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2. Contents 1. Marketing Mix and Key Marketing Activities 2. Developing Market Segmentation 3. Product Planning and Development 4. Promotion Mix : Advertising, Publicity, PersonalSelling and Sales Promotion 5. Distribution Planning and Pricing Strategy If you find this presentation useful, please consider tellingothers about our site (www.studyMarketing.org)www.studyMarketing.org 2 3. Marketing Mix and Market Segmentationwww.studyMarketing.org 3 4. Marketing Credo There is only one valid definition of business purpose : to create a customer Peter Druckerwww.studyMarketing.org 4 5. Marketing Mix ProductPrice Target Market Place Promotionwww.studyMarketing.org5 6. Key Marketing Activities Consumer Analysis Distribution Product PlanningPlanningPromotionPrice Planning Planningwww.studyMarketing.org6 7. Key Marketing Activities Examination and evaluation of consumerConsumer Analysischaracteristics, needs, and purchase processes Development and maintenance of products,Product Planning product assortments, product positions, brands, packaging, options, and deletion of old products Outlines price ranges and levels, pricing Price Planningtechniques purchase terms, price adjustments, and the use of price as an active or passive factorwww.studyMarketing.org 7 8. Key Marketing ActivitiesEstablishment of channel relations, physical Distributiondistribution, inventory management,Planningwarehousing, transportation, allocation ofgoods, and wholesaling PromotionCombination of advertising, publicity,Planningpersonal selling, and sales promotion todrive sales revenuewww.studyMarketing.org 8 9. Product/Market Matrix Existing ProductsNew ProductsMarketMarket Product ProductExisting MarketsPenetrationDevelopmentPenetrationDevelopmentMarket MarketDiversification Diversification New Markets Development Developmentwww.studyMarketing.org 9 10. Product/Market MatrixMarket The firm seeks to achieve growth withMarketPenetrationexisting products in their current marketPenetration segments, aiming to increase its market share Effective when the market is growing or not yet saturatedMarket Market The firm seeks growth by targeting its Development Development existing products to new market segments Effective when a local or regional business looks to wider its market, new market segments are emerging due to changes in consumer life-style/demographics, and innovative uses are discovered for a mature product 10www.studyMarketing.org 11. Product/Market Matrix Product The firms develops new products Product Development Developmenttargeted to its existing market segments Effective when the firm has a core ofstrong brandsDiversification The firm seeks growth by targeting itsDiversificationexisting products to new marketsegments Diversification is utilized so that thefirm does not become overly depend-ent on one product linewww.studyMarketing.org 11 12. Market SegmentationMarket The division of a market intoSegmentdifferent homogeneous groups of consumersShould be: measurable accessible by communication and distribution channels different in its response to a marketing mix durable (not changing too quickly) substantial enough to be profitablewww.studyMarketing.org 12 13. Types of Market Segmentation Based on regional variables such asGeographic region, climate, population density, and population growth rate. Based on variables such as age, gender,Demographicethnicity, education, occupation, income, and family statuswww.studyMarketing.org 13 14. Types of Market Segmentation Based on variables such as values,Psychographicattitudes, and lifestyle Based on variables such as usage rateBehavioral and patterns, price sensitivity, brand loyalty, and benefits soughtwww.studyMarketing.org14 15. Step in Planning A Segmentation StrategyDeterminingAnalyzingDevelopingcharacteristics andconsumer consumerneeds of consumers similarities and groupfor the productdifferencesprofilescategory of thecompany Selecting Positioning Establishing consumercompanys an segment (s) offering in appropriate relation to marketing competition.planwww.studyMarketing.org15 16. Product Planning and Developmentwww.studyMarketing.org16 17. Products : Types of Goods Convenience GoodsTypes ofShopping Goods GoodsSpecialty Goodswww.studyMarketing.org 17 18. Convenience Goods Those purchased with a minimum of effort,Conveniencebecause the buyer has knowledge ofGoodsproduct characteristics prior to shopping The consumer does not want to search for additional information (because the item has been bought before) and will accept a substitute rather than have to frequent more than one storewww.studyMarketing.org 18 19. Convenience Goods Staples are low-priced items that areConvenienceroutinely purchased on a regular basis,Goodssuch as detergent, milk, and cereal Impulse goods are items that the consumer