The Marketing Process

• The marketing process:– Analyzing marketing

opportunities

– Selecting target markets– Developing the

marketing mix, and

– Managing the marketing effort

• Three key steps:– Market segmentation

– Target marketing

– Market positioning

Figure 2.4

Identifying Your Competitors

• Companies or individuals which Companies or individuals which provide similar products, services, or provide similar products, services, or benefits as perceived by your target benefits as perceived by your target customer.customer.

Types of CompetitionThree Types

1. Direct (first level)Companies or individuals that offer the same products or services as perceived by the target customer.

2. Indirect (second level) Companies or individuals that offer the same benefits as

perceived by the target customer.

3. Invisible competitionPeople or businesses that have the capacity or desire to provide the same products, services or benefits that you do.

Competitive Intelligence• Competitive intelligence (CI)

The process of learning, collecting and using information about your competitors for the purpose of growing your business.

• Requires a well-researched understanding of

Your target customers

Your current competition

Your future customer

Competitive Touchpoint AnalysisA touchpoint is any contact that your customer has with any aspect of your competition. Making a list of all the touchpoints allows you to identify your competitors’ strengths and weaknesses.

The Competitive Edge

Niche or Focus StrategyNiche or Focus Strategy

Three BroadCompetitiveStrategies

Three BroadCompetitiveStrategies

Differentiation StrategyDifferentiation Strategy

Cost Leadership StrategyCost Leadership Strategy

Competitor Analysis

Two methods to evaluate potential competitors are:

1. Competitive test matrixA grid showing the strengths and weakness of your

competitors.

2. Competitive SWOTFor each competitor, evaluate its internal strengths and

weaknesses and external opportunities and threats.

The Competition Life Cycle

EmbryonicEmbryonic

GrowthGrowth

MatureMature

DeclineDecline

Key Stages of the

Life Cycle

Key Stages of the

Life Cycle

Your CompetitivePositioning Strategy

EmbryoEmbryo DeclineDecline

MaturityMaturity

GrowthGrowth

CU

ST

OM

ER

SC

US

TO

ME

RS

CO

MP

ET

ITIO

NC

OM

PE

TIT

ION

Figure 5.4Figure 5.4

TARGET MARKET(6 - O’s)

SELLER’S MIX(The P’s)

UNCONTROLLABLE FACTORS*Demographics *Globalization*Political

*Economy *Environmental * Research *Legal* Government * Technology * War * Terrorism

Reviewing the Outputs

- Types of distribution- Distribution strategies (consumer & business)

- Types of promotion- Promotional strategies

(consumer & business)

- Price Elasticity (Sensitivity)- Pricing strategies

(lifecycle/product type)- Pricing policies

Product PromotionPricing

Marketing Mix Elements

Place

- Product types- Product tangibility- Product lifecycle

- New product development

Analytic Tools:

• Research• Balance & Gaps Assessment

• Measurement, Monitoring & Evaluation

Marketing Objectives & Strategy

The Four P’s of the Marketing Mix

• The marketing mix:– Set of controllable,

tactical marketing tools

– Product, price, place, and promotion

– Blended to produce the desired response in the target market

• Internal consistency helps to be successful

• Represents the seller’s view of the market

Figure 2.5

The 4 P’s Versus 4 C’s

• A different (buyer’s) way of looking at the four P’s

Product

Price

Place

Promotion

Customer solution

Customer cost

Convenience

Communication

Four Service Characteristics

• Service: any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything

Figure 10.5

Three Levels of Product

• Core product: – Problem solving services or benefits of

consumers’ purchase

• Actual product: – A product’s parts, quality,

features, design, brand name and other attributes received

• Augmented product:

– Additional consumer services and benefits built around core and actual product

– Add value/ differentiate product from competition

The Total Product Concept

Brand

Warranty and

service

Product image

Package and label

Physical or Functional

Characteristics of a Good or Service

10-3

A total bundle of physical, service, and symbolic characteristics designed to satisfy customer wants.

Marketing the Product: Brand Equity

Brand association

Brand loyalty

Brand awareness

Perceived quality

10-11

Brand Equity

How well and widely a brand is

known

Customer assessment of

how well a product meets

expectations

Connections consumers make between products

and their perceptions

(Brand Image)

Level of commitment a

consumer has to a brand (familiar, preference and

insistence)

Represents the value customers (and the stock market) place on the sum of the history the customer has had with a brand.

Stages in the Product Life CycleA product’s progress through introduction,

growth, maturity, and decline stages.

Objective: Stimulate Demand Stimulate purchase & repurchase

Protect volume from competition

Protect volume from shifting consumer preference

Overlap of Life Cycle for Products A and B

What is a Price?

• Price: the amount of money charged for a product or service, or the sum of values exchanged for the benefits of having or using the product or service

• Also known as rent, tuition, fee, fare, rate, interest

• Historically, most pricing was dynamic, arrived at through negotiation

• Fixed price policy more recent

• Price is the only marketing mix element that produces revenue therefore it is a key element in the strategy

• Pricing best practices:– Develop a 1% pricing mindset

– Consistently deliver more value

– Price strategically, not opportunistically

– Know your competition

– Make pricing a process

Source: Paul Hunt, Strategic Pricing Division, The Advantage Group, Toronto, Ontario

Costs

• Costs set the floor, or lowest amount that should be charged -Ideally covering all costs plus margin for profit

• Fixed costs: costs that do not vary with production - overhead (rent, utilities, insurance, management salaries)

• Variable costs: costs that vary directly with the level of production (raw materials, labour, supplies)

• Total costs: the sum of fixed and variable cost. Average cost to produce decreases as volumes increase (Economies of scale)

PRICE OPTIONS

• Prestige

• Odd

• Externally Guided

• Skim the Cream

• Penetration

• Full Cost

• Demand

New-Product Pricing

• Market skimming pricing: setting a high price to skim maximum revenues from segments willing to pay (new technology)

• Market penetration pricing: setting a low price for a new product to attract a large number of buyers and achieve a

large market share • Advantage to be gained by

large volumes early in life cycle

Figure 7.7

Skimming price drops in steps

Price Adjustment Strategies

Table 12.2

Discount andAllowance pricing

Segmentedpricing

Psychologicalpricing

Promotionalpricing

Geographicalpricing

Internationalpricing

Reducing prices to reward customerresponses such as paying early

Adjusting prices to allow for differencesin customers, products, or locations

Adjusting prices for psychologicaleffect; reference pricing

Temporarily reducing pricesto increase short-run sales

Adjusting prices to account forgeographic location of customers

Adjusting prices forinternational markets

Promotional Mix

• Promotional mixThe key to connecting with

customer is your promotional

mix—all the elements that you blend

to maximize communication with

your customer.

PROMOTION• Direct marketing:

– Direct communications with targeted individuals to obtain an immediate response and lasting customer relationships

• Integrated marketing communications:– Coordinating/integrating to

deliver a clear, consistent, and compelling message on all communication channels

– Leverage: the overall effect is greater than the sum of its parts

Steps in Developing Effective Communications

• Identifying the target audience:– Will determine what, how, when, where, and who will say it

• Determining the desired response:– Will depend on what “stage” of the purchase decision process the

buyer is presently at

Buyer Readiness Stages:

The stages that buyers normally pass through when making purchase decisions

Figure 15.3

PROMOTION

Advertising

Publicity

Personal Selling

Special Promotions

PROMOTIONAdvertising paid, non-personal

Institutional

Brand

Sales

Classified

Relationship between Advertising and the Product Life Cycle

• For product advertising to be effective it must accomplish three key objectives:

InformativeAdvertising

Sal

es

Introduction

PersuasiveAdvertising

Reminder-Oriented Advertising

Time

Growth Maturity Decline

Inform Persuade Remind

PROMOTION

Publicity not paid, non-personal

* high credibility

* off-guard

* dramatization

Public Relations

• Public relations: – Building good relations with the company’s various publics

– obtaining favourable publicity,

– building a good corporate image, and

– handling or heading off unfavourable rumours, stories, and events

• Public relations functions:– Press relations

– Product publicity

– Public affairs

– Lobbying

– Investor relations

– Development

• Public relations tools:– News, speeches

– Special events

– Mobile marketing

– Published materials

– Website

– Public service activities

PROMOTION

Personal Selling person-to-person

*Product awareness & preference

*Closing a sale

*Negotiating price and terms

* High end of preference scale

Customer Service and QualitySome Market Facts

If you provide quality service, you can:• Charge up to 10 percent more for your product or service

Increase sales growth

Reduce costs

Gain new customers

Make word-of-mouth advertising work for you

ANDAND

• Increase Profits!Increase Profits!

PROMOTION

Special Promotionsshort term buy incentives

•Consumer

•Trade •Sales-force promotions

Direct MailDirect MailDiscount CouponsDiscount Coupons

Promotion in

Cyberspace

Promotion in

CyberspaceBranding Yourself

Branding YourselfPromotional Mix

CataloguesCatalogues

Paid mediaadvertisingPaid mediaadvertising

Point-of-purchase displays

Point-of-purchase displays

Working visibly

Working visibly

Direct MailDirect Mail

Free Ink and Free Air

Free Ink and Free Air

Trade ShowsTrade Shows

Industry LiteratureIndustry

Literature

Personal SellingPromotional MixPromotional MixPromotional MixPromotional Mix

Money-Back Guarantees

Money-Back Guarantees

Business Cards

Business Cards

Integrated Marketing Communication (IMC) Applied

Advertising

Sales Promotion

Public Relations

Purpose: Awareness and preference buildingTiming: Introduction and Growth StagesTypes: Informative, Persuasive, Reminder, Retail

Personal Selling

Direct Response

Purpose: IncentiveTiming: Late Growth, Maturity, Decline StagesTypes: POP, Specialty, discount and loyalty programs

Purpose: Fostering product and company goodwillTiming: Introduction and Growth stages (builds credibility)Types: Sponsorship, Publicity

Purpose: Stimulate immediate salesTiming: Introduction, Growth, Maturity StagesTypes: Direct Mail, Internet banners, TV

Purpose: Complex, customized sales, personal referencesTiming: Introduction, Growth and Maturity StagesTypes: Order processing, Creative selling

Guerrilla Marketing

• Guerrilla MarketingAn important part of your promotional mix

will

be your “guerrilla marketing” promotional

strategies—unconventional methods of

getting the customer’s attention at minimal cost.

Push Versus Pull Promotional Strategies

• Refers to the direction of promotional effort• Exists as a range, yet most companies use a combination of both

• Consumer goods use primarily pull; advertising

• Industrial goods use primarily push; personal selling

Figure 15.4

Plotting Your Future Checklist

What is your marketing strategy?

What prices will you charge?

What are your promotional mix, goals and objectives?

What stimulates your target market to buy or use your product or service?

What has your primary and secondary research told you about promoting your business?

Plotting Your Future Checklist

Develop a promotional strategy for your business.

How will you cost out your promotional budget?

Does your business have a unique twist for a possible publicity story?

Why did you select the business name you are using?