Principles of Marketing Lecture 11 PDF

PRINCIPLES OF MARKETING Lecture Lecture 11 Prof. Prof. Bedman Bedman Narteh Narteh  Objectives  The Role of Marketing in an Organization  Tasks of Marketing  Major Concepts &...

PRINCIPLES OF MARKETING Lecture Lecture 11 Prof. Prof. Bedman Bedman Narteh Narteh  Objectives  The Role of Marketing in an Organization  Tasks of Marketing  Major Concepts & Tools of Marketing  Marketplace Orientations  Marketing’s Responses to New Challenges ©2000 Prentice Hall  THE NEW ECONOMY  Substantial increase in buying power  A greater variety of goods and services  A greater amount of information about practically anything  A greater ease in interacting and placing and receiving orders  An ability to compare notes on products and services ©2000 Prentice Hall  What What is is Marketing? Marketing? Process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others. More simply: Marketing is the delivery of customer satisfaction at a profit. Core Core Marketing Marketing Concepts Concepts Needs, wants, Products and demands and Services Core Core Marketing Marketing Concepts Concepts Markets Value, satisfaction, and quality Exchange, transactions, and relationships  A SIMPLE MODEL OF THE MARKETING PROCESS Capture value Create value for from customers and build customers in customer relationships return Construct Understand an Capture Build the Design a integrated value from profitable marketplace customer- marketing customers relationships and driven program to create and create customer marketing that profits and customer needs and strategy delivers customer delight wants superior equity value 6 What What Motivates Motivates aa Consumer Consumer to to Take Take Action? Action? Needs - state of felt deprivation for basic items such as food and clothing and complex needs such as for belonging. i.e. I am thirsty Wants - form that a human need takes as shaped by culture and individual personality. i.e. I want a Coca-Cola. Demands - human wants backed by buying power. i.e. I have money to buy a Coca-Cola.  What What satisfies satisfies Consumers’ Consumers’ Needs Needs and and Wants? Wants? Products - Services - anything that activities or can be offered to benefits offered a market for for sale that are attention, essentially acquisition, use intangible and or consumption don’t result in and that might the ownership of satisfy a need or anything. want. Examples: Examples: banking,  How How Do Do Consumers Consumers Choose Choose Among Among Products Products and and Services? Services? Customer Value - benefit that the customer gains from owning and using a product compared to the cost of obtaining the product. Customer Satisfaction - depends on the product’s perceived performance in delivering value relative to a buyer’s expectations.  How How Consumers Consumers Obtain Obtain Products Products and and Services Services Exchanges - act of obtaining a desired object from someone by offering something in return. Transactions - trade of values between parties. Usually involves money and a response. Relationships - building long-term relationships with consumers, distributors, dealers, and suppliers.  Who Who Purchases Purchases Products Products and and Services? Services? Actual Actual Market Market--buyers buyers Buyers Buyers who whoshare shareaa particular particularneed need or orwant wantthat thatcan can be besatisfied satisfiedby byaa company’s company’sproducts products Potential Potential or orservices. services. Buyers Buyers  Marketing Marketing Philosophies Philosophies Consumers favor products that are Production Production Concept Concept available and highly affordable Improve production and distribution Consumers favor products that offer Product Product Concept Concept the most quality, performance, and innovative features Consumers will buy products only if Selling Selling Concept Concept the company promotes/ sells these product Focuses on needs/ wants of target Marketing Marketing Concept Concept markets & delivering satisfaction better than competitors Focuses on needs/ wants of target Societal SocietalMarketing MarketingConcept Concept markets & delivering superior value Society’s well-being  Designing customer-oriented marketing strategy Situational analysis Segmentation Targeting Positioning 13  Customer Customer Delivered Delivered Value Value Starting Focus Means Ends Point Selling Profits Existing Factory and through Products Promoting Volume The TheSelling SellingConcept Concept Profits Customer Integrated Market through Needs Marketing Satisfaction The TheMarketing MarketingConcept Concept  Societal Societal Marketing Marketing Concept Concept Society Society (Human (Human Welfare Welfare)) Societal Societal Marketing Marketing Concept Concept Consumers Consumers Company Company (Wants) (Wants) (Profits) (Profits)  Design a marketing programme Value proposition to be delivered Segmentation, Targeting and Positioning 4ps 7ps 16  The Four Ps The Four Cs Marketing Mix Place Product Convenience Customer Solution Price Promotion Customer Communication Cost 17 Traditional Organization Chart Top Management Middle Management Front-line people Customers 18 New New Marketing Marketing Challenges Challenges New Business Landscape & Information Technology Nonprofit Marketing Emerging Emerging Ethical Concerns Challenges Challenges Globalization Changing World Economy End of lecture One Thank you PRINCIPLES OF MARKETING Lecture Lecture 22 ANALYZING THE MARKETING ENVIRONMENT  Objectives The Microenvironment The Macroenvironment Responding to the marketing Environment 01/25/2025 23  Marketing Environment The actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with target customers. 01/25/2025 24  Microenvironment The actors close to the company that affect its ability to serve its customers — The company Suppliers Marketing intermediaries Customer markets Competitors and publics. 