microsoft power point - part d market segment and context

8/8/2019 Microsoft Power Point - Part D Market Segment and Context

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Part D

The extended Marketing Mix


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Course Content

Part A The Concept and Process of Marketing

Part B Segmentation, targeting, positioning

Part D Market segments and contexts

Types of Market

Services Marketing

International Markets


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Part C Types of Markets

Chapter 14


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Consumer Markets

Fast moving consumer goods (FMCGs)

Frequently bought

Low price / low risks

Can be subject to impulse purchase

Are basics High switching cost if product not available

=> Impact for marketer: ensure availability, brandawareness and use onsite advertisement topromote impulse purchase


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Consumer Markets

Consumer goods (as opposed to

industrial goods) Convenience goods (grocery)

Specialty goods (jewellery)

Unsought goods (catalogues,..)


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Impact for the marketer

Analyse the graph page 379


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B2B marketsPrimary, Secondary, Tertiary industries

Industrial goods: Capital goods (plants)

Accessories

Raw materials Components

Supplies (office stationery)

Business services

We have discussed when we covered Buying behaviourthe differences bewteen B2C and B2B (+ in case studyPortakabin)


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Differences between marketing for

B2C and Marketing for B2B

See summary figure 14.2 page 386


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Charity and not for profit marketing

Objective is not making a loss

Focus on attracting funds and achievinga particular response from their target

Marketing is view as a way to improvethe performance of the organisation

Most often use the 7Ps of the Mix Pricing strategy is the most different

element


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Part C Services Marketing

Chapter 15


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How Important is the Service Sector

in Our Economy? In most countries, services add more economic value

than agriculture, raw materials and manufacturing

combined

In developed economies, employment is dominatedby service jobs and most new job growth comes from

services Jobs range from high-paid professionals and

technicians to minimum-wage positions

Service organizations can be any sizefrom hugeglobal corporations to local small businesses

Most activities by government agencies and nonprofit

organizations involve services


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Services dominate the United States Economy:

GDP by Industry, 2001

Finance, Insurance,Real Estate

20%Manufacturing 14%

Agriculture, Forestry,

Mining, Construction 8%

Source: Bureau of Economic Analysis, November 2002

Wholesale andRetail Trade

16%

Transport, Utilities,Communications8%

Health6%

BusinessServices

5%

Other Services 11%

Government(mostly services)

13%

SERVICES


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Changing Structure of Employment

as Economic Development Evolves

Agriculture

Time, per Capita Income

Industry

Source: IMF, 1997


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Distinguishing Characteristics of Services

Customers do not obtain ownership of services

Service products are ephemeral and cannot be

inventoried

Intangible elements dominate value creation

Greater involvement of customers in roduction rocess

Other people may form part of product experience

Greater variability in operational inputs and outputs

Many services are difficult for customers to evaluate

Time factor is more important--speed may be key

Delivery systems include electronic and physical channels


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Difference between physical goods and servicesPhysical goods Services

tangible intangible

homogeneous heterogeneous

Production and distribution areseparated from consumption

Production, distribution andconsumption are simultaneous

processesA thing An activity or process

Core value processed in factory Core value produced in the buyer-seller interaction

Customers do not participate in theproduction process

Customers participate in production

Can be kept in stock Cannot be kept in stock

Transfer of ownership No transfer of ownership


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Marketing Implications - 1

No ownership

Customers obtain temporary rentals, hiring ofpersonnel, or access to facilities and systems

Pricing often based on time

Customer choice criteria may differ for rentingvs. purchase--may include convenience, qualityof personnel

Cant own people (no slavery!) but can hireexpertise and labor


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Services cannot be inventoried after

productionService performances are ephemeraltransitory,perishable

Balancing demand and supply may be vitalmarketing strategy

Key to profits: target right segments at right

times at right priceNeed to determine whether benefitsare

perishable or durable


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Marketing Implications - 2 Customers may be involved in production process

Customer involvement includes self-service andcooperation with service personnel

Think of customers in these settings as partial employees

productivity, so marketers need to educate/train customers

Changing the delivery process may affect role played bycustomers

Design service facilities, equipment, and systems withcustomers in mind: user-friendly, convenientlocations/schedules


