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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.。
C HAPTER 20--M ANAGING THE S ALES F ORCEOVERVIEWMost companies use sales representatives, and many companies assign them the pivotal role in the marketing mix. Salespeople are very effective in achieving certain marketingobjectives. At the same time they are very costly. Management must give careful thought to designing and managing its personal-selling resources.Sales force design calls for decisions on objectives, strategy, structure, size and compensation. Sales force objectives include prospecting, communicating, selling and servicing, information gathering, and allocating. Sales force strategy is a question of what types and mix and selling approaches are most effective (solo selling, team selling, and so on). Sales force structure is a choice between organizing by territory, product, customer, or a hybrid combination and developing the right territory size and shape. Sales force size involves estimating the total workload and how many sales hours-and hence salespeople-would be needed. Sales force compensation involves deter-mining pay level and components such as salary, commission, bonus, expenses, and fringe benefits.Managing the sales force involves recruiting and selecting sales representatives and training, directing, motivating, and evaluating them. Sales representatives must be recruited and selected carefully to hold down the high costs of hiring the wrong persons. Sales-training programs familiarize new salespeople with the company's history, its products and policies, the characteristics of the market and competitors, and the art of selling. Salespeople need direction on such matters as developing customer and prospect targets and call norms and using their time efficiency through computer-aided information, planning and selling systems and inside support salespeople. Salespeople also need encouragement through economic and personal rewards and recognition because they must make tough decisions and are subject to many frustrations. The key idea is that appropriate sales force motivation will lead to more effort, better performance, higher rewards, higher satisfaction, and therefore still more motivation. The last management step calls for periodically evaluating each salesperson's performance to help him or her do a better job. The purpose of the sales force is to produce sales, and this involves the art of personal selling. One aspect is salesmanship, which involves a seven-step process: prospecting and qualifying, preapproach, approach, presentation and demonstration, overcoming objections, closing, and fol-low-up and maintenance. Another aspect is negotiation, the art of arriving at transaction terms that satisfy both parties. The third aspect is relationship management, the art of creating a closer working relationship and interdependence between the people in two organizations.In summary, the primary variables for the sales force / management effort include the following: (1) Setting Objectives - Objectives can be general rules for guiding salespeople or more specific expectations for behavior. Regardless, the sales objectives should address the relationship between sales, customer satisfaction, and company profit; (2) Designing Strategy- Strategy requires decisions on salesforce structure, size, and compensation. Variations inthis mixture are appropriate for differing industries, markets and sales objectives; (3) Recruiting and Selecting - Knowing in advance what characteristics will always produce good salespeople is very difficult. Selection procedures should attempt to screen candidates forboth ability and retention-related issues; (4) Training Salespeople - Issues in training center onskills such as order taking and order getting, seeing customers as people who require problem solutions; (5) Supervising Salespeople - Supervision addresses problems in directing and coordinating salespeople's organization, time management, motivation, and customer relationships; (6) Evaluating Salespeople - Evaluation requires both qualitative and quantitative measures of salesforce performance.LEARNING OBJECTIVES:After reading the chapter the student should understand:∙The key factors in designing a sales force∙How one manages a sales force successfully∙The fundamental principles of personal sellingOUTLINEI.Introduction - various classifications of sales positions ranging from least to most creativetypes of selling (deliverer, order taker, missionary, technician, demand creator, solutionvendor)II.Designing the Sales ForceA.Sales Force Objectives (tasks to perform include: prospecting, targeting,communicating, selling, servicing, information gathering, and allocating)B.Sales Force Strategy - approach can be: sales rep to buyer, sales rep to buyergroup, sales team to buyer group, conference selling or seminar selling. Acompany can utilize a direct (company) or contractual (outside) sales force.C.Sales Force StructureD.Force Size and Compensation - level and appropriate combination of components(fixed, variable, expense allowances, and benefits).III.Managing the Sales ForceA.Recruiting and Selecting Sales Representative1.What Makes a Good Sales Representative?2.Recruitment Procedures3.Applicant-Rating ProceduresB.Training Sales Representatives - several goals: to know and identify with thecompany, to know the company’s products, to know the customers’ andcompetitors’ characteristics, to know how to make effective sales presentations,and to understand field procedures and responsibilitiesC.Supervising Sales Representatives1.Developing Norms for Customer Calls2.Developing Norms for Prospect Callsing Sales Time EfficientlyD.Motivating Sales Representatives - the higher the salesperson’s motivation, thegreater his or her effort.1.Sales quotas2.Supplementary Motivators (meetings, contests, etc.)E.Evaluating Sales Representatives1.Sources of Information - sales reports including activity plans and write-ups of activity reports2.Formal Evaluation of Performance (current-to-past sales comparisons,customer-satisfaction evaluation, qualitative evaluation)IV.Principles of Personal SellingA.Professionalism - major steps involved in any sales presentationB.Prospecting and Qualifying - identify and screen out leads1.Pre-approach - learning about the prospect2.Approach - greeting the prospect3.Presentation and Demonstration - tell the product “story”4.Overcoming Objections - psychological and logical resistance5.Closing - asking for the sale6.Follow-Up and Maintenance - ensure satisfactionC.Negotiation1.Negotiation Defined - in negotiated exchange, price and other terms areset via bargaining behavior, in which two or more parties negotiate long-term binding agreements.2.When to Negotiate - appropriate whenever a zone of agreement exists3.Formulating a Negotiation StrategyD.Relationship Marketing - based on the premise that important accounts needfocused and continuous attention. Main steps in establishing a relationshipmarketing program include:1.Identify the key customers meriting relationship marketing,2.Assign a skilled relationship manager to each key customer,3.Develop a clear job description for relationship managers,4.Appoint an overall manager to supervise the relationship managers,5.Have relationship managers develop long-range goals and annualcustomer-relationship plans.V.SummaryMarketing and Advertising1. Ford uses ads such as this, which appeared in Latina magazine, to bring prospects into its dealers' showrooms. Then sales representatives take over, asking about prospects' needs and discussing features and benefits of various Ford models. What kind of training do you think dealers' sales representatives n eed? How can they qualify prospects? Why are good follow-up and maintenance skills important for dealers' sales representatives?Answer: Dealers' sales representatives need training in the features and benefits of each Ford model, as well as training in customers' and competitors' characteristics, effective sales presentation methods, and appropriate field procedures. They can qualify prospects by asking about their preferences (to see whether these match with Ford models being sold), schedule for buying, and price requirements. Good follow-up and maintenance skills keep customers coming back for service at the dealership and encourage customers to buy the next vehicle from the same dealer.2. The Xerox ad shown in Figure 2 is geared toward businesses that produce marketing materials such as brochures in color. This ad directs interested readers to call a toll-free number and ask for a "Xerox Color Specialist." Which of the six types of sales representatives is this specialist likely to be? Which of the specific sales tasks is this sales rep likely to perform?Answer: The