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BUSINESS MARKETING [B2B];

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Title: BUSINESS MARKETING [B2B];


1
5 BUSINESS MARKETING B2B MARKETS BUYER
BEHAVIOR
2
SUPPLY CHAIN MANAGEMENT
The supply chain is the vehicle that allows us to
enjoy the vast marketplaces of today. Every
entity has a supply chain! It involves every
process and step from taking materials out of the
ground to making a product available in a store
or online. The World Food Program video
3
SUPPLY CHAIN MANAGEMENT
MARKETS Consumers Customers Prospects Suspects
SUPPLIERS SUPPLIERS

CUSTOMERS
CUSTOMERS CUSTOMERS
SUPPLIERS or SUPPLIERS

4
TOPPERS TRIPS TO MARKET
1-Plastic eyes 10-transistors Shenzhen, China
2 9-Speakers for voice, 12-wiring Dongguan, China
3-Plastic body Malaysia
4-Motor for legs Shaoguan, China
Manufacturer
Outbound Port
Inbound Port
Warehouses and Distribution Centers
5-Plastic legs 11-IC chips Taiwan
6-Microfiber fabric coat Korea
7-Voice recognition requirements San Francisco
8-Voice recognition programming Taiwan
Thousands of Retail Stores
13-Packaging Hong Kong, China
5
SUPPLY VALUE CHAIN GOAL
  • Original definition
  • To combine the support and direct activities to
    create value as perceived by the target markets
    segments.
  • Current definition

6
BUSINESS MARKETS
  • gt70 of total sales
  • BUSINESS MARKETS
  • Businesses
  • Governments
  • Resellers
  • International
  • Institutions education and health care
  • Non-profits
  • Captive

7
THE NATURE AND SIZE OF ORGANIZATIONAL MARKETS
LO1
BUSINESS BUYER CLASSIFICATION
PRODUCERS Manufacturers, OEMs or Private Labelers Purchase products for producing other goods and services can be either a finished good or a component
RESELLERS Purchase finished goods or components for resale, rental, or leasing for a profit
GOVERNMENTS Federal, state, and local governments all different buyer behaviors
ORGANIZATIONS / INSTITUTIONS Purchase finished goods and services for resale, rental, or leasing for a profit
8
B2B MARKETS
  • Numerous industries identified by NAICS codes
    usually employ a differentiation or low-cost
    strategy
  • B2C Inexpensive pens, pencils, pads of paper,
  • B2B floor sweeping compound
  • One or a few industries identified by NAICS codes
  • May be very profitable usually employ a
    differentiation or niche strategy
  • B2C 1,000 fountain pen
  • B2B CT scanner

9
BUSINESS MARKET COMPLEXITY
BUSINESS SERVICES
Professional Services
Industrial Services
Project related
Technical industrial
On-going
Consulting Investment banking Research
Education
Education training Installation Maintenance
Engineering Quality Product testing
Maintenance contracts Field upgrades
10
THE ECONOMY AND NAICS
SELL
GROW OR MAKE
SERVICE
GOVT
Agriculture Mining Utilities Construction
Manufacturing
Wholesale Retail Transportation
Information Finance Real Estate
Professional Management
Administration Entertainment
Health Education Accommodation Other
Public Administration
11
MEASURING DOMESTIC AND GLOBAL INDUSTRIAL,
RESELLER, ANDGOVERNMENT MARKETS
LO1
  • North American Industry ClassificationSystem
    (NAICS)
  • NORTH AMERICAN INDUSTRIAL CLASSFICATION SYSTEM
    NAICS 2007
  • 20 sectors 1,174 industries and growing
  • NAFTA 5 digits 6TH for country coding
  • Compatible with ISIC Rev. 3 UN