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Marketing Implications - 2 Intangible elements dominate value creation

Understand value added by labor and expertiseof personnel

Effective HR management is critical to achieve

serv ce qua yMake highly intangible services more concrete

by creating and communicating physical images

or metaphors and tangible clues


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Value Added by Tangible vsIntangible Elements in Goods

and Services

Salt

Soft drinks

CD PlayerGolf clubs

New carTailored clothing

Hi

Fast food restaurantPlumbing repair

Office cleaning

Health club

Airline flightRetail banking

Insurance

Weather forecast

Furniture rental

Lo HiIntangible Elements


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Greater variability in operational inputs and outputs

Must work hard to control quality and achieveconsistency

Seek to improve productivity through

standardization, and by training both employeesand customers

Need to have effective service recovery policies in

place because it is more difficult to shield

customers from service failures


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Other people are often part of the service product

Achieve competitive edge through perceived quality ofemployees

Ensure job specs and standards for frontline serviceersonnel reflect both marketin and o erational

criteria Recognize that appearance and behavior of other

customers can influence service experience positivelyor negatively

Avoid inappropriate mix of customer segments atsame time

Manage customer behavior (the customer is not

always right!)


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Marketing Implications - 4Often difficult for customers to evaluate

servicesEducate customers to help them make good

choices, avoid risk

Tell customers what to expect, what to look forCreate trusted brand with reputation for

considerate, ethical behavior

Encourage positive word-of-mouth from satisfiedcustomers


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GUIDELINES FOR SERVICE

PROMOTION

1. PROVIDE TANGIBLE CLUES

2. MAKE THE SERVICE UNDERSTOOD

3. MM I ATI TI ITY

4. PROMISING WHAT IS DELIVERED

5. CAPITALISING ON WORD OF MOUTH

6. DIRECT COMMUNICATION TOEMPLOYEES


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Marketing Implications - 4 Time factor assumes great importance

Offer convenience of extended service hours up to 24/7

Understand customers time constraints and priorities

Minimize waiting time

Distribution channels take different forms

Tangible activities must be delivered through physicalchannels

Use electronic channels to deliver intangible, information-based elements instantly and expand geographic reach


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SERVICE LOCATION:SITUATIONS & THEIR

IMPACT

SITUATION IMPACT

SERVICE PROVIDER GOESTO THE CUSTOMER LOCATION BECOMES LESSIMPORTANT

SERVICE PROVIDED AT LOCATION BECOMES

ARMS LENGTH WITHOUTSERVICE PROVIDER &

CUSTOMER INTERACTION

INSIFNIFICANT

CUSTOMER GOES TO THESERVICE PROVIDER &

INVOLVES CLOSE

INTERACTION

APPROPRIATE LOCATIONOR MULTI LOCATIONS


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Determinants of service quality

Reliability delivering on promises

Responsiveness willing to help

Assurance ins irin trust and

confidence

Empathy individualizing customers

Tangibles- physical representation


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Moments of truth

It is the customer service encounter

Every positive or negative experience ofthe consumer would have fall-out on the


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In services, the last experienceremains uppermost in your.

Therefore, it is not enough to begood, you have to be

consistently good


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Elements of The Services Marketing Mix:

7Ps vs. the Traditional 4Ps

Rethinking the original 4Ps Product elements

Place and time

Price and other user outlays

Adding Three New Elements

Physical environment

Process

People


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The 7Ps: (1) Product Elements

All Aspects of Service Performance thatCreate Value

Core product featuresboth tangible andintangible elements

Bundle of supplementary service elements Performance levels relative to competition

Benefits delivered to customers (customers

dont buy a hotel room, they buy a goodnights sleep)

Guarantees


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The 7Ps: (2) Place and Time

Delivery Decisions: Where, When, and How

Geographic locations served

Service schedules

Physical channels

Electronic channels

Customer control and convenienceChannel partners/intermediaries


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The 7Ps: (3) Promotion and Education

Informing, Educating, Persuading, and Reminding Customers Marketing communication tools

media elements (print, broadcast, outdoor, retail, Internet, etc.) personal selling, customer service

sales promotion

Imagery and recognition

branding

corporate design

Content information, advice

persuasive messages

customer education/training


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The 7Ps:(4) Price and Other User Outlays

Marketers Must Recognize that Customer Outlays Involve

More than the Price Paid to Seller

Traditional Pricing Tasks Selling price, discounts, premiums

Margins for intermediaries (if any)

re t terms

Identify and Minimize Other Costs Incurred by Users

Additional monetary costs associated with service usage (e.g., travel toservice location, parking, phone, babysitting,etc.)

