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Principles of Marketing
KHAN Muhammad Asif
QADER Muhammad Zeeshan
CESEMED 1, 2011-2012(S2)
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Kotler on Marketing
The future is not ahead of us. It hasalready happened.
Unfortunately, it is unequallydistributed among companies, industries
and nations.
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How Business and Marketing are Changing
Substantial increase in buying power
A greatervariety of goods and services
A greater amount ofinformation about practically anything
A greater ease in interacting and placing and receiving orders
An ability to compare ratings/opinions on products andservices
Companies can collect fuller and richerinformation aboutmarkets, customers, prospects and competitors
Technological push
Globalization
Marketing in the 21th century
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Major Consequences
Internet Marketing
Pure players: Amazon, Dell Computers
Click and Mortar Stores: Barnes and Nobles, FNAC
Internet communications, Complaint Sites
Lesser role of big media (TV, Radio, Billboards)
On line Marketing Research
Design your own product One to one marketing
Brand Communities
More control by the market
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Session Overview
Session 1: Defining Marketing and the Marketing ProcessSession 2: The Marketing Environment and Managing Marketing
InformationSession 3: Markets and Buyer BehaviorSession 4: Customer Driven Marketing Strategy: Creating Value for
Target CustomersSession 5: Product, Services and Branding StrategySession 6: Pricing Products: Understanding and Capturing
Customer ValueSession 7: Marketing Channels and Supply Chain ManagementSession 8: Integrated Marketing CommunicationS
ession 9: Direct Marketing & Sales Force ManagementSession 10: Final Exam
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Session #1: Defining Marketing
and the Marketing Process Marketing: Managing Profitable CustomerMarketing: Managing Profitable Customer
RelationshipsRelationships
Company and Marketing Strategy:Company and Marketing Strategy:Partnering to Build CustomerPartnering to Build Customer
RelationshipsRelationships
Marketing in the Digital Age: Making NewMarketing in the Digital Age: Making NewCustomer ConnectionsCustomer Connections
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Marketing: ManagingMarketing: Managing
Profitable CustomerProfitable Customer
RelationshipsRelationships
Kotler and Armstrong (2008)
Chapter 1
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Objectives
Be able to define marketingand discuss its core concepts.
Be able to define marketingmanagement and compare the fivemarketing management orientations.
Understand the role of Marketing in thestrategic planning process
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Objectives
Understand customer relationship
management and strategies. Realize the major challenges facing
marketers in the new connectedmillennium.
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Strong sales, no profits
Customer-driven to its core
Each customers
experience is unique
Provides great
selection, good
value, discovery and
convenience
A true online
community
Amazon.comAmazon.com
Discussion:Discussion: Will Amazon.com Survive?Will Amazon.com Survive?
Example
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What is Marketing?
Marketing is managing profitable customerrelationships
Attracting new customers
Retaining and growing current customers
Marketing is NOT synonymous with sales
or advertising
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What is Marketing?
Kotlers social definition:
Marketing is a social and managerialprocess by which individuals andgroups obtain what they need and wantthrough creating and exchangingproducts and value with others.
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Goods Services
Experiences
Events Persons
Places Properties
Organizations
Information Ideas
Many Things Can Be Marketed!Many Things Can Be Marketed!
What is Marketing?
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Needs, wants, anddemands
Marketing offers:including products,services andexperiences
Value andsatisfaction
Exchange,
transactions and
relationships Markets
Core Marketing ConceptsCore Marketing Concepts
What is Marketing?
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Marketing Management
Marketing managementis the art andscience of choosing target markets and
building profitable relationships with them. Creating, delivering and communicating
superior customer value is key.
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Marketing Management
Customer Management:
Marketers select customers that can be
served well and profitably.
Demand Management:
Marketers must deal with different demandstates ranging from no demand to too much
demand.
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Marketing Management
Production concept
Product concept
Selling concept
Marketing
concept
Societal marketing conceptSocietal marketing concept
Management OrientationsManagement Orientations
Marketing Management
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CRM
CRM Customer relationshipmanagement...is the overall process of building andmaintaining profitable customerrelationships by delivering superiorcustomer value and satisfaction.
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CRM
It costs 5 to 10 times MORE to attracta new customer than it does to keep a
current customer satisfied. Marketers must be concerned with
the lifetime value of the customer.
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CRM
Attracting, retaining andgrowing customers
Building customer
relationships and
customer equity
Customer value/satisfaction
Perceptions are key
Meeting/exceeding expectationscreates satisfaction
Loyalty and retention Benefits of loyalty
Loyalty increases as satisfactionlevels increase
Delighting consumers should bethe goal
Growing share of customer
Cross-selling
Key ConceptsKey Concepts
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CRM
Customer equity
The total combinedcustomer lifetime values of
all customers. Measures a firms
performance, but in amanner that looks to thefuture.
Key ConceptsKey Concepts
Attracting, retaining andgrowing customers
Building customer
relationships and
customer equity
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CRM
Customer relationship levelsand tools Target market typically dictates
type of relationship
Basic relationships Full relationships
Customer loyalty and retentionprograms
Adding financial benefits
Adding social benefits
Adding structural ties
Attracting, retaining andgrowing customers
Building customer
relationships and
customer equity
Key ConceptsKey Concepts
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Marketing Challenges
Technological advances, rapid globalization,and continuing social and economic shiftsare causing marketplace changes.
Major marketing developments can begrouped under the theme ofConnecting.
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Marketing Challenges
Via technology
With customers
With marketing
partners With the world
Advances in computers,telecommunications, video-conferencing, etc. are majorforces.
Databases allow forcustomization of products,messages and analysis ofneeds.
The Internet Facilitates anytime,
anywhere connections Facilitates CRM Creates marketspaces
ConnectingConnecting
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Marketing Challenges
Selective relationshipmanagement is key. Customer profitability
analysis separates winnersfrom losers.
Growing share of customer Cross-selling and up-selling
are helpful.
Direct sales to buyers are
growing.
ConnectingConnecting
Via technology
With customers
With marketing
partners With the world
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Marketing Challenges
Partner relationshipmanagement involves:
Connecting inside the
company
Connecting with outsidepartners
Supply chainmanagement
Strategic alliances
ConnectingConnecting
Via technology
With customers
With marketing
partners With the world
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Marketing Challenges
Globalization Competition
New opportunities
Greater concern forenvironmental and social
responsibility
Increased marketing bynonprofit and public-sectorentities
Social marketing campaigns
ConnectingConnecting
Via technology
With customers
With marketing
partners With the world
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Company and MarketingStrategy: Partnering to Build
Customer Relationships
Kotler and Armstrong (2008)
Chapter 2
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Objectives
Understand marketings role in strategicplanning
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Example
Known for films, animation,
theme parks and customerorientation
Parks offer a variety ofattractions as well ascleanliness, order, and warmth
Satisfying the customer is
everyones job Disney has grown via
diversification
Sales and net income havefallen
Walt Disney CompanyWalt Disney Company
Discussion:Discussion: HowCan DisneyRecover?HowCan DisneyRecover?
