MKT 300 Marketing

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Marketing Analysis
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The Marketing Process
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Core Marketing Concepts
Products and Services
Needs, wants, and demands
Core Marketing Concepts
Markets
Value, satisfaction, and quality
Exchange, transactions, and relationships
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What Will Satisfy ConsumersNeeds and Wants?

• Products a good, service, or idea consisting of
  a bundle of tangible and intangible attributes
  that satisfies consumers
• Examples automobile, iPod, printer, and
  insurance.

• Services - activities or benefits offered for
  sale that are essentially intangible and dont
  result in the ownership of anything
• Examples banking, airlines, haircuts, and hotels.

And/ or
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How Consumers Choose

• Customer Value A Cost-Benefits View

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(No Transcript)
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Why the Focus on Customer Satisfaction, Utility,
and Value?
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Marketing Management Philosophies

• Consumers favor products that are
• available and highly affordable
• Improve production and distribution
• Consumers favor products that offer
• the most quality, performance, and
• innovative features
• Consumers will buy products only if
• the company promotes/ sells these
• product
• Focuses on needs/ wants of target
• markets delivering satisfaction
• better than competitors
• Focuses on needs/ wants of target
• markets delivering superior value
• Societys well-being

Production Concept
Product Concept
Selling Concept
Marketing Concept/ Customer Era
Societal Marketing Concept
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Marketing Sales Concepts Contrasted
The Selling Concept
Starting Point
Focus
Means
Ends
The Marketing Concept
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A Philosophy of Business

• Focus on Customer Satisfaction
• Total Integration of Effort
• Profit Orientation

Marketing Concept/Customer Era
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The Marketing Concept

• 1. Customer Satisfaction and CRM

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The Marketing Concept

• 2. Total Company Effort
• Including information sharing

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The Marketing Concept

• 3. Profit is an objective

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Adoption of the Marketing Concept Has Not Been
Universal

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The Marketing Concept and Social Responsibility

• Individual vs. Societal Needs
• CFCs and the Ozone layer
• Individual Rights
• cigarettes, cocaine, marijuana, guns
• Must all segments be served?
• Unprofitable neighborhoods? groups?
• Profits
• auto safety features may cut manufacturer profits
  as consumers wont pay more

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Marketings Role in the Corporation
HR
Global
Information Systems
Research
Legal
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The Marketing Process
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Overview of the Strategic Marketing Process

• Marketing Analysis
• Analysis of environmental factors
• SWOT as marketing analysis tool
• Marketing Planning
• Market-product focus goal setting
• Developing a marketing program
• Marketing Implementation
• Marketing Control

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Micro vs. Macro Environments
Suppliers
Demographic- Economic Environment
Technological- Natural Environment


Marketing Intermediaries
Macro Environment
Macro Environment
Customers (End User Market)
Social-Cultural Environment
Political-Legal Environment
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The Marketing Environment Internal vs. External

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Scan and Manage

• Environmental Scanning
• Monitoring process
• Environmental Management
• Forecasting process
• Adaptive process

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Scanning vs. ManagementA Recent Example

• Brita finds P G has acquired PUR, a faucet
  system (SCANNING)
• Brita suspects P G will invest heavily in PUR
  and may steal share from Brita Pitchers
  (MANAGEMENT Forecasting)
• Brita develops and launches its own faucet system
  to compete (MANAGEMENT Adapting to threat)

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Micro EnvironmentCompetitor Analysis
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Competitive Considerations

• Number
• Relative strength/market share
• Potential competitor reactions
• The value of competition
• more innovation
• lower prices
• lower profits
• BUT.more failure of individual firms

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Types of Competitive Strategies

• Linear
• INTEL decide to move from memory to
  processing based on industry analysis
• Strong competition
• Commodity-like product
• Few profits
• Non-linear
• INTEL decided to NOT license its processors to
  vendors
• Controlled technology
• Controlled pricing
• Controlled image
• Avoided commoditization (INTEL PENTIUM inside)