Time expenditures, especially waiting

Unwanted mental and physical effort

Negative sensory experiences


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The 7Ps: (5) Physical Environment

Designing the Servicescape and providing tangibleevidence of service performancesCreate and maintaining physical appearances

buildings/landscaping

interior desi n/furnishin s

vehicles/equipment staff grooming/clothing

sounds and smells

other tangibles Select tangible metaphors for use in marketing

communications


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7Ps: (6) Process

Method and Sequence in Service Creation and

Delivery Design of activity flows

Providers of value chain components

Nature of customer involvement

Role of contact personnel

Role of technology, degree of automation


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The 7Ps:(7) People

Managing the Human Side of the Enterprise The right customer-contact employees performing tasks well

job design recruiting/selection

training

evaluation/rewards empowerment/teamwork

The right customers for the firms mission fit well with product/processes/corporate goals

appreciate benefits and value offered

possess (or can be educated to have) needed skills (co-production)

firm is able to manage customer behavior


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Managing the 7Ps Requires Collaboration between Marketing,Operations, and HR Functions

OperationsManagement

MarketingManagement

Customers

Human ResourcesManagement


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Service TriangleService Triangle

Management

Sellin theEnablin the

Employee CustomerDelivering the

promise

promise

promise

Interactive Marketing


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The Services Marketing TriangleThe Services Marketing Triangle

Internal MarketingInternal MarketingVertical Communications

Horizontal Communications

External MarketingCommunicationAdvertising

Company

Interactive MarketingPersonal Selling

Customer Service CenterService Encounters

Servicescapes

Public RelationsDirect Marketing

CustomersEmployees

Source: Parts of model adapted from work by Christian Gronroos and Phillip Kotler

A h f I i S i


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Approaches for Integrating Services

Marketing Communication

Manage

CustomerExpectations

Goal:Delivery

greater thanor equal topromises

ImproveCustomerEducation

ManageService

Promises

ManageInternal

MarketingCommunication


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Service Quality


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Part C International Markets

Chapter 16

Reasons of Recent International Growth


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Reasons of Recent International Growth

Rapid Increase in TechnologyRapid Increase in Technology

Liberalization, Privatization & GlobalizationLiberalization, Privatization & Globalization

D l m n f In i i n r inD l m n f In i i n r in

& facilitating International Trade& facilitating International Trade

Consumers/Customers PressureConsumers/Customers Pressure

Increased Global CompetitivenessIncreased Global Competitiveness


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Other Drivers Convergence of consumer tastes

Emergence of global niche markets Self Reliance to Interdependence

conom es o ca e

Standardisation

Consumerism

E-commerce and Internet technology


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International Marketing - Definition

The definition of International Marketing is differentThe definition of International Marketing is different

from the general definition of Marketing only in thatfrom the general definition of Marketing only in thatgoods and services are marketed across politicalgoods and services are marketed across political

boundaries.boundaries. (Albaum)(Albaum)

International Marketing is the performance ofInternational Marketing is the performance of

business activities that direct the flow of a companysbusiness activities that direct the flow of a companys

goods and services to consumers or users in moregoods and services to consumers or users in morethan one nation for profit. (Cateora)than one nation for profit. (Cateora)


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International Marketing - Definition

Thus International Marketing revolvesThus International Marketing revolves

around:around: Identifying needs & wants of DiverseIdentifying needs & wants of Diverse

International MarketsInternational Markets

Marketing Mix Decisions & Strategies in relationMarketing Mix Decisions & Strategies in relationto Diverse & Dynamic International Markets.to Diverse & Dynamic International Markets.

