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Exam2Review

LectureNotes:Chapter5

ConsumerBehaviorandMarketingStrategyPlanning(Exhibit51)

Threekeydeterminantsofconsumerbehaviorinclude:
1.Individualconsumerfactors:economicneeds,psychologicalvariables,socialinfluences,andthe
purchasesituation.
Youhavetomakeadecisionafterevaluatingallofthesevariableaboutwhetherornottobuy
2.Externalinfluencesonconsumerbehavior:likemarketingmixesandotherstimuli.
3.Theproblemsolvinganddecisionmakingprocessesconsumersgothrough.
ConsumerDecisionMakingProcess
Itisageneralfivestepprocessthatmovestheconsumerfromrecognitionofaneedtotheevaluationofa
purchasedecision.
Itisaguidelineforstudyinghowconsumersmakedecisions.
Exhibit6.1:ConsumerDecisionMakingProcess

NeedRecognition

Thisisthefirststageinthedecisionmakingprocess.
Resultofanimbalancebetweenactualanddesiredstates.
Ex.acarthatsnotgettinggoodgasmileage
ConsumersScaleBack
APewResearchCenterpollsuggestsconsumersaremorefocusedonbasicnecessities.
63%ofwomenand51%ofmenreportbuyingcheaperbrandsandincreasedshoppingatdiscountstores.
Anincreasednumberofrespondentsreportedinternetasanecessity,whileadecreasednumberreported
television.
NeedRecognition

Amarketingmanagersobjectiveistogetconsumerstorecognizeanimbalancebetweentheirpresentstatusand
theirpreferredstate.
Advertisingandsalespromotionoftenprovidethisstimulus.
Marketinghelpsconsumersrecognizeanimbalancebetween
present
statusand
preferred
state.
Internal
EX:Hungerandthirst
External
EX:Carrecommendations
Stimulus
Anyunitofinputaffectingoneormoreofthefivesenses:
1.Sight
2.Smell
3.Taste
4.Touch
5.Hearing
RecognitionofUnfulfilledWants
Whenacurrentproductisntperformingproperly.
Whentheconsumerisrunningoutofaproduct.
Whenanotherproductseemssuperiortotheonecurrentlyused.

InformationSearch
InternalInformationSearch
Recallinformationinmemory.
An
internalinformationsearch
istheprocessofrecallinginformationinmemory.
Thisincludespriorexperienceorpriorknowledgeaboutaproduct.
ExternalInformationSearch
Seekinformationinoutsideinenvironment.
Canbeobtainedfromtwotypesofsourcesincluding:
1.
Nonmarketingcontrolled
sourcesincludepersonalexperience,personalsources,and
publicsources.
2.
Marketingcontrolled
informationisbiasedtowardaspecificproductbecauseit
originateswithmarketerspromotingthatproduct.
Thesesourcesincludemassmediaadvertising,salespromotion,salespeople,product
labelsandpackaging,andtheInternet.
An
externalinformationsearch
reliesoninformationintheoutsideenvironment.
Thisincludespersonalandpublicreferences,advertisements,andpublicity.
EvokedSet

Theinformationsearchshouldyieldagroupofbrands,or
evokedset
,whicharetheconsumerspreferred
alternatives.
Fromthisset,consumerswillfurtherevaluatethealternativesandmakeachoice.
EvaluationofAlternativesandPurchase

Oncetheevokedsetisconstructed,theconsumerisreadytomakeadecision.
Onewaytomakeachoiceistopickproductattributesthatareimportanttohim/her,thenexcludeallproductsin
thesetthatdonothavethatattribute.
Anotherwaytonarrowthenumberofchoicesistousecutoffs,orminimumormaximumlevelsofanattributethat
analternativemusthave.
Manytimes,priceisanimportantcutoffattribute.
Thegoalofthemarketingmanageristodeterminewhichattributeshavethemostinfluenceonaconsumers
choice,anddesignamarketingmixthatstressesthoseattributestotheconsumer.
Asingleattribute,suchasprice,maynotalwaysexplainaconsumersevaluationofproducts.
Attributesthatthemarketermayconsiderimportantarenotalwaysimportanttotheconsumer.
Brandnames,suchasJohnson&Johnson,haveasignificantimpactoverthechoiceofproducts.

Purchase

Ultimately,theconsumermustspecificallydecide:
1.Whethertobuy.
2.Whentobuy.
3.Whattobuy(producttypeandbrand).
4.Wheretobuy(typeofretailer,specificretailer,onlineorinstore).
5.Howtopay.
CognitiveDissonance

Onceapurchasedecisionismade,thenextstepintheprocessistheevaluationoftheproductafterpurchase.
Consumersexpectcertainoutcomesfromthepurchase,andhowwelltheseexpectationsaremet
determinesthelevelofcustomersatisfaction.
Priceinfluencesthelevelofexpectationsforaproductorservice.
Whenpeoplefeelinconsistencybetweentheirvaluesoropinionandtheirbehavior,theyfeelaninnertension
called
cognitivedissonance
.
Inpurchasedecisions,thisisalsocalledbuyersremorse.
Forexample:Whydopeoplewhohavebeenrepeatedlywarnedthatcigarettesarebadfortheirhealthcontinueto
smoke?
Becausesmokersknowonethingandfeelanotherthatscognitivedissonanceatwork.
PostpurchaseBehavior
Consumerscanreducedissonanceby:
Seekinginformationthatreinforcespositiveideasaboutthepurchase.
Avoidinginformationthatcontradictsthepurchasedecision.
Revokingtheoriginaldecisionbyreturningtheproduct.
Marketingmanagerscanhelpreducecognitivedissonancethrougheffectivecommunicationwithconsumers,such
asfollowupnotes,advertising,andguarantees.

PsychologicalInfluencesWithinanIndividual


Needs
:basicforcesthatmotivateconsumerstodosomething.

Wants
:learnedneedsthatis,theyareneedsexpressedasadesireforaparticularneedsatisfier.

Drive
:astronginternalstimulusthatencouragesactiontoreduceaneed.
InClassVideo
ConsumerDecisionMaking
VermontTeddyBear
Need:toshowloveandtobeloved
BestsmallcompanyinAmerica
BearGram#1seller
Wearenotateddybearcompany,wearethebeargrambusiness
Peoplelovethattheyaregettingaoneofakindgift
Whatmotivatesconsumers?
Consumerswanttobeseenasromanticandtobeappreciatedforgivingthisgifts,theywantemotionsand
feelings
Seasonaltrends:giftgivingholidays,Vday,Christmas,Graduation
Priceisntanissueduringgiftgivingholidays
Mengenerallywaituntilthelastminute
Emphasizeadirectconsumermarketstrategy
Developedtohelpwithproblemrecognition
Fivestages:
1.Problemrecognition
Topleasesomeonewithaspecialgift
2.Informationsearch
Searchactivityinitiatedwhentheycall800numberandtalktoabearcounselor
Radioadvertising
VTBcansolveyourproblem
Logontothewebsite
Catalog
3.Evaluationofalternatives
Someweighalternativewhiletalkingtobearcounselors
4.Purchasedecision
5.Postpurchasebehavior
Senderscontactcustomerservicetomakesurethebeargramwasdelivered
Negative:beargramwaswrong,broken,etc.>disappointedcustomer
Positive:rightbeararrivesontimesatisfiedcustomer

PossibleNeedsMotivatingaPersontoSomeAction(Exhibit53)

ThePSSPHierarchyofNeeds(Exhibit54)

Physiologicalneeds
:themostbasicneedspeopleexperience.
EX:biologicalneedsforfood,liquid,rest,andsex.

Safetyneeds
:concernedwithprotectionandphysicalwellbeing.
EX:health,medicine,exercise,andsecurity.

