Professional Documents
Culture Documents
Production Concept: Four Pillars
Production Concept: Four Pillars
holds that consumers will favor those products that are widely available & low cost.
Product Concept
holds that consumers will favor those products that offer the most quality, performance, or
innovative features.
Selling Concept
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 effort.
Marketing Concept
holds that the key to achieving organizational goals consists of being more effective than
competitors in integrating marketing activities toward determining and satisfying the needs and
wants of target markets.
Four Pillars
1. target market
2. customer needs
3. integrated marketing
4. profitability.
1. stated
2. real
3. unstated
4. delight
5. secret
6 Macro-environment Forces
1. demographic
2. economic
3. natural
4. technological
5. political/legal
6. social/cultural.
Strategic groups are a group of firms following the same strategy in a given target market
3 Shares
1. share of the market
2. share of the mind
3. share of the heart
4 Levels of Competition
(based on the degree of product substitutability)
Positioning Strategy
The way in which a company distinguishes itself from competitors; a company can differentiate
itself using the following criteria:
In developing a positioning strategy working out the tactical details is essentially determining the
marketing mix: product, price, place, and promotion. A company can position its products along
several lines: attribute, benefit, use/application, user, competitor, product category, or
quality/price.
Value Chain
5 Primary Activities
4 Support Activities
1. procurement
2. technology development
3. human resource management
4. firm infrastructure:
o The value-delivery network is formed when companies partner with specific
suppliers and distributors to gain competitive advantages beyond their own
operations. Moves from a Pull (by demand) system to a Push (by supply) system
o Institutional procurement has low budgets and captive clienteles. The buying
objective is not profit nor is cost minimization the sole objective. The purchasing
agent for institutions must purchase goods that meet or exceed a certain minimum
standard and whose prices are low.
o Government procurement usually operates by requiring suppliers to submit
bids, and normally award the contract to the lowest bidder. Because government
purchases are subject to public review the suppliers face considerable paperwork,
bureaucracy, regulations, decision-making delays, and frequent shifts in
procurement personnel.
o Business procurement usually requires the supplier to develop a marketing
orientation and product differentiation. Institutional / government markets do not
require such things because their procurement policies more traditionally
emphasize price and because the product’s characteristics tend to be carefully
specified. Suppliers who sell to institutions and governments tend to invest their
efforts in bringing costs down rather than investing in advertising or personal
selling to win bids.
Market Segmentation
Identify and profile distinct groups of buyers who might require separate products and/or
marketing mixes.
Geographic segmentation
Demographic segmentation
Behavioral segmentation where buyers are divided into groups on the basis of their
knowledge of, attitude toward, use of, or response to a product. Depending on what the
clock is used for, the clock company will want to segment based on such factors.
Behavior variables:
Brand loyal purchases may be that or may be habit, indifference, low price, high
switching cost or nonavailability of other brands. Companies must be interpret
buying patterns carefully.
1. First time prospects – not yet purchased, want vendor who can help
2. Novices – already have purchased, want easy to read manuals, training, customer service
3. Sophisticates – want speed in maintenance and repair, customization, high tech support
4 Business Segments
1. Programmed buyers – view product as not important, routine purchase, usu. pay full
price
2. Relationship buyers – view as moderately important, small discount and modest service
3. Transaction buyers – see as very important, receive 10% discount, above avg. service
ready to switch at better price
4. Bargain hunters – see as very important, demand highest discount and service, ready to
switch as slightest dissatisfaction
Market Targeting
Single-Segment Concentration – can develop strong position in segment, higher than
normal risks
Selective Specialization – selects a number of segments, diversifies company’s risk
Product Specialization – making a certain product for several segments, through this
strategy, company builds strong reputation in the specific product area.
Market Specialization – serving many needs of a particular customer group, gains
strong reputation for serving the group.
Full Market Coverage – serve all customer groups with all the products they need, only
very large firms can do this
Ways to Market
1. Undifferentiated marketing – ignore segment differences, mass distribution &
advertising
2. Differentiated marketing – operates in several markets and designs programs for each
Cost of attracting new customer is estimated to be five times cost of keeping a current customer
happy
In-suppliers – want to keep customers so they try to maintain quality and service.
Out-suppliers – want to gain customers so they 1) try to offer something new or 2)
exploit customer dissatisfaction with current supplier.
Modified Rebuy
Buyer wants to modify product specifications, prices, delivery requirements. Requires more
people to come to decision. Makes in-suppliers nervous because they have to negotiate business
and have a potential to lose a customer. Makes out-suppliers happy because they may have an
opportunity to gain a customer.
New Task
Purchaser is buying product for the first time. This buying situation takes
1. the largest # of decision participants
2. most information sharing
3. longest time to make decision.
This is the best opportunity for a supplier to gain a buyer. Types of new task buying include:
Systems buying and selling – where a company buys a total solution to a problem from
a seller. Example: Buying a dam or utilities for a community.
Type of Systems buying is MRO – (maintenance, repair, operating) here the supplier,
provides all the MRO supplies the customers will need. The Buyer saves money because
they don’t have to maintain inventory or search for a supplier and they are price protected
by a contract. The Seller saves money because they get a steady demand.
4 Types of Buying
1. Complex buying – expensive, brands risky, self – expressive (buying car)
2. Dissonance reduced buying – expensive, infrequent, risky, no focus on brands (buying
rug)
3. Habitual buying – ad repetition, inexpensive, no loyalty, habit buying
4. Variety seeking buying – low involvement
Mature markets tend to acquire a fixed set of suppliers, competitors, distributors, and customers.
These groups of players tend to join forces to protect themselves from intruders. This situation is
often supported by outside groups such as government regulatory boards, labor unions, business
associations, lending institutions, and the like