Advanced Marketing Concepts I

8/9/2019 Advanced Marketing Concepts I

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04/22/10 Advanced Marketing Concepts 1

Advanced Marketing Concepts - I

4 Ps

STP


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Why is the Four "Ps" idea helpful?Provides an organizing framework

Helps to bring many, more detailed decisions

together in a logical fashionFocuses thinking on the idea that all marketing

decisions must work together as a whole

Focuses on a managerial orientationand whata marketing manager/firm can do about needsof target customers

The Four Ps and Marketing

Mix Planning


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A Marketing StrategyShowing the 4 Ps of a

Marketing Mix


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Marking MixArea

Strategy Policies Likely Operational Decisions

Product Carry as limited a line of colors, stylesand sizes as will satisfy the targetmarket

Add, change, or drop colors, styles,and/or sizes as customer tastesdictate

Place Distribute through selected babyproducts retailers who will carry thefull line and provide good in-storesales support and promotion

In market areas where sales potentialis not achieved, add new retail outletsand/or drop retailers whoseperformance is poor.

Promotion Promote benefits and value of thespecial design and how it meetscustomer needs

When a retailer hires a newsalesperson, send current trainingpackage with details on product line;

increase use of local newspaper printads during peak demand periods

Price Maintain a premium price, butencourage retailers to make large-volume orders by offering discountson quantity purchases

Offer short-term introductory pricedeals to retailers when a new styleis first introduced

Relation of Strategy Policies to Operational

Decisions for Baby Shoe Company


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Customer Analysis

Who will be our customers?Segmentation, Market size, growth, etc.

Why would they buy?Buying motives, criteria

When would they buy?Age, replacement cycle

Where would they buy?Distribution outlets

How would they buy? Rs., time expenditures


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A Framework for Marketing

Management: The 4 Ps (marketing

mix) Product

quality, brand name, packaging, warranty, etc.

Price list price, discounts, credit terms

Place

distribution channels, inventory, transportation

Promotion advertising, personal selling, sales promotion


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The functional marketing process

Segmentation,

Targeting,Positioning

ProductStrategy PricingStrategy PromotionStrategy PlaceStrategy

Opportunity

assessment

Implementation, Monitoring, and Control


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The five major segmenting strategies

(dude, but I only count 4 of them here)

Fig 7.2, pg 210


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Segmenting, Targeting, and

Positioning Cornerstones ofMarketing Management


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Step 1. Market SegmentationBases for Segmenting Business Markets

Bases

for Segmenting

Business

Markets

Bases

for Segmenting

Business

Markets

DemographicsPersonal

Characteristics

Situational

Factors

Operating

Characteristics

PurchasingApproaches


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MeasurableMeasurable

AccessibleAccessible

SubstantialSubstantial

DifferentialDifferential

Segments must be large or

profitable enough to serve.

Segments can beeffectively reached andserved.

ActionableActionable

Size, purchasing power,profiles of segments canbe measured.

Segments must responddifferently to

different marketing mixelements & actions.

Must be able to attract and

servethe segments.

Effective Segmentation


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Five Patterns of Target Market

SelectionSingle-segmentconcentration

Productspecialization

M1 M2 M3P1

P2P3

Selectivespecialization

M1 M2 M3

P1

P2P3

M1 M2 M3

Full marketcoverage

P1

P2

P3

Marketspecialization

M1 M2 M3P1

P2

P3

P1

P2P3

M1 M2 M3

P = ProductM = Market


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Positioning is t he a c to f des ign ing thecom pan y s o f fe r inga n d im a g e to o c c u p y ad is t inc t ive p lac e inthe the ta rge tm a r k e t s m in d . P 2 9 8


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Positioning Strategies

Product Attributes

Benefits, Problem Solutions & Basic Needs

Price & Quality

Specific Use

Against Other Products Product User

Against a Competitor


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Advanced Marketing Concepts - II

PLC

Brand Management


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The Product Life CycleThe Product Life Cycle

ConceptConcept Products, like people, have been viewedas having a life cycle.

