P >> C (Title)

P << C (Payment)

P >> C (Credit)

P >> << C (Information, Feedback, Promotion)

• Customers
• Share holders
• Media
• Regulations
• Special Interest Groups

The 4 P's

(AKA: The Marketing Mix)

1. Product
2. Price
3. Promotion
4. Place (distribution)

1. Production-Emphasis on production of product and efficient distribution (Not everyone could get their hands on products)
2. Sales-Emphasis on moving inventory (Telling people they need more than 1 of the same thing [sleazy salesman])
3. Marketing-Emphasis on the Marketing Concept

NO!

• Find out what customer needs are
• create a WANT or PREFERENCE for their product

• State WHAT you want to accomplish, not how.
• Objectives MUST be quantified (amount and time frame)(lose 10lbs. by christmas)
• Objectives MUST be written
• Objectives MUST be reviewed periodically

1. Executive Summary
2. Situation/SWOT Analysis
3. Strategic Planning
4. Marketing Mix Strategies and Tactics
5. Control and Evaluation
6. Profit and Loss Statement

*(most important) Must be related to purchase behavior! (Aim hair products at hair types).

Must be measurable.

Must define segments large enough (to make money).

Should define segments that are accessible.

AVOID variables that are highly correlated with each other.

Common Kinds of Segmentation Variables

1. Demographics
2. Lifestyle (Psychographics): How ppl spend their time and $
3. Benefits-(problem)-b/c because need to relate back to demo or lifestyle (Buick safety ad).

1. Undifferentiated Marketing Strategy- one marketing mix to everyone in the market (*we NEVER do this).
2. Concentrated- 1 marketing mix targeting 1 segment.
3. *Targeting more than 1 segment using a different marketing mix for each.

Net Market Contribution (NMC) [Ex: in notes]

Net Profit = NMC - Operating Expenses

NMC = [Mkt Demand x Mkt Share x (Unit Price - Variable Cost)] - Mkt Expenses

Mkt Demand = (N)umber x (Q)uantity

Our Mkt Share = Our mktg effort/Industry mktg effort

Mktg Expenses = Advertising, Sales commish/Salary, Sales Promotion, Distribution Costs

COMPETITION

How many? Beware of major fallacy *(The largest market is NOT the best b/c it will have the most competition)

Do we have Differential Advantage?

Barriers to entry

Unfulfilled needs Ex: Cakes for single ppl

Ease of reaching the Market

1. Trend Projection- gas prices, temp *(look up graphs in notes)
2. Regression- Using predictor variable to see what happens in future
3. Expert Judgement
4. Sales Force Composite

Placing product in the proper file folder in the mind of the customer (front).

GOLDEN RULE: You must actively position the product in the mind of the customer or else they will do it for you in the worst possible place.

Gives you 2 dimensions of importance to the customer.  (gives layout of the land, can see how your product and other competition are doing)

• Tells us where segments are
• Tells which are being satisfied
• Tells where competition is
• Ideas for where to position ourselves

1. Attribute- something the product HAS (Ex: twist n lock bag "doesn't spill". Ppl come to you when they think of that feature).
2. Benefit- Something you GET from the product (Ex: Tide coolwater, saves you money).
3. Situation- The way you feel when...(Ex: Visa Card, when you are in a hurry you don't have to use cash).
4. We Were First- Ex: Xerox first to make copiers so they should know the most)
5. Relative to Competition- *Positioning Link*(Linking to something else, Ex: Pork found healthy file folder and linked to "white meat")
6. Relative to Something Familiar- Ex: Diet Dr. Pepper to candy.
7. Relative to Yourself- Ex: Kodak, known for photos/cameras so they should be good at photo copying.
8. Repositioning Competition- Ex: 7up the "Uncola".
9. Reposition Yourself- within current market segment, or new market segment, (Ex: Marlboro).

• Overall marketing objectives- (terms of profit contribution, aka NMC)
• Segmentation
• Target markets
• Positioning strategy
• Objectives by segment

Yes, decrease in price can increase sales.