Choosing the right International Market entryChoosing the right International Market entrymode/modesmode/modes

Decisions in line with dynamic InternationalDecisions in line with dynamic InternationalMarketing EnvironmentMarketing Environment


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Terms In International Marketing

Made up of many facets based on levels of

involvementDomestic Marketing

Export Marketing International Marketing

Multi National Marketing

Global Marketing


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Domestic Marketing One set of Competitors

One Economy One set of Market Pressures

One set of Customers

Marketing mix and plan for domestic market.


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Export Marketing

Where the company sells its goods/servicesacross national or political boundaries

Usuall a reactive situation

Emphasis on product modification, if required.

Most traditional and least complicated form ofinternational marketing.

I i l M k i


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International Marketing

Entire marketing strategy will need to be adapted.

Understanding ofdifferent environmentsbecomes

essential. Several markets

Differing controllable variables across markets

Differing uncontrollable variables across markets

Giving

Differing infrastructures

Differing advertising/promotions Differing complexity of market

M lti ti l M k ti


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Multinational Marketing

Where similar activities apply to more than one

country Some limited control on the market place

Markets may be independent profit centres Marketing strategy can be tailored to local

market, individual strategy per location, can

have many and varied strategies.

PAN REGIONAL MARKETING


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PAN-REGIONAL MARKETING

Marketing strategies for regions ratherthan countries.

e.g. Asia, fastest growing market for GMMotors, Honda, Toyota, Dior, Rolex,Cartier, Gucci..


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Global Marketing The whole organisation exploits one strategy on a

worldwide basis

No individual country influence, although oftensome form of local modification necessary.

ne s ra egy sne s ra egy s a

Efficiencies of scaleEfficiencies of scale

Needs significant market segmentssignificant market segments withsimilar demand all over the worldsimilar demand all over the world

Might need marketing mix tweakedmarketing mix tweaked per region?

Cl ti it


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Class activity

List the reasons why Vietnamese

companies will want to enter overseasmarkets ?

List what types of problems they mightalso encounter?

Write them on the board

Significance of International MarketingSignificance of International Marketing


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Significance of International MarketingSignificance of International Marketing

Provides new markets

Presents opportunities for growth, expansion &

income

Allows for the flow of ideas, services & capital

Increases the speed of innovation Allows for better usage of human capital

Allows greater access to financing

Gives consumers more choice

Objectives of Going InternationalObjectives of Going International


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Objectives of Going InternationalObjectives of Going International

Growth & ProfitabilityGrowth & Profitability

Economies of ScaleEconomies of ScaleMinimizing RiskMinimizing Risk

global player)global player)

Acquiring Inputs, Resources & TechnologyAcquiring Inputs, Resources & Technology

Uniqueness Providing OpportunitiesUniqueness Providing Opportunities

Opportunities Arising out of PLCOpportunities Arising out of PLC

R&D Cost SpreadR&D Cost Spread

See also in your course notes book page 412 for other reasons/ objectives

Why is International Marketing Different?Why is International Marketing Different?


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Why is International Marketing Different?Why is International Marketing Different?

Culture Diverse, Multi-cultured Markets Widespread, Fragmented,different Data Difficult to get, expensive Politics Varying stability and attitudes

u es owar s ore gn ra e

Competitors Varying levels Economies Varying levels & Systems Finance Varying systems & regulatory bodies

Currencies Varying & Fluctuating Businesses Cross Cultural Influences Control Remote & Difficult

See also in your course notes book page 412 & 413

Problems of International Marketing


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Problems of International Marketing

Debt / InvestmentDebt / Investment

Unstable countriesUnstable countries

Tariff regulationsTariff regulations

Instability in Foreign Exchange marketsInstability in Foreign Exchange markets

Non tariff barriers, e.g. specifications, quotas,Non tariff barriers, e.g. specifications, quotas,

B i t I t ti l M k tiB i t I t ti l M k ti


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Barriers to International MarketingBarriers to International Marketing

Control

Language

Cash flow

Logistics

Lack of trained staff

Tariff & Non-Tariff Barriers

Need to mNeed to manipulate a series of Variablesanipulate a series of Variables


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Need to mNeed to manipulate a series of Variablesanipulate a series of Variables

Controllable by business (Internal)Controllable by business (Internal)

PricePrice

PromotionPromotion DistributionDistribution

ProductProduct

Uncontrollable by business (External)Uncontrollable by business (External)Economic structureEconomic structure

CompetitorsCompetitors

CulturalCultural

LegalLegal


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Decision to enter International Markets


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Decision to enter International Markets

Can be Strategic or Tactical move

To perform the analysis of Internationalmarketing opportunities you can use/

Class activity what can the 12 Cs stand for?