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Components of Competition Avoiding Market Myopia

• Competition from
• DELL competes with Compaq
• Potential competition from
• Pharmaceutical companies battle generics and new
  brands when patents expire
• Competition from
• Wow chips a substitute for pretzels (Frito Lay
  and Cannibalization)
• Competition from
• Retailers create PLBs to compete with national
  brands
• Retailer is a customer in this case

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The Macro Environment
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Micro vs. Macro Environments
Suppliers
Demographic- Economic Environment
Technological- Natural Environment
Competitors
Company (Marketer)
Marketing Intermediaries
Macro Environment
Macro Environment
Customers (End User Market)
Social-Cultural Environment
Political-Legal Environment
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Economic Environment
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Drivers of consumer spending patterns

• Wants Needs - infinite!!!!
• Confidence about the future
• Employment
• Income
• Inflation
• Interest Rates

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U.S. UnemploymentHistorical Trends
Year UR 1965 4.5 1970 4.9 1975 8.5 1980
7.1 1985 7.2 1990 5.5 1991 6.7 1992 7.4 19
93 6.8 1994 6.1 1995 5.6
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Current Situation
Year UR July 00 4.0 July 01 4.5 June
02 5.9 June 03 6.4 June 04 Dec 04
July 05
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INCOME

• Distribution
• Discretionary Income and Engels Law
• Inflation Effects on Real Income

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Income Distribution (2001)
KNOW
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Engels LawCategory Spending Varies by Income
Level

• As a Familys Income Increases, spent on
• ______ decreases
• housing and clothing holds stead
• luxuries, education, travel, etc. grows
• Segmentation Often Based on Income

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Discretionary Income

• Absolute versus Discretionary
• Life-cycle effects
• Young singles
• Full nesters
• Empty nesters

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Inflation Effects

• Inflation reduces real income by increasing
  nominal prices
• Real income spending power
• 5 percent inflation
• 35,000 nominal in 2004
• 33,250 real in 2005

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Inflation in U.S.

• 11-14 1979-1981
• 4-5 during most of the 80s
• 2-3 during most of the 90s
• 2-3 during early 2000s
• July 2004 2.99
• Nov 2004
• July 2005

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A Global View

• Inflation in Japan means
• Higher nominal prices (Yen)
• Hence possible demand effects
• Plus.
• Foreign currency exposure by holding Yen
• Hedging as a strategy

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A Global View

• Some High Inflation Countries Mid 90s (D. Digit
  )
• Mexico
• Brazil
• Poland
• Some Low Inflation Countries Mid 90s (S. Digit)
• Germany
• France
• UK
• NOTE EU membership requires reasonable and
  stable economic conditions including inflation

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Consumer Confidence Index

• 5,000 households surveyed monthly
• Conducted by NFO for The Conference Board (NYC)
• A ______________ of economic activity

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CCI is Positively and Significantly Correlated
with

• Gross Domestic Product (GDP)
• Dow-Jones Industrial Average
• Total Retail Sales
• Housing Sales
• Auto Sales
• Clothing Sales
• Entertainment Travel Expenditures

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Consumer Confidence
Year CCI 1985 100.0 1989 116.8 1991
68.5 1992 61.6 1993 65.9 1994
90.6 1995 101.0 1999 135.3
These werent great years economically!
Incredibly high particularly December- So were
retail holiday sales!!!
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Current CCI

• Jan 2000 144.7
• July 2001 116.3
• July 2002 97
• July 2003 76.6
• July 2004 106.1 (4th consecutive ? month)
• Dec 2004
• July 2005

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CCI

• Causes of downturns??
• Causes of upswings??
• Jobs and job expectations
• Economy rebounding
• International stability

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Technological Environment
Pace of Change
R D Budgets
Issues in the Technological Environment
Incremental vs. Major Improvements
Regulation
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Technology Teams

• Companies often utilize research teams
• FYI, Thomas Edison had research teams
• The electric light bulb required hundreds of
  researchers and considerable external financing
  to achieve
• But 3M and bootlegging suggests power of
  individual in the process

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Some hot industries now?