25  Macroenvironment The larger external forces that affect the microenvironment: Demographic Economic Natural Technological Political and Cultural forces 26  Macro environmental Forces Opening of “new” markets Emerging transnational firms Cross-border strategic alliances Regional ethnic & religious conflict 27 Demographic Environment Worldwide WorldwidePopulation PopulationGrowth Growth Population PopulationAge AgeMix Mix Ethnic EthnicMarkets Markets Educational EducationalGroups Groups Household HouseholdPatterns Patterns Geographical GeographicalShifts Shiftsin inPopulation Population Increasing IncreasingDiversity Diversity 28  Economic Environment Income Income Distribution Distribution Economic Economic indices indices Industrializing Industrializing economies economies Changes Changes in in consumer consumer spending spending 29  Changing ChangingClimatic Climatic conditions conditions Higher HigherPollution Natural Shortage Pollution Shortageof of Levels Environment Raw Levels RawMaterials Materials Increased IncreasedCosts Costs of ofEnergy Energy 30 Accelerating AcceleratingPace Pace Unlimited UnlimitedOpportunities Opportunities of ofChange Change for forInnovation Innovation Issues Issues in in the the Technological Technological Environment Environment Increased Increased Mobile Mobileplatforms platforms Regulation Regulation 31 Increased Increased Legislation Legislation Ethics Ethics and and Political- Political- CSR CSR actions actions Legal Legal Environment Environment Special- Special- Interest Interest Groups Groups 32 Social/Cultural Environment 33 Social/Cultural Environment Of Oneself Of Of the Universe Views Views Others That That Express Express Of Values Values Of Nature Organizations Of Society 34 Responding to the marketing Environment Focus on Ethics and Responsible actions Focus on Technology Understanding demographic changes Marketing by the numbers (segment analytics) End of lecture Two Thank you SEGMENTATION, TARGETING AND POSITIONING LECTURE 3  Objectives Identifying Market Segments Choosing Target Markets Positioning the offer 38  Market Segmentation Dividing a market into distinct group of buyers who have distinct needs, characteristics, or behaviour and who might separate products or marketing mixes A market segment refers to a group of consumers who respond in a similar way to a given set of marketing efforts.  Steps in Market Segmentation, Targeting, and Positioning Market Market Market Segmentation Targeting Positioning 1. Identify 3. Evaluate 5. Identify segmentation attractiveness possible positioning variables and of each concepts for segment the segment each target market segment 4. Select the 2. Develop target 6. Select, profiles of segment(s) develop, and communicate resulting the chosen segments positioning concept 40  Step 1. Market Segmentation Levels of Market Segmentation Through Market Segmentation, Companies Divide Large, Heterogeneous Markets into Smaller Segments that Can be Reached More Efficiently And Effectively With Products and Services That Match Their Unique Needs. Mass Marketing Same product to all consumers (no segmentation, i. e. a commodity) Segment Marketing Different products to one or more segments (some segmentation, i.e. Marriott) 41 Step 1. Market Segmentation Demographic Segmentation Dividing the market into groups based on variables such as: – Age – Gender – Family size or life cycle – Income – Occupation – Education – Religion – Race – Generation – Nationality 42 Step 1. Market Segmentation Psychographic Segmentation Divides Buyers Into Different Groups Based on: 43  Step 1. Market Segmentation Behavioral Segmentation Dividing the market into groups based on variables such as: – Occasions – Benefits – User status – Usage rate – Loyalty status – Readiness stage – Attitude toward product 44  Requirements for effective segmentation Size, purchasing power, profiles Measurable Measurable of segments can be measured. Segments can be effectively Accessible Accessible reached and served. Segments are large or profitable Substantial Substantial enough to serve. Effective programs can be designed to attract and serve Actionable Actionable the segments. 45 Additional Segmentation Criteria Ethical Choice of Market Targets Segment Interrelationships & Supersegments Segment-by-Segment Invasion Plans Intersegment Cooperation 46  Importance of market segmentation  Helps to identify different market segments for targeting  Helps to allocate marketing budget  Ensures effective marketing  Helps to reveal hidden marketing opportunities. 47 Step 2. Market Targeting Market Coverage Strategies A. Undifferentiated Marketing B. Differentiated Marketing C. Concentrated Marketing 48  Step 2: Market Targeting: Evaluating Market Segments  Segment Size and Growth  Segment Structural Attractiveness  Objectives and Resources  Look for Competitive Advantages. 49  Five Patterns of Target Market Selection Single-segment Selective Product concentration specialization specialization M1 M2 M3 M1 M2 M3 M1 M2 M3 P1 P1 P1 P2 P2 P2 P3 P3 P3 Market Full market specialization coverage M1 M2 M3 M1 M2 M3 P1 P = Product P1 M = Market P2 P2 P3 P3 50 Choosing a Market-Coverage Strategy Company Company Resources Resources Product Product Variability Variability Product’s Product’s Stage Stage in in the the Life Life Cycle Cycle Market Market Variability Variability Competitor’s Competitor’s Marketing Marketing Strategies Strategies 51  Step 3. Choosing a Positioning Strategy  Positioning is the act of designing the company’s offering and image to occupy a distinctive place in the target market’s mind.  The place the product occupies in consumers’ minds relative to competing products.  