BUS 1050 Foundation of business

Source: Chicago Tribune, company reports

Harley-Davidson is feeling the wind in its face once again. A waiting list of two years to purchase a new “hog” has the motorcycle-maker ready to build a manufacturing plant in Kansas City, Mo.

Hog heaven

Harley’s back on top once again

The past decade has seen Harley’s popularity leave the others in the dust.

Harley-Davidson

profile*

Headquarters:

Milwaukee, Wis.

Employment:

4,700 Sales

Sales:

$1.35 billion

Net income:

$112.5 million

Units sold:

105,104 motorcycles

Foreign sales:

$395 million

*1995 numbers.

Foundations of Business Thought

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Harley-Davidson

Harley-Davidson

Honda

Honda

Kawasaki

Kawasaki

Suzuki

Suzuki

Yamaha

Yamaha

Others

Others

12.5

55.8

50.4

17.6

11.3

8.5

8.5

7.9

15.2

3.6

2.1

6.6

Percent of U.S. Market 1983

Percent of U.S. Market 1995

Harley-Davidson

Honda

Kawasaki

Suzuki

Yamaha

Others

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Place

Promotion

Price

Product

Product

: the physical

unit, package,

warranty, after-sale

service, image value,

etc.

Price

: list price, credit

terms, allowances,

flexibility, discounts

Place

: channels,

middlemen, market

coverage, transportation

Promotion

: objectives,

personal selling,

advertising, sales

promotion, public

relations, word of mouth

Foundations of Business Thought

The Marketing Mix Elements

P R O D U C T

Foundations of Business Thought

•

Generating Ideas

•

Screening Ideas

•

Business Analysis

•

Development

•

Test Marketing

•

Commercialization

Possibilities

New Product

Foundations of Business Thought

New Product Development Process

Brand

: a name, term, symbol, design or combination that identifies

a sellers product and differentiates it form its competition.

Brand Name

: part of the brand that can be spoken, including

letters, words or numbers that differentiates the goods and

services of a seller from their competitors.

Brand Mark

: elements of a brand that cannot be spoken; used on

all or most of a company’s products.

Trade Character

: a person, personified character or animal used

to identify a product or business.

Trade Mark

: exclusive right to use a brand, brand name, brand

mark or trade character that has been given legal protection.

Foundations of Business Thought

Branding Distinctions

0

50

100

150

200

250

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

0

50

100

150

200

250

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

Foundations of Business Thought

Extending the Product Life Cycle

The Many Uses of Baking Soda:

Cleaning Batteries

Dry Baths for Pets

Deodorizing Musty Towels

Cat Litter Deodorizer

Refreshing Bath Additive

Cleaning Brushes and Combs

Denture Soak

Hair Care (mix with shampoo)

Insect Bite Care

Relief for Acid Indigestion

Soothing Irritated Skin

Cleaning Coffee and Tea Pots

Deodorizing Cutting Boards

Homemade modeling clay

Emergency Fire Pail

Make an Erupting Volcano

Freshen and Deodorize

Foundations of Business Thought

Prestige Pricing

P R O M O T I O N

Foundations of Business Thought

Newspapers

22.22%

Yellow Pages

6.09%

Direct Mail

19.67%

Business Papers

2.19%

Radio

7.19%

Magazines

5.24%

Miscellaneous

12.71%

Outdoor

0.78%

Farm Publicatoins

0.17%

Television

23.74%

Magazine, 8.60%

Sunday Magazine, 0.60%

Business Publication, 1.90%

Local magazine, 0.20%

National Newspaper, 1.30%

Local Newspaper, 9.40%

FSI, 0.50%

Network TV , 9.90%

Spot TV, 6.30%

Syndicated TV , 1.60%

Cable TV Network, 6.10%

Network Radio, 0.40%

National Spot Radio, 1%

Local Radio, 2.70%

Outdoor, 1.30%

Internet, 3.10%

Leading National Advertisers 2005 (in million)

4608.8

4353.2

3493.7

2483.7

2470.8

2398.4

2278.8

2209.3

2194.2

2178.6

010002000300040005000

Proctor & Gamble Co.

General Motros Corp.

Time Warner

Verizon Communications

AT&T

Fort Motor Co.

Wall Disney Co.

Johnson & Johnson

GlaxoSmithKline

Daimler Chrysler

Problem Recognition

(need to replace an old broken down

Bicycle)

Information Search

(search for store, models, prices,

other’s opinions)

Evaluation of Alternatives

(Which can I afford? Which is most

reliable? What will others think?

Which performs better?)

