ◆ Harvesting (“milking”) the firm’s investment to recover cash quickly ◆ Divesting the business quickly by disposing of its assets as advantageously as possible Critique to PLC: w Life-cycle patterns are too variable in shape and duration. w PLC pattern seldom tell what stage the product is in w PLC pattern may be the result of marketing strategies rather than an inevitable course that sales must follow Lecture Two New－Product Development Strategy Objectives w In this chapter, we focus on the following questions: ◆What are the reasons leading to failure in developing new products? ◆What organizational structures are used to manage new-product development? ◆What are the main stages in developing new products, and how can they be managed better? Six categories of new products: 1. New-to-the-world products 2. New product lines 3. Additions to existing product lines 4. Improvements and revisions of existing products 5. Repositioning 6. Cost reductions The Reasons of Development Failure w 1. A high-level executive pushes a favorite idea through in spite of negative research findings. w 2. The idea is good, but the market size is overestimated. w 3. The product is not well designed w 4. The product is incorrectly positioned in the market, not advertised effectively, or overpriced. w 5. The product fails to gain sufficient distribution coverage or support. w 6. Development costs are higher than expected. w 7. Competitors fight back harder than expected Organizational Arrangements w New-product deployment requires specific criteria – one company established the following acceptance criteria: ◆The product can be introduced within five years ◆The product has a market potential of at least $50 million and a 15 percent growth rate. ◆The product would provide at least 30 percent return on sales and 40 percent on investment. ◆The product would achieve technical or market leadership. Organizational Arrangements w Budgeting For New Product Development Case: 3M’s approach: ◆ 15% rule ◆ Each promising idea gets an “executive champion” ◆ Expect some failures ◆ Golden Step awards handed out each year Table 5-2: Finding One Successful New Product (Starting with 64 New Ideas) Stage Number of Ideas Pass Ratio Cost per Product Idea Total Cost 1. Idea screening 64 1:4 $ 1,000 $ 64,000 2. Concept testing 16 1:2 20,000 320,000 3. Product development 8 1:2 200,000 1,600,000 4. Test marketing 4 1:2 500,000 2,000,000 5. National launch 2 1:2 5,000,000 10,000,000 $5,721,000 $13,984,000 The New-Product Development Process (1) w Ideal generation: ◆ Interacting with others → customers → scientists → competitors → employees → channel members, → top management The New-Product Development Process (1) ◆ Creativity technologies（How to stimulate the creativity in a group） ● Forced relationships ● Morphological analysis ● Reverse assumption analysis ● New contexts ● Mind-mapping The New-Product Development Process (2) w Idea screening ◆ Does the product meet a need? ◆ Would it offer superior value? ◆ Can it be distinctively advertised? ◆ Does the company have the necessary know- how and capital? ◆ Will the new product deliver the expected sales volume, sales growth, and profit? Case: Idea screening of Lego w Lego Group does not accept a new product idea unless it satisfies these questions: ◆ Does the proposed product have the Lego look? ◆ Will children learn while having fun? ◆ Will parents approve? ◆ Does the product maintain high quality standards? ◆ Does it stimulate creativity?" The New-Product Development Process (3) w Concept to strategy ◆ Concept development Product idea Product concept w Figure 5-4 Product and Brand Positioning The New-Product Development Process (3) ◆ Concept Testing The approaches to test: 1. creating physical prototypes ( Tradition ) 2. virtual reality programs ( CAD ) 3. customer-driven engineering ( Internet ) The New-Product Development Process (4) wMarketing Strategy Development ◆ Part 1 describes: ● the target market's size, structure, and behavior; ●the planned product positioning; ●the sales, market share, and profit goals sought in the first few years. The New-Product Development Process (4) ◆ Part 2 outlines: ● the planned price ● distribution strategy, ● marketing budget for the first year; The New-Product Development Process (4) ◆ Part 3 describes: ● sales , profit and goals in the long run ● marketing-mix strategy over time. The New-Product Development Process (5) w Business Analysis ◆Estimating Total Sales ◆Estimating Cost and Profits ● Break-even analysis ● Risk analysis The New-Product Development Process (6) wProduct Development ◆Quality Function Development (QFD) ◆Customer attributes (CAs) ◆Engineering attributes (EAs) The New-Product Development Process (7) wTest Marketing ◆Consumer-goods market testing (from the least to the most costly): 1. Sales-Wave Research 2. Simulated Test Marketing 3. Controlled Test Marketing The New-Product Development Process (7) 4. Test Markets ●How many test cities? ● Which cities? ● Length of test? ● What information? ● What action to take? ◆ Business-Goods Market Testing The New-Product Development Process (8) wCommercialization ◆ When (time) First entry Parallel entry Later entry ◆ Where (Geographic Strategy) ◆ To Whom (Target-Market Prospects) ◆ How (Introductory Market Strategy) The best way to hold customers is to constantly figure out how to give them more for less. Kotler on Marketing Chapter Objectives w In this chapter, we focus on the following questions: – What are the characteristics of products? – How can a company build and manage its product mix and product lines? – How can a company make better brand decisions? – How can packaging and labeling be used as marketing tools? The Product and the Product Mix – Product • Physical goods • Services • Experiences • Events • Persons • Places • Properties • Organizations • Information • Ideas Figure 14.1: Components of the Market Offering The Product and the Product Mix w Product levels – Customer value hierarchy – Core benefit – Basic product – Expected product – Augmented product Figure 14.2: Five Product Levels The Product and the Product Mix – Consumption system – Potential product w Product hierarchy – Need family – Product family – Product class – Product line – Product type – Item The Product and the Product Mix – Product system – Product mix w Product classifications – Durability and Tangibility Classification: • Nondurable goods • Durable goods • Services The Product and the Product Mix – Consumer-Goods Classification: • Convenience goods – Staples – Impulse goods – Emergency goods • Shopping goods – Homogeneous shopping goods – Heterogeneous shopping goods • Specialty goods • Unsought goods The Product and the Product Mix – Industrial-Goods Classification • Materials and parts – Farm products – Natural products – Manufactured materials and parts – Component materials – Component parts • Capital items – Installations – Equipment The Product and the Product Mix – Supplies and business services • Maintenance and repair items • Operating supplies • Maintenance and repair services • Business advisory services The Product and the Product Mix w Product mix (Product assortment) – Product mix has a certain: • Width • Length • Depth • Consistency Table 14.1: Product-Mix Width and Product-Line Length for Proctor& Gamble Products PRODUCT- LINE LENGTH Product-Mix Width Detergents Toothpaste Disposable Bar Soap Diapers Paper Tissue Ivory Snow (1930) Dreft (1933) Tide (1946) Cheer (1950) Gleem (1952) Crest (1955) Ivory (1879) Kirk’s (1885) Lava (1893) Camay (1926) Pampers (1961) Luvs (1976) Charmin (1928) Puffs (1960) Banner (1982) Summit (1992) See text for complete table The Product and the Product Mix w Product-line decisions – Product-line analysis • Sales and Profits – Four types of product classes: • Core product • Staples • Specialties • Convenience items The Product and the Product Mix – Market profile Figure 14.4: Product Map for a Paper-Product Line The Product and the Product Mix w Product-line length – Line Stretching • Downmarket Stretch – The company may notice strong growth opportunities as mass retailers attract a growing number of shoppers – The company may wish to tie up lower-end competitors who might otherwise try to move upmarket – The company may find that the middle market is stagnating or declining • Upmarket Stretch • Two-Way Stretch The Product and the Product Mix – Line Filling • Just-noticeable difference – Line Modernization, featuring, and pruning The Product and the Product Mix w Commonly used research approaches to determine brand meaning: – Word associations – Personifying the brand – Laddering up the brand essence • Brand essence • Laddering up The Product and the Product Mix w Building Brand Identity – Brand bonding • Brands are not built by advertising but by the brand experience • Everyone in the company lives the brand • Three ways to carry on internal branding – Employees must – Understand – Desire, and – Deliver on the brand promise w Building Brands in the new economy – Heidi and Don Schultz urge companies to: • Clarify the corporation’s basic values and build the corporate brand. • Use brand managers to carry out the tactical work. • Develop a more comprehensive brand-building plan. • Define the brand’s basic essence to be delivered wherever it is sold. • Use the brand-value proposition as the key driver of the company’s strategy, operations, services, and product development. • Measure their brand-building effectiveness, not by the old measures of awareness, recognition, and recall, but by a more comprehensive set of measures including customer-perceived value, customer satisfaction, customer share of wallet, customer retention, and customer advocacy. The Product and the Product Mix The Product and the Product Mix w Brand Equity – Brand awareness – Brand acceptability – Brand preference • Aaker’s five levels of customer attitude: – The customer will change brands, especially for price reasons. No brand loyalty. – Customer is satisfied. No reason to change brands. – Customer is satisfied and would incur cost by changing brand. – Customer values the brand and sees it as a friend. – Customer is devoted to the brand. Brand Equity No Brand Loyalty (customer will change) Satisfied Customer (no reason to change) Satisfied & Switching Cost Values the Brand (brand as friend) Devoted to Brand An Overview of Branding Decisions Branding Decision •Brand •No brand Brand- Sponsor Decision •Manu- facturer brand •Distribu- tor (private) brand •Licensed brand Brand- Name Decision •Individual brand names •Blanket family name •Separate family names •Company- individual names Brand- Repositioning Decision •Reposi- tioning •No reposi- tioning Brand- Strategy Decision •Line extension •Brand extension •Multi- brands •New brands •Cobrands Brand Strategies Brand Extension New B ra nd N am e Product Category Line Extension Existing Existing MultibrandsNew New Brands Good Brand Names: Suggest Product Benefits Distinctive Lack Poor Foreign Language Meanings Suggest Product Qualities Easy to: Pronounce Recognize Remember The Product and the Product Mix – Value of Brand Equity • Brand valuation • Competitive advantages of high brand equity: – The company will have more leverage in bargaining with distributors and retailers because customers expect them to carry the brand. – The company can charge a higher price than its competitors because the brand has higher perceived quality. – The company can more easily launch extensions because the brand name carries high credibility. – The