does not plan to buy on a specific trip to a store, such as candy, a magazine, and ice cream Emergency goods are items purchased out of urgent need, such as an umbrella during a rainstorm, a tire to replace a flat, or aspirin for a headachewww.studyMarketing.org 19 20. Shopping Goods Those for which consumers lackShopping sufficient information about product Goods alternatives and their attributes, and therefore must acquire further knowledge in order to make a purchase decisionwww.studyMarketing.org20 21. Shopping Goods For attribute-based shopping goods,Shopping consumers get information about and then Goods evaluate product features, warranty, performance, options, and other factors. The goods with the best combination of attributes is purchased. Sony electronics and Calvin Klein clothes are marketed as attribute-based shopping goods For price-based shopping goods, consumers judge product attributes to be similar and look around for the least expensive item/storewww.studyMarketing.org 21 22. Specialty Goods Those to which consumers are brand Specialty loyal.Goods They are fully aware of these products and their attributes prior to making a purchase decision. They are willing to make a significant purchase effort to acquire the brand desired and will pay a higher price than competitive products, if necessary. For specialty goods, consumers will not make purchases if their brand is not available. Substitutes are not acceptable.www.studyMarketing.org22 23. Services Rented-goods ServiceType ofOwned-goods serviceServicesNon-goodswww.studyMarketing.org 23 24. ServicesRented-Involves the leasing of a good for a specified period of time. Examples include car, hotel room, goods apartment, and tuxedo rentalsService Involves an alteration or repair of a good owned by Owned-goods the consumer. Examples include repair services service (such as automobile, watch, and plumbing), lawn care, car wash, haircut, and dry cleaning Provides personal service on the pan of the seller;Non-goodsit does not involve a goods. Examples include accounting, legal, and consulting serviceswww.studyMarketing.org 24 25. Characteristics of Services The intangible nature of many services makes the consumers choice more diffi-cult than with goods The producer and his or her services are often inseparable The perishability of services prevents storage and increases risks Service quality may be variablewww.studyMarketing.org25 26. Product Life Cycle Growth Maturity IntroductionDeclinewww.studyMarketing.org 26 27. Product Life CycleCharacteristicsIntroduction GrowthMarketing objective Attract innovators and Expand distribution andopinion leader to newproduct lineproductIndustry salesIncreasing Rapidly increasingCompetition None or smallSomeIndustry profitsNegative IncreasingCustomers Innovators Affluent mass marketProduct mix One or two basic Expanding linemodelsDistributionDepends on product Rising number of outletsPricing Depends on product Greater range of pricesPromotion InformativePersuasivewww.studyMarketing.org 27 28. Product Life Cycle CharacteristicsMaturity Decline Marketing objective Maintain differential (a) cut back, advantage as long as(b) revive, possible(C) terminate Industry salesStableDecreasing Competition Substantial Limited Industry profitsDecreasingDecreasing Customers Mass market Laggards Product mix Full product line Best-sellers DistributionGreatest number ofDecreasing number of outlets outlets Pricing Full line of prices Selected prices Promotion Competitive Informativewww.studyMarketing.org28 29. New Product PlanningIdea Product Concept BusinessGeneration Screening Testing Analysis Product TestCommercial- Development Marketing izationwww.studyMarketing.org 29 30. New Product Planning A continuous, systematic search for newIdea product opportunitiesGeneration It involves delineating sources of new ideas and methods for generating them After the firm identifies potentialProductproducts, it must screen themScreening Many companies use a new-product screening checklist for preliminary evaluationwww.studyMarketing.org 30 31. Screening Checklist GENERAL CHARACTERISTICS OF NEW PRODUCTSProfit potentialExisting competition Potential competitionSize of marketLevel of investmentPatentability Level of risk MARKETING CHARACTERISTICS OF NEW PRODUCTS Fit with marketing capabilities Effect on existing products (brands) Appeal to current consumer markets Potential length of product life cycle Existence of differential advantage Impact on image Resistance to seasonal factors PRODUCTION CHARACTERISTICS OF NEW PRODUCTS Fit with production capabilities Length of time to commercialization Ease of product manufacture Availability of labor and material resources Ability to produce at competitive priceswww.studyMarketing.org 31 32. New Product Planning Concept testing presents the consumer with a proposed