Share change = Points

Sales change = Percent

1. Problem Recognition
2. Search for Information
3. Evaluation of Alternatives
4. Decision
5. Post Purchase Behavior
6. Feedback

We recognize significant difference between what we WANT and what we've GOT.  Based on NEED, Marketers strategy: (CareerBuilder monkeys)

• Target a group with needs that they want fulfilled
• Make particular group aware of their needs
• Show the group that we do a better job of fulfilling their needs so they "want" us

The first place you search for information is in your head.

Internal- (In your head) Ex: need a new car so you think of dealerships you already know of.

External- May or may not occur, continues until the cost of search = value of search (when you get enough info you stop).

1. Tells us where to put the product/ info affects: DISTRIBUTION
2. Tells us the form in which to present the information, affects: ADVERTISING/PROMOTION

• Based on attitude: the amount of liking or disliking something
• The most positive attitude becomes the "want"
• Marketers want to understand: How attitude is formed, How to change it if needed, How to measure it.

• PPB: What we do after purchase
• Feedback: All we have learned during the process, stores in our head
  *Because of this, most decisions involve "habitual" decision making instead of "extended" decision making

Systematic gathering, recording, and analyzing of data about problems relating to the marketing of goods and services.

• Takes place on EVERYTHING

*The only thing worse than no information is BAD INFORMATION

We want to understand how to produce results that are Valid and Reliable

1. Define problem/objective
2. Review the design factors/decision criteria
3. Collect relevant information
4. Analyze
5. Develop and implement plan

• *This is the most important b/c it is the FIRST STEP (if you mess up you have to start over

• Which form of research is most appropriate?

1. Exploratory: Focus Groups (Qualitative)
2. Descriptive: Survey (Quantitative)
3. Causal Studies: Experiments (Quantitative)

• Select Data Source

1. Primary- collected at current time for current problem
2. Secondary- previously collected for w/e reason

*ALWAYS get secondary first because it is cheaper

• Watch ordering (easy first-watch grouping)
• Watch out for subtle word difference
• Beware of hard to define words: "regularly"?
• *Beware of biased questions: unethical to send a survey that is actually trying to sell you something
• Beware of double questions: Do you like to bike to work AND take your lunch?
• Beware of unanswerable questions

Causal Research showing the relationship between an Independent Variable and a Dependent Measure.

Before and After Design

*look up in notes*

• Cheaper and Easier >> represents population of interest

1. Probability- Every item has a known chance of being selected for the sample
2. Non Probability- The chance of being selected is unknown

• Simple random sample: every item has a known and equal chance of being selected (A complete list of the population is required)
• Cluster sample: random sample of "clusters" (Where the ppl physically group together)

• Convenience sample: Whoever comes along (survey on Wescoe beach)
• Quota sampling: REQUIREMENTS are set in attempt to make the sample more representative (50% this, 50% that).

• Evaluate results
• Prepare research report: Summarize beginning (Topline Report), Body of Report (details like what, why, how, charts), Recommendations, Supporting Data (usually in appendix).
• *All becomes secondary data for the future

1. Length of use and tangibility

• Durable (Tangible)
• Non durable (Tangible) Ex: pencil/lunch
• Services (Non Tangible)

A set of products that are related

• Used together (cleaning prods)
• Sold to same segment 
• Priced similarly (Prices of suits/ties)
• Sold through same kind of retailer (high end grocery vs. discount grocery)

• Variation is color/flavor/size (Total Cereal- different flavors)
• ***Flankers don't have separate ad campaigns or management teams

1. Lengthen existing product lines
2. Add product lines
3. Add flankers

• DOWNWARD STRETCH: (features and price) High to Low.  Ex: Apple Ipod >> Nano, shuffle.  Why do downward stretch???
• Lower market may be growing faster
• Prevent competition from gaining foothold (Barrier to Entry)*
• Problems: Cannibalization, May hurt image
• To avoid problems: Make separate Brand (less likely to hurt image) Sony and it's other brand "Iowa"?
• UPWARD STRETCH: Why do upward stretch? 
• May be growing or greater profits
• Maybe competition is weak at high end
• Problems: Harder to do b/c of image Ex: McDonalds (not a dinner place)
• Successful: Proctor and Gamble b/c nobody really knows what they make...*They don't put their name on label
• TWO WAY STRETCH: Ex: Car companies have done this

