Lectures = basic concepts and processes of Marketing ( 3 x 3 h ) Product development ( 1 x 3 h )

1. Hilkka Jankkila, Principal Lecturer, ROVANIEMI POLYTECHNIC, School of Forestry and Rural Industries • Lectures = basic concepts and processes of • Marketing ( 3 x 3 h ) • Product development ( 1 x 3 h ) • Quality management ( 1 x 3 h ) • Group working with practices ( 10 h ) • Excursions / notes / analysis ( 24 h ) • Exam and evaluation: ( 4,5-6 Hungarian credits ) -Active participating in the lectures + group reports; Hungarian and Finnis students together prepare reports ( 2-3 groups ), see “Practises 1 and 2 “ -The Hungarian students give exam to professor Horvath Gabor -The Finnish students have a written test and more practice in F inland MARKETING -Jankkila 2004 -

2. MARKETING – PRODUCT DEVELOPMENT – QUALITY MANAGEMENT Literature in English: Lancester, Geoff - Reynolds, Paul. 2004. “ Marketing “ Kotler, Philip – Amstrong, Gary. 2004. “ Principles of Marketing “ MARKETING -Jankkila 2004 -

3. THE MARKET • A environment where the demand and supply meets each other and the marketing occurs • A group of people, who needs and wants products/services/experiences/information and who have buyingpower to satify their needs • The set of all actual and potential buyers of a product or service ( Kotler-Amstrong 2004 ) MARKETING - Jankkila 2004 -

4. MARKETING ”A social and managerial process whereby individuals and groups obtain what they need and want through creating and exchanging products and value with others” –Kotler-Amstrong 2004; Principles of marketing CONCEPTS *needs *wants *demands, *marketing offers = products, services, experiences *value *satisfaction *exchanges *transactions *relationships *markets MARKETING -Jankkila 2004 -

5. MARKETING > A comprehensive, well planned social and managerial process > Market and environment analysis to get information about demand, cutomers, competition > Studying the needs and wants of the customers/ creating needs > Developing products satifying those needs and wants > Pricing > Presentation ( information, Public Relations, sales promotion, advertising, profiling ) > Distribution > Personnel, Service process, Physical Evidence OBJECTIVES AND TARGETS > The business is economically profitable > The customers are satisfied MARKETING -Jankkila 2004 -

6. THE MARKETING PROCESS MODEL- Lancester-Reynolds 2004 - Marketing Sales Buyer recearch forecasting behavior SUPPLIER CUSTOMER Product Price Distribution Promotion Personal Segmentation Channels Logistics selling targeting and positioning Information Public Relations Advertising Sales promotion MARKETING -Jankkila 2004 -

7. MARKETING AND PRODUCT DEVELOPMENT Market recearch - Feedback MARKET - CUSTOMERS AdministrationMARKETINGFinancing PROMOTION PRODUCTDISTRIBUTIONSERVICEPRICING Ideas Channels Logistics - Strategies Legis- Ideageneration - Price - lation Ideascreening defining Concept development Compe- Business planning Production Packing titors and evaluation - procedures -materials Product development - capacity -procedures Test market - quality assurance -the needs of Launch - raw materials customers, retails and wholesalers, MARKETING -Jankkila 2004 -

8. MARKETING ALONGSIDE OTHER ELEMENTS OF BUSINESS Production Marketing Finance CUSTOMERRecearch and development Marketing Human secource management MARKETING -Jankkila 2004 -

9. MARKETING MANAGEMENT ORIENTATIONS -Kotler-Amstrong 2004- PRODUCTION CONSEPT Consumers favor the products which are available and highly affordable. Focus on improving production and distribution efficiency PRODUCT CONSEPT Consumers favor products that offer the most quality, performance and features. Focus on continous product improvements SELLING CONSEPT Consumers do not buy enough unless the firm undertakes a large-scale selling and promotion effort MARKETING -Jankkila 2004 -

10. MARKETING MANAGEMENT ORIENTATIONS -Kotler-Amstrong 2004- MARKETING CONSEPT Customer focus and value = paths to sales and profits. Customer-centred sense and respond. Find the right products for customers. CUSTOMER RELATIONSHIP MANAGEMENT = CRM Create profitable relationships with the customers. Customer database management activity. Achieve customer’s loyalty Bacic realtionship, full partnership Financial and social benefits, frequency marketing programs, club marketing programs MARKETING -Jankkila 2004 -

