Idea Screening
Once the firm has collected a number of new product ideas, the next step is to screen out the weaker ideas, because product-development costs rise substantially with each successive development stage. Most companies require new-product ideas to be described on a standard form that can be reviewed by a new-product committee. The Figure 3-8 The New-Product-Development Decision Process Figure 3-8 The New-Product-Development Decision Process description states the product idea, the target market,...
Step 1 Define the Problem and Research Objectives
Management must not define a problem too broadly or too narrowly. A marketing manager who tells the marketing researcher, Find out everything you can about air travelers' needs, will collect a lot of unnecessary information. Similarly, a marketing manager who says, Find out if enough passengers aboard a B747 flying between the East Coast and West Coast would be willing to pay 25 to make a phone call so that American Airlines would break even on the cost of offering this service, is taking too...
Marketing Strategies For Service Firms
In addition to the traditional four Ps of marketing, service providers must pay attention to three more Ps suggested by Booms and Bitner for services marketing people, physical evidence, and process.10 Because most services are provided by people, the selection, training, and motivation of employees can make a huge difference in customer satisfaction. Ideally, service employees should exhibit competence, a caring attitude, responsiveness, initiative, problem-solving ability, and goodwill....
Managing Differentiation
Service marketers frequently complain about the difficulty of differentiating their services on more than price alone. Price is a major marketing focus in service industries such as communications, transportation, and energy, which have experienced intense Figure 4-6 Continuum of Evaluation for Different Types of Products Figure 4-6 Continuum of Evaluation for Different Types of Products price competition since deregulation. In a deregulated environment, the continued expansion of budget-priced...
Brand Strategy Decision
A company has five choices when it comes to brand strategy. The company can introduce line extensions existing brand name extended to new sizes or flavors in the existing product category , brand extensions brand names extended to new-product categories , multibrands new brand names introduced in the same product category , new brands new brand name for a new category product , and co-brands brands bearing two or more well-known brand names . Line Extensions Line extensions introduce additional...
Line Featuring and Line Pruning
The product-line manager typically selects one or a few items in the line to feature this is a way of attracting customers, lending prestige, or achieving other goals. If one end of its line is selling well and the other end is selling poorly, the company may use featuring to boost demand for the slower sellers, especially if those items are produced in a factory that is idled by lack of demand. In addition, managers must periodically review the entire product line for pruning, identifying weak...
Core Marketing Concepts
Marketing can be further understood by defining the core concepts applied by marketing managers. A marketer can rarely satisfy everyone in a market. Not everyone likes the same soft drink, automobile, college, and movie. Therefore, marketers start with market segmentation. They identify and profile distinct groups of buyers who might prefer or require varying products and marketing mixes. Market segments can be identified by examining demographic, psychographic, and behavioral differences among...
Corporate And Division Strategic Planning
Marketing plays a critical role in corporate strategic planning within successful companies. Market-oriented strategic planning is the managerial process of developing and maintaining a viable fit among the organization's objectives, skills, and resources and its changing market opportunities. The aim of strategic planning is to shape the company's businesses and products so that they yield target profits and growth and keep the company healthy despite any unexpected threats that may arise....
Step 2 Develop the Research Plan
The second stage of marketing research calls for developing the most efficient plan for gathering the needed information. The marketing manager needs to know the cost of the research plan before approving it. Suppose the company estimates that launching the in-flight phone service would yield a long-term profit of 50,000. The manager believes that doing the research would lead to an improved pricing and promotional plan and a long-term profit of 90,000. In this case, the manager should be...
Bases for Segmenting Business Markets
Business markets can be segmented with some variables that are employed in consumer market segmentation, such as geography, benefits sought, and usage rate. Yet business marketers can also use several other variables. Bonoma and Shapiro proposed segmenting the business market with the variables shown in Table 3.6. The demographic variables are the most important, followed by the operating variables down to the personal characteristics of the buyer. Segmenting Consumer and Business Markets 153...