Socialneeds
:derivedfromapersonsinteractionswithothers.
EX:love,friendship,status,esteem,andconnectingwithothers.

Personalneeds
:concernedwithanindividualsneedforpersonalsatisfaction,unrelatedtowhatothersdo.
EX:personalsatisfaction,accomplishment,fun,freedom,andrelaxation.
PerceptionDeterminesWhatConsumersSeeandFeel

Perception
referstohowpeoplegatherandinterpretinformationfromtheworldaroundthem.
Marketersareverymuchinterestedintheprocessespeopleusetohandleincomingmarketingmixstimuli,
becausepeoplecantprocessalltheinformationtowhichtheyareexposedonadailybasis.
Thevolumeistoogreat.

Selectiveexposure
meansthatconsumersseekoutandnoticeonlytheinformationthatintereststhem.

Selectiveperception
meansthatpeoplescreenoutormodifyideas,messages,andinformationthatconflict
withpreviouslylearnedattitudesandbeliefs.

Selectiveretention
meansthatconsumersrememberonlywhattheyreallywanttoremember.
TheLearningProcess(Exhibit55)

Marketersunderstandthatvirtuallyallofconsumerbehaviorislearned,sotheyareveryinterestedinhowtheycan
positivelyaffectthelearningprocess.
Learning
isachangeinapersonsthoughtprocessescausedbypriorexperience.
Asmentionedpreviously,a
drive
isastronginternalstimulusthatencouragesactiontoreduceaneed.

Cues
arestimuliintheenvironmentthattriggeradriveorresponse.
A
response
isanefforttosatisfyadrive.

Reinforcement
occurswhentheresponseisfollowedbysatisfaction,whichreducesthedrive.
Marketersoftentrytoidentify
positivecuesorimagesthathavepositiveassociationsfromsomeothersituation
andrelatethemtotheirmarketingmix
.
Manyneedsareculturallylearned
.
PsychographicsFocusonActivities,Interests,andOpinions
Personalityandlifestylesareotherpsychologicalvariablesthataffectconsumerbehavior.
Personalityaffectshowpeopleseethings.
Marketershavefounditdifficulttoincorporatepersonalityintothemarketingmix.
Psychographicsorlifestyleanalysis:
Activities
:identifywhatpeopledoobjectivelyobservable.
Interests
:tendtocreatestrongerdrivesthatmaypinpointmarketopportunities.
Opinions
:thewaysinwhichpeoplefeelaboutthings.
Bycombiningopinionswithinterestsandactivities,marketerscandeveloparobustviewofcertaintargetmarket
segments.
LifestyleDimensions(andsomerelateddemographicdimensions)(Exhibit56)

FamilyLifeCycleInfluencesNeeds(Exhibit57)

Thetraditionalfamilylifecycleflowfromyoungandsingle,togettingmarried,addingchildrenwhogrowupand
laterleavethehome.
Increasingly,manyAmericansarechoosingnottohavechildren.
Anothergrowingfamilylifecyclepatterninvolvesdivorce.
Youngpeopleandfamiliesacceptnewideas.
Reallocationforteenagers.
Increasingsinglesmarket.
Sellingtothe
emptynesters
:peoplewhosechildrenaregrownandwhoarenowabletospendtheirmoneyin
otherways.
AdoptionProcessSteps

Manynewproductconceptsrequireanadoptionprocess.
1.Inthe
awareness
stage,thepotentialcustomerfirstlearnsabouttheexistenceofaproductbutmay
lackmoredetails.
2.Ifthe
interest
stageisreached,theconsumerwillgathergeneralinformationandfactsaboutthe
product.
3.In
evaluation
,theconsumergivestheproductamentaltrial,applyingittohisorherownpersonal
situation.
4.In
trial
,theconsumermaybuytheproducttoexperimentwithitinuse.
5.Theconsumerultimatelymakesa
decision
oneither
adoption
/continueduse,or
rejection
ofthe
productfromfurtherconsideration.
6.Afterthedecision,thereis
confirmation
wheretheadoptercontinuestorethinkthedecisionand
searchesforfurthersupportthatitwascorrect.
Dissonancemaysetinafterthedecisiontensioncausedbyuncertaintyabouttherightnessofa
decision.

ConsumerBehaviorinInternationalMarkets
Thelessamarketingmanagerknowsaboutthespecificsocialandintrapersonalvariablesthatshapethebehavior
oftargetcustomers,themorelikelyitisthatrelyingonintuitionorpersonalexperiencewillbemisleading.

ThisphotohelpsillustratetheculturalissuesthatMcDonaldsaddressedwhenexpandingintotheSaudi
Arabianmarketcustomersaresegregatedbysex.
Failuretounderstandlocalculturalfactorscanbethedifferencebetweensuccessandfailure.
Someculturalfactorsareassubtleastheyarefundamental.

LectureNotes:Chapter6

BusinessandOrganizationalCustomersABigOpportunity

Individualpeoplemakepurchasestosatisfytheirneeds,butsodoorganizations.
Theorganizationalmarketisactuallybiggerthanthefinalconsumermarket,atleastintermsofthe
numberofpurchasesmade.
Theorganizationalconsumermarketisoftenreferredtoastheindustrialmarketorthe
businesstobusiness
(B2B)market
.
Businessandorganizationalcustomersbuyforresaleortoproduceothergoodsandservices.
Therearefourmaincategoriesforthesecustomersincluding:
1.Producersofgoodsandservices:manufacturers,farmers,realestatedevelopers,etc.
2.Intermediaries:wholesalersandretailers.
3.Governmentunits,atthefederal,state,andlocallevels,aswellasforeign
governments.
4.Nonprofitorganizations:bothnationalandlocalorganizations.
BusinessProducts
Areusedtomanufactureotherproducts.
Theybecomepartofanotherproduct.
BusinessProductsaidthenormaloperationsofanorganizationorbusiness.
Areacquiredforresalewithoutanychangeinform.
*...thekeyisintendeduse*
Aproductthatispurchasedforpersonaluseisconsideredaconsumergood.
Ifthesameproductispurchasedforuseinabusiness,itisabusinessproduct.
Thekeyinclassificationasabusinessproductisintendeduse.
ThesizeofthebusinessmarketintheU.S.andmostothercountriessubstantiallyexceedsthatoftheconsumer
market.

BusinessversusConsumerMarkets

Purchasevolume
:businesscustomersbuyinlargerquantitiesthanconsumers.
#ofcustomers
:businessmarketershavefewercustomersthanconsumermarkets.
Anadvantageisthatitiseasiertoidentifybuyers,monitorcustomerneeds,andbuildpersonal
relationships.
Adisadvantageisthateachcustomerbecomescrucial,especiallyforthosemanufacturerswhohaveonly
onecustomer.
Locationofbuyers
:businesscustomersaremoregeographicallyconcentratedthanconsumers.
Distributionstructure
:businessproductstypicallyhaveshorterchannelsofdistribution,anddirectchannelsare
common.
Ontheotherhand,consumerproductspassthroughadistributionsystemthatmayincludetheproducer,
thewholesaler(s),andtheretailers.
Natureofbuying
:morepeopleareinvolvedinabusinessmarketpurchasedecisionthaninaconsumer
purchase.
Representativesfromqualitycontrol,marketing,finance,andpurchasingmaybegroupedinabuying
center.
Natureofbuyinginfluence
:typically,morepeopleareinvolvedinasinglebusinesspurchasedecisionthanina
consumerpurchase.
Typeofnegotiations
:negotiationismorecommoninbusinessmarketingdecisionsandmaytakemonthstowork
outthefinalcontracts.
Useofreciprocity
:businesspurchasersoftenchoosetobuyfromtheirowncustomers.
Itisnotunethicalorillegalunlesstheexchangeiscoerced.
Useofleasing
:businessescommonlyleaseexpensiveequipmenttoreducecapitaloutflow,keepstateoftheart
products,andgaintaxadvantages.
Primarypromotionalmethod
:businessmarketersemphasizepersonalselling,especiallyforexpensive,
customdesignedproducts.
DemandinBusinessMarkets

