cbs mba 401 workshop 2 @ibbm

PNG Ins(tute of Banking and Business Management

Unit 401

Sweta Sud Chifley Adjunct Faculty

Marketing Management

In this Unit.. Week 1

• First workshop • 31st Jan, Friday

Week 2 • Read the Study guide • Read the book – Fee Refund

Week 3 • 2nd workshop •  14th Feb, Friday

Week 4 • Do the assignment – 17th Feb • Due on 24th Feb

Week 5 •  3rd workshop • 28 Feb, Friday

Week 6 • Exam on 6th March – return 7th March

Today’s Agenda

1 • Market Informa(on and Marke(ng Strategy(Chap 4,7) • Morning tea@10:00

2 •  Buyer Behaviour (Chap 5,6) •  Lunch @ 12:30pm

3 •  Products, Services, Brands (Chap8,9) •  Evening Tea@ 2:30pm

4 •  Pricing Strategies (Chap10,11)

Unit-401, Workshop1, 31st Jan 2014

Principles of Marke7ng Chapter 4

Managing Marke7ng Informa7on

Market Research

Customer Insights

Marke7ng Informa7on

PNG Ins(tute of Banking and Business Management Conduc(ng Marke(ng Research

Discussion Ques(ons

1.  What cons(tutes good marke(ng research?

2.  What are the best metrics for measuring marke(ng produc(vity?

3.  How can marketers access their return on investment of marke(ng expenditures?

Marke(ng Research System

Insight

Market Research

The systema*c design, collec*on,

analysis, and repor*ng of data and

findings relevant to a specific marke*ng

situa*on facing the company.

Marke(ng Research

Crea(ve Research Means

Rivals

Marke(ng partners

Student projects

Internet sources Check out rivals

Marke(ng Research Process

Step 1: Define the Problem

Focused inquiry

Step 2: Develop the Research Plan

Sampling plan Contact method

Data Sources •  Secondary data •  Primary data

Research Approaches •  Observa(on •  Focus groups •  Surveys •  Behavioral data •  Experiments

Research instrument •  Ques(onnaires •  Qualita(ve measures •  Technological devices

Step 3: Collect the Informa(on

Online surveys

Telephone surveys

Interviews In-‐home surveys

Step 4: Analyze the Informa(on

Step 5: Present the Findings

Step 6: Make the Decision

Research Decisions

Characteris7cs of Good Marke7ng Research 1. Scien(fic method 2. Research crea(vity 3. Mul(ple methods 4. Interdependence of models and data 5. Value and cost of informa(on 6. Healthy skep(cism 7. Ethical marke(ng

Former marke(ng research

execu(ve for General Foods

concluded that Star Wars would

fail at the box office. The film

grossed $4.3 billion in box office

receipts.

Measuring Marke(ng Produc(vity

Marke(ng-‐mix modeling

Marke(ng metrics

Marke(ng Metrics

Quan(fy

Interpret

Compare Marke(ng

Performance

Marke(ng Metrics

External •  Awareness •  Market share •  Rela(ve price •  Number of complaints •  Consumer sa(sfac(on •  Total number of customers •  Perceived quality/esteem •  Loyalty/reten(on •  Rela(ve perceived quality

Marke(ng-‐Mix Modeling

Awareness

Expenditure

Marke(ng Dashboards

Marke(ng Dashboard Example

{ Commercial Break }

This (me is for real…

OK, We’re back. Again.

Marke7ng Strategy

Posi7oning

Differen7a7on

Targe7ng

Segmenta7on

Iden(fying Market Segments and Targets

Discussion Ques(ons

1.  What are the different levels of market segmenta(on?

2.  In what ways can a company divide a market into segments?

3.  What are the requirements for effec(ve segmenta(on?

4.  How should business markets be segmented?

5.  How should a company choose the most aorac(ve target markets?

Target Marke(ng Requirements

1.  Iden(fy and profile dis(nct groups of buyers (market segmenta(on).

2.  Select one or more market segments to enter (market targe(ng).

3.  For each, establish and communicate benefits of offering (market posi(oning).

Bases for Segmen(ng Consumers

Geographic

Demographic

Psychographic Behavioral

Geographic Segmenta(on

Geoclustering

Demographic Segmenta(on

Age and Life-‐cycle Stage Life Stage Gender Income Genera(on Race and Culture

Age and Life-‐Cycle Stage

Life Stage

Gender Women:

