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MGCR 352 (82)
Lecture

Marketing management 1

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Department
Management Core
Course
MGCR 352
Professor
Emine Sarigollu
Semester
Fall

Description
Marketing 03/10/2011 10:36:00 AM Case analysis Ne pas repeter le case, assume that audience read it already. Marketing plan  look around, environment! Competition, how world works now, how can new tch impact Ask around what is important when purchasing smthg, make then talk about buying decision, to see what is important decision factor Marketing environment PEST analysis ( political, economic, social, technological) Blockbuster went bankrupt because they didn’t pay attention to marketing environment.  competitors offering consumers benefits that really value: convenience. Illegal download= form of competition too! even more convenient, but not legal. But people see it as sharing, values are changing. Bbuster couldn’t compete, adapt to new environment. Microenvironement  company’s internal environement Macroenvironement  external forces on company  Demographic envt ( size, density, location, age, sex, race, occupation)(Genertion cohorts – see slides- = group of people born around same year, they share common characteristic  easy to create product, adv for them) ex: Baby boomers  had jobs, prosperity, spent as if they had no tomorrow, characterised by TV viewing – homogeneous group of people, easy to reach ( TV adv, ex Soaps, tv program financed by soap company), generation X  smaller size, not much money left for them, no big purchasing power, more educated but less jobs, less economic opportunities, watched specialised tv, generation Y away from tv to computers, internet for info before, now for creation of content, no more passive users but active users. Y & Z are showing same characteristic in entire world ( more or less) where before, very diff from population to another Great rebalancing  in merging market, important is : more people at work, less people as dependent,wealth improving. Largest urban migration in history, people move to cities in big number, leave agricultural type of works, Cultural environment: attitudes and values  Core values ( do not really change often)  Secondary values ( how do you perceive yourself, environment, world, etc.) ex: what is private, confidencial, sharing…. Economic envt  Conditions : inflation vs recession  Consumer income: gross, disposable(after tax), discretionary(after life-food- expenses)  Changing consumer pending patterns ( they value diff charac, new genreations convenience, are there services providing this benefits?) World in 2050? “This decade will mark the tipping point in a fundamental long-term economic rebalancing that will likely leave traditional Western economies with a lower share of global GDP in 2050 than they had in 1700”. “In the next decade, emerging-market economies will … shed their role as suppliers of low-cost goods and services—the world’s factory—to become large-scale providers of capital, talent, and innovation.” Source: The great rebalancing McKinsey Quarterly Jun 2010 Global economic power shift from Western Europe & the US  Asia; return to the pre-Industrial Revolution Source: The world in 2050 Pricewaterhouse-Coopers Jan 2011 change in economy, happening fast, => if you want to grow a business, good chance to do it outside of north America. Adaptability! ( culturally, professionally, socially…) [learn language, experience internship away, exchange] Technological envt: causes major changes in marketing, management, business, cloud computing! In future people say that don’t need software on computer but all on cloud. Implication for IT industries . before people complained, not enough data, now, TOO MUCH. We can get full environment of purchases AND location, when, where, what happens before/after,…. We can identify who are leaders, social leaders. Social media is used, info provided can allow to identify trends… Political envt:  protect companies from unfair competition  antitrust ex:google, Microsoft  Competitive environment - Brand competitors ( Honda/ Toyota) - Industry competitors ( honda/ Ferrari) - Form competitors ( bike/metro) - Generic competitors Kindle fire repositioned itself. Before, kindle = industry competitor, now brand competitor to Ipad. CONSUMER BEHAVIOUR How consumer make decisions.  identify the consumer + why, how, where what when do they buy? While consumers make decisions, many various sitmulis + characteristics influence for decision= buyer’s black box  we don’t know how all this merges together. We need to try to identify what other factors lead to decision. When consumer buy product he goes through a process. As marketer we can manipulate four P’s to serve consumer better. Be also to motivate people, change people perceptions on product, try induce temporal effects ( ex limited in time deals/promotions). Marketing efforts can have impact on social influence ex on advertising in social networks. Marketers have full control on 4Ps but there are other factors, that we can try to impact on,  what marketers have to try to do! This model is descriptive. If we want to quantify decision try to model purchase: purch=f(price, person, temporal…). Marketers try to link all personal charasteristics, factors to regression, and see what level of importance they have on decisions. Use standards statistical calculus to see which factor is really important. Consumer behaviour influences:  Cultural- most important determinant in wants and needs. When marketing product, give direct link to cultural factors. (ex hockey, maple leaf for Canada) , subculture= ethnicity, geography…, social class= money realted,  Social- people finds them credible, word of mouth is valuable info and brings additional customers or less if negative word of mouth, internet! Social netwokrs.. impact of pos/neg words of mouth is bigger! People give value to social sources. Marketers look for leaders in social networks, are there opinion leaders that we can positively influence. Danger of manipulation  Personal- lifestyle indentified, find characteristics, what activites…  Psychological  Buyer Decision process:  Need/problem recognition: rant out of product, advertising, product placement, promotions, promotion for seasonal items, social interaction ( ex buying flowers for friend’s birthday). Maslow’s hierarchy of need- needs