PRODUCT AND PRICE STRATEGY Entrp 1: Lecture 5 & 6

PRODUCT AND PRICE STRATEGY

Entrp 1: Lecture 5 & 6

Learning Objectives

Describe the marketing mixExplain the importance of brandingDescribe primary and secondary market

researchCreate a marketing planIdentify marketing toolsPricing Strategy

Marketing Mix

Marketing is process of developing mutually satisfying relationships with customers

Four Ps in the classical marketing mixThe set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market.› Product› Place› Price› Promotion

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Marketing Mix

PRODUCT

Variety, quality, Design, Features,

Brand name, Packaging,

Services

PLACEChannelsCoverageLocationsInventory

TransportationLogistics

PROMOTIONAdvertising,

Personal SellingSales PromotionPublic Relations

PRICEList PriceDiscountsAllowances

Payment PeriodCredit Terms

Target CustomersIntended Positioning

Putting Together: Marketing Mix to create awarness

Product

Place

Price

Promotion

What is the Product? How is it Positioned? (a)Product as Service: SIM card; (b)Product as Product: Coffee; (c)Service as Service: Legal Advise or (d) Service as Product: DHL logistics, software etc

Create a Customer Portfolio. Contact them through personalized emails or SMS based marketing. Collaborate with partner institutions to create shared log ins.

Free trials for 1 month. Discounted fee for 3 months and then regular charge. Charges will be based on type and variability of services.

Distribution channels cold be banks by enabling strategic relations.

Awareness Interest TrialCreate Market

Make Customers dependent

Market Mix Strategies

Marketing Mix (continued)

Marketing mix from customer’s viewpoint Four Cs marketing mix model

Customer needs and wants Convenience Communication Cost to customer

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Marketing Mix (continued)6-7

Customer Needs

(Product)

Communication(Promotion)

Cost to Customer

(Price)

Convenience (Place)

Marketing Mix

Building Your Brand

A brand Incorporates customers’ perceptions of and experiences

with a business Combination of name, logo, and design that

identifies a business’s products and services in consumers’ minds

Trusted brand can drive sales Examples

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Building Your Brand (continued)

Define how you want products/services perceived by customers Understand core elements of business Differentiate core elements from competitors’ core

elements Identify how products/services meet customers’ needs Decide how to convince customers that products/services

best meet their needs

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Discover words, phrases, images to put best public “face” on business

Brand names and Slogans› Simple› Easy to remember, spell, and understand› Have “snap”› May be a proper name or use personification

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Building Your Brand (continued) Domain name (URL) and branding

› Address associated with a Web page› Can be used to help build a brand› Single- and common-word domain names largely

already taken Office.com, Business.com, dell.com MAKE Website Synonymous with the Brand

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Use creative “brainstorming” to develop brand name Create list of words or phrases and combine them in

creative ways Ask for help from friends, family, advisors

Pay for professional help in developing brand name The Namestormers, NameLab

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Domain name (URL) registration Managed by ICANN for the U.S. Dept. of Commerce

Top-level domains identify the general category in which a domain name is registered

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Building Your Brand (continued)6-14


Tying URL to business name can help build a brand amazon.com register.com bn.com ey.com

Some e-businesses use clever, made-up words for URL google.com

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Brand names, domain names, trademarks are becoming more interchangeable Make certain a URL does not infringe on the brand or

trademark of an existing company

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Market Research

Collecting and analyzing data to make business decisions› Primary research

Uses quantitative or qualitative methods to physically collect and analyze data and then publish the results

› Market research company examples NPD Group Forrester IDC Frost & Sullivan Gartner

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Market Research (continued)

Secondary research› Collects data from secondary sources who have

already performed the primary research› Resources for secondary research

Reports published by market research companies Industry white papers Government databases Trade associations Professional journals: Mckinsey Quarterly

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Creating a Marketing Plan and Strategize

Provides the details for the marketplace analysis section of a business plan

Plan elements Executive Summary Situational Analysis Objectives, Strategies, and Tactics Budget and Performance Measures

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Creating a Marketing Plan and Strategize(continued)

Situational Analysis section Explains what is known about the marketplace

Market size (Total Shipments X Average Unit Price) Market segments Target market Market Positioning

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Creating a Marketing Plan and Strategize

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Identify Bases for Segmenting Market

Develop Relevant Market Segment profiles

Forecast Total Potential Within each segment

Determine Marketing Program to serve each

segment

Analyze Competitive Forces within each

Segment

Forecast own market share for each segment

Estimate Cost benefit for Each Segment

Do Benefits outweigh Costs for each segment?

Decision on selection of target segments

Stage1

Stage 2

Stage 3

Stage 4

Stage 5

Marketing Strategy

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Customers grouped by: Geographic Demographic Psychographic Behavioral

Market segment is a group of consumers who respond in similar ways to marketing efforts

1. Market Segmentation

2. Target marketing

3. Market Positioning

Marketing Strategy

Strategy

Market Segmentation

Clinique for Men products are designed for a segment of men who will pay more for skin care products.

