Marketing Strategy And Concept

Children and Fast Food Advertising

2011-12-14T02:46:00.000-08:00

Children have been targeted by soda advertisers since the early twentieth century.

Television greatly expanded the ability of advertiser to reach children, especially on during children programs on saturday mornings, meant that advertisers could market directly to the age group of their choice.

By the 1960s, advertisers had identified children as a separate market, as fast food chains join soda companies in targeting children.

Food advertisements account for well over 50% of all advertisements targeting children on national network and food is the most frequently advertised product category on children’s TV.

In addition to television advertising, fast food chains also created child oriented characters such as Ronald MacDonald and began offering meals made especially for children, such as Happy Meals with toys and the creation of playgrounds for children.

Advertisers are trying to create situations where consumers are constantly exposed to their brand names.

Products are displayed in as many places as possible, whether it is on the grocery store shelf, in a television carton, or on the cover of a book.

Finally, the companies developed movie tie-ins and made special arrangements with theme parks such as Disneyland, which has had long history of selling fast food.

Children themselves have little buying power but they do have pester power. Busy parents simply take the easy way out and give in to children’s constant pestering. In addition, advertisers believe that childhood experiences will be remembered throughout a lifetime.

In United States in early 1991, a study reveled that children watching cartoon shows for a four hour period on atypical Saturday morning were bombarded with total food commercials.

The product advertised were dominated by sugar coated cereals, candy cookies, fruit flavored drinks, chocolate syrup, fast food meals and pizza.

Besides food advertisement, advertisements for fast food chains have strongly increased in the United States and in Europe during last 15 years reaching almost a third of all food advertisements in the United States.
Children and Fast Food Advertising

Forecast accuracy : number of item factor

2011-11-22T16:16:00.001-08:00

Forecasting is not possible although assessments based on similar past events can be made. It is a factor in the choice of technique. Forecast accuracy has to do with the closeness of a forecasting model’s predictions to the actual data.

The forecasting accuracy increases with the number of observation as well as the level of aggregation.

Forecast of customer demand aggregated over many customer are more accurate since their is a high probability that increased demand from one customer will be compensated by decreased demand from another customer during the same unit tie period.

The larger the number of items involved - while all other things being equal, the more accurate the forecast.

Because of the statistical law of large numbers, the size of forecasting errors and therefore the accuracy decreases as the number of items being forecast increases and vice versa.

Thus, the accuracy of phone calls arriving at a switching station during five minutes interval than the number of HP computers sold in a certain day.

It means that the larger amount of an item’s volume are forecasting, the lower the unexplained variance in comparison to the actual volume being forecast, thus lower the error.
Forecast accuracy : number of item factor

Fast Food Advertisement

2011-09-24T00:39:00.000-07:00

During the 1920s, White Castle, the first fast food advertised in newspapers. It was slow to value radio advertising but did have promotions on radio during the 1930s.

Most of its advertising was targeted at working class. This changed during the 1950s, when White Castle sponsored a children television show, The Cactus and Randy Show.

At that tine American spending in food continue to grow. The increase appears to have stemmed primarily from changes in foods purchased, including more food bought and eaten away from home.

During the second half of the century, consumers increasingly spent food dollars on meals outside the home.

McDonald’s did little national advertising in the 1950s. In 1959, Minneapolis McDonald’s operator, Jim Zein, began running radio advertisements and his sales skyrocketed.

Based on this success, Ray Kroc encouraged other franchises and managers to launch their own campaigns.

Following this directive, two Washington D.C., franchisees, John Gibson and Oscar Goldstein, began sponsoring a children’s television show, called Bozo’s Circus.

This resulted in the creation of Ronald MacDonald, the McDonald’s corporate clown icon who appeared in local Washington, DC television commercial beginning in 1963.

During the following year, he appeared in national television on Thanksgiving. The company has regularly used McDonald its advertising campaigns and like the Quaker Oats man, people dressed as Ronald MacDonald make personal appearances throughout the nation.

Ronald McDonald’s a household word with its “billion served” advertisement slogan serving as evidence of its leadership in this area of fast food.

The Happy Meal has been pleasing kids since 1979. The Ronald MacDonald Houses are noted for their continued good work with families and children suffering from incurable disease.

Through extensive advertising, McDonald’s became the nation’s largest fast food chain during the 1970s.

McDonald’s and other fast food restaurant don’t rely just on advertising to get young people hooked. McDonald’s operates more than 8,000 playgrounds at its US restaurants to lure children onto the premises.

