,. BAMK 360 EXAM 1 NOTES

~HA~TE~ 1 An Q~erview of Strategic Marketing 8-27-93

*Fundamental reason for marketing is economics; amount of marketing depends on supply & demand of the economy.

*Buss word in industry now is TQM(Total Quality Management).

*Key to success is "customer satisfaction"; good marketing is going after that goal of "customer satisfaction".

8-30-93

*Marketing: consists of individual and organizational activities that facilitate and expedite satisfying exchange relationships in a dynamic environment through the creation, distribution, promotion, and pricing of goods, services, and ideas.

*Marketing Strateqv: a plan or blueprint for selecting and analyzing a target market and creating and maintaining a marketing mix.

*Marketing Mix involves four areas:(called the 4 Ps of marketing) (controllable)

l.products(R&D, testing)

2.promotion(advertising, personal selling, sales promotion)

3 .place or distribution(physical, channels)

4.pricing

*Target Market: a group of people for who a firm creates and maintains a marketing mix.

*Four Basic Management Functions: (used in marketing) l.planning

2.organizing

3.directing

4.controlling

*Marketing Strategy has 2 elements: l.target market

2.market mix Page 1

Si C~tl

yctt rnaki:" t.:t1c: c:nv i r·-cJn.ff:c: n t is very, very dynari11c(cor1 tantly cliar1g1r1g)

''. ( "U.ll.C(J::n_t:t"G-11 al:;1 c)

3 ,. Lf:quJ atory

4-, z;uci0t;_J.l

6, tecb.r1olo9i.cal

0 figt1ri::~ 1. 6 Oil pg· 16 . .......... .

*companies can't control the marketing environment but can ix1fluencc sometimes.

·;..:cornpar1ie2.i can. con.tco] t.11e rnarket:.ing rn:i.x,

Pr·ocit1ct

old ( existin.\J)

++++0+++++++++++++++++++++++++++·~+

+ + + + + + + + +

+ A + B +

+ + + + + ++++++++++++++++++++++++++++++++++ + + + + + + + +

+ c; + I} 1--

+ + ' new +++++·t++~+t++++++++·+t+~-1-~~+-++1-++++

Page 2

n.r~~v1

Market Penetration Strategy(old prod1ct old marl~et):

a.repositioning a product( c;f a p:r:od.ti.ct).

ir1q t.L1e c::u.::.t.orr:c._.

b.provide more uses tor the pr·oduct.

Marlzet Development Strategy(old product. new rr1aYket):

l.develop a new rnarket(inside /o~ outsiae the US).

Product Development Strategy(new product-·old market):

l.develop a ne~r product in a existing market that the company is involved in already.

[); flive:cs.ificatj_or1 Strategy(n(::·VJ prodll.Ct .r1e\.<J rnarkc;t:):

l.a company goes into a different market that it wasn't involved with before; this i.s done eitt1er through acusit1.on or starting a new company.

*a company can make a move market strategies.

coul.d use more than one of t.hP

9-l 93 & 9-3 93 & 9--8 93

*Mar·ket Envir·onment: consists of 11ncontrollable set of variables but a company can influence it(ie: parents can influence their children but can't control them); companies must react very quickly to the changes in the environment

1. Political forces(ie: different political party in the 14111 tf:llOl-l.~32)

2. Economic forces(ie: j_nflation rate, interest rates)

3. Societal focces(ie: environmental movement, healthier lifestyles, consumer rr1ovement, cultural diversity, more women the: <ilC)l"){force)

Sllrner

"'Value Marl~etinq

::..: r: 1J . '· J ·c · : < i. i)f Consumers(Bil c1f F'.:i.gbt~::.

(draft8d Pre2ider1t John E'. Kenn >:>tart the cur1:~:.1 . ..;1Tiet rnovcrner1t)

l right tt1 safety: a con1pany has ar1 obligation not to rnarke 'k:.1')ov1i.n9l y a pr:oclt1ct that c:ou.l c1 b.a.rrn c1.):n::--:;-, 1rner.:;,

2.tight to be heard: consumers will receive full & sympathetic consideration in the formulatiorl of govt. policy and promises consumers fair treatment when they complain even to a court of law .

. right. to choose: consumers must the access to a variety of

products and services at cornpetj.tive prices.

4.l:ight LO be inforrned· consumers should have access to and the opportunity to review all relevant infor·mat:ion about a product before buying it.