Influence 80% of consumer purchases Make 75% of new home decisions Purchase 60% of cars

Income

Genera(on

Gen X (1964-‐1978) Baby Boomers (1946-‐1964) Silent Genera(on (1925-‐1945)

Millennials (Gen Y) – (1979-‐1994) -‐78 Million people -‐$187 annual spending power

Cohort Size Defining Features

Millennials (1979-‐1994) 78 m Raised in affluence, tech savvy,

perceived immunity from marke(ng

Gen X (1964-‐1978) 50 m Parents relied on day care, accepts diversity, pragma(c and individualis(c

Baby Boomers (1946-‐1964) 76 m

Control 3/4th of the wealth in the U.S, seek fountain of youth (hair color, hair replacement), home exercise equipment

Silent Genera(on (1925-‐1945) 42 m Lead vibrant lives, spend money and

(me on grandchildren.

U.S. Genera(on Cohorts

Race and Culture

Mul(cultural Market Profile

Psychographic Segmenta(on

•  Personality traits

•  Lifestyle •  Values

VALS Segmenta(on System

Behavioral Segmenta(on

User and Usage

Needs and Benefits

Decision Roles

Ini(ator

Influencer

Decider Buyer

Usage occasions

User status

Usage rate

Buyer-‐readiness

Loyalty status

Brand Funnel

Consumer Avtudes

Enthusias(c Posi(ve Indifferent Nega(ve Hos(le

Behavioral Segmenta(on

Bases for Segmen(ng B2B Markets

Demographic

Opera(ng Variables

Purchasing Approach

Situa(onal Factors

Personal Characteris(cs

Industry, company size, loca(on

Technology, user status, customer capabili(es

Power structure, nature of exis(ng rela(onship

Urgency, specific applica(on, size of order

Buyer-‐seller similarity, loyalty, risk avtude

Market Targe(ng

Effec(ve Segmenta(on Criteria Measurable Substan(al Accessible Differen(able Ac(onable

Market Targe(ng Porter’s Five Force

Rivals

New Entrants

Subs(tute Products

Buyer Power

Supplier Power

Evalua(ng and Selec(ng Segments

Individual marke(ng

Full market coverage

Mul(ple segment specializa(on

Single-‐segment concentra(on

Levels of Segmenta(on

Consumer Buyer Behavior

Buyer Decision Process

Buyer Decision

Buying Decision

Consumer Behaviour

Analyzing Consumer Markets

Discussion Ques(ons 1.  How do consumer characteris(cs influence buying

behavior?

2.  What major psychological processes influence consumer responses to the marke(ng program?

3.  How do consumers make purchasing decisions?

4.  In what ways do consumers stray from a delibera(ve, ra(onal decision process?

The study of how individuals, groups, and organiza(ons select, buy, use, and dispose of goods, services, ideas, or experiences to sa(sfy their needs or wants.

Buyer’s Characteris(cs

Cultural Factors

Social Factors

Personal Factors

Psychological Factors

Cultural Factors

Culture

Subculture

Social Class

Average U.S. Outlays IN 2007

38.5% 15.5% 11.4% 8.5% 6.1%

4.8% 4.2% 3.3% 2.1%

Social Factors Reference Groups

Family

Role and Status

Personal Factors

Life Cycle Stage

Personality

Personal Factors Values Occupa(on

Lifestyle

Economic situa(on

Psychological Factors

Mo(va(on Freud

Maslow

Herzberg

Maslow’s Hierarchy of Needs

Percep(on

Selec(ve Distor(on

Selec(ve Reten(on

Selec(ve Aoen(on

Subliminal Percep(on

Learning Driver

Discrimina(on

Emo(ons

Memory

Brand Associa(ons

Mental Maps

Memory Processes

Encoding Retreival

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Associa(on

The Buying Decision Process

Buying Decision Process

Problem Recogni(on

S(mulus •  Internal •  External

“I’m Hungry”