11. MARKETING MANAGEMENT ORIENTATIONS -Kotler-Amstrong 2004-Selling ( 1 )and marketing ( 2 )concepts contrated:Starting pointFocusMeansEnds1 Factory Existing Selling Profits through products and promotion sales volume2 Market Customer Intergated Profits through needs marketing customer satisfaction MARKETING -Jankkila 2004 -

12. - SOCIETAL MARKETING CONSEPT • Kotler-Amstrong 2004 – • organization / firm should determine the needs / wants / interests of target markets • deliver the desired satisfactions more effeciently and effective than the competitors do • in a way that maintains or improves the consumer´s and society´s well being *Quality management and assurance ! *Environmental quality management ! MARKETING -Jankkila 2004

13. SOCIETAL MARKETING SOCIETY Human welfare SOCIETAL MARKETING CONCEPT CONSUMERS COMPANY Want satisfaction Profits Conflicts between consumer shot term wants and consumer long-run welfare?? MARKETING -Jankkila 2004 -

14. MARKETING ENVIRONMENT MICRO ENVIRONMENT 1. Elements over which a firm has control ( marketing mix = 4 + 3 Ps ) or which it can influence in order to gain information that will help it in its marketing operations –Lancester-Reynolds 2004- 2. Actors close to firm/company that affect its ability to serve the customers = company, suppliers, marketing intermediaries, customer markets, competitors- Kotler-Amstrong 2004 - MACRO ENVIRONMENT -all forces and agencies external to the marketing firm itself >close to firm = customers, suppliers, agents, distributors, other íntermediaries, competing firms, public - Lancester-Reynolds 2004-, >wider external = legal, cultural, economic,demographictechnological subenvironments, political -(Kotler-Amstrong & lancester-Reynolds - MARKETING -Jankkila 2004 -

15. MARKETING ENVIRONMENT • COMPANY >top management, finance, recearc&development, purchasting, operations, accounting • SUPPLIERS >raw material suppliers, • INTERMEDIARIES >firms that helps the company to promote, sell, distribute the goods to final buyers; resellers, phycical distribution firms, marketing service agencies, financial intermediers MARKETING -Jankkila 2004 -

16. MARKETING ENVIRONMENT • CUSTOMERS >consumer markets = individuals and households > personal consumption >business markets = buy goods and services for further processing or for use in their product process >reseller markets = buy goods and services to resell at a profit >government markets = buy goods and services to produce public services or transfer them to people who need them >international markets = buyers in other countries • COMPETITORS >other firms MARKETING -Jankkila 2004 -

17. MARKETING ENVIRONMENT • PUBLICS >groups that have an actual or potential interest in or impact on an firm`s ability to achieve its objestives -financial publics = banks, funds, investment houses, stocholders … -media publics = newpapers, television stations, editorial opinion … -government publics = product safety, truth of advertising .. -citizen action publics = consumer organisations, environmental groups, minority groups … -local publics = community organizatios … -general public and the public´s attitudes and images of company -internal publics = workers, manaagers, directors … MARKETING -Jankkila 2004 -

18. MARKETING ENVIRONMENTMacro environment • DEMOGRAPHIC -human population’s size, density, location, age, gender, race, occupation … • ECONOMIC -factors that affect consumer buying power and spending patterns = income changes, income distribution, classes, changing consumer spending patterns • NATURAL -natural recources that are needed as inputs by marketers or that are affected by marketing activities MARKETING -Jankkila 2004 -

19. MARKETING ENVIRONMENT • TECHNOLOGICAL -froces that create neeeew technologies, creating new product and market opportunities • POLITICAL -increasing legislation regulating business -laws, government agencies, pressure groups, ethics and socially responsible actions ( social codes and rules) -protect compnies from each other, protect consumers from unfair business practices • CULTURAL FORCES >institutions and forces that affect ssocietys´s bacic values, perceptions, preferenc es and behaviors MARKETING -Jankkila 2004 -