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Strategic Planning
Business portfolio:the collection of businessesand products that make upthe company.
Designing the business portfolio
is a key element of the strategicplanning process.
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Planning Marketing
Marketing plays a key role in the strategicplanning process.
Marketers must practice CRM andPartnerRelationship Management. Partnering with other departments in the
company as well as other firms in the
marketing system helps to build a superiorvalue delivery-network.
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The Marketing Process
The strategic planningand business portfolioanalysis processes help toidentify and evaluate
marketing opportunities. The purpose of the marketing
process is to help the firmplan how to capitalize on
these opportunities.
Analyzing marketingopportunities
Selecting target markets
Developing the marketingmix
Managing the marketing
effort
Key ElementsKey Elements
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The Marketing Process
The segmentation processdivides the total market intomarket segments.
Target marketingdetermines
which segment(s) arepursued.
The market positioningfor theproduct is then determined.
Analyzing marketingopportunities
Selecting target markets
Developing the marketingmix
Managing the marketing
effort
Key ElementsKey Elements
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The Marketing Process
Competitor analysis guidescompetitive marketing strategydevelopment.
Strategy leads to tactics by way of
the marketing mix: The Four Ps product, price,
place, promotion (seller viewpoint)
The Four Cs customersolution, cost, convenience, andcommunication (customer
viewpoint)
Analyzing marketingopportunities
Selecting target markets
Developing the marketingmix
Managing the marketing
effort
Key ElementsKey Elements
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The Marketing Process
Marketing analysis
Provides information helpful inplanning, implementation, andcontrol
Marketing planning Strategies and tactics
Marketing implementation
Turns plans into action
Marketing control
Operating control
Strategic control
Marketing audit
Analyzing marketingopportunities
Selecting target markets
Developing the marketingmix
Managing the marketing
effort
Key ElementsKey Elements
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Marketing in theMarketing in theDigital Age: Making NewDigital Age: Making New
Customer ConnectionsCustomer Connections
Kotler and Armstrong (2008)
Chapter3
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Objectives
Be able to identify the major forces shapingthe new digital age.
Understand how companies have respondedto the Internet with e-business strategies.
Be able to describe the four major e-commerce domains.
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Objectives
Understand how companies use e-commerce to profitably deliver greater
value to customers.
Realize the promise and challenges thate-commerce presents for the future.
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Invented discount
brokerage category First U.S. major player to
go online
Initially offered two-tiered
trading system
to protect profits / stopcannibalization
Later became first true click-
and-mortar full-servicebrokerage
Now worlds largest
e-commerce site
85% online trades; 21% of
trade volume; Strong stockreturn
Charles SchwabCharles Schwab
Example
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Major Forces Shaping theDigital Age
Digitalization and Connectivity
The flow of digital information requiresconnectivity
Intranets, Extranets, and the Internet
The Internet Explosion
Key driver of the new economy
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New Types ofIntermediaries
Brick-and-mortar firms often facedisintermediation from click-only competitors
The click-and-mortar business model has beenhighly successful
Customization and Customerization
Major Forces Shaping theDigital Age
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Marketing Strategy in theDigital Age
E-business:
uses electronic means and platforms to conductbusiness.
E-commerce:
facilitates the sale of products and services byelectronic means.
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Marketing Strategy in theDigital Age
E-marketing:
Includes efforts that inform, communicate,promote, and sell products and services over theInternet.
E-commerce benefits both buyers and
sellers
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Marketing Strategy in theDigital Age
Buyer Benefits of E-Commerce:
Convenience
Easy and private
Greater product access/selection
Access to comparative information
Interactive and immediate
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Marketing Strategy in theDigital Age
Seller Benefits of E-Commerce:
Relationship building
Reduced costs
Increased speed and efficiency
Flexibility
Global access, global reach
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EE--Marketing DomainsMarketing Domains
E-Commerce Domains
Targeted toTargeted toconsumersconsumers
Initiated byInitiated bybusinessesbusinesses
B2CB2C
Targeted toTargeted tobusinessesbusinesses
Initiated byInitiated byconsumersconsumers
C2CC2C C2BC2B
B2BB2B
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E-Commerce Domains
B2C
B2B
C2C
C2B
Online consumers
Now more mainstream anddiverse
Has created new targeting
opportunities Online behavior differs by age
Online consumers differ fromtraditional off-line consumers
They initiate and control theexchange process
Value information highly
Major DomainsMajor Domains
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E-Commerce Domains
B2C
B2B
C2C
C2B
B2B sales far exceed B2C sales
B2B sales are estimated toreach $4.3 trillion in 2005
Open trading networks
E-marketspace bringingsellers and buyers together
Private trading networks
Links sellers with their owntrading partners
Major DomainsMajor Domains
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E-Commerce Domains
B2C
B2B
C2C
C2B
C2C web sites helpconsumers exchange goodsor information eBay is one example
Auction sites facilitate theexchange process Allow access to a much larger
audience
Newsgroups / forums Help consumers to find and
share information
Major DomainsMajor Domains
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E-Commerce Domains
B2C
B2B
C2C
C2B
Allow consumers to searchout sellers, learn about offers,initiate purchase, or dictatepurchase terms
Ex: Priceline.com Some sites facilitate the
feedback process betweencustomers and companies Ex: Planetfeed.com
Major DomainsMajor Domains
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Conducting E-Commerce
Corporate web sites Build goodwill and
relationships; generateexcitement
Marketing web sites Engage consumers
and attempt to influencepurchase
Web site design
7 Cs of effective web sitedesign
EE--MarketingMarketing
Creating web sites Placing online ads and
promotions
Creating or using webcommunities
Using E-mail andwebcasting
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Seven Cs ofWeb Site DesignSeven Cs ofWeb Site Design
Conducting E-Commerce
Context Content
Community
Communication Connection
Commerce
Customization
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Conducting E-Commerce
Online forms of ads andpromotions Banner ads/tickers
Skyscrapers Interstitials
Browser ads
Content sponsorships
Microsites
Viral marketing
Future of online ads
EE--MarketingMarketing
Creating web sites Placing online ads and
promotions
Creating or using webcommunities
Using E-mail andwebcasting
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Conducting E-Commerce
Web communities allowmembers with specialinterests to exchange views
Social communities Work-related communities
Marketers find well-defineddemographics and sharedinterests useful whenmarketing
EE--MarketingMarketing
Creating web sites Placing on-line ads and
promotions
Creating or using webcommunities
Using E-mail andwebcasting
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Conducting E-Commerce
E-mail marketing Key tool for B2B and B2C
marketing
Clutter is a problem Enriched forms ofe-mail attempt to breakthrough clutter
Webcasting Auto downloading of
customized content torecipients PCs
EE--MarketingMarketing
Creating web sites Placing on-line ads and
promotions
Creating or using webcommunities
Using E-mail andwebcasting
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Promise and Challenges of E-Commerce
The Promise of E-Commerce
The future of B2B E-commerce is bright A few click-only companies may succeed
Most companies will integrate online marketinginto the marketing mix
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Session #2: The Marketing
Environment and ManagingMarketing Information
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The Marketing
Environment
Kotler and Armstrong (2008)
Chapter 4
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Objectives
Know the environmental forces that affectthe companys ability to serve its
customers. Realize how changes in the demographic
and economic environments affect
marketing decisions.
