福特公司SWOT分析 中山大学吴柏林教授 研究生“品牌管理”绝密资料

C HAPTER 3--W INNING M ARKETS:M ARKET-O RIENTED S TRATEGICP LANNINGOVERVIEWA major challenge for marketing-oriented companies as they respond to the rapidly changing marketplace is engage continuously in market-oriented strategic planning. They must learn how to develop and maintain a viable fit between their objectives, resources, skills, and opportunities. The strategic planning process is carried out at the corporate level, business level, and product level. The objectives developed at the corporate level move down to lower levels where business strategic plans and marketing plans are prepared to guide the company's activities. Strategic planning involves repeated cycles of planning, implementation, and control.Corporate strategic planning involves four planning activities. The first is developing a clear sense of the company's mission in terms of its industry scope, products and applications scope, competence scope, market segment scope, vertical scope and geographical scope. A well-developed mission statement provides employees with a shared sense of purpose, direction, and opportunity.The second activity calls for identifying the company's strategic business units (SBUs). A business is best defined by its customer groups, customer needs, and technologies. SBUs are business units that can benefit from separate planning, face specific competitors, and can be managed as profit centers.The third activity calls for allocating resources to the various SBUs based on their market attractiveness and business strength. Several portfolio models, including ones by the Boston Consulting Group and General Electric, are available to help determine which SBUs should be built, maintained, harvested, or divested.The fourth activity calls for expanding present businesses and developing new products to fill the strategic planning gap. The company can identify opportunities by considering intensive growth (market penetration, market development, and product development), integrative growth (backward, forward, and horizontal integration); and diversification growth (concentric, horizontal, and conglomerate diversification).Each SBU conducts its own business strategic planning which consists of eight steps: defining the business' mission, analyzing the external environment, analyzing the internal environment, choosing business objectives and goals, developing business strategies, preparing programs, implementing programs, and gathering feedback and exercising control. All of these steps keep the SBU close to its environment and alert to new opportunities and problems. Furthermore, the SBU strategic plan provides the context for preparing market plans for specific products and services.Marketing plans focus on a product/market and consist of the detailed marketing strategies and programs for achieving the product’s objectives in a target market. Marketing plans are the central instrument for directing and coordinating the marketing effort. The distinction between the strategic and tactical marketing plans and efforts is very important, because if the firm and its marketing organization fails to recognize the interdependent yet separate activities involved in the strategic and tactical marketing efforts, the results will be less than expected. Without effective value development in the strategy planning, which comes from the firm’s research and analysis programs, the tactical marketing activities likely will not be as successful as when the coordination effort starts from the beginning.The marketing planning process consists of five steps: analyzing market opportunities, researching and selecting target markets, designing market strategies, planning marketing programs, and organizing, implementing and controlling the marketing effort.Marketing planning results in a marketing plan document that consists of the following sections: executive summary, current market situation, opportunity and issue analysis, objectives, marketing strategy, action programs, projected profit and loss statement, and controls.To plan effectively, marketing managers must understand the key relationship between types of marketing-mix expenditures and their sales and profit consequences.LEARNING OBJECTIVES:After reading this chapter students should:∙Know the characteristics of high performance business∙Understand what is meant by "strategic" planning∙Know the major steps in strategic planning and their contribution to development of a successful strategy∙Understand the strengths and weaknesses of the business portfolio techniques∙Understand the difference between strategic and business unit planning∙Understand the contribution of the steps of business unit planning to the development of a successful business strategy∙Know what is meant by the “marketing management process” and its various steps∙Understand the contents of a marketing planCHAPTER OUTLINE:I. IntroductionA.Definition of market-oriented Strategic Planning - the managerial process ofdeveloping and maintaining a viable fit between the organization’s objectives,skills and resources and its changing market opportunities in order to yield targetprofits and growth.B.Strategic planning calls for action in three areas and occurs on four differentlevels.II.Corporate and Division Strategic PlanningA.Defining the Corporate Mission - What is our business? Who is the customer?What is value to the customer? What will our business be? What should ourbusiness be? Each company’s mission is shaped by five elements: history,current preferences of the owners, the market environment, resources anddistinctive competencies.B.Establishing Strategic Business Units - organization should be seen as a satsifierof needs rather than a producer of goods. Large companies manage differentbusinesses, each requiring its own strategy. Business units can be defined interms of customer groups, customer needs, and technology.C.Assigning Resources to Each SBU1.Boston Consulting Group Approach - question marks, stars, cash cows,dogs2.General Electric Approach - market attractiveness and business strength3.Critique of Portfolio Models - Arthur D. Little model and the Shelldirectional-policy model have improved the Portfolio model capabilitiesbut still must be used with caution.D.Planning New Businesses, Downsizing Older Businesses1.Intensive Growth - Ansoff Matrixa)Market penetration strategy - current products to current marketsb)Market development strategy - current products to new marketsc)Product development strategy - new products to current markets2.Integrative Growth - backward, forward or horizontal integration3.Diversification Growth - new products to new markets. Three types arepossible: concentric, horizontal, and conglomerate4.Downsizing Older Businesses - to pursue growth, companies must notonly develop new businesses but also carefully divest tired oldbusinesses.III.Business Strategic PlanningA.Business Mission - Each business unit must define its specific missionB.External Environment Analysis (Opportunity and Threat Analysis)1.Marketing Opportunities Analysis- an area of buyer need in which acompany can perform profitably. Classified according to attractivenessand probability of success.2.Environmental Threat Analysis - a challenge posed by an unfavorabletrend or development. Classified by degree of seriousness andprobability of occurrence.C.Internal Environment Analysis (Strengths and Weakness Analysis)D.Goal Formulation - establish objectives that are specific with respect tomagnitude and time.E.Strategy Formulation - the game plan for achieving the stated objectives. Thereare three generic types of strategic thinking: overall cost leadership,differentiation, and focus.F.Strategic Alliances - In the form of marketing alliances with other domestic ormultinational firms to complement or leverage existing marketing capabilitiesand resources. Can be product or service, promotional, logistics alliances orpricing collaboration.G.Program Formulation - develop detailed programs to support the strategyH.Implementation - McKinsey 7-S FrameworkI.Feedback and Control - a firm must track the results of its strategyIV.The Marketing ProcessA.The Value-Delivery Sequence -B.Steps in the Planning ProcessC.Analyzing Marketing OpportunitiesD.Developing Marketing StrategiesE.Planning Marketing Programs - the marketing mixF.Managing the Marketing EffortV.Product Planning: The Nature and Contents of a Marketing PlanA.Contents of the Marketing Plan1.Executive Summary and Table of Contents2.Current Marketing Situation3.Opportunity and Issue Analysis (opportunities/threats analysis,strengths/weaknesses analysis, issues analysis)4.Objectives (Financial, Marketing)5.Marketing Strategy6.Action Programs7.Projected Profit-and-Loss Statement8.ControlsB.Sonic Shelf Stereos --- Ongoing ExampleVI.Marketing Planning for the 21st Century - the evolution of business and marketing planning efforts that are more responsive to market conditions and more customer andcompetitor-oriented.VII.SummaryMARKETING A ND ADVERTISING1. The Kelly Services ad shown in Figure 1 names the company's seven main strategic business units. Kelly Temporary Services is the oldest of the firm's SBUs. Overall, the company's 750,000 employees work on temporary assignments for more than 200,000 customers, mainly businesses. Do the newer SBUs represent concentric diversification, horizontal diversification, or conglomerate diversification? How mig ht Kelly Temporary Services define its business mission? What opportunities and threats would this SBU be likelyto confront in the U.S. market for temporary services?Answer: The newer Kelly SBUs represent concentric diversification, because they share marketing synergies with the original Kelly Temporary Services, most notably the offer of skilled personnel for temporary work assignments in specific work environments. Kelly Temporary Services might define its business mission as: "We aim to be the supplier of choice for office-based businesses of all sizes that seek the best-trained workers for temporary assignments." Students may suggest other appropriate definitions of Kelly's business mission.One opportunity Kelly Temporary Services might confront in the U.S. market is a shortage of qualified permanent office workers, which would increase demand for qualified temporary employees to handle office jobs until permanent workers can be found. One threat this SBU might confront is a proliferation of competing suppliers offering highly-trained temporary office personnel. Students may suggest other opportunities and threats, as well.2. United Parcel Service delivers packages and documents to customers in more than 200 countries every day, as this ad indicates. Overall, the company's global volume of 3 billion yearly deliveries rings up over $22 billion in annual revenues. Is UPS pursuing a cost leadership strategy, differentiation strategy, or focus strategy? How do you know? Look at Figure 2. How important are systems to the successful implementation of UPS's strategy?Answer: UPS is pursuing a differentiation strategy, delivering superior performance in an important customer benefit area: reliable on-time delivery to 200+ countries with a money-back guarantee. Systems are extremely important to the successful implementation of this strategy because UPS offers electronic customs clearance as well as on-line tracking in 16 languages as part of its international delivery service.FOCUS ON TECHNOLOGYMarketers can use geographic information systems (GIS) to support analysis and planning of their geographic operations. A GIS is a computerized system designed to present data about an area in map form. This system enables marketers to select and analyze all kinds of data and then view the results on the screen. For example, a regional gasoline marketer might decide where to expand its geographic scope after viewingpopulation, economic, and vehicle ownership data overlaid on a map showing main highways and stree ts in selected areas.To see a GIS in action, visit the Montana State Library Natural Resource Information System Web site (/gis/mtmaps.html) and go to the Montana Maps Interactive section. There you will be able to view state maps that display population density, land use, legislative districts, and other data. If you were a farm equipment marketer trying to decide whether to expand into Montana, what data would you want to obtain from a GIS—and why?Answer: A farm equipment marketer considering expansion into Montana could use a GIS to determine the amount of land devoted to crops; a lot of crop land suggests a strong market for farm equipment. The marketer could also use a GIS to locate population centers suitable for opening regional sales and service offices. Students may suggest additional marketing uses of a GIS, as well.MARKETING FOR THE MILLENNIUMAT&T has forged alliances with a number of major companies in the telecommunications industry. Visit AT&T's Web site () and look for information about its international strategic alliances with British Telecom (BT) and other companies. Then use your favorite search engine to find recent news stories about BT and about other AT&T strategic alliances. Of the eight strategic reas ons why companies enter into alliances, which seem to apply to AT&T's alliances? How is the alliance between AT&T and BT a strategic fit? Why would BT agree to this alliance? Do you expect the alliance between AT&T and BT to change in any way during the first years of the new millennium? Why and how?Answer: AT&T seems to be using strategic alliances to extend the scope of its existing operations (entering the Russian market with Sovintel and going global with the BT alliance, as two examples), reduce risk and entry costs into new markets (sharing the investment costs for the global venture with BT, for example), and achieve economies of scale (boosting efficiency through higher volume of calls in the BT alliance). The alliance between AT&T and BT is a strategic fit in that the companies complement each other's geographic coverage and technological expertise; both are also deep-pocketed enough to support an ambitious global alliance to service many more customers than either could service alone.BT benefits because it needs a strong partner to invest in the infrastructure necessary for a global success. It also links its strong brand with the strong brand of AT&T, another benefit. And BT will profit financially from the alliance, another major motivation. The AT&T/BT alliance may have to change in the early years of the new millennium as additional competitive alliances challenge it on a regional or global level. Students may offer additional answers to this exercise.YOU'RE THE MARKETER: SONIC MARKETING PLANEvery marketing plan must include the company's mission and objectives. These guide the implementation of specific strategies and programs during the period covered by the plan. The plan must also indicate the competitive scope of the business.As Jane Melody's assistant at Sonic, you are responsible for drafting the mission statement, reviewing the objectives, and recommending the competitive scope. The marketing objectives have already been developed, as shown in this chapter. Using your knowledge of marketing, Sonic's data, and library or Internet resources, answer the following questions:∙What should Sonic's mission be?∙Are the proposed marketing objectives reasonable, given the industry's output? Visit the Web site of the U.S. Census (/epcd/www/sic.html), and check under SIC 3651 orthe equivalent NAICS code for industry statistics. In addition, research industry sales trends.∙What nonfinancial objectives should Sonic set? How will these help Sonic fulfill its mission?∙How would you define the major competitive scopes within which Sonic will operate?As your instructor directs, enter the mission statement and all objectives in a written marketing plan or type them into the Mission and Objectives section of the Marketing Plan Pro s oftware. Also enter information on the competitive scope in the executive summary of the marketing plan.Answer: Students should start this exercise by reviewing the chapter data about Sonic. Then they will be in a better position to answer the questions. Students may offer differing definitions of Sonic's mission. One possibility: "Sonic is dedicated to producing and marketing high-quality shelf stereo systems that deliver excellent sound quality, outstanding service, and solid value to customers across the United States." Achieving a net profit of $1.8 million in 2000 requires total sales revenue of $18 million, a 9 percent increase from the previous year. That increase may be ambitious, given current trends. However, if Sonic successfully expands consumer awareness of the brand and adds 10 percent more dealers—two key marketing objectives—then the revenue and profit goals will be within reach. Research into the industry's output and sales trends will help students decide whether the objectives are reaso nable.In addition to increased consumer awareness and expansion of the dealer base, students will want to set several other nonfinancial objectives for Sonic. One example: achieve 98 percent satisfaction on customer service surveys, supporting the "outstanding service" aspect of the mission.Sonic's mission offers some clues to its major competitive scopes; students may suggest additional scopes. Some ideas:∙Product: stereo systems, specifically compact shelf models∙Industry: primarily consumer markets but open to considering business markets.∙Geography: nationwide across the United States∙Competence: producing quality sound components and offering excellent service.∙Market segments: Primarily middle income to upscale households.∙Vertical scope: Manufacturers its own products for distribution through outside stores and dealers.。

PART IV – SHAPING THE MARKET OFFERING CHAPTER13--M ANAGING P RODUCT L INES,B RANDS, ANDP ACKAGINGOVERVIEW:Product is the first and most important element of the marketing mix. A product is anything thatcan be offered to a market for attention, acquisition, use, or consumption and that might satisfy awant or need. Products can be physical objects, services, persons, places, organizations, andideas. Product strategy calls or making coordinated decisions on product mixes, product lines,brands, packaging, and labeling.A product can be considered on five levels. The core benefit is the essential use-benefit, problem-solving service that the buyer primarily buys when purchasing a product. The generic product is the basic version of the product. The expected product is the set of attributes and conditions thatthe buyer normally expects in buying the product. The augmented product is additional servicesand benefits that the seller adds to distinguish the offer from competitors. The potential product isthe set of possible new features and services that might eventually be added to the offer.All products can be classified according to their durability (nondurable goods, durable goods, andservices). Consumer goods are usually classified according to consumer shopping habits(convenience, shopping, specialty, and unsought goods). Industrial goods are classified according to how they enter the production process (materials and parts, capital items, and supplies and services).Most companies handle more than one product, and accordingly product mix can be described aspossessing a certain width, length, depth, and consistency. These four dimensions are the tools fordeveloping the company's product strategy. The various lines making up the product mix have tobe periodically evaluated for profitability and growth potential. The company's better lines shouldreceive disproportionate support; weaker lines should be phased down or out; and new lines should be added to fill the profit gap.Each product line consists of product items. The product-line manager should study the sales andprofit contributions of each item in the product line as well as how the items are positionedagainst competitors' items. This provides information for making several product-line decisions.Line stretching involves the question of whether a particular line should be extended downward,upward, or both ways; line filling, whether additional items should be added within the present range of the line; line modernization raises the question of whether the line needs a new look and whether the new look should be installed piecemeal or all at once; line featuring, which items to feature in promoting the line; and line pruning, how to detect and remove weaker product items from the line.Companies should develop brand policies for the individual product items in their lines. Theymust decide on product attributes (quality, features, design), whether to brand at all, whether to do producer or distributor branding, whether to use family brand names or individual brand names, whether to extend the brand name to new products, whether to create multiple brands, and whether to reposition any of them.Physical products require packaging decisions to create such benefits as protection, economy, convenience, and promotion. Marketers have to develop a packaging concept and test it functionally and psychologically to make sure it achieves the desired objectives and is compatible with public policy. Physical products also require labeling for identification and possible grading, description, and promotion of the product. Sellers may be required by law to present certain minimum information on the label to inform and protect consumers.LEARNING OBJECTIVES:After reading the chapter the student should understand:∙The levels of the product∙How a company can build and manage its product mix and product lines∙How a company can make better brand decisions∙How packaging and labeling can be used as a marketing toolCHAPTER OUTLINE:I.Introduction What Is a Product? - Definition. - Anything that can be offered to a marketto satisfy a want or need.II.The Product and the Product MixA.Five Levels of a Product - core benefit, basic product, expected product, augmentedproduct (beyond expectations, where most competition takes place), and potentialproduct (future augmentation possibilities)B.Product Hierarchy - seven levels of product hierarchy: need family, product family,product class, product line, product type, brand, and itemC.Product Classifications1.Durability and Tangibility - nondurable goods, durable goods, services2.Consumer-Goods Classification - convenience, specialty, shopping,unsought3.Industrial-Goods Classification - materials and parts, capital items,supplies and business servicesD.Product-Mix Decisions - a product mix is the set of all products and items that aparticular sellers offers for sale to buyers. Marketer must consider width, length,depth, and consistency.III.Product-Line Decisions - a product line is a group of products that are closely related because they perform a similar function, are sold to the same customer groups, are marketed through the same channels, or fall within given price ranges.A.Product-Line Analysis - sales and profits of each item1.Product-line sales and profits2.Product-line market profile - positioning against competitorsB.Product-Line Length - a line is too short if the manager can increase profits byadding items; the line is too long if the manager can increase profits by droppingitems.1.Line-stretching decisiona.Downward stretch - enter on the low endb.Upward stretch - enter on the high endc.Two-way stretch - both directionsd.Line-filling decision - adding more itemsC.Line Modernization - update to reflect current trends, themesD.Line-Featuring - select one or a few items in the line to featureE.Line-Pruning - when a product is depressing profits, or a company is short ofproduction capacity.IV.Brand Decisions - traditionally, market