Plan positions to attain competitive advantage  Design marketing mixes to attain them. 52  Step in Choosing a Positioning Strategy Step 1. Identify Possible Competitive Advantages Step 2. Select the Right Competitive Advantage Step 3. Communicating and Deliver the Chosen Position 53  Identifying Possible Competitive Advantages Product Services Differentiation Differentiation i.e. Features, i.e. Delivery, Installation, Performance, Style & Repair Services, Customer Design, or Attributes Training Services Image Personnel Differentiation Differentiation i.e. Symbols, i.e. Hiring, Training Atmospheres, Events Better People Than Competitors Do 54 Communicating and Delivering the Chosen Position  Once position is chosen, company must take strong steps to deliver and communicate the desired position to target consumers.  All the company’s marketing mix must support the positioning strategy. Positioning strategy must be monitored and adapted over time to match changes in consumer needs and competitor’s strategies. 55  Positioning Strategies Positioning by specific product attributes Positioning by benefits Positioning for user category Positioning for usage occasion Positioning against another competitors Positioning against another product class 56  Positioning mistakes Under positioning Over positioning Confused positioning Doubtful positioning 57  Steps to Choosing and Implementing a Positioning Strategy  Step 1. Identifying Possible Competitive Advantages: Competitive Differentiation.  Step 2. Selecting the Right Competitive Advantage: Unique Selling Proposition (USP).  Step 3. Communicating and Delivering the Chosen Position. 58  Product Differentiation Physical attributes Service differentiation Personnel differentiation Location Image differentiation 59 Which differences to promote? Important to customers Distinctive Superior Communicable to customers Preemptive Affordable Profitable 60  Introduction to The Four Ps Product - collection of features and benefits that provide customer satisfaction Price - value perceived in the mind of the consumer Promotion - marketing communications Place - covers location ,distribution, channels and logistics End of lecture Three Thank you PRODUCT DECISIONS LECTURE 4  The Four Ps Marketing Mix Place Product (Distribution) Price Promotion 64  Marketing mix The set of marketing decisions that management make to implement their positioning strategy and achieve the organisation’s objectives “The set of marketing tools that the firm uses to pursue its marketing objectives in the target market” (Kotler)  The four Ps Product - collection of features and benefits that provide customer satisfaction Price - value perceived in the mind of the consumer Promotion - marketing communications Place - covers location ,distribution, channels and logistics  Alternatives to The 7 Ps The 4 Ps of product, price, promotion and place PLUS People Process Physical evidence The 7Ps are more appropriate than the 4 Ps in the marketing of services.  Products, Services & Experiences Product is anything that can be offered in a market for attention, acquisition, use, or consumption that might satisfy a need or want Service is a product that consists of activities, benefits or satisfaction that is essentially intangible and does not result in the ownership of anything Experiences represent what buying the  What is a Product? Anything that can be offered to a market for attention, acquisition, use or consumption. Satisfies a want or a need and Includes: Physical Products Services Persons Places Organizations Ideas Combinations of the above Nature of a Product? Types of Products? Consumer products Industrial products  Product Classifications Consumer Products Convenience Products Shopping Products > Buy frequently & immediately > Buy less frequently > Low priced > Gather product information > Many purchase locations > Fewer purchase locations > Includes: > Compare for: Staple goods Suitability & Quality Impulse goods Price & Style Emergency goods Specialty Products Unsought Products > Special purchase efforts > New innovations > Unique characteristics > Products consumers don’t > Brand identification want to think about > Few purchase locations > Require much advertising & personal selling  Product and Service Classifications Industrial products products purchased for further processing or for use in conducting a business Classified by the purpose for which the product is purchased – Materials and parts – Capital – Raw materials Product and Service Decisions Product Product Mix Mix Decisions Decisions Width Width--number numberof of different differentproduct product lines lines Consistency Length Length--total totalnumber number Product ProductMix Mix-- of ofitems items all allthe theproduct product within withinthethelines lines lines linesoffered offered Depth Depth--number numberofof versions versionsof ofeach each product product End of lecture Four Thank you  New product development & the product life cycle Lecture 5  New Products  A product that is essentially new. Different from existing company products Different from competitors Minor improvements Basis for meeting customer changing needs. 78  Why New Products Fail “Over Championing” Overestimated Demand Poor Design Poor Marketing Execution High Development Costs Strong Competitive Reaction 79 New Product Development Process Marketing Business Strategy Analysis Development Concept Product Development Development and Testing Market Idea Testing Screening Idea Commercialization Generation 80  New Product Development Process 1: Idea Generation Idea Generation is the Systematic Search for New Product Ideas Obtained Internally From Employees and Also From: Customers Competitors Distributors Suppliers 81  New Product Development Process Step 2. Idea Screening Process to spot good ideas and drop poor ones as soon as possible. Many companies have systems for rating and screening ideas which estimate: – Market Size – Product Price – Development Time & Costs – Unit Costs – Rate of Return Then, the idea is evaluated against a set of general company criteria.  