TE - III - M - 1

HUMBOLDT-UNIVERSITÄT ZU BERLININSTITUT FÜR INFORMATIK

TECHNICAL ENTREPRENEURSHIP

Vorlesung 3

THE MARKETING

Wintersemester 1999

Leitung: Prof. Dr. Miroslaw MalekBetreuer: Peter K. Ibach

www.informatik.hu-berlin.de/~rok/entrepreneurship

TECHNISCHE UNIVERSITÄT BERLININSTITUT FÜR INFORMATIK

TE - III - M - 2

THE MARKETING

• The Marketing Concept• Customer and Marketing Orientation• Market Opportunity Analysis (MOA)• Sources of Information for MOA• Consumer Profiles• Marketing Implications of Product Characteristics• Profile of Competitors• Marketing Mix Variables• Marketing Channels• Promotion Mix Tools• Promotion Tools Strengths and Weaknesses• Advantages and Disadvantages of Major Advertising

Media

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THE MARKETING CONCEPT

Customer

Orientation

Customer

Needs &

Wants

Organizational

Integration

Success

Goal

Achievement

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INDICATORS OF CUSTOMER AND MARKETING ORIENTATION

1) What information do you carefully collect about the

exact needs of your customer ?

2) Could you consider custom designing your services or

products for smaller groups of customers ? How ?

3) Are your (nonsales) employees specifically trained to

represent your company to customers ? How ?

4) Are customers contacted after the sale to determine their

level of satisfaction ? How ?

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INDICATORS OF CUSTOMER AND MARKETING ORIENTATION (continued)

5) How do you convert unsatisfied customers to satisfied

customers ? Do you have any strategy?

6) Is your top marketer in the company a top-level, equal team member ?

7) To what extent do you build your strategies around

an in-depth understanding of your customers ?

8) To what extent are activities of different people

(or departments) coordinated to ensure customer satisfaction ?

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MARKETING MANAGEMENT AND ENTREPRENEURSHIP

Risk taking Creativity

Creating value

Venture ideaidentification,

innovation, and exploiting opportunity

Business plandevelopment

Assembling/integratingresources

Team buildingManaging

growth

Organizational mission

Marketopportunity

analysis

Marketing strategy

Targetmarket

Marketingobjectives

Marketing program

Environmental scanning

Implementation/control

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THE FIVE STEPS TO ANALYZING MARKET OPPORTUNITY

• 1. Identify the business environmental forces.– Economic conditions and trends

– Legal and regulatory situations and trends

– Technological positioning and trends (state of the art; related R&D)

– Relevant social changes

– Natural environment (shortages ? vulnerabilities ?)

• 2. Describe the industry and its outlook.– Type of industry

– Size -now and in 3-5 years

– Types of marketing practices

– Major trends

– Implications for opportunity

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THE FIVE STEPS TO ANALYZING MARKET OPPORTUNITY (continued)

• 3. Analyze the key competitors– Product description

– Market positioning (relative strength and weaknesses, as seen by customers)

– Market practices: channels, pricing, promotion, service

– Estimated market share (if relevant)

– Reactions to competition

– Implications for opportunity

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THE FIVE STEPS TO ANALYZING MARKET OPPORTUNITY (continued)

• 4. Create a target market profile.– Levels: generic needs, product type, specific brands

– End-user focus; also channel members

– Targeted customer profiles

– Who are my potential customers ?

– What are they like as consumers/businesspeople

– How do they decide to buy / not buy ?

– Importance of different product attributes ?

– What outside influences affect buying decisions?

– Implications for opportunity ?

