Developing Marketing Developing Marketing StrategiesStrategies

Ian Mejia 2009Ian Mejia 2009

Redfield CollegeRedfield College

Syllabus Points CoveredSyllabus Points Covereddeveloping marketing strategies developing marketing strategies •• market segmentation and product/service differentiationmarket segmentation and product/service differentiation•• product and serviceproduct and service–– positioningpositioning–– brandingbranding–– packagingpackaging•• price including pricing methods — cost, market and competition-price including pricing methods — cost, market and competition-

basedbased–– pricing strategies/tactics — skimming, penetration, loss leaders, price pricing strategies/tactics — skimming, penetration, loss leaders, price

pointspoints–– price and quality interactionprice and quality interaction•• promotionpromotion–– elements of the promotion mix — personal selling, advertising, below-the-elements of the promotion mix — personal selling, advertising, below-the-

line promotions, public relationsline promotions, public relations–– the communication process including opinion leaders and word of mouththe communication process including opinion leaders and word of mouth•• place/distributionplace/distribution–– distribution channels and reasons for intermediariesdistribution channels and reasons for intermediaries–– channel choice including intensive, selective, exclusivechannel choice including intensive, selective, exclusive–– physical distribution issues including transport, warehousing, inventoryphysical distribution issues including transport, warehousing, inventory•• environmental effects on distribution — technology, local environmental effects on distribution — technology, local

government government

Market SegmentationMarket Segmentation

• Market segmentation is the process of identifying Market segmentation is the process of identifying niche markets within a mass market.niche markets within a mass market.

• Market segmentation is effective because it Market segmentation is effective because it gathers people with similar characteristics and gathers people with similar characteristics and allows a business to be more specific with its allows a business to be more specific with its strategies.strategies.

Markets can be identified Markets can be identified throughthrough

• Demographic factorsDemographic factors

• Geographical factorsGeographical factors

• Psychographic factorsPsychographic factors

• Behavioural factorsBehavioural factors

DemographicsDemographics

• AgeAge

• SexSex

• EducationEducation

• IncomeIncome

• OccupationOccupation

• ReligionReligion

Geographical FactorsGeographical Factors

• Where do customers make purchase Where do customers make purchase decisions?decisions?

• Seasonal variations? Climate, Seasonal variations? Climate, conditions etc.conditions etc.

• Type of living conditionsType of living conditions

• City / Suburbs / RuralCity / Suburbs / Rural

PsychographicPsychographic

• Why does a customer buy a product or Why does a customer buy a product or service?service?

• Lifestyle characteristicsLifestyle characteristics

• Personality typesPersonality types

• Self perceptionSelf perception

• BeliefsBeliefs

• Any personal influence on a buying Any personal influence on a buying decision.decision.

Behavioural FactorsBehavioural Factors

• What is the purchase situation when What is the purchase situation when making a purchase?making a purchase?

• Customer loyaltyCustomer loyalty

• Usage rates (how often)Usage rates (how often)

• Purchase occasion (what is occurring Purchase occasion (what is occurring during the purchase)during the purchase)

Product DifferentiationProduct Differentiation

• Product differentiation is a marketing Product differentiation is a marketing strategy designed to reinforce the strategy designed to reinforce the distinctions between products intended distinctions between products intended for a similar market segment.for a similar market segment.

• This occurs to: This occurs to:

-tailor a base product.-tailor a base product.

-differentiate from competition.-differentiate from competition.

Tailoring a Base ProductTailoring a Base Product

• This allows businesses to penetrate a This allows businesses to penetrate a range of markets and allows range of markets and allows customers to purchase a product customers to purchase a product more suited to them.more suited to them.

• Extras on cars, i-pods, mobile phone Extras on cars, i-pods, mobile phone accessoriesaccessories

Differing from CompetitionDiffering from Competition

• Make one product seem superior or Make one product seem superior or better at meeting the needs of a better at meeting the needs of a customer.customer.

• May increase the market share of a May increase the market share of a businessbusiness

• May allow a premium price to be May allow a premium price to be charged for a good or service, charged for a good or service, justified by a superior product.justified by a superior product.

The Four P’s.The Four P’s.

• ProductProduct

• PricePrice

• PromotionPromotion

• PlacePlace

1.0 Product1.0 Product• PositioningPositioning

-Positioning is a marketing term that -Positioning is a marketing term that describes how customers percieve a describes how customers percieve a product in relation to a similar product in relation to a similar product in a market.product in a market.

-Products are positioned to tap in to -Products are positioned to tap in to target markets to create value in a target markets to create value in a consumers mind.consumers mind.

Perceptual MapsPerceptual Maps

Effective PositioningEffective Positioning

DetermineDetermine

1.1. What do customers think of the product What do customers think of the product now?now?

2.2. What does the business want consumers to What does the business want consumers to think about the product?think about the product?

3.3. Which differentiation strategy will elevate Which differentiation strategy will elevate the consumers’ current perceptions to the the consumers’ current perceptions to the desired perception.desired perception.

1.1 Positioning Strategies1.1 Positioning Strategies

• Product Users – emphasis on the Product Users – emphasis on the type of user, someone they can type of user, someone they can relate to or emulate to.relate to or emulate to.

• Product Usage – emphasis on the Product Usage – emphasis on the benefits of usage or how it can be benefits of usage or how it can be usedused

• Competition – positioning in relation Competition – positioning in relation to competitorsto competitors

1.2 Branding1.2 Branding• Branding is the use of names, Branding is the use of names,

terms, symbols, and designs used terms, symbols, and designs used to identify a product.to identify a product.

Successful branding Successful branding involvesinvolves

1.1. Attracting attentionAttracting attention

2.2. Being memorableBeing memorable

3.3. Communicates PositionCommunicates Position

4.4. Is Easily Recognisable / Is Easily Recognisable / DistinguishableDistinguishable

1.3 Packaging1.3 Packaging

• Packaging plays an important role in Packaging plays an important role in establishing a product’s branding. establishing a product’s branding. Thus its function is both: Thus its function is both:

• Functional, and Branding in nature.Functional, and Branding in nature.

Packaging StrategiesPackaging Strategies

• Product IdentificationProduct Identification

• Product differentiationProduct differentiation

• Cost efficientCost efficient

• Socially responsibleSocially responsible

• Market requirementsMarket requirements

• Government requirementsGovernment requirements

• Brand IdentityBrand Identity

2.0 Price2.0 Price• Opportunity cost vs ProfitOpportunity cost vs Profit

• Do we compete on price? Or lower Do we compete on price? Or lower the significance of price through the significance of price through product differentiation.product differentiation.

2.1 Pricing Methods2.1 Pricing Methods

• Cost Based MethodCost Based Method

• Market Based MethodMarket Based Method

• Competition Based MethodCompetition Based Method

Cost-based MethodCost-based Method

• This method involves pricing products where the This method involves pricing products where the final price is the cost of a product, plus a profit final price is the cost of a product, plus a profit margin on each product.margin on each product.

• From the break even point, a business then adds From the break even point, a business then adds how much margin they want to receive per unit how much margin they want to receive per unit sold. As a percentage per unit, or as a fixed sold. As a percentage per unit, or as a fixed amount.amount.

• What are the possible problems associated with What are the possible problems associated with this type of pricing method?this type of pricing method?

Market-based MethodMarket-based Method

• A pricing method A pricing method where the price is where the price is determined by the determined by the demand equalling demand equalling supply.supply.

Competition-based MethodCompetition-based Method

• This method involves setting a price This method involves setting a price relative to that of a competitors.relative to that of a competitors.

• Competition based pricing is often Competition based pricing is often coupled with strong product coupled with strong product differentiation, with the emphasis on differentiation, with the emphasis on increasing market share.increasing market share.

2.2 Pricing Strategies2.2 Pricing Strategies

• Price SkimmingPrice Skimming

• Penetration PricingPenetration Pricing

• Loss Leader PricingLoss Leader Pricing

• Price PointsPrice Points

• Percieved Quality PricingPercieved Quality Pricing

Price SkimmingPrice Skimming

• A business sets an A business sets an initial high price and initial high price and then reduces it over then reduces it over time.time.

• The idea is to ‘skim’ The idea is to ‘skim’ the top of the market, the top of the market, this technique is this technique is generally reserved for generally reserved for new products with new products with little or no competition little or no competition at the time of release.at the time of release.

Penetration PricingPenetration Pricing

• A strategy used to A strategy used to gain large amounts gain large amounts of market share of market share through a very low through a very low initial price.initial price.

• The idea is to The idea is to induce a repeat induce a repeat purchase a rapidly purchase a rapidly gain market sharegain market share

Loss Leader PricingLoss Leader Pricing

• Selling a product at a Selling a product at a loss to attract loss to attract customers to buy other customers to buy other products or eliminate products or eliminate ay competition by ay competition by pricing them out of the pricing them out of the market.market.

• The idea is that The idea is that competitors will be competitors will be forced to follow suit or forced to follow suit or lose their market share. lose their market share. It is a test of who has It is a test of who has deeper pockets?deeper pockets?

Price PointsPrice Points

• A pricing method A pricing method using one base using one base product with a product with a number of add-on number of add-on features that will features that will increase the priceincrease the price

Percieved Quality PricingPercieved Quality Pricing

• Using price to Using price to position a product position a product as being higher as being higher quality because of quality because of the perception of the perception of high price meaning high price meaning higher quality.higher quality.

Pricing StrategiesPricing Strategies

• What are the possible opportunities What are the possible opportunities and threats for:and threats for:

• Price skimming?Price skimming?

• Penetration pricing?Penetration pricing?

• Loss Leader pricing?Loss Leader pricing?

3.0 Promotion3.0 Promotion• Personal SellingPersonal Selling

• AdvertisingAdvertising

• Below-the-lineBelow-the-line

• Public RelationsPublic Relations

Personal SellingPersonal Selling

• Direct spoken Direct spoken communication communication either in person or either in person or over the phone.over the phone.

• Positives and Positives and negatives??negatives??

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AdvertisingAdvertising

• Communication with Communication with the attempt to the attempt to influence a influence a consumer’s consumer’s perceptions of a perceptions of a brand and position.brand and position.

• New and innovative New and innovative forms of advertising forms of advertising are being are being introducedintroduced

Public RelationsPublic Relations

• Focused on the Focused on the relationship relationship between a between a business and its business and its markets. Public markets. Public relations aims to relations aims to market through market through improving a improving a business’ image.business’ image.

Word of MouthWord of Mouth

• Becoming more and more popular as Becoming more and more popular as a marketing tool.a marketing tool.

• Opinions of friends or family is held Opinions of friends or family is held in a higher regardin a higher regard

• How can you utilise this?How can you utilise this?

4.0 Place4.0 Place• DistributionDistribution

• How will your product be distributed? How will your product be distributed?

• How will it reach your market?How will it reach your market?

Physical Distribution IssuesPhysical Distribution Issues

• TransportTransport

• WarehousingWarehousing

• InventoryInventory

• EnvironmentEnvironment