Marketing Strategy

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1Copyright © 2008 by Nelson, a division of Thomson Canada Limited

Marketing Strategy

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1 What is the marketing concept?

2 What are the components of the marketing mix?

3 Explain how consumers and organizations make buying decisions?

4 What are the five basic forms of market segmentation?

5 Describe the process of marketing research.

Learning Objectives

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Marketing—The “Right” PrincipleGetting

The “Right” Goods or Services

toThe “Right” People

atThe “Right” Place, Time, and Price

usingThe “Right” Promotion Techniques

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Marketing

The process of discovering the needs and wants of potential buyers and customers and then providing

goods and services that meet or exceed their expectations.

Marketing

www.lscmcourse.com What are the customers wants?

http://www.lscmcourse.com/

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The Marketing Concept Focus on customer wants & distinguish your

products from competitors’. Focus all of activities to satisfy these wants. Achieving long-term goals for the organization by

satisfying customer wants and needs, legally and responsibly.

1

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The Marketing Concept1

CustomerSatisfaction

The customer’s feeling that a product has met or exceeded

expectations.

CustomerValue

The ratio of benefits to costs to obtain those benefits,

(determined by the customer).

RelationshipMarketing

A strategy that focuses on long-term partnerships with customers by

providing value & customer satisfaction.

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2 Creating a Marketing Strategy

1. Understanding the External Environment

2. Defining the Target Market

3. Creating a Competitive Advantage

4. Developing a Marketing Mix

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21. Understanding the External

Environment

EnvironmentalEnvironmentalScanningScanning

Demographic Forces

Economic Forces

Technological Forces

Political & Legal Forces

Competitive Forces

Social Forces

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2 2. Defining the Target Market

The specific group of consumers toward which a firm directs

its marketing efforts.Target Market

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2 3. Creating a Competitive Advantage

Differential CompetitiveAdvantage

A firm’s ability to provide a unique product or service that offers something of value besides

a lower price.

CostCompetitiveAdvantage

A firm’s ability to produce a product or service at

a lower cost than its competitors.

NicheCompetitiveAdvantage

A firm’s ability to target and effectively serve a single segment of the market within a limited

geographic area.

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3 The Marketing Mix

Elements of Elements of thethe

Marketing MixMarketing Mix

““The Four Ps”The Four Ps”

Product

Price

Place

Promotion

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3Product Strategy (Ch 13)

Brand name Packaging Colours Warranty Accessories Service program

““Product” --Product” --The “Heart” of The “Heart” of

thetheMarketing MixMarketing Mix

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Pricing Strategy

Based on demand for the product and the cost of producing it.

Also, special considerations can influence the price (e.g. branding & loyalty).

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Distribution Strategy (Place)

Creating the means (channels) by which a product flows

from the producer to the customer.

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3Promotion Strategy

Personal selling Advertising Public relations Sales promotion

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4 Consumer Decision Making

Postpurchase Behaviour

Purchase

Evaluation of Alternatives

Information Search

Need Recognition

Cultural, Social, Cultural, Social, Individual and Individual and Psychological Psychological

Factors Factors affect affect

all stepsall steps

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4 4 Influences on Consumer Decision

Making

Psychological: perception, beliefs& attitudes

Individual: gender, personality & self-concept

Social: reference groups, leaders, celebrities

Cultural: values, ideas, attitudes, etc. based on background

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4Types of Consumer Buying

Decisions

Low InvolvementShort Decision TimeLow CostInternal Information SearchOne Alternative

RoutineResponseBehaviour

LimitedDecisionMaking

ExtensiveDecisionMaking

More InvolvementLong Decision TimeHigh CostInternal/External SearchMany Alternatives

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5

Volume

Benefit

Psychographic

Geographic

Demographic

Amount of use (light versus heavy)

Benefits provided by the good or service

Lifestyle, personality, interests, values, attitudes

Regional location, population density, city/county size, climate

Derived from individual’s positionin an organization

Age, education, gender, income, race, social class, household size

Forms of Market Segmentation

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Demographic Groups (Age)

1. Gen Y – 1979-94quiet, listening to music with friends

2. Gen X – 1965-78latchkey children

3. Baby Boomers – 1950-64cherishes convenience

4. Old Age <1950wealthy, healthy, well educated

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3. Collect the data3. Collect the data

2. Choose a method of research2. Choose a method of research

1. Define the Marketing Problem1. Define the Marketing Problem

4. Analyze the research data4. Analyze the research data

5. Make recommendations5. Make recommendations

The Marketing Research Process

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7

One-to-one marketing

Shopper loyalty cards

Scanner-based research

Trends

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Developing Quality Productsat the Right Price(Product & Price)

Prepared byNorm Althouse

University of Calgary

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Developing Products and Pricing

Organizations prepare forlong-term success by creating and packaging products thatadd value and PRICING them to meet the organizationalfinancial objectives.

Creation of the Marketing Mixusually begins

with the PRODUCT

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What is a Product?1

Any good or service,along with its perceivedattributes and benefits,that creates value for

the customer.

Product

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What is a Product?1

Packaging

Image ofRetailStore

Warranty

Colour

Instructions

Image ofBrand

Attachments

ServiceafterSale

Product

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Classifying Consumer Products1

UnsoughtProduct

ConvenienceProduct

ShoppingProduct

SpecialtyProduct

Products that are either unknown to the potential buyer or are known, but the buyer does not actively seek them.

Relatively inexpensive items that require little shopping effort and are purchased routinely without planning.

Items that are bought after considerable planning, including brand-to-brand and store-to-store comparisons.

Items for which consumers search long and hard for and for which they refuse to accept substitutes.

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2Effective Branding (in the

Product) Easy to pronounce Easy to recognize Easy to remember Short Distinctive, unique Describes the product Describes the product’s use Describes the product’s benefits Has a positive connotation Reinforces the desired product image Is legally protectable in home and foreign

markets

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2 Levels of Brand Loyalty

Brand preferenceBrand preference

Brand recognitionBrand recognition

Brand insistenceBrand insistence

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3 Package (in the Product)

but more to Help promote the product

Yes, to Protect the product

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Labelling (in the Product) 4

Focuses on a promotionaltheme or logo – consumerinformation is secondary

Designed to helpconsumers make proper

product selections

Persuasivelabelling

Informationallabelling

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3 Warranties (in the Product)

Warranty

ImpliedWarranty

Express Warranty

Guarantees the quality of a good or service.

An unwritten guarantee that the good or service is fit for the purpose for which it was sold.

A written guarantee.

Full WarrantyThe manufacturer must meet certain minimum standards, including repair of defects, product replacement, or refunds.

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4 Product Development Process

6. Introduce product to marketplace6. Introduce product to marketplace

5. Test-market the new product5. Test-market the new product

4. Develop the concept4. Develop the concept

3. Screen ideas/concepts3. Screen ideas/concepts

2. Develop new-product ideas2. Develop new-product ideas

1. Set new-product goals1. Set new-product goals

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5

Time

Sale

s an

d pr

ofits

Total market profits

Totalmarket sales

IntroductionIntroduction GrowthGrowth MaturityMaturity DeclineDecline

$0

_

+

The Product Life Cycle

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6

Value pricing

Target returnon investment

Profit maximization

Offering the target market a high quality product at a

fair price and with good service.

The price of a product is set to give a company the desired

profitability in terms of return on its money.

Producing a product as long as revenue exceeds the cost of producing it.

Pricing Objectives

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Distributing Products in aTimely and Efficient Manner



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1 What is physical distribution?

2 What are distribution channels and their functions?

3 What is wholesaling, and what are the types of wholesalers?

4 How can supply chain management increase efficiency and customer satisfaction?

5 What are the trends in distribution?

Learning Goals

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Principles Distribution (Place)

The use of distribution (logistics) systems to enhancethe value of a product.

Distribution

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Physical Distribution1

Management of the acquisition of raw materials to the factory

Management of the movement of products from the producer to industrial users and consumers

The RoleThe Roleofof

DistributionDistribution

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Supply Chain1

Suppliers ofRaw Materials

CD Factory

Wholesaleor

DistributionCentre

Retailers,Wholesalers,Distribution

Centres

Customers

Finished CDs

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2 Distribution Channels

IndustrialDistributors

Independent wholesalers that buy related product lines from

manufacturers and sell them to industrial users.

WholesalersFirms that sell finished goods to

retailers, manufacturers, and institutions.

Agents andBrokers

Agents are sales representatives of manufacturers and wholesalers, and brokers are entities that bring

buyers and sellers together.

RetailersFirms that sell goods to consumers

and to industrial users for their own consumption.

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2Functions of Distribution

Channels

Ease the flow of goods

Perform needed functions

Reduce the number of transactions

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2Functions of Distribution

Channels

Ease theEase theflow of goodsflow of goods Accumulating

Sorting out

Allocating

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3 Vertical Integration

Backward Vertical Integration

Occurs when a wholesaler or retailer gains control over the

production process

Forward VerticalIntegration

Occurs when a manufacturer acquires a marketing channel closer

to the customer

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4 The Intensity of Market Coverage

SelectiveDistribution

A manufacturer selected a limited number of dealers in an area (but more than one or two) to market

its products.

IntensiveDistribution

A manufacturer tries to sell its products wherever there are

potential customers.

ExclusiveDistribution

A manufacturer selects only one or two dealers in an area to market

its products.

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The Intensity of Market Coverage4

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5

Manufacturer Wholesalingintermediaries

Agents andbrokers

Merchantwholesalers

Retailers orindustrial users

Customers

Full-service

Limited-service

Oftenselective

orexclusive

distribution

Oftenintensivedistribution

The Two Categories of Wholesalers

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Responsibilities of Supply Chain Managers7

Make channel strategy decisions Coordinate the sourcing and procurement of raw

materials Schedule production Process orders Manage inventory Transport and store supplies and finished goods Coordinate customer service activities

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Trends in Distribution8

Information Sharing: POS (point of sale data shared with suppliers & even manufacturers

Category Management: suppliers manage the product for the retailer

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Chapter 15

Using Integrated Marketingto

Promote Products(Promotion)



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1 What are the goals of promotional strategy?

2 What are the elements of the promotional mix, and how does integrated marketing communications make use of them?

3 ID the factors that affect the promotional mix.

4 Discuss the trends in Promotion.

Learning Goals

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Integrated Marketing Communications

The attempt by marketers toinform, persuade, or remind

consumers and industrialusers to engage in the

exchange process.

Promotion

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Promotional Goals1

2. Getting consumers to try products

3. Providing information

4. Keeping loyal customers

6. Identifying target customers

1. Creating awareness

5. Increasing the amount and frequency of use

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2 Elements of the Promotional Mix

Promotional Mix

AdvertisingAdvertising

Public Public RelationsRelations

PersonalPersonalSellingSelling

SalesSalesPromotionPromotion

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2Integrated Marketing

CommunicationsThe careful coordination ofall promotional activities to produce a consistent, unified message that is

customer focused.

Integrated Marketing

Communications

Promotional Mix

AdvertisingAdvertising

Public Public RelationsRelations

PersonalPersonalSellingSelling

SalesSalesPromotionPromotion

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3 Types of Advertising

ReminderAdvertising

Used to keep a product’s name inthe public’s mind

ProductAdvertising Features a specific good or service

ComparativeAdvertising

Compares the company’s productwith competing, named products

InstitutionalAdvertising

Creates a positive picture of a company and its ideals, services, and roles in the community

AdvocacyAdvertising

Takes a stand on a social or economic issue; also called grassroots lobbying

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4 Advertising Media

Newspapers Magazines

OutdoorRadio

Direct Mail Internet

Television

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4Choosing Advertising Media:

NewspapersStrengthsStrengths

Geographic selectivity Short-term commitments Immediacy Constant readership High individual market

coverage Low cost

WeaknessesWeaknesses

Limited demographic selectivity

Little colour Short-lived

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MagazinesStrengthsStrengths

Good reproduction Message permanence Demographic selectivity Regionality Local-market selectivity Special-interest Relatively long ad life


Long-term advertiser commitments

Slow audience buildup Limited demonstration Lack of urgency Long lead time May be expensive for

national coverage

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RadioStrengthsStrengths

Low and negotiable costs High frequency Immediacy of message Little seasonal change

in audience Highly portable Short scheduling notice

and short-term advertiser commitments

Entertainment carryover


No visuals Advertising message

short-lived Background sound Commercial clutter

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TelevisionStrengthsStrengths

Widely diversified audience

Creative visual and audio opportunities

Immediacy of message Entertainment carryover


High cost Limited demographic

selectivity Advertising message

short-lived Skepticism about claims

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Outdoor AdsStrengthsStrengths

Repetition Moderate costs Flexibility


Short messages Lack of demographic

selectivity Distractions

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Direct MailStrengthsStrengths

Efficient with good mailing list

Personalization by computers

Specific demographic market reach

Lengthy message


Costly with poor mailing list

May never be opened

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InternetStrengthsStrengths

Inexpensive global coverage

Available at any time Interactive personalized

message via e-mail


Not everyone has access Difficult to measure ad

effectiveness Pop-up clutter

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4 Advertising Costs

Audience Selectivity

Frequency

Reach

Cost per thousand

Factors Factors Influencing Influencing AdvertisingAdvertising

ChoicesChoices

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5

Provides a detailed explanation or demonstration of the product

Message can be varied according to the motivations and interests of each prospective customer

Can be directed only to qualified prospects Costs can be controlled by adjusting the size of

the sales force in one-person increments Considerably more effective than other forms of

promotion in obtaining a sale and gaining a satisfied customer

Advantages of Personal Selling

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Committees

Purchasing Agents

Wholesalers and Retailers

Selling to…Selling to…

Opportunities in Sales

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6. Following up sale

5. Closing sale

4. Handling objections

3. Presenting & demonstrating

2. Approaching customers

1. Prospecting and qualifying

Satisfied Customer

The Selling Process

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1. Does the prospect have a need for our product?

2. Can the prospect make the buying decision?

3. Can the prospect afford our product?

Qualifying Questions

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6

Comarketing Special events Sampling Coupons Games, contests, sweepstakes Sponsorships Internet Trade shows Premiums

Goal of Sales Promotionis

Immediate Purchase

Sales Promotion

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Any communication or activity designed to win

goodwill or prestige for acompany or person.

Public Relations

Public Relations

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Product publicity

Corporate communications

Public affairs

Employer and investor relations

Press relations

Lobbying

Crisis management

Functions of Public Relations

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Factors that Affect the Promotional Mix8

Push and Pull Strategies

Available Funds

Market Characteristics

Nature of the Product

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Push and Pull Promotional Strategies8

ManufacturerManufacturerpromotes to promotes to wholesalerwholesaler

Wholesaler Wholesaler promotes to promotes to

retailerretailer

Retailer Retailer promotes topromotes toconsumerconsumer

ConsumerConsumerbuys frombuys from

retailerretailer

PUSH STRATEGYPUSH STRATEGY

Orders to manufacturer

ManufacturerManufacturerpromotes to promotes to

consumerconsumer

Consumer Consumer demands demands productproduct

from retailerfrom retailer

Retailer Retailer demands demands productproduct

from wholesalerfrom wholesaler

Wholesaler Wholesaler demandsdemands

product fromproduct frommanufacturermanufacturer

Orders to manufacturer

PULL STRATEGYPULL STRATEGY

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Guerrilla Marketing

Application of Technology

Growth of Internet Advertising

Trends in Promotion

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Guerrilla Marketing9

Proactive efforts to spreadpositive word-of-mouth

information and toencourage product usage.

Guerrilla Marketing(Street Marketing

and Diffusion Marketing)

Marketing Strategy

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