Marketing Management. Lesson1. Course objectives. Course Outline. Understanding Marketing Management

Transcription

1 Course objectives Marketing Management Showing the major decisions that marketing managers face in their efforts to balance the organization s objectives and resources against needs and opportunities in the global marketplace. This course tries to show a new approach to marketing management which based on strategies for growing customer value and profitability. 1 2 Course Outline 1. Understanding Marketing Management 2. Analyzing Marketing Opportunities -Customer Analysis 3. Analyzing Marketing Opportunities -Measuring and Forecasting Market Demands 4. Analyzing Marketing Opportunities -Competitors and SWOT Analysis 5. Strategic Marketing Management 6. Designing Marketing Strategies Introduction 7. Designing Marketing Strategies - STP 8. Designing Marketing Strategies -Distribution and Price 9. Designing Marketing Strategies Product 10. Designing Marketing Strategies Promotion Lesson1 Understanding Marketing Management 3 4 1

2 Agenda 1. Defining marketing 2. The marketing concept 3. Company orientations toward the marketplace 4. Marketing management 1. DEFINING MARKETING 5 6 Activities in the company Defining marketing Understanding of customer value Financing Human Resource Management Research & Development Marketing Creating of customer vaule Delivering of customer value Marketing is societal process by which individuals and groups (target market) obtain what they need and want through understanding, creating and delivering and freely exchanging products and services of value with others Procurement Operation Physical distribution Source: P. Kotler (2003). Marketing Management, 11th, Prentice Hall, Upper Saddle River, p. 9. Source: own preparation

3 When marketing is important? Self-production Robbery Beg Exchange! Exchange Exchangeis the process of obtaining a desired product from someone by offering something in return Conditions of exchange There are at least two parties Each party has something that might be of value to the other party Each party is capable of communication and delivery Each party is free to accept or reject the exchange offer Each party believes it is appropriate or desirable to deal with the other party Source: P. Kotler (2003). Marketing Management, 11th, Prentice Hall, Upper Saddle River, p. 12. Source: P. Kotler (2003). Marketing Management, 11th, Prentice Hall, Upper Saddle River, p Elements of the marketing concept Customer needs and value Understanding of customer value 2. THE MARKETING CONCEPT Creating and delivering of customer value Satisfaction Customer, Employee, Supplier, Shareholder

4 Customer needs and value Needs are the basic human / organizational requirements Wants needs become wants when they are directed to specific objects that might satisfy the need Customer value ratio between what the customer gets and what he gives Source: P. Kotler (2003). Marketing Management, 11th, Prentice Hall, Upper Saddle River, p Customer needs and value Human needs Selfactualization needs Esteem needs Social needs Safety needs Physiological needs 13 Source: A.H. Maslow (1970). Motivation and Personality, 2nd ed., Prentice Hall, Upper Saddle River., 14 Understanding of customer value Creating and delivering customer value Marketing intelligence system Managers experience Marketing Research Market information Managers Intuition +3P Personnel Physical Evidence Procedures Source: own preparation. 15 Source: own preparation based on: R. Lauterborn(1990). New Marketing Litany: Four P s Passe: C-Words Take Over, Advertising Age, 1 October p

5 Company orientations toward the marketplace COMPANY ORIENTATIONS TOWARD THE MARKETPLACE Production concept Product concept Selling concept Marketing concept Customer concept Societal marketing concept Source: P. Kotler (2003). Marketing Management, 11th, Prentice Hall, Upper Saddle River, p Company orientations toward the marketplace 2 Concepts Starting point Focus Means Ends Production Factory Widely available and High production efficiency Profits through inexpensive products Low cost volume and low cost Mass distribution Product Factory Superior products Making superior products Profits through high and improving them over quality product time Selling Factory Products Aggressive selling and Profits through sales promotions volume Marketing Target market Customer needs Integrated marketing Profits through customer satisfaction Customer Individual customer Customer needs One-to-one marketing Profits through and value Integration and value chain capturing customer share,loyalty, and lifetime value Societal marketing Best long-run Customer needs, Integrated marketing and Profits through interests customer customer interests, and education customer customer and society long-run societal welfare satisfaction and society s well-being 4. MARKETING MANAGEMENT Source: own preparation based on: P. Kotler (2003). Marketing Management, 11th, Prentice Hall, Upper Saddle River, p

6 Marketing Management-1 Marketing management is art and science of choosing target markets and getting, keeping, and growing customers through understanding, creating and delivering superior customer value Marketing Management- 2 analyzing market situation designing marketing strategies implementing and organizing the marketing effort controlling marketing performance Source: own preparation based on: P. Kotler (2003). Marketing Management, 11th, Prentice Hall, Upper Saddle River, p The Organisation s Marketing Environment AnalyzingMarketing Opportunities Cultural forces Market demands Social factors The economy Suppliers The organisation Demography Distributors & dealers Customer Analysis Customers Competitors Legal Political structures structures Technology 6

7 Outline Customer Analysis types of customers the business market versus the consumer market DMU (decision-making unit) types of buying behaviour stages of the buying decision process Types of Customer Markets consumer markets industrial markets reseller markets government and non-profit markets international markets The Customer in Context Consumer buying behaviour the decision processes and acts of individuals involved in buying and using products or services (Dibb et al, 1994) What Influences the Buyer? Cultural factors values, attitudes, beliefs, ideas, artefacts and symbols Social factors primary membership groups (family..) secondary member groups (union, cim..) aspirational groups (MBA!) dissociative groups (hell s angels??) Personal factors age, life cycle, occupation, lifestyle, personality... Psychological factors motivation, perception, 7

8 The Buyer DMU Initiator Source:Webster and Wind, 1972 Does Behaviour Change in Relation to What is Purchased? Source:Assael, 1987 first suggests buying product or service Influencer User low Degree of involvement high whose comments affect the decision Decider Ultimately make all or part of buying decision Buyer Physically makes purchase Help define spec, help in evaluation of alternatives Product requirements and suppliers Formal authority to select supplier - negotiate terms Significant difference between brands few many HABITUAL VARIETY (seeking) DISSONANCE (differing of views) COMPLEX User Consumes product or service Initiate process / define specs Consumer Decision Making Process Need recognition stimuli can be internal or external Information search personal, commercial, public, experiential Evaluation of alternatives forms judgement - conscious & rational Purchase decision commit Post-purchase evaluation re-evaluate and re-assure The Organisational Buyer fewer highly concentrated close relationship between buyer and seller geographically concentrated buyers demand for industrial goods is ultimately derived from the demand for consumer goods professional purchasing 8

9 Source: Webster and Wind, 1972 Characteristics of Organisational Markets Producer markets purchase to make profit from using operationally or to produce other goods Reseller markets purchase to make profit from reselling with no or minor alteration Government markets buy to support operations -normally purchase through bids or negotiation Institutional markets seek to achieve charitable, community, educational or nonbusiness goals Initiator The Industrial Buyer DMU first suggests buying product or service Influencer whose comments affect the decision Decider Ultimately make all or part of buying decision Buyer Physically makes purchase User Consumes product or service User Help define spec, help in evaluation of alternatives Product requirements and suppliers Formal authority to select supplier - negotiate terms Initiate process / define specs Approvers Authorise decider and buyer proposals Gatekeepers Control random contact from sellers / flow of information Types of Purchase New Task First time purchase, full buying process Modified re-buy E.g. faster delivery, lower price, specification Straight re-buy Routine re-purchase, same terms Truncated buying process Organisational Buying Process recognise the problem develop product specification to solve problem search for products / suppliers evaluate products to specification select and order most appropriate product evaluate product and supplier performance 9

10 Source:Robinson et al, 1967 Differences Between Industrial and Consumer Marketing Types of Purchase 1 Purchase motiv. Industrial Marketing Multiple influences Consumer Marketing Individual / family Phases of the buying process Recognition of problem Determining general need Specific description of product required Search for potential suppliers Detailed evaluation of suppliers Selection of supplier Establish order routine Performance review and feedback Straight Re-buy N N Y N N N N Y Buy classes Modified Re-buy Possibly Possibly Y Possibly Possibly Possibly Possibly Y New Task Y Y Y Y Y Y Y Y Nature of demand Emphasis of seller Customer needs Nature of buyer Time effect Product detail Promotional dec. Price decision Place decision Customer service Legal factor Derived or joint Economic needs Bespoke Group decision Lon-term relationship Technically sophisticated Personal selling Determined before terms vital Limited short channels Critical to success Contractual normal Primary Immediate satisfaction Similar group needs Individual / family unit Short-tem relationship Low technical content Mass media advertising Fixed discounts sought Lots, complex channels Less important Only on major purchase 13 Environmental Impact on sales direct / indirect Impact on demand direct The Organisation s Marketing Environment Analyzing Marketing Opportunities Competitors Analysis Social factors Cultural forces Market demands Political structures Competitors The economy Suppliers The organisation Technology Demography Distributors & dealers Customers Legal structures 10

11 Outline Porter s Industry Analysis: The 5 Forces Model Source: Porter, 1985 Porter s five forces model industry s competitive structure product/market battlefield roles in the target market assessing competitors strengths and weaknesses competitors reaction patterns SUPPLIERS Bargaining power POTENTIAL ENTRANTS Threat of rivalry INDUSTRY Competitive rivalry Threat of substitution Bargaining power BUYERS SUBSTITUTES Bargaining Power of Suppliers the strength of the supplier brand the source of supply spans only a small number of suppliers switching supplier substitute products of suppliers forward integration Bargaining Power of Buyers where few buyers control a large volume of the market where there are a large number of smaller suppliers fighting for a share of the market the cost of switching supplier is low the supplier s product is a mass-market product and not necessarily differentiated strong customer power threat of backward vertical integration 11

12 The Threat for Potential Entrants economies of scale access to new distribution channels brand loyalty capital investment competitor retaliation regulatory influence Threat of Substitutes a new product or service equivalent a new product replacing an existing product consumer substitution Key Factors Influencing Competitive Rivalry stage of product life cycle of competing product use of specialized production techniques liquidity of competitor ability to achieve differentiation and brand loyalty competitor intentions the relative size of the competitor barrier of exit from the industry number of sellers & degree of products differentiation Who Are Our Competitors? only those companies offering similar products / services, same target market, similar technology. E.g... Penguin Bar = Kit-Kat 6 pack all companies in same product/service category. E.g... Penguin = Crisps (chips) / Ice-cream all companies manufacturing/supplying products delivering same service. E.g... Bus carrier = Railways, cars, planes all companies competing for the same spending power E.g... House extension = holiday 12

13 Who Are Our Competitors (potentially)? Industry s Competitive Structure smaller companies attacking the market segment One seller Few sellers Many sellers companies operating in other markets wishing to expand companies wishing to diversify Undifferentiated product Pure monopoly Pure oligopoly Pure competitive Differentiated product Differentiated oligopoly Monopolistic competitive...how does it matter? Roles in the Target Market market leader market challenger Product/Market Battlefield Does competitors offers differ? -type od product...? -type of customer (market)...? market follower market nicher Product/market battlefield map and main findings and main implications... 13

14 Identifying & Evaluating Competitor s SW First step -collecting information about: sales, market share, cost& profit levels and how they appear to be changing over time, cash flows, return on investment, investment patterns, production process, product portfolio, organisational culture, product quality,the levels of brand loyalty, targets, distribution channels, financial capabilities, management capabilities and attitudes to risk, ownership patterns... Second step -assessment:comparative assessment of competitors, unweighted or weighted strength assessment... Identifying a Competitor s Response Profile At what point id the competitor likely to respond if challenged, and with what level of commitment? Is the competitor satisfied with its current position? How expansionist is the competitor likely to be? What likely moves or strategy shifts will the competitor make in the short term and the long term? What will provoke the greatest and most effective retaliation by the competitor? Are there areas in which the competitor is unlikely to retaliate? Competitors Reaction Patterns the laid-back competitor (What s the reason?) the selective competitor the tiger competitor Analyzing Marketing Opportunities Measuring and Forecasting Market Demand the stochastic competitor 56 14

15 The Organisation s Marketing Environment Outline -Measuring and Forecasting Market Demand Social factors Cultural forces Market demands Political structures Competitors The economy Suppliers The organisation Technology Demography Distributors & dealers Customers Legal structures Market Market potential Market penetration Forces that limit market penetration Market Development Index Accelerating Market Growth Market demand Market demand (volume) Market demand (value) Estimating market demand Market share Share development tree Forecasting market demand and sales Market Market potential and penetration Market is the set of all actual and potential buyers of a market offer (product) Market potential Market penetration Market potential the maximum number of customer who enter the market given a specific served market definition Market penetration the total number of customers who have entered that market at a specific point of time

16 Forces that limit market penetration Market Development Index Forces that limit market penetration: Awareness Availability Ability to use Benefit Deficiency Affordability Awareness Availability Ability to use Benefit Deficiency Affordability Maximum Number of Potential Customers Market Market Penetration Development = x 100 Index Market Potential Market penetration Market demand Marketdemandforaproductisthe total volume that would be bought by a defined customer group in a defined geographical area in a defined period in a defined marketing environment under defined marketing program Market demand (volume) Market demand (volume)= number of customers x purchase amount Market demand (volume)= (Existing customer x purchase amount) + (New customer x purchase amount)

17 Market demand (value) Market demand (value)= number of customers x purchase amount x average price Market demand (value)= (Existing customer x purchase amount x average price) + (New customer x purchase amount x average price) Market demand Market demand is function of: market development index condition of environment industry marketing expenditure marketing sensitivity of demand Estimating potential market demand Number of customers secondary data(total number of customers, market development index,rateofenter)-n Estimating market demand Multiple-factor Index Methods Purchase amount secondary data(average consumption, production, export and import of products GUS, Nielsen, GUS) and primarydata -q Average price secondary data (Nielsen, IMS,GUS) p B = 0,5y + 0,3r + 0, 2p i where Bi percentage of total national buying power found in area i yi percentage of national disposable personal income originating in area i ri percentage of national retail sales in area i pi percentage of national population located in area i i i i Q = n x q x p

18 Estimating future demand (sales) Forecasting Executive Opinions Heuristic methods Executive opinions Sales force opinions Survey of buyers intentions Statistic methods Time series analysis Exponential smoothing Moving averages method Regression analysis Collect and combine the sales projections of executives in different departments Pros: Easy, fast, cheap No statistical skills Forecast is joined with strategy Cons: Time consume executive Recent experiences have heavy impact 70 Forecasting Sales force Opinions Forecasting Survey of buyers intentions Asking salespeople to forecast attainable sales volume in their territories for a given time period and combining those projections to produce total sales forecast Pros: Easy, fast, cheap Salespeople have knowledge about customers Sales reps might have greater confidence in their sales quotas Forecast broken down for: products, territory, customers, distribution channels No statistical skills Cons: Time consume salespeople Underestimate forecast Salespeople do not have knowledge about strategy Recent experiences have heavy impact Asking potential buyers about intention to buy a certain product during a specific time period Pros: Information from customers Forecast broken down for: products, territory, customers, distribution channels Cons: Difficult, time consumed, expensive Problems with reach to customers Customers do not have disclose real intentions

19 Forecasting Time series analysis Developing on the basis of past sales Pros: Objective Fast, cheap Forecast broken down for: products, territory, customers, distribution channels Cons: Stable Statistical skills Stabile environment History of sales Sales is function of time Macro Environmental Analysis & SWOT Analysis y = f( t)= at+ b The Organisation s Marketing Environment Macro Analysis Frameworks The economy PEST Cultural forces Market demands Social factors Suppliers The organisation Demography Distributors & dealers PESTEL SLEPT Competitors Political structures Technology Customers Legal structures 75 19

20 The PEST Framework SWOT Analysis Political / Legal Legislative structures Monopoly restrictions Political / gov. stability Political orientation Taxation policies Employment legislation Foreign trade regulations Economic Business cycles Money supply Inflation rates Investment levels Unemployment Energy costs Organisation Socio-Cultural Demographics Lifestyles Social mobility Education levels Attitudes Consumerism Religion Technological Speed of change Rate of technological transfer Product life-cycles Availability Cost Levels of industrial and gov. R&D expenditure SWOT analysis draws together key strengths, weaknesses, opportunities and threats that have been derived as a result of the marketing audit, i.e. the macro and micro analysis and assessment SWOT Analysis Marketing Objectives Strengths convert Weaknesses SSpecific-descriptive, succinct and provide clarity throughout the organization as to what is to be achieved Internal Financial resources, product portfolio, economies of scale, technical capability,management ability, innovative design, profitability, R&D, marketing intelligence Lack of skilled labour, high workforce turnover, lack of financial investment, poor internal communications, lack of management commitment, supplier relationships, management weaknesses, over-capacity M Measurable-clearly state tangible targets that can be measured in the future A Aspirational- challenging but achievable, motivational External Global markets, competitive Global markets, investment activity, competitive opportunities, diversification, investment, supplier technology innovation, desertion, substitute internet, high quality products products, market saturation, resistance to change Opportunities Threats convert R Realistic-based on sound market analysis, financial, human & physical resources should underpin the objectives T Timebound-a timescale should be set against the achievment of each objective in order for performance measurement to be undertaken 20

21 Marketing Objectives e.g. rate of return on investment net profits cash flow total sales revenue sales volume market share consumer awareness number of distribution outlets average realized price DesigningMarketing Strategies S-T -P Outline S -T -P market segmentation market targeting positioning STP What Is It? Segmenting Dividing market according to some set of criteria into relatively homogeneous groups of customers Targeting Involves determining the atracttiveness and profitability of created segments and then choosing the strategy Positioning Creating value and image of company s offer, which should lead to getting a distinguished and important place in consumers minds through differentiation and developing competitive advantage 84 21

22 Phases in STP Procedure SEGMENTATION Segmenting 1. Identification of segmentation criteria 2. Dividing the market 3. Defining a profile of each segment Targeting 1. Segment attractiveness assessment 2. Choosing market strategy Positioning 1. Differentiation tools 2. Positioning process 86 Segmentation: Conditions Segmentation Do customers have similar needs and wants? Can we collect information about the segment? Are the segments profitable? Can the segments be reached? SENSITIVITY MEASURABILITY SIZEABLE ACCESSABILITY S E G M E N T A T I O N Basis for segmentation: geographics demographics geodemographics psychographics behaviour Internally homogeneous, externally heterogeneous 22

23 Segmentation Criteria 4 B2C Demographics Geographic Socio-economical/ demographic Psychographic Gender, age, family size, family life cycle Size of town, administrative, climate Education, job, social class, religion, race, nationality, income Personality, lifestyle, innovativeness, risk taking Family life cycle Single DINKS FullNest Emptynest Survival Behavioral Status, consumption level, brand loyalty, attitude towards the product, purchase readiness Preferencial type of preferedbenefits, place of purchase, reason of purchase Geographical Criteria Typical segmentation criteria: region, voivodship, district, municipality, town Also: climate, population density Advantages: easy access to info Disadvantages: too general, ignores other important characteristics Needs also other criteria Socio-economic Grading A Upper middle class B Middle class C1 Lower middle class C2 Skilled working class D Manual workers E Lowest subsisence 23

24 Geodemographic Segmentation The Acorn Segmentation analysis of people according to where they live based on belief that people live in homogenous neighbourhoods Acorn Mosaic Thriving (19,7%) Expanding (11,6%) Rising (7,8%) Settling (24,1%) Aspiring (13,7 %) Striving (22,7 %) As an example of a more detailed breakdown, group Aspiring contains the following groups: - new home owners, mature communities (9,7%): council areas, some new home-owners; mature home-owning areas, skilled workers; low rise estates, older workers, new home-owners birds of a feather flock together - white collar workers, better off multi-ethnic areas (4%): homeowning multi-ethnic areas, young families; multioccupied town centres, mixed occupations, multiethnic areas, white collar workers Behavioral Criteria Preferences Require empirical research Typical segmentation basis: Occasions ordinary vs special Expected benefits quality, service, savings, speed User status non-user, ex-user, potential, regular Usage intensiveness occasional, average, intensive Loyalty none, average, strong Purchase readiness unaware, aware, informed, interested, wanting to buy Attitudes toward the product enthusiastic, positive, neutral, negative, hostile Type of preferred benefits Low price, economy, convenience, durability, reliability, etc. Preferred purchase place Modern-traditional trade Electronic-stationary trade(click vs brick) Reasons of purchase business, holidays, family (trip) For self, gift 96 24

25 Psychographic Criteria Segmentation basis include: lifestyle, personality, interests, etc. Basic areas of marketer s interest include: Social behavior free time activity, recreation, sport, holidays, shopping habits Interests music, books/magazines, science, history, fashion Opinions social issues, aesthetics, economical, political, cultural, religious, educational Business Markets Segmentation demographic industry, company size, location operational variables technology, user or nonuser status, customer capabilities status purchasing approaches general purchase policies, purchasing criteria, nature of existing relationships situational factors urgency, specific applications, size of orders personal characteristic buyers-seller similiarity, attitudes towards risk, loyality Segmentation Criteria 4 B2B Main Operational Attitude towards purchase Preferrences Personal qualities Organization size, geographical scope, industry, type of organization, user status, location technology, average product usage, average order size, financial capabilities Organizational structure, supply funcion, way of dealing with transactions Preferred benefits, ways of obtaining products, length of contract Buyer-seller likeliness, loyalty, risk taking Cost Effective Segmentation Measurable Can you define what it is? Accessible If you can define it -can you get at it? Substantial Is it large enough to be profitable? Unique What makes it different from other segments? Appropriate Does it meet your resources and objectives, can it be actioned? Stable Can you predict how it will develop? 99 25

26 Segment Attractiveness Assessment Market Targeting Options Segment Attractiveness Mass marketing Full-scope marketing Selective marketing Concentrated marketing big segment Concentrated marketing small segment Niche marketing marketing Demand Criteria Competition Criteria Accessability Criteria Current size Numberof competitors Company awareness Growth dynamics Exit barriers Access to distribution Potential size Offer differentiation Adjustment Substitutes Positioning positioning is how the product is perceived and evaluated by the target audience relative to competitor products companies must differentiate products or services positioning must promise the benefit the customer will receive should not be all things to all people should be believable Positioning- Phases Identification of attributes which distinguish theofferon themarket Defining competitors market position Market position selection positioning process Matching the offer with positioning strategy Communication

27 Choosing Market Position Positioning Howmany differences What differences How 1 dimension 2 dimensions Multidimentional Important Out-standing Safe Connected Additional criteria Strengthening current position Seeking new position Competition repositiong Positioning Strategies Overall Focus Options attribute customer benefit price and quality use / application product user product class competitor 105 Major Positioning Errors underpositioning -brand does not have a clear identity in the eyes of the customer DesigningMarketing Strategies overpositioning -buyers may have too narrow image of a brand confused positioning -too many claims might be made for a brand Product doubtful positioning -positioning may not be credible in the eyes of buyer 27

28 Product Outline product decisions - product mix decisions - product attributes - new product development -product life cycle Product definition Product everything (set of functional, social & psychological benefits for a customer), which can be offered for consumption, usage, spending time, etc., in order to satisfy customer s needs in the exchange process 110 Types of Product Tangible goods Services Celebrities Organizations Places Ideas Events Symbols Marketing Decisions Regarding Product 1. Market assortment planning 2. Individual product attributes 3. New product planning 4. Product life cycle

29 Market Assortment Assortment width Length of product line Depth of product type Assortment integrity Product system Assortment Width number of assortment groups in the company Assortment Length variety of product types and brands within each of the assortment group Assortment Depth Variety of item options within a particular product type

30 Market Assortment Integrity customer Are the products offered to the same customer group? functional Are assortment groups complementary or satisfy different needs? technological Can the same machines, technology, know how be used to produce these goods? supply Can the same materials, resources and components be used? distribution Cant the same distribution channels and sales methods be used? promotional Can the same promotion forms and tools be used? logistics Can the goods be offered, transported, stored in the same way? vertical Is company s activity a part of the same market system (industry, branch)? Product - levels 117 Product Levels Core Product Tangible (formal) product delivery installation packaging Core product after sale service Set of benefits offered to consumers within a particular product basic benefits supplementing benefits brand quality core benefit... styling features drill making holes car transportation beer entertaining way of satisfying thirst warranty credit Augmented (enhanced) product 30

31 Formal Product Brand Sum of utilitarian and functional value (quality) in a particular project offered in a packaging (sometimes) and under a certain brand name which allows realization of a particular set of benefits delivered in a product Technical characteristics Technical parameters Accordance of quality with technical parameters Style Size Identification, instruction Packaging Brand (name, logo) Brand Brand - name, sign, symbol, pattern or a combination of all the above,givenbyasellerinorderto identify and differentiate the product among the competition Brand: Decisions Functions: Identification Guarrante Promotional Meaning of a brand: qualities benefits values culture personality user 31

32 1. Shall We Brand?.. YES NO GENERIC products 2. Who Is The Sponsor? Producer Intermediary Mixed 3. How Can We Obtain a Brand? create own buy licence 4. How To Brand? individual brand name familybrand(thesame for allthe assortment) mixed brand 32

33 Benefits From Branding Higher price Convenient ordering Allows legal protection of a product Helps building customer loyalty Facilitates market segmentation Helps building company s image Enhanced Product Pre&post sales services Guarantee length and scope Service speed and scope Alternative usage forms Loans Return policy Re-buying of the used product Sale of certified products Cycle - Profit Relationship The Process of NPD introduction growth maturity decline profit time idea generation screening concept development and testing marketing strategy business analysis product development market testing commercialisation 33

34 DesigningMarketing Strategies Promotion Promotion promotion tools - advertising - sales promotion - public relations - personal selling - direct selling Principle Methods Communication at Work Advertising Personal Selling Direct Marketing Public Relations Sales Promotion Differentiates between competitors, substitutes and alternatives. Reminds and re-enforces past transactions. Makes future dealings desirable. Informs makes potential customers / users aware of offer. Essential to diffuse information. Persuades influences the decision making process. Makes the exchange desirable. 34

35 Marketing Communications Source: Fill, 1999 The Promotional Toolbox -a Bag of Marbles A management process through which an organisation enters into a dialogue with its various audiences. Personal selling Sponsorship? Field marketing Advertising Word of mouth Commerce. the objective of the process is to (re)position the organisation and/or their offerings, in the mind of each member of the target audience in a consistent and likeable way. Internal marketing Point of Purchase Sales promotion Packaging Consumer Audience Channel Audience Stakeholder Audience Corporate identity Website Direct marketing Exhibitions Branding Perception Public relations Push and Pull Strategy Push strategy-decision to concentrate communications effort on the members of the distribution channel, i.e. the wholesaler and retailers Pull strategy-in contrast to the push, creating demand for the product through direct communication with the customers both push & pull strategy-in order to assert as much influence as possible on the supply chain and the customer Possible Communications Objectives clarification of customer needs increasing brand awareness increasing product knowledge improving brand image improving company image increasing brand preference stimulating search behaviour increasing trial purchase increasing repeat purchase increasing word-of-mouth recommendation improving financial position increasing co-operation from the trade enhancing the reputation with key stakeholder building up management ego... 35

36 Advertising Is any paid form of non-personal presentation and promotion of ideas, goods or services by an identified sponsor Major decisions (5 Ms): - Mission: What are the advertising objectives? -Money: How much can be spend? - Message: What message should be sent? -Media: What media should be used? - Measurement: How should the results be evaluated? Pros Wide range Low cost of reaching a single customer High control Appeals to emotions Cons Feedback may be delayed Highly standardized message Some forms very expensive Limited information capacity Good Advertisement: High visibility Appeals to emotions Close in time and space Originality Accessible information repetitive Associated with info already known: memories, tradition, stereotypes Advertising Tools TV commercials Radio commercials Newspaper and magazine ads Exhibition and POS Outdoor Internet Persuasive 36

37 Sales Promotion Sales Promotion A range of tactical marketing techniques designed within a strategic marketing frameworktoaddvaluetoaproductorservice in order to achieve specific sales and marketing objectives Short-term incentives motivating customers to (faster) purchase decision or buying more; intermediaries are encouraged to sell more and more actively Customer incentives - Free samples - Lotteries and contests - Discounts - Coupons - Refunds - Presentations, degustation, demonstrations - Prizes for loyalty Intermediaries incentives - Price discounts - Help with exhibitions - Product samples - Information and promotion materials - Influencing the staff - Exhibitions, trade shows, etc - Refunds Pros + quick feedback + liked by buyers + increases impulse shopping + adds value to a product + develops cooperation in distribution channels Cons -Can be used in shortterm -Later customers do not want to buy products on regular conditions -Worsens company s image -May push customer s attention towards less important factors (price-payment) Public Relations PR is a planned and sustained efford to establish and maintain goodwill and mutual understanding between an organization and its publics (e.g. Customer groups, local and central government, the general public, financial institution, the media, employees) 37

38 Public Relations Objectives Pros Cons to create and maintain the corporate and brand image to enhance the position and standing of the organization in the eyes of public to communicate the organization s ethos, philosophy, corporate values to disseminate information to the public to undertake damage limitation activities to overcome poor publicity for the organization to raise the company profile and forge stronger, lasting, customer and supply chain relationships + high credibility + lower costs + can be used when advertising is prohibited + mass receiver + can reach customers avoiding advertising -Low control over the place, time, and content of information presented -Difficulty in planning activities -Impossible to familiarize customers with offer details Public Relations Personal Selling publicity internal communication and with cooperators sponsoring corporate identity lobbying crisis communication An interpersonal communication tool which involves face-to-face activities undertaken by individuals, often representing an organization, in order to inform, persuade or remind an individual or group to take appropriate action, as required by the sponsor s representative 38

