ADVANCED ADVERTISING Marketing

WHAT EXACTLY IS “MARKETING”?

MARKETING

Marketing consists of the strategies and

tactics, used to identify, create and maintain

satisfying relationships with customers that

result in value for both the customer and the

marketer.

DISSECTING THE DEFINITION

Strategies and tactics

Strategies – the direction marketing efforts take over a period of time

Tactics – actionable steps or decisions made to follow the strategies

Satisfying relationships – Provide products and services that customers want and make the customers feel that they are partner in the transaction, rather than just a source of revenue.

Identify, create and maintain – Identify the customers, create avenues to build relationship with customers, and take steps to keep customers satisfied and happy.

Value for both customer and marketer – both the customer and marketer gain benefit, not necessarily monetary.

ROLE OF MARKETING

Developing products that satisfy needs and enhance society’s quality of life.

Creating a competitive environment that helps lower product prices.

Developing product distribution system to provide product to a large number of customers and many geographic locations

Building demand for products that require organizations to expand labor force

MARKETING MIX

A planned mix of the controllable elements of the product’s marketing plan.

They are adjusted until the right combination of the elements is found to serve the needs of the consumer and generating income for the organization

ELEMENTS OF THE MARKETING MIX

Marketing mix

Place

Promotion

Price

Product

PRODUCT

The actual goods or services made for consumers according to their needs and requirements.

Supporting elements like warranties and guarantees are also included in Product.

Every product goes through a cycle called product life cycle. At each stage different strategies are used.

PRODUCT LIFE CYCLE

Introduction WithdrawlDecline MaturityGrowth

PLC - INTRODUCTION

The product is introduced in the market.

No pressure of immediate profit.

Awareness for product is created.

Generally no competitors at this stage.

PLC - GROWTH

Competitors enter the market with similar products.

Products become profitable.

Advertising spend is high.

Companies focus on brand building

Market share tends to stabilize.

PLC - MATURITY

Sales grow at a decreasing rate and then stabilize.

Companies attempt to differentiate products using branding.

Price wars and intense competition occurs. Market becomes saturated. Some producers leave the market due to

small profit margins. Promotion is widespread and media usage is

high.

PLC - DECLINE

More innovative products have entered the market.

Consumers tastes have changed.

Intense price –cutting

Marketing spend is decreased.

PLC - WITHDRAWL

Products are finally removed from the market, producers move on to other businesses.

ELEMENTS OF THE MARKETING MIX

Marketing mix

Place

Promotion

Product

Price

PRICE

The process of setting a price for a product,

including all kinds of incurred costs like production cost,

manufacturing cost, storage cost, discounts to

be offered etc.

PRICING STRATEGIES

Four basic strategies

Premium pricing

Penetration Pricing

Economy Pricing

Price Skimming

PREMIUM PRICING

Use a higher price where there is a uniqueness about the product or service.

Used when a substantial competitive advantage exists.

Such prices are charged for luxuries.

PENETRATION PRICING

The price charged for products and services is set artificially low in order to gain market share.

Once it is achieved , the price is increased.

E.g. Habeeb masala used low introductory prices .

ECONOMY PRICING

A no frills low price.

The cost of manufacturing and marketing are kept at a minimum.

PRICE SKIMMING

Charge a high price because you have a substantial competitive advantage.

This high price tends to attract new competitors into the market.

As a result price of the product falls due to increased prices

E.g telecom services

OTHER PRICING STRATEGIES

Psychological pricing Product line pricing Optional product pricing Captive product pricing Product bundle pricing Promotional pricing Geographical pricing Value pricing

Psychological pricing Used when marketer wants the consumer to respond

on an emotional basis rather than a rational basis. E.g. 99 rupees only as compared to Rs.100 Rs. 399 instead of Rs.400

Product line pricing When there is a range of services the pricing reflects

the benefits of parts of the range. E.g hair cut – Rs. 300, protein treatment – Rs. 400,

whole package – Rs. 700

Optional product pricing Companies will start to increase the amount the

customer spends once they start to buy, by offering them the optional but tempting “extras”.

