Marketing Strategy KEY CONCEPTS to review for ETS exam.

Marketing Strategy: Key Concepts 1

Concepts key terms !inke" to "ictionary
#ink to $isc%ssion &oar"
What is Marketing?
Marketing is t'e process of p!anning an" exec%ting t'e conception pricing promotion
an" "istri(%tion of i"eas goo"s an" services t'at satisfy in"ivi"%a! an" organi)ationa!
goa!s. *** +M+
Pro"%ct is t'e p!atform for attracting c%stomers.
+!! organi)ations are in t'e (%siness of attracting c%stomers.
Can t'e a(ove two statements (e c'a!!enge",
-s marketing se!!ing O. "oes it re"%ce t'e nee" for se!!ing,
$isc%ssion Topic/ C'a!!enge t'e a(ove statements %sing yo%r own experiences as
reference.
What are markets?
Exc'ange "ivision of !a(or positive s%m re!ations'ips (arter money re"%ces friction.
Evo!%tion of markets
0. Tra"itiona! (a)aars
1. Separation of s%pp!y an" cons%mption
2. Mass Markets 3 Me"ia
4. Target Markets 3 Nic'e Me"ia
5. E!ectronic Markets/ Meta Markets
Evolution of the Marketing Concept
0. Production Concept
$eman" for goo"s an" services 6 S%pp!y ... t'erefore cons%mers g!a"!y
p%rc'ase" w'at was (eing pro"%ce". Pro"%cers 'ave a captive market.
-nvestment on increasing t'e efficiencies of pro"%ction 'a" t'e greatest
impact on company profita(i!ity. T'%s smart (%sinesses foc%se" on
increasing pro"%ctivity rat'er t'an %n"erstan"ing t'e cons%mer. 7enry
8or"9s :%ote/ ;T'e c%stomer can 'ave any co!or car as !ong as it is (!ack;
is c!ose!y i"entifie" wit' t'is era< T'is is appropriate for "eve!oping
co%ntries an" evo!ve" in t'e =S wit' t'e a"vent of t'e in"%stria!
revo!%tion.
1. Sales Concept
$eman" > S%pp!y ... t'erefore pro"%cers 'a" to convince cons%mers to
p%rc'ase t'eir pro"%cts. 8oc%s of (%siness investment starts s'ifting
towar"s "eve!oping a ro(%st sa!es mec'anism in or"er to comm%nicate
wit' cons%mers. T'e sa!es concept is a!so re!evant for pro"%cts cons%mers
"o not seek o%t or"inari!y s%c' as !ife ins%rance an" "enta! treatment.
2. Marketing Concept
S%pp!y 6 $eman" ... t'erefore pro"%cers nee" to first %n"erstan" w'at
cons%mers wante" t'en pro"%ce t'ose pro"%cts t'en convince cons%mers
to p%rc'ase t'ose pro"%cts. Target marketing an" market segmentation
(ecame t'e new too!s to increase company profita(i!ity.
4. ne ! ne "#elationship$ Marketing Concept
T'e Marketing era evo!ve" an" saw pro"%cers f%rt'er segment t'eir
markets targeting sma!!er gro%ps of cons%mers wit'in t'ose markets.
?it' t'e potentia! %n!eas'e" (y t'e microprocessor an" information
tec'no!ogy we are seeing targeting "own to t'e in"ivi"%a! one to one. +
common!y cite" examp!e is +ma)on. Notice if yo% make a p%rc'ase from
t'is site @or simi!arA w'en yo% ret%rn to t'e site yo% wi!! receive
recommen"ations (ase" on yo%r previo%s p%rc'ases. T'is presentation is
(ase" not on!y on yo%r p%rc'ases @"ata store" in yo%r cookie fi!e a!!ows
for t'isA (%t on p%rc'ases of ot'ers w'o 'ave (o%g't t'e same (ook an"
simi!ar (ooks.
5. %iral Marketing
+n interesting t'ing is occ%ring as we are now in a networke" economy.
O%r cons%mers are a(!e to ;ta!k; to eac' ot'er an" serve as an exten"e"
sa!es force. T'is !atera! comm%nication an" 3 or transaction (etween
c%stomers an" non*c%stomers can serve as an opport%nity for companies
to !everage. T'e pioneer of vira! marketing was 7otmai!. T'is ?ire"
artic!e 7otMa!e "isc%sses t'is marketing ;acci"ent.; +not'er goo"
examp!e is &!%emo%ntain.com. Since t'e receiver of t'e e*car" 'as to visit
t'e site to access t'e car" t'is visit serves to promote t'e service to t'e
receiver.
B. Societal Marketing Concept
Companies more aware of society an" t'e environment at !arge promote
t'eir affi!iation wit' t'e environment. &en C Derry9s an" T'e &o"y S'op
are examp!es.
$isc%ssion Topic/ -"entify ot'er companies w'o fo!!ow t'e societa! marketing concept.
$isc%ss t'e merits of t'is type of marketing.
#elationship &ith Selling and Marketing
Se!!ing is an aspect of marketing.
8ire vers%s .ea"y +im an" 8ire
Marketing Mi'
Marketing Mix a!so known as t'e 8o%r Ps
Pro"%ct
Price
P!ace @$istri(%tionA
Promotion
(arget Markets
Organi)ations se!ect target markets wit'in t'e entire marketp!ace %sing market
segmentation. T'ey t'en "eve!op a marketing mix to reac' t'e target market.
$isc%ssion Topic/ -"entify t'e marketing mix for a pro"%ct yo% %se.
)our Cs
Macro*environment
C%stomers
Competitors
Co!!a(orators
Company
Market Planning
4 Cs/ Company Co!!a(orators Competition C%stomers
4 Ps
Market Segmentation
Eva!%ation an" &%"gets
$isc%ssion Topic/ -"entify a recent marketing campaign "esigne" to create negative
"eman".
.e!evant we(sites
+merican Marketing +ssociation
E"m%n"s.com***Meta Market
S&+/ T'e Marketing P!an
#ink to $isc%ssion &oar"
.et%rn to Sy!!a(%s
O!" Notes
Marketing Strategy: Key Concepts !
Section 0 1
Strategic Planning Process
0. Corporate #eve!
1. &%siness #eve!
2. Pro"%ct #eve!
7ig'er !eve!s @corporateA govern !ower !eve! p!anning processes. Strategic p!anning
re:%ires/
0. P!anning
1. -mp!ementation
2. Contro!
Corporate Strategic Planning
0. -"entify t'e company9s Mission
1. -"entify S&=s @c%stomer foc%se"A
2. +!!ocate .eso%rces across S&=s @&CE Mo"e!F EE Mo"e!F Pro"%ct #ife Cyc!eF
systemsA
4. Erowt' Strategies for S&=s @intensiveF integrativeF "iversificationA
Mission Statement/ P%rposeF &%sinessF Ga!%es .eason to (e, -nvisi(!e 'an" etc.
Pro"%ct Terms...o%t"ate"
Tec'no!ogy Terms...o%t"ate"
Market Terms...keep in to%c' wit' cons%mer9s nee"s
8rom five years ago an" sti!! re!evant/
+TCT is in t'e comm%nications (%siness not t'e te!ep'one (%siness.
Gisa...a!!ows c%stomers to exc'ange va!%es...not cre"it car"s
2M so!ves pro(!ems (y p%tting innovation to work.
Examp!e Mission Statements/
Mo)i!!a.org
%nicef
&en C Derry9s
PepsiCo
New York State E"%cation9s Mission
$isc%ssion Topic/ 8in" yo%r company9s mission statement. 7ow we!! is t'is statement
%n"erstoo" among emp!oyees an" c%stomers, Eva!%ate t'e missions statements a(ove
wit' respect to p%rpose (%siness an" va!%es.
-"entify t'e !imiting factors wit' t'e &CE an" EE mo"e!s.
-nsea" ?'arton +!!iance.
$isc%ssion Topic/ Cite examp!es of strategic a!!iances. -"entify a!!iances yo%r company
participates an" w'y.
S*+ Strategic Planning
Provi"es t'e context for t'e preparation of t'e marketing p!ans for t'e %nits pro"%cts an"
services.
0. $efining &%siness Mission
1. +na!y)ing Externa! Environment @OTA @economic "emograp'ic tec'no!ogy
po!itica! !ega! socio an" c%!t%ra! markets competitors co!!a(orators etc.A
2. +na!y)ing -nterna! Environment @S?A @competitive a"vantages v%!nera(i!ities
positioningA
4. C'oosing O(Hectives an" Eoa!s @specific meas%ra(!e ac'ieva(!e an" consistentA
5. $eve!oping &%siness Strategies @cost !ea"ers'ipF "ifferentiationF foc%sA
B. Preparing Programs
I. -mp!ementing Programs @McKinsey I*S 8rameworkA
J. Eat'ering 8ee"(ack an" Exercising Contro!
-f goa! is to grow a (%siness (y 05K w'at ot'er "ata are re!evant to H%"ge t'e merits of
t'e goa!,
$isc%ssion Topic/ Create a S?OT ana!ysis of yo%r own (%siness @(%siness %nitA.
Marketing Plans
8oc%s on pro"%ct an" marketF foc%s on "etai!e" marketing strategies for ac'ieving t'e
pro"%ct9s o(Hectives in a target market.
Consi"er t'e "ifference (etween strategic marketing an" tactica! marketing.
Marketing P!anning Process inc!%"es/
0. +na!y)ing marketing opport%nities
1. .esearc'ing an" se!ecting target markets
2. $esigning marketing strategies
4. p!anning marketing programs @marketing mixA
5. imp!ementation an" contro!
P%t anot'er way/
0. Sit%ation +na!ysis
o Corporate Capa(i!ities an" C%!t%re
o C%stomer +na!ysis
o Competitive +na!ysis
o Co!!a(orators
o Macro -ss%es
o S?OT +na!ysis
o O(Hectives
o +!ternative Strategies
1. +ction P!ans
o Eva!%ation an" .ecommen"ations
o Marketing Mix E!ements @Pro"%ct Price Promotion P!aceA
2. -mp!ementation an" Eva!%ation
o 8orecasting an" &%"geting
o Meas%res of Effectiveness
$isc%ss Can Price!ine .emain Profita(!e wit' respect to strategic p!anning iss%es.
-"entify t'e fo%r Cs/ C%stomer co!!a(orator competition an" company
Consi"er past an" f%t%re growt' strategies
Consi"er t'e fo%r Ps/ Price Pro"%ct Promotion an" P!ace.
*usiness Markets
More sa!es (y va!%e in &1& t'an &1C.
P%rc'ase for/
o Pro"%ction
o .esa!e
o .e"istri(%tion
o M.O @Maintenance .epair an" OperationsA JLK (%siness p%rc'ases
vers%s ...
-n or"er to/
o -ncrease Sa!es
o C%t Costs
o Meet Socia! an" #ega! .e:%irements
C%stomers are/
o &%sinesses for Profit
o Non*Profits
o Eovernments
C'aracteristics of &%siness C%stomers/
o .isk +verse
o Know!e"gea(!e
o Price*oriente"
o 8ewer an" #arger
o Nat%re of $eman" @$erive" -ne!astic 8!%ct%atingA
o P%rc'ase vers%s #ease
&%ying Process consists of/
o Pro(!em .ecognition
o Eenera! Nee" $escription
o Pro"%ct Specification
o S%pp!ier Searc'
o Proposa! So!icitation
o S%pp!ier Se!ection
o Or"er .o%tine Specification
o Performance .eview
Mo"ifie" "epen"ing on w'et'er/ Straig't re(%y Mo"ifie" re(%y or New task.
Contrast t'is wit' t'e Cons%mer (%ying process,
?'o makes t'e p%rc'asing "ecision,
?'at are t'e context%a! e!ements t'at affect t'e "ecision,
?'at is inc!%"e" in p%rc'ase/ re/ c%stomer service !eve!s etc.