The concept of the product life cycledescribes the stages a new product goes

through in the marketplace:introduction, growth, maturity, and

decline.


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Stages in the Product Life Cycle


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Figure 11.13: Overlapping Life Cycles for Two Products


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Figure 2.1: Planning at Different

Levels


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Steps in Strategic Planning

(Fig. 2.1)

Defining theCompany

Mission

Defining theCompany

Mission

SettingCompany

Objectivesand Goals

SettingCompanyObjectivesand Goals

Designingthe Business

Portfolio

Designingthe Business

Portfolio

Planning,marketing,and otherfunctionalStrategies

Planning,marketing,and other

functionalStrategies

Corporate LevelBusiness unit,

product,and market

level

E l t th I t l/E t l


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Evaluate the Internal/ExternalEnvironment

WeaknessesStrengths

Opportunities Threats


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Question Marks

High growth, low share Build into Stars or phase out Require cash to hold

market share

Question Marks

High growth, low share Build into Stars or phase out Require cash to hold

market share

Stars

High growth & share Profit potential May need heavy

investment to grow

Cash Cows

Low growth, high share Established, successful SBUsProduce cash

Cash Cows

Low growth, high share Established, successful SBUsProduce cash

Dogs

Low growth & share Low profit potential

Dogs

Low growth & share Low profit potential

Relative Market ShareHigh Low

Market

Gr

owth

R

ate

Low

H

igh

Analyzing Current SBUs:

Boston Consulting Group Approach

?


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BCG Matrix

Method focuses on the potential of a firmsexisting successful products to generate cash that

the firm can then use to invest in new products

New products are chosen for their potential tobecome future cash generators

Two dimensions:

Market growth rate Relative market share


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BCG Matrix: Stars

SBUs with dominant market share in high-growth markets

requires funding to keep up with production

and promotion demands

strategies seek to maximize market share in the

face of increasing competition


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BCG Matrix: Cash Cows

SBUs with dominant market share in alow-growth potential marketproduct is well established and market share

can be maintained with minimal fundingfirms milk cows of profits to fund growth of

other products in portfolio

too many cows can become a liability due tothe lack of growth potential


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BCG Matrix: Question Marks

SBUs with low market shares in fast-growthmarkets sometimes called problem children

the firm has failed to compete effectively

The dilemma? Investing more money into theSBU may: improve market share in a high potential market OR

result in negative cash flow and failure


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Marketing Productivity ???

Generating maximum sales with leastinvestment

Customer Satisfaction

Minimizing Sales Returns Generating Word of Mouth Publicity

Brand Equity

Geographical Area Covered


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1. Measurement is the most difficult part.just gettingstarted is a hurdle and commitmentlarger companies dobetter with measurements

2. Successful measurement creates challenges: how to

change existing practices to Best Practices

3. Market mix modeling is gaining adherents but not witheveryone. Small companies measure less than largedonot have the data

4. Companies are outsourcing measurement to gain speed,objectivity and access to best/better practices

MARKETING ROI:

WHAT ARE THE HURDLES?


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Marketings Results

Are Embarrassing

Sales promotions are mostlywasted.

Direct marketing mailings

have poor response.

Too many sales calls done bythe numbers.

High rate of new productfailure


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Poor Marketing Controls

Less than half the companies knew their individual products profitability.

About one-third had no regular review procedures for spotting and deletingweak products.

Almost half of the companies failed to conduct formal evaluations of

advertising effectiveness.

Companies took four to eight weeks to develop control reports, which wereoccasionally inaccurate.

*Study of 75 companies


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Basic Performance Evaluation

Questions What is/isnt working? Why are strategies working/not working?

Have marketing strategies been implemented according toplan? Have resources been used efficiently and effectively?

What are direct and indirect competitors current andevolving marketing strategies and tactics? What is theirimpact?

