Class 9 - March 17, 2011

This week we discussed Chapter 10, Developing and Managing Products.

The thing I thought was most interesting in this chapter was learning the product life cycles.  The product life cycle is a biological metaphor that traces the stages of a product's acceptance, from its introduction (birth) to its decline (death).  The amount of time a product spend in each life cycle can vary dramatically. 

First is the introductory stage.  This stage represents the full-scale launch of a new product into the marketplace.  A high failure rate, little competition, frequent product modification, and limited distribution typify the introductory stage of the product life cycle.  During this stage, sales normally increase slowly, and profits are usually negative due to R & D costs, factory tooling, and high introduction costs.  The promotional strategy focuses on developing product awareness and informing customers about the product's potential benefits.

The second stage is the growth stage.  If a products survives the introductory stage, it advances into the growth stage.  In this stage, sales typically grow at an increasing rate, many competitors enter the market, and large companies may start to acquire small pioneering firms.  Profits rise rapidly, reach their peak, and begin declining as competition intensifies.  The promotional strategy switches to aggressive brand advertising and communication of the differences between brands.  Distribution becomes a major key to success during the growth stage.

The third stage is the maturity stage.  This is the period which sales begin to increase at a decreasing rate.  Normally, this is the longest stage of the product life cycle.  It is during this stage that appliances begin to release a yearly model.  Product lines are lengthened to appeal to additional market segments.  Marginal competitors begin dropping out of the market.  Promotion increases with dealers and consumers to maintain loyalty and market share.

The final stage is the decline stage.  This stage is signified by a long-run drop in sales.  During this stage, companies must learn to develop strategies specific for this stage; to eliminate all nonessential marketing expenses and let sales decline as more and more customers discontinue buying their products. 


While my business is more of a service business rather than a products business, I still think it is important to understand how this works - just in case I am ever involved in a product based company.

Class 8 - March 3, 2011

This week was the Midterm. 

I got a 92%! 

Whoo Hoo!!

Class 7 - February 24, 2011

This week we discussed Chapter 9, Product Concepts.

First of all, you need to know what a product is.  A product may be defined as everything both favorable and unfavorable that a person receives in an exchange.  Typical product features are the packaging, style, color, options, and size.  A product can be a tangible good, a service, an idea, or some combination of these. 

There are six major types of products:

1. Business product - used to manufacture other goods or services, to facilitate an organization's operations, or to resell to other customers.
2. Consumer product - is bought to satisfy an individuals personal wants.
3. Convenience product - a relatively inexpensive item that merits little shopping effort - a customer is unwilling to shop extensively for such an item.
4. Shopping product - usually more expensive than a convenience product and is found in fewer stores - consumers usually compare several brands or stores on style, practicality, price, and lifestyle compatibility.
5. Specialty products - consumers search extensively for a particular item and are very reluctant to accept substitutes.
6. Unsought products - a product unknown to the potential buyer or a known product that the buyer does not actively seek - new products, insurance, burial plots.

Rarely does a company sell only one single product, they usually sell a variety of products.  A product item is a specific version of a product that can be designated as a distinct offering among an organization's products.  A product line is a group of closely related product items.  An organization's product mix includes all the products it sells.

We also discussed branding.  A brand is a name, term, symbol, design, or combination thereof that identifies a seller's products.  A brand name is that part of a brand that can be spoken, including letters (GM, YMCA), words (Chevrolet), and numbers (WD-40, 7-Eleven).  The elements of a brand that cannot be spoken are called the brand mark, such as the Mercedes Benz symbol.  A trademark is the exclusive right to use a brand or part of a brand.  Others cannot use the brand without permission. 


I learned that my product mix will include all of the services that my company offers.  It was good to learn the correct terminology for each of these.

Class 6 - February 17, 2011

This week we discussed Chapter 8, Decision Support Systems and Marketing Research.

A decision support system (DDS) is an interactive, flexible computerized information system that enables managers to obtain and manipulate information as they are making decisions.  DDS's are interactive, flexible, discovery-oriented, and accessible.  The fastest growing use of DSS's is for database marketing, which is the creation of a large computerized file of customers' and potential customers' profiles and purchase patterns.  It is usually the key tool in one-on-one marketing.

Marketing research  is the process of planning, collecting, and analyzing data relevant to a marketing decision. 

Marketing Research:

1. Marketing Research Problem - Determining what information is needed and how that information can be obtained efficiently and effectively.
2. Marketing Research Objective - The specific information needed to solve a marketing research problem; the objective should provide insightful decision-making information.
3. Management Decision Problem - A broad-based problem that  requires marketing research in order for managers to take proper actions.

There are several ways to conduct a research project.  It is important that one uses the best way for the information they are trying to achieve.  Not all data is the same and not all forms of collecting data will work best in all situations.  You need to pay attention to what you are trying to figure out and decide which strategy is best for that particular question, whether it be primary data, secondary data, interviews, surveys, or by whichever means you choose.

Class 5 - February 10, 2011

This week we discussed Chapter 7, Segmenting and Targeting Markets.

In class we discussed in great detail market segmentation.  To begin, a market is people of organizations with needs or wants and with the ability and willingness to buy.  A market segment is a subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs.  And the process of dividing a market into meaningful, relatively similar, and identifiable segments or groups is called  market segmentation.  Market segmentation helps markets define customer needs and wants more precisely. 

Marketers segment markets for 3 main reasons:

1. Segmentation enables marketers to identify groups of customers with similar needs and to analyze the characteristics and buying behavior of these groups.
2. Segmentation provides markets with information to help them design marketing mixes specifically matched with the characteristics and desires of one or more segments.
3. Segmentation is is consistent with the marketing concept of satisfying customer wants and needs while meeting the organization's objectives.

