mmi marketing 3
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Develop Marketing Strategy
Chapter III
Marketing Strategy – Two levels
STRATEGIC MARKETING
OPE
RATI
ONA
L M
ARKETI
NG
The 4 Ps of Marketing Model
1. Product: The product aspects of marketing deal with the specifications of the actual good or service, and how it relates to the end-user's needs and wants.
2. Pricing: This refers to the process of setting a price for a product, including discounts.
3. Promotion: This includes advertising, sales promotion, PR, sales force and direct marketing, and refers to the various methods of promoting the product, brand, or company.
4. Placement or distribution refers to how the product gets to the customer; for example, point of sale placement or retailing.
Develop Marketing Strategy
PRODUCT…
Product Aspects 1. The physical product
2. The brand name
3. The company reputation
4. Pre-sale education provided by salespeople
5. Post sale technical support
6. Financing plans
7. Reputation of outlet where purchased, etc
Differentiating, positioning, and branding
DifferentiatinDifferentiatingg
PositioniPositioningng
MARKETING
MARKETING
BrandingBranding
The act of distinguishing your company's offering from competitors' offerings in ways that are meaningful to consumers Determining and communicating the central benefit of the product in the minds of target buyers.
A product brand is a name, term, sign, symbol, or design—or any combination of these—that identifies the offering and differentiates it from those of competitors.
Differentiation
Product’s physical distinctions
Product’s service distinctions
Form
Features
Performance quality
Conformance quality
Durability
Reliability
Reparability
Style
Design
Ordering ease
Delivery
Installation
Customer training
Customer consulting
Maintenance and repair
Branding
Implies a strong brand image
Attributes
Benefits
Values
Culture
Personality
User
Rules for Brand Names and Messages 1. You must “reserve” a particular word in
the mind of potential consumer.
2. Two distinct companies can’t “reserve” the same word in the mind of potential consumer
3. If you admit a defect, the potential consumer will assign you a quality
4. Each attribute has an opposite that can be very effective
Product Lifecycle
Product Introduction
Product Introduction
Product Growth
Product Growth
Product Maturity Product
Maturity
Product Decline
Product Decline
Low sales, high cost per customer, no profits, few competitors
Create product awareness and trial
Offer a basic product
Use heavy promotions to entice trial
Marketing Objectives Market Strategies
Rising sales and profits, more and more competitors
Maximize market share
Offer product extensions Reduce promotions due to heavy demand
Peaking sales and profits, stable or declining number of competitors
Maximize profit while defending market share Reduce expenditure and "milk" the brand
Declining sales, profits, and number of competitors
Phase out weak productsCut price; reduce promotion
Diversify brandsIntensify promotion to encourage switching to new brands
Why Develop New Products and Services? Consumers like to have new choices
New products to satisfy consumer new desires and to build sales
Consumers attitudes toward existing products can change rapidly
Products have a natural life cycle and eventually become outdated
Your competitors are also looking for ways to offer bigger and better deals to customers
Develop New Products and Services
Start generating new product ideas
Test
You
r Id
eas
Test-marketing the new product
Generating New Products Ideas
Sources of BEST new products Ideas:
– Customers
– Competitors
– Company's employees
– Industry consultants and publications
– Market-research firms
Testing Your Ideas
1. Determine whether the ideas are compatible with your company's overall strategies and resources
2. For the products compatible with company’s strategy and resources, present the concept to target consumers In focus groups Through a mail-in questionnaire
3. Get customers’ reactions and ideas
Test-Marketing New Product
1. Develop samples of the actual product
2. Test consumer goods and business goods separately
3. If the test-marketing results are positive start to produce and distribute it
Test-Marketing Consumer GoodsSales wave
Let some consumers try the product at no cost. Then re-offer the product, or a competitor's product, at slightly reduced prices. See how many customers choose your product again, and gauge their satisfaction with it.