power has rested with brand-name companies.A.What is a brand? a name, term, sign, symbol, or design, or a combination of them,intended to identify the goods or services of one seller or group of sellers and todifferentiate them from those of the competition. A brand has six levels of meaning.B.The Concept and Measurement of Brand Equity - brand awareness, brandacceptibility, brand preference, brand loyalty. High brand equity provides a numberof competitive advantages.C.Challenges in Branding1.Branding Decision: To Brand or not to Brand?2.Brand-Sponsor Decision - manufacturer’s, distributor’s, or licensedbrand name3.Brand-name decision - individual, blanket family, separate family, orcombination. Desirable qualities in a brand name, p. 451 of text.4.Brand--strategy decisiona.Line extensions - additional items in the same product categoryb.Brand extensions - existing brand name in a new productcategoryc.Multibrands - additional brand names in the same productcategoryd.New Brands - new brand names in a new product categorye.Cobrands - two well-known brand names combine in oneproduct offeringf.Brand-repositioning decision - however well the brand ispositioned in the market, it may have to be repositioned later. V.Packaging and Labeling DecisionsA.Packaging requires decision on concept, size, shape, materials, color, text, and brandmark. Many marketers have called packaging the 5th P. Various factors havecontributed to packaging’s growing use as a marketing tool: self-service, consumeraffluence, company and brand image, and innovation opportunity.bels are a subset of products which can be used to identify, grade, describe orpromote the product.VI.SummaryMarketing and Advertising1. The toothpaste products made by Tom's of Maine are positioned as environmentally friendly, with natural rather than artificial ingredients. The ad in Figure 1 is for the company's fluoride toothpaste. Whatis the core benefit of this product? What are the basic, expected, and augmented products? Analyze this ad, and explain what elements of product and packaging strategy are incorporated into the ad's theme and copy. Answer: The core benefit of Tom's fluoride toothpaste is healthy teeth. The basic product includes fluoride, the main ingredient in fighting cavities. The expected product includes good taste, whitening agents, and an easy-to-squeeze container. The augmented product includes natural ingredients and earth-friendly packaging. The potential product may contain numerous attributes, such as more effective cavity-fighting ingredients, a more convenient tube or dispenser, and so on. One key element of the product strategy incorporated into this ad's theme and copy is the use of only natural ingredients rather than artificial additives; students may identify additional elements. One key element of the packaging strategy incorporated into this ad is the use of earth-friendly packaging materials; students may identify additional elements.2. Figure 2 shows a Zippo ad aimed at business markets. Based on this ad and your knowledge of Zippo, discuss the company's product mix. Why would Zippo put its brand name on the three products shown in the ad? How would you categorize the brand strategy represented by this ad? What does this strategy imply about Zippo's perception of its brand equity? Explain your answer.Answer: Zippo is using a brand extension strategy to put its name on flashlights, pens, and pocket knives. This gives the new products immediate brand recognition and smoothes the way for earlier acceptance. Zippo perceives that it has high brand equity and it wants to use that equity to expand into new product categories.Focus on TechnologyWhat's in a name? For marketers, brand names are valuable assets that must be selected with care. Some companies hire a specialized marketing research firm to create and test potential brand names, whereas others prefer to handle the process internally. Now "do-it-yourself" marketers can use brand-name-development technology offered by Namestormers.The company's Web site () explains how its NamePro software can be used to generate brand names and offers a free downloadable demonstration. Also on the Web site is an explanation of NameWave, a Web-based service that presents up to 40 brand-name ideas for products in categories selected by the user. What are the advantages of using NamePro or NameWave? What are the disadvantages? If you were responsible for developing a product's brand name, would you choose one of these options? Why or why not?Answer: The major advantage of using NamePro or NameWave is the availability of a convenient, structured, controlled system for generating potential brand names. One major disadvantage is that neither system fully integrates an individual product's benefits or qualities or customer perceptions of the product. Students may identify other advantages and disadvantages. Students may suggest using either NamePro or NameWave as a preliminary first step in the process of developing a brand name, because the cost is relatively reasonable and the systems can generate numerous ideas for further study and evaluation. On the other hand, students may not want to use these options because they prefer to use a more customized, individualized process of choosing a brand name.Marketing for the MillenniumAs noted earlier, Pampers is an aggressive brand builder on and off the Internet. In addition to its traditional advertising schedule, Pampers maintains a value-added Web site () offering advice and answers to parents' questions about child development and—what else?—toilet training.Visit the Pampers site and browse the "What's New" section to see the kind of information parents can find here. Next, go to the "Pampers Diapers" section and click on the two links that lead to information about having Pampers delivered to your home and buying Pampers in your local area. After you enter your zip code, you will see banner ads for several retailers. Why would these retailers want links to the PampersWeb site? Why would Procter & Gamble highlight these links? How does this site contribute to brand building for all participating retailers as well as for Pampers?Answer: Retailers want to link to the Pampers site because they hope visitors to that site will buy the diapers at their stores. Procter & Gamble is building stronger relationships with channel members by highlighting retailer links on its Web site. Because the site contains an enormous amount of authoritative information, it should give consumers a positive image of Pampers and the retailers, contributing to brand building for all involved.YOU'RE THE MARKETER: SONIC MARKETING PLANDecisions about products and branding are critical to the success of any marketing plan. During the planning stages, marketers must consider a variety of issues related to product-mix, product-line length, brand equity, and brand strategies.At Sonic, you are helping Jane Melody manage product lines and branding for the company's shelf stereos. Look again at the company's current situation, the target market, and the product strategy data already in the marketing plan. Then answer these questions to plan Sonic's product programs (noting the need for additional research where necessary):∙What is the core benefit of your product? What elements of the potential product should you consider incorporating?∙Analyze your current product mix and your current product line. What specific changes do you recommend—and why?∙What are the attributes and benefits suggested by the Sonic brand?∙What specific line and brand extensions, new brands, or other brand strategies do you recommend for Sonic—and why?Consider how your answers to these questions will influence Sonic's marketing efforts. Then, as your instructor directs, summarize your recommendations in a written marketing plan or type them into the Marketing Strategy and Program sections of the Marketing Plan Pro software.Answer: The core benefit of Sonic's shelf stereo system is a space-saving way to enjoy music. Students may suggest variations on this core benefit; they may also have many ideas for the potential product, including a longer warranty period, a more decorative speaker design, and a smaller chassis. Sonic has a product line of shelf stereos that range in price from $150 to $400, somewhat below competing brands. It is planning to stretch the line by adding one lower-priced model and two higher-priced models. Its product mix is narrow and getting longer, with the addition of the three new models. Students should offer a variety of changes to the product strategy. The Sonic brand suggests attributes such as reasonable price and well-made products, with related benefits such as value for the money and product reliability.Students may offer various suggestions for line and brand extensions, new brands, and other brand strategies. Evaluate these suggestions in the context of how they fit with the target market's needs, the company's strengths, and the competitive situation (as discussed by students in their marketing plans).。

CHAPTER5--S CANNING THE M ARKETING E NVIRONMENT OVERVIEW:Change in the macroenvironment is the primary basis for market opportunity. The company must start its search for opportunities and possible threats with the firm's macroenvironment. The macroenvironment consists of all the actors and forces that affect the company's operations and performance. Companies need to understand the trends and megatrends characterizing the current macroenvironment. This is critical to identify and respond to unmet needs and trends in the marketplace.The macroenvironment consists of six major forces; demographic, economic, natural, technological, political/legal, and social/cultural. The demographic environment shows a worldwide explosive population growth, a changing age, ethnic and educational mix, new types of households, geographical shifts in population, and the splintering of a mass market into micro-markets. The economic environment shows an emphasis on global income distribution issues, low savings and high debt, and changing consumer-expenditure patterns. The natural environment shows potential shortages of certain raw materials, unstable cost of energy, increased pollution levels, and the changing role of governments in environmental protection.The technological environment exhibits accelerating technological change, unlimited opportunities for innovation, varying R&D budgets, and increased regulation of technological change. The political/legal environment shows substantial business regulation, and the growth of special interest groups. The social/cultural environment shows individuals are changing their views of themselves, others, and the world around them. Despite that there is a continuing trend toward self-fulfillment, immediate gratification, and secularism. Also of interest to marketers is the high persistence of core cultural values, the existence of subcultures, and rapidly changing secondary cultural values.LEARNING OBJECTIVES:After reading this chapter students should:∙Understand some of the major forces impacting a company's macroenvironment∙Know the major trends influencing marketing decisions in the macro environment CHAPTER OUTLINE:I.IntroductionII.Analyzing Needs and Trends in the Macroenvironment - successful companies recognize and respond profitably to unmet needs and trends in the macroenvironment.III.Identifying and Responding to the Major Macroenvironmental Forces -“noncontrollables” which require a responseA.Demographic Environment1.Worldwide population growth - although it brings with it inherent risk, italso presents opportunities2.Population age mix - a strong determinant of needs3.Ethnic markets - each population group has specific wants and buyinghabits.cational groups - from illiterates to those with professional degrees5.Household patterns - traditional household is no longer the dominantpattern6.Geographical shifts in population - migration to safer countries, anddifferent types of areas7.Shift from a mass market to micromarkets - fragmentation is causingcompanies to abandon the “shotgun” approachB.Economic Environment1.Income Distribution - nations vary greatly in their level and distributionof income. It is related to industrial structure, but is also affected by thepolitical system.2.Savings, debt, credit availability - affects consumer expendituresC.Natural Environment1.Shortage of raw materials, infinite, finite renewable, and finitenonrenewable2.Increased cost of energy - oil is a finite nonrenewable resource3.Increased levels of pollution - industrial activity will inevitably harm theenvironment4.Changing role of governments in environmental protection - varies bycountryD.Technological environment1. Accelerating pace of technological change1.Unlimited opportunities for innovation2.Varying R&D budgets - US leads the world in expenditures3.Increased regulation of technological change - complex products causesafety concerns to ariseE.Political/Legal Environment1.Legislation regulating business - has three main purposes: to protectcompanies from unfair competition, to protect consumers from unfairbusiness practices, and to protect the interests of society from unbridledbusiness behavior.2.Growth of special interest groups - number and power have increasedover the last three decades, putting more constraints on marketers.F.Social/Cultural Environment - the society in which people grow up shapes theirbeliefs, values, and norms. Of interest to marketers:1. A high persistence of core cultural values2.Existence of subcultures - emerging from special life experiences orcircumstances.3.Shifts of secondary cultural values through time - Swings from "core"values over time that impact marketing efforts.IV.SummaryMarketing and Advertising1. The ad in Figure 1, from Stockholm-based Ericsson, uses a baby to capture the attention of businesspeople who make buying decisions or influence the buying of telecommunications equipment and technologies. Which of John Naisbett's megatrends are represented in this ad? Support your answers. What does this ad imply about Ericsson's response to the technological environment?Answer: Megatrends represented in the ad include: the booming global economy (Ericsson is based on Sweden but selling in 130 other countries); global lifestyles (widespread use of wireless and Internet communication technologies around the world); and the triumph of the individual (consumer needs driving more, better, customizable wireless and Internet communication products). Ericsson appears to be responding proactively to the technological environment by searching for new innovations for product development.2. Most ads include a picture of the product being promoted, but not the Energizer ad shown here. What demographic segment does this ad appear to be targeting? How do you know? What attitudes are reflected in this ad? How would other segments be likely to respond to it? If you were Energizer, what magazines would you choose to run these ads? Explain your choices.Answer: This Energizer ad seems to be targeting Generation X consumers who buy and use digital cameras, judging by the informal and slightly irreverent copy in the ad. One attitude reflected in this ad is a strong tendency toward independence; another is the importance of family ties (students may offer additional responses). Older consumers may laugh at the ad or even be somewhat offended by its irreverence. Energizer should run these ads in magazines targeted toward Generation X consumers.Focus on TechnologyThe accelerating pace of technological change is leading to marketing opportunities based on new needs and lifestyles. Consider the trend toward increased telecommuting—people working at home instead of commuting to business offices some distance away. Every year, more employees and entrepreneurs opt to work from home, creating higher demand for personal computers, printers, fax machines, telephone services, Internet access, and related goods and services.Increased sales of home office equipment and communication services are not the only consequences of this technological change. Now that more people are working from home, their lifestyles are changing, creating both opportunities and threats. For example, people who no longer drive long distances to work may buy new cars less often and use less gasoline. On the other hand, their expenditures on household meals and casual clothing will increase. Identify two more marketing opportunities and threats that result from the trend toward more telecommuting. Telecommuters are not listed in any central directory, so how can companies locate and market to this growing segment?Answer: Students may have a variety of ideas for marketing opportunities and threats resulting from the trend toward increased telecommuting. Two sample opportunities are: selling more paper for pr inters and fax machines; and selling more personal financial products to help telecommuters track expenses for working at home. Two sample threats are: lower sales of office furniture; and lower demand for large office facilities. Marketers can market to this segment in many ways; two sample ideas: reach post banner ads on popular Web sites such as Yahoo! and other Internet sites that cater to telecommuters; and advertise in specialized magazines geared toward industries with high or growing numbers of telecommuters.Marketing for the MillenniumAt the start of the new millennium, environmental concerns are driving marketing in new directions. Consider trends in the dry cleaning industry. Thousands of green cleaners are opening their doors all over the United States. Manufacturers such as Procter & Gamble and Exxon are also jumping on the green bandwagon.What are the marketing implications of this trend? Get some ideas from the links on the Web site of the nonprofit Center for Neighborhood Technology (), which promotes economic and communitydevelopment through ecological improvement. Look under "sustainable manufacturing" to find the "wet cleaning" section. Going beyond cleaning fluids and equipment, identify two additional opportunities for new products related to green cleaning. If consumers are mainly motivated by convenience, should marketing for these new products stress environmental safety? How might increased competition from environmentally-sound products affect the marketing strategy for these new products? For traditional dry cleaning outlets?Answer: Students may offer various responses to these questions. Two sample marketing opportunities for new products related to green cleaning: marketing training programs and materials to teach entrepreneurs how to handle green cleaning equipment and supplies; and marketing recyclable bags, hangers, and other materials to green cleaners that want to be environmentally-friendly in more areas of their business. Environmental safety should be part of the message for these new goods and services, but the message should focus mainly on how the products help green cleaners serve their customers better, more quickly, and with less environmental waste. As more environmentally-sound products come on the market, existing products should have an easier time conveying and supporting their "green" messages because of increased consumer awareness and acceptance of similar products. Traditional dry cleaning outlets, on the other hand, may begin to lose customers or face more questions about environmental issues, which will necessitate changes in their marketing strategy.YOU'RE THE MARKETER: SONIC MARKETING PLANEvery firm has to examine its macroenvironment to understand the key developments that shape opportunities and pose threats. This environmental scanning uncovers emerging trends and changes that can potentially affect the needs of customers, the competition, and the firm's markets.Jane Melody asks you to scan Sonic's external environment for signs of change that indicate opportunities and threats for shelf stereo systems. Review Sonic's current situation and then, using library or Internet resources (or both), locate information to answer the following questions about Sonic's macroenvironment:∙What demographic changes are likely to affect Sonic's target market, buyers age 20-40? For example, check U.S. Census data () by clicking on "subjects A to Z," thenclicking "age," and accessing the state-level age projections.∙What technological changes can potentially affect product development and buyer acceptance of current product? Look at the Web site of UHF Magazine () for newsabout stereo technologies such as DVD; check industry sources for more technological trends.∙What economic trends might influence the product line's future? Check the Commerce Department's Stat-USA. site (/), especially key topics within theGeneral Economic Indicators section under the "State of the Nation" heading.∙What political-legal issues might affect Sonic and its competitors? Search the Thomas Web site () for any relevant federal legislation on import-export opportunities, usingkeyword searches such as "import + stereo" and "export + stereo." Also use search engines tofind any new regulations that affect competitors' import-export activities.Once you have completed your environmental scan, analyze the results and their implications for Sonic's marketing efforts. As your instructor directs, summarize your findings and conclusions in a written marketing plan or type them into the Marketing Situation section of the Marketing Plan Pro software. Answer: Students' answers will depend on the latest information available about the macroenvironment, including demographic changes, technological changes, economic trends, and political-legal issues. For example, they will find on the Census site that the overall population 18-24 has decreased since 1990 while the overall population 25-44 has increased. They will also be able to track these changes by gender, by region of the country, and by individual states. Demographic data such as this will help Sonic determine whether it should continue to focus on consumers aged 20-40, change the age or gender focus, and/or select particular states or region for more or less distribution and marketing emphasis. Technological trends are continually changing, so students need to analyze what they find out through UHF Magazine and other sources to determine whether Sonic has the right mix of products or needs to begin developing newproducts with new technology. Sonic must also understand how economic trends will affect consumers' ability to buy and interest in buying new shelf stereo systems. Finally political-legal changes researched on the Thomas site and other sites or sources will help Sonic determine (1) whether the environment will support profitable expansion into international markets, (2) whether overseas competitors are likely to have an easier or tougher time marketing in the United States, and (3) whether Sonic will have a more difficult time importing parts from other countries.。

