Product(custo + org)-definition:
Org s point of view:-what s being sold
Customer s perpective: solution to a problem or package of benefits.
On what basis a customer might choose a product?
1.customer value(how far to satisfy their needs)
2.price(value for money)
3. Kotler: a customer must feel they re getting the best deal of any alternatives
(industrial and consumer goods)
Consumer goods :
1.Convenience goods (groceries-staple vs impulse goods-brand awareness important)
2.Shopping goods-more durable goods(fridge-advanced planning )
3.Specialty goods-jewellery luxurious items 4.Unsought goods-customer did not realise they needed
- Industrial goods
1.Installations(factory assembly line)
4.Components(intel microchip in most PC s)
Product levels and attributes (pg 325 nb)
1.Core product -core benefits(car-transport)
2.Actual/basic product(features eg car-airbag,efficiency)
3.Expected product-expected attributes (performance ,reliability and psycological benefits)
4.Augmented product (support core actu product:warranty,delivery,after sales)
5.Potential product:possible changes in the future(better fuel economy)
Product issues in the marketing mix will include factors such us:
3.quality and reliability
4.after sales service
Product range characteristics:
2.depth(products per product line)
3.consistency (closeness of relationships in product ranges for the customer s benefit)
Marketing mix (extended) -7ps:
3.Promotion(ads,pop ups ect)
5.People(trained to produce and deliver these products)
7.physical evidence(letter of guarrantee for building work
Product range management-Ways of extending it and how it can be reduced:
1.Variations in models or style.
2.Différentiation in quality(price accordingly) 3.Developing associated items.
4.Developing new products with little technical or mkt relationship to the existing range.
- Reduction-discontinuing a product
Issues related to the mgt of a product range:
1.What role should play in the range (Flagship brand,profit provider,niche filler,ect)Should create a balanced range .Cash generating to support cash -using(new market) products.
4.How far recognizable as part of the brand family
Bcg model-define and describe
Classification: market share-growth in the market 1.Star :High market share High growth industry (Potential signif earnings,substantial mkt exp)
2.Question mark(problem child)Low mkt share,high growth ind (Competitors strong position,new mkr mix-funding to gain share,market good and product viable then more acrive mkt)
3.Cash cow:High market sh,low growth ind (established campaign and high loyalty,contribution in profits-if market strong:holding startegy,weakening growth:harvesting by cutting back mkt exp)-
4.Dog :low low divestment unless the cash flow position is strong
Product life cycle:
1.Introduction (Few comp,heavy adv,design changed flexibility and capability )
2.Growth (More comp,features important,growing demand,quality standards maintained or impr,cost and price important)
3.Market maturity (Small number of org,design standard.,varieties to extend cycle,productivity improvements)
4.decline (Competition on price,cost target main obj) Also :shakeout after growth
Place-it deals with:
1.channel -where are the products sold
2.Logistics: warehouses location and efficiency of distribution
Aims of promotion:
All mkt communications
Lancaster and Withey-elements of successful advertising.
1.well planned and executed
3.part of an overall effective mix
4.aligned with values of the company.
Range of promotional tools:
1.Above the line -radio tv ect,range has expanded in recent years
2.Below the Line(adv agency): Product integral,negotiated sales incentives(merchandising) ,competitions ect
The second is gaining ground against the first . Below the line (or through the line-Fills) far more common. Fill: shift from intervention-based to permission based
Product life cycle(plc) and promotional strategy.
1.Introduction-strong push then pull for awareness
(pr ,adv,personal selling,sales promotion)
2.Growth-pull to differentiate (Adv,direct mkt,personal sell)
3.maturity-pull and push to sustain loyalty and exposure through reassurance (Pr,adv,dorect,personal sell,sales promo)
4.Decline-some pull to remind core users
3 main types of influence on price setting in practice:
Issue with cost plus (eg mark up) approach to pricing:
1.Price stability,reactive mkt strategy rather than proactive.
2.Limited consideration of demand
Going rate pricing:average level becomes the norm
In some markets price competition may be avoided (informally) leading to a concentration on non price competition(cigarettes,petrol)
Demand-pricing:cases where discriminating prices can be set?
1.By market segmet (cross channel ferry-country),cinemas (by age)
2.By product version
3.By place: theater seats
Competitors actions and reaction.Options when a rival cuts prices:
1.maintain existing prices if only a small share is expected to be lost.
2.maintain prices and respond with a non price counter attack(secure justify current prices)
3.Reduce its prices:secure market share ,consumer wins
4.raise prices and respond with a non price counter attack.Campaign on quality difference.