Simulated test marketing
Ask a number of qualified buyers to answer questions about their product preferences. Then invite them to look at a series of commercials or print ads that include one for your new product. Finally, give them some money and set them loose in a store. See how many of them buy your product. Controlled
test marketing
Place your product in a number of stores and geographic locations that you're interested in testing. Test different shelf positions, displays, and pricing. Measure sales through electronic inventory control systems.
Test-market
This is test-marketing on a grand scale. Select a few representative cities, get your sales force to give the product thorough exposure in those cities, and unleash a full advertising and promotion campaign. See how well the product sells.
Test-Marketing Business Goods
Alpha testing
Build a few units of the new product. Ask your most important and friendliest customers to try the product for free and comment on its functionality, features, and problems.
Beta testing Similar to alpha testing, but it is done in the product-
development process—when the product is close to be finalized.
Trade show exhibits Observe how much interest participants show in the
product, how they react to various features, and how many express clear intention of buying the product
Develop Marketing Strategy
PRICE…
Product Price
The price is the amount a customer pays for a product
It depends on:– Market share– Competition– Product identity– Customer's perceived value of the product
Product Price
ProductProduct
PricePrice
Positioning
Positioning
Promotion
Promotion
REVENUES
COSTSCOSTS
Pricing Variables
1.Prices list
2.Discounts
3.Bundling
4.Payment terms and financing options
Pricing
…“Customers are more receptive to value, not to price. When they buy judging by price, they do it because they do not see significant differences between high price products with and low price products.”
Philip Kotler
Price Customization Developing a product line
– Example: full color magazine and black and white cheaper version of the same magazine
Controlling the availability of lower prices– E.g. by making them available only in certain
locations
Varying prices based on observable buyer characteristics– Example: lower prices for old, loyal clients
Varying prices based on observable characteristics of he transaction– E.g. quantity discounts could be offered if the
situation were that big-volume buyers valued the product less than small-volume buyers
What to do when Competition Stakes on Low Prices? Decrease costs
Re-planning
Savings
Invest in new technologies (that will reduce production costs)
Enrich your offer (add new benefits to old products/services, launch new products/services)
Simply buy the competitor
Develop Marketing Strategy
PROMOTION…
Marketing Communication Plan
Key Steps:
The marketing objectives must be clearly stated
The message needs to match the target markets' needs or demands
Implementation should be carefully planned
The results have to be evaluated
Direct Marketing
Direct Marketing
PublicRelations
PublicRelations
Sales Promotions
Sales Promotions
Direct Sales
Direct Sales
AdvertisingAdvertising
Marketing Communication
Plan
Marketing Communication
Plan
Advertising
Print brochures or flyers Billboards Point-of-purchase ads Television and radio ads Website banners
Advertising forms
Inform (give information to the consumer)Persuade (influence the consumer to buy)Remind (maintain consumer awareness)
Advertising Strengths
Tips for Creating an Effective Print Ad
1. Clarify the purpose of the ad (format and content) 2. Get consumers' attention
3. State the product's or service's benefit for consumers
4. Give consumers a reason to act now
5. Use ad copy to your advantage6. Use design to your advantage
7. Avoid using too many different type sizes and styles.
Sales Promotions
Coupons for product savingsContestsFree trialsCash refunds
Sales Promotions forms
Introduce a new productBuild brand loyaltyGain entry into a new distribution/retail channel
Sales Promotions Usage
Tips for Designing a Powerful Sales Promotion 1. Use sales promotions with advertising 2. Be clear about your objectives
3. Choose the appropriate promotion tools 4. Use sales promotions in markets of high
brand dissimilarity .