Xerox color specialist is likely to be a solution vendor who can devise a system to solve the customer's problems. This sales rep will not do prospecting, targeting, or allocating, but wil l respond to calls from customers by communicating, selling, servicing, and information gathering.Focus on TechnologyAutomated sales management software helps companies boost the productivity of their sales representatives and better integrate sales activities with overall marketing and corporate strategies. Among the leaders in this technology is Trilogy, whose Selling Chain software includes modules for managing sales compensation, contracts, pricing, proposals, and other aspects of the sales proces s.Visit Trilogy's Web site to read about its Selling Chain software(/products/selling_chain.asp). Also click on the "SC Commission" button (in the column of products at left) to read about the sales compensation portion of this program, used by sales managers at Hewlett-Packard and many other companies. With this program, what criteria might sales managers want to use to evaluate the performance of their representatives? Why would sales managers want to track the profitability as well as the volume of sales produced by a sales representative?Answer: Using the Trilogy software, sales managers might want to evaluate their sales reps on the basis of activity (including the number of sales calls made and the number of resulting proposals, contracts, and quotes generated) as well as performance in meeting sales quotas and revenue and profit goals. Customer satisfaction is not tracked directly by the Trilogy software, but should also be included in any sales performance evaluation. Profitability as well as sales should be tracked because reps who build sales volume by discounting prices can significantly hurt the company's overall profitability.Marketing for the MillenniumMany companies are using their Web sites as tool s for building long-term relationships between sales representatives and their customers. A case in point is Texas Instruments, which has created a sophisticated Web site to support its sales of multiple product lines, including calculators and semiconductors.Visit the Texas Instruments Web site (/). Click on the privacy policy (at bottom of page) to learn why information is collected from visitors. Then return to the home page and click on the TI&ME button (at top right) to see how visitors can customize what they view on this site. What does Texas Instruments do with the information it collects from visitors? Why would a customer want to customize the Web page? Why would Texas Instruments want its customers to set up customized Web pages? What effect is this likely to have on the relationship between customers and their sales representatives? Answer: Texas Instruments' privacy policy states that the company will not provide any visitor's personally identifying information to other companies or individuals without getting the visitor's consent. The company tracks the sites from which people go to the Texas Instrument site; it also retains cookies to track specific information requested by the vi sitor, such as personalized Web pages, registrations, and so on. Customers who do not want to waste time wading through mountains of irrelevant data would find customized Web pages useful and time-saving. Knowing what interests a customer can help a sales reptailor the offer of goods and services to better meet that customer's needs; thi s strengthens the relationship between the customer and the sales rep.YOU'RE THE MARKETER: SONIC MARKETING PLANMany marketers—including nonprofit and for-profit organizations—include personal selling in their marketing plans. However, because of the high cost of maintaining a sales force, many marketers are substituting mail and telephone sales for some personal sales calls.At Sonic, you are helping Jane Melody plan sales strategy for the company's line of shelf stereos. Take a few minutes to review Sonic's current situation and the marketing strategies you have already recommended. Then answer the following questions about Sonic's use of personal selling:∙Who should Sonic's sales force be calling on? How can the sales force support Sonic's marketing plan and goals? Would Sonic benefit from major account management?∙What sales objectives and quotas should Sonic set for its sales force?∙What kind of compensation would be most appropriate for the sales force?∙What training should Sonic be providing for new and existing sales representatives?Once you have answered these questions, consider the implications for Sonic's overall marketing goals and its marketing mix. Depending on your instructor's directions, type your answers and recommendations into a written marketing plan or enter them into the Marketing Strategy/Sales Force section and the Sales Forecast section of the Marketing Plan Pro software.Answer: Sonic's sales force should be calling on wholesalers and retailers as part of the distribution strategy. The goals set for the sales force should directly link with Sonic's marketing plan and goals and with the company's overall goals. Sonic would probably benefit from major account management. This would allow for the development and nurturing of longer-term relationships with retailers and other channel members who sell large quantities of Sonic stereos. Sales objectives and quotas for Sonic's sales force should include: quotas that are higher than the sales forecast presented in the marketing plan, to encourage higher performance; objectives for unit sales, revenues, and profitability; and objectives for customer satisfaction. Sonic can structure its sales compensation in several ways. If straight salary is provided, the company should add special incentives to motivate and reward sales reps for extraordinary effort or results. If straight commission is provided, the company only pays when reps perform, which encourages sales reps to meetor exceed their quotas. However, Sonic would probably do best with a combination of salary and commission, which would pay reps for handling necessary nonsales functions while rewarding them for making or exceeding their quotas. Sonic needs to train its sales reps about the company and its goals; the products and their features and benefits; customers and competitors' characteristics; sales presentation methods; and sales procedures and responsibilities.。
PART II -- ANALYZING MARKETINGOPPORTUNITIESCHAPTER4--G ATHERING I NFORMATION AND M EASURINGM ARKET D EMANDOVERVIEW:Marketing 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 non-price 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 sub-systems. 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 salesforce, 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 demandestimates, 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 can be 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 OBJECTIVES:After reading this chapter students should:∙Understand demand measurement terminology∙Know the methods of estimating current demand∙Know the methods of estimating future demandCHAPTER OUTLINE:I.Introductionponents of a Modern Marketing Information SystemA.Consists of people, equipment, and procedures to gather, sort, analyze, evaluate,and distribute needed, timely, and accurate information to marketing decisionmakers.III.Internal Records SystemA.The 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 customers.IV.Marketing Intelligence SystemA. A set of procedures for managers to obtain everyday information about pertinentdevelopments in the marketing environment.B.Internal records systems supplies “results” data, and the marketing intelligencesystem supplies “happenings” data.C.There are four steps to improving marketing intelligence: train the sales force,motivate intermediaries to share intelligence, purchase information from outsidesuppliers, and establish an internal marketing information center to collect andcirculate intelligence.V.Marketing Research SystemA.Marketing research -- the systematic design, collection, analysis, and reporting ofdata and findings relevant to a specific marketing situation facing the company.B.Suppliers of marketing research - can be achieved through an in-housedepartment, an outside marketing research firm, or a variety of other costefficient ways. Increasing amounts of information available via the Internet.C.The Marketing Research Process1.Define the Problem and Research Objectives2.Developing the Research Plan - decisions on data sources, researchapproaches, research instruments, sampling plan, and contact methods.3.Collect the Information - phase most expensive and prone to error.4.Analyze the Information - extract pertinent findings from the collecteddata.5.Present the Findings - pertinent to the major marketing decisions facingmanagement.D.Overcoming Barriers to The Use of Marketing ResearchVI.