Copyright 2005 Prentice- Hall, Inc. 10-2
Bu
sin
ess
Part Three: Part Three: Understanding Principles Understanding Principles
of Marketingof Marketing10.10. Understanding Market Understanding Market
Processes And Consumer Processes And Consumer BehaviorBehavior
11.11. Developing And Pricing Developing And Pricing ProductsProducts
12.12. Distributing ProductsDistributing Products13.13. Promoting ProductsPromoting Products
10-3
ChapteChapte
rr 1010Understanding Marketing Understanding Marketing
Processes and Consumer Processes and Consumer BehaviorBehavior
Copyright 2005 Prentice- Hall, Inc. 10-4
Bu
sin
ess Chapter OutlineChapter Outline
What Is Marketing?What Is Marketing?Target Marketing/SegmentationTarget Marketing/SegmentationMarketing ResearchMarketing ResearchUnderstanding Consumer Understanding Consumer
BehaviorBehaviorOrganizational Marketing & Organizational Marketing &
Buying BehaviorBuying BehaviorInternational Marketing MixInternational Marketing MixSmall Business & The Small Business & The
Marketing MixMarketing Mix
Copyright 2005 Prentice- Hall, Inc. 10-5
Bu
sin
ess
Marketing Mix Marketing Mix Of Goods & ServicesOf Goods & Services
• DevelopingDeveloping
• PricingPricing
• PlacingPlacing
• PromotingPromoting
Copyright 2005 Prentice- Hall, Inc. 10-6
Bu
sin
ess Value & SatisfactionValue & Satisfaction
• Benefits- Functions Of Product Benefits- Functions Of Product & Emotional Satisfaction& Emotional Satisfaction
• Benefits Must Exceed Costs To Benefits Must Exceed Costs To Be Of Value To The ConsumerBe Of Value To The Consumer
Value = Value = BenefitsBenefits CostsCosts
Copyright 2005 Prentice- Hall, Inc. 10-7
Bu
sin
ess
Utility = Satisfy Utility = Satisfy Need/WantNeed/Want
• TimeTime
• PlacePlace
• Ownership/PossessionOwnership/Possession
• FormForm
Copyright 2005 Prentice- Hall, Inc. 10-8
Bu
sin
ess Goods, Services, IdeasGoods, Services, Ideas
• Consumer GoodsConsumer Goods
• Industrial GoodsIndustrial Goods
• Services- IntangibleServices- Intangible
TangibleTangible
Copyright 2005 Prentice- Hall, Inc. 10-9
Bu
sin
ess Relationship MarketingRelationship Marketing
• Emphasizes Economic/Social Emphasizes Economic/Social Ties Between Buyer & SellerTies Between Buyer & Seller
• NetworkingNetworking
Copyright 2005 Prentice- Hall, Inc. 10-11
Bu
sin
ess Marketing EnvironmentMarketing Environment
• Political/Legal- Foreign Political/Legal- Foreign & Domestic& Domestic
• Social/Culture- Changing Social/Culture- Changing Values In Today’s Dynamic Values In Today’s Dynamic MarketMarket
• Technological- ObsolescenceTechnological- Obsolescence• Economic- Patterns/Levels Of Economic- Patterns/Levels Of
Spending Spending
Copyright 2005 Prentice- Hall, Inc. 10-12
Bu
sin
ess
Crude Oil Prices-Crude Oil Prices-Yearly AverageYearly Average
0
5
10
15
20
25
30
35
40
45
1945 1955 1965 1975 1985 1995 2004
Source: “History if Illinois Basin Posted Crude Oil Prices”, http://www.ioga.com/Special/crudeoil_Hist.htm
OPEC OPEC FormedFormed
Yom Yom Kippur Kippur
WarWar
US Emphasis US Emphasis On Energy On Energy EfficiencyEfficiency
Iraq/Iran WarIraq/Iran War
Saudi Arabia Increases Saudi Arabia Increases ProductionProduction
Gulf Gulf WarWar
Import Import CutbacksCutbacks
Copyright 2005 Prentice- Hall, Inc. 10-13
Bu
sin
ess Competitive EnvironmentCompetitive Environment
