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157 Cards in this Set
- Front
- Back
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Marketing
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The process of which two or more parties exchange something of value in order to satisfy perceived needs
-Both parties are better off as a result of exchange |
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Key terms:
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Needs, wants, demands, exchange, transaction, customer-perceived value, market, customer, provider, competitor, marketing offering (product), customer satisfaction, quality, relationships.
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1.Needs
2. Wants 3. Demands |
1. States of felt deprivation: social (belonging, affection), Individual (knowledge, self expression)
2. The ways certain needs are expressed in society as shaped by culture and individual personality: described in terms of objects that will satisfy needs. 3. Wants and needs backed up by money: people want products with the most satisfaction and for money |
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4.Exchange
5. Transaction 6. Customer Perceived Value |
4. The act of receiving a desired object from a party by offering something in return.
5. Money or value involved in exchange. Trade between two parties involving at least two things of perceived value, agreed upon conditions and a time and place of agreement. 6. The customers evaluation of the difference between benefits and costs of a marketing offering compared to those of competing offers |
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7. Market
8. Customer 9. Provider |
7. All actual and potential buyer of a product or service
8. People who see and use organisations products, |
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10. competitor
11. marketing offering (product) 12. Customer satisfaction |
10. An organisation that emits identical or similar strategies and products to identical or similar customers
11. Combination of products, services, information or experiences offered to a market to satisfy needs or wants. 12. The extent to which a product reaches a buyers expectations in terms of perceived performance |
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13. quality
14. Relationships |
13. Consistently delivers what is specified or promised to a satisfactory level.
14. - Customer relationship management: process of building and maintaining profitable customer relationships by delivering satisfactory customer value and satisfaction. - Customer-managed relationships: customers utilise modern digital technologies to shape their relationships with brands through interaction with companies and each other. |
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Role of Marketing
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-Achieve organisational objectives
-facilitation -communicate -exchange -value -make profit -satisfy customers -Building and managing relationship between market and organisation -Acts as dialogue between two parties manages demand |
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Marketing Philosophies/Concepts
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-Production,
-Product -Selling -Marketing -Societal, |
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1. Production
2. Product |
1. Consumers: Favour products that are highly available and affordable
Organisation: must improve production and distribution efficiency , mass produce, Useful when: Demand exceeds supply – product cost is too high and production efficiency is needed to reduce it 2. consumers: Favor products that offer the most quality, performance and features Organisations: should focus of making continuous improvements to the product e.g. - quality and performance - bettered what was in market (new and different) - what is diff and superior in our product over others. Useful when: Demand outstrips supply but competitor activity requires a USP (Unique Selling Proposition) |
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3. Selling
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Consumers: will not buy enough products unless..
Organisation: undertakes large scale selling and promotional effort. E.g. unsought goods (blood donation), - Emphasis on advertising, door to door sales Useful when: over capacity of products so try and sell what they have -Assumes customers will like what is purchased |
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4. Marketing
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Achieving organisational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors
E.g understanding needs wants and demands - Takes outside-in perspective (others inside-out), market focused/customer driven, - Balances giving satisfaction with organisational goals - Long lasting relationships Useful when: Supply outstrips demand |
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5. Societal
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Should consider consumers wants, the companies requirements, consumers long run interests and societies long run interests
- Additional to marketing philosophy - Incorporates maintenance /improvements of consumer and society well being Useful when: resource shortages lead to societal concern - Enviro issues lead to resource concerns, long term view. |
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Marketing management process
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process that puts philosophy into practice
- Utilises A.S.D.I. 1. Analysing Marketing Opportunities 2. Selecting Target Market 3. Designing Marketing Strategies 4. Implementation and Control of Plan |
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Need to Plan
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-Makes sense of changing environment
-Need for flexibility = led to resurgence in the process of planning -The best plans = less formal and simple organisational structures that allow flexibility and quick adaptation to market forces. |
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Strategic Planning
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Developing and maintaining a strategic fit between the organisations goals and capabilities and its changing marketing opportunities.
E.g makes sense of changing environment -Need for flexibility is important thus planning -Allows for long term survival |
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Marketing role defined by strategic planning
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Provides input and information to prepare for plan. -Involves adapting the firm to take advantage of opportunities in the changing environment
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Characteristics of plan
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Whether or not an organisation plans depends on:
-Age -Size -Senior management Are either: Formal or Informal -The type of plan depends on the hierarchy |
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Strategic Hierarchy
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Corporate strategy level, Strategic Business Unit (SBU), Functional Level
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1. Corporate Strategy Level
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Involves:
-Mission and Vision: statement of the organisations purpose – what it wants to accomplish in the large environment. – should be marketing oriented – defined in terms that satisfy basic customer needs – meaningful, specific - About customers and their experiences - NOT sales or profits, -Objectives: details supporting objectives for each level of management -hierarchy of objectives -marketing objectives Business portfolio strategy: the collection of businesses and products that make up a company -best kind fits strengths and weaknesses to opportunities in the environment -requires two steps: 1. Analyse current business portfolio and decide which business should receive more, less or no investment. 2.. must shape future portfolio by developing strategies for growth and downsizing. |
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2. Strategic business unit level (SBU)
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The key businesses that make up a company
Involves: -Business definition -objectives -Product market portfolio -competitive strategy -resource allocation and management |
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3. Functional Level of SBU (Marketing Strategy)
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- Marketing Strategy: Marketing objectives, product/markets strategies
- R&D strategies, techniques product development - Production and Opportunity strategies - Finance and Admin Startegies - Human Resources strategies |
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Different Plans
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1. Business Plan 2.Marketing Plan
1.Focus: All functions Focus: Marketing - Customer acquisitions Duration: 3-5 years retention, resources, actions Duration: 1-2 years |
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Marketing plan
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Deciding on marketing strategies that help company achieve overall objectives
Involves: -Executive summary -Analysing Marketing Opportunities: -Current Situation: -Opportunity and Issues Analysis -Corporate & Marketing Objectives: -Marketing Strategies: -Action Programs: -Projected Profit & Loss: -Controls: |
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Analysing Marketing Opportunities:
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-current Situation:market size, growth, competitive structure, product contribution, current sales, prices, margins & profits
-Opporunity and Issues Analysis: Macro & micro environmental analysis. (customer behaviour, needs, perceptions and trends) -SWOT analysis -Main issues to address |
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Marketing strategies
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“how” to achieve the objectives:
-Define the target market -produce positioning strategy -product -price -distribution(place) -communications -required R&D -marketing research requirements |
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Action Programs:
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-Tactics
-elaborate on each market strategy -what, when, who, how much…. |
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Projected profit and loss
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-revenue: forecast sales volume in units and the average prices
-expenses: cost of production, physical distribution and marketing profit: difference between revenues and expenses |
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Controls
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-methods to monitor and evaluate the plans progress
-contingency plans |
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Factors for poor implementation
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-isolated planning
-trade offs between short and long term objectives -resistance to change -lack of integration (often finance and marketing) -overemphasis on the document |
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Factors for Successful Implementation
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-The action program: specific details needed to put the plan into action
-organisational structure: -simple, flexible structures allow for ready adaptation, more informal -decision and rewards systems -human resource planning: required skills, motivation and personal characteristics -fit with company culture |
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Marketing Ethics & Social Responsibility
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Ethics: Moral standards that guide marketing decisions and actions,
Responsibility: concerns an organisations obligation to improve its positive effects on society and reduce it’s negative effects –Trade off -E.g. marketing to children, x-rated videos, alcohol, credit, either self imposed or government imposed |
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Ethics
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Law: is it legal
Code of Conduct: is it within the Organisations.industries rules Ethics (organisational or individual) |
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AMSRS
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Australian Marketing and Social Research Society
– governing body for marketing |
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Ethics Three Rules of Thumb
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1. Golden Rule: do unto others
2. Professional Ethic: how would colleagues view action 3. T.V Test: could explain this to audience on t.v |
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Efforts to regulate marketing
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1. Consumerism
2. Environmentalism 3. Public Actions |
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1. Consumerism
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- Organised movement who's aim is to improve the rights and power of buyers in relation to sellers, ingredient labelling, date labelling, nutritional labelling etc,
-consumers have right and responsibility of protecting selves -CONSUMER RIGHTS: 1. Be safe, 2. Be informed, 3. Be heard, 4. To choose -RIGHTS OF PROVIDER(SELLER): 1. Produce what you want (seize, style) 2. Charge what you want (as long as does not discriminate) 3. Promote the product how you want (budget to spend want you wan, messages to communicate how you want- as long as not misleading, incentives to use what you want as long as not misleading |
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2. Environmentalism
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Concerned citizens & gov. who seek to protect, improve and sustain the environment we live in.
-concerned with damage to ecosystem caused by: mining, forest depletion, acid rain, zone layer damage, litter, waste disposal, pollution, chemically treated food -encourage more care in businesses towards the environment and general quality of life |
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3. PUBLIC ACTIONS
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Often lead to legislative proposals
-modification, rejection or acceptance of bills -laws effect most marketing decisions: e.g. competitive relations, products, prices, promotion, channels of distribution |
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Marketing Management Process/Plan
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Analysing Marketing opportunities:
-Marketing Environment: Industry definition/Scope (tree diagram), competitor overview, MICRO, MACRO -Consumer Behaviour Analysis -Research: Marketing Research-internal/external data, defining problem, develop research plan, implement research plan, interpreting and reporting the findings Selecting target markets: -Segmentation:select base, build profile for each segment, evaluate segment, select target, develop positioning strategy, marketing mix(4P’s) Designing marketing strategies: 4p’s -Product: -services -new product development -pricing -promotion -IMC(communications) –advertising, PR -selling: personal etc. -Place: channels , logistics Implementation and control of the plan: -not focused on here but explain how it would achieve objectives |
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Analysing Marketing Opportunities:
Marketing Environment |
Environment effects organisations and management’s ability to make good strategic decisions.
-broader environment is bounded by the scope of how the industry is defined and poses opportunities and threats -Shapes and influences behaviour of: investment decisions and strategies made by organisations and the behaviours, needs, wants and expectations of customers -Organisations must analyse and respond to the environment to ensure ongoing success |
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Defining Industry Scope
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What to focus on
E.g. what is the extent of this environment (how far do we investigate), who are the competitors (Maccas),what business are we in -Tree diagrams help: -Find aspects of industry that are close together, -which parts belong together, -displays both broad and narrow -understands the scope of the report. |
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Marketing Environment
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Poses opportunities and threats
-Use marketing Intelligence system to watch for changes -strategies must be developed or adapted in response to the changes e.g. target market or 4p’s -Two environments: Micro (SIP-CCC), Macro (DENT-PC) |
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Micro-Environment
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Actors
-actors close to organisation that affect it’s ability to serve its customers to the expected level. -Utilises SIP-CCC: Suppliers, Intermediaries, Publics, Company, Competitors, Customers |
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1.S
2. I 3. P |
1. Suppliers – provide resources to organisation; look out for supply availability, shortages, delays, possible strikes, prices/price trends of supplies (can effect sales prices of organisation)
2. Intermediaries – help promote, sell and distribute goods to final buyers. E.g.Resellers, Physical Distribution Firms, Marketing Services agencies, Financial Intermediaries 3. Publics – any groups that has actual or potential interest in or impact on organisations ability to achieve objectives. E.g. financial, media, government, citizen-action, local, general , internal |
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4. C
5. C 6.C |
4. Competitors – organisation must provide greater customer value and satisfaction than its competitors – each marketer should consider own size and industry position compared to competitors
5. Company – senior management sets mission, objectives, broad strategies and policies; marketing managers must make decisions within those plans 6. Customers- e.g. consumer markets, business, reseller, government, international |
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Macro – Environment
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Forces
-These forces must be strategically responded to by marketing mangers in order to take advantage of opportunities and minimising threats. -Utilises 6 forces in form of DENT PC |
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1. D
2. E 3. N |
1. Demographic trends e.g. age, family structures (average number), education, geographic shifts, population, location, gender, race, occupation,
2. Economic trends, e.g. changes in income, consumer spending patterns, economic development 3. Natural e.g. areas of concern in natural environment, energy costs, government interventions, increades pollution, shortage of raw materials |
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4.T
5. P 6. C |
4.Technological: e.g. increased regulation, focus on minor improvements, faster pace of change, high R & D budgets
5. Political: e.g legislations, enforcements, greater concern for ethics, 6. Cultural: tend to be enduring, affects society’s basic values, perceptions, preferences and behaviours, e.g. expressed in views of themselves(me), view of others (we), view of organisations(orgs. Need to find new ways to win consumer confidence), there are subcultures e.g. groups of people with shared value systems based on common life experiences or situations who share beliefs, preferences and behaviour, e.g. Catholics, teens, working women, Emos etc |
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Responding strategically to environmental (micro & macro) factors
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USE MARKETING MIX (4P’S)
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Consumers
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Macro environmental analysis involves understanding customers such as Consumer Behaviour.
