Marketing Management... 100 Slides
BUSINESS STRENGHT Strong
MARKET ATTRACTIVENESS
High
Medium
Weak
Joints Aerospace Fittings
Hydraulic Pumps Clutches
Fuel Pumps
Medium Flexible Diaphragms
Relief Valves
Low
(a) Classification
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Key Words... Market Structure – Market Forces – Marketing Concepts – Customer Added Value – Relationship Marketing – Profitability Analysis – Stakeholder Analysis – Threat Matrix – Value Creation – Marketing Mix – Hierarchy of Needs – Demand Measurement – Market Definition – Segment Rivalry – Target Market – Product Development – Demand-Life-Cycle – MarketSpace Diagram – Marketing Strategies – Market Entry – Promotions – Marketing Communication – Service Quality Model – 3 C’s Model – Hybrid Grid – Distribution Management – Consumer Brands – Control Chart Model – Multichannel Marketing – Demand Elasticity – Strategic Planning Gap – AIDA Model
Markets and Structure of Flow Resources
Resources
Resource markets
Money
Taxes, goods
Services, money
Services, money
Manufacturer markets
Taxes, goods
Government markets
Services, money
Money Goods and services
Money
Taxes Services
Taxes, goods
Middlemen markets
Money Goods and services
Consumer markets
Main Actors and Forces in the Market
Environment
Company (marketer) Marketing intermediaries
Suppliers
Competitors
End user market
The Selling and Marketing Concepts Starting point
Factory
Focus
Means
Products
Selling and promoting
Ends
Profits through sales volume
(a) The selling concept
Target market
Customer needs
Coordinated marketing
(b) The marketing concept
Profits through customer satisfaction
The Chart Company Organization
Marketing`s Role in the Company
Production
Production
Finance
Finance Marketing
Personnel Marketing
Personnel
(a) Marketing as an equal function
Marketing
(b) Marketing as a more important function
Customer
(d) The customer as the controlling function
(c) Marketing as the major function
Customer
(e) The customer as the controlling function and marketing as the integrative function
Determinants of Customer Added Value Product value Services value Personnel value
Total customer value
Image value
Customer delivered value
Monetary price Time cost Energy cost Psychic cost
Total customer cost
The Generic Value Chain Firm infrastructure Human resources management Technology development Procurement
Inbound logistics
Operations
Outbound logistics
Primary Activities
Marketing and sales
Service
Levels of Relationship Marketing
Many customers /
HIGH MARGIN
MEDIUM MARGIN
HIGH MARGIN
Accountable
Reactive
Basic or reactive
Proactive
Accountable
Reactive
Partnership
Proactive
Accountable
distributors Medium number of customers / distributors Few customers / distributors
Customer/Product Profitability Analysis Customers C1 P1
++
P2
+
C2
C3
+
Highly profitable product Profitable product
+
Products
_
P3 P4
+ High profit customer
Mixed-bag customer
_
Losing product
_
Mixed-bag product
Losing customer
The Strategic Planning, Implementation and Control Process Planning
Implementing
Controlling
Measuring results Corporate planning
Organizing
Division planning
Implementing Diagnosing results
Business planning
Product planning
Taking corrective action
Relationships Among Stakeholders
Profits
Growth
Stockholder satisfaction
Customer satisfaction
Breakthrough innovations
Continuous improvements
Higher-quality products and services
Higher-quality environment (employee satisfaction)
The BCG Growth-Share Matrix Question Marks
Stars 22% 20%
4
1 3
16%
2
14% 12%
5
10%
Dogs
Cash Cows 8% 6%
6
4%
7
2%
Relative Market Share
0.1 x
0.2 x
0.3 x
0.5 x 0.4 x
1x
1.5 x
2x
4x
8 10 x
Market Growth Rate
18%
Market Attractiveness – Portfolio Classification and Strategies I BUSINESS STRENGHT Strong
5.00
Medium
Weak Invest / grow
Joints
High
MARKET ATTRACTIVENESS
Selectivity / earnings Aerospace Fittings
Hydraulic Pumps
3.67
Harvest / divest
Clutches Fuel Pumps
Medium Flexible Diaphragms
2.33
Relief Valves
Low
1.00 5.00
3.67
2.33
(a) Classification
1.00
Market Attractiveness – Portfolio Classification and Strategies II BUSINESS STRENGHT Strong PROTECT POSITION
High
• invest to grow at maximum digestible rate
MARKET ATTRACTIVENESS
• concentrate effort on maintaining strength
BUILD SELECTIVELY
Medium
• invest heavily in most attractive segments • build up ability to counter competition • emphasize profitability by raising productivity PROTECT AND REFOCUS
Low
• manage for current earnings • concentrate on attractive segments • defend strengths
Medium INVEST TO BUILD • challenge for leadership • build selectively on strengths • reinforce vulnerable areas