Part I Understanding Marketing ManagementChapter 1 – Defining Marketing for the Twenty-First CenturyI. Chapter Overview/Objectives/OutlineA. OverviewMarketing is the organizational function charged with defining customer targets and the best way to satisfy needs and wants competitively and profitably. Since consumers and business buyers face an abundance of suppliers seeking to satisfy their every need, companies and nonprofit organizations cannot survive today by simply doing a good job. They must do an excellent job if they are to remain in the increasingly competitive global marketplace. Many studies have demonstrated that the key to profitable performance is to know and satisfy target customers with competitively superior offers. This process takes place today in an increasingly global, technical, and competitive environment.Marketing management is the conscious effort to achieve desired exchange outcomes with target markets. The marketer’s basic skill lies in influencing the level, timing, and composi tion of demand for a product, service, organization, place, person, idea, or some form of information.There are several alternative philosophies that can guide organizations in their efforts to carry out their marketing goal(s). The production concept holds that consumers will favor products that are affordable and available, and therefore management’s major task is to improve production and distribution efficiency and bring down prices. The product concept holds that consumers favor quality products that are reasonably priced, and therefore little promotional effort is required. The selling concept holds that consumers will not buy enough of the company’s products unless they are stimulated through a substantial selling and promotion effort.The marketing concept moves toward a more enlightened view of the role of marketing. The marketing concept holds that the main task of the company is to determine the needs, wants, and preferences of a target group of customers and to deliver the desired satisfactions. The four principles of the marketing concept are: target market, customer needs, integrated marketing, and profitability. The marketing concept places primary focus on the needs and wants of customers who comprise the target market for a particular product.Rather than coax customers into purchasing a product they may not find satisfying, the emphasis is on determining the types of markets to be satisfied, and creating the product that achieves this satisfaction objective. Choosing target markets and identifying customer needs is no small task; a marketer must dig beyond a customer’s stated needs. Once this is accomplished, a marketer can offer for sale the products that will lead to the highest satisfaction. This encourages customer retention and profit, which is best achieved when all areas/departments of a company become “customer-focused.”Beyond the marketing concept, the societal marketing concept holds that the main task of the company is to generate customer satisfaction and long-run consumer and societal well being as the key to satisfying organizational goals and responsibilities.Interest in marketing continues to intensify as more organizations in the business sector, the nonprofit sector, and the global sector recognize how marketing contributes to improved performance in the marketplace. The result is that marketers are reevaluating various marketing concepts and tools that focus on relationships, databases, communications and channels of distribution, as well as marketing outside and inside the organization.B. Learning Objectives∙Know why marketing is important to contemporary organizations.∙Understand the core concepts of marketing.∙Know the basic tasks performed by marketing organizations and managers.∙Understand the differences between the various orientations to the marketplace.∙Know the components of the marketing concept and why they are critical to successful marketing practice.∙Know why marketing is critical to different types of organizations and in different environments.C. Chapter OutlineIntroductionI.The New EconomyA.Focus on the digital revolution (Internet and related) and the impact onbusinesses and consumers in terms of capabilities.1.For Consumers - Multiple new capabilities related to increases in buyingpower, variety of goods and services available, information, interactivity,and product comparability.2.For Companies - Enhanced marketing reach, direct connectivity,information on all of the stakeholders and competitors, communications(internal and external), customized services and products, enhancedlogistics, and enhanced training.B.The Information Age Versus the Industrial Age1.Management has to recognize the potential quickly2.Marketing - “Meeting needs profitably”II.Marketing TasksA.Radical Marketing - Breaking the Existing Marketing Rules1.Firms are moving closer to the customer versus expensive research andmass marketing.2.Stages in marketing practice - entrepreneurial, formulated, andintrepreneurial.3.Focus on formulated marketing versus creative marketing.B.Scope of Marketing - Involves a Broadened View of Marketing1.Products - Anything offered for sale or exchange that satisfies aneed or want.2.Products can be goods, services, and ideas.3.Includes people, places, activities, organizations, and information.C.The Decisions That Marketers Make1.Focus on demand states and marketing tasks, along with the questionsthat marketers ask to remain aware and focused.2.Consumer markets and business markets each requires new tools andcapabilities to better understand and respond to the customer.3.Global Markets, Nonprofit markets, and governmental marketsbecoming more sophisticated in recognizing and dealing with marketingchallenges and decisions.III.Marketing Concepts and ToolsA.Defining Marketing1. A social and managerial process by which individuals and groups obtainwhat they need and want through creating, offering, and exchangingproducts of value with others.B.Core Marketing Concepts1.Target Markets and Segmentationa)Every product or service contains features that a marketer musttranslate into benefits for a target market.b)The consumer perceives these benefits to be available in aproduct and directly impacts the perceived ability to meet theconsumer need(s) or want(s).2.Marketplace, Marketspace, and Metamarketa)Marketplace - physicalb)Marketspace - digitalc)Metamarket - cluster of complementary goods and servicesacross diverse set of industries. Includes metamediaries.3.Marketers and Prospectsa) A marketer is someone actively seeking one or more prospectsfor an exchange of values.b) A prospect is willing and able to engage in the exchange.4.Needs, Wants, and Demandsa)To need is to be in a state of felt deprivation of some basicsatisfaction.b)Wants are desires for specific satisfiers of needs.c)Demands are wants for specific products backed by an abilityand willingness to buy them.5.Product or offeringa)Value proposition - Benefits companies offer to satisfycustomer needs.b)Brand - An offering from a known source. Brand image isthe associations that are connected to the brand.6.Value and Satisfactiona)Customer value triad - Combination of quality, service, and price(QSP).b)Value is the consumer’s estimate of the product’s overallcapacity to satisfy his or her needs.c)Marketers respond by changes in the triad.7.Exchange and Transactionsa)Five conditions must be satisfied.b)An exchange means obtaining a desired product by offeringsomething desirable in return.c) A transaction is the trade of values (involves several dimensions).8.Relationships and Networksa)Relationship marketing seeks long-term, “win-win” transactionsbetween marketers and key parties (suppliers, customers,distributors).b)The ultimate outcome of relationship marketing is a uniquecompany asset called a marketing network of mutually profitablebusiness relationships.9.Marketing Channelsa)Reaching the target market is critical.b)Achieved via two-way communication channels (media-newspapers through the Internet), and physical channels (productand service).c)The marketer also must decide on the distribution channel, tradechannels, and selling channels (to effect transactions).10.Supply chaina)Refers to the long channel process that reaches from the rawmaterials and components to the final product/buyers.b)Perceived as a value delivery system.petitiona)Includes actual and potential rival offerings and substitutes.b) A broad view of competition assists the marketer to recognizethe levels of competition based on substitutability: brand,industry, form, and generic.12.Marketing Environmenta)The task environment includes: immediate actors in theproduction, distribution, and promotional environmentsb)The broad environments include: demographic, economic,natural, technological, political-legal, and social-cultural.13.Marketing Programa)Marketing mix - The set of marketing tools the firm uses topursue marketing objectives in the target market.b)Involves recognition and use of the four Ps (product, price, place,and, promotion) and the four Cs (customer solution, customercost, convenience, and communication) in the short run and thelong run.pany Orientations Toward the MarketplaceA.The Production Concept - Assumes consumers will favor those products that arewidely available and low in cost.B.The Product Concept - Assumes consumers will favor those products that offerthe best combination of quality, performance, or innovative features.C.The Selling Concept - Assumes organizations must undertake aggressive sellingand promotion efforts to enact exchanges with otherwise passive consumers.D.The Marketing Concept - Assumesthe key to achieving organizational goals consists of being more effective than competitors in integrating marketing activities toward determining and satisfying the needs and wants of target markets.1.Target Market - No company can operate in every market and satisfyevery need.2.Customer Needs - It is not enough to just find the market.a)Marketers must also understand their customer’s needs andwants. Not a simple task.b)Key marketer actions: Responsive marketing, anticipativemarketing, and creative marketingE.Integrated Marketing - When all a firm’s departments must work together toserve customer interests(a company-wide activity).1.Involves external and internal marketing.2.Profitability - The ultimate purpose of marketing is to help organizationsachieve their objectives.3.Hurdles to Adopting a Marketing Orientationa)Organized Resistance - Some departments see marketing as athreat to their power in the organizationb)Slow Learning - Despite efforts by management, learning comesslowly.c)Fast Forgetting - There is a strong tendency to forget marketingprinciples.4.The Customer Concept - Moving beyond the marketing concept—especially for firms with considerable customer informationF.The Societal Marketing Concept1.The organization’s task is to determine the needs, wants, andinterests of target markets.2.Also to deliver the desired satisfactions more effectively andefficiently than competitors.3.And in a way that preserves or enhances the consumer’s and thesociety’s well-being.a)Cause-related marketing - Firms with an image act to enhancetheir reputation, etc., via causes.V.How Business and Marketing are ChangingA.Major new forces changing the way marketing process1.Customers expect more and better2.Rising brand competition3.Store-based retailers sufferingB.Trends of Company Responses and Adjustments1.Reengineering key processes versus functional depts.2.Outsourcing everything3.e-commerce trend4.Benchmarking based on world-class performers5.Alliances, supplier-partnerships, market-centered, global/local anddecentralized.C.Marketer Responses and Adjustments1.Focus on relationship marketing (versus transactional marketing)2.Creation of customer lifetime value orientation3.Focus on customer share marketing versus only market share4.Target marketing (versus mass marketing)5.Individualization of marketing messages and offerings6.Customer databases for data-mining7.Integrated marketing communications for consistent images8.Consideration of channel members as partners9.Recognition of every employee as a marketer10.Model and fact-based decision making versus intuition aloneVI.SummaryII. LecturesA. “Marketing Enters the 21st Century”The focus in this discussion is on the increasingly important role of the marketing processin the ever-changing domestic and global business environment.Teaching Objectives∙To explain the concepts related to understanding the role and potential of marketing in the larger business environment.∙To provide students a new and possibly different perspective on the role of marketing in business and society.∙To indicate areas where the marketing process and concept will be useful to the student in assessing business developments.DiscussionI NTRODUCTIONMany observers argue that all new or important directions in management thought and practice are marketing oriented. Marketing is no longer something done when a company has extra revenue to invest. It must be implemented for a business to survive.The marketing concept has changed dramatically over the last several decades, and recently the focus increasingly has moved to customers (versus products and selling), marketing globally, and the various technology issues that impact the market. In addition, there is renewed emphasis in marketing on creating and innovating with new and better products and services rather than just competing against other firms and following the marketing patterns established by competitors.The marketing concept is a matter of increased marketing activity, but it also implies better marketing programs and implementation efforts. In addition, the internal market in every company (marketing your company and products to and with the employees of the company) has become as challenging as the external marketplace due to diversity and many other social/cultural issues.C HANGES IN C ONSUMER B EHAVIORThere have been many major marketing shifts during the last few decades that have shaped marketing in the 21st century. There is a view among professional marketers that there is no longer the substantial product loyalty that existed over the last few decades. Product and brand loyalty, many argue, has been replaced by something more akin to a consumer decision that is based on the absence of a better product or service. In addition, there are major changes in the way customers look at market offerings. During the 1980s customers were optimistic, and in the early 1990s they were pessimistic. Later in the 1990s, consumers appeared rather optimistic, but still cautious at times. The following chart demonstrates some of the major shifts that have occurred to the present:1980s 1990s PresentConspicuous consumer Frugal consumer, becomingmore well-off Suspicious but generally well-off consumerImage driven Value and quality driven Highly eclecticTrusting Skeptical and cynical A “prove it” attitudeBrand loyal Does not exhibit loyalty Believes that there is alwayssomething betterEmotional buyer Informed buyer Highly informed and specialized Dreamers Escapists Focused on personal needs Overindulgent Health, wellness-conscious Health, wellness and someoverindulgence, withoutexpectation of costs orconsequencesOverworked Burnt-out, stressed out andplacing tremendous value onconvenience and time Reliant on technology and telecommunications to save time in making purchase decisionsIndustrious Baby Boomer Responsible Baby Boomer Unconvinced Generation Xer Increasingly it is clear that while the 4 Ps (product, price, promotion, and place) have value for the consumer, the marketing strategies of the 21st century will use the four “4 Cs” as added critical marketing variables:1.Care: It has replaced service in importance. Marketers must really care about theway they treat customers, meaning that customers are really everything.2.Choice: Marketers need to reassess the diversity and breadth of their offeringsinto a manageable good-better-best selection.munity: Even national marketers must be affiliated, attached toneighborhoods wherever they operate stores.4.Challenge: The task of dealing with the ongoing reality of demographic change.E ND OF THE M ASS M ARKETDuring the late 1990s, we witnessed the death of the concept of mass market. Regardless, some marketers continue to argue that database marketing will never replace mass marketing for most products. The view is that communicating with users by e-mail, Web site, mail, telephone, or fax will never become cost-efficient enough to justify the return. However, the success of the Internet provides considerable evidence that one-to-one marketing is and will be appropriate for many packaged goods and other high- and low-involvement products that in the past sold almost exclusively with brand advertising.Through the 1970s, only high-end retailers and personal-service firms could afford to practice one-to-one marketing. For the most part, they did it the old-fashioned way with personal selling and index-card files. In the 1980s, as the mainframe computer became more practical, airlines got into the act with a proliferation of frequent flyer programs. Frequency marketing programs such as these relied on monthly statement mailings and large, batch-processed databases of customer records.During the 1990s, bookstore chains, supermarkets, warehouse clubs, and even restaurants began to track individual purchase transactions to build their “share of the customer.”Many of these programs now run on PC platforms or workstation environments much more powerful than the most capable mainframes of the 1970s. It is possible today to track 5 or 6 million customers for the same real cost as tracking a single customer in 1950. With Internet-based databases and remote access, this capability literally has exploded in the last few years. The situation will become even more interesting as one-to-one marketing becomes even increasingly pervasive. With an increasingly powerful array of much more efficient, individually interactive vehicles, the options are virtually unlimited, including on-site interactivity, Web site connections, fax-response, e-mail, and interactive television.Most households today either have direct Internet access, or with TV sets that also provide real-time interactivity through the Internet. We are closing rapidly on the time where individuals will interact with their television and/or computer simply by speaking to it. Via various Web sites, computers work for us to enable us to remember transactions and preferences and find just the right entertainment, information, products, and services. Likewise, online capabilities enable providers to anticipate what a consumer might want today or in the future. Unfortunately, the system has been slower to protect consumers from commercial intrusions that they may not find relevant or interesting.The increasing level of market definition and refinement (and resulting opportunities for marketers) is possible through the massive social, economic, and technological changes of the past three decades. There is no longer a U.S. mass market because lifestyles have changed so dramatically. Some of the important demographic shifts have been:∙Increasing diversity of the population. The United States has always been an immigrant nation. However, large numbers of immigrants from Latin Americaand Asia have increased the proportion of minorities in the country to one inthree, up from one in five in 1980. This diversity is even more noticeable in theyounger market.∙Changing family and living patterns. There has been a substantial rise in the divorce rate, cohabitation, non-marital births, and increased female participationin the labor force. In addition, married couples with one earner make up only 15percent of all households. Dual-earner households have become much morecommon—the additional income is often necessary for the family to pay theirbills. Thus, the stereotypical family of the 1950s has been replaced by two olderand harried, working parents with much less time available.∙Emergence of a new children’s market. Minorities are over-represented in the younger age brackets due to the higher fertility and the younger populationstructure of many recent immigrants. The result is that one in three children inthe United States is black, Hispanic, or Asian. In addition, nearly all of today’schildren grow up in a world of divorce and working mothers. Many are doingthe family shopping and have tremendous influence over household purchases.In addition, they may simply know more than their elders about productsinvolving new technology such as computers.∙Income and education increases are two other important demographic factors impacting the marketing management arena. Generally, incomeincreases with age, as people are promoted and reach their peak earning years, and the level of education generally has increased over the last fewdecades. Family units today often have higher incomes because they may havetwo earners. Accordingly, there is an increased need for products and servicesbecause they likely have children and are homeowners.In sum, the need for market analysis and marketing decision-making, and managers to perform those tasks has never been greater. But, as the course will demonstrate, the complexities of, and analytical tools required for, these activities have never been greater. Be prepared for a challenging experience.B. “The Changing Image of Marketing”Focus: the changing perceptions of marketing in the contemporary business environment.Teaching Objectives∙To explain the concepts related to understanding the role and potential of marketing in the larger business environment.∙To provide students a new and possibly different perspective on the role of marketing in business and society.∙To indicate areas where the marketing process and concept will be useful to the student in assessing business developments.DiscussionI NTRODUCTIONWhat image comes to mind when you hear the word “marketing”? So me people think of advertisements or brochures, while others think of public relations (for instance, arranging for clients to appear on TV talk shows). The truth is, all of these—and many more things—make up the field of marketing. The Knowledge Exchange Business Encyclopedia defines marketing as “planning and executing the strategy involved in moving a good or service from producer to consumer.”With this definition in mind, it’s apparent that marketing and many other business activities are related in some ways. In simplified terms, marketers and others help move goods and services through the creation and production process; at that point, marketers help move the goods and services to consumers. But the connection goes even further: Marketing can have a significant impact on all areas of the business and vice versa.M ARKETING B ASICSIn introductory marketing you learned some basics—first the four P’s, and then the six P’s: ∙Product—What are you selling? (It might be a product or a service.)∙Price—What is your pricing strategy?∙Place or distribution—How are you distributing your product to get it into the marketplace?∙Promotion—How are you telling consumers in your target group about your product?∙Positioning—What place do you want your product to hold in theconsumer’s mind?∙Personal relationships—How are you building relationships with your target consumers?The sum of the above is called the marketing mix. It is important to have as varied a mix as possible in marketing efforts, since each piece plays a vital role and boosts the overall impact. Let’s take a closer look at the basic P’s of marketing and particularly at how they might affect what you do in business.▪ProductMarketers identify a consumer need and then provide the product or service to fill that need. The marketer’s job is to pinpoint and understand existing needs, expand upon them, and identify new ones. For example, because there are more singles and small families these days than in years past, marketers might see a need for products to be sold in smaller quantities and offered in smaller packages.How can this impact other professionals in the business/marketing process? Let’s say your company has developed a new product that generates enormous consumer demand. Your marketing department may ask you to find a way to speed up the workflow in order to crank out more products faster. A year after the product is introduced, however, the market might be flooded with cheap imitations. Since one marketing strategy is to keep products price-competitive, a marketer may then ask you to find a way to make the product less expensively. This relationship works both ways. There may be production and industrial engineers who may see a way to change the work process that would create additional options for consumers. Those engineers will also be instrumental in design and development of products for which human factors and ergonomics are important considerations. Maybe there’s room to add another product line. For instance, that product X is still blue but new product Y is red. You can suggest this to your marketing department; it, in turn, would do research to gauge potential consumer demand for the new line.