brand offers some defense against price competition. – Managing Brand Equity w Branding Challenges – Branding Decision: To Brand or Not to Brand? The Product and the Product Mix The Product and the Product Mix – Branding gives the seller several advantages: • Brand name makes it easier for the seller to process orders and track down problems • Seller’s brand name and trademark provide legal protection of unique product features • Branding gives the seller the opportunity to attract a loyal and profitable set of customers. • Branding helps the seller segment markets. • Strong brands help build corporate image, making it easier to launch new brands and gain acceptance by distributors and consumers. The Product and the Product Mix – Brand-Sponsor Decisions • Manufacturer brand • Distributor brand • Licensed brand name • Slotting fee • Brand ladder • Brand parity The Product and the Product Mix – Brand-Name Decision • Four available strategies: – Individual names – Blanket family names – Separate family names for all products – Corporate name combined with individual product names The Product and the Product Mix – Desirable qualities for a brand name • It should suggest something about the product’s benefits • It should suggest the product or service category • It should suggest concrete, “high imagery” qualities • It should be easy to spell, pronounce, recognize, and remember • It should be distinctive • It should not carry poor meanings in other countries and languages The Product and the Product Mix – Brand building tools • Public relations and press releases • Sponsorships • Clubs and consumer communities • Factory visits • Trade shows • Event marketing The Product and the Product Mix – Brand Strategy Decision – Functional brand – Image brand – Experimental brands • Line Extensions – Branded variants • Brand extensions – Brand dilution The Product and the Product Mix • Multibrands, New Brands, and Co-Brands – Multibrand • Flanker Bands – Co-branding (Dual branding) • Ingredient co-branding • Same-company co-branding • Joint venture co-branding • Multisponsor co-branding The Product and the Product Mix – Brand Asset Management – Brand Auditing and Repositioning • Brand report card The Product and the Product Mix w Packaging and Labeling – Packaging – Package • Primary Package • Secondary Package • Shipping Package – Factors which have contributed to the growing use of packaging as a marketing tool • Self-Service • Consumer affluence • Company and brand image • Innovation opportunity The Product and the Product Mix – Labeling • Functions – Identification – Grading – Description • Consumerists have lobbied for: – Open dating – Unit pricing – Grade labeling – Percentage labeling Product Mix C on si st en cy Two-Way Product-Line Stretch: Marriott Hotels Quality Economy SuperiorStandard Good High Above average Average Low Fairfield Inn (Vacationers) Courtyard (Salespeople) Marriott (Middle managers) Marriott Marquis (Top executives) What is a Brand? Labels Sell value, not price. Kotler on Marketing Chapter Objectives w In this chapter, we focus on three questions: – How should a price be set on a product or service for the first time? – How should the price be adapted to meet varying circumstances and opportunities? – When should the company initiate a price change, and how should it respond to a competitor’s price change? Figure 16.1: Nine Price-Quality Strategies Figure 16.2: Price Should Align with Value Setting the Price w Step 1: Selecting the pricing objective • Survival • Maximize current profits • Maximize their market share – Market-penetration pricing • Best when: – Market is highly price-sensitive, and a low price stimulates market growth, – Production and distribution costs fall within accumulated production experience, and – Low price discourages actual and potential competition Setting the Price w Step 2: Determining Demand – Price sensitivity – Total Cost of Ownership (TCO) Setting the Price – Tom Nagle offers this list of factors associated with lower price sensitivity • The product is more distinctive • Buyers are less aware of substitutes • Buyers cannot easily compare the quality of substitutes • The expenditure is a smaller part of the buyer’s total income • The expenditure is small compared to the total cost of the end product • Part of the cost is borne by another party • The product is used in conjunction with assets previously bought • The product is assumed to have more quality, prestige, or exclusiveness • Buyers cannot store the product Setting the Price – Estimating Demand Curves – Price Elasticity of Demand • Inelastic • Elastic • Price indifference band Setting the Price w Step 3: Estimating Cost – Types of Cost and Levels of Production • Fixed costs (overhead) • Variable cost • Total cost • Average cost – Accumulated Production • Experience curve (Learning curve) Setting the Price – Differentiated Marketing Offers • Activity-based cost (ABC) accounting – Target costing w Step 4: Analyzing Competitors’ Cost, Prices, and Offers Setting the Price w Step 5: Selecting a Pricing Method – Markup Pricing Unit Cost = variable cost + (fixed cost/unit sales) – Markup price Markup price= unit cost/ (1 – desired return on sales) – Target-Return Pricing Target-return price = unit cost + (desired return X investment capital)/unit sales – Break-even volume Break-even volume = fixed cost / (price – variable cost) – Perceived-Value Pricing • Perceived value • Price buyers • Value buyers • Loyal buyers • Value-in-use price Figure 16.8: Break-Even Chart for Determining Target-Return Price and Break- Even Volume Setting the Price Setting the Price – Value Pricing • Everyday low pricing (EDLP) • High-low pricing – Going-Rate Pricing – Auction-Type Pricing • English auctions (ascending bids) • Dutch auctions (descending bids) • Sealed-bid auctions – Group Pricing Table 16.1: Effect of Different Bids on Expected Profit Company’s Bid Company’s Profit Probability of Getting Award with This Bid (Assumed) Expected Profit $ 9,500 $ 100 0.81 $ 81 10,000 600 0.36 216 10,500 1,100 0.09 99 11,000 1,600 0.01 16 Setting the Price w Step 6: Selecting the Final Price – Psychological Pricing • Reference price – Gain-and-Risk-Sharing Pricing – Influence of the Other Marketing Elements • Brands with average relative quality but high relative advertising budgets charged premium prices • Brands with high relative quality and high relative advertising budgets obtained the highest prices • The positive relationship between high advertising budgets and high prices held most strongly in the later stages of the product life cycle for market leaders Setting the Price • Brands with average relative quality but high relative advertising budgets charged premium prices • Brands with high relative quality and high relative advertising budgets obtained the highest prices • The positive relationship between high advertising budgets and high prices held most strongly in the later stages of the product life cycle for market leaders – Company Pricing Policies – Impact of Price on Other Parties Adapting the Price w Geographical Pricing (Cash, Countertrade, Barter) • Countertrade • Barter • Compensation deal • Buyback arrangement • Offset – Price Discounts and Allowances Table 16.2: Price Discounts and Allowances Cash Discount: A price reduction to buyers who pay bills promptly. A typical example is “2/10, net 30,” which means that payment is due within 30 days and that the buyer can deduct 2 percent by paying the bill within 10 days. Quantity Discount: A price reduction to those who buy large volumes. A typical example is “$10 per unit for less than 100 units; $9 per unit for 100 or more units.” Quantity discounts must be offered equally to all customers and must not exceed the cost savings to the seller. They can be offered on each order placed or on the number of units ordered over a given period. See text for complete table Adapting the Price w Promotional Pricing – Loss-leader pricing – Special-event pricing – Cash rebates – Low-interest financing – Longer payment terms – Warranties and service contracts – Psychological discounting Adapting the Price w Discriminatory Pricing – Customer segment pricing – Product-form pricing – Image pricing – Channel pricing – Location pricing – Time pricing • Yield pricing Adapting the Price w Product-mix pricing – Product-Line Pricing – Optional-Feature Pricing – Captive-Product Pricing • Captive products – Two-Part Pricing – By-Product Pricing – Product-Bundling Pricing • Pure bundling • Mixed bundling Initiating and Responding to Price Changes w Initiating Price Cuts – Drive to dominate the market through lower costs – Low quality trap – Fragile-market-share trap – Shallow-pockets trap Table 16.3: Marketing-Mix Alternatives Strategic Options Reasoning Consequences 1. Maintain price and perceived quality. Engage in selective customer pruning. Firm has higher customer loyalty. It is willing to lose poorer customers to competitors. Smaller market share. Lowered profitability. 2. Raise price and perceived quality. 3. Maintain price and raise perceived quality. Raise price to cover rising costs. Improve quality to justify higher prices. It is cheaper to maintain price and raise perceived quality. Smaller market share. Maintained profitability. Smaller market share. Short-term decline in profitability. Long-term increase in profitability. See text for complete table Table 16.4: Profits Before and After a Price Increase Before After Price $ 10 $10.10 (a 1 percent price increase) Units sold 100 100 Revenue $1000 $1010 Costs -970 -970 Profit $ 30 $ 40 (a 33 1/3 percent profit increase) Initiating and Responding to Price Changes Initiating and Responding to Price Changes w Initiating Price Increases – Cost inflation – Anticipatory pricing – Overdemand – Delayed quotation pricing – Escalator clauses – Unbundling – Reduction of discounts Initiating and Responding to Price Changes • Possible responses to higher costs or overhead without raising prices include: – Shrinking the amount of product instead of raising the price – Substituting less expensive materials or ingredients – Reducing or removing product features – Removing or reducing product services, such as installation or free delivery – Using less expensive packaging material or larger package sizes – Reducing the number of sizes and models offered – Creating new economy brands Initiating and Responding to Price Changes w Reactions to Price Changes – Customer Reactions – Competitor Reactions w Responding to Competitors’ Price Changes • Maintain price • Maintain price and add value • Reduce price • Increase price and improve quality • Launch a low-price fighter line Establish channels for different target markets and aim for efficiency, control, and adaptability. Kotler on Marketing w In this chapter, we focus on the following channel questions from the viewpoint of the manufacturers: – What is the value network and marketing channel system? – What work is performed by marketing channels? – What decisions do companies face in designing, managing, evaluating, and modifying their channels? – What trends are taking place in channel dynamics? – How can channel conflict be managed? Chapter Objectives What is a Value Network and Marketing-Channel System? • Value Network • Marketing channel How a Distributor Reduces the Number of Channel Transactions Store Distribution Channel Functions Ordering Payments CommunicationTransfer Negotiation FinancingRisk Taking Physical Distribution Information Consumer Marketing Channels