Marketing Basics

John A. Hengeveld

SCHOOL OF BUSINESS ADMINISTRATION BA 530 John A. Hengeveld Winter 2004

Marketing Analysis (The 5Cs)

Customers Company Competitors Collaborators Context

Creating Value

Market Segmentation

Target Market Selection

Product/Service Positioning

Marketing Mix (The 4Ps)

Capturing Value
Product & Service Place/ Channel Pricing Promotion

Sustaining Value

Customer Acquisition

Customer Retention

SCHOOL OF BUSINESS ADMINISTRATION BA 530 John A. Hengeveld Winter 2004

Decide what business you are in.

SCHOOL OF BUSINESS ADMINISTRATION BA 530 John A. Hengeveld Winter 2004

Gain understanding: Macro-environmental scan

Demographic forces Economic forces. Natural forces. Technological forces. Political/Legal forces. Social/Cultural forces.
Understanding these illuminates the terrain upon which the firm may be deployed

SCHOOL OF BUSINESS ADMINISTRATION BA 530 John A. Hengeveld Winter 2004

Examples of Consumer Market Segments

Region Household size Lifestyle Benefits sought Usage rate Age Sex Income Lifestyle
SCHOOL OF BUSINESS ADMINISTRATION BA 530 John A. Hengeveld Winter 2004

Example of business market segments

Location Vertical market
By industry

Horizontal market
By product usage

Size of account Purchase method

SCHOOL OF BUSINESS ADMINISTRATION BA 530 John A. Hengeveld Winter 2004

Five Steps in segmenting and targeting markets

Steps : 1. Form prospective buyers into segments 2. Form products to be sold into groups

3. Develop a market-product grid and estimate size of markets

4. Select target markets

5. Take marketing actions to reach target markets

SCHOOL OF BUSINESS ADMINISTRATION BA 530 John A. Hengeveld Winter 2004

Criteria for picking target segments

Size:
The estimated size of the market to determine whether or not it is worth going after.

Expected growth:
The size of the market may be small, but if it is growing significantly it may be worth going after.

Competitive position:
The less competition the more attractive the market.

Cost of reaching the segment Compatibility with organizations objectives & resources Bottomline: can we be successful there?
SCHOOL OF BUSINESS ADMINISTRATION BA 530 John A. Hengeveld Winter 2004

The Basis for Segmentation: Customer and Product Characteristics

*Size *Technical sophistication *OEM/replacement
*Demographics *Lifestyle *Purchase occasion *Size *Distributor/broker *Exclusive/ nonexclusive *General/special list

Industrial buyers

Characteristics of the Buyers

Household buyers

Distribution channel Opportunities for Differentiation Geographical location

*Physical size *Price level *Product features Characteristics *Technology design of the Product *Inputs used (e.g. raw materials) *Performance characteristics SCHOOL OF BUSINESS ADMINISTRATION BA 530 John A. Hengeveld Winter 2004 *Pre-sales & post-sales services

A Framework for Competitor Analysis

OBJECTIVES What are competitors current goals? Is performance meeting their goals? How are its goals likely to change? STRATEGY How is the firm competing? ASSUMPTIONS What assumptions does the competitor hold about the industry and itself?

PREDICTIONS
What strategy changes will the competitor initiate? How will the competitor respond to our strategic initiatives?

RESOURCES & CAPABILITIES What are the competitors key strengths and weaknesses?

SCHOOL OF BUSINESS ADMINISTRATION BA 530 John A. Hengeveld Winter 2004

Segmentation and Key Success Factors in the U.S. Bicycle Industry

SEGMENT
Low price bicycles sold primarily through department and discount stores, mainly under the retailers own brand (e.g. Sears Free Spirit);

KEY SUCCESS FACTORS

* Low-costs through global sourcing of components & low-wage assembly. * Supply contract with major retailer. Leading competitors: Taiwanese & Chinese assemblers, some U.S manufacturers, e.g. Murray Ohio, Huffy

Medium-priced bicycles sold primarily under manufacturers brand name and distributed mainly through specialist bicycles stores;

*Cost effieciency through large scale operation and either low wages or automated manufacturing. *Reputation for quality (durability, reliability) through effective marketing to dealers and/or consumers. * International marketing & distribution. Leading competitors: Raleigh, Giant, Peugeot, Fuji

High-priced bicycles for enthusiasts.

*Quality of components and assembly, Innovation in design (e.g. minimizing weight and wind resistence). *Reputation (e.g. through success in racing, through effective brand management). *Strong dealer relations.

Childrens bicycles (and tricycles) sold primarily through toy retailers (discount Similar to low-price bicycle segment. SCHOOL OF BUSINESS ADMINISTRATION toy stores, department stores, and BA 530 John A. Hengeveld Winter 2004 specialist toy stores).

The Four Ps of Marketing

Product

Place Marketing Mix

Price

Promotion
SCHOOL OF BUSINESS ADMINISTRATION BA 530 John A. Hengeveld Winter 2004

Product
Product

Why?

Differentiation

Place Marketing Mix

Make or buy

Price

International

Promotion

R&D

SCHOOL OF BUSINESS ADMINISTRATION BA 530 John A. Hengeveld Winter 2004

Product Line Planning Decisions

Product Line Breadth Consistency or Similarity between categories Product Line Length Different price points within a category Product Line Depth Varieties at a price point.

SCHOOL OF BUSINESS ADMINISTRATION BA 530 John A. Hengeveld Winter 2004

Product Development Process (Classic Version)

Opportunity Identification Design Testing Product Introduction Life Cycle Management

SCHOOL OF BUSINESS ADMINISTRATION BA 530 John A. Hengeveld Winter 2004

The Product Life Cycle

Revenue ($) Introduction Growth Maturity Decline

Revenue

Time

SCHOOL OF BUSINESS ADMINISTRATION BA 530 John A. Hengeveld Winter 2004

Place
Product

Whats the value?

Direct vs. indirect

Place Marketing Mix

Consumer & business Vertical marketing systems

Price

Promotion

Channel choice & SCHOOL OF BUSINESS ADMINISTRATION mgmt BA 530 John A. Hengeveld Winter 2004

Price
Product
Determining Price

Place Marketing Mix

Brand

Price

TR - TC

Promotion

Price wars

SCHOOL OF BUSINESS ADMINISTRATION BA 530 John A. Hengeveld Winter 2004

Promotion
Product

Ads

Sales

Place Marketing Mix

Public Relations

Price

Direct Marketing

Promotion

Sales Promotion SCHOOL OF BUSINESS ADMINISTRATION

BA 530 John A. Hengeveld Winter 2004

Promotion
Product

Ads

Sales

Place Marketing Mix

Public Relations

Price

Direct Marketing

Promotion

Sales Promotion SCHOOL OF BUSINESS ADMINISTRATION

BA 530 John A. Hengeveld Winter 2004