▪PriceIdeally, a marketer wants to be proactive in setting price rather than simply react to the marketplace. To that end, the marketer researches the market and competition and plots possible price points, looking for gaps that indicate opportunities. When introducing a new product, the marketer needs to be sure that the price is competitive with that of similar products or, if the price is higher, that the consumers perceive they’re getting more value for their money.Various other technical professionals can have an important impact on marketers’ pricing decisions. Again, you may be asked to determine if productivity can be enhanced so that the product can be manufactured and then sold—for a lower price.▪Place or distributionWhat good is a product if you can’t get it to people who want to purchase it? When marketers tackle this issue, they try to figure out what the optimum distribution channels would be. Forexample, should the company sell the product to distributors who then wholesale it to retailers or should the company have its own direct sales force?Marketers also look at where the product is placed geographically. Is it sold regionally, nationally, and internationally? Will the product be sold only in high-end stores or strictly to discounters? The answers to all of these questions also help shape how a product can be distributed in the best way.Such distribution questions are potentially of great significance to many professionals, including industrial and other types of engineers in a company. For instance, whether a product will be marketed regionally or internationally can have enormous implications for package design as well as obvious areas of the supply chain: logistics, transportation, distribution, and warehousing.▪PromotionPromotion encompasses the various ways marketers get the word out about a product—most notably through sales promotions, advertising, and public relations.Sales promotions are special offers designed to entice people to purchase a product. These can include coupons, rebate offers, two-for-one deals, free samples, and contests.Advertising encompasses paid messages that are intended to get people to notice a product. This can include magazine ads, billboards, TV and radio commercials, Web site ads, and so forth. Perhaps the most important factor in advertising success is repetition. We’re all bombarded with an enormous number of media messages every day, so the first few times a prospective customer sees an ad, it usually barely makes a dent. Seeing the ad over and over is what burns the message into people’s minds. That’s why it’s good to run ads as frequently as possible.Public relations refers to any non-paid communication designed to plant a positive image of a company or product in consumers’ minds. One way to accomplish this is by getting the company or product name in the news. This is know n as media relations, and it’s an important aspect of public relations.As with price, changes in demand created by promotions can have a direct impact on the work of many other professionals.▪PositioningBy employing market research techniques and competitive analysis, the marketer identifies how the product should be positioned in the consumer’s mind. As a luxury, high-end item? A bargain item that clearly provides value? A fun product? Is there a strong brand name that supports how the image is fixed in the consumer’s mind? Once the marketer answers these kinds of questions, he or she develops, through a host of vehicles, the right image to establish the desired position.This, too, can affect the work you do. If an upscale image is wanted, the materials used in the product and packaging are likely to be different from those used in a bargain product—a fact that could make the workflow significantly more complex. On the other hand, with your engineering knowledge, you may be able to suggest alternative materials that would preserve the desired image but be easier or less expensive to use.。

C HAPTER 6--A NALYZING C ONSUMER M ARKETS AND B UYING B EHAVIOR OVERVIEW:In addition to a company’s marketing mix and factors present in the external environment, a buyer is also influenced by personal characteristics and the process by which he/she makes decisions. A buyer’s cultural characteristics, including values, perceptions, preferences, and behavior learned through family or other key institutions, is the most fundamental determinant of a person’s wants and behavior. Consumer markets and consumer buying behavior have to be understood before sound marketing plans can be developed.The consumer market buys goods and services for personal consumption. It is the ultimate market in the organization of economic activities. In analyzing a consumer market, one needs to know the occupants, the objects, and the buyers' objectives, organization, operations, occasions and outlets.The buyer's behavior is influenced by four major factors: cultural (culture, subculture, and social class), social (reference groups, family, and roles and statuses), personal (age and life cycle state, occupation, economic circumstances, lifestyle, and personality and self-concept), and psychological (motivation, perception, learning, and beliefs and attitudes). All of these provide clues as to how to reach and serve buyers more effectively.Before planning its marketing, a company needs to identify its target consumers and their decision processes. Although many buying decisions involve only one decision maker, some decisions may involve several participants, who play such roles as initiator, influencer, decider, buyer, and user. The marketer's job is to identify the other buying participants, their buying criteria, and their influence on the buyer. The marketing program should be designed to appeal to and reach the other key participants as well as the buyer.The amount of buying deliberateness and the number of buying participants increase with the complexity of the buying situation. Marketers must plan differently for four types of consumer buying behavior: complex buying behavior, dissonance-reducing buying behavior, habitual buying behavior, and variety-seeking buying behavior. These four types are based on whether the consumer has high or low involvement in the purchase and whether there are many or few significant differences among the brands.In complex buying behavior, the buyer goes through a decision process consisting of need recognition, information search, evaluation of alternatives, purchase decision, and postpurchase behavior. The marketer's job is to understand the buyer's behavior at each state and what influences are operating. This understanding allows the marketer to develop an effective and efficient program for the target market.LEARNING OBJECTIVES:After reading this chapter students should:∙Understand the major factors influencing consumer behavior∙Know and Recognize the types of buying decision behavior∙Understand the stages in the buying decision processCHAPTER OUTLINE:I.IntroductionII. A Model of Consumer BehaviorIII.Major Factors Influencing Buyer BehaviorA.Cultural Factors1.Culture - values, perceptions, and preferences that are the mostfundamental determinant of a person’s wants and behavior.2.Subcultures - nationalities, religions, racial groups, geographical regions3.Social Class - hierarchically ordered divisions in a society; membersshare similar values, interests and behavior. (see Table 6-1)B.Social Factors1.Reference groups - all groups that have an influence on attitudes orbehavior.2.Family - the most influential primary reference group.3.Roles and statuses - activities a person is expected to perform and thestatus associated with each.C.Personal Factors1.Age and life cycle stage - people buy different goods over their lifetime.2.Occupation and Economic circumstances -a)blue collar v. white collarb)spending income, savings and assets, debts, borrowing power,and attitude toward spending versus saving --- all impactsproduct choice.3.Lifestyle - pattern of living as expressed by activities, interests, opinions4.Personality and self-concept. - each person has distinguishingpsychological characteristics that influence buying behavior.5.Psychological Factorsa)Motivation - correlated to the strength of a need (Freud, Maslow,Herzberg)b)Perception - selective attention, selective distortion, selectiveretentionc)Learning - changes in behavior arising from experience.d)Beliefs and attitudes - a belief is a descriptive thought a personholds about something; an attitude is a person’s e nduringfavorable or unfavorable evaluations, emotional feelings, andaction tendencies toward some object or idea.IV.The Buying Decision ProcessA.Buying Roles - five different roles: initiator, influencer, decider, buyer and userB.Buying Behaviorplex buying behavior - high involvement, significant differenceamong brands2.Dissonance-reducing buying behavior - high involvement, little or noperceived difference among brands. Purchase is fairly quick.3.Habitual buying behavior - low involvement, little or no brand difference4.Variety-seeking buying behavior - low involvement but perceivedsignificant brand differences. May occur to relieve boredom.C.The Stages in the Buying Decision Process1.Problem recognition - difference between actual state and desired statermation search - both internal and external sources3.Evaluation of alternatives - different process for every consumer,involves weighing product attributes and their ability to deliver benefits4.Purchase decision - form a preference and intention to buy. Actualpurchase can be influenced further by attitudes of others andunanticipated situational factors.5.Postpurchase behavior - satisfaction or dissatisfaction will lead tosubsequent behavior that can have both positive and negative effects. V.SummaryMarketing and Advertising1. Business travelers have specific needs to be addressed through buying behavior, as this Sheraton Four Points Hotels ad indicates. What personal and psychological factors in the buying process have been incorporated into this ad? In terms of the buying decision for hotel accommodations during a business trip, which role or roles are being addressed by this ad? Which stage of the consumer buying process is this ad most likely geared toward? Why?Answer: Among the personal factors incorporated into the Sheraton Four Points Hotels ad are: buyer's occupation, lifestyle, personality, and self-concept. Among the psychological factors incorporated into the ad are: motivation, perception, learning, and beliefs and attitudes. The consumer's role in the working world as someone who must travel on business is being addressed by this ad. In addition, the ad seems to be addressing consumers who have higher status roles in the work world, compared to those who have lower status roles. This ad is mostly likely geared toward the information search stage in the consumer buying process, because it offers information to help the buyer learn about this Sheraton Hotels brand, its features, and its benefits.Focus on TechnologyCookies—tiny bits of data about on-line activities that are stored on a user's computer—are controversial. On-line marketers like cookies because they reveal what consumers are buying, which sites they are visiting, and other personal details. Based on cookie data, CDnow and are two of a growing number of marketers that can create personalized Web pages geared to individual consumers' preferences and purchasing patterns.Many companies post their Internet privacy policies so consumers can see how cookie data are collected and used. Still, privacy advocates worry about allowing marketers access to personal information. Consumers who use Internet browsers by Netscape and Microsoft can block cookies, but the default setting for these programs allows cookies. As a result, consumers may not even know that cookies are being stored on their computers. If you headed the marketing department at on-line bookseller , what would you say in your privacy policy? How would you expect this policy to influence consumer attitudes and behavior?Answer: Students will offer a variety of responses. They might include the following types of messages in a privacy policy for : reassurance that the company will not release personal information without the consumer's knowledge and approval; and a guarantee that personal information will be strictly safeguarded against unauthorized access. These messages would encourage consumers to have a positive attitude toward giving personal information rather than worrying about misuse of the information; they would also encourage consumers to feel good about buying from the company. Marketing for the MillenniumPsychographic research has gone digital. Marketers getting ready for the new millennium can use psychographic research tools such as SRI Consulting's iVALS and Forrester Research's Technographics to segment consumers based on technology types. The iVALS approach, for example, groups consumers into10 segments: Wizards, Pioneers, Upstreamers, Socialites, Workers, Surfers, Mainstreamers, Sociables, Seekers, and Immigrants.To see how iVALS operates, visit SRI Consulting's Web site and take the latest survey, which includes questions about new media (/vals/surveynew.html). Also examine the section on iVALS types (/vals/ivals.segs.html). Why would marketers want to use this type of psychographic segmentation? Which marketers (or products) would benefit most from the application of iVALS segmentation? Why?Answer: Marketers would want to use iVALS to better understand how segments of consumers and businesspeople feel about and use technology. In turn, this understanding can help marketers develop strategies for targeting the right segment for the right kind of technological product use. It can also help marketers understand the reasons why these people behave as they do, which allows marketers to craft appropriate messages and choose suitable media for reaching targeted segments at the right time with the right product. Segmentation using iVALS would most benefit marketers of electronics products, telecommunications for home and office, and other products that incorporate technology in some way. Students may offer additional ideas.YOU'RE THE MARKETER: SONIC MARKETING PLANEvery marketer has to study consumer markets and behavior prior to developing its marketing plan. This enables marketers to understand who constitutes the market, what and why the market buys, who participates in the buying, and how, when, and where the market buys.You are responsible for researching and analyzing the market for Sonic's shelf stereos. Look again at the company's current situation, then answer these questions about the market and buyer behavior (noting the need for additional research where necessary):∙What cultural, social, personal, and psychological factors have the most influence on buyers of shelf stereos? What research tools would help you better understand the effect on buyerattitudes and behavior?∙Which specific factors should Sonic's marketing plan focus on?∙What buying roles and buying behaviors relate to shelf stereo products?∙What kind of marketing activities should Sonic plan to coincide with each stage of the consumer buying process?After you have analyzed your markets and consumer behavior, consider the implications for Sonic's marketing efforts. As your instructor directs, summarize your findings and conclusions in a written marketing plan or type them into the Marketing Situation, SWOT/Issue Analysis, and TargetMarkets/Positioning sections of the Marketing Plan Pro software.Answer: Students are likely to come up with a variety of responses to these questions, depending on the rest of their marketing plan ideas and the strategies they want Sonic to pursue. As a sample, students may say that the target market's values of material comfort, practicality, and similar cultural values all influence buyers of shelf stereos. Social factors that may influence these buyers are the viewpoint of opinion leaders, the interaction and roles of family members in buying shelf stereos. Personal factors having the most influence might include age and life-cycle stage, economic circumstances, and lifestyle. Psychological factors having the most influence on such purchases might include perception and beliefs and attitudes. among the buying roles, Sonic might choose to use its advertising to target the initiator and the decider (students may suggest and support the choice of other roles). Sonic also needs more research to determine whether its products are considered high or low involvement and what type of buying behavior is associated with purchases of shelf stereos.Finally, Sonic should plan activities for every stage of the consumer buying process. Sonic's goal in the first stage is to help consumers recognize a need for a new shelf stereo, using advertising and other activities (students will offer many ideas). In the second stage, Sonic needs to be sure it provides as muchinformation in as much depth as consumers require, not just from commercial sources but from public sources and experiential sources. Personal sources will work in Sonic's favor if friends and others are satisfied with Sonic's products. In the third stage, Sonic must be sure its brand-building activities contribute to the consumer's evaluation of the product as having the right benefits and attributes to satisfy their needs. In the fourth stage, Sonic should plan marketing activities that ensure a positive buying situation as well as lower perceived risk. In the fifth and final stage, Sonic's marketing activities should reassure consumers that they have made the right decision and continue to provide satisfaction when customers need service or have other contact with the company.。

C HAPTER 8--D EALING WITH THE C OMPETITION OVERVIEW:In the marketplace there are many companies that develop effective products, channels, pricingand advertising. However, many of these companies lose in the marketplace. There may bemany reasons, but a critical variable may be an inability to understand the competitiveenvironment and to gather and utilize data on that environment.To prepare an effective marketing strategy, a company must consider its competitors as well as itsactual and potential customers. This is especially necessary in slow growth markets because salescan only be gained by wining them away from competitors.A company's closest competitors are those seeking to satisfy the same customers and needs andmaking similar product / service offers. A company should also pay attention to its latentcompetitors who may offer new and/or different ways to satisfy the same needs. The companyshould identify its competitors by using both an industry and market-based analysis.A company should gather information on competitor strategies, objectives, strengths, weaknesses,and reaction patterns. The company should study and understand competitor strategies in order to identify its closest competitors and take the proper steps. The company should know thecompetitor's objectives in order to anticipate further moves and reactions. Knowledge of thecompetitor's strengths and weaknesses permits the company to refine its own strategy to takeadvantage of competitor weaknesses while avoiding engagements where the competitor is strong.Understanding typical competitor reaction patterns helps the company choose and time its moves. Competitive intelligence should be collected, interpreted and disseminated continuously. Company marketing executives should be able to obtain full and reliable information about any competitor that could have bearing on a decision. As important as a competitive orientation is in today's markets, companies should not overdo their focus on competitors. Changing consumer needs and latent competitors are more likely to hurt a firm than the existing competitors. Companies that maintain a good balance of consumer and competitor considerations are practicing effective market orientation.LEARNING OBJECTIVES:After reading this chapter students should:∙Know the difference between the industry and market concepts of competition∙Understand how to identify competitor strategies∙Understand how to determine competitor objectives∙Understand how to estimate competitor reaction patterns∙Know how to design competitive intelligence systems∙Know how to select competitors to attack or avoid∙Understand what it means to balance a customer and competitor orientation CHAPTER OUTLINE:I.Introduction: Porter’s Five F orces; the first three forces focus on competitors; theInternet is rapidly altering many of the existing patterns of competition, especially for the existing middleman and distribution channels.II.Identifying Competitors - four levels: brand, industry, form, and genericA.Industry Concept of Competition1.Number of Sellers and Degree of Differentiation (monopoly, oligopoly,monopolistic competition and pure competition)2.Entry and Mobility Barriers - ease of entry into market and varioussegments3.Exit and Shrinkage Barriers - ease of exit and reduction in size4.Cost Structure5.Degree of Vertical Integration6.Degree of GlobalizationB.Market Concept of Competition - in addition to companies making the sameproduct, look at companies that satisfy the same customer need.III.Analyzing CompetitorsA.Identifying Competitor StrategiesB.Determining Competitor ObjectivesC.Assessing Competitor Strengths and Weaknesses - share of market, share of mind,share of heart. Companies that make steady gains in mind share and heart sharewill inevitably make gains in market share and profitability.D.Estimating Competitor Reaction Patterns - four categories: laid-back (does notreact), selective (reacts only to certain types of attacks), tiger (reacts to anyassault), and stochastic (no predictable reaction)IV.Designing the Competitive Intelligence System -- with considerable emphasis on the Internet and competitor Web sites.A.Four Main Steps1.Setting up the system2.Collecting the data3.Evaluating and analyzing the data4.Disseminating information and respondingB.Selecting Competitors to Attack and Avoid - major steps in customer valueanalysis are:1.identify the major attributes that customers value; assess the quantitativeimportance of the different attributes; assess company and competitorperformance on the different customer values against their ratedimportance; examine how customers in a specific segment rate thecompany’s performance against a specific major competitor on anattribute-by-attribute basis; and monitor customer values over time.2.Classes of Competitors -- following customer value analysis: strong vs.weak, close versus distant, "good" versus "bad.3.Customer value analysis helps a marketer perceive company / productvalue to a customer relative to competitor product value(s).V.Designing Competitive StrategiesA.Market-Leader Strategies1.Expanding the total market, with new users, new uses and more usage2.Defending Market Share, with position, flank, preemptive,counteroffensive, mobile and contraction defensive strategies3.Expanding Market Share (note Procter & Gamble and Caterpillar casestudies) -- line-extension, brand-extension, multibrand, etc., strategies.B.Market-Challenger