Businessdemandisdifferentfromconsumerdemandinthefollowingareas:
1.Thedemandforbusinessproductsis
deriveddemand
,meaningthatorganizationsbuyproductstobe
usedinproducingcustomerproducts.
Asaresult,businessmarketersmustcarefullymonitortrendsandpatternsinfinalconsumer
marketsaswellascustomersforecasts.
Demandforbusinessproductsresultsfromdemandforconsumerproducts
2.
Inelasticdemand
isdemandwithoutregardtoprice.
Anincreaseordecreaseintheproductpricewillnotsignificantlyaffectthedemandforthe
product.
Achangeinpricewillnotsignificantlyaffectthedemandforproduct
3.
Jointdemand
occurswhenmultipleitemsareusedtogetherinafinalproduct.
Multipleitemsareusedtogetherinmakingthefinalproduct.Demandforoneitemaffectsall.
4.
Fluctuatingdemand
:thedemandforbusinessproductstendstobemoreunstablethanthedemand
forconsumerproducts.
Demandforbusinessproductsismorevolatilethanforconsumerproductsthusrequiringmore
planningandexactingdetail
Asmallincreaseordecreaseinconsumerdemandcanproduceamuchlargerchangeindemand
forthefacilitiesandmanufacturingequipmentneededtomaketheconsumerproduct.
Thisisknownasthe
multipliereffect
.
TypesofBusinessProducts

1.
Majorequipment
:capitalgoodssuchaslargeorexpensivemachines,mainframecomputers,airplanes,and
buildings.
Depreciatedovertime.
Oftencustomdesigned.
Personalsellingisanimportantmarketingstrategy.
2.
Accessoryequipment
:lessexpensiveandshorterlivedthanmajorequipment,includesfaxmachines,
personalcomputers,andpowertools.
Usuallynotdepreciated.
Oftenstandardizedandpurchasedbymorecustomers.
Advertisingisanimportantpromotionaltool.
3.
Rawmaterials
:unprocessedproducts,suchasminerals,timber,wheat,corn,andfish.
Becomepartoffinishedproducts.
Personalsellingisthemarketingmixcomponentused.
Distributionchannelsusuallydirectfromproducertobusinessuser.
4.
Componentparts
:finisheditemsreadyforassemblyorthatneedverylittleprocessing.
Twoimportantmarketsforcomponentpartsinclude:
1)Originalequipmentmanufacturer(OEM)
2)Replacementmarket
5.
Processedmaterials
:useddirectlyinmanufacturingotherproducts,includessheetmetals,chemicals,and
lumber.
Donotretaintheiridentityinfinalproducts.
Priceandserviceareimportantfactorsinchoosingasupplier.
6.
Supplies
:consumableitemsthatdonotbecomepartofthefinalproduct.
Shortlivesandinexpensive.
Generallyfallintocategoriesofmaintenance,repair,oroperatingsupplies(MRO).
7.
Businessservices
:expenseitemsthatdonotbecomepartofthefinalproduct.
Thisincludesjanitorial,advertising,legal,managementconsulting,marketingresearch,andmaintenance
services.

ServingSmallBusinessCustomers

MarketersfrequentlyaimtheiradvertisingandpromotionatspecificsegmentsoftheB2Bmarket,asillustratedin
thisadfromKyocera.
Theadsmessagehighlightsthefactthatprintingcostscanbeaheadacheforsmallbusinesses.
Italsoemphasizesa$2,000rebate,whichhelpssmallbusinesscustomers.
Duringthecurrenteconomicdownturn,watchingmarginalcostshasbecomemoreimportant.
ObjectiveofBB&T:helpsmallbusinesses.
SpecificationsandQuality

Unliketheindividualconsumermarket,organizationalbuyerstendtofocusmoreonqualityandexactingpurchase
specifications.
Organizationalbuyersoftenconcentrateon
qualitycertification
inmakingpurchases.
ISO9000
isawayforasuppliertodocumentitsqualityproceduresaccordingtointernationally
recognizedstandards.
Purchasingspecifications
:writtenorelectronicdescriptionsofwhatthefirmwantstobuy.
The
specificationsdescribetheneeds
theorganizationalbuyershave.
Specificationsmaybefairlysimple,ortheymaybeverydetailed.
LandsEndVideoNotes
KINDSOFPURCHASES
Straightrebuy
Modifiedrebuy
NewTaskPurchases
BUYINGCRITERIA
EconomicCriteria
QualityandServiceCriteria
VendorCriteria

MultipleInfluenceandRolesintheBuyingCenter

Purchasingmanagersarespecialistsinbuyingactivitiesfortheiremployers.
Multiplebuyinginfluence:severalpeopleplayapartinmakingapurchasedecision.
Thecollectionoftheseinfluencesisa
buyingcenter
andincludes:
1.
Buyers
:thepurchasingmanagerswhoareresponsibleforworkingwithsuppliersand
arrangingforthetermsofthesale.
**Havetheformalauthoritytodoit.**
2.
Users
:thepeoplewhowillactuallyusetheproduct.
Theymaybeproductionworkersorsupportstaff.
3.
Influencers
:peoplewhoexpertiseisusedtohelpdeterminewhichproductsareneeded.
Theyareoftentechnicalpeoplewhohelpwritespecifications.
4.
Gatekeepers
:peopleinkeypositionsintheorganizationwhocontroltheflowofinformation.
Theycanincludereceptionists,secretaries,researchers,andothers.
5.
Deciders
:thepeopleintheorganizationwhohavethepowertoselectorapprovethesupplier.
EvaluatingOrganizationalBuyingInfluences

Althoughmostbuyersinorganizationalmarketsareprofessionals,acomprehensive
vendoranalysisconsidersall
influences
onpurchasedecisions.
Vendoranalysis
isaformalratingofsuppliersonallrelevantareasofperformance.
Thegoalistolowerthe
totalcosts
ofapurchase.
Abuyers
behaviorneedsarerelevant
,too.
EX:ifabuyersmaincontactwiththesupplieristhroughasalesrepresentativewhois
uncooperative,thesupplierislessattractivetothebuyer.
Ethicalconflictsmayarise
inbuyersupplierrelationships.
Someorganizationshaveprovisionsintheircodesofconductgoverningtheseinteractions.
Purchasingmayalsobecentralized
inmanyorganizationsbyconcentratingthepurchasingforall
branchesatonelocation.
Thismayhelpthebuyingorganizationtomanagespendingorachieveeconomiesofscale.
Requisition
:arequesttobuysomethingiteventuallybecomesapurchaseorder.
Electronicrequisitionsarebecomingmorepopular.