Managing Service Quality
Another way for a service firm to succeed is by delivering consistently higher-quality service than that of its competitors and by exceeding customers' expectations. These expectations are formed by the firm's past experiences, word of mouth, and advertising. After receiving the service, customers compare the perceived service with the expected service. If the perceived service falls below the expected service, customers lose interest in the provider. If the perceived service meets or exceeds...
Characteristics of Services and Their Marketing Implications
Services have four major characteristics that greatly affect the design of marketing programs intangibility, inseparability, variability, and perishability. Services are intangible. Unlike physical products, they cannot be seen, tasted, felt, heard, or smelled before they are bought. The person who is getting a face lift cannot see the exact results before the purchase, just as the patient in the psychiatrist's office cannot know the exact outcome before treatment. To reduce uncertainty, buyers...
Categories of Service Mix
As the previous examples show, services are often part of a company's total offering in the marketplace. Five categories of an offering's service mix can be distinguished 1. Pure tangible good The offering is a tangible good such as soap no services accompany the product. 2. Tangible good with accompanying services The offering consists of a tangible good accompanied by one or more services. General Motors, for example, offers repairs, maintenance, warranty fulfillment, and other services along...
Stage 6 Supplier Selection
Before selecting a supplier, the buying center will specify desired supplier attributes such as product reliability and service reliability and indicate their relative importance. It will then rate each supplier on these attributes to identify the most attractive one. At this point, the buyer may attempt to negotiate with preferred suppliers for better prices and terms before making the final selection. Despite moves toward strategic sourcing, partnering, and participation in cross-functional...
MarketTest Method
Where buyers do not plan their purchases carefully or experts are not available or reliable, a direct market test is desirable. A direct market test is especially desirable in forecasting new-product sales or established product sales in a new distribution channel or territory. 1. Three developments make the need for marketing information greater now than at any time in the past the rise of global marketing, the new emphasis on buyers' wants, and the trend toward nonprice competition. 2. To...
Product Levels
Marketers plan their market offering at five levels, as shown in Figure 4-2.1 Each level adds more customer value, and together the five levels constitute a customer value hierarchy. The most fundamental level is the core benefit the fundamental service or benefit that the customer is really buying. A hotel guest is buying rest and sleep the pur- Figure 4-1 Components of the Market Offering chaser of a drill is buying holes. Effective marketers therefore see themselves as providers of product...
The Marketing Process
Planning at the corporate, division, and business levels is an integral part of planning for the marketing process. To understand that process fully, we must first look at how a company defines its business. The task of any business is to deliver value to the market at a profit. There are at least two views of the value-delivery process.18 The traditional view is that the firm makes something and then sells it Figure 1-8 . In this view, marketing takes place in the second half of the...
Major Influences on Business Buying
Business buyers respond to many influences when they make their decisions. When supplier offerings are similar, buyers can satisfy the purchasing requirements with any supplier, and they place more weight on the personal treatment they receive. When supplier offerings differ substantially, buyers are more accountable for their choices and pay more attention to economic factors. Business buyers respond to four main influences environmental, organizational, interpersonal, and individual13 Figure...
Executive Summary Wwp
Organizational buying is the decision-making process by which formal organizations establish the need for purchased products and services, and then identify, evaluate, and choose among alternative brands and suppliers. The business market consists of all of the organizations that acquire goods and services used in the production of other products or services that are sold, rented, or supplied to others profit-seeking companies, institutions, and government agencies. Compared to consumer...
Concept Development
We shall illustrate concept development with the following situation A large food processing company gets the idea of producing a powder to add to milk to increase its nutritional value and taste. This is a product idea. But consumers do not buy product ideas they buy product concepts. A product idea can be turned into several concepts. The first question is Who will use this product The powder can be aimed at infants, children, teenagers, young or middle-aged adults, or older adults. Second,...