6-11
12
FIGURE 6-1 NAICS breakdown for the information
industries sector NAICS code 51 Paging.
6-12
13
COMPARING CHARACTERISTICS OF BUSINESS MARKETS TO
CONSUMER MARKETS
BUSINESS MARKETS CONSUMER MARKETS
Market Structure Fluctuating, derived demand Geographically dispersed Mass markets Small volumes Primary demand
Products Standard / complex / custom Service etc. are critical Business applications Standard Service etc. of some note Personal use
Buyer Behavior Individuals purchasing Some family influence Social / psychological drives
Buyer-Seller Relationships Technical expertise Close interpersonal relationships Long-term focus May be very dependent on each other Amateur Impersonal Immediate / Short-term
14
COMPARING CHARACTERISTICS OF BUSINESS MARKETS TO
CONSUMER MARKETS
BUSINESS MARKETS CONSUMER MARKETS
Supply Chains / Channels of Distribution Often shorter more direct Not seen by consumer Usually indirect except for catalog and internet.
Promotion Often involves resellers Simple Advertising
Price Volume sensitive Complex formalized process Competitive bid / Many strategies Individuals limited purchasing skill Little, if any, leverage Simple process Not applicable
Demand Inelastic in the short-run Volatile and discontinuous Direct Elastic Limited volatility
15
B2B MARKETING
  • Businesses purchase products for one of three
    primary applications.

16
B2B DIVERSITY AND SPECIFICATIONS
  • Great variety
  • For nearly all sophisticated or expensive items.
  • For virtually all components and parts for
    resale.

17
BUSINESS PRODUCTS CLASSIFICATIONFor an Auto Plant
Factories, support buildings, large machines, large material handling equipment
Rolled steel, rubber, plastic resins
Spark plugs, radiators, steering wheels
Drill presses, assembly lines, small material handling equipment
Cleaning supplies, office supplies, toilet tissue,
Grounds maintenance, cleaning service, office equipment servicing
18
CHARACTERISTICS OFORGANIZATIONAL BUYING
LO2
  • Characteristics of Demand
  • Organizational Buying Objectives

6-18
19
BUSINESS DEMAND
  • Elastic and Inelastic demand
  • Fluctuating demand due to
  • Erratic based on their customers demands from
    their customers and/or new programs/products
  • Their demand is the total of the demand of
    multiple segmentswhich are frequently not in
    concert with each other.

20
DERIVED DEMAND
The demand for products and services is derived
from the demand for their customers products and
services whose demand may also be
derived. EXAMPLE PCs drive demand for
computer chips
21
MULTIPLE MARKET SEGMENT DEMAND
22
DEMAND
  • It is critical one understands the all the
    components of the total demand schedule Dt!
  • The problem in the channels.

23
BULL-WHIP EFFECThttp//www.shmula.com/310/the-bul
lwhip-effect
24
INFLUENCES ON BUSINESS BUYERS
ENVIRONMENTAL Economic, Technological, Political
EPA, Competitive
ORGANIZATIONAL Objectives, Policies, Procedures,
Structure, and Systems
INTERPERSONAL Authority, Status, Empathy, and
Persuasiveness
INDIVIDUAL Age, Education, Position, Personality,
and Risk Attitudes
BUYERS Risk and Reward
25
CHARACTERISTICS OFORGANIZATIONAL BUYING
LO2
  • Organizational Buying Criteria
  • Standards
  • Supplier Development
  • Just-in-Time

26
CHARACTERISTICS OFORGANIZATIONAL BUYING
LO2
  • Buyer-Seller Relationships and Supply Partnerships
  • Reciprocity
  • Supply Partnership

6-26
27
JUST-IN-TIME JIT SYSTEMS
  • Improve logistics
  • Improve product quality
  • Maximize production efficiency
  • Provide optimal customer service

28
QUALITY APPROACHES
  • ISO-9000 Series
  • ISO-14000 Series Environmental
  • QS9000 ISO / TS-16949 Automotive
  • ISO-17779 Information Security
  • SIX SIGMA Motorola, GE,
  • Malcom Baldridge Cadillac

29
CHARTING THE ORGANIZATIONAL BUYING
PROCESS ORGANIZATIONAL BUYING BEHAVIOR
LO3
  • Organizational Buying Behavior
  • -The process by which a Buyer identifies,
    evaluates, and selects a set of suppliers.
  • Stage 1 Problem Recognition
  • Make-Buy Decision
  • Stage 2 Information Search
  • Value Analysis