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 action. Explanation of how an MDSS works.VII.An Overview of Forecasting and Demand MeasurementA.Measures of Market Demand - see TextB.Which Market to Measure? - available market, qualified available market, targetmarket, or penetrated marketC. A 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 Shares - identifying competitorsand estimating their salesE. Estimating Future Demand1.Survey of Buyers' Intentionsposite of Sales-Force Opinion3.Expert Opinion4.Past-Sales Analysis5.Market Test MethodVIII.SummaryMARKETING AND ADVERTISING1. Marriott has boosted annual revenues over $12 billion by working to identify and satisfy the differing needs and preferences of travelers. The Marriott ad shown in Figure 1 is targeted toward health-conscious business travelers. What internal data sources can the company use to identify opportunities such as this? To identify problems with a particular part of the service offering such as the health club or pool? How would a marketing intelligence system help Marriott compete against Hilton and other rivals who target the business travel market? If you were designing Marriott's marketing intelligence system, what would you include? Why?Answer: To identify opportunities such as meeting the needs of health-conscious business travelers, Marriott might examine internal data sources such as records of trends in usage of its hotels' swimming pools and other health facilities and sales by room service and hotel restaurants of foods favored by health-conscious consumers; students may suggest additional internal data sources. Internal sources of data about problems with the service offering include written complaints and responses to customer satisfaction surveys; students may suggest additional sources. Marriott might use a marketing intelligence system to find out about changes in its competitors' hotels and service offerings geared toward the business travel market (such as new offers of in-room laptops, 24-hour copy center availability, and so on). Such intelligence would allow Marriott to evaluate rivals' actions and consider suitable responses. Students may have many ideas for what to include in a marketing intelligence system for Marriott. Two ideas: Ask suppliers about unusual or large orders placed by rival hotel chains; listen to competitors' speeches and visit their exhibits at conventions and other industry events.2. Bayer Aspirin, the product featured in this ad, is locked in competitive battle with Tylenol, Advil, and a wide range of other pain-killers. In planning next year's marketing programs, the company wants to estimate future demand. Would a survey of buyers' intentions be appropriate for this product? Would you suggest using past-sales analysis or a direct market test? What effect would the unexpected introduction of a new pain-killing drug from a rival firm—supported by a high-profile, multi-million dollar campaign—be likely to have on Bayer's forecast of future demand?Answer: No, a survey of buyers' intentions would not be appropriate for Bayer aspirin, because consumers are unlikely to plan purchases of aspirin for the months ahead. A past-sales analysis would be more helpful than a direct market test, because past sales can be thoroughly analyzed as a way of projecting future sales. Direct market tests are more useful for new products or products being expanded into additional channels or areas, not for an established product such as Bayer aspirin. The unexpected introduction of a new pain-killing drug from a rival firm, supported by a major promotional campaign, would probably change actual sales results, making Bayer's forecasts of future demand inaccurate and out-dated.Focus on TechnologyEvery year since 1994, the Georgia Institute of Technology has conducted two World Wide Web user surveys to find out who is using the Web, what technology is being used, the problems users are encountering, how much individuals and companies are spending online, and how they are using on-line financial services. To learn more, point your Web browser to Georgia Tech's WWW Survey site (/gvu/user_surveys/). Look through the latest survey results. What limitations should companies bear in mind when using these survey results? What kind of sample does this survey represent,and why should marketers care? How could a company such as United Airlines apply the results of this survey in its efforts to sell more airline tickets on the Web?Answer: Companies using the results of this survey should bear in mind that the data may not be representative of a target population, since the respondents are self-selected. The results of the survey may be biased by the exclusion of people who do not use the Internet or prefer not to answer on-line surveys. This survey is a convenience sample, selecting from among an accessible population of Internet users. Knowing this helps marketers realize that they cannot measure the sampling error in such a sample. United Airlines might use the results of this survey to determine what Internet users like, dislike, want, and do not want when making on-line purchases of goods and services; it will also reveal attitudes toward privacy concerns and other problems that bother Internet users. This survey will help the airline get a sense of the demographics of Internet users for comparison with the company's targeted segments. Students may suggest other uses of this survey.Marketing for the MillenniumPrudential is one of many companies using data mining to target its marketing outreach. Through data mining, the firm has saved money and improved response by more narrowly targeting the mailing lists for specific product offers. Visit Prudential's Web site () and select one type of product, such as life insurance. Identify two ways that data mining could be applied to market life insurance. What potential problems or dangers do you see in using data mining? What additional marketing applications can you foresee for Prudential's use of data mining?Answer: Students may suggest various ways that Prudential could use data mining to market life insurance. Two sample ideas for Prudential: (1) sift its complete customer database to identify consumers who have not yet bought life insurance from Prudential to identify prospects for such products; and (2) search the database to find the average age and other demographics of Prudential's most profitable life insurance customers, then search external databases to find other prospects who match the same profile and send them offers for Prudential life insurance. Some potential problems or dangers of data mining are: consumer concerns about privacy; the need for extensive safeguards to protect such valuable data; concerns about future regulation of databases containing sensitive consumer data; students may identify additional issues. Other marketing applications for data mining within Prudential include the ability to assign sales people only to prospects with the highest potential for purchasing selected products; and the ability to rank customers in order of overall profitability so Prudential can target more profitable customers formore/better service and use less-expensive methods for less-profitable customers (students may also offer other ideas).YOU'RE THE MARKETER: SONIC 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, 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. Referring to Table 3-3 in Chapter 3, 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 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 willuse the data in your marketing planning.∙What surveys, focus groups, observation, behavioral data, and/or experiments will Sonic need to support its marketing strategy, including product management, pricing, distribution, andmarketing communication? Be specific about the questions or issues that Sonic should be ableto resolve using market research.As your instructor directs, enter information about Sonic's use of marketing data and research in the appropriate sections of a written marketing plan or type them in the corresponding sections of the Marketing Plan Pro software.Answer: Students should review the data about Sonic shown in Chapter 3 and look at their answers to the marketing plan questions in Chapter 3 before answering these questions. Referring to Table 3.3, students will need secondary data as well as primary data as they look at Sonic's current marketing situation, the opportunity and issue analysis, and marketing strategy. This is because they need to collect primary data from internal sources (such as historical sales figures) and from external sources (such as consumer surveys) and gather secondary data (such as competitive product specifications) as background for writing about the marketing situation, analyzing opportunities and issues facing Sonic, and developing a suitable marketing strategy.Students may offer different ideas for sources of appropriate secondary data for this marketing plan. Some sample ideas include: searching printed materials or Internet sites maintained by trade associations to learn about trends in sales of products similar to the Sonic product line; and searching government publications and Internet sites to find out about current and pending regulations that might affect Sonic's ability to buy parts from international suppliers or sell finished products in international markets.In addition, students are likely to offer various answers about surveys, focus groups, observation, behavioral data, and/or experiments Sonic needs to support its marketing strategy decisions. Evaluate their responses on the basis of how well the marketing research they describe will help Sonic answer specific questions and resolve specific issues important to the company's marketing planning process. As one example, the research should help Sonic better describe attractive, profitable market segments to be targeted.。