Strategies by defining the strategic objective and theopponents, choosing a general attack strategy, and choosing a specific attackstrategy.C.Market-Follower StrategiesD.Market-Nicher StrategiesVI.Balancing Customer and Competitor Orientations - marketers should not become so competitor-centered that they focus on customers already lost.VII.SummaryMARKETING A ND ADVERTISING1. The U.S. Postal Service uses advertising to show businesses the benefits of reaching customers through direct mail. Figure 2 is a USPS ad offering a free kit to help marketers learn how to add direct mail to their media mix. Is the industry structure for first class mail a pure monopoly, an oligopoly, monopolistic competition, or pure competition? Support your answer. What is the competitive structure for the overnight delivery industry in which Express Mail competes? What are the implications for the way the USPS markets first-class mail to the business market? For the marketing of Express Mail to the business market?Answer: First class mail is a pure monopoly, because only the U.S. Postal Service is legally allowed to provide this service in the United States. On the other hand, the competitive structure for overnight delivery is an oligopoly, with a relatively s mall number of large organizations such as FedEx, UPS, and the U.S.P.S. offering a range of products. As a result of its monopoly position, the U.S.P.S. does not have to compete on the basis of price or service when it markets first class mail to businesses. Still, the U.S.P.S. wants businesses to use its mail services rather than other media such as magazines, which is the reason for ads such as this. When marketing Express Mail to businesses, the U.S.P.S. faces a great deal of competition, so it has to compete on the basis of price, service, and other marketing mix elements.FOCUS ON TECHNOLOGYLevi Strauss is using mass-customization manufacturing technology to bring customer-size specializationto a new level in an innovative market-nicher strategy for its jeans. The program, titled Levi's Original Spin, allows customers to order jeans specially manufactured to their personal specifications. Levi's salespeople take just three body measurements, and customers get to pick the color, fabric, leg opening, fly type, and model cut. These specifications are electronically transmitted to the Levi's facto ry, where the automated equipment manufactures custom-fit jeans in two to three weeks.Visit the Original Spin pages on Levi's Web site (/originalspin/) to read about this program. How does this program help Levi's compete more effectively against Wrangler and Lee, two traditional competitors in the jeans market? Is Levi's aiming for high margin or high volume with this niche strategy? How do you know?Answer: Original Spin allows Levi's to compete more effectively against Wrangler and Lee with the powerful competitive tool of custom sizing for perfect fit. Whereas Wrangler and Lee offer jeans in standard sizes, Levi's goes further, inviting customers to have jeans made to exact body measurements—intheir choice of cut and fabric. Customers who try Original Spin and like it are far more likely to remain loyal to Levi's; in contrast, customers who buy standard sizes are likely to be less loyal to Wrangler and Lee. Levi's is aiming for high margin, because it charges higher prices for custom-made jeans and can therefore generate a higher profit than from its ready-to-wear lines. Because of the higher price and two-week minimum delay in receiving the custom-made jeans, Original Spin would have difficulty achieving the same sales volume as Levi's ready-to-wear jeans, which indicates that Levi's is not seeking high volume with this niche strategy.MARKETING FOR THE MILLENNIUMDisintermediation via the Internet is changing the competitive playing field in many industries, from tangible goods such as cars (exemplified by Auto By Tel) to intangible services such as insurance (exemplified by LifeQuote). Taking a closer look at disintermediation in the travel industry, consider the competition that a local travel agency faces from airline Web sites such as American Airlines and travel Web sites such as Microsoft's Expedia.Visit the A merican Airlines Web site () to see what is offered, including special fares, flight schedules and pricing, frequent flyer programs, information about airport acces s, and so on. Next, visit the Expedia Web site () to sample its offerings, including booking air travel, rental cars, and hotel rooms, finding information about travel destinations, maps, and more. How are these sites similar, and how are they different? What do these sites offer that traditional travel agencies do not? What do traditional travel agencies offer that these sites do not? What are the implications for the traditional agencies who compete with these online sites?Answer: In general, the A merican Airlines and Expedia Web sites are similar in that both offer information and reservations for air travel. Both also encourage online reservations and purchases and request that visitors register as members. They differ in that A merican Airlines focuses primarily on air travel, emphasizing its own flights, programs, and services, while Expedia covers a wide range of travel services and destinations. Students may go into detail about additional differences and similarities. Unlike traditional travel agencies, the AA site provides easy access to personalized frequent flyer summaries and benefits, Web-only special fares and packages, and similar "exclusives." The Expedia site offers a wealth of detail that travel agents do not, including information and maps for many travel destinations as well as the opportunity to participate in travel chat rooms/message boards.For their part, travel agencies offer the human touch, a personal quality no Web site can really match. When discussing business or leisure travel, traditional agents can detect their customers' underlying interests and concerns, then gear their advice and suggestions accordingly. They can also hand-deliver tickets and itineraries and offer other personalized services that Web sites cannot. Recognizing the strengths and weaknesses of Web-based travel sites, traditional travel agents can launch Web sites and use e-mail to keep customers updated on special fares and offers. At the same time, they should continue to emphasize the one-on-one experience of dealing with a personal travel agent, which will help build relationships with customers. Students may offer additional ideas.YOU'RE THE MARKETER: SONIC MARKETING PLANCompetitive strategy comes into play in two areas of the marketing plan. First, in assessing the current marketing situation, companies have to examine their competitors' strengths and weaknesses and competitors' reaction patterns. Second, they have to use competitive intelligence to shape their overall competitive strategy, which is supported by the marketing mix.As Jane Melody's assistant, you are analyzing Sonic's competitive situation and preparing its competitive strategy for shelf stereo systems. Assuming that Sonic is not the market leader, answer the following questions about competitive strategy (noting the need for competitive intelligence where necessary): What is the strategic group for Sonic?∙Which firm is the market leader, and what are its objectives, strengths, and weaknesses?(What additional competitive intelligence is needed?)∙As a market challenger, what competitive strategy would be most effective for Sonic?∙Given this competitive strategy, how would you define Sonic's strategic objective and attack strategy?Think carefully about how Sonic's competitive strategy will affect its marketing mix. Then summarize your findings and conclusions in a written marketing plan or type them into the Marketing Situation and Marketing Strategy sections of the Marketing Plan Pro software.Answer: The answers to this chapter's questions depend, in part, on information about Sonic that students have gleaned from Chapter 3 and from their work on marketing plan exercises in earlier chapters. The overall strategic group for Sonic, as outlined in Chapter 3, includes A iwa, Panasonic, Sony, and Philips, companies that manufacture shelf stereo systems at various prices offered in various distribution channels. More specifically, Sonic's positioning of quality and reliability at higher prices may put it in a narrower strategic group with competitors such as Sony and Philips.Although they know that Sonic is not the market leader, students may indicate that additional competitive intelligence is needed to determine exactly which firm leads the market. In earlier exercises, students investigated industry trends by accessing UHF Magazine () and similar sources, which also should have information about market leadership and about the leader's objectives, strengths, and weaknesses. Remind students that market leadership can change from year to year, which will affect Sonic's competitive strategy.As a market challenger with declining profits, Sonic has limited resources and will therefore not want to attack the market leader unless it changes its pricing and other strategies to gain a clear, compelling competitive advantage. One good approach would be to use a flank attack against the weaknesses of the market followers. Another approach might be a bypass attack aimed at segments of the business market, where key competitors may have low or no strategic interest.The competitive strategy that students choose will define Sonic's strategic objective and attack strategy. For example, Sonic might do well with an adapter strategy, improving on the smaller speakers that are gaining favor with consumers. Sonic might also consider a specific attack on the basis of product proliferation (broadening the product line), improved services, or distribution innovation. Sonic should strike a balance between being competitor-centered and being customer-centered, even as it monitors both customers and competitors to follow trends and spot emerging needs.。

Chapter 5—Gathering Information and Measuring Market DemandOverviewMarketing information is a critical element in effective marketing as a result of the trend toward global marketing, the transition from buyer needs to buyer wants, and the transition from price to nonprice competition. All firms operate some form of marketing information system, but the systems vary greatly in their sophistication. In too many cases, information is not available or comes too late or cannot be trusted. Too many companies are learning that they lack an appropriate information system, still do not have an information system, lack appropriate information, or they do not know what information they lack or need to know to compete effectively.A well-designed market information system consists of four subsystems. The first is the internal records system, which provides current data on sales, costs, inventories, cash flows, and accounts receivable and payable. Many companies have developed advanced computer-based internal reports systems to allow for speedier and more comprehensive information.The second market information subsystem is the marketing intelligence system, supplying marketing managers with everyday information about developments in the external marketing environment. Here a well-trained sales force, purchased data from syndicated sources, and an intelligence office can improve marketing intelligence available to company marketing managers. The third subsystem, marketing research, involves collecting information that is relevant to specific marketing problems facing the company. The marketing research process consists of five steps: defining the problem and research objectives; developing the research plan; collecting information; analyzing the information; and presenting the findings. Good marketing research is characterized by the scientific method, creativity, multiple methodologies, model building, and cost/benefit measures of the value of information.The fourth system is the Marketing Decision Support System (MDSS marketing system) that consists of statistical and decision tools to assist marketing managers in making better decisions. MDSS is a coordinated collection of data, systems, tools, and techniques with supporting software and hardware. Using MDSS software and decision models, the organization gathers and interprets relevant information from the business and the environment and turns it into a basis for marketing action. MDSS experts use descriptive or decision models, and verbal, graphical, or mathematical models, to perform analysis on a wide variety of marketing problems.To carry out their responsibilities, marketing managers need estimates of current and future demand. Quantitative measurements are essential for market opportunity, planning marketing programs, and controlling the marketing effort. The firm prepares several types of demand estimates, depending in the level of product aggregation, the time dimension, and the space dimension.A market consists of the set of actual and potential consumers of a market offer. The size of the market depends on how many people have interest, income, and access to the market offer. Marketers also must know how to distinguish between the potential market, available market, qualified available market, served market, and the penetrated market. Marketers must also distinguish between market demand and company demand, and within these, between potentials and forecasts. Market demand is a function, not a single number, and as such is highly dependent on the level of other variables.A major marketing research task is to estimate current demand. Total demand can be estimated through the chain ratio method, which involves multiplying a base number by successive percentages. Area market demand is estimated by the market-buildup method (for business markets) and the multiple-factor index method (for consumer markets). In the latter case, geodemographic coding systems are proving a boon to marketers. Estimating industry sales requires identifying the relevant competitors and estimating their individual sales in order to judge their relative performance.To estimate future demand, the company can use several major forecasting methods: expert opinion, market tests, time-series analysis, and statistical demand analysis. The appropriate method will vary with the purpose of the forecast, the type of product, and the availability and reliability of data.Learning ObjectivesAfter reading this chapter students should:∙Understand demand measurement terminology∙Know the methods of estimating current demand∙Know the methods of estimating future demandChapter Outlineponents of a modern marketing information system1.Expansion of detailed buyer wants, preferences, and behavior, but stillmany gapsponents of the system: people, equipment, and procedures to gather,sort, analyze, evaluate, and distribute needed, timely, and accurateinformation to marketing decision-makers3.Many questions must be answered before determining MIS configuration II.Internal records systemA.Order-to-payment cycle—the heart of the internal records systemB.Sales Information Systems—technology has allowed sales reps to haveimmediate access to information about their prospects and customersIII.Marketing intelligence systemA. A set of procedures for managers to obtain everyday information about pertinentdevelopments in the marketing environmentB.Internal records systems supplies ―results‖ data, and the marketing intelligencesystem supplies ―happenings‖ dataC.Steps for improving marketing intelligence1.Train sales force2.Motivate intermediaries to share intelligence3.Purchase information from outside suppliers4.Establish an internal marketing information center to collect andcirculate intelligenceIV.Marketing research systemA.Marketing research—the systematic design, collection, analysis, and reporting ofdata and findings relevant to a specific marketing situation facing the companyB.Suppliers of marketing research—can be achieved through an in-housedepartment, an outside marketing research firm, or a variety of other cost-efficient ways. increasing amounts of information available via the internetC.Marketing research process1.Define the problem and research objectives2.Developing the research plan—decisions on data sources, researchapproaches, research instruments, sampling plan, and contact methods3.Collect the information—phase most expensive and prone to error4.Analyze the information—extract pertinent findings from the collecteddata5.Present the findings—pertinent to the major marketing decisions facingmanagementD.Overcoming barriers to the use of marketing research—details on requirementsfor good marketing research and reasons for failure in the research effortV.Marketing Decision Support System (MDSS)A.Coordinated collection of data, systems, tools and techniques with supportingsoftware and hardware by which an organization gathers and interprets relevantinformation from business and environment and turns it into a basis formarketing actionB.Note: The Marketing News lists of marketing research programs, includingBRANDAID, CALLPLAN, DETAILER, GEOLINE, MEDIAC, PROMOTER,ADCAD, COVERSTORY1.Quantitative tools used in MDSS systems: multiple regression,discriminant analysis, factor analysis, cluster analysis, conjoint analysis,mulitidimensional scaling2.Models include Markov-process, queuing, and new-product pretest3.Optimization routines: differential calculus, mathematical programming,statistical decision theory, game theory, heuristicsVI.Forecasting and demand measurementA.Measures of market demandB.Which market to measure?—available market, qualified available market, target(served) market, or penetrated market?C.Vocabulary for demand measurement1.Market demand2.Market forecast3.Market potentialpany demandpany sales forecastpany sales potentialD.Estimating current demand1.Total market potential2.Area market potentiala)Market-buildup methodb)Multiple-factor index method3.Estimating industry sales and market sharesa)identifying competitors andb)estimating their salesE. Estimating future demand1.Survey of buyers’ intentions, including the purchase probability scaleposite of sales-force opinion3.Expert opinion4.Past-sales analysis5.Market test methodVII.SummaryLecture—Marketing Research and Measurement at the MillenniumThis lecture is intended for use with Chapter 5, ―Managing Marketing Information and Measuring Market Demand.‖ It focuses on the development of information for marketing management. The discussion begins by considering examples of particular approaches in developing market research. This leads into a discussion of the implications for the introduction of other research opportunities to the firm and the industry. It is useful to keep the examples current so that students will be able to identify readily with this concept based on their general knowledge of the techniques, companies, and products involved in the discussion.Teaching Objectives∙Introduce students to some of the more important concepts in contemporary marketing research∙Consider the role of marketing research and information systems in helping the firm achieve its overall marketing strategies∙Discuss specific marketing research considerations and principles∙Open a line of discussion related to several of the computer exercises in the IRM and the accompanying interactive spreadsheetsDiscussionIntroductionMarketing research and measurement long have been areas of great difficulty and opportunity for the marketer, not just because they provide more complex and precise responses, but also because the training, analytical, and communication requirements are substantial. Measurement in some areas has been much easier than in others. For example, it is much more difficult to measure directly the results of advertising expenditures than to learn about the attitudes of prospective buyers toward a product or service. Between an advertisement and the actual purchase of goods or services there are lag effects, multiple distribution channels, and other intervening variables. With the exception of direct marketing, it is very difficult to relate marketing efforts directly to sales.However, the other side of the equation relates to what we are able to do with an area of marketing research where there is more certainty. Marketers increasingly utilize marketing research to improve product and service value to current customers and find new customers.Marketing research is used in the contemporary environment to provide more information on the customer, the market, and the channels of distribution. Among the more important information is that which relates to the factors influencing sales. This can be done in many ways, ranging from population sampling to on-on-one personal interviews and a range of options in between. Marketing Research with a PurposeNote: Consider the possible tie of this material to some of the applications exercise discussions and applications materials (especially Simmons and Nielsen).However, before we can do any of this we need to determine what we want to ask and why, and recognize that every marketing research tool has a different purpose. With all the new technologies available and some very sophisticated interpretation tools, the research and analysis process is much easier than it was just a few years ago. However, most managers still have difficulty in determining which tools are right for their needs, especially whether qualitative or quantitative information is most important and which type of research technique will provide the best value for the money.Quantitative research deals with numbers and answers questions about how many, how much, or how often. Quantitative-oriented survey research generally relies on close-ended questions—questions that can be answered briefly, often with a yes, a no, or a number.Qualitative research deals primarily with the feelings and attitudes that drive behaviors. Open-ended questions that cannot be answered in one word encourage respondents to describe their feelings, opinions, attitudes, and values.In some situations a telephone survey may be the best way to talk to consumers about the product, but in other situations focus groups may provide a better result. One of the more important questions is whether the company can or should attempt to perform independent research projects or buy into a syndicated or omnibus study.This choice is important because the cost in terms of time, money, and effort can throw the strategy and planning effort for the firm into the wrong gear or worse yet into the wrong direction. Further, if the firm is not entirely clear on the research needs and process, it must decide whether or not to use a professional researcher versus pay for information from existing sources.One of the best methods for getting good quantitative research data is to use scanner information. This information has become much more flexible and usable. Effective use of tools such as Behavior Scan and InfoScan, both products of Information Resources, Inc. (IRI), has added substantial depth to efforts to understand the buying process.This is not project information but rather it is available on a continuous weekly basis, usually contracted on a multiyear basis to provide sufficient information over a period of time. This powerful capability enables firms to micromarket effectively and plan down to the individual store level. Data on the factors influencing product sales, such as client and competitor advertising, and other promotional activities, can be effectively assessed. In addition, the capability now exists to obtain information on a specific store or all the stores in a system, enabling not only enhanced data-checking capabilities but also rapid and effective