Marketing 2 - Reaching the Customer PDF

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Marketing 2 – Reaching the Customer #1 Key - find a position for the product in the mind of the customer where It provides a unique benefit #2 Key - convince the customer that the product provides that unique benefit – so that it occupies that position in their mind – PERCEPTION is key What does a great Positioning statement look like? - The goal of the positioning statement is to occupy a clear, distinctive and attractive place, relative to competing products, in the minds of target consumers - How do you state it? Frozen Dinner Example - Our – cheap and yummy line of frozen dinners – is the best taking among all economically friendly frozen dinner because it uses high quality ingredients superior to competition Starbucks example But.. Not enough to write it in a statement; it has to be an effective position to negin with - It is all about about PERCEPTION - … Positioning - “the act of deliberately defining how you are the best at something that a defined market cares a lot about” - Impacts the way your customers perceive your product and if they even understand what It is - Customers will use what they know to make sense of what they don’t (be careful of context being placed into) Think of Positioning as a ladder in the customers mind Market Context Competitors Distribution Price Features Target Positioning Strategies - Be first, be different - Anteposition – deposition the leader, use the leader’s position in the customers mind to how you fix the problems

Tesla example – people don’t buy features they buy the product with features.

#2 Key  Convince the customer that the product provides that unique benefit – through consistent marketing strategy – integrated system (coordinated set) of activities  All parts of the organization must have a clear idea of the unique benefit  Value proposition and positioning statement – clear, concise statements of products benefits, uniqueness and positioning in the marketplace – act as glue that keeps decisions consistent and guides development of marketing strategy Marketing Concept – talked about in text - “A philosophy that a business should provide goods and services that satisfy customer needs through a coordinated set of activities that allow the business to achieve its objective” - There needs to be fit, or everything else doesn’t matter - Orientation towards customer everything is customer focused  customer centered instead of company centered - 4P’s are product centered, and company makes decision. Focused on who’s putting it out there, not who’s buying it  that’s why 4A’s are so important  converts 4P’s into something that are customer centered “Product” is replaced with “Acceptability” – has both functional and psychological acceptability “Price” is replaced with Affordability – economic and psychologically “Place” is replaced with Accessibility – availability and convenience “Promotion” is replaced with Awareness – product knowledge and brand awareness - Values that matter most to customers/ a set of conditions that must be fulfilled focuses on why and how vs what and is more holistic Guidelines for using the 4A’s 1. Market Value Coverage - MVC is a measure of how well the the overall marketing strategy succeeds in ensuring that potential customers become actual customers - But the A’s are multiplicative  acceptability* affordability * accessibility* awareness 2. Even though the A’s are multiplicative, the dimensions of each are additive – can make up for each other, or counterbalance. 3. Each A is dynamic vs static 4. The 4A’s are integrative and can move in tandem 5. Sequencing matters 6. Leverage all resources to increase MVC – every part of the company can be used to effect MVC.

Total Product Concept - Related to marketing concept - A way of viewing a product as the totality of value and benefits it provides to the customer – look at it through their eyes - Consumers don’t even define ‘product’ by features – to them the product is a total package of benefits / value package - Therefore, we must understand ‘product’ as seen from the eyes of the customer – the entire experience they have with the product through… - Packaging, brand, service, warranty, delivery, credit, atmosphere, image, reputation, location What is a “brand” “a collection of perceptions n the mind of the consumer’ - Built only through effective communications or appealing logos – its is built through the total experience that the product offers - An effective brand strategy creates “brand equity” - Brand name – communicate value proposition Brand loyalty slide insert*****

‘Product’ Classification - in quotes because it isn’t just a product thing, effects all decisions - Consumers cannot tell you this, they show you from their behaviour - How does the consumer behave when buying your product? – tied to job they are trying to get done - Convenience product or shopping product or specialty or unsought - Tied to the job they are trying to get done… What the text doesn’t tell you is that convenience is dived into 3 different categories - Staples: something you always get , crucial - Impulse: bought on impulse, little thought, see and pick It up - Emergency: something you buy because you need it immediately – “ all of I sudden I need this “ Shopping goods - Homogenous vs heterogenous Think product is same – best price I’m looking at price and features because differences Specialty good – extra special effort to find it

What does it man for how you sell it? -

If it’s a shopping product – make it easy for them. Make sure its beside similar items. Put it in those stores. – like a car dealership, people tend to shop for cars. A car dealership that isn’t close to any car dealer ships… let them compare.. think about what they are doing and facilitate it

Careful – different customer segments will classify the same product differently Hotels example – and the types of goods Convenience – business travelers Emergency – flight get delays and you need to stay somewhere Homogenous – travelling students looking for price Heterogenous – sports teams looking @ features Specialty – honeymoon Product Life Cycle Intro – new product category, few competitors, sales low, profits low Growth – customers begin to adopt the product, sales and profits increase competitors take notice and enter the product category Maturity – sales peak: profits decline as market becomes saturated and competitors lower prices Decline – declining sales and profits, consumers need change – ability to produce at low cost usually determines which competitors remain in the market - What stage are you in - What stage is your industry in? - How does that affect your marketing mix? - How will your strategy evolve over time?  Decisions can and will evolve and change as you move through the cycle - Recognize what’s coming next How will you continue to be competitive? - Product roadmap - How to ‘slow down’ the cycle and encourage new growth How to keep competitive – slow the pace of the cycle - New uses - baking soda makes fridge send better, triscuit – used for appetizers - New users – Johnson & Johnson baby products – promote as something for the whole market. Canadian tire – not just tires - Products or new markets – Oreo cookies in Asia and Latin America

PRICE – COVERED IN THE TEXT- COVERED SUFFECIENTLY - Pricing consideration, objectives and strategies - AFFORDABILITY – PLACE - Channels, benefits of intermediaries + implications, types of retailers, physical distribution, intensity of distribution - Important to consider what the implications of these place choices Accessibility & Place - Affected by choice of distribution channel -> critical decision - Use of marketing intermediaries / channel of distribution – business model canvas - Choice of intermediaries must fit.  affects acceptability, and also affects affordability as it changes time, effort and price that something may take - Channels of Distribution – Image from textbook Implications! - Must sell to intermediary as well as consumer AND lose control over how its sold and the effort made  solution  push vs pull? Pull customer in - Manufacturer promotes to consumer  consumer demands product from channel --. Channel demands product from manufacturer  consumer buys product Push the product through - Manufacturer promotes to channel  channel promotes to consumer  consumer buys product - Help intermediary make more $ on product; often gives you control - Example: volume discount, coop advertising, go in stock shelves for them -

Another implication: each intermediary takes a ‘cut’ AND you lose control over the final price (MSRP) - Solution? Demand-backward pricing – 4.99 – 1. 50 – 1.0 = 2.49 to wholesaler – if they take a cut will it lower profit – volume potential / tradeoff PROMOTION - handled well in sense of recognizing mix of details  About awareness/ promotion - Advertising, personal selling, sales promotion, publicity - Advertising – any form of non personal sales presentation of a relatively long term nature that is paid for by an identified sponsor - Publicity – not paid for, but free Advertising -Objections  Create AIDA – awareness, interest, desire, action – AIDA  Communicate value prop  Position product in customers mind KEY is to SELL products.

Advertising that SELLS Made to stick – simple, unexpected, concrete, credible KEY- communicate brand in a way that persuades / leads to sale  But don’t lose sight of what makes things go viral in the first place …. - Its more than online – only 7% is - 10 million views don’t matter - Goal is to turn customers into advocate - Shares are more important than views = virality - Not just viral – valuable virality - “viral coefficient” = number of invited friends * conversion rate Now for the big question can we translate this into revenue?  Forecasting Demand - No formula – projections based on research and logic = educated guess you can defend - Market potential DNE sales forecast – forecast depends on plan – scalability Top Down Forecasting  (breakdown) (potential) - Market potential not just #households – with lawns / likely to mow law / care about benefits - Still doesn’t equal sales forecast – ready to buy? (lawn mowers per year/ per capita – target buy in same proportion? need new one?, time to adopt / switching costs? - Also consider geographic market operating in Bottom Up forecasting (buildup) - What you can do given capacity and marketing plan - # of stores that sell lawn mowers / # that will carry / # mowers they sell in a season on average  constraints  biggest bottleneck - Compare to breakeven – what you have to do - Sensitivity analysis and contingency plan – some what-ifs what the risks are and how I can avoid them - Breakeven / capacity / similar sized company or launch - Better to base sensitivity on – potential changes to forecast with highest probability of occurrence – ‘ what ifs ‘? - Milestones – points that increase valuation of business Except! You must for top down look at % of listen to radio, % care about benefit % would pay price % adoption rate...