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Objectives
Identify the major trends in the firms naturaland technological environments.
Know the key changes in the political andcultural environments.
Understand how companies can react to themarketing environment.
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Example
Millennial fever set the stage
to bring back the Beetle VWs investment:
$ 560 million
Demand quickly outstrippedsupply
The new VW beetle
enjoyed cross-generationalappeal
Earned many awards
Beetle now accounts forover 25% of company
sales
VolkswagenVolkswagen
Discussion:Discussion: Will the flowerWill the flower--powerMicrobus succeedpowerMicrobus succeednext?next?
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Key Environments
Marketing Environment The actors and forces that affect a firms ability to build
and maintain successful relationships with customers. Aspects of the marketing environment:
Microenvironment
Macroenvironment
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Actors Affecting a Firms AbilityActors Affecting a Firms Ability
to Serve Customersto Serve Customers
The Microenvironment
Company
Suppliers
CustomerMarkets
Competitors
Publics
MarketingIntermediaries
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The Microenvironment
Departments within the company impact marketingplanning.
Suppliers help create and deliver customer value. Treat suppliers as partners.
Marketing intermediaries help sell, promote, anddistribute goods. Intermediaries take many forms.
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The Macroenvironment
Customer markets must be studied. Consumer, business, government, reseller and international
markets exist.
Successful companies provide better customer valuethan the competition. Size and industry position help to determine the appropriate
competitive strategy.
Various publics must also be considered.
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Types of PublicsTypes of Publics
The Microenvironment
Financial Media
Government
Local General
Internal
Citizen ActionCitizen Action
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Macroenvironmental ForcesMacroenvironmental Forces
The Macroenvironment
Demographic
Economic
Natural
Technological
Political
Cultural
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The Macroenvironment
Key Demographic Trends World population growth
Changing age structure The U.S. population consists of seven
generational groups. Baby boomers, Generation X, and
Generation Y are key groups.
Distinct segments typically exist withinthese generational groups.
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The Macroenvironment
Born between 1946 and 1964
Represent 28% of the population;earn 50% of personal income
Many mini-segments exist withinthe boomer group
Entering peak earning years asthey mature
Lucrative market for travel,entertainment, housing, and more
Baby Boomers
Generation X
Generation Y
Key GenerationsKey Generations
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The Macroenvironment
Born between 1965 and 1976
First latchkey children
Maintain a cautious economicoutlook
Share new cultural concerns Represent $125 billion in annual
purchasing power
Will be primary buyers of mostgoods by 2010
Baby Boomers
Generation X
Generation Y
Key GenerationsKey Generations
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The Macroenvironment
Born between 1977 and 1994
72 million strong; almost as largea group as their baby boomerparents
New products, services, andmedia cater to GenY
Computer, Internet and digitallysaavy
Challenging target for marketers
Baby Boomers
Generation X
Generation Y
Key GenerationsKey Generations
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The Macroenvironment
Key Demographic Trends
Changing American household
Geographic population shifts
Better-educated, more white-collar workforce
Increasing Diversity
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The Macroenvironment
The Economic Environment
Affects consumer purchasing power and
spending patterns. Two types of national economies: subsistence
vs. industrial.
U.S. consumers now spend carefully and desire
greater value.
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The Macroenvironment
Key Economic Trends U.S. income distribution is skewed.
Upper class, middle class, working class and theunderclass.
Rich are getting richer, the middle class is shrinking,and the underclass remains poor.
Consumer spending patterns are changing.
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The Macroenvironment
The Natural Environment
Concern for the natural environment has grown
steadily, increasing the importance of thesetrends:
Shortage of raw materials
Increased pollution
Increased governmental intervention
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The Macroenvironment
Key Technological Trends The technological environment is characterized
by rapid change. New technologies create new opportunities and
markets but make old technologies obsolete.
The U.S. leads the world in research anddevelopment spending.
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The Macroenvironment
The Political Environment Includes laws, governmental agencies, and pressure
groups that impact organizations and individuals. Keytrends include:
Increased legislation to protect businessesas well as consumers.
Changes in governmental agency enforcement.
Increased emphasis on ethical behavior and
social responsibility.
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The Macroenvironment
The Cultural Environment Is composed of institutions and other
forces that affect a societys basic values, perceptions,
preferences, and behaviors. Culture can influence decision making.
Core beliefs are persistent; secondary cultural valueschange and shift more easily.
The cultural values of a society are expressed through
peoples views.
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Cultural values are expressedCultural values are expressed
via how people view:via how people view:
The Macroenvironment
Themselves
Others
Organizations
Society
Nature
The Universe
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Responding to the MarketingEnvironment
Reactive: Passive Acceptance and Adaptation
Companies design strategies that avoid threats andcapitalize upon opportunities.
Proactive: Environmental Management Use of lobbyists, PR, advertorials, lawsuits, complaints, and
contractual agreements to influence environmental forces.
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Managing Marketing
Information
Kotler and Armstrong (2008)
Chapter 5
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Objectives
Understand the importance of informationto the company.
Know the definition of a marketinginformation system and be able to discussits subparts.
Learn the steps in the marketing research
process.
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Objectives
Learn how companies analyze and distributemarketing information.
Realize the special issues some marketingresearchers face, including public policy andethical issues.
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Example
New Coke was a fiasco;consumer complaints resulted
in the return of Coke Classicafter only 3 months.
$4 million was spentresearching New Coke.
Key issue: the researchproblem was too narrowly
defined, and consumerfeelings were ignored.
Poor judgment in resultinterpretation was also aproblem.
CokeCoke
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Marketing Info. System
Marketing Information System (MIS)
Consists of people, equipment, and procedures
that gather, sort, analyze, evaluate, anddistribute needed, timely, and accurateinformation to marketing decision makers.
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Marketing Info. System
Assessing Marketing Information Needs The MIS serves company managers as well as
external partners. The MIS must balance needs against feasibility:
Not all information can be obtained.
Obtaining, processing, sorting, and deliveringinformation is costly.
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Marketing Info. System
Internal data is gathered viacustomer databases, financialrecords, and operations reports.
Advantages of internal data
include quick/easy access toinformation.
Disadvantages stem from theincompleteness orinappropriateness of data to aparticular situation.
