Basic Marketing PDF

Basic Marketing Yoshihiro Takeguchi JICA PROJECT TEAM 1  Table of Contents Management Strategy & Marketing Marketing Management Process Target Setting STP(segmentation/targeting/positioning) Market Research Consumer Behavior...

Basic Marketing Yoshihiro Takeguchi JICA PROJECT TEAM 1  Table of Contents Management Strategy & Marketing Marketing Management Process Target Setting STP(segmentation/targeting/positioning) Market Research Consumer Behavior Marketing Mix & 4Ps IMC(integrated marketing communication) Digital Marketing Relationship Marketing Internet Marketing(Web Marketing) 2  Table of Contents Management strategy & Marketing Marketing Management Process Target Setting STP(segmentation/targeting/positioning) Market Research Consumer Behavior Marketing Mix & 4Ps IMC(integrated marketing communication) Digital Marketing Relationship Marketing Internet Marketing(Web Marketing) 3  Overall Management Strategy [Company Activity and Management Strategy] Money Market Raw Material Product Market Company Market Add Value Labor Market Company Activity (ex. Manufacturing company) Raise fund from money market Procure raw materials for manufacturing Management Hire workers and staffs to operate the business Strategy is a MUST Produce the products(add value) and sell & collect money 4  Overall Management Strategy [Management Philosophy and Management Strategy] A company philosophy is “The way we do Management things around here.” In a conventional sense, philosophy company philosophy stands for the basic beliefs that people in the business are expected to hold and be guided by – informal unwritten Vision guidelines on how people should perform and conduct themselves. Management A vision is a vivid mental image of what you Strategy want your business to be at some point in the future, based on your goals and aspirations. A vision statement captures, in writing, the Business Strategy essence of where you want to take your business and can inspire you and your staff to reach your goals. 5 Business Unit Strategy and Function Strategy Management philosophy A division B division C division Vision HR strategy Management Strategy Finance strategy Business Strategy Operation strategy Business Unit Strategy Marketing Strategy Functional Strategy others Each strategy should be consistent with Management Strategy. 6  What is Marketing? Definition of Marketing Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. (Approved 2017) (American Marketing Association) Marketing is the process of getting potential clients or customers interested in your products and services. Marketing involves researching, promoting, selling, and distributing your products or services 7  What is Marketing? In the simplest and not technical language marketing may be defined as a business function entrusted with the creation and satisfaction of customer to achieve the aims of business itself. According to Philip Kotler, “marketing is a human activity directing at satisfying needs and wants through exchange process.” Business Aims at Profit: 1. To realize profit, a sale has to be made. 2. To make the sale, a customer has to be created. 3. To retain the customer, he/she has to be satisfied. 4. To satisfy the customer, his/her needs have to be met. 5. To meet his/her needs, the product should conform to the requirements of the customer. 8  Marketing 5 Concepts 5. 1. 2. 3. 4. Production Marketing Social Product Selling Marketing Sales Concept Market Concept (Product-out) (Market-in) 9  Marketing 5 Concepts 1. The Production Concept. This concept is the oldest of the concepts in business. It holds that consumers will prefer products that are widely available and inexpensive. Managers focusing on this concept concentrate on achieving high production efficiency, low costs , and mass distribution. They assume that consumers are primarily interested in product availability and low prices. This orientation makes sense in developing countries, where consumers are more interested in obtaining the product than in its features. 10  Marketing 5 Concepts 2. The Product Concept. This orientation holds that consumers will favor those products that offer the most quality, performance, or innovative features. Managers focusing on this concept concentrate on making superior products and improving them over time. They assume that buyers admire well-made products and can appraise quality and performance. However, these managers are sometimes caught up in a love affair with their product and do not realize what the market needs. Management might commit the “better-mousetrap” fallacy, believing that a better mousetrap will lead people to beat a path to its door 11  Marketing 5 Concepts 3. The Selling Concept. This is another common business orientation. It holds that consumers and businesses, if left alone, will ordinarily not buy enough of the selling company’s products. The organization must, therefore, undertake an aggressive selling and promotion effort. This concept assumes that consumers typically show buying inertia or resistance and must be coaxed into buying. It also assumes that the company has a whole battery of effective selling and promotional tools to stimulate more buying. Most firms practice the selling concept when they have overcapacity. Their aim is to sell what they make rather than make what the market wants. 12  Marketing 5 Concepts 4. The Marketing Concept. This is a business philosophy that challenges the above three business orientations. Its central tenets crystallized in the 1950s. It holds that the key to achieving its organizational goals (goals of the selling company) consists of the company being more effective than competitors in creating, delivering, and communicating customer value to its selected target customers. The marketing concept rests on four pillars: target market, customer needs, integrated marketing and profitability. 13  Marketing 5 Concepts 5. The Societal Marketing Concept. This concept holds that the organization’s task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors (this is the original Marketing Concept). Additionally, it holds that this all must be done in a way that preserves or enhances the consumer’s and the society’s well-being. 14 Sales Concept vs Marketing Concept Distinctions between the Sales Concept and the Marketing Concept: The Sales Concept focuses on the needs of the seller. The Marketing Concept focuses on the needs of the buyer. The Sales Concept is preoccupied with the seller’s need to convert his/her product into cash. The Marketing Concept is preoccupied with the idea of satisfying the needs of the customer by means of the product as a solution to the customer’s problem (needs). The Marketing Concept represents the major change in today’s company orientation that provides the foundation to achieve competitive advantage. This philosophy is the foundation of consultative selling. 