20. BUYER BEHAVIOURFocus on the consumer buyer behaviour • The acts of individuals directly involved in obtaining and using economic goods and services, including the decision process that precede and determine these acts-Lancester-Reynolds- • Consumer buyer behaviour - the buying behaviour of final consumers = individuals and households who buy goods and services for personal consumption–Kotler-Amstrong- • Consumer = most important of the marketing environment => the firm must know : WHAT, WHEN, HOW, WHY the customer buyes MARKETING -Jankkila 2004 -

21. MODEL OF BUYER BEHAVIOUR –Kotler-Amstrong MARKETING AND BUYER’S BUYER’S OTHER STIMULI BLACK BOX RESPONSES MarketingOther Buyer Buyer Product choice Product Economic character decision Brand choice Price Technologicál istics process Dealer choice Place Political Purchace timing Promotion Cultural Purchace amount a MARKETING –Jankkila 2004 -

22. FACTORS INFLUENCING CONSUMER BEHAVIOUR –Kotler-Amstrong 2004 - CULTURALSOCIALPERSONALPSYCHOLOGICAL Culture Reference Age and life- Motivation Subculture groups cycle stage Perception Social class Family Occupation Learning Roles and Economic Beliefs and status situation attitudes Lifestyle Personality and self-concept For the most marketers can not control such factors – but they must be taken into account – MARKETING -Jankkila 2004 -

23. Hierarcy of needs by Maslow SELF ACTUALISATION Creativity fulfillment, Pursue RESPECT AND SELF-ESTEEM Achiement qualifications SOCIAL NEEDS Recognition and belonging, friends , family SAFETY NEEDS; Protection, security, stability, Freedom of fear PHYSIOLOGICAL NEEDS;Hunger, Thirst, shelder, warmth MARKETING -Jankkila 2004 -

24. BUYERS DECISION PROCESS –Kotler-Amstrong- Lancester-Reynolds - PROBLEM / NEED RECOGNITION INFORMATION SEARCH EVALUATION OF ALTERNATIVES PURCHASE DECISION POSTPURCHASE BEHAVIOUR MARKETING -Jankkila 2004 -

25. STAGES IN THE ADOPTION PROCESS – NEW PRODUCT–Kotler-Amstrong-Lancester-Reynolds- 1. AWARENESS 2. INTEREST/INFORMATION 3. EVALUATION 4. TRIAL 5. ADOPTION 6. POST-ADOPTION CONFIRMATION MARKETING -Jankkila 2004 -

26. DIFFUSION PROCESS OF INNOVATIONSRogers, Kotler-Amstrong, La´ncester-Reynolds 34 % 34 % Early Late majority majority 2,5 % 13,5 %16 % Innovators Early Laggards adopters MARKETING -Jankkila 2004 -

27. SEGMENTATION–TARGETING– –Kotler-Amstrong 2004 - MARKET SEGMENTATION = - Dividing the market into distinct groups with distinct needs, characteristics or behaviour who might require separate products or markettin mixes - geographic, demographic, psychographic, behavioral TARGET MARKETING = - The process of evaluating each market segment’s attractiveness and selecting one or more segments - undifferentiated=massmarketing, ifferentiated=segmented marketing, concentrated=niche marketing, micromarketing =local or individual marketing MARKETING -Jankkila 2004 -

28. POSITIONING MARKET POSITIONING Arranging for a product to occuby a clear, distinctive and desirable place relative to competing products in the minds of target consumers PRODUCT POSITION The Way the products is defined by consumers on important attributes - the place the product occupies in consumers’ mind relative to competing products CONSUMERS ORGANIZE PRODUCTS INTO CATEGORIES The consumers do not reevaluate the products every time they make a buying decision > they organize products, services and companies into categories and POSITION them in their minds MARKETING MIX EFFORTS SUPPORT THEPOSITIONING STRATEGY ! MARKETING -Jankkila 2004 -

29. BUSINESS IDEA WHATTO WHO Products, services, experiences The market experinces -customers needs/wants • quality -market opportunities • price -segmentation -competition situation HOW IMAGES/POSITION - enterprice´s structure PROFILES - way of doing/actioning, manners - product/service/firm/ -marketing concept and processes managening profile MARKETING -Jankkila 2004 -