6-29
30
BUYING PARTICIPANTS
Users MANDATORY
Initiators / Info seekers STARTERS
Influencers / Advocates SUPPORT
Gatekeepers CONTROL FLOW
Buyers / Purchasing FORMS
Deciders AUTHORITY
Approvers NECESSARY
31
CHARACTERISTICS OF ORGANIZATIONAL
BUYING ORGANIZATIONAL BUYING CRITERIA
LO2
  • 1 Problem recognition
  • 2 Information search
  • Fact finding, preliminary vendor analysis, value
    analysis
  • 3 Alternative Evaluation

32
NEGOTIATIONS
  • PREPARATION
  • Strategy alternatives
  • Psychological
  • PERSONAL SKILLS
  • TACTICS COUNTERS
  • Ridiculous request - ridiculous response

33
CHARTING THEORGANIZATIONAL BUYING PROCESS STAGES
IN BUYING A MACHINE VISION SYSTEM
LO3
  • Stage 4 Purchase Decision
  • Stage 5 Postpurchase Behavior

6-33
34
GOVERNMENT PURCHASING
35
ONLINE BUYING INORGANIZATIONAL MARKETS
LO4
  • Prominence of Online Buyingin Organizational
    Markets
  • E-marketplaces B2B exchanges / e-hubs
  • Online Auctions in Organizational Markets
  • Traditional Auction
  • Reverse Auction

6-35
36
6 MARKET RESEARCH
37
WHAT IS MARKET RESEARCH?
LO1
38
THE MARKET RESEARCH PROCESS

Developing the research plan
Collect the information
Analyze the information
Present the findings

Market research can describe, analyze, and/or
predict.
39
PERSPECTIVE
  • Ones viewpoint is their perspective.
  • You must understand others perspectives to
    succeed.

40
THREE RESEARCH TYPES
You must also know when marketing research will
not be cost-effective or very difficult to use..
41
STEP 2 DEVELOPTHE RESEARCH PLAN
LO2
  • Specify Constraints
  • Identify Data Needed for Marketing Actions
  • Determine how to collect data

8-41
42
STEP 3 COLLECT RELEVANT INFO/DATASECONDARY DATA
LO3
  • INTERNAL primary under your direction
  • Corporate data
  • Privately purchased
  • Privately purchased market research
  • Observational
  • Watching people
  • Asking people
  • EXTERNAL secondary under someone elses
    direction
  • Government
  • Standard reports and market research
  • Periodicals / books
  • Associations

8-42
43
DATA AND ITS USE
  • QUALITATIVE DATA
  • Symbolic data
  • Only subjective data
  • Understand behavior
  • Evaluate reactions
  • Describe small groups of subjects or individuals
    in depth
  • Exploratory role generate ideas and hypotheses
  • Depth and richness of information
  • QUANTITATIVE DATA
  • Numeric data
  • Objective data
  • Measure a market
  • Describe groups of consumers structured by
    parameters
  • Extrapolate from a sample to the general
    population market or market segment
  • Representative data

44
TYPES OF SAMPLES
  • PROBABILITY SAMPLE scientific process
  • Simple random sample
  • Stratified random sample
  • Cluster area sample
  • NONPROBABILITY SAMPLE arbitrary
  • Convenience sample easy
  • Judgment sample select
  • Quota sample n

45
SCALES OF MEASUREMENT
 

Equal distances between items (e.g. 3-24-3)
Calendar days Temperature
46
TYPES OF STATISTICS
  • F, t, z, ANOVA,
  • Large sample size required
  • NON-PARAMETRIC or DISTRIBUTION-FREE
  • Chi-square, Kruskal-Wallace, Smirnoff,
  • Ideal for small sample sizes

47
STEP 3 COLLECT RELEVANT INFO/DATA/ OF
SECONDARY DATA
LO3
  • Advantages
  • Time Savings
  • Inexpensive
  • Disadvantages
  • Out of Date
  • Definitions/Categories Not Right
  • Not Specific Enough

8-47
48
STEP 3 COLLECT RELEVANT INFO/DATAPRIMARY
DATAOBSERVING BEHAVIOR
LO4
  • Mechanical Observation
  • Personal Observation
  • Mystery Shopper
  • Videotaping