• Usually easiest thing to do (cost and consumer acceptance)
• Helps prevent switching due to boredom
• May do a better job of targeting
• May push out competition
• PROBLEMS: May confuse customer or anger retailer Ex: Barry Shuartz- Paradox of Choice

• Enhances image of the firm
• Plugging holes where competition can enter
• More chances for a sale

PRUNING

• Consider more than just profitability of products (Do they serve a special purpose? Don't alienate a special group)

• An activity providing benefits that is offered for sale
• We are a service driven economy
• Increase is GDP and labor force
• What accounts for this increase?
• A: *People specialize in things we cant do ourselves

• INTANGIBILITY: Make it tangible in the mind (Ex: Logos, representation)
• INSEPERABILITY(produced and consumed at the same time): Make easier to evaluate by giving money back guarantees, warranties, samples, etc.
• PERISHABILITY(can't save it): Production, demand, staffing (Ex: restaurants shifting demand with weekday specials)
• VARIABILITY: Training, service recovery. Cut down on variability. When service is bad you can't throw it out so fix it. It is an *Opportunity

"All Products Eventually Die"

• Profits peak in growth stage and decline in maturation
• Sales peak in maturation and decline in decline
• Something that goes through the life-cycle really fast is called a FAD
• Never know when an industry is going to die (Calculator came out overnight to kill the slide rule)

• Kill the product
• Milk the product
• New uses in current market (Ex: baking soda)
• Reposition to new market (Ex: polaroid)

1. Idea Development
2. Idea Screening
3. Economic Analysis
4. Product Development/Features
5. Final Product Testing

• Observation (see what things people are doing)
• Customer Suggestions (Focus groups)
• Internal Company Development and Suggestions
• Licensing
• Acquisitions

The "concept" test (paragraph that describes the benefit of the product)

• *Always test the idea first
• Advantages: Done early, Inexpensive.
• Disadvantages: Only a rough estimate, only as good as the concept you write, if the product changes, test may not be accurate.

*There is no direct relationship with the cost of a feature to implement and its value to the customer (Ex: vacuum clean with cord out the top was $30 more and customers still bought it).

• Conjoint Analysis: Give people choices and see what they choose (Marriott $10 less or have a bigger room?)
• Final Design: Branding

Anything that Identifies

• Brand name: can be spoken (Ex: Prince symbol)
• Trademark: Legal designation (TM= you are using) ( (R)= Registered trademark with gov. approval).
• Branding makes shopping possible
• Imparts Image
• Affects price customer will pay
• Aids segmentation
• Builds identity usable across products
• Brand Equity: The value of the brand by itself
• *Protect your brand so won't be ruled as "generic" by the courts (Ex: Aspirin used to be a brand name)

Functions:

• Protection
• Promotion
• Convenience
• Information
• *All have different importance depending on the product

• Test Marketing: pick markets by demographics, tracking, promo

• Run test until multiple repeat purchases
• High sales at first b/c people are trying the product, if they don't like it they will stop buying it.
• Trial = Concept
• Repeat = Fulfillment

• Advantages: Faster, cheaper, competition doesn't find out about it.
• Disadvantages: Not marketing or advertising (don't see how people react), people might not like concept.

• Maximize profits
• Maximize market share (Barrier to entry)
• Status quo: price that everyone goes on

• Elastic: Convenience Goods
• Inelastic: STAPLES (things you MUST have)

• Historical data- not always the same because of adjustments like inflation.
• Pricing Survey
• Pricing experiment or test market (See how pricing a product affects its demand)
• Expert Judgement

• Don't produce the product
• Cut costs (the products we buy get cheaper and cheaper in quality, could hurt image)
• Increase demand (ability to buy, willingness to buy)
• *Shift demand curve to the right
• *Increase ability to buy (store credit)
• *Increase willingness to buy (promotion)
• *Change the shape of the demand curve
• *Enhance Value or Image

"Stair step" process.