CHAPTER22--M ANAGING THE T OT AL M ARKETING E FFORT OVERVIEW:This chapter examines how the marketing function is organized and how it relates to othercompany functions and how marketing plans must be implemented in order to succeed in themarketplace.The modern marketing department evolved through several stages. It started as a sales department,and later took on ancillary functions, such as advertising and marketing research. As the ancillaryfunctions grew in importance, many companies created a separate marketing department to manage them. Sales and marketing people generally worked well together. Eventually, the twodepartments were merged into a modern marketing department headed by a marketing vice-president. A modern marketing department, however, does not automatically create an effectivemarketing company unless the other departments accept and practice customer orientation.When a company refocuses on its organizational structure on key process, rather thandepartments, it becomes a process-outcome-based company.Modern marketing departments are organized in a number of ways. A functional marketing organization is where separate managers head marketing functions, reporting to the marketing vice-president. A geographical marketing organization allocates its sales organization resources along geographic lines, nationally, regionally or locally. A product management organization assigns products to product managers who work with functional specialists to develop and achieve product plans. A market management organization assigns major markets to market managers who in turn work with functional specialists to develop and implement their plans. Some large companies use a product and market management organization called a matrix organization. Finally, multi-division companies usually operate with a corporate marketing department and divisional marketing departments.Marketing must work harmoniously with other functional areas. In its pursuit of the customer’sinterests, marketing may come into conflict with R&D, engineering, purchasing, manufacturing,operations, finance, accounting, credit, and other functions. These conflicts can be reduced whenthe company president commits the firm to a customer orientation and when the marketing vice-president learns to work effectively with the other executives. Acquiring a modern marketing orientation requires top executive support, a marketing task force, outside marketing consulting help, in-house marketing training, acquisition of strong marketing talent, a customer-oriented system and other related steps.Those responsible for the marketing function must not only develop effective marketing plans butalso implement them successfully. Marketing implementation is the process of turning plans intoaction exercises describing who does what, when, and how. Effective implementation requires skills in allocating, monitoring, organizing, and interacting at all levels of the marketing effort. The four types of marketing control address the annual marketing plan, profitability, efficiency and strategy. The capstone effort in this process is the marketing audit.LEARNING OBJECTIVES:After reading the chapter the student should understand:The need for organization∙Organization of the marketing and sales functions∙How marketing relates to other key business functions∙How to develop a stronger market-focused organization and orientation∙The skills needed for effective implementation∙How a company may improve its marketing implementation skillsCHAPTER OUTLINE:I.Trends in Company Organization - Companies must reorganize in response toglobalization, deregulation, advances in computer technology and telecommunications,market fragmentation, and other developments.II.Marketing OrganizationA.The Evolution of the Marketing Department1.Stage I: Simple Sales Department - sales vice president, sellingorientation, occasional outside support.2.Stage II: Sales Department with Ancillary Marketing Functions3.Stage III: Separate Marketing Department - still with a focus on sales4.Stage IV: Modern Marketing Department - Sales and marketingrelatively equal, planning from marketing, implementation by sales5.Stage V: Effective Marketing Company - beginning of customerorientation6.Stage VI: Process- and Outcome-Based Company - focus of structure onkey processes (new-product development, customer acquisition, etc.)versus departmentsB. Organizing the Marketing Department1.Functional Organization2.Geographical Organization3.Product- or Brand-Management Organization - advantages anddisadvantages. An alternative to product managers is product teams.4.Market-Management Organization5.Product-Management/Market-Management Organization - otherwiseknown as a matrix organization6.Corporate/Divisional Organization - from no corporate marketing staff toa strong corporate marketing staffC.Marketing's Relations With Other Departments1.R&D2.Engineering3.Purchasing4.Manufacturing5.Operations6.Finance7.Accounting8.CreditD.Strategies for Building a Companywide Marketing Orientation. --The main stepsare to:1.convince the managment team of the need to become customer focused;2.appoint a top marketing officer and a marketing task force, get outsidehelp and guidance;3.change the reward structures in the company; hire strong marketingtalent;4.develop strong in-house marketing training programs;5.install a modern marketing planning system;6.establish an annual marketing excellence recognition program;7.consider reorganzing from a product-centered company to a market-centered company;8.shift from a department focus to a process/outcome focus.III.Marketing ImplementationA.The process that turns marketing plans into action assignments and ensures thatsuch assignments are executed in a manner that accomplishes the plan’s statedobjectives. Four skills related to effective implementation:1.Diagnostic skills2.Identification of company level3.Implementation skills4.Evaluation SkillsIV.Evaluation and Control - four types of control:A.Annual-Plan Control1.Sales Analysis2.Market Share Analysis3.Marketing Expense-To-Sales Analysis4.Financial Analysis5.Market-based scorecard analysisB.Profitability Control1.Methodology of Marketing-Profitability Analysis (identifying thefunctinal expenses, assigning the functional expenses to the marketingentities, and preparing a profit-and-loss statemetn for each marketingentity)2.Determining the Best Corrective Action3.Direct versus Full Costing (direct costs, traceable common costs, andnontraceable common costs)C.Efficiency Control1.Sales Force Efficiency2.Advertising Efficiency3.Sales-Promotion Efficiency4.Distribution EfficiencyD.Strategic Control1.The Marketing-Effectiveness Review2.The Marketing Audit3.The Marketing Excellence Review4.The Ethical and Social Responsibility ReviewV.SummaryMarketing and Advertising1. When ConAgra introduced the new Healthy Choice Savory Selections packaged cold cuts shown in the ad in Figure 1, it had to coordinate the work of the marketing department with the work of the purchasing, manufacturing, finance, accounting, and credit departments. Outline how marketing would interact with each of these other departments in the course of developing and launching the three new flavors.Answer: Before placing any ads, employees in the ConAgra marketing department would have to check with the manufacturing department to find out the exact date the new product line wou ld be ready. Theywould have to request purchase orders from the purchasing department for goods and services related to placing the ads. They would have to coordinate the advertising budget with employees in the finance