Wholesaler Jobber Retailer Consumer    Consumer Retailer Consumer Manufacturer 0-level channel Wholesaler Retailer Consumer Mfg 2-level channel Mfg 3-level channel 1-level channel Manufacturer Industrial distributors M an uf ac tu re r C on su m er Manufacturer’s representative Manufacturer’s sales branch Industrial Marketing Channels Break-Even Cost Chart Channel Management Decisions Selecting FE ED B A C K Motivating Training Evaluating Types of Vertical Marketing Systems Corporate Common Ownership at Different Levels of the Channel Contractual Contractual Agreement Among Channel Members Administered Leadership is Assumed by One or a Few Dominant Members Conventional Distribution Channel vs. Vertical Marketing Systems Manufacturer Retailer Consumer Manufacturer Consumer Retailer Wholesaler W ho le sa le r What is a Value Network and Marketing-Channel System? w “Go-to-market” or hybrid channels – IBM’s sales force sells to large accounts, outbound telemarketing sells to medium-sized accounts, direct mail sells to small accounts, retailers sell to still smaller accounts, and the Internet to sell specialty items – Charles Schwab enables its customers to do transactions in branch offices, over the phone, or via the Internet – Staples markets through traditional retail, direct-response Internet site, virtual malls, and 30,000 linked affiliated sites What is a Value Network and Marketing-Channel System? • Channel integration characteristics: – Ability to order a product online, and pick it up at a convenient retail location – Ability to return an online-ordered product to a nearby store – Right to receive discounts based on total of online and off-line purchases What Work is Performed by Marketing Channels? • Many producers lack the financial resources to carry out direct marketing • In some cases direct marketing simply is not feasible • Producers who do establish their own channels can often earn a greater return by increasing their investment in their main business. Figure 17.1: How a Distributor Effects an Economy of Effort What Work is Performed by Marketing Channels? w Channel Functions and Flows – Key functions include: • Gather information about potential and current customers, competitors, and others • Develop and disseminate persuasive communications to stimulate purchasing • Reach agreements on price and other terms so that transfer of ownership or possession can be effected • Place orders with manufacturers What Work is Performed by Marketing Channels? • Acquire funds to finance inventories at different levels in the marketing channel • Assume risk connected with carrying out channel work • Provide for the successive storage and movement of physical products • Provide for buyers’ payment of their bills through banks and other financial institutions • Oversee actual transfer of ownership from one organization or person to another Figure 17.2: Five Marketing Flows in the Marketing Channel for Forklift Trucks What Work is Performed by Marketing Channels? – Forward flow – Backward flow What Work is Performed by Marketing Channels? w Channel levels – Zero-level channel (a.k.a. direct-marketing channel) – One-level channel – Two-level channel – Three-level channel – Reverse-flow channel w Service Sector Channels w Information Highway Channels Channel-Design Decisions • Push strategy • Pull strategy – Designing a channel system involves four steps: • Analyzing customer needs • Establishing channel objectives • Identifying major channel alternatives • Evaluating major channel alternatives Channel-Design Decisions w Analyze Customers’ Desired Service Output Levels – Lot size – Waiting time – Spatial convenience – Product variety – Service backup Channel-Design Decisions w Establish Objectives and Constraints w Identify Major Channel Alternatives – Types of Intermediaries – Number of Intermediaries • Exclusive distribution – Exclusive dealing • Selective distribution • Intensive distribution Channel-Design Decisions – Terms and Responsibilities of Channel Members • Price policy • Conditions of sale • Distributors’ territorial rights w Evaluate the Major Alternatives – Economic Criteria Figure 17.4: The Value-Adds versus Costs of Different Channels Figure 17.5: Break-even Cost Chart Channel-Design Decisions • Channel advantage – Control and Adaptive Criteria Channel-Management Decisions w Selecting Channel Members w Training Channel Members wMotivating Channel Members – Producers can use: • Coercive power • Reward power • Legitimate power • Expert power • Referent power Channel-Management Decisions • Distribution programming – Distributor-relations planning w Evaluating Channel Members wModifying Channel Arrangements Channel Dynamics w Vertical Marketing Systems • Conventional marketing channel • Vertical marketing systems (VMS) – Corporate and Administered VMS • Corporate VMS • Administered VMS Channel Dynamics – Contractual VMS • Wholesaler-sponsored voluntary chains • Retailer cooperatives • Franchise organizations – Manufacturer-sponsored retailer franchise – Manufacturer-sponsored wholesaler franchise – Service-firm-sponsored retailer franchise Channel Dynamics – The New Competition in Retailing w Horizontal Marketing Systems wMultichannel Marketing Systems Channel Dynamics – Roles of Individual Firms • Insiders • Strivers • Complementers • Transients • Outside innovators Channel Dynamics w Conflict, Cooperation, and Competition – Types of Conflict and Competition • Vertical channel conflict • Horizontal channel conflict • Multichannel conflict – Causes of Channel Conflict • Goal incompatibility • Unclear roles and rights – Differences in perception Channel Dynamics – By adding new channels, a company faces the possibility of channel conflict which may include: • Conflict between the