-This research is usually done to discover: What (they buy), WHO (buys), HOW (they buy), WHEN AND WHERE( they buy) and WHY. |
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Consumer Market
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Individuals and households who buy or acquire goods and services for personal consumption.
-Important to understand how they behave in order to meet and exceed expectations |
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Consumer Decision Making Process
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five stages;
-need recognition -information search, -evaluation of alternatives -purchase, post-purchase evaluation. Each stage is influenced by many internal and external factors. |
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1. Need recognition
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Perceived difference between an actual and desired state
E.g. out of stock (finished toilet paper) -dissatisfaction (with product) -new needs/wants(have a child, going on date) -related products.purchases (camera lense, work appropriate clothing) -market induced problem recognition (mothers day, valentines day) -new products on market (mp3 care stereo as opposed to tape) |
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2. Information Search
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searching for info on ways to solve problem
-can use personal sources (they legitimise and evaluate the need) -internal and external searches e.g. personal experiences, personal sources, marketer-controlled sources, public sources. |
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3. Evaluation of alternatives
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comparison of attributes and benefits of alternatives, -Attributes used to compare are often:
-objective e.g. prices, warrantee, features, performance etc, -or subjective e.g. style, appearance, image etc. . -Consumers view is important: products are sets of consequences or outcomes: -functional consequences e.g. concrete, -tangible outcomes -or psychological consequences e.g. abstract and subjective. |
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4. Purchase decision
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buyer actually decides to exchange value with seller (buys good or service)
-influenced by immediate attitudes of important personal sources (causes last minute change of mind), -also influenced by Situational factors e.g. competing offers of value, sales person may not close sale correctly - emotional and functional factors |
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5. Post – Purchase Dissonance
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cognitive dissonance; were expectations met (difference between what was sought and expected, and what was delivered), re-evaluation of value, self evaluation of involvement in the process
-Outcomes of post-exchange evaluation; stored in memory, forms attitudes and beliefs, word of mouth. |
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Influencing Factors
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There are two Internal and External, all part of the Consumer Decision Process (CDP/CMP)
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Internal
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Psychological & Personal
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1. Psychological
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-Motivations (need that the person is seeking satisfaction for, e.g. Maslows Hierarchy)
-Perception (way people select, organise and interpret info to form meaningful picture of world, -Learning and habit(learning, memory, habit, e.g. previous experiences with product teaches them to buy it in future), - beliefs and attitudes e.g. belief or attitude about a particular product either from experience of what they have heard (marketer may want to launch campaign to change these beliefs) |
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2. Personal
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-lifestyle (hobbies, work, social events, views on self etc.)
-personality & self-concept (effects brand choice such as how they see the brand in relation to themselves e.g. cool young people buy macs) -Demographics (location, religions, gender, education, occupation(tradies buy trades clothing, business men buy suits) -income (effects what people buy due to price) -age-different interests and tastes( boomers, xers, gen y, gen z), -household size-(how many, what type (single parent etc), -family life cycle-(children still at home new, baby in house etc.)) |
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External Influences
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four types of influences:
-Social -Cultural -Environmental (micro and macro) -marketing programs |
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1. Social
2. Cultural |
1. Social: Family, friends, peer (&reference) groups, social networks, opinion leaders
2. Cultural: -culture: basic cause of wants and needs -cultural (sub-)group: must tailor to needs of these different groups -Social class: hierarchy etc, not greatest basis for developing marketing strategy |
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3. Environmental influences
4. Marketing programs |
3. This includes macro and micro environmental factors
4. We control this: communication in terms of television, print, radio etc. also range of products, rate at which they change (winter collection, summer collection), price and brand |
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Consumer Buying Roles
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Five roles:
-Initiator -Influencer -Decide -Buyer -User. |
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Marketing Research
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important in order to produce superior value and satisfaction and develop strategic plans.
-They need information on: -the customers -macro and micro environment (end-users, resellers, competitors, other forces in market) -government regulations |
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MIS
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Marketing Information Systems
-procedures for assessing information needs, developing the needed information, and helping decision makers to use the information to generate and validate actionable customer and market insights. -helps managers make better decisions by distributing the right info in the right form and time. -two parts: Assessing Information Needs & Developing Marketing Information |
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1. Assessing Information Needs
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MIS must balance the information manager would like to have against what is needed and feasible to offer.