New Product Development Process Step 3. Concept Development 1. Develop New Product Ideas into Alternative Detailed Product Concepts 2. Concept Testing - Test the New Product Concepts with Groups of Target Customers 3. Choose the One That Has the Strongest Appeal to Target Customers 83 New Product Development Process Step 4. Marketing Strategy Part One Describes Overall: Target Market Planned Product Positioning Sales & Profit Goals Market Share Part Two Describes First-Year: Product’s Planned Price Distribution Marketing Budget Part Three Describes Long-Term: Sales & Profit Goals Marketing Mix Strategy 84  Step 5. Business Analysis Step 6. Product Development Business Business Analysis Analysis Review Review of of Product Product Sales, Sales, Costs, Costs, and and Profits Profits Projections Projections to to See See ifif They They Meet Meet Company Company Objectives Objectives If No, Eliminate Product Concept If Yes, Move to Product Development 85  7. Consumer-Goods Market Testing Where the Product and Marketing Program are Simulated Simulated Controlled Controlled Introduced into Test Test Market Market Test Test Market Market More Realistic Test AAfew fewstores storesthat thathave have Market Settings. Testin inaasimulated simulated agreed shopping environment shopping environment agreedtotocarry carrynew new to products productsfor foraafee. fee. toaasample sampleofof Sales- Sales- consumers. consumers. Wave Wave Standard Standard Research Research Test Test Market Market Test Testoffering offeringtrail trailto to Full Fullmarketing marketingcampaign campaign aasample sampleofof in inaasmall smallnumber numberof of consumers consumersin in representative cities. representative cities. successive successive periods. periods. 86  8:Commercialization When Whom Product Price Place Promotion Where 87  Adopter Categorization of the Basis of Relative Time of Adoption of Innovations 34% 34% Early Late majority majority 2 1/2% 13 1/2% 16% Innovators Early Laggards adopters Time of adoption innovations 88  Characteristics of the Innovation Rate of Adoption Relative advantage Compatibility Complexity Divisibility Communicability 89  Product life Cycle The stages of growth and sales in the life of a product. or The various stages a product goes through from the time of introduction until its eventual withdrawal from the market. Introduction Growth Maturity Decline. 90 Sales & profits ($) Sales & Profit Life Cycles Introduction Growth Maturity Decline Time 91  Introduction Stage Summary of Characteristics, Objectives, & Sales StrategiesLow sales Sales Low sales Costs Costs High High cost cost per per customer customer Profits Profits Negative Negative or or low low Create Create product product awareness awareness andand Marketing Marketing Objectives Objectives trial trial Product Product Offer Offer aa basic basic product product Usually Usually is is high; high; use use cost-plus cost-plus Price Price formula formula Distribution Distribution High High distribution distribution network network Create Create awareness awareness among among early early Advertising Advertising adopters adopters andand dealers dealers 92  Growth Stage Summary of Characteristics, Objectives, & Strategies Sales Sales Rapidly Rapidly rising rising sales sales Costs Costs Average Average cost cost per per customer customer declines declines Profits Profits Rising Rising profits profits Marketing Marketing Objectives Objectives Maximize Maximize market market share share Offer Offer new new product product design design (fighter (fighter Product Product brands), brands), extensions, extensions, service, service, and and warranty warranty Price Price Increase Increase Price Price Increase Increase number number of of distribution distribution Distribution Distribution outlets outlets Advertising Build Build awareness awareness and and preference preference inin Advertising the the mass mass market market 93  Maturity Stage Summary of Characteristics, Objectives, & Strategies Sales Sales Peak Peak sales sales Costs Costs Low Low cost cost per per customer customer Profits Profits High High profits, profits, then then lower lower profits profits Maximize Maximize profits profits while while defending defending Marketing Marketing Objectives Objectives market market share share Product Product Diversify Diversify brand brand and and models models Price Price Price Price to to match match or or beat beat competitors competitors Distribution Distribution Build Build more more intensive intensive distribution distribution Promotion Promotion Rely Rely more more on on sales sales promotion promotion 94  Maturity Stage Company tries to increase consumption of the current product. Changing characteristics such as quality, features, or styles to attract new users. Company tries to improve sales by changing one or more marketing mix elements. 95  Decline Stage Summary of Characteristics, Objectives, & Strategies Sales Sales Declining Declining sales sales Costs Costs High High cost cost per per customer customer Profits Profits Declining Declining profits profits Reduce Reduce expenditure and expenditure and maintain, maintain, Marketing Marketing Objectives Objectives reposition, reposition, harvest harvest or or drop drop the the product product Product Product Phase Phase out weak out weak items items Price Price Cut Cut price price Go Go selective: selective: phase phase out out Distribution Distribution unprofitable unprofitable outlets outlets Advertising Reduce Reduce to to level level needed needed toto retain retain Advertising hard-core hard-core loyal loyal customers customers 96 End of lecture Five Thank you SERVICES MARKETING & SERVICE DECISIONS LECTURE 6  What are Services Services are performances, deeds or efforts.  