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Musaed Al-Mahfouz
200901354
Muhannad Al-Mathami 200800809
Nasser Al-Anizan
200700264
Principles of Marketing
Section: 102
Dr. Richard Maguire
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Table of Content:
 Introduction
 Business Market and Business Buyer Behavior
 Customers-Driven Marketing Strategy
 Products, Services, and Brands
 New Product Development
 Conclusion
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Introduction:
Marketing is equal to promotion. Marketing generally is what
you want to explain or deliver on how your product is valuable, and why
should people get your product. Marketing is an ad. Marketing first aim is
to know and understand the customer.
Business Market and Business Buyer Behavior:
For a start, what is business market? Business market is all the
organization that buy goods and services to use in the production of other
products and services that are sold, rented, or supplied to other. Business
Market split into different characteristics, each model has it own
characteristics.
First characteristic, market structure and demand, the business
marketer normally deals with far fewer but far larger buyers than the
consumer marketer do. Business markets are also more geographically
concentrated. Many business markets have inelastic demand; that is, total
demand for many business products is not affected much by price
changes, especially in the short run. Finally, business markets have
more fluctuating demand. The demand for many business goods and
services tends to change more—and more quickly—than the demand for
consumer goods and services does.
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Second Characteristic, is nature of buying unit. Compared with
consumer purchases, a business purchase usually involves more decision
participants and a more professional purchasing effort. Often, trained
purchasing agents who spend their working lives learning how to buy
better do business buying, the more complex the purchase, the more
likely that several people will participate in the decision-making process.
A decision in marketing is so difficult. Business buyers usually
face more complex buying decisions than do consumer buyers. Purchases
often involve large sums of money, complex technical and economic
considerations, and interactions among many people at many levels of the
buyer's organization. Because the purchases are more complex, business
buyers may take longer to make their decisions. The business buying
process tends to be more formalized than the consumer buying process.
Finally, in the business buying process, buyer and seller are often
much more dependent on each other. Consumer marketers are often at a
distance from their customers. In contrast, business marketers may roll up
their sleeves and work closely with their customers during all stages of
the buying process—from helping customers define problems, to finding
solutions, to supporting after-sale operation.
At the most basic level, marketers want to know how business
buyers will respond to various marketing stimuli. Figure 1 shows a model
of business buyer behavior. In this model, marketing and other stimuli
affect the buying organization and produce certain buyer responses. As
with consumer buying, the marketing stimuli for business buying consist
of the four Ps: product, price, place, and promotion. Other stimuli include
major forces in the environment: economic, technological, political,
cultural, and competitive. These stimuli enter the organization and are
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turned into buyer responses: product or service choice; supplier choice;
order quantities; and delivery, service, and payment terms. In order to
design good marketing mix strategies, the marketer must understand what
happens within the organization to turn stimuli into purchase responses.
Figure 1
Within the organization, buying activity consists of two major parts: the
buying center, made up of all the people involved in the buying decision,
and the buying decision process. The model shows that the buying center
and the buying decision process are influenced by internal organizational,
interpersonal, and individual factors as well as by external environmental
factors. The model in Figure 1 suggests four questions about business
buyer behavior: What buying decisions do business buyers make? Who
participates in the buying process? What are the major influences on
buyers? How do business buyers make their buying decisions?
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Customers-Driven Marketing Strategy:
Most companies have moved away from mass marketing and toward
target marketing—identifying market segments, selecting one or more of
them, and developing products and marketing programs tailored to each.
Figure 7.1 (pg.216) shows the four major steps in designing a customerdriven marketing strategy. Market segmentation involves dividing a
market into smaller groups of buyers with distinct needs, characteristics,
or behaviors that might require separate marketing strategies or mixes.
Market targeting (or targeting) consists of evaluating each market
segment’s attractiveness and selecting one or more market segments to
enter. Differentiation involves actually differentiating the firm’s market
offering to create superior customer value. Positioning consists of
arranging for a market offering to occupy a clear, distinctive, and
desirable place relative to competing products in the minds of target
consumers.
Segmenting Consumer Markets
Table 7.1 (pg.217) outlines the 4 major variables that might be
used in segmenting consumer markets. A marketer has to try different
segmentation variables, on its own and in combination, to find the best
way to view the market structure.