While McDonald’s is re-finding its belief in beef as its core product, KFC is continuing to harry its competitors by promoting chicken as a lean and healthy product, confronting the obesity and food hygiene issue rather than shying away from it.

The new positioning by company is summed up used by company advertising and marketing: tasty and safe, balanced nutrition, high quality, and healthy living.

In 2000, the fast food industry spent $3 billion a year on television advertising, much of it targeted at children.
Fast Food Advertisement

Food advertisement in United States

2011-09-12T00:06:00.001-07:00

Marketing food is heightened interest to food manufacturers for a few reasons. The food industry is intensely competitive, with companies competing for a limited amount of ‘stomach share’.

Along with increased food availability is the massive increase in advertising and marketing for food products.

Many of the products food manufacturers produce are similar, and so companies use advertising to differentiate their brands.

According to a study published in 2003 by US Department of Agriculture, food manufacturers spent $7 billion on advertising in the United States in 1997.

The US food marketing system is the second largest advertiser in the US economy.

Food products accounts for significant percentage of television commercials, but not all foods are advertised equally.

Although product advertising may result in a public health benefit when the advertising promotes healthful products, the majority of the debate about food product marketing focuses around those products that may have harmful effects particularly among children.

Children in the United States are exposed to about 20 food commercials for every hour of television and the majority of these advertisements are high in fat, sugar and salt.

Beyond television, there are a multitude of other promotional practices designed to make children desire specific food products, including web sites, in school marketing, sales promotion, product placement, event sponsorships and movie tie-ins.
Food advertisement in United States

Augmented Product

2011-07-17T00:06:00.001-07:00

The augmented product refers to services and other activities that support the marketing of the main (or core) product.

The augmented product comprises the totality of features of a product. It includes the core benefits and any numbers of ‘add-on’ or premium benefits, which makes the product more acceptable to certain segments of the markets.

This definition is wider than the mere provision of after sales services and warranty back up which form part of this definition; it also includes sales persons, service personnel, transportation and, where appropriate, assembly or construction of the product at the customer’s home or workplace.

In other words, the augmented product encompasses everything surrounding the service and its delivery, including intangible attributes such as accessibility and atmosphere.

It also includes all aspects of the commercial transaction of the purchase itself and the provision of credit when required.

In many modern marketing situations, the value of the augmented product is often deemed to be at least as important as the core product.

There are three layer involved:
*The core layer is simply product itself. The core product is what actually meets the consumer’s needs.
*Layer two adds elements to the product designed to make it more appealing.
*Layer three adds more and adds things that might be describe as less inherently part of the product itself.

The augmented product exceeds customer expectations. MacDonald’s are a good example of what marketing people call the ‘augmented product; that is the actual product is surrounded by additional goods or services that together make up a package of customer expectations.
Augmented Product

Modern Food Advertising

2011-06-16T01:31:00.000-07:00

Before that late nineteenth century, food was not commonly marketed directly to Americans.

Shoppers at typical nineteenth century grocery stores would walk in, find a clerk and tell the clerk what they needed and the clerk would pass the order to other employees.

The goods then either delivered to the customer’s home or given to the customer on the spot.

The invention of modern advertising can be largely be credited to patent medicine sellers of the Reconstruction era.

They came up with all sorts of spurious and very dangerous cures for such ill-defined diseases as neuralgia and dyspepsia, which seemed epidemic in that unsettled time.

Early soft drinks were sold and marketed as patent medicine. An 1892 advertisement for Coca-Cola was typical of the genre the carbonated potion was recommended as “the Ideal Brain Tonic for Headache & Exhaustion.”

Coffee substitutes were originally promoted in much the same way. As late as 1951, the Federal Trade Commission was investigating the Post Company for running ads for its Postum beverage claiming that drinking coffee discourage marriage or that it results in “divorces, business failures, factory accidents, juvenile delinquency, traffic accidents, fire or home foreclosures.”

Since 1970s and the latest presents a picture that hasn’t change much. But two thirds of the TV commercial on Saturday morning TV were foods.

Over half of these commercials were for breads cereal, rice and pasta and the next largest category (28%) were fast food outlets.

The strong rise of food advertising was closely related to the emergence of brand names and the transformation of the retail sector.

In pre-industrial society the production and purchase of consumer goods were mostly locally oriented.

The range of available goods was limited and their quality depended on their region and the preferences of the retailer. From the second half of the 19th century onwards, industrial mass production of consumer goods, including food products, increased rapidly.