comparisons at various local, regional, and national levels.Although such information by itself cannot provide predictions of the future, it can and does provide the means to evaluate various trends and make it possible to apply an expert system in the analysis process to forecast more precisely than in the past.On the qualitative side of the equation, there are other methods such as the static panel, a sample of households in the United States. An example is Simmons Market Research Bureau (SMRB),which has a 13,000+ household panel that is representative of the national census in terms of the significant demographics. Conducted frequently over a year or more, the panel provides a means to measure relatively small changes in household purchases and product usage (see Analytical Tools for Marketing Management [Computer Exercises] for more information on Simmons research information).Another method is the consumer diary. Diaries are especially appropriate for answering questions on brand penetration and loyalty. This approach indicates what factors influence purchasing behaviors, such as price and advertising, and where purchases are made—supermarkets, warehouse outlets, drugstores. This method appeals to a wide range of clients in packaged goods, apparel, home furnishings, financial services, travel, and entertainment.An area of less measurement, advertising impact measurement, remains the activity where research efforts have been less successful. Until recent years the result is that most marketers of consumer products have developed mass marketing programs rather than target more narrowly. This has been by necessity. Without sufficient consumer purchase or usage information that could be tied directly to the advertising/promotion effort, they could not do otherwise. Because marketers have not been able to gauge the results of advertising and various other forms of marketing communication directly, they instead surveyed the psychological impact of the communications programs on customers and prospects.Advertisers and agencies have been able to evaluate consumer attitudes toward the product, plus awareness and knowledge levels about their advertising and marketing communications program. Much of this research was based on testing the ability of the consumer to recall advertising messages or state how seeing or hearing advertising messages might, could, or in fact had changed their attitudes toward the product or their inclination to either buy or continue buying it. Thus, mass marketing in the past has operated on the assumption that attitudes lead to behavior. That may be true, but it is just as likely true that behavior leads to attitudes. If you see an ad on TV, form a favorable impression of a product, try it out, and decide you hate it, then your new attitude is a result of your purchase behavior. So perhaps there is more going on in a purchase decision than the linear model suggests.A more central difficulty with the mass marketing model is the measurable surrogates or substitutes that we have used to stand in for unmeasurable purchase behavior. Recall does not necessarily equal sales or even favorable recall: Does anyone really miss ―Ring Around the Collar,‖ or did ―the Heartbeat of America‖ ever really cause someone to buy an automobile? Likewise, brand awareness does not guarantee success. The IBM brand is recognized by 90 percent of its potential customers around the world, yet the company still has some substantial marketing and sales problems.There have been efforts to measure the effects of marketing communications on sales even less directly, for example, by looking at incremental units sold after a promotion. But by and large, incremental units have measured sales stolen from a competitor for a short period of time or that we have cannibalized from our own future business.Database Marketing and the FutureDatabase marketing eliminates much of the need for surrogates. With cheap computing power and the ability to capture, store, and manipulate massive amounts of data, new methods of marketing communications and planning are possible. For example, with what is called single-source data, marketers can identify specific customers and users of products and services, measure their actual purchase behavior, and relate it to specific brand and product categories:Up to now, database-centered advertising and marketing communications research for the most part has been conducted with consumers who shop in supermarkets, drugstore chains, and mass-merchandising outlets. This is because these retailer categories have been the pioneers in various forms of electronic data capture and storage. The technology is rapidly diffusing, and it is likely that during the early years of the next century almost all types of retail vendors will be able to gather, conduct, and evaluate this type of customer information. As a result of working with retailers and market research groups, increasing numbers of manufacturers, brand managers, and so on will be able to capture and use purchase data on their brand customers and prospects.To a large extent, the contemporary database marketing approach makes obsolete the statistical research and analysis techniques in which marketers have traditionally been trained. In the past, researchers took a sample, projected it to the whole world, and hoped they had it right. An interesting aspect of the current techniques is that when the researcher deals with real-world data, he or she begins to understand that quite often traditional statistical techniques do not make any sense.Normal curves are generally irrelevant in database-derived marketing because all the interesting things are happening at the tails of the distribution, not in the middle. And, with the ability to capture longitudinal data (collected on the same person over a period of time) on individual customers, you can actually look at your customer’s behavior over time and thereby reach much more meaningful conclusions concerning attitudes and buying behavior.The old linear model of consumer behavior was built on a one-way process, but the new direction is research built on two-way communication between marketer and customer. The marketer receives feedback from the customer, both explicitly (through survey responses, warranty cards, and so forth) and implicitly (through purchase behavior tracked in the database). The dialogue between marketer and customer is always evolving. While mass marketing treats every customer as a new prospect, integrated marketing creates individual dialogues and even changes its message as marketer and customer get to know each other. This provides the basis for the one-to-one marketing process that is at the center of contemporary consumer marketing activities. Marketing and Advertising1.American beef producers sponsored the print ad in Figure 1 promoting the nutritionalbenefits of beef. The ad addresses misconceptions that U.S. consumers have about beef’s nutritional value, as revealed in survey research conducted for the National Cattleman’sBeef Promotion and Research Board.a.When measuring market demand for beef, what space and product levels wouldthe National Cattleman’s Beef Promotion and Research Board be most interestedin?b.Is this ad seeking to increase primary or selective demand for beef? Why?c.If the beef producer’s group needed a relative ly accurate measure of marketresponse to this ad, would you recommend that it use a probability or anonprobability sample?Answera.As discussed in the text, demand can be measured for six different product levels,five different space levels, and three different time levels. The NationalCattleman’s Beef Promotion and Research Board would probably be mostinterested in U.S. nationwide market demand for beef. It would also be mostinterested in the product levels of industry sales. This is because the organizationis trying to stimulate overall demand for beef.b.The ad seeks to increase primary demand for beef as a product category, becausethe organization represents producers who will benefit whenever beef is sold,regardless of the particular company or product form.c.For a relatively accurate measure of market response, the beef producers shoulduse a probability sample so the researchers can calculate the confidence limits forsampling error.2. As advertised in Figure 2, Mutual of America wants to help companies of all sizes andtypes handle their retirement and insurance needs. According to the copy, all businesscustomers ―receive the same quality service and care‖ and ―the same freedom of choice‖regardless of size.a. Which research approaches would be most helpful in identifying any problemsthat customers might have experienced in working with Mutual of Americaconsultants?b. If company marketers decide to collect primary data, would you recommend theyuse closed-end or open-end questions? Why?c. Draft a brief questionnaire that Mutual of America could use to identifyadditional needs that the company might try to satisfy with new financial servicesproducts or services.Answera.Mutual of America might use focus-group research to get detailed customercomments about its consultants. It might also use customer surveys to ask userswhat they like and don't like about their consultants, check its internal records forinformation, and monitor complaint letters and e-mails.b.Closed-end questions can be tallied more quickly and conveniently but open-endquestions will allow customers more freedom to explain what their problemshave been in some detail.c.Evaluate students’ questionnaires on the basis of whether the questions areunbiased, simple, direct, flow in logical order, and elicit the information aboutcustomer needs that Mutual of America could use in designing new offerings. Online Marketing TodayResearch conducted by Purdue University shows that up to 75 percent of consumers fail to complete their online purchases, primarily because of sluggish Web sites, poor site design, and related factors. Seeking to learn what online visitors do and don’t do at its Web site, Northwest Airlines has added a new software tool to its online operations. ―The success of our online business comes down to our customers and how satisfied they are with our products and services,‖ says Northwest’s manager of e-commerce. ―This new tool,‖ he says, ―makes it very easy to determine where we should focus our efforts,‖ by analyzing the online behavior of visitors, finding out which affiliates send the most visitors to the site, and tracking response to online promotions. With this information, the airline will be able to make the site function more efficiently and more effectively to increase sales and customer satisfaction.Browse Northwest’s home page () and then follow the link to the ―Talk to Us‖page. Sample several of the links on this page to see how customers can submit questions and feedback. Would such data be included as part of Northwest’s marketing information system, marketing intelligence system, or marketing research system? Where would the airline store the primary data about online visitor behavior that its new software tool is collecting? What kind of research approach does this primary data represent? How else might Northwest use its Web site to gather primary data?AnswerFeedback and questions from online customers would be included as part of Northwest’s marketing intelligence system, because this information concerns developments in the marketing environment. The airline would store the primary data about online visitor behavior in its data warehouse, specifically in its customer database. This research represents an observational approach because it involves observing what customers do online.Students may suggest numerous ways in which Northwest might use its Web site to gather primary data. One sample response: Northwest could use cookies to track how often customers visit the site, which pages they look at and for how long, how often their visits culminate in purchases, how many leave in the middle of a purchase but before finalizing the transaction, and other information.You’re the Marketer: Sonic PDA Marketing PlanMarketing information systems, marketing intelligence systems, and marketing research systems are used to gather and analyze data for various parts of the marketing plan. These systems can help marketers examine changes and trends in markets, competition, consumer needs, product usage, and distribution channels, among other areas. They can also turn up evidence of important opportunities and threats that must be addressed.You are continuing as Jane Melody’s assistant at Sonic. She has collected a considerable amount of marketing intelligence about the market and the competitive situation, but you believe Sonic needs more data in preparation for launching the first product. Based on the marketing plan contents discussed in Chapter 4, answer the following questions about how you can use MIS and marketing research to support the development and implementation of Sonic’s marketing plan for its new PDA:∙For which sections will you need secondary data? Primary data? Both? Why do you need the information for each section?∙Where can you find suitable secondary data? Identify two non-Internet sources and two Internet sources, describe what you plan to draw from each source, and indicate how you will use the data in your marketing planning.∙What surveys, focus groups, observation, behavioral data, or experiments will Sonic need to support its marketing strategy, including product management, pricing, distribution,and marketing communication? Be specific about the questions or issues that Sonicshould seek to resolve using market research data.Enter your answers about Sonic’s use of marketing data and research in the appropriate sections of a written marketing plan or in the Marketing Research, Market Analysis, and Market Trends sections of the Marketing Plan Pro software.Answer。

CHAPTER21--M ANAGING D IRECT AND O NLINE M ARKETING OVERVIEW:Direct and online marketing are tools of growing importance in marketing planning. Directmarketing is an interactive system of marketing, which uses one or more advertising media(direct mail, catalogs, telemarketing, electronic shopping, and so forth) to effect a measurableresponse and/or transaction at any location. It has been growing at a more rapid rate than storemarketing and is used by manufacturers, retailers, service companies and other types of organizations to provide continuity, better timing, high readership, testability, and privacy. Directmarketing benefits both customers and sellers, effecting highly targeted and efficient exchanges.Accordingly, there is a strong trend toward integrated direct marketing and database marketing. Database marketing is critical to the process of direct marketing. Companies use their databases to identify prospects, differentiate offers, build customer loyalty and reactivate customer purchases. While it requires a special investment, a well-managed database will lead to sales gains that will more than cover costs.The process for implementing direct marketing strategies includes: setting objectives, choosingmarkets and prospects, constructing an effective offer, testing the elements of the offer strategy,and measuring the likely success of the campaign.On-line marketing is the most recent development in the direct marketing process. It is a channel,one that a consumer can reach via computer and modem. The benefits are many, for both buyersand sellers. Marketers can conduct on-line marketing by creating electronic storefronts, webpages, participating in forums, news groups and bulletin boards, placing advertising on-lineand/or using e-mail.Despite the potential of direct marketing, there is controversy associated with the directmarketing process. There are Issues of concern regarding irritation, unfairness, deception andfraud, and increasingly the invasion of privacy.LEARNING OBJECTIVES:After reading the chapter the student should understand:∙Comparative benefits of direct response and e-commerce marketing∙The overall development and application of customer databases∙The overall processes and strategies related to the use of direct marketing channels∙The issues (public and ethical) related to direct marketing∙The future of direct and on-line marketing capabilitiesOUTLINEI.The Growth and Benefits of Direct Marketing - Direct marketing is an interactivemeasuring system that uses one or more advertising media to effect a measurableresponse and/or transaction at any location. Goal is long-term relationship building(direct relationshp marketing).A.The Growth of Direct Marketing and Electronic Shopping -1.catalog and direct -mail sales growing at a rate of 7% annually,compared to retail sales growth of 3%.2.Electronic - Internet traffic doubles every 100 days; 1.5 million Websites; forecast (2002) e-commerce sales of $327 billion.B.The Benefits of Direct Marketing - for both consumers and sellersII.Customer Databases and Direct Marketing - a customer database is an organized collection of comprehensive data about individual customers or prospects that is current,accessible, and actionable for such marketing purposes as lead generation, leadqualification, sales of a product or service, or maintenance of customer relationships.A.Database marketing is the process of building, maintaining, and using customerdatabases and other databases (products, suppliers, resellers) for the purpose ofcontacting and transacting. Companies can customize their product, offer,message, shipment method, and payment method to maximize customer appeal.panies use their databases in four ways: to identify prospects, decide whichcustomers should receive a particular offer, deepen customer loyalty andreactivate customer purchases.III.Major Channels for Direct MarketingA.Face-to-Face SellingB.Direct-Mail Marketing (post office, overnight carriers, fax mail, e-mail, or voicemail). How to construe an effective direct-mail campaign:1.Determine Objectives - order-response rate is usually 2%.2.Define Target Markets and Prospects3.Consider other Elements - construct an effective offer. Five components:outside envelope, sales letter, circular, reply form, and reply envelope.4.Test Direct Marketing Elements5.Measure the Campaign’s Success - breakeven response rate, determiningcustomer lifetime valueC.Catalog Marketing - on paper or CD-ROMD.Telemarketing - using the telephone to sell products/servicesE.Television and Other Major Media Direct-Response Marketing (direct-responseadvertising, at-home shopping channels, and videotext)F.Kiosk Marketing - “customer-order-placing machinesG.Online ChannelsIV.Marketing in the 21st Century: Electronic Commerce - an online channel is one that a person can reach via computer and modem. There are two types of online channels:commercial channels such as America Online, CompuServe, and Prodigy; and theInternetA.The Online ConsumerB.Online marketing: Advantages and Disadvantages1.The Benefits of Online Marketing - for buyers: convenience,information, and fewer hassles.2.For marketers: quick adjustments to marketing conditions, lower costs,relationship building, and audience sizingC.Conducting Online Marketing1.Creating an Electronic Storefront - what type of information exists on a“home page”2.Participating in Forums (discussion groups on commercial onlineservices), Newsgroups (the Internet’s version of forums), and BulletinBoards (center on a specific topic or group)3.Placing Ads Online - classified ads, ads in newsgroups, or “pop ups” ononline billboards.ing E-mail - a way to encourage feedback from prospects andcustomers.D.The Promise and Challenges of Online Marketing1.The Growing use of Integrated Direct Marketing - “maximarketing”V.Public and Ethical Issues in Direct MarketingA.Irritation, unfairness, deceptionB.Fraud and invasion of privacyVI.SummaryMarketing and Advertising1. Many nonprofit organizations, such as the Earthjustice Legal Defense Fund, use direct response advertising to solicit contributions. This magazine ad as ks consumers to call a toll-free number or visit a Web site and pledge a contribution to support lawyers fighting for the Endangered Species Act. What offer is Earthjustice making to consumers? What benefits will consumers gain from responding to this offe r? What is Earthjustice likely to do with the names of people who respond to this ad? Why?Answer: Earthjustice is offering consumers the opportunity to help save endangered species by sending money to support the legal defense fund. Consumers gain the benefit of feeling satisfied that they are supporting the environment and helping to save plants and animals at risk. Earthjustice is likely to retain the names of people who respond and send them additional information about progress toward saving endangered species—as well as additional requests for contributions to further the cause.Focus on TechnologyData mining is a sophisticated computerized analysis used by marketers to identify meaningful patterns in a data warehouse of customer purchasing information. With data mining, marketers can determine which customers are the best to target for a particular offer. They can also figure out which customers are their most profitable and then design special retention programs to reinforce those customers' loyalty.What kinds of ethical and public concerns are raised by the increased use of data warehouses and data mining? Should consumers be allowed to opt out of some company data warehouses? Should companies be required to notify consumers when their names and other personal information are added to certain data warehouses? Do you think government regulation is needed to control the collection and use of personal details in data warehouses? Defend your answer.Answer: Students will identify a number of issues raised by data warehouses and data mining, including possible violation of personal privacy, release or exchange of sensitive information, and discrimination against certain customers. Students who support allowing consumers to opt out of data warehouse s may say that this approach is already used on a voluntary basis by direct mail marketers and telemarketers. Students opposed might say that customers benefit from more and better personalized service when companies use data warehouses and data mining. Students who support notification may argue that this will reassure consumers that data is being collected, stored, and used more responsibly; those opposed to notification may argue that consumers have a right to know when and how personal data is being used. Students can build a case for or against government regulation, based on these responses.Marketing for the MillenniumAs more companies get involved in electronic commerce, they must beware of irritating consumers by sending unwanted e-mail to promote their products. Netiquette, the unwritten rules that guide Internet etiquette, suggests that marketers ask customers for permission to e-mail marketing pitches—and tell recipients how to stop the flow of e-mail promotions at any time.To see permission-based marketing in action, visit the Web site of Iomega, which makes the Zip drive and other computer storage devices (URL: ). The company constantly runs contests to encourage people to register at its site. Click to enter any contest, then read the entire entry form. You will notice that Iomega asks permission to e-mail you marketing material and to give your name to other marketers. Iomega also asks other questions, such as which of its products you own. Why would Iomega ask about your ownership of its products? Why would the company want to share your name with other marketers? What would you gain by granting permission for Iomega to give your name to others?Answer: Iomega can collect a great deal of valuable data about customers and prospects by asking Web site visitors to answer a few questions when they register for contests and other activities. Iomega would share names with other marketers in exchange for either cash payment or names collected by those marketers. Visitors who agree to have their names given to others would receive offers of goods and services that are related to personal computer usage, which can be convenient for people who want to know about the latest products.YOU'RE THE MARKETER: SONIC MARKETING PLANAs electronic commerce continues to grow, more marketers are including online as well as direct and online marketing in their marketing plans. Even manufacturers who sell their goods through wholesalers and retailers can use direct and online marketing as part of multiple vehicle, multiple-stage campaigns to boost the effectiveness of their marketing communications.You are Jane Melody's assistant at Sonic, where you are developing and coordinating marketing programs for the company's shelf stereo systems. Look again at Sonic's current situation, its goals, and its strategies. Also review the other marketing mix programs you have already planned. Then answer the following questions about creating direct and online marketing for Sonic:∙If Sonic lacks a good database, what does it need to know about its customers (the consumer market) and its distributors (the business market)? How can it gather this information?∙How can Sonic use direct or online marketing to support consumer promotions and communications? To support trade promotions and communications?∙Which messages and channels would be most appropriate for reaching consumers who buy Sonic products? For reaching retailers who buy Sonic products? What programs would yourecommend, and when should these be scheduled?∙How can Sonic use its Web site to communicate with both consumers and retailers?Consider how the online and direct marketing programs you are recommending will mesh with Sonic's other programs and support Sonic's goals and strategies. As your instructor directs, summarize your recommendations in a written marketing plan or type them into the Marketing Mix section and the Programs and Tactics section of the Marketing Plan Pro software.Answer: Sonic needs to know some basic information about customers, at the very least: names and addresses and other demographic information; and products purchased, at what date, and at what price. The company needs more information about its distributors, including: products purchased in the past and on order for future delivery; buying practices, patterns, and policies; names and contact methods for buying center members; use of competitive suppliers; revenue and profitability history related to Sonic products. If its consumer database is incomplete, Sonic might be more successful with online marketing than direct marketing to support consumer promotions and communications. Students may suggest various methods, including using the Web site to announce and publicize promotion and communication activities. Direct marketing would be more of a factor for trade promotions and communications; students should offer a variety of ideas for the trade, including mailing all retailers announcements of consumer promotions and communications before they are released to the public. Students may suggest a number of different messages, channels, and programs for reaching consumers and retailers. They will also have creative ideas for using the Sonic Web site to communicate with consumers and retailers.。