30. FROM IDEA TO ACTIONFrom customer centred businessidea to action -Rope 1989 - SEGMENTATIONCOMPETITORS -segment determining -present/future -needs of the segment BUSINESS IDEADESICIONSFIRM at present -what, to who, how, ímages -know-how -recources BUSINESS IDEA REALIZATION -internal marketing SOCIETY -economical/technical/ EXTERNAL MARKETINGattitude changes -profiling -profiling MARKETING -Jankkila 2004 -

31. MARKETING MIX-Kotler-Amstrong and Booms-Bitner • The set of controllable tactical marketing tools • Everything the firm can do to influence the demand of its products Sellers view Customers view 4 Ps: 4 Cs: > Product > Customer solution > Price > Customer cost > Place > Convenience > Promotion > Communication 3 more Ps: > People > Process > Phycical evidence MARKETING -Jankkila 2004 -

32. 4 Ps PRODUCT PRICE Variety, Quality List price, Discounts Design, Features Allowances, Payment Brand name, Packaging period, Credit terms Services TARGET CUSTOMERS INTENDED POSITIONING PROMOTION PLACE Advertising Channels, Coverage Personal selling Assortments, Locations Sales promotion Inventory, Transportation Public Relations Logistics MARKETING -Jankkila 2004 -

33. The 7 – Ps – Extended Marketing Mix–Booms-Bitner - • Marketing Strategy tool that expands the number of controllable variables from the four in the original Marketing Mix Model to seven. • People ( explicit faktor ) • Process ( explicit faktor ) • Phycical Evidence ( implicit faktor ) • The traditional Marketing Mix model was primarily directed and useful for tangible products. • The 7-Ps model is more useful for services industries and arguably also for knowledge-intensive environments. MARKETING -Jankkila 2004 -

34. 7- Ps People All people directly or indirectly involved in the consumption of a service are an important part of the extended marketing mix. Knowledge Workers, Employees, Management and other Consumers often add significant value to the total product or service offering. Process Procedure, mechanisms and flow of activities by which services are consumed (customer management processes) Physical Evidence The ability and environment in which the service is delivered both tangible goods that help to communicate and perform the service and intangible experience of existing customers and the ability of the business to relay that customer satisfaction to potential customers. MARKETING -Jankkila 2004 -

35. 7 Ps • Booms and Bitner also suggest that Place in a service-oriented company includes the accessibility of the service, and that Promotion in a service-oriented company includes the input of front-line service personnel. MARKETING -Jankkila 2004 -

36. PRODUCT / SERVICEKotler-Amstrong 2004, Lancester-Reynolds 2004 • PRODUCT = Anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need >industrial goods = installations, assessories, raw materials, component parts and materials, supplies >consumer goods =convenience goods, shopping goods, speciality goods, unsought goods • SERVICE = Any activity or benefit that one party can offer to another that is esssenntially intangible and does not result in the ownership of anything • EXPERIENCE = memorable, personal, take place in minds MARKETING -Jankkila 2004 -

37. THREE LEVELS OF PRODUCT–Kotler-Amstrong- AUGMENTED PRODUCT Delivery Credit After sale ACTUAL PRODUCT service Brand CORE Features name BENEFIT Core product QualityDesign Packing Installation Warranty MARKETING -Jankkila 2004 -

38. PRODUCT/SERVICE CLASSIFICATIONS –Kotler-Amstrong 2004 - • CONSUMER PRODUCT > bought by final consumer for personal consumption • CONVENIENCE PRODUCT > consumer product that the customer usually buys frequently with a minimum of comparison and buying efforts( fast food, newspaper ) • SHOPPING PRODUCT > consumer good that the customer in the selection and comparison process and purchase buys ( suitable, quality, price, style ) • SPECIALTY PRODUCT > consumer product with unique characteristics or brand identifications ( specific brands and types of cars, cameras, phones, clothes, wines ) MARKETING -Jankkila 2004 -

