PowerPoint Presentation

ESSENCE OF NICK A. LANSANG JR.

Faculty Sr. Researcher and Lecturer Marketing Management (Executive MBA) Strategic MarketingAteneo Graduate School of Business (AGSB)Ateneo Center for Continuing Rockwell, Makati CityEducation (CCE)

Introduction

What is Marketing and what is its role in Business Management?

sedatedworld.comWhat most normally know.

What most marketing graduates and marketing practitioners know Most of the time , they know only about promotion activity oriented

What most business organizations know

just one of the functions

auto-seo-system.comIt can actually be complex

MBT Marketing107 SE Washington St.Suite 635 Portland, OR 97214 quite complex

www-rohan.sdsu.eduand tedious too

sinergikonsultanmanajemen.wordpress.com

It can be this simple

bee-social.comSome say it is now this way

juliaburman.comOthers say it is still as holistic as it should be

What if Marketing has just died?

its okay, I will just look for another racketperhaps business modeling or strategic planning

What is marketing?

Is Marketing Selling?Managers sometimes think of marketing as the art of selling products, but many people are surprised when they hear that selling is not the most important part of marketing! Selling is only the tip of the marketing iceberg.15

SellingMarketingFrom:

Marketing is much more than Selling

There will always, one can assume, be need for some selling. But the aim of marketing is to make selling superfluous (unnecessary). The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. 16

Ideally, marketing should result in a customer who is ready to buy. All that should be needed then is to make the product or service available.by: Peter Drucker

So what is Marketing then?Marketing is the process of continuously and profitably satisfying target customers needs, wants and expectations better (more superiorly) than competition.

by Josiah Go

18Marketing Is A SystemMarketerMarket

Gather informationProvide InformationDevelop/Improve & Sell the Product Buy the Product & Provide Revenues1) 2)3)4)

By: Ruby Alminar (Miriam College)

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Marketing Success =

(STP) + (the base P) + (the 3 Support Ps)The Best of Marketing RxNed Roberto w/ Ardy Roberto

Integrating the Marketing MixMarketing Now: Sequence of 3 Processes1. Process of STP (Segmenting > Targeting > Positioning)Start marketing from where our target consumers are, that is, with their priority values, and not from where we are as marketers

2. Process of creating the Base P (Product) Thats the product created to embody the uncovered consumer priority values

3. Process of delivering the Product via the Support Ps (Price, Placement and Promotion)all in support of bringing and delivering the base P to the target consumers

Dr. Ned Roberto & Ardy RobertoMarketing Rx, Inquirer, 06 Feb 0920

SegmentingIdentifying allpossible segmentsTargetingChoosing the primary target market (PTM)ConsumerInsighting Uncovering Consumer insightValue OfferingRelevant & Distinct Unique Selling Proposition (USP)Product Design/ ConceptualizationProduct DevelopmentPackagingBrandingBrandPositioningPricingPlacementPromotionIntegrated MarketingCommunication (IMC)

The Marketing Process By: NALProfilingDetermining the most vulnerable and profitable segmentProduct

(Brand DNA)

There is no such thing as loyalty to the brandbut loyalty only to the value of the brand

SatisfiedTargetMarketSuperiorProduct/ServiceReasonable/AffordablePriceEffective &SufficientPromotionExtensive AvailabilityExcellent MarketInsightingExcellentSelling Procedure EfficientProductionExcellentDistributionSystemExcellentStrategyFormulationTrained, Motivated, Dedicated, Result Oriented, Satisfied Work ForceExcellentManufacturingSystemMarketing Strategy Map By NALSales & ProfitGrowth &Expansion

Marketing Vs. Selling SellingProduct-centeredPre-occupied with converting the product into cashPersuadingCan only start when the product becomes availableMarketingCustomer-centeredPre-occupied with satisfying the customersConvincingStarts even before the product start to exist24

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TopManage-ment MiddleManagementFrontline PeopleCUSTOMERSCUSTOMERSFrontline People MiddleManagementTopManage- mentTraditional Organization ChartModern Customer-oriented Organization ChartCUSTOMERS

CUSTOMERS

26Role of Marketing Where is Marketing in Business Equation?

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Where is Marketing?Profit = Sales - Expense

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Hence, one has to be sure that a marketing strategy will workotherwise, everything would just be a wasteincluding youand where do we throw the waste?

29Supply ChainProductionMarketingCustomersSalesProfitFinanceITHR/ODAccountingRevenues

Role of Marketing in Value CreationWhat will Accounting account if there are no transactions?What will Supply Chain supply if there are no production requirements?What will Production produce if there are no demand?What will Finance fund if the business does not expand?What information will IT process and provide if there are no business activities?What is the use of personnel if there is nothing to do?