Examples of Service Industries 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 – airlines, travel agencies, theme park Others: – hair styling, pest control, plumbing, lawn maintenance, counseling services, health club Service Tangibility Spectrum Characteristics of Services  Service Case - Discuss You visit a hospital and the doctor tells you that for every 100 surgery he/she performs, 1 dies. Would you risk it and why?  Why manage service quality? High Competition for survival Substitutes = easy switching Consumer power High cost of service recovery in case of service failure  Marketing Strategies for Service Firms Managing Service Differentiation – Develop offer, delivery and image with competitive advantages. Managing Service Quality – Empower employees – Become “Customer obsessed” – Develop high service quality standards – Watch service performance closely Managing Service Productivity – Train current or new employees – Increase quantity by decreasing quality – Utilize technology  Marketing Strategies for Service Firms Improve service continuously. Concentrate on the areas most important to customer retention. Use customer satisfaction to expand revenues. Make sure service improvement efforts are financially accountable. Delight – don’t just satisfy – the customer  Possible Service delivery results Dissatisfactio n Satisfaction Customer Delight You decide the expression for your customers End of lecture Six Thank you PRICING STRATEGIES & PROGRAMS LECTURE 7  What is Price The amount of money charged for a product or service; the sum of the values that customers exchange for the benefits of having or using the product or service. Price is the only element in the marketing mix that produces revenue; all other elements represent costs. 110  Pricing The process of placing monetary value on the products and services. Importance:  Produces revenue  quality perception  profitability  demand 111  Pricing Process 1. Selecting the pricing objective 2. Determining demand 3. Estimating costs 4. Analyzing competitors’ costs, prices, and offers 5. Selecting a pricing method 6. Selecting final price 112  Pricing Methods Customer Value- based Cost-based Competition-based 113  Cost-based Pricing Setting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk.  Cost-plus pricing (Mark-up pricing)  Break even pricing  Target return pricing 114  Value-based Pricing Customer value-based pricing uses buyers’ perceptions of value, not the seller’s cost, as the key to pricing. Perceived value pricing Value-added pricing 115 Cost-Based Pricing Versus Value-Based Pricing  Competition-based pricing Setting prices based on competitors’ strategies, prices, costs, and market offerings Going rate pricing Below the market pricing Sealed bid pricing 117  Promotional Pricing Loss-leader pricing Bait pricing Special-event pricing Cash rebates Low-interest financing Longer payment terms Warranties & service contracts Psychological discounting 118  New Product pricing  Skimming pricing product is unique demand is inelastic high price will not attract competition.  Penetration pricing market is price sensitive demand is elastic competitors should not react low price and low quality 119  Discriminatory Pricing Customer Segment Product-form Location Time 120 Product mix Pricing 121 Discount and allowances  Quantity  Seasonal  Trade/functional  Cash  Trade in allowance  Promotional allowance  Stocking allowance 122  Price-Reaction Program for Meeting a Competitor’s Price Cut Hold our price Has competitor No at present level; cut his price? continue to watch competitor’s Yes No No price Is the price Is it likely to be How much has likely to significantly Yes aprice permanent Yes his price been cut? cut? hurt our sales? By less than 2% By 2-4% By more than 4% Include a Drop price by Drop price to pesewa-off coupon half of the competitor’s for the next competitor’s price purchase price cut 123 End of lecture Seven Thank you DESIGNING AND MANAGING INTEGRATED MARKETING COMMUNICATIONS LECTURE 8 & 9  Elements in the Communication Process Message SENDER SENDER Decoding Encoding Receiver Media Media Noise Noise Feedback Feedback Response Response 126  The Marketing Communications Mix Any AnyPaid PaidForm FormofofNon-personal Non-personal Advertising Advertising Presentation Presentation by anIdentified by an Identified Sponsor. Sponsor. Sales Promotion Short-term Incentives to Encourage Trial or Purchase. Protect and/or Promote Public Relations Company’s Image/products. Personal Personal Selling Selling Personal Presentations. Direct Communications Direct Marketing With Individuals to Obtain an Immediate Response. 127  Communications process Step Step 1. 1. Identifying Identifying the the Target Target Audience Audience Step Step 2. 2. Determining Determining the the Communication Communication Objectives Objectives Buyer BuyerReadiness ReadinessStages Stages Awareness Knowledge Liking Preference Conviction Purchase Purchase 128 Step Step 3. 3. Designing Designing the the Message Message Message Content Rational Appeals Emotional Appeals Moral Appeals Message Structure Draw Conclusions Single v. double Argument Order Message Format Layout, Words, & Sounds, Body Language Message Source Expertise, Trustworthiness 129 Step Step 4. 4. Select Select Communications Communications Channel Channe Personal Communication Channels Nonpersonal Communication Channels 130 Step Step 5. 5. Establish Establish the the Budget Budget % Of Affordable Sales Competitive Objective Parity & Task 131 Step Step 6. 