Amur - marketing
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LO2MarketingEssentials.pptxUnit 2 - Marketing Essentials R/508/0486 LO 2 The Marketing Mix - Product
HND in Business
LO2 Compare ways in which organisations use elements of the marketing mix (7Ps) to achieve overall business objectives.
The 7Ps marketing mix:
Product: Differences between products and services, importance of brands, product development and product lifestyle.
Price: Pricing context, pricing strategies and tactics.
Place: Channel management, supply chain management and logistics.
Promotion: Integrated communication mix and promotional tools.
People: The different roles of ‘people’ in marketing, including customer interfacing and support personnel. The different skills, attitudes and behaviour of people delivering the product or service to customers.
Physical evidence: The tangible aspects of service delivery − visual, aural and olfactory elements.
Process: Systems and processes involved in delivering a consistent service. Different types of processes used to expedite the marketing function.
Achieving overall business objectives:
The shift from the 4Ps to the 7Ps and the significance of the extended marketing mix.
An overview of the marketing planning process (Analysis, Planning, Implementation and Control) and marketing strategy.
Types of Products
Products:
Physical products
with form and
substance
Services:
Non-physical products
usually involving
performance
Products is something that satisfies a set of wants that customers have.
The products satisfy the needs of the customers though the following attributes
Tangible Attributes
Availability and Delivery
Performance
Price
Design
Intangible Attributes
Image
Perceived value
These tangible and intangible attributes are interlinked and play a major role in the success of the product.
Characteristics and Strategies for Services
Service Characteristic Service Strategy
Intangible Associate service with something tangible
Perishable Manage demand to utilize supply
Inseparable Capitalize advantages of
person providing service
Variable Standardize service delivery
as much as possible
Brand
Name
Quality
Level
Packaging
Design
Features
Delivery
& Credit
Installation
Warranty
After-
Sale
Service
Core
Benefit
or
Service
Extended
Product
Core
Product
Augmented
Product
Product could be classified as,
Core Product – Basic Product
Extended Product - Basic Product plus value addition
Augmented Product – Basic product plus higher value addition
Eg. Core Product - Tooth Paste
Extended Product – Tooth Paste with cavity
protection
Augmented Product - Double Action High Calcium
Tooth Paste
Types of Products
| Consumer Goods | Convenience Goods | Shopping Goods | Specialty Goods | Unsought Goods |
| -Frequent purchases bought with minimal buying effort and little comparison shopping -Low price -Widespread distribution -Mass promotion by producer Eg. Chocolates, baked beans etc. | -Less frequent purchases Eg. Furniture, Washing Machine - More price comparisan | -Strong brand preference and loyalty, -little brand comparisons, -High price -Exclusive distribution Eg. Jewellary | -Little product awareness and knowledge -Aggressive advertising and personal selling Eg. Direct Marketing Products | |
| Industrial Goods | Installations | Raw Materials | Accessories and components | Supplies |
| Machinery, factory assembly etc. | Plastic, metal, wood,food stuff, chemicals etc. | PCs, headlights for cars etc. | Office Stationary, cleaning materials etc. |
Product Life Cycle
Introduction
Growth
Maturity
Decline
Withdrawal
Sales
Profit
New Product Development
New Product Development plays an important role in overcoming competition.
The new products could be either entirely new or slightly changed from another product
Degree of Newness
The unquestionably new product – a product that is totally new. Eg. Drugs that could totally cure AIDS and Cancer
The partially new product – a development from an existing product – Eg. DVD Player ( developed from VCD / Mp3 players)
Major product change – radical technological change from the old product. Eg. Digital Camera developed from normal Camera
Minor product change – Simple changes such as style and colour. Eg. Nokia phone
NPD Process
Idea
Generation
Idea
Screening
Concept
Development
and Testing
Marketing
Strategy
Business
Analysis
Product
Development
Test
Marketing
Commercialization
Idea Generation – Gathering ideas on various product options.
Screening – Evaluating the ideas gathered to find out the most attractive ones.
Concept Development – Developing the concept for the few attractive ideas chosen
Marketing Strategy – Deciding on the Marketing strategy for each idea.
Business Analysis – At this point, the company analyses the costs and projected sales figures to find out the possibility of making the product.
Product Development – Actual product development takes place at this point only
Market Testing – The product developed will be introduced to a test market, to study the customer responses.
Commercialization – If the customer responses are positive, then the product is introduced to the market at full scale.
Brand
Brand:
A name, term, sign, symbol, design, or combination that a uses to identify its products and differentiate them from those of competitors.
