TMLA Marketing and Strategy. Oliver W. Olson November 27, 2017

Transcription

1 TMLA Marketing and Strategy Oliver W. Olson November 27, 2017

2 Marketing vs. Advertising Advertising - A small part of Promotion

3 But we will still have some fun

4 FedEx in the 80 s

5 FedEx in the 80 s

6 Who am I? Work: 13 years in banking (USA) 3 years in brand management (Germany) Past 11 years in management education (Hungary, Romania, Netherlands) 20+ years in marketing & strategy Countries: USA Sweden (University) Germany Romania Hungary Netherlands

7 Who am I?

8 Answer These Questions: Activity 1 1. Think of a product or service that you have purchased due to a specific advertisement. (NOT the other way around don t think of a product or service and then find any ad.) Choose only one to present for your group. 2. Find that exact ad for this product on the internet to show to the class. 3. Describe how the ad communicated to you as a customer. 4. Did the product or service actually deliver the expected value that the ad promised? 8

9 Hertog Jan Bastaard

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11 Bus Stop Billboard Social Media Ad

12 Group Assignment Presentation 5 minutes max + video time Group C About You Group A Magnum Group B Labello Group D Skip Hop 12

13 Marketing vs. Advertising Advertising - A small part of Promotion

14 What is Marketing? The management process which identifies, anticipates and supplies customer requirements efficiently and profitably (UK Chartered Institute of Marketing) An organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders. (American Marketing Association) Emphasis: meeting customers value expectations in order to deliver profit. 14

15 What is marketing? 1. Identifying and meeting human and social needs 2. Meeting needs profitably 15

16 What is marketing? Going to Market 16

17 Going to Market 17

18 Was this Going to Market?

19 Marketing does NOT require a lot of money

20 Is Selling Marketing? There will always be need for some selling. But the aim of marketing is to make selling easy. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be needed is to make the product or service available. Peter Drucker 20

21 So Does marketing really work? 21

22 Half of The Money I spend on advertising is wasted Beneficial/Wasted Wasted/Beneficial The problem is, I don t know which half. John Wanamaker, (attributed) US department store merchant ( ) 22

23 Not any more If in this day and age you don t know better than to think that a big chunk of your advertising investments go to waste it s nobody s fault but your own.

24 The link between marketing and strategy 29-Feb-16 24

25 The Connection Between Corporate Strategy and Marketing

26 The Strategic Management Process Competitive Advantage Definition: the ability to create more economic value than competitors Mission Objectives External Analysis Internal Analysis Strategic Choice Marketing Strategy Implementation Competitive Advantage

27 The Tools of strategy Strategic GPS Satellites

28 SWOT Analysis SWOT (WHAT)

29 Five Forces Model 5 FORCES + 1 (WHAT) Complementors

30 ENHANCED SWOT (HOW) Translate into tasks for the Project Plan Strengths Weaknesses Opportunities How do I use these strengths to take advantage of these opportunities? How do I overcome the weaknesses that prevent me taking advantage of these opportunities? Threats How do I use my strengths to reduce the likelihood and impact of these threats? How do I overcome the weaknesses that will make these threats a reality?

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32 The MOST important slides

33 The Communication Process

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36 The Value Equation Value = Perceived Benefits / Cost (V=PB/C) If Value is greater than or equal to 1, then a customer will tend to purchase the product given The customer is aware of the product There are no substitutes for which Value is even greater than your product. The customer can afford the Cost of the product Benefits = Perceived Benefits Function(s) Status Brand Other?

37 The Value Equation Components of Total Customer Value (Perceived Benefit) Components of Total Customer Cost (Perceived Cost) Philip Kotler, A Framework for Marketing Management, 2003, p. 39

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39 Razor blades Gillette Schick Wilkinson Sword Bic 80% of US Market Dollar Shave Club

40 back

41 Dollar Shave Club numbers 12,000 members within 48 hours of video s release July 2015: 2,000,000 members / July 2016: 3,200,000 members As of December 2015: 54% of online razor market (vs. 24% for Gillette) Average membership level: $7/month Range expansion: 20 product lines planned (all for the bathroom) All products to be under $20 Global expansion: Australia, Canada International? Fund raising: Seed: $1mm Series A: $9.8mm Series B: $12mm Series C: $50mm Series D: $75mm (valuation of $615mm) 2014 revenue: $65mm 2015 revenue: $152mm

42 Razor blades Gillette Schick Wilkinson Sword Bic 80% of US Market Dollar Shave Club

43 International Market selection model The Firm Environment Step 1: Selection of segmentation criteria Step 2: Development of segments Step 3: Screening of segments Step 4: Microsegmentation Market entry Figure 8.2 International market segmentation, Hollensen

44 International Market selection model The Firm Environment Step 1: Selection of segmentation criteria Step 2: Development of segments Step 3: Screening of segments Step 4: Microsegmentation Market entry Figure 8.2 International market segmentation, Hollensen

45 Criteria for effective segmentation Measurability Accessibility Substantiality/profitability Actionability

46 Step 1: The basis of international market segmentation Figure Hollensen

47 Personal factors Age Selfconcept Life cycle stage Lifestyle Occupation Values Wealth Personality

48 LOHAS (Lifestyles of health and sustainability) market segments Sustainable economy Healthy lifestyles Ecological lifestyles Alternative health care Personal development

49 Maslow s hierarchy of needs

50 International Market selection model The Firm Environment Step 1: Selection of segmentation criteria Step 2: Development of segments Step 3: Screening of segments Step 4: Microsegmentation Market entry Figure 8.2 International market segmentation, Hollensen

51 International Market selection model The Firm Environment Step 1: Selection of segmentation criteria Step 2: Development of segments Step 3: Screening of segments Step 4: Microsegmentation Market entry Figure 8.2 International market segmentation, Hollensen

52 Step 4: Microsegmentation

53 The Famous 4 P s

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55 What are Services? 56

56 What Are Services? The historical view Smith (1776): Services are different from goods because they are perishable Say (1803): As services are immaterial, consumption cannot be separated from production A fresh perspective: Benefits without Ownership Rental of goods: a) Payment made for using or accessing something usually for a defined period of time instead of buying it outright and b) Allows participation in network systems that individuals and organizations could not afford 57

57 What Are Services? Five broad categories within non-ownership framework of which two or more may be combined Rented goods services Defined space and place rentals Labor and expertise rentals Access to shared physical environments Access to and usage of systems and networks 58

58 Definition of Services Services are economic activities offered by one party to another most commonly employ time-based performances to bring about desired results In exchange for their money, time, and effort, service customers expect to obtain value from access to goods, labor, facilities, environments, professional skills, networks, and systems; normally do not take ownership of any of the physical elements involved. 59

59 The 7 Ps of Marketing 60

60 People Individuals on marketing activities Individuals on customer contact Recruitment Culture/image Training and skills Remuneration Process Customer focus Business-led IT-supported Design features Research and development Physical Evidence Sales/staff contact experience of brand Product packaging Online experience Physical environment (buildings)

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62 I agree that 4Ps + service is all you really need and that still emphasises other areas! - Dr. Dave Chaffey, Marketing expert and author

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65 The First P : Product Decisions

66 Now lets talk about branding

67 In summary, what is a brand? The promise you make as one organization that shapes your relationship with all your stakeholders. and how that promise is delivered.

68 Why Worry About Branding? Strong brands can Create sustainable competitive advantage Increase demand and market share Attract premium pricing Drive revenue growth Improve profitability Help avoid commoditization Salt Help diversification efforts Reduce business risk Brands account for almost one-third of the value of Fortune 500 companies

69 Why Worry About Branding? If this business were split up, I would give you the land and bricks and mortar, and I would take the brands and trade marks, and I would fare better than you. (John Stuart, Chairman of Quaker, 1900)

70 Morton Salt 1911 Magnesium Carbonate

71 Brand Architecture Masterbrand dominant (monolithic)

72 Brand Architecture Masterbrand + sub-brands (heavy endorsed)

73 Corporate brand Brand Architecture Corporate + product brands (light endorsed) Product brands

74 P = Promotion

75 The major international advertising decisions Objectives setting Budget decisions Message decisions Media decisions Agency selection Advertising evaluation Figure Hollensen

76 Objectives Setting Communication objectives Introduce yourself to a new market Increase awareness on an existing market Introduce a new feature of an existing product Public Relations Sales objectives Obtaining new customers Increase usage among existing customers Introduce new sales channels Emphasize a strategic alliance

77 Public relations Possible PR methods Event sponsorship Prizes at events Press releases Announcements Lobbying CSR Possible PR targets Employees Shareholders Suppliers Customers General public Governments Financial markets