BuyingSituations

Often,businessfirms,especiallymanufacturers,mustdecidewhethertomakesomethingorbuyitfromanoutside
supplier.
Ifafirmdoesdecidetobuyaproductinsteadofmakingit,thepurchasewillbe(1)anewbuy,(2)a
modifiedrebuy,or(3)astraightrebuy.
OrganizationalBuyingProcesses(Exhibit63)

Likeindividualconsumers,organizationalbuyersareproblemsolvers.
Thethreekindsofbuyingprocessthatareusefulinclude:
1.
Newtaskbuying
occurswhenacustomerorganizationhasanewneedandwantsagreat
dealofinformation.
Itofteninvolves(1)settingproductspecifications,(2)evaluatingsourcesofsupply,and
(3)establishinganorderroutinetofollowinthefuture.
Itrequiresinformation.
2.A
straightrebuy
isaroutinerepurchasethatusesexistingsupplierstofillastandardorder.
Theyoftenuseecommerceordersystems.
3.A
modifiedrebuy
istheinbetweenprocess.
Somereviewofthebuyingprocessisdonebutnotasmuchasinanewtaskbuy.
MajorSourcesofInformationUsedbyOrganizationalBuyers(Exhibit64)

Anewtaskbuystartswithauserwhobecomesawareofaneedandbeginsresearchingsolutions.
Eventhoughawidevarietyofinformationsourcesareavailable,businessbuyerswillusethesourcesthey
trust.
Tobuildtrust,amarketermustmakesureitsinformationisreliable.
Onesourceofinformationcomesfromthemarketingfirm.
Thisincludespersonalinformationthatcomesfromtalkingtothesellingfirmspersonnel.
Inaddition,thefirmproducesinformationthatappearsinprintformonpaperoronline.
Buyerswillalsoturntosourcesofinformationoutsidethedirectcontroloftheseller.
ThesecanbepersonalsourcesorImpersonalsources
BuyerSellerRelationshipsinBusinessMarkets

RelationshipsbetweenbuyersandsellersintheB2Bmarketmaybecasual,armslengthrelationships,orthey
canbeclose,longlastingpartnerships.
Marketersshouldknowthedegreeofclosenessthatisappropriateforagivenrelationship.

Closerelationshipsbetweenbuyersandsellersmayproducemutualbenefits.

Thebestrelationshipsinvolverealpartnershipswheretheresmutualtrustandalongtermoutlook.
Closelytiedfirmsoftensharetasksatlowercostthanwouldbepossibleworkingatarmslength.

Closerelationshipsmaynotmakesense.

Theycanreduceabuyersflexibilityandleverage.
Somepurchasesaresimplytoosmallortooinfrequent.
Somepurchasesrequiresomuchspecialattentionthattherelationshipwouldneverbeprofitableforthe
seller.
RelationshipsHaveManyDimensions(Exhibit65)

Cooperationtreatsproblemsatjoinresponsibilities.

Thebuyerandsellerworktogethertoachievebothmutualandindividualobjectives.
Bothsidesareinvolvedinproblemresolution.
Boththesupplierandthebuyerbenefitwhentheycan
shareinformation
.
Typesofsharedinformationmayinclude:
Itincludestheexchangeofproprietarycostdata,discussionofdemandforecasts,andjoinwork
onnewproductdesigns.
Itisfastandeasytoupdatetheinformation.
Itsavestime.
Itcanleadtobetterdecisions,reduceduncertaintyaboutthefuture,andbetterplanning.
Eventhoughsharedinformationisuseful,itmayberiskyifthereisapossibilitythatoneofthepartnerswill
misuseit.

DynamicsofBuyerSellerRelationships
Theremaybeanimbalanceofpowerfavoringoneofthepartners.
A
powerfulcustomermaycontroltherelationship
.
Althoughamarketingmanagermaywanttoworkinacooperativepartnership,thatmaybe
impossiblewithlargecustomerswhohavethepowertodictatehowtherelationshipwillwork.
Buyersmaystilluseseveralsourcestoreducetheirrisk
.
Buyersoftenlookforseveraldependablesourcesofsupplytoprotectthemselvesfrom
unpredictableevents.
Buyingvariationsbycustomertype
.
TheGovernmentMarket

Governmentbuyerstypicallyusecompetitivebiddingandapprovedsupplierlists,andputlegalconstraintsonthe
latitudeofindividualbuyers.
The
sizeanddiversity
ofthegovernmentmarketmakeitanattractivetarget.
Governmentbuyersarerestrainedbypurchasingregulations,and
competitivebidsmayberequired
.
Forroutinepurchases,agovernmentunitcanpreparean
approvedsupplierlist
.
Governmentpublicationshelpmarketersto
learnwhatgovernmentwants
tobuy.
In
dealingwithforeigngovernments
,informationislessavailable,andtheremaybesignificant
obstaclesthatfavoradomesticsupplier.

Isitunethicaltobuyhelp
indealingwithforeigngovernments?
Notinsomecountries.
IntheU.S.,the
ForeignCorruptPracticesAct(FCPA)
prohibitsU.S.firmsfrompayingbribes
toforeignofficials.

LectureNotes:Chapter7

EffectiveMarketingRequiresGoodInformation

Marketinginformation
isneededtoinformmanagersaboutalldecisionsmadeinthe
developmentofmarketing
strategy
.
Marketingmanagersmaywanttogatherinformationaboutanyoftheelementsinourmarketingstrategyplanning
model.
Forexample,indevelopingstrategy,amarketingmanagermayfinditusefultolearnmoreaboutcustomer
attitudestowardthecompanysbrandname.
Oramarketingmanagermaywanttoknowthepricesbeingchargedbycompetitors.
Amarketingmanagermightwanttotestwhethertheuseofadvertisingontelevision,inmagazines,oronthe
Internetwouldbemosteffectiveinbuildingawarenesswithaparticulartargetmarketing.
Orthemarketingmanagermaywanttoknowhowwellaparticularproductissellingthrougheachofthe
companysprimarychannelsofdistribution.

MarketingInformationInputstoMarketingStrategyPlanningDecisions(Exhibit71)

Twomajorelementsrelatingto
marketinginformation
are(1)marketinginformationsystems,and(2)marketing
research.
Marketinginformationsystems
,andtheircomponents,ensuretheavailabilityandaccessibilityof
information,aswellasthetoolstoanalyzetheinformation.
Manyfirmsrelyon
marketingresearch
,whetherinhouseorcontracted,togetanswerstospecific
questions.
MarketingDecisionSupportSystems
Aninteractive,flexiblecomputerizedinformationsystemthatenablesmanagerstoobtainandmanipulate
informationastheyaremakingdecisions.
Characteristicsinclude:
1.Interactive
2.Flexible
3.DiscoveryOriented
4.Accessible
EffectiveResearchRequiresCooperation

Sometimesdevelopingagoodrelationshipisdifficult,becausethemarketingmanagerandtheresearchcomefrom
somewhatdifferentprofessionalworlds.
Marketingmanagersneedresearchbecausetheyhaveproblemstheywanttosolve,buttheysometimes
havetroubleexplainingwhattheyneedtoaresearcher.
Ontheotherhand,researcherswhoareveryskilledinthetechnicalaspectsofmarketingresearchmay
notcompletelyunderstandthedecisionsituationfacingthemanager.
Mostlargecompanieshaveaseparatemarketingresearchdepartmenttoplanandmanageresearchprojects.

MarketingDecisionSupportSystems

ThefastestgrowinguseofDSSsisfordatabasemarketing.
Itisusuallythekeytoolforsuccessfulonetoonemarketing,whichreliesonveryspecificinformation
aboutamarket.
TheRoleofMarketingResearch
Marketingresearch
:theprocessofplanning,collecting,andanalyzingdatarelevanttoamarketingdecision.
Itprovidesdataontheeffectivenessofthemarketingmixandinsightsfornecessarychanges.
Itisamaindatasourceformanagementinformationsystemsanddecisionsupportsystems.
TheRoleofMarketingResearch
Marketingresearchhasthreerolesincluding:
1.
Descriptive
:gatheringandprescribingfactualstatements.
Whatisthehistoricsalestrendintheindustry?Whatareconsumersattitudestowardaproduct?
2.
Diagnostic
:explainingdata.
Whatwastheimpactonsalesafterachangeinthepackagedesign?
3.
Predictive
:addresswhatifquestions.
Whatifquestions,suchashowcandescriptiveanddiagnosticresearchbeusedtopredictthe
resultsofaplannedmarketingdecision?
ManagementUsesofMarketingResearch
Improvethequalityofdecisionmaking.
Traceproblems.
Focusonkeepingexistingcustomers.
Understandthemarketplace.
Alertthemtomarketplacetrends.
Gaugethevalueofgoodsandservices,andthelevelofcustomersatisfaction.
ChangesAreUnderWayinMarketingInformationSystems

Marketingmanagersneedinformationabout(1)customersandtheirresponsestothemarketingmix,(2)targeting
andsegmentation,(3)competitors,and(4)themarketingenvironment.
Thealsoneedinformationthatwillallowthemtododetailedcostanalysisforthepurposeof
implementationandcontrol.