39. PRODUCT/SERVICE CLASSIFICATIONS • UNSOUGHT PRODUCT > consumer product that the consumer either does nor know about or knows about but does not normally think of buying ( life insurance, consulting ) • INDUSTRIAL PRODUCT > product bought by individual or organizations for further processing or use in conducting business 1. Materials and parts ( raw materials, manufactured materials ) 2. Capital items ( installations and accessory equipments ) 3. Supplies and services ( operating supplies, repair items, business services, business advisory services ) MARKETING -Jankkila 2004 -

40. MARKETING -Jankkila 2004 -

41. PRODUCT DEVELOPMENT STRATEGIES-Kotler-Amstrong, Lancester-Reynolds ANSOFF MATRIX ( Igor Ansoff 1957 ) New marketsExisting markets New products True innovators Product development Risky strategy strategy Existing products Market development Market penetrations MARKETING -Jankkila 2004 -

42. NEW PRODUCT DEVELOPMENT –Kotler-Amstrong, Lancester-Reynolds - • ACQUISITION > By buying a whole company, a papent or a licence to produce someone else’s product • NEW PRODUCT DEVELOPMENT > innovative, original products > replacement products, product improvements, product modifications > Imitative products ”me to” products > Relaunced, products, new brands MARKETING -Jankkila 2004 -

43. NEW PRODUCT DEVELOPMENT STAGES-Kotler-Amstrong, Lancester-Reynolds IDEA GENERATION IDEA SCREENING CONCEPT DEVELOPMENT AND TESTING MARKETING STRATEGY BUSINESS ANALYSIS PRODUCT DEVELOPMENT TEST MARKETING COMMERCIALIZATION MARKETING -Jankkila 2004 -

44. NEW PRODUCT PROCESS … ÍDEA GENERATION *The systematic search for new-products ideas *Internal = new-product managers, committees, departments, venture teams *External = customers, competitors IDEA SCREENING *Go or drop decisions- spot good ideas and drop poor ideas as soon as possible

45. NEW-PRODUCT PROCESS … CONCEPT DEVELOPMENT AND TESTING *Product concept = A detailed version of the new-product idea stated in meaningsful consumer terms *Concept testing = testing a new-product concept wit a group of tarket consumersto find out if thr concepts have strong consumer appeal. MARKETING STRATEGY *The target market; positioning, sales, market share, profit goals *Outlines of the product; price, distribution, marketing budget *Long run sales, profit goals, marketing mix strategy MARKETING -Jankkila 2004 -

46. NEW-PRODUCT PROCESS … BUSINESS ANALYSIS * A review of the sales, costs and profits projections for a new product to find out whether these factors satisfy the firms’s objectives PRODUCT DEVELOPMENT • Developing the product concept intoa phycical product in order to ensure that the product idea can be turned into a workable product MARKETING -Jankkila 2004 -

47. NEW PRODUCT PROCESS …. PRODUCT DEVELOPMENT *prototypes, product appraisal tests *product refinement and modification by feedback, > development cost increace sharply ! TEST MARKETING *The product and marketing program are tested in more realistic market settings –Standard, Controlled, Simulated • Problem = competitors see your product ! - Test marketing does not quarantee succees ! COMMERCIALIZATION *Introducing a new-product into the market – - few new-product ideas succeed ! MARKETING -Jankkila 2004 -

48. PRODUCT LIFE CYCLE MATRIXby Barksdale-Harris PIONEERING GROWTH MATURITY DECLINE -sales- stars cash cows war horses high market high market high market share, high share, low hare, negative growth growth growth infants problem children dogs/cash dogs dodos low market share low market share low market share high growth low growth negative growth Entry - time - Exit MARKETING -Jankkila 2004 -

49. INDIVIDUAL PRODUCT / SERVICE DECISIONS – Kotler-Amstrong - Product attributes Branding Packaging Labeling Product support services MARKETING -Jankkila 2004

50. PRODUCT QUALITY – Kotler-Amstrong- ”When our customers come back and our products do not” • Ability of a product to perform its functions • Characteristics of a product or service that satisfy customer’s stated or implied needs • Is closely linked to customer value and satisfaction • One of the marketer’s major positioning tools • Has a direct impact on product or service performance • Freedom of defects – is it enough ? MARKETING -Jankkila 2004 -