• Substitute ProductsSubstitute Products
• Brand CompetitionBrand Competition
• International CompetitionInternational Competition
Copyright 2005 Prentice- Hall, Inc. 10-14
Bu
sin
ess Marketing Mix (4 P’s)Marketing Mix (4 P’s)
ProductProduct
PlacePlace
PricePrice
PromotionPromotion
Copyright 2005 Prentice- Hall, Inc. 10-15
Bu
sin
ess ProductProduct
• Good, Service, Idea To Fill Need Good, Service, Idea To Fill Need Or WantOr Want
• Product DifferentiationProduct Differentiation
Copyright 2005 Prentice- Hall, Inc. 10-16
Bu
sin
ess VHS Vs. DVD RentalVHS Vs. DVD Rental
$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
2000 2001 2002 2003
DVD
VHS
Source: Video Software Dealers Association
Copyright 2005 Prentice- Hall, Inc. 10-17
Bu
sin
ess PricePrice
• Price Must Create Profit By:Price Must Create Profit By:–Covering CostsCovering Costs
–Attract CustomersAttract Customers
• High-Low StrategyHigh-Low Strategy– Low = Large Sales VolumeLow = Large Sales Volume
–High = Greater Profit Per Unit High = Greater Profit Per Unit SoldSold
Copyright 2005 Prentice- Hall, Inc. 10-18
Bu
sin
ess PlacePlace
• Getting Product From Producer Getting Product From Producer To ConsumerTo Consumer
• Decisions Include:Decisions Include:–StorageStorage
–Mode Of TransportationMode Of Transportation
Copyright 2005 Prentice- Hall, Inc. 10-19
Bu
sin
ess Channels Of DistributionChannels Of Distribution
ProducerProducer ProducerProducer ProducerProducer
ConsumerConsumer ConsumerConsumer ConsumerConsumer
RetailerRetailerWholesalerWholesaler
RetailerRetailer
Copyright 2005 Prentice- Hall, Inc. 10-20
Bu
sin
ess PromotionPromotion
• Communicate InformationCommunicate Information
• Tools:Tools:–AdvertisingAdvertising
–Personal SellingPersonal Selling
–Sales PromotionSales Promotion
–Public RelationsPublic Relations
Copyright 2005 Prentice- Hall, Inc. 10-21
Bu
sin
ess
Web Effect OnWeb Effect OnMedia ShoppingMedia Shopping
36%
18%11%
5%
30%Comparison Shop
Get More Obscure Titles
Buy More Stuff
Use Online Suggestions
No Change
What’s the biggest way the What’s the biggest way the Web has changed how you Web has changed how you
shop for media?shop for media?
Source: “Add To Cart” Wired, 10/04, p. 70.
Copyright 2005 Prentice- Hall, Inc. 10-22
Bu
sin
ess Target MarketTarget Market
• Target Market- Group With Target Market- Group With Similar Needs/WantsSimilar Needs/Wants
• Product Positioning- Product Positioning- According To Consumers’ According To Consumers’
PerceptionPerception
Copyright 2005 Prentice- Hall, Inc. 10-23
Bu
sin
ess
Market Market Segmentation VariablesSegmentation Variables• GeographicGeographic
• DemographicDemographic
• PsychographicPsychographic
• BehavioralBehavioral
Copyright 2005 Prentice- Hall, Inc. 10-24
Bu
sin
ess Geographic VariablesGeographic Variables
• Places Consumers ResidePlaces Consumers Reside
• Countries > NeighborhoodsCountries > Neighborhoods
• Water = BoatsWater = Boats
• Mountains/Rural = Four-Wheel Mountains/Rural = Four-Wheel Drive VehiclesDrive Vehicles
• Urban Area = Designer ClothingUrban Area = Designer Clothing
Copyright 2005 Prentice- Hall, Inc. 10-25
Bu
sin
ess Demographic VariablesDemographic Variables
• AgeAge
• IncomeIncome
• GenderGender
• Ethnic Ethnic BackgroundBackground
• Marital StatusMarital Status
• RaceRace
• ReligionReligion
• Social ClassSocial Class
• Others?Others?