Marketinginformationsystems(MIS)helpmakethisinformationavailableandaccessible
.
BigDataExplosionBusinessestodayareawashindatasetstoolargetoworkwithusingconventional
databasemanagementtools.
AnMISallowsamanagerto
getmoreinformation,faster,andeasier
,bymakingitreadilyavailableinan
easytouseformat.
AnMISorganizesincomingdatainadatawarehouse.

Intranet
:asystemforlinkingcomputerswithinacompanythatworksliketheInternet.
Anintranetiseasilyaccessibleandisalso
easytoupdate.

ElementsofaCompleteMarketingInformationSystem(Exhibit72)

InformationsourcesforanMISmayincludeformalmarketingresearchstudies,aswellaspreviouslypublished
internalorexternaldataandthisinformationiscollectedandstoredina..

Datawarehouse
:aplacewheredatabasesarestoredsothattheyareavailablewhenneeded.
SomeMISshavea
decisionsupportsystem(DSS)thatputsmanagersonline.

Fromthedatawarehouse,otherelementsoftheMISallowmarketingmanagerstoaskquestionsandseek
answers.

Decisionsupportsystem(DSS)
:acomputerprogramthatmakesiteasyforamarketingmanagertogetand
useinformationwhileheorsheismakingdecisions.
Marketingdashboard
:computerdisplayofuptotheminutemarketingdatainaneasytoreadformat
customizedtothemanagersareaofresponsibility.
Marketingmodel
:astatementofrelationshipsamongmarketingvariables.
Itallowsamanagertoseehowanswerstoquestionsmightchangeinvariouswhatifsituations.
Allofthisinformationfeedsintothedecisionthatmarketingmanagersmakeandultimately
influencesimportantoutcomesofthedecisionwhichbecomefeedbacktotheprocess.
Thedatabaseiscontinuallyrefreshedwithnewinformation,makingitanuptotheminutemanagement
tool.
FiveStepScientificApproachtoMarketingResearchProcess(Exhibit73)

Scientificmethod
:adecisionmakingapproachthatisobjectiveandorderlyintestingideasbeforeaccepting
them.
Hypothesis
:educatedguessesaboutlikelycausesandeffectsthatcanbemeasuredobjectivelytohelpeliminate
unnecessaryrisktaking.

The
marketingresearchprocess
isafivestepapplicationofthescientificmethod.
Step1is
definingtheproblem
.
Themanagerandtheresearcherdeterminethekeydecisionissuesrequiringinformation.
Step2is
analyzingthesituation.

Aninformalstudyofinformationthatisalreadyavailableintheproblemarea.
Step3is
gettingproblemspecificdata
.
Thecollectionofdatathatiscustomizedtothedecisionmarketersuniqueneeds.
Step4is
interpretingthedata
.
Theprocessofgettingmeaningfromthecollecteddataitisatransformationofrawdatatouseful
information.
Step5is
solvingtheproblem.

Thedeliveryofrecommendationstothemarketingmanager,whoisultimatelyresponsiblefor
implementingtherecommendations.
Themarketingmanagermayfindthatatanystep,asolutionmightbeidentifiedtheearlyidentificationofa
solutioncansavetimeandmoney.
Goodmarketingresearchrequirescooperationbetweenresearchersandmarketingmanagers.
Researchersmustbesuretheirresearchfocusesonrealproblems.
DefiningtheProblemStep1

Thisisthemostimportantandoftenthemostdifficultstepintheresearchprocess.
Often,theresearchmusthelpthemanagertofleshouttherealproblemfacingtheorganizationandthe
typesofinformationneededtosolvetheproblem.

Findingtherightproblemlevelalmostsolvestheproblem,
inmanycases.
Inordertofindtherightproblem,themarketingstrategyplanningframeworkcanbeuseful.

Dontconfuseproblemswithsymptoms
.
Keyperformanceindicatorsinmarketingmaybesymptomsofothermorefundamentalproblems.

Settingresearchobjectivesmayrequiremoreunderstanding
.
Theresearcherandmanagercandevelopalistofresearchquestionsthataremostimportant.
Asingleresearchprojectmaynotbeadequateforansweringallofthequestions.
AnalyzingtheSituationStep2

Situationanalysis
isbasicallyaninformalstudyinanswertothequestion,
Whatinformationdowealready
haveintheproblemarea?

Situationanalysishelpseducatearesearcher
,byprovidingbackgroundaboutunfamiliarproblemareas.
Thesituationanalysismayuncoverinformationthatleadstoanearlyidentificationofasolution,oritmay
helptodeterminewhatothertypesofinformationarereallynecessary.

SourcesofSecondaryandPrimaryData(Exhibit74)

Asituationanalysisusuallyincorporates
secondarydata,whichmayprovidetheanswers,oratleastsome
background
,relevanttotheresearchproblem.

Secondarydata
:informationthathasalreadybeencollectedorpublished.

Primarydata
:informationspecificallycollectedtosolveacurrentproblem.

Muchsecondarydataisavailable
.
ExamplesofsecondarydatasourcesfrominsidethecompanymightbedatafromtheMIS,
financialinformationfromtheaccountingdepartment,orreportsfromthefieldsalesforce.
Informationfromoutsidethecompanymightincludegovernmentinformation,tradeassociation
studies,orinformationavailableinmagazinesorjournalarticles.

SearchtheInternetforinformation
.

Searchenginesmaymissimportantdatabases
availableontheInternet.

Specialinterestdiscussiongroups
ornewsgroups
ontheWeb
shareinformationontopicsofspecific
interest.

Governmentdataisinexpensive
andavailableindigitalorprintedform.
Mostcountrieswithadvancedeconomieshavegovernmentagenciesthathelpresearchersget
thedatatheyneed.
Primarydatamaybeobtainedthroughobservationorquestioning.
SourcesofSecondaryData

Secondarydataisdatapreviouslycollectedforanypurposeotherthantheoneathand.
AdvantagesofSecondaryData
Savestimeifontarget.
Aidsindeterminingdirectionforprimarydatacollection.
Pinpointsthekindsofpeopletoapproach.
Servesasabasisofcomparisonforotherdata.
DisadvantagesofSecondaryData
Maynotgiveadequatedetailedinformation.
Maynotbeontargetwiththeresearchproblem.
Qualityandaccuracyofdatamayposeaproblem.