12 Cs


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12 Cs

Country

Culture and customer behaviour

Concentration Communication

Channel of distribution

Capacity to pay

Currency

Control & co-ordination

Commitment

Choices Contractual obligations

Caveats / limitations

EPRG CONCEPT Howard PerlmutterO i t ti I t ti l M k ti O i ti


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Orientation: International Marketing Organization

ETHNOCENTRICETHNOCENTRICConsiders own culture as superiorConsiders own culture as superiorsame Marketing stratesame Marketing strate

Ignore environmental differencesIgnore environmental differences

Domestic or extension to export marketingDomestic or extension to export marketing

POLYCENTRICPOLYCENTRIC Highly market OrientedHighly market Oriented

Considers each market UniqueConsiders each market Unique

Treats region as a uniform market SegmentTreats region as a uniform market Segment

Adapts similar marketing strategy within region butAdapts similar marketing strategy within region but

across the regionacross the region

REGIOCENTRICREGIOCENTRIC

GEOCENTRICGEOCENTRIC

Needs corporate resourcesNeeds corporate resources

Whole world a single marketWhole world a single market

Formulate integrated marketing strategiesFormulate integrated marketing strategies

Economies of scaleEconomies of scale

Evolutionary ProcessEvolutionary Process-- Global MarketingGlobal Marketing


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Stages Marketing Market Focus Orientation Marketing Mix DecisionsI

Domestic DomesticEthnocentric

SMEs

Domestic Customer

Focussed

II Export Overseas

Ethnocentric

Food products,Jewelleries,

-Mainly Domestic customers

-Overseas mkt. only an Extn.of domestic marketing

- Decisions made at HQ

Differentiation b Pol centric Product develo ment u on

.

International

developing

products & brands

Corporate

sector

Country needs. Decisions by

individual subsidiaries

IV Multinational

Consolidation of

operations

on regional basis.

Gains from

Economies of Scale

Regiocentric

Product standardization

within regions

but not across them.i.e., Regional basis

V GlobalConsolidation on

global basis

Geocentric

IBM, SONY

Globalisation of marketing mix

decisions with local variations

t. Decision making across glob

Process Of Internationalization


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Process Of Internationalization

GLOCAL MARKETINGGLOCAL MARKETING


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Evolution from Domestic to Exports,

Exports to International Markets,

. ,

Multinational to Global Markets, and

Global approach with Local orientationGlobal approach with Local orientation



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Strategic advantage as positive stimulus:

Gains in terms of increased profits,

Increased market share,

Economies of scale,

Competition in domestic or in other

international operated market

High degree of marketing complexity

Structure choice


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Structure choice

Simple exporting

Licensing (patents, design, trade)

Franchising

Joint Ventures

Trading companies

Manufacturing abroad / direct ownership

Marketing Mix in International context


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g

Product:

Standardise or Adapt? Straight extension no change

Communication adaptation

Product and communication adaptation

Product invention

Global Products


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Localisationof a product or service to fit localregulation and usage requirements e.g. localvoltages and safety laws

Adaptationfits the product to buyerpreferences e.g. Air-conditioning in USA

Standardisedglobal products are not adaptedto local preferences, but must still belocalised. E.g Coca-Cola obey local hygienelaws

Advantages of standardisation


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g

Cost reduction - e.g. economies of scale

Improved quality - resources can be focussed Enhanced customer preference - positive

x ri n l l l r n l l

Global customers - uniform quality andservices

Global segments - e.g. software, cameras.