15  Market In vs Product Out Market IN Market In Product Out Marketing Survey R&D NEEDS WANTS DEMANDS Consumer Voice Unique Technology Product Product Out SEEDS Growing Market Introduction & Mature (Technology) Similarity Differencciation 16  Exercise What product and service satisfy your needs ? 1. List your favorite product and service which satisfy your needs. 2. State possible reasons why as many as you can. 17  Table of Contents Management strategy & Marketing Marketing Management Process Target Setting STP(segmentation/targeting/positioning) Market Research Consumer Behavior Marketing Mix & 4Ps IMC(integrated marketing communication) Digital Marketing Relationship Marketing Internet Marketing(Web Marketing) 18 Marketing Management Process Environmental analysis External/internal Target Setting for Marketing Revenue/Profit/Penetration/Brand image Market Segmentation Geographic/demographic/psychographic Target Marketing Full coverage/ Needs oriented/ Focus Market Positioning Business unique selling point Marketing Mix 4Ps Product/Price/Place/Promotion 19  Marketing Environment Macro External Environment Demographic Politics/Law Society/Culture Micro External Environment People Asset Money Consumer Industry Internal Recourses Information Economy Nature Competitor Technology 20  Target Setting for Marketing Revenue, Profit, Profit % Revenue Quantitative Market Share (based on Competitive Goal market) Qualitative Corporate Image, Corporate Branding Goal Customer Satisfaction 21  Frameworks for Target Setting PEST analysis Are we recognizing changes in external environments? Growth Matrix Which strategy of Growth Matrix are we taking? Competitive Advantage Cost Leadership? Differentiation? Focusing? Competing position Leader? Challenger? Nicher? Follower? Is the target market attractive? Isn’t the competition there 5 Forces harsh? Resources/ Can we conquer our weakness and make the most of our Core Competence / VRIO strength? Have we inquired the balance among our company, customers, 3C analysis and competitors? Domain Does our targeting match our domain (To Who, What, How) ? 22  Examples of Marketing Objectives Bad Objectives Good Objectives Our objective is to be a leader in the Our objective is to spend 12 percent of sales industry in terms of new product revenue between 2013 and 2015 on research development and development in an effort to introduce at least five new products in 2016. Our objective is to maximize profits. Our objective is to achieve a 10 percent return on investment during 2013, with a payback on new investments of no longer than four years. Our objective is to better serve customers Our objective is to obtain customer satisfaction survey, and to retain at least 85 percent of our 2013 customers as repeat purchasers in 2014. Our objective is to be the best that we can Our objective is to increase market share from be. 30 percent to 40 percent in 2013 by increasing promotional expenditures by 14 percent. 23  Table of Contents Management strategy & Marketing Marketing Management Process Target Setting STP(segmentation/targeting/positioning) Market Research Consumer Behavior Marketing Mix & 4Ps IMC(integrated marketing communication) Digital Marketing Relationship Marketing Internet Marketing(Web Marketing) 24 STP (Segmentation / Targeting / Positioning ) One way to think about market is on a continuum that ranges from un-differentiated, where everybody essentially needs and wants the same thing, to singular, where each person has unique needs and wants. The territory between these two extreme is where segmentation approaches come into play Basic logic and principle behind segmentation Not all customers are alike Subgroups of customer can be identified on same basis of similarity Subgroups will be smaller and more homogeneous than overall market. Needs and wants of subgroup are more efficiently and effectively addressed than would be possible the homogeneous full market. Criteria for effective segmentation Sufficient size to warrant investing in unique value-creating strategy Readily identifiable and can be measured. Cleary differentiated one or more dimensions when communicating the value of the product. Reachable both in term of communication and product to deliver the value of product and can be effectively and efficiently managed. 25  Market segmentation Examples Consumer Markets Segmentation Base Example of Market Segments Geographic: Continents Africa, Asia, Europe, North America, South America Global regions Southeast Asia, Mediterranean, Caribbean Countries China , Canada, France, United States, Brazil Country region Pacific Northwest, Middle Atlantic, Midwest Population density Urban, Suburban, rural Climate Tropical, temperate, cold Demographic: Age Under 6 years old, 6-12,13-19,20-29,30-39,40-49,50-59,60+ Gender Male, female Family size 1-2 persons, 3-4 persons, more than 4 persons Family life cycle Single, young, married, with children, sole survivor Income Under $10,000 per year, $10,000-$19,999, $20,000-$29,999, $30,000-$39,999,$40,000- $49,999,$50,000-$59,999,$60,000-$69,999, $70,000- Education Grade school or less, some high school, graduated from high school, some college, graduated from college, some graduate work, graduate degree Marital Status Single, married, divorced, widowed 26  Market Segmentation Examples Consumer Markets Segmentation Base Example of Market Segments Behavior: Media usage Newspaper, magazine, TV, Internet, FB, Twitter Specific media usage Sports illustrated, Cosmopolitan, Ebony Payment method Cash, Visa, Mater-Card, American Express, Check Loyalty status None, some, total Usage rate Light, medium heavy User status Nonuser, ex-user, current user, potential user Usage situation Work, home, vacation, commuting Combined approaches: Psychographics Achievers, strivers, strugglers Person / situation College students for lunch, executive for business dinner Geodemographic Money and Brains, American Dreams, Bohemian Mix 27 Selecting Target Markets : Some Questions Marketing Managers Should answer 1/3 Measurability Questions 1. What are the appropriate bases for segmenting this market and are these bases readily measurable? 2. Are secondary data available on these bases so that the market segment can be identifies and measured inexpensively? 3. If primary data are needed, is there sufficient return on investment to do the research? 4. Are specific names and addresses of people in this market segment needed, or is general knowledge of their existence, number, and geographic location sufficient? 5. Can purchases of people in this market segment be readily measured and tracked? 28  Selecting Target Markets : Some Questions Marketing Managers Should answer 2/3 Meaningfulness Questions 1. How many people are in this market segment and how frequently will they purchase our product? 