8-48
49
STEP 3 COLLECT RELEVANT INFO/DATAPRIMARY
DATAQUESTIONING CONSUMERS
LO4
  • Questionnaire data
  • Idea generation methods
  • Individual interviews
  • Depth interviews
  • Focus groups
  • Fuzzy front end

50
ELEMENTS OF A GOOD QUESTIONNAIRE
  • Precise questions and answers
  • Avoids leading questions
  • Does not ask unreasonable questions
  • Does not alienate the respondent
  • Sensitive topics ?
  • Readily lends itself to statistical analysis

51
STEP 3 COLLECT RELEVANT INFO/DATAPRIMARY
DATAQUESTION FORMATS
LO4
  • Open-Ended Questions
  • Closed-End or Fixed Alternative Questions
  • Dichotomous Questions
  • Semantic Differential Questions
  • Likert Scale Questions

8-51
52
WHICH TYPE OF QUESTION IS BEST FOR YOUR SITUATION?
OPEN-END or COMPLETELY UNSTRUCTURED OBTAINS
INFORMATION WITHOUT BIAS What do you think
about scholarship support at Texas Tech
University? - General understanding of that
persons perspective - Complex questions -
- Answer interpretation can be
problematical FREE RESPONSE ANSWERS ARE LIMITED
TO A WORD OR A PHRASE Does TTU provide
inadequate, sufficient, or exceptional financial
scholarship support?
53
TYPES OF QUESTIONS
SENTENCE COMPLETION THE answer IS OBTAINED BY
DIVIDING the numerator BY the denominator. GOO
D FOR ROTE MEMORY MEASUREMENT BAD FOR
CREATIVITY AND BAD FOR ANALYSIS.
54
TYPES OF QUESTIONS
DICHOTOMOS THE RESPONDENT MUST ANSWER ONE OF
JUST TWO CHOICES Do you think TIDE gets
clothes clean without injuring the fabric?
YES NO
55
TYPES OF QUESTIONS
DICHOTOMOS THE RESPONDENT MUST ANSWER ONE OF
JUST TWO CHOICES Do you think TIDE gets
clothes clean without injuring the fabric?
YES NO YES CLEAN AND WITHOUT INJURY TO
THE FABRIC NO WHICH? CLEAN, INJURES,
CONFUSED, ?
56
TYPES OF QUESTIONS
MULTIPLE CHOICE VERY EASY ONE CORRECT ANSWER
TO MEDIUM SEVERAL ANSWERS ARE ONLY SLIGHTLY
DIFFERENT TO HARD COMBINATION ANSWERS ONLY
SLIGHTLY DIFFERENT
57
TYPES OF QUESTIONS
RANKING, RATING, and CONTINUUM QUESTIONS FORCE
A MORE PRECISE SCALE OF MEASUREMENT SCALE
DETERMINES TYPE OF STATISTICAL ANALYSIS THE
CHALLENGE WITH ALL OF THESE IS THE MEANING OF THE
SCALE OF MEASUREMENT.
58
PROBLEMS WITH QUESTIONS
  • THE RESPONDENT
  • DOES NOT UNDERSTAND THE QUESTION
  • DOES NOT HAVE THE INFORMATION TO ANSWER THE
    QUESTION
  • CAN NOT REMEMBER THE ANSWER
  • DOES NOT WANT TO ANSWER

59
THE PROBLEMS OF ENGLISH
  • AMBIGUITY
  • Pear, pare, pair
  • To, two, too
  • The, run
  • THE CHICKEN AND THE EGG
  • SPECIFICITY AND ABSTRACTION
  • What is the midpoint between right and wrong?

60
STEP 3 COLLECT RELEVANT INFO/DATAPRIMARY
DATAPANELS EXPERIMENTS
LO4
  • Panels
  • Experiments
  • Independent VariableThe Cause
  • Dependent VariableThe Result
  • Test Markets

8-60
61
STEP 3 COLLECT RELEVANT INFO/DATA/ OF PRIMARY
DATA
LO4
  • Advantage
  • More Specific to the Problem
  • Disadvantages
  • Expensive
  • Time Consuming to Collect

8-61
62
STEP 3 COLLECT RELEVANT INFO/DATAUSING INFO
TECHNOLOGY TO TRIGGER MARKETING ACTIONS
LO5
  • Data Mining A New Approach to Searching the Data
    Ocean
  • Data Mining is the extraction of hidden
    predictive information from large databases.