Internal data
Marketing
intelligence
Marketing research
DevelopingDevelopingInformationInformation
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Marketing Info. System
Marketing intelligence is thesystematic collection and analysisof publicly available informationabout competitors and trends inthe marketing environment.
Competitive intelligence gatheringactivities have growndramatically.
Many sources of competitiveinformation exist.
Internal data
Marketing
intelligence
Marketing research
DevelopingDevelopingInformationInformation
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Sources ofSources of
Competitive IntelligenceCompetitive Intelligence
Marketing Info. System
Company employees
Internet
Garbage
Published information
Competitors employees
Trade shows
Benchmarking
Channel members andkey customers
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Marketing Info. System
Marketing research is thesystematic design, collection,analysis, and reporting of datarelevant to a specificmarketing situation facing anorganization.
Steps in the marketingresearch process.
Internal data
Marketing
intelligence
Marketing research
DevelopingDevelopingInformationInformation
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Marketing Info. System
Steps in the Marketing Research Process: Defining the problem and research objectives.
Developing the research plan for collecting information. Implementing the research plan collecting and analyzing
the data.
Interpreting and reporting the findings.
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Marketing Info. System
Step 1: Defining the problem and researchobjectives
Dont confuse the symptoms of the problem with itscause when defining the problem.
Exploratory, descriptive, and causal research eachfulfill different objectives.
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Marketing Info. System
Step 2: Developing the Research Plan Research objectives guide the determination of specific
information needs. Research proposals outline the type of data needed and theresearch plan.
Secondary data: Information collected for another purposewhich already exists.
Primary data: Information collected for the specific purpose at
hand
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Marketing Info. System
Secondary data sources:
Government information
Internal, commercial, and onlinedatabases
Publications
Advantages:
Obtained quickly
Less expensive than primarydata
Disadvantages:
Information may not exist or maynot be usable.
Secondary data Primary data
Types of DataTypes of Data
f S
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Evaluate the Following WhenEvaluate the Following When
Judging Data QualityJudging Data Quality
Marketing Info. System
Relevance
Accuracy
Currency
Impartiality
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Marketing Info. System
Planning primary research:
Research approaches:
Observation, survey, experiment
Contact methods:
Mail, telephone, online, personal
Sampling plan:
Sampling unit, sample size,sampling procedure
Research instruments:
Questionnaire, mechanicalinstruments
Secondary data Primary data
Types of DataTypes of Data
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Marketing Info. System
Research approaches:
Observation research using people or machines
Mystery shoppers, traffic counters, web site cookies aresome examples.
Discovers behavior but not motivations.
Ethnographic research expands observation research toinclude consumer interviews.
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Marketing Info. System
Research approaches: Survey research is widely used to gather
descriptive information. Single source data systems gather information from
consumer panels
Survey research faces many problems
Experimental research investigates cause and
effect relationships.
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Marketing Info. System
Key Contact Methods Include: Mail surveys
Telephone surveys Personal interviewing:
Individual or focus group
Online (Internet) research
Each contact method has strengths and weaknesses
M k ti I f S t
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Strengths and Weaknesses ofStrengths and Weaknesses of
Contact Methods Relate to:Contact Methods Relate to:
Marketing Info. System
Flexibility
Sample control
Data quantity Cost
Interviewer effects
Speed of datacollection
Response rate
M k i I f S
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Marketing Info. System
Sample: subgroup of population from whominformation will be collected
Sampling Plan Decisions: Sampling unit
Sample size
Sampling procedure:
Probability samples
Non-probability samples
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Marketing Info. System
Research Instruments:
Questionnaires
Include open-ended and closed-endedquestions
Phrasing and question order are key
Mechanical instruments
M k ti I f S t
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Marketing Info. System
Step 3 of the Research Process:Implementing the Research Plan
Involves collecting, processing, and analyzinginformation.
Step 4 of the Research Process:Interpreting and Reporting the Findings
M k ti I f S t
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Marketing Info. System
Analyzing Marketing Information
Customer relationship management (CRM) helps
manage information. CRM offers many benefits and can help a firm gain
a competitive advantage.
Technology alone cannot build profitable customer
relationships.
M k ti I f S t
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Marketing Info. System
Distributing and Using Marketing Information Routine reporting makes information available in a timely
manner.
User friendly databases allow for special queries. Intranets and extranets help distribute information to
company employees and value-network members.
Oth C id ti
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Other Considerations
Marketing research in small businesses andnot-for-profit organizations
International marketing research Public policy and ethics
Consumer privacy issues
Misuse of research findings
Session 3: Markets & Buyer
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Session 3: Markets & Buyer
Behavior
Consumer Markets and Consumer Buyer
Behavior
Business Markets and Business Buyer
Behavior
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109
Consumer Markets andConsumer Markets andConsumer Buyer BehaviorConsumer Buyer Behavior
Kotler and Armstrong (2008)
Chapter 6
Obj ti
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Objectives
Be able to define the consumer marketand construct a simple model of
consumer buyer behavior. Know the four major factors that
influence consumer buyer behavior.
Obj ti
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Objectives
Understand the major types ofbuying decision behavior and the
stages in the buyer decisionprocess.
Be able to describe the adoption and
diffusion process for new products.
Example
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Harley Hogs account for
1/5 of U.S. cycle sales
Sales have exceeded
supply for years
1986-2000: Four stock
splits, increase of 7,100%
Fiercely loyal clientele
revolves around 7 core
customer types
Harley owners use their bikes
to express their lifestyle and
attitudes
Advertising reflects the
Harley mystique
HarleyHarley--DavidsonDavidson
Example
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Definitions Consumer Buying Behavior
Buying behavior of individuals and
households that buy products forpersonal consumption.
Consumer Market All individuals/households who buy
products for personal consumption.
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Stimulus Response Model
Marketing and other stimuli enter thebuyers black box and produce certainchoice/purchase responses.
Marketers must figure out what is inside
of the buyers black box and how stimuliare changed to responses.
Model of
Consumer Behavior
Characteristics Affecting
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gConsumer Behavior
Cultural
Social
Personal
Psychological
Culture
Subculture Hispanic consumers African Americans
Asian Americans
Mature consumers Social Class
Key FactorsKey Factors
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Hispanics
35 million consumers purchase $425billion worth of goods and services.
Expected to grow 64% in 20 years.
Spanish media makes group easy toreach.
Brand loyal group.
Characteristics Affecting
Consumer Behavior
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African Americans 35 million consumers purchase $527 billion
worth of goods and services.
Growing more affluent / sophisticated.
Price and brand name conscious; quality and
selection are important. Certain media target this group.
Characteristics Affecting
Consumer Behavior
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Asian Americans 10 million consumers purchase $229 billion
worth of goods and services.
Fastest growing, most affluent subculture.
Many nationalities comprise this group.
Consumer packaged goods companies nowtarget this group more heavily.
