The Marketing Process The marketing process: –Analyzing marketing opportunities –Selecting target markets –Developing the marketing mix, and –Managing.
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The Marketing Process
• The marketing process:– Analyzing marketing
opportunities
– Selecting target markets– Developing the
marketing mix, and
– Managing the marketing effort
• Three key steps:– Market segmentation
– Target marketing
– Market positioning
Figure 2.4
Identifying Your Competitors
• Companies or individuals which Companies or individuals which provide similar products, services, or provide similar products, services, or benefits as perceived by your target benefits as perceived by your target customer.customer.
Types of CompetitionThree Types
1. Direct (first level)Companies or individuals that offer the same products or services as perceived by the target customer.
2. Indirect (second level) Companies or individuals that offer the same benefits as
perceived by the target customer.
3. Invisible competitionPeople or businesses that have the capacity or desire to provide the same products, services or benefits that you do.
Competitive Intelligence• Competitive intelligence (CI)
The process of learning, collecting and using information about your competitors for the purpose of growing your business.
• Requires a well-researched understanding of
Your target customers
Your current competition
Your future customer
Competitive Touchpoint AnalysisA touchpoint is any contact that your customer has with any aspect of your competition. Making a list of all the touchpoints allows you to identify your competitors’ strengths and weaknesses.
The Competitive Edge
Niche or Focus StrategyNiche or Focus Strategy
Three BroadCompetitiveStrategies
Three BroadCompetitiveStrategies
Differentiation StrategyDifferentiation Strategy
Cost Leadership StrategyCost Leadership Strategy
Competitor Analysis
Two methods to evaluate potential competitors are:
1. Competitive test matrixA grid showing the strengths and weakness of your
competitors.
2. Competitive SWOTFor each competitor, evaluate its internal strengths and
weaknesses and external opportunities and threats.
The Competition Life Cycle
EmbryonicEmbryonic
GrowthGrowth
MatureMature
DeclineDecline
Key Stages of the
Life Cycle
Key Stages of the
Life Cycle
Your CompetitivePositioning Strategy
EmbryoEmbryo DeclineDecline
MaturityMaturity
GrowthGrowth
CU
ST
OM
ER
SC
US
TO
ME
RS
CO
MP
ET
ITIO
NC
OM
PE
TIT
ION
Figure 5.4Figure 5.4
TARGET MARKET(6 - O’s)
SELLER’S MIX(The P’s)
UNCONTROLLABLE FACTORS*Demographics *Globalization*Political
*Economy *Environmental * Research *Legal* Government * Technology * War * Terrorism
Reviewing the Outputs
- Types of distribution- Distribution strategies (consumer & business)
- Types of promotion- Promotional strategies
(consumer & business)
- Price Elasticity (Sensitivity)- Pricing strategies
(lifecycle/product type)- Pricing policies
Product PromotionPricing
Marketing Mix Elements
Place
- Product types- Product tangibility- Product lifecycle
- New product development
Analytic Tools:
• Research• Balance & Gaps Assessment
• Measurement, Monitoring & Evaluation
Marketing Objectives & Strategy
The Four P’s of the Marketing Mix
• The marketing mix:– Set of controllable,
tactical marketing tools
– Product, price, place, and promotion
– Blended to produce the desired response in the target market
• Internal consistency helps to be successful
• Represents the seller’s view of the market
Figure 2.5
The 4 P’s Versus 4 C’s
• A different (buyer’s) way of looking at the four P’s
Product
Price
Place
Promotion
Customer solution
Customer cost
Convenience
Communication
Four Service Characteristics
• Service: any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything
Figure 10.5
Three Levels of Product
• Core product: – Problem solving services or benefits of
consumers’ purchase
• Actual product: – A product’s parts, quality,
features, design, brand name and other attributes received
• Augmented product:
– Additional consumer services and benefits built around core and actual product
– Add value/ differentiate product from competition
The Total Product Concept
Brand
Warranty and
service
Product image
Package and label
Physical or Functional
Characteristics of a Good or Service
10-3
A total bundle of physical, service, and symbolic characteristics designed to satisfy customer wants.
Marketing the Product: Brand Equity
Brand association
Brand loyalty
Brand awareness
Perceived quality
10-11
Brand Equity
How well and widely a brand is
known
Customer assessment of
how well a product meets
expectations
Connections consumers make between products
and their perceptions
(Brand Image)
Level of commitment a
consumer has to a brand (familiar, preference and
insistence)
Represents the value customers (and the stock market) place on the sum of the history the customer has had with a brand.
Stages in the Product Life CycleA product’s progress through introduction,
growth, maturity, and decline stages.
Objective: Stimulate Demand Stimulate purchase & repurchase
Protect volume from competition
Protect volume from shifting consumer preference
Overlap of Life Cycle for Products A and B
What is a Price?