Segmenting and segmentation

SEGMENTING: IDENTIFYING ALL POSSIBLE SEGMENTS TO TARGET FOR THE PRODUCT/SERVICE

Segmentation: Market FocusDefinition: Dividing the total market into different groups that have their respective homogenous character traits Market Segment: consists of a group of customers who share a similar set of needs and wants.

Micromarketing: segments, niches, local areas, individuals (ethical pharmaceutical marketing)32

Why Segmentation ?Better serving customers needs and wantsPeople have different needs and/or changing needs

The computer manufacturer Dell, for instance, does not organize its website by product groups (desktops, notebooks, servers, printers etc), but by customer groups (privates, small businesses, large businesses, public/state organizations).

Companies have limited resourcesOpportunities for growthJohnson Baby ShampooAs a strategy to penetrate a highly contested marketExample?33

Bases for SegmentationGeographic SegmentationNation, states, regions, cities, neighborhoodDemographicsgender, age, income, occupation, education, religion, race, social classPsychographics/personalityAttitude, behaviorsIntrovert, extrovert, pessimist, optimistActive, adventurous, outgoing, experimentalNave, conservative, cautious, studious

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Consumer MarketsIndustrial Markets / Business MarketsGeographic: Land or regionRural or metropolitan areaDemographic:Age, sex, marital statusIncome, occupation, EducationReligion, nationality, ethnical groupPsychographic:Social statusLifestyle-typePersonal typeBehavioral:Intensity of product useBrand loyaltyUser behaviors IndustryIntermediary or final consumerType of corporation (public or private sector)Size of corporationGeographical locationIntensity of product useOrganization of purchasing function Centralized or decentralizedPurchasing policies, rules and criteria

The following table shows the most important traditional variables for segmentation.

Since customer orientation of organizations is growing, segmentation as the basis for establishing customer relationships and customer loyalty gains importance. In this context, the elements of the loyalty ladder model could be used as segmentation variables:

Marketers have to choose those variables that are relevant for segmenting the market for a particular product. The basic rule is to focus on a limited number of important variables. To segment the market into too many small, slightly distinct segments would require splitting up the marketing budget into too many ineffective chunks. Such varied marketing activities in the diverse segments could confuse customers and would lead to cannibalization effects.

In choosing the PTM/Segment1. The segment should be big enough to be profitable2. There should be a distinct segment need for the product or service3. The segment can identify themselves with the product/brand segment owning the brand 4. The segment is vulnerable to switch to another brand/product37

Identifying the right segment:

Combine all bases for segmentation to concretely define the segment:Young, active college girls living in the city and belonging to AB socio-economic class who love to go out and hang around with friends. 38

the more specific the better

What can be a good segment to target for a toothpaste product considering the highly competitive market situation?39

Examples

Luxury CarsMercedez BenzSenior Top Executives

BMWYoung Achievers/Businessmen

VolvoConservative Senior Executives/Businessmen

Axe DeocologneYoung menPoten-CeeSmokers40

Consumer insighting

Once you know who you are talking to, how do you Engage & Connect them?

Consumer Insight is The Key

What is Customer insight ?

Knowledge about customers needs, characteristics, preferences and behaviors based on analysis of qualitative and quantitative data. Specific insights can be used to inform marketing tactics directed at groups of customers with shared characteristics

From Dictionary.com

1. an instance of apprehending the true nature of a thing, esp. through intuitive understanding

2. penetrating mental vision or discernment; faculty of seeing into inner character or underlying truth.

An insight is a fresh and unexpected perspective. It gets the following reaction from those involved: Wow, yes, youre right. Id never thought of it like that before, but youre absolutely right. You really understand Whats going on here.

Insight is a great word. Marketing insight sounds valuable. Good to have, and worth paying a consultant or agency if we cant find one ourselves. An insight is going to help us succeed, to beat the competition. But what is an insight? How can you be sure youve got one?

Next time you think youve got an insight, check it againsst this definition:

Achieving that kind of reaction is not easy. It means you have to think of something that no one has thought of before. Or. More accurately, that no one else in your market has thought of before.

It requires that you look at things differently. For that reason, most of the greatsources of insight inspiration are from outside of your category, and often outside of your (geographic) marketplace

From BuildBrands

Uncovering Consumer InsightUnderstand thoroughly your target marketWhat is the single factor that will compel them to at least try a new/different product?Find the answers to the following:What makes them happy and what will make them happier?What are their pre-occupation? What do they miss or long for?What do they desire?What DIABs (Disappoints, Irritates, Annoys, Bothers) them?What their fears or worries or apprehensions are?What is their primary consideration in using their current product? What will make them shift to another product or brand?