4. Legal Forces; r of laws that influerice marketing decisions and activities.

*More important acts that affect marketir1g decisions:

l .. Shermar1 Antitrust Act(l890): prohibits contracts. combinations, or conspiracies to restrain trade and pLohibits monopolies or atten\pts by businesses t.o monopolize a particul.ar market or industry.

2. Clayton Act.(J.914): prohibits specific practices such as pri.ce discrin1inatj.on 1 exclusive dealer ar~angements, and stoclc acquisit:ions in which the effect may notably lessen competition or tend to create a monopoly.

3.Robinson-Patman Act(l936}: prohibits price discriminat.ion that lessens competition among wholesalers or retailers (intermediaries); prohibits producers from giving disproportionate services 01· facilities to large buye s

S. Regulatory Forces~ enforcement of laws and regulations a1:e done by regulatory agencies(governmental & nongoJernmental)

*Feder-al Regulatory Agencies(governmental)

1~ Fedetal rrr::1d.E:: (.:ornrn:L;:2s:Lon(F'l2(~)): er1forces ar~d qu.id_,:-. lines regarding business practices; takes action to stop

acl.ve:ct:i..sj.r:19 p,39·e "i

;ind part1ctilarJy haza1rtotl~ consume

~. Consun~er Prodtict Sa .::~on1pl :i anct::' v.ii th. tb.e Cun.s1.1rnet Pi..:·odi.1ct Se,tet:1 l-\ci· prut;·C't:.·.

lr:::: .r:i..sk of . . ,. :trl_:Jttr.Y I

consumer product not covered by other regulatory aiJer1c1 es ..

4. Interstate Commerce Commission(ICC): regttlatEc: frar1ch:Lse, rates, and finances of interstate rail, bus/ t~uck, and V-Jate:c carrier·,,:;, ..

F'(.:de.t:a1 (:ornrn1Jn.ica.tion .. 0:.: ConnTl::i..,ss:i.on.(f'C~c:) ~· regt:~} at(~:J

communication by wire, radio, and televisj_on in ir1terstate and foreign commerce.

G. Erivironmental Ptotectior1 ency(EPA): develops and enforces environmental protection standards and conducts research into the adverse effects of pollutio11.

? F'eclera1. Power C'.ornm.i.s.~;:i.on.(FPC) ~ rc~9111ate.·::; t~;;.t.es a.:nct .sal;:.:;;s of natural gas products, thereby affecting the supply and vrice of gas ~vailable to consumers~ also regulates wholesales rates for electricity and gas, pj_peline construction, and U.S. gas and electricity.

er;. c. :.L 1-: '·'-'

orts and exports of natural

.Better Business Bureaus: local regulatory agency supported local businesses.

6. Competitive Forces:

I:.J\1t·e<"

et.itior1 l'1or1opo l. i. :::.-.; t :i_ c c~t .it i or1

c; 1 \') ~.- -·- J_

().l igopoly

A.Pure Competi1·icn: nt!,yer.c3

ar-;-· Gell er«:·;

1. No barriers tn 0n

6 1n1niinal inarketing

,., . •' . ' ,... i"lOflC•fiU -1. J ::. (' J f\1ar1y Lr;

'> l'1an_1/ ,:·;el lers

,,., '-Ji

t:~titior1:

J. fr·oduct di.ff0rer1tiation a.(l:i.ffe:cc~11tiated })y: :1.19i:.-ed:LeiJ.t;:.' Lita:nd n.arn(::~;_:., r;:(J.Ce,.

packa9J. r19. 1. Few barriers to entry 5. More knowledge tha11 oligopoly but less than monopo 1 ''

Lots of ma~keting 7 I'.1:t:~pos.itio11ing

8. a growth industry(rate of growth very hi *ie: Levi Strauss

1 Mar1y· Btlyer,c.;,; .L.- F'c-hi S(:.cllerE,'.

et:Lticn:

1 Homogeneous Product at Differ·er1tiated Product a. brand differentiatior1

4. ,;>u1ri<.:' Liar:cier;;.s to en.tt·y ~ Imperfect ltnowl e of the market 6. Lots of marlteting *ie: Philip Morris

D. Monc>Poly etit1on: .l . lvJ:an y e L" .'.:~

··-" C)r1e Sel 1 et 3 Unique Pr·oduct 4. barriers to entry b. l?eL~fi:.;;c~t kn.ow} 6. verv little marketing kie: gas co1npany, power company

-.Technological Forces

9-10-93 & 9-13-93 & 9 ]5 93

~)1;est.ions to aslt yourself when face witll a ethic!a] s1 uatio1·l

l. What is morally good or bad? Pr::~9e t:;

> T}-_\;·

to others what you wot11u nave tl1err1 do unto you.