2. What market share can we expect in this segment? 3. What is the growth potential of this segment? 4. How strong is competition for this market segment and how is it likely to change in the future? 5. How satisfied are customers in this market segment with current product offerings? 29  Selecting Target Markets : Some Questions Marketing Managers Should answer 3/3 Marketability Questions 1. Can this market segment be reached with our current channels of distribution? 2. If new channels are needed, can we establish them efficiently? 3. What specific promotion media do these people read, listen to, or watch? 4. Can we afford to promote to these people in the appropriate media to reach them? 5. Are people in this market segment willing to pay a price that is profitable for the company? 6. Can we produce a product for this market segment and do so profitably? 30  Target Marketing by Kotler Marketing Mix/Products Segment Mass Marketing Undifferentiated 1 1 Marketing strategy All market 1 1 Differentiated Marketing strategy 2 2 3 3 Concentrated 1 Marketing strategy 1 2 MSME Model 3 31  Target Marketing by Abell M1 M2 M3 M1 M2 M3 M1 M2 M3 P1 P1 P1 P2 P2 P2 P3 P3 P3 Focus on 1 segment Focus on product Focus on market M1 M2 M3 M1 M2 M3 P1 P1 P2 P2 M=Market P=Product P3 P3 32 Focus on selected segment Cover all market  Positioning MAP Positioning is a marketing process that involves differentiating a product or service offering from what already exists or is already offered by competitors. It involves the discovery and the communication of the business’ unique selling point in relation to the competitors. Positioning maps are diagrams drawn to illustrate the customer perception of the business’ offering based on price, quality, or other product benefits and how the perception compares against the competitors. The visual diagram helps marketers in coming up with the appropriate positioning strategy, which may involve developing new competitive advantages or optimizing existing ones. To create a position map one needs to define the consumer needs that they would like to understand and develop a market scope for the analysis. Price and the benefit that will be used in the mapping need to be defined, for instance, the price can be the retail or wholesale price of the different products. The primary benefit can be the quality, features, and serviceability among other parameters. The different products covered would then be analyzed and placed in their rightful places (quadrants) based on how they combine/relate to the price and the primary product benefit. 33  Positioning MAP 【A】 B 【B】 【C】 A A B A B ？ C E C A D C D D F E G Case Situation Interpretation 【A】 Our company and competitors are → Differentiation is not sufficient. overlapped. 【B】 Companies are aligned in one lime. → Axis of KBF (key buying factor) is inadequate. 【C】 There is no market/no competitors at present. 34 Blank zone exists. → Could there be a business chance?  Positioning Map Example 1/2 Women's clothing High Price A E Chic/Quiet D Colorful/Gaudy C B Low Price 35 Positioning Map Example 2/2 36  Exercise Let’s share an actual example of “Target marketing” 1. State as many industry for consumer market as you can think of 2. Select one industry and make target marketing (1) Step1: Segmentation (2) Step2: Targeting (3) Step3: Positioning 37  Table of Contents Management strategy & Marketing Marketing Management Process Target Setting STP(segmentation/targeting/positioning) Market Research Consumer Behavior Marketing Mix & 4Ps IMC(integrated marketing communication) Digital Marketing Relationship Marketing Internet Marketing(Web Marketing) 38  Marketing Research The Five Ps of the Research Process Market research is the process of Purpose of the research determining the viability of a new service or product through research Plan of the research conducted directly with potential customers. Market research allows a Performance of the research company to discover the target market and get opinions and other Processing of research data feedback from consumers about their interest in the product or service. Preparation of research report 39  Data Collection Methods of Marketing Research Method Advantages Disadvantages Group interview ・Depth of information collected. ・Requires expert moderator ・Flexibility in use. ・Questions of group size and acquaintanceships of ・Relatively low cost participants ・Data collected quickly ・Potential for bias from moderator ・Small sample size Telephone ・Centralized control of data collection. ・Resistance in collecting income, financial data. surveys ・More cost-effective than personal interviews. ・Limited depth or response. ・Data collected quickly ・Disproportionate coverage of low-income segments. ・Abuse of phone by solicitors. ・Perceived intrusiveness. Mail Surveys. ・Cost-effective per completed response. ・Refusal and contact problems with certain segments. ・Broad geographic dispersion ・Limited depth of response. ・Ease of administration ・Difficult to estimate nonresponse biases. ・Data collected quickly ・Resistance and bias in collecting income, financial data. ・Lack of control following mailing Personal ・More depth of response than telephone interviews. ・Easy to transmit biasing cues. (in-depth) ・Generate substantial number of ideas compared with ・Not-at-homes interviews group methods. ・Broad coverage often infeasible ・Cost per contact high. ・Data collection time may be excessive 40  Method Advantages Disadvantages Internet surveys ・Inexpensive, quickly executed. ・Responses must be checked for duplication, bogus ・Visual stimuli can be evaluated. responses. ・Real-time data processing possible. ・Respondent self-selection bias. ・Can be answered at convenience of respondent ・Limited ability to qualify respondents and confirm responses. ・Difficulty in generating sample frames for probability sampling. Experimental ・Useful in work association tests of new brand names. ・Require trained interviewers. design(Projective ・Less threatening to respondents for sensitive topics. ・Cost per interview high. Techniques) ・Can identify important motives underlying choices Observation ・Can collect sensitive data. ・Appropriate only for frequently occurring behaviors. ・Accuracy of measuring overt behaviors. ・Unable to assess opinions of attitudes causing behaviors. ・Different perspective than survey self-reports. ・May be expensive in data-collection-time costs. ・Useful studies of cross-cultural differences Leaving method ・Flexibility in collection data, answering questions, probing ・Limited time. respondents. ・Sample composition or representativeness is suspect. ・Data collected quickly. ・Costs depend on incidence rates. ・Excellent for concept tests, coly evaluation, other visuals. ・Interviewer supervision difficult. ・Fairly high response rates. 