SELECTIVITY/MANAGE FOR EARNINGS • protect existing program • concentrate investments in segments where profitability is good and risks are relatively low MANAGE FOR EARNINGS • protect position in most profitable segments
• upgrade product line • minimize investment
(b) Strategies
Weak BUILD SELECTIVELY • specialize around limited strengths • seeks ways to overcome weaknesses • withdraw if indications of sustainable growth are lacking LIMITED EXPANSION OR HARVEST • look for ways to expand without risk; otherwise, minimize investment and rationalize operations
DIVEST • sell at time that will maximize cash value • cut fixed costs and avoid investment meanwhile
The Strategic-Planning Gap Sales Desired sales
Diversification growth
Strategicplanning gap
Integrative growth Intensive growth
Projected sales
0
5
10
Time (years)
Ansoff‘s Product/Market Expansion Grid Current Products
New Products
Current Markets
Market penetration strategy
Product development strategy
New Markets
Market development strategy
Diversification strategy
The Business Strategic-Planning Process External environment analysis
Goal formulation
Business mission
Internal environment analysis
Strategy formulation
Program formulation
Implementation
Feedback and control
Opportunity Matrix Success Probability Opportunities High
Low 1. Company develops a more powerful lighting system
1
2
Attractiveness
High
2. Company develops a device for measuring the energy efficiency of any lighting system 3. Company develops a device measuring illumination level
Low
3
4
4. Company develops a software program to teach lighting fundamentals to TV studio personnel
Threat Matrix Probability of Occurence High
Low Threats
High
1
2
1. Competitor develops a superior lighting system
Seriousness
2. Major prolonged economic depression 3. Higher costs
Low
3
4
4. Legislation to reduce number of TV studio licenses
McKinsey 7-S Framework
Structure
Systems
Strategy Shared values
Skills
Style
Staff
Two Views of Creating Value Make the Product
Design product
Procure
Sell the Product
Make
Price
Sell
Advertise / promote
Distribute
Service
(a) Traditional Physical Process Sequence
Choose the Value
Provide the Value
Communicate the Value
Sourcing Distributing Customer segmentation
Market selection / focus
Value positioning
Product development
Service development
Salesforce
Pricing Making Servicing
(b) The Value Creation and Delivery Sequence
Sales promotion
Advertising
The Product-Positioning Map High quality
E A
B
Low price
High price
C D
Low quality
The Four P‘s of the Marketing Mix Marketing Mix Product variety Quality Design Product Features Brand name Packaging Sizes Services Warranties Returns
Place
Channels Coverage Assortments Locations Inventory Transport
Target Market
Price List price Discounts Allowances Low quality Payment period Credit terms
Promotion Sales promotion Advertising Salesforce Public relations Direct marketing
Marketing-Mix Strategy Promotion Mix Sales promotion
Advertising
Offer Mix Company
Products Services Prices
Salesforce
Public relations
Direct mail and telemarketing
Distribution channels
Target customers
Factors Influencing Marketing Strategy Demographic/ economic environment
Marketing Intermediaries
Technological / physical environment
Product
Suppliers
Place
Target Price customers
Publics
Promotion
Political / legal environment
Competitors
Socio/ cultural environment
The Marketing Information System Marketing Information System Marketing Managers Analysis
Developing Information
Assessing information needs
Internal records
Marketing intelligence
Marketing Environment Target markets Marketing channels
Planning Implementation
Distributing information
Marketing decision support analysis
Competitors Marketing research
Control
Marketing decisions and communication
Publics Macroenvironment forces
Model of Buyer Behavior
Other stimuli
Buyer’s characteristics
Product
Economic
Cultural
Price
Technological
Social
Marketing stimuli
Place
Political
Personal
Promotion
Cultural
Psychological
Buyer’s decisions process
Buyer’s decisions
Problem recognition
Product choice
Information search
Dealer choice
Evaluation
Brand choice
Purchase timing Purchase amount
Postpurchase behavior
Model of Factors Influencing Behavior Cultural Cultural Culture
Personal Reference groups Subculture Family Social class
Age and lifecycle stage
Psychological
Occupation
Motivation
Economic circumstances
Perception
Lifestyle Roles and statuses
Personality and selfconcept
Learning Beliefs and attitudes
BUYER
Maslow‘s Hierarchy of Needs
Self-Actualization Needs (self-development and realization)
Esteem Needs (self-esteem, recognition, status)
