Transcript No Slide Title

Social Responsibility and
Marketing Ethics
• Social responsibility concerns a firm's
obligation to improve its positive
effects on society and reduce its
negative effects
• Marketing ethics are the moral
standards that guide marketing
decisions and actions
Excerpt from the Code of Ethics
of the American Marketing
Association
“ ...Participants in the marketing exchange
process should be able to expect that:
1. Products and services offered are safe and fit
for their intended uses;
2. Communications about offered products and
services are not deceptive;
3. All parties intend to discharge their obligations,
financial and otherwise, in good faith; and
4. Appropriate internal methods exist for equitable
adjustment and/or redress of grievances
concerning purchases…”
Marketing
• TARGET MARKETING
– Marketing mix is tailored to fit
specific target customer(s)
• MASS MARKETING
– Vaguely aims at "everyone" with the
same marketing mix
The Four Ps and Marketing
Mix Planning
• Why is the Four "Ps" idea helpful?
– Provides an organizing framework
– Helps to bring many, more detailed
decisions together in a logical
fashion
– Focuses thinking on the idea that all
marketing decisions must work
together as a whole
The Marketing Plan
• Marketing plan: a written statement of a
marketing strategy and the time related
details for carrying out the strategy.
• Spells out, in detail:
– What marketing mix is to be offered
– To what target market
– For how long
– What resources (costs) are needed at what
Marketing Program
• Marketing program: blends all of the firm's
marketing plans into one "big" plan—
which is an integrated part of the wholecompany strategic plan
– Program requires an effective "building
up" process
– A good program must be based on good
plans
– Each plan must be carefully developed
Competitive Advantage
• Competitive advantage: the firm has a
marketing mix that the target market sees
as better than a competitor's mix
– A better marketing mix offers target
customers better customer value
– Note: customers who are not in the target
market may not see the marketing mix as
offering better value
• Requires that the firm:
Planning Process
• Narrowing down from broad market
opportunities that a firm might pursue to a
specific strategy
– Marketing strategy specifies a specific target
market and a specific marketing mix
– Not just “some” strategy, but one that will
offer target customers superior value
• Segmentation helps pinpoint a specific
target market
Examples of Different Types
of Opportunities
• Market Penetration
– Arm & Hammer promotes new uses of its
baking soda
• Market Development
– Marriott Hotels target families for
weekend "get-aways" to rent rooms filled
by business travelers during the week
• Product Development
How Readings Relate to Market
Segmentation
• Introduction to market segmentation
concepts (Chapter 3)
• How changes in the external environments
affect segmentation opportunities (Chapter
4)
• Why demographic variables are useful for
segmentation and what they tell us about
the size of segments (Chapter 5)
• How understanding customer behavior
A Market Grid Diagram with
Submarkets
The bicycle-riders product market
Submarket 1
Exercisers
Submarket 2
Off-Road
Adventurers
Submarket 3
Transportation
Riders
Submarket 4
Socializers
Submarket 5
Environmentalists
Concept: divide a broad product-market (or generic market) into
homogeneous submarkets
Criteria for Segmenting
• Customers within a segment should be
homogeneous
– similar responses to marketing mix
– similar segmenting dimensions
• Customers in different segments are
heterogeneous
– different responses to marketing mix
– different segmenting dimensions
Three Ways to Develop MarketOriented Strategies
• Single Target Market Approach
– select one homogeneous segment as the
target
• Multiple Target Market Approach
– select two or more target segments
– develop a different marketing mix for
each segment
• Combined Target Market Approach
Market Dimensions to Marketing
Strategy Decision Areas
• Behavioral needs, attitudes, and how
present and potential goods and services fit
into customers' consumption patterns.
– Affects Product (features, packaging, product
line assortment, branding) and Promotion (what
potential customers need and want to know
about the firm's offering, and what appeals
should be used).
