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Introduction to Marketing 301
Professor Jim Harvey,
Associate Professor of Marketing
School of Management
George Mason University
e-mail: [email protected]
website: http://mason.gmu.edu/~jharvey
Interests & Recent Accomplishments:
Support of Public and Nonprofit Institutions
Healthcare Marketing
Customer Satisfaction
Service Value Creation
Electronic Commerce
Distance Learning Technology
Executive Development
Counsultancies:
Booze-Allen-Hamilton, Bureau of Land Management, Fairfax County Park
Authority, Internal Revenue Service, Environmental Protection Agency,
United Way of America, Federal Trade Commission, National Institutes of
Health, Department of Health and Human Services, World Bank and others
Basic Marketing
60-Minute Tutorial*
Establish
Presence in
the Market
Price for
Customer
Value
Provide
Convenient
Access
Customer
Focus
TOTAL
MARKETING
EFFORTS
Manage
Product and
Service
Quality
Vision
Defined by
Consumers
Customer
Satisfaction
is Key
Build
Relationships
with Segments
* Jim Harvey
[email protected]
http://mason.gmu.edu/~jharvey
Marketing in Contemporary
Society - PERCEIVED
To begin understanding your perspectives, let’s
discuss some common marketing challenges you may
want to learn more about.
What comes to mind when you hear someone is
talking about ‘MARKETING.’
• Hype?
• Junk mail?
• Advertising?
• Rebates?
• Telemarketing?
Have you heard of napster?
How did you learn about it?
What does this say about
marketing?
False Perceptions Marketing
of Marketing
REALLY is...
Marketing as
Selling
Getting AND Holding
Customers
Marketing as
Advertising
Use ALL parts of
Marketing Mix
Marketing as
Panacea
Not magic that can
FIX everything
Short-term
orientation
Long-term
orientation
Marketing in Contemporary
Society - REALITY
Eight Keys to Successful Marketing
1. Customer focus - How do you listen?
2. Business vision seen through customer’s needs
3. Customer satisfaction key objective
4. Build relationships with segments of the market
5. Manage product and service quality
6. Provide convenient access
7. Price for customer value
8. Consistent communications to establish market
presence and to satisfy customer information needs
Marketing Vs Selling ...
Production
Selling
Selling
‘Build It and they will come’
OurNewBeginnings.com spent
$25M during Super Bowl
Y2K. What were the results?
Consumption
Marketing Vs Selling ...
Marketing
Consumer
Integrated Marketing Effort
Customer Satisfaction
Achievement of Organizational Goals
FEEDBACK
1. Customer Focus
Walk a mile in your customers’ shoes.
Describe an organization’s key clients - Who
are they?
Why do they buy - use their services?
What problem are they solving for customers?
Discussion: Name Firestone’s customers. Why do
people purchase tires?
What are common methods that organizations list and
describe their customers?
Who are Your ‘Customers’?
Consumers
Suppliers
Co-Workers
Organization
Media
Other Agencies
Public
What Affects Buyer Behavior?
College Students Bought CURRENTLY USED
Products Because of...
Word-of-Mouth
22%
Price
45%
Advertising
7%
Brand Name
26%
College Students Bought NEW Products Beacuse of...
Advertising
22%
Word-of-Mouth
46%
Brand Name
10%
Price
22%
2. Business Vision
Customers buy what the product/service
DELIVERS not what it is MADE FROM
Typewriters are now ancient history.
What’s next? Videotape? Telephone?
Television?
Does videoconferencing technology
compete with the airline industry?
Do workers want drills or holes?
3. Customer Satisfaction is Key
How satisfied are your customers?
How do
you know?
What causes
different levels
of satisfaction?
Discussion: How
useful are customer
comment cards?
Who would include Firestone when shopping for tires?
Factors that Affect Customer
Satisfaction
Friendly Employees
Knowledgeable Employees
Helpful Employees
Quick Service
Billing Clarity
Courteous Employees
Overall
Customer
Satisfaction
Good Value
Accuracy of Billing
Billing Timeliness
Competitive Pricing
Service Quality
4. Build relationships with
segments of the market
Is everyone your client?
Can you satisfy everyone?
How and why do companies focus on
relationships?
Compare Wal-Mart with Sam’s Club on price,
selection and convenience. What does the WalMart strategy say about the structure of
markets?
How do technology customers differ?
Assess iwon.com’s ability to hold users
Why Do Consumers Purchase Technology?
Primary Motivation
High
Career
Entertainment
Status
Fast
Forwards
Mouse
Potatoes
Cyber-snobs
Technostrivers
Gadget
Grabbers
X-techs
Handshakers
Media
Junkies
Country
Clubbers
High
Low
Neohearthminders
Low
Disposable Income
Disposable Income
Technology pessimists Technology optimists
Family
Traditionalists
Sidelined Citizens
Source: Forrester Research, Inc.
Why are customers More Profitable Over Time?
Total Company Profits
Price Premiums
Referrals
Reduced Costs
Increased Purchases
Base Profit
0
Customer
Acquisition
Costs
1
2
3
4
5
6
Pizza Hut knows each satisfied customer
has a lifetime value of $10,000
7
Year
5. Manage the Forces that
Affect Product/Service Quality
What is quality? Who defines it?
Are products different than services?
What about positioning?
Do you like
the design
of the PT
Cruiser?