Producers needed to sell to a wider market and to provide the customers with information about the product.

Advertising offered the obvious means to this end. This led the manufacturers to package their products and complete them with a brand name.

Advertising are major influences on American food consumption patterns. Food marketers are the nation’s largest advertisers, with around $30 billion per year is for food products after automobiles. About 70% of food advertising is for food products, principally packaged foods, snacks and soft drinks and another 28% for food service especially fast foods.
Modern Food Advertising

Behavioral Sciences

2011-04-23T22:38:00.000-07:00

Behavioral sciences is essentially a collective term identifying a number of discipline that study human behaviors.

Behavioral sciences is science disciplines in which the actions and reactions of humans and animals are studied through observational and experimental methods.

These include psychology, sociology, economics, anthropology and history.

The understanding from all these disciplines contributes towards enhancing understanding of human behaviors. Behavioral sciences have contributing significantly to understanding of consumer buying behaviors.

Marketing sciences is the behavioral science that seeks to explain exchange relationships. Marketing science sleeks to answer this question: why do, which buyers purchase, what they do, where they do, when they do, and how they do?

Economics theory of production, exchange and consumption of goods and services is the basis of many marketing principles such as the satisfaction of consumer wants and needs and the consumer buying models.

Behavioral sciences orientation can help designers plan intervention in terms of behavioral objectives. They are called in to develop programs to inform people, to make them aware or to involve them emotionally.
Behavioral Sciences

Domestic Marketing

2011-02-18T00:53:00.001-08:00

Geographically speaking, marketing has two dimensions – domestic marketing and international marketing.

Domestic marketing involves the company manipulating a series of controllable variables such as price, advertising, distribution and the product, in a largely uncontrollable external environment that is made up of different economic structures, competitors, cultural values and legal infrastructure, within specific political or geographic country boundaries.

Domestic marketing is constrained by both controllable as well as uncontrollable factors, the former comprising price, product and promotion and the latter including economic.

Domestic marketing is targeted exclusively on the home country market. A company in domestic marketing may be doing this consciously as a strategic or unconsciously in order to avoid the challenge of managing how to market outside the home country.

Fewer and fewer companies practice domestic marketing.
Domestic Marketing

Buyer-Seller Interdependence

2010-08-30T05:22:00.001-07:00

Buyer-Seller Interdependence
Buyer-seller interdependence is indeed a hallmark of industrial marketing, especially for products used in the customer’s operations.

The buyer becomes crucially dependent on suppliers for many things – an assured supply of raw materials, components, or subassemblies; continued supply of maintenance and repair parts and skilled repair service for capital equipment; efficient order handling, delivery and usually extension of credit terms, and the like.

One significant result is that the ‘sale’, the actual transaction, is only one points on the time continuum in industrial marketing, albeit a crucial one, the way most business “keep score.”

By contrast, in consumer marketing the buyer-seller relationship often ends with the sale.

In industrial marketing, a significant negotiation process is often the most important regulator of the buyer-seller relationship, whereas consumer marketing usually lacks this, relying instead on an “arm’s length” transaction in an more or less competitive and often very impersonal market.

One of the major strategic drivers for both industrial marketers and their customers in the 1990’s is the move toward strategic partnerships.

Strategic partnerships with customers may require substantial investments in supporting services and system, such as electronic data interchange and these investments must be evaluated in the context of overall marketing strategy.
Buyer-Seller Interdependence

Marketing Analysis Detecting Weak Signals

2010-07-25T00:15:00.000-07:00

Marketing Analysis Detecting Weak Signals
It is arguable that many organizations have difficulty recognizing the strong signals that face them.

There has, however been a considerable amount of academic discussion about weak signals. These are small pieces of information that signal important changes which are as yet unrecognized, since their main impact has yet to come.

The discussion, largely by academics, has concentrated upon retrospective analysis. Thus, the signals that Japanese manufacturers were coming to dominate certain industries (the motorbike industry, for instance) were, once you look for the related signals, apparently obvious; yet they were totally overlooked by the existing suppliers in these markets.

This is an important message to covey to those conservative organizations which have long since settled into a comfortable rut and may not be able to read the danger signals.

The problem is that while it is easy to see these patterns with the benefits of hindsight, it proves very difficult indeed to detect them in advance.

These severely limits the practical implementation of any formal scanning processes.

Since those signals are by definition weak, there is no obvious evidence of the special importance, and hence they are not easy to spot.