5. Distinguish between price promotions and added-value promotions
6. Pretest your sales promotion program
Direct Sales
The salesperson's persuades the consumer to purchase the product
Sales Promotions forms
Looking for new prospectsCommunicating face-to-faceSellingServicingPerforming market research
Salespeople’s tasks
Tips for Evaluating Sales Representatives
1. Analyze salespeople's annual territory marketing plans
2. Review other reporting documents from sales reps
3. Compare sales reps' current performance with their past performance and company averages
4. Test sales reps' professionalism
5. Assess negotiation skills 6. Assess ability to build long-term relationships
with customers
Direct Marketing
Printed, mailed marketing pieces Radio TV Telemarketing Faxes E-mail Web sites Online services
Direct Marketing Supports
Lets firms engage in relationship marketing, or one-to-one marketingCompanies build stronger, more profitable bonds with target customers
Direct Marketing benefit
Why Direct Marketing?
Buy mailing lists containing the names and contact information of various targets
Customize the messages they deliver to target customers
Deliver the message at the right moment
Achieve higher readership of printed materials
Test messages and media to find the most cost-effective approach
Conceal their offerings and strategy from competitors
Measure customer responses Integrate direct-marketing strategies
with other strategies Less expensively than sales force Build stronger bonds with target
customers.
Buy mailing lists containing the names and contact information of various targets
Customize the messages they deliver to target customers
Deliver the message at the right moment
Achieve higher readership of printed materials
Test messages and media to find the most cost-effective approach
Conceal their offerings and strategy from competitors
Measure customer responses Integrate direct-marketing strategies
with other strategies Less expensively than sales force Build stronger bonds with target
customers.
Shop more easily and quickly from home or the office
Choose from a larger selection of products
Compare products, services, and prices easily
Order goods 24 hours a day
Learn about available products or services without tying up time meeting with salespeople
Receive their purchases quickly through next-day delivery services
Shop more easily and quickly from home or the office
Choose from a larger selection of products
Compare products, services, and prices easily
Order goods 24 hours a day
Learn about available products or services without tying up time meeting with salespeople
Receive their purchases quickly through next-day delivery services
Benefits for companies Benefits for customers
Direct Marketing and new Technologies New technologies facilitate the compilation of
customer databases, allowing:
Identify prospects
Decide which customers should receive a particular offer
Deepen customer loyalty
"Reactivate" customer purchases
New technologies facilitate the compilation of customer databases, allowing:
Identify prospects
Decide which customers should receive a particular offer
Deepen customer loyalty
"Reactivate" customer purchases
Direct Marketing Channels
Face-to-face selling
Direct mail
Catalogs
Telemarketing
Direct-response TV
Kiosks
Face-to-face selling
Direct mail
Catalogs
Telemarketing
Direct-response TV
Kiosks
The dark side of Direct Marketing Customer irritation
Unfairness
Outright deception and fraud
Invasion of privacy
Chaos and clutter
Customer irritation
Unfairness
Outright deception and fraud
Invasion of privacy
Chaos and clutter
Online Marketing
InternetElectronic MarketsElectronic commerceCommercial online services
Online Marketing technologies
New opportunities New challengesNew customer categories (especially young)
Online Marketing benefits
Online Marketing Advantages
Advertising
Limited amount of information; uses traditional channels: TV, radio, press
Marketing activities
Traditional Marketing
Cyber-MarketingHigh amount of information available on company’s websites and also on other websites
Client service
Available 8 hours a day, 5 days a week, as an answer to clients requests; maintenance and training face to face only
Available 24 hour a day, 7 dais a week; offers solutions by phone, fax or e-mail; fixes problems from distance, through automatic diagnose
Sales Direct contact (visit) or by phone with potential clients
Video-conferences with potential clients; on-line demonstrations/ presentations of the productsMarket
Research Individual interviews, focus groups; telephone and mail surveys
Online newsgroups for interviews and discussions; online / by e-mail questionnaires
Conduct Online Marketing Establish an electronic presence
Advertise online
Participate in or sponsor Internet interest groups
– Forums– Newsgroups– Bulletin boards
Web communities
Send e-mails (electronic newsletters, special product offers, reminders of upcoming promotions, and announcements for special events)
– Consider asking for customers' permission before sending e-mail offers
Establish an electronic presence
Advertise online
Participate in or sponsor Internet interest groups
– Forums– Newsgroups– Bulletin boards
Web communities
Send e-mails (electronic newsletters, special product offers, reminders of upcoming promotions, and announcements for special events)
– Consider asking for customers' permission before sending e-mail offers
Other Tips for Online Marketing
1. Follow standards for online ads
2. Use the Web as a direct-response tool
3. Look for ad-space bargains
4. Try to make a sale through a Web ad
5. Make your own Web site attractive and easy to use
1. Follow standards for online ads
2. Use the Web as a direct-response tool
3. Look for ad-space bargains
4. Try to make a sale through a Web ad
5. Make your own Web site attractive and easy to use
Example – Google AdWords Advertising PlatformHow it works?
