1 Introduction to Marketing JENNIFER DEBOER
Outline 2 Introduction to Marketing Customer Research (5 C s) Customer, Company, Competition, Context/Climate, and Collaboration Marketing Mix (4 P s) Product, Price, Promotion, and Place (Distribution) Value Propositions (NABC) Need, Approach, Benefit, Competition Assignment 2
Introduction to Marketing 3 Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. AMA
The Marketing Concept 3 Customer or market NEED Customer Company BENEFITS you provide the customer Your unique APPROACH; also, MARKETING Competition Alternative approach to the COMPETITION
Marketing Examples/Methods 5 sales advertising commercials demographics packaging distribution consumer research pricing discounts publicity supply chains relationships international trade social media attitudes after sales service communications public relations products quality warranties consumer trust market share education data analysis profit competition
The Marketing Plan 4 Market Research? Marketing Mix? Marketing Strategy Customer Company Competition Context/Climate Collaboration Product Price Place Promotion Marketing Plan
Marketing Research Categories 5 Types of marketing research: 1. Exploratory Research - to gain ideas and insights ( marketing artist /qualitative approach ) 2. Descriptive Research to provide numerical information ( marketing scientist /quantitative approach) 3. Causal Research to establish causality ( marketing scientist /quantitative approach)
8 MARKET RESEARCH APPROACHES: Marketing Artist vs. Marketing Scientist
Marketing Research Sources 9 Review relevant websites, online reports, brochures, flyers, advertising, etc. Visit retailers, manufacturers, public events, etc. Consult experts (i.e. sales staff, managers, scholars, etc.) Talk to people with first-hand knowledge (i.e. carpenters, builders, architects, developers, renovators, engineers, etc.) Explore government publications/statistics, forest sector associations data/media, university data/media, academic publications, trade publications, etc.
5 C s of Market Research 10 5 C s of Market Research Customer: customer/market need, customer segments, target markets, and market positioning Company: what is your company s approach & what benefits does this approach provide, business description, strengths, weaknesses, opportunities, and threats (e.g. SWOT analysis) Competition: who/what is the competition, how competitive is the market environment (e.g. Porter s Five Forces Model) Context/Climate: political, economic, social, and technological environment (e.g. PEST analysis) may also contribute to NABC Collaboration: mutually beneficial partnership opportunities may also contribute to NABC
Customer Research (1 st C) 11 1. What is the customer or market need? 2. Who is the primary customer for the product/service? Market Segmentation: Identify bases for segmenting the market; develop segment profiles Target Market: Develop measures of market attractiveness; select target markets Market Positioning: Develop positioning for target market; develop a marketing mix
Market Segmentation Strategies 12 Geographic Demographic Psychographic Behavioral Local Cities Regions Province State Nation Country Continent Age Gender Family Education Income Religion Lifestyle Social Class Personality Hobbies Interests User Status Usage Rate Benefits Sought Loyalty Occasions Attitudes Target Market = a particular group of consumers at which a product or service is aimed. With a clearly defined target audience, it is much easier to determine where and how to market your company.
Target Markets and Market Positioning 13 Total Available Market Potential Market Target Market Positioning refers to the place that a brand occupies in the mind of the customer and how it is distinguished from products from competitors. In order to position products or brands, companies may emphasize the distinguishing features of their brand (what it is, what it does and how, etc.) or they may try to create a suitable image (inexpensive or premium, utilitarian or luxurious, entry-level or high-end, etc.).
Company Research (2 nd C) 14 The company analysis examines the approach (e.g. mission, vision, objectives, strategies, etc.) and benefits (e.g. product line, capabilities, technology, etc.) of a business. Strengths: What do you do well? How do you stand apart from you competitors? What tangible and intangible assets/resources do you have? Weaknesses: Which areas need improvement to compete with competitors? What does your business lack? Are resources limited? Opportunities: What opportunities exist in your market? What market changes might you anticipate? How can these opportunities benefit your business? Threats: Who are your potential competitors? Which risks are associated with your business/market? What threatens your marketing efforts?
Competitive Research (3 rd C) 15 Assess the competitive environment; who/what is the competition? Porter's five forces analysis is a framework that attempts to analyze the level of competition within an industry and business strategy development. Consider existing competitors, potential competitors, suppliers, buyers, and substitute products Examples???
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Context/Climate Research (4 th C) 17 Context/climate analysis is the evaluation of the macro-environmental factors affecting the business. The primary factors to consider include political, economic, social/cultural, technological (PEST), however, some models add environmental and legal as well (i.e.pestle). Examples???