Segmenting Business Markets
Consumer and business marketers use many of the same variables
to segment their markets. Business marketers also use some additional
variables, such as customer operating characteristics, purchasing
approaches, situational factors, and personal characteristics. Many
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marketers believe that buying behavior and benefits provide the best basis
for segmenting business markets.
Segmenting International Markets
Companies can segment international markets using one or a combination
of several variables.
 Geographic factors: Nations close to one another will have many
common traits and behaviors.
 Economic factors: Countries may be grouped by population
income levels or by their overall level of economic development.
 Political and legal factors: Type and stability of government,
receptivity to foreign firms, monetary regulations, and the amount
of bureaucracy.
 Cultural factors: Grouping markets according to common
languages, religions, values and attitudes, customs, and behavioral
patterns.
Inter market segmentation is segmenting of consumers who have similar
needs and buying behavior even though they are located in different
countries e.g. IKEA targets the aspiring global middle class.
Evaluating Market Segments:
In evaluating different market segments, a firm must look at three
factors:
 Segment size and growth,
 Segment structural attractiveness, and
 Company objectives and resources.
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Segment size & growth: The largest, fastest-growing segments are not
always the most attractive ones for every company. Smaller companies
may find these segments too competitive.
Segment structural attractiveness: The Company also needs to
examine major structural factors that affect long-run segment
attractiveness. A segment is less attractive if it already contains many
strong and aggressive competitors.
The existence of many actual or potential substitute products may limit
prices and the profits. The relative power of buyers also affects segment
attractiveness. A segment may be less attractive if it contains powerful
suppliers who can control prices.
Company objectives and resources: Some attractive segments may not
align with the company’s objectives and resources. Or, the company may
lack the skills & resources.
Micromarketing
Local marketing: Tailoring brands and promotions to the needs and
wants of local customer groups—cities, neighborhoods, specific stores.
Individual marketing
Is Tailoring products and marketing programs to the needs and
preferences of individual customer.
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Products, Services, and Brands
What Is a Product?
Product is anything that can be offered to a market that might satisfy a
need or a want. Experiences represent what buying the product or service
will do for the customer
The most basic level of a product is called its core benefit
 Consumer products: Consumer products are products and services
for personal consumption
 Classified by how consumers buy them
1. Convenience products
2. Shopping products
3. Specialty products
4. Unsought products
Convenience products are consumer products and services that the
customer usually buys frequently, immediately, and with a minimum
comparison and buying effort, Newspapers, Candy, Fast food.
Shopping products are consumer products and services that the customer
compares carefully on suitability, quality, price, and style, Furniture,
Cars, Appliances. Specialty products are consumer products and services
with unique characteristics or brand identification for which a significant
group of buyers is willing to make a special purchase effort, Medical
services, Designer clothes High-end electronics.
Unsought products are consumer products that the consumer does
not know about or knows about but does not normally think of buying,
Life insurance, Funeral services, and Blood donations.
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Industrial products are products purchased for further processing or
for use in conducting a business classified by the purpose for which the
product is purchased: Materials and parts, Capital, Raw materials
Capital items are industrial products that aid in the buyer’s production or
operations materials and parts include raw materials and manufactured
materials and parts usually sold directly to industrial users
Supplies and services include operating supplies, repair and maintenance
items, and business services.
Organization marketing consists of activities undertaken to create,
maintain, or change attitudes and behavior of target consumers toward an
organization
 Product and Service Decisions
Product attributes are the benefits of the product or service: Quality,
Features, Style and design. Product quality includes level and
consistency: Quality level is the level of quality that supports the
product’s positioning. Conformance quality is the product’s freedom
from defects and consistency in delivering a targeted level of
performance. Product features are a competitive tool for differentiating a
product from competitors’ products. Packaging involves designing and
producing the container or wrapper for a product.
Product mix consists of all the products and items that a particular seller
offers for sale.
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Desirable qualities:
1. Suggest benefits and qualities.
2. Easy to pronounce, recognize, and remember.
3. Distinctive.
4. Extendable.
Internal marketing means that the service firm must orient and motivate
its customer contact employees and supporting service people to work as
a team to provide customer satisfaction. Internal marketing must precede
external marketing. Interactive marketing means that service quality
depends heavily on the quality of the buyer-seller interaction during the
service encounter, like Service quality. Managing service differentiation
creates a competitive advantage from the offer, delivery, and image of the
service, Offer can include distinctive features, Delivery can include more
able and reliable customer contact people, environment, or process,
Image can include symbols and branding. Managing service quality
provides a competitive advantage by delivering consistently higher
quality than its competitors. Managing service productivity refers to the
cost side of marketing strategies for service firms, Employee recruiting,
hiring, and training strategies, Service quantity and quality strategies.