8-62
63
STATISTICAL MEASURES
  • Intent
  • Does it measure what it is meant to?
  • Error
  • What is the consistency of the data?
  • Who? Type of ? How many ?
  • Is it representative of the population?

64
OTHER MATHEMATICAL TOOLS
  • Calculus
  • Linear programming, matrix algebra, and Simplex
    solutions
  • Queing theory
  • Markov chains
  • Regression analysis
  • Time series analysis

65
SOME MARKETING RESEARCH TOOLS
  • CORRESPONDENCE MAPPING
  • CLUSTERING

66
CORRESPONDENCE MAPPING
  • 1 - Graphically represents the relationship
    between brands / products and other variables
    such as psychographics, media, etc..
  • 2 - A preliminary step to cluster analysis, used
    in determining the most discriminatory
    psychographic statements

67
CLUSTER ANALYSIS
  • USED FOR SEGMENTING MARKETS BY GROUPING
    INDIVIDUALS WITH SIMILAR RESPONSES INTO DISCRETE
    GROUPS.
  • A POWERFUL STATISTICAL TOOL FOR UNDERSTANDING
    CHARACTERISTICS AND RELATIONSHIPS

68
7 MARKET SEGMENTATION TARGET MARKETING
69
CREATING CUSTOMER VALUE
70
MARKETS SEGMENTS
PRODUCTS, SERVICES, TECHNOLOGIES
APPLICA-TIONS
CHANNELS
71
WHY SEGMENT MARKETS?WHEN AND HOW TO SEGMENT
MARKETS Kotler
LO1
  • WHY IS IT WORTH DOING?
  • Allows targeted communications
  • Fulfills consumers needs and wants
  • Responds to changing markets
  • Very efficient use of resources

9-71
72
WHAT IS MARKET SEGMENTATION?
  • A multi-step process
  • The same process whether B2C or B2B
  • A process for determining attractive target
    market segments

73
MARKET SEGMENTATION- A MULTI-STEP PROCESS -

SELECT RANK THE MOST MEANINGFUL BENEFITS
74
MARKET SEGMENTATION- BASES FOR SEGMENTATION-
75
CONSUMER B2C MARKET SEGMENTATION METHODS
  • Geographic
  • Demographic
  • Psychographic
  • Behavioral

76
STEPS IN SEGMENTING AND TARGETING MARKETSSTEP 1
GROUP POTENTIAL BUYERS INTO SEGMENTS
LO3
  • Geographic Segmentation B2C

World region North America, Europe, EU,
Region Southwest, Mountain States
Population SMSAs or SCAs, small cities
Population density Urban, suburban, exurban, rural
Climate Temperate, hot, humid, rainy
Lubbocks leading radio station
9-76
77
STEPS IN SEGMENTING AND TARGETING MARKETSSTEP 1
GROUP POTENTIAL BUYERS INTO SEGMENTS
LO3
  • Demographic Segmentation B2C

9-77
78
PRIZM
  • PRIZM
  • 500,000 neighborhoods
  • 62 clusters

79
STEPS IN SEGMENTING AND TARGETING MARKETSSTEP 1
GROUP POTENTIAL BUYERS INTO SEGMENTS
LO3
  • Psychographic Segmentation B2C

9-79
80
STEPS IN SEGMENTING AND TARGETING MARKETSSTEP 1
GROUP POTENTIAL BUYERS INTO SEGMENTS
LO3
  • Psychographic Segmentation B2C

ATTITUDES, INTERESTS, OPINIONS (AIO) for
instance Spends 1 hours per day on the
Internet, heavy e-mail user Buys on the
Internet, goes to stores only as
required Professional, income above 75,000 per
year Belongs to multiple frequent traveler
programs
81
STEPS IN SEGMENTING AND TARGETING MARKETSSTEP 1
GROUP POTENTIAL BUYERS INTO SEGMENTS
LO3
  • Behavioral Segmentation B2C

