Marketing Principles
Pre Reading Comment - Chapters 10 & 11
These chapters do a good job
of describing many fundamental concepts of marketing. Read both chapters carefully but pay special
attention to six main topics: value,
4Ps, market segmentation, product life cycle, branding, and distribution
channels. See also pages 53-55 for a discussion of customer rights.
Lecture Notes
Lecture Summary
·
Value and
marketing
·
4Ps
·
Target markets
and segmentation
·
Product Life Cycle
·
Branding
·
Distribution
Channels
·
Marketing Ethics
Major Points
Value
Why would you spend $6 for a
hamburger at some restaurants when you can get one for $2 at McDonalds or make
one at home for less than $1? All people
have limits to what they can spend, so why would they ever spend more than the
minimal amount? Why is the cheapest
product rarely the one that sells the best?
What makes a higher priced product sometimes more valuable to consumers
than a lower priced good?
Activity #1: What traits provide value in
restaurants? Why might someone prefer a
$6 hamburger? Try to list at least ten value traits.
Activity #2: What value traits are you creating for your
business plan? How do you know those
traits are valuable to your customer?
How could you learn more about what customers
value?
The Marketing Strategy (4Ps)
Any discussion of marketing
strategy usually begins with efforts to consider the 4 Ps (product, pricing,
place, and promotion). What is important
about the 4 Ps is that too many people think “marketing” means “selling.” But in fact there are many aspects to
marketing beyond actually pushing a product on potential customers. We have to understand what makes the product
special, what price is best, what venue to use when selling it, and what
promotional avenue to choose.
Activity #3: What marketing strategy will you use as part
of your business plan? Describe the
special characteristics of your product, your pricing strategy, the means you
plan to use to get your product to customers, and your promotional ideas. For pricing, place and promotion, list three
alternative possibilities with a rationale for each.
Target markets and Segmentation
Potential customers can be
grouped in many ways – by location, by education, gender, hobbies, and personal
attitudes. The problem for marketers is
to first determine the ideal market segment, and then determine how to appeal
to that segment.
Activity #4: Pick a particular brand and model of
car. What market segment do you think is
being targeted by ads for that car? Why
is that segment being pursued? What
other segments are being ignored in the ads?
Why? Pick another segment that
you think might be profitable. What
would you change in promotional approaches to reach them?
Product Life Cycle
The four stages of the
product life cycle (introduction, growth, maturity, decline)
should serve as a warning to every business – growth does not go on
forever. Nevertheless, decline can be
delayed.
Activity #5: Pick a product or service that had a
relatively short life cycle (such as a musical group). How was the product introduced? What caused it growth? What could have been done to delay its
decline?
Activity #6: What competitive forces might cause your
business to stop growing? What can you
do to respond to them?
Branding
What does it mean that one
fast-food restaurant has a nationally known name on it while another fast-food
restaurant serves the same food, but has a name that is unknown? Which would you rather stop at? Which one would you pay more for? If you owned the unknown restaurant, how hard
would you work to establish a known brand?
How could you compete with the national brand?
Activity #7:
Name five brands that you
make an effort to purchase. Why do you
choose them?
Distribution Channels
Pages 330-334 provide a good
list of ways you can get a product to customers. The list also suggests that there are many
ways to reach customers beyond those that business novices may be aware of. Each involves choices, and each involves
benefits and disadvantages.
Activity #8: Create a table of advantages and
disadvantages for each of the 8 channels listed. The table should look something like this:
|
Channel |
Advantages |
Disadvantages |
|
Direct to consumers |
|
|
|
Via retail |
|
|
|
Via wholesale |
|
|
|
Via agents |
|
|
|
Agent to consumer and
businesses |
|
|
|
Direct to businesses |
|
|
|
Wholesale to businesses |
|
|
|
Wholesale to business
retailer |
|
|
Activity #9: What distribution channel will you use for
your business? What makes it best? What other alternative might work for you?
Marketing Ethics
The Better Business Bureau
was established in an effort to encourage companies to tell the truth about
their products. Since then legislation
and lawsuits have helped ensure customer rights. But there are still many practices that are
unethical, even if they are strictly legal. There are various definitions of “ethical
behavior,” but they all begin with treating people the way you would like to be
treated. To help clarify correct
treatment, professional bodies often set up statements or lists of right such
as those on pages 53-54.
Activity #10:
If you were to build a list of customer rights, what would it say in response
to these examples:
Business Plan Aspects