Steps in the Marketing Process
The marketing process consists of analyzing market opportunities, researching and selecting target markets, designing marketing strategies, planning marketing programs, and organizing, implementing, and controlling the marketing effort. The four steps in the marketing process are 1. Analyzing market opportunities. The marketer's initial task is to identify potential longrun opportunities given the company's market experience and core competencies. To evaluate its various opportunities, assess...
Notes Tml
1. Christopher Power, Flops, Business Week, August 16, 1993, pp. 76-82. 2. New Products Management for the 1980s New York Booz, Allen amp Hamilton, 1982 . 3. Erika Rasmussen, Staying Power, Sales amp Marketing Management, August 1998, pp. 44-46. 4. Robert G. Cooper and Elko J. Kleinschmidt, New Products The Key Factors in Success Chicago American Marketing Association, 1990 . 5. Modesto A. Madique and Billie Jo Zirger, A Study of Success and Failure in Product Innovation The Case of the U.S....
Nalyzing Needs And Macroenvironment
Successful companies recognize and respond profitably to unmet needs and trends. Companies could make a fortune if they could solve any of these problems a cure for cancer, chemical cures for mental diseases, desalinization of seawater, non-fattening tasty nutritious food, practical electric cars, and affordable housing. Enterprising individuals and companies manage to create new solutions to unmet needs. Club Mediterranee emerged to meet the needs of single people for exotic vacations the...
Defining the Corporate Mission
An organization exists to accomplish something to make cars, lend money, provide a night's lodging, and so on. Its specific mission or purpose is usually clear when the business starts. Over time, however, the mission may lose its relevance because of changed market conditions or may become unclear as the corporation adds new products and markets. When management senses that the organization is drifting from its mission, it must renew its search for purpose. According to Peter Drucker, it is...
Executive Summary Vhx
Before developing their marketing plans, marketers need to use both rigorous scientific procedures and more intuitive methods to study consumer behavior, which is influenced by four factors cultural culture, subculture, and social class , social reference groups, family, and social roles and statuses , personal age, stage in the life cycle, occupation, economic circumstances, lifestyle, personality, and self-concept , and psychological motivation, perception, learning, beliefs, and attitudes ....
Step 3 Collect the Information
The data collection phase of marketing research is generally the most expensive and the most prone to error. In the case of surveys, four major problems arise. Some respondents will not be at home and must be recontacted or replaced. Other respondents will refuse to cooperate. Still others will give biased or dishonest answers. Finally, some interviewers will be biased or dishonest. Yet data collection methods are rapidly improving thanks to computers and telecommunications. Some research firms...
Targeting Multiple Segments and Supersegments
Very often, companies start out by marketing to one segment, then expand to others. For example, Paging Network Inc. known as PageNet is a small developer of paging systems, and was the first to offer voice mail on pagers. To compete with Southwestern Bell and other Bell companies, it sets its prices about 20 percent below rivals' prices. Initially, PageNet used geographic segmentation to identify attractive markets in Ohio and Texas where local competitors were vulnerable to its aggressive...
The Decisions That Marketers Make
Marketing managers face a host of decisions in handling marketing tasks. These range from major decisions such as what product features to design into a new product, how many salespeople to hire, or how much to spend on advertising, to minor decisions such as the wording or color for new packaging. Among the questions that marketers ask and will be addressed in this text are How can we spot and choose the right market segment s How can we differentiate our offering How should we respond to...
The Nature and Contents of a Marketing Plan
The marketing plan created for each product line or brand is one of the most important outputs of planning for the marketing process. A typical marketing plan has eight sections Executive summary and table ofcontents This brief summary outlines the plan's main goals and recommendations it is followed by a table of contents. Current marketing situation This section presents relevant background data on sales, costs, profits, the market, competitors, distribution, and the macroenvironment, drawn...
Existence of Subcultures
Each society contains subcultures, groups with shared values emerging from their special life experiences or circumstances. Star Trek fans, Black Muslims, and Hell's Angels all represent subcultures whose members share common beliefs, preferences, and behaviors. To the extent that subcultural groups exhibit different wants and consumption behavior, marketers can choose particular subcultures as target markets. Marketers sometimes reap unexpected rewards in targeting subcultures. For instance,...