are predetermined, some needs more fondamentals than others. –physiological needs- safety needs- social needs- esteem needs( self respect)- self actualization ( want to give back to community or to yourself, temper myself)  Information search: personal sources, commercial sources, publics sources, experiential sources. Different types of decision depending on which type of product/information search. Level of information search is dependent on high or low involvement ( ex bottle water vs computer), on degree of rosk (financial, performance, social) and on brand differentiation. On high involvement = extended problem solvinf. Low involvement = Routine problem solving ( one attribute ex: lower price, closest to you. Process: total set of alternatives( inclu all brands available in market when choosing procuct)  awaress process ( products you nkw about  consideration ser ( procutes you could consider buying  choice set ( where there is the most competition)  choice  Evaluation of alternatives  Purchase decision  Post purchase behaviour TO DO! Using the inlfuences on the consumenr decision process a, explain how you make the decision to attend Mcgilll. Product ( and sevices) First step in marketing = defining the product Product in marketing= bundle of benefit offered to the consumer to satisfy want or need. A product ca be: physical good or sevices, experiences ( Disney), events ( f1), places, persons, properties, organizations ( google), information, ideas ( ecology, socialism) Distinction btw product/ service.  continuum  pure tangible good – hybrid offer – service dominated offerings  ( soap) (restaurant, flight) (babysitter) Four service characterstics: Intangibility: cannot be seen, tasted, felt… tangibilize the service through advertising Variability : depends on who provides, where, when? Ex hotels -> difficult to build strong brand Inseparability: from the provider Perishability: cannot be stored for resale or later use, services are good for period of time you paid for Individual product decision : Product attribute, packaging, labelling, product support services, branding Product attributes:  quality ( level and consistency), level is selected by managers, if consistent in quality can build brand  features as a tool of differentiation, have to determine wants and need to add features. Ex google scholar, yahoo doesn,t have this  design as a competitive weapon, well design= good performance = facilitates use, design and style are +++ competitive factors  style based solely on visual impact, pleasant to the eye Brand: name, logo, signage that uniquely identifies the goods/services of a particular firm. Whatever comes to your mind when you hear a company’s name. Create a brand through: advertisement, establish a core value, a differentiating advantage, write it down, promote it, teach it to people. Select the right competitive advantage! : important, distinctive, superior, preemptive (first to come with it, can substain it?), affordable, profitable. Create a brand = difficult. Some people value th brand. Some reason to buy product = brand. Use branding because is the name, because helps recognition, positioning strategy, legal protection. Ex: Xerox, name, used a verb. Company complaining that name used as a verb. If a very poor quality copy comes from a non Xerox machine but still call I a Xerox then bad association. Branding decision:  to brand or not to brand, expensive to build a brand and to keep on,  selct brand name 9 suggest benefits and qualities, easy to pronounce recognize, remember, distinctive, translate easily, capable of registration and legal protection, adaptable for brand extensions  brand strategy: line extension( extanding exiting product: cocacola, coca0 coca light, risk of canibalize) in the same market, same product category, brand extension(same brand, new product, failure may hurt badly!), multibrands (in a makert where already operation, multiple brand in existing product cat, objective to dominate the market, diff for competitor to make an entry), new brand ( for company perspective, buys new brand, or develop new brand on new market some products brand themselves, others doesn’t have name  not branded product ex: sugar, salt…. The no-name brand is a brand. In some cases producer doesn’t have financial resources to build a brand. First thing to build a brand = look at how differentiate product, what is the core attribute product that is diff from others, then need to run it through a test: is it important to people. Is it distinctive, superior, preemptive ? next step: communicate it to potential buyers: positioning statement + brnd name suitable for our benefit then advertising to teach people that brand exists = building the brand. Then need to worry about protecting, maintaining, enhancing the brand. Branding strategy: product belongs in one of the categories. New brand doesn’t mean new to the world but new to the company. Packaging Often most distinctive marketing effort ( companies spend more on packaging than advertising) use package to promote their brand. Sometime packaging sells the product. Ex Arizona tea, perfumes. Bottle became collectors. Some proudcts made their product more eye ctching on the shelves. Design would be the product itself or in the package. Important tangibles benefits of a package: because it protects the product. + increase self life of a product ex: milk bottle letting shelf life be 6 months. Use package as part of bnding strategy or not. Package is teached to people, if change package, consumer is lost. Labeling Label is a tag attached to product to identify product + info about product. ( identify+quantity+ name and place of business of producer) There are certain restriction on use of words, naming ( light) Product development and life cyvle strategies How generate new product? From conceot to launch? Whcich strategies applied trhough life cycle? Adoption process, how do we react to it? Why companies develop new product?  