• 5. Set sales projections– As many formal or intuitive approaches as possible

– Comparison of results

– Go/ no go

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SOURCES OF INFORMATION FOR MARKET OPPORTUNITY ANALYSIS (MOAS)

• Published Sources– Periodicals and newspapers

– Trade association reports

– Standardized information service reports

– Government documents

– Company reports

• Personal observation– Of customers

– Of competitors

– Of macroenvironmental influences

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SOURCES OF INFORMATION FOR MARKET OPPORTUNITY ANALYSIS (MOAS) (continued)

• Interviews with experts– Managers of suppliers

– Managers of trade companies

– Managers of trade associations

– Consultants

– Salespersons

• Primary marketing research– Cross-sectional surveys

– Longitudinal panels

– Experiments

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TYPES OF ADOPTERS BY ADOPTION TIME REQUIRED

Pro

port

ion

ofev

entu

al a

dopt

ers

2 1/2%

13 1/2%

34%34%

16%

Innovators

Earlyadopters

Earlymajority

Latemajority

Laggards

Time to adoption decision

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COMPARATIVE PROFILES OF THE CONSUMER INNOVATOR AND THE LATER ADOPTER

Characteristic Innovator Noninnovator(or later adopter)

Product interest More Less

Opinion leadership More Less

Personality Dogmatism Social character Category width

Open-mindedInner-directedBroad categorizer

Closed-mindedOther-directedNarrow categorizer

Venturesome More Less

Perceived risk Less More

Purchase andconsumption traitsBrand loyaltyDeal pronenessUsage

LessMoreMore

MoreLessLess

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COMPARATIVE PROFILES OF THE CONSUMER INNOVATOR AND THE LATER ADOPTER (contin.)

Characteristic Innovator Noninnovator(or later adopter)

Media habits Total magazine exposure Special-interest magazines Television

MoreMoreLess

LessLessMore

Social characteristics social integration Social striving (e.g., social, physical, and occupational mobility) Group memberships

More

MoreMore

Less

LessLess

Demographic characteristics Age Income Education Occupational status

YoungerMoreMoreMore

OlderLessLessLess

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MARKETING IMPLICATIONS OF IMPORTANT PRODUCT VENTURE CHARACTERISTICS

Characteristic Marketing action

Relative advantage Clearly and credibly communicate the product'sadvantage. Obtain third-party/professional/objective endorsements. Price the product to"deliver" benefits quickly.

Compatibility Develop an understanding of customerlifestyles, behavior, etc., to minimize therequired adaption.Make the product fit in with related products.Make the product/brand fit customer's socialsituation.

Complexity Make the product readily understandable.Strive to make the product user friendly.Make the product at a complexity level notexceeding that of substitutes.

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MARKETING IMPLICATIONS OF IMPORTANT PRODUCT VENTURE CHARACTERISTICS (contin.)

Characteristic Marketing action

Testability Offer money-back guarantee (reduce thecost/risk of trial).Make small quantities free or at low price.Provide incentives to encourage trial.Offer special incentives for durable items (testdrives for autos, etc.)

Observability Encourage visible use by customers.Make it easy for others to perceive theproduct/brand.Create incentives for customers to encouragefriends to consider trial.

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Factors influencing the marketing strategy of key competitors

Profile of Competitors• Mission and business objectives• Market position and sales trends• Management capabilities and limitations• Target market strategies• Marketing objectives• Marketing strategies and tactics

Key competitor’s financialsize and strength

Target market’srequirements

Key competitor’s technical, marketingand management capabilities

Key competitor’s objectives

Key competitor’smarketing strategy

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MARKETING MIX VARIABLES

Product Distribution Price Promotion

Features Types of channels/middlemen

List price Promotion blendAdvertisingMediaTiming

Quality Store/distributorlocation

Credit terms Personal sellingTrainingMotivationAllocation

Packaging Storage Discounts Sales promotion

Branding Transportation and logistics

Selection andallowances

Publicity

Services Service levels Flexibility

Guarantees

Assortment

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CUSTOMER PERCEPTION HIERARCHY

Benefits / satisfactions

Tangible attributes

Quality Packaging Other featuresStyle Branding

Extended product

Warranties Promotion Distribution convenience Company image

Customer product perception

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NEW PRODUCT DEVELOPMENT PROCESS

Business Strategy

Idea generation

Idea screening and evaluation

Business analysis

Product/service development

Product/service testing

Market entry

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ALTERNATIVE MARKETING CHANNELS

Manufacturers / producers

Agents / brokers

Wholesalers /distributors

Retailers Retailers

Consumers and organizational end-users

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Channel design decisions and decision criteria