Informa(on Search

Personal

Commercial Public

Experien(al

Successive Sets Involved in Consumer Decision Making

Evalua(on of Alterna(ves

Avtudes

Beliefs

Steps between Evalua(on of Alterna(ves and Purchase Decision

Purchase Decision Noncompensatory Models

Dealer

Quan(ty

Timing

Payment method

Purchase subdecisions

Choice Heuris(cs: •  Conjec(ve •  Lexicographic •  Elimina(on-‐by-‐aspect

Postpurchase Behavior Postpurchase Sa7sfac7on

Postpurchase Ac(ons Defect

Dissa(sfied

Sa(sfied

Delighted

Stay or Go

Modera(ng Effects

Low-‐involvement

Variety seeking

Behavioral Decision Theory

Decision Heuris(cs

Decision Framing

Business Buyer Behavior

Govt. and Ins7tu7onal Buying

E-‐Procurement

Business Buyer Behavior

Business Markets

Analyzing Business Markets

Discussion Ques(ons

1.  What is the business market, and how does it differ from the consumer market?

2.  What buying situa(ons do organiza(onal buyers face?

3.  Who par(cipates in the B2B buying process?

4.  How do business buyers make their decisions?

5.  How can companies build strong rela(onships with business customers?

6.  How do ins(tu(onal buyers and government agencies do their buying?

The decision-‐making process by which formal organiza(ons establish the need for purchased products and services and iden(fy, evaluate, and choose among alterna(ve brands and suppliers.

-‐-‐ F. Webster Jr and Y. Wind

Organiza(onal Buying

Business Markets

Agriculture

Communica(ons

Banking & Finance

Transporta(on & Distribu(on

Construc(on

Forestry Manufacturing

Business Markets

•  Understanding deep customer needs

•  Iden(fy areas for growth •  Improving value management techniques

•  Calcula(ng beoer marke(ng metrics

•  Compe(ng and growing in global markets

•  Countering product commodi(za(on

•  Gain support for the marke(ng concept

Similari(es to the Consumer Market

Business Markets

Professional Buyers

Geographically Concentrated

Mul(ple Sales Calls

Differences to the Consumer Market

Personal Rela(onships

Fewer, Larger Buyers

Business Markets

Demand •  Derived •  Inelas(c •  Fluctua(ng

Derived Demand

Differences to the Consumer Market

Fluctua(ng Demand

Inelas(c Demand

Buying Situa(ons

Straight Rebuy New Task

Modified Rebuy

Systems Buying and Selling

Prime Contractor

Second-‐(er

Contractors

Business Buying Par(cipants

Influencer

Buyers Gatekeeper

Decider Ini(ator/Users

Approver

Buying Center Influences

Par7cipants differ by: •  Interest •  Authority •  Status •  Persuasiveness •  Decision criteria

Targe(ng Firms and Buying Centers

Who to target?

Purchasing/Procurement Process

Diverse supplier base

Benefits vs. Costs

Stages in the Buying Process

Problem Recogni(on Descrip(on and

Characteris(cs Supplier Search

Proposal Solicita(ons

Supplier Selec(on

Order Specifica(on

Performance Review

Problem Recogni(on Internal s7muli

•  New product being developed

•  Broken machine

•  Low stock level External s7muli

•  Trade show visit •  Adver(sement

Technical specifica7ons •  Reliability •  Durability •  Price

Descrip(on and Characteris(cs

Product value analysis

Trade directories

Trade adver(sements

Trade shows

Supplier Search

E-‐Procurement Lead genera(on

Proposal Solicita(ons

Formal presenta(on

Wrioen

Supplier Selec(on

Supplier-‐evalua(on model

Number of suppliers

Order Specifica(on

Technical specifica(ons

Quan(ty

Delivery (me

Return policy

Warran(es

Stockless purchase plan

End user evalua(ons

Weighted-‐score

method

Performance Review

Buyclasses

New Task Modified Rebuy

Straight Rebuy

1. Problem Recogni(on Yes Maybe No 2. General need descrip(on Yes Maybe No 3. Product specifica(on Yes Yes Yes 4. Supplier search Yes Maybe No 5. Proposal solicita(on Yes Maybe No 6. Supplier Selec(on Yes Maybe No 7. Order-‐rou(ne specifica(on Yes Maybe No 8. Performance review Yes Yes Yes