Social Needs (sense of belonging, love)
Safety Needs (security, protection)
Physiological Needs (hunger, thirst)
How Customers Handle Dissatisfaction Seek redress directly from business firms
Take some form of public action
Complain to business, private, or governmental agencies
Take some action
Dissatisfaction occurs
Take no action
Take legal action to obtain redress
Take some form of private action
Decide to stop buying product or brand or boycott seller
Warn friends about the product and/or seller
Customers‘ Use or Dispose of Product
Rent it Get rid of it temporarily
Get rid of it permanently
Trade it
To be used
Sell it
Direct to consumer
Throw it away
Through middleman
Use it to serve original purpose
Keep it
To be (re)sold
away
Loan it
Product
Give it
Convert it to serve a new purpose Store it
To middleman
Model of Industrial Organization Analysis Supply Raw materials Technology Unionization Product durability Value weight Business attitudes Public policies
Basic Conditions
Demand Price elasticity Substitutes Rate of growth Cyclical and seasonal character Purchase method Marketing type
Industry structure Number of sellers Product differentiation Entry and mobility barriers Exit and shrinkage barriers Cost structures Vertical integration Global reach
Conduct Pricing behavior Product strategy and advertising Research and innovation Plant investment Legal tactics
Performance Production and allocative efficiency Technological progress Profitability Employment
Shifting Company Orientations Customer Centered No
Yes
Product orientation
Customer orientation
Competitor orientation
Market orientation
No
Competitor Centered Yes
90 Types of Demand Measurement (6 x 5 x 3) World Space Level
U.S.A. Region Territory Customer All sales
Product Level
Industry sales Company sales Product line Product form Product item Short-range
Medium-range Time Level
Long-range
Levels of Market Definition Total population
100%
Potential market
Available market
Qualified available market
100%
40%
20%
Served market
Potential market
10% (a) Total market
Penetrated market
10% 5% (b) Potential market
Segmentation, Targeting, Positioning
Market Segmentation
Market Targeting
Market Positioning
1. Identify segmentation variables and segment the market
3. Evaluate the attractiveness of each segment
5. Identify possible positioning concepts for each target segment
2. Develop profiles of resulting segments
4. Select the target segment(s)
6. Select, develop, and communicate the chosen positioning concept
Different Segmentation of a Market
(a) No market segmentation
2
1 1
(b) Complete segmentation
B
A
1
1A
A
3
B
B 3
(c) Market segmentation by income classes 1, 2, and 3
2B
1A
3B 1B
A (d) Market segmentation by age classes A and B
3A
(e) Market segmentation by income-age class
Creaminess
Creaminess
Creaminess
Basic Market-Preference Patterns
Sweetness
Sweetness
Sweetness
(a) Homogeneous preferences
(b) Diffused preferences
(c) Clustered preferences
Five Forces Determining Segment Structural Attractiveness Potential Entrants (Threat of mobility)
Suppliers (Supplier power)
Industry Competitors (Segment rivalry)
Substitutes (Threat of substitutes)
Buyers (Buyer power)
Barriers of Profitability
Exit Barriers Low
High
Low, stable returns
Low, risky returns
High, stable returns
High, risky returns
Low
Entry Barriers
High
Five Patterns of Target Market Selection M1
M1
M1
M1
M1
M1
M1
P1
P1
P1
P2
P2
P2
P3
P3
P3
Singlesegment concentration
(P=Product / M=Market)
Market specialization
Selective specialization M1
M1
M1
M1
P1
P1
P2
P2
P3
P3
Product specialization
M1
M1
Full coverage
M1
M1
Three Alternative Market Selection Strategies Company Marketing Mix
Market
(a) Undifferentiated marketing Company marketing mix 1
Segment 1
Company marketing mix 2
Segment 2
Company marketing mix 3
Segment 3
(b) Differentiated marketing Company marketing mix
Segment 1 Segment 2 Segment 3
(c) Concentrated marketing
Segments and Supersegments
Customer Groups 1
2
3
Customer Groups 4 1
5
6
7
2, 3
8
4, 8
5, 6, 7
9
10
11
12
9, 10, 11, 12
(a) Segments
(b) Supersegments
The New BCG Matrix
Many
Fragmented
Specialization
Stalemate
Volume
Small
Large
Number of approaches to achieve advantage Few
Size of the advantage
Quality Level
(Profitability ROI)
Brand-Quality Strategies and Profitability
Low
Average
Superior
Quality improvement
High
Quality maintenance
Average
Quality adulteration
Low
Superior
Quality Level A) Relationship between product quality and profitability (return on investment – ROI)
Time B) Three strategies for managing product quality through time
Evaluating a Market Opportunity Is the market opportunity compatible with company objectives?