TheNewAgeofSecondaryInformation:TheInternet
TherapiddevelopmentoftheInternethaseliminatedmuchofthedrudgeryassociatedwiththecollectionof
secondarydata.
Gatheringsecondarydatahastraditionallybeenatediousboringjob.
Theresearcheroftenhadtowritetogovernmentagencies,tradeassociations,orothersecondary
dataprovidersandthenwaitdaysorweeksforareplythatmightnevercome.
PrimaryData
Primarydata:i
nformationcollectedforthefirsttimethatisusedforsolvingtheparticularproblemunder
investigation.
Advantagesinclude:
Answersaspecificresearchquestion.
Themainadvantageofprimarydataisthattheywillansweraspecificresearchquestionthat
secondarydatacannotanswer.
Theinformationisproprietary.
Dataarecurrent.
Sourceofdataisknown.
Secrecycanbemaintained.
DisadvantagesofPrimaryData
Primarydatacanbeveryexpensive.
Thecostofprimarydatamayrangefromafewthousanddollarsforalimitedsurveytoseveralmillionfora
nationwidestudy.
Tosavemoney,firmsmay:
Cutbackonthenumberofinterviews,anduseInternetstudiesinstead.
Use
piggybackstudies
bygatheringdataontwodifferentprojectsusingone
questionnaire.
Disadvantagesareusuallyoffsetbytheadvantagesofprimarydata.
SurveyResearch
Surveyresearch
:themostpopulartechniqueforgatheringprimarydata,inwhicharesearcherinteractswith
peopletoobtainfacts,opinions,andattitudes.
FormsofSurveyResearch
1.
Inhomepersonalinterviews
:providehighqualityinformation,butareexpensivebecauseoftraveltimeand
mileagecostsfortheinterviewer.
NotapopularsurveytoolintheU.S.andEurope.
2.
MallInterceptinterviews
:conductedinshoppingmallsorinamarketingresearchofficeinthemall.
Surveysmustbebrief.
Itishardtogetarepresentativesampleofthepopulation.
However,probingispossible.
3.
Telephoneinterviews
:costlessandprovideoneofthebestsamplesofanytraditionalsurveyprocedure.
Manyfacilitiesfortelephoneinterviewsutilizecomputerassistedinterviewing,whereinformationisdirectly
inputintoacomputerapplication.
ThefederalDoNotCalllawdoesnotapplytosurveyresearch.
4.
Mailsurveys
:benefitsarethelowcost,eliminationofinterviews,centralizedcontrol,andanonymityfor
respondents.
However,mailquestionnairesusuallyproducelowresponserates.
Consequently,theresultingsamplemaynotrepresentthesurveyedpopulation.
Mailpanels,consistingofasampleofhouseholdsrecruitedtoparticipateforagivenperiod,yieldresponse
ratesof70%.
5.
Executiveinterviews
:involvesinterviewingbusinesspeopleattheirofficesregardingindustrialproductsor
services.
Thistypeofinterviewingisexpensive,duetotheprocessoffinding,qualifying,andinterviewing
respondents.
6.
Focusgroups
:atypeofpersonalinterviewing,characterizedbyseventotenpeoplegatheredinameeting
place.
Theinteractionprovidesgroupdynamics,withaninterplayofresponsesyieldingricherinformationthan
individualinterviews.

GettingProblemSpecificDataStep3

Therearetwobasicmethodsofcollectingprimarydata.
1.Observing.
2.Questioning.
Itcanrangefromqualitativetoquantitativeresearch.
Qualitativeresearch
seeksindepth,openendedresponses,notyesornoanswers.
Theresearchertriestogetpeopletosharetheirthoughtsonatopicwithout
givingthemmanydirectionsorguidelinesaboutwhattosay.
ObservationResearch
Observationresearch
isthesystematicprocessofrecordingthebehavioralpatternsofpeople,objects,and
occurrenceswithoutquestioningthem.
Itreliesonfourtypesofobservationincluding:
1.
Peoplewatchingpeople.
2.
Peoplewatchinganactivity.
3.
Machineswatchingpeople.
4.
Machineswatchingactivity.
ObservationalSituations

Observationalresearchdependsonwatchingwhatpeopledo.
Itmaybeconductedbyhumanobserversormachines.
AnalyzingtheData
Crosstabulation
:amethodofanalyzingdatathatletstheanalystlookattheresponsestoonequestionin
relationtotheresponsestooneormoreotherquestions.
Afterthedataiscollected,thenextstepistoanalyzedata.
Thepurposeofdataanalysisistointerpretanddrawconclusionsfromthecollecteddata.
Dataisorganizedbyonewayfrequencycounts,crosstabulations,andmoresophisticatedstatisticalanalysis.
Onewayfrequencytablesrecordtheresponsestoaquestion.
Theyprovideageneralpictureofthestudysresults.
Acrosstabulationlooksattheassociationsbetweencertainresponses,suchasassociationbetweengenderand
productchoice.

InterpretingtheDataStep4(Exhibit76)

Dataanalysisandinterpretationfollowdatacollection,anditanswersthequestion,
Whatdoesitreallymean?

Quantitativeanalysisisfacilitatedbytheuseof
statisticalpackages
:easytousecomputerprogramsthat
analyzedata.
Dataanalysiscanbeeithersimpleorcomplex.
Oneofthemostpopularanalyticalapproachesiscrosstabulation.
Thetableshowsthecombinedresponsesfortwoquestions:
1.Whatisyourhouseholdincome?
2.DoesyourhomehavebroadbandInternetservice?
Amongpeoplewithahouseholdincomeofmorethan$75,000,72.4%havebroadbandInternetservice.
Amongpeoplewithahouseholdincomelessthan$30,000,thepercentageofpeoplewithbroadband
Internetserviceisonly23.7%.
Therefore,thecrosstabulationanalysisshowsthathouseholdswithhigherincomesaremuch
morelikelytohavebroadbandInternetservice.
KeyConcernsinDataInterpretation

Thefirstquestionamarketingresearchermustansweris,
Isyoursamplereallyrepresentative
ofthepopulation?
Population
:thetotalgroupofinteresttotheresearcherormarketingmanager.

Sample
:asmallergroupselectedtorepresentthepopulation.
Thekeyhereistoensurethatthesampleselectedrepresentsthelargerpopulation.
ChatterontheInternetnotrepresentativebutcanbeuseful.

Researchresultsarenotexact
.
Confidenceinterval
:therangeoneithersideofanestimatethatislikelytocontainthetrue
populationvalue.

Validityproblemscandestroyresearch.

Validity
:theextenttowhichdatameasureswhatitisintendedtomeasure.
Poorinterpretationcanalsodestroyresearch
.
Problemscanariseiftheresearcherdoesnotunderstandthemanagementproblem,sothe
marketingmanager
andresearchershouldworktogetherc
losely.
Ethicsinvolvedininterpretingandpresentingresults
.
Themostcommonethicalissuesconcerndecisionstowithholdcertaininformationabouttheresearch.

SolvingtheProblemStep5

Inthislaststepoftheresearchprocess,managersusetheresearchresultstomakemarketingdecisions.
Researchersandmanagersarefascinatedbytheinterestingtidbitsofinformationthatcomefromtheresearch
processandtheyareexcitediftheresearchrevealssomethingtheydidntknowbefore.
Ifresearchdoesnthaveactionimplications,ithaslittlevalueandsuggestpoorplanningbythe
researcherandthemanager.
Whentheresearchprocessisfinished,themarketingmanagershouldbeabletoapplythefindingsin
marketingstrategyplanningthechoiceofatargetmarketorthemixofthefourPs.
Iftheresearchdoesntprovideinformationtohelpguidethesedecisions,thecompanyhaswasted
researchtimeandmoney.
PreparingandPresentingtheReport
Concisestatementoftheresearchobjectives.
Explanationofresearchdesign.
Summaryofmajorfindings.
Conclusionwithrecommendations.
FollowingUp
Thefinalstepinthemarketingresearchprocessistofollowup.
Theresearchershoulddeterminewhymanagementdidordidnotcarryouttherecommendationsofthe
report.
Weretherecommendationsfollowed?
Wassufficientdecisionmakinginformationincludedinthereport?
Whatcouldhavebeendonetomakethereportmoreusefultomanagement?
InternationalMarketingResearch

Marketingresearchcontributestointernationalmarketingsuccess.