Create your ads and choose keywords (words or phrases related to your business)
When people search on Google using one of your keywords, your ad will appear next to the search results
Now you're advertising to an audience that's already interested in you
How it works?
Create your ads and choose keywords (words or phrases related to your business)
When people search on Google using one of your keywords, your ad will appear next to the search results
Now you're advertising to an audience that's already interested in you
Example – Google AdWords Advertising PlatformCosts and Payment
There's no minimum spending requirement. You can, for instance, set a daily budget of five dollars and a maximum cost of ten cents for each click on your ad
Google provides keyword traffic and cost estimates so you can make informed decisions about choosing keywords and maximizing your budget
You're charged only if someone clicks your ad, not when your ad is displayed
Costs and Payment
There's no minimum spending requirement. You can, for instance, set a daily budget of five dollars and a maximum cost of ten cents for each click on your ad
Google provides keyword traffic and cost estimates so you can make informed decisions about choosing keywords and maximizing your budget
You're charged only if someone clicks your ad, not when your ad is displayed
Relationship Marketing
Combination of traditional direct-marketing media (mailings, radio spots, kiosks), new media (Internet and e-mail) and recent database technologies
Relationship Marketing
Firms learn more and more about their target customers Build strong, profitable bonds with their target customers
Relationship Marketing benefits
Why Relationship Marketing?
Build strong, profitable bonds with their target customers
Customers buy more and more often from the company, increasing firm’s profit
The costs associated with serving such loyal customers decreases with every purchase
Build strong, profitable bonds with their target customers
Customers buy more and more often from the company, increasing firm’s profit
The costs associated with serving such loyal customers decreases with every purchase
Build bonds and accumulate a purchasing history with trusted companies
Avoid the time-consuming - and often stressful - process of shopping around for the best deal
May hear about attractive products, services, or special offers
Build bonds and accumulate a purchasing history with trusted companies
Avoid the time-consuming - and often stressful - process of shopping around for the best deal
May hear about attractive products, services, or special offers
Benefits for companies Benefits for customers
Relationship Marketing – A Problem Relationship Marketing may imply a
serious risk – consumer irritation
How to avoid/correct this problem?
– See through consumers' eyes
– Regain customers' trust
– Build honest relationships
Relationship Marketing may imply a serious risk – consumer irritation
How to avoid/correct this problem?
– See through consumers' eyes
– Regain customers' trust
– Build honest relationships
Customer Perception - Examples
"Too many companies want personal relationships with me!"
Marketing advances seem trivial, useless, or annoying. Consumers' interest in relationship building evaporates.
Customer Perception Result
"Companies want my friendship, loyalty, and respect—but they're not giving me those same things in return!"
Consumers see marketing as a "one-way street" that benefits companies only
"Companies treat their best customers like kings and queens—and ignore the rest of their customers!"
Loyal customers feel devalued.
Customers feel overwhelmed and paralyzed.
"Companies offer too many options—I can't keep them straight in my mind!"