Worse still, they are buried amidst large amounts of similar data which act as ‘noise’, drowning out these faint signals.

The only general recommended solution is that the reader should be an informed observer who knows rather better than most (because he or she is an expert in the industry for instance) which of these weak signals is most important. Even so, the task is a very difficult one.

There was a suggestions that the key is to look for pattern – a sequence of signals – but two errors can follow. The first and most likely is to miss the signals altogether. The second, at the opposite extreme is to find a pattern which is not really there.

Other suggestion is that one way of tracking weak signals is to set thresholds (for instance, that a senior politicians has to become involved with an issue or that a journal considers it worth an editorial comment) above which signals are then tracked.

It has to be recognized, however that setting any such thresholds requires considerable expertise.
Marketing Analysis Detecting Weak Signals

International Marketing

2010-06-22T22:41:00.000-07:00

International Marketing
International marketing involves operating across a number of foreign country markets in which not only do the uncontrollable variables differ significantly between one market and another but the controllable factors in the form of cost and price structures opportunities for advertising and distributive infrastructure are also likely to differ significantly.

It is these sorts of differences that lead to the complexities of international marketing.

International marketing is defined and interpreted depends on the levels of involvement of the company in the international marketplace. International marketing could therefore be:

Export marketing, in which case the form markets its goods and services across national political boundaries.
International marketing, where the marketing activities of an organization include activities, interest or operation in more than one country and where there is some kind of influence or control of marketing activities from outside the country in which the goods or services will actually be sold. Sometimes markets are typically perceived to be independent and a profit centre in their own right, in which case the term multinational or multi-domestic marketing is often used.
Global marketing, in which the whole organization focuses on the selection and exploitation of global marketing opportunities and marshal resources around the globe with the objective of achieving a global competitive advantage.
International Marketing

Product Complexity

2010-05-18T22:34:00.000-07:00

Product Complexity
Turning to another dimension of industrial marketing uniqueness, technical product complexity, the major barrier to a true marketing orientation in the industrial firm remains excessive product, engineering, manufacturing and technical orientation.

One class or business strategies available to industrial companies calls for a high degree of technical innovativeness and risk taking with related high expenditures for research and development.

In such companies, top management is likely to have been grown in the engineering and research garden and technical values may be prominent in management decision making.

The real risk in these cases is “loving the product more than the customer,” becoming so enamored with a technical accomplishment or particular product parameters that the necessary flexibility for responding to customer needs in a competitive marketplace disappears.

As a result, one of the most common marketing sins can be unwittingly committed – trying to change the customer to fit the product.

Assuming there can be degrees of sin, this sin of product orientation is more serious in industrial marketing than in consumer complexity of the problem the customer is trying to solve.

Therefore greater supplier flexibility is required in contrast to consumer marketing.

One marketing guru offers four key concepts for understanding the nature of industrial market selection and product planning:

*The basic and most important decision in planning marketing strategy are those related to the choice of market or markets to serve. All else follows.

*The form of the product is a variable, not a given, in developing marketing strategy. Products are planned and designed to serve customers. In other words, various product options must be evaluated and the best selected to serve the needs of particular market.

*The product is what it does; it is total package of benefits the customer receives when he buys.

*The product, in this broad sense will have different meaning to different customers – important with regard to both market selection and pricing.
Product Complexity

Planning for Survival

2010-04-22T18:30:00.000-07:00

Planning for Survival
Organizations will differ in what they regard as ‘long term’ and said it would adopt longer rather than shorter timescale.

It should be obvious that we are looking to achieve rather more than conventional planning sets out to do.

In particular, whether most conventional planning extrapolates from existing trends, we are attempting to detect the major discontinuities which may derail these trends.

The greatest long term threat faced by organizations and by whole industries, comes from unexpected discontinuities which undermines the way that they do business.

In example of this has been the coal industry, especially in the United Kingdom. Barely two decades ago miners were the ‘aristocrats’ of manual labor, working in an industry – one of the fundamentals in any economy which seemed to have a a very prosperous future.

The trends were there for all to see: steadily growing use of electrical power, which had to be produced by large coal-burning power stations, which depended upon deep pits nearby for their supplies.

In fact, the outcome is very different. The reason for this are complex, but a number of unexpected discontinuities contributed to this:

Economics
The introduction of bulk carriers, a development in the technology of sea-borne transport, meant that coal could be delivered cheaply from vast open-cast mines on the other side of the world.

