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Business vs.

Consumer Marketing
Business Marketing Business Marketing Consumer Marketing

Brachs

Fruit Producers
Fruit is grown & harvested Fruit is processed into various forms

(jelly beans)

Winn-Dixie
(jams, jellies, etc.)

You

Kelloggs
(Pop Tarts)
Processed fruit is included as ingredients in foods

From Industrial Product to Commercial Consumer


Electrical Equipment Manufacturer Business Marketer
(Producer of Electrical Motors)

Type of Commercial User

Food-Processor Firm (User)

Appliance Manufacturer (OEM)

Electrical Supply Dealer (Industrial Distributor) Users OEMs

Purpose Product Serves

Electrical motor used in high-speed mfg system of food proc.

Electrical motor incorporated directly into product (e.g., washer)

Electrical motors are purchased and resold to users and OEMs

Classifying Goods & Services for the Business Market


Entering Goods

Raw Materials
- Farm Products - Natural Products (e.g., iron ore, lumber)

Foundation Goods Installations


- Buildings & Land Rights - Fixed Equipment

Manufactured Materials/Parts
- Component Materials - Component Parts (e.g., tires, microchips)

Accessory Equipment
- Light Factory Equipment (e.g., lift trucks) - Office Equipment

Facilitating Goods Supplies


- Operating Supplies (e.g., lubricants, paper) - Maintenance & Repair Items (e.g., paint)

Business Services
- Maintenance & Repair Services - Business Advisory Services

The Supply Chain


(the entire system for lawnmowers)
Transportation, a facilitating service

Raw Materials

Manufactured Materials

Assembly

Component Parts

Finished Lawnmower

Purchase Order Copied, a facilitating product Number, type, style of mowers determined by research, a facilitating service

The Realm of Buyer-Seller Relationships


Sellers Motivation to Relate
High

Buyers market

Seller-maintained relation

Joint relationship maintenance

Low

Buyer-maintained relation Discrete exchange (spot contracts)


No Exchange Low

Buyers High Motivation to Relate

Sellers market

The Relationship Development Process


Relationship Phase 1. Awareness Phase Characteristics 1. No interaction

Enabling Subprocesses for Deepening Dependence


2. Exploration Attraction 3. Expansion Communication & Bargaining Power & Justice 2. Interaction occurs; testing, gradual increase in dependence 3. One party makes a successful request for adjustment; more benefits sought from current partner rather than from others 4. Means of sustaining the relationship develop; social ties, shared ownership, etc. Disputes resolved internally

Norm Development

Expectations Development

4. Commitment Shared values and decisionmaking structures support joint investment in relationship. 0 Sellers dependence on buyer Buyers dependence 0 on seller

Market Segmentation
Substantiality

Criteria for Successful Segmentation

Identifiability and Measurability Accessibility

Responsiveness

Segmenting Consumer Markets


Geographic

Demographic

Bases for Segmenting Consumer Markets

Psychographic

Benefits

Usage Rate

The Family Life Cycle


Middle-aged divorced without children

Young divorced without children

Middle-aged married without children

Young single*

Young married without children*

Young married with children*

Middle-aged married with children*

Middle-aged married without dependent children

Older married*

Older unmarried*

Young divorced with children

Middle-aged divorced with children

Middle-aged divorced without dependent children

Usual flow Recycled flow Traditional flow

The VALS 2 Categories


Abundant resources Principleoriented Statusoriented Actionoriented

Actualizers

Fulfillers

Achievers

Experiencers

Believers

Strivers

Makers

Strugglers
Source: The VALS 2 Categories. Reprinted by permission of SRI International, Menlo Park, California.