Don't want to be in the middle of stair step.

Ex: If a product is priced too low compared to all the others you might not buy it.

*Recognizes difference in demand curve by segment (Ex: Airline ticket prices for vacationers and business travelers).

• Generally require a "rate fence" (Prevents people who normally pay a higher price from paying a lower price)
• Extreme price customization is called "dynamic pricing"

M >> W >> R >> C

Selling Price = Cost/(1-markup)

• Skimming: start high and gradually lower (used when little competition is at the beginning)
• Penetration: start low and maintain (used when competition is present)

• *Designed to get you to buy NOW
• Shift demand
• Pull from competition
• Remove old product

• *Designed to get you to buy MORE
• Quantity
• Cumulative (Set time frame or no time frame)
• Repetitive (One time discount repeated over and over)

• Lower Price
• Don't Respond (Lose marginal customers)
• Emphasize Value
• Introduce an economy model or new brand
• Raise price (increase prestige & quality)
• Maintain price and bundle in more
• Lower price and unbundle
• Make price comparisons more difficult

*Sherman Act: Outlaws horizontal price fixing (Illegal to discuss price with your competitors)

*Robinson Patman Act: If you offer a discount to one buyer of your product, you need to offer it to everybody

• Provide expertise
• Reduce contacts
• Reduce discrepancy in quantity
• Reduce discrepancy in assortment
• Provide time and place utility

*You can eliminate the channel members, but you cant eliminate their function

• Do not confuse with main objective which is...
• To minimize total cost of distribution for the level of service desired by our customer.
• *Depends first on level of service desired, then total cost.

Make more than 50% of their dollar volume in sales from end customers

• Differ by specialty (general vs. specific)
• Differ in advantage offered (convenience, discount, variety)
• Differ in size (corner stores, super markets)
• Differ in form (internet, kiosk, vending, catalog)
• Trends: they kill off small local stores

• Can provide lower prices
• Many are savvier marketers (better job of understand customer and meeting their needs)

YES

• Must do a better job of understanding customer needs and the changing market...
• Why dont they????
• They have TRADITION, they need to break this
• Find a niche market (Ex: Costco vs. Wal Mart)
• Concentrate on customer service
• Establish your positioning
• Gather data (target customers of greatest value)
• Make the experience entertaining or interesting.
• Ex: STEW LEONARD's (750 items on shelf and make $1.5 million per week)
• *Eliminated channels but performs their functions himself

• "SLOTTING ALLOWANCES": people pay to get their product on the shelves so grocers dont listen to customer preferences Carolyes. Ex: Cookies by Carolyn).
• Slotting fees keep prices low
• Slotting fees keep new companies off the shelf

Full Service: supply the standard service- buy , sell, finance, store, assume risk, transport, etc.

Limited Service: Specialize in a particular service.

• Drop Shipper- Shipped directly to buyer. Drop shipper owns product while in shipment, then transfers ownership to buyer.
• Cash and Carry (quick)- Small number of items you need quickly
• Truck Distributor- Ex: Mako Tools sell to auto shops
• Rack Jobber: maintain rack of goods FOR the retailer.  (Ex: Retailer wants "scrambled goods")
• Agents and Brokers: Get paid on % of sale, whereas wholesalers get pain on markup

The Clayton Act: makes monopolies illegal...outlaws tying contracts and exclusive dealing contracts

Coordination of information and flow

• Modes of transportation
• Number, size, placement of warehouses
• Inventory management
• Order processing
• *The future is in information flow rather than physical flow.

Originator of message

*Perceived Source: Noun that delivers message & is NOT originator of message.

• Why use perceived source?
• A: To target a specific segment (Interpretation, Believability, More Memorable, Jared is a REAL source for subway)

Design the message using words, terms, signs, or symbols

• Why do we encode?
• A: Limited time and money, make more interesting, better understanding, more memorable

The medium of delivery for the message

• Pick a channel that will reach the target market
• Pick a channel that will properly communicate the encoded message
• Ex: Cant do demonstration on radio (Billy Mays)

Information from the receiver back to the source representing reaction to the message.