Brand Name:
The element of a brand that can be vocalized:
IBM
Tide
Snickers
Diet Coke
Types of Brands
Generics
(Products typically not branded)
Manufacturer Brand
(National brand or
regional brand)
Distributor Brand
(Store brand, private brand,
or private label)
Best Brands 2017
Source: http://brandirectory.com/league_tables/table/global-500-2017
Marketing Mix: Price
You don’t sell through price. You sell the price! A Price is:
“What You Think your product is Worth to That Customer at That Time.”
Jay Klompmaker’s 4 C’S of Pricing
What is the highest price I can charge and still make the sale?
Customers
Competitors
Am I willing and able to sell at that price?
Costs
Constraints
Marketing Mix: Setting Pricing Policy
1. Setting the pricing objective
2. Determining demand
3. Estimating costs
4. Analysing the competition:
costs, price, and offers
5. Selecting a pricing method
6. Selecting the final price
Selecting a Pricing Method
Markup pricing
Target return
Value in use
Value
everyday low pricing
Going rate
Sealed-bid
Price Discounts and Allowances
Cash discount
Quantity discount
Functional discount
Trade discounts to channel members
Seasonal discount
Allowances
Trade in Allowance or Promotional Allowance
Promotional Pricing
Loss-leader pricing
Special event pricing
Cash rebate
Low interest financing
Longer payment terms
Warranties & service contracts
Initiating Price Cuts: Traps to Avoid
Low quality trap
Price-quality relationship
Shallow pockets trap
Strongest firms may be able to cut price and still make a profit!
Fragile market share trap
LOYALTY cannot be bought!
How to Avoid Raising Prices
Shrink amount of product
Less expensive ingredients
Remove features
Remove/reduce services
Less expensive packaging
Create new, economy brands
Factors Affecting Price Sensitivity
Perceived substitutes
Unique value effect
Switching cost
Difficult comparison effect
Price-quality effect
Fairness effect
Pricing Strategies & Tactics
Skimming
Penetration
Neutral
Segmented
Purchase location
Time of purchase
Quantity purchased
Product bundling
Tie-in/metering
Tactics
Unit 2 - Marketing Essentials R/508/0486 LO 2 The Marketing Mix – Place & Promotion
HND in Business
T.T.A. Rohanaraj
Place - (Distribution)
“When it absolutely, positively, has to be there overnight”
Right Product, Right Customer, Right Quantity & Right Time
Goals of Distribution System
Provide a targeted level of customer service at the least cost
Maximise profits, not sales
Higher distribution costs/higher customer service levels
Lower distribution costs/lower customer service levels
Retailing Marketing Decisions
Target market
must profile the customer segments you seek
marketing research is critical to determine effectiveness
Product assortment and procurement
match target market’s expectations
breadth and depth
must develop a differentiation strategy
Services offered
what service mix do you offer?
Retailing Marketing Decisions
Store atmosphere
layout, mood, music, scents, lighting, image, texture,
Promotion decision
tools must fit image, must match target market
Place decision
“location, location, location,”
Price decision
must be based on target market and store image
Retail Trends
New retail forms and combinations
Growth of non-store retailing -- direct marketing
Mass merchandisers vs. specialty retailers
Global competition
McDonalds, KFC, WalMart
Technology
customer interface
supplier interface
Distribution Channels
DISTRIBUTION CHANNELS
People and firms involved
in the transfer of title to a product
as the product moves from producer to
ultimate consumer or business user
Producers
Middlemen
Final
Consumer
Or
Business
User
Market Logistics
Involves planning, implementing and controlling the physical flow of goods to points that meet customer requirements -- at a profit
Logistics costs are not necessarily maximized by asking each logistics manager to minimize his or her costs
rail is less expensive than air, but is much slower which may increase costs of stock-outs or perishable goods
cheap shipping containers may cost less but increase damaged goods
Market Logistics Decisions
Order processing
key is to reduce the elapsed time between order receipt, fulfillment and payment
Warehousing
key is to reduce total warehousing costs without incurring stock-outs
Inventory
higher levels of service require greater inventory and/or better logistics management
Transportation
Key Market Logistics Question
How do we increase the efficiency of our supply chain management without decreasing the effectiveness of that supply chain?
The firms that best resolve this question will be the most successful
MARKETING MIX: Communication (Advertising and Sales Promotion)
Marketing Communications Mix
Advertising: Paid form of non-personal presentation by a sponsor
Sales Promotions: Short-term incentive to encourage trial or purchase
Public Relations: Protect and/or promote the firm’s image/products
Personal Selling: Personal presentations
Direct Marketing: Direct communications. Goal: immediate response
Elements in the Communications Process
Sender
encoding
Message/Media
Noise
Receiver
decoding
Response
feedback
purchase
Designing the Message
Message content
rational, emotional and/or moral appeals
Message structure
draw conclusions, argument
Message format
Layout, words, sounds, body language
Message source
expertise, trustworthiness, matching
Communication Strategy: Push vs. Pull
Pull strategies focus on getting the customer to request or demand the product from the retailer or intermediaries (middle-men)
Push strategies focus on getting the product distributed through the channels so that the various intermediaries have the product on hand and are actively promoting the product.