Profit objective
No
Yes
Sales volume objective
No
Yes
Sales growth objective
No
Yes Yes
Is the market opportunity compatible with company resources?
Customer goodwill objective
No
Does company have the necessary capital?
No
No
Yes
Does company have the necessary distribution capability? Yes
Move to next stage
No
Yes
Yes
Does company have the necessary production and marketing know-how?
Can it be obtained at a reasonable cost?
Can it be obtained at a reasonable cost?
No
Yes No
Can it be obtained at a reasonable cost? Yes
Reject the market opportunity
No
Product and Brand Positioning High price per ounce Brand A Bacon and eggs
Brand C
Cold cereal
Slow
Quick Pancakes Hot cereal
High in calories
Low in calories Low
Brand B
Instant breakfast
Inexpensive
a) Product-positioning map (breakfast market)
Low price per ounce b) Brand-positioning map (instant breakfast market)
The New-Product-Development Decision Process Coordinate, stimulate, and search for ideas in external environment and among company personnel
Identify: 1.Company factors
Is the particular idea worth considering?
Propose: 1.Price 2.Distribution
2.Their weights
3.Promotion
Prepare:
Conduct:
1.Market analysis
1.Engineering tests
2.Cost analysis
2.Consumer preference tests
Go into limited production, prepare advertising
Buy equipment and go into full production and distribution
3.Branding 4.Packaging
Yes
1. Idea generation
Develop alternative product concepts
Yes
2. Idea screening Is the product idea compatible with company objectives, strategies, and resources?
Yes
Yes
3. Concept developing and testing
4. Marketing strategy development
Can we find a good concept for the product that consumers say they would try?
Can we find a cost-effective, affordable marketing strategy?
Yes
Yes
Yes
5. Business analysis
6. Product development
7. Market testing
Will this product meet our profit goal?
Have we developed a product that is sound technically and commercially?
Have product sales met our expectations?
No
Yes
8. Commercialization Are product sales meeting our expectations?
Lay future plans
No
Yes
No
No
No
No
No
DROP
No
Should we send the idea back for product development?
Would it help to modify our product or marketing program?
Yes
Adopter Categorization on the Basis of Relative Time of Adoption of Innovation
21/2% Innovators
131/2% Early adopters X - 2
X-
34% Early majority
34% Late majority X
Time of adoption of innovations
16% Laggards X+
Demand-Technology-Product Life Cycles
G2
G1
D Demand lifecycle
T2 Sales
Sales
Demand lifecycle
M
T1
E
Demand technology cycles
P3 P2
Demand technology cycle P4
Product life cycle
P1
Time
Time
(a)
(b)
Sales and Profit Life Cycles
Sales and Profits
Sales
Profit
Introduction
Growth
Maturity
Time
Decline
Four Marketing Strategies Promotion High
Low
High
Rapid-skimming strategy
Slow-skimming strategy
Low
Rapid-penetration strategy
Slow-penetration strategy
Price
Stages of the Competitive Cycle
100% Market share
Capacity share
Production costs
Price premium
Sole Supplier
Competitive Penetration
Share Stability
Commodity Competition
Withdrawal
Companies in a Mature Industry Market Nichers
Volume leaders Quality
Cost
leader
leader
Service
leader Market specialist
Product specialist Customizer
Market-Space Diagrams
Size
Large
Medium
Y
Y
1
2
Attribute 1
Small
4
5
6
7
8
9
X Y
Y
3
4
Attribute 2
Number of functions a) Market-crystallization stageconsumer-preference distribution for hand calculator
b) Market-expansion stageillustration of a strangulation strategy with four brands of firm Y attacking firm X’s brand
Market Fragmentation and Market Reconsolidation Stages
C
H
C H
AB
J
AB DE
YZ
DE XY
JK
X
M
L
Z K M
FG L
a) Market-fragmentation stage
FG
b) Market-reconsolidation stage
Hypothetical Market Structure
Market Leader
40%
Market Challenger
30%
Market Follower
20%
Market Nichers
10%
Defense Strategies (2) Flanking defense
ATTACKER
(3) Preemptive defense (4) Counteroffensive defense
(1) Position defense
DEFENDER