• Urgency to get need satisfied and desire and
willingness to seek information, compare,
Dimensions for Consumer
Markets
• CUSTOMER RELATED:
–
–
–
–
–
–
–
Customer needs (automobiles)
Geographic location (tire chains)
Age (insurance policies)
Sex (clothing)
Family size (child care services)
Income (vacation services)
Education (magazines)
• SITUATION RELATED:
Segmenting Dimensions and Typical
Breakdowns for Consumer Markets
• Needs
– Economic, functional, physiological, social, and
more detailed needs
• Attitudes
– Favorable or unfavorable attitudes, interests and
opinions
• Purchase relationship
– Favorable and ongoing; intermittent; none; bad
relationship
Examples of Possible Segmenting
Dimensions for Business Markets
• Type of organization (computer software)
• Closeness of relationship with customer
(travel services)
• Size (buildings)
• North American Industry Classification
System (NAICS) codes (machinery)
• Geographic location (electronic parts)
• Type of product (X-ray film)
for Business/Organizational
Markets
• Kind of relationship
–
–
–
–
Weak loyalty --------> strong loyalty to vendor
Single source --------> multiple vendors
"Arm's length" dealings--------> close partnership
No reciprocity --------> complete reciprocity
• Type of customer
– Manufacturer, service producer, government agency, military, nonprofit, wholesaler or
retailer (when end user), and so on
• Demographics
– Geographic location (region of world, country, region within country, urban -------->
rural)
– Size (number of employees, sales volume)
– Primary business or industry (North American Industry Classification System)
– Number of facilities
• How customer will use product
– Installations, accessories, components, raw materials, supplies, professional services
• Type of buying situation
Segmenting Dimensions
• Qualifying Dimensions
– Segmenting dimensions relevant to the productmarket
– Are there characteristics typical of customers
who are at least potentially interested in the
relevent product type?
• Determining Dimensions
– Segmenting dimensions that affect the purchase
of a specific product or brand
– Why does a potential customer select one brand
Approach to Segmenting ProductMarkets
•
•
•
•
•
•
1. Name broad product-market
2. List potential customers' needs
3. Form homogeneous submarkets
4. Identify determining dimensions
5. Name possible product-markets
6. Evaluate why segments behave as
they do
Toothpaste Market Segment
Description
Segment Name
The sensory
segment
Principal benefit Flavor, product
sought
appearance
Demographic
Children
strengths
Users of
Special
spearmint
behavioral
flavored
characteristics
toothpaste
Brands
disproportion- Colgate, Stripe
ately favored
Personality
High selfCharacteristics
involvement
Life-style
Hedonistic
characteristics
The sociables
segment
Brightness of
teeth
Teens, young
people
The worriers
segment
Decay
prevention
The
independent
segment
Price
Large families
Men
Smokers
Heavy users
Heavy users
Macleans, Plus
White Ultra
Brite
Crest
Brands on sale
High sociability
Active
High
High autonomy
hypochondriasis
Conservative
Value-oriented
Differentiation
• Positioning analysis is based on how
(potential) customers think about a firm's
current or potential offering
• Positioning considers how customers think
about competitors' offerings as well as the
firm’s own offering
• Positioning analysis identifies what kind of
offering different segments see as ideal
• Differentiation focuses on developing a
Provides Guidance
• Mission statement helps set the course of a
firm by explicitly stating the organization’s
basic purpose for being
– May make it clear that some
opportunities (target market or marketing
mix alternatives) are not related to the
mission
– Some opportunities may be a good fit
with mission, but not as good a fit or as
Resources
•
•
•
•
•
•
Financial strength (AT&T)
Producing flexibility (Chrysler)
Patents (IBM)
Channel relationships (Kraft)
Loyal customer base (Coke)
Technical capability (3M)
Disposable Diaper Competition in
Japan
P&G’s Current and
Planned Strategy
Kao’s Strengths (+) and
Weaknesses (-)
Target Market(s)
Upscale, modern parents who
can afford disposable diapers
Same as for P&G
Product
Improved fit and absorbency
(+); brand name imagery
weak in Japan (-)
Brand familiarity (+); but no
longer the best performance
(-)
Place
Promotion
Price
(Potential) Competitive
Barriers
Likely response(s)
Uni-Charm’s Strengths
(+) and Weaknesses (-)
Same as for P&G, but also
budget-conscious segment
that includes cloth diaper
users (+)
Two brands- for different
market segments- and more
convenient package with
handles (+)
Distribution through
Close relations with and
Distribution through 80% of
independent wholesalers to
control over wholesalers who
food stores in best locations
both food and drugstores (+),
carry only Kao products(+);
(+); shelf space for two brands
but handled by fewer retailers
computerized inventory
(+)
(-)
reorder system (+)
Heaviest spending on daytime