national account managers and field sales force • Conflict between the field sales force and the telemarketers • Conflict between the field sales force and the dealers Channel Dynamics wManaging Channel Conflict • Diplomacy • Mediation • Arbitration w Legal and Ethical Issues in Channel Distribution • Exclusive distribution • Exclusive dealing • Tying agreements The best advertising is done by satisfied customers. Kotler on Marketing Chapter Objectives w In this chapter, we focus on the following questions: – What steps are involved in developing an advertising program? – What explains the growing use of sales promotion, and how are sales-promotion decisions made? – How can companies exploit the potential of public relations and publicity? – How can companies use integrated direct marketing for competitive advantage? – How can companies do effective e-marketing? Major Decisions in Advertising Objectives Setting Budget Decisions Message Decisions Media Decisions Campaign Evaluation Informative Advertising Build Primary Demand Persuasive Advertising Build Selective Demand Comparison Advertising Compares One Brand to Another Reminder Advertising Keeps Consumers Thinking About a Product. Advertising Objectives w Specific Communication Task w Accomplished with a Specific Target Audience w During a Specific Period of Time Figure 20.1: The Five Ms of Advertising Developing and Managing an Advertising Program w Setting the Advertising Objectives – Advertising goal (Objective) Advertising Budget Factors Profiles of Major Media Types Newspapers Advantages: Flexibility, timeliness; good local market coverage; broad acceptance, high believability Limitations: Short life; poor reproduction quality; small pass-along audience Television Advantages: Combines sight, sound, motion; high attention; high reach; appealing to senses Limitations: High absolute costs; high clutter; fleeting exposure; less audience selectivity Direct Mail Advantages: Audience selectivity; flexibility, no ad compe- tition within same medium; allows personalization Limitations: Relative high cost; “junk mail” image Radio Advantages: Mass use; high geographic and demographic selectivity; low cost Limitations: Audio only; fleeting exposure; lower attention; nonstandardized rates; fragmented audiences Magazines Advantages: High geographic and demographic selectivity; credibility and prestige; high-quality reproduction; long life; good pass-along readership Limitations: Long ad purchase lead time; waste circulation; no guarantee of position Outdoor Advantages: Flexibility; high repeat exposure; low cost; low message competition Limitations: Little audience selectivity; creative limitations Profiles of Major Media Types Classification of Advertising Timing Patterns Month Number of messages per month Concen- trated (1) (2) (3) Level Rising Falling Alternating (4) Continuous (8)(7)(6)(5) (9) Inter- mittent (10) (11) (12)(9) Simplified Rating Sheet for Ads 0 20 40 60 80 100 (Attention) How well does the ad catch the reader’s attention? __20 (Read-through) How well does the ad lead the reader to read further? __20 (Cognitive) How clear is the central message or benefit? __20 (Affective) How effective is the particular appeal? __20 (Behavior) How well does the ad suggest follow-through action? __20 Advertising Strategy Message Execution Typical Message Execution Styles Testimonial Evidence Slice of Life Scientific Evidence Lifestyle Technical Expertise Fantasy Musical Personality Symbol Mood or Image Turning the “Big Idea” Into an Actual Ad to Capture the Target Market’s Attention and Interest. Advertising Evaluation Advertising Program Evaluation Communication Effects Is the Ad Communicating Well? Sales Effects Is the Ad Increasing Sales? Why the increase in Sales Promotion? w Growing retailer power w Declining brand loyalty w Increased promotional sensitivity w Brand proliferation w Fragmentation of consumer market w Short-term focus w Increased managerial accountability w Competition w Clutter Channels of Sales Promotions Push Push Pull Consumer Promotion Consumer-Promotion Objectives Consumer-Promotion Tools Point-of-Purchase Displays Premiums Price Packs Cash Refunds Coupons Samples Patronage Rewards Games Sweepstakes Contests Advertising Specialties Patronage e ards Entice Consumers to Try a New Product Lure Customers Away From Competitors’ Products Get Consumers to “Load Up’ on a Mature Product Hold & Reward Loyal Customers Consumer Relationship Building “Deal Proneness,” Liechtenstein, Burton, & Netemeyer, Journal of Retailing, Summer 1997 w Examination of “deal proneness” among consumers in a supermarket setting w Surveys & Grocery Receipts used w Eight types of deals: – Cent-off, One-free, Gift, Display, Rebate, Contest, Sale, & Coupon “Deal Proneness,” Liechtenstein, Burton, & Netemeyer Cluster analysis yielded two interpretable results: X 49% are “deal prone,” 51% not X 24% High “Deal prone,” 50% intermediate, 26% deal insensitive w “Deal-proneness” a generalized construct - (crosses type of promotion) w Younger & Less educated more likely to be deal prone Trade-Promotion Objectives Trade-Promotion Tools Specialty Advertising ItemsContests Free Goods Buy-Back Guarantees Allowances Price-Offs Patronage Rewards Push Money Discounts Premiums Displays Persuade Retailers or Wholesalers to Carry a Brand Give a Brand Shelf Space Promote a Brand in Advertising Push a Brand to Consumers Trade Promotions Business-Promotion Objectives Business-Promotion ToolsGenerate Business Leads Stimulate Purchases Reward Customers Motivate Salespeople Conventions Trade Shows Sales Contests Business-to-Business Promotion Major Public Relations Tools Special EventsWritten Materials Corporate Identity Materials Speeches News Audiovisual Materials Public