TEST 1 Marketing 3000 13 09 2010 17 28 00 Week 1 Marketing Context and Overview Definition of Marketing The process of planning and executing the conception pricing promotion and distribution of ideas goods and services to create exchanges that satisfy individual and organizational objectives Marketing s first task Discovering Consumer Needs Discover Consumer needs Information about needs It is always easier to sell something people want Marketing s second task Satisfying Consumer needs Marketing Mix Four P s o Product Most Important because without it nothing else matters o Place Ex Bottled water in vending machines add convenience to the product o Price o Promotion Can help differentiate similar products The right combination of the 4 P s help satisfy the consumers needs Benefits and Costs Categories Benefits o Functional Learn about marketing get course credit It fulfills a need Ex A hammer provides a function a car pencil o Social Meet friends business partners etc Ex A cell phone Facebook Skype o Personal Feeling good about learning Ex Rock climbing charity work exercising o Experiential College traveling concerts Costs o Monetary Ex Tuition and book fees o Temporal Ex Time spent in class and studying The time it takes to assemble something IKEA is a tradeoff between less monetary cost and more temporal cost o Psychological Ex Stress studying for exams seeing a scary movie o Behavioral Ex Having something delivered or going to pick it up Marketing Strategy and Competitive Analysis Analyzing the Marketing Environment 40 Billion diet industry Businesses responded to the demand in a variety of ways o Ex Shake weight shape ups vitamin water The immediate environment Consumers Company Competition Corporate Partners Macroenvironmental Factors Culture Demographics Social Trends Technology Economic Political legal Three Phases of a strategic Marketing Plan Mission Environmental Analysis SWOT Segmentations Targeting Positioning Defining the mission of Vision Answers two questions o In which industries do we operate in o What is our substantial competitive advantage Porters Five Forces Model Industry Profitability depends on o Industry Competiveness Lower intensity Higher Profitability An industry has low competiveness when few firms are competing Ex Commercial Aircraft Manufacturers Boeing Low competition high profits Ex Wristwatch makers High competition lower profits o Availability of Substitute products A customer can choose a different product as a substitute Few or no substitutes High profitiability Ex Few or no substitutes Gas propriety drugs toilet paper electricity Ex Many substitutes Fresh vegetables technological products soda Sodas substitutes coffee tea energy drinks Substitutes and direct competitors are not always the same o Potential entrants High barriers to entry Higher Profitiability High barriers exist when High capital requirements Economies of scale are present o Soda Sales have to be very large High product differentiation Network externalities technological or learning curve o Ex Phone service that allows you to talk to everyone on your network for free More people more value Ex High barriers Automobile industry Ex Low Barriers Software on line auctioneering Lemonade stand o Supplier Power Buyer Power Lower bargaining power of supliers buyers Higher profitability Lower bargaining power when High number Low information Low supplier power example Computer industry There are so many of them Low buyer power example Medical Services The internet has supplied buyers with more information which has lowered the prices of goods Walmart has taken the buying power away from the consumers because they have so many consumers Boston Consulting Group Growth share matrix Star o What every product strives to be They have a high market growth rate and control a large percentage of the market o Ex The Ipod Question Marks o Goods in a high market growth rate that need to attain a larger percentage of the market o Want to turn into Stars o Ex Ford Escape Hybrid Cash Cows o High percentage of the market but the market is not growing quickly or at all o Ex Tide Detergent Ford F 150 o You want to take money from your cash cows and invest in your question marks Dogs o Low market percentage and low growth rate o You want to get rid of these products Sustainable Competitive Advantage An advantage versus the competition that can be maintained consistently overtime o Ex McDonalds Low Price Fast Service Macro Strategies for Developing Customer Value Product Excellence o Achieving effective branding and positioning BMW Nike Operational Excellence o Efficient operations o Excellent supply chain Customer Excellence o Retaining loyalty with excellent customer service Ex Apple Zappos Macy s Intensive Growth Strategies Ansoff s Product Market Expansion Grid Market Penetration o Existing Markets and Existing Products Market Development o New Markets and Existing Products Product Development o Existing Markets and New Products Ex Ipod nano Diversification o Satisfying new needs Ex Fedex buying Kinkos Market Structure Market Leader o 40 of market Expand market Defend Market Share Expand Market Share Market Challenger o 30 Attack leader Status quo Market Follower o 20 Imitiate Market Nicher o 10 o Specialize Apple Inc What is this firms subsainable competitive advantage o Innovation What would you say is the firms main type of growth strategy and macro strategy o Growth strategy Product Development Existing market with new products o Macro Strategy Product Excellence Market Segmentation Steps in Market Segmentation Targeting and Positioning Segmentation o 1 Identify segmentation variables and segment the market o 2 Develop profiles of resulting segments Targeting o 3 Evaluate attractiveness of each segment o Select the target segment s Positioning o 5 Identify possible positioning concepts for each target segment o 6 Select develop and communicate the chosen positioning concept Market Segmentation Definition The process of dividing the total market for a good or service into several smaller internationally homogenous groups Why Segment Segmentation is necessary because customers in a market have o Differences in buying habits o Differences in the way the good or service is used o Different motives in buying For themselves or a gift Ex Toothpaste has many different marketing segments even though the products are very similar NEVER use Mass Marketing ALWAYS practice segmentation Segmentation Process