COMM 131
Developing a Positioning Statement
"To [target segment and need] our [brand] is [concept] that [point of difference]."
Heart and Mind Effects
1. Advertising Campaign: Values, Creative, Media 2. Noise: Get consumer's attention 3. Heart and Mind Effect: Rational (Inform & Persuade), Emotional (Get them to like you), Experiential (Give an experience of product) 4. "Pocket" Effects
Case Analysis (5 Steps)
1. Define Problem 2. Situational Analysis (SWOT, Customer, Competitor, Financial) 3. Define Objectives (Target Market + Marketing Mix Alternatives) 4. Analysis (Target Market Choice, Alternative Analysis) 5. Recommend Course of Action
Market Research Steps
1. Defining problem and research objectives 2. Developing research plan for collecting information 3. Implementing research plan - collecting and analyzing the data 4. Interpreting and reporting findings Defining the problem and objectives is the hardest but the most important part of the marketing research process. Different objectives and questions mandate different methods: the question defines the method.
5 Social Media Mistakes Your Brand Should Avoid
1. Having Inactive Accounts 2. Having No Social Media Policy 3. Removing Negative Comments 4. Ignoring Customers 5. Not Considering Social Media Advertising
Steps in Marketing Planning
1. Learn about your environment 2. Define your objectives 3. Design a strategy to achieve those objectives. 4. Measure results to determine if you did achieve your objectives.
Product Life Cycle
1. Product development 2. Introduction 3. Growth 4. Maturity 5. Decline There is a profit curve and sales curve
Product Characteristics & Adoption Rate
1. Relative Advantage - superior to existing products. 2. Compatibility - fits the values and experiences of potential consumers. 3. Complexity - difficulty to understand or use. 4. Divisibility - can be tried on a limited basis. 5. Communicability - results of using the new product can be observed or described to others.
New Product Diffusion Curve
2.5%: Innovators 13.5%: Early Adopters 34%: Early Majority 34% Late Majority 16%: Laggards Penetration Curve: cumulative number of adopters
Specific Goals of Branding
A brand is the collection of all the associations that it triggers in consumers' minds. - Create a unique, memorable brand - Create specific associations between product and needs - Create a positive attitude towards brand Brand Name Selection, Brand Positioning, Brand Sponsorship, Brand Development
What is a Brand?
A name, term, symbol, design, or combination thereof that identifies a seller's products and differentiates them from competitors' products. Key tool we use to position our product in the minds of consumers: - Creating enduring emotional associations that a consumer has with a particular company or product - Creating meanings through telling a story Branding is a key tool for building relationships between consumers and products/companies
What is Advertising?
A paid form of communication (message) from the marketer (brand, firm, etc) to the customer. The goal? Inform, Persuade, Maintain, Promise, Even entertain Good advertising is always driven by a specific objective, with the ultimate goal being to increase 'sales'!
Services
A service is a form of product that consists of activities, benefits or satisfactions offered for sale that have: Intangibility: cannot be seen, tasted, felt, heard or smelled before purchase Inseparability: cannot be separated from providers Variability: quality depends on who provides them and when, where and how Perishability: cannot be stored for later sale or use
What is a distribution channel?
A set of interdependent organizations that help make a product or service available to the consumer Affects every other marketing decision
What can we do about attitudes?
ABC model of attitudes Affect: how you feel towards an object Behavior: your intentions to act towards and object Cognition: your beliefs about an object
Campaign Design: The 1/3rd Principle
Account Planning Media Planning Creative Strategy
Trends to watch
Adaptive New marketing model of the next millennium? - Especially personalized offerings (e.g., Amazon's recommendations, Google Ads in Gmail, Bing personalized search) Podcasts: Mimics trends in Radio advertising, though less conglomeration... may still be seen as credible for now, but what might happen? Interactive TV (ITV)
Why Segment Markets
Additional features add cost, but not value Customers differ Better satisfy though tailoring to specific needs Build right relationship with right customers
Multichannel Benefits and Costs
Advantages: Allows targeting of different customer segments, Different channels can offer superior value Disadvantages: May be harder to control, especially when ownership varies, May generate conflict / cannibalization, if channels compete for customers
Comprehension: Ad - Experience Alignment
Advertising does not exclusively influence consumer perceptions about the brand, consumer perceptions are also based on consumers' own experiences with the brand As the gap between ad-generated perceptions and the experience-based perceptions increases, credibility decreases.
Advertising Strategy
Advertising strategy major elements: - Creating Ads - Message strategy: Creative concept - Message execution: Tone, format, illustration, headline, copy, etc. - Selecting Media Creative strategy can be driven by message content or media choice - message and media should be aligned.
Sales Promotion
An activity or material that offers a direct inducement to purchase. Pros: Attract attention, Strong incentive to purchase, Sense of immediacy, Encourages trial, Boost staggering sales, Fast ROI Cons: Short Lived, Danger of harming brand, Doesn't build loyalty/relationships Two broad forms: Consumer Promotions, Trade Promotions
Repositioning
An attempt to change the image consumers have of a brand or company Normally necessary when consumers have developed a schema that is inconsistent with the primary needs of the segment Can be difficult to change schemas significantly (May need a change of brand name)
Comprehension and Processing
An effective ad is: Understandable, Convincing, Easy to remember. Motivation to process message is key High Motivation - Central Processing: - Effortful processing of factual information in the ad. - Consumers are influenced by quality of arguments in the ad. Low Motivation - Peripheral Processing - Unconscious processing that bypasses thoughtful evaluation of ad content; consumers make decisions based on associations. - More influenced by peripheral cues in the ad (i.e., aspects of the communication not related to the central message).