Large efficient sales force (+);
Advertising spending high
TV, heavy sales promotion,
lowest advertising spending (- (+); effective ads that appeal
including free samples (+);
) and out-of-date ad claims (-)
to Japanese mothers (+)
small sales force (-)
High retail price (-) but lower
Highest retail price (-), but
Lowest available retail price
unit price for larger quanities
also best margins for
(+);price of premium brand
(+)
wholesalers and retailers (+)
comparable to P&G (-)
Parent protection (+), limits in Inferior product (-), excellent Economies of scale and lower
access to retail shelf space (-)
logistics support system (+)
costs (+); loyal customers (+)
Improve wholesaler and
Press retailers to increase inIncrease short-term sales
retailer margins; faster
store promotion; change
promotions; but if P&G takes
deliveries in channel; change
advertising and/or improve
customers, cut price on
package to require less shelf
product
premium brand
space
Examples of Effect of
Technological Environment
• Rapid changes in the Internet and World
Wide Web
• Robotics (better quality control, lower
production costs)
• Computer scanners at retail check-out
counters
• Worldwide satellites for data
communication
Examples of Changes in the
Political/Legal Environment
• Deregulation of energy industries
• Less emphasis on antitrust laws by
federal government
• Maturing of consumerism
• More attention to laws governing
international trade
• Changes in labeling requirements
Federal Antimonopoly Laws
on the Four Ps
Law
Product
Place
Sherman Act
Monopoly or
Monopoly or
(1890) Monopoly or
conspiracy to control conspiracy to control
conspiracy in
a product
distribution channels
restraint of trade
Forcing sale of some Exclusive dealing
Clayton Act (1914)
products with
contracts (limiting
Substantially lessens
others—tying
buyers’ sources of
competition
contracts
supply)
Federal Trade
Commission Act
(1914) Unfair
Unfair policies
methods of
competition
Robinson-Patman
Act (1936)
Tends to injure
competition
Prohibits paying
allowances to
“direct” buyers in
lieu of middlemen
costs (brokerage
charges)
Wheeler-Lee
Amendment (1938) Deceptive packaging
Unfair or deceptive
or branding
practices
Antimerger Act
Buying producers or
(1950) Lessens
Buying competitors
distributors
competition
Magnuson-Moss
Act (1975)
Product warranties
Unreasonable
practices
Promotion
Price
Monopoly or
conspiracy to fix or
control prices
Price discrimination
by manufacturers
Deceptive ads or
selling practices
Deceptive pricing
Prohibits “fake”
advertising
allowances or
discrimination in
help offered
Prohibits price
discrimination on
goods of “like grade
and quality” without
cost justification,
and limits quantity
discounts
Deceptive ads or
selling claims
Deceptive pricing
Important Laws that Affect
Marketing
• Sherman Act (1890)
– prohibits conspiracy to reduce competition
– example: price "fixing" agreements among
competing firms
• Federal Trade Commission Act (1914)
– prohibits unfair methods of competition
– example: use of deceptive advertising
• Robinson-Patman Act (1936)
– prohibits most types of price-related
Now Affecting Competition in
Marketing
Year
Antimonopoly
(procompetition)
Anticompetition
Sherman Act
Clayton Act, Federal
1914
Trade Commission Act
1936 Robinson-Patman Act Robinson-Patman Act
Antispecific practices
1890
1938
1950
Antimerger Act
1975
Magnuson-Moss Act
Clayton Act
Robinson-Patman Act
Wheeler-Lea
Amendment
Antimerger Act
Magnuson-Moss Act
Some Important U.S. Federal
Regulatory Agencies
Agencies
Federal Communications
Commission (FCC)
Environmental Protection Agency
(EPA)
Responsibilities
Enforces laws and develops guidelines
regarding unfair business practices
Enforces laws and develops regulations
to prevent distribution and sale of
adulterated or misbranded foods, drugs,
cosmetics, and hazardous consumer
products
Enforces the Consumer Product Safety
Act—which covers any consumer
product not assigned to other regulatory
agencies
Regulates interstate wire, radio, and
television
Develops and enforces environmental
protection standards
Office of Consumer Affairs (OCA)
Handles consumers’ complaints
Federal Trade Commission (FTC)
Food and Drug Administration
(FDA)
Consumer Product Safety
Commission (CPSC)
Examples of Trends in the
Cultural Environment
• More women in the work force
• "Aging" of America, but accompanied
by new growth in the “teen” group
• More single-person households
• More health consciousness
• More concern about the environment
and Wholesale Distributor ($5
million annual sales)
•
Quantitative criteria
–
–
–
–
Increase sales by $750,000 per year for the next five years.
Earn ROI of at least 25 percent before taxes on new ventures.
Break even within one year on new ventures.
Opportunity must be large enough to justify interest (to help meet objectives) but
small enough so company can handle with the resources available.
– Several opportunities should be pursued to reach the objectives--to spread the risks.