Evo!%tion of &%siness &%ying
o $eve!op re!ations'ips vers%s a"versaria! contest/ ExtranetsF increase !ock*
in.
o Eeograp'ic Concentration/ Ecosystems
T'e Evo!%tion of &1&/ #essons 8rom t'e +%to -n"%stry
EE E!o(a! eMc'ange Services
$e!! Me"i%m an" #arge &%siness 7ome Page
,ealing &ith Competition
Porter9s five (asic forces of competition/
1. T'reat of new entrants
2. .iva!ry among existing competitors
3. &argaining power of s%pp!iers
4. &argaining power of (%yer
5. T'reat of s%(stit%tes
?'enever yo% make c'oices wit' respect to yo%r c%stomers @(%siness or fina!
cons%mersA yo% nee" to (e aware 'ow yo%r competition c'anges as a f%nction of
yo%r "ecisions. =n"erstan"ing t'e prisoners "i!emma mo"e! is %sef%!. C!ear!y
yo%r re!ation compare" to ot'er competitors is important @market !ea"er vers%s
fo!!ower for instanceA an" t'e nat%re of t'e marketp!ace @monopo!y o!igopo!y an"
monopo!istic competitionA.
Conse:%ences of )ero percent financing for a%tos,
Nee" to consi"er competitors +N$ c%stomers for "ecisions.
-mportance of competitive inte!!igence.
C!assification of competitors @(ran" in"%stry form genericA
Keep competitors,
-n"%stry Concept of Competition/
o -mpacts of &arriers to Entry an" Exit
o N%m(er of se!!ers an" "egree of competition @monopo!y o!igopo!y
monopo!istic competition p%re competitionA
o Cost Str%ct%re
o $egree of Gertica! -ntegration
o $egree of E!o(a!i)ation
New Entrants/
-nnovators $i!emma
$isr%ptive Tec'no!ogy
Price!ine Expe"ia an" +merican +ir!ines vers%s Trave! +gent market p!ace.
$isc%ssion Topic/ -"entify an" "isc%ss ot'er in"%stries prone to "isr%ptive
tec'no!ogies.
S&+/ T'e Marketing P!an
T'e Marketing +%"it Comes of +ge
7ow to ?rite a Mission Statement
#ink to "isc%ssion (oar"
.et%rn to Sy!!a(%s
Marketing Strategy: Key Concepts -
C%stomers are increasing!y important.
One of m%!tip!e stake'o!"ers t'at nee" to (e a""resse"
@emp!oyees stock'o!"ers s%pp!iers an" "istri(%torsA
***Erotto Pi))a Mission
Corporate c%!t%re nee"s to (e cons%mer*centric @(egins
wit' t'e missionA
+c:%ire c%stomers @set expectationsA vers%s retain
c%stomers @"o expectations fit wit' rea!ityA
Perceive" va!%e @:%a!ity service an" va!%eA vers%s
"e!ivere" va!%e
&eat c%stomer expectations. @"e!ig't c%stomersA
7ow "o c%stomers perceive :%a!ity 'ow "o yo% offer it
(etter t'an yo%r competitors "o,
Evo!%tion of Marketing Concept s%pports t'is/
Competition in t'e Marketp!ace increasing @an"
g!o(a!A
Tec'no!ogy @$& an" comm%nicationsA a!!ows
c%stomers to !earn more ***!ook at t'e evo!%tion.
#elationship Marketing Management
Nee" to (%i!" satisfaction t'ro%g' c%stomer re!ations'ip
"eve!opment activities.
.e!ations'ip Marketing process of attracting an" retaining
c%stomers. +"" financia! (enefits socia! (enefits an"
str%ct%ra! ties.
#ife*time Ga!%e of a c%stomer vers%s cost of ac:%iring a
c%stomer
C%stomer +c:%isition Mat' Examp!e/
Cost of Sa!es Ca!! N5LL
S%cces of Sa!es Ca!!/ 0 3 5
Cost of new c%stomer N15LL @not inc!%"ing over'ea"A
+verage #ife Ga!%e of C%stomer/
+nn%a! C%stomer .even%e/ N0LLLL
+verage #ife Time/ 2 years
Profit Margin/ 0LK
#ife Time Ga!%e/ N2LLL
T'is !ooks at averages not at "ifferent cons%mers.
$o not try to satisfy a!! c%stomers ... some more profita(!e
t'an ot'ers. 8ire c%stomers or move t'em to 'ig'er
profita(i!ity @increase price re"%ce cost of serviceA. 1L*JL*
2L r%!e
C%stomers "o not or"inari!y comp!ain t'ey simp!y "o not
(%y an" t'ey may te!! ot'ers< Enco%rage comp!aints to
fi!ter to yo%r company. @See Ke!!ogg "isc%ssionA
Cost of !ost c%stomers,
S%rveying !ost c%stomers
$isc%ssion Topic/ 7ow "oes yo%r company process
c%stomer comp!aints. w'at is "one wit' t'em re/ interaction
wit' c%stomer an" c'anging (%siness process,
@+!ternative!y as a c%stomer 'ow 'ave yo%r comp!aints
(een 'an"!e",A
-nterna! marketing nee"s
Making C%stomer .e!ations'ip Management ?ork
Customer Service
C%stomer service comments/
?'arton M&+ Site
E*mai! +%torespon"er ?'arton 7&S .esponse Ke!!og
.esponse
?'arton +"comm. taking :%estions
t'e !east app!icant*frien"!y &*sc'oo!/ #iste" .easons for
?'arton
D=$EE T7E +$M-SS-ONS O88-CES
?'at is =p w3 Ke!!ogg E%y,
S'ang'ai interview ***st%"ents 'e!ping st%"ents serving
(etter t'an we co%!".
$isc%ssion Topic/ Provi"e yo%r own examp!es of
exce!!ent 3 poor c%stomer service t'at 'ave materia! impact
on retaining 3 !osing c%stomers @%se examp!es from a
(%siness an" or c%stomer perspectiveA.
$isc%ssion Topic/ 7ow "oes yo%r company %se its we(*site
for c%stomer service an" 3 or c%stomer re!ations'ip
(%i!"ing,
Marketing
Stimuli
Environmental
Stimuli
*uyer.s
Characteristics
*uyer.s ,ecision
Process
*uyer.s
,ecisions
Pro"%ct Economic C%!t%ra!
Pro(!em
.ecognition
Pr%"ct C'oice
Price Tec'no!ogy Socia!
-nformation
Searc'
&ran" C'oice
Promotion Po!itica! Persona! Eva!%ation
$ea!er
C'oice
P!ace C%!t%ra! Psyc'o!ogica! P%rc'ase $ecision
P%rc'ase
Timing
Post P%rc'ase
&e'avior
P%rc'ase
+mo%nt
-ntro/ C&& ... Not H%st a(o%t c'anging promotions (%t
entire marketing mixes.
C%!t%ra! C'aracteristics/ Ga!%es Perceptions preferences
an" (e'aviors @!earne" from fami!yA f%n"amenta! to
persons wants.
&%yer (e'avior inf!%ence" (y fo%r factors/
c%!t%ra! @c%!t%re s%( c%!t%re an" socia! c!ass
@et'nocentrism an" patriotismAA
socia! @reference gro%ps fami!y an" ro!es an"
stat%sesA
persona! @age an" !ife cyc!e state occ%pation
economic circ%mstance !ife sty!e persona!ity an" se!f
conceptA
psyc'o!ogica! @motivation @fre%" mas!ow 'ert)(ergA
perception !earning an" (e!iefs an" attit%"esA
$o Mixe" Emotions an" +"vertising Mix,
7ow Store #ocation an" Pricing Str%ct%re +ffect S'opping
&e'avior
$ecision inf!%encers @initiator inf!%encer "eci"er (%yer
an" %serA ... not as comp!ex as &1& (%ying "ecision
inf!%encers.
Types of &%ying Sit%ations/
Comp!ex &%ying &e'avior
$issonance .e"%cing &%ying &e'avior
7a(it%a! &%ying &e'avior
Gariety Seeking &%ying &e'avior
Cons%mer "ecision*making process/
0. Nee" .ecognition
1. -nformation Searc'
2. Eva!%ation of +!ternatives
4. P%rc'ase $ecision
5. Post P%rc'ase &e'avior
got mi!k, C'ange cons%mer attit%"es a(o%t mi!k.
Patriotism
?'arton M&+ P%rc'ase Process
S.- &%siness -nte!!igence/ G+#S Psyc'o!ogy of Markets
$isc%ssion Topic/ ?'y %se iG+#S an" psyc'ograp'ic
segmentation, ?'ic' marketers wo%!" (enefit most from
iGa!s segmentation an" w'y,
Privacy vers%s =n"erstan"ing t'e c%stomer on t'e net.
Yanke!ovic'
#ink to o!" c!ass notes.
#ink to "isc%ssion (oar"
.et%rn to Sy!!a(%s
Marketing Strategy: Key Concepts /
Marketing Mathematics
T'e (asic marketing mat' t'at is nee"e" to 'e!p make
marketing "ecisions are (e!ow. T'ese are critica! to
%n"erstan" w'en performing case ana!ysis.
T'ey inc!%"e/
&reak Even +na!ysis
#ifetime Ga!%e of t'e C%stomer
Market Segment Si)ing
Market Segment Si0ing
Estimate t'e n%m(er of c%stomers (y starting wit' t'e most
genera! pop%!ation an" t'en re"%cing accor"ing to t'e
c'aracteristics of t'e act%a! segment (eing so%g't.
Segment va!%e > N%m(er of C%stomers x Ga!%e per
C%stomer
N%m(er of C%stomers > Pop%!ation x Segment Si)e @KA x
Segment Penetration @KA
C%stomer Ga!%e > C%stomer =sage .ate x =nit Price @NA x
=nit Contri(%tion @KA
-mproving $ecision Making ?it' Simp!e &reak*Even
+na!ysis
+ttacking &%siness $ecision Pro(!ems ?it' &reak*even
+na!ysis
8orm%!a for -ncrementa! &reak*Even +na!ysis
#ifetime Ga!%e in .e!ations'ip Marketing
$etermining C%stomer #ifetime Ga!%e for yo%r -nternet
Marketing P!an
T'e #ifetime Ga!%e of a C%stomer
OO$isc%ssion Topic/ +ny iss%es wit' respect to t'e a(ove
marketing mat'ematics,
Marketing 1nformation Collection
Marketing -nformation System/
0. -nterna! recor"s
1. marketing inte!!igence system
2. marketing researc'
0. "efining pro(!em an" researc' o(Hectives
1. "eve!oping t'e researc' p!an
2. co!!ecting information
4. ana!y)ing information
5. presenting fin"ings
4. marketing "ecision s%pport system
OO$isc%ssion Topic/ +ssess t'e impact of t'e we( on t'e
area of "ata gat'ering.
Primary research: ,ata gathering2
Examp!e s%rveys/
Stanfor" ?e(*site S%rvey
?'arton Matric S%rvey
OO$isc%ssion Topic/ +fter reviewing t'e ?'arton an"
Stanfor" s%rveys "isc%ss t'e goa!s of t'e s%rveys in terms
of w'at eac' sc'oo! is trying to !earn. Comment on t'e
effectiveness of eac' s%rvey.
Note/ Poomerang is a great reso%rce for "esigning on!ine
s%rveys.
&a!ance (etween "ata gat'ering an" t'e nee" for privacy.
D%nk(%sters.com/ + great site to exp!ore yo%r privacy
rig'ts3iss%es.
Some useful secondary resource sites on the &e3:
&%siness -nformation
Cy(erat!as.com CommerceNet +merican Marketing
+ssociation + &%siness .esearc'ers -nterests &!oom(erg
C3Net E$E+. 7oover9s Nationa! Tra"e $ata &ank
P%(!ic .egister9s +nn%a! .eport Service
Eovernment
Cens%s &%rea% 8e"?or!" T'omas
-nternationa!
T'e E!ectronic Em(assy -*Tra"e T'e =nite" Nations
Non Profit
-"ea!ist.org -nternet Non Profit Center Nonprofit .eso%rce
Center
-mportance of "eman" ana!ysis market "eman" pro"%ct
"eman" expansi(!e markets.