41  Comparison of data collection Group Personal Telephone Mail Leaving Internet Data amount Much Much Mid Mid Much Mid Complex Possible Possible Party Partly Partly Partly Question Possible Visual Data Possible Possible Partly Partly Possible (videocall) Response Rate Mid Mid Mid Low Mid Mid Data collection Mid Mid Short Long Long Short Period Interviewer Vias High High Mid n/a Low n/a Answer bias Very high Very high Mid Very low High Very low 42  Table of Contents Management strategy & Marketing Marketing Management Process Target Setting STP(segmentation/targeting/positioning) Market Research Consumer Behavior Marketing Mix & 4Ps IMC(integrated marketing communication) Digital Marketing Relationship Marketing Internet Marketing(Web Marketing) 43  What is Consumer Behavior? In general terms, consumer behavior is a psychologically-based study of how individuals make buying decisions; what motivates them to make a purchase. Several facets of consumer behavior exist, such as: How a consumer feels about certain brands, products, or services What motivates a consumer to pick one product over another and why What factors in a consumer's everyday environment affect buying decisions or brand perceptions and why How consumers make decisions in groups or when they are alone 44  Customer Behavior History Information Elaboration S-R S-O-R Process Likelihood Model Model Model Model 45  Customer Behavior History Passive Positive Information Elaboration S-R S-O-R Process Likelihood Model Model Model Model Passive Stimulus Stimulus Internal Infor Rational Process Emotional Black Box Organization External Infor Process Response Response Response Response 46 Psychological Customer Behavior Models Beginning w/ Internet w/ SNS Modern DECAX AIDA AISAS VISAS Dual AIDMA AISCEAS SIPS AISAS 1920s~ 2000s~ 2010s~ 2010s~ 47  AIDA, AIDMA, AISAS, AISCEAS Model Attention Interest Desire Search Memory Comparison Examination Action Share AIDA A I D A AIDMA A I D M A AISAS A I S A S AISCEAS A I S C E A S 48  VISAS, SIPS SNS = Face-Book, Twitter, Instagram, Blog etc. VISAS Viral Influence Sympathy Action Share SIPS Share & Sympathize Identify Participate Spread 49  DECAX, Dual ASIS SNS = Face-Book, Twitter, Instagram, Blog etc. DECAX Discover Engage Check Action eXperience Dual AISAS Activate Interest Search Action Share Interest/Share/Spread/Accept 50  Consumer Decision Processes (Buyer Decision Processes) Problem or Evaluation Post- Information Need of Purchase purchase Search Recognition Alternatives Behavior 51  Buying Behavior Type High Involvement Low Involvement Expensive Not so expensive Huge Difference btw High loyalty Low switching cost Brands Rarely Purchase Ex. Shirt, Cloth Ex. House, Car, PC Expensive Daily life Low loyalty Low loyalty Few Difference btw A few choices Fast purchase Brands Ex. TV, Camera Ex. Bread, milk 52  Organization Decision Processes Products spec Review Selection of Problem proposals of and Value order routine Recognition suppliers analysis General need Suppler Supplier search evaluation description selection 53  Behavior comparison Organizational Individual Process Long Short Participants Many One or a few Business relationship Long Spot or short Price elasticity Low Higher Factor Rational Rational & emotional 54  Table of Contents Management strategy & Marketing Marketing Management Process Target Setting STP(segmentation/targeting/positioning) Market Research Consumer Behavior Marketing Mix & 4Ps IMC(integrated marketing communication) Digital Marketing Relationship Marketing Internet Marketing(Web Marketing) 55  What is Marketing MIX? Marketing Mix is a set of marketing tool or tactics, used to promote a product or services in the market and sell it. It is about positioning a product and deciding it to sell in the right place, at the right price and right time. The product will then be sold, according to marketing and promotional strategy. The components of the marketing mix consist of 4Ps Product, Price, Place, and Promotion. In the business sector, the marketing managers plan a marketing strategy taking into consideration all the 4Ps. However, nowadays, the marketing mix increasingly includes several other Ps for vital development, which are People, Process and Physical Evidence. 56  4Ps What Are the 4Ps of Marketing? The 4Ps of marketing is a model for enhancing the components of your "marketing mix" – the way in which you take a new product or service to market. It helps you to define your marketing options in terms of Price, Product, Promotion, and Place so that your offering meets a specific customer need or demand. 57  Developing the Marketing Mix Product Marketing 4Ps Price Product variety List price Quality Discounts Design Allowance Feature Payment period Brand name TARGET Credit terms CUSTOMERS POSITIONING Place Promotion Channels Advertising Coverage Personal selling Assortments Sales promotion Locations Public relations Inventory 58 4P Example iPhone6 59 Product  Product : 3 layers model Installation Augmented Product Actual Product Packaging Quality Feature After Sales service Delivery & Credit Core Benefit Design Brand Name Warranty 61 Product Configuration Product : economical classification Consumer Goods Tangible Goods Industrial Goods GOODS Service For Customer Intangible Goods Service for Business Site 62  Product Characteristic(tangible) Consumer Goods Industrial Goods Who Purchases End Customer Manufacturing company etc. Purchase amount Small Large Motivation Impulsive, Customary, Rational, Planned Unplanned Purchase Criteria Taste, hobby, Cheaper, reasonable emotional Purpose Personal satisfaction Organization profit 63  Product Life Cycle Companies create, launch and transform products as market condition change every time. This product evolution is referred to as Product Life Cycle(PLC) and defines the life of product in four basic stages: introduction, growth, maturity and decline. 1. The PLC generally refers to a product The Product Life Cycle category rather than a product item The Introduction Growth Maturity Decline curve show industry trend. 2. A sales declining point does not necessarily mean the death of the product. 3. See the case of bottled water like Evian, Sales / Profit sales Dasni, Zephyrhills and others → by adding profit new flavor, the health aspect of water were emphasized and created a new market. ＋ 4. The PLC works best when marketing 0 managers focus on historical precedent, － where has product been ? How do we plan now to be successful in the new stage. 