(5) Mobile defense
(6) Contraction defense
Market Share and Profitability 16
%
14
30.0
12
Profitability
Profitability
30
23.4 20 14.1
10
Sperry-New Holland
17.6
9.1
10 8 6 4 2
%
Deere
Steiger Hesston AllisChalmers J.I. Case
International Harvester Massey Ferguson
0
0 Under 10
10-20
20-30
30-40
Market Share (a) Linear relationship according to PIM studies
Over 40
%
1,000
3,000
5,000
Average Sales (constant $000)
(b) V-shaped relationship
Attack Strategies (4) Bypass attack (2) Flanking attack
(1) Frontal attack
DEFENDER
ATTACKER
(3) Encirclement attack
Major Decisions in International Marketing
Deciding whether to go abroad
Deciding which markets to enter
Deciding how to enter the market
Deciding on the marketing program
Deciding on the marketing organization
Evaluating Which Markets to Enter Market Attractiveness High H
Competitive Advantage
Low
China
M
L
Medium
Czechoslovakia
L
Eastern Germany Risk
H
M
L
Poland
Romania
H
Five Modes of Entry into Foreign Markets
Indirect exporting
Direct exporting
Licensing
Joint venture
Amount of commitment, risk, control, and profit potential
Direct investments
Five International Product and Promotion Strategies Product Do Not Change Product
1. Straight extension
Develop New Product
3. Product adaptation
Promotion
Do Not Change Promotion
Adapt Product
5. Product invention
Adapt Promotion
2. Communication adaptation
4. Dual adaptation
Whole-Channel Concept
Seller
Seller’s international marketing headquarters
Channels between nations
Channels within foreign nations
Final buyers
Five Product Levels Potential product Augmented product Expected product Generic product Core benefit
Overview of Branding Decisions Branding Decision
Brand-Sponsor Decision
Brand-Name Decision
Should a brand be developed for the product?
Who should sponsor the brand?
What names should be put on the products?
Brand No brand
Brand-Strategy Decision
Manufacturer’s brand Private brand Mixed brands
Individual brand names Blanket family name Separate family name Company / individual names
Brand-Repositioning Decision
What branding strategies should be used?
Should the brand be repositioned?
New brands Brand extensions Line extensions
Brand repositioning No brand repositioning
Four Brand Strategies Product Category Existing
Existing
Line extension
New
Brand extension
Brand Name
New
Multibrands
New brands
Elements in a Service Encounter The Service Business as a System
Service Business
Customer A
Physical environment
Service X
Contact personnel
Other services
Internal organizational system
Not visible to customer
Direct interactions Secondary interactions
Visible to customer
Advertising Billing and payment Sales calls Media stories Word-of-mouth comments Random exposures to personnel and facilities Market research studies
Other customers
Three Types of Marketing in Service Industries Company
Internal Marketing
Employees
External Marketing
Interactive Marketing
Customers
Evaluation for Different Types of Products
High in search qualities
High in experience qualities
High in credence qualities
Medical diagnosis
Auto repair
Root canal
Legal services
Television repair
Child care
Haircuts
Most services
Vacation
Restaurant meals
Automobiles
Houses
Furniture
Jewelry
Easy to evaluate
Clothing
Most goods
Difficult to evaluate
Service-Quality Model Word of Mouth Communications
Personal Needs
Past Experience
Expected Service
GAP 5 Perceived Service
Consumer
Marketer
GAP 1
Service Delivery (including pre- and postcontacts) GAP 3 Translation of Perceptions into Service Quality Specs. GAP 2 Management Perceptions of Consumer Expectations
GAP 4
External Communications to Consumers
Nine Price/Quality Strategies Price High
Product Quality
High
Medium
Low
Medium
Low
1. Premium strategy
2. High-value strategy
3. Super-value strategy
4. Overcharging strategy
5. Medium-value strategy
6. Good-value strategy
7. Ripp-off strategy
8. False economy strategy
9. Economy strategy
Price, Revenue, Market Share, and Profits (%)
