Marketing Principles Revision PDF

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Marketing Principles Revision 1. Introduction  Marketing- Management processes responsible for identifying, anticipating and satisfying consumer requirements profitably  Market- people or organisations that have needs and wants and an ability and willingness to buy  Marketing Concept-Focus is on ...

Description

Marketing Principles Revision 1. Introduction 

Marketing- Management processes responsible for identifying, anticipating and satisfying consumer requirements profitably

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Market- people or organisations that have needs and wants and an ability and willingness to buy

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Marketing Concept-Focus is on the customer

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The Marketing Concept states that marketing should be the philosophy that drives the company’s strategy

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Exchange- A key ingredient in the philosophy of marketing; it occurs when people give up something in order to receive something they would rather have

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Value -Refers to what we get for what we pay for.

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Firms with a Production orientation focus on the internal capabilities of the firm rather than on the desires and needs of the marketplace

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4Ps o o o o

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Product- A need satisfying market offering (design, packaging and variety) Place- How it will be made available to the consumer Price- How much it will charge for the product Promotion- Informing the consumer about the offer

Key Marketing Trends o Technology o Relationships o Global Reach o Ethical and societal responsibilities

2. STP 

Segmentation- Grouping consumers according to similar characteristics

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Targeting- Deciding which segment to enter and how to reach them

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Positioning- How to position product/service in relation to competitors

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Why Segment o Meet consumer needs more precisely- distinct marketing mix o Increase profits o Segment leadership o Retain customers o Focus marketing communications

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Bases of Segmentation o Geographic- Different countries o Demographic- Different age groups o Psychographic- Social class, Lifestyle, Personality o Behavioural- Usage rate, buyer readiness, attitude towards product, loyalty, occasions

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Targeting strategies o Undifferentiated- Entire market o Differentiated- 2 or more target segments o Concentrated- One specific market segment o Mass Customisation- flexible market segments

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Evaluating market segments o Segment size and growth o Segment attractiveness (no of competitors, etc) o Company objectives and resources (company fit)

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To be effective, the market segment must have measurable purchasing power and size.

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The rationale of market segmentation is by grouping together customers with similar needs as it provides a commercially viable method of serving these customers.

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Undifferentiated o Can occur by default when a company lacks marketing orientation and practices undifferentiated marketing through lack of customer knowledge o Easy process for a company to follow as only a single product/marketing strategy is developed

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Differentiated o Different products(brands) for different Segments o Product and marketing variations = higher sales o But Increased costs due to number of different products o Separate market plans for separate segments  Packaging  Promotions  Channels

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Concentrated (Niche) o Limited resources o Exclusive target market o In-depth knowledge of smaller segment o Niche players can become major players

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Micromarketing o Tailoring products and marketing programs to the needs and wants of specific individuals and local/individual customer segments

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Mass Customization o Advances in technology o Personalisation

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Product Position o The place the product occupies in consumers’ minds relative to competing products o Value proposition for each segment

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Value proposition o The full positioning of a brand. The full mix of benefits on which it is positioned

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Communicating and Delivering the chosen position (7ps) o Product (Brand) o Place o Price o Promotion o People o Processes o Physical Evidence

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Competitor Analysis o Who are the competitors? o Where is company placed in relation to them? o What criteria does company use? o Perceptual map

3. Product & Branding 

Marketing Mix- Tactical tools that are used to implement a company’s strategy

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By manipulating elements of the marketing mix, managers can fine tune the customer offering and achieve competitive success o Product (Variety, Quality, Design, Brand Name, Packaging) o Place (Channels, Supply chain, Logistics, VMS) o Price (Costs, Margin, Value, Price Sensitivity, Profit) o Promotion (Advertising, Digital Mktg, Promotions, PR) o People o Processes o Physical Evidence

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Product o Anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need o Includes physical objects, services, personas, places, organizations & ideas. o Tangible Attributes  Availability  Performance  Price o Intangible Attributes  Image  Perceived Value  Design

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Product line- A group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same type of outlets, or fall within given price ranges.

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Product Levels o Potential (Future developments) o Augmented (Installation, After sales service, Warranty, Delivery and credit) o Actual/Tangible (Packaging, Features, Design, Quality, Brand name) o Core (Product) Products have different levels. Actual level is the level companies can most differentiate in

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Product Decisions o Individual (Attributes, branding, packaging, labelling, product support services) o Product Line (Group of products closely related as function in similar manner, sold to same consumers, marketed through similar outlets, fall within given price ranges) o Product Mix (The set of all product lines and items a particular seller offers for sale to buyers, Product Mix- Width, Length, Depth and Consistency) 

New Product Development (NPD) o Innovation through NPD is essential to the survival of an organization o Products and services become obsolete or unnecessary very quickly as technology forces changes on our lifestyles o New products keep a company profitable o Risks of NPD  Loss of money  Product failure  Company reputation

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Crowd Sourcing- Customer feedback used in developing new products. Digitally co-created processes

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NPD Process o Idea Generation o Idea Screening o Concept Development & Testing o Marketing Strategy Development o Business Analysis o Product Development o Test Marketing o Commercialization

Brand- A name, term sign, symbol or design, or a combination of these, intended to identify the goods or services of one seller or group of sellers, and to differentiate them from those of a competitor o Viewed as major enduring asset of company o Represent consumers’ perceptions and feelings about a product and its performance o Brand name, symbol, reputation, associations o Real value of strong brand is its power to capture consumer preference & loyalty

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Benefits of Brand o Consumers  Communicates features and benefits  Simplifies the purchase decision- trusted and preferred brands are purchased again and again  Symbolic value- indicators of consumer’s personality type  Reduces the risk in purchasing- financial risk and social embarrassment o Seller  Trademark- legal protection  Higher market share, increased sales, profitability  Brand Loyalty

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Brand Strategy Decision o Brand Positioning (Attributes, Benefits, Beliefs & Values) o Brand Name Selection (Selection, Protection) o Brand Sponsorship (Manufactures brand, Private brand, Licensing, Cobranding) o Brand Development (Line extension, Brand extension, Multi-brands, New brands)

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Brand Positioning o Emotional Benefits o Desirable Benefits o Product Attributes

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Brand Personality- Specific mix of human traits that may be attributed to a particular brand o Sincerity (honest, down to earth) o Excitement (daring, spirited, imaginative) o Competence (Reliable, Intelligent, Successful) o Sophistication (Upper Class, Charming) o Ruggedness (Outdoorsy, tough)

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Branding Sponsorship Strategy o Manufactures brand o Private brand o Licensing o Co-branding o Celebrity Endorsements

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Brand Development Strategies

4. Promotion & Services 

Promotional Mix o Marketing Communications (5 Finger Story)  Promotion  Personal Selling  Direct Marketing  PR & Publicity  Advertising

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Factors changing marketing communications landscape o Increasingly focused marketing communications designed to build customer relationships o Data obtained through social media and loyalty cards means less broadcasting and more narrowcasting o Technology is driving greater interaction between customers and companies – customers now in control of how, when and what they receive.

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Digital Marketing o Nearly all brands and companies have a Web site. Most have a Facebook page, and email based customer service is commonplace. o All customer relationships now have a digital dimension. That is, they rely on digital technologies — connected devices

o Marketers continue to shift a larger share of their advertising investments to digital venues, and both retailers and manufacturers sell goods through a variety of digital channels.

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Method of Communication

Ad ver tisi

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ng o o o o o o

Can reach mass audience Consumers tend to view advertised products as standard & legitimate Can repeat message many times, be very creative Good use to inform, persuade, remind Can be very expensive, impersonal, one-way communication Most successful ones are those that are memorable, have a clear message and have a story at their heart which makes an emotional connection with us

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Product Placement o An old form of advertising used in media (Movies, Gaming, etc)

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Direct Marketing  Target customers via database  Generate response, that can be attributed to specific ‘call to action’  Be able to track and measure responses from customers  Personal or mass appeal o Advantages  Cost Effective  Fast & Efficient for reaching customers powerful for customer relationship building  Better response rates o Disadvantages  Invasions of privacy issues

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Irritation Fraud Environmental Concerns

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Personal Selling o Personal presentation by the firm’s sales force for the purpose of making sales and building customer relationships o Advantages  Impact  Precision  Cultivation o Disadvantages  Cost  Labor intensive

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Sales Promotion (magazines, mass appeal) o Short term o Increase sales o Promote awareness o Using powerful narratives to tap into people’s wishes and aspirations – with the technical side of data, digital engineering and analytics. o Understanding people’s motivations and using these insights to create campaigns that promote brands and encourage people to buy their products. It is a creative and often intuitive process.

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Digital Impact o Manipulate prices o Public relations (mass appeal) o Management of any successful brand requires deep knowledge of the consumer, which starts with all of the data available via digital touchpoints. o It is measurable and it can help provide intelligence. o Digital offers granular data about interactions and often a direct consumer response through deep segmentation and targeting, real-time reactivity, and interactivity. o Viral marketing  Online form of word-of mouth communication  Usually video, e-mail, TV ad, song, passed around through friends/office  Funny/entertaining

If successful – very low cost, high reach The ultimate goal of marketers interested in creating successful viral marketing programs is to create viral messages that appeal to individuals with high social networking potential (SNP) and that have a high probability of being presented and spread by these individuals and their competitors in their communications with others in a short period of time o Guerilla marketing  An unconventional system of promotions that relies on time, energy and imagination rather than a big marketing budget.  

o Social, Mobile, Online  Customers do your marketing for you o Relevancy 

Services o Any activity or benefit that one party can offer to another which is essentially intangible and does not result in the ownership of anything

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Service Industries o Government o Non-Profit o Commercial

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Characteristics of a service o Intangibility- cannot be seen, tasted, felt, heard, or smelt before purchase o Inseparability- cannot be separated from providers, refers to their instantaneous production and consumption o Variability- Quality of services depends on who provides them, when, where and how o Perishability- Services cannot be stored for later sale or use

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7ps (other 3Ps) o People  Services are provided by people for people  Good training for service staff  Careful selection of staff  Staff held accountable and responsible o Processes  The sequential steps taken to provide or deliver the service  Easy booking systems  Faster service  More staff for busy periods  Service Blueprint o Physical Evidence  The environment or ambience  Internal and external appearance of premises

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Short queues Modern equipment Tangible elements Online reviews Awards Servicescapes

5. Marketing Mix: Price & Place 

Price- The amount of money charged for a product or service; the sum of the values that consumers exchange for the benefits of having or using the product or service.

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Pricing-The process of determining what a company will receive in exchange for its products and services.

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Price is not value

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Factors affecting pricing strategies

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Considerations Affecting Price Decisions o Overall Marketing Strategy o Organizational Considerations o The Market and Demand o Competitors Strategies and Prices o External Factors (Economy & Taxes)

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The Marker & Demand o Before setting prices, the marketer must understand the relationship between price and demand for its products. o Price Sensitivity  Customers more price sensitive to products that cost more or bought frequently

Customers less price sensitive to low cost items, or items bought infrequently o Estimate Demand – price experiments, survey, statistical analysis, past sales, previous prices etc. 

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Price Elasticity Concept- Relates to the proportion of income spent on the good-the lower the proportion of income spent, the more inelastic the good will tend to be o The number of substitutes - the more substitutes a good has the easier it is for consumers to switch to another product if the price goes up o The strength of the brand - the stronger the brand, the more inelastic the product will be o The level of necessity or addiction - the more necessary or addictive something is, the more inelastic it will be

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Demand Curve o INELASTIC DEMAND- A small increase in price has a limited effect on demand = Low price sensitivity o ELASTIC DEMAND- A small increase in price has a significant effect on demand = High price sensitivity

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Pricing Approaches (Strategies) o Cost based o Customer needs o Demand based o Competition based o New product

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Cost-based pricing o Involves setting prices based on the costs for producing, distributing and selling the product plus a fair rate of return for effort and risk. o Product>Cost>Price>Value>Customers

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Value-based pricing o Uses the buyers’ perceptions of value, not the sellers cost, as the key to pricing. Price is considered before the marketing program is set. o Customers>Value>Price>Cost>Product

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Good-value pricing offers the right combination of quality and good service at a fair price.

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Value-added pricing attaches value-added features and services to differentiate a company’s offers and charging higher prices.

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Everyday low pricing involves charging a constant everyday low price with few or no temporary price discounts.

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High–low pricing involves charging higher prices on an everyday basis but running frequent promotions to lower prices temporarily on selected items.

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Company & Product Costs o Fixed Costs + Variable Costs= Total Costs

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Competition-based pricing o Setting prices based on competitors’ strategies, prices, costs and market offerings. o Consumers will base their judgments of a product’s value on the prices that competitors charge for similar products.

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Other internal and external considerations affecting price decisions o Pure Competition- Many buyers and sellers trading in a uniform commodity. No single buyer or seller has much effect on the going market price. Marketing research, product development, pricing, advertising and sales promotion play little or no role. Sellers in these markets do not spend much time on marketing strategy o Monopolistic Competition- Many buyers and sellers who trade over a range of prices rather than a single market price. A range of prices occurs because sellers can differentiate their offers to buyers o Oligopolistic Competition- Few sellers who are highly sensitive to each other’s pricing and marketing strategies. Each seller is alert and responsive to competitors’ pricing strategies and moves o Pure monopoly- One seller

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Market-Skimming Pricing- A strategy with high initial prices to ‘skim’ revenue layers from the market. o Product quality and image must support the price. o Buyers must want the product at the price. o Costs of producing the product in small volume should not cancel the advantage of higher prices. o Competitors should not be able to enter the market easily. o Used When  Few or no competitors  Innovative product  Price inelastic demand

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Market-Penetration Pricing- Sets a low price for a new product to attract a large number of buyers and a large market share (gain rapid market share). o Price sensitive o Inverse relationship of production and distribution cost to sales growth. o Low prices must keep competition out of the market.

o Used When  Extensive Competition  Market is price sensitive 

Product Mix Pricing Strategies o Product Line Pricing (Setting price steps between product line items) o Optional Product Pricing (Options/accessories with their own prices) o Captive Product Pricing (Pricing products that must be used with the main unit) o By-Product Pricing (Pricing low-value products to get rid of them) o Product Bundle Pricing (Pricing bundles of products sold together)

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Price Adjustment Strategies o Segmented Pricing- Different segments pay different prices o Psychological Pricing- Adjusting prices for psychological effect o International Pricing- Different prices in different nations o Dynamic Pricing- Continual adjustment of prices o Geographical Pricing- Different prices in different localities o Promotional Pricing- Price as a promotional tool o Discount & Allowance Pricing- Redu...