,.<dn.t:i.an t1iod;::J (by Ernrn;J.r.i.u;Jl J< -.:r1t l - t'.vei:y perso11 b.:-:i._;.:_; basic c b.t::;.

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0

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pt·i vacy c F:i g}1t t 0 freedom of conscience

., 0 F( l gh t t c fre of £f,eech e R 1. t t 0 dti.e r:.1r·oce:::1z.>

*action is morally correct if it minimizes the violation of tlle r1 ts of others.

3.Enlighteri Self-rnterest Model: Action is morally correct if it increases b0nefits for the individtial in a way that it does riot :i.r1tc~11t:i.orJ.::::111y l-~t1t:t otl"Ier.'3 ar1d. if these }:;0r1efj_t.s ;_1re bcJ; -"::v(_'d to counter balance or· offset any unintentional harms that came a))O'!Jt,.

>Business is responsible to three stakeholders, they are:

stockb.olcler·s 2, f;;:np 1 oy(~1 es

3, COl"l$1)lTlt:-c:r·s

I.Consumer Movement: indi.viduals; groups, const1rners. ( ie: rig1-1t

l\cti.vi ties undertaken by independent zations to 9rotect their Lights

to sa.fety / i::ight to be :i.n.-fo:crned, r.i to cb.oose, arid r:i t to be) }1ea rel)

? Corn.Ynttni.ty F:elat:ior1::-;: Sc'.:>ci.ety ar~xio·u;::l. to }1ave rnaLketer·:-'­contributute to its well being, wishing to know what businesses do to help solve social problems.(ie: equality issues. disadvantaged members of society, safety & health, and education

' ,,- ' \')el I: 3. L C'c }

Green Marketing: Consumers insisting not only on the 0 ual:i y of life but also on a healthful environment so that they can maintai.n a high standard of livirlg during their lifetimes.(ie conservation, wat.er pol.lution 1 air pollution, and ].and pollt1tion)

>Fotlr baE1c strategi02 foi- systematically dealing with social

lt~00 ractics are iegaJ maneuvering, seeking the support of trade uriions, and government :i.ng:.

Accommodatio11 St1:ategy: a ])Usir1ess ass11rr1es responsibility fo1 its actions. Example is when a special interest group encourages a parti.cular action or when Congress passes a 1aw to ensur0 compliance when a business fails to react ..

4. Proactive Strategy: a business assumes respan;·~bility for j1

actions and responds to accusations make against it without c:,~.:sutc:.·- c11 Lbe· tb.:cc-::21t of. i;JC)\}1:':~r:n.rner1t :i.:ot.erven.ti()Ilo

>Five Basic Parts of Ma~keting Concept

2.ptod\1c:.ing products t t s2tisfy those needs and desi.res

ey

4.acL social.ly responsible.

5. use a systen1s approach(orgariize the presentation to the consumer); proper mechanism for product safety, consumer· t·c0searcb.r etc,

*r1ote· wants or desj.res is how yo11 exp~ess your needs.

>Types of Target Marl{ets:

Total or Undiffe~entiated Target Market:

one target market b. or1e marketing mix c. effective under two conditions:

l.large p1·0r0rtion of custome~s ir1 the to•.di marllet must have similar needs ~; -·· ...

l..Ul. the r>roclt:tct,

2.the organization must be able to develop and maintair1 :i single macketing mix that satisfies customers' needs

*i~· dairy industry

r~~ the segments the custon1P characterir·- a~e

j 1-l"

or1e taLget ma ket !-, u:ne rnarki,:;~t:! n_q rn1x c. focuses on one segment of the market

or Differentiated Target MarJ:et:

a. going after the er1tire market b the entire market is se ed c many target ma~kets a marketing mix for each market

*ie: Jockey Underwear(use to b0 only rner• but n0~0 women G cb.i 1 clr c~r1)

4. Partial Segmentation Target M0iket

a. onJ.y go after part of the market.

t lie;

*see fig. 4.G or1 pg lJ.4.

nc'In<'lGY ic \iar·:i.at>Ic:: :3tt1dy of- t.}:1e: po1)u.l<:ttio:n.(iE.~: a9e, E;1::-:x., Lace income, education, religion).

r:a: c Variable: deals w/ physical locatj_on of the co:c1stJrnc:;r(' '. (;lirnate, ter:t·air1 .. r1at.t1i:·aJ l.f':'.:;;,0-urc(:E.'1 popul<:J-.t:ion density, mar1tet der1sity).