Despite the distances involved, it could be delivered to the power stations at prices considerably below that of the coal expensively hewn from the deep pits nearby.

Society
The emergence of a powerful environmental lobby, opposed to the pollution (especially acid rain) caused by coal burning stations, changed the ground rules.

Much of the foreign coal had a low sulphur concept so that it required less treatment of the emissions, while local coal needed significant investment in ‘scrubber’.

Worse still, the newly available supplies of natural gas did not need any such treatment.

Technology
A new generation of gas powered generators were not just more efficient and less polluting, but required a capital investment which was only a fraction of their coal fired competitors.

Politics
All of this was, at the end of the day, overshadowed, in the United Kingdom at least by political developments. At one extreme, the onset of privatization created regional electricity companies which wanted to control their own supplies – even at a cost – and the lower investment in gas powered stations met this need.

At the other extreme, Conservative government wanted to contain the power of the trade unions; and miners – with leaders who powerfully symbolized all that was seen to be wrong with the previous political balance were naïve enough to allow themselves to be used in the destruction of the coal industry as a major weapon in the governments’ campaign.

Caught on the middle of these discontinuities, the coal industry changed from being a major part of the economy, employing hundreds of thousands of manual workers, to a few privatized pits, with a few thousand workers.
Planning for Survival

Target audience

2010-03-26T01:53:00.000-07:00

Target audience
One of the target audience in marketing is influencers. These alongside customers and consumers are the principal members of the ‘decision making unit’, any one or combination of whom be selected as targets.

Such a group might come together formally, as in industrial markets, or informally, as in many consumer purchases decisions.

Influencers for a child’s toy, for example, might include the child friends, teachers, relatives, parents and the media.

If marketing communications are used to ‘influence the influencers’ more favorable outcomes may occur.

For this reason, opinion leaders and the media may specifically targeted when new products are being launched.

It is wise to consider a range of target audiences (both push and pull) when planning marketing communications and their specification should be as precise as possible.

The most widely quoted approach is use to the social grading system. It uses ‘occupation of the head of household’ as the basis of the A B C1 C2 D E classification system familiar to so many people.

The groupings toughly equate to social classes. Although the social grading approach remains popular, it is best to used in conjunction with other approaches.

Today, there are many other and more powerful measures that can be used, including those using other demographic, geodemographic, psychographic, mediagraphic, buyer behavior and life stage variables.

For example, research into people’s lifestyles reveal telling differences between audience groups.
Target audience

How to define audience

2010-03-19T01:50:00.000-07:00

How to define audience
Defining audience is an extremely important marketing communications task.

Unless the right audience is identified and reached, marketing communications cannot be effective.

Research and analysis is used to identify and develop an understating of audience. Messages and media are then chosen to reach selected targets effectively and efficiently.

The most obvious target audiences are customers, but there should not be thought of as the only targets.

Consumers are another group. Whereas customers are buyers, consumers are users and as such influence the decision to buy.

Sometimes they may be the same people, but often they are not. In industrial purchases this is typically the case.

In family situations, the other may make many household purchases, but do so for other members of the family.

In situations where trade intermediaries are used (e.g. wholesalers and retailers), both trades customers and the end customers/consumers will need to be targeted.

Promotional strategies are known as push (promoting to the trade) and pull (promoting to end buyers and users) strategies.
How to define audience

The Importance of International Marketing

2010-02-27T18:38:00.001-08:00

The Importance of International Marketing
2007’s international trade in merchandise exceeded US$10.5 billion and world trade in services is estimated at around US$2.4 trillion.

While most of us cannot visualize such huge amounts, it does serve to give some indication of the scale of international trade today.

This global marketplace consists of a population of 6.6 billion people which is expected to reach 10 billion by 2050 according to the latest projection prepared by the Undiluted Nations.

Global wealth is increasing and this is reflected in higher demand. Increasing affluence and commercial dynamism has been nations across Asia. Central and Eastern Europe emerge as high growth economics, increasing affluence and demand simply means that consumers will actively seek choice, with the result that globally competition is intensifying as companies compare to win the battle for disposable income.

Population growth and increased affluence together have helped create a ‘global youth culture’ – teenagers now account for 30 per cent of the population globally.

In many countries, more than half the population is pre-adult, creating one of the world’s biggest single market, the youth market.

Everywhere adolescents project worldwide cultural icons, Nike, Coke, as well as Sega, Sony playstation.