CHAPTER7--A NAL YZING B USINESS M ARKETS AND B USINESS B UYINGB EHAVIOROVERVIEW:Business markets consist of individuals and organizations that buy goods for purposes of furtherproduction, resale, or redistribution. Businesses (including government and nonprofitorganizations) are a market for raw and manufactured materials and parts, installations, accessory equipment, and supplies and services. The variables impacting the business buyer are similar tothose of the consumer buyer in some ways but very different in others. In general, the businessbuyer is generally much more technical, price-oriented, educated for the job, and risk averse thanthe consumer buyer. Also, with the business buying environment there is more concern for thestatus and power of potential vendors, and persuasiveness and empathy play relatively lower roles. The industrial market buys goods and services for the purpose of increasing sales, cutting costs,or meeting social and legal requirements. Compared with the consumer market, the industrialmarket consists of: fewer buyers, larger buyers, close supplier/customer relationships,geographically concentrated buyers, derived demand that is relatively inelastic and fluctuating;professional purchasing with several more buying influences involved, direct purchasing,reciprocity, and leasing. Industrial buyers make decisions that vary with the buying situation orbuyclass. Buyclasses comprise three types: straight rebuys, modified rebuys, and new tasks. Thedecision-making unit of a buying organization, the buying center, consists of persons who playany of seven roles: initiators, users, influencers, deciders, approvers, buyers and gatekeepers.The industrial marketer needs to know: Who are the major participants? In what decisions do theyexercise influence? What is their relative degree of influence? And what evaluation criteria doeseach decision participant use? The industrial marketer also needs to understand the majorenvironmental, organizational, interpersonal, and individual influences operating in the buyingprocess. The buying process itself consists of eight stages called buyphases: problem recognition,general need description, product specification, supplier search, proposal solicitation, supplier selection, order-routine specification, and performance review. As industrial buyers become more sophisticated, industrial marketers must upgrade their marketing capabilities.The institutional and government market shares many practices with the business market and hassome additional characteristics. Institutional buyers are less concerned with profit than with otherconsiderations when they define the products and services to buy for the people under their care.Government buyers tend to require many forms and favor open bidding and their own nationalswhen they choose their suppliers. Suppliers must be prepared to adapt their offers to the special needs and procedures found in institutional and government markets.LEARNING OBJECTIVES:After reading this chapter students should:∙Know the who, what, and how of the business market∙Know the who, what, and how of the institutional and government markets CHAPTER OUTLINE:I.IntroductionII.What is Organizational Buying?A.The Business Market versus the Consumer Market. Characterized by:1.Fewer buyersrger buyers3.Close supplier-customer relationship4.Geographically concentrated buyers5.Derived demand6.Inelastic demand7.Fluctuating demand8.Professional purchasing9.Several buying influences10.Direct purchasing11.Reciprocity12.LeasingB.Buying Situations - Straight rebuy (reorder on a routine basis), Modified rebuy(product specs, prices, delivery requirements, or other terms may be modified),New task (a purchaser buys a product or service for the first time with majorsubdecisions involved in the buying decision)C.Systems Buying and Selling - many purchasers prefer to buy a total solution totheir problem from one seller.D.Participants in the Business Buying Process - initiators, users, influencers,deciders, approvers, buyers, gatekeepersE.Major Influences on Business Buyers1.Environmental factors - level of demand, economic outlook, interest rateanizational factors - objectives, policies, procedures, structures,systems. There are several organizational trends about which businessmarketers should know.3.Interpersonal factors - everyone in the buying center has differinginterests, authority, status, empathy, and persuasiveness.4.Individual factors - every business buyer is an individualF.The Purchasing/Procurement Process1.Problem recognition2.General need description3.Product specifications - search for ways to lower costs4.Supplier search - seek the most appropriate bidders5.Proposal solicitation - Request for Proposal (RFP)6.Supplier selection - each bidder rated on specified criteria7.Order routine specification - final negotiations8.Performance review - through both internal and external methodsIII.Institutional and Government Markets - institutions tend to have low budgets and captive clienteles. Government is also a major buyer of goods and services. Decision topurchase is usually based on cost. Paperwork is considerable.IV.SummaryMARKETING A ND ADVERTISING1. Marketers of milk and other products can choose between a number of materials for use in containers and other packaging. This American Plastics Council ad describes the latest advances that make plastic containers a better choice. Where should the industry group place ads like this? What other methods might the industry group use to convince its markets of the value of using plastic for packaging food s and other products?Answer: The market for this American Plastics Council ad includes beverage marketers such as Hood (milk), Evian (water); supermarket chains that sell private label beverages; and supermarket chains that buy plastic grocery bags. Therefore, this ad should be placed in publications that reach the target audience, such as Supermarket News, as well as in general business publications such as Business Week that reach executives in these business organizations. Other methods the council might use to convince its markets of the value of using plastic include: making speeches to meetings of the target audience, such as supermarket executives; preparing press releases with information about the cost-benefits of using plastic packaging and bags; hosting exhibits at trade shows attended by the targeted groups; sending out periodic newsletters to educate members of the target audience about the benefits of using plastic; posting detailed information and studies on the council's Web site; mounting a consumer campaign as a "pull" strategy to encourage marketers and retailers to use more plastic packaging. Students may suggest additional methods.2. This Kinko's ad targets businesses of all sizes. Is the information in this ad geared toward a straight rebuy, a modified rebuy, or a new task? Would buyers, approvers, or initiators be most likely to respond to this ad? How does the ad relate to problem recognition and supplier selection in the business purchasing process? What kind of performance review might a business buyer apply to its purchasing of Kinko's color duplication services?Answer: This Kinko's ad is probably geared toward a modified rebuy, since the ad copy refers to previously created "dull, dingy business materials" that need brightening. Initiators would be most likely to respond to this ad, since they would recognize the need for brighter, more colorful business materials. In this case, the initiators would often be the users of the color materials, which is why they are aware that better color would give the company's materials more impact. A business buyer might review the performance of the purchase of Kinko's color copying services by contacting the end users to ask for their evaluations. If the users believe that Kinko's color materials are making the company look better and having other positive effects, the buyer will give Kinko's performance a good rating and continue to buy.FOCUS ON TECHNOLOGYTechnology is changing the way government organizations buy goods and services. For e xample, the city of Fort Collins, Colorado buys all kinds of products, such as computers and flooring. These days, the purchasing agent announces the city's needs and requests for proposals on a special page on its Web site (/CITY_HA LL/PURCHASING/bidlist.htm). Another page (/CITY_HA LL/PURCHASING/index.htm) explains the city's purchasing process and offers standard documents for downloading by suppliers.Visit both of these pages and see what Fort Collins requires of its suppliers. How does this technology benefit the city? How does it benefit suppliers who want to provide goods and services to the city? What other information about the city's purchasing process might a supplier want to see on these pages? Answer: Fort Collins benefits in several ways from the use of Internet technology to post and solicit proposals for purchasing goods and services:∙Lower costs due to less paper and postage and fewer personnel needed to handle the solicitation and processing of proposals and bids;∙Ability to efficiently reach suppliers of all sizes and types, which widens the pool of potential bidders;∙Higher productivity due to use of standardized forms downloaded from the Web site. Suppliers who want to provide goods and services to the city also benefit in several ways: ∙Lower costs due to less paper and postage and fewer personnel needed to handle the preparation and submission of proposals and bids;∙Ability to quickly and efficiently identify opportunities to submit proposals and bid for purchases made by Fort Collins;∙Ability to compete more effectively with suppliers of any size for purchases made by Fort Collins.A supplier reviewing the Fort Collins Web site might want to see additional information about the city's purchasing process, such as: supplier selection criteria; decision and notification dates for projects up for bid; and any prerequisites for successful bidders, such as performance bonds. Students may have other suggestions, as well.MARKETING FOR THE MILLENNIUMThe "cyberbuying bazaar" is busier than ever before as more businesses go online in search of MRO (maintenance, repair, and operations) materials. Business-to-business electronic commerce can streamline the purchasing process for MRO items, saving time and money for both parties.GE Information Services (GEIS) is a leader in helping businesses use the Internet to buy from and sell to other businesses. Visit the Electronic Marketplaces page on the GEIS Web site(/html/emindx..html), where you will see various products for business-to-business buying and selling. Then click on the link to TPN Register Buyer Services, a service specifically designed for MRO items. Why would a business buyer want to access information about suppliers usin g the Thomas Register Classification System? Why is reducing cycle time important for MRO items? Why would a supplier want to participate in this service? What potential disadvantages can you see for suppliers? Answer: The Thomas Register Classification System shows information about a large number of suppliers in a given classification, widening the potential pool of sellers from whom the buyer can purchase goods and services. Reducing cycle time for MRO items allows companies to maintain lower inventory levels of these fairly routine purchases and avoid delays in delivery that can disrupt operations. Suppliers would want to participate because they will be introduced to a wider market of potential customers. Two potential disadvantages for suppliers are:∙Lower loyalty on the part of purchasers, who can more easily locate competing suppliers; and ∙More competition from competing suppliers who are listed in the system. (Students may cite additional disadvantages, as well.)YOU'RE THE MARKETER: SONIC MARKETING PLA NLike consumer marketers, business-to-business marketers need to understand their markets and the behavior of members of the buying center in order to develop appropriate marketing plans.At Sonic, you have decided to investigate the business market for the company's shelf stereo systems, such as small restaurants and stores that want to play music for their customers. Given Sonic's current situation and your knowledge of business marketing, answer the following questions:∙In addition to restaurants and stores, what other types of businesses might want to buy a shelf stereo system?∙How can you find out the overall size of business markets such as small restaurants? (Check the U.S. Census Web site listing of businesses by SIC—eating places are SIC 5812, forexample—at /epcd/cbp/view/us94.txt; also check state Web sites for morestati stics, as well as other sources.)∙What specific needs could Sonic's product address for these businesses?∙What type of purchase would a Sonic system represent for these businesses? Who would participate in and influence this type of purchase? What are the implications for yourmarketing strategy?Think about the opportunities, threats, and issues represented by the business markets you have researched. Summarize your findings and conclusions in a written marketing plan or type them into the Marketing Situation, SWOT/Issue Analysis, and Target Markets/Positioning sections of the Marketing Plan Pro software.Answer: How students draft the business-to-business part of Sonic's marketing plan depends on the results of the research they conduct. Looking up all retail establishments on the U.S. Census Web site, for example, they will find under the 52 SIC for retail trade: 1.56 million total retail stores, 1.32 million stores with 1-19 employees, 216,800 stores with 20-99 employees, 25,376 stores with 100-499 employees, and 738 stores with 499+ employees. Under SIC 5400 food stores, they will find 182,512 total stores, 149,648 stores with 1-19 employees, 25,720 stores with 20-99 employees, 7,128 stores with 100-499 employees, and 25 with 499+ employees. In addition, under SIC 5812 eating places, students will find 367,205 total restaurants, 252,954 with 1-19 employees, 110,332 with 20-99 employees, 3,872 with 100-499 employees, and 47 with 499+ employees.In addition, students may choose to target businesses state by state, researching the market on the Internet by accessing state Web sites. On the Connecticut Web site, for example, the Research Division of the Department of Economic and Community Development (/ecd/research/) contains links to statewide retail statistics and other data, as well as details about consumer markets.At first glance, the statistics seem to indicate a sizable business market for shelf stereo systems. However, not every store or restaurant is likely to be interested in such products. Larger establishments may already have sound systems or may be part of chains that use a central purchasing process. Smaller establishments, on the other hand, may be a better—and potentially larger—market if Sonic can reach them with an appropriate marketing strategy.Students should identify the specific needs that shelf stereos will address for such businesses. These might include: providing background music throughout the establishment during business hours to make the shopping or dining experience more pleasant for consumers and providing background music for workersin non-public areas, which can enhance productivity. More research may be needed to ascertain whether these businesses are interested in shelf stereos and exactly how the buying process works in these establishments.Buying a Sonic sound system would be a new task buying situation, because these establishments have probably never purchased a stereo system before. Research will reveal the role of owners or managers, who are likely to be deciders and buyers (and may play other roles, as well). Sonic should consider the behavior and attitudes of these key buying center members when developing targeting and marketing mix strategies for the business market.。

CHAPTER2--BUILDING CUSTOMER SATISFACTION THROUGHQUALITY,SERVICE AND VALUEOVERVIEWToday's customers face a growing range of choice in the products and services they can buy. They are making their choice on the basis of their perceptions of quality, service, and value. Companies need to understand the determinants of customer value and satisfaction. Customer delivered value is the difference between total customer value and total customer cost. Customers will normally choose the offer that maximizes the delivered value.Customer satisfaction is the outcome felt by buyers who have experienced a company performance that has fulfilled expectations. Customers are satisfied when their expectations are met and delighted when their expectations are exceeded. Satisfied customers remain loyal longer, buy more, are less price sensitive, and talk favorably about the company.A major challenge for high performance companies is that of building and maintaining viable businesses in a rapidly changing marketplace. They must recognize the core elements of the business and how to maintain a viable fit between their stakeholders, processes, resources and organization capabilities and culture. Typically, high performing businesses develop and emphasize cross-functional skills rather than functional skills (overall project management and results versus functional strengths (best engineers, etc.). They also build their resources into core capabilities that become core competencies, distinctive abilities and competitive advantages. This, along with a corporate culture of shared experiences, stories, beliefs and norms unique to the organization, are the keys to their success.To create customer satisfaction, companies must manage their value chain as well as the whole value delivery system in a customer-centered way. The company's goal is not only to get customers but even more importantly, to retain customers. Customer relationship marketing provides the key to retaining customers and involves providing financial and social benefits as well as structural ties to the customers. Companies must decide how much relationship marketing to invest in different market segments and individual customers, from such levels as basic, reactive, accountable, proactive, to full partnership. Much depends on estimating customer lifetime value against the cost stream required to attract and retain these customers.Total quality marketing is seen today as a major approach to providing customer satisfaction and company profitability. Companies must understand how their customers perceive quality and how much quality they expect. Companies must then strive to offer relatively higher quality than their competitors. This involves total management and employee commitment as well as measurement and reward systems. Marketers play an especially critical role in their company's drive toward higher quality.LEARNING OBJECTIVES:After reading this chapter students should:∙Know what constitutes customer value and satisfaction∙Know how leading companies organize to produce and deliver high customer value and satisfaction∙Know how companies can retain customers as well as attract customers∙Know how companies can determine customer profitability∙Know how companies can practice total quality marketing strategyCHAPTER OUTLINE:I.IntroductionII.Defining Customer Value and SatisfactionA.Customer Value1.Customer delivered value - the difference between total customer valueand total customer cost, or “profit” to the customer. Total customervalue is the expected bundle of benefits.2.Total customer cost - bundle of costs consumers expect to incur inevaluating, obtaining and using the product or service.3.Customer value assessment - weighing the value against all of the costsB.Customer Satisfaction1.Perceived performance and expectations - contribute to overallsatisfaction2.Methods of tracking and measuring customer satisfaction - see Text. III.The Nature of High-Performance BusinessesA.Stakeholders - customers, employees, suppliers, distributorsB.Processes - work flows through an organization, to achieve cross functional skillsC.Resources - labor, power, materials, machines, information, energy, etc., toachieve core competence, distinctive ability(ies) and competitive advantage.anization and Organizational Culture - structures, policies. Corporate