Identification of channel alternatives

Evaluation and selection of channel(s) to be used

Selection of channelparticipants

Design stages Decision criteria

Intensity of distributionAccess to end-userPrevailing distribution practicesNecessary activitiesand functions

Revenue-cost analysisTime horizon for developmentControl considerationsLegal constraintsChannel availability

Market coverageCapabilityIntermediary’s needsFunctions providedAvailability

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PROMOTION MIX TOOLS

Advertising

Print adsBroadcast adsBillboard adsPackaging logos and information

Personal selling

In-person sales presentationsTelemarketing

Sales promotion

Games, contestsFree samplesTrade showsCouponingTrading stampsPrice promotionSigns and displays

Publicity

Print media news storiesBroadcast media news storiesAnnual reportsSpeeches by employees

Thepromotion mix

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PROMOTION TOOL’S STRENGTHS AND WEAKNESSES

Low Low Very low

Veryhigh

Poorto good Good Moderate

Verygood

Poorto good Poor

Poor to good

Verygood

None NoneLow tomoderate

Verygood

Low Low High Moderate to high

AdvertisingSalespromotion Publicity

PersonalsellingCriteria

Cost perAudiencemember

Confined totarget markets

Deliver aComplicated

message

Interchangewith audiences

Credibility

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ADVANTAGES AND DISADVANTAGES OF MAJOR ADVERTISING MEDIA

Media Advantages Disadvantages

Television Reaches large audiencesHas visual and audio capabilitiesProvides great flexibilityin getting attentionShort lead time neededto place ad

Not easy to reach specific marketsTotal cost is high relative to othermediaRequires productionspecialistsShort exposure time

Magazines and journals

Reach of issues is high for demo-graphic and geographic segmentsHigh-quality productionAd lasts as long as magazines orjournal is keptIssues are often read bymore than one personCredibility of magazineor journal can benefit ad

Must place ad well in advance ofPublicationProvide limited flexibility ingaining attentionProvide incompletecontrol overlocation of ad inissue

Outdooradvertising

Relatively inexpensiveMany repeat exposures

Only very limited message possibleCannot reach well-defined targetmarkets

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ADVANTAGES AND DISADVANTAGES OF MAJOR ADVERTISING MEDIA (continued)

Media Advantages Disadvantages

Radio Audio capabilityLow cost relative to costs of theother mediaShort lead time neededto place adCan reach demographicand geographic segmentsReaches large audiencesReaches audiences in cars

No visual capabilityShort exposure timeProvides littleflexibility in gainingattention

News-papers

Reach large audiencesCan reach segments by localeShort lead time needed toplace adCredibility of newspapercan benefit ad

May be relatively expensiveProvide little flexibilityfor use of creativityLimited reproduction quality(e.g., little or no use of color)Short life carries over to ad

Directmail

Provides great flexibility in rea-ching target market segmentsNo clutter from competing adsEasy to personalize copyand layout

Easily thrown awayas "junk mail"Obtaining appropriate mailinglists can be expensive

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CONDITIONS SUGGESTING PERSONAL SELLING AS A MAJOR ELEMENT OF THE MARKETING MIX

Mix area Characteristics

Product orservice

Complex products requiring customer applicationassistance (computers, pollution control systems,steam turbines)Major purchase decisions, such as fooditems purchased by supermarket chainsFeatures and performance of the productrequiring personal demonstration andtrial by the customer (private aircraft)

Channels Channel system relatively short and direct to end-users channel intermediariesPersonal selling needed in "pushing"product through channelChannel intermediaries available to perform personalselling function for supplier with limited resourcesand experience (brokers or manufacturer's agents)

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CONDITIONS SUGGESTING PERSONAL SELLING AS A MAJOR ELEMENT OF THE MARKETING MIX

(continued).

Mix area Characteristics

Price Final price negotiated between buyer and seller(appliances, automobiles, real estate)Selling price or quantity purchased enable an adequatemargin to support selling expenses (traditional departmentstore compared to discount house)

Advertising Advertising media do not provide effective link with markettargetsInformation needed by buyer cannot be provided entirelythrough advertising and sales promotion (life insurance)Number and dispersion of customers will not enableacceptable advertising economies