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Marketing
Business 40
Week 6
Chapter 13
23 February, 2005
Article – WSJ Nextel
Why do you think Nextel's original walkie-talkie feature was so
successful, particularly with construction crews?
See page 403- what do you think Nextel did?
Based on the information contained in the article, and your
own personal observations, what are some of the major
challenges involved with selling to the teen market?
See page 417 – how do teens buy products?
Do you think Nextel is underestimating the challenge involved
with selling to the teen market? Do you think it will be
successful? Why or why not?
See page 417 – do you think teens buy the way Nextel thinks
they will?
What is Marketing?
Target Market
Market Needs
Satisfy Needs
4 Ps: The Marketing Mix
Place
Product
Marketing
Program
Buy at
Computers
‘R Us
Price
Promotion
Product Design
Concept Test
Prototype
Test Market
Outsource
Package Design/Brand Name
Pricing (March 2nd)
Promotion (March 9th)
Place (Distribution)
Uses of Market Research
Analyze Customer
Needs/Satisfaction
Analyze Markets &
Opportunities
Analyze Effectiveness
of Strategy/Tactics
Analyze Goal
Achievement
Guidelines for Market Research
Clarify research objectives/stay
on target.
Decide whether you will do the
research or use a professional
researcher.
Make certain questions are
directed to objectives.
Ask for relevant information.
Sources for Market Research Information
Secondary Data
Company Records
Gov’t Agencies
Trade Associations
Research Companies
Primary Data
Surveys
Observations
Focus Groups
Different Markets
Consumer
- Niche
- One-to-One
Business-toBusiness (B2B)
Consumer Market Segmentation (p. 413)
Geographic
Demographic
Psychographic
Benefit
Volume
What is happening by city?
Percent of total
Percent of population by age bracket
30%
25%
20%
15%
10%
5%
0%
Livermore, CA %
Berkeley, CA %
Ocala, FL %
<18 18-24 25-34 35-44 45-54 55-64 65-74 75-84 85+
Age bracket
http://www.census.gov
U.S. Buying Power*
Native Americans
Asian Americans
In Million $
Gay Men/Lesbians
African Americans
Hispanics
Disabled
Women
$0
$500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 $4,000
*Excludes senior citizens, as not all sources characterize them as a diversity market
Urban Adult Spending Habits
$75 on Shoes Last Year
Watch Pay-per-view
All Adults
Keep Up With Latest
Fashion
Urban Adults
Enjoy Clothes Shopping
Prefer Designer Jeans
0%
Source: Simmons Market Research
20%
40%
60%
80%
Buying Process
Step 1: Recognize Problem
Step 2: Information Search
Step 3: Evaluate Alternatives
Step 4: Make Purchase Decision
Step 5: Postpurchase Evaluation
Consumer Decision Making
P. 417
Consumer Influences p. 417-418
Learning
Culture
Reference
Group
Customer
Subculture
Cognitive
Dissonance
Break, Nascar Video
Watch for references to elements of:
1) Market Segmentation (p.413)
2) Consumer Influences (p.417)
Decide amongst yourselves how you’ll
Break first? Later?
Organize the tables for watching for specifics
Business-to-Business (B2B) Segments
1. Number
2. Size
3. Geographic
Concentration
4. Rational
5. Direct Sales
6. Personal Selling
Tips: Successful Marketing in Small
Organizations
Identify your best
customers.
Build lasting
relationships.
Share your
customers with
other businesses by
developing strategic
alliances.
Practice integrated
marketing.
Know what makes
your customers
happy.
Personally thank your
customers for
support.
Stand out above the
competition.
Customer Relationship Management
So why is this so important?
(Bain & Company) research found that only 31
percent of online retail customers generate 65
percent of profits.
Other segments identified by the survey ("Casual
Buyers," "Relationship Seekers," and "Bargain
Hunters" are less profitable or even losing.
A 5 percent increase in customer loyalty can
increase profitability by 40 percent to 95 percent
Why does loyalty matter so much to profits?
www.cyberatlas.com, Bain & Co
Banking example
79.67%
80.00%
60.00%
Bank’s
Profits
24.82%
40.00%
15.83%
1.52%
20.00%
0.00%
-20.00%
-21.83%
-40.00%
5%
11%
28%
28%
28%
Customer segment
http://www.dbmarketing.com/
How the Safeway Club built loyalty
{
Total
grocery
shopping
}
1st
20%
2nd
20%
3rd
20%
4th
20%
Spent at
Safeway
5th
20%
http://www.dbmarketing.com/articles/Art144.htm
What they did…
Segmented
Secondary Shoppers
Did most of their shopping elsewhere
Were sent coupon for a manufacturer-sponsored item (i.e.free
Dannon Yogurt)
Received a $1 off coupon for anything in meat or produce (if they
did not shop heavily there).
Changing customer behavior, by getting people to visit store
departments that they had not previously shopped.
Primary Shoppers
“Maxed out”- no point in giving them extra discounts
So, they got a $1 off in the cookie department.
But, if you give $1 off to good customers who had not previously
bought cookies, it generates incremental revenue.
http://www.dbmarketing.com/articles/Art144.htm
More of what they did…
Newsletter - Food Sense, contained tips and recipes.
Targeted inserts
“Peanut butter conversion series“ to Jif, Skippy users
Month 1, 2 – Articles on Safeway PB, how made
Month 3 – “Stock up" offer - $1 off any two jars
Month 4 – “Cross sell" $0.50 off Safeway jelly
Card, free ice cream on the customer’s birthday
Best practices
Easy to use
Provide immediate rewards
Have value that is worth it from the
customer’s perspective
Be targeted to customers whose behavior
your are trying to change
Be limited to what you can afford to spend
Have a published exit strategy
http://www.dbmarketing.com/articles/Art144.htm
Market Stakeholders of Business
Employees
Distributors,
Wholesalers,
Retailers
Stockholders
Business
Firm
Creditors
Customers
Suppliers
See Figure 1.2 on page 8
Nonmarket Stakeholders of Business
Communities
General
Public
Business
Support
Groups
Governments
Business
Firm
Activist
Groups
Media
See Figure 1.3 on page 9
Customer Relationship Management
80/20 Rule
Software
Next week:
Chapter 14
Papers are due on March 16th
How are they coming?
Midterm is also on March 16th
Open book, open note
Might be a case you’ve already seen