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Marketing
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
What is marketing?
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
• provide the customer with what they want and need• a business philosophy that requires:
complete customer orientation coordinated company commitment profit (not sales) as the objective
The marketing concept
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
The marketing concept
environment
marketing research
marketing
company customer
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
The 4 P’s
product place
customer
price promotion
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
• a firm’s action on controllable variables to satisfy customer group(s)
high-end wood furniture for small urban living spaces a select line of furniture items with high design values and
functionality priced at a premium, sold in specialty retail outlets in the
downtown core advertised through architectural and lifestyle magazines, walk
by traffic, and word-of-mouth
The marketing mix
eg
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
The 4 P’s
customer
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
The customer
“A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him.He is not an interruption of our work. He is the purpose of it.He is not an outsider on our business. He is part of it.We are not doing him a favour by serving him.He is doing us a favour by giving us an opportunity to do so.”
- Mahatma Gandhi, 1890
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
The customer (value chain)
Trees Sawmills
Pulp &Paper
ByProducts
PanelProducers
LumberProducts
Value AddedProducer
Dist
ribut
ion
Specifier
Retailer
End User
Builder
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
The 4 P’s
product
customer
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
• physical good or service that satisfies a customer’s wants and needs product levels: items, lines, mixes, bundles types of (forest) products: commodity, differentiated, specialty total product concept product life cycle
Product
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
lumberpaper
furniturefruits and nuts
carbon
plywood
doors and windows
musical instruments
flooring
newsprint
oriented strandboard
recreation
toys
shakes and shinglesMSR lumber
decks
prefabricated homes
bioenergy
medicinal products
rayon
maple syrup
corks
pulp
firewood
ethanol
biofuels
pallets
charcoal
medium density fibreboard
ecotourism
cabinets
spices
bark mulch
rubber
florals
waxes
resins
turpentine
coated papers
packaging
fencing
oils
food additives
inks
cosmetics
methanol
nanocellulose fibers
types of (forest) products
Product
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
lumberpaper
furniturefruits and nuts
carbon
plywood
doors and windows
musical instruments
flooring
newsprint
oriented strandboard
recreation
toys
shakes and shinglesMSR lumber
decks
prefabricated homes
bioenergy
medicinal products
rayon
maple syrup
corks
pulp
firewood
ethanol
biofuels
pallets
charcoal
medium density fibreboard
ecotourism
cabinets
spices
bark mulch
rubber
florals
waxes
resins
turpentine
coated papers
packaging
fencing
oils
food additives
inks
cosmetics
methanol
nanocellulose fibers
commodity products
Product
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
lumberpaper
furniturefruits and nuts
carbon
plywood
doors and windows
musical instruments
flooring
newsprint
oriented strandboard
recreation
toys
shakes and shinglesMSR lumber
decks
prefabricated homes
bioenergy
medicinal products
rayon
maple syrup
corks
pulp
firewood
ethanol
biofuels
pallets
charcoal
medium density fibreboard
ecotourism
cabinets
spices
bark mulch
rubber
florals
waxes
resins
turpentine
coated papers
packaging
fencing
oils
food additives
inks
cosmetics
methanol
nanocellulose fibers
differentiated products
Product
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
lumberpaper
furniturefruits and nuts
carbon
plywood
doors and windows
musical instruments
flooring
newsprint
oriented strandboard
recreation
toys
shakes and shinglesMSR lumber
decks
prefabricated homes
bioenergy
medicinal products
rayon
maple syrup
corks
pulp
firewood
ethanol
biofuels
pallets
charcoal
medium density fibreboard
ecotourism
cabinets
spices
bark mulch
rubber
florals
waxes
resins
turpentine
coated papers
packaging
fencing
oils
food additives
inks
cosmetics
methanol
nanocellulose fibers
value-added products
Product
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
lumberpaper