PEST Analysis 18 Political = legislation (current and future), subsidies, grants, regulation, corruption, and general political climate Economic = taxes, tariffs, industry factors, interest and exchange rates, local and global economic climate, market and trade cycles Social = consumer attitudes and opinions, ethical issues, lifestyle trends, demographics, media views, customer spending patterns, major events and influences Technological = competing technologies, innovation potential, research funding opportunities, maturity of technology, intellectual property issues
Collaboration Research (5 th C) 19 Collaborators are the external stakeholders who team up with the organization in a mutually beneficial partnership. Agencies, suppliers, distributors, referrals, and business partners are typical collaborators; it is important to understand their capabilities, performances, and issues to better identify business opportunities and problems.
Marketing Mix (4 P s) 20 Product Price Promo Place
Marketing Mix (4 P s): Product (1 st P) 21 Product
Product Definition 22 A product can be a tangible good or an intangible service that fulfills customers wants or needs. Whether you sell plywood or provide ecotourism accommodations, it is imperative that you have a clear understanding of exactly what your product or service is and what makes it unique before you can successfully market it.
Forest Product Examples 23 Plywood Maple Syrup Bioenergy Doors Rayon Resins Recreation Flooring Standboard Shakes/Shingles Nanocellulose Paper Corks Firewood Ethanol Fruits/Nuts Medicine Pallets Decks Windows Pulp Fencing Ecotourism Fibreboard Cabinets Prefab Homes Newsprint MSR Lumber Furniture Carbon
Product Evaluation 24 What does the customer want/need from the product or service? What does the product look like? How will the customer use it? Where will the customer use it? What features must the product have to meet the client s needs?* Are there any necessary features that you missed?* Are you creating features that are not needed by the client?*
New Product Development 25 Why must successful businesses continually develop new products? to stay in business (to mitigate against the decline of products) to contribute to growth in sales, profitability, and/or market share to gain a competitive advantage (address needs and wants of customers) to capitalize on excess plant capacity, even out seasonal production flows, and address changes in resource base to exploit new technologies
New Product Ideas 26
Innovative Product Life Cycle 27
New Product Implications 28 Why do new products succeed (fail) in the marketplace? the product offers no competitive advantage markets are poorly defined poor company fit, lack of channel support weak marketing efforts development / production / marketing costs underestimated markets overestimated poor understanding of customers wants and needs
Typical Product Life Cycle 29 All products have a limited lifespan! The key to a successful business is not just understanding this life cycle, but also proactively managing products throughout their lifetime, applying the appropriate resources and sales and marketing strategies, depending on what stage products are at in the cycle.
Product Life Cycle Description 30 Stage 1. Market Introduction: this is when a new product is first brought to market, before there is a proved demand for it; costs are high while sales are low and creep along slowly. Stage 2. Market Growth: demand begins to accelerate and the size of the total market expands rapidly; this might also be called the Takeoff Stage. Costs decrease while sales and competition increase. Stage 3. Market Maturity: demand slows and levels off; costs decrease while sales and competition increase. Stage 4. Market Decline: the product begins to lose customer appeal and sales drift downward; prices, sales, and profitability diminish.
Product Life Cycle Implications 31 Implications of the product life cycle: length of a product s life cycle depends on: the rate of technological change and innovation market acceptance of substitutes economic factors product class Extending a product s life cycle is possible: redefine markets redefine production redefine products
Marketing Mix (4 P s): Price (2 nd P) 32 Price
Price 33 The price of the product is the amount that a customer pays for it. The price must encompass fixed costs, variable costs, taxes, and profit margins. Once a concrete understanding of the product offering is established we can start making some pricing decisions. Price determinations will impact profit, supply, demand, survival, and marketing strategy. Adjusting the price of the product has a big impact on the entire marketing strategy as well as greatly affecting the sales and demand of the product. Pricing strategies???
Pricing Strategies 34 Pricing models: cost-based pricing (often 2-5 times the product cost; most common) market share-based pricing (e.g. introductory pricing) sales volume-based pricing (e.g. price by sales volume range) status quo pricing (e.g. adopt current mainstream prices) value-based pricing (e.g. vital medicines/pay anything) feature pricing (e.g. price incrementals for additional features) portfolio pricing (e.g. blend low and high mark-ups) competitive positioning (e.g. push competitors out of market) razor blade model (e.g. cheap product/razor and expensive supplies/blades) *Discounts: trade, package, cash, promotional, quantity, seasonal, coupons, rebates
Pricing Example 35
Portfolio Pricing 36 $5 $6 $8 $10 $11 $12 $19
Pricing Implications 37 What is the value of the product or service to the customer? Are there established price points for this product or service in your market segment? Is the customer price sensitive? What discounts should be considered? How will your price compare to that of your competitors?
Marketing Mix (4 P s): Promotion (3 rd P) 38 Promo
Promotion 39 A successful product or service means nothing unless the benefit of such a product or service can be communicated clearly to the target market. Promotion is any activity to raise awareness of a product or to encourage existing and potential customers to purchase a product. Advertising is a form of promotion but not all promotions are advertisements.