The Marketing research Process.Marketing research is gathered using a systematic approach. An example of one follows:Define the problem. Never conduct research for things that you would 'like' to know. Make sure that you really 'need' to know something. The problem then becomes the focus of the research. For example, why shoppers are not buying in our stores?How will you collect the data that you will analyze to solve your problem? Do we conduct a telephone survey, or do we arrange a focus group? Select a sampling method. Do we use a random sample, stratified sample, or cluster sample?How will we analyze any data collected? What software will we use? What degree of accuracy is required? Decide upon a budget and a timeframe.Go back and speak to the managers or clients requesting the research. Make sure that you agree on the problem! If you gain approval, then move on to step seven. Go ahead and collect the data.Conduct the analysis of the data.Check for errors. It is not uncommon to find errors in sampling, data collection method, or analytic mistakes.Write your final report. This will contain charts, tables, and diagrams that will communicate the results of the research, and hopefully lead to a solution to your problem. Watch out for errors in interpretation.

Primary - Marketing Research

Primary marketing research is collected for the first time. It is original and collected for a specific purpose, or to solve a specific problem. It is expensive, and time consuming, but is more focused than secondary research. There are many ways to conduct primary research. We consider some of them:

1. Interviews2. Mystery shopping3. Focus groups4. Projective techniques5. Product tests6. Diaries7. Omnibus Studies

Secondary - Marketing Research.

Secondary marketing research, or desk research, already exist in one form or another. It is relatively cheap, and can be conducted quite quickly .However, it tends to have been collected for reasons other than for the problem or objective at hand. So it may be untargeted, and difficult to use to make comparisons (e.g. financial data gather on Australian pensions will be different to data on Italian pensions). There are a number of such sources available to the marketer, and the following list is by no means conclusive:

Trade associations National and local press Industry magazines National/international governments Websites Informal contacts Trade directories Published company accounts Business libraries Professional institutes and organisations Omnibus surveys Previously gathered marketing research Census data Public records

Market Research Helps You To:Know about your market size, segmentation and industry driversDetermine which way the market is headingBe aware of recent industry trends or key eventsReach the most suitable target marketLearn about your competitors and their market strategiesIncrease sales by in-depth into your clients needs, values, lifestyles, or your consumers buying behavior, or demographicsScreen new market niches for business opportunitiesDecide on diversification, expansion in other countries or new distribution channelsGain crucial, customized information so as to make firm decisions

Deep Consumer Insights for a Financial InstitutionBy BCG

Learn how customer research uncovered the best way to educate and raise awareness about a pharmaceutical product. BCG

A New Positioning Strategy for a Health Care Player

Value proposition

Defining the Value PropositionWhat unique relevant and compelling value can you provide to your target market? Is it really significantly valuable to the target market?State clearly the unique or competitive benefit the you want to provide to your target marketnormally it is a description of what your target market would get or realize.

ValueRelevantDistinct+Point-of-ParityPoint-of-Difference1. Is the key benefit important to our customer?2. Can we deliver the benefit?3. Can we own this point of difference over time?4. Is this point of difference sustainable over our competition and their directions? Point-of-Difference QuestionsValue =Benefit/Cost

Examples of Value PropositionWorry-free effective first-aid wound treatment for the kids Sense of achievement at an early age by driving a sleek, sporty luxury carCarefree atmosphere while enjoying delicious, home-cooked meal Accurate and affordable diagnostic test result at the comfort of your home

Product strategyand branding

59Product LevelsCore Benefit: the value to the customerBasic Product: the tangible productExpected Product: attributes and conditions of the productAugmented Product: exceeds customer expectationPotential Product: future product to satisfy future demand

60Types of ProductsConsumer: used/consumed directly by the customerDurableNon-durableFast moving consumer goodsCommodities: price and availabilityCan you brand commodityIndustrial: use to produce consumer goods

Product DevelopmentWhat features and attributes the product should have to deliver the value proposition?What processes or systems should be in placed to support value delivery?What improvements should be done in an existing product or service to provide the unique benefit you want the target market to realize?

62Product DecisionsProduct type (what need to address/satisfy?)Product line (what form or category?)Product depth (what variances?)Branding PackagingContainer/Pack DesignContainer/Pack Shape and SizeContainer MaterialLabel Design/Text/Color

BenefitsFeaturephysicalsecuritysocialpersonalspiritual

.A brand is essentially a promise from a company to deliver a predictable customer experience.

65What is a Brandname?Product nameProduct IdentityEquityFranchiseCompany/Organization

66Considerations in BrandingEasy to pronounceEasy to rememberEasy to writeNo bad meaning in other languageShould convey or connote the products:Use (Mr. Clean)Advantage (Havit All)Benefit (Safeguard)

67Branding StrategiesUni-branding - One brand for several productsCompany name brandingFamily/Mother BrandingBrand Extension

Multi-brandingDistinct brand per product

68Which is better?Uni-brandingEffective if there is a strong common attribute among the products

Multi-brandingDifferent product lineDifferent attribute or benefitDifferent image

69ExamplesNot Quite Effective Uni-brandingGreen Cross (alcohol to bath soap)What else?