:ca:t?hic: Va:cia}:>le: d_(_:_·a . .l:::; \'i/ 1:Lfest.y1(~, <'" 1:iersc)nc_:,__J (~_'-/.:

*Karen Horney's Types of Personalities: a. compliant(go the flow)

aggressive(go against the flow, rebe1s 1 go-getter) rnoving away from the flow)

B vioristic Variable Iooh:s at volurne usage, r_:_~n.d u.;sc:, Joyalty,

*Market segment2tion allows you to practice the ma 1~keting cox:i.cept

*~~omentqtion 1 s very costly and car1 be bad of too segmented_

C(:irnpeti ti on t·,r. 1.1. ,'.'.1• +·· ·.1 .. ·. U"'' ·.,1 .. ·1· u ),.,! ·,,·,,·, ·.1"1,·,<.1· ·!-. '1", \.·1··. ,-~.. ,, , ..... _,,., .. , .-·- ·,'- -'. j_ ., --- • " ~ I' •. ~ .: ... '" -- I- .. - " ,,,_ ,__ ' '.. _ .w ___ , .. -~.Ji.l_ .. (~_;, __ LL 1.U.il ;"' -'· ;lli:) t_} .S.(:.~f:':J;'I U.p; the competition goes afte1 anotl1er segarnent doesn't

mean yo11r company goes after the sarrie segament

4. Stage in the Product Life Cycle(PLC): life cycle determines what type of segamention to do.

9·-·l~ -93 & 9 20 93

D(:-:c.i.sio:n 1'·1 :1r1g

high low fJ·f+++++-~+++++t+i++++++i·+++++++ 1

·I

+ Po J3 ·I

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/:,~ ex. Dec::i_,3io:r.i. 11.ak:i.rlt;J( . .:.:igh .siq:.i.nificant br2r1d cliff ar1d b.i ir1volvemer1t)· spending time to evaluate the different brands; gJ after a brand name i.f there isn't much time to eva.luate

D. Variety Seeking( gh siginificat brand diff and low i.::·:volv(-:::rnen.t): expc~t·irnen.t; (:Le: pt~1.-f\1rnes).

:-,,._,,o:l\/r_:_'.Hlc::c:.t); rn:i.:o.i Zl'::- tb.e ::;trc~s3 10'.'vel u±: t:l."::.e cit'.:'c::l::.-;1(1'1; (.i.e· similai· job offers but will have high involvment level in

d.c:<."::i.c'l:.i.nJ) _

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t 1 a:~~ive brand selection process; (loyalty occurs oi1 spJY r~, 1·_lie rnoniert t )

~consumer Buyinq Decision Process

sio. making; a1scove that there is a neetl

or.l Sea1."C'};1:

R2t:sfy the need; d

P· ~luation of alt0 11atives ii1 t}1e ev1Jk~1

! ooL:. at q1J;3l i ty

S1:age Four~ Purchase

2g0 Five~ Postpurchase Evaluatior1; in expensive pt1rc}1aes tl1ere may result cognitive dissonance(doubts that occur because the

er questions whether the r1

tf}C:' procl1Jct: l de c: i ;:_-; J.._ on. i/f a . . c:.! rn c.1

Possible Influen~es 011 the Decisio11 PLocess

Personal Influences a. .Dc~rnoqr apl"1i c

Ir~f l lter1ce;:.'. a. Per·cept.on: process of selecting, organizing, a~d

interpreting events in a environment.

c Atilitv and Knowledge

d At.ti tudes

a. Roles and Family: role is a set of actions arid activitie2 that a person in a particular position is supposed to perform.

~vidual identifies ~;ith it so much that he takes on many of the values attitudes, or l·)ehaviors of group niembcrs.

So~ial Classes. i:·) an op0n g~oup of individuals who hav 2"·:11·il.2:i: ::::-ocia.1 t·an.k.