Copyright 2005 Prentice- Hall, Inc. 10-26
Bu
sin
ess Psychographic VariablesPsychographic Variables
• LifestyleLifestyle
• InterestsInterests
• AttitudesAttitudes
• Can Be Changed By Can Be Changed By Marketing EffortsMarketing Efforts
Copyright 2005 Prentice- Hall, Inc. 10-27
Bu
sin
ess Behavioral VariablesBehavioral Variables
• Ways In Which Product/Service Ways In Which Product/Service Is UsedIs Used
• Benefits ExpectedBenefits Expected
• Reasons For PurchaseReasons For Purchase
• Brand Loyalty vs. SwitcherBrand Loyalty vs. Switcher
Copyright 2005 Prentice- Hall, Inc. 10-28
Bu
sin
ess Marketing ResearchMarketing Research
• Study Consumer Study Consumer Needs/WantsNeeds/Wants
• Determine Ways Determine Ways Sellers Can Satisfy Sellers Can Satisfy Needs/WantsNeeds/Wants
Copyright 2005 Prentice- Hall, Inc. 10-29
Bu
sin
ess
Marketing ResearchMarketing Research& Process& Process
Copyright 2005 Prentice- Hall, Inc. 10-30
Bu
sin
ess Research ProcessResearch Process
Study SituationStudy Situation
Select MethodSelect Method
Collect DataCollect Data
Analyze DataAnalyze Data
Prepare ReportPrepare Report
Copyright 2005 Prentice- Hall, Inc. 10-31
Bu
sin
ess Research MethodsResearch Methods
ObservationObservation
Focus GroupFocus GroupExperimentationExperimentation
SurveysSurveys
Copyright 2005 Prentice- Hall, Inc. 10-32
Bu
sin
ess
Influences OnInfluences OnConsumer BehaviorConsumer Behavior
• PsychologicalPsychological
• PersonalPersonal
• SocialSocial
• CulturalCultural
Copyright 2005 Prentice- Hall, Inc. 10-34
Bu
sin
ess DataData
• Warehousing- Collecting, Warehousing- Collecting, Storing, & Retrieving Storing, & Retrieving DataData
• Mining- Searching, Mining- Searching, Sifting, & Reorganizing Sifting, & Reorganizing DataData
Copyright 2005 Prentice- Hall, Inc. 10-35
Bu
sin
ess Organizational MarketsOrganizational Markets
• IndustrialIndustrial
• ResellerReseller
• Government/InstitutionalGovernment/Institutional
Copyright 2005 Prentice- Hall, Inc. 10-36
Bu
sin
ess
Buying Behavior- Buying Behavior- OrganizationalOrganizational
• Buyer DifferencesBuyer Differences–ProfessionalProfessional
–SpecialistSpecialist
–ExpertsExperts
• Buyer-Seller RelationshipBuyer-Seller Relationship
Copyright 2005 Prentice- Hall, Inc. 10-37
Bu
sin
ess
Marketing Mix- Marketing Mix- InternationalInternational
• Products- Redesign For Foreign Products- Redesign For Foreign BuyerBuyer
• Pricing- Cover Increased Cost Of Pricing- Cover Increased Cost Of Transport/SellingTransport/Selling
• Distribution- Delays In Distribution- Delays In Establishing Network For StartupEstablishing Network For Startup
• Promotion- Cultural DifferencesPromotion- Cultural Differences
Copyright 2005 Prentice- Hall, Inc. 10-38
Bu
sin
ess
Marketing Mix-Marketing Mix-Small BusinessSmall Business
• Products- Limited Buying Products- Limited Buying MarketMarket
• Pricing- Incorrect Cost Pricing- Incorrect Cost EstimationEstimation
• Distribution- Location Is CriticalDistribution- Location Is Critical• Promotion- Local Which Is Promotion- Local Which Is
CheaperCheaper