To be useful, a segmentation scheme must produce segments that meet four basic criteria:

1. Substantiality:  A segment must be large enough to warrant developing and maintaining a special marketing mix.
2. Identifiability and measurability:  Segments must be identifiable and their size measurable.
3. Accessibility:  The firm must be able to reach members of targeted segments with customized marketing mixes.
4. Responsiveness:  Markets can be segmented using any criteria that seem logical. 

Marketers use segmentation bases, or variables, which are characteristics of individuals, groups, or organizations, to divide a total market into segments.  Consumer goods marketers commonly use one or more of the following characteristics to segment markets:

• geography:  region of a country or the world, market size, market density, or climate.
• demographics:  age, gender, income, ethnic background, and family life cycle.
• psychographics:  personality, motive, lifestyles, and geodemographics (combination of geographic, demographic, and lifestyle segments).
• benefits sought:  grouping according to benefits they seek from the product.
• usage rate: amount of product bought or consumed. -- 80/20 principle:  20% of all customers generate 80% of the demand.

I learned that I will need to pay close attention to these details as I start to market my services to be sure that I am focusing on the right groups of people and not wasting time and money marketing to the wrong groups.

Class 4 - February 3, 2011

This week we discussed Chapter 5, Consumer Decision Making.

One of the things I took away from this class was the 5 steps of the consumer decision-making process. 

1. Need Recognition - the imbalance between present state and preferred state - internal and external stimuli.
2. Information Search - Internal search is to recall from memory.  External search is using outside sources.   When you know more about the subject, it is less risky, where as the less information you know about the subject, the more risky it is.  You eventually end up with an evoked set, the group of brands from your search to choose from. 
3. Evaluation of Alternatives - This is where you narrow down from your evoked set.  You can either pick an attribute and exclude all the products in the set without that attribute or use cutoffs.  Cutoffs are either minimum or maximum levels of an attribute that an alternative must pass to be considered.
4. Purchase - Marketing tells the purchaser what attributes the product has to achieve your objective.
5. Post Purchase Behavior -  When people recognize inconsistency between their values or opinions and their behavior, they tend to feel an inner tension called cognitive dissonance, also referred to as buyers remorse. 

Another thing I found really interesting was Maslow's Hierarchy of Needs.  It is a method of classifying human needs and motivations into five categories in ascending order of importance. 

1. The base level is psychological needs - food, water, and shelter.  Because these are the basic needs, they must be met first. 
2. The second is safety needs - security and protection.  Marketers sometimes appeal to consumers' anxieties and fears about safety to sell their products.
3. The third is social needs - a sense of belonging or love.  Marketers probably appeal more to this need than any other.  Teens especially want to belong to the in crowd and marketers appeal brands for them to this need.   
4. The fourth is esteem needs - self-esteem, recognition and status.  This also includes prestige, fame, and recognition of one's accomplishments.  Marketers know that Asians especially are strongly motivated by status, thus they spend freely on premium brands.
5. The top level is self-actualization needs - self-development and self-realization.  This is the point where people feel that they are what they should be.  Although Maslow felt that very few people ever attain this level, advertisers may focus on this type of need.

I will want to make sure that, as I sell my clients my services, that they feel that they are making the right choice.  I will need to inform them, in detail, of what I will be doing for them, especially those that know less information about it and will view my service as more risky than others might.

Class 3 - January 27, 2011

This week we discussed chapter 3, Social Responsibility, Ethics, and the Marketing Environment.  There were two major things I took away from this class:

The first is about sustainability.  Sustainability is the idea that socially responsible companies will outperform their peers by focusing on the world's social problems and viewing them as opportunities to build profits and help the world at the same time. Total corporate social responsibility has four components: economic, legal, ethical, and philanthropic.   What seems to be so obvious that it gets overlooked, is that a company must be economical to be profitable.  Profitability is the foundation of the Corporate Social Responsibility pyramid.  Sometimes people try too hard to make their customers happy, that they lower their prices too low to be profitable.  If you do that too much, you won't stay in business. 

Another major part to the pyramid is ethics in business.  Ethics refers to the moral principles or values that generally govern the conduct of an individual or a group.  Morals are the rules people develop as a result of cultural values and norms.  One of the best ways to prevent future ethical problems in your company is to create a code of ethics, one that is neither too vague or too detailed.  This will help all of the employees to know what is right and wrong. 

The second major thing I took from this class was the demographic factors - the generations. 

• Tweens, ages 8 - 14.  They spend on average $39 billion annually, with their parents spending an additional $150 billion.  They tune out during commercials because they're boring.
• Generation Y, those born between 1979 - 1994.  They spend nearly $200 billion annually.  They are impatient, family -oriented, inquisitive, opinionated, ethically diverse, good time managers, street smart and connected through social networks.
• Generation X, those born between 1965 - 1978.  They are the first group of latchkey kids, from dual income homes, and half come from divorced or separated parents.  Over the past 30 years, they have earned 60% more than any other age group, but still tend to be ignored by advertising companies.
• Baby Boomers, those born between 1946 - 1964.  They are the largest demographic of today's population.  They are expected to have more than 60% continue working past retirement age.  They have more than $1 trillion spending power per year.  They are, in some cases, more willing to brand hop than younger ages.

The most important part of this chapter that I will use in my business is the ethical part.  I am going to start a human resource firm when I am done with school and you have to be ethical and honest with your clients, especially when you're dealing with their money.