Occasion Regular or special 4th of July, new child
Benefits Quality, service, convenience, value
Brand loyalty None to insistence frequent flyer
Usage rates Light, medium, heavy
82
STEPS IN SEGMENTING AND TARGETING MARKETSSTEP 4
SELECT TARGET MARKETS
LO4
  • KOTLERS FIVE TESTS B2C
  • MEASURABLE quantifiable
  • SUBSTANTIAL the right size for my firm
  • ACCESSIBLE uses current channels
  • HETEROGENEOUS differentiable
  • ACTIONABLE long-term desire
  • EACH SEGMENT SHOULD HAVE A NEARLY UNIQUE
    RESPONSE / BEHAVIOR PATTERN.

83
BUSINESS B2B MARKET SEGMENTATION
  • Use the same process as B2C
  • Use different attributes / variables

84
BUSINESS BUYER CLASSIFICATIONReview
Purchase products for producing other goods and services can be either a finished good or a component
Purchase finished goods or components for resale, rental, or leasing for a profit distributors, dealers, wholesalers, retailers,
Federal, state, and local governments all different buyer behaviors
Purchase finished goods and services for resale, rental, or leasing for a profit
85
DEMAND Review
  • It is critical one understands the all the
    components of the total demand schedule Dt!
  • The problem is at the channel level. Thus the
    Bull-Whip Effect.

86
BUSINESS MARKET COMPLEXITYReview
BUSINESS SERVICES
Professional Services
Industrial Services
Project related
Technical industrial
On-going
Consulting Investment banking Research
Education
Education training Installation Maintenance
Engineering Quality Product testing
Maintenance contracts Field upgrades
87
BUSINESS B2B MARKET SEGMENTATION METHODS
  • Geographic
  • Demographic
  • Behavioral

88
STEPS IN SEGMENTING AND TARGETING MARKETSSTEP 1
GROUP POTENTIAL BUYERS INTO SEGMENTS
LO3
  • Geographic Segmentation B2B
  • Statistical Areas SMSA, SCA

AREA BUSINESSES LA Long Beach 686,222 New
York 598,093 Philadelphia - NJ 405,082 Chicago
399,511
9-88
Source DB Sales and Marketing Catalog, 2005
89
STEPS IN SEGMENTING AND TARGETING MARKETSSTEP 1
GROUP POTENTIAL BUYERS INTO SEGMENTS
LO3
  • Demographic Segmentation B2B
  • NAICS codes Industries example
  • Annual sales
  • Channel of distribution
  • Title / functional responsibility
  • Number of employees See example

9-89
90
BUSINESS MARKET SEGMENTATION
  • DEMOGRAPHIC
  • EMPLOYEES BUSINESSES
  • 1,000 18,864
  • 500-999 16,270
  • 100-499 126,466
  • lt100 1,803,535

Source DB Sales and Marketing Catalog, 2005
91
STEPS IN SEGMENTING AND TARGETING MARKETSSTEP 1
GROUP POTENTIAL BUYERS INTO SEGMENTS
LO3
  • Behavioral Segmentation B2B
  • Usage Rate
  • Product / process / technology / application
  • Type of equipment plastic manufacturing

92
BUSINESS MARKET SEGMENTATION
A
93
PRODUCT MARKET MATRIX
Example is DuPont, see also Dow, GE,
94
STEPS IN SEGMENTING AND TARGETING MARKETSSTEP 4
SELECT TARGET MARKETS
LO4
  • Criteria to Use in SelectingTarget Markets
  • Two Types of Criteria
  • Those That Divide a Market into Segments
  • Those That Actually Pick the Target Segments

9-94
95
STEPS IN SEGMENTING AND TARGETING MARKETSSTEP 4
SELECT TARGET MARKETS
LO4
  • Criteria to Use in Selecting Target Markets
  • Market Size
  • Expected Growth
  • Competitive Position
  • Cost of Reaching Segment
  • Compatibility with OrganizationalGoals and
    Resources

