Marketing

Business 40Week 6Chapter 1323 February, 2005

Article – WSJ Nextel Why do you think Nextel's original walkie-talkie feature was so

successful, particularly with construction crews?  See page 403- what do you think Nextel did?

Based on the information contained in the article, and your own personal observations, what are some of the major challenges involved with selling to the teen market? See page 417 – how do teens buy products?

Do you think Nextel is underestimating the challenge involved with selling to the teen market? Do you think it will be successful? Why or why not? See page 417 – do you think teens buy the way Nextel thinks

they will?

What is Marketing?

Target MarketTarget Market

Market NeedsMarket Needs

Satisfy NeedsSatisfy Needs

4 Ps: The Marketing Mix

ProductProduct

MarketinMarketing g

ProgramProgram

PlacePlace

PromotionPromotion

Buy at Buy at Computers Computers

‘R Us‘R Us

PricePrice

Product Design

Concept Test Prototype Test Market Outsource Package Design/Brand Name

Pricing (March 2nd)

Promotion (March 9th)

Place (Distribution)

Uses of Market Research

Analyze Customer Needs/Satisfaction

Analyze Markets & Opportunities

Analyze Effectiveness of Strategy/Tactics

Analyze Goal Achievement

Guidelines for Market Research

Clarify research objectives/stay on target.

Decide whether you will do the research or use a professional researcher.

Make certain questions are directed to objectives.

Ask for relevant information.

Sources for Market Research Information

Secondary Data Company Records Gov’t Agencies Trade Associations Research Companies

Primary Data Surveys Observations Focus Groups

Different Markets

Consumer- Niche- One-to-One

Business-to-Business (B2B)

Consumer Market Segmentation (p. 413) Geographic Demographic Psychographic Benefit Volume

What is happening by city?

http://www.census.gov

Percent of population by age bracket

0%

5%

10%15%

20%

25%

30%

<18 18-24 25-34 35-44 45-54 55-64 65-74 75-84 85+

Age bracket

Per

cen

t o

f to

tal Livermore, CA %

Berkeley, CA %

Ocala, FL %

U.S. Buying Power*

$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000

Women

Disabled

Hispanics

African Americans

Gay Men/Lesbians

Asian Americans

Native Americans

In Million $In Million $

*Excludes senior citizens, as not all sources characterize them as a diversity market*Excludes senior citizens, as not all sources characterize them as a diversity market

Urban Adult Spending Habits

0% 20% 40% 60% 80%

Prefer Designer Jeans

Enjoy Clothes Shopping

Keep Up With LatestFashion

Watch Pay-per-view

$75 on Shoes Last Year

All Adults

Urban Adults

Source: Simmons Market Research

Buying Process

Step 1: Recognize ProblemStep 1: Recognize Problem

Step 2: Information SearchStep 2: Information Search

Step 3: Evaluate AlternativesStep 3: Evaluate Alternatives

Step 4: Make Purchase DecisionStep 4: Make Purchase Decision

Step 5: Postpurchase EvaluationStep 5: Postpurchase Evaluation

Consumer Decision Making

P. 417

Consumer Influences p. 417-418

LearningLearning

SubcultureSubculture

Reference Reference GroupGroup

Cognitive Cognitive DissonanceDissonance

CustomerCustomer

CultureCulture

Break, Nascar Video

Watch for references to elements of: 1) Market Segmentation (p.413) 2) Consumer Influences (p.417)

Decide amongst yourselves how you’ll Break first? Later? Organize the tables for watching for specifics

Business-to-Business (B2B) Segments

1. Number

2. Size

3. Geographic Concentration

4. Rational

5. Direct Sales

6. Personal Selling

Tips: Successful Marketing in Small Organizations Identify your best

customers. Build lasting

relationships. Share your

customers with other businesses by developing strategic alliances.

Practice integrated marketing.

Know what makes your customers happy.

Personally thank your customers for support.

Stand out above the competition.

Customer Relationship Management

So why is this so important? (Bain & Company) research found that only 31

percent of online retail customers generate 65 percent of profits.

Other segments identified by the survey ("Casual Buyers," "Relationship Seekers," and "Bargain Hunters" are less profitable or even losing.

A 5 percent increase in customer loyalty can increase profitability by 40 percent to 95 percent

Why does loyalty matter so much to profits?

www.cyberatlas.com, Bain & Co

Banking example

79.67%

24.82%15.83%

1.52%

-21.83%

-40.00%

-20.00%

0.00%

20.00%

40.00%

60.00%

80.00%

5% 11% 28% 28% 28%

Bank’sProfits

Customer segment

http://www.dbmarketing.com/

How the Safeway Club built loyalty

http://www.dbmarketing.com/articles/Art144.htm

{Total grocery shopping

} Spent at Safeway

1st

20%2nd 20%

3rd 20%

4th 20%

5th 20%

What they did… Segmented Secondary Shoppers

Did most of their shopping elsewhere Were sent coupon for a manufacturer-sponsored item (i.e.free

Dannon Yogurt) Received a $1 off coupon for anything in meat or produce (if they

did not shop heavily there). Changing customer behavior, by getting people to visit store

departments that they had not previously shopped. Primary Shoppers

“Maxed out”- no point in giving them extra discounts So, they got a $1 off in the cookie department. But, if you give $1 off to good customers who had not previously

bought cookies, it generates incremental revenue.

http://www.dbmarketing.com/articles/Art144.htm

More of what they did… Newsletter - Food Sense, contained tips and recipes. Targeted inserts

“Peanut butter conversion series“ to Jif, Skippy users Month 1, 2 – Articles on Safeway PB, how made Month 3 – “Stock up" offer - $1 off any two jars Month 4 – “Cross sell" $0.50 off Safeway jelly

Card, free ice cream on the customer’s birthday

Best practices

Easy to use Provide immediate rewards Have value that is worth it from the

customer’s perspective Be targeted to customers whose behavior

your are trying to change Be limited to what you can afford to spend Have a published exit strategy

http://www.dbmarketing.com/articles/Art144.htm

Market Stakeholders of Business

Employees

Stockholders

Creditors

Suppliers

Customers

Distributors, Wholesalers,

Retailers Business Firm

See Figure 1.2 on page 8

Nonmarket Stakeholders of Business

Communities

Governments

Activist Groups

Media

Business Support Groups

General Public

Business Firm

See Figure 1.3 on page 9

Customer Relationship Management 80/20 Rule Software

Next week: Chapter 14 Papers are due on March 16th

How are they coming? Midterm is also on March 16th

Open book, open note Might be a case you’ve already seen