product and measures attitudesConcept and intentions at this early stage ofTesting development Concept testing is a quick and inexpensive way of measuring consumer enthusiasm Business analysis for the remaining productBusiness concepts is much more detailed than product screeningAnalysis Because the next step is expensive and time- consuming product development, critical use of business analysis is essential to eliminatewww.studyMarketing.org marginal items 32 33. Business Analysis Variables Factors Considerations Demand projectionsPrice/sales relationship; short- and long-run sales potential; speed of sales growth; rate of repurchases; channel intensity Cost projections Total and per unit costs; use of existing facilities andresources; startup vs. continuing costs; estimates of futureraw materials and other costs; econo-mies of scale; channelneeds; break-even point Competition Short-run and long-run market shares of company and competitors; strengths and weaknesses of competitors; potential competitors; likely competitive strategies in response to new product by firm Required investment Product planning (engineering, patent search, product development, testing); promotion; production; distributionProfitability Time to recoup initial costs; short- and long-run total and per-unit profits; control over price; return on investment (ROI)www.studyMarketing.org 33 34. New Product Planning Product development converts a product ideaProductinto a physical form and identifies a basicDevelopmentmarketing strategy It involves product construction, packaging, branding, product positioning, and attitude and usage testing. Test marketing involves placing a product forTest sale in one or more selected areas andMarketingobserving its actual performance under the proposed marketing plan. The purpose is to evaluate the product and pretest marketing efforts in a real setting priorwww.studyMarketing.org to a full-scale introduction34 35. New Product Planning After testing is completed, the firm is ready Commercial- to introduce the product to its full target ization market. This is commercialization and corresponds to the introductory stage of the product life cycle Commercialization involves implementing a total marketing plan and full productionwww.studyMarketing.org 35 36. Promotion Mix : Advertising, Publicity, Personal Selling and Sales Promotionwww.studyMarketing.org36 37. Promotion Mix AdvertisingPublicityTargetMarket PersonalSalesSellingPromotionwww.studyMarketing.org 37 38. Promotion MixFactor AdvertisingPublicity Personal SellingSales PromotionAudienceMass Mass Small (one-to-one)Varies MessageUniformUniformSpecificVaries Cost Low per viewer orNone for media space High per customer Moderate perreader and time; can be customer moderate costs for press releases and publicity materials SponsorCompanyNo formal sponsor in Company Company that media are not paidFlexibility LowLowHighModerateControl over contentHigh None HighHigh and placementCredibility Moderate High ModerateModerate Major goal To appeal to a massTo reach a massTo deal with individual To stimulate short-runaudience at aaudience with an consumers, to resolve sales, to increasereasonable cost, and independentlyquestions, to close impulse purchasescreate awareness and reported message salesfavorable attitudes ExampleTelevision ad for aNewspaper articleRetail sales personnelA Kodak video cameraKodak video camera reporting on the explaining how adisplayed at consumer unique features of a Kodak video cameraphotography shows Kodak video camera workswww.studyMarketing.org 38 39. Four Key Steps to Advertise Determine message content and devise an adSpecify thelocation of an ad(media placement)Choose how manyOutline a promotionvariations of aschedulebasic message toutilizewww.studyMarketing.org 39 40. Things to Consider in Advertising Waste is the portion of an audience that isWastenot in a firms target market. Because media appeal to mass audiences, waste is a significant factor in advertising. Reach refers to the number of viewers orReachreaders in the audiencewww.studyMarketing.org 40 41. Things to Consider in Advertising Frequency is how often a medium can beFrequencyused. It is greatest for newspapers, radio, and television, where ads may appear daily and advertising strategy may be easily changed Message permanence refers to the numberMessage of exposures one advertisement generates permanence and how long it remains with the audiencewww.studyMarketing.org 41 42. Things to Consider in Advertising Persuasive impact is the ability of a mediumPersuasive to stimulate consumers. Television often hasimpact the highest persuasive impact because it is able to combine audio, video, color, animation, and other appeals.ClutterClutter involves the number of ads that are contained in a single program, issue, etc. of a medium. Clutter