Customerneedsandinterests,aswellassegmentingdimensionsandotherenvironmentalfactors,maybe
considerablydifferentinforeignmarkets.
Decisionsmadewithoutsoundmarketingresearchareladenwithrisk.
Inmanycountriesitisdifficultforaforeignertogatheraccurateinformation.
Marketersdealingininternationalmarketswouldbewelladvisedto
avoidmistakesbyusinglocalresearchers
.
Ifafirmisengagedinsimilarresearchprojectsinvariousoverseasmarkets,
somecoordinationand
standardizationmakessense
.

LectureNotes:Chapter8

ProductDecisionsforMarketingStrategyPlanning(Exhibit81)

Product
meanstheneedsatisfyingofferingofafirm.
The
productidea
encompassesmanyattributesofaphysicalgoodorservice:(1)itsfeatures,(2)benefits,(3)
qualitylevel,aswellasitsaccessories,installationrequirements,andinstructions.
Anyproductmustalsobepositionedrelativetotheotherofferingsoftheorganizationinitsproductline.
Branding
isakeyproductstrategyarea.
Marketersneedtodecidewhattypesofbrandstheywishtoproduce.
The
package
ismorethanjustameansofprotectingtheproduct.
Itcanhelptopromotetheproductorenhanceitsuse.
Marketersmustdecideiftheywanttooffer
productwarranties
,andiftheydo,howextensivethewarrantieswill
be.
The
typeofconsumer
(
productclass
)thatwilluseitdeterminesifaproductisaconsumer
WhatIsaProduct?

ProductisthestartingpointoftheMarketingMix.
Price,distribution,andpromotionstrategiescannotbedetermineduntilthefirmhasaproducttosell.
A
product
iseverything,bothfavorableandunfavorable,thatapersonreceivesinanexchange.
Wellconceivedprice,distribution,andpromotionstrategieshavelittlevaluewithoutastrongproductoffering.
Exhibit101:CampbellsProductLinesandProductMix

AllofCampbellsproductsconstituteitsproductmix.
Eachproductintheproductmixmayrequireaseparatemarketingstrategy.
Insomecases,productlinesandmixessharesomemarketingstrategycomponents.

BenefitsofProductLines
1.
Advertisingeconomies
:productlinesprovideeconomiesofscaleinadvertising.
2.
Packageuniformity
:packagesintheproductlinemayhaveacommonlookbutmaintaintheirindividual
identities.
3.
Standardizedcomponents
:reductionsinmanufacturingandinventorycosts.
4.
Efficientsalesanddistribution
:aproductlineenablesafullrangeofchoicestocustomers,andasaresult,
betterdistributionandretailcoverage.
5.
Equivalentquality
:allproductsinalineareperceivedashavingsimilarquality.
ProductQualityandCustomerNeeds
Fromamarketingperspective,
quality
meansaproductsabilitytosatisfyacustomersneedsorrequirements.
Qualitymaybeabsoluteorrelative,butinallcasesthecustomersexpectationsforqualityinagivenproductform
thebasisfordetermininghowtoachievecustomersatisfaction.

InthisadforVolvotrucks,Volvopromisestomeettheneedsthattruckershaveforhighfuelefficiencyand
performance.
NotethattheadfeaturesbothatollfreetelephonenumberandaWebsitesothatinterested
consumerscaneasilycontactVolvoinordertolearnmore.

Branding
Typesofbrandinginclude:
1.
BrandName
:thatpartofabrandthatcanbespoken,includingletters,words,andnumbers.
2.
BrandMark
:theelementsofabrandthatcannotbespoken.
3.
BrandEquity
:thevalueofcompanyandbrandnames.
4.
GlobalBrand
:abrandwhereatleastathirdoftheearningscomefromoutsideitshomecountry.
RecognizedTrademarksandSymbolsHelpinPromotion(Exhibit83)

Branding
meanstheuseofaname,term,symbol,ordesigntoidentifyaproduct.
Somecompaniesuseacombinationofsomeorallofthesewhenbranding.
A
brandname
isaword,letter,oragroupofwordsorletters.
A
trademark
includesonlythosewords,symbols,ormarksthatarelegallyregisteredforusebyasinglecompany.
A
servicemark
isatrademarkthatreferstoaserviceoffering.
Brandsmeetneeds
.
EX:brandsmakeshoppingeasierbecauseconsumerscanidentifylevelsofqualitywithspecificproducts
andshortenthetimeneededforinformationsearch.
Brandingalsohelpsmarketersbecauseitcan:
Reducesellingtimeandcost.
Improvethecompanysimage.

ConditionsFavorabletoBranding

Theproductis
easytolabelandidentify
bybrandortrademark.
Theproductquality
iseasytomaintain
andisthe
bestvaluefortheprice
.
Dependableandwidespreadavailability
ispossible.
Demandisstrongenoughthatthe
marketpricecanbehigh
enoughtomakethebrandingeffortprofitable.
Thereare
economiesofscale
.
Ifbrandingisreallysuccessful,costsshoulddropandprofitsshouldincrease.
Favorableshelflocationsordisplayspace
instoreswillhelp.
AchievingBrandFamiliarityIsNotEasy

Brandfamiliarity
meanshowwellcustomersrecognizeandacceptacompanysbrand.
Thefivelevelsofbrandfamiliaritythatareusefulforstrategyplanninginclude:
1.
Brandrejection
meansthatpotentialcustomerswontbuyabrandunlessitsimageis
changed.
2.
Brandnonrecognition
meansfinalconsumersdontrecognizeabrandatall,eventhough
middlemenmayuseitforidentificationandinventorycontrol.
3.
Brandrecognition
meansthatcustomersrememberthebrand.
4.
Brandpreference
meansthattargetcustomersusuallychoosethebrandoverotherbrands.
5.
Brandinsistence
meanscustomersinsistonafirmsbrandedproductandarewillingto
searchforit.
BenefitsofBranding
Brandinghasthreemainpurposes:
1.Productidentification
*Themostimportantpurpose*
2.Repeatsales
3.Newproductsales.
Theterm
brandequity
referstothevalueofcompanyandbrandnames.
Theterm
globalbrand
referstoabrandthatobtainsatleastathirdofitsearningsfromoutsideitshomecountry,
isrecognizableoutsideitshomebaseofcustomers,andhaspubliclyavailablemarketingandfinancialdata.
Brandloyalty
,aconsistentpreferenceforonebrandoverallothers,isquitehighinsomeproductcategories.

TopTenGlobalBrands

TraderJoesTheBrand
About80%oftheitemsofferedatTraderJoesareprivatelabel.
TraderJoesoffersseveralsubbrandswithintheTraderJoesfamily,suchasTraderMingsforChinesefoodand
TraderDarwinsforvitamins.
TraderJoespurchasesdirectlyformthemanufacturerandshipsdirectlytoitsdistributioncenters,wheremanyof
theproductsareportionedandpackaged.
Cobranding

Cobrandingisplacingtwoormorebrandnamesonaproductoritspackage.
Ingredientbrandingidentifiesthebrandofapartthatmakesuptheproduct.
EX:IntelinDellcomputers,CoachinteriorsinLincolnautomobiles.
Cooperativebrandingoccurswhentwobrandsreceiveequaltreatment.
EX:promotionalcontestsponsoredbyRamadaInns,AmericanExpress,andContinentalAirlines.
Complementarybrandingreferstoproductsadvertisedormarketedtogethertosuggestusage.
Thebenefitsofcobrandinginclude:
Enhancementofprestigeorvalueofaproduct.
Increasedmarketpresenceinmarketswithlittleornomarketshare.
CharacteristicsofaGoodBrandName(Exhibit84)

Arespectednamebuildsbrandequity
thevalueofthebrandsoverallstrengthinthemarket.