9-95
96
CREATING CUSTOMER VALUE
97
MARKET SEGMENTATIONFILLING THE GAPS
CHANNELS OF DISTRIBUTION
1
3
PRODUCTS SERVICES APPLICATIONS
4
2
MARKETS / SEGMENTS
TARGET MARKETS
Identifying relatively homogeneous groups with
similar needs and buyer behavior.
98
TARGET MARKETS
99
MARKET TARGETINGCHOOSING A MARKET-COVERAGE
STRATEGY
100
MARKET SEGMENTATIONMarket Coverage Strategies
The firm decides to ignore market segment
differences. One marketing mix Same product to
all segments Coca Cola Early Ford
  • 1 Pricing strategy
  • 1 Promotional program aimed at everybody
  • 1 Type of product with little/no variation
  • 1 Distribution system for the entire market
  • Staple foods-sugar and salt and farm produce,
    Henry Ford Model T standard model, no options

101
MARKET SEGMENTATIONMarket Coverage Strategies
The firm decides to target several large
market segments Each segment has a marketing
mix Different products for each market
segment Proctor Gamble detergents
Current auto manufacturers
Until around 2000, Marriott International U.S.
segmentation was Consumer market
segments Marriott Suites.....Permanent
vacationers Fairfield Inn...Economy
Lodging Business market segments Residence
Inn.....Extended Stay Courtyard By
Marriott.Business Travelers
102
MARKET SEGMENTATIONMarket Coverage Strategies
The firm decides to pursue a larger market
share of selected smaller segments,
sub-segments, or niches Different products to the
sub-segments Different marketing mix for each
segment or sub-segment SUVs standard to family
to luxury to Disney co-branded to
103
MARKET SEGMENTATIONMarket Coverage Strategies
Specialized products for individuals and
locations Brands, promotions

11 marketing Local chain grocery stores

Amazon, Dell
104
STEPS IN SEGMENTING AND TARGETING MARKETSSTEP 4
SELECT TARGET MARKETS
LO4
  • KOTLERS FIVE TESTS
  • MEASURABLE
  • SUBSTANTIAL
  • ACCESSIBLE
  • HETEROGENEOUS
  • ACTIONABLE

9-104
105
8 DIFFERENTIATION POSITIONING
106
CREATING CUSTOMER VALUE
107
DIFFERENTIATION
LO5
  • Differentiation is a marketing strategy that uses
    different marketing mixes to help consumers
    perceive a product as being different from and
    having meaningful benefits compared to competing
    products.

9-107
108
DIFFERENTIATION
  • SETTING YOURSELF APART
  • Important in consumer marketing
  • Essential in business marketing
  • DIFFERENTIATION BASED ON THE MARKETING MIX
  • Product the pen exercise and services if
    applicable
  • Place limited availability
  • Promotion Schlitz Beer
  • Price value perception, brand

109
IDENTIFY AND ESTABLISH BRAND POSITIONING AND
VALUES
  • RELEVANCE relevant and important
  • DISTINCTIVENESS distinctive and superior
  • BELIEVABILITY believable and credible
  • COMMUNICABLE gets through the noise

110
IDENTIFY AND ESTABLISH BRAND POSITIONING AND
VALUES
  • Elements where there is disagreement as to how
    their performance or functionality compares to
    the next best alternative.
  • COMPETITIVE FRAME OF REFERENCE

111
AREAS OF DIFFERENTIATION
PERCEPTION areas for competitive differentiation
People Company / User class or segment B2C vs. B2B
Service Repairability, Warranty
Product Form Features Performance
Durability Reliability - Expected life Design -
Apple
Image Style Design Quality Away from or
against competitors?
112
COMMON AREAS OF BRAND DIFFERENTIATION
  • The brand
  • provides unique or superior customer service,
    purchase, or usage experience
  • delivers superior performance and/or is the
    technology leader or innovator / pioneer
  • is the most convenient or easy to find and use
  • delivers the best perceived overall value for the
    price category
  • has excellent testimonials