Purchase

(decision based on emotions or

rationale)

Purchase Behavior

(Were expectations met? observe

how others react, test

performance, compare new bike to

old bike)

Individual &

Social Factors

Marketing

Factors

•

Personal

•

Social

•

Psychological

•

Cultural

•

Product

•

Place

•

Promotion

•

Price

Foundations of Business Thought

Consumer Decision-Making Process

“Having perused the 928-page ‘Golden Jubilee’ Sears, Roebuck & Co. catalog

lately mailed to 6,500,000 customers,

Printer’s Ink

last week marked three

lessons for the average advertiser:

(1) Though the occasion was its fiftieth anniversary, Sears devoted less than

one-tenth of one percent of the catalog to talking about itself, which might

be a good proportion to keep in mind.

(2) Though it is necessary to describe mail-order merchandise in great detail,

Sears provides more information than is ordinarily available in personal

transaction.

(3) Nowhere in the volume is merchandise represented as a means to such

ends are these:

Getting a husband.

Holding a husband.

Saving the home from wreckage.

Soothing the nerves.

Getting a date for the junior prom.

Overcoming social inferiority.

Curing a disease of the ‘housewife’s knuckles’ type.

Eliminating sleepless nights.

Preventing the baby from having to have dental plates at age

seven.

Stimulating an emotional Jag.”

Time Magazine (1936)

Foundations of Business Thought

Sears & Roebuck’s 1908

The Advertising Guide

“Copy reading ‘regardless of cost’ should be used

sparingly, as cost is always regarded.

Exaggerated claims and unrestrained superlatives

undermine customer’s confidence. Therefore avoid

free use of such expressions as BEST, FINEST,

BIGGEST, and avoid all statements the truth of

which may be questioned.

Appeals to patriotism as an argument to induce

buying are to be avoided.”

Foundations of Business Thought

“I note your suggestion that you would make an

extra pair of pants for $8.65. I am 71 years of age.

The undertaker would charge me $35.00 for a

burial suit. I would get to wear that but once. You

are charging me $28.75 for a suit. I am pretty sure

I will get to wear that a number of times, before

being buried in it, so I am saving the difference in

cost (I am not Scotch). Now as to the extra pair of

pants. I will not need them where I am going.”

Letter to Sears & Roebuck

Foundations of Business Thought

“I am a lonely school teacher in the dismal hills of

Idaho. Would you be kind enough to do your

share in assisting a poor forlorn teacher in her

future happiness by sending this man which you

advertised in your latest edition?

If at the present time this particular man is not in

stock, I leave the responsibility of choosing my

future mate up to you.”

Letter to Sears & Roebuck

Foundations of Business Thought

THE PAUSE THAT

REFRESHES

Foundations of Business Thought

L S M F T

Foundations of Business Thought

The codfish lays ten thousand eggs,

the homely hen lays one.

The codfish never cackles

to tell you what she’s done.

And so we scorn the codfish,

while the humble hen we prize,

which only goes to show you

that it pays to advertise.

- - ANON.

Foundations of Business Thought

HOT CROSS BUNS, HOT CROSS BUNS,

ONE A PENNY, TWO A PENNY,

HOT CROSS BUNS,

IF YOUR DAUGHTERS DON’T LIKE THEM,

GIVE THEM TO YOUR SONS,

ONE A PENNY, TOW A PENNY,

HOT CROSS BUNS.

Foundations of Business Thought

P L A C E

Foundations of Business Thought

Producer

Agent /

Broker

Wholesaler

Retailer

Consumer

Producer

Wholesaler

Retailer

Consumer

Producer

Retailer

Consumer

Producer

Consumer

Consumer Products

Marketing Intermediaries

Producer

Consumer

Producer

Wholesaler

Consumer

Industrial Products

Marketing Intermediaries

Foundations of Business Thought

Marketing Channels

Converse

K Swiss

Nike

New Balance

Adidas

Consumer 1

Consumer 2

Consumer 3

5 PRODUCERS x 3 CONSUMERS = 15 TRANSACTIONS

Nike

New Balance

Adidas

K Swiss

Consumer 1

Consumer 2

Consumer 3

FOOTLOCKER

Converse

5 PRODUCERS + 3 CONSUMERS = 8 TRANSACTIONS

Foundations of Business Thought

Intermediary Efficiencies

12.5

50.4

11.3

8.5

15.2

2.1

55.8

17.6

8.5

7.9

3.6

6.6

0

10

20

30

40

50

60

Harley-

Davidson

Honda

Kawasaki

Suzuki

Yamaha

Others

Percent of U.S. Market 1983

Percent of U.S. Market 1995