furniturefruits and nuts
carbon
plywood
doors and windows
musical instruments
flooring
newsprint
oriented strandboard
recreation
toys
shakes and shinglesMSR lumber
decks
prefabricated homes
bioenergy
medicinal products
rayon
maple syrup
corks
pulp
firewood
ethanol
biofuels
pallets
charcoal
medium density fibreboard
ecotourism
cabinets
spices
bark mulch
rubber
florals
waxes
resins
turpentine
coated papers
packaging
fencing
oils
food additives
inks
cosmetics
methanol
nanocellulose fibers
innovative products
Product
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
lumberpaper
furniturefruits and nuts
carbon
plywood
doors and windows
musical instruments
flooring
newsprint
oriented strandboard
recreation
toys
shakes and shinglesMSR lumber
decks
prefabricated homes
bioenergy
medicinal products
rayon
maple syrup
corks
pulp
firewood
ethanol
biofuels
pallets
charcoal
medium density fibreboard
ecotourism
cabinets
spices
bark mulch
rubber
florals
waxes
resins
turpentine
coated papers
packaging
fencing
oils
food additives
inks
cosmetics
methanol
nanocellulose fibers
non-timber forest products
Product
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
lumberpaper
furniturefruits and nuts
carbon
plywood
doors and windows
musical instruments
flooring
newsprint
oriented strandboard
recreation
toys
shakes and shinglesMSR lumber
decks
prefabricated homes
bioenergy
medicinal products
rayon
maple syrup
corks
pulp
firewood
ethanol
biofuels
pallets
charcoal
medium density fibreboard
ecotourism
cabinets
spices
bark mulch
rubber
florals
waxes
resins
turpentine
coated papers
packaging
fencing
oils
food additives
inks
cosmetics
methanol
nanocellulose fibers
subsistence products
Product
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
lumberpaper
furniturefruits and nuts
carbon
plywood
doors and windows
musical instruments
flooring
newsprint
oriented strandboard
recreation
toys
shakes and shinglesMSR lumber
decks
prefabricated homes
bioenergy
medicinal products
rayon
maple syrup
corks
pulp
firewood
ethanol
biofuels
pallets
charcoal
medium density fibreboard
ecotourism
cabinets
spices
bark mulch
rubber
florals
waxes
resins
turpentine
coated papers
packaging
fencing
oils
food additives
inks
cosmetics
methanol
nanocellulose fibers
ecosystem services
Product
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
Product
types of products
commodity products
differentiated products
specialtyproducts
natural evolution
product complexity, importance of marketing activities
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
Product
product
reputation
credit
quality
warranty
style
reliability
service
total product concept
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
Product
dimensionlumber
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
Product product life cycle
Introduction Growth Maturity Decline
0
in $VALUE
TIME
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
Product
Why is it critical to recognize where your product(s) lies on the product life cycle?
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
Product
Introduction: Growth: Maturity: Decline:
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
Product
source: adapted from Sinclair (1992)
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
Product
The length of a product’s life cycle depends on what?
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
Product
How can a product’s life cycle be extended?
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
The 4 P’s
product place
customer
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
• sometimes known as “distribution”, “logistics”, “supply chain management”
• all of the activities that get the right product to the right customer at the right time transportation methods packaging delivery times and locations inventories retail provision of services
Place
eg
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
• supply chain (management) definitions: “A supply chain is a physical network of entities through which
materials, (directly, or via inventory), information, and cash flow. The supply chain starts with a raw material supplier and ends with the customer that consumes the products produced by the chain.”
“Supply chain management implies planning, development, coordination, organisation, steering, and control of intra and inter-organisational processes from a holistic perspective and accounting for exchanges of materials, information, cash, product development activities and marketing activities in supply chains.”