113
THE PRODUCT CONCEPTEvery item in the product
concept is an opportunity to differentiate.
114
DIFFERENTIATION AND PRODUCT DECISIONS
115
INDIVIDUAL PRODUCT DECISIONS
Product Safety, Product Liability
Warranties
Expressed written Implied unwritten
116
WARRANTIES
  • Lifetime
  • Limited lifetime
  • Extended warranty
  • Free from manufacturers defects
  • Merchantability and fitness of use

117
INDIVIDUAL PRODUCT DECISIONS
Product Safety, Product Liability
Warranties
Product Recalls
Individual and Class Action Lawsuits
118
PRODUCT STRATEGIES
119
CREATING CUSTOMER VALUE
120
POSITIONING
LO5
  • Positioning helps you
  • or to see if you are launching into a crowded
    competitive marketplace
  • appreciate the most important criteria customers'
    use when positioning different brands in their
    mind
  • find the best position for your product or brand
    in the marketplace.

9-120
121
POSITIONING
Increasing Emotional Connection with Consumers
Increasing Difficulty for Competitors
122
SELECT THE RIGHT COMPETITIVE ADVANTAGES FOR
POSITIONING TO BE EFFECTIVE
Important to the consumer
Profitable
Distinctive differentiation
Affordable relative
Superior perception
Communicable
Preemptive
123
PERCEPTUAL MAP
LO5
A perceptual map is a way of displaying the
perception of brands, companies, products, or
services in the minds of consumers. It allows
one to understand the importance of the
meaningful differences being promoted relative to
the competition. It is usually done in two
dimensions, but occasionally in three.
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124
POSITIONING DIMENSION CANDIDATES
Quality Applications Occasions Lifestyle /
image Attributes Competition Price
125
POSITIONING PERCEPTUAL MAPPING
Fashion Coverage
Gap
More Copy
More Artwork
C
A
Gap
Channels / Products?
B
Club Coverage
126
POSITIONING STRATEGIES
Against Competition
Reposition a Competitor
U
C
C
C
U
127
POSITIONING STRATEGIES
Find a Position
Create a Position
VS
Gap
C
C
C
C
C
C
C
C
128
MARKET POSITION STRATEGYSee Marketing Warfare
article, by Ries and Trout
MARKET LEADER Coca Cola
MARKET Challenger Pepsi
MARKET Follower RC Cola
MARKET Nicher P/L
Frontal or indirect attack? Frontal attacks are
usually for market leaders. Really good marketing
executives are flexible.
129
MARKET POSITION STRATEGIES
MARKET LEADER Expand total market share Protect all market shares Expand selective market shares If the market leader retaliates, you are in trouble!
MARKET CHALLENGER Full frontal attack very risky Indirect attack
MARKET FOLLOWER Follow closely Follow at a distance laggard
MARKET NICHER By customer type, market sub-segment, special products, service level Pursue multiple niches
130
MARKETING WARFARE EXCERPTSRies and Trout
  • THE PRINCIPLE OF FORCE greater numbers usually
    always win.
  • TAKE NO PRISONERS, IF ATTACKED STRIKE BACK.
  • PRINCIPLES OF OFFENSIVE WARFARE launch the
    attack on as narrow a front as possible
  • THERE ARE NO FACTS IN THE HUMAN MIND. THERE ARE
    ONLY PERCEPTIONS. THE PERCEPTION IS THE REALITY.
  • The key characteristic of a marketing general is
    flexibility.
  • It is awfully hard to defend against what youre
    unprepared for.

131
POSITIONING STRATEGIES
Broaden the Base
C
U
C
C
C
132
MICROSOFT BRANDS IN 2003
MICROSOFT MICROSOFT MICROSOFT MICROSOFT MICROSOFT MICROSOFT
Commercial Commercial Commercial Commercial Consumer Consumer
Windows Server System Microsoft Business Solutions Microsoft Visual Microsoft Office MSN XBOX
133
UNIQUE SELLING PROPOSITION USP
  • THREE TESTS

A
134
SALES FORECASTING TECHNIQUES
LO6
  • Industry or Market Potential
  • Sales Forecast
  • Company Forecast

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135
SALES FORECASTING TECHNIQUES
LO6
  • Statistical Methods
  • Trend Extrapolation - extending a pattern
    observed in past data into the future

9-135
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