• Problem with communication: We ASSUME it has occured

1. Users of competition: Prefer competition
2. Users of our brand: Prefer our brand
3. Prospects: Don't use category, but could
4. Nonusers: Don't use category and not expected to use

• Get users of competition to become Users of our Brand. (Must have: Differential advantage or lots of $)
• Get users of our brand to use more. (Must have: new uses or new times for use)
• Get prospects to become users of the category. (Must have: Major market share so they are more likely to use you)
• *Marketing Decision: REDEFINE Nonusers as prospects, then turn prospects into users. (Ex: Remington hot comb and the beatles)

SALES determine the budget

Sales % = Spending % x Expected Sales

Spending % = (This years ad spending) / (This years sales)

Follow competition

• *Problem >> Assumes competition knows what to do, assumes their objectives are the same as ours.

*Best Way*

• Determine promotional objective
• determine tasks needed to meet objective
• Sum up cost of tasks

Lower your objectives.

Become more efficient in your promotion.

Local Medium

• ADVANTAGES:
• short closing time (2-3 days)
• good geographic selection (only have to pay for certain section of city).
• DISADVANTAGES:
• Short Life (24 hours)

National Medium

• ADVANTAGES:
• Good geographic and demographic/lifestyle selection (makes small companies look big; different ads in different editions TIME).
• Long lasting
• Good mechanical production (glossy pages)
• DISADVANTAGES:
• Long closing time (2 months)
• Disappearing (b/c of internet)

Print and electronic.

• ADVANTAGES:
• *Most specific and selective of all media
• DISADVANTAGE:
• Rising mail costs
• Junkmail/Spam image
• Cost per Thousand

National and Local

• ADVANTAGES:
• sight, sound, movement (Billy Mays)
• good geographic and demo/lifestyle selectivity (based on channels).
• DISADVANTAGES:
• fleeting impression
• ads considered intrusive

Local Mainly

• ADVANTAGES:
• good geo/demo/lifestyle selectivity
• shortest closing time
• easy, low-cost preparation
• DISADVANTAGES:
• fleeting (reminder) impression
• audio only

Purchased by Length and Daypart.

Cost is a function of "ratings" and length.

1 rating point = 1% (about 1 mm televisions) households.

• *Internet is a distribution system w/ a variety of advertising presentation options.
• The key on Internet is placement (get in front of your target market)
• Search Engine Optimization (SEO)
• Google ad words (Pay per Click)
• Social Network Marketing (Facebook)
• Inbound Marketing (opting in for promotion, getting people attracted to you instead of pushing product)

• More important for B to B purchases
• ADVANTAGES:
• Better targeting of prospects
• Better adaptation to customer
• Good for detailed explanation
• More effective in closing a sale

1. Prospecting (people interested)/Qualifying (have money)
2. Precall (aka pre-approach) everything done in advance before contacting
3. Approach
4. Presentation: Fact finding, info delivery
5. Handling objectives- getting in step
6. Close (sometimes don't take the lose signal and try to keep selling)
7. Follow up (to make good on any promises, to ensure satisfaction)

• ADVANTAGES (Rep):
• best for new firms- smaller or specialized lines
• established relationships and knowledge of area
• Commission, no training or hiring costs
• DISADVANTAGES (Rep):
•  
• ADVANTAGES (Sales Force):
• spend all their time on project
• gain more control, train as you want
• DISADVANTAGE (Sales Force):
• assume costs- hire train conp

Work load approach:

NS = (NC x CF x CL)/AST

• PUSH (most common): promote to channel gets distribution
• PULL: Manufacturer promotes straight to consumer, creates customer demand which gets distribution-is more expensive and may anger channel members, but gets faster distribution.

Greater control involves more risk

• Exporting: least risk, least control
• Licensing: grant process, patents, trademarks (Contractual arrangement provides more control)
• Joint Venture: Share ownership and control Ex: foreign car companies working with American car companies. Varies in arrangements and sharing. Often looked upon favorably by other country.
• Total Ownership: greatest risk and control

Bottom line: NO

We wouldn't continue to do it if it didn't work.  Advertising IS part of society.