Major Media:Advantages/Disadvantages
Broadcast
appeals to senses, large audience
high cost, high clutter, fleeting exposure
Direct Mail
audience selectivity, flexibility, personalization
relative high cost, “junk mail” image
Newspapers:
flexible, local coverage, believable, accepted
short-life, poor reproduction quality
Major Media:Advantages/Disadvantages
Magazines
high geographic and demographic selectivity, credible, prestigious, high quality reproduction, long-life
long ad purchase lead time, waste circulation, no guarantee of position
Outdoor
flexible, high repeat exposure, low cost, low message competition
little audience selectivity, creative limitations
Decision Stages in Promotion Planning
Set objectives and define target market
Determine budget
Determine creative strategy
intended positioning
give direction for message creation
Develop message
focus on benefits and image
Select media
Evaluate effectiveness
Budgeting
Rule of thumb
Percentage of sales
What the competition does
Objective-task method
Set Objectives -- sales volume, share, etc.
Assess necessary functions to be performed
Define specific goals for advertising
Direct Mail
Equals 10-50 media exposures
Efficient with good lists
Industrial directories
Lists bought from trade publications
Lists bought from mailing list houses
Self-generated lists from previous customers & prospects
When buying center is identified, it is a cost effective promotional tool
Consumer Promotion Tools
Samples
Games and Sweepstakes
Coupons
Cash refund
Price packs
Point-of-Purchase displays
Advertising specialties
Contests
Patronage rewards (frequent buyer cards)
Trade Promotion Tools
Price-offs
Allowances
Premiums
Free Displays
Buy-back guarantee
Free goods
Discounts
Push money
Specialty advertising items
E-Marketing
Database Marketing
Internet Programs
Website
Trade Shows
Benefits of trade shows
Sales message delivered
New products introduced
Customer gets “Hands-On” experience
Generate prospects
Enhance goodwill
Free publicity for firm
Personal Selling
Person-to-person communication with a prospect
Personal selling is a process of
Developing relationships
Discovering needs
Matching products with needs
Communicating benefits
Viewed as a process that adds value
Public Relations
Types of PR
web site
news reports
speeches
special events
audio-visual materials
public service activities
written materials
Unit 2 - Marketing Essentials R/508/0486 Part 2 The Marketing Mix – People, Process & Physical Evidence
HND in Business
T.T.A. Rohanaraj
What is Service? The Old View
Service is a technical after-sale function that is provided by the service department.
Old:
Service =
wrench time
Old view of service =
Customer Service Center
60
What is Service? The New View
Service includes every interaction between any customer and anyone representing the company, including:
Customer
61
Dealers
Salespeople
Receptionists and Schedulers
Management and Executives
Service Employees
Billing and Accounting Personnel
Web site and any e-channel Interaction
Service Can Mean all of These
Service as a product
Customer service
Services as value add for goods
Service embedded in a tangible product
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Traditional Marketing Mix
All elements within the control of the firm that communicate the firm’s capabilities and image to customers or that influence customer satisfaction with the firm’s product and services:
Product
Price
Place
Promotion
Expanded Mix for Services – The 7 Ps
Product
Price
Place
Promotion
People
All human actors who play a part in service delivery and thus influence the buyer’s perceptions: namely, the firm’s personnel, the customer, and other customers in the service environment.
Physical Evidence
The environment in which the service is delivered and where the firm and customer interact, and any tangible components that facilitate performance or communication of the service.
Process
The actual procedures, mechanisms, and flow of activities by which the service is delivered—the service delivery and operating systems.
Expanded Marketing Mix for Services
Thinking Point
You are the Assistant marketing manager of a company that produces perfume. Your company has decided to produce two new flavors of perfume. Develop a marketing mix for the new product that could be manufactured by your organization.
Segmentation, Targetting and Positioning
Segmentation – Grouping the consumers based on some meaningful criteria
Tageting – Choosing profitable segments.
Positioning – Positioning the organization in the minds of the consumer.
Markets have a variety of product needs and preferences.
Marketers can better define customer needs.
Decision makers can define objectives and allocate resources more accurately.