64  Product Life Cycle Introduction Phase Growth Phase Maturity Phase Decline Phase Objective Build market awareness to Differentiate product From high growth to Determine the future the product leading to trial from new competitors, sales stability of the product purchase promoting rapid expansion Profitability Low sales and high failure Sales grow and profit Sales increase, but at Long-run drop in sales. Market rate become healthier decreasing rate Product Margins High Marketing and product Cost minimization has dramatically reduced cost reached full extent Targeted Innovators and early Early adopters Early majority Late majority consumers adopters Competitors Little competition Many competitors Marginal competitors Falling demand forces dropping out many out of market Product High quality, innovative More feature and better Work to further Decide whether to design design than first differentiated product invent further in Features well received by generation Diversification from competitor product or allocate target customers of product and release of funding to new complementary product products Strategy and sonic. Price Penetration price or New and improved model Target high-end market Product at low prices skimming price to recoup at high price with differentiated to stimulate remaining R&D cost product and higher price demand. Market Inform and educate target Promotion, brand Short time promotion or Lower communication Communication client advertisement more in the brand cost 65  Branding - Definition Branding is one of the most important aspects of any business, large or small, retail or B2B. An effective brand strategy gives you a major edge in increasingly competitive markets. American Marketing Association: A name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct from those of other sellers. The legal term for brand is trademark. A brand may identify one item, a family of items, or all items of that seller. If used for the firm as a whole, the preferred term is trade name. Philip Kotler: “ a seller’s promise to deliver a specific set of features, benefits and services consistent to the buyers…”. 66  Branding - Definition Simply put, your brand is your promise to your customer. It tells them what they can expect from your products and services, and it differentiates your offering from your competitors'. Your brand is derived from who you are, who you want to be and who people perceive you to be. Company has to answer the following questions. What is your company's mission? What are the benefits and features of your products or services? What do your customers and prospects already think of your company? What qualities do you want them to associate with your company? 67 Corporate Brands 68  Summary / Brand FAQs What Does Brand Mean in Marketing? A brand is an intangible concept that helps people (notably consumers) recognize and identify a particular company, product, or individual. What Are 4 Types of Brands? There are numerous types of brands, but the four most common ones include corporate brands, personal brands, product brands, and service brands. What Are Brand Examples? Although brands are generally intangible, we often associate things like products and names with brands. Examples include Apple, Nike, Coca-Cola and AMAZON. What Is the Importance of a Brand? Brands are important because they create value for corporations and individuals. They also provide a competitive edge in the market against an entity’s competition. Successful branding augments a company's customer base, which creates trust and credibility, leading to brand loyalty—all of which give a company a competitive edge in the market and a bigger bottom line. 69 Packaging (Labeling) Packaging is the science, art and technology of enclosing or protecting products for distribution, storage, sale, and use. Packaging also refers to the process of designing, evaluating, and producing packages. Packaging can be described as a coordinated system of preparing goods for transport, warehousing, logistics, sale, and end use. Packaging contains, protects, preserves, transports, informs, and sells. In many countries it is fully integrated into government, business, institutional, industrial, and personal use. 70  New Product Development Stage What 1 Idea Generation Generate seeds and/or needs 2 Idea Screening Narrow down to one idea considering company vision, mission, strategy and resources etc. 3 Concept Development Define product concept 4 Marketing Strategy Identify how to optimum market and sell the product or Development service based on 4Ps 5 Business Analysis Review predicted revenue, profit by sensitive analysis 6 Product Development Develop final product or service with development dpt. 7 Test Marketing Decide final design and function etc. reflecting test marketing 8 Commercialization Product or service launch as smooth as possible and review 71  New Product Strategy When developing new products, the first question must be, in how many ways can a product be new ? Authors C. Merle Crawford and Anthony DiBenedetto have developed a useful definition of new products based on the following categories. 1. New-to –the-world products. 2. New-to –the-firm products Additions to existing product lines. 3. Additions to existing product lines. 4. Improvements and revisions of existing products. 5. Repositionings. Products that are retargeted for a new use or application. 6. Cost reductions. These are new products that simply replace existing products in a line, providing the customer similar performance but at a lower cost. 72  New Product Development Growth Vector or Growth Matrix is Ansoff’s growth business model classification. Products /Service Existing Products New Products ➂ Product / Existing ① Market Service Markets Market Penetration Development New ② Market ④ Diversification/ Market Development New Business ① Market share increase in existing market with existing products and service ② New market with existing products and service ③ Introduction of new products and service into existing market ④ New business in new market 73 Price  Pricing Factor Internal factor External factor Competitive Business Goal position Other marketing Price elasticity of mix factor demand PRICE Macro economic Cost situation Competitive Legal factor strategy 75  Pricing Factor Internal factor Based on revenue, market share or Business Goal based on profit, profit%? Other marketing Brand strategy, channel strategy, mix factor promotion strategy ? Cost Based on manufacturing cost ? Competitive Cost leadership or differentiation strategy strategy? 76  Pricing Factor External factor Leader or Challenger or Follower or Competitive Nicher? position How much is the price elasticity on Price elasticity of the product? demand What is the economic trend in the Macro economic market ? situation Anti-trast law, resale regulation? Legal factor 77  Pricing Strategy Select a pricing strategy that’s based on the product itself, competitive environment, customer demand, and other products that you offer. Cost Plus Cost Plus is taking the production cost and adding a certain profit percentage. The resulting amount will be the product’s price. You need to consider variable and fixed production costs for this pricing method. Value Based Instead of using the production cost as your basis, you consider the customer’s perception of the product’s value. The perception of the buyer is dependent on the product’s quality, the company’s reputation, and healthfulness, aside from the cost factors. 