Macroenvironment
$emograp'ic
Economic
nat%ra!
tec'no!ogica!
po!itica!3!ega!
socia!3c%!t%ra!
interre!ations'ips
8ait' Popcorn9s Tren"s
Sierra C!%(
Creative $estr%ction/ T'e Essence of Capita!ism
.e!evant KQ? +rtic!e/
.o!e P!aying/ + Met'o" to 8orecast $ecisions
.o!e P!aying as a 8orecasting Too!
Marketing Science Meets 7o!!ywoo"
8orecasting in Conf!icts/ 7ow to pre"ict w'at yo%r
opponenet wi!! "o.
Making C$ Sa!es .ing
Et'ica! -nspirations for Marketing Managers
#ink to "isc%ssion (oar"
.et%rn to Sy!!a(%s
Marketing Strategy: Key Concepts 4
Pro"%ct scope/ goo"s services experiences events
persons p!aces properties organi)ations information an"
i"eas.
Pro"%ct #eve!s/
0. Core &enefits
1. &asic Pro"%ct/ to satisfy core (enefit so%g't
2. Expecte" Pro"%ct/ meet (%yers expectations for
pro"%ct
8oc%s of competition in #$C
4. +%gmente" Pro"%ct/ excee" expectations
8oc%s of competition in "eve!ope" co%ntries
5. Potentia! Pro"%ct/ f%t%re possi(i!ities
Competitive press%res p%s' competition at t'e a%gmente"
!eve! feat%res at t'e a%gmente" !eve! (ecome expecte"
feat%res as t'e market a"opts new feat%res f%rt'er
'eig'tening competition. T'is !eaves room to "eve!op
strippe" "own pro"%cts for price conscio%s market.
$e!ig't C%stomers (y excee"ing expectations.
Pro"%ct 7ierarc'y/
0. Nee" 8ami!y
1. Pro"%ct 8ami!y
2. Pro"%ct C!ass
4. Pro"%ct #ine
5. Pro"%ct Type
B. &ran"
I. -tem
Pro"%ct C!assifications/ $ifferent types of goo"s re:%ire
"ifferent marketing mixes to (e s%ccessf%!.
0. $%ra(!e Eoo"s
1. Non $%ra(!e Eoo"s
2. Services
-nnovation of (atteries,
Cons%mer Eoo"s C!assification/
Convenience/ Packaging is important to se!! t'e
pro"%ct. Cons%mers wi!! accept a s%(stit%te. Marketers
foc%s on intense "istri(%tion time %ti!ity. Convenience
pro"%cts can (e categori)e" into stap!e @mi!kA imp%!se
@not inten"e" prior to s'opping tripA.
Shopping/ Cons%mers expen" consi"era(!e effort
p!anning an" making p%rc'ase "ecisions @i.e.
app!iances stereos camerasA. Cons%mers are not
partic%!ar!y (ran" !oya!. Nee" pro"%cer interme"iary
cooperation 'ig' margins !ess o%t!ets t'an
convenience goo"s. =se of sa!es personne!
comm%nication of competitive a"vantage (ran"ing
a"vertising c%stomer service etc. +ttri(%te (ase"
@Non Price CompetitionA pro"%ct wit' t'e (est set of
attri(%tes is (o%g't. -f pro"%ct attri(%tes are H%"ge" to
(e simi!ar t'en price" (ase".
Specialty/ &%yer knows w'at t'ey want an" wi!! not
accept a s%(stit%te -E Merce"es. $o not compare
a!ternatives. &ran" store an" person !oya!. ?i!! pay a
premi%m if necessary. Nee" remin"er a"vertising.
Unsought/ S%""en pro(!em to reso!ve pro"%cts to
w'ic' cons%mers are %naware pro"%cts t'at peop!e "o
not necessary t'ink of p%rc'asing. =m(re!!as 8%nera!
P!ots Encyc!ope"ia<<
-n"%stria! Eoo"s C!assification/
Production Goods
o .aw Materia!s/
o Component parts/ (ecomes part of t'e p'ysica!
pro"%ct/ -nte! Eore
o Process materia!s/ not rea"i!y i"entifia(!e part of
t'e pro"%ction of ot'er pro"%cts
Support Goods
o MaHor E:%ipment/
o +ccessory E:%ipment/ "esk tops an" too!s
o Cons%ma(!e S%pp!ies/ -E Paper penci!s or ink
cartri"ges
o &%siness*to*&%siness services/ 8inancia! !ega!
marketing researc' etc.
-f an organi)ation is marketing more t'an one pro"%ct it
'as a pro"%ct mix.
Product item**a sing!e pro"%ct
Product line**a!! items of t'e same type
Product mix**tota! gro%p of pro"%cts t'at an
organi)ation markets
Depth meas%res t'e R of pro"%cts t'at are offere" wit'in
eac' pro"%ct !ine. Satisfies severa! cons%mer segments for
t'e same pro"%ct maximi)es s'e!f space "isco%rages
competitors covers a range of prices an" s%stains "ea!er
s%pport. 7ig' cost in inventory etc.
Width meas%res t'e R of pro"%ct !ines a company offers.
Ena(!es a firm to "iversify pro"%cts appea!s to "ifferent
cons%mer nee"s an" enco%rages one stop s'opping.
Pro"%ct #ine $ecisions/
Canni(a!i)ation an" cons%mer movement iss%es
-nterna! @companyA vers%s externa! @marketA
nee"s3"ecisions
Coke 7%nts for Ta!ent ro .e*Esta(!is' -ts Marketing Mig't
&ran"
?'at is &ran"ing, ?'y &ran",
$efinition/
+ name term "esign sym(o! or any ot'er feat%re t'at
i"entifies one se!!er9s goo" or service as "istinct from
anot'erSs.
Brand name is t'at part t'at can (e spoken inc!%"ing
!etters wor"s an" Rs -E I=P.
&ran" names simp!ify s'opping g%arantee a certain
!eve! of :%a!ity an" a!!ow for se!f*expression.
Brand mark*e!ements of t'e (ran" t'at cannot not (e
spoken -E sym(o!3 !ogo
Trade Character -E .ona!" Mc$ona!" Pi!!s(%ry
$o%g'(oy
Trade mark * !ega! "esignation t'at t'e owner 'as
exc!%sive rig'ts to t'e (ran" or part of a (ran".
Tradename*T'e f%!! !ega! name of t'e organi)ation. -E
8or" not t'e name for a specific pro"%ct.
Provi"es (enefits to (%yers an" se!!ers
( *+5E#:
7e!p (%yers i"entify t'e pro"%ct t'at t'ey !ike3"is!ike.
-"entify marketer
7e!ps re"%ce t'e time nee"e" for p%rc'ase.
7e!ps (%yers eva!%ate :%a!ity of pro"%cts especia!!y if
%na(!e to H%"ge a pro"%cts c'aracteristics.
7e!ps re"%ce (%yerSs perceive" risk of p%rc'ase.
&%yer may "erive a psyc'o!ogica! rewar" from
owning t'e (ran" -E .o!ex or Merce"es.
( SE66E#:
$ifferentiate pro"%ct offering from competitors
7e!ps segment market (y creating tai!ore" images
&ran" i"entifies t'e companies pro"%cts making
repeat p%rc'ases easier for c%stomers
.e"%ce price comparisons
&ran" 'e!ps firm intro"%ce a new pro"%ct t'at carries
t'e name of one or more of its existing pro"%cts...'a!f
as m%c' as %sing a new (ran" !ower co. "esigns
a"vertising an" promotiona! costs
Easier cooperation wit' interme"iaries wit' we!!
known (ran"s
8aci!itates promotiona! efforts
7e!ps foster (ran" !oya!ty 'e!ping to sta(i!i)e market
s'are.
8irms may (e a(!e to c'arge a premi%m for t'e (ran".
&ran"ing vers%s Tactica! Promotions,
&ran" E:%ity @C%stomer E:%ityA
Operating profits * expecte" profits for generic N/ 0L Most
Ga!%a(!e
S'are of Min" +ttit%"es > -magePower. #an"or +ssociates
&ran" awareness > consi"ere" set
&ran" awareness/
0. wit'in re!evant market@sA
1. wit' inf!%encers
2. wit' entire market
T'e &est E!o(a! &ran"s/ 7an"o%t
-nter(ran"/ &est E!o(a! &ran"
&ran" Name $ecisions/
-n"ivi"%a! Names/ Procter an" Eam(!e Ti"e C'eer
&o!"
8ami!y Names/ EE +TCT an" Sears
Tra"e name wit' in"ivi"%a! pro"%ct name/ Kraft
Pro"%cts
M8 &ran" vers%s Private &ran",
Selecting a *rand 7ame
Criteria for c'oosing a name some iss%es to consi"er/
Easy for c%stomers to say spe!! an" reca!! @inc.
internationa! pp!A
-n"icate pro"%cts maHor (enefits
S'o%!" (e "istinctive
Compati(!e wit' a!! pro"%cts in pro"%ct !ine
=se" an" recogni)e" in a!! types of me"ia
Sing!e an" m%!tip!e wor"s &ic $o"ge Eran" Caravan
-&M PC @!ettersA or a com(ination Ma)"a .MI
+vai!a(i!ity a!rea"y over 4LL car ;name p!ates; t'is
makes it "iffic%!t to se!ect a new one.
=se wor"s of no meaning to avoi" negative
connotation Ko"ak Exxon
Can (e create" interna!!y (y t'e organi)ation or (y a
cons%!tancy
#ega! restrictions i.e. 8oo" pro"%cts m%st a"'ere to
t'e N%trition #a(e!ing an" E"%cation +ct 0TTL...May
J 0TT4
E!o(a! trans!ations ,
T'e &ran" Pyrami"/
0. 8eat%res/ tangi(!e c'aracteristics of pro"%ct
1. 8%nctiona! &enefits/ (enefits to cons%mer for (ran"
feat%res
2. Emotiona! .ewar"s/ psyc'o!ogica! or emotiona!
(enefits receive" (y %sing (ran"9s pro"%ct,
4. Ga!%es/ w'at are t'e va!%es of t'e typica! !oya!
c%stomer for t'is (ran",
5. Persona!ity/ w'at wor"s wo%!" yo% %se to "escri(e
(ran" if it were a person,
Name#a(
$omain Names/ 7ig'Hacking iss%es, @7ig'Hacke" $omain
an" New $omainA/ 7e!p< -9ve #ost My $omain Name<
$isc%ssion Topic/ -nvestigate t'e a(ove iss%es to "etermine
w'o 'as rig'ts to t'e %se of a "omain name.
On!ine (ran" investment vers%s off!ine (ran" investment
Pampers
$isc%ssion Topic/ $isc%ss t'e c'a!!enges of (ran"ing on
t'e we( 'ow are Pampers "eve!oping a (ran"ing strategy,
+rt'%r +n"ersen c'anges name to +n"ersen
+ccent%re now a c!ear winner wit'o%t +n"ersen name
-s t'ere a win"ow of conf%sion,
+n"ersen +ccent%re
$isc%ssion Topic/ $isc%ss t'e evo!%tion of t'e va!%e of t'e
(ran"/ +n"ersen
&ran" #icensing
$isc%ssion Topic/ $isc%ss t'e ro!e t'e corporate !ogo p!ays
in (ran"ing. Cite !ogos an" t'eir in'erent va!%e. $isc%ss
!ogos w'ic' 'ave c'ange" an" w'y,
Packaging
Consists of a pro"%cts p'ysica! container !a(e! an"3or
insert.
+pproximate!y 0LK of pro"%ct se!!ing cost.
$eve!opment of a container an" a grap'ic "esign for a
pro"%ct. Can affect p%rc'ase "ecisions -E p%mp "ispenser
on a t%(e of toot'paste.
Packaging 8%nctions inc!%"e/
Protect pro"%ct an" maintain f%nctiona! form -E mi!k.
8oi! s'op !ifting
Offer convenience =sage
Promote pro"%ct (y comm%nicating feat%res ;!ast 5
secon"s of mktg; Camp(e!!s re" !a(e!s...