Done by: -interviewing managers about what they need -finding what decisions need to be made -Asking what information a manager receives regularly –too much or too little info can be harmful to decision makers |
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2. Developing Marketing Information:
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Marketers can get information using:
-Internal data, competitive marketing intelligence, Analysing and using marketing information, marketing research -: -: formal study – gains insight for specific marketing situations and decisions. – systematic design, collection, analysis and reporting. used to identify and define marketing o's & problems, generate, refine and evaluate marketing actions, monitor marketing performance, improve |
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1. internal data
2. competitive marketing Intelligence |
1. records, info within company,existing data, cheaper, used to evaluate performance or detect opportunities/problems
2.publicly available info on marketing environment and competitors, systematic collection, analysis & distribution of info, provides early warnings about o/t’s |
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3. Analysing and using marketing information
4. marketing research |
3. further analysis may be required before distributing information
– customer relationship management (crm)used to manage detailed info about customers & managing interaction between customers and company (e.g. purchases or website visits) to maximise loyalty) 4. formal study – gains insight for specific marketing situations and decisions. – systematic design, collection, analysis and reporting -used to identify and define marketing opps and problems, generate, refine and evaluate marketing actions, monitor marketing performance, improve understanding of marketing process.e.g. understanding customers, developing product, communicating, distribution. |
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Marketing Research Process
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Define Problem, Developing Research plan, Implementing the research plan, Interpreting and Reporting the findings
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1. Defining the problem
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Define problem and agree on research objectives.
- Hardest step – know something is wrong without knowing cause. -Three types of MR objectives: Exploratory, Descriptive, Casual -1. Exploratory Research, 2. Descriptive Research, 3. Casual Research: 1. Gather preliminary info that will help define problem and suggest hypotheses, 2. Describe things/situation, e.g. potential for markets customer attitudes 3. Test hypotheses about cause and effect relationships |
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2. Developing Research plan
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Researchers must determine exact info needed, develop plan for gathering it efficiently, present plan to management.
-Uses Primary & Secondary data -1. Primary Data 2. Secondary Data: 1. Data collected on hand – uses Qualitative (small number of people in interviews or focus groups – in depth info on topic) and Quantitative (lots of people-uses statistics tools to analyse data to interpret averages, correlations and relationships). 2. Pre-existing information collected for previous purposes. Must be evaluated to ensure relevance, accurate (reliably collected & reported), current and impartial (objectively collected and reported), external secondary data includes:government publications, periodicals and books, commercial data etc.-consider speed, cost and process -If information does not exist in secondary, then must use primary |
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Implementing Research Plan
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Collecting, processing and analysing information
-must be carried out by MR staff or outside agency, -most expensive stage (data collection) and most prone to error, must be analysed and have precautionary measures in place to ensure accuracy and complete. |
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4. Interpreting and Reporting findings
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Interpret findings, draw conclusions and report them to management
-Must include marketing managers in process so they can help interpret data due to their knowledge of the problem and decisions needing to be made. –Must guard against biased interpretations – research is meaningless if manager accepts wrong interpretations |
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Ethics in Market Research
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When properly used, MR benefits both company and customers, but if misused it can abuse and annoy customers.
-Intrustions on Consumer Privacy & Mis-use of research findings -1. Intrusions on consumer privacy:Worry about large amounts of personal info the company may have about them, become resentful and increase privacy legislation 2.Misuse of Research findings: Stretching the truth,= can be misleading, misinterpreting findings. |
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SELECTING TARGET MARKETS:
Marketing Options for organisations |
Mass marketing (like production philosophy-mass produces, distributes and promotes one product to all buyers)
-Product variety marketing (like product philosophy-produces two or more products with different features, styles, quality, sizes etc) -Target marketing (like marketing philosophy-identifies market segments, selects one or more of then, develops products (and marketing mixes) tailored to each) |
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Target Marketing
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organisations understand they cannot appeal to all buyers in the same way because
– consumers are numerous, too widely scattered and varied in their needs and buying practices – different companies vary widely in their ability to serve different segments of the market. -Must identify parts of market can serve best. |
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Market Segmentation
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dividing a market into smaller groups of people
- the process that groups or links individuals according to similarities in needs/wants.characteristics/behaviour – “market segment” = group of potential buyers (share similarities, require separate/uniqe products, likely to respond similarly to set of marketing strategies (4 or 7 p’s)- |
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Benefits of market segmentation
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Helps design effective marketing program for reaching groups of buyers
- identifies opportunities for new product development, - improves allocation of marketing resources, powerful tool enabling competitive advantage and allocating resources |
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Market Segmentation process
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4 Stages:
1. Define the industry/market (what is the scope or market boundary?), 2. Segment the market 3. Target a segment/s 4. Position the offer -Segmentation focuses mainly on stages 2, 3, & 4. However 1 is important -6 steps within stages 2, 3 & 4. |