When virtual reality is commonplace, the one world youth culture market will exceed all others as premier global market segment. Parochial, local and ethnic growth products may face difficult times.

Older consumers are also increasingly non-national on their identity, of not their personal identity then the perspective of the consumable fabric of their lives.

They drive international cars, take foreign holidays, watch international programmes on television, use international hardware and software.

On the supply side, multinational and global corporation are increasing in size and embracing more global power.

The top 500 companies in the world now account for 70 percent of world trade and 80 percent of international investment.

Total sales of multinational are now in excess of world trade, which gives them a combined gross product of more than some national economies.

The global marketplace is no longer the summation of a large number of independent country markets but much more multilateral and interdependent, economically, culturally and technically.

Information moves anywhere in the world at the speed of light, the case of transmission being facilitated by the convergence of long distance telecoms, cuts in the cost of electronics processing and the exponential growth in internet excess.

The combination of all these forces has meant that all companies need to develop a marketing orientation which is international in nature and that companies need managers who have the skills to analyze, plan and implement strategies across the globe.

It is for these reason that international marketing has become such a critical are of study for manager and an important component of the marketing syllabus of business faculties in universities.
The Importance of International Marketing

Industrial Marketing and Consumer Marketing differences

2010-02-14T19:49:00.000-08:00

Industrial Marketing and Consumer Marketing differences
At the most general level there is a body of theory, knowledge and practice that cuts across all marketing – industrial and consumer products and services business and non profits organization and so on.

But to understand and intelligently attack industrial marketing problems, a number of substantial differences between industrial and consumer marketing must be recognized.

While it may be true that these are often differences of degree rather than kind, the degrees of differences are substantial.

One of the marketing expert noted that the marketing concept, despite lip service from top management and all the organizational trappings of acceptability, often fell short of full scale acceptance in industrial companies because of a failure to recognize these differences.

He observed that the four key dimensions in applying the marketing concept to industrial marketing were:

1. Aiming for improved profit performance, with sales volume and market share per se not as important as in consumer marketing.

2. Indentifying customer needs, which requires understanding the economics of the customers’ operations, the structure of the industry within which they operate, and how they compete.

3. Selecting customer groups foe emphasis, the classics problem of market segmentation, which takes on special meaning to industrial markets of the high degree of buyer seller interdependence after the sale.

4. Designing the product. Service package, where there is seldom a standard product, the accompanying bundle of services is often more important than the product itself and the product must often be “invented.”

Industrial Marketing and Consumer Marketing differences

Types of Uncertainty

2010-01-26T17:45:00.000-08:00

Types of Uncertainty
In looking to the future we are dealing with uncertainty.

There are three main types of uncertainty:

• Risks – Where historical evidence of similar events allows us to estimate the probabilities of future outcomes.

• Structural uncertainties – where the event is unique enough not to offer evidence of such probabilities.

• Unknowable – where we cannot even imagine the event

We are well used to handling ‘ordinary’ risks. Managers regularly come into contact with such risks and indeed, this is aspect of entrepreneur activity managers are supposed to even relish.

Where no probable pattern of outcomes can be derived from previous experience the decision involves become much more a matter of judgment; and this is the area where scenario planning can make major contribution.
Types of Uncertainty

Audience

2010-01-13T09:13:00.000-08:00

Audience
Defining the audience is an extremely important marketing communications task.

Unless the right audience is identified and reached, marketing communications cannot be effective.

Research and analysis used to identify and develop an understanding of audiences.

Messages and media are then chosen to reach selected targets effectively and efficiently.

The most obvious target audiences are customers, but these should not be thought of as the only targets.

Consumers are another group. Whereas customers are buyers, consumers are users and as such influence the decision to buy.

Sometimes they may be the same people, but often they are not.

In industrial purchases, this is typically the case. In family situations, the mother may make many household purchases but do so for other members of the family.

In situations where trade intermediaries are used both trade customers and the end customers/consumers will need to be targeted.

Promotional strategies are known as push (promoting to the trade) and pull (promoting to end buyers and users) strategies.

A third category of target audience is other influencers. These, alongside customers and consumers, are the principal members of the ‘decision making unit’, any one or combination of whom may be selected as targets.

Such a group might come together formally, as in industrial markets, or informally, as in many consumer purchase decision.

Influencers for a child’s toy, for example, might include the child, friend, teachers, relatives, parents and the media.

If marketing communications are used to ‘influence the influencers’, more favorable outcomes may occur.