$eve!op re%sa(!e package for a!ternative %se.
Segmentation tai!ore" to a specific gro%p
Packaging "ecision serve t'e c'anne! mem(ers an" t'e
fina! cons%mer.
Cost**'ow m%c' are c%stomers wi!!ing to pay for t'e
packaging,
Preprinte" cost %se =PC co"es
M%st comp!y wit' t'e 8$+ packaging reg%!ations.
Make pro"%ct tampering evi"ent to t'e rese!!er an"
c%stomer cost (enefit wit' !ia(i!ity
Nee" to consi"er consistency among package
"esigns**8ami!y packaging...category
consistent...Pring!es
Nee" to inform potentia! (%yers of new pro"%cts
content feat%res %ses a"vantages an" 'a)ar"s.
Nee" to create a "esira(!e image t'ro%g' co!or etc.
Can (e "esigne" to appear ta!!er or s'orter @t'in
vertica! !ines for ta!!erA Peop!e associate specific
co!ors wit' certain fee!ings .e" wit' fire. $o not
package meet in green<<
M%st meet t'e nee"s of rese!!ers**transportation
storage an" 'an"!ing.
Environmenta! responsi(i!ity.
C$ Packing -ss%es
+O# Packaging
#a(e!ing
Product Positioning and Product #epositioning
$efinition/
T'is refers to a p!ace a pro"%ct offering occ%pies in
cons%mers9 min"s on important attri(%tes re!ative to
competing offerings.
7ow new an" c%rrent items in t'e pro"%ct mix are
perceive" in t'e min"s of t'e cons%mer t'erefore
reemp'asi)ing t'e importance of perception<<
New Pro"%ct**nee" to comm%nicate (enefits
Esta(!is'e" Pro"%cts**nee" to reinforce (enefits
1deal Characteristics
Nee" to intro"%ce pro"%cts t'at possess c'aracteristics t'at
t'e target market most "esires i"ea!. Pro"%ct positioning is
cr%cia!.
Cons%mers "esires refer to t'e attri(%tes cons%mers wo%!"
!ike t'e pro"%cts to possess**-$E+# PO-NTS.
?'enever a gro%p of cons%mers 'as a "istinctive ;i"ea!;
for a pro"%ct category t'ey represent a potentia! target
market segment.
+ firm "oes we!! if its attri(%tes @of t'e pro"%ctA are
perceive" (y cons%mers as (eing c!ose to t'eir i"ea!. T'e
o(Hective is to (e ;more i"ea!; t'an t'e competitors.
Eac' pro"%ct m%st provi"e some %ni:%e com(ination of
new feat%res "esire" (y t'e target market.
-nstea" of a!!owing t'e c%stomer to position pro"%cts
in"epen"ent!y marketers try to inf!%ence an" s'ape
cons%mers concepts an" perceptions.
Marketers can %se perception maps.
E'isting Products
S%n Tan #otion Examp!e/
^
|
|
Old Position | New Position
|
|
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Glamour--------------------------------------------------Health
|
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|
Tra"itiona! s%n tan !otion positione" as ai"ing in getting a
very g!amoro%s "eep tan etc.
$ermato!ogist reports...skin cancer etc.
#ifesty!e nee"s c'ange move to more 'ea!t' conscio%s
society
Nee" to reposition s%n tan !otion as a 'ea!t'y way to (e
expose" to t'e s%n.
Target market 'as s'ifte" from t'e !eft :%arti!e to t'e rig't
:%arti!e as far as nee"s are concerne".
S%n tan marketers nee" to "o same as far as c'anging
cons%mers perception for t'e pro"%ct.
7ow,
C'ange Promotion/ ;Tan "on9t &%rn; T'e St. Trope)
Tan vs. =!tra Sweat Proof Serio%s tan for...&e S%n
Smart
C'ange Pro"%ct/ S%nscreen an" s%n!ess tanning agent.
*MW positions on afforda3ility
^
Very a!e
| "e#us$in!initi
| %er&edes
| '%(
|
|
|
)hea*--------------------------------------------------+#*ensi,e
|
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Very -nsa!e
&M? to reposition %p to t'e !eft
$%e to t'e exc'ange rate #ex%s moves to t'e rig't
?'y "i" t'ey reposition,
Safety
+ffor"a(i!ity
Competitors inc!%"e -nfiniti #ex%s Merce"es &en) an"
+%rora
-f yo% a!rea"y 'ave a (ran" in t'e market m%st (e s%re to
avoi" canni(a!i)ation. +ttri(%tes an" (ran" image s'o%!"
give a pro"%ct "istinct appea!.
7e& Product Positioning
?'en "eve!oping a new pro"%ct a company s'o%!"
i"entify a!! t'e feat%res t'at are offere" (y a!! its maHor
competitors.
Secon" i"entify important feat%res3(enefits %se" in making
p%rc'ase "ecisions.
$etermine t'e overa!! ranking of feat%res (y importance
an" re!ate t'e importance of eac' feat%re to its
;%ni:%eness;/ w'at are t'e %ni:%e se!!ing points @=SPsA.
8or examp!e yo% wo%!"n9t (%y a sprea"s'eet program t'at
if it "i"n9t perform (asic mat' so (asic mat' is very
important.
7owever since every sprea"s'eet 'as t'at itSs an ;important
f%n"amenta! feat%re; instea" of an ;important
"ifferentiating feat%re;.
T'e ot'er si"e wo%!" (e a sprea"s'eet t'at "isp!ays a!!
n%m(ers in (inary @L*0A instea" of ;norma!; n%m(ers @L*TA.
T'is is %ni:%e (%t not important.
T'e eva!%ation (ecomes a 1 x 1 matrix wit' %ni:%eness on
t'e M*axis an" importance on t'e Y*axis.
^
. /m*ortant to 0% 1to&23ro2er4 .
%ath !un&tions | /m*ort 5ata
|
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-----------------------------------------------------------ni6ue
|
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|
| .
'inary 5ata
-f t'e feat%re is in t'e %pper rig't 'an" corner t'en yo%
pro(a(!y 'ave a winning feat%re @=SPA.
T'is is known as feat%re positioning as oppose" to pro"%ct
positioning. One can t'en see w'at type of c%stomer nee"s
t'e important @an" per'aps %ni:%eA feat%res.
-f yo%r sprea"s'eet accepts contin%o%s "ata in rea!*time
@s%c' as stock market "ataA w'i!e Exce! "oesn9t yo%9"
position yo%r sprea"s'eet as a ;rea!*time sprea"s'eet wit'
a!! ca!c%!ations nee"e" (y ?a!! Street.;
-ts a c!aim t'at te!!s somet'ing %ni:%e a(o%t yo%r pro"%ct
w'o it9s for an" (y imp!ication t'at Exce! can9t "o it.
Product 6ife Cycle
Pop%!ari)e" (y T'eo"ore #evitt 0TB5
P#C can (e app!ie" to/
pro"%ct category @?atc'A
pro"%ct sty!e @$igita!A
a pro"%ct item3(ran" @TimexA
8o%r Stages to t'e Pro"%ct #ife Cyc!e/
0. -ntro"%ction
1. Erowt'
2. Mat%rity
4. $ec!ine
T'e fo!!owing materia! refers to t'e P#C as far as t'e
pro"%ct category is concerne" %n!ess ot'erwise state".
1ntroduction
8ai!%re rate for new pro"%cts can range from BLK*TLK
"epen"ing on t'e in"%stry. + pro"%ct "oes not 'ave to (e
an entire!y new pro"%ct can (e a new mo"e! @carA a new
pro"%ct for t'e company or repositioning a pro"%ct to a
new market.
Marketing Mi' "MM$ considerations
Nee" to (%i!" c'anne!s of "istri(%tion3se!ective "istri(%tion
$ea!ers offere" promotiona! assistance to s%pport t'e
pro"%ct...P=S7 strategy.
$eve!op primary "eman"3pioneering information
comm%nications s'o%!" stress t'e (enefits of t'e pro"%ct to
t'e cons%mer as oppose" to t'e (ran" name of t'e
partic%!ar pro"%ct since t'ere wi!! (e !itt!e competition at
t'is stage an" yo% nee" to e"%cate cons%mers of t'e
pro"%ct9s (enefits.
Price skimming...set a 'ig' price in or"er to recover
"eve!opmenta! costs as soon as possi(!e.
Price penetration...set a !ow price in or"er to avoi"
enco%raging competitors to enter t'e market a!so 'e!ps
increase "eman" an" t'erefore a!!ows t'e company to take
a"vantage of economies of sca!e.
8ro&th
Nee" to enco%rage strong (ran" !oya!tyF competitors are
entering t'e market p!ace. Profits (egin to "ec!ine !ate in
t'e growt' stage.
May nee" to p%rs%e f%rt'er segmentation.
MM considerations
May nee" to perform some type of pro"%ct mo"ification to
correct weak or omitte" attri(%tes in t'e pro"%ct.
Nee" to (%i!" (ran" !oya!ty @se!ective "eman"A
comm%nications s'o%!" stress t'e (ran" of t'e pro"%ct
since cons%mers are more aware of t'e pro"%cts (enefits
an" t'ere is more competition m%st "ifferentiate yo%r
offering from yo%r competitors.
May (egin to move towar" intensive "istri(%tion*t'e
pro"%ct is more accepte"F t'erefore interme"iaries are more
inc!ine" to risk accepting t'e pro"%ct.
Price "ea!ing3c%tting or meeting competition especia!!y if
previo%s!y a"opte" a price skimming strategy.
Maturity
Sa!es c%rve peaks*severe competition cons%mers are now
experience" specia!ists.
MM Considerations
+ pro"%ct may (e reH%venate" t'ro%g' a c'ange in t'e
packaging new mo"e!s or aest'etic c'anges.
+"vertising foc%ses on "ifferentiating a (ran" sa!es
promotion aime" at c%stomer @P=##A an" rese!!er @P=S7A.
Move to more intense "istri(%tion
Price "ea!ing3c%tting or meeting competition
Provi"es company wit' a !arge !oya! gro%p of sta(!e
c%stomers. Eenera!!y cas' cows t'at can s%pport ot'er
pro"%cts.
Strategies "%ring mat%rity inc!%"e/
Mo"ification of pro"%ct...%se !ine extensions
.eposition Pro"%ct
?eaker competition wi!! 'ave !eft t'e market p!ace.
,ecline
Sa!es fa!! off rapi"!y. Can (e ca%se" (y new tec'no!ogy or
a socia! tren".
Can H%stify contin%ing wit' t'e pro"%ct as !ong as it
contri(%tes to profits or en'ances t'e effectiveness of t'e
pro"%ct mix.
Nee" to "eci"e to e!iminate or reposition to exten" its !ife.
MM Considerations
Some competition "rop o%t
Nee" to time an" exec%te proper!y t'e intro"%ction
a!teration an" termination of a pro"%ct.
Canni(a!i)ation strategies to intro"%ce new pro"%cts.
Nee" to manage pro"%ct mix t'ro%g' t'eir respective !ife*
cyc!es. ?'en to "eci"e to intro"%ce new @mo"ifie"A
pro"%cts t'at compete wit' t'e c%rrent pro"%ct offering.
?it' 'ig'*tec' pro"%cts nee" to consi"er intro"%cing new
@an" competingA pro"%cts as t'e existing pro"%ct is sti!! in
t'e growt' stage of its !ife cyc!e.
,ifferent types of 6ife Cycle Curves
8a" C%rve
8!eeting fas'ions vs. !asting s'ifts in cons%mer
preference. Cannot "ifferentiate (etween t'e two %sing
%s%a! marketing too!s !ike foc%s gro%ps.
;7an" anyone a '%!a 'oop an" t'ey9!! 'ave f%n wit'
it**at first;
Seasona! C%rve
#ife cyc!es t'at vary (y season c!ot'ing etc.
,eveloping and Managing Products
To compete effective!y an" ac'ieve goa!s of an
organi)ation t'e organi)ation m%st (e a(!e to a"H%st its
pro"%ct mix.
Nee" to %n"erstan" competition an" c%stomer attit%"es an"
preferences.