Promotional Mix 40 Internet Marketing Personal Selling Advertising Promo Mix Public Relations Direct Marketing Sales Promotion Advertising and direct marketing require the least cost per contact but tend to be less effective whereas public relations and personal selling require the greatest cost per contact but tend to be more effective. Personal selling dominates the forest products industry.
Promotional Mix Described 41 Advertising: paid form of communication to customers / potential customers through media outlets (TV, magazines, radio, outdoor) Direct Marketing: communication with target markets to generate a response and/or transaction (telemarketing, direct mail, catalogues, flyers) Internet Marketing: interactive media and messaging delivered via the internet (social media, company websites, e-commerce) Sales Promotion: marketing activities that provide extra value or incentives to the sales force or customers (trade shows, showrooms, free samples, coupons, discounts, point of purchase displays, sales incentives, etc.) Public Relations: information about a firm / product disseminated to the public at no (or little) cost (news releases, media reporting, etc.) in order to earn public understanding and acceptance Personal Selling: direct presentation of information related to a firm s product/service; provides personalized/tailored message and immediate feedback.
Promotional Implications 42 When can you best communicate your marketing messages to your target market? Where can you best communicate your marketing messages to your target market? How do your competitors promote their products or services? How does your competitors choices/actions influence your choice of promotional activity?
Marketing Mix (4 P s): Place (4 th P) 43 Place Attributes?
Place 44 Place (aka distribution or logistics) is about (1) where the product is made, (2) where the product is stored, (3) how the product is transported to the customer, and (4) where the customer purchases/receives the product. The place for each of these things should ensure that the product gets to the right place at the right time without damage or loss. The ideal place will be: Convenient for the customer and the business Accessible for the customer if it is the place where the product is sold Low cost or free for the customer if it is the place where the product is sold Reasonable cost to the business
Place Strategies 45 There are many place/distribution strategies: Intensive distribution sell through as many outlets as possible Exclusive distribution select retailers are given exclusive rights Selective distribution between intensive and exclusive Franchising - the right to market or sell goods under the trademarked name, or patented process, of an established business
Place Implications 46 Where do current and potential customers go to look for your product? If they look in a store, what kind and where? How can you access the best distribution channels? What do you competitors do and how can you learn and/or differentiate from them? Do you need a sales force, brick and mortar store? Do you need a website and online presence?
Value Propositions: NABC Approach 47 NABC was developed to provide a more systematic approach to the understanding of value propositions. In other words, the value of original and creative thinking. This method enables idea-makers and innovators to present their ideas while at the same time it assesses their value using a range of central and consistent parameters. Using NABC to introduce one s idea is called to pitch. To pitch means to try and sell, so to speak, an idea in a precise and concise way. It is important to have thorough knowledge of the value proposition. It is preferable, however, to elaborate or go into depth only when answering questions, while the presentation itself should always remain short and concise.
Value Propositions: NABC Approach 48 NABC = Need, Approach, Benefit, and Competition N for Need. N is the most important factor in the method. An idea without a practical need for it remains just what it is: a good idea and nothing more. A for Approach. A is usually a point of departure for most activities, but with the NABC method, A always comes after N. B for Benefit. B stands for the innovative elements of an idea, in other words that which constitutes its uniqueness. C for Competition. C stands for a study of the competition existing in the area concerned. C is often mistaken for N. C, however, focuses on the reality within which a concept has to function.
NABC Framework 49
Dragon s Den (Assignment 2) 50 Each student and student group will be graded on the following: Class Presentation (Dragon Evaluations): 10 15 min presentation & 10 min Q&A* Develop a forest related entrepreneurial innovation. Research the feasibility of the innovation and present a value proposition to a panel of dragons (i.e. potential investors). Presentations will be graded on innovativeness, creativity, engagement, content, and style. Team Evaluation Similar to Assignment 1, team evaluations will be completed by your fellow team members. Each team member will be evaluated on attendance to team meetings, group cohesion, productivity and focus, constructive ideas and feedback, quality of work, and quantity of work. Value Proposition Report: 10 12 pages Submit a formal report (i.e. NABC value proposition) for your innovation. This report should include an executive summary, the identified product/service need, a business/company description (including the approach your company will pursue and the benefits the business will provide customers), a competitive analysis (i.e. who/what is your competition), a marketing plan (i.e. the 4 P s), and any additional relevant information (i.e. climate or collaborations).
Presentation Sign-Ups 51 Meet with your group and discuss when you d like to present. Presentations will be scheduled March 20, 21, 23, 27, 28, and 30 th. No more than three groups may select the same presentation date. Send ONE group member to the front of the classroom to select a presentation date. Please respect your peers while doing so. o Choose one of the six dates indicated (starred) o Maximum of three groups may present each day
Questions??? 52