Effective Uni-brandingJohnson & Johnson (Baby-care line)San Miguel (beer line)Dove (mild personal care product line)Betadine?

Brand dna

What is Unique genetic profile made up of specific attributes, intricately balanced which act instantaneously on the minds of the customers

?

Brands seem like complex organisms, partly because each one of these basic attributes can act in a different way on each customer or group in the brand's environment (the Brandscape.) But, like a biological organism, Brand DNA must exhibit a certain baseline simplicity in order to be intelligible to customers and to evolve by rapid transmission from host to host. In other words, there must be a compelling story to be told about the brand if people are gong to talk about it. BrandSequencing makes sure not only that the story is compelling, but that it's the right story in the first place.Characteristics of Brand DNA

5 Dimensions of Brand DNABrand Category: What exactly is it? What category does it fit to?Brand Character: Whats it look and feel like?Brand Benefit: Whats the primary benefit to me?Brand Difference: What makes it stand out against competitors?Brand Credibility: What allows me to believe the claims made about the brand?

BRANDDifferenceA Typical Brand DNA DiagramBenefitCredibilityCharacterCategory

BMWDifferencePowerful EngineExample of Brand DNA DiagramBenefitStatus SymbolCredibilityGerman TechnologyCharacterSleek & SportyCategoryLuxury Car

Positioning

PositioningBrand Position in the mind. What step in the brand ladder in the mind?Top-of-mind exerciseSoft drinksCellphoneSearch engineLap top computer

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Brand XBrand YBrand Z

Positioning

What you want your target market to perceive about your productYour target markets understanding and acceptance of your product value proposition.

How to Position Your Product According to target segmentSecret (Exclusively for women)SanMig Light Unique product offering (USP)Johnson Baby Shampoo (For everyday shampoo)Versus Competition (Repositioning)Avis rent a car (Were no.2 so we try harder)Volkswagen (Small is beautiful)Pepsi (The Taste of the New Generation)7-up (The Uncola)C2 (The healthy alternative to soft drinks)

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How to Position Your Product

Versus Competition (Repositioning)According to target segmentAccording toProduct Benefit(USP)

Trout and Ries suggest a six-step question framework for successful positioning:

What position do you currently own?What position do you want to own?Whom you have to defeat to own the position you want.Do you have the resources to do it?Can you persist until you get there?Are your tactics supporting the positioning objective you set?

Positioning Line ExamplesBetadine Wound SolutionWalang hapding paggalingBetadine Feminine WashYour extra protection During susceptible (wet) daysPoten-CeeEasy-to-swallow, no sour after-tasteBetadine GarleProphylactic treatment for every dental procedureGlutaphosThe Brain Vitamin

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The marketer would draw out the map and decide upon a label for each axis. They could be price (variable one) and quality (variable two), or Comfort (variable one) and price (variable two). The individual products are then mapped out next to each other Any gaps could be regarded as possible areas for new products.

Brand PositioningReference: Scott M. Davis, Brand Asset Management : Driving Profitable Growth Through Your Brands

A well-crafted brand positioning has three primary components: A definition of the target market you wish to pursue A definition of the business your company is in or the industry or category it competes in A statement of your point of difference and key benefits

One Sentence Positioning StatementFor___________________ who (PTM demographic) __________________ (PTM psychographic)_____________ is the ____________________ (brand) (competitive category) that provides/makes/gives/offers/brings/etc. ___________________________ (distinct benefit) 85

Example: For upper middle-class men who demand the most of themselves, Boardroom is the fitness center that provides personal trainers who bring the most vigorous work-outs directly to office or home86

Would the customers we seek recognize themselves as part of this target market?

Is the target market both identifiable and reachable?

Is it clear why this target market would be interested in our point of difference?

If we have not served this target market before, why do we want to serve them now? Target Segment Questions

Brand Positioning Guiding PrinciplesA brand's positioning should be updated every three to five years, or as often as needed to update the company's overall growth strategy. Positioning should drive all of an organization's brand strategies, as well as revenue and profit streams. Senior management has to lead the charge in implementing a brand's positioning. Employees, not advertising agencies, bring a brand positioning to life. A strong brand positioning is customer driven and fits with customer perceptions of the brand.