(ime' (urns do&n the S&atch
0TJ1 Timex t%rne" "own t'e opport%nity to market
;Swatc'es;.
Timex was resting on its !a%re!s simp!e !ow cost watc'es.
$igita! revo!%tioni)e" in"%stry tec'no!ogica! c'ange
Timex st%ck wit' ana!og.
DD !"T #$$P UP WT% W&TC%$S $'"(UT"!
)*"+ & )U!CT"!&( "B,$CT T" & )&S%"!
&CC$SS"*-.
Now cons%mer owns 5 watc'es %p from 0.5 2L years ago
@emp'asi)ing fas'ion nee"A. Timex 'as ac:%ire" E%ess an"
Monet Dewe!!ers @"istri(%tion o%t!etsA in an effort respon"
to c'ange.
Pro"%ct mix/
$ressy watc'es to ?a!t $isney C'aracter watc'es -n"igo.
Now 'ave 05LL sty!es 2LL in 0TIL.
,eveloping 7e& Products
Nee" to "eve!op new pro"%cts. + new pro"%ct can (e/
Contin%o%s -nnovation...No new (%yer (e'avior to
!earn i.e. *pro"%cts not previo%s!y markete" (y t'e
firm (%t (y ot'ers
$ynamic Contin%o%s -nnovation...minor e"%cation
nee"e" for cons%mers to a"opt pro"%ct
$iscontin%o%s -nnovation...entire!y new cons%mption
patterns
,%, Standard
$G$ +ssociation
$isc%ssion Topic/ $isc%ss t'e evo!%tion of t'e $G$
stan"ar" an" its importance in new pro"%ct
"eve!opment.
8or a new pro"%ct to s%ccee" it m%st 'ave/
"esira(!e attri(%tes
(e %ni:%e
'ave its feat%res comm%nicate" to t'e cons%mer @mkt
s%pport necessaryA
$eve!oping new pro"%cts is expensive an" risky.
8ai!%re not to intro"%ce new pro"%cts is a!so risky. -E
Timex a(ove
8irms "eve!op new pro"%cts in t'ree ways/
&y ac:%isition i.e. Timex (o%g't E%ess an" Monet
Dewe!!ers in 0TT1 (ringing in new pro"%cts to t'eir
pro"%ct mix.
+c:%iring patents !icensing tec'no!ogy
-nterna! "eve!opment t'is is w'at we are going to
foc%s on.
+(o%t 1LK new pro"%cts a year !a%nc'e"/ a(o%t I5K are
(ran" extensions.
Why 7e& Products )ail
#ack of "ifferentiating a"vantage
Poor marketing p!an
Poor timing
Target market too sma!!
Poor pro"%ct :%a!ity
No access to market
Seven phases to ne& product development:
0. New Pro"%ct Strategy $eve!opment
On!y a few i"eas are goo" eno%g' to reac'
commercia!i)ation. -"eas can (e generate" (y c'ance
or (y systematic approac' an" (y company c%!t%re
@2MA. Nee" a p%rposef%! foc%se" effort to i"entify
new ways to serve a market. New opport%nities appear
from t'e c'anges in t'e environment.
1. -"ea Eeneration
Contin%o%s systematic searc' for new pro"%ct
opport%nities.
o +arketing oriented sources**i"entify
opport%nities (ase" on cons%mer nee"s !a(
researc' is "irecte" to satisfy t'at researc'. 0*
JLLRs researc' etc.
o (a.oratory oriented sources**i"entify
opport%nities (ase" on p%re researc' or app!ie"
researc'.
o ntra/irm devises**(rain storming incentives an"
rewar"s for i"eas. 2Ms Post it from c'oir
practice. 7ew!ett Parkar"s !a( is open 14 'rs.
"ay. +na!y)ing existing pro"%cts rea"ing tra"e
p%(!ications.
Brainstorming /or your group pro0ect. deas
should not .e critici1ed2 no matter ho3 o//4.eat
they are.
2. Pro"%ct Screening an" Eva!%ation
New pro"%ct c'eck !istF !ist new pro"%ct attri(%tes
consi"ere" most important an" compare eac' wit'
t'ese attri(%tes. C'eck !ist is stan"ar"i)e" an" a!!ows
i"eas to (e compare".
**Eenera! c'aracteristics Marketing C'aracteristics
an" Pro"%ction C'aracteristics.
-"eas wit' t'e greatest potentia! are se!ecte" for
f%rt'er researc'.
$o t'ey matc' t'e organi)ations goa!s @Some
companies 'ave many patents t'at t'ey 'ave not
exp!oite" for t'is very reason.A
#ook at companiesS a(i!ity to pro"%ce an" market t'e
pro"%ct.
Nee" to !ook at t'e nat%re an" wants of t'e (%yers an"
possi(!e environmenta! c'anges.
Concept Testing
Samp!e of potentia! (%yers is presente" wit' t'e
pro"%ct i"ea t'ro%g' a written or ora! "escription to
"etermine t'e attit%"es an" initia! (%ying intentions.
ConHoint +na!ysis to see feat%re tra"eoffs.
T'is is "one (efore investing consi"era(!e s%ms of
money an" reso%rces in .esearc' an" $eve!opment.
Can (etter %n"erstan" pro"%ct attri(%tes an" t'e
(enefits c%stomers fee! are most important.
?o%!" yo% (%y t'e pro"%ct,
?o%!" yo% rep!ace yo%r c%rrent (ran" wit' t'e new
pro"%ct,
?o%!" t'is pro"%ct meet rea! nee"s,
4. &%siness +na!ysis
+na!y)e potentia! contri(%tion to sa!es costs an"
profits.
$oes t'e pro"%ct fit into t'e c%rrent pro"%ct mix,
?'at kin" of environmenta! an" competitive c'anges
can (e anticipate",
7ow wi!! t'ese c'anges effect sa!es etc.,
+re t'e interna! reso%rces a"e:%ate,
Cost an" time !ine of new faci!ities etc.,
-s financing avai!a(!e,
Synergies wit' "istri(%tion c'anne! etc.
M-S to "etermine t'e market potentia! sa!es etc.
Patenta(i!ity s'o%!" (e "etermine" !ast 0I years 04
years for a p'armace%tica! pro"%ct.
8in" o%t if it is tec'nica!!y feasi(!e to pro"%ce t'e new
pro"%ct.
-f yo% can pro"%ce t'e new pro"%ct at a !ow eno%g'
cost so as to (e a(!e to make a profit.
5. Pro"%ct $eve!opment
$eve!op a prototype working mo"e! !a( test etc.
+ttri(%tes t'at cons%mers 'ave i"entifie" t'at t'ey
want m%st (e comm%nicate" t'ro%g' t'e "esign of t'e
pro"%ct.
B. Test Marketing
Can o(serve act%a! cons%mer (e'avior.
#imite" intro"%ction in geograp'ica! areas c'osen to
represent inten"e" market.
+im is to "etermine t'e reaction of pro(a(!e (%yers.
-t is t'e samp!e !a%nc' of t'e Marketing Mix.
$etermine to go a'ea" mo"ify pro"%ct mo"ify
marketing p!an or "rop t'e pro"%ct.
P.OS are/
o #essens t'e risk of pro"%ct fai!%re.
o .e"%ces t'e risk of !oss of cre"i(i!ity or
%n"erc%tting a profita(!e pro"%ct.
o Can "etermine t'e weaknesses in t'e MM an"
make a"H%stments.
o Can a!so vary parts of t'e MM "%ring t'e test
market.
o Nee" to se!ect t'e appropriate MM an" c'eck t'e
va!i"ity.
CONS are/
o Test market is expensive.
o 8irm9s competitors may interfere.
o Competitors may copy t'e pro"%ct an" r%s' it
o%t. -E C!orox "etergent wit' (!eac' PCE. ;-n a
!ive test yo%9ve tippe" yo%r 'an" an" (e!ieve me
t'e competition is going to come after yo%.
=n!ess yo% 'ave patente" c'emistry t'ey can rip
yo% off an" (eat yo% to a nationa! !a%nc';
*$irector of Marketing at Ei!!ette9s Personne!
"ivision.
+!ternative!y can %se a sim%!ate" test market. 8ree
samp!es offere" in t'e ma!! taken 'ome an"
interviewe" over t'e te!ep'one !ater.
I. Commercia!i)ation
Correspon"s to intro"%ction stage of t'e Pro"%ct #ife
Cyc!e.
P!ans for f%!!*sca!e marketing an" man%fact%ring m%st
(e refine" an" sett!e".
Nee" to ana!y)e t'e res%!ts of t'e test market to
"etermine any c'anges in t'e marketing mix.
Nee" to make "ecisions regar"ing warranties etc
@re"%ces cons%mers riskA. ?arranties can offer a
competitive a"vantage.
Spen" a!ot of Ns on a"vertising personne! etc.
Com(ine" wit' capita! expen"it%re makes
commercia!i)ation very expensive.
Nee" to consi"er/
t'e spee" of acceptance among cons%mers an"
c'anne! mem(ersF
intensity of "istri(%tion
pro"%ction capa(i!ities
promotiona! capa(i!ities
prices
competition
time perio" to profita(i!ity an" commercia!i)ation
costs.
*uyers. Product 9doption Process
0. +wareness
&%yers (ecome aware of t'e pro"%ct
1. -nterest
&%yers seek information an" is receptive to !earning
a(o%t pro"%ct
2. Eva!%ation
&%yers consi"er pro"%ct (enefits an" "etermines
w'et'er to try it
4. Tria!
&%yers examine test or try t'e pro"%ct to "etermine
%sef%!ness re!ative to nee"s
5. +"option
&%yers p%rc'ase t'e pro"%ct an" can (e expecte" to
%se it w'en t'e nee" for t'e genera! type of pro"%ct
arises.
.ate of a"option "epen"s on cons%mer traits as we!! as t'e
pro"%ct an" t'e firm9s marketing efforts.
,iffusion Process
T'e manner in w'ic' "ifferent mem(ers of t'e target
market often accept an" p%rc'ase a pro"%ct @go t'ro%g' t'e
a"option processA
0. -nnovators
Tec'no*savvies first c%stomers to (%y a pro"%ct 1.5
K of cons%mers
1. Ear!y +"opters
Ten" to (e opinion !ea"ers. +"opt new pro"%cts (%t
%se "iscretion 02.5K
2. Ear!y MaHority
24K of cons%mers first part of t'e mass market to (%y
t'e pro"%ct
4. #ate MaHority
#ess cosmopo!itan an" responsive to c'ange 24K
5. #aggar"s
Price conscio%s s%spicio%s of c'ange 0BK "o not
a"opt %nti! t'e pro"%ct 'as reac'e" mat%rity.
-mp!ications to marketers company m%st promote pro"%ct
to create wi"esprea" awareness of existence an" (enefits.
Pro"%ct an" p'ysica! "istri(%tion m%st (e !inke" to patterns
of a"option an" repeat p%rc'ase.
$isc%ssion topic/ $isc%ss t'e "ifferences in t'e new
pro"%ct "eve!opment process for "igita! goo"s vers%s
tangi(!e goo"s consi"er inte!!ect%a! property iss%es
stan"ar"s iss%es etc,
#elevant Kno&ledge:Wharton 9rticles
Corporate Sponsors'ips of Sta"i%ms an" Ot'er -nstit%tions
$onSt +!ways Pay Off
Switc'ing names effect of (ran". Ga!%e to sta"i%ms va!%e
to c%stomers,
7ow to Keep Ot'ers 8rom .ipping Off Yo%r -"eas
Poac'ers +re O%t to P!%n"er Yo%r -nte!!ect%a! Property
Can yo% $o +nyt'ing,
-nte!!ect%a! Property/ ?-PO
-nte!!ect%a! Property an" t'e Nationa! -nformation
-nfrastr%ct%re
#ink to "isc%ssion (oar"
.et%rn to Sy!!a(%s
Marketing Strategy: Key Concepts ;
Market 8oc%s/ $omestic vers%s -nternationa!