The Importance of Market Segmentation
68
No Market Segmentation
69
Segmented by Gender
70
Segmented by Age
71
Characteristics of individuals,
groups, or organizations
used to divide a total market into segments. (variables)
Bases for Segmenting Consumer Markets
72
Bases for Segmentation
Usage Rate
Benefits Sought
Psychographics
Demographics
Geography
Chapter 7 Segmenting and Targeting Markets
73
Notes:
One or more of the characteristics listed above is used to segment markets and described on subsequent slides.
Segmenting Consumer Markets
Geographic Segmentation: Dividing an overall market into homogeneous groups on the basis of their locations
74
Segmenting Consumer Markets
Demographic segmentation: dividing consumer groups according to characteristics such as gender, age, income, occupation, education, ethnicity, household size, and stage in the family life cycle.
75
Psychographic Segmentation
Psychographic Segmentation: dividing a population into groups that have similar psychological characteristics, and lifestyles.
Lifestyle: people’s decisions about how to live their daily lives, including family, job, social, and consumer activities
76
Benefit Segmentation
The process of grouping customers into market segments according to the benefits they seek from the product.
77
Usage Rate Segmentation
Segmenting people based on the rate of usage.
Eg. Mobile Data packages
Undifferentiated Strategy Differentiated Concentrated
Targeting Strategy
79
Undifferentiated Strategy
Single Marketing Mix
Target Market
Organization
80
Differentiated Strategy
Organization
Marketing Mix 1
Target Market
Marketing Mix 2
81
Concentrated Strategy
Single Marketing Mix
Target Market
Organization
82
Product Positioning Perceptual Mapping
A means of displaying or graphing, in two or more dimensions, the location of products, brands, or groups of products in customers’ minds.
83
Perceptual Maps
Expensive
Inexpensive
Conservative
Sporty
Camry
Corolla
Rav 4
84
High moisturizing
Low moisturizing
Nondeodorant
Deodorant
1
2
3
4
5
7
6
8
Safeguard
Lever 2000
Zest
Coast
Lux
Dove
Tone
Lava
Lifebuoy
Dial
Product Positioning using perceptual maps
85
Undifferentiated Strategy
The undifferentiated targeting strategy is one in which an organization defines an entire market for a particular product as its target market, designs a single marketing mix, and directs it at the entire market.
The underlying assumption is that the needs of the target market for specific kinds of product are very similar; thus the business can satisfy most customers with a single marketing mix.
There are two requirements for effective use of this approach.
A homogeneous market is one in which a large proportion of customers have similar needs for a product.
The organization must be able to develop and maintain a single marketing mix that satisfies customers’ needs.
Undifferentiated Strategy
The
undifferentiated targeting strategy
is one in which an
organization defines an entire market for a particular
product as its target market, designs a single marketing
mix, and directs it at the entire market.
The underlying assumption is that the needs of the target
market for specific kinds of product are very similar; thus
the business can satisfy most customers with a single
marketing mix.
There are two requirements for effective use of this
approach.
A
homogeneous market
is one in which a large
proportion of customers have similar needs for a
product.
The organization must be able to develop and
maintain a single marketing mix that satisfies
customers’ needs.
Differentiated Strategy Through Market Segmentation
Differentiated targeting strategy is a strategy in which an organization targets two or more segments by developing a marketing mix for each segment.
Advantages
A business can increase its sales in a total market by focusing on more than one segment.
Sales to additional market segments may absorb excess production capacity.
Disadvantages
A greater number of production processes, materials, and skills means higher production costs.
Several distinct promotion plans and distribution methods are required, resulting in higher marketing costs.
Differentiated Strategy Through Market Segmentation
Differentiated targeting strategy
is a strategy in which an
organization targets two or more segments by developing a
marketing mix for each segment.
Advantages
A business can increase its sales in a total market by
focusing on more than one segment.
Sales to additional market segments may absorb
excess production capacity.
Disadvantages
A greater number of production processes, materials,
and skills means higher production costs.
Several distinct promotion plans and distribution
methods are required, resulting in higher marketing
costs.
Concentrated Strategy Through Market Segmentation
Heterogeneous markets are markets made up of individuals or organizations with diverse product needs.
Market segmentation is the process of dividing the total market into groups or segments that have relatively similar product needs for the purpose of designing a marketing mix that will more precisely match the needs of individuals in a selected segment.
A market segment consists of individuals, groups, or organizations with one or more similar characteristics that cause them to have relatively similar product needs.
Concentrated Strategy Through Market Segmentation
Heterogeneous markets
are markets made up of
individuals or organizations with diverse product needs.
Market segmentation
is the process of dividing the total
market into groups or segments that have relatively
similar product needs for the purpose of designing a
marketing mix that will more precisely match the needs of
individuals in a selected segment.
A
market segment
consists of individuals, groups, or
organizations with one or more similar characteristics that
cause them to have relatively similar product needs.