Multiple products-pricing-Loss leaders
Very low price for one product makes consumers buy other products in the range with higher profit margins.
Price setting strategies
1.Market penetration(low price to stimulate growth or obtain share).Appropriate when
- economies of scale
- price sensitive
- low prices discourage new competitors
2.Market skimming(higher price for new product-advantage of buyers who want to pay a premium) .Then price falls down.Appropriate:
- insufficient production capacity/competitors cannot increase capacity.
- some buyers relatively insensitive
- high price equals high quality
3.Early cash recovery(recover investment in a new product asap)
- -business high risk
- -rapid changes in fashion or tech expected -innovator short of cash
4.product line promotion(profit from range).Looks at the whole range from 2 points if view:
- -interaction of the Mkt mix -
- monitoring returns
- -net contribution worthwhile
5.Cost plus pricing
6.Target pricing(specified rate of return for a given output)
7.Price discrimination/selective pricing (Category/consumer group/peak) (Exaples:Clearly defined segments,own branding,bulk buying discounts)
8.Going rate/competitive prices-set with reference to competitor s pricing
9.Price leadership/predatory pricing(efficient producer with reputation for technical competence-dominates price levels)
10. Quantum pricing (99 p not 1)
Characteristics of services
Characteristics of services-intagibility
Lack of subtance-consumers not sure what they receive .
Dealing with intangibility:
- increasing level of tangibility-physical or conceptual representations
- focus on benefits(images or testimonies from previous users)
- differentiating the service and reputation building (enhancing perceptions/excellence in delivery)
Characteristics of services-inseparability
Cannot be separated from the provider:
All at the same time:
Increasing importance to generate a service ethic .
Services-heterogeneity: In terms of Mkt policy ,heterogeneity highlights the need to develop and maintain processes for :
1.Clear and objective quality measures,consistent quality control .
2.Consistent customer care,standardise
3.Effective staff selection,training and motivation.
4.Monitoring service levels and customers perceptions
Perishability of services:
Cannot be stored
key planning priority: Anticipating and responding to demand (minimize unnecessary expenditure on wages)
Policies to smooth out fluctuations:
- price variations
- off peak -promotions
- off peak -flexible staffing methods(parr time,temp ,outsourcing)
Do not result in transfer of service: (Issue when it doesn t accrue until some time in the future)
- 2 basic approaches:
- promote advantages of non ownership(periodic upgrading)
- make available a tangible symbol or representation of ownership(merchandise item,receipt,certificate)
Extended mkt mix-people:
Front line staff must be trained and motivated with particular attention to customer care and PR. Physical presence is important. (Inseparability)
Extended mkt mix-processes
Can become a mkt advantage on their own right (order processing)
- Issues to be considered:
1.Policies with regard to ethical dealings
2.Procedures(efficiency and standardisation)
3.Automation and computerization of processes
4.Queuing and waiting times
5.Info gathering,processing and communication times.
6.Capacity mgt(D and S match,timely -cost effective way)
7.Accessibility of services,premises,personnel and services
Extended mkt mix-Physical evidence
Intangibility and ownership :tackled by making available a physical symbol or representation of the service and the benefits it confers.
Eg certificates of attainment in training
Physical evidence of service may be incorporated in the design and specification of the service environment by designing premises that reflect this quality.
Identify a the product of a seller and differentiate it from competitors'.
- Key element of corporate strategy
- Generates revenue
The premium the customers are prepared to pay for the branded product to a non branded product
Begins with a name but extends to a range of physical features such as:
- Package design
Objectives of bradnding
- Aids product differentiation-helps loyalty and increase/maintain sales
- Max impact of adv for product recognition
- Readier acceptance by wholesalers /retailers
- Reduces price differentials
- Supports market segmentation
- Supports brand extension or Stretching
- Eases the task of personal selling
Branding strategies -Kotler:
Line extension (applied to a variant of a product within the same product category-car manufacturers same class of car)
Brand extension(new flavours,sizes ect to capitalise on existing brand loyalty)
- Multi branding (number of brands that satisfy similar product characteristics eg detergents-littele or no brabd loyalty/family branding
New brands (when new product or market created to avoid risking reputation/existin brands not compatible with product or market)
Co-brands(Nike shoes compatible with Apple's ipod)
Brand value :
Source of competitive advantage:
3 approaches to valuing a brand:
- Market approach (estimation of value based on similar market transactions (e.g. similar license agreements) of comparable brand rights.) Royalty relief method – Assume theoretically a company does not own the brand it operates under, but instead licenses the use from another. The royalty relief method uses available data of similar arrangements in the industry and assigns the value of the brand as the present value of future royalty payments.