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e11t and Broker Middleman: tate title at the goods and ar0 c:ompensated w/ ~omm1ssions for negotiating 0xc s0 lers and buyers.

lvie:rc.ba:nt !11.idd.lerner1: ttlke title of t}J(; goods; dSS\1n1e r:L:=.~\<'

usually involved in buying and reselling products to other· whoJ.esa1ers. industrial customers, or retailers.

> i;<!b e.s ( p_g

l. Ful]-·service wholesalers: middlemen who offer the widest possible rar1ge of wholesaling functior1s; relied llpOrl for product availabi1.i.ty, suit.able assortments bulk br·eaking, financia} assi.s~ance, technical advice, service, and marketing services.

a. general-merchandise wholesaler: carry a wide product m1~ iiut offer liYnited depth within the product lines (ie: drugs, hardware, nonperishable foods, cosmetics, detergents, and to})a.cco) ,.

b, limited-line wholesaler: carry a narrower product mix bu~ more depth(ie: groceries lighting fixtures or 011-well drilling cq"LJi:p .. ),

~. specialty···line wholesaler: carry the narrowest range of products with usually a single product line or a few items with a

pr:or:i1Jct l:Lr1e:(ie~ sh_el1fis11, fruit 1 ot· food c1e.L:i.cacies),.

* racJ~ jobbers: specialty line wholesalers that own and maintain their own display racks i.n supermarkets and drugstores; usually nonfood items and operaLe on consignment & take back unsold J?LOd\3.CtE',

·1 Limitsd service wholesalers: provide only same marketing services and specialize in a few functions; take title but ir1

many cases do not deliver merct1andise, grar\t ctedit. provide marketing information, and store inventory.

~- casn-and-carry wholesalers: pay cash and furnish 't a ri. E p C) J~ t. 2'_'! t. i c::, r:( ,.

orae1· wholesaiers: U2P ~atalogs instead of s~J0~ i:ndtJ::'_1tr"taJ

r::: rs ,

J.. ents: represen~ either buyer or seller usually on a perrna.n.ent basi.:;

a. manufacturers' agent: independent business person who sells complementary products of several pr rs i11 assigned terLitor:Lc:s ar1d is cornper1.sa.t(::~d tl"1roL191-1 conwn1,c-_:;;::;1on,~::,,

i'::i. sell:Lr1g aqents: hrl10 rnal:k('.:'~t al] of a specified. pr-ocl1Jct line or the entire out of a manufacturer; have control ave the manufacturer 1 s marketing effort and may be used in place of a marketing department.

c. commission merchant often used in agricultural marketing who usually exercises physical control over products, negotiates saJ.es and is given btoad powers regardir1g prices and terms of Sell CO,

Brokers: bring buyers and sellers together on a temporary basis; has fewer functions than other ir1termediaries(ie: food brokers, real estate llrokers, brokers in securities & insuranceJ.

2H,,OO

* average ma1g1n at Whlilesale is ~-10%

,:~s"' ·'.i 1n%

1

l /

Goods ~ Services Mix: looks at Lhe types ot goods or· services

Cornrn1)ri:i.c;:1t}~on 1~1iI" b_O\AJ tb_1,'::.: ~:::r_ore c::ornrnu11.icat.es to th<::: ct1.::::t:-:irnct·

;, P r1ca Distributi.on Mix: the actual products from manufacture to the consumer

·=c.,:1.1. tJ0 1,1 (1t

provides time & place utiljtyt ime is inveritory or when the customer needs the prodti<:t AND place is movement or where the custome1~ needs the prodt;ct).

* See figure 13.6 on pg. 420 for relationships between merchandise breadth and depth for a typi.cal discot1nt st.ore, department store. and specialty store.

Retail Posi.tioning: j_nvolves identifying an unserved or undeserved market niche or segment and serving the s throt1gh a strategy that distinguishes tl1e retai.J.er from others Lr1

the minds of the persons in that s

* Scrarnbled Merchandising: additior1 of unrelated pr ts and prodtlct lines to an existing product. mix, par·ticula~ly fast moving items that can be sold in l.arge volume.

* Wheel of Retailing: l1ypothesis tt1at holds that new types o 1 ow retailers usually enter the market as

price operators but eventually evolve merchants(see figure 13.8 on pg. 426).