78  Pricing Strategy Competitive You take a survey of the pricing implemented by your competitors on a similar product that you are trying to market and then decide whether to price your product lower, the same, or higher. You should also monitor their prices and be able to respond to changes. Going Rate This pricing strategy is more common in selling environments where the companies have little to no control of the market price. You price your product according to the going rate of similar products Skimming You introduce a high-quality product, price it high, and target affluent customers. When the market has become saturated, you then lower the price accordingly. 79  Pricing Strategy Discount Most commonly used for old product stocks or when you’re clearing up you inventory. You take the advertised price and lower the amount. A good example is a discount coupon. Loss Leader You take the production cost and price the product even lower. The idea is to attract your customers to your store where they can be convinced to buy your other products. Psychological You may have noticed that you rarely see pricing rounded off to the nearest whole number. This is a psychological pricing strategy. $5.99 looks more attractive than $6.00 although you’re only saving a single cent. 80  Pricing, discount and other method Payment Period : This is the length of time before you receive the payment. Allowance : You give part of the advertised price to the retailer in return for promotional activities like in-store display that features your product. Seasonal Allowances : You lower the price of certain products ordered during low sale seasons to attract customers to buy during non-peak times. Product/Services Bundles : You put in similar or dissimilar products together and sell them as a bundle at a discounted price Trade Discounts : You give price discounts as payments to your distribution channels for doing tasks like shelf stocking and warehousing. Price Flexibility : You let the reseller, or the salesperson modify the price according to an agreed range. Volume Discounts : You give discounts for wholesale buyers. Credit Terms : You allow consumers to pay for your products at a later date. 81 Place  Channel strategy(Place) Channel length 1 2 3 4 5 Type 1 Manufacturer Retailer Customer Type 2 Manufacturer Agent Retailer Customer Type 3 Manufacture Wholesaler Retailer Customer Type 4 Manufacture Agent Wholesaler Retailer Customer 83  Channel strategy(Place) Channel Width Intensive channel Selective channel Exclusive channel Commodity What Limited channel Exclusive channel Daily necessaries Who Daily necessity user Specific user Very specific user Cosmetics Example Food, drink Home electric appliances Louis Vuitton, Ferrari 84  SCM (supply chain management) Raw Materials Supply chain management (SCM) is the centralized management of the flow of goods and services and includes all processes that transform raw materials into final products. By managing the supply chain, companies are able to cut excess costs and deliver products to the consumer faster. Good supply chain management keeps companies away from expensive recalls and lawsuits. 85  SCM KPI Cash to cycle time: The time between paying for raw materials and receiving payment for goods delivered, which is an important factor in determining working capital requirements. Perfect order rate: The number of orders delivered without errors, which is a crucial metric for organizations striving for perfection and often broken down further by function. Inventory turnover: The time it takes to sell the total inventory in dollars, which is another factor that affects working capital. GMROI: The gross margin return on investment, measuring the amount of gross profit earned on the cost of inventory used, which is a metric commonly used in retail. 86 Promotion  Promotion Mix The Promotion Mix refers to the blend of several promotional tools used by the business to create, maintain and increase the demand for goods and services. The Promotion Mix is the integration of Advertising, Personal Selling, Sales Promotion, Public Relations and Direct Marketing. The marketers need to view the following questions in order to have a balanced blend of these promotional tools. What is the most effective way to inform the customers? Which marketing methods to be used? To whom the promotion efforts be directed? What is the marketing budget? How is it to be allocated to the promotional tools? 88  Pull and Push Promotion A Pull strategy involves motivating customers to seek out your brand in an active process. "Getting the customer to come to you" Demand Demand Producer Intermediator End User Marketing Activities EXAMPLES OF PULL TACTICS Advertising and mass media promotion Word of mouth referrals Customer relationship management Sales promotions and discounts 89  Pull and Push Promotion A push promotional strategy involves taking the product directly to the customer via whatever means, ensuring the customer is aware of your brand at the point of purchase. "Taking the product to the customer" Promotional activities Demand Producer Intermediator End User 90 EXAMPLES OF PUSH TACTICS Trade show promotions to encourage retailer demand Direct selling to customers in showrooms or face to face Negotiation with retailers to stock your product Efficient supply chain allowing retailers an efficient supply Packaging design to encourage purchase Point of sale displays Advertising and Public Relations (Pull Strategy) Advertising is the paid presentation and promotion of ideas, goods, or services by an identified sponsor in a mass medium. Examples include print ads, radio, television, billboard, direct mail, brochures and catalogs, signs, in-store displays, posters, mobile apps, motion pictures, web pages, banner ads, emails. Public relations or publicity is information about a firm's products and services carried by a third party in an indirect way. It can be accomplished by planting a significant news story indirectly in the media or presenting it favorably through press releases or corporate anniversary parties. Examples include newspaper and magazine articles, TVs and radio presentations, charitable contributions, speeches, issue advertising, seminars. Word of mouth is also a type of publicity, which transform from the person-to-person storytelling to social media influencers, or bloggers promotions today. 91  Typical Advertising Advantages and Disadvantages Newspapers Disadvantages Direct Mail Advantages 1. Creative limitations Advantages 1. Flexible and timely. 