Cultureis the shared experiences, stories, beliefs, and norms that characterize anorganization.IV.Delivering Customer Value and SatisfactionA.Value Chain - used as a tool for identifying ways to create more value. Ninevalue creating activities.B.Value-Delivery Network - to be successful a firm has to look for competitiveadvantages beyond its own operations. Theme that building a better network canbe a highly successful differentiation tactic that leads to greater customersatisfaction.V.Attracting and Retaining Customersputing the Cost of Lost Customers - compute customer defection rate (4-stepprocess)B.The Need for Customer Retention - cost of attracting a new customer is 5 timesthat of retaining a satisfied current customer.C.Relationship Marketing: The Key - there is a process to attracting and retainingcustomers. There are five levels of customer relationship building, and threecustomer-value building approaches:1.Adding Financial Benefits - frequency marketing programs and clubmarketing programs2.Adding Social Benefits- individualize and personalize customerrelationships3.Adding Structural Ties -help customers manage themselves.VI.Customer Profitability: The Ultimate Test - a profitable customer is a person, household, or company that over time yields a revenue stream that exceeds by an acceptable amount the company’s cost stream of attracting, selling, and servicing the customer. A company should not attempt to pursue and satisfy all customers.VII.Implementing Total Quality ManagementA.Total Quality Marketing (TQM) - Most customers will no longer accept ortolerate average quality performance. There is an intimate connection amongproduct and service quality, customer satisfaction and company profitability.B.The role of Marketing now is extended beyond external marketing activities tointernal marketing roles to act as the Customer's watchdog within theorganization.VIII.SummaryMARKETING A ND ADVERTISING1. Toyota, like many automotive manufacturers, emphasizes excellent product quality and high customer satisfaction. But what exactly is quality—and how can Toyota prove that it offers excellent quality? The Toyota ad in Figure 1 shows one approach. What element of quality is the ad stressing, and how does this element satisfy customer needs? Is the ad focusing on performance or conformance quality? What are the implications for customers? For Toyota's marketing strategy?Answer: This Toyota ad is emphasizing performance quality, specifically the ability of the Sienna model to withstand a crash better than any other vehicle ever tested. This element of quality satisfies customers' needs for safety. The implications for customers are that those who worry about accidents can choose the Sienna and feel safer than they would in any other vehicle. The implications for Toyota's marketing strategy are that the company can promote the car to audiences that worry about accidents, including parents with children and anyone else who wants to feel safer when they drive, on the basis of evidence from credible third-party crash tests. This is a powerful competitive edge.2. Roadway Express wants to be the trucking firm of choice for companies that choose to outsource their shipping function, as the ad in Figure 2 indicates. What is Roadway's core competence? Why would Rawlings, the customer featured in the ad, prefer to outsource to Roadway rather than handle its own shipments? What capability does Roadway appear to be emphasizing in this ad?Answer: Roadway's core competence is its exceptional on-time delivery. Rawlings would prefer to outsource shipments because Rawlings's core competence is baseball equipment. Therefore, Rawlings wants to own and nurture its core resources and competence while outsourcing less critical activities such as delivery. Roadway is emphasizing customer linking in this ad; this is clear from its use of the Rawlings testimonial, indicating how happy Rawlings is as a Roadway customer. It is also clear from the insertion of the Rawlings URL at the bottom of the ad—equal in size to the Roadway URL—that Rawlings and Roadway consider themselves partners.FOCUS ON TECHNOLOGYHow can a company use its Web site for cost-effective customer-relationship building? Fuji Film Company maintains an extensive Internet presence for consumers and business customers. Generally, the profit margins in consumer products are too small to allow for expensive outreach beyond basic marketing. Yet Kodak, Fuji's archrival, invites consumers to become members of its Web site. Members receive Kodak information via e-mail and are able to upload their own photo images for inclusion in electronic postcards.Visit the Web sites of Kodak () and Fuji Film (), and examine how each reaches out to consumers. What can Fuji learn from Kodak's membership approach? How can Fuji use its Web site to stay in touch with consumers on a regular basis?Answer: Fuji might want to adapt Kodak's membership approach. This would allow Fuji to learn more about its consumer markets and provide consumers with value-added services that will build and strengthen relationships over the long term. Fuji might also want to use a membership approach to build relationships with the other market segments it serves, including profess ionals and businesses. Fuji can offer contests, weekly or monthly special events, and other inducements to keep consumers coming back to its Web site; this way, Fuji can stay in touch with consumers on a regular basis. Fuji can also periodically e-mail announcements to consumers who become members, another way to stay in touch. Students can use their creativity to develop ways for Fuji to use its Web site to strengthen relationships with individual consumers. MARKETING FOR THE MILLENNIUMLogistix is testing Web Agent software from Aspect Telecommunications that allows an employee and a customer to view the same Web screen simultaneously while they are having a telephone conversation. Web Agent is only one of the products Aspect offers for teleweb applications. Visit Aspect's Web site () and locate its integrated call center solutions. Try an on-line demo of one of the featured products or read the detailed description of Web Agent. How does this Aspect product deliver value to Logistix? What value does it add for the business customer who contacts Logistix through its call center? How can Logistix use this product to build relationships with its business customers? What relationship-building obstacles do you think Logistix might encounter early in the next millennium—and how should the company respond?Answer: The Aspect Web Agent software delivers value to Logistix because the program allows the firm to more conveniently communicate with and service customers who access Internet pages, a process that is more complex without Aspect's specialized software. In turn, this more convenient service and communication adds to customer satisfaction and strengthens customer relationships, ultimately boosting customer retention and slowing customer defect ions for Logistix. It also adds value for business customers who contact Logistix through the call center, because they get immediate assistance with questions or problems without having to log off the Internet, dial up Logistix, and try to put into words exactly what they need.Logistix can use this software to build relationships with business customers by encouraging them to access the company's Web site and simultaneously call the company to discuss any questions or problems they may have with products or information. Over time, business customers are likely to find this system so convenient that they will buy more from Logistix because of the value-added service. One relationship-building obstacle Logistix might encounter early in the next millennium is an evolution in Internet technology that allows every competitor to handle customer calls the way Web Agent does today—but without specialized software. This will erode Logistix's competitive edge in customer service. The company can respond to this obstacle by continuing to explore new communication methods for immediate customer service through multiple channels (Internet, telephone, and others). Students will offer various answers to question of obstacles in the new millennium.。

CHAPTER9--I DENTIFYING M ARKET S EGMENTS AND S ELECTING T ARGETM ARKETSOVERVIEW:Sellers can take three approaches to a market. Mass marketing is the decision to mass produce and mass distribute one product and attempt to attract all kinds of buyers. Product-variety marketing attempts to offer a variety of products to broaden the customer base. Target marketing is the decision to distinguish the different groups that make up a market a to develop corresponding products and marketing mixes for each target market. Sellers today moving away from mass marketing and product differentiation toward target marketing because the latter is more helpful in spotting market opportunities and developing winning products marketing mixes. The key steps in target marketing are market segmentation, market targeting, and product positioning. Market segmentation is the act of dividing a market into distinct groups of buyers with different needs or responses. The marketer tries different variables to see which reveal the best segmentation opportunities. For each segment, a customer segment profile is developed. Segmentation effectiveness depends upon arriving at segments that are measurable, substantial, accessible and actionable.Next, the seller has to target the best market segment(s). The seller must evaluate the potential of each segment, which is a function of segment size and growth, segment attractiveness, and company objectives and resources. Then the seller must decide how segments to serve the seller can ignore segment differences (undifferentiated marketing), develop different market offers for several segments (differentiated marketing), or go after one or a more market segments (concentrated marketing). In choosing target segments, marketers need to consider the ethical choice of market targets, segment interrelationships and supersegments, and potential segment invasion plans.LEARNING OBJECTIVES:After reading this chapter students should:∙Understand what it means to "segment" a market∙Know the basic steps in segmenting a market∙Understand the bases used to segment consumer and business markets∙Know how to evaluate and select segments for targeting of marketing programs CHAPTER OUTLINE:I.IntroductionII.Levels and Patterns of Market Segmentation - buyers differ in many ways.A.Levels of Market Segmentation1.Mass - one product/marketing mix available for all buyers.2.Segment - a large identifiable group within a market. Midpoint betweenmass and individual marketing.3.Niche - a narrowly defined smaller group whose needs are not currentlybeing met well.4.Local - Marketing programs targeted to the needs and wants of localcustomer groups.5.Individual - “one to one” marketing6.Self - a form of individual marketing in which the consumer takes moreresponsibility for determining which brands and products to buy. (i.e. -shopping over the Internet)B.Patterns of Market Segmentation - homogenous, diffused, clusteredC.Market Segmentation Procedure - survey, analysis, profileIII. Segmenting Consumer and Business MarketsA.Bases for Segmenting Consumer Markets1.Geographic segmentation - nations, states, regions, counties, cities,neighborhoods2.Demographic segmentation - age and life-cycle, gender, income,generation, social class.3.Psychographic segmentation - lifestyle, personality4.Behavioral segmentation - based on purchase occasions, benefits sought,user status, usage rate, loyalty status, buyer-readiness stage, and attitude.5.Multi-Attribute segmentation (geoclustering assumes people who livenear each other exhibit similar traits in all of the above segmentationbases)6.Targeting Multiple SegmentsB.Bases for Segmenting Business Markets - see page 267C.Requirements for Effective Segmentation - measurable, substantial, accessible,actionableIV.Market TargetingA.Evaluating the Market Segments1.Segment size and growth2.Segment structural attractivenesspany objective and resourcesB.Selecting the Market segments1.Single-segment concentration - firm concentrates on one market only forits one product.2.Selective specialization - firm selects a number of attractive andappropriate segments and develops products which appeal to eachsegment.3.Product specialization - firm focus is on a product it can sell to severalsegments.4.Market specialization - firm satisfies multi-faceted needs of oneparticular group.5.Full market coverage - firm serves all customer groups with productsthey might needa)Undifferentiated marketing - entire market receives the sameprogramb)Differentiated marketing - different programs for differentsegments.C.Additional Considerations in Evaluating and Selecting segments1.Ethical choice of market targets - targeting sometimes generatescontroversy2.Segment interrelationships and super segments - for cost, performanceand technology3.Segment-by-segment invasion plans - enter one at a time.4.Intersegment cooperation - all segment managers work together toimprove overall company performance.V.SummaryMARKETING AND ADVERTISING1. As the ad in Figure 1 shows, Olympus has developed an extremely tiny 35 mm zoom camera. Is the company engaging in mass marketing, segment marketing, local marketing, niche marketing, or individual marketing? Based on this ad, which demographic, psychographic, and behavioral variables do you think Olympus is using to segment its consumer markets?Answer: Olympus seems to be engaging in segment marketing, targeting consumers who want an especially small pocket-size camera with a zoom lens. This segment has particular wants that differ from the wants of the larger market. The overall market may want a smaller camera or a zoom camera, but the segment targeted by Olympus wants both a tiny camera and a zoom lens—wants that are addressed by the artwork as well as the copy in the ad. Based on this ad, Olympus appears to be using several demographic, psychographic, and behavioral variables to segment its consumer markets, including: age (relatively young consumers); active lifestyle; and flexibility and convenience benefits. Students may suggest additional variables.2. Praxair supplies atmospheric, process, and specialty gases for a variety of industrial applications. The ad in Figure 2, which appeared in a national business magazine, describes how Praxair's carbon dioxide products help businesses in the food industry eliminate beetles and other bugs without the use of dangerous pesticides. Which of the major segmentation variables do you think Praxair is using on its business markets? What personal characteristics might be particularly important in Praxair's business markets? Why? Answer: Praxair appears to be using demographic variables (by industry; in this case, food), situational factors (specific applications of the product; in this case, as an insecticide); and personal characteristics (attitudes toward innovation; in this case, food companies willing to try a new process as an alternative to other pesticides). Students may also cite other segmentation variables. Loyalty is another personal characteristic that might be particularly important in Praxair's business markets. This is important because the company specializes in creating solutions for customers, so it wants long-term relationships that allow for testing and application of even more novel solutions. Students may answer with additional personal characteristics.FOCUS ON TECHNOLOGYCompanies that use outbound telemarketing (company reps calling customers and prospects) or inbound telemarketing (company reps answering calls from customers and prospects) can now apply Claritas's PRIZM geoclustering technology to their telemarketing activities. Outbound telemarketers can use TelePRIZM, as this specialized technology is called, to target the customers and prospects most likely to purchase their goods and services. Inbound telemarketers can use TelePRIZM to analyze the profile of consumers who call the company to see whether any changes are needed to the offerings and advertising. Find out more by reading about TelePRIZM on the Claritas Web site (/telepriz.htm). What type of companies would find TelePRIZM most useful for their inbound calls? Select one company and suggest how it might apply this technology to calls received from current customers. What benefits can you see for callers who contact this company?Answer: Banks, brokerage firms, computer marketers, and department stores are some of the companies that would find TelePRIZM useful for inbound calls, because they can benefit from targeting specificsegments for specific goods and services. As one example, Fidelity Investments could apply TelePRIZM to inbound calls from current customers. Using this technology, Fidelity can analyze the lifestyle groupings of callers and see which clusters respond best to particular offerings and which clusters have the most investments in Fidelity products, as well as which are most profitable. Fidelity can then fine-tune its offerings to specific clusters and intensify marketing to clusters that are most profitable while easing up on marketing to less-profitable clusters. Callers who contact Fidelity will benefit because the products they are offered will be more tailored to their backgrounds and demographics. Students who select other companies will offer other possibilities, as well.MARKETING FOR THE MILLENNIUMMass customization is helping high-tech and non-tech companies alike to build consumer relationships one at a time through individual marketing. This level of segmentation will be increasingly important to marketers in the new millennium. Dell, for example, is a leader in mass customization.Visit Dell's home page () and look at the way it segments its market. Also visit the store information page to see how Dell's mass customization process works(/storeinfo/howto.htm). Why does Dell highlight the various segments so prominently? Why does it offer a 30-day money-back guarantee? If Dell is aggressively pursing online commerce, why does it include a toll-free phone number on its home page? What competitive challenges do you think Dell will face in continuing its individual marketing strategy into the new millennium? Answer: Dell prominently highlights the various segments so visitors to the Web site can self-select the area that best matches their description and needs. This approach sends a signal to visitors in each segment that Dell understands their needs and has special offers geared specifically for their segment. Dell offers a 30-day money-back guarantee to give customers (first-time buyers in particular) confidence in the quality of the computer they are purchasing sight-unseen. It also allows customers to find out, without risk, whether this expensive purchase truly meets their needs.The reason Dell includes a toll-free number on its home page is to reassure visitors (again, first-time buyers in particular) that they do not have to purchase online or even wade through multiple screens if they would prefer to speak to a Dell representative. It also shows that Dell offers more than one option for contact, giving customers the security of a viable alternative if they cannot access the Dell Web site. The company is likely to face increased competition in the new millennium as more computer makers follow an individual marketing strategy to sell custom-built products. Another competitive challenge will come from retailers that follow a similar individual marketing strategy, ordering computers from manufacturers on the basis of customized orders. Students may mention other challenges, in addition.YOU'RE THE MARKETER: SONIC MARKETING PLANDefining a target marketing strategy through market segmentation is a critical aspect of any marketing plan. The goal is to identify and describe distinct market segments, target specific segments, and then pinpoint the differentiating benefits to be stressed.In your role as Jane Melody's assistant, you are responsible for market segmentation, target marketing, and positioning for Sonic's shelf stereo products. Review the data you previously gathered about the company's marketing situation, your analysis of SWOT and critical issues, and market needs and requirements. Then answer the following questions about market segments, target markets, and positioning:∙Which variables should Sonic use to segment its consumer markets? (For example, in addition to age, does Sonic want to focus on consumers in specific areas? Consumers who havespecific attitudes toward music? Consumers in particular stages of the family life cycle?) ∙If Sonic is pursuing business customers, which variables should be used to segment business markets? (For example, should Sonic segment the business market by industry and companysize? By specific product application?)∙How can Sonic evaluate the attractiveness of each identified segment? Should Sonic market to one segment or more than one segment? (For example, is each segment accessible? Is itsubstantial? How does each segment fit with Sonic's objectives and resources?) ∙What differentiates Sonic's shelf stereos from competing products? How can Sonic use differentiation to develop and communicate a powerful positioning strategy? (For example,does the product have competitively superior performance or reliability? Which point(s) ofdifferentiation would be the most compelling as the basis of Sonic's promotional strategy?)Next, consider how your answers to these questions will affect Sonic's marketing efforts. Then, as your instructor directs, summarize your findings and conclusions in a written marketing plan or type them into the Target Markets/Positioning section of the Marketing Plan Pro software.Answer: The answers to these questions depend, in part, on information about Sonic that was presented in Chapter 3 and on data that students have gathered and analyzed for marketing plan exercises in previous chapters.Variables Sonic can use to segment its consumer markets include: age (20-40), income (middle-income and upscale households), family life cycle (early stages such as single, married, and married with relatively young children), benefits (quality, economy, fits decor, all-in-one system), and attitude (likes good music but is not a music enthusiast). Gender is another variable (targeting women, in particular) Sonic can use. Students may suggest other variables, as well.In the event Sonic decides to pursue business markets, the company can use the following variables to segment business markets: industry (such as restaurants and retail stores), company size (smaller), operating variables (nonusers for a basic model and users for an upgraded model), purchasing approaches (companies with highly decentralized buying organizations), and specific application (companies that want music to entertain their patrons). Students may suggest additional variables for these markets.Sonic can evaluate the attractiveness of each identified segment by determining whether each is measurable, substantial, accessible, differentiable, and actionable. This may require research in some cases. The decision to market to one segment or more than one segment depends on how each segment fits withSonic's objectives and resources (such as budget).What differentiates Sonic's shelf stereos from competing products is its high-quality image. Sonic can use differentiation to develop and communicate a powerful positioning strategy by stressing quality sound and reliability. The firm's excellent service network and trusted brand name are supporting points to be communicated. Students may offer other ideas about Sonic's differentiation and positioning.。