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Segmentation Steps
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1. Identify bases for segmenting the market
2. Develop profiles of resulting segments 3. Develop measures of segment attractiveness 4. Select the target segments 5. Develop positioning for each target segments 6. Develop marketing mix for each target segment. |
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Stage 2: Segment the Market
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Steps 1 & 2 : Identify bases for segmenting & develop profiles of resulting segments
-1. Bases include: -Geographic :Nations, Regions, States, Municipalities, Cities, Neighbourhoods, City/town size, Population Density, Climate. -Demographic: Ages, Gender, Family size, Family life cycle, Income, Occupation, Education Nationality, Religion. -Behavioural: Purchase occasions, Benefits sought, User status, Usage rate, Loyalty tatus, Readiness stage, Attitude to product (positive/negative) -Psychographic: Socioeconomic status, Personality Characteristics, VALS(Values, Attiitude, Lifestyle) -2. Must be created – Good marketer can Identify people in their target market |
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Requirements for effective segmentation
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-Measurable (size, purchasing power and profiles can be measured)
Accessible (segments can be effectively reached and served) -Substantial(segments are large or profitable enough to serve) -Differentiable (segments conceptually distinguishable and respond differently to different marketing mix elements and programs) -Actionable (effective programs can be designed for attracting and serving segments) -PEOPLE SHOULD ONLY FIT INTO ONE SEGMENT |
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Stage 3: Target a segment
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steps 3& 4 – Evaluate each segment & Select Desired Segments to target
-3. Measure Attractiveness of each Segment, select most attractive segment(s): 1. Size & growth, 2. Structural attraxtiveness (competition related – less competition the better), 3. Organisational objectives and resources. -4. After evaluating different segments you can find one or more segments worth serving |
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Stage 4:Position the offer
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Steps 5&6 – Develop a positioning strategy & Implement position by the marketing mix
-5. Product position is: the way the products is defined by customers on important attributes – the place the product occupies in consumers’ minds relative to competing products – attempts to differentiate the offer from its competitors on attributes or benefits considered important by a target market = most appealing to them -advantage because: product ladder: people remember 7 brands, if higher rung means higher market share -differentiates -can be done by: Product (features, performance, style, design,) Service (services which accompany the product e.g. speed convenience, delivery etc) -Channels (coverage, expertise, performance or channel) -People(hiring, training) -Image (conveys products benefits – symbols, logos etc.) -Implementing a positioning strategy: requires perceptual map/axis - identifies factors that differentiates brands e.g. department stores etc |
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step 6
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6. Positioning strategy dictates all subsequent marketing strategies.4/7P’s , most important P, Marketing mix cannot be developed until Positioning strategy has been developed.
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DESIGNING MARKETING STRATEGIES:
4/7P’s |
4 P’s USED FOR PRODUCTS: Product, Price, Place, Promotion
7 P’s USED FOR SERVICE: Product, Promotion, Place, Price, People, Process Management, Physical evidence |
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Product
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Anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need.- complex as can vary on product level, type and managerial decisions
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Classification for product
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- Consumer products (purchased for their own consumption)
- Business-t-business products(bought for further processing for use in conducting business), -Event marketing (special event e.g. Olympics, sporting events e.g. afl, ambush marketing) - Person marketing (live performances, celebrities) - Political marketing (politicians, parties) - Cause & cause related marketing (promoting idea or social cause e.g. smoking causes cancer, cause-related marketing e.g. organisation donates part of profit to charity) -Non-for profit marketing (not motivated by profit, leads to donations/contributions/bequests) -Experiences marketing (destinations, entertainment, activities) |
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Services
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Intangible: interaction does not result in the ownership of anything enduring e.g. holiday package.
- Intangible = cannot be seen, taste, felt experienced etc. before purchase. - Typically high involvement and personal -characteristics of services: - Intangibility, variability, inseparability (synchronous delivery and consumption), perishability, ownership - Carry unique characteristics and require unique marketing strategies |
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Product Level
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-Core: what they are literally receiving e.g. water quenching thirst
- Actual: water in shaped bottle with label -Augmented: service – happy/unhappy |
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PRODUCT DECISIONS
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Product and Service decisions are Made at three levels: -Individual product decisions
-Product line decisions -Product mix decisions –Most important are Individual and New product |
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1. Individual Product decisions
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Product levels,
Individual product decisions : -Product attributes: branding, packaging, labeling, product support services – Product attributes: quality-it’s ability to satisfy stated or implied customer needs, product features and product style and design -Branding: name, term, sign, symbol, design- consumers attach meaning and develop relationships with brands -Packaging: activities designing and producing container or wrapper for a product - good–packaging can create immediate consumer recognition of brand -Labeling: should identify product or brand and might describe product – label should help promote brand -Product support services: support services/customer service – ensure after-sale care to build lasting relationships |
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2. Product Line decisions
3. Product mix |
2. A group of products closely related because they function in a similar manner, sold to same customer groups, marketed through same types of outlets or fall within given price ranges.