($M)
20
80
90
($M)
18
80
Pretax profit
75
Revenue
70
14
60
65 50
40
Profit
16
Revenue
Share
70
60
Market share
Primary tradeoff range
12
10
80
85
90
95
100
Apex Price (dollar / unit)
105
110
Price
Inelastic and Elastic Demand
P2
P’2
P1
P’1
Q2 Q1
Q’2
Q’1
Quantity Demanded per Period
Quantity Demanded per Period
(a) Inelastic demand
(b) Elastic demand
The Three Cs Model for Price Setting
High Price
Low Price
No possible profit at this price
Costs
Competitors’ prices and prices of substitutes
Customers’ assessment of unique product features
No possible demand at this price
Break-Even Chart 1200
Dollars (in thousands)
Total revenue 1000
Target profit Total cost
800
600
400
Fixed cost 200
0
10
20
30
40
50
Sales Volume in Units (in thousands)
How a Distributor Effects an Economy of Effort
1
M
C
M
2
1
3 4 5
M
C
C
M
2
4
D
5
C
6 3
7
6
8 M
9
(a)Number of contacts MxC=3x3=9
C
M
(b)Number of contacts M+C=3+3=6
M = Manufacturer C = Customer D = Distributor
C
Consumer and Industrial Marketing Channels
Retailer
Manufacturer
Consumer Wholesaler Wholesaler
Retailer Jobber
Retailer
(a) Consumer marketing channels
Industrial distributors
Manufacturer Manufacturer’s representative Manufacturer’s sales branch
(b) Industrial marketing channels
Industrial customer
The Hybrid Grid Demand-Generation Tasks Lead Qualifying Generation Sales
Presales
Close of Sales
Postsales Service
Account Management
Telemarketing
BIG CUSTOMERS
MIDSIZE CUSTOMERS
Direct Mail Retail Stores
Distributors Dealers and ValueAdded Resellers
SMALL CUSTOMERS AND NONCUSTOMERS
C U S T O M E R
Direct Sales V E N D O R
Marketing Channels and Methods
National Account Management
The Downside of Multichannel Marketing
Cost using salesforce only National accounts
A
Field salesforce
Cost
Cost using different sales channels
Telemarketing Dealer
B
Agent
Small, Rural
Small, Urban
Medium Customer Size
Large
Very Large
Nature of Physical Distribution
Procurement Suppliers
Manufacturing Physical distribution
Channels
Customers
Optimal Order Quantity
Cost per Unit
Total cost per unit
Inventory carrying cost per unit
Order-processing cost per unit Q*
Order Quantity
Response Hierarchy Models Models Stages
“AIDA” Model
“Hierarchy-ofEffects” Model
“InnovationAdoption” Model
Awareness Cognitive stage
Attention
Exposure Awareness
Knowledge Interest Affective stage
Liking
“Communication ” Model
Reception Cognitive response
Interest
Attitude
Evaluation
Intention
Preference Desire
Conviction
Trial
Behavior stage
Action
Behavior
Purchase Adoption
Promotional Tools in Consumer vs. Industrial Markets
Consumer Goods
Advertising
Personal selling
Sales promotion
Sales promotion Industrial Goods
Personal selling
Advertising
Public relations
Public relations Relative Importance
Relative Importance
Push vs. Pull Strategy Marketing activities Push Strategy
Manufacturer
Demand Intermediaries
End users
Demand
Marketing activities Demand
Demand Pull Strategy
Manufacturer
Intermediaries
End users
Cost Effectiveness of Different Promotional Tools
Promotional Cost Effectiveness
Sales promotion
Awareness
Personal selling Advertising and publicity
Comprehension
Conviction
Ordering
Stages of Buyer Readiness
Reordering
Current Consumer States for Two Brands
20% not aware 60% not aware
40% did not try 100% market
100% market
80% aware 60% tried
80% disappointed
40% aware
Awareness Brand A
Brand Trial
Satisfaction
20% disappointed
30% tried 80% satisfied
20% satisfied Total
70% did not try
Total
Awareness Brand B
Brand Trial
Satisfaction
Major Decisions in Advertising Management Message decision
Objectives setting
Budget decisions
Communication objectives Sales objectives
Affordable approach Percent of sales Competitive parity Objectives and task
Message generation Message evaluation and selection Message execution
Advertising evaluation
Media decision
Communication impact Sales impact
Reach, frequency, impact major media types, specific media vehicles, media timing