Place
source: Mattsson (2000, 1999)
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
• supply chain (management):
Place
source: Vahid (2011)
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
Place
system made up of independent institutions involved in moving products from points of production to points of consumption
source: Sinclair (1992)
channels of distribution:
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
• channel strategies: sell direct to customers? which intermediaries should be used? agents versus merchants degree of channel ownership / integration? intensity / exclusivity of distribution? level of cooperation along supply chain? domestic or international markets? delivery times and locations? packaging and treatments? inventories? mode of transport? rail, truck, waterways, intermodal
Place
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
• terms of delivery (INCOTERMS):
Place
Departure– EXW (Ex Works)
Main Carriage Unpaid– FCS (Free Carrier)– FAS (Free Alongside Ship)– FOB (Free On Board)
Main Carriage Paid– CFR (Cost & Freight)– CIF (Cost, Insurance & Freight)– CPT (Carriage Paid To)– CIP (Carriage & Insurance Paid To)
Arrival– DAF (Delivered at Frontier)– DES (Delivered Ex Ship)– DEQ (Delivered Ex Quay)– DDU (Delivered Duty Unpaid)– DDP (Delivery Duty Paid)
source: Juslin and Hansen (2011)
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
Place
manufacturing
wholesalers distributors
industrial end-users
lumberyards
building and remodeling contractors
consumers and home owners
manufacturing
industrial end-users
pro-dealers
building and remodeling contractors
consumers and home owners
DIYretailers
productionbuilders
source: Poyry (2009)two-step supply chain one-step supply chain
wood industry trends
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
The 4 P’s
product place
customer
price
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
• amount charged for a good or service fixed costs variable costs taxes
profit margin
Price
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
pricing models:• cost-based pricing• market share-based pricing (introductory pricing)• sales volume-based pricing• status quo pricing• value-based pricing• discounts:
trade, package, cash, promotional, quantity, seasonal, coupons, rebates
Price
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
The 4 P’s
product place
customer
price promotion
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
Promotion
source: McGraw-Hill Magazines (1989)
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
Forest Firms Try a Different Pitch by M. McCulloughThe Vancouver Sun (date unknown)
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
• communication that a company uses to inform existing and potential customers about who they are and what they are selling
• generic model:
push
through supply chain
pull
Promotion
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
Promotion
Research Inputs
Strategic Decisions
Tactical Execution
Evaluate & Adjust
Measure Effectiveness
Market Impact
Constraints & Influences
Feedback
promotional planning
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
PromotionPROMOTION
mass selling sales promotion personal selling
advertising publicity end-user company personnel
source: Sinclair (1992)
theoretical model for promotion
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
PromotionPROMOTION
mass selling sales promotion personal selling
advertising publicity end-user company personnel
source: Sinclair (1992)
low high
cost per contact
effectiveness of communication
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
PromotionPROMOTION
mass selling sales promotion personal selling
advertising publicity end-user company personnel
sending messages to customers / potential customers through media (TV, magazines, flyers, radio, direct mail, internet, social media)
• to reinforce positive attitudes• to communicate incentives• to change attitudes
source: Sinclair (1992)
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
PromotionPROMOTION
mass selling sales promotion personal selling
advertising publicity end-user company personnel
information about a firm / product disseminated to the public at no (or little) cost
• news releases, media reporting, etc.
source: Sinclair (1992)
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
PromotionPROMOTION
mass selling sales promotion personal selling
advertising publicity end-user company personnel
• trade shows, showrooms, free samples, coupons, discounts, point of purchase displays, etc.
source: Sinclair (1992)
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
PROMOTION
mass selling sales promotion personal selling
advertising publicity end-user company personnel
Direct presentation of information related to a firm’s product/service
• order-taking• relationship-building• missionary sales• technical sales
source: Sinclair (1992)
dominates forest products industry
Promotion
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
Promotion
Find an advertisement in a wood products / forestry journal and answer the following questions:
• What is the advertisement communicating about the company, product, service, etc.?
• How is the advertisement getting the message across?• Who is the target audience?• Is it an effective advertisement? Why or why not?
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
• if promotion is communication that a company uses to inform existing and potential customers about who they are and what they are selling,
• then markets are the set of all existing and potential buyers of a particular service
Promotion
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
mass marketing:a single marketing aimed at as broad a range of customers as possible
market
target marketing:segmenting the market and targeting products/services to one or more well-defined customer groups
market
Promotion
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
Promotion
Why do most forest products firms now employ some form of target marketing / segmentation?
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
market
market segments should be:• homogenous• accessible• economical
examples of market segments:• industrial vs. consumer• geographic• customer / product class• demographic• psychographic
target markets / segments
Promotion
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
marketing strategy
market
product place
customer
price promotion
WOOD 465 – Business Management in the Wood IndustryComponent #3 – Marketing
Marketing
Marketing strategy
Devise (brainstorm) a marketing strategy for a hypothetical forest product.