Executive Summary Dgk
Companies usually are more effective when they target their markets. Target marketing involves three activities market segmentation, market targeting, and market positioning. Markets can be targeted at four levels segments, niches, local areas, and individuals. Market segments are large, identifiable groups within a market, with similar wants, purchasing power, location, buying attitudes, or buying habits. A niche is a more narrowly defined group. Many marketers localize their marketing...
Personal Factors Influencing Buyer Behavior
Cultural and social factors are just two of the four major factors that influence consumer buying behavior. The third factor is personal characteristics, including the buyer's age, stage in the life cycle, occupation, economic circumstances, lifestyle, personality, and self-concept. People buy different goods and services over a lifetime. They eat baby food in the early years, most foods in the growing and mature years, and special diets in the later years. Taste in clothes, furniture, and...
Market Demand
As we've seen, the marketer's first step in evaluating marketing opportunities is to estimate total market demand. Market demand for a product is the total volume that would be bought by a defined customer group in a defined geographical area in a defined time period in a defined marketing environment under a defined marketing program. Market demand is not a fixed number but rather a function of the stated conditions. For this reason, it can be called the market demand function. The dependence...
Social Factors Influencing Buyer Behavior
In addition to cultural factors, a consumer's behavior is influenced by such social factors as reference groups, family, and social roles and statuses. Reference groups consist of all of the groups that have a direct face-to-face or indirect influence on a person's attitudes or behavior. Groups that have a direct influence on a person are called membership groups. Some primary membership groups are family, friends, neighbors, and co-workers, with whom individuals interact fairly continuously...
Patterns of Market Segmentation
Market segments can be built up in many ways. One common method is to identify preference segments. Suppose ice cream buyers are asked how much they value sweetness and creaminess as two product attributes. Three different patterns can emerge Homogeneous preferences Figure 3-6 shows a market in which all of the consumers have roughly the same preference, so there are no natural segments. We predict that existing brands would be similar and cluster around the middle of the scale in both...
Critique of Portfolio Models
Both the BCG and GE portfolio models have a number of benefits. They can help managers think more strategically, better understand the economics of their SBUs, improve the quality of their plans, improve communication between SBU and corporate management, identify important issues, eliminate weaker SBUs, and strengthen their investment in more promising SBUs. However, portfolio models must be used cautiously. They may lead a firm to overemphasize market-share growth and entry into high-growth...
Ethnic Markets
Countries also vary in ethnic and racial makeup. At one extreme is Japan, where almost everyone is Japanese at the other is the United States, where people from come virtually all nations. The United States was originally called a melting pot, but there are increasing signs that the melting didn't occur. Now people call the United States a salad bowl society with ethnic groups maintaining their ethnic differences, neighborhoods, and cultures. The U.S. population 267 million in 1997 is 73...
Psychological Factors Influencing Buyer Behavior
Psychological factors are the fourth major influence on consumer buying behavior in addition to cultural, social, and personal factors . In general, a person's buying choices are influenced by the psychological factors of motivation, perception, learning, beliefs, and attitudes. A person has many needs at any given time. Some needs are biogenic they arise from physiological states of tension such as hunger, thirst, discomfort. Other needs are psychogenic they arise from psychological states of...
Market Potential
The market forecast shows expected market demand, not maximum market demand. For the latter, we have to visualize the level of market demand resulting from a very high level of industry marketing expenditure, where further increases in marketing effort would have little effect in stimulating further demand. Market potential is the limit approached by market demand as industry marketing expenditures approach infinity for a given marketing environment. The phrase for a given market environment is...
Strategic Control
From time to time, companies need to undertake a critical review of overall marketing goals and effectiveness. Each company should periodically reassess its strategic approach to the marketplace with marketing-effectiveness reviews and marketing audits. The marketing-effectiveness review. Marketing effectiveness is reflected in the degree to which a company or division exhibits the five major attributes of a marketing orientation customer philosophy serving customers' needs and wants ,...