Public Relations (PR)
Publicity and Media RelationsSpeechesEventsNewslettersBrochuresWebsites Annual reportsLettersSponsorships Charitable contributionsFact sheetsNews Alerts, etc
Public Relations tactics
Strengthen your credibilityEnhance your image Influence public opinion
Relationship Marketing benefits
PR vs. Advertising Advertising became irritating and has no credibility; the more companies try to sell, the more customers reject the message
PR is credible; customers accept the message as helping and impartial
Advertising is spatial (involves many channels and resources); but after the campaign is over, the return is tot as attractive as expected
PR is a linear (step by step) and long term process, which consolidates the brand value and the customer loyalty.
Advertising is addressing to everybody
PR is addressing to somebody in particular
Advertising is oriented to itself
PR is oriented to others
PR vs. Advertising Advertising is costlyPR does not involve high
costs
Advertising encourages existing product lines extension
PR encourages new brands
Advertising does not need to be creative; it has to work with ideas already present in consumer’s mind (due to PR)
PR is creative
Advertising is visualPR is verbal
Advertising is funny PR is serious
Advertising diesPR lives
AIDA of the Communication Plan
Get your customers’ Attention
Keep them Interested
Generate a Desire
Encourage them to take Action
Tips for Selecting the Right Marketing Communications Mix 1. Gauge consumer readiness—and adapt your
communications tools accordingly
2. Tie your choice of communications tools to your product's life-cycle stage
3. Tie your choice of tools to your company rank in the market
4. Adapt your communications mix to the product market you're targeting
5. Distinguish between "push" versus "pull" strategies
What You Need to Remember
Tailor your promotional message to meet the needs of each different segment of your audience
If your budget is limited, use different ways to make the most of what you have to spend on marketing communication (e.g. consider a two-color brochure rather than a full color one)
Use World Wide Web as a tool for communicating with your customers
Be prepared to invest time and resources in your ’website maintenance’ to make the most of your investment
Form for Drafting Communication Plan (1)
Form for Drafting Communication Plan (2)
Form for Drafting Communication Plan (3)
Develop Marketing Strategy
Placement (Distribution)…
Placement/Distribution
Distribution refers to how the product gets to the customer
Includes all aspects of distribution:– The channel by which a product gets “in
touch” with customer and the firm “goes on market”
– Which geographic region or industry– To which segment (young adults, families,
business people), etc
Distribution Channels Functions
1. Product information2. Product customization
3. Product Quality Assurance4. Lot size (e.g. the ability to buy small
quantities)
5. Product assortment (breadth, length and width of product lines)
6. Availability
7. Aster-sale service8. Logistics
A Paradox
To many distribution channels might be difficult to control. More, a conflict between channels is imminent.
To many distribution channels might be difficult to control. More, a conflict between channels is imminent.
A high number of distribution channels ensures coverage of all targeted markets
A high number of distribution channels ensures coverage of all targeted markets
Channel Management
1. Pay extra attention to proper design of contracts and other explicit understandings that can generate conflicts
2. Good communication Almost always will me necessary to resolve
issues since contracts cannot typically anticipate all the situation that may arise
How to operate direct sales without loosing distributors channel?
1. Operate direct sales to important (high value) clients, and leave the smaller customers to distributors
2. Develop new products that can be sold directly to customers, and that differ from the ones distributors sell
3. Give up distributors and operate direct sales only
Designing marketing strategies for services Select unique processes to deliver your
service
Train and motivate employees to service customers well
Develop an attractive physical (or virtual) environment in which to deliver the service
Differentiate the image associated with your service
Holistic Vision of Marketing Holistic marketing focuses on consumer and implies 4 major
processes:
– Better understanding consumers needs, behavior and life style
– Structuring all the departments in the “client oriented” spirit
– Evaluating the impact of company’s actions on all people involved financially: clients, employees, distributors, suppliers, not just shareholders
– Having a broader vision on the industry, its players and evolution
Signals that Your Marketing Strategy is not Working1. The sales are constant or dropping and the company
needs a strategy to increase the volume of sales
2. The sales have ups and downs and need to be brought to a relative constant trajectory
3. The sales are acceptable but the profit margin is too low
4. Profits from different products, consumer segments or distribution channels are too low
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