For this reason, opinion leaders and the media may be specially targeted when new products are being launched.

It is wise to consider a range of target audiences (both ‘push’ and ‘pull’) when planning marketing communications and their specification should be as precise as possible.

The most widely quoted approach is use of the social grading system.
Audience

Derived Demand for Industrial Goods and Services

2009-12-12T19:31:00.001-08:00

Derived Demand for Industrial Goods and Services
Demand for industrial goods and services are derived from the demand for consumer goods and services.

Raw materials, components and subassemblies become part of the customer’s finished product and therefore, the demand from them is directly determined by the demand for the industrial customer’s product.

Not so obviously but equally true, the demand for capital equipment, for maintenance and repair item, and for services of various kinds is also determined by the strength of demand facing the industrial marketer’s customers.

It is probably more realistic to say that industrial customer; purchases reflect their expectations about future demands for their goods and services.

Clearly purchasing decisions must be made in anticipation of the market conditions that the customer company expects to face.

The customer’s actual need for products, willingness to make commitments to potential suppliers, and ability to pay for these purchases are all a function of the customer’s optimism or pessimism about the future.

Information about purchasing agent’s expectations has proven to be a useful indicator of economic growth.

Some purchases may be made in anticipation of hard times rather than good times. For examples, cost reducing capital equipment may become a more attractive purchase of a company expects to face declining sales and eroding profits margins.

Or, to take an opposite situation, a customer operating at full capacity may not have enough organizational slack to permit a program of equipment installation or other innovation requiring a modification of production schedules.

Because demand for industrial products s derived demand, industrial marketers can sometime stimulate demand for their products by stimulating demand for their customer’s products.

A somewhat more complex from of end-user demand stimulations is often required to develop markets for truly innovative products.

For example, a manufacturer of a high barrier paper coating material used in food packaging found it necessary to work with paperboard manufacturers, paper coaters, packaging forms, food processors and retail chains in order to develop the markets for its product.

It is therefore true that understanding the nature and scope of industrial markets requires understanding both the nature of demand facing the industrial customer an the customer’s customers through out the marketing channel to actual consumer demand.

In addition, it is usually helpful to analyze competition in the customer’s industry and perhaps competition among the customers in the market that customer serves.
Derived Demand for Industrial Goods and Services

Long Range Planning: Terminology

2009-11-13T09:57:00.000-08:00

Long Range Planning: Terminology
Kotler describes the function of the mission statement, the start of the now traditional approaches to corporate planning, thus:

A well worked-out mission statement provides company personnel with a shared sense of opportunity, direction, significance and achievement.

The company mission statement acts as an ‘invisible hand’ that guides geographically scattered employees to work independently and yet collectively toward realizing the organization’s goals.

Goals he describes even more succinctly:
....indicates what the business unit wants to achieve in the planning period.

Goals and objectives often have the same meaning. Kotler stresses that as far as possible they should be quantitative and realistic.

Strategy is about how goals are to be achieved:
Goals tell where a business wants to go; strategy answers how it plans to get there. Every business must tailor a strategy for achieving its goals. The strategy must then be refined into specific programs that are implemented efficiently and corrected if they are failing to achieve the objectives.

This quotation for Kotler also illustrates what is involved in the implementation of programs or tactics, which in turn lead to short term plans with a number of targets being set.

These terms can helpfully be thought of reference to a single factor: time.

The mission is the description of the main, permanent values which ultimately motivate the organization.

Goals or objectives specify where the organization wants to be in the future.

Strategy is the broad course of action planned to enable the organization to achieve its goals. Tactics are the specific programs of activities needed to implement the strategy in the shorter term (typically within the annual budgetary cycle).
Long Range Planning: Terminology

Advertising, what it can and cannot do

2009-10-25T02:34:00.000-07:00

Advertising, what it can and cannot do
Popular opinion often credits advertising with a wider range of effects than is reasonable.

In fact its key characteristics, that it delivers massages via advertising media, means it has a more distant relationship with its target audience than do several of its relatives in the marketing communications mix.

As a result, it is unlikely to be able to clinch a sale, except in the special case of direct response advertisements. A more realistic role is longer term brand-building, which it can do by:

Building awareness
Conveying information
Telling a story
Establishment an identity
Creating a predisposition

These are, of course, generalized common aims; more specific objectives must be set for individual advertising campaigns.

In practice those all too often include the requirement to ‘increase sales’ within the period of the campaign, which is normally comparatively short-term.