Plymouth Neon?
Small Trucks?
Discussion: How do customers define quality? What is the
difference between service and product marketing?
High
Product Positioning
Low
Low
Richness
High
Sales ($)
Product Life Cycle
Maturity
Introduction
Decline
Growth
Time
Light
Advertising,
preintroduction
Publicity
Heavy use
of
advertising,
PR for
awareness;
sales
promotion
for trial
Advertising,
PR, Brand
loyalty
Personal
Selling for
distribution
Ads decrease.
AD/PR
Sales
decrease
Promotion,
Limited
Personal
Sales
Selling
Promotion,
Reminder &
Personal
Persuasive
Selling for
distribution
Discussion: How do marketing challenges change across the
product lifecycle?
Services are Different Than Products
• Intangible - They cannot be touched, seen, tasted, heard, or
felt or stored.
• Inseparable - Production and consumption activities are
inseparable. Services cannot normally be produced in a
centralized location and consumed in decentralized locations
• Heterogeneous - Services tend to be less standardized and
uniform than products due to their dependence upon the
performance of individual employees/individuals
• Perishable - Services cannot be stored, warehoused or
inventoried. An empty seat in a theatre cannot produce
revenue later. Perishability results in discount pricing of
services at almost any price greater than their variable costs.
Discussion: General Electric estimates that each $1B sales in gas turbines
translates into $2B in service revenue. How does this fact affect their pricing
policy? Why are services often more profitable than products?
6. Provide Convenient Access
How do organizations provide convenient
access?
How convenient is it to obtain their
product/service?
Why is
E-Trade
the largest
pureplay
bank?
Should other
banks worry?
Discussion: How importance is convenience
to clients? How do customers define
convenience?
Value Added by Channels
WHEN Desired
P
R
O
D
U
C
E
R
S
WHERE Convenient
SERVICE Needed
ASSORTMENT Wanted
C
U
S
T
O
M
E
R
S
7. Price for Value
How do organizations price products and
services?
How do customers conclude prices are fair?
Discussion: Why is ebay popular? How important will auctiondriven pricing become? What is the effect on consumer
knowledge? What about B2B auctions?
What do you think about Coke’s attempts at ‘dynamic pricing’?
Amazon’s relationship pricing?
Subjective Price
Factors affecting subjective price
•The consumer’s
background
•The consumer’s
shopping behavior
•The firm’s
marketing mix
•The brand’s overall
image
•The brand’s
perceived quality
•The brand’s
perceived value
•The availability of
substitutes
•Competitor’s price
strategies
•The consumer’s
urgency of need
Outcome
(1)
Product’s
subjective
price to
consumer
(2)
(3)
Price
perceived
as high
Price
perceived
as fair
Price
perceived
as low
8. Communicate Presence in
the Market and Address
Customers’ Information Needs
How do organizations assure their presence in
the marketplace?
What are their customers’ information needs?
How many of you have heard of Napster? How did
you learn about it? What does this say about
managing marketing communication?
Integrated Marketing Communications
Sales
Promotion
Consistent,
Unified
Message
Customer
Focused
Goals and Tasks of Promotion
Informing
PLC Stages:
Introduction
Early Growth
PLC Stages:
Growth
Maturity
Reminding
PLC Stages:
Maturity
Target
Audience
Persuading
How Successful was this Ad?
Nissan's Ad Campaign Was A Hit Everywhere But In the Showrooms
How
Technology
Changing
Marketing’s
HowisTechnology
is Changing
the 4P's
of Marketing4P’s?
PRODUCT
PLACE
PRICE
PROMOTION
Era of
Personal Selling
(pre - 1840s)
Commodities: Focus
on availability of
delivered goods
Retail Store: Local
vendors sell
unbranded products
Whatever the
local buyer
would pay
Occasional store
displays and flyers
Era of
Advertising
(1840s - 1990s)
National Brands:
Focus is on
manufacturer's image,
reputation, and
product quality
Malls and
Superstores:
Advances in
transportation
technology broaden
the geographic
availability of
products
Greater price
National
competition
advertising
generates lower
prices
Era of
Interactive
Commerce
(1994 and
beyond)
Brand Commodities:
Focus is on the lowest
worldwide price for
well known goods
Worldwide
Marketplace:
Shopping from home
or office via desktop
computer
Intelligent
software agents
locate the
lowest
worldwide price
Mass Customization:
Focus is on using
technology to deliver
unique goods at the
lowest worldwide
price
Internet-based
Websites
Targeting and
personalized
interactive ads
The 4I’s of the New Marketing
Interactive - Dialogue-drive, permission-based. Rather than ‘Get
the message out’ ‘Bring the customer in’ is the goal. The Internet
is not the only way - face-to-face, consumer advisory councils,
briefings and market audits are included.
Intuitive - Marketing research in a world of short life cycle
competition is replaced by a ‘Fire, Re-aim, Fire’ strategy based on
rapid execution and quick learning.
Integrated - Old views of marketing as a separate function give
way to a realization that marketing is integrated into every
functional area of the organization - executive management,
operations, product development, sales and customer relations.
Individualized - Client segmentation and targeted messages has
given way to personalized one-to-one relationships based on
intimate customer knowledge.
Discussion: Do you agree with this ‘new’ view? Who looks wiser in 2001 Toys R Us or E-Toys? Is it fair to compare these two organizations?