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Chapter 6,7,8,9 Summary
Musaed Al-Mahfouz
200901354
Muhannad Al-Mathami
200800809
Nasser Al-Anizan
200700264
PRINCIPLES OF MARKETING
Section : 102
Dr. Richard Maguire
Table of Content
 Introduction
 Business Market and Business Buyer Behavior (Ch.6)
 Customers-Driven Marketing Strategy (Ch.7)
 Products, Services, and Brands (Ch.8)
 New Product Development (Ch.9)
 Conclusion
Introduction
What is Marketing?
Business Market and Business Buyer
Behavior (Ch.6)
 What is a Business Market?
 Characteristics of Business Markets
Market Structure and Demand:
1. Fewer, larger buyers
2.
Geographically concentrated
3.
Demand derived from consumers
4.
Inelastic demand
5. Fluctuating demand
Cont.
Nature of the Buying Unit
1. More buyers
2. More professional purchasing effort
Types of Decisions & the Decision Process
 More complex decisions
 Process is more formalized
 Buyer and seller are more dependent on each other
 Build close long-term relationships with customers
Cont.
- Major Influences on Business Buying
 Environmental
Economic, Technological, Political, Competitive & Cultural
 Organizational
Objectives, Policies, Procedures, Structure, & Systems
 Interpersonal
Authority, Status, Empathy &Persuasiveness
 Individual
Age, Education, Job Position, Personality & Risk Attitudes
Cont.
Stages in the Business Buying Process:
1. Problem Recognition
2. General Need Description
3. Product Specification
4. Supplier Search
5. Proposal Solicitation
6. Supplier Selection
Customers-Driven Marketing Strategy
(Ch.7)
Designing a true customer-driven marketing strategy
involves:
1.Segmentation
2.Targeting
3.Differentiation
4.Positioning
Market Segmentation:
Segmentation: Dividing a market into smaller segments with
distinct needs, characteristics, or behaviors that might
require separate marketing strategies or mixes.
Cont.
 Key variables:
Geographic: States, Counties
Demographic: Age, gender
Psychographic: Dividing a market into different groups
based on social class.
Behavioral: Dividing buyers into groups based on consumer
knowledge, attitudes, uses
Benefits sought: Different segments desire different benefits
from products.
Cont.
User status: Nonusers, ex-users, potential users, first-time
users, regular users.
Usage rate: Light, medium, heavy.
Loyalty status: Brands, stores, companies.
Business marketers can also use:
1. Operating characteristics.
2. Purchasing approaches.
3. Situational factors.
4. Personal characteristics.
Requirements for Effective Segmentation:
To be useful, market segments must be:
Measurable, Accessible, Substantial, Differentiable,
Actionable
Micromarketing
1. Local marketing: Tailoring brands and promotions to the
needs and wants of local customer groups—cities,
neighborhoods, specific stores.
2. Individual marketing: Tailoring products and marketing
programs to the needs and preferences of individual
customers.
Products, Services, and Brands (Ch.8)
What Is a Product?
- The most basic level of a product is called core benefit
1) Consumer products:
-
Consumer products are products and services for
personal consumption
1. Convenience products
2. Shopping products
3. Specialty product
4.
Unsought products
Cont.
2) 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
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.
Cont.
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.
Cont.
 Managing service:
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.
New Product Development (Ch.9)
 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.
Cont.
 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.
Cont.
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.
Stage 5: Business Analysis: Sales, cost, and profit projections
Stage 6: Product Development: Prototype development and
Stage 7: Test Marketing: Standard test markets, Controlled test markets,
simulated test markets
Stage 8: Commercialization.
Product’s Life
Cont.
 Product Life-Cycle PLC Stages
1-Product development: Begins when the company develops a
new-product idea, sales are zero, Investment costs are high,
and profits are negative.
2-Introduction: Low sales, High cost per customer acquired,
Negative profits, 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.
Cont.
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, 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
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