department. Marketing employees would have to alert the accounting department about potential discounts and about bills that would be received for planning, creating, and implementing the ad campaign. And before arranging for the new products to be advertised and distributed, they would check with the credit department to find out which distributors, if any, have not paid for shipments of previous products.Focus on TechnologyLarger and multinational companies have a particularly difficult time grappling with the complexities of coordinating and controlling marketing activities across departmental and national borders—let alone time zones. Now technology is available to help everyone involved in the planning process juggle their roles and responsibilities, avoiding overlap and smoothing the way for more effective implementation and control. To see a sample screen from this software, visit the Web site of Copernicus, a marketing strategy consulting firm (/market/docs/planners.htm). The Copernicus software, customized for each company, shows who is responsible for which activities. It also includes the company's mission, vision, and goals, as well as the marketing objectives and a full set of budgets, forecasts, and schedules. This technology runs on the company's Intranet, so it is accessible to everyone who participates in marketing planning. Why are budgets and schedules important for marketing control? Why do managers need to see the company goals and marketing objectives as they create each year's marketing plan? Answer: Budgets help marketers control their plans by indicating how much money has been allocated to different marketing elements. At the end of each period (each month or each year), the marketer can compare actual expenses to the budget to identify variations and make any needed changes. Schedules also help marketers follow the timing of the development and execution of each marketing and advertising element. By comparing actual timing with planned schedules, marketers can pinpoint timing problems and make changes to keep all programs and activities running as planned. The marketing plan must dovetail with the company's overall goals as well as its marketing objectives. Therefore, the managers creating the marketing plan must be familiar with the company's goals and marketing objectives so they can make the marketing plan consistent with the entire company's targets and strategies.Marketing for the MillenniumWith globalization spreading throughout the apparel industry, fair labor practices have become a high-profile marketing issue—and a matter of corporate ethics—for U.S. companies. Recent news reports have covered the plight of underpaid, overworked, and sometimes under-age employees in factories across Latin America and the Pacific Rim. Search for the latest news on this key issue using your favorite search engine (such as ). Also check the U.S. Department of Labor's Bureau of International Labor Affairs Web site for more information (/dol/ilab/). Have any U.S. companies with international factories been charged lately with unfair labor practices? How are these companies responding to the charges? Is the U.S. government doing anything about these problems?Answer: Students' answers will depend on what is currently posted on the Department of Labor Web site. Once charges are posted, it is likely that the U.S. government is planning some sort of action, such as levying a fine or forcing changes in the company's activities.YOU'RE THE MARKETER: SONIC MARKETING PLANNo marketing plan is complete without provisions for organizing, implementing, evaluating, and controlling the total marketing effort. In addition to measuring progress toward financial targets and other objectives, marketers need to plan how they will audit and improve their marketing activities.You are Jane Melody's assistant at Sonic. Your role is to recommend how Sonic can manage the market ing of its shelf stereos. Review the company's current situation. Also look at the goals, strategies, and programsyou have developed for Sonic's marketing plan. Now answer these questions about managing the company's marketing activities:∙What is the most appropriate organization for Sonic's marketing and sales departments?∙What can Sonic do to create a more market- and customer-focused organization?∙What control measures should Sonic incorporate into its marketing plan?∙What can Sonic do to evaluate its marketing and its level of ethical and socially responsible marketing?After you have answered these questions, either summarize your recommendations in a written marketing plan or type them into the Controls section of the Marketing Plan Pro software, d epending on your instructor's directions.Answer: Students' answers will vary, depending on the choices and suggestions they have made earlier in the marketing planning process. They may suggest a functional organization structure to keep employees focused on their areas of expertise. If they are recommending that Sonic develop more new products for new target markets, they may prefer a geographical organization, a product-management organization, or a market-management organization. Sonic can create a mo re market-focused organization by putting more top-management emphasis on customer needs and satisfaction; rewarding employees for building relationships with customers; investing more heavily in marketing talent, programs, and planning systems; and shifting to a process/outcome focus.Among the control measures Sonic should have in its marketing plan are: annual-plan controls such as sales analysis and market-share analysis; profitability controls measured by product, segment, trade channel, and so on; efficiency controls to improve productivity of the sales force, advertising, and other marketing elements; and strategic control through marketing audits and other methods that show whether the company is fully exploiting the best marketing opportunities. To evaluate its marketing, Sonic should conduct a marketing audit; to evaluate the ethics and social responsibility of its marketing, Sonic should perform a regular, perhaps annual review of its performance in this area.。
C HAPTER 18–D ESIGNING AND M ANAGING I NTEGRATED M ARKETINGC OMMUNICATIONSO VERVIEWMarketing communications is one of the four major elements of the company's marketing mix. Marketers must know how to use advertising, sales promotion, direct marketing, public relations, and personal selling to communicate the product's existence and value to the target customers. The communication process itself consists of nine elements: sender, receiver, encoding, decoding, message, media, response, feedback, and noise. Marketers must know how to get through to the target audience in the face of the audience's tendencies toward selective attention, distortion, and recall.Developing the promotion program involves eight steps. The communicator must first identify the target audience and its characteristics, including the image it carries of the product. Next the communicator has to define the communication objective, whether it is to create awareness, knowledge, liking, preference, conviction, or purchase. A message must be designed containing an effective content, structure, format, and source. Then communication channels both personal and nonpersonal must be selected. Next, the total promotion budget must be established. Four common methods are the affordable method, the percentage-of-sales method, the competitive-parity method, and the objective-and-task method.The promotion budget should e divided among the main promotional tools, as affected by such factors as push-vs.