Place : developing and international


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distribution strateyKey strategic areas :

Distribution density (exposure/ coveragedesired)

Channel length & channel partners

Distribution logistics (flow of product)

What influence international pricing?


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The cost of manufacturing, distributing and marketing yourproduct.

The physical location of production plants might influence price.

Of course fluctuations in foreign currencies affect pricing. The price that the international consumer is willing to pay for your

product.

Your own business objectives will influence price. For example,

large international companies such as Starbucks may operate ata loss in some locations but still need a local presence in order tomaintain their economies of scale, as well as their reputation as aglobal player.

The price that competitors in international markets are alreadycharging.

Business environment factors such as government policy andtaxation.

International Pricing strategy


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g gy

Export Pricing - a price is set for by the home-based

marketing managers for the international market.

Non-cash payments - less and less popular these days, non-cash payments include counter-trade where goods are

exchanged for goods between companies from different

parts o t e or .

Transfer Pricing - prices are set in the home market, andgoods are effectively sold to the international subsidiary

which then attaches its own margin based upon the best

price that local managers decide that they could achieve.

Standardization versus adaptation - do you use a

standard, common approach to pricing in each market, or do

you decide to adapt the price to local conditions?

International Promotion


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There are a number of factors that will impact upon choice andavailability of media such as:

The nature and level of competition for channels in your target market.

Whether or not there is a rich variety of media in your target market.

The level of economic development in your target market (forexample, in remote regions of Africa there would be no mainse ectr c ty on w c to run s or ra os .

The availability of other local resources to assist you with yourcampaign will also need to be investigated (for example, sales peopleor local advertising expertise).

Local laws may not allow specific content or references to be made inadverts (for example, it is not acceptable to show naked legs in adverts

displayed in Muslim countries). And of course a lot depends upon the purpose of the international

campaign in the first place. What are your international marketingcommunications objectives?

Example of the extended marketing


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Mix in an international context Pepsi cola and Coca cola marketing

strategy in India

Globalization


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It has been said that arguing againstIt has been said that arguing againstglobalization is like arguing against the law ofglobalization is like arguing against the law of

gravity.gravity. General Kofi Annan, - UN Secretary

Global characteristicsGlobal characteristics

-- Customer needs are similar internationallyCustomer needs are similar internationally

-- Compete in globalized industriesCompete in globalized industries

-- Locate valueLocate value--adding activities in places worldadding activities in places world--widewide

where competitive advantage can be gainedwhere competitive advantage can be gained-- Integrate & coordinate intl. activities betweenIntegrate & coordinate intl. activities between

countriescountries

Class activity


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Are you For or Against Globalisation?

Is Globalisation an opportunity or threat?

Globalization: Opportunity or Threat?


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Promotes free trade

More goods & services are available at lower cost to

wider people

Globalized capital markets attract money to economies

for growth and allow for greater returns for investors

Creates jobs and economic growth

Creates a common culture, allowing people around the

world to understand each other more easily

Breaks down isolation

Globalization: Opportunity or Threat?


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Favors wealthy, industrialized countriesFavors wealthy, industrialized countries

Occurs at the expense of workers in poorerOccurs at the expense of workers in poorer

countriescountries

political, economic and social problemspolitical, economic and social problems

Exploits cheap labor and natural resources whereExploits cheap labor and natural resources where

laws dont adequately provide protectionlaws dont adequately provide protection

Undermines traditional culture, language andUndermines traditional culture, language and

valuesvalues

Future of Intl. Business &Future of Intl. Business &


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GlobalizationGlobalization

Globalization is inevitable

Intl. Business to grow along

Regional lines than Global lines.

Anti-Globalization & Anti Intl. Business Forces

to slow down.


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Source: International Trade Statistics (WTO)

The Powerful MNEs


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Modern MNEs are larger economies thansome nations

Measuring company sales against GDP,

world are companies

Mitsubishi is larger than Indonesia

Ford is bigger than Turkey Wal-Mart is bigger than Israel

CocaCoca--ColaCola


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80% of operating incomeis derived outside theU.S.

Distributes its productsin more than 200countries

Employs more than71,000 worldwide


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Thanks!

microsoft power point - part d market segment and context

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