(;(_:;,c;,;t' h,i. -,. r :t. ( e

inventory cor1t1ol

2. t~ansportati.on

4. order processing

~~. matetiais handling

s ve~y important t!ecause represf11ts 30

inventory ievel and purchase ptodt.ct tl1ey ;::re: l\(~e~dz.::cl 1~c:.r: urci<:.u.cr.::i..c1IJ,

£<a.i 1 ~<Ja.ys f'iC1 t <J {"\} C'h:i. C :J. C:S

r:i :L p <:'' 1 i .n r:::; ,~-::

A. Inland Waterways P":i r:w·a y s

*Refer to figure 14.6 on pg. 450.

*Refer t.o Tabl.e l4.~ on pg. 454.

l. !osts: 1s the more expensive mode worth the higher costs.

2. 'rrans1.~ Time: total time a carrier nas possession of the qood;:_;.

~. Reliability: the consistency of service provided.

r.j,. c:a.pa.l::i:i. l i ty; ility of a transportation mode to provide he appropt ate eqt.ipmer1t ai1d conditions for moving specj.fic· ki.r1ds or 900Cis.

').Accessibility: abiJity to move goods over a specific rouEe 01 ,-_,'c'>Jork .-

b. Security: what is the dc,].j __ \!Cl'.y,

ysical condition of goods upon

7 '11 raceao1lity: relative ease with located and transferred.

ich a shiprnent can be

11-3-93 & 11-5 93 & 11 8-93 & 11 10 93 & 11 l~ q~

* Prornotion: communication with organizations to directly or ~

in.flt1encing a11dience members to prod.l.1cts

individuals, grotlps 1 or irect].y facilitate ex ace an organiza·tior1 s

ic Hea~ons to do Promotion

y

1\· i~:Lope of d d.c'.rnar1d,

curve i.s a ft1nct:ior1 of the elastLcity of

tity demanded is different for each pLic level) then the demand ct1~ve shifts.

/'""'

}price of other products :.>: f)erna:ncl ::.::: F ~ (;n v _'1, r cinrner1 t

1~~~~=g~t:r~~::::ces ot co:r1slitnr~rs

\ __ ~1ark.:::tir1g effcJ_:·t.':; of

* P1:omote products to e the demand curve; must continue to

* Promotion is attempts to communicate w/ your customers; must un_c1ers.tar1d. tbr::.: c cat..:Lo:n p1:o(;e.ss,

7wo MaJol Players: ser1der and recei.ver

2. Serider uses encoding in a fo~rr1 where th2 receiver will \}r:it:ierstar1d_,

ng to receive the message

.1se

Sen_dE:-t" En.codi11g Dc:.-c odi n<J Rece:i.vf;r

F·ee(l}:)ack

* z11Jise: anythiz1g t}1?t prevents or irnpeads the communic~atiox1 0rz1cess from being completed.

ommunication proc0ss c?l riot_.: ·1 '(\ rn<1J. J;;c.,T.·Lr1t;.J fc~edb{Jck J ;:;\ :LnC'.L'( a,'.(::tl '';a.t r'.:oE-;.

~ ,'') ('. ')

'k

~21 ~~romotion~ ar1ytl1ing that can~t be catorizea in tl1e r) l;

5. persona1 selling: face 1~o face attempt to communicate.

4 licity/PR: nonpaid fcrm of impersonal mass median communication; public relati(JDS are within an orgar1iz~tio11 an• ,-;\1t~::,~1dt.:: ar1 orgar1izatior1; ttsu.a11y b.<:"J.Ve n.o cor1t.ro} ove'.r pu}:;1.:i.ci.ty.

S o:n pg_, __ 1.1<3 3)

2 interest: ccnsum0L are motivated to get information about the product'~ features, uses, a(ivantage 1 disadvar1 :! ocation.

? evalttation: consume1 cc1nsider whether the produc'.t will sat~·isfy

certain crit.eri_a that are cruc:ial for meeting their specific

consumec uses or experier1ces the pr0duct tor th ti.Nie purchasing a srnal] quantity or free samp} d 1;:·:rnont.:,; t :r '·'*ti on Oi bo~rowing product f rorn someone

t :i.. ()rJ. :. consumer chooses the specific product tl1at general type.