-pull strategy, buyer readiness stage, product life-cycle stage and company market rank. The marketer should then monitor to see how much of the market becomes aware of the product, tries it, and is satisfied in the process. Finally all of the communications effort must be managed and coordinated for consistency, good timing, and cost effectiveness. LEARNING OBJECTIVES:After reading the chapter the student should understand:♦The nine elements of the communication process♦How to identify the target audience♦How to determine the communication objectives♦How the message should be designed♦The selection of communication channels♦How the promotion budget is determined♦How the promotion mix is established♦How to evaluate and manage the communication processCHAPTER OUTLINE:I.Introduction - the five major modes of communication (advertising, sales promotion,public relations, personal selling, and direct marketing)II. The Communication Process - communications as the management of customer buying processes over time, the nine elements of the communications model, reasons whymessage may not get through the receiver (selective attention, selective distortion, andselective recall)III.Developing Effective CommunicationsA.Identifying the Target Audience - image analysis is a major part of audienceanalysis that entails asses sing the audience’s current image of the company, itsproducts, and its competitors. First step is to measure target audience’sknowledge of the subject using a familiarity scale; second step is to determinefeelings toward the product using a favorability scale. The specific content of aproduct’s image is best determined with use of semantic differential (Five steps)B.Determining The Communication Objectives - based on seeking of a cognitive,affective, or behavioral response. Assuming the buyer has high involvementwith the product category and perceives high differentiation within the category,base objectives on the hierarchy-of-effects model.C.Designing the Message1.Message Content - choosing an appeal (rational appeal to audience’s selfinterest, emotional appeal attempt to stir up either positive or negativeemotions, moral appeals are directed to the audience’s sense of what isright and proper)2.Message Structure - one-sided presentation v. two-sided argument3.Message Format - Must be strong, based on headline, copy, "sound",nonverbal clues, color, expression, dress, etc.4.Message Source - expertise, trustworthiness and likabilityD.Selecting Communication Channels1.Personal Communication Channels - direct2.Nonpersonal Communication Channels - indirect (media, atmospheres,events)E.Establishing the Total Marketing Communications Budget1.Affordable Method2.Percentage-of-Sales Methodpetitive-Parity Method4.Objective-and-Task MethodIV.Deciding on the Marketing Communications MixA.The Promotional Tools - benefits of each tool (advertising, sales promotion, etc.)B.Factors in Setting the Promotion Mix (type of product market, push versus pullstrategy, buyer-readiness stage, product-life-cycle stage, company market rank)C.Measuring ResultsV.Managing and Coordinating Integrated Marketing Communications ( a concept of marketing communications planning that recognizes the added value of a comprehensive plan that evaluates the strategic roles of a variety of communications disciplines andcombines these disciplines to provide clarity, consistency and maximum communications impact through the seamless integration of discrete messages.VI.SummaryMarketing and Advertising1. Figure 1, an ad geared toward the business market, describes the Bosch Corporation's century-old tradition of innovation in automotive products and includes a toll-free number for more information. What do you think Bosch wants to accomplish by placing this ad in a national business magazine? As a business marketer, would Bosch be likely to put more of its marketing communications budget toward advertising or toward other modes of communication? Why?Answer: By advertising in a national business magazine, Bosch may be trying to increase brand recognition, encourage positive audience attitudes, build goodwill among stakeholders, and attract investors' attention.Bosch is likely to put more of its budget toward other modes of communication, such as personal selling, rather than advertising. This is because business-to-business marketing often requires long-term one-to-one sales efforts to build and maintain relationships between suppliers such as Bosch and industrial customers.Focus on TechnologyWith integrated marketing communications, every brand contact, regardless of communication channel, plays a strategic role in shaping the customer's view of the company. For this reason, companies with Web sites need to be sure that their online marketing messages are aligned with messages in other media for greater sales impact.One company that is expert at this is McDonald's. Its television, radio, and print ads have a similar look, and the content is consistent across media. The current advertising theme is also carried through online. Visit the "What's New" area of the company's Web site(/whatsnew/usa/dssmcd/index.html) and note the similarity of the brief online ad to the current advertising campaign. Why would McDonald's create this special ad snippet just for its Web site? Who is the likely target audience? What results might McDonald's expect from this online message? Answer: McDonald's created this ad snipped because it knows its Web site is as much a part of its integrated marketing communication strategy as every other type of advertising. The company is smart to use its Web ad snippet to reinforce the look and content of the ads it is running in other media. The likely audience is consumers in McDonald's target audience, especially customers. In addition, students may mention stakeholder audiences such as the trade, because these audiences have an interest in the corporation. Although McDonald's would not expect sales to increase as a result of this online message, it could expect results such as reinforcement of its brand and enhancement of the synergy created by the various elements in its IMC campaign. Students may suggest other non-financial results, as well. Marketing for the MillenniumAs more marketers take their communications global at the start of the new millennium, they have to answer four questions in planning their global advertising and promotion. Are their products suitable for each country? Are their targeted market segments legal and customary? Is their advertising acceptable? And should their ads be created centrally or locally?To see how a multinational marketer is addressing these issues, point your Web browser to the "Around the World" section of the Unilever Web site (/public/unilever/around/org_arwo.htm). Click on the arrow near the right side of the screen to keep reading about the company's international focus. Then click on the "brands" link at the top left side of your screen to see a listing of the company's food brands, followed by links to local brand Web sites. Why does Unilever say it is international rather than global? How does this distinction affect its products and its online communications?Answer: Unilever stresses its international focus rather than saying it is global because it is building brands country-by-country and region-by-region. Unilever's products and brands are not available all over the world, just in selected countries and areas. Similarly, its online communications are available to consumers on a country-by-country and region-by-region basis, another example of an international rather than a global focus.YOU'RE THE MARKETER: SONIC MARKETING PLANMarketing communication planning is a critical component of every marketing plan, because it drives the way companies connect with their stakeholders, including customers and prospects.You are responsible for planning integrated marketing communications programs for Sonic's shelf stereos. Take another look at the company's current situation. Also look at the strategies and marketing mix programs you have planned so far. Then answer these questions about marketing communications for Sonic:∙What audience(s) should Sonic be targeting? What communication objectives should it set for each target audience?∙What message design and communication channel (personal or nonpersonal) is most appropriate for each target audience? Why?∙How should Sonic establish its marketing communications budget?∙Which promotional tools would be most effective in Sonic's marketing communications mix?Why?Be sure that your marketing communications plans will support Sonic's overall marketing efforts. Now, as your instructor directs, summarize your ideas in a written marketing plan or type them into the Marketing Mix/Promotion section of the Marketing Plan Pro software.Answer: Sonic should target the consumer segments it has identified for each product or product line; students may have described these segments in detail earlier in their marketing plans. In addition, Sonic should target channel members and other members of the trade. Communication objectives for consumer audiences include: building awareness of the brand and products; offering more information to build the audience's knowledge of the products; influencing the audience's liking of and preference for the product; reinforcing the audience's conviction about buying Sonic products; and leading the audience to buy Sonic products. Similar communication objectives can be set for trade audiences.Students will offer various responses for the message design and communication channel for each target audience. They should plan for a mix of personal and nonpersonal communication channels to reach different audiences. They will also suggest different promotional tools for Sonic's marketing communications mix, depending on the choices and strategies they have suggested in their marketing plans. In general, students will want to consider some advertising, some sales promotion, public relations and publicity, personal selling (especially for trade audiences), and direct marketing.。