Tagline

A phrase or a short statement that summarizes the positioning statementWhat you normally indicate immediately below or beside the brand name in any communication materialShould sell the brand right away to the target marketShould clearly communicate the distinct advantage of the brand

Bad TaglinesKojie.SanLet the fantasy become realityAccentureHigh Performance. DeliveredThe Suites at Mount MalarayatAn ACTIVE Group Resort CommunityEast West Bank Credit CardThe Credit You DeserveTrevocaDo More in Life

Good Taglines:Panasonic InverterSave up to 60% EnergyMedicOne Step Pregnancy TestCheriferThe only pediatric vitamin with Chlorella Growth FactorMercury DrugGamot ay Siguradong BagoOlayHealthy fairness with vitamin C

Bad or Good Tagline?CenturyReal Estate With PassionPhilippines:7,107 islands beyond the usualMang InasalUnlimited Rice on All Paborito MealsLight ResidencesHome is where the shops areMotostarPinoy Pride (Manny Pacquiao endorser)AudiVorsprung durch Technic

Pricing

95Why do we price a product?To maximize profit

Profit = Sales Expense Sales = Units x Price

96What is pricing?The amount we pay for the over-all value we derived from consuming/using the product or experiencing the service

Why is it that a glass of coke in the cafeteria is much cheaper than the glass of coke in a 5-star hotel? Arent they the same cola?

97Major Pricing MethodsCost Plus PricingCost + MarginProfit Objective PricingMarket DemandCompetitive AdvantagePrice SkimmingDistinctivenessDemand Size and Potential

98Basic Pricing StrategiesHigher Pricing: better qualityPremium Pricing (Signature Brands; Mercedez)Image Pricing, ex.?Parity Pricing: same priceAt least one added value Lower Pricing: At least the same quality

99Mark-up PricingUnit cost = Variable Cost + (Fixed Cost/Unit Sales)Markup Price = Unit Cost/(1-Desired Return on Sales)Example: Variable Cost Per Unit: P10.00 Fixed Costs : P300,000.00Expected Unit Sales :50,000 Markup Target :20% Unit Cost = 10 +(300,000/50,000) = P16.00 Mark-up Price = 16/(1-0.2) = P20.00

100Target-Return PricingYields target ROIFormula: Target-return Price = Unit Cost + (Desired Return x Invested Capital/Unit Sales)Example ROI Target: 20% Total Investment: P1,000,000Unit Cost: P16.00 Unit Sales: 50,000

Target-return Price = 16+(0.20 x P1,000,000/50,000) = P20.00

101Break-even Volume Total Revenue = Total CostBreak-even Volume Formula = Fixed Cost/(Price-Variable Cost)Example FC: P300,000 Price: P20.00 Variable Cost: p10.00 Break-even Volume = 300,000/(20-10) = 300,000/10 = 30,000 units

102Perceived Value PricingCustomers perceived value is made up of several elements:Product Performance ImageChannel DeliverablesWarranty QualityCustomer SupportSofter Attributes (suppliers reputation, trustworthiness and esteem)Companies must deliver the value promised by their value propositionMarketing-mix elements, such as advertising and sales force, are used to communicate and enhance perceived value

103Perceived Value PricingExample: Sony Television Pricing is P20,000 vs. P15,000 price of TLCRationale:15,000 is the Sony TVs price if it is only equivalent to TLC TV 3,000 is the price premium for Sonys superior durability 2,000 is the price premium for Sonys superior reliability 1,500 is the price premium for Sonys superior service 1,000 is the price premium for Sonys longer warranty on parts22,500 is the normal price to cover Sonys superior value- 2,500 discount20,000 final priceThe customer actually only pays 5,000 for 7,500 extra value

104Value PricingMost Ideal Pricing StrategyCharging a fairly low price for a high-quality offeringIt is not simply setting lower pricesIt is a matter of reengineering the companys operations to become a low-cost producer without sacrificing qualityHence, attracting a large number of value-conscious customersExamples: Toyota, Southwest AirlinesTypes: Everyday Low Pricing (EDLP) and High-low Pricing

105Going Rate PricingPrice is based largely on competitors price, charging the same, more or less than major competitor(s)In oligopolistic industries that sell a commodity such as paper, fertilizer, LPG, etc., all firms normally charge the same price.The smaller firms follow the leaders changing their prices when the market leaders prices change rather than when their own demand or costs change.Some firms might change a slight premium or discount but they contain the amount of difference, e.g. oil dealersThe key in going rate pricing is of course managing the cost via efficient production and/or good sourcing

106Auction-type PricingPrimary purpose is to dispose of excess inventories or used goodsIt is growing more popular especially with the growth of internetEnglish Auction (ascending bids)One seller, many buyers. Starts with low priceOn sites such as yahoo and ebayDutch Auction (descending bids)One seller, many buyers or one buyer many sellersStarts with high priceOn sites such as FreeMarket.comSealed Bid AuctionWould be suppliers can submit only one bid and cannot know the other bids.A supplier will not bid below its cost but cannot bid too high for fear of losing the sale. Highly advantageous for the seller since it can choose the price for maximum profitEffective for contract selling