* r0jection can occur at any stage.

on

try a product as soon as it comes out on tt0 n:n

i;).}:'( f1J.:1 .l. -'{ .:· j ·3·i}, ,-:>t ;:) (/(·'

:ne,.- -: l

rvi.119 r10\~ proau~t-S'. war -·n

(; U(' ~ev ~av0 kept1c sm;

Liggards: driven 1:-ir:i,.c;,·nte:·:d 'L\i·v-:i;;_,,x d -; O }/ '\1 ! ;:± L i Cr n , p ,_: :.::: r. . ':' u ::·~; c .i o u ::.~> , _! f

t. like tl1e produce li.fe cvc10 CU} \1 C:':.

,,_··a.r;d ·i ife cyc·le: r1eY.AJ i vi.dual. b~and of a li.ne of products can have sales increasing ever1 thr the pr·oduct co\1ld be declining on the prod11ct life c1.1rve(ie: ,~jgarettes a e i.n 4·}-0

decline stage of the product life cycle ))ut a new })rand ~iil1 hav b~and Life cycle that will have increasing sales).

1. Prima~y Dema11d Stimulation: advertisi11g to stin1t1late demarici for a produc category rather than a specific brand of the 'JLOd'U(:'t,

a) Pioneer adver·tising: ir1forms people about. a product(what it is what it does, how it can be used, & where L~ car1 be p1..:i)_·c:t_-,_ased.), oftt.-::r:t t),secl ·j n. t.}1e :i.r1troc:t1Jc·t.cry :::;ta_q of b.e _pLoci"t.)c--'· life cycle when there are no competitive brands.

2, S j .-,,,~:t:i.\/C-' .De111a.rJ_r.J :::~t:Lrn"t.J:t a.ti on:. :J_dver·c.1;:.:_;:truJ: t;J ::;t:LrnuI <::tte: _-·-ic'ff1ar1d rct a Epecific brand .

.i. t.ive a)

f:r:::~aturcE~, advantages ove1· other brands but doesn t mention

(:'.OfllP<-J.td°l.°i.\IC> d.1JV(~J:"t:_i_t:3:i.it~J: a.d\J(':·,--··· i.;::'.Jt1g specifiei brand~ are compaied on the basi.s ··

brands are n1entioned

1n whicl1 two 1)r n1r11

on_c-; ot: 11orc.' pLod.uct

advertisj.ng the goodw~ll of the particulaJ· (JrganizatLon; promoting organizational :i.cle;,1s / or

a the Advertising

\· \--,

pl\1s a fac~or for pl company traditional averages; major flaw is

a s ta:cJ.dard per cc::1it J'(' cf .F'-i .'.'::.-:: ·:'.d .L <:'::·''. sa1ss.~. g:rowtl·1 oi:· dE:'.c;'lin(:. 1 ])d.::0 c~d t;,por: t".11, ..

.i nq·· or:. th.e :i.r1coy·re··c;t c1-;:-;,~_,u;.~:i;·_·io:c! "'"'·::;, ;:;,;-_-;;_:te,::·

eates advertisirig wl12 A it should be advertising ·reates sale most widely accepted approach because it is easy t~ us0 and less d:i.«~-"-ruptive c:ornpet 11 \/E-?.! y

d f)bje~tive ar1d Tasl< rcacli: deteLmiue the objectives t}121 the adv0rtising ca1npa1g0 sl1ould achi.ev~ ther1 attempt to list the

ac::c:C)Yt:pJ. isb t: calculated anc~ added together to get a a1nount: u1 t})0 ota]

*Public RelatJuns: spreadirig goodw·i 1 1 ·~ithi,, the orgar1J.zation and outside the organization(ie: company cl1ildcar0 g1·ants ti~ 1)0 .. i\/('L::3it-:i.e.r.:!.).

*Refer to Tabl0 16.4 011 pg.517 Ear Characterist and Disadvantages of Major Adver·tising Media.

arison Indicator: compares t}10 costs a s~v i-·21

venJc·les within a specific medium(ie: CPM(co2 c·o;::;t cornp;::tr <;<:";f!. incl.i r:·f-.c>:c fu.t n·1;0,q3.z·1 .c':;~.) 0

og_ t Effecti.veness of t

pe·

] evaluation can occu1 before. during, and afte 2 adver·tising \';(;\ff)})()_ i 1JTJ. ,

lncludcs pretest., posttes1: te.st and aided Lecall test which are done

or experiments which are very expensive

2notb.ei:: 0).' rt),t:.; nqs

'}: .t r_:.n d. 1 l in;;::- :