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.。
PART ONE -- UNDERSTANDING MARKETINGMANAGEMENTCHAPTER1--M ARKETING IN THE T WENTY-F IRST C ENTURY OVERVIEWMarketing is the company function charged with defining customer targets and the best way tosatisfy their needs and wants competitively and profitably. Since consumers and business buyersface an abundance of suppliers seeking to satisfy their every need, companies cannot survive today by simply doing a good job. They must do an excellent job if they are to remain in theincreasingly competitive global marketplace. Recent studies have demonstrated that the key toprofitable company performance is knowing and satisfying target customers with competitivelysuperior offers. This process takes place today in an increasingly global, technical andcompetitive environmentMarketing has its origins in the fact that humans have needs and wants. Needs and wants create astate of discomfort in people, which is relieved through acquiring products to satisfy these needs and wants. Since many products can satisfy a given need, product choice is guided by the concepts of value, cost, and satisfaction. These products are obtainable in several ways: self-production, coercion, begging and exchange. Most modern societies work on the principle of exchange, which means that people specialize in producing particular products and trade them for the other things they need. They engage in transactions and relationship-building. A market is a group of people who share a similar need. Marketing encompasses those activities that represent working with markets and attempting to actualize potential exchanges.Marketing management is the conscious effort to achieve desired exchange outcomes with targetmarkets. The marketer's basic skill lies in influencing the level, timing, and composition ofdemand for a product, service, organization, place, person, idea or some form of information. There are five 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.Heading towards more enlightened views of the role of marketing, the marketing concept holdsthat the main task of the company is to determine the needs, wants, and preferences of a targetgroup of customers and to deliver the desired satisfactions. Its four princ iples 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 thatachieves 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”.Moving 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 is intensifying 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 re-evaluating various marketing concepts and tools focus on relationships, databases, communications and channels of distribution, as well as marketing outside and inside the organization.LEARNING OBJECTIVES:After reading this chapter students should:∙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 has been found to be critical to different types of organizations and in different environments.CHAPTER OUTLINE:I.Introduction --- Importance of Marketing in Contemporary Organizations - with rapidchanges come both challenges and opportunities, marketing allows organizations to take advantage of these opportunitiesII.Marketing TasksA.Scope of Marketing -- Involves a broadened View of Marketing - to types ofentities (goods, services, and ideas)1.Products are anything offered for sale or exchange that satisfies a need orwant.2.Products can be goods, services, ideas -- and also people, places,activities, organizations and information.B. A Broadened View of Marketing Tasks - Decisions Marketers Make -1.Consumer Markets and Business Markets - Each requires new tools andcapabilities to better understand and respond to the customer.2.Global Markets, Nonprofit and Governmental Markets - Becoming moresophisticated in recognizing and dealing with marketing challenges anddecisions.III.Marketing Concepts and ToolsA.Defining Marketing1.Marketing Defined - a social and managerial process by whichindividuals and groups obtain what they need and want through creating,offering, and exchanging products of value with others.B.Core Marketing Concepts1.Target Markets and Segmentation - Every product or service containsfeatures which a marketer must translate into benefits for a target market.It is these benefits the consumer perceives to be available in a productand directly impacts the perceived ability to meet the consumer need(s)or want(s).2.Marketers and Prospects - a marketer is someone actively seeking one ormore prospects for an exchange of values. A prospect has beenidentified as willing and able to engage in the exchange.3.Needs, Wants, and Demands - to need is to be in a state of feltdeprivation of some basic satisfaction. Wants are desires for specificsatisfiers of needs. Demands are wants for specific products that arebacked by an ability and willingness to buy them.4.Product or offering - Anything offered for sale that satisfies a need orwant. Products consist of three primary components: goods, servicesand ideas. The physical product provides the desired service or action.5.Value and Satisfaction - Value is the consumer’s estimate of theproduct’s overall capacity to satisfy his or her needs determinedaccording to the lowest possible cost of acquisition, ownership and use.6.Exchange and Transactions - exchange means obtaining a desiredproduct by offering something desirable in return. Five conditions mustbe satisfied (p.11) A transaction is the trade of values (involves severaldimensions).7.Relationships and Networks - Relationship marketing seeks long-term,“win-win” transactions between marketers and key parties (suppliers,customers, distributors) The ultimate outcome of relationship marketingis a unique company asset called a marketing network of mutuallyprofitable business relationships.8.Marketing Channels - Reaching the target market is critical. To do thisthe marketer can use two-way communication channels (media-newspapers through the Internet), versus more traditional means. Themarketer also must decide on the distribution channel, trade channels andselling channels (to effect transactions).9.Supply chain - the long channel process that reaches from the rawmaterials and components to the final product / buyers. Perceived as avalue delivery system.petition - Includes actual and potential rival offerings and substitutes.A broad view of competition assists the marketer to recognize the levelsof competition, based on substitutability: brand, industry, form andgeneric.11.Marketing Environment - Includes the task (immediate actors in theproduction, distribution and promotional environments) and the broadenvironments (demographic, economic, natural, technological, political-legal and social-cultural).12.Marketing Mix - the set of marketing tools the firm uses to pursuemarketing objectives with the target market. Involves recognition anduse of the four Ps and the four Cs in the short run and the long 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 _- Assumes:1.The key to achieving organizational goals consists of being moreeffective than competitors in integrating marketing activities towarddetermining and satisfying the needs and wants of target markets.2.Target Market - no company can operate in every market and satisfyevery need.3.Customer Needs - it’s not enough to just find the market; marketers mustalso understand their customer's needs and wants. This is not a simpletask.4.Integrated Marketing - all of a company’s departments must worktogether to serve the customer’s interests. This begins among the variousmarketing functions and carries out into other departments.5.Profitability - the ultimate purpose of marketing is to help organizationsachieve profitability goals.6.Hurdles to Adopting a Marketing Concepta)Organized Resistance - some departments see marketing as athreat to their power in the organizationb)Slow Learning - despite efforts by management, learning comesslowc)Fast Forgetting - there is a strong tendency to forget marketingprinciples7.ProfitabilityE.The Societal Marketing Concept1.Societal Marketing Concept - the organization’s task is to determine theneeds, wants, and interests of target markets and to deliver the desiredsatisfactions more effectively and efficiently than competitors in a waythat preserves or enhances the consumer’s and the society’s well-being. V.How Business and Marketing are Changingpany Responses and Adjustments - the focus here is on reengineering thefirm, outsourcing goods and services, e-commerce, benchmarking, alliances(networking), partner-suppliers, market-centered (versus product centered), localand global marketing (versus only local), and decentralization to encourageinnovative thinking and marketing.B.Marketer Responses and Adjustments - Focus