Service Activities Web Site Developing and Managing an Advertising Program – Advertising objectives at different stages in Hierarchy of Effects • Informative advertising • Persuasive advertising • Reminder advertising • Reinforcement advertising – Brand equity Developing and Managing an Advertising Program w Deciding on the Advertising Budget – Five factors to consider when setting the advertising budget: • Stage in the product life cycle • Market share and consumer base • Competition and clutter • Advertising frequency • Product substitutability Developing and Managing an Advertising Program w Choosing the Advertising Message – Message generation – Message evaluation and selection • Twedt rates messages on: – Desirability – Exclusiveness – Believability • Creative brief – Positioning statement – Message execution • Rational positioning • Emotional positioning – Social responsibility review Deciding on Media and Measuring Effectiveness w Deciding on Reach, Frequency, and Impact – Media selection – How many exposures, E*, will produce audience awareness A* depends on the exposures’: • Reach (R) • Frequency (F) • Impact (I) Figure 20.2: Relationship Among Trial, Awareness, and the Exposure Function Deciding on Media and Measuring Effectiveness – Total Number of Exposures (E) E = R x F where R = reach, F = frequency Known as Gross Rating Points (GRP) – Weighted Number of Exposures (WE) WE = R x F x I where R = reach, F = frequency, I = average impact Deciding on Media and Measuring Effectiveness w Choosing Among Major Media Types Table 20.1: Profiles of Media Types Medium Advantages Limitations Newspapers Flexibility; timeliness; good local market coverage; broad acceptance; high believability Short life; poor reproduction quality; small “passalong” audience Television Combines sight, sound, and motion; appealing to the senses; high attention; high reach High absolute cost; high clutter; fleeting exposure; less audience selectivity Direct mail Audience selectivity; flexibility; no ad competition within the same medium; personalization Relatively high cost; “junk mail” image See text for complete table Deciding on Media and Measuring Effectiveness – Media planners consider: • Target-audience media habits • Product characteristics • Message characteristics • Cost w New Media – Advertorials – Infomercials Deciding on Media and Measuring Effectiveness w Allocating the Budget w Audience size measures: – Circulation – Audience – Effective audience – Effective ad-exposed audience Figure 20.3: Classification of Advertising Timing Patterns Deciding on Media and Measuring Effectiveness w Deciding on Media Timing – Carryover – Habitual behavior Deciding on Media and Measuring Effectiveness • Buyer turnover • Purchase frequency • Forgetting rate – Continuity – Concentration – Flighting – Pulsing w Deciding on Geographical Allocation • Areas of dominant influence (ADIs) or designated marketing areas (DMAs) Deciding on Media and Measuring Effectiveness w Evaluating Advertising Effectiveness – Communication-Effect Research • Copy testing • Consumer feedback method – Example questions: • What is the main message you get from this ad? • What do you think they want you to know, believe, or do? How likely is it that this ad will influence you to undertake the implied action? • What works well in the ad and what works poorly? • How does the ad make you feel? • Where is the best place to reach you with this message? Table 20.2: Advertising Research Techniques For Print Ads. Starch and Gallup & Robinson, Inc. are two widely used print pretesting services. Test ads are placed in magazines, which are then circulated to consumers. These consumers are contacted later and interviewed. Recall and recognition tests are used to determine advertising effectiveness. For Broadcast Ads. In-home tests: A videotape is taken into the homes of target consumers, who then view the commercials. Trailer test: In a trailer in a shopping center, shoppers are shown the products and given an opportunity to select a series of brands. They then view commercials and are given coupons to be used in the shopping center. Redemption rates indicate commercials’ influence on purchase behavior. See text for complete table Deciding on Media and Measuring Effectiveness • Portfolio test • Laboratory test Figure 20.4: Formula for Measuring Sales Impact of Advertising Deciding on Media and Measuring Effectiveness w Sales-Effect Research – Share of advertising expenditures – Share of voice – Share of consumers’ minds and hearts – Share of market – Historical approach – Experimental design Sales Promotion – Promotion offers incentive to buy – Consumer promotion – Trade promotion – Sales-force promotion w Purpose of Sales Promotion Sales Promotion wMajor Decisions in Sales Promotion – Establishing Objectives – Selecting Consumer-Promotion Tools • Manufacturer promotions • Retailer promotions Table 20.3: Major Consumer-Promotion Tools Samples: Offer of a free amount of a product or service delivered door to door, sent in the mail, picked up in a store, attached to another product, or featured in an advertising offer. Coupons: Certificates entitling the bearer to a stated saving on the purchase of a specific product: mailed, enclosed in other products or attached to them, or inserted in magazines and newspaper ads. Cash Refund Offers (rebates): Provide a price reduction after purchase rather than at the retail shop: consumer sends a specified “proof of purchase” to the manufacturer who “refunds” part of the purchase price by mail. Price Packs (cents-off deals): Offers to consumers of savings off the regular price of a product, flagged on the label or package. A reduced-price pack is a single package sold at a reduced price (such as two for the price of