Such an objective typically places an unfair burden on advertising management and advertising agencies by ignoring:

The crucial gap between responding favorably to advertising and being persuaded to take up the product.
The time lag between being convinced and deciding to act accordingly
The concurrent positive or negative affects of the advertiser’s decisions about other elements of the marketing mix, such as price
Entirely external; determinants, such as personal economics, social norms or the activities of the advertiser’s competitors

Advertising, what it can and cannot do

The Selling Concept

2009-09-29T19:48:00.000-07:00

The Selling Concept
Selling concepts holds that consumers if left alone, will ordinarily not buy enough of the organization’s products. The organization must therefore undertake an aggressive selling and promotion.

The concept assumes that consumers typically show buying inertia or resistance, and have to be coaxed into buying, and that the company has available a whole battery of effective selling and promotion tools to stimulate more buying.

The selling concept is more practice most aggressively with “unsought goods,” those goods that buyers normally do not think of buying such as insurance, encyclopedia, and funeral plots.

These industries have perfected various sales techniques to locate prospects and hard sell them on the product benefits.

The selling concept is also practice in the non-profits area by fund raisers, college admission offices and political parties.

For examples, a political party may campaign aggressively to win an election.

Heavy advertising, numerous speeches and door to door visits may be used to promote its candidate while hiding their flaws.

After winning the party may take a sales oriented view by trying to get its citizens to accept its policies rather than to find out what voters really want.

Most firms practice the selling concept when they have overcapacity. Their aim is to sell what they make rather than make what the market wants.

In modern industrial economics, productive capacity has been built up to a point where most markets are buyer markets (that is buyers dominants) and sellers have to scramble hard for customers.

Prospects are bombarded with television commercials, news paper ads, direct mail and sales calls. At every turn, someone is trying to sell something. As a result, the public identifies marketing with hard selling and adverting.
The Selling Concept

Industrial Marketing

2009-09-10T17:24:00.000-07:00

Industrial Marketing
Industrial marketing is the marketing of goods and services to industrial and institutional customer.

These include manufacturing firms, governments, public utilities, educational institutional, hospitals, wholesalers and retailers, and other formal organizations.

Consumer marketing, in contrast, is concerned with marketing to individual, families and households purchasing goods and services for their own consumption.

The distinguishing feature of industrial and institutional customers is that they use purchased goods and services in their own production of goods and services.

Purchased products, such as raw materials, components and subassemblies, may become part of the customer’s final product or may be added to physical facilities, in the form of construction and equipment.

In other cases the purchases may be supplies used in operations, repair and maintenance activities, including such products as fuel, office supplies and building materials.

Resellers, such as retailers, distributors and wholesalers purchase products for resale but add value to those products in the form of the services they provide, such as availability, credit and customer.

In real sense, industrial marketing keeps the economy functioning by providing the products and services required by factories, offices, government agencies, hospitals, universities and other providers of goods and services.

It has been estimated that industrial marketing transactions equal in dollar value at least twice the value of consumer purchases.

This can be understood by considering the long and complex chain of industrial market transactions preceding the manufacturing and sale of a consumer product, such as a shirt or a can of soup, chain that begins with raw materials from farm, forest, mine, or ocean and almost certainly crosses national border at several points.

Given that all manufacturers depend upon other manufacturers for goods and services, the chain is virtually endless.
Industrial Marketing

Implications of Megamarketing

2009-08-26T09:21:00.001-07:00

Implications of Megamarketing

Megamarketing broadens the thinking of marketers in three ways:

Enlarging the multiparty marketing concept
Marketers spend much time analyzing how to create preference and satisfaction in target buyers. Because other parties – governments, labor unions, banks, reform groups – can block the path to the target buyers, marketers must also study the obstacles these parties create and develop strategies for attracting their support or at least neutralizing their opposition.
Blurring the distinction between environmental and controllable variables
Marketers have traditionally defined the environment as those outside forces that cannot be controlled by the business. But megamarketing argues that some environmental forces can be changed through lobbying, legal action, negotiation, issue advertising, public relations, and strategies partnering.
Broadening the understanding of how markets work
Most market thinkers assume that demand creates its own supply. Ideally, companies discover a market need and rush to satisfy that need. But real markets are often blocked, and the best marketer does not always win. We have seen that foreign competitors with offers comparable or superior to those local companies cannot always enter the market. The result is a lower level of consumer satisfaction and producer innovation than would otherwise result.

Implications of Megamarketing