2. Many distractions for viewer 1. Audience selectivity 2. Intense coverage of local markets 3. Public attack (ecological implications) 2. Flexible 3. Broad acceptance and use 4. No selectivity of audience 3. No competition from competing 4. High believability of printed word. Television advertisements Disadvantages Advantages 4. Personalized 1. Short life 1. Combination of sight, sound, and motion Disadvantages 2. Read hastily 2. Appeals to senses 1. Relatively high cost 3. Small “pass-along” audience 3. Mass audience coverage 2. Consumers often pay little and Radio 4. Psychology of attention throw it away Advantages Disadvantages Internet 1. Mass use (over 25 million radios sold 1. Non selectivity of audience Advantages annually) 2. Fleeting impressions 1. Interactive 2. Audience selectivity via station format 3. Short life 2. Low cost per exposure 3. Low cost (per unit of time) 4. Expensive 3. Ads can be placed in interest 4. Geographic Flexibility Magazines sections Disadvantages Advantages 4. Timely 1. Audio presentation only 1. High geographic and demographic selectivity 5. High information content possible 2. Less attention than TV 2. Psychology of attention 6. New favorable medium 3. Chaotic buying (non standardized rate 3. Quality of reproduction Disadvantages structures) 4. Pass-along readership 1. Low attention getting 4. Short life Disadvantages 2. Short message life Outdoor display 1. Long closing periods (six to eight weeks prior to 3. Reader selects exposure Advantages publication) 4. May be perceived as intruding 1. Flexible 2. Some waste circulation 5. Subject to download speeds 2. Relative absence of competing 3. No guarantee of position (unless premium is advertisements paid) 3. Repeat exposure 4. Relatively inexpensive 92  Personal Selling and Sales Promotion (Push Strategy) Personal selling is the process of helping and persuading one or more prospects to purchase a good or service or to act on any idea through the use of an oral presentation, often in a face-to-face manner or by telephone. Examples include sales presentations, sales meetings, sales training and incentive programs for intermediary salespeople, samples, and telemarketing. Sales Promotion is media and non-media marketing communication used for a pre-determined limited time to increase consumer demand, stimulate market demand or improve product availability. Examples include coupons, sweepstakes, contests, product samples, rebates, tie-ins, trade shows, trade-ins, and exhibitions. Corporate giveaway items, sometimes called swag, can be included within product samples and distributed to participants at an event for promotional purposes. 93  Personal Selling Process 7 Steps Selling Process 1. Prospecting 2. Preparation 3. Approaching 4. Presentation & Qualifying Pre-approach the customer 5. Overcoming the 6. Closing the sale 7. Following up objection 94  What does a Professional Salesperson Do ? 1.Creates new customers 2.Sells more to present customers 3.Builds long-term relationships with customers 4.Provides solutions to customer problems 5.Provides service to customers 6.Helps customers resell products to their customers 7.Helps customers use products after purchase 8.Builds goodwill with customers 9.Provides company with market information 95 Pros and Cons for Push and Pull Strategy PUSH PULL Sales Personal Public Advertising Promotion Selling Relations Pros Pros Possible to approach to each Lower running cost than Push type customer’s need Good to make relationship with Good to increase product brand customers awareness Cons Cons Difficult to connect to potential Higher running cost customers Poor negotiating power Take long time to make relationship with customers 96  Table of Contents Management strategy & Marketing Marketing Management Process Target Setting STP(segmentation/targeting/positioning) Market Research Consumer Behavior Marketing Mix & 4Ps IMC(integrated marketing communication) Digital Marketing Relationship Marketing Internet Marketing(Web Marketing) 97 What is IMC (Integrated Marketing Communication)? IMC is an approach used by organizations to Personal Event & brand and coordinate their marketing efforts Selling Experience across multiple communication channels. As marketing efforts have shifted from mass advertising to niche marketing, companies have increasingly used IMC to develop more Sales Promotion IMC PR cost-effective campaigns that still deliver consumer value. Typically, communication tools for IMC encompass both traditional and digital media, Direct Promotion such as blogs, webinars, search engine Marketing optimization, radio, television, billboards, and magazines. 98  Table of Contents Management strategy & Marketing Marketing Management Process Target Setting STP(segmentation/targeting/positioning) Market Research Consumer Behavior Marketing Mix & 4Ps IMC(integrated marketing communication) Digital Marketing Relationship Marketing Internet Marketing(Web Marketing) 99 Digital Marketing vs Web Marketing Marketing Digital Marketing Web Marketing Access Analysis EC Site Mail STP SNS Targeting SEO Blog Application Persona 100  4Ds for Digital Marketing Digital Media Web Site, SNS, EC Site, Mail, Blog, Application etc. Digital Device PC, Smart phone, Tablet etc. Digital Technology Access Analysis, SEO(*), Retargeting etc. Digital Data Transaction history, Browsing history, Location data etc. SEO stands for search engine optimization. SEO is the process of taking steps to help a website or piece of content rank higher on Google , Yahoo etc. 101  Communication channel Media Classic Marketing Relationship Marketing Internet Marketing Advertising Direct Paid Media Personal Selling One to One Owned Media Public Relations Data Base Earned Media (SNS) Sales Promotion 102  Relationship Marketing Relationship marketing is a facet of customer relationship management (CRM) that focuses on customer loyalty and long-term customer engagement rather than shorter-term goals like customer acquisition and individual sales. The goal of relationship marketing (or customer relationship marketing) is to create strong, even emotional, customer connections to a brand that can lead to ongoing business, free word-of- mouth promotion and information from customers that can generate leads. Benefits of relationship marketing: Higher customer lifetime value (CLV). Reduction in marketing and advertising spend. Spending on marketing and advertising to acquire new customers can be expensive. Stronger organizational alignment around the customer. 