ProtectingBrandNames&Trademarks

Registeringbrandnamesandtrademarksisimportantbecauseitmeansthatnooneelsecanusethemwithout
specificauthorizationfromtheowner.
U.S.commonlawandcivillawprotecttherightsoftrademarkandbrandnameowners.
The
LanhamAct
(1946)spellsoutwhatkindsofmarks(includingbrandnames)canbeprotectedandtheexact
methodofprotectingthem.
Abrandcanbearealassettoacompany,but
eachcompanymustprotectitsown
.
Ifabrandbecomesagenericdescriptivewordforaproductcategory,protectionislostandthebrand
becomespublicproperty.
Evenifbrandsareregistered,
counterfeitingisacceptedinsomecultures
,especiallyindevelopingnations.
Manypopularbrandedproducts,suchasLevisjeansandRolexwatches,havebeencopiedwithout
authorization.
Weakregulationinmanydevelopingcountriesmakesitdifficultforcompaniestoprotecttheirbrandsfrom
counterfeits.
WhatKindofBrandtoUse?

A
familybrand
isthesamebrandnameusedforseveralproducts,suchasSunkist,whichoperatesonfreshfruit,
juice,vitamins,andsoftdrinks.
Usingafamilybrandisagoodapproachiftheindividualproductsareofasimilarquality.
Aspecialcaseoffamilybrandingisa
licensedbrand
,awellknownbrandthatsellerspayafeetouse.
Individualbrands
maybeusedforoutsideandinsidecompetition.
Whenacompanymakesveryunrelatedproductsthatrequireaseparateidentitytoavoidconfusion,
developingindividualbrandsforeachcanbeagoodidea.
Somecompaniesdevelopseveralversionsofaproductsuchastoothpaste,eachwithauniquepositionin
themarket.
Genericbrands
areproductsthathavenobrandatallotherthantheidentificationoftheircontents.
Theycanbeimportant,lowcostalternativesforconsumers,suchasinthemarketforprescriptiondrugs.

WhoShouldDotheBranding?

Inadditiontothetypeofbrand,thebrandscreationandownershiparealsopartoftheoverallproductstrategy.
Manufacturerbrands
arebrandscreatedbyproducers.
Manufacturerbrandsaresometimescallednationalbrandsbecauseoftheirwideappeal.
Dealerbrands
arealsocalledprivatebrands.
Intermediaries,suchaswholesalersandretailers,createthesebrands.
The
battleofthebrands
isacompetitionbetweenmanufactureranddealerbrands.
Manyretailershaveexpandedthelinesofproductssoldundertheirstorebrands,whilereducing
theamountofspacegiventomanufacturerbrands.
Whoswinningthebattleofbrands
?
Thebigwinneristheconsumer,whobenefitsfromgreaterchoiceandmore
intensepricecompetition.
Trademarks
A
trademark
istheexclusiverighttouseabrand.
Othersareprohibitedtousewithoutpermission.
Manypartsofabrandandassociatedsymbolsqualifyfortrademarkprotection.
Trademarkrightcomesfromuseratherthanregistration.
Torenewthetrademark,thecompanymustproveuseofthemark.
Rightcontinueforaslongasthemarkisused.
Trademarklawappliestotheonlineworld.
Aservicemarkperformsthesamefunctionforservices.
Partsofabrandorotherproductidentificationmayqualifyfortrademarkprotection.
Companiesthatfailtoprotectfacetheriskofproductnamesbecominggeneric.
Thislistincludesaspirin,cellophane,thermos,monopoly,cola,andshreddedwheat.
PackagingPromotes,Protects,andEnhances
Goodpackagingmakesproductseasiertoidentifyandpromotesthebrand.
Packagingcanenhancetheproduct.

Itcandomorethancontainandprotecttheproduct.
Thepackagecanmaketheproducteasiertouseorsafertouse.
Itcanalsodetershopliftingandcanalsobedesignedtoachieveecologicalobjectives.
Packagingsendsamessage
.
Creativeuseofdesigninpackagingcanvisuallyhelptotietheproducttootherelementsofthe
promotionmix.
Theyconveyinformation,suchasthenutritionalinformationonfoodproducts.
Itcanalsopromotethebrandatthepointofpurchaseorinuse.
Packagingmaylowerdistributioncosts
.
Goodpackagessavespaceandweightsotheyareeasiertotransport,handle,anddisplace.
Inhelpingdistributorsandendsaleretailers,goodpackagesaremorewelcomebythese
intermediaries.

FunctionsofPacking
Functionsofpackagingareto::
1.Containandprotectproducts.
2.Promoteproducts.
3.Facilitatestorage,use,andconvenience.
*firstthreearethemostimportant*
4.Facilitaterecycling..
WhatIsSociallyResponsiblePackaging?
1.
Packagingcanhurttheenvironment
.
Ecologicalconcernsarebecomingmoreprominentinpackagingdecisions.
Producershavebeencriticizedfordevelopingpackagesthatharmtheenvironment.
Otherscontentthatmanufacturersdonotdiscloseallofthepossibleharmfuleffectsoftheir
products.
2.The
FederalFairPackagingandLabelingAct
(196^)requiresthatconsumergoodsbeclearlylabeledin
easytounderstandterms,togiveconsumersmoreinformation.
Thelawalsocallsonindustrytotrytoreducethenumberofpackagesizesandmakelabelsmoreuseful.
3.
Ethicalissuesremain
,andexamplesofsuchissuesareeasytofind.
Somecompanieshavebeenaccusedofdesigningpackagesthatconcealdownsizedproducts.
Dealerbrandedproductsareoftenpackagedtolookverysimilartomanufacturerbrands.
GlobalIssuesinPackaging
1.Themajor
labeling
concernispropertranslationofingredient,promotional,andinstructionalinformationon
labels.
2.Package
aesthetics
areimportantfromaculturalperspective.
EX:colorsmayhavedifferentconnotationsindifferentcountries.
Packagesizeisinfluencedbyavailabilityofrefrigeration,amountofstoragespace,andeventhe
purchasingpowerofbuyers.
3.Extreme
climatesconsiderations
andlongdistanceshippingnecessitatesturdierpackages.
Packagesmayneedalongershelflife
ProductClassesHelpPlanMarketingStrategies

Consumerproducts
areproductsmeantforthefinalconsumer.
Businessproducts
areproductsmeantforuseinproducingotherproducts.
*Itispossiblethatsomeproductsmightbeinbothgroups.*
Sellingthesameproducttofinalconsumersandbusinesscustomersrequires(atleast)twodifferentstrategies.
TypesofProducts

Productscanbeclassifiedaseitherbusinessorconsumerproducts.
Theclassificationasabusinessorconsumerproductdependsonthebuyersintentions.

TypesofConsumerProducts

Thisapproachclassifiesproductsbyhowmucheffortisusedtoshopforthem.
TypesofConsumerProducts

Productsandservicesthatfallintoeachoftheconsumerproductcategoriesinclude:
ConvenienceProduct
:candy,softdrinks,deodorant,aspirin,hardware,anddrycleaning.
ShoppingProduct
:homogenousshoppingproductssuchaswashers,dryers,andtelevisions.
Decisionsarebasedonthelowestpricedbrandwiththedesiredfeatures.
Heterogeneousshoppingproductsareessentiallydifferent,forexamplefurniture,clothing,
housing,universities,etc.
Decisionsarehighlyindividualandbasedonfindingthebestproductforme.
SpecialtyProduct
:finewatches,expensiveautomobiles,andgourmetrestaurants.
UnsoughtProduct
:newproducts,insurance,burialplots,andencyclopedias.