Classification of Advertising Timing Patterns Rising
Level
Falling
Alternating
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
Concentrated
Continuous
Number of messages per month
Intermittent
Month
Steps in Designing and Managing the Salesforce Designing the salesforce
Salesforce objectives
Salesforce strategy
Salesforce structure
Salesforce size
Salesforce compensation
Managing the salesforce
Recruiting and selecting sales representatives
Training sales representatives
Directing sales representatives
Motivating sales representatives
Evaluating sales representatives
Improving salesforce effectiveness
Salesmanship training
Negotiation skills
Relationship building skills
Major Steps in Effective Selling
Prospecting and qualifying
Preapproach
Approach
Presentation and demonstration
Overcoming objections
Closing
Follow-up and maintenance
Stages in the Evolution of the Marketing Department President
President
Sales VP
Sales VP
Other marketing functions
Salesforce
Marketing Director Other marketing functions
Salesforce
(a) Stage 1
(b) Stage 2 President
President Executive VP of Marketing and Sales
Sales VP
Salesforce
Marketing VP
Other marketing functions
(c) Stage 3
Sales VP
Marketing VP
Salesforce
Other marketing functions
(d) Stages 4 and 5
Functional Organization
Marketing vice-president
Marketing administration manager
Advertising and sales promotion manager
Sales manager
Marketing research manager
New products manager
The Product Manager‘s Interactions Agency media dept, Company media dept. Media sales reps
Suppliers Trade
Suppliers
Manufacturing and distribution
Advertising agency Media
Research and development
Premium suppliers Premium screening Store testing Sampling Couponing
Promotion services
Product manager
Legal
Packaging
Designers Researchers Purchasing
Fiscal
Market research Research suppliers
Publicity Salesforce Trade
Suppliers
Three Types of Product Teams
PM PM
PM APM
PA
(a) Vertical product team
R
C
(b) Triangular product team
R
C
S
D
F
E
(c) Horizontal product team
PM = product manager, APM = associate product manager, PA = product assistant, R = market researcher, C = communication specialist, S = sales manager, D = distribution specialist, F = finance / accounting specialist, E = engineer
Advertising Expense / Sales Ratio
The Control-Chart Model
14
12
Upper control limit
10
Desired level Lower control limit
8
6
1
2
3
4
5
6
7
8
9
Time Period
10
11
12
13
14
15
Financial Model of Return on Net Worth
Profit margin 1.5% Financial leverage
Return on assets
Net profits Net sales =
4.8%
X
2.6
Return on net worth =
12.5%
Asset turnover
Net profits
Total assets
Net profits
3.2
Total assets
Net worth
Net worth
Net sales Total assets
Dynamic Interactions Between Sales Orders and Distribution Efficiency
Perceived need to improve delivery time
Sales surge
Management increases sales incentives
No or late action taken to add capacity
Delivery delay
Sales fall
Insufficient production and distribution capacity
Major Marketing Decision Areas Posing Legal or Ethical Questions SELLING DECISIONS Bribing? Stealing trade secrets? Disparaging customers? Misrepresenting? Disclosure of customer rights? Unfair discrimination?
COMPETITIVERELATIONS RELATIONS DECISIONS DECISIONS COMPETITIVE
PRODUCT DECISIONS
Anticompetitive acquisition? Barriers to entry? Predatory competition?
Product additions and deletions? Patent protection? Product quality and safety? Product warranty? Harmful products?
ADVERTISING DECISIONS
PACKAGING DECISIONS
False advertising? Deceptive advertising? Bait-and-switch advertising? Promotional allowances and services?
Fair packaging and labeling? Excessive cost? Scarce resource? Pollution?
Legal or Ethical Questions
CHANNEL DECISIONS
PRICE DECISIONS
Exclusive dealing?
Price fixing? Resale price maintenance? Price discrimination? Deceptive pricing?
Exclusive territorial distributorships? Tying agreements? Dealers’ rights?
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