•
Qualitative criteria
– Nature of business preferred.
•
•
•
•
Should take advantage of our on-line Internet order system.
New goods and services for present customers to strengthen relationships.
"Quality" products that do not cannibalize sales of current products.
Competition should be weak and opportunity should be hard to copy for
several years.
• There should be strongly felt (even unsatisfied) needs--to reduce promotion
costs and permit "high" prices.
– Constraints
Grid
• A way of organizing business judgments
about existing and/or proposed productmarket plans
• Business Strengths Dimension
–
–
–
–
Company size, market share
Profit margins
Technology position
Limiting factors (personnel, capital needed,
etc.)
Select Countries
Country
Canada
China
Finland
Ghana
India
Israel
Japan
Mozambique
Peru
Saudi Arabia
Somalia
Switzerland
U.K.
U.S.
Venezuela
Percent
2000 Percent Urban
Population
Pop. Popul(000) Growth
ation
29,989
1,253,438
5,115
19,272
1,012,909
5,852
126,582
19,614
26,198
22,246
10,880
7,374
58,894
274,943
23,596
1.2
1.0
0.3
2.4
1.7
2.6
0.2
3.3
1.8
3.4
2.7
0.8
0.3
1.0
2.0
77
29
65
36
26
90
78
28
70
80
24
68
90
75
85
GNP
($Millions)
GNP per
Capita
573,695
744,890
105,174
6,719
319,660
87,875
4,963,587
1,353
55,019
133,540
1,047
286,014
1,094,734
7,100,007
65,382
19,380
620
20,580
390
340
15,920
39,640
80
2,310
7,040
156
40,630
18,700
26,980
3,020
Percent
Growth
GNP
2.0
10.0
4.0
4.0
6.0
7.0
1.0
3.0
8.0
-1.0
0.6
1.0
2.0
2.0
3.0
Percent
Literacy
96.6
81.5
100.0
64.5
52.0
95.6
100.0
40.1
88.7
62.8
24.0
100.0
100.0
99.5
91.1
Demographic Dimensions
• Important operational dimensions for
understanding market segments and
developing marketing mixes
– Much good data is available
• Important for determining size of
consumer target markets
– Is the market substantial?
• Seeing demographic trends helps identify
opportunities
Age Distribution
• Average age is increasing
• But there is a big teen cycle on the way
• Post World War II "Baby Boomers":
still a big, influential group
• 50 and older group to grow
dramatically in next decade
(in 1996 dollars)
19
60
19
64
19
68
19
72
19
76
19
80
19
84
19
88
19
92
19
96
50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
to Different Income Groups in
1996
Top 20%
46.8
23.1
Middle
15.8
10
Lowest 20%
4.2
0
10
20
30
40
50
Each Group's Percent of Total Income
Note: the 20 percent of all families who have the lowest
incomes account for only 4.2% of total income; the
20% with the highest incomes have 46.8 percent-a 10-fold difference between the “haves” and “have-nots”
Income Distribution
• Growth in real income has slowed
down
• Middle income groups in U.S. enjoy
real choices
– U.S. distribution like Canada,
Western Europe, Japan, Australia,
New Zealand
• Higher income groups still have much
Types of Income
• DISPOSABLE INCOME
– Income that is left after taxes
• DISCRETIONARY INCOME
– What is left of disposable income
after paying for "necessities"
Family Income Levels (in 1995
dollars)
$15,000-$19,999
Category
Food
Housing
Clothing
Transportation
Health care
Personal care
Education
Reading
Entertainment
Alcohol
Tobacco
Insurance &
pensions
Contributions
Miscellaneous
Total spending
$20,000-$29,999
$30,000-$39,999
$
%
$
%
$
%
3,883
7,407
1,187
4,009
1,610
299
162
112
903
180
276
17.2
32.8
5.2
17.7
7.1
1.3
0.7
0.5
4.0
0.8
1.2
4,065
8,417
1,471
5,258
1,743
366
194
142
1,217
219
309
15.2
31.5
5.5
19.7
6.5
1.4
0.7
0.5
4.6
0.8
1.2
4,710
10,461
1,656
6,419
1,666
450
375
180
1,764
243
324
14.1
31.4
5.0
19.3
5.0
1.4
1.1
0.5
5.3
0.7
1.0
1,201
807
581
22,617
5.3
3.6
2.6
100.0
1,910
729
691
26,731
7.1
2.7
2.6
100.0
3,249
816
1,008
33,321
9.8
2.4
3.0
100.0
Cycle
Stage
1.Singles; unmarried people living
away from parents
2.Divorced or separated
3.Newly married couples; no
children
4. Full nest I: youngest child under
six
5. Full nest II: youngest child over
five
6. Full nest III: older couples with
dependent children
7. Empty nest: older couples, no
children living with them, head still
working
8. Sole survivor, still working
9. Senior citizen I: older married
couple no children living with them,
head retired
10. Senior citizen II: sole survivor,
not working
Characteristics and buying behavior
Feel “affluent” and “free.” Buy basic household goods. More interested in recreation,
cars, vacations, clothes, cosmetics and personal care items.