is low when a limited number of ads is presented and high when many ads are presented.www.studyMarketing.org 42 43. Publicity : Poor and Good ResponseSituationPoor ResponseGood ResponseFire breaks out in Requests for information by Company spokesperson explains the cause a company plant media are ignored.of the fire and company precautions to avoid it and answers questions.New productAdvertising is used without Preintroduction news releases, product introducedpublicity samples, and testimonials are used.News story about Requests for information by media Company spokesperson states that tests are product defects are ignored, blanket denials arebeing conducted on products, describes issued, hostility is exhibited toward procedure for handling defects, and answers reporter of story.questions. CompetitorThe advertising campaign is Extensive news releases, statistics, andintroduces new stepped up. spokespeople are made available to media to product present companys competitive features. High profitsProfits are rationalized and positive Profitability is explained, data (historical andreported effects on the economy are cited. current) are provided, uses of profits are detailed: research, community development.Overall view of There is an infrequent need forThere is an ongoing need for publicity, strongpublicity publicity; crisis fighting is used planning, and contingency plans for badwhen bad reports are circulated. reports.www.studyMarketing.org43 44. Developing a Publicity PlanSettingOutliningobjectives types of publicity Creating Selecting publicity media messages Timing publicity messageswww.studyMarketing.org 44 45. Publicity Type Publicity Type ExampleNews publicity Macys describes its decision to sell its stores in the Midwest. Business feature article Toyota explains its goals and objectives for the 2020.Service feature article A trade association offers 10 tips on how to reduce home heatingcosts. Finance releaseGeneral Electric distributes quarterly financial data about thecompany. Product releaseIntel announces its new, fastspeed microprocessorPictorial release Apple distributes photos showing all of its personal computerproducts and related software Background editorial Mc Kinsey presents a biography of its president and his rise releasethrough the company.Emergency publicity The Red Cross makes a request for aid to tornado victims.www.studyMarketing.org 45 46. Specific Personal Selling ObjectivesType of Objective IllustrationsDemand-OrientedInformationTo fully explain all good and service attributes To answer any questions To probe for any further questionsPersuasion To clearly distinguish good or service attributes from those of competitors To maximize the number of sales as a per cent of presentations To convert undecided consumers into buyers To sell complementary items, e.g., film with a camera To placate dissatisfied customers Reminding To ensure delivery, installation, etc. To follow up after a good or service has been purchased To follow up when a repurchase is near To reassure previous customers when making a new purchaseImage-OrientedIndustry and company To maintain a good appearance by all personnel in contact with consumers To follow acceptable sales practiceswww.studyMarketing.org 46 47. Personal Selling Process ProspectingApproachCustomer (blind, lead)Wants SalesAnswering Presentation Questions(questions andobjections) Follow up Close (satisfaction, referrals, repurchase)www.studyMarketing.org47 48. Types of Sales PromotionType CharacteristicsIllustrationCoupons Manufacturers or retailers advertise P&G mails consumers a 25centsspecial discounts for customers whooff coupon for Sure deodorant,redeem coupons.which can be redeemed at any supermarket. Refund or A consumer submits proofofFirst Alert home fire alarmsrebate purchase (usually to theprovides $5 rebates to consumers manufacturer) and receives an extra submitting proof of purchase. discount.Samples Free merchandise or services are When Sunlight dishwashing liquidgiven consumers, generally for new was introduced, free samples wereitems. mailed to consumers. Contests or Consumers compete for prizes by Publishers Clearinghouse sponsorssweepstakes answering questions (contests) orannual sweepstakes and awards filling out forms for random drawings automobiles, houses, and other of prices (sweepstakes).prices.www.studyMarketing.org 48 49. Types of Sales PromotionType CharacteristicsIllustration Bonus or Consumers receive discountsSome stores run Icent sales,multipacks for purchasing in quantitywhereby the consumer buys one item and gets a second one for a penny. Point-of- Instore displays remindChewing gum sales inpurchase customers and generatesupermarkets are high because displays impulse purchases. displays arc placed at checkout counters.Special Manufacturers or retailers Virtually every major league