Characteristics Affecting
Consumer Behavior
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Mature Consumers 75 million consumers aged 50+ will grow to 115
million within 25 years.
Mature consumers control 50% of alldiscretionary income.
Attractive market for travel, restaurant, andcosmetics products, among others.
Characteristics Affecting
Consumer Behavior
Characteristics Affecting
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gConsumer Behavior
Cultural
Social
Personal
Psychological
Groups Membership
Reference Aspirational groups
Opinion leaders Buzz marketing
Family
Children can influence
Roles and Status
Key FactorsKey Factors
Characteristics Affecting
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Consumer Behavior
Cultural
Social
Personal
Psychological
Age and life cycle
Occupation
Economic situation Lifestyle
Activities, interests, andopinions
Lifestyle segmentation
Personality and self-concept Brand personality
Key FactorsKey Factors
Characteristics Affecting
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Brand Personality DimensionsBrand Personality Dimensions
Characteristics Affecting
Consumer Behavior
Sincerity
Ruggedness
Excitement
Competence
Sophistication
Characteristics Affecting
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Consumer Behavior
Cultural
Social
Personal
Psychological
Motivation Needs provide motives for
consumer behavior
Motivation research
Maslows hierarchy of needs
Perception Selective attention, selective
distortion, selective retention
Learning
Drives, stimuli, cues, responsesand reinforcement
Beliefs and attitudes
Key FactorsKey Factors
Characteristics Affecting
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Maslows Hierarchy ofNeedsMaslows Hierarchy ofNeeds
Characteristics Affecting
Consumer Behavior
Self-actualization
Esteem Needs
Social NeedsSafety Needs
Physiological Needs
Types of Buying-Decision
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Types of Buying Decision
BehaviorDifferenceDifference
between brandsbetween brands
SignificantSignificantDifferencesDifferences
ComplexComplexbuyingbuying
behaviorbehavior
LowLow
FewFewDifferencesDifferences
DissonanceDissonance--reducingreducingbuyingbuying
behaviorbehavior
Habitual buyingHabitual buyingbehaviorbehavior
VarietyVariety--seekingseekingbuying behaviorbuying behavior
HighHigh
Involvement LevelInvolvement Level
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Five Stages:
Need recognition
Information search
Evaluation of alternatives
Purchase decision Postpurchase behavior
The Buyer Decision Process
The Buyer Decision Process
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The Buyer Decision Process
Need recognition
Information search
Evaluation of alternatives
Purchase decision
Postpurchase behavior
Needs can be triggeredby: Internal stimuli
Normal needs becomestrong enough to drivebehavior
External stimuli
Advertisements
Friends of friends
ProcessProcess
StagesStages
The Buyer Decision Process
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The Buyer Decision Process
Need recognition
Information search
Evaluation of alternatives
Purchase decision
Postpurchase behavior
Consumers exhibit heightenedattention or actively search for
information. Sources of information:
Personal
Commercial
Public
Experiential Word-of-mouth
ProcessProcess
StagesStages
The Buyer Decision Process
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The Buyer Decision Process
Need recognition
Information search
Evaluation of alternatives
Purchase decision
Postpurchase behavior
Evaluation proceduredepends on the consumer and
the buying situation. Most buyers evaluate multiple
attributes, each of which isweighted differently.
At the end of the evaluation
stage, purchase intentions areformed.
ProcessProcess
StagesStages
The Buyer Decision Process
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The Buyer Decision Process
Need recognition
Information search
Evaluation of alternatives
Purchase decision
Postpurchase behavior
Two factors intercedebetween purchaseintentions and the actualdecision: Attitudes of others
Unexpected situational
factors
ProcessProcess
StagesStages
The Buyer Decision Process
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The Buyer Decision Process
Need recognition
Information search
Evaluation of alternatives
Purchase decision
Postpurchase behavior
Satisfaction is important: Delighted consumers engage
in positive word-of-mouth. Unhappy customers tell onaverage 11 other people.
It costs more to attract a newcustomer than it does toretain an existing customer.
Cognitive dissonance iscommon
ProcessProcess
StagesStages
B D i i P f
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Buyer Decision Process for
New Products
New Products
Good, service or idea that is perceived bycustomers as new.
Stages in the Adoption Process
Marketers should help consumers movethrough these stages.
Buyer Decision Process for
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Stages in the Adoption ProcessStages in the Adoption Process
Buyer Decision Process for
New Products
Awareness
Evaluation
Interest
Trial
Adoption
B D i i P f
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Buyer Decision Process for
New Products
Individual Differences in Innovativeness
Consumers can be classified into five adoptercategories, each of which behaves differentlytoward new products.
Product Characteristics and Adoption
Five product characteristics influence theadoption rate.
Buyer Decision Process for
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Adopter CategoriesAdopter Categories
Buyer Decision Process for
New Products
Innovators
Early Majority
Early Adopters
Late Majority
Laggards
Buyer Decision Process for
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Product CharacteristicsProduct Characteristics
Buyer Decision Process for
New Products
Relative Advantage
Compatibility
Complexity
Divisibility
Communicability
B D i i P f
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Buyer Decision Process for
New Products
International Consumer Behavior
Values, attitudes and behaviors differ greatly inother countries.
Physical differences exist which require changes inthe marketing mix.
Customs vary from country to country.
Marketers must decide the degree to which they willadapt their marketing efforts.
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138
Business Markets andBusiness Markets andBusiness Buyer BehaviorBusiness Buyer Behavior
Kotler and Armstrong (2008)
Chapter7
Objectives
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Objectives
Be able to define the business marketand explain how business markets
differ from consumer markets. Know the major factors that influence
business buyer behavior.
Objectives
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Objectives
Understand the steps in thebusiness buying decision process.
Understand institutional andgovernment markets and howbuyers in these markets make their
buying decisions.
Example
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Sells jets exclusively
for corporate use 300 500 customers
worldwide
Rational, objective,
and human factors
influence business
buyers decisions
Multiple people are
involved in the decision Buying influences
include the CEO, pilot,
board members, even
spouses
Company has been
highly successful
Gulfstream AerospaceGulfstream Aerospace
p
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Definition Business Buyer Behavior:
The buying behavior of organizations thatbuy goods and services for use in theproduction of other products and servicesor for the purpose of reselling or rentingthem to others at a profit.
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Characteristics of Business Markets Sales in the business market far exceed sales in
consumer markets.
Business markets differ from consumer markets inmany ways.
Marketing structure and demand
Nature of the buying unit
Types of decisions and the decision process
Business Markets
Business Markets
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Business Markets
Marketing Structure and
Demand
Nature of the
Buying Unit
Types of Decisions and
the Decision Process
Compared to consumermarkets: Business markets
have fewer but largercustomers
Business customers
are more geographicallyconcentrated
Demand is different
Demand is derived Demand is price inelastic
Demand fluctuates more, and
changes more quickly
CharacteristicCharacteristicss
Business Markets
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us ess a e s
Marketing Structure and
Demand
Nature of the
Buying Unit
Types of Decisions and
the Decision Process
Compared to consumerpurchases: Business purchases
involve more buyers in thedecision process.