on relationship marketing (versustransactional marketing), creation of customer lifetime value orientation, focuson customer share marketing versus only market share, target marketing (versusmass marketing), individualization of marketing messages and offerings,customer databases for data-mining, integrated marketing communications forconsistent images, consideration of channel members as partners, recognition ofevery employee as a marketer, and model and fact-based decision making versusintuition alone.VI.SummaryMARKETING A ND ADVERTISING1. The A ir Canada ad in Figure 1 stresses the time-saving aspect of its flights between the United States and Canada as well as the frequent flier mileage benefits. How do these two elements affect the ratio of benefits to cost in the value equation? Other than advertising lower ticket prices, how else can Air Canada use its advertising to affect the value perceived by customers? Suggest at least two specific value-enhancing approaches Air Canada might take.Answer: By reducing the amount of time needed to fly between the United States and Canada, Air Canada lowers the total costs in the denominator of the value equation, which raises the value ratio. In addition, the frequent flyer benefits add to the numerator of the value equation, again raising the value ratio. Two other ways Air Canada can use its advertising to affect the value perceived by customers are: (1) invite travelers to use specially-equipped Air Canada waiting lounges with office amenities such as e-mail access and fax machines, which boosts the benefits; and (2) invite customers to sign up for a special service that automatically notifies up to three relatives and/or business associates when a customer's plane arrives at its destination, which cuts the psychic costs and adds to the emotional benefits. Students may offer other value-enhancing ideas.2. The marketing network of Dow Chemical Company consists of a wide range of stakeholders, including customers, employees, suppliers, distributors, and volunteers and beneficiaries of nonprofit organizations such as Habitat for Humanity. Why would Dow advertise its support of Habitat for Humanity? What effect does the company expect this ad to have on its relationships with various stakeholders? How can Dow build on strong stakeholder relationships to compete more effectively in the construction industry?Answer: Dow advertises its support of Habitat for Humanity because it believes in the societal marketing concept. Some students may argue that Dow is also enhancing the emotional benefits that customers perceive in its products and enhancing its relationship marketing by creating a stronger social tie with customers and other stakeholders. In addition, Dow is putting a more human face on its corporation and products. Dow expects this ad to encourage customers (both consumers and businesses), suppliers, and other global stakeholders to choose and support Dow products because the company is conscientiously balancing profitability and customer satisfaction with concern for society's well-being.Dow can build on strong stakeholder relationships to compete more effectively in the construction industry in various ways. One suggestion: create specialized programs to attract and retain construction customers that are particularly interested in supporting social causes s uch as Habitat for Humanity. Another suggestion: expand this type of program to include the wholesale and retail companies that carry Dow products, which strengthens channel relationships and motivates channel members to do an even better job of selling Dow construction products. Students are likely to offer other creative ideas.FOCUS ON TECHNOLOGYCharles Schwab, based in San Francisco, is a giant discount brokerage firm offering a wide range of investment and financial services options. When someone visits a Schwab office or calls the company, employees can immediately bring up that customer's online records and talk knowledgeably about investments and services suited to that customer's individual situation. Schwab also invites customers to open accounts, locate financial research, place trades, and track market trends on its Web site. Browse the Schwab Web site (), looking at the offerings and the online demonstration of Schwab capabilities. How does this Web site confirm Schwab's focus on the customer? Why is employee access to complete and current customer records especially important in the brokerage business? What other parts of Schwab must be properly coordinated to ensure integrated marketing for customer satisfaction?Answer: The Schwab Web site can be customized to fit each customer's interests; it also offers a wide range of information, resources, and tools to help customers address their financial needs. In this way, Schwab confirms its focus on the customer. Brokerage employees need access to complete and current customer records because securities trading requires speedy response. Outdated or incomplete information can cost customers money and aggravation—making customers angry and ultimately driving them away.Other parts of Schwab that must be coordinated to ensure integrated marketing for customer satisfaction are: external marketing, with the marketing mix accurately reflecting Schwab's features and benefits; internal marketing, with all employees trained and motivated to provide excellent customer service; all layers of management, ready to assist the front-line people who handle customer transactions and customer service; and all company departments ready to work together to respond to and satisfy Schwab's customers.MARKETING FOR THE MILLENNIUME-commerce is growing exponentially because of its convenience, savings, selection, personalization, and information. Still, figuring out exactly how to reach the right cybercustomers can be challenging for even the largest marketers. Kraft, Kellogg, and other companies are learning to use targeted banner advertisingto reach the customer segments most likely to be interested in their products. These companies boosted online sales significantly by placing banner ads on Peapod, a Internet-based grocery shopping service. Untargeted ad banners, by comparison, are inexpensive but draw less customer response. Visit Peapod's Web site () and type in your zip code, as directed. Then sign in to take the shopping demonstration showing which products are offered and how the service operates. What types of products could potentially benefit from advertising on this site? What kind of information would these marketers want from Peapod in order to determine the value of targeted banner advertising on this site? How might Kellogg use banner advertising on Peapod to support a new cereal product? To support an existing cereal product?Answer: Branded grocery products in particular can potentially benefit from advertising on Peapod's Web site—as long as online customers can purchase these products from Peapod. This Web advertising would reinforce the messages of other marketing communications such as broadcast commercials and print ads, building consumer demand and preference for the branded products. In addition, grocery products that represent impulse purchases (such as snacks) would benefit from advertising on Peapod, because consumers can make an immediate purchase to satisfy the wants generated by these ads.Marketers would want to know how many consumers view Peapod's ads; how many consumers have responded (if this information is available) to previous ads; how many other products in the marketer's category are advertising at the same time on Peapod banners (to gauge competition); ho w long the banner will run; and how fees will be calculated (according to number of clicks, number of times page is accessed, or other method?). Students may suggest other questions, as well.Kellogg can use banner advertising on Peapod to support a new cereal product by starting with a banner that highlights the new cereal's main feature and benefit while clearly identifying the target audience ("Try Cereal X, a good tasting, low-sugar cereal for children," for example). It can also use the banner to remind consumers when to watch for the new product on Peapod's listings; when to watch for commercials andprint ads promoting the new product; when to check for special new-product pricing. Kellogg can use banner advertising on Peapod to support an existing cereal product by reinforcing the name and main feature/benefit ("Special K has all essential vitamins for healthy bodies," for example), reminding consumers to watch for the product's advertising in other media ("See ad in this week's newspaper"), urging consumers to stock up during price specials, and so on. Students will have other creative ideas for ways that Kellogg can use banner advertising on Peapod.。