May be financially squeezed to pay for alimony or maintaining two households. Buying
may be limited to “necessities”—especially for women who have no job skills.
Both may work and so they feel financially well-off. Buy durables: cars, refrigerators,
stoves, basic furniture—and recreation equipment and vacations.
Feel squeezed financially because they are buying homes and household durables—
furniture, washers, dryers, and TV. Also buying child-related products—food,
medicines, clothes and toys. Really interested in new products.
Finally are better off as husband earns more and/or wife goes to work as last child goes
to school. More spent on food, clothing, education, and recreation for growing children.
Financially even better off as husband earns more and more wives work. May replace
durables and furniture, and buy cars, boats, dental services, and more expensive
recreation and travel. May buy bigger houses.
Feel financially “well-off”. Home ownership at peak, and house may be paid for. May
make home improvements or move into apartments. And may travel, entertain, go to
school, and make gifts and contributions. Not interested in new products.
Income still good. Likely to sell home and continue with previous lifestyle.
Big drop in income. May keep home but cut back on most buying as purchases of
medical care, drugs, and other health-related items go up.
Same as senior citizen I, except likely to sell home, and has special need for attention,
affection and security.
Needs
•
•
•
•
•
Economy of purchase or use
Convenience
Efficiency in operation or use
Dependability in use
Improvement in earnings
Psychological (intra-personal)
Variables
•
•
•
•
•
•
Motivation
Perception
Learning
Attitudes and beliefs
Personality
Lifestyle (psychographics)
Possible Needs Motivating a
Person to Some Action
Examples of Specific Needs
Types of Needs
Physiological
needs
Hunger
Sex
Thirst
Rest
Activity
Preservation
Sleep
Warmth
Psychological
needs
Aggression
Independence
Fulfillment
Pride
Curiosity
Love
Competition
Self-Expression
Dominance
Nurturing
Relaxing
Tenderness
Imitation
Order
Power
Desire for…
Acceptance
Affiliation
Comfort
Happiness
Recognition
Achievement
Appreciation
Fun
Knowledge
Respect
Acquisition
Beauty
Esteem
Prestige
Status
Affection
Companionship
Fame
Pleasure
Variety
Freedom from
Fear
Ridicule
Discomfort
Pain
Loss
Pressure
Harm
Sadness
Imitation
Depression
Anxiety
Illness
Lifestyle Dimensions (and some
related demographic dimensions)
Dimension
Examples
Activities
Work
Hobbies
Social events
Vacation
Entertainment
Memberships
Community
Shopping
Sports
Interests
Family
Home
Job
Community
Recreation
Fashion
Food
Media
Achievements
Opinions
Themselves
Social issues
Politics
Business
Economics
Education
Products
Future
Culture
Demographics
Income
Age
Family life cycle
Geographic area Occupation
City size
Family size
Dwelling
Education
Social (inter-personal) Influences
on Consumers
•
•
•
•
Family
Reference groups
Social class
Culture and subculture
of Different Social Class Groups
in the United States
Relative size
1.5%
Group
Upper-class
12.5%
32%
38%
Some (abbreviated) characteristics
People from old wealthy families and
socially prominent new rich...
Upper-middle
class
Successful professionals and managers;
community minded and ambitious for their
children...
Lower-middle
class*
Small business people, teachers,
office workers, technicians--the
typical white collar workers...
Upper-lower
The blue collar workers--factory
(“working”) class* workers, skilled laborers, and service
people…most earn good incomes...
16%
Lower-lower
class
* America’s “mass market”
Unskilled laborers and people in
very low status occupations
Characteristics and Attitudes of
Middle and Lower Classes
• Middle classes
– Plan and save for
the future
– Analyze
alternatives
– Understand how the
world works
– Feel they have
opportunities
– Willing to take risks
• Lower classes
– Live for the present
– "Feel" what is
"best"
– Have simplistic
ideas about how
things work
– Feel controlled by
the world
– "Play it safe"