6. Decide Decide on on Communications Communications Mix Mix Advertising Advertising Public, Public,Pervasive, Pervasive,Expressive, Expressive,Impersonal Impersonal Sales Sales Promotion Promotion Communication, Communication,Incentive, Incentive,Invitation Invitation Public Public Relations Relations & & Publicity Publicity Credibility, Credibility,Surprise, Surprise,Dramatization Dramatization Personal Personal Selling Selling Personal PersonalConfrontation, Confrontation,Cultivation, Cultivation,Response Response Direct Direct Marketing Marketing Nonpublic, Nonpublic,Customized, Customized,Up-to-Date, Up-to-Date,Interactive Interactive 132 Step Step 7. 7. Measure Measure Results Results Step Step 8. 8. Manage Manage the the IMC IMC Process Process 133  Advertising  Anypaid form of non personal presentation and promotion of ideas, goods and services by an identified sponsor. 134  Advertising Objectives  Specific Communication Task  Accomplished with a Specific Target Audience  During a Specific Period of Time Informative InformativeAdvertising Advertising Persuasive PersuasiveAdvertising Advertising Build BuildPrimary PrimaryDemand Demand Build BuildSelective SelectiveDemand Demand Comparison ComparisonAdvertising Advertising Reminder ReminderAdvertising Advertising Compares ComparesOne OneBrand Brandto to Keeps KeepsConsumers ConsumersThinking Thinking Another Another About AboutaaProduct. Product. 135  Profiles of Major Media Types Newspapers Advantages: Flexibility, timeliness; good local market coverage; broad acceptance, high believability Limitations:Short life; poor reproduction quality; small pass-along audience Television Advantages: Combines sight, sound, motion; high attention; high reach; appealing to senses Limitations: High absolute costs; high clutter; fleeting exposure; less audience selectivity Direct Mail Advantages: Audience selectivity; flexibility, no ad competition within same medium; allows personalization Limitations: Relative high cost; “junk mail” image 136  Profiles of Major Media Types Radio Advantages: Mass use; high geographic and demographic selectivity; low cost Limitations:Audio only; fleeting exposure; lower attention; non-standardized rates; fragmented audiences Magazines Advantages: High geographic and demographic selectivity; credibility and prestige; high-quality reproduction; long life; good pass-along readership Limitations: Long ad purchase lead time; waste circulation; no guarantee of position Outdoor Advantages: Flexibility; high repeat exposure; low cost; low message competition Limitations: Little audience selectivity; creative limitations 137  Advertising Advertising Strategy Strategy Message Message Execution Execution Turning the “Big Idea” Into an Actual Ad to Capture the Target Market’s Attention and Interest. Testimonial Testimonial Slice Sliceof ofLife Life Evidence Evidence Scientific Scientific Lifestyle Lifestyle Evidence Evidence Typical Typical Technical Message Message Technical Fantasy Expertise Expertise Execution Execution Fantasy Styles Styles Personality Mood Moodoror Personality Symbol Image Image Symbol Musical Musical 138  Advertising Evaluation Advertising Advertising Program Program Evaluation Evaluation Communication CommunicationEffects Effects Sales SalesEffects Effects Is Isthe theAd AdCommunicating CommunicatingWell? Well? Is Isthe theAd AdIncreasing IncreasingSales? Sales? 139  Sales Promotion  Short term measures designed to give consumers incentives to buy a product.  Featured offer: Something given as the incentive to encourage the purchase.  Duration. It can not be permanent. 140  Why the increase in Sales Promotion?  Growing retailer power  Declining brand loyalty  Increased promotional sensitivity  Brand proliferation  Fragmentation of consumer market  Short-term focus  Increased managerial accountability  Competition  Clutter 141  Designing a Sales Promotion Determine the objectives Determine the featured offer Design the programme Determine the entry requirement How to win and redeem the prize Determine the duration Evaluation 142  Consumer Consumer Promotion Promotion Consumer-Promotion Consumer-Promotion Objectives Tools Entice EnticeConsumers Consumersto to Samples Advertising Advertising Try a New Product Samples Try a New Product Specialties Specialties Coupons Coupons Lure LureCustomers CustomersAway Away Rewards From FromCompetitors’ Competitors’Products Cash Products CashRefunds Refunds Patronage Patronage Contests Contests Rewards Get GetConsumers Consumersto to“Load “LoadUp’ Up’ Rewards Price PricePacks Packs on onaaMature MatureProduct Product Sweepstakes Sweepstakes Hold Hold&&Reward Reward Loyal Loyal Premiums Premiums Games Games Customers Customers Consumer ConsumerRelationship Relationship Point-of-Purchase Point-of-Purchase Building Building Displays Displays 143  Trade Promotions Trade-Promotion Trade-Promotion Objectives Tools Persuade PersuadeRetailers Retailersor or Wholesalers Price-Offs Premiums Wholesalersto toCarry CarryaaBrand Brand Price-Offs Premiums Give Allowances Patronage Patronage Displays GiveaaBrand BrandShelf ShelfSpace Space Allowances Rewards Rewards Buy-Back Buy-Back Promote PromoteaaBrand Brandin in Discounts Discounts Guarantees Guarantees Advertising Advertising Push PushMoney Money Free FreeGoods Goods Push PushaaBrand Brandto toConsumers Consumers Specialty Specialty Advertising Advertising Contests Contests Items Items 144  Business-to-Business Promotion Business-Promotion Objectives Business-Promotion Tools Generate GenerateBusiness BusinessLeads Leads Conventions Conventions Stimulate StimulatePurchases Purchases Trade TradeShows Shows Reward RewardCustomers Customers Sales SalesContests Contests Motivate MotivateSalespeople Salespeople 145  Personal Selling Defined A form of person to person communication in which a salesperson works with prospective buyer and attempts to influence purchase in the direction of his or her company’s products or services  Importance of Personal Selling Allows the firm to immediately respond to the needs of the prospect Allows for immediate customer feedback Results in an