,·,,,c

;:-;{

t.'/}JC

,;:1J;>f1 l."OSC·b

a) ~efe~ral approach ·'·-'/ c'.i:i~rc:c·r n:;- ccJ.d c,.~_,

ber1efit approa~h· pt·c cJuct

b_ !")\cf t :h (:'-'· ·:·:: l). E.i t Orne l_·

a) canned presentation 1°).\ \J :::y nfox:·rna.l x;_;ri:,::::::~1-."'nt ati.c;n r:; some structure combi

t j_ CJrt.c::;

6. Closirg t~10 sale

'(\ '! l

J. .i. ::) '-l ( t· h/ . .• :~ b ' '

('

(lfJ. (j

J lJC t

* l)tl t; corn1)(:·t.·i t:.t.c:in. ··> c·::tst<.:;rn(-::, ·(1T1ar:kt:.'t is a price taker.

alJgopoiy-> uniform pricir1g structure

3, monopoly-> sear·ch for a cr1ce }.evel: seller is a price

Total C,_;~:;t.<::: ''P (''

'PR price x g\1antitv

p:c:i.Cf:: }(:\IC:}

____ ,-- ,,,--,··---·-·-··--,* c1ern;:CJ.n d ;:; c Lti:::c1ti 1 c: :i.. ;'.'.> the r·elationship between price and quant1tv

q U.3.11 ti. 'C )'

d.ei:na.:n.d.

* elasri~i1:y: how sensitive the quar1tity demanded jr~ to pi··· c r1a119 e,

. . 1n pr·.I.cc

n.

dO >·'

scLeciu. e.

fl t tV.J,.,JX:o

(' w

/I

[J (

PS pr-icing Strategi2s

c:,xhi J)·i. t

pr ces usually at: th0 kinked part. of demand (; l.l :c v (:'.

a; MatKup: 0 percertag ') the c~ost or r·etai

cost t"f'·?td.1 .I. p :i c;,

1.00 so

SO 15090 (rnarJ.;:tlF' 2 S\ ,_,, c:o.st) "()

60~~ (rna

~ most retail stores llse the per·centage of retail price.

* keystone(fl.1llstor1e ma doubl0 the cost a? the retail ::_i'.f, ot co;_; t. rna 1/7 stone 1s 50% of cost

rro±-:.:·

10 0 ~ RP

100 + ~.i9c,

(\I\

11'1.: Ir1it:i.::_:i.1 rna.Lk.up RR: retail eduction(employee di

count, stealing, breaKage .(J.poi 1 a9e)

cos is $100 so what is retail price?

reta:i_ ! pr·:i.(:::e ::.: c J. I J'!i .l .333.3

····:.:; E:~U '}'f<:.:· TC'

'l't · 'TF'(~ + 'T'\/ c·

cosLs that does not vary with c}1211ges in the nurnbe1· or urits prodt1ced 01 sold with

I

1

, ... ,.,, __

i'

er ( r-

uvc· is tl1e cor1t~ibution rnargin

c) R01(Retttrn on Jnvestment:): expected amount of proftt tor :i. n v e~·:; tYnen t ,

st price the 1narket wil upon what the c~ompetition is ch)tging ar1d/or teccver investme1·i

]J) penetration'. price the product below competitions rr1ce i1·.

(' I,-'r>_yc.'}101 oqica.·.l pr1c~ng rnetiiods designed to enc:oui:age purcha~G-~ th.at ernot :i than

odd even pricing: assumes that more of a product will b0 sold at: $99.99 than at Sl00.00 indicating that an odd nrice ·1s a better value; even prices ct£~· userl to give r_:ii:·cJd.tJ.ct 2In. e>zc:i\J.s:iv;_::'. Ol ·up;;.;(:ale :Jrna1;,:t1.?:.

prest~~c pricing: prices are ser at an ar~JficiaJ y hi_gh level to pEovide pr·e31L1ge e- 0

selected !1nes of products(ie: suits l 20() I 250·-3)!5 i

.4on·~7C())

Cf,_~---

r c-;

b. SEtup a mi2s1on statement

0 i [:J

A. ftoduct-Portfolio Analysis

J:'.· L 06 tlC T. -· lTl<·) r J{ E: l

9.LCr\,1tY.r (pcrc::,::_~:nt

ca.~~'-h COV/

high ow

Relative n1arket ~ are

1; f gure ~n 4 on pg. 0)~.