107Analyzing Competitors PricingDemandWorth to the customersSuperior or inferior valuePrice cut objectives:Steal the marketCompany is doing poorly and wants to boost its salesReduce price to stimulate total demand

Pricing StrategyPricing Strategies for New ProductsPricing Strategies for Established ProductsPrice Flexibility StrategyPrice Leadership Strategy

1. Pricing For New Products

Skimming Pricing Strategy

Penetration Pricing Strategy

Skimming Pricing StrategySetting a relatively high price during the initial stage of the products lifeObjectives:To serve customers who are not price conscious while the market is at the upper end of the demand curve and competition has not entered yet the marketTo recover a significant portion of promotional and research & development costs through a high margin

Skimming Pricing StrategyRequirements:Heavy promotional expenditures to introduce product, educate customers, and induce early buyingRelatively inelastic demand at the upper end of the demand curveLack of direct competition and substitutes

Penetration Pricing StrategySetting relatively low price during the early stage of the products lifeObjectivesTo discourage competition from entering the market by quickly taking a large market share and by gaining a cost advantage through realizing economies of scale.RequirementsA product must appeal to a market large enough to support the price advantageDemand must be highly elastic in order for the firm to guard its cost advantage

2. Pricing for Established ProductsMaintaining the Price

Reducing the Price

Increasing the Price

Maintaining the PriceObjectives:To maintain position in the market place (i.e., market share, profitability, etc.)To enhance public imageRequirements:Firms served market is not significantly affected by changes in the environmentUncertainty exists concerning the need for or result of a price changeFirms public image could be enhanced by responding to government requests or public opinion to maintain price

Reducing the PriceObjectives:To act defensively and cut price to meet the competitionTo act offensively and attempt to beat competitionTo respond to a customer need created by a change in the environment

Reducing the PriceRequirements: Firms must be financially or competitively strong to fight in a price war if that becomes necessaryMust have a good understanding of the demand function of its product

Increasing the PriceObjectives:To maintain profitability during inflationary periodTo take advantage of product differences, real or perceivedTo segment the current served market

Increasing the PriceRequirements: Relatively low price elasticity but relatively high elasticity with respect to some other factor such as quality or distributionReinforcement from the other ingredients of the marketing mix

Pricing Flexibility StrategyOne Price StrategyFlexible Pricing Strategy

One Price StrategyCharging the same price to all customers under similar conditions and for the same quantitiesObjectives:To simplify pricing decisionsTo maintain goodwill among customers

One Price Strategy Requirements:Detailed analysis of the firms position and cost structure as compared with the rest of the industryInformation concerning the cost variability of offering the same price to everyoneKnowledge of economies of scale available to the firmInformation on competitive prices; information on the price that customers are ready to pay

Flexible Pricing StrategyCharging different prices to different customers for the same product and quantityObjective: To maximize short-term profits and build traffic by allowing upward and downward adjustments in price depending on competitive conditions and how much the customer is willing to pay for the product

Flexible Pricing Strategy Requirements: Have the information needed to implement the strategyUsually this strategy is implemented in one of four ways:By marketBy productBy timingBy technology

Flexible Pricing StrategyOther Requirements include: A customer-value analysis of the productAn emphasis on profit margin other than just volume, andA record of competitive reactions to price moves in the past

4. Price Leadership StrategyThis strategy is used by the leading firm in an industry in making major pricing moves, which are followed by other firms in the industry.Objective: To gain control of pricing decisions within an industry in order to support the leading firms own marketing strategy (i.e., create barriers to entry, increase profit margin, etc.)

4. Price Leadership Strategy Requirements:An oligopolistic situationAn industry in which all firms are affected by the same price variables (i.e., cost, competition, demand)An industry in which all firms have common pricing objectives

PLACEMENT/DISTRIBUTION

Distribution DefinedKotlers Definitionis a system of bringing products and services to the trade to satisfy customers efficiently

NALs DefinitionMaking your products/services available at places where your target market would or can have access to buy

Is Distribution the same as Selling?Technically, no. Selling is a different discipline. Its a form of promotionBut there is selling in distribution, especially for consumer goods, since you have to convince the store owner to make your product available in his/her outlet.