3. Set of product line and items that a particular seller offers for sale |
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4. New product
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Those which company builds through its own research and development efforts
E.g. New to world (inventions/original products), new category entries (new to firm), new brands (line extensions), product improvements and modifications, repositioning (re-targeted for new use, application or user), variations. -How to get new products: Acquisition(buying whole company or producing anothers product under license.), developing new products . -Success & failure: people want and expect new and improved products, improving effectiveness of new product gives greatest potential for improving profit - new product failure rate = high |
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Success & Failure of Product
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Success: Determine what successful products have in common, develop superior product, well defined product concept, supply adequate budget, gain commitment from top management, understand market, consumers and competitors- to guard against high product failure use:New product development process
-Failure: Top executive pushes favourite idea, over-estimation of market size, poorly designed product, poorly positioned in market, higher than expected costs, competitor retaliation,poor market research, no clear benefit. |
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Product Life Cycle (PLC)
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Used to manage launched product
-Useful framework for describing how products and markets work –Helps manage product as it progresses through stages or its life-cycle by developing good strategies for each stage Cautions when using PLC: -difficult to forecast sales level, the length of each stage and the shape of PLC curve –Using PLC for forecasting product performance becomes problematic |
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PRICING:
Price |
Amount of money charged for product
- can be changed due to: - costs and demand -stage of the product life cycle -Buyers and situations. |
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Approaches to Pricing
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-Cost based pricing
-Value-based pricing -Competitor-based pricing -Relationship pricing |
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1. Cost-Based Pricing
2. Value-based pricing |
Uses two methods :
-Cost-plus pricing e.g. mark up pricing, adds standard mark-up to cost of product -Breakeven pricing e.g target profit pricing, setting price to break even on the costs of making and distributing it, adds target profits 2. Uses customers perception of value rather than the sellers cost, as as basis or pricing e.g. designer perfume, luxury cars, price is set to match perceived value in buyers minds, |
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3. Competition-based pricing
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Based on competitors prices:
Three types: -Economic value pricing: Equitment purchases are evaluated over their economic lives and comparisons between competitors go beyond straight price assessment -Going-rate pricing: company bases price largely on Competitors prices with less attention paid to own costs or demand -Sealed-bid pricing: based on how it thinks competitors will price rather than own costs or demand-often requires pricing less than other companies |
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4. Relationship pricing
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Three types of relationships:
1- special relationship: they share one, but no change in price 2- enrichment:price is established as a function of the enrichment the customer sees 3- shared risk and reward: price is replaced by a sharing arrangement based on the value provided in the enrichment chain |
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New Product Pricing Strategies
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Market-Penetration pricing, Market skimming pricing
-1. Market- Penetration pricing: Setting a low price for a new product in order to attract a large number of buyers and a large market share -2. Market Skimming Setting a high price for a new product. The company makes few but more profitable sales. |
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Factors Affecting pricing decisions
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Internal & External factors
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Internal factors
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Marketing objectives:
Focus on target market: Take into account survival, current profit maximisation, market share leader ship, product quality leadership -Marketing mix strategy: Price of making product should show how much to price it(choose price after manufacturing), - price of product shows how much to make it at (by setting price before manufacturing you can stay within costs given), Costs: consider variable costs –vary with production level(e.g. raw materials, packaging, transportation etc.), -fixed costs-do not vary with production level(e.g. rent. Heating, loan etc), production levels, experience curve , -organisational considerations: who should be setting price-top management(smaller companies) -divisional or product line manager(larger companies, -salespeople (industrial markets and within price range), -Pricing department: -pricing is key factor e.g. airlines, cars), -influencers (sale manager, production manager, finance manager) |
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External influences
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Nature of market: -pure competition; going rate pricing is the rule,
-monopolistic competition; products can be differentiated -oligopolistic competition; few seller each sensitive to the others pricing and marketing strategies -pure monopoly; pricing depends on whether the single seller is government or private regulated monopoly, |
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External influences continued
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-Consumer perceptions of price and value: set price according to what buyers will pay
-Nature of demand: set price according to demand for product-higher demand=higher price -Demand curve (shape)-price elasticity = sensitive to demand price(elastic demand =very price sensitive, inelastic demand = less price sensitive) -Competitors prices and offers (consider its competitiors – what are the competing prices, how are competition likely to react to our prices, pricing decision may effect who competitors will be), other external factors (social concers –broader societal considerations, economic conditions – inflation, recession, boom, likely reaction of reselelers –provide fair profit margin to fgain their support, likely reaction of government-within laws and policies) |
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Promotion:
INTEGRATED MARKETING COMMUNICATIONS (IMC) |
integration of a company’s many communications channels to deliver a clear consistent and compelling message about the organisation and its brands
– interact with market in a coordinated, integrated manner -gain synergy from used media -uses blend of elements to meet objectives |
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Elements/Tools used to communicate
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-Advertising
-Public Relations/Publicity -Sales Promotion, Direct & Digital marketing -Personal selling -Sponsorships |
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Decisions in Developing IMC
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Eight: 1.Identify Target Audience 2.Determine the response sought 3.Selecting a message 4.Selecting the media 5.Selecting the message source 6.Collecting feedback 7.Setting the budget 8.Setting promotional Mix
1.Identify Target Audience: Affects all communications decisions 2.Determine the response sought (objectives): The 6 buyer readiness states 3.Selecting a message: -Rational appeals; show product quality-value-benefits, -Emotional appeals; fear-guilt-shame-love -Moral appeals; sense of right/wrong e.g environment -Message Structure; -closure;only certain people understand -one/two sided; why product is best -first/last -Message format; people, colours, words, gestures 4. Selecting the Media (personal or non-personal communication channels |
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Decisions continued
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5. Selecting the message source: credibility (expert, trustworthy, likeable)
6. Collecting feedback: gauge effect on audience 7. Setting the budget: affordable, percentage or sales, competitive parity, objective & task methods 8. Setting Promotional Mix |
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Promotional Mix
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- Advertising
- Public Relations |
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Advertising
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Any paid form of non-personal presentation and promotion of ideas, goods or services by and identified sponsor.
-4 decisions made for advertising: 1.determine objective, 2. set budget, 3. develop strategy(message and media), 4. Evaluate |
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3. Develop Strategy (Message & Media)
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i) The message ii) The Media
i) Message: a) Message Strategy (what is general message) To gain and hold attention the message should: -follow on from positioning strategy -get consumers thinking or reacting in a certain way, -identify customers benefits suitable for use as an ‘appeal’, -The big idea: creative concept -simple message is best -Utilises USP (Unique Selling Proposition) the key feature or benefit used to drive differentiation in the mind of consumer b) Message Execution(how it is said): how appeal is brought to life, -Several execution styles: scientific evidence, testimonial evidence, sof life, lifestyle, fantasy, mood/image, musical, personality symbol, technical expertise, dramatization, demonstration. |
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Develop Strategy continued
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ii) Media Decisions: Advertiser chooses the media to carry the message
-Four major steps : 1. Deciding on reach, frequency and impact, 2. Selecting major media types 3. Selecting specific media vehicles, deciding on media timing |
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4.Evaluating Advertising
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-Advertising pre-testing:
-direct rating –consumer panel rates advertisements, portfolio tests ( consumers watch several ads then recall), laboratory tests (physiological reactions) -Advertising post-testing: -recall tests (tests power of ad to be noticed and retained) -recognition tests (tests impact) -measuring the results of advertising expenditure remains inexact e.g. what sales result from an ad that increases brand awareness by 20% and brand preference by 10% |
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Advantages & Disadvantages
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Advantages:
-Public nature suggests legitimacy, -Can repeat –consumers can compare brands, -Expressive –Can be creative -Large reach –Lost cost per exposure Disadvantages: -Expensive – now represented about 25% of IMC budget, -Impersonal – less persuasive than personal selling, -Asynchronous communication – one way. |
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Promotion Mix:
Public Relations: |
builds good relations with the company’s various publics by obtaining favourable publicity, building up a good corporate image and handling or heading off unfavourable rumours, stories and events.
Publicity: fits within the broader PR term – most powerful form – promote a company or its products by obtaining coverage in media not paid for by the sponsor. –highly credible and believable |
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PR Tools
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seeks to influence opinions and beliefs held by customers and stakeholders using:
-Press relations -Product publicity –press release -Public affairs - promotes understanding of firm-building relations -Lobbying-to promote or defeat legislation -Investor relations-shareholder and financial institutions relations -Development-gaining support from donors or members of NGO’s -Counselling –advising management about issues-image-position -This is all achieved via: News, speeches, special events, written materials, audiovisual materials, corporate identity materials, community service activities. |
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Advantages & Disadvantages
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Advantages:
-strong impact on public awareness -low cost per exposure -highest credibility – results can be spectacular, -Disadvantages: -difficult to manage -limited and scattered use -no control, can be in conflict with marketers instead of working together |
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Promotional Mix:
Personal Selling |
Oldest form
-Two way personal communications between sales people and individual customers -used in complex selling situations -Best when product: -has high value -is custom made -Technically complex -few customers -consumers are concentrated -Can be done : face to face, telephone, video conferences, other means -People doing the selling: Salespeople, sales representatives, accounts executives/representatives, sales consultants/engineers, agents, district managers, marketing representatives |
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Good sales people
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-Intrinsic motivation
-disciplined work style -ability to close a sale -ability to build relationships with customer Best are: -Empathetic -patient -caring -responsive -good listeners -honest |
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Decision around selling function
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-How to make a sale (the process):
-prospecting -pre-approach -approach -handling objections -closing -follow up, -Managing the sale function: -who to hire -how to delegate tasks -how to rewards staff |
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Promotional Mix:
Sales Promotion |
Buy now
–short term incentives to encourage purchase or sale of a product -direct inducement that offers extra value to the sales force or ultimate consumers to create an immediate sale -covers a range of incentives that are used with products promoted via either mass media advertising or by direct and online methods Best when: -product has low value -standardised -simple to understand -has many customers -customers are geographically dispersed -More of IMC budget assigned to it than advertising |
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Sales Promo continued
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Tools:
-Samples: in-store, through mail, magazines, -Redeemable coupons: get a product or discount next purchase -Cash-back offers, refunds, rebates- need proof of purchase -Cents-off deal: discounts or two for one deals, -Premiums: free gits -Advertising specialties: novelty items for special events e.g. key ring, patronage rewards (loyalty programs),cash, merchandise etc. -Point of purchases promotions: include themes, contests and games- win a prize by luck or skill -Objectives: -Entice consumers to try a new product or brand -lure consumers away from competitors products or brands -get consumers to load up n a mature product -hold and reward loyal customers -Decisions: -size of incentive -conditions for participation -how to promote and distribute the program -the length of the promotion -sales promotion budgeting -evaluation: measure return on investment |
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Trade Sales Promotion
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trade or business to business promotion:
-directing promotions to wholesalers and retailers -organised by sales and key account managers -more money spent on these than consumer promotions |
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Tools
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-prize/contests: best merch display, highest sales level,
-allowances: for advertising displays, free goods –reward for buying in large quantity – or carrying range, -push money: cash or incentives to push the mfrs product, -conventions/trade shows –shade exhibitions |
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Promotional Mix:
Direct Marketing |
(personal) and online: involve techniques that use mass and targeted media to create a direct response from customers
-direct = techniques used to get customers to make a purchase from their home, office or non retail setting. -media and techniques: -mail = direct mail and catalogs -telephone = telemarketing and telesales and sms, -radio, tv and press=direct response advertising and interactive tv -internet and email = electronic interactive marketing Entails: -prospects who interact to with the organisation become part of the database -interacting with known customers and channel members -one to one basis mostly in real time, helps maintain value laden relationships, generates measurable response using electronic network tools and technologies. |
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Promotional mix:
Sponsorships |
Enhance a company, product or brands visibility by associating it with something the market sees as positive.
– events and sponsorship = good relationship building tools that can emotionally blind customers to a company or brand -This includes: people with cultural, sporting or educational importance, cultural and sporting events, charities and causes. |
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New forms of IMC
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Viral advertising, permission marketing, ambient advertising, product placement
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Socially responsible communications
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Growing legal and ethical issues due to unfortunate abuses
– laws and regulations formed to protect consumers --This governs : -advertising: no false or deceptive, no bat and switch, -Personal selling: must not lie = match advertising claims,-cooling off (for home purchases), no bribes or trade secrets or disparage competition (if it is untrue), -Direct Marketing activities: irritation,unfairness, deception and fraud (AMA), invasion of privacy e.g. cross- referencing data (personal information is interconnected and used without permission, access to lists)-unwanted mail e(spamming unsolicited emaul to many peopleto make a sale. |
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DESIGNING MARKETING STRATEGIES:
Marketing Mix |
4/7P’s –Price, Product, promotion, placement, People, Process, Physical evidence
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Placement
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getting the right product, to the right place, at the right time, in the right quantity
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Marketing Logistics Network
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efficiently and effectively making and getting products to end users
Physical distribution: -involves: -planning -implementing and controlling physical flow of materials and final goods from points of origin to points of use to meet the needs of customers at a profit marketing channels: network of interdependent organisations –Intermediaries: involved in the process of making goods and services available for use or consumption |
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Marketing channels
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Why use intermediaries:
- suppliers lack financial resources to carry out direct marketing or customers want personal interaction –producer who can afford own channels can get more money by increasing their investment in their main business-through their contacts, experience, specialisation and scale of operation -intermediaries usually offer a producer or supplier more than it can achieve on it’s own |
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The Ideal marketing channel
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consists of dissimilar firms that have branded together,
-each are dependent on the others -individual success depends on channel success(working together to understand their roles and coordinate goals and activities as well as cooperate to attain overall channel goal) -however things go wrong when they disagree about goals and roles |
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Channel functions
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all must be performed:
– information: gathering & distributing MR and Intelligence -promotion: developing and spreading communications about an offer -contact: finding and communicating with prospective buyers -matching: shaping and fitting offer to buyers needs such as manufacturing, grading, assembling and packaging -negotiating: reaching agreement on price and others terms of the offer so that ownership and possession can be transferred -physical distribution: transporation and storing of goods -financing: acquiring and using funds to cover the costs of the channel work -risk taking: assuming the risks of carrying out the channel work -basic channel strategies: is intensive, selective, exclusive |
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continued
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-intensive: making your produce available in every possible location that a product like that could be bought e.g. milk
-selective: making your product slightly less available, but still where a consumer might wish to buy it e.g. specialty stores -exclusive: making your product available only through exclusive outlets e.g. designer clothes bmw |
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Types of marketing channels
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-conventional: manufacturer, wholesaler, retailer , consumer
-vertical:manufacturer wholesaler, retailer,. Consumer Vertical = more control |
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Wholesaling
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includes all activities involved in selling goods and services to those buying for resale or business use
-perform one or more of these functions: -selling & promoting -buying & assortment building -bulk breaking -warehousing -transportation -financing -risk bearing -market information -management services and advice |
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Retailing
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selling goods or services directly to final consumers for their personal, non-business use
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retailing decisions
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target market and positioning of store
- organisational approach: control of outlet-type of store(cbd, strip, shopping centres) -marketing mix decisions: amount of service (self, limited, full), product lines(product assortment, depth), relative prices(regular, discount, offprice, catalogue showrooms), -advertising, pr, website, sales, staff(train re customer complaints handling), -atmosphere –the retail experience branding, -location product line sold: retailers can be classified by the length and breadth(how many different items we carry) of their product assortments -specialty stores, combination stores, department stores, spermarkets, continence stores, mass merchants, superstores, hypermarkets,service businesses |
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example
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control of outlet-corporate chains (e.g. bunnings, amcal, just jeans, dick smith, david jones), voluntary chains and retailer coopoeratives(e.g. goodfellows iga, mitre 10), franchise organisations(e.g. maccas, vip gardening, bp perol stations), merchandising conglomerateS(e.g. coles, woolworths)
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Location
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depends on"
- favourable labour climate -proximity to suppliars and resources -proximity to the parent company’s facilities, -transportation costs -ocation of competitors -site-specific factors |
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Retailing Trends
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-Future growth avenues: natural expansion with a growing population is not longer possible
-increasing competition = can only grow through increasing market share -technologies to remain competitive: -improved forecasting -inventory management -orders/payment methods -communications -RFID -IN-STORE WEB-STYLE TECHNOOGIES: touch screen kiosks, self scanning etc.) -shorter life cycle:reach maturity quickly, growth of e-retailing and interactive home sopping -new combinations: fuel/convenience e.g. bp, supermarket/fuel e.g. safeway/coles, department/pharmacy |
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Logistics
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adds value to customers
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Important because
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-good inventory control =satisfied customer demand,
-availability/accessibility=source of competitive advantage -logistics can be up to 40% produce costs = efficient reduces prices -convenience =important in time poor society, 36% shopper will abandon total store purchase if something is out of stock -good logistics =good service/value for customers -GOOD FOR PRODUCERS: -retailers stock 2.5 days of stock on shelf making variations in demand problematic -harder to change logistics than price or promotion -reduces uncertainty about inventory -warehousing and transport -includes physical deliver of goods (transport) -represent up to 40% of produce costs = efficiency reduces costs -inventory -warehousing,CREATES VALUE! -Adds value & costs: requires tradeoff between provision of optimal service levels and optimal profit, represents up to 40% of total product costs(to wrap, bundle, load, unload, sort, reload, transport), adds value with: inventory, warehousing, transport, information, |
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Inventory
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needed because of:
-production economies -seasonality -production process -contingencies -transport savings -info to determine customer demand -high inventory levels=increased customer service levels but increased cost to organisation |
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Warehousing
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decisions:
-ownership: owned or outsourced -number of warehouses -location of warehouses -info helps determine location -more warehouses closer to customers: increased customer service levels but increased cost to organisation |
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Transportation
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decisions:
-based on characteristics of customers, the product and mode (water rail, road, air other/pipeline, people, electronic etc) -info helps determine optimum load faster more reliable transport: increases customer service but increased cost to org |
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Logistics decisions
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once organisations have forcast sales, they must determine the customer service level required.
Apart from inventory, warehouse and transport decisions they must consider: -cycle time reductions: changing changing mfg process, conversion ops -location: where to place mfg plant -purchasing decisions: network suppliers -manufacturing and ops process decisions(high/low), -order processing and costs: system of technologies -restructure the marketing channels: near end users |
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Logistics designs
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require balance between meeting service level expectation of customers and inventory carrying costs, warehousing costs, transportation costs, order processing and info costs.
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logistics continued
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Logistics and channel management serve as glue in marketing
-brings it all together -directly influences customer satisfaction and org profits -must be balanced and interfered with other marketing mix factors -orgs view place as final frontier for gaining competitive advantage |
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Ethical
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D
E A(X) R |