2 - 24Marketing in Action

Evaluation of each segment’s attractiveness

Selection of segments with greatest long-term profitability

A company can choose one or several segments to target

Marketing Strategy

Strategy


2. Target marketing


Target Markets

Business Week magazine targeted

to business professional who don’t have much

time

Marketing in Action2 - 26

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The place the product occupies in the consumer’s mind

Products are positioned relative to competing products

Marketers look for clear, distinctive and desirable places in positioning

Marketing Strategy

Strategy


2. Target marketing


Target Positioning

Amazon.com was created to make shopping hassle-free and from home

Marketing in Action2 - 28

Creating a Marketing Plan and Strategize (continued)

Objectives, Strategies, and Tactics section Objectives describe marketing mission Strategies identify what is to be accomplished Tactics detail how it will be done

Budget and Performance Measures section A budget estimates the cost of the plan Performance measures evaluate the results of plan

implementation

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Marketing Tools

Search tool submissions Search engines use spiders to browse the Web and

locate new pages to build indexes Directories use human submissions of Web page

information to build indexes Most modern search tools use a combination of both

means to build indexes E-businesses can submit Web page information to

multiple search tools

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Marketing Tools (continued)

Search engine optimization (SEO) Build Web pages that are easy to index by search

engines Relevant inbound links (most important) Use good HTML tags/structure Write clear and on-topic Web page text Use descriptive page titles Avoid frames and dynamic content Use text navigation links Use meta tags: used to add information to a web page

that a web browser can see.

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Note: using certain Web page design elements, such as frames, flash content, and image navigation links, can make it more difficult for a spider or to index a Web page.


Public relations effort Establishes and maintains a company’s public image Timely press release is a cost-effective marketing

tool Good idea to work with a PR professional

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Online advertising› Banner and

sidebar ad Rectangular image Linked to

advertiser’s site

› Pop-up or pop-under ads Appear in own

window above or below browser window

Linked to advertiser’s site

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Online advertising (continued)› Rich media ads

Interactive elements, Flash technologies, streaming media

Shoshkele and streaming media ads

Permission-based marketing› Opt-in e-mail or

newsletters› Double opt-in process

verifies recipient voluntarily receives messages

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Online advertising (continued)› Search tool or portal

advertising Featured placement at other

Web sites Pay-per-click search tool ads Featured placement in

search results lists Featured placement on

same page as search results list

Based on relevant search keywords

Yahoo!, Search Marketing, and goClick.com

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Traditional advertising Radio TV Print media Outdoor advertising Direct mail

Used together with online advertising to acquire new customers as inexpensively as possible

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Link exchanges Exchange links with Web sites to boost link

popularity Drive new customers to Web site and improve SEO Beware of link farms and link stuffing

Newsgroups and Web-based forums Participation in can indirectly promote a business

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Word of mouth Electronic word of mouth exploits the network effect

and viral marketing Business blogs

Put a “human face” on a business Way to keep tabs on what customers, potential

customers, and competitors are thinking and saying Provide valuable feedback on products and services

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RSS and Podcasting Syndication of Web page content or audio using

XML technologiesAffiliate programs***

Arrangement in which an e-business pays a fee or commission when a customer clicks through from another site and makes a purchase

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Web rings A group of similar e-businesses linked together in a

circular “chain” Visitor can click through from site to site in the

chainAwards

Can give a startup e-business more credibility in the marketplace

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Marketing

Using Marketing to Shape Perceptions and ExpectationsPerceptions and expectations of value can be as

important as actual value. To influence, can use: Preannouncements and press releases

Can build “mind share” in advance of actual market share

Can forestall purchases of competitors’ products Reputation

Provides signal to market of likelihood of success Credible commitments

Substantial irreversible investments can convince market of firm’s confidence and determination

Pricing

Price influences product positioning, rate of adoption, and cash flow. What are firm’s objectives?

Survival Maximize current profits Maximize market share

Typical pricing strategies for new innovations: Market skimming strategy (high initial prices)

Signals market that innovation is significant Recoup development expenses (assuming there’s

demand) Attracts competitors, may slow adoption

Pricing

Penetration Pricing (very low price or free) Accelerates adoption, driving up volume Requires large production capacity be established

early Risky; may lose money on each unit in short run Common strategy when competing for dominant

design

Can manipulate customer’s perception of price Free initial trial or introductory pricing Initial product free but pay for monthly service Razor and razorblade model: Platform is cheap but

complements are expensive (as in video games)

Distribution

Selling Direct versus Using Intermediaries Selling direct

Gives firm great control over selling process, price and service Can be expensive and/or impractical

Intermediaries may include: Manufacturers’ representatives: independent agents that may

promote and sell the product lines of one or a few manufacturers. Useful for direct selling when its impractical for manufacturer to

have own direct sales force for all markets. Wholesalers: firms that buy manufacturer’s products in bulk then

resell them (typically in smaller, more diverse bundles) Provide bulk breaking and carry inventory. Handles transactions with retailers and provides transportation.

Distribution

Retailers: firms that sell goods to public Provide convenience for customers Enable on-site examination and service

Original equipment manufacturers (OEMs): A company that buys products (or components) from other

manufacturers and assembles them or customizes them and sells under its own brand name. E.g., Dell Computer

Aggregates components from multiple manufacturers Provides single point-of-contact and service for customer

In some industries, information technology has enabled disintermediation or reconfiguration of intermediaries.

E.g., online investing enables customers to bypass brokers; online bookselling requires retailer to provide delivery services.

Documents

PRODUCT AND PRICE STRATEGY Entrp 1: Lecture 5 & 6