78 The major international advertising decisions Objectives setting Budget decisions Message decisions Media decisions Agency selection Advertising evaluation

79 Percentage of sales method (Mostly for Equity/Hierarchical modes) With this method, a percentage of previous years sales is allocated for the Marketing/Advertising/Media budget. For example, if previous years sales were $10 million and a 10% allocation was specified for advertising, the budget would be $1 million. The actual percentage depends on your industry, benchmarks of other companies, previous experience or simply guessing. Advantages Guarantees equality among markets Easy to justify Guarantees only what is affordable is spent Disadvantages Based on historical performance Ignores necessity of increased spending during declining sales Does not consider goals Fails to address relationship between advertising and sales

80 Other budgeting methods (Mostly for Equity/Hierarchical modes) Competitive parity Simply duplicate the amounts spent on advertising by major rivals Objective and task approach Start with determining the advertising objectives and then ascertain the tasks needed to attain the objectives. (Makes sense, no?) A 1991 study showed that only 20% of companies in US, CA and UK used this method. Complex to formulate

81 Budgeting methods for non-equity modes Export Modes Indirect Negotiate with the agent. Usually, the agent responsible for entering the foreign market has responsibility for determine the advertising needs and budget. Direct Shared-costs model. Firm A and Firm B can split advertising costs (usually 50/50) as long as the ads and budget are pre-approved by Firm A and Firm B can give proof of the advertising to Firm A. Cooperative no ad budget Intermediate/Contract Modes Contract Manufacturing Same as Equity Mode (previous two slides) Licensing no ad budget Franchise Same as Equity Mode (previous two slides), but the advertising of Firm A (Franchisor) should concentrate on Brand Awareness advertising. It is Firm B s (Franchisee) responsibility to advertising the product and push for local sales. Joint Ventures Same as Equity Mode (previous two slides)

82 The major international advertising decisions Objectives setting Budget decisions Message decisions Media decisions Agency selection Unique Selling Proposition (USP) Standardization versus adaptation Advertising evaluation

83 MsM Romania MBA Master Class

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86 The major international advertising decisions Objectives setting Budget decisions Message decisions Media decisions Agency selection Advertising evaluation

87 Media decisions Reach Media mix (Types) Frequency Gross rating points (GRPs) = Reach x Frequency

88 Main media types Television Radio Newspapers Magazines Cinema Outdoor Online

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90 The major international advertising decisions Objectives setting Budget decisions Message decisions Media decisions Agency selection Will not be covered or tested in this course Advertising evaluation

91 The Second P : Pricing Decisions

92 Figure 15.2 Strategies for pricing a new product

93 Skimming charging a high price at the top end of the market with the objective of achieving the highest possible contribution in a short time Unique Product Segments must exist who are willing to pay Product must offer clear increased PB As more segments are targeted, prices should start coming down.

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95 Problems with skimming Having a small market share makes the firm vulnerable to aggressive local competition Maintenance of a high-quality product requires a lot of resources If product is sold more cheaply at home or in another country grey marketing is likely

96 Market Pricing charging a final price based on competitive prices Intensive local competition Very little differentiation between products PLC should be relatively long

97 Motives for penetration pricing charging a low price with the objective of achieving the highest possible sales Intensive local competition Lower income levels of locals View of exporting as marginal activity

98 Non-Media marketing platforms

99 Sales promotion communication platforms Contests, games, sweepstakes and lotteries Premiums and gifts Sampling Fairs and trade shows Exhibits Demonstrations Coupons Rebates Low-interest financing Entertainment Trade-in allowances Tie-ins

100 Events and experiences platforms Red Bull's flugtag event Sports Entertainment Festivals Arts Causes Factory tours Company museums Street activities Red Bull Events List

101 Why sponsor events? To identify with a particular target market or life style. To increase brand awareness. To create or reinforce consumer perceptions of key brand image associations. To enhance corporate image. To create experiences and evoke feelings. To express commitment to community. To entertain key clients or reward employees. To permit merchandising or promotional opportunities.

102 Catalogues Mailings Telemarketing Electronic shopping Blogs TV shopping Voic Websites

103 Word-of-mouth marketing Person to person Chatrooms Blogs Personal selling Sales presentations Sales meetings Incentive programs Samples Fairs and trade shows

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105 Integrating marketing communications builds brands