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New Product Development
Development of original products, product improvements, product
modifications, and new brands through the firm’s own R & D efforts.
New Product Development Strategy: New products can be obtained via
acquisition or development; new products suffer from high failure rates,
several reasons account for failure.
Major Stages in New-Product Development
Stage 1: Idea Generation
Internal idea sources: R & D
External idea sources: Customers, competitors, distributors, suppliers.
Stage 2: Idea Screening
Product development costs increase dramatically in later stages.
Ideas are evaluated against criteria; most are eliminated.
Stage 3: Concept Development and Testing
Product concepts provide detailed versions of new product ideas.
Consumers evaluate ideas in concept tests.
Stage 4: Marketing Strategy Development
Strategy statements describe:
The target market, product positioning, and sales, share, and profit goals
for the first few years.
Product price, distribution, and marketing budget for the first year.
Long-run sales and profit goals and the marketing mix strategy.
Stage 5: Business Analysis: Sales, cost, and profit projections
Stage 6: Product Development: Prototype development and testing
Stage 7: Test Marketing: Standard test markets, Controlled test markets,
simulated test markets
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Stage 8: Commercialization.
Sales and Profits Over A Product’s Life
The Typical Product Life Cycle (PLC) Has Five Stages
Product Development, Introduction, Growth, Maturity, Decline
Not all products follow this cycle: Fads, Styles, and Fashions.
The product life cycle concept can be applied to a: Product class (soft
drinks), Product form (diet colas), Brand (Diet Dr. Pepper)
Product Life-Cycle PLC Stages
1-Product development: Begins when the company develops a newproduct idea, sales are zero, Investment costs are high, and profits are
negative.
2-Introduction: Low sales, high cost per customer acquired, Negative
profits, and Innovators are targeted, little competition. And for
Introduction Stage: Product – Offer a basic product, Price – Use cost-plus
basis to set, Distribution – Build selective distribution, advertising –
Build awareness among early adopters and dealers/resellers, Sales
Promotion – Heavy expenditures to create trial.
3- Growth: Rapidly rising sales, Average cost per customer, Rising
profits, Early adopters are targeted, Growing competition. And for
Growth Stage: Product – Offer product extensions, service, warranty,
Price – Penetration pricing, Distribution – Build intensive distribution,
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Advertising – Build awareness and interest in the mass market, Sales
Promotion – Reduce expenditures to take advantage of consumer
demand.
4-Maturity: Sales peak, Low cost per customer, High profits, Middle
majority are targeted, Competition begins to decline. And for Maturity
Stage: Product – Diversify brand and models Price – Set to match or beat
competition, Distribution – Build more intensive distribution, Advertising
– Stress brand differences and benefits, Sales Promotion – Increase to
encourage brand switching.
5-Decline: Declining sales, Low cost per customer, declining profits,
and laggards are targeted, declining competition. And for Decline Stage:
Product – Phase out weak items, Price – Cut price, Distribution – Use
selective distribution: phase out unprofitable outlets, Advertising –
Reduce to level needed to retain hard-core loyalists, Sales Promotion –
Reduce to minimal level.
Conclusion
In conclusion, in this report we’ve summarized the main part of
business market and business buyer behavior, customer-driven marketing
strategy, what is product, service, and brands, and finally the new product
development. I hope this report is written in high manner and the way is
should be.
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References
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"Business Markets and Business Buyer Behavior." GMX.
N.p., n.d. Web. 9 Dec. 2012.
<gmx.xmu.edu.cn/ews/business/pmarketing/chapter06.htm
>.
"Combines.(Products, Brand Names &
Services)." Implement & Tractor 15 Jan. 2004: 76. Web.
Loch, C.. Handbook of new product development
management. Amsterdam: Butterworth-Heinemann, 2008.
Web.
Sheth, Jagdish N., Banwari Mittal, and Bruce I.
Newman. Customer behavior: consumer behavior &
beyond. Fort Worth, TX: Dryden Press, 1999. Web.
Walker, Orville C.. Marketing strategy: a decision-focused
approach. 5th ed. Boston: McGraw-Hill Irvin, 2006. Web.
 Figures and Graphs were grabbed from the web.
Thank You 
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