Efficiency Control
Suppose a profitability analysis reveals poor profits for certain products, territories, or markets. This is when management must ask whether there are more efficient ways to manage the sales force, advertising, sales promotion, and distribution in connection with these marketing entities. Some companies have established a marketing controller position to work on such issues and improve marketing efficiency. Marketing controllers work out of the controller's office but specialize in the...
Nternal Records System
Marketing managers rely on internal reports on orders, sales, prices, costs, inventory levels, receivables, payables, and so on. By analyzing this information, they can spot important opportunities and problems. The heart of the internal records system is the order-to-payment cycle. Sales representatives, dealers, and customers dispatch orders to the firm. The sales department prepares invoices and transmits copies to various departments. Out-of-stock items are back ordered. Shipped items are...
Hallenges In Newproduct Development
To get a feel for how much money can be thrown at a product that is destined to fail, consider the fate of the smokeless cigarette. .J. By the late 1980s, R. J. Reynolds Tobacco Company RJR had already spent more than 300 million on the reduced-smoke Premier cigarette. Five months after its introduction in 1988, Premier disappeared from the test markets because smokers didn't like the taste. It was also difficult to light. Premier gave you a hernia trying to get the smoke through, said one...
Full Market Coverage
Here a firm attempts to serve all customer groups with all of the products they might need. Only very large firms can undertake a full market coverage strategy. Examples include IBM computer market , General Motors vehicle market , and Coca-Cola drink market . Large firms can cover a whole market in two broad ways through undifferentiated marketing or differentiated marketing. In undifferentiated marketing, the firm ignores market-segment differences and goes after the whole market with one...
Demographic Segmentation
In demographic segmentation, the market is divided into groups on the basis of age and the other variables in Table 3.5. One reason this is the most popular consumer segmentation method is that consumer wants, preferences, and usage rates are often associated with demographic variables. Another reason is that demographic variables are easier to measure. Even when the target market is described in nondemographic terms say, a personality type , the link back to demographic characteristics is...
The Business Market Versus the Consumer Market
The business market consists of all of the organizations that acquire goods and services used in the production of other products or services that are sold, rented, or supplied to other customers. The major industries making up the business market are agriculture, forestry, and fisheries mining manufacturing construction transportation communication public utilities banking, finance, and insurance distribution and services. U.S. marketers can learn more about specific industries by consulting...
Accelerating Pace of Technological Change
Many of today's common products were not available 40 years ago. John F. Kennedy did not know personal computers, digital wristwatches, video recorders, or fax machines. More ideas are being worked on the time lag between new ideas and their successful implementation is decreasing rapidly and the time between introduction and peak production is shortening considerably. Ninety percent of all the scientists who ever lived are alive today, and technology feeds upon itself. The advent of personal...
Increased Regulation of Technological Change
As products become more complex, the public needs to be assured of their safety. Consequently, government agencies' powers to investigate and ban potentially unsafe products have been expanded. In the United States, the Federal Food and Drug Administration must approve all drugs before they can be sold. Safety and health regulations have also increased in the areas of food, automobiles, clothing, electrical appliances, and construction. Marketers must be aware of these regulations when...
Establishing Strategic Business Units
A business can be defined in terms of three dimensions customer groups, customer needs, and technology.6 For example, a company that defines its business as designing incandescent lighting systems for television studios would have television studios as its customer group lighting as its customer need and incandescent lighting as its technology. In line with Levitt's argument that market definitions of a business are superior to product definitions,7 these three dimensions describe the business...
MultiAttribute Segmentation Geoclustering
Marketers are increasingly combining several variables in an effort to identify smaller, better defined target groups. Thus, a bank may not only identify a group of wealthy retired adults, but within that group may distinguish several segments depending on current income, assets, savings, and risk preferences. One of the most promising developments in multi-attribute segmentation is geoclustering, which yields richer descriptions of consumers and neighborhoods than does traditional...