Is Selling a PromotionYes,And there is promotion (trade marketing) in distribution since the ultimate aim is to sell to consumers

Distribution is part of the supply chain

Going to Market: Channels of DistributionSUPPLIERAGENTDISTRIBUTORWHOLESALERRETAILERCONSUMER

Distribution = Sell-in (Availability)

Promotion = Sell-out (Off-take)

Distribution Strategy is based on market conditions and the companys goalMarket CoverageChannel ControlCostOther qualifying factorsIntensity of distributionIntensiveSelective

Product type and marketing approach help determine your choice of channelPullSupplier advertiseRetailers stock up / Consumers look for it

PushSuppliers sell to dealersDealers select which suppliers product to carry and to push

Push and Pull are both used: Balance is key

PULLPUSHNikeSan Mig LiteHappy MealGran MatadorMercedes Benz

PhilamlifeViagraSerendraCar paintsCADP Sugar

FMCGB2B

Other important considerationsCOSTListing fees and In-store participation requirementsAdvertisingMarket ResearchSalespersonsCAPABILITIESOrder ProcessingPhysical capabilityWarehousesVehiclesSalespersons

Promotion --- imc138

Objectives of Promotion To inform the market about the brand To convince the market to prefer the brand To create recall about the productTo influence the market to make on the spot buying decisionTo establish good company/brand goodwill or image

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INTEGRATED MARKETING COMMUNICATION

The Integrated Marketing Communication enables our customers to achieve one-face communication, a cross-media effect that combines both real and net media, improvement of brand value and more efficient media penetration etc.

Chugai Company, LTD. (Japan)

Promotional Elements

Developing the Promotional Program

DEVELOPING THE PROMOTION PROGRAMS

Specifying Promotion ObjectivesQualities of Good Objectives:Designed for a well-defined target audience Measurable Cover a specified time period. Hierarchy of effects:Sequence of stages a prospective buyer goes through Use as a tool to develop objectives Awareness. Ability to recognize and remember the product or brand.Interest. Increase in desire to learn about the product features Evaluation. Consumers appraisal of the product on important attributes. Trial. Consumers actual first purchase and use. Adoption Repeated purchase and use of the product or brand

Selling

146Integrating Marketing to SellingStart with selecting the right prospects (Segmentation/Targeting)Gather as many information as possible about your chosen prospects (Consumer Insighting)Identify the need that can be particularly addressed by your product or service (Value Proposition)Communicate clearly your products attribute that can particularly satisfy their need or identify what service should be added/done to totally satisfy the customer (Promotion)Do or offer other services that would satisfy other needs related to the basic need (Full-line Selling)Conduct post-sales services/activities to sustain a good relation with the client (Building Customer Loyalty)

The following questions are significant to any marketing and sales planning process:

Where are we now? How did we get there? What is the competition? What do our customers want? Where are we heading? Where do we want to be? How must we get there? Are we on track? What must we do to stay there?

Analyzing your Present Sales SituationA.External Issues and Challenges1.Effects of the Present Business Climate2.Changes in your Customers' Buying Behavior3.Changes in your Competitors B.Internal Issues and Challenges1.Company Situation and Objectives2.Analysis of your Products and Offerings' Alignment to the Market3.Analysis of your Sales Organization4.Analysis of your Support GroupsC. Scenario Sales Planning based on your Challenges1.Specifying the Driving Forces or Threats that would affect your Sales2.Specifying the Weaknesses in your Sales Organization and Company3.Creating your Scenarios and Contingency Plans

Adaptive Sales Management StrategiesThe Equation for Sales Optimization (Source: CSO Insights)1.Having the "Right" Sales Team2.Doing the "Right Things"3.Armed with the "Right Tools"4.Given the "Right Support"5.To persuade Clients to make the "Right Decision"6."Right NOW"

advertising

6 Ms in AdvertisingMessageMarketMaterialMediaMoneyMeasure151

Message (What to say?)The most important element in the advertising campaignIt is what the audience should comprehend and believe after getting exposed to the ad

Product Positioning:What you want your target market to perceive about your product

The most significant consideration in preferring your brand or product over competitor(s)152

Market (To whom?)The target audience for the ad who should comprehend and believe your message and influence the decision to buyThe target can be any or combination of the following:Product userDecision makerDecision influencerBuyer153

Material (How to say?)How the advertisement should be executedStory lineCopy/TextDesign/Lay-outOver-all aestheticsShould creatively convey the message to achieve AIDAShould be appealing to target audienceShould consider celebrity endorser only if necessarystress a message154

AIDAAttention : depends on how creatively executed the ad is (material)Interest : depends on the value proposition of the product (message) Decision: depends on how significant the product offer to the audience (positioning)Action: depends on the level of need of the target market and competitiveness of the product155

Media (Where to say?)Traditional Media = Tri-media (TV, radio, print)New Media: (web space, cellphone, outdoor space)Considerations in Media Selection:Placement costReachOptimal number of target audience exposed to the mediumFrequency Number of exposure needed to achieve AIDAImpactLevel of awareness/recall that an ad material would create due to its impact creative execution)The right media for the target audienceMaximize exposure only to primary target audience156

Exerxcise: Choosing the media mix efficiently & Appropriating Media BudgetAssume the following:You will advertise your cologne for middle-age femaleTarget sales is 50 million pesos in one year1 million PTM populationPrice per bottle is 100 pesosAverage purchase is twice a yearExposure in print only for three monthsWhat should be the right print media mix and how much should you budget?What should be the conversion rate or how many should you convince to buy?