E.g extra cheese for Rs.50 on a Rs.1100 pizza

Captive product pricing The basic product is charged low. The

accessories/refills/re usable parts are priced using premium pricing strategy

E.g. a different charger for Samsung cellphones.

Product bundle pricing Sellers combine several products in the same

package. Usually used to move old stock.

Promotional pricing Price used to promote a product. E.g. buy one get free

Geographical Pricing Price varies in different geographical regions E.g. fast food items

Value pricing When external factors like recession or increased

competition force companies to provide ‘value’ products and services to retain sales.

e.g. value meals at McDonalds

ELEMENTS OF THE MARKETING MIX

Marketing mix

Promotion

Price

Product

Place

PLACE

Also called channel, distribution or intermediary.

The mechanism through which goods or services are moved from the manufacturer/ service provider to the user or consumer.

6 BASIC CHANNEL DECISIONS

1. Do we use direct or indirect channels? (direct to consumerr or indirect through a wholesaler)

Single or multiple channels Cumulative length of the multiple channels Types of intermediary No of intermediary at each level Which companies as intermediaries to avoid

‘intrachannel’ conflicts (e.g. fighting between local distributors)

SELECTION CONSIDERATION

How to select a distributor: Market Segment

Distributor must be familiar with your target consumer and segment

Changes at different PLC stages In introductory phase, product may be available

at specific locations. In maturity, at many generic locations.

CHANNEL INTERMEDIARIES

Wholesalers Purchase bulk, break down into packages, resell

to retailers and have storage facilities Reduce producer to consumer contact, take

some of marketing responsibilities.

Agents Secure orders for producer and take commission,

do not purchase product. Usually used in international markets.

CHANNEL INTERMEDIARIES

Retailers Have a stronger personal relationship with the

consumer. Holds several brands and products, hence

consumer is exposed to several products. Are a strong brand themselves , e.g. Makro,

Metro, Imtiaz… Internet

Geographically dispersed market. Product reaches a wide audience Set up costs are low. Use e-commerce for payment.

ELEMENTS OF THE MARKETING MIX

Marketing mix

Place

Price

Product

Promotion

PROMOTION

Different activities held to promote the product to the target audience

PROMOTION MIX

Promotion Mix

Personal

Selling

Sales Person

Public Relatio

nsDirect Mail

Trade Fairs

Advertising

Sponsorship

PERSONAL SELLING

Effective way to manage personal customer relationships.

The sales person acts on the behalf of the organization

They contact consumers personally and motivate them to buy a product.

SALES PROMOTION

All kinds of promotions except advertising, personal selling and public relations.

E.g buy one get one free Coupons Money off promotions Introductory offers Free accessories

Should be carefully costed and compared with the next best alternative

PUBLIC RELATIONS

Deliberate, planned, sustained effort to establish and maintain mutually beneficial relationship between an organization and it’s publics.

Cheaper than other promotional elements.

DIRECT MAIL

Customers are targeted based upon a database.

An email or snail mail is sent directly to customers in the specific target market, with the expectation that some of them will place an order.

E.g. Medical students can be sent a mail regarding medical textbooks.

TRADE FAIRS AND EXHIBITIONS

Used to meet companies to meet with both the trade and the consumer

Intention is to create an impression rather than sell the product.

Exhibitions are good for making new contacts and renewing old ones.

ADVERTISING

‘Paid for’ communication

Used to develop attitudes, create awareness, and transmit information in order to gain response from the target market.

Advertising media such as newspapers, magazines and journals, televsion, etc.

SPONSORSHIP

When an organization pays to be associated with a particular event, cause or image.

Companies sponsor sports events like Olympics or Formula One, or TV shows etc. e.g Olper’s associated with morning shows, Kisan pak raha hay kia etc.

The attributes of the event are then associated with the sponsoring organization.