• Price: the amount of money charged for a product or service, or the sum of values exchanged for the benefits of having or using the product or service
• Also known as rent, tuition, fee, fare, rate, interest
• Historically, most pricing was dynamic, arrived at through negotiation
• Fixed price policy more recent
• Price is the only marketing mix element that produces revenue therefore it is a key element in the strategy
• Pricing best practices:– Develop a 1% pricing mindset
– Consistently deliver more value
– Price strategically, not opportunistically
– Know your competition
– Make pricing a process
Source: Paul Hunt, Strategic Pricing Division, The Advantage Group, Toronto, Ontario
Costs
• Costs set the floor, or lowest amount that should be charged -Ideally covering all costs plus margin for profit
• Fixed costs: costs that do not vary with production - overhead (rent, utilities, insurance, management salaries)
• Variable costs: costs that vary directly with the level of production (raw materials, labour, supplies)
• Total costs: the sum of fixed and variable cost. Average cost to produce decreases as volumes increase (Economies of scale)
PRICE OPTIONS
• Prestige
• Odd
• Externally Guided
• Skim the Cream
• Penetration
• Full Cost
• Demand
New-Product Pricing
• Market skimming pricing: setting a high price to skim maximum revenues from segments willing to pay (new technology)
• Market penetration pricing: setting a low price for a new product to attract a large number of buyers and achieve a
large market share • Advantage to be gained by
large volumes early in life cycle
Figure 7.7
Skimming price drops in steps
Price Adjustment Strategies
Table 12.2
Discount andAllowance pricing
Segmentedpricing
Psychologicalpricing
Promotionalpricing
Geographicalpricing
Internationalpricing
Reducing prices to reward customerresponses such as paying early
Adjusting prices to allow for differencesin customers, products, or locations
Adjusting prices for psychologicaleffect; reference pricing
Temporarily reducing pricesto increase short-run sales
Adjusting prices to account forgeographic location of customers
Adjusting prices forinternational markets
Promotional Mix
• Promotional mixThe key to connecting with
customer is your promotional
mix—all the elements that you blend
to maximize communication with
your customer.
PROMOTION• Direct marketing:
– Direct communications with targeted individuals to obtain an immediate response and lasting customer relationships
• Integrated marketing communications:– Coordinating/integrating to
deliver a clear, consistent, and compelling message on all communication channels
– Leverage: the overall effect is greater than the sum of its parts
Steps in Developing Effective Communications
• Identifying the target audience:– Will determine what, how, when, where, and who will say it
• Determining the desired response:– Will depend on what “stage” of the purchase decision process the
buyer is presently at
Buyer Readiness Stages:
The stages that buyers normally pass through when making purchase decisions
Figure 15.3
PROMOTION
Advertising
Publicity
Personal Selling
Special Promotions
PROMOTIONAdvertising paid, non-personal
Institutional
Brand
Sales
Classified
Relationship between Advertising and the Product Life Cycle
• For product advertising to be effective it must accomplish three key objectives:
InformativeAdvertising
Sal
es
Introduction
PersuasiveAdvertising
Reminder-Oriented Advertising
Time
Growth Maturity Decline
Inform Persuade Remind
PROMOTION
Publicity not paid, non-personal
* high credibility
* off-guard
* dramatization
Public Relations
• Public relations: – Building good relations with the company’s various publics
– obtaining favourable publicity,
– building a good corporate image, and
– handling or heading off unfavourable rumours, stories, and events
• Public relations functions:– Press relations
– Product publicity
– Public affairs
– Lobbying
– Investor relations
– Development
• Public relations tools:– News, speeches
– Special events
– Mobile marketing
– Published materials
– Website
– Public service activities
PROMOTION
Personal Selling person-to-person
*Product awareness & preference
*Closing a sale
*Negotiating price and terms
* High end of preference scale
Customer Service and QualitySome Market Facts
If you provide quality service, you can:• Charge up to 10 percent more for your product or service
Increase sales growth
Reduce costs
Gain new customers
Make word-of-mouth advertising work for you
ANDAND
• Increase Profits!Increase Profits!
PROMOTION
Special Promotionsshort term buy incentives
•Consumer
•Trade •Sales-force promotions
Direct MailDirect MailDiscount CouponsDiscount Coupons
Promotion in
Cyberspace
Promotion in
CyberspaceBranding Yourself
Branding YourselfPromotional Mix
CataloguesCatalogues
Paid mediaadvertisingPaid mediaadvertising
Point-of-purchase displays
Point-of-purchase displays
Working visibly
Working visibly
Direct MailDirect Mail
Free Ink and Free Air
Free Ink and Free Air
Trade ShowsTrade Shows
Industry LiteratureIndustry
Literature
Personal SellingPromotional MixPromotional MixPromotional MixPromotional Mix
Money-Back Guarantees
Money-Back Guarantees
Business Cards
Business Cards
Integrated Marketing Communication (IMC) Applied
Advertising
Sales Promotion
Public Relations
Purpose: Awareness and preference buildingTiming: Introduction and Growth StagesTypes: Informative, Persuasive, Reminder, Retail
Personal Selling
Direct Response
Purpose: IncentiveTiming: Late Growth, Maturity, Decline StagesTypes: POP, Specialty, discount and loyalty programs
Purpose: Fostering product and company goodwillTiming: Introduction and Growth stages (builds credibility)Types: Sponsorship, Publicity
Purpose: Stimulate immediate salesTiming: Introduction, Growth, Maturity StagesTypes: Direct Mail, Internet banners, TV
Purpose: Complex, customized sales, personal referencesTiming: Introduction, Growth and Maturity StagesTypes: Order processing, Creative selling
Guerrilla Marketing
• Guerrilla MarketingAn important part of your promotional mix
will
be your “guerrilla marketing” promotional
strategies—unconventional methods of
getting the customer’s attention at minimal cost.
Push Versus Pull Promotional Strategies
• Refers to the direction of promotional effort• Exists as a range, yet most companies use a combination of both
• Consumer goods use primarily pull; advertising
• Industrial goods use primarily push; personal selling
Figure 15.4
Plotting Your Future Checklist
What is your marketing strategy?
What prices will you charge?
What are your promotional mix, goals and objectives?
What stimulates your target market to buy or use your product or service?
What has your primary and secondary research told you about promoting your business?
Plotting Your Future Checklist
Develop a promotional strategy for your business.
How will you cost out your promotional budget?
Does your business have a unique twist for a possible publicity story?
Why did you select the business name you are using?
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