Buygrid Framework Bu

Table 7.1

Managing B2B Rela(onships

One-‐to-‐one Marke(ng

Online social media

Managing B2B Rela(onships

Ver(cal Coordina(on

Rela(onship Factors Availability of alterna(ves Importance of supply Complexity of supply Supply market dynamism

Buyer-‐Seller Rela(onship Categories

Customer is king

Collabora(ve

Mutually adap(ve Contractual transac(on

Coopera(ve systems

Ins(tu(onal and Governments Markets

Schools

Hospitals

Prisons

Government agencies

Products, Services, Brands

Branding Strategy

Services Marke7ng

Product

THREE LEVELS OF PRODUCT DECISION 1. Individual Product Decision

Product Support Services

Product Aoributes Branding

Packaging Labelling

2. Product Line Decision

Packaging Labelling

3. Product Mix Decision

Packaging Labelling

Crea(ng Brand Equity

“A name, term, sign, symbol, or design, or a combina(on of them, intended to iden(fy the goods or services of one seller or group of sellers and to differen(ate them from those of compe(tors.”

Strategic Brand Management

Iden(fy

Plan Measure/ Interpret

Role of Brands Consumer Benefits

Brands:

•  Iden(fy source/maker

•  Simplifies decision making

•  Reduces risk

Role of Brands

Brands: •  Simplify product handling

•  Protect unique features

•  Create loyalty •  Establish barriers to entry

Marketer Benefits

Scope of Branding

Crea(ng difference between products

The added value endowed on products and services because of the brand.

Brand Equity

Customer-‐based Brand Equity

Differences in consumer response

Consumers’ brand knowledge

Percep(ons, preferences, and behaviors

Brand Promise

What the brand must be and do for consumers.

Branding Strategy

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Develop new brand elements

Apply exis(ng brand elements

Combine new and exis(ng elements

Branding Strategy

Line Extension Category Extension

Parent Brand (Master or Family Brand)

Tide -‐  Fruit on the Bottom -‐  Fruit Blends

Honda -‐  Automobiles -‐  Lawn Mowers

Branding Decisions

Sub-‐brand name

Company Brand GE, Heinz, Campbell Soup

Individual Brand Names

•  Bisquick •  Gold Medal •  Whea(es •  Yoplait

Kellogg’s Rice Krispies, Frosted Flakes…

A brand porzolio is the set of all brands and brand lines a par(cular firm offers for sale in a par(cular category or market segment.