157

Money (How much to be able to say?)Budget Decision:As percentage of saleEstablished brand5%; 10%Share-of-voiceHead-on competitionExample?Advertising ObjectiveNew product; re-launch productPre-emptive marketing assault

158

Measure (How do you know if what you are saying is understood, believed and accepted?Awareness levelBrandname surveyMessage surveyRecall levelBrandname surveyMessage surveyAttitude levelSurvey, FGD, observationSales and ProfitInternal figuresShelf off-takeIndustry Sales Audit (Vs. competition)159

Assessment of TV adsWinner corned beefFamily SardinesBench (Richard Gomez)SolmuxFibisco

160

Sales PromotionsConsumer promotionBenefits the consumersOn-pack promo; dry sampling; discount coupons; raffle promo, etc.Trade promotionBenefits the trade channelsVolume discount; Off-take contest; etc.161

When to do Sales Promotions?Product Launch (part of integrated marketing communication)When there is strong challengerTo pre-empt any strong competitive moveTo capture in-store buying decision

162

Trade MarketingAvailabilityStock inventory monitoringVisibilityMerchandisingFacing; display; collateralsMovementIn-store promoPush program (push girls; promodizers)

163

PublicityTo create company/brand goodwill with the customersTo establish favorable company/brand imageTo develop customer emotional attachment with the company/brandTo sustain company/brand patronageTo indirectly solicit government/public supportWhat to publicize:CSR activitiesSports sponsorshipsCompany advocacies (R&D, Clean Environment, Green Marketing) 164

Integrated Marketing Communication (IMC)Promo Mix done under one theme Advertising message :Publicity :Special Events :Sales Promo :Personal Selling :Employee Communication and Attitude :165Example : Clear Shampoo

Integrated marketing communication (IMC) Message

Theme

ProductUsersDecision Makers

NAL166

DecisionInfluencers

Promotion MixPromotion MixPromotion Mix

166

Product Life Cycle

PRODUCT LIFE CYLE AND PROMOTION STRATEGY

Product Life Cycle and the 4 Ps168

169

INTRODUCTION GROWTH MATURITY DECLINETarget MarketProductPricePlacementPromotion

STRATEGIESSalesProfit

170IntroductionGrowthMaturityDecline Stretch marketMaintain loyal usersFocus on the primaryEnter new segments convert non-usersTarget Market target segment enter new segments attract competitors' customers Improve quality, stylingStart to develop new product forObsolete the product withProductDifferentiateIntroduce new variants any emerging market a new promising oneStay competitive in quality andSell the product if there are attributes interested to acquire it Objective pricingLower price to reachLower to be more competitiveOptimize to maximize profitPrice Price Skimming out to more segmentsIncrease to maximize profitCompetitive pricingOffer trade discounts Saturate distribution channelsLimit to outlets where there is PlacementPrimary outletsExpand channel coverageStrengthen partnership with movement the channels Product awarenessProduct PreferenceReinvest if new market or newNo investment PromotionInformative Competitiveusage created is big enoughRechannel investment to newpromising product(s)

Strategies in the Different Stages of the Product Life Cycle

New Marketing RealitiesNetwork information technology (e-marketing)Globalization (international marketing)DeregulationPrivatizationMultilevel Marketing (MLM)Heightened competition (national vs. multinational brands; brands vs. generics; concessionaire brand vs. house brands) Industry convergence (communication and entertainment)Consumer resistance (negative opinion about advertising and marketing)Retail Transformation (mega retailers, specialty retailers, direct-mail firms, home shopping TV, e-commerce on the Internet)

171

New Consumer CapabilitiesA substantial increase in buying powerA greater variety of goods and servicesA great amount of information about practically anythingGreater ease in interacting and placing receiving ordersAn ability to compare note on products and servicesAn amplified voice to influence peer and public opinion172

New Company CapabilitiesCan use the internet as powerful information and sales channelResearchers can collect fuller and richer information about markets, customers, prospects and competitors Managers can facilitate quick communication with internal and external customers (internet connection)Target marketing and two-way communication are easier (internet connection)Companies can establish customer network without physically organizing them (internet connection)Companies can reach customers on the move with mobile marketing (GPS technology)173

Internet and Mobile PhonesSelling mediaAdvertising mediaSales promo mediaMarket research mediaNetwork marketing mediaMarketing strategy feedback media

174

Marketing Process SummaryDiscovering/ Identifying the ValueCreating the Value

Communicating the Value

Making the Value Accessible SegmentingProfilingTargetingConsumer InsightingValue Offering

Product ConceptProduct DevelopmentBranding PositioningPricingDistributionPlacementChannel MarketingIMCEMC1243

Wow,Indeed!

"The way to get started is to quit talking and begin doing."- Walt Disney

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