103  Exercise Let’s share an actual example of “Relationship marketing” State as many as you can think of ✓ ✓ ✓ 104  Direct Marketing Direct marketing consists of any marketing that relies on direct communication or distribution to individual consumers, rather than through a third party such as mass media. Mail, email, social media, and texting campaigns are among the delivery systems used. It is called direct marketing because it generally eliminates the middleman, such as advertising media. Typical Industrial Business Manufacture Consumer Flow Disributor customer Biz Direct Manufacture Customer Consumer 105  One to one marketing & DB marketing One-to-one marketing is a strategy that emphasizes having an individualized experience with customers. The personalization of interactions is thought to improve customer loyalty and have a high return on marketing investment. Database marketing is a form of direct marketing. It involves collecting customer data like these. This information is then analyzed and used to create a personalized experience for each customer, or to attract potential customers. 106  Exercise Let’s share an actual example of “one-to-one marketing” ✓State as many as you can think of ✓ ✓ 107  Internet Marketing People sharing & engagement With paid promotion Advertising Sharing Pay Per Click Mentions Display Ads Retargeting Shares Reposts Paid Reviews Earned Paid Influencers Paid Contents Promotion Media Media Social Media ADs SEO & brand contents drive earned media(sharing) And traffic Leverage owned, earned & Owned paid media for a comprehensive Marketing strategy Web Properties Web Site Media Mobile Site Social Media Channels Gain more exposure to web Prepares with SEO and PPC 108 አመሰግናለው 109 Supplemental Material Strategic Marketing Framework 110 Exercise Pick a famous product or brand of your own choosing that is sold in your geographical area. Product or Brand : Complete Marketing Strategy Objectives Customer Target(s) Competitor Target(s) Core Strategy Marketing Mix Customer Communications Product Channels of Price Relationship and Promotion Policy Distribution Management Source : Winer, R. & Shar, R. (2011). Marketing Management (4th ed.). Boston: Prentice Hall. Objectives Objectives Customer Target(s) Competitor Target(s) Core Strategy Marketing Mix Customer Communications Product Channels of Price Relationship and Promotion Policy Distribution Management Source : Winer, R. & Shar, R. (2011). Marketing Management (4th ed.). Boston: Prentice Hall. Objectives Many kind of objectives are set in an organization. Company level, Business units or division level, Brand products, etc. Objectives ✓ should have a quantified standard of performance ✓ should have a clear time frame ✓ should be stated in measurable terms ✓ should be ambitious enough to be challenging Exercise What is the objective of the product or brand you chose? Product or Brand : ⚫ Objective : Customer Target(s) Objectives Customer Target(s) Competitor Target(s) Core Strategy Marketing Mix Customer Communications Product Channels of Price Relationship and Promotion Policy Distribution Management Source : Winer, R. & Shar, R. (2011). Marketing Management (4th ed.). Boston: Prentice Hall. Customer & Competitor Target(s) Which customers the company wants to persuade to buy the product or service. Market Market Penetration Development Nonbuying Customers Own in existing target Customers segments Competitor’s New Segments Customers Customers Exercise What is the customer & competitor target(s) of the product or brand you chose? Product or Brand : ⚫ Objective : ⚫ Customer Target: ⚫ Competitor Target: Core Strategy Objectives Customer Target(s) Competitor Target(s) Core Strategy Marketing Mix Customer Communications Product Channels of Price Relationship and Promotion Policy Distribution Management Source : Winer, R. & Shar, R. (2011). Marketing Management (4th ed.). Boston: Prentice Hall. Core Strategy The Value Proposition Developing a succinct summary of the relative value of the product or service to the customer Differentiation Developing a competitive or differential advantage on which customers will choose the product or service over the competitors. Product Positioning To determine what differential advantages are to be emphasized and communicated to the target customers. Core Strategy - (1) Value Proposition Developing a succinct summary of the relative value of the product or service to the customer. Model for a value proposition: For (target segment), the (product/brand name) is a (product category) that unlike (competitor targets), (statement of primary differentiation). Core Strategy - (2) Differentiation Developing a competitive or differential advantage on which customers will choose the product or service over the competitors. An advantage should have three characteristics: 1. It should generate customer value 2. The increased value must be perceived by the customer 3. The advantage should be difficult to imitate Three general approaches: 1. Cost- or Price-Based advantage 2. Quality-based or differentiation advantage 3. Perceived quality or brand-based advantage Core Strategy - (3) Product Positioning To determine what differential advantages are to be emphasized and communicated to the target customers. Product Positioning should be based on the strategies: ◼The product’s objective ◼The customer targets ◼The competitor target for each customer target ◼The possible ways to differentiate the product or service, based on either real or perceived advantages, in the target group Exercise What is the core strategy of the product or brand you chose? Product or Brand : ⚫ Objective : ⚫ Customer Target: ⚫ Competitor Target: ⚫ Core Strategy : Marketing Mix Objectives Customer Target(s) Competitor Target(s) Core Strategy Marketing Mix Customer Communications Product Channels of Price Relationship and Promotion Policy Distribution Management Source : Winer, R. & Shar, R. (2011). Marketing Management (4th ed.). Boston: Prentice Hall. Marketing Mix Implementation stage of the strategy ◼ Price ◼ Communication and Promotion ◼ Product Policy ◼ Channels of Distribution ◼ Customer Relationship Management Exercise What is the marketing mix of the product or brand you chose? Product or Brand : ⚫ Objective : ⚫ Customer Target: ⚫ Competitor Target: ⚫ Core Strategy : ⚫ Marketing Mix: Exercise Please share the company you listed with us. Product or Brand : ⚫ Objective : ⚫ Customer Target: ⚫ Competitor Target: ⚫ Core Strategy : ⚫ Marketing Mix: Case study 129 Make Complete Marketing Strategy against McDonald’s Objectives Customer Target(s) Competitor Target(s) Core Strategy Implementation : Marketing Mix Customer Communications and Product Channels of Price Relationship Promotion Policy Distribution Management Source : Winer, R. & Shar, R. (2011). Marketing Management (4th ed.). Boston: Prentice Hall. Step 1 Let’s discuss what is the complete marketing strategy of McDonald’s? Product or Brand : McDonald’s ⚫ Objective : ⚫ Customer Target: ⚫ Competitor Target: ⚫ Core Strategy : ⚫ Marketing Mix: Step 2 Let’s discuss what is the complete marketing strategy of your company to compete with McDonald’s strategy? Product or Brand : Your Company ⚫ Objective : ⚫ Customer Target: ⚫ Competitor Target: ⚫ Core Strategy : ⚫ Marketing Mix: