Strategy and the Marketing Mix
Transcript of Strategy and the Marketing Mix
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Strategy and the Marketing Mix
Business Policy
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Please note that these slides are not intended as a substitute
to reading the recommended text for this course.
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Relevance of strategic marketing
The role of the consumer in a firm’s competitive advantage
The role of pricing management in a firm’s competitive advantage
Impact of price sensitive customer segment
Apply STP – Segmentation, Targeting, and Positioning process
Chapter 2: Johnson, Scholes & Whittington
Objectives
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Consumer / Buyer Behavior
The decision processes and purchasing
activities of people who purchase products
for personal or household use and not for
business purposes.
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Consumer Buying Decision Process/Possible Influences on the Process
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Expanded Marketing Mix – 7Ps
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Pricing decisions are influenced by various factors
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Cost of the Product
CompanyObjectives
CompetitionCustomer Needs &
Characteristics
Pricing Policy & Decisions
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Pricing decisions from a company perspective
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AdvetisingSales
PromotionPublic
Relations
Personal Selling
Direct Marketing
Marketing Communications - Promotional Mix
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Integrated Marketing Communications
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An approach to
achieving the
objectives of a
marketing
campaign,
through a well
coordinated use
of different
promotional
methods that are
intended to
reinforce each
other.
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Segmentation Marketing
– Identify bases for segmenting the market
– Develop segment profiles
Target Marketing
– Develop measure of segment attractiveness
– Select target segments
Market Positioning
– Develop positioning for target segments
– Develop a marketing mix for each segment
3 Steps in Target Marketing (S T P)
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Segmentation, Targeting & Positioning (STP) - Market segmentation
This is the process of dividing the total market for a good or service into several smaller, internally similar (or homogeneous) groups.
All members in a group have similar factors that influence their demand for the particular product.
– Mass marketing– Segmented – differentiated
marketing– Niche – distinctive traits– Micro - specific
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Geographic — The city size, urban/ suburban/ rural population distribution and climate.
Demographic — The distribution of a population’s age, sex, income, stage in family cycle and ethnic background.
Psychographic — Personalities, lifestyles, social class including activities, interests and opinions (AIO).
Behaviour towards products.
– Benefits desired or sought.
– Product usage rate.
Bases for segmentation
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Mcdonalds globally, sell burgers aimed at local markets, for example, burgers are made from lamb in India rather then beef because of religious issues.
In Mexico more chilli sauce is added and so on. Tereyaki burger in Japan.
Geographic Example - McDonalds
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Measurable examples include the size, purchasing power, and profiles of the segments.
Accessible refers to the fact that the market can be effectively reached and served.
Substantial refers to the fact that the markets are large and profitable enough to serve.
Differentiable refers to the fact that the markets are conceptually distinguishable and respond differently to marketing mix elements and programs.
Actionable refers to the fact that effective programs can be designed for attracting and serving the segments.
Segmentation Criteria
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Segment size and growth
Segment structural attractiveness –think 5 Forces – Competition / Substitute products /Power of buyers /Power of suppliers
Company objectives and resources
Evaluating Market Segments
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Undifferentiated marketing targets the whole market with one offer - Mass marketing
Differentiated marketing targets several different market segments and designs separate offers for each
Concentrated marketing targets a small share of a large market
Target Marketing Strategies
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Market coverage strategies
Segment 1
Segment 2
Segment 3
Companymarketing
mix
Segment 1
Segment 2
Segment 3
Companymarketing
mix
Company mix 1
Company mix 2
Company mix 3
Market
A. Undifferentiated marketing (Aggregation)
B. Differentiated marketing (Single segment)
C. Concentrated marketing (Multiple segments)
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Appeal to
‘All’
Think Coca
Cola / Cars
Shoes
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Depends on:
– Company resources – limited resources - Concentrated
– Product variability – little to no variability – steel - undifferentiated
– Product life-cycle stage – new product could chose undifferentiated / concentrated
– Market variability – same tastes - undifferentiated
– Competitor’s marketing strategies – opposite /same
Choosing a Targeting Strategy
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Positioning is assessed:
– In relation to a competitor.
– According to a product class or attribute.
– By price and quality.
Positioning can be in various forms, although it always incorporates a statement that identifies, (based on the marketing mix) how a business wants its products or services to be perceivedby the consumer.
Positioning strategies
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Factors to consider:
– Competition — look for a gap or niche.
– Customers — seek product attributes.
– Company image — what is the current image?
– Target market — have the needs of the target market changed? Do we need repositioning?
– The marketing mix — does it support the selected position?
Selecting a position
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Branding is the imagery a company uses to make us IDENTIFY them and pick them out from their competition.
Branding can involve the use of a CONSISTENT range of colour or a LOGO.
The “Brand” can be the company e.g. TESCO; or it can be a product range that is a “Brand” e.g. “Lynx” (made by Unilever).
Branding - Definition
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Products & Brand
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Increases loyalty
Can charge HIGHER PRICES
Establishes product’s position
Can launch complimentary products in same brand name – e.g. shampoo; conditioner; hairspray.
Positive association
Be easy to pronounce and remember
Suggest product benefits
Be distinctive
Benefits of Branding to the consumer
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Basis for product’s quality story
Provides legal protection
Helps to segment markets
Allows premium pricing
Helps create loyalty
Benefits of Branding to the organisation
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Brand Positioning
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Own-label brands have become increasingly important in the Ireland. Once considered as a cheap alternative, own label brands are now an acceptable alternative, which account for over 20 per cent of food purchases. Supermarkets have moved on from creating copy-cat brands of leading manufactures to producing their own good quality ranges.
Ad: Give the kids healthy food they'll love with Disney Kids! Trusted by parents, loved by kids, Tesco Disney is a nutritious new range that encourages healthier eating. Making good food great fun the range covers everything from fresh fruit to Mickey shaped pizza.
Example: Tesco
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What is a New Product?
New Product
Replacement
Addition
New Line
New to the world
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PLC
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Pre-
Launch
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The Seven-Stage New Product Development Process
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Idea Generation
ScreeningConcept
DevStrategy
DevBusiness Analysis
Product Dev
Mkt Testing
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What is Service Marketing?
Definition: Activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product
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Health Care
– hospital, medical practice, dentistry, eye care
Professional Services
– accounting, legal, architectural
Financial Services
– banking, investment advising, insurance
Hospitality
– restaurant, hotel/motel, bed & breakfast
– ski resort, rafting
Travel
– airline, travel agency, theme park
Others
– hair styling, pest control, plumbing, lawn maintenance, counseling services, health club, interior design
Examples of Service Industries
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IntangibilityVariability /
Heterogeneity
Inseparability /
Simultaneous
Production
and
Consumption
Perishability
Characteristics of Services Compared to Goods
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Nature of Services
Characteristics
Intangibility
Inseparability
Variability
Perishability
Cannot be touched, seen, tasted, heard, or smelled before purchase
Lack of trial means higher consumer risk
Consumers rely on cues to draw quality inferences
Marketers must try to “tangibilise the intangible”
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Nature of Services
Characteristics
Intangibility
Inseparability
Variability
Perishability
Services are produced and consumed at the same time (air travel)
Service providers and sometimes other customers become part of the service (restaurant)
Strong preferences for service providers exist
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Nature of Services
Characteristics
Intangibility
Inseparability
Variability
Perishability
Service providers vary with respect to attitudes, skills, mood, etc. Even the same provider may give different service on a different day.
Quality control is critical:– Hiring the right people
– Standardising service
– Monitoring satisfaction
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Nature of Services
Characteristics
Intangibility
Inseparability
Variability
Perishability
Services can not be inventoried or otherwise stored
Capacity / demand management is critical:
– Demand side strategies
– Supply side strategies
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The Services Marketing Triangle
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Overall Strategic Assessment
– How is the service organization doing on all three sides of the triangle?
– Where are the weaknesses?
– What are the strengths?
Specific Service Implementation
– What is being promoted and by whom?
– How will it be delivered and by whom?
– Are the supporting systems in place to deliver the promised service?
Ways to Use the Services Marketing Triangle
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Understanding customer needs
Managing expectations
Traditional marketing communications
Sales and promotion
Advertising
Internet and web site communication
Five Major Approaches to Overcome Service Communication Channels
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Service delivery
– Reliability, responsiveness, empathy, assurance, tangibles, recovery, flexibility
Face-to-face, telephone & online interactions
The Customer Experience
Customer interactions with sub-contractors or business partners
The “moment of truth”
Keeping Promises
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Enabling Promises
Hiring the right people
Training and developing people to deliver service
Employee empowerment
Support systems
Appropriate technology and equipment
Rewards and incentives
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