Protectionism vers%s open markets,
?'o9s Stan"ar"s to a"opt 'ome co%ntry or 'ost co%ntry,
S'o%!" company p!ay (y 'ost r%!es or try to c'ange t'em,
=nions Environmenta!ists
E?&/ 8ree Tra"e area E= to impose tariffs to protect stee!
market
Some risks inc!%"e/
c'anging (or"ers
%nsta(!e governments
foreign exc'ange iss%es @"eva!%ations etc,A
tec'no!ogy pirating
a"aption costs for pro"%ct an" comm%nication strategy
Steps to consi"er/
"etermine t'e internationa! market environment
@economic po!itica! !ega! an" c%!t%ra!AF internationa!
tra"e system
few vers%s many co%ntries percentage of sa!es
"etermine w'ic' market to enter risk vers%s rate of
ret%rn
'ow to enter t'e market, exporting !icensing Hoint
vent%res an" "irect investment
a"aption of 4 Ps,/ Text &ooks<
organi)ationa! str%ct%re for internationa! (%siness,
Economist/ Marc' 1n" 1LL1 /T'e S'ort +rm of t'e #aw
$isc%ssion Topic/ $isc%ss t'e comp!ications of removing
(ri(ery from internationa! transactions. ?'at are t'e
o%tcomes for economies,
-nternationa! marketing is not a!ways a(o%t going
overseas,
#as Gegas,
Eenera! -nternationa! #inks/
&a(e! 8is'
=S $epts. of Commerce -nternationa! Tra"e
+"ministration Export*-mport &ank of t'e =nite" States
T'e &%rea% of Export +"ministration
#inks to Tra"e +!!iances/
?TO 3 E+TT N+8T+ E= for t'e =S E%ropean =nion
On!ine
#inks for &ri(ery $isc%ssion/
OEC$/ Organisation for Economic Co*Operation an"
$eve!opment 8oreign Corr%pt Practices +ct Transparency
-nternationa! S'e!!/ Management Primers
Services
+!! pro"%cts inc!%"e a service component.
-ntangi(!e @associate w3 tangi(!e representationA
-nsepara(!e @inf!%ence provi"ersA
Peris'a(!e @inf!%ence "eman"A
Garia(!e @stan"ar"i)ation iss%esA
Eenera! Marketing -ss%es/
Externa! Marketing
-nterna! Marketing
-nteractive Marketing
2 a""itiona! Ps
Peop!e
P'ysica! Evi"ence
Processes
8oc%s/
Searc' U%a!ities/ Eoo"s @c!ot'ing Hewe!eryA
Experience U%a!ities
Cre"ence U%a!ities/ Services @me"ica! a%to repair
!ega! servicesA
#elevant Kno&ledge:Wharton 9rticles
Prescription $r%g Coverage for Seniors 8aces =ncertain
8%t%re
+ #ive &a(y or Yo%r Money &ack
Poac'ers +re O%t to P!%n"er Yo%r -nte!!ect%a! Property V
Can Yo% $o +nyt'ing,
Et'ica! Stan"ar"s for E!o(a! Corporations,
Et'ica! -nspiration for Marketing Managers
+ Searc' for Eoog!eSs S%ccess T%rns =p Two ?or"s/
Tr%st an" Tec'no!ogy
#ink to "isc%ssion (oar"
.et%rn to Sy!!a(%s
Marketing Strategy: Key Concepts <
?'at is price,
Price is t'e va!%e exc'ange" for t'e pro"%ct.
Economic @inc. (arterA
8ree"om of C'oice @!ock*in opport%nity costA
Privacy
Evo!%tion of pricing mec'anisms/ 8ixe" vers%s varia(!e/
C'apt. 1 $igita! $arwinism .
Pioneer of fixe" pricing/ +aron Montgomery ?ar"
On!y e!ement of t'e MM t'at is given in ret%rn
1mportance of "the economic aspect of$ Price to the Marketer
Often t'e on!y e!ement t'e marketer can c'ange
:%ick!y in response to "eman" s'ifts.
.e!ates "irect!y to tota! reven%e T. > Price O Utty
Profits > T. * TC
*effects profit "irect!y t'ro%g' price an" in"irect!y (y
effecting t'e :tty so!" an" effects tota! costs t'ro%g'
its impact on t'e :tty so!" @ie economies of sca!eA
Can %se price sym(o!ica!!y emp'asi)e :%a!ity or
(argain @signa! va!%eA.
$ef!ationary press%res cons%mers very price
conscio%s.
Six step process/
0. Esta(!is' marketing o(Hectives
o s%rviva! @s'ort termA
o profit max.
o reven%e max. @yie!" management pricingF
"ynamic pricingA
o growt' max. @penetration pricing ... ;free;A
o market skimming
o pro"%ct*:%a!ity !ea"ers'ip @signa!ing effect,A
1. $eman" sc'e"%!e/ e!astic vers%s ine!astic "eman"
iss%es @price!ineA
Percent c'ange in :%antity "eman"e" re!ative to t'e
percent c'ange in price.
K c'ange in Utty "eman"e"
*************************
K c'ange in price
?e are now !ooking at t'e act%a! impact on "eman" as
price varies. $lastic demand is more sensitive to price
t'an inelastic demand.
E!astic "eman" greater t'an0 @*0A
-ne!astic "eman" !ess t'an 0 @*0A
=nitary "eman" e:%a! to 0
&l3ays take the a.solute values
1nelastic ,emand
7|8
| 8
| 8
| 8
| 8
|-----------9tty
7
Elastic ,emand
7|8
| 8
| 8
| 8
| 8
|-----------9tty
7
T. > Price O Utty
-f "eman" is elastic t'en c'ange in price ca%ses an
opposite c'ange in t'e total revenue.
-f "eman" is inelastic t'en c'ange in price ca%ses t'e
same c'ange in t'e total revenue2
T'e !ess e!astic t'e "eman" t'e more (eneficia! it is
for t'e se!!er to increase price.
2. Cost iss%es/ "ifferent !eve!s of pro"%ct @!earning c%rve
iss%esA @"isAeconomies of sca!e fixe"3varia(!e
(reakeven iss%es margina! ana!ysis
Margina! +na!ysis/
?'at 'appens to t'e costs an" reven%es as pro"%ction
increases (y one %nit. T'is wi!! "etermine at w'ic'
point profit wi!! (e maximi)e". Nee" to "isting%is'
(etween/
8ixe" Costs
+verage 8ixe" Costs 8C3%nits pro"%ce"
Garia(!e Costs @materia!s !a(or etc.A
+verage Garia(!e Cost GC3=nit pro"%ce"
Tota! Cost > @+8CW+GCAOUTTY
+arginal cost > t'e extra cost to t'e firm for
pro"%cing one more %nit.
+arginal revenue > t'e extra reven%e wit' t'e sa!e of
one a""itiona! %nit.
M. * MC te!!s %s if it is profita(!e to pro"%ce one
more %nit.
Profit maximi)ation at M. > MC
To pro"%ce3se!! more %nits t'an t'e point M. > MC
t'e a""itiona! cost of pro"%cing one more %nit is
greater t'an t'e a""itiona! reven%e from se!!ing one
more %nit. +t any point prior to M. > MC M. wi!!
(e greater t'an MC t'erefore t'e a""itiona! reven%e
from se!!ing one more %nit wi!! (e greater t'an t'e
a""itiona! cost of pro"%cing one more %nit t'erefore
forgoing t'e opport%nity to generate a""itiona! profits.
T'erefore M. > MC > Profit Maximi)ationF assuming
all products are sold.
$%e to t'e environment it is "iffic%!t to pre"ict costs
an" reven%es etc.
Cost str%ct%res can inf!%ence pricing o(Hective/ 'ig'
!ow fixe" varia(!e make*%p 'as significant impact on
contri(%tion margins.
4. Competitors pricing
5. Pricing met'o"/
o Cost P!%s/
E%arantees contri(%tion
simp!e to ca!c%!ate
not optima!
o Competition
par wit' market
price war imp!ications,
not optima!
o Ga!%e
optima!
"iffic%!t to "etermine
B. 8ina! price se!ection/ o"" 3 even etc.
8inancing iss%es.
#ife*cyc!e Pricing iss%es. Especia!!y w3 services two tier
pricing etc.
Price Segmentation3$iscrimination/ Garying prices "%e to
market con"itions "ifferent cons%mers/
;cost to serve; are "ifferent
va!%e of pro"%ct are "ifferent
service "eman"s "iffer
Met'o"s of segmentation3"iscrimination/
Price negotiation @secon" 'an" car examp!es on!ine
a%ctionsA
Eeograp'y
Price an" :%antity "isco%nts/ seasona! "isco%nts tra"e
"isco%nts tra"e*ins
Promotion pricing/ !oss !ea"er @!ock*in etc.A specia!
event re(ates !ow interest financing warranties
$iscriminatory pricing/ c%stomer segment pricing
pro"%ct form pricing time pricing
Pro"%ct mix pricing/ !ine pricing optiona! feat%re two
part pricing pro"%ct (%n"!ing
Pro"%ct (%n"!ing/ office s%ite etc.
Price c'anging iss%es @re"%cing or increasingA a!so re!evant
for esta(!is'ing a price at a(ove or (e!ow market/
C%stomer reactions
Competitor reactions
Co!!a(orator reactions
Eame t'eory imp!ications of a"opting prices in competitive
markets.
Signa! va!%e of price c'anges to competitors an"
c%stomers.
Price transparency iss%es for esta(!is'ing an" c'anging
prices.
$ea!ing wit' competitor price c'anges.
$isc%ssion Topic/ ?'at are t'e potentia! !ong r%n
conse:%ences of a price promotion "esigne" to attract
competitors c%stomers,
$isc%ssion Topic/ .e!ate examp!es of pro"%cts t'at are
;free; ... an" if t'ey are free w'at is t'e o(Hective of t'e
company,
$isc%ssion Topic/ +ccess E*(ay an" "escri(e yo%r
experiences as a (%yer 3 se!!er. ?'at type of pro"%cts
wo%!" work we!! %n"er a "ynamic pricing mo"e!, $oes t'e
!ife cyc!e stage of a pro"%ct impact its attractiveness for
"ynamic pricing,
#elevant Kno&ledge : Wharton 9rticles
?i!! Cons%mers &e ?i!!ing to Pay for T'eir 8ormer!y 8ree
#%nc' on t'e -nternet,
Can Price!ine .emain Profita(!e,
New -nternet Pricing Mo"e!s &ring Pain an" 8ort%ne to
.etai!ers
-s t'e Price .ig't, +sk Day ?a!ker
7ow Store #ocation an" Pricing Str%ct%re +ffect S'opping
&e'avior
#ink to "isc%ssion (oar"
.et%rn to Sy!!a(%s
Marketing Strategy: Key Concepts =
Channel Selection 1ssues
=se interme"iaries w'o perform f%nctions more efficient!y. 8%nctions inc!%"e/
information f!ow
promotion
negotiation
or"ering
financing
risk taking
p'ysica! possession
payment an" tit!e
Two key iss%es to s%pport interme"iaries
-mprove exc'ange efficiency @5 mf. an" 5 c%stomers > 15 transactions wit' no
interme"iaryF 0L transactions wit' one interme"iaryA
specia!i)e in f%nctions !iste" a(ove
Types of %ti!ity provi"e" (y interme"iaries/
Time
P!ace
Possession
8orm
C'anne! "ecisions inc!%"e/
"irect se!!ing vers%s %sing 0 or 1 or more interme"iaries
Man%fact%rer *6 Cons%mer
Man%fact%rer *6 .etai!er *6 Cons%mer
Man%fact%rer *6 ?'o!esa!er *6 .etai!er *6 Cons%mer
Man%fact%rer *6 $istri(%tor *6 ?'o!esa!er *6 .etai!er *6 Cons%mer
Examp!es
ana!y)e c%stomers9 "esire" service o%tp%ts @si)e waiting time spatia!
convenience s%pport etc.A
c'anne! o(Hectives an" constraints @(ase" on pro"%ct c'aracteristics
interme"iaries environment an" competitors c'anne!sA
(%yer (e'avior @cons%mer an" c'anne!A
(%yer "emograp'ics
i"entify c'anne! a!ternatives @exc!%sive @&M?A vs. se!ective @c!ot'es !inesA vs.
intensive @orange H%iceAA
competitors9 c'anne!s
c'anne! terms an" responsi(i!ities
C'anne! incentives @tra"e promotions etc.A
eva!%ate c'anne! (y economic a"aptive an" contro! criteria
$irect to market >
Ereater fixe" cost
Ereater effectiveness 3 contro! over contacts
Ereater contro! over targeting
-n"irect to market >
Ereater varia(!e cost
#ess contro! 3 responsi(i!ity
Ereater coverage
Know!e"ge of c%stomer wit'in c'anne!