Product
Anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or a need. It could take in any one of the following forms.
Product Life Cycle: Product Development
Begins when the company develops a new product idea Sales are zero Investment costs are high Profits are negative
Brand Development
Brand Name and Product Category Existing vs. New BN & PN: New brands BN & PE: Multibrands BE & PN: Brand Extension BE & PE: Line Extension
Benefits of Strong Brands
Brand equity is the $ amount attributed to the value of the brand based on all the intangible qualities. - Positive differential effect that knowing the brand name has on customer response to the product or service. Greater willingness to pay for preferred brand - High brand awareness - Strong brand loyalty and repeat sales - Speeds adoption of new products - Less susceptible to price competition Brand valuation is the process of estimating the total financial value of a brand.
Cross-Channel Integration
Browse a catalogue, order online (delivered to your home), in-store return Minimal acceptable standard of service must be maintained
Sponsorships
Build brand loyalty and positive feelings by meeting with (potential) customers and other stakeholders in unique situations Sports: Mass audience for mass brands Cultural events: Often able to reach more affluent and TV averse members of society Combine with advertising and other promotional efforts
Selective Relationship Building
Build relationships with the right customers High/Low Profitability & Short-term/Long-term Customers LS: Strangers LL: Barnacles HS: Butterflies HL: True Friends
Decision Process: Purchase Decision
Buy the most preferred brand, except if: - Influenced by other people - Unexpected situational factors arise (e.g. comparable brand is discounted, preferred brand is unavailable) Make purchase experience consistent with overall brand experience
Finding Specific Ad Placement Costs
CardOnline through library. Specific media vehicles will publish their advertising rates. - Search terms like 'rate card' and/or media kit. - -They will also give you information about their customers (i.e., your target market).
Integrated Marketing Communications (IMC): Challenges and Benefits
Challenges: Expensive, Hard to Execute/Coordinate, Difficult to measure the effectiveness of each effort, Too much can be a bad thing Benefit: Prevent conflicting messages*, which can confuse a company an brand image , Reinforces your message through multiple channels, Creates Synergy (1+1>2) *The problem is particularly prevalent when functional specialists handle individual forms of marketing communications independently.
Risks of Line Filling
Choice Overload = Delay Choosing, Make poorer choices, Less satisfied When there are so many options we can't even compute or determine which would be our favorite, so we experience much more anticipated regret, cognitive dissonance, etc.
Data
Collect Data: Info from purchase history, personal preference profiles, geographics, demographics, etc. Analyze Data: Lifetime value analysis, Data mining (e.g. actionable insights) Utilize Data: - Permission Marketing: Send promotional information only to consumers who have given a company permission to do so - Loyalty Programs: offering rewards for a series of purchases. Encourage customers to make repeat purchases (e.g. by creating lost lasting relationships)
Managing the Business Portfolio
Collection of businesses and products that make up the company. Good companies frequently evaluate their existing SBUs, so that they can put strong resources into the more profitable businesses and phase down or drop the weaker ones. - Analyze business units by market attractiveness (growth rate) and company strength in market (market share) Boston Consulting Group Approach (BCG matrix)
Marketing Tactics
Collection of marketing activities that together accomplish the larger goal of satisfying customer needs and building customer relationships. - Product - Price - Place (Distribution) - Promotion
Public relations
Communicating with key audiences through avenues and methods other than advertising or promotion without immediate sales intentions Managing, protecting and enhancing the reputation and image of a brand/company Focus on earned vs. paid media. Wide category of diverse tools: news stories, features, sponsorships, product placement, events, branded entertainment, etc.
Integrated Marketing Communications (IMC)
Companies carefully integrate and coordinate their communications to deliver a clear, consistent, and compelling message
Marketing Myopia
Companies need to continuously evolve and adapt to customer expectations/needs or they will fail! In fact, very successful companies often anticipate changes and strive to be a few steps ahead of the market.
Managing Channel Conflict: Option 1 (Manage Structure)
Companies need to embrace channel philosophies that: 1. Aren't be too opportunistic; new opportunities may jeopardize established channel relationships for short-term gains. 2. Recognize that channel partners must earn fair returns to stay motivated. 3. Avoiding long-run agreements that restrict ability to adapt to changing markets. On a more tactical level, companies should: 1. Be cautious of selling through restrictive channels that offer high volume, but low margins. 2. Create systems where competing channels aren't competing for the same set of customers. 3. Build and maintain "fences" between competing channels to minimize leakage (or build coordinated vertical marketing)
Choosing Targeting Strategy
Company Resources Product Variability Product's stage in life-cycle Market/ Customer variability Competitors' marketing strategies Target narrowly or broadly Undifferentiated (mass) marketing, Differentiated (segmented) marketing, Concentrated (niche) marketing, Micromarketing (local/individual)
Channel Conflict
Conflicts/disputes between different levels in the same marketing channel.
Choosing Media
Consider consumer media habits! Choose among the major media types: - Newspaper, TV, radio, magazines, outdoor, internet etc. - New Media!: digital, computerized, or networked information and communication technologies, Google Ads in Gmail Select specific media vehