Strategy and the Marketing Mix Business Policy Please note that these slides are not intended as a substitute to reading the recommended text for this course. 0
Objectives Relevance of strategic marketing The role of the consumer in a firm s competitive advantage The role of pricing management in a firm s competitive advantage Impact of price sensitive customer segment Apply STP Segmentation, Targeting, and Positioning process Chapter 2: Johnson, Scholes & Whittington 1
Consumer / Buyer Behavior The decision processes and purchasing activities of people who purchase products for personal or household use and not for business purposes. 2
Consumer Buying Decision Process/Possible Influences on the Process 3
Expanded Marketing Mix 7Ps 4
Pricing decisions are influenced by various factors Cost of the Product Company Objectives Pricing Policy & Decisions Customer Needs & Characteristics Competition 5
Pricing decisions from a company perspective 6
Marketing Communications - Promotional Mix Advetising Sales Promotion Public Relations Personal Selling Direct Marketing 7
Integrated Marketing Communications An approach to achieving the objectives of a marketing campaign, through a well coordinated use of different promotional methods that are intended to reinforce each other. 8
3 Steps in Target Marketing (S T P) Segmentation Marketing Identify bases for segmenting the market Develop segment profiles Target Marketing Develop measure of segment attractiveness Select target segments Market Positioning Develop positioning for target segments Develop a marketing mix for each segment 9
Segmentation, Targeting & Positioning (STP) - Market segmentation This is the process of dividing the total market for a good or service into several smaller, internally similar (or homogeneous) groups. All members in a group have similar factors that influence their demand for the particular product. Mass marketing Segmented differentiated marketing Niche distinctive traits Micro - specific 10
Bases for segmentation Geographic The city size, urban/ suburban/ rural population distribution and climate. Demographic The distribution of a population s age, sex, income, stage in family cycle and ethnic background. Psychographic Personalities, lifestyles, social class including activities, interests and opinions (AIO). Behaviour towards products. Benefits desired or sought. Product usage rate. 11
Geographic Example - McDonalds Mcdonalds globally, sell burgers aimed at local markets, for example, burgers are made from lamb in India rather then beef because of religious issues. In Mexico more chilli sauce is added and so on. Tereyaki burger in Japan. 12
Segmentation Criteria Measurable examples include the size, purchasing power, and profiles of the segments. Accessible refers to the fact that the market can be effectively reached and served. Substantial refers to the fact that the markets are large and profitable enough to serve. Differentiable refers to the fact that the markets are conceptually distinguishable and respond differently to marketing mix elements and programs. Actionable refers to the fact that effective programs can be designed for attracting and serving the segments. 13
Evaluating Market Segments Segment size and growth Segment structural attractiveness think 5 Forces Competition / Substitute products /Power of buyers /Power of suppliers Company objectives and resources 14
Target Marketing Strategies Undifferentiated marketing targets the whole market with one offer - Mass marketing Differentiated marketing targets several different market segments and designs separate offers for each Concentrated marketing targets a small share of a large market 15
Market coverage strategies A. Undifferentiated marketing (Aggregation) Company marketing mix Market Appeal to All B. Differentiated marketing (Single segment) Company mix 1 Company mix 2 Company mix 3 Company marketing mix Segment 1 Segment 2 Segment 3 C. Concentrated marketing (Multiple segments) Segment 1 Segment 2 Segment 3 Shoes Think Coca Cola / Cars 16
Choosing a Targeting Strategy Depends on: Company resources limited resources - Concentrated Product variability little to no variability steel - undifferentiated Product life-cycle stage new product could chose undifferentiated / concentrated Market variability same tastes - undifferentiated Competitor s marketing strategies opposite /same 17
Positioning strategies Positioning is assessed: In relation to a competitor. According to a product class or attribute. By price and quality. Positioning can be in various forms, although it always incorporates a statement that identifies, (based on the marketing mix) how a business wants its products or services to be perceived by the consumer. 18
Selecting a position Factors to consider: Competition look for a gap or niche. Customers seek product attributes. Company image what is the current image? Target market have the needs of the target market changed? Do we need repositioning? The marketing mix does it support the selected position? 19
Branding - Definition Branding is the imagery a company uses to make us IDENTIFY them and pick them out from their competition. Branding can involve the use of a CONSISTENT range of colour or a LOGO. The Brand can be the company e.g. TESCO; or it can be a product range that is a Brand e.g. Lynx (made by Unilever). 20
Products & Brand 21
Benefits of Branding to the consumer Increases loyalty Can charge HIGHER PRICES Establishes product s position Can launch complimentary products in same brand name e.g. shampoo; conditioner; hairspray. Positive association Be easy to pronounce and remember Suggest product benefits Be distinctive 22
Benefits of Branding to the organisation Basis for product s quality story Provides legal protection Helps to segment markets Allows premium pricing Helps create loyalty 23
Brand Positioning 24
Example: Tesco Own-label brands have become increasingly important in the Ireland. Once considered as a cheap alternative, own label brands are now an acceptable alternative, which account for over 20 per cent of food purchases. Supermarkets have moved on from creating copy-cat brands of leading manufactures to producing their own good quality ranges. Ad: Give the kids healthy food they'll love with Disney Kids! Trusted by parents, loved by kids, Tesco Disney is a nutritious new range that encourages healthier eating. Making good food great fun the range covers everything from fresh fruit to Mickey shaped pizza. 25
What is a New Product? Replacement New to the world New Product Addition New Line 26
PLC Pre- Launch 27
The Seven-Stage New Product Development Process Idea Generation Screening Concept Dev Strategy Dev Business Analysis Product Dev Mkt Testing 28
What is Service Marketing? Definition: Activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product 29
Examples of Service Industries Health Care hospital, medical practice, dentistry, eye care Professional Services accounting, legal, architectural Financial Services banking, investment advising, insurance Hospitality Travel Others restaurant, hotel/motel, bed & breakfast ski resort, rafting airline, travel agency, theme park hair styling, pest control, plumbing, lawn maintenance, counseling services, health club, interior design 30
Characteristics of Services Compared to Goods Intangibility Variability / Heterogeneity Inseparability / Simultaneous Production and Consumption Perishability 31
Nature of Services Characteristics Intangibility Inseparability Variability Perishability Cannot be touched, seen, tasted, heard, or smelled before purchase Lack of trial means higher consumer risk Consumers rely on cues to draw quality inferences Marketers must try to tangibilise the intangible 32
Nature of Services Characteristics Intangibility Inseparability Variability Perishability Services are produced and consumed at the same time (air travel) Service providers and sometimes other customers become part of the service (restaurant) Strong preferences for service providers exist 33
Nature of Services Characteristics Intangibility Inseparability Variability Perishability Service providers vary with respect to attitudes, skills, mood, etc. Even the same provider may give different service on a different day. Quality control is critical: Hiring the right people Standardising service Monitoring satisfaction 34
Nature of Services Characteristics Intangibility Inseparability Variability Perishability Services can not be inventoried or otherwise stored Capacity / demand management is critical: Demand side strategies Supply side strategies 35
The Services Marketing Triangle 36
Ways to Use the Services Marketing Triangle Overall Strategic Assessment How is the service organization doing on all three sides of the triangle? Where are the weaknesses? What are the strengths? Specific Service Implementation What is being promoted and by whom? How will it be delivered and by whom? Are the supporting systems in place to deliver the promised service? 37
Five Major Approaches to Overcome Service Communication Channels Understanding customer needs Managing expectations Traditional marketing communications Sales and promotion Advertising Internet and web site communication 38
Keeping Promises Service delivery Reliability, responsiveness, empathy, assurance, tangibles, recovery, flexibility Face-to-face, telephone & online interactions The Customer Experience Customer interactions with subcontractors or business partners The moment of truth 39
Enabling Promises Hiring the right people Training and developing people to deliver service Employee empowerment Support systems Appropriate technology and equipment Rewards and incentives 40