Purchasing efforts areundertaken byprofessional buyers.
CharacteristicCharacteristicss
Business Markets
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Marketing Structure and
Demand
Nature of the
Buying Unit
Types of Decisions and
the Decision Process
Compared to consumerpurchases: Business buyers face
more complex buyingdecisions.
The buying process ismore formalized.
Buyers and sellers work
more closely togetherand build long-termrelationships.
CharacteristicCharacteristicss
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Major Types of Buying Situations
Straight rebuy
Reordering without modification
Modified rebuy
Requires modification to prior purchase
New task First-time purchase
Business Buyer Behavior
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Systems Selling:
Buying a packaged solution to a problemfrom a single seller.
Convenience is a major benefit
Often a key marketing strategy for
businesses seeking to win and holdaccounts.
Business Buyer Behavior
Business Buyer Behavior
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Participants in theParticipants in the
Business Buying ProcessBusiness Buying Process
y
Users
Buyers
Influencers
Deciders
Gatekeepers
MajorInfluences on BusinessBuyers
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Buyers
Environmental
Organizational
Interpersonal
Individual
Economic trends
Supply conditions
Technological change Regulatory and political
environments
Competitive developments
Culture and customs
Key FactorsKey Factors
MajorInfluences on BusinessBuyers
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Buyers
Environmental
Organizational
Interpersonal
Individual
Objectives
Policies
Procedures
Organizationalstructure
Systems
Key FactorsKey Factors
MajorInfluences on BusinessBuyers
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Buyers
Environmental
Organizational
Interpersonal
Individual
Authority
Status Empathy
Persuasiveness
Key FactorsKey Factors
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Eight Stages:
Stage 1: Problem Recognition
Stage 2: General Need Description
Stage 3: Product Specification
Value analysis helps to reduce costs
Stage 4: Supplier Search Supplier development
Business Buying Process
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Eight Stages:
Stage 5: Proposal Solicitation
Stage 6: Supplier Selection
Stage 7: Order-Routine Specification
Blanket contracts are often used for
maintenance, repair and operating items. Stage 8: Performance Review
Business Buying Process
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Business Buying on the Internet E-procurement is growing rapidly.
Reverse auctions account for much of the onlinepurchasing activity.
E-procurement offers many benefits: Access to new suppliers
Lower purchasing costs Quicker order processing and delivery
Business Buying Process
Institutional and Government
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Institutional Markets
Consist of churches, schools, prisons,hospitals, nursing homes and otherinstitutions that provide goods andservices to people in their care.
Institutional and Government
Markets
Institutional and Government
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Institutional Markets
Often characterized by low budgets andcaptive patrons.
Marketers may develop separatedivisions and marketing mixes to serviceinstitutional markets.
Institutional and Government
Markets
Institutional and Government
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Government Markets
Governmental units federal, state, andlocal that purchase or rent goods andservices for carrying out the mainfunctions of government.
Institutional and Government
Markets
Institutional and Government
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Government Markets
More than 82,000 buying units. Require suppliers to submit bids.
Favor domestic suppliers.
Extensive paperwork is required fromsuppliers.
Institutional and Government
Markets
Institutional and Government
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Government Markets
Government buyers often favor: Depressed business firms and areas
Small businesses
Minority-owned businesses
Firms which practice non-discriminatorypractices
Institutional and Government
Markets
Institutional and Government
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Government Markets
Most firms that sell to government buyersare not marketing oriented.
Some companies have separategovernment marketing departments.
Much of government buying has migratedonline.
Institutional and Government
Markets
Session 4: Customer Driven
Marketing Strategy Creating
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Marketing Strategy Creating
Value for Target Customers
Segmentation, Targeting, and Positioning
Building the Right Relationships with the
Right Customers
Segmentation Targeting andSegmentation Targeting and
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164
Segmentation, Targeting, andSegmentation, Targeting, and
Positioning: Building the RightPositioning: Building the Right
Relationships with the RightRelationships with the Right
CustomersCustomers
Kotler and Armstrong (2008)
Chapter 8
Objectives
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Be able to define the three steps oftarget marketing: market
segmentation, target marketing, andmarket positioning.
Understand the major bases for
segmenting consumer and businessmarkets.
Objectives
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Know how companies identifyattractive market segments and howthey choose a target marketingstrategy.
Comprehend how companiesposition their products for maximum
competitive advantage.
Example
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Sells multiple brands
within the same
product category for a
variety of products
Brands feature a
different mix of
benefits and appeal todifferent segments
Has also identifieddifferent niches withincertain segments
Product modificationsare useful: Tide offersseven differentproduct formulationsto serve differentniches needs
Procter & GambleProcter & Gamble
D fi iti
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Definition
Market Segmentation:
Dividing a market into distinct groups with
distinct needs, characteristics, orbehavior who might require separateproducts or marketing mixes.
Market Segmentation
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Segmenting ConsumerMarkets
Segmenting BusinessMarkets
SegmentingInternational Markets
Requirements forEffective Segmentation
Geographical segmentation
Marketing mixes arecustomized geographically
Demographic segmentation
Most popular segmentation
Demographics are closely relatedto needs, wants and usage rates
Psychographic segmentation
Lifestyle, social class, andpersonality-based segmentation
Behavioral segmentation
Typically done first
TopicsTopics
Market Segmentation
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Geographic SegmentationGeographic Segmentation
VariablesVariables
World Regionor Country
U.S. region
State
City
Neighborhood
City orMetro Size
Density Climate
Market Segmentation
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Demographic Segmentation VariablesDemographic Segmentation Variables
Age Gender
Family size
Family life cycle
Income
O
ccupation Education
Religion
Race
Generation
Nationality
Market Segmentation
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Behavioral SegmentationBehavioral Segmentation
VariablesVariables
Occasions
Benefits
User Status
User Rates
Loyalty Status
Readiness Stage
Attitude Toward the Product
Market Segmentation
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Segmenting ConsumerMarkets
Segmenting BusinessMarkets
SegmentingInternational Markets
Requirements forEffective Segmentation
Demographic segmentation
Industry, company size, location
Operating variables
Technology, usage status,
customer capabilities Purchasing approaches
Situational factors
Urgency, specific application, sizeof order
Personal characteristics
Buyer-seller similarity, attitudestoward risk, loyalty
TopicsTopics
Market Segmentation
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Segmenting ConsumerMarkets
Segmenting BusinessMarkets
SegmentingInternational Markets
Requirements forEffective Segmentation
Geographic segmentation
Location or region
Economic factors
Population income or level of
economic development Political and legal factors
Type / stability of government,monetary regulations, amount ofbureaucracy, etc.