- Cost approach (patents,promotional activities)
- Income approach( based on NPV .Expected future earnings overall economic benefit it ll generate -expenditure for brand awareness over its life=net income figure discounted at an interest rate (risk profile and characteristics).
- Direct Mkt
- The internet
- Coorporate image
- Personal selling
- Word of mouth
Approaches to promotion-promotion mix:
Mass media (whole segment -same communication)
Personal and interactive (two way communic)
Personal and direct (one way )
B2C /B2B promotion tools (pg 344 nb)
- B2C :advertising -sales promotion,no personal selling
- B2B:More personal selling ,mass adv wasteful,Pr
Types of marketing:
- Consumer Mkt (4 ps)
- Services mkt (+3ps )
- Direct/Indirect mkt
- Guerilla mkt
- Viral mkt
- Interactive mkt
- Experiential mkt
- Relationships mkt
- Post modern mkt
Integrated marketing communication process:
pg 345 nb
Product maker-4 ps (promotion ->adv,pr,sales promo,personal mkt)-->>advertising--->>>customer
Direct Mkt-key words:
Recorsing and analysis(response data)
Zero level channel (no intermediaries)
- Mkt of a products as result of another activity /action
- No push activity(recipies with specific products,word of mouth adv)
- Resent dvts :Guerilla and viral mkt
- Taking people by surprise and creating a buzz in unexpected places -it relies more on imagination than large sum of money.
- Jay Conrad Levinson
Principles of Guerrilla mkt:
Small org and entrepreneurs
- Based on psychology rather than experience ,judgement,guesswork
- Based on time ,energy,imagination rathere than money
- Orgs should be judged on sales rather than profit.
- Focus on the number of relationships created each period
- Focus on creating a standard of excellence rather than diversifying.
- Focus on increasing numbers of customer referals and size of transactions rather tahn attracting new customers
Cooperation with competitors
- A combination of mkt methods to be used
- Campaign should make use of technology.
- Use of pre existing social networks
- to spread brand awareness or otehr mkt objectives
- successful when customer receives the mkt message ,copies it and sends it to friends or posts it on social networking sites
Forms of viral mkt:
- Video clips
- Novelty ,quircky computer games
- text messages
- mobile phones ringtones
High SNP -indiv who pass on viral mkt
Efective -short time span
Six principles of effective viral mkt:
- Free items to attract attention
- Form of message should be easy to pass on
- Transmission method must be scalable from small to large very quickly
- Must exploit common motivations and behaviours
- Use existing communication networks
- Take advantage of other people's resources.
Deighton interactive mkt
Ability to adress the customer ,remember what the customers says and adress rge custoer again in a way that illustrates that we remember what the customer has told us.
E commerce -customer info stored in databases and electronic communications with teh customer occuer very quickly.
- Providing an experience that an emotional cinnection between a person and a brand,product,idea.
- engage with the personality of the brand through experiencing it.
- combination of in store promotion-field mkt
- Enable participation
- Encourage return visits
- Allow for two way communication systems
- Integrate with back office systems(to process orders and dispatch products denerated by the website)
Security (protect privacy and security)
Benefits of an effective website:
Loyalty (offers and features)
Productivity(better mgt of supply chain)
Reputation (real costumer benefits)
Costs(lower than retail outlets)
Opportunity (smaller orgs compete with large established ones)
Information(enhances market segmentation).
Potential problems with web sites:
- Credit card fraud
- Confidential customer info
- Set up and running costs
- searche engine optimisation
Web site promotion
- Banner advertising(affiliate scheemes ,pay per click adv)
- Email mkt(cheap,easily targeted,mass)
Relationship mgt :
Aim:maximise customer retention adn satisfaction
- Make teh most out of every customer interaction
- Ensure offers and and promotions are relevant to customers
- Value customers and treat them with respect
- Listen to customer comments and complaints
- Act on customer comments and complaints
- Reward customers for loyalty
Post modern mkt:
Attributed to Stephen Brown :
- Traditional ,broad mkt theory and generilisations may no longer apply
- Focus on giving the customer an experience that is customised to them.
- Mass mkt should be replaced by a multi dimensional approach where the marketer communicates with individual customers
New media such as tablets -generate an interactive or immersive experience rather than a static one.
Big data analytics