events sponsor celebrity appearances, baseball team has an annual "Oldfashion shows, and other Timers Day," which attracts largeactivities.crowds.Gifts Consumers are given gifts forSavings banks offer a range ofmaking a purchase or opening gifts for consumers opening newa new account. accounts or expanding existing ones.www.studyMarketing.org49 50. Sales Promotion Advantages It helps attract customer traffic and maintain brand or storeloyalty Quick results can be achieved Some forms of sales promotion (calendars, tshirts. Pens,etc) provide value to the consumer and are retained bythem; and these forms can provide a reminder function Impulse purchases can be increased through instoredisplayswww.studyMarketing.org50 51. Sales Promotion Disadvantages The image of the firm may be lessened if it continuously runs promotions. Consumers may view discounts as representing a decline in product quality and believe the firm could not sell its offerings without them. When coupons, rebates, or other special deals are used frequently, consumers may not make purchases if the items are sold at regular prices. Instead, they will stock up each time there is a promotion.www.studyMarketing.org 51 52. Sales Promotion Disadvantages Sometimes sales promotions shift the focus away from the product onto secondary factors. Consumers may be attracted by calendars, coupons, or sweepstakes instead of by product quality, functions, and durability. In the short run this generates consumer enthusiasm. In the long run this may have adverse effects on a brands image and on sales, because a product related differential advantage has not been developed.www.studyMarketing.org 52 53. Distribution Planning andPricing Strategywww.studyMarketing.org 53 54. Distribution Planning Distribution planning is systematic decision making regarding the physical movement and transfer of ownership of a product from producer to consumer. It includes transportation, storage, and customer transactions. Distribution functions are carried out through a channel of distribution, which is comprised of all the organizations or people involved in the process. These organizations or people are known as channel members or middlemen.www.studyMarketing.org54 55. Intensity of Channel CoverageCharacteristics Exclusive SelectiveIntensive DistributionDistribution DistributionObjectives Prestige image,Moderate market Widespread channel control andcoverage, solid market coverage, loyalty, price image, some channel stability and high channel control and acceptance, sales profit margins loyalty, good sales volume and profitsand profits Channel Few in number, Moderate in number, Many in number, members wellestablished wellestablished, all types reputable stores better stores of outlets Customers Few in number, Moderate in number, Many in number, trend setters, brand conscious,convenience willing to travel to somewhat willing to oriented store, brand loyal travel to storewww.studyMarketing.org 55 56. Intensity of Channel CoverageCharacteristicsExclusiveSelective IntensiveDistribution DistributionDistributionMarketing Personal selling, Promotional mix,Mass Emphasis pleasantpleasant shopping advertising,shoppingconditions, goodnearby location,conditions, goodservice items in stockservice Major Limited salesMay be difficult to Limited channelDisadvantages potential carve out a niche control Examples Automobiles,Furniture,Groceries,designer clothes, clothing, watches householdcaviarproducts,magazineswww.studyMarketing.org56 57. Methods of Channel CooperationFactorManufacturer Action Channel Member Action New-productThorough testing, adequate Good shelf location and introduction promotionalspace, enthusiasm forsupportproduct, assistance in test marketing Delivery Prompt filling of orders, adherence to Proper time allowed forscheduled datesdelivery, shipments immediately checked for accuracy PromotionSales force training, sales forceAttractive instore displays,incentives, development of nationalknowledgeable salespeople,advertising campaign, cooperativeparticipation in cooperativeprograms programs ProductProduct guarantees Proper installation and quality servicing of productswww.studyMarketing.org 57 58. Pushing and Pulling Strategy Pushing StrategyPulling Strategy Manufacturer Manufacturer ManufacturerManufacturer ChannelChannel Channel Channel members membersmembersmembersConsumersConsumersConsumers Consumerswww.studyMarketing.org58 59. Price PlanningRepresents the value of aRepresents the value of a good or service for both the good or service for both the A Price A Price seller and the buyerseller and the buyerSystematic decision making Systematic decision making Price Price by an organization regarding by an organization regarding Planning Planningall aspects of pricing all aspects of pricingwww.studyMarketing.org59 60. Factors Affecting Pricing