• E-commerce
• Bubble is over but trends are strong
• Vacation Cruise Lines
• confluence of tech and demographics
• Bio-technology/Genetic Engineering
• Pharmaceutical Products for Seniors
• Phizer, etc. poised for aging boomers
• Electronic Sensors on Everything
• Britas smart pitchers/Navistar, etc.
• Personal Communications
• Wireless, phone/palm/camera combos, etc.

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Technology does ...

• improve current customer service
• better demand forecasting by Lands End
• lower prices
• telephone service, computers
• improve existing products
• safer automobiles, geo-mapping
• new products - goods services
• electronic mail didnt exist a decade ago!
• make products obsolete
• slide rules, gas lamps, desktop computers?

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Political Environment
Laws, Government Agencies, etc. that affect and
control The actions of Organizations
Individuals in Society
Increasing Legislation
Changing Government Agency Enforcement
Increased Emphasis on Ethics Socially Responsibl
e Actions
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Political-Legal Issues

• Local vs. National vs. Global
• Political Agendas and Enforcement
• International Trade

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U.S. Government Regulation

• Competition
• Consumers
• Specific Industries
• International Trade

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Regulating Competition

• Sherman Act (1890) - Conspiracy to control a
  market
• Clayton Act (1914) Price discrimination and
  tying agreements

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Protecting Consumers

• Federal Trade Commission Act (1914) - Deceptive
  ads or selling practices
• Federal Food and Drug Act (1906) adulturation
  and misbranding of food and drugs in interstate
  commerce
• Child Protection Act (1966) Hazardous toys and
  articles, child-resistant packaging
• Childrens Television Act (1990) Amount of
  Advertising shown during childrens TV programs
• Nutrition Labeling and Education Act (1990)
  nutrition labeling requirements

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Specific Industries

• Airline Deregulation Act (1978) more control to
  airlines in setting fees and choosing routes
• Motor Carrier Act (1980) permit firms to
  negotiate fees, routes, and services
• Telecomm Act (1996) deregulated telecom
  industry by removing barriers to local and
  long-distance phone and cable competition

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International Trade

• NAFTA (1993) International trade agreement
  between Canada, Mexico, and the US, to facilitate
  trade by removing tariffs, and other trade
  barriers
• The European Union
• OPEC International Petroleum Cartel Price
  fixing, control of supply regional cartel but
  global impact

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A Global View
At Least Four Political-Legal Factors Should be
Considered in Deciding Whether to do Business in
a Given Country
Business Regulations
Attitudes Toward International Buying
Government Bureaucracy
Political Stability
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Socio-Cultural Factors

• Gender Roles
• Women in work force
• Stay at home dads
• Time Pressures
• Work habits
• Eating habits
• Electronic Shopping
• Embracing Technology
• Multiculturalism

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Multi-Culturalism
Increasing Diversity in U.S. 70 Caucasian, 13
Hispanic, 12 African-American 4 Asian
Increasing Global Culture Overlap Global Teen
Market/Brands China/India/Europe/U.S. Bollywood
Source Marketing News, July 22, 2002
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Multiculturalism One Sub-Trend

• The Hispanic Market Subculture
• Second largest Ethic Subculture (and growing)
• 13 of population and 600B in purchase power
• Expected 25 of population by 2050
• Spanish-language media on the rise still only
  3.2 of major advertiser spending
• Different culture and values challenge marketers
• e.g., Got Milk not funny to many Hispanic women
• Spanish-language media
• Generational issues
• And, challenging market to target due to
  fragmentation
• Country of Origin (Mexico vs. Cuba vs. Puerto
  Rico)
• Region of Country (CA, FL, NYC)
• Language

Source Marketing News, July 22, 2002, page 20