Minimal resources

Segmenting Business Markets


Geographic Customer Type Macrosegmentation Customer Size Product Use

Business to Business

Purchasing Criteria Purchasing Strategy Microsegmentation Importance


Personal Characteristics

Steps in Segmenting a Market


Select Market or Product Category Choose Segmentation Bases Select Segmentation Descriptors Profile/Analyze Segments

Steps in Segmenting a Market

Select Target Markets Design, Implement, Maintain Marketing Mix

Subsequent Marketing Activities

Strategies for Selecting Target Markets

Undifferentiated Strategy

Concentrated Strategy

Multisegment Strategy

Multisegment Targeting
Benefits
Potentially greater sales volume Higher profits Larger market share Economies of scale in: manufacturing marketing

Costs
Production design costs Production costs Promotion costs Inventory costs Market research costs Management costs Cannibalization

Positioning Bases
Attribute Price and Quality

Use or Application Positioning Bases Product User

Product Class

Competitor

Marketing Research

Descriptive Diagnostic Predictive

The Marketing Research Process


Define Problem Plan Design/ Primary Data Specify Sampling Procedure

Collect Data
Analyze Data Prepare/ Present Report Follow Up

Advantages/Disadvantages of Secondary Data


Advantages
Rapid availability Inexpensive May shed light on the problem

Disadvantages
Often doesnt provide a sufficient answer

Quality of data sometimes difficult to determine

Sources of Secondary Data


Source
Internal Information Market Research Firms Trade Associations
University Research Bureaus, Professional Associations, Foundations

Description
Sales Invoices, Accounting Records, Previous Market Research Companies Such As A.C. Nielsen, Arbitron, IMS International Associations Such As National Industrial Conference Board, National Retail Merchants Association Variety of Nonprofit Organizations Advertising Age, Sales Management, Product Marketing, Selling Power Federal Government publications such as Census of Housing, Census of Manufacturers, Economic Indicators

Commercial Publications Government Data

Advantages/Disadvantages of Primary Data


Advantages
Answer specific questions Current Known source Secrecy can be maintained

Disadvantages
Time-consuming
Expensive

Forms of Survey Research


In-Home

Mall Intercept
Telephone (Interviewer) Telephone (Central)

Common Forms of Survey Research

Focus Group One-Time Mail Survey Mail Panel Surveys

Consumer Products
Convenience Products Shopping Products

Specialty Products

Unsought Products

Product Lines
Advertising Economies Package Uniformity

Benefits of Product Lines

Standardized Components
Efficient Sales and Distribution Equivalent Quality

Gillettes Product Lines & Mixes


Width of the product mix
Blades and razors
Depth of the product lines Sensor Trac II Atra Swivel Double-Edge Super Adjustment Lady Gillette Super Speed Twin Injector Techmatic Three-Piece Knack Blades

Toiletries
Series Adorn Toni Right Guard Silkience Soft and Dri Foamy Dry Look Dry Idea Brush Plus

Writing instruments
Paper Mate Flair

Lighters
Cricket S.T. Dupont

Abbreviated Product MixKraft


Width of Product Mix

Breakfast Cereals
Alpha-Bits Fruit & Fiber Grape-Nuts Honeycomb Pebbles Post 40% Bran Flakes Post Raisin Bran Post Toasties Smurf-Berry

Baked Goods
Entenmanns Hostess Snacks

Beverages
Country Time Lemonade Crystal Light

Depth of Product Lines

Krema Candy Kool-Aid Orowheat Sugar-Free Kool-Aid Tang

Crunch

Changing Product LinesKraft


Width of Product Mix Baked Goods
Entenmanns Hostess Snacks Crystal Light Grape-Nuts Krema Candy Kool-Aid Honeycomb Orowheat Sugar-Free

Breakfast Cereals
Alpha-Bits Fruit & Fiber

Beverages
Country Time Lemonade

Depth of Product Lines

Pebbles
Flintstones Post 40% Bran Flakes Post Raisin Bran Post Toasties Smurf-Berry Crunch

Kool-Aid
Tang Sweet Stuff

Adjustments to Items, Lines, & Mixes

Product Modifications

Strategies for Changing Product Lines

Repositioning Product Line Extensions Product Line Contractions

Branding
Individual

Types of Manufacturers Brands

Family

Co-Branding

Combination

Major Branding Decisions


Brand No Brand

Manufacturers Brand

Private Brand

Individual Brand

Family Brand

Combination (family and individual)

Individual Brand

Family Brand

Combination (family and individual)

Packaging
Contain and Protect

Promote

Facilitate Storage, Use, and Convenience

Functions of Packaging

Facilitate Recycling

MKTG 501
Marketing Rocks!