Cultural factors
Language, religion, values,attitudes, customs, behavioralpatterns
TopicsTopics
Market Segmentation
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Segmenting ConsumerMarkets
Segmenting BusinessMarkets
SegmentingInternational Markets
Requirements forEffective Segmentation
Measurable
Size, purchasing power, and profileof segment
Accessible
Can be reached and served Substantial
Large and profitable enough toserve
Differentiable
Respond differently
Actionable Effective programs can be
developed
TopicsTopics
Target Marketing
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Target Marketing
Evaluating Market Segments Segment size and growth
Segment structural attractiveness Level of competition
Substitute products
Power of buyers
Powerful suppliers Company objectives and resources
Target Marketing
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Target Marketing
Target Marketing Strategies
Undifferentiated (mass) marketing
Differentiated (segmented) marketing
Concentrated (niche) marketing
Micromarketing (local or individual)
marketing
Target Marketing
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Target Marketing
Choosing a Target-Marketing StrategyRequires Consideration of:
Company resources
The degree of product variability
Products life-cycle stage
Market variability
Competitors marketing strategies
Target Marketing
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Target Marketing
Socially Responsible Targeting
Some segments are at special risk:
Children
Inner-city minority consumers
Internet shoppers
Controversy occurs when the methodsused are questionable.
Positioning
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Positioning
Positioning:
The place the product occupies in
consumers minds relative to competingproducts.
Typically defined by consumers on thebasis of important attributes.
Positioning
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Positioning
Choosing a Positioning Strategy: Identifying possible competitive advantages
Products, services, channels, people or image can be
sources of differentiation.
Choosing the right competitive advantage How many differences to promote?
Unique selling proposition
Positioning errors to avoid Which differences to promote?
Positioning
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Criteria forCriteria for
Meaningful DifferencesMeaningful Differences
Important
Superior
Preemptive
Distinctive
Communicable
Affordable
Profitable
Positioning
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Positioning
Choosing a Positioning Strategy: Selecting an overall positioning strategy
More for More Value Proposition More for the Same Value Proposition
The Same forLess Value Proposition
Less for Much Less Value Proposition
More forLess Value Proposition
Positioning
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Positioning
Choosing a Positioning Strategy:
Developing a positioning statement
Positioning statements summarize thecompany or brand positioning
EXAMPLE: To (target segment and need) our(brand) is (concept) that (point-of-difference).
Communicating the chosen position
Session 5: Marketing Decisions I:
S
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Product,S
ervices, and BrandingStrategies
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186
Product, Services, andProduct, Services, andBranding StrategiesBranding Strategies
Kotler and Armstrong (2008)
Chapter 9
Objectives
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Be able to defineproductand know themajor classifications of products andservices.
Understand the decisions companies makeregarding their individual products andservices, product lines, and product mixes.
Objectives
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Understand how firms build and managetheir brands.
Know the four characteristics of servicesand the additional marketing considerationsthat services require.
Review additional product issues related to
social responsibility and internationalmarketing.
Example
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Cosmetics
companies sellbillions of dollars
worth of products
Consumers buy
more than just aparticular smell
The promise,
image, company,name, package, and
ingredients are all
part of the product,
as are the storeswhere it is sold.
The Cosmetics IndustryThe Cosmetics Industry
Definitions
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Definitions
Product Anything offered to a market for attention,
acquisition, use, or consumption that mightsatisfy a need or want.
Service Any activity or benefit that one party can offer to
another that is essentially intangible and does
not result in ownership of anything.
What is a Product?
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What is a Product?
Products, Services, and Experiences
Market offerings, pure tangible goods,pure services, experiences
Levels of Product and Services
Core benefit, actual product, andaugmented product
Product and Service Classifications
What is a Product?
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Convenience
Shopping
Specialty
Unsought
Frequent purchasesbought with minimalbuying effort and little
comparison shopping Low price
Widespread distribution
Mass promotion by
producer
Types ofTypes ofConsumerConsumer
ProductsProducts
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Convenience
Shopping
Specialty
Unsought
Less frequent purchasesrequiring more shopping effortand price, quality, and stylecomparisons.
Higher than conveniencegood pricing
Selective distribution in feweroutlets
Advertising and personal
selling by producer andreseller
Types ofTypes ofConsumerConsumer
ProductsProducts
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Convenience
Shopping
Specialty
Unsought
Strong brand preference andloyalty, requires specialpurchase effort, little brandcomparisons, and low price
sensitivity High price
Exclusive distribution
Carefully targeted promotionby producers and resellers
Types ofTypes ofConsumerConsumer
ProductsProducts
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Convenience
Shopping
Specialty
Unsought
Little product awareness andknowledge (or if aware,sometimes negative interest)
Pricing varies
Distribution varies
Aggressive advertisingand personal selling byproducers and resellers
Types ofTypes ofConsumerConsumer
ProductsProducts
What is a Product?
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What is a Product?
Product and Service Classifications
Consumer products
Industrial products Materials and parts
Capital items
Supplies and services
What is a Product?
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What is a Product?
Product and Service Classifications Organizations, persons, places, and ideas
Organizational marketing makes use of corporate
image advertising Person marketing applies to political candidates,
entertainment sports figures, and professionals
Place marketing relates to tourism
Social marketing campaigns promote ideas
Product and Service Decisions
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Individual Product
Product Line
Product Mix
Product attributes Quality, features, style and
design
Branding
Packaging
Labeling
Product support services
Key DecisionsKey Decisions
Product and Service Decisions
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Individual Product
Product Line
Product Mix
Product line length Line stretching: adding
products that are higher orlower priced than theexisting line
Line filling: adding moreitems within the presentprice range
Key DecisionsKey Decisions
Product and Service Decisions
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Individual Product
Product Line
Product Mix
Product line width: number of different
product lines carried bycompany
Product line depth: Number of different
versions of each product inthe line
Product line consistency
Key DecisionsKey Decisions
Branding Strategy
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Branding Strategy
Brands are powerful assets that mustbe carefully developed / managed.
Brands with strong equity have manycompetitive advantages: High consumer awareness
Strong brand loyalty
Helps when introducing new products
Less susceptible to price competition
Brand Strategy
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Brand Positioning
Brand Name
Selection
Brand Sponsorship
Brand Development
Three levels ofpositioning:
Product attributes Least effective
Benefits
Beliefs and values
Taps into emotions
Key DecisionsKey Decisions
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Brand Strategy
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Brand Positioning
Brand Name
Selection
Brand Sponsorship
Brand Development
Manufacturer brands
Private (store) brands
Costly to establish and
promote Higher profit margins
Licensed brands
Name and character licensinghas grown
Co-branding Advantages / disadvantages
Key DecisionsKey Decisions
Brand Strategy
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Brand Positioning
Brand Name
Selection
Brand Sponsorship
Brand Development
Line extensions Minor changes to existing
products
Brand extensions Successful brand names help
introduce new products
Multibrands Multiple product entries in a
product category
New brands New product category
Key DecisionsKey Decisions
Brand Strategy
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Line ExtensionsLine Extensions
May Feature Different:May Feature Different:
Flavors
Colors
Forms
Ingredients
Package Sizes
Services Marketing
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g
Services
Account for74% of U.S. gross domestic
product. Service industries include business
organizations, government, and privatenot-for-profit organizations.