Decisions Consumers Competitors Cost Channel Government Members Total Effects on PriceDecisionswww.studyMarketing.org 60 61. Consumers and Price Decisions The relationship between price and consumer purchases and perceptions is Consumers explained by two economic principles the law of demand and price elasticity of demand The law of demand states that consumers usually purchase more units at a low price than at a high price The price elasticity of demand defines the sensitivity of buyers to price changes in terms of the quantities they will purchasewww.studyMarketing.org61 62. Consumers and Price DecisionsElastic Elastic demand occurs if relatively small changes inElastic price result in large changes in quantity demanded Demand Demand Numerically, price elasticity is greater than 1 With elastic demand, total revenue goes up when prices are decreased and goes down when prices rise In-elastic Inelastic demand takes place if price changes haveIn-elastic little impact on quantity demandedDemand Demand Price elasticity is less than 1 With inelastic demand, total revenue goes up when prices are raised and goes down when prices declinewww.studyMarketing.org62 63. Consumers and Price DecisionsUnitary Unitary Unitary demand exists if changes in price are Demandexactly offset by changes in quantity demanded, Demand so that total sales revenue remains constant. Price elasticity is 1www.studyMarketing.org 63 64. Competitors and Price Decisions Another element contributing to the Competitors degree of control a firm has over prices is the competitive environment within which it operateswww.studyMarketing.org 64 65. Competitors and Price Decisions Market-Market- Characterized by a high level of com controlled controlledpetition, similar goods and services, andprice price little control over price by individualenvironmentenvironmentcompanies Company- Company- Characterized by moderate competition, controlled controlledwelldifferentiated goods and services, and priced pricedstrong control over price by individual firmsenvironmentenvironmentwww.studyMarketing.org 65 66. Competitors and Price DecisionsGovernment-Government- Characterized by prices set by the controlled controlledgovernment. Examples are public utilities,price price buses, taxis, and state universitiesenvironmentenvironmentwww.studyMarketing.org66 67. Channel Members and Price Decisions A wholesaler or retailer can gain stronger Channel control over price by stressing its importance as Members a customer to the manufacturer, refusing to carry unprofitable product, stocking competitive items, and developing strong dealer brands so that consumers are loyal to the seller and not the manufacturer Sometimes retailers engage in selling against the brand, whereby they stock merchandise, place high prices on it, and then sell other brands for lower prices. This is often done to increase the sales of their own brandswww.studyMarketing.org 67 68. Channel Members and Price Decisions To ensure channel member cooperation with Channel price decisions, the manufacturer needs to Members consider four factors: channel member profit margins, price guarantees, special deals, and the impact of price increaseswww.studyMarketing.org 68 69. Government and Price Decisions Price fixing regulations Price fixing regulationsProhibitions against priceProhibitions against pricediscrimination amongdiscrimination among Governmentchannel memberschannel members Unfair sales acts :: Unfair sales actspredatory pricing predatory pricingwww.studyMarketing.org 69 70. Cost and Price Decisions Cost of raw Cost of rawCostmaterials andmaterials andsuppliessuppliesLabor costLabor costPricing Decisions Advertising Cost Advertising Cost Distribution Cost Distribution Costwww.studyMarketing.org 70 71. Price Strategy Cost-based Price Strategy Price Demand-basedStrategy Price StrategyCompetition-based PriceStrategywww.studyMarketing.org71 72. Price Strategy With a cost-based price strategy, theCost-based Price marketer sets prices by computingStrategy merchandise, service, and overhead costs, and then adding the desired profit to these figures The marketer sets prices after Demand-basedresearching consumer desires and Price Strategyascertaining the range of prices acceptable to the target marketwww.studyMarketing.org 72 73. Price Strategy The marketer sets prices inCompetition- accordance with competitorsbased PriceStrategy Prices may be below the market, at the market, or above the market, depending on customer loyalty, services provided, image, real or perceived differences between brands or stores, and the competitive environmentwww.studyMarketing.org73 74. Recommended Further Readings 1. Joel Evans and Barry Berman, Marketing, Prentice Hall 2. Phillip Kotler, Marketing Management, Prentice Hallwww.studyMarketing.org74 75. End of Materialwww.studyMarketing.org 75