What are trends and critical events in the environment howare they affecting industry competitors?


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The Problem

Capital investments in plant andequipment have a well-analyzed

payoff.

Capital investments inmarketing go with a prayer

rather than a measured payoff.

We can do better!!


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THE BIG ISSUE: ACCOUNTABILITY

DEFINITIONS: ROI - Agreement on Definitions

RESPONSIBILITY: Marketing?

Finance?, Supply Chain?

MEASUREMENT: How Many?

How Often?

How Accurate?

Quantitative\Qualitative

Who Assesses?

How to Manage Results?


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Marketing Productivity ???

Marketing KPAs

(Key Performance Areas) Market Demand

Market Share

Revenue per customer Variable cost per customer

Marketing Expense

Marketing = Net Marketing Contribution/

Productivity Marketing Budget


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Chain of Marketing Productivity.Tactical Actions

Advertising, Channels

Impact on Customers

Attitude, Satisfaction

Market ImpactShare, Sales

Financial Impact

ROI, EVA, etc.

Impact on Firm Value

MVA

Strategies : Vision - 4Ps

Marketing Assets

Brand Equity, Customer Equity

Market Position

Market Share, Sales

Financial Position

Profit, Cashflow

Value of Firm

Market Capitalization

Marketing KPAs and their


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Key PerformanceAreas

Performance Objectives Proposed Measure

1 Strategies& TacticalActions

1.1

1.21.3

1.4

Product

PricePlace

Promotion

Product Innovations.Product AcceptabilityCompetitive PricingVendors contribution in salesEffectiveness of Channel membersAbility to reach to target marketEffectiveness of Communication

2 Customer Impact

2.12.2

2.32.4

2.5

Customer AwarenessCustomer AssociationCustomer AttitudeCustomer AttachmentCustomer Experience

Company and Product RecognitionFavorability of Customers PerceptionQuality and SatisfactionLoyalty Company & Products

Enquire, Use and Word of Mouth

3 Marketing Assets 3.1

3.2

Brand Equity

Customer Equity

Impact on Buyer behavior / DMPDistribution ChannelNumber of CustomersTime span of Customer /Lifetime

Marketing KPA s and their

Performance Objectives


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Marketing KPAs and their

Performance Objectives

4 Market 4.14.24.3

Market ShareImpact on salesCompetitive marketposition

Turnover / Industry sale Convenience insellingWillingness to pay price premiumCompetitive Market Rating

5 Financials 5.1

5.25.35.45.5

ROI

EVAIRRProfitCash Flow

% Discounted Expenditure

Net Operating Profit Cost of CapDiscounted Return NPVSales Cost (Marketing Exp)

6 Valuation 6.1

6.26.3

Market CapitalizationMVAEnvironment

Market value of outstanding shares

Net Marketing ContributionPolitical, Social, Technological


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Key performance area Performance objectives Proposed measures

Sales Sales Sales (absolution monetary)

Sales expense control Sales / selling expense profit / sales

Profitability Profit / sales

Market penetration Value of orders booked / Totalmarket available

Collection index Sales / account receivables

Stock turnover Sales / average stock

Market research Market demand determination Intangible ( scale 0 -1 )

Pricing trend establishment Intangible ( scale 0 -1 )

Customer preference establishment Intangible ( scale 0 -1 )

Sales policy formulation Intangible ( scale 0 -1 )

KPAs and Performance Objectives -

Marketing Sub System


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Key performance area Performance objectives Proposed measures

Product strategy product introduction Intangible ( scale 0 -1 )

Test marketing Intangible ( scale 0 -1 )

Product deletion Intangible ( scale 0 -1 )

Sales promotion and publicity Sales promotion Total sales / promotional expense

Target area identification Intangible ( scale 0 -1 )

Sales promotion effectiveness Intangible ( scale 0 -1 )

Effective product image Intangible ( scale 0 -1 )


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Questions

Documents

Advanced Marketing Concepts I