Services Marketing
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g
Characteristics of Services Intangibility
Consumers look for service quality signals
Inseparability Services cant be separated from providers
Variability Employees and other factors result in variability
Perishability Services cant be inventoried for later sale
Services Marketing
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g
Service Firm Marketing Strategies
The Service-Profit Chain
Internal Marketing Interactive Marketing
Managing Service Differentiation
Managing Service Quality Managing Service Productivity
Additional Product
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Product Decisions and Social
Responsibility Acquisitions and mergers
Legal compliance
Product liability issuesWarranties
Considerations
Additional Product
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International Product and ServicesMarketing
Special challenges: Which products should be marketed
internationally?
Should the products be standardized or adapted forworld markets?
How should packaging be adapted?
How can other barriers be overcome?
Considerations
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212
NewNew--Product Development andProduct Development andProduct LifeProduct Life--Cycle StrategiesCycle Strategies
Kotler and Armstrong (2008)
Chapter 10
Objectives
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Understand how companies find and developnew-product ideas.
L
earn the steps in the new-productdevelopment process.
Know the stages of the product life cycle.
Understand how marketing strategies change
during the products life cycle.
Example
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$50 billion in profits
over 27 years
Early new-product
development relied
heavily on copying
the competition
$4.2 billion annuallyinvested in R & D
Innovation is critical to
Microsofts future
success
Much of R & D efforts
are Internet related
Many new products and
services are indevelopment
MicrosoftMicrosoft
Definition
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New Product Development
Development of original products, product
improvements, product modifications, andnew brands through the firms own R & Defforts.
New Product Development
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New products can be obtained via
acquisition or development. New products suffer from high failure
rates.
Several reasons account for failure.
Strategy
New Product Development
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New Product Development Process:
Stage 1: Idea Generation Internal idea sources:
R & D
External idea sources:
Customers, competitors, distributors, suppliers
Strategy
New Product Development
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New Product Development Process:
Stage 2: Idea Screening Product development costs increase
substantially in later stages.
Ideas are evaluated against criteria; most are
eliminated.
Strategy
New Product Development
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New Product Development Process:
Stage 3: Concept Development and
Testing Product concepts provide detailed
versions of new product ideas.
Concept tests ask target consumers to
evaluate product concepts.
Strategy
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New Product Development Process:
Stage 4: Marketing Strategy Development Strategy statements describe: The target market, product positioning, and sales, share,
and profit goals for the first few years.
Product price, distribution, and marketing budget for thefirst year.
Long-run sales and profit goals and the marketing mixstrategy.
Strategy
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New Product Development
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New Product Development Process:
Stage 7: Test Marketing Standard test markets
Controlled test markets
Simulated test markets
Stage 8: Commercialization
Strategy
Product Life-Cycle Strategies
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The Typical Product Life Cycle (PLC) Has
Five Stages Product Development, Introduction, Growth,Maturity, Decline
Not all products follow this cycle: Fads
Styles
Fashions
Product Life-Cycle Strategies
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The product life cycle concept can beapplied to a:
Product class (soft drinks)
Product form (diet colas)
Brand (Diet Dr. Pepper)
Using the PL
C to forecast brand performance or todevelop marketing strategies is problematic
Product Life-Cycle Strategies
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Product development Introduction
Growth
Maturity
Decline
Begins when thecompany develops a
new-product idea Sales are zero
Investment costs arehigh
Profits are negative
PLC StagesPLC Stages
Product Life-Cycle Strategies
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Product development Introduction
Growth
Maturity
Decline
Low sales
High cost per customer
acquired Negative profits
Innovators are targeted
Little competition
PLC StagesPLC Stages
Marketing Strategies:
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Product Offer a basic product
Price Use cost-plus basis to set
Distribution Build selective distribution
Advertising Build awareness among earlyadopters and dealers/resellers
Sales Promotion Heavy expenditures tocreate trial
Introduction Stage
Product Life-Cycle Strategies
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Product development Introduction
Growth
Maturity
Decline
Rapidly rising sales
Average cost per
customer Rising profits
Early adopters aretargeted
Growing competition
PLC StagesPLC Stages
Marketing Strategies:
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Product Offer product extensions, service,warranty
Price Penetration pricing Distribution Build intensive distribution
Advertising Build awareness and interest in themass market
Sales Promotion Reduce expenditures to takeadvantage of consumer demand
Growth Stage
Product Life-Cycle Strategies
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Product development Introduction
Growth
Maturity
Decline
Sales peak
Low cost per customer
High profits Middle majority are
targeted
Competition begins to
decline
PLC StagesPLC Stages
Marketing Strategies:
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Product Diversify brand and models
Price Set to match or beat competition
Distribution Build more intensive distribution Advertising Stress brand differences and benefits
Sales Promotion Increase to encourage brandswitching
Maturity Stage
Product Life-Cycle Strategies
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Product development Introduction
Growth
Maturity
Decline
Declining sales
Low cost per customer
Declining profits Laggards are targeted
Declining competition
PLC StagesPLC Stages
Marketing Strategies: Decline
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Product Phase out weak items
Price Cut price
Distribution Use selective distribution: phase outunprofitable outlets
Advertising Reduce to level needed to retainhard-core loyalists
Sales Promotion Reduce to minimal level
Stage
Session 6: Marketing Decisions II:
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Pricing Decisions Understandingand Capturing Customer Value
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235
Pricing ConsiderationsPricing Considerationsand Approachesand Approaches
Kotler and Armstrong (2008)
Chapter 11
Objectives
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Understand the internal factors affectinga firms pricing decisions.
Understand the external factorsaffecting pricing decisions, including theimpact of consumer perceptions of priceand value.
Be able to contrast the three general
approaches to setting prices.
Example
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Buyer-drivencommerce concept
offers lower prices toconsumers and theability to sell excessinventory to sellers
13.5 million user
customer base Tremendous growth
Most deals relate totravel or time sensitive /
perishable services Not all ventures have
been profitable
Some customers find itdifficult to commit to
purchase prior tolearning details
Priceline.comPriceline.com
What is Price?
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Price Has Many NamesPrice Has Many Names
Rent Fee
Rate
Commission
Assessment
Tuition Fare
Toll
Premium
Retainer
Bribe Salary
Wage
Interest
Tax
Definition
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Price
The amount of money charged for a
product or service, or the sum of thevalues that consumers exchange
top related