actual sale  The Personal Selling Process Pre- Prospecting Approach Approach Need Follow-Up Identification Gaining Handling Presentation Commitment Objections  The Personal Selling Process Prospecting Prospecting involves finding qualified sales leads Qualified sales leads: potential customers that have a need for the salesperson’s product, and are able to buy Referrals: obtained by the salesperson asking current customers if they know of someone else who might have a need for the salesperson’s product Cold-calling: means contacting prospective customers without a prior arrangement  The Personal Selling Process Pre-approach The collection of information about the potential customer and the customer’s company prior to the initial visit Researching the prospect and the company will assist the salesperson in planning the initial presentation to the prospective customer  The Personal Selling Process Approach The development of rapport with the customer The chance to make a good first impression The salesperson should adapt to the potential customer’s social style  The Personal Selling Process Need Identification Requires asking probing questions of the prospective customer to determine needs The salesperson should ask open- ended questions Make sure that the customer’s needs and potential concerns are addressed  The Personal Selling Process Presentation The focus of the sales presentation is the salesperson’s explanation of how the features of the product provide “benefits” Presentation may be flexible or memorized The salesperson should be prepared to provide documentation for any statements of fact that are made  The Personal Selling Process Handling Objections The salesperson may have failed to provide adequate information, or have not demonstrated how the product meets the needs of the prospect Objection as a sign of interest on the part of the prospect Provide information that will ensure the prospect’s confidence in making the purchase  The Personal Selling Process Gaining Commitment Commitment is gained when the prospect agrees to take the action sought by the salesperson The salesperson must ask for commitment  The Personal Selling Process Follow- Up The salesperson complete any agreed upon actions The salesperson should stay in touch after the sale by writing thank-you notes, clipping and mailing newspaper articles of interest to the prospect and calling on the customer to ensure the customer’s satisfaction End of lecture 8 & 9 Thank you PUBLIC RELATIONS & DIRECT MARKETING LECTURE 10  Public Relations Public Relations refers to the function of building good relations with the company’s various publics by obtaining favourable publicity, building up a good corporate image, and handling or heading off unfavourable rumours, stories and events.  Public Relations Functions The PR department may perform any or all of these functions: Press relations or press agency -creating and placing newsworthy information in the news media to attract attention to a person, product or service. Product publicity -publicizing specific products  Public Relations Functions Public affairs -building and maintaining national or local community relationships Lobbying -building and maintaining relationships with legislators and government officials to influence legislation and regulation  Public Relations Functions Investor relations -maintaining relationships with shareholders and others in the financial community. Development -working with donors or members of nonprofit organizations to gain financial or volunteer support.  Major tools for Public Relations The major tools for Public Relations include: News Speeches Special events Written materials Audiovisual materials Public service activities/C.S.R.  Impact of Public Relations Public Relations impacts on the firm’s activities in the following ways: Strong impact on public awareness Cost effective as compared to advertising Greater credibility from knock-down effect Stirs up customer excitement  Direct Marketing Direct marketing refers to the act where an organization connects directly with carefully targeted segments or individual customers, often on a one-to-one interactive basis. Direct marketing involves the use of detailed databases which companies use to tailor their marketing offers and communications to the needs of the narrowly defined segments, or individual buyers.  Forms of Direct Marketing The major forms of Direct Marketing include: Online marketing Direct mail marketing Catalogue marketing Telemarketing New digital technologies Direct response television marketing  Benefits of Direct Marketing to Buyers It is convenient. It is private Easy to facilitate Provides buyers with a wide array of products. Provides access to comparative information about the company’s products and that of competitors.  Benefits of Direct Marketing to Sellers Powerful tool for building customer relationships Effective in targeting Efficient/Low cost Quick medium for reaching market Greater flexibility  Forms of Direct Marketing The major forms of Direct Marketing include: Online marketing Direct mail marketing Catalogue marketing Telemarketing New digital technologies Direct response television marketing End of lecture Ten Thank you SELECTING AND MANAGING MARKETING CHANNELS LECTURE 11  Objectives  Work Performed by Marketing Channels  Channel-Design Decisions  Channel-Management Decisions  Channel Dynamics  Retailing  Wholesaling  Market Logistics 172 A channel of distribution or place is the process of moving products from the point of production to the point of consumption.  It involves selecting and managing relations with the channel members 173  Itcould also be defined as the route taken by products as they move from the factory to the final consumers.  Channel members include  Wholesalers  Retailers  Agents  Transportation firms 174  Warehousing firms  Channel Channel Functions Functions Information Information Transfer Transfer Communication Communication Payments Payments Negotiation Negotiation Physical Physical Distribution Distribution Ordering Ordering Risk Risk Taking Taking Financing Financing 175  Consumer Consumer Marketing Marketing Channels Channels 0-level channel Manufacturer Manufacturer Consumer Consumer 1-level channel Manufacturer Manufacturer Retailer Retailer Consumer Consumer 2-level channel Mfg Mfg Wholesaler Wholesaler Retailer Retailer Consumer Consumer 3-level channel Mfg Mfg Wholesaler Wholesaler Agent Agent Retailer Retailer Consumer Consumer 176  Industrial Marketing Channels Manufacturer Industrial Consumer distributors Manufacturer’s representative Manufacturer’s sales branch 177  Channel design decisions  Analyze customer desired decisions  Do consumers want to buy from nearby locations or willing to travel to more distant and centralized locations?  Would customers rather buy in person, by phone, or online?  Do they value breadth of assortment or do they prefer specialization?  Do consumers want many add-on services (delivery, installation, repairs), or will they obtain these services elsewhere?  Establish channel objectives & constraints  Which segment to serve and the best channels to use  company’s channel objectives are also influenced by the nature of the company, its products, its marketing intermediaries, its competitors, and the environment. (example, the company’s size and financial situation) 178  Channel design decisions  Identify major channel alternatives  Types of intermediaries,  Number of intermediaries, and the  Responsibilities of each channel member  Evaluate the major alternatives  Economic criteria: comparing likely sales, costs and profitability of the different channel alternatives.  Adaptability criteria: comparing flexibility in terms of environmental changes (typically for the long-term) 179 Channel management Decisions Selecting Selecting channel channel members members FEEDBACK Training Training Motivating Motivating Evaluating Evaluating 180 Conventional Distribution Channel vs. Vertical Marketing Systems Conventional Vertical marketing marketing channel channel Manufacturer Manufacturer A vertical marketing system Wholesaler in which independent firms at different levels of Wholesaler production and distribution join together through contracts Retailer Retailer Consumer Consumer 181 Causes of Channel Conflict  Incompatibility  Difference in Perception  Dependence 182  Relevance Relevance of of Wholesalers Wholesalers Management Management Selling Sellingand and Services Services&& Advice Advice Promoting Promoting Market Market Buying Buyingand and Information Information Wholesaler Assortment AssortmentBuilding Building Risk RiskBearing Bearing Functions Bulk BulkBreaking Breaking Financing Financing Warehousing Warehousing Transporting Transporting 183  Wholesaling Merits Demerits  Holder of buffer stock  Market information  Divided loyalty  Advertises goods in  Control of resale own name  Lower cost in personal policies selling  High prices  Finance  Transportation  Takes credit and  Risk bearing good will meant for manufacturers. 184  Retailing Merits Demerits  Information  High prices  Bulk breaking  Costly due to  Customer service margin  Consumer  Divided loyalty education 185  Types Types of of Non-store Non-store Retailing Retailing NonStore Retailing Direct Accounts for More Direct Selling Selling Than 12% of All Consumer Purchases, and is Direct Direct Marketing Marketing trending up. Automatic Automatic Vending Vending Buying Buying Services Services 186  Wheel of Retailing Mid Price Mid Status Mid Margin Low Price Low Status High Price Low Margin High Status High Margin 187  Legal & Ethical Issues in Channel Relations  Exclusive Dealing When the seller requires that these dealers not handle competitors’ products  Exclusive Territories An agreement not to sell to other dealers in a given area  Tying Agreements Selling to dealers only if they will take some or all the rest of the product line  Dealers’ Rights 188  Logistics Management Market logistics: Planning, implementation & controlling the physical flows of materials and final goods from point of origin to point of use to meet customer requirements at a profit. 189  Goals Goals of of the the Logistics Logistics System System Provide a Targeted Level of Customer Service at the Least Cost. Maximize Profits, Not Sales. Higher Distribution Costs/ Higher Customer Service Levels Lower Distribution Costs/ Lower Customer Service Levels 190  Logistics Systems Costs Costs Order OrderProcessing Processing Minimize MinimizeCosts Costsofof Submitted Submitted Attaining AttainingLogistics Logistics Processed Processed Objectives Objectives Shipped Shipped Logistics Transportation Functions Water, Truck, Warehousing Warehousing Rail, Storage Storage Pipeline & Air Distribution Distribution Inventory Inventory When Whento toorder order How Howmuch muchto toorder order 191 Just-in-time Just-in-time  Transportation Modes Rail Rail Most Mostcountries’ countries’largest largestcarrier, carrier,cost-effective cost-effective for forshipping shippingbulk bulkproducts, products,piggyback piggyback Truck Truck Flexible Flexiblein inrouting routing&&time timeschedules, schedules,efficient efficient for forshort-hauls short-haulsofofhigh highvalue valuegoods goods Water Water Low Lowcost costfor forshipping shippingbulky, bulky,low-value low-value goods, goods,slowest slowestform form Pipeline Pipeline Ship Shippetroleum, petroleum,natural naturalgas, gas,and andchemicals chemicals from fromsources sourcestotomarkets markets Air Air High Highcost, cost,ideal idealwhen whenspeed speedisisneeded neededororto to ship shiphigh-value, high-value,low-bulk low-bulkitems items 192 End of lecture Eleven Thank you