one). A banded pack is two related products banded together (such as a toothbrush and toothpaste). See text for complete table Table 20.4: Major Trade-Promotion Tools Price-Off(off-invoice or off-list): A straight discount off the list price on each case purchased during a stated time period. Allowance: An amount offered in return for the retailer’s agreeing to feature the manufacturer’s products in some way. An advertising allowance compensates retailers for advertising the manufacturer’s product. A display allowance compensates them for carrying a special product display. Free Goods: Offers of extra cases of merchandise to intermediaries who buy a certain quantity or who feature a certain flavor or size. Source: For more information, see Betsy Spethman, “Trade Promotion Redefined,” Brandweek, March 13, 1995, pp. 25-32. Sales Promotion – Selecting Trade-Promotion Tools Table 20.5: Major Business-and Sales-Force-Promotion Tools Trade Shows and Conventions: Industry associations organize annual trade shows and conventions. Business marketers may spend as much as 35 percent of their annual promotion budget on trade shows. Over 5,600 trade shows take place every year, drawing approximately 80 million attendees. Trade show attendance can range from a few thousand people to over 70,000 for large shows held by the restaurant or hotel-motel industries. Participating vendors expect several benefits, including generating new sales leads, maintaining customer contacts, introducing new products, meeting new customers, selling more to present customers, and educating customers with publications, videos, and other audiovisual materials. Sales Contests: A sales contest aims at inducing the sales force or dealers to increase their sales results over a stated period, with prizes (money, trips, gifts, or points) going to those who succeed.See text for complete table Sales Promotion – Selecting Business-and Sales-Force-Promotion Tools Sales Promotion – Developing the Program • Incentive Considerations – Size of incentive – Conditions for participation – Duration of promotion – Distribution vehicle – Presenting, Implementing, Controlling, and Evaluating the Program – Lead time – Sell-in time Public Relations – Public – Public Relations – Public Relations Department Functions Include: • Press relations • Product publicity • Corporate communication • Lobbying • Counseling Public Relations wMarketing Public Relations (MPR) – Publicity vs. MPR – MPR assists in the following tasks: • Assisting in the launch of new products • Assisting in repositioning a mature product • Building interest in a product category • Influencing specific target groups • Defending products that have encountered public problems • Building the corporate image in a way that reflects favorably on its products Table 20.6: Major Tools in Marketing PR Publications: Companies rely extensively on published materials to reach and influence their target markets. These include annual reports, brochures, articles, company newsletters and magazines, and audiovisual materials. Events: Companies can draw attention to new products or other company activities by arranging special events like news conferences, seminars, outings, trade shows, exhibits, contests and competitions, and anniversaries that will reach the target publics. Sponsorships: Companies can promote their brands and corporate name by sponsoring sport and cultural events and highly regarded causes. News: One of the major tasks of PR professionals is to find or create favorable news about the company, its products, and its people, and get the media to accept press releases and attend press conferences.See text for complete table Public Relations wMajor Decisions in Marketing PR Public Relations – Establishing the Marketing Objectives • MPR can: – Build awareness – Build creditability – Hold down promotional cost Public Relations • Thomas L. Harris offers the following suggestions: – Build marketplace excitement before media advertising breaks – Build a core customer base – Build a one-to-one relationship with consumers – Turn satisfied customers into advocates – Influence the influentials – Choosing Messages and Vehicles • Event Creation – Implementing the Plan and Evaluating Results Direct Marketing – Direct-Order Marketing – Customer Relationship Marketing w The Growth of Direct Marketing – Market Demassification w The Benefits of Direct Marketing w Integrated Direct Marketing Direct Marketing wMajor Channels for Direct Marketing – Face-To-Face Selling – Direct Mail • New Forms of Mail Delivery – Fax mail – E-mail – Voice mail Direct Marketing • Direct marketing has passed through a number of stages: – Carpet bombing – Database marketing – Interactive marketing – Real-time personalized marketing – Lifetime value marketing – Constructing a Direct-Mail Campaign • Objectives • Target Markets and Prospects • Offer Elements • Testing Elements • Measuring Campaign Success: Lifetime Value Direct Marketing w Catalog Marketing – Telemarketing and M-Commerce • Inbound telemarketing • Outbound telemarketing • Four types of telemarketing: – Telesales – Telecoverage – Teleprospecting – Customer service and technical support Direct Marketing – Other Media for Direct-Response Marketing • Direct-response advertising • At-home shopping channels • Videotext and interactive TV w Kiosk Marketing Direct Marketing w E-Marketing – Permission Marketing • Levels of Permission Marketing: – No permission level – Low permission level – Medium permission level – High permission level – Transaction level – E-Marketing Guidelines • Give the customer a reason to respond • Personalize the content of your e-mails • Offer something the customer could not get via direct mail • Make it easy for the customer to “unsubscribe”