generate revenue. When product put on market sale increase. But very risky, 80% fail. But keep introducing to: send positive signal that you are innovative + source of competitive advantage + reinforce/change strategic direction, grow in / consumer new habits + enhance corporate image, reposition themselves + Capitalize on production and operation resources. Product fail demand overstated ( manager pet product, if people like product, doesn’t mean they will buy it + cultural issues) + marketing strategy (mistake in product positioning or in four Ps) + competitive reactions (lower their price when new product enter, through adv, product the same product, make it diff for you to have access to distribution) + company capability may not be suitable to new market ( ex sony in Hollywood). New product development process: idea generation – creening – soncept development & testing- mrkt strategy-…. Generating new ideas require imagination, coming from: consumers ( buyers and seller work in close relation, products designed through specifics of what consumers wants), internal sources, employees ( post it note), sales people, R&D, managers, competitors ( build a car based on +- of other cars), distributors and suppliers ( in buis to buis, close to buyer) Screening ideas: identify good ideas, drop poor ones. Because idea not feasible, no technological ability yet. Concept development and testing: who will buy product, what will be core benef, … may develop more than one concept for one product. Mrkt group develop the concept. Ex Nyquil, cold medicine, turned dead product idea into very successful product idea t Marketing strategy: (=marketing plan), who is customer, how to position product, 4Ps, define a one year budget, Product development: performed by engineering ot R&D, come up with a prototype, transform product concept into physical product Test marketing: pre-test markets ( group of customers hired to test it, people know they are part of a testing strategy, ask opinion about it, subjects involved are aware that they are part of test marketing, company make adjustments), test markets (take product to real market, ex in grocery stores, product in limited distribution, expensive! But important because if go national and fail, worse! This made to identify any problem with product, if results not positive chose no go), product use tests – beta testing (used in tech product, first level of testing in company, once satisfied use it externally, for experts or people who ahev the knowledge, product need, then distrib), demonstration at trade shows (business to business marketing, for construction materials ex, some trade shows attracting to consumers ex: books, cars, apple, electronics Commercialization: taking product to mass market Process step by step, but long time process > loose competitiveness, … Seepding up the process: sequential process like developing new car can take to 4 years, long! Japanese introduce product fast, use mass market to pass test, car developed in one year/18months, price of developing it = th 1/10 of car in us ex, because use lot of processes of current products. Introduce more than 1000 softdrinks a year. Simultaneous or team based: multiple teams working at the same time. Have shorter life cycle. First mover advantage, ex Cocacola, 3M, Xerox, but risky Ex: Google new product introduction process= quick process, cut some of the levels of process, part of attempt of innovative companies, but risk, Pharmaceutical comp: in a rush, product tested in earlier stage, in excellent centers but regulation is more restricted in us, but do they have same standars as in us. Product life cycle: View cycle Can to it for an industry or for particular brand or for particular product/model of a brad. Or take a prodict form, ex storage of music. As a manager need to make mlerting decision throughout life cycle becaue market change. View product life cycle strategy. Decisions have to be mae in marketing, even after product is introduced into market because environment change. In introduction stage: Sales are low because not introduced in big scale, customer don’t know product yet, maturity, sales level off in late maturity decline. Cost hugh at first because produce smaller nmber if unit, not yet eco of scale, cost per person is high, as product more it declines. Profits not in intro, in growth start showing, maturity, maximised profits because costs are low. Customers: innovators, thos who must need your product, those who buy in maturity are more price conscious, serve diff clients throughout life cycle. Competitors, growth start oing up, maturity: maximise level of competitors in the market but market no longr growing, nd of maturity companies start leaving. Marketing objectives: intro high, growth maximise market share, maturity, max profit, decline, clear inventory Regarding 4 P: Product: intro: simplest version, vanilla stage. Growth: product extensions, product with more features. Maturity: Versioning of product for diff audience. Delcine: remove Price: Intro: use cost-plus: add cost plus to real price of product. But sometimes not appropriate for all type of products ex: information goods: software, book, game,… diff to estimate cost of digital goods.Growth: price low enough to gain max market share. Maturity: max profits because cost low, match competitors price. Decline: cut the price Distribution: Intro, selective. Growth and maturity, expand. Decline, selective but not same as intro. For Luxury goods, distributiotnn always selective, exclusive product. Advertising:high in intro to teach, Matu: increase to adv differentitation advantage. Decline: promotion Sales promotion: Intro Adoption procees: when cosumer buys your product Rules “of some”?: 2,5% innovators (NEED your product, willing to pay high price for it, open mind, more educated when providing last tech..). 13,5% early adopters (want to buy product but are looking for some features important for them, going to hold on and wait for it), 34% early majority (people who wait because not only want to see more variety but also diff point levels, availabilities, want to have a choice), 34% late majority (more price sensitive), 16% laggards (no need for it). PRICING PRODUCTS AND SERVICES chap 13 how do you set the price? Once set how to adapt? Develepoment? Setting pricing policy: Set price when introduce new product on the market, when introduce existing produce to new market (ex new distribution channel), when you enter a bid. Process: 1-Determine objective ( maximise profit, maximise market share, survive), and price considerations related to consumers, company, competition 2-constraint: who much does it cost to build product, consumers’ willingness to pay (demand: elastic/inelastic to pay –in he short term-)if facing inelastic demand, no competi
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