Mmi marketing 3

Develop Marketing Strategy

Chapter III

Marketing Strategy – Two levels

STRATEGIC MARKETING

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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.


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

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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


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


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)




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