-ss%es in se!ecting c'anne! partners/
?'at ro!e "o partner p!ay,
?'at margin "o we give,
Can 3 "o t'ey carry competing 3 comp!ementary pro"%ct private !a(e!s
7ow "o we incentivi)e
$o t'ey pass on price c%ts,
7ow "o we contro! for canni(a!i)ation w3 ot'er c'anne!s @"irectA,
#ock*in to c'anne! "ecisions
C'anne! "ecisions impact on ot'er e!ements of t'e mix
#ife cyc!e iss%es c'ange c'anne! strategy.
Ear!y stage/ Specia!i)e" c'anne!s
Erowt' stage/ +!ternative c'anne!s
Mat%rity stage/ Mass c'anne!s
Ear!y stage/ 'ig' contro! service an" "e!ivere" price
#ater stage/ increasing conf!ict range of provi"ers comp!exity of c'anne!
C'anne! mem(er re!ations'ips
-mpact of tra"e promotions/ "istortion effects,
Pero s%m .e!ations'ip w3 c'anne! mem(ers,
Nee" to (%i!" sym(iotic re!ations'ips wit' c'anne! mem(ers.
C'anne! mo"ification iss%es
Tren"s inc!%"e vertica! 'ori)onta! an" m%!ti*c'anne! conf!ict.
-nternet 'as 'a" significant impact re/ (%i!"ing new c'anne!s an" c'anging in"%stries
t'ro%g' "isinterme"iation an" information f!ow iss%es.
#ega! an" et'ica! iss%es/
Exc!%sive "ea!ing
Exc!%sive territories
Tying agreements
$ea!ers9 rig'ts
#etailing
.etai!ing inc!%"es a!! interactions w3 fina! c%stomer
Store retai!ing @specia!ty "epartment stores s%permarkets convenience
s%perstores "isco%nt stores ware'o%se stores 'ypermarkets an" cata!og
s'owroomsA
Non*store retai!ing @"irect se!!ing "irect mai! (i!!ing cata!ogs we( ven"ing
mac'inesA
.etai! organi)ations @corporate c'ains vo!%ntary c'ains 3 retai!er cooperatives
cons%mer cooperatives franc'ises in"epen"entsA
.etai! !ife cyc!e
?'ee! of retai!ing
.etai! market p!anning/
target a%"iences
pro"%ct/ assortment an" service
pro"%ct/ positioning @Kmart vs. ?a! Mart an" TargetA
pro"%ct/ services an" store atmosp'erics
pro"%ct/ sym(iotic re!ations'ips
pricing
promotion
p!ace
.etai!ing tren"s/
new forms
s'ortening !ife cyc!es
non store growt'
intertype competition po!arity category ki!!ers
one*stop s'opping
g!o(a! expansion
stores as meeting p!aces
Wholesaling
?'o!esa!ing inc!%"es a!! interactions w3 interme"iaries (%ying for resa!e or (%siness %se.
8%nctions inc!%"e/
se!!ing an" promotion
(%ying an" assortment*(%i!"ing
(%!k*(reaking
ware'o%sing
transporting
financing
risk (earing
s%pp!ying market information
?'o!esa!ers comprise fo%r gro%ps/
merc'ant w'o!esa!ers @take possession f%!! service vs. !imite" serviceA
agents an" (rokers @"o not take possession pai" commissionA
man%fact%rers9 an" retai!ers9 (ranc'es
misce!!aneo%s w'o!esa!ers @e.g. agric%!t%ra! (%!k c'emica!sA
-ncreasing importance of !ogistics an" provi"ing a system*wi"e approac' at re"%cing
costs.
#ogistics "ecisions/
or"er processing @s'orten or"er to remittance cyc!eA
ware'o%sing
inventory
transportation @rai! air tr%cks waterways an" pipe!inesA
-nteresting sites/
Carmax.com for %se" cars
+ma)on.com for %se" (ooks
Napster an" En%te!!a for m%sic
$isc%ssion Topic/ -mpact of c'anne! mem(ers creating a market for %se" pro"%ct. -s t'is
goo" or (a" for t'e market 'ow "oes it impact t'e va!%e of t'e new pro"%ct,
#elevant Kno&ledge : Wharton 9rticles
KmartSs 1L*Year -"entity Crisis
Taking Stock of S%permarket .etai! Performance
Pay*for*Performance Tra"e Promotions Can Ease 8riction &etween Man%fact%rers an"
.etai!ers
C'ristmas E*tai!ers/ ?i!! -t &e 7o*7o or So*So,
Making t'e Case for O%tsi"e Sa!es .eps
7ow Store #ocation an" Pricing Str%ct%re +ffect S'opping &e'avior
+"" re!evant we(sites
#ink to "isc%ssion (oar"
.et%rn to Sy!!a(%s
Marketing Strategy: Key Concepts >
,irect and nline Marketing
+n interactive system t'at creates a meas%ra(!e response @varia(!e cost vers%s fixe" cost
of marketingA an" 3 or transaction.
Eoa! to "eve!op re!ations'ips wit' c%stomers.
.api" growt' rate.
cata!og an" "irect mai! sa!es growing a(o%t IK ann%a!!y @retai! sa!es Q 2KA
internet growt' rates @Cy(erat!as is a great reso%rce for t'e n%m(erA
Erowt' "%e to innovations in/
tec'no!ogy/ "ata(ases @"ata mining an" ware'o%sesA 3 comm%nication systems
to!!*free te!ep'one services
payment systems @cre"it car"s an" smart car"sA
Provi"es contin%ity (etter timing testa(i!ity an" privacy. Can (enefit (ot' c%stomers an"
(%siness wit' 'ig'!y targete" an" efficient exc'anges.
$ata(ase marketing to s%pport "irect marketing. Companies can %se t'eir "ata(ases to/
i"entify prospects
"ifferentiate offers
cross se!! pro"%cts
(%i!" !oya!ty
reactivate c%stomer p%rc'ases
-ss%es wit' "irect marketing inc!%"e/
0. annoyance
1. "eception an" fra%"
2. privacy
MaHor "irect marketing c'anne!s/
8ace*to*8ace
$irect Mai! @inc. voice*mai! an" e*mai! (i!!s faxA
Cata!og Marketing @inc. C$sA
Te!emarketing @%se of comp%ters 3 ce!! p'ones @context%a! marketingA
TG @"irect response a"vertising 3 infomercia!s 3 s'opping c'anne!sA
Kiosks @an" ven"ing mac'inesA
On!ine @permission (ase" marketingA
On!ine marketing is t'e most recent evo!%tion of "irect marketing. T'is can create
c'anne! conf!ict.
E?Commerce Marketing
Session 0/ -ntro"%ction
Session 1/ +spect of ??? as a Me"i%m
Session 2/ Markets an" Pricing Mo"e!s an" $igita! Economics
Session 4/ +"vertising
Session 5/ E*tai!ing
Session B/ -ntegrate" Marketing an" Comm%nications
$irect Marketing +ssociation
+"" re!evant we(sites
#elevant Kno&ledge : Wharton 9rticles
?i!! Cons%mers &e ?i!!ing to Pay for T'eir 8ormer!y 8ree #%nc' on t'e -nternet,
T'e Ce!! P'one as Marketing Too!/ ?i!! Cons%mers +nswer t'e Ca!!,
C!icking ?it' C%stomers/ New C'a!!enges in On!ine Conversion
?'y Do( Searc'ing is t'e Secon" Most Pop%!ar +ctivity on t'e -nternet
+re T'ere #essons to &e #earne" from -nternet Porn Sites,
New -nternet Pricing Mo"e!s &ring Pain an" 8ort%ne to .etai!ers
T'ree Marketing #essons from t'e #ove &%g
7ow Companies Sponsor #isten in an" #earn 8rom C'at .ooms
-s Yo%r ?e(site ?orking ?e!! for Yo%, C'eck its e*Performance
7ow to Keep C%stomers -n #ine for Yo%r On*!ine &%siness
7it an" Miss/ ?'y 7ig' Traffic Streams Nee" not #ea" to More On!ine &%siness
Step'en KingSs Nove! -"ea/ ?i!! -t C'ange t'e P%(!is'ing -n"%stry,
C'ristmas E*tai!ers/ ?i!! -t &e 7o*7o or So*So,
+ Searc' for Eoog!eSs S%ccess T%rns =p Two ?or"s/ Tr%st an" Tec'no!ogy
#ink to "isc%ssion (oar"
.et%rn to Sy!!a(%s
Marketing Strategy: Key Concepts 1@
got mi!k,
$efinition/
To comm%nicate wit' in"ivi"%a!s gro%ps or organi)ations
to "irect!y or in"irect!y faci!itate exc'anges (y informing
an" pers%a"ing one or more a%"iences to accept an
organi)ation9s pro"%cts.
*Companies m%st comm%nicate wit' t'eir c%stomers t'is
comm%nication s'o%!" not (e !eft to c'ance.
$esign comm%nication to yo%r specific target a%"ience/
Target Market
Part of Target Market
$ifferent stake'o!"ers of yo%r organi)ation.
Promotion/ 8o%rt' e!ement of t'e marketing mix. Nee" to
make s%re t'e goa!s of promotion are integrate" wit' ot'er
Ps.
Nee" to "esign a comm%nications strategy t'at integrates
t'e promotion mix/
a"vertising/ pai" form of non persona! comm%nication
a(o%t an organi)ation or its pro"%cts t'at is
transmitte" to a target a%"ience t'ro%g' a me"i%m/
=S/ 0TTL N02J ( 1LLL N21L ( @approxA wor!"wi"e
NIJL (. -n =S 15K promotiona! (%"get
sa!es promotion/ materia!s t'at act as a "irect
in"%cement offering a""ing va!%e or incentive for t'e
pro"%ct to rese!!ers sa!es peop!e or cons%mers/ tra"e
promotions > 4IK of promotiona! (%"get cons%mer
promotions > 1JK
p%(!ic re!ations 3 p%(!icity/ news story form a(o%t an
organi)ation or its pro"%cts or (ot' t'ro%g' a me"i%m
at no c'arge
persona! se!!ing/ persona! comm%nication in an
exc'ange sit%ation
"irect marketing
-ncreasing importance of -ntegrate" Marketing
Comm%nications ... ?'y,
T'e fo%rt' P t'e critica! P,
Comm%nications process consists of/
0. sen"er
1. enco"ing
2. message
4. me"ia
5. "eco"ing
B. receiver
I. response
J. fee"(ack
T. noise
Nee" to i"entify an" %n"erstan" t'e target a%"ience from
t'e perspective of information processing/
0. se!ective attention
1. "istortion
2. reca!!
4. context%a! iss%es
Steps of t'e promotiona! program/
0. -"entify target a%"ience an" c'aracteristics an"
perception of pro"%ct context etc.
1. $efine comm%nications o(Hectives @not aware
awareness interest eva!%ation tria! a"optionA.
Seeking cognitive affective or (e'aviora! response
2. message/
0. content @rationa! 3 emotiona! 3 mora!A
1. str%ct%re @one or two si"e"A
2. format @'ea"!ine copy so%n"A
4. so%rce @tr%ste" 3 !ika(!e 3 expertA
4. se!ect me"ia @comm%nications c'anne!sA
5. esta(!is' (%"get @affor"a(!e 3 K sa!es 3 competitive 3
o(Hective an" taskA
Consi"er/
p%s' vers%s p%!!
stage of p%rc'ase process
stage of pro"%ct !ife cyc!e
pro"%ct comp!exity an" risk
market position
9dvertising
Nee" to consi"er t'e fo!!owing iss%es w'en consi"ering
w'et'er to a"vertise/
$oes t'e pro"%ct possess %ni:%e important feat%res to
foc%s on =ni:%e Se!!ing Point @=SPA
+re t'e 'i""en :%a!ities important to t'e (%yers
-s t'e genera! "eman" tren" for t'e pro"%ct a"e:%ate
-s t'e market potentia! for t'e pro"%ct a"e:%ate
-s t'e competitive environment favora(!e
-s t'e organi)ation a(!e an" wi!!ing to spen" t'e
re:%ire" money to !a%nc' an a"vertising campaign
-ss%es to consi"er for a"vertisers/
.eac'/ nationa! regiona! !oca!
a%"ience/ in"%stria! cons%mer
pro"%ct/ pro"%ct (ran" instit%tion
o(Hectives/ awareness interest eva!%ation tria!
a"option @inform pers%a"e or remin"A
$ecision making for a"vertising/
0. o(Hectives setting
1. (%"get "ecision @stage in pro"%ct !ife cyc!e market
s'are competition an" c!%tter nee"e" fre:%ency
pro"%ct s%(stit%ta(i!ityA
2. message "ecision
o message generation
o message eva!%ation an" se!ection ... =SP ,
o message exec%tion/ str%ct%re "epen"ing on me"ia
@print/ 'ea"!ine i!!%strations s%( 'ea"!ine (o"y
copy signat%reA
"efine" o(Hective "efine" pro"%ct positioning
(%i!" pro"%ct "ifferentiation consistent t'ro%g'
campaign strong integration appropriate target
market simp!e pro"%ct centere" message
positioning of (ran" name wit'in message
o socia! responsi(i!ity iss%es ... a wi"er context of
eva!%ation
4. me"ia "ecision
o reac' @R of pp! expose" at !east onceA fre:%ency
@tota! n%m(er of times reac'e"A an" impact
@:%a!ity of impactA
o me"ia types @TG @11KA Newspaper @12KA
$irect Mai! @1LKA O%t"oor Maga)ines @BKA
.a"io @IKA ???A
o Me"ia Ge'ic!es @programs ?SD Ya'oo Gog%eA/
cpm re!evant market etc.
o me"ia timing
o geograp'ic a!!ocation/ nationa! vers%s spot
(%ying
5. a" effectiveness eva!%ation
=sef%! a"vertising !inks/ a"for%m +"vertising +ge
t(wa3c'iat3"ay 8a!!on Organic Ma" $ogs an"
Eng!is'men
+fter reviewing Net.atings "isc%ss t'e state of a"vertising
on t'e we(.
Sales Promotion
S'orter*term too!s to stim%!ate "eman" @cons%mer tra"e
an" orgs. sa!es force.A
Potentia! impact on (ran" an" s'ift "eman",
Sa!es Promotion spen" excee"s a"vertising spen" an" is
growing faster ... w'y,
Cons%mer promotiona! too!s inc!%"e/
samp!es
Co%pons @re"emption rates ,A
re(ates
cas' ref%n"s
pro"%ct warranties @'ig' risk itemsA
premi%ms @Mc$ona!"sA
pri)es
fre:%ent %ser programs
free tria!s
point of p%rc'ase "isp!ays
$isc%ssion Topic/ Take a !ook at Sweepstakes(%i!"er/
?'at ro!es "oes a service !ike t'is provi"e for we(*sites,
?'y wo%!" we(*sites participate,
Tra"e promotiona! too!s inc!%"e/
re"%ce" price
a"vertising s%pport
free goo"s
p%s' money
Pu3lic #elations
Can (%i!" awareness an" preference in t'e marketp!ace
repositioning pro"%cts an" "efen"ing t'em.
Too!s inc!%"e/
news
speec'es
events
p%(!ic service activities
Proactive vers%s reactive approac',
Me"ia re!ations
$ea!ing wit' (a" p%(!icity,
Sales
Nee" to "etermine sa!esforce/
o(HectivesF prospecting comm%nicating se!!ing
servicing information gat'ering
strategies/ so!o team
str%ct%re/ territory @si)e 3 s'apeA pro"%ct c%stomer
si)e
compensation/ sa!ary commission (on%s expenses
Persona! se!!ing inc!%"es/
0. prospecting an" :%a!ifying
1. preapproac'/ !earn a(o%t prospect
2. approac'/ greeting
4. presentation/ te!! t'e story
5. overcoming o(Hections
B. c!osing
I. fo!!ow*%p an" maintenance
-mportance of negotiations
Stan"ar"s vers%s f!exi(i!ity
.e!ations'ip management vers%s sing!e transaction
Tec'no!ogies impact on se!!ing, @Know!e"ge of c%stomer 3
C.M 3 f!exi(i!ityA
#elevant Kno&ledge : Wharton 9rticles
Corporate Sponsors'ips of Sta"i%ms an" Ot'er -nstit%tions $onSt +!ways Pay Off
$o Mixe" Emotions an" +"vertising Mix,
T'e Ce!! P'one as Marketing Too!/ ?i!! Cons%mers +nswer t'e Ca!!,
7ow an" ?'en +"vertising ?orks
Tec'no!ogy is C'anging t'e +"vertising &%siness
Pay*for*Performance Tra"e Promotions Can Ease 8riction &etween Man%fact%rers an"
.etai!ers
#ink to "isc%ssion (oar"
.et%rn to Sy!!a(%s

Social Marketing
Social marketing is the planning and implementation of
programs designed to bring about social change using
concepts from commercial marketing.
Among the important marketing concepts are:
The ultimate objective of marketing is to influence
action;
Action is undertaken whenever target audiences
believe that the benefits they receive will be greater
than the costs they incur;
Programs to influence action will be more effective if
they are based on an understanding of the target
audience's own perceptions of the proposed
echange;
Target audiences are seldom uniform in their
perceptions and!or likely responses to marketing
efforts and so should be partitioned into segments;
"arketing efforts must incorporate all of the #$ Ps%#
i.e.:
o &reate an enticing "Product" 'i.e.% the
package of benefits associated with the
desired action(;
o "inimi)e the "Price" the target audience
believes it must pay in the echange;
o "ake the echange and its opportunities
available in "Places" that reach the audience
and fit its lifestyles;
o Promote the echange opportunity with
creativity and through channels and tactics
that maimi)e desired responses;
*ecommended behaviors always have competition
which must be understood and addressed;
The marketplace is constantly changing and so
program effects must be regularly monitored and
management must be prepared to rapidly alter
strategies and tactics.
These key concepts can be abbreviated as follows:
Action is the objective
The target audience is the
focus
The echange is critical
+egment markets
,se all four Ps
Analy)e and beware of
competition
"onitor and be fleible
home about us social marketing success stories
conferences related sites working papers
search employment listings register
Key concepts
Key concepts of importance for %ti!ising market information an" market researc'/
C9SE C7CEP(S
T'e artic!e "isc%sses t'e contin%e" opport%nities t'at exist for no*fri!!s air trave!
a!!owing examination of market segmentation opport%nities an" t'e processes t'at
may (e invo!ve" in gat'ering Aualitative an" Auantitative data on (%siness an"
!eis%re trave!ers. 8%rt'er t'ere is opport%nity to "isc%ss t'e "ifferent research
methodologies t'at co%!" (e emp!oye" an" t'e arg%ments for t'e creation of an
effective marketing information system.
CB9P(E# C7CEP(S
+arketing n/ormation System
T'e system consists of peop!e tec'no!ogy an" processes to gat'er sort ana!yse
an" "isseminate information in a time!y an" acc%rate form for marketing "ecision
makers. -nteresting!y t'e e!ements i"entifie" for a marketing information system are
t'e same as for any ot'er type of management information system. T'e %ni:%eness
of a marketing information system is t'e foc%s on marketing orientate" information.
Developing n/ormation
T'e information re:%ire" (y marketing professiona!s from a marketing information
system as "escri(e" in 8ig%re J.0 on p.20I emp'asi)es interna! company recor"s
marketing inte!!igence an" market researc'. T'e information ana!ysis system
typica!!y "riven (y specia!ist comp%ter tec'no!ogy processes "ata to pro"%ce
meaningf%! an" %sef%! information.
De/ining the +arket
+ market is terme" (y many as a p!ace w'ere (%yers an" se!!ers comm%nicate" in
t'e process of (%ying an" se!!ing goo"s. Tra"itiona!!y t'e p!ace of s%c' exc'anges
wo%!" (e p'ysica! in nat%re (%t "%e to "eve!opments in tec'no!ogy t'e !ocation for
many markets is a!so (ecoming virt%a!.
&ssessing Current +arket Demand
Marketing professiona!s nee" to (e a(!e to assess t'ree aspects of c%rrent market
"eman"/ tota! market "eman"F area market "eman"F an" act%a! sa!es an" market
s'are. T'e meas%rement process is c%rrent!y "riven (y on*!ine marketing "ata(ase
systems w'ic' are "eve!ope" t'ro%g' "e"icate" market assessment organisations or
(y t'e act%a! (%yers an" se!!ers wit'in an in"%stry. T'e gat'ering an" "istri(%tion
of information is now (ecoming more time!y an" responsive "%e to comp%ter
networks an" (%yer3s%pp!ier networks in (ot' cons%mer an" (%siness markets.
)orecasting )uture Demand
Market estimates are nee"e" in or"er to H%"ge f%t%re sa!es an" market potentia! in
co%ntries regions cities an" towns. T'is ena(!es many organisations to a!!ocate
marketing (%"gets more cost effective!y amongst c'osen !ocations.
Key
conc
epts
Key concepts re!evant to !earning/
C9SE C7CEP(S
T'e case !ooks for an app!ication of marketing services to t'e
entertainment in"%stry in partic%!ar m%!ti*screen cinema t'eatres. T'e
specific characteristics of t'e cinema service are in"icate" re:%iring
t'e s%ggestions of a!ternative marketing strategies for t'e %se of
cinema ven%es. ?'i!e t'e case provi"es a =S perspective on t'e
pro(!ems t'ere is certain!y app!ica(i!ity to t'e =K an" !essons t'at
can (e !earnt. -t is important for st%"ents to (e a(!e to "raw %pon t'ese
"istinctions an" per'aps s%ggest strategies for differentiation.
CB9P(E# C7CEP(S
!ature and Characteristics o/ a Service
+ service in t'e context of !earning is :%ite intangi(!e in nat%re (%t
wit' meas%ra(!e o%tcomes from t'e process of service offering. T'e
!earning market re:%ires 'ig' !eve!s of "ifferentiation an"
responsiveness to c'anging nee"s.
+arketing Strategies /or a Service )irm
+n acceptance an" "rive towar"s interactive marketing initiative in
t'e p%rs%it of (ot' responsiveness an" t'e a(i!ity to a"apt. -nteractive
marketing offers a s'ift towar"s more rea! time c'anges in service
marketing.
+anaging Di//erentiation and Change
On*!ine !earning provi"es an i"ea! p!atform for (ot' "ynamic an"
f!%i" approac'es towar"s service "e!ivery. T'e comp!exity of
cy(erspace a!so provi"es an infrastr%ct%re ena(!ing (ot' :%a!ity an"
"ifferentiation.
nternational Services +arketing
T'e g!o(a! comm%nications c'anne! of t'e -nternet offers
%nprece"ente" opport%nities for service marketing initiatives.
Tec'no!ogy "riven service marketing initiative can (e easi!y a"apte"
virt%a!!y rea! time for market segments an" c%!t%ra! "iversity.
Computer +ediated Communications
Marketing services on t'e -nternet nee"s to accept an" 'arness t'e
new mo"es of comm%nications. 7yperme"ia too!s are anticipate" to
ra"ica!!y c'ange c%rrent marketing service initiatives t'ro%g' t'e
mo"e an" spee" of comm%nications.