39 Pros Cons Direct Marketing + Fast feedback -High cost of reaching a customer and passing + Information range can be the info easily adjusted + Possibility of info exchange + Relatively high effectiveness of seller s personal influence on purchase decisions -Low effectiveness when a customer does not know much about the offer -Only a very limited number of customers can be reached Direct Marketing Personal, persuasive communication by people both employed and not employed by the company OR An interactive system of marketing which uses one or more advertising media to effect a measurable response and or transaction at any location (US Direct Marketing Association) Direct Marketing Direct Marketing Benefits Includes Direct Mail Telemarketing Magazine Inserts Door to Door Distributions Mail Order Features Advertising and selling combined Results are measurable High degree of flexibility Easily controllable Highly selective Economic ability to target to the individual allows personalisation supplies a response mechanism and reinforcement for other media scope for vast use of different creative formats highly sophisticated testing 39

40 The Principal Characteristics of Communications Tools Advert. Sales promotion Communications PR Personal selling Direct marketing Costs The Principal Characteristics of Communications Tools Advert. Sales promotion PR Personal selling Direct marketing Ability to deliver personal messages Scope for reaching large audiences Degree of interaction Perceived credibility by target audiences Low Low Low High High High Medium Medium Low Medium Low Low Low High High Low Medium High Medium Medium Absolute costs High Medium Low High Medium Cost per contact Low Medium Low High High Wastage levels High Medium High Low Level of investment Low High Medium Low High Medium Control The Principal Characteristics of Communications Tools Advert. Sales promotion PR Personal selling Direct marketing DesigningMarketing Strategies Scope for targeting specific audiences Medium High Low Medium High Distribution Management s ability to adjust the deployment of the tool ws circumstances change Medium High Low Medium High 40

41 Distribution Distribution channels Outline selecting marketing channels - direct vs. indirect channels - number of channel levels - number of intermediaries - vertical marketing systems The distribution channel consists of a group of individuals or organizations that assists in getting the product to the right placeattherighttime. Selecting the Channels of Distribution Company Sales Force or Manufacturer s Sales Agency? What are the product characteristics and how do they affect methods of distribution? Who are our customers? Where are our customers? What are our customers requirements? How, when and where do they want to buy our products? What are our competitors doing by way of distribution? What is the cost of distribution? What are the legal and regulatory constraints of distribution? Selling costs ($) Level of sales ($) Manufacturer s sales agency Company sales force 41

42 Channel Design Decisions Channel Levels channels levels number of intermediaries at each channel level vertical marketing systems short vs. long channel (from one to three level) key factors: - average order size - geographic concentration of customers - seasonality of sales - geographical distance from producer to market -perishability of the product Number of intermediaries Intensive distribution Three strategies: Key characteristic include: intensive distribution-as many available outlets as possible hold this product; products for which consumers require a great deal of location convenience selective distribution-more than a few but less than all of the intermediaries exclusive distribution-severely limiting the number of intermediaries; even only one outlet in a certain geographic area supplies a product maximum number of outlets covered to maximize availability target outlets in as many geographical regions as possible consumer convenience products high number of purchasers high purchase frequency impulsive purchase low price 42

43 Selective distribution Exclusive distribution Key characteristic include: Key characteristic include: medium level of customers -but likely to be significant less intensive distribution f outlets retailers may require specialist knowledge shopping based products purchase is occasional purchase is more likely to be planned medium price relatively few customers limited retail outlet close retailer/customer relationship speciality products infrequent purchase high involvement and planned purchase high price Impact of Internet on Channel Decisions Significant for financial services, leisure industry & others.... DesigningMarketing Strategies Endless potential benefits: improve corporate image, improve customer service, increase visibility, create market growth opportunities, lower overall business costs, increase speed of transactions, improve management of information, constraints removal of time and distance, ability to full competitive area, cost-effectiveness, more effective/closer relationships... Price (an insight into the views of 300 executives from across Europe, source: Chaffey et al., 2000) 43

44 Price Price decisions Outline setting price - calculation of price range - selecting the final price selecting the pricing objective determining demand estimating costs analyzing competitors costs, prices and offers selecting a pricing method selecting the final price Selecting the Pricing Objective Determining Demand survival maximum current profit maximum current revenue maximum sales growth maximum market skimming product-quality leadership price sensitivity price elasticity of demand 44

45 Estimating Costs Analyzing Competitors Costs, Prices and Offers fixed costs typical methods variable costs main findings total costs Selecting a Pricing Method Selecting the Final Price markup pricing target-return pricing perceived-value pricing value pricing going-rate pricing auction-type pricing group pricing psychological pricing gain-and-risk-sharing pricing influence of other marketing-mix elements company pricing policies 45

46 Adapting the Price geographical pricing price discounts promotional pricing discriminatory pricing 46