Brand Porzolio

Brand Porzolio -‐ Sony

Computer Cameras Televisions Theatre

Portable Electronics

Sony Pictures Games

VAIO -‐notebook -‐desktop

Digital Home

Disc Burner

Loca(on Free

So{ware

Cyber-‐shot

Alpha SLR

HandyCam

Printers

Digital picture frames

Photo services

Televisions

Home theatre systems

Blu-‐ray Disc

DVD players

Home audio components

Walkman Video MP3

Reader Digital Book

Sony Cell Phone

Movies -‐Theatre -‐DVD -‐Blue-‐ray

Television -‐Comedy -‐Drama -‐Day(me -‐Cartoons Music

PlaySta7on -‐PS3 -‐PS2 -‐Portable

Brand Roles

Cash Cows

Flankers Low-‐end Entry Level

High-‐end Pres(ge

Brand Extensions

Improve the odds of new-‐product success

Building Strong Brands

Brand Posi(oning • Aoributes • Benefits • Beliefs and Values

Brand Name Selec(on

Brand Sponsorship

Brand Development

New Product Development

Product Life Cycle Strategies NPD Strategy

Google.com

Product Life Cycle Challenges

1.  New Product Development 2.  Product Life Cycle Strategies

Principles of Marke7ng Chapter 9,10

Pricing Strategies

Price Changes

Pricing Strategies

Developing Pricing Strategies and Programs

Discussion Ques(ons

1.  How do consumers process and evaluate prices?

2.  How should a company set prices ini(ally for products or services?

3.  How should a company adapt prices to meet varying circumstances and opportuni(es?

4.  When should a company ini(ate a price change?

5.  How should a company respond to a compe(tor’s price change?

Marke(ng Mix

Product Price

Promo(on Place

Revenue Producer

Changing Price Environment

Instant Price Comparisons

I’ll pay $235.00

Name Your Own Price

Get Products Free

Buyers

$29.99 $19.99 $24.99

Changing Price Environment Sellers

Monitor Customers

Selec7ve Pricing

Nego7ate Prices

How Companies Price

Pricing Department

Small Business Owner

Product-‐line Managers (w/guidance)

Consumer Psychology and Pricing

Reference Prices

Price-‐Quality Inferences

Price Endings $1.99

A Black T-‐Shirt

Armani -‐ $275

Gap -‐ $14.90

H&M -‐ $7.90

Select Final Price

Sevng the Price

Price Method

Compe(tor Analysis

Es(mate Costs

Determine Demand

Pricing Objec(ve

Selec(ng the Pricing Objec(ve Survival Maximum Current Profit Maximum Market Share Maximum Market Skimming Product-‐Quality Leadership Other Objec(ves

Determining Demand

Price sensi7vity Es7ma7ng demand curves Price Elas7city of Demand

Inelas(c and Elas(c Demand

Es(ma(ng Costs

Demand Price Ceiling

Profit

Price Floor

Es(ma(ng Costs

Fixed Costs (overhead) Variable Costs Total Costs

Types of costs

Costs at Varying Levels of Produc(on

Es(ma(ng Costs

Accumulated Produc7on

Experience Curve (Learning Curve)

Es(ma(ng Costs

Target Cos7ng

Market research Design engineers

The Experience Curve

Analyzing Compe(tors’ Offers

“A” “B”

Worth to Customer

Costs Reac(on

Selec(ng a Pricing Method

Pricing Methods •  Markup •  Target-‐return •  Perceived-‐Value •  Value •  Going-‐rate •  Auc(on-‐type

Three Cs Model for Price Sevng

Ceiling price

Customers’ assessment of unique product features

Orien(ng point

Compe(tors’ prices and prices of subs(tutes

Floor Price

High Price

(No possible demand at this price)

Low Price

(No possible profit at this price)

Markup Pricing

Variable cost per toaster $10

Fixed costs $300,000

Expected unit sales 50,000

Target-‐Return Pricing

Perceived-‐Value Pricing Customer’s perceived-‐value

•  Performance $$$ •  Warranty $ •  Customer support $ •  Reputa(on $$

Value Pricing

P1 P2 C1 C2

Level of Quality

THOUSANDS OF

LOW PRICES EVERY DAY throughout the store

Low Pricing

Going-‐Rate Pricing

Follow the Leader

Commodi(es

Auc(on Pricing English auc7on (ascending bids)

Dutch auc7on (descending bids)

Sealed-‐bid auc7on

Selec(ng the Final Price

Brand Quality

Impact on others

Pricing Policies

Gain-‐and-‐risk-‐sharing

Adap(ng the Price Geographic Pricing

Price Discounts and Allowances

Promo7onal Pricing

Differen7ated Pricing

Dealing with Price Changes

Compe7tor Moves

Raising Prices

Cugng Prices

{ Lets call it a day}

Next week’s Case Study

Team 1: Page A16-‐ 1.1 to 1.5

Team 2: Page A23-‐2.1 to2.3 -‐ Westgate

Team 3: Page A27-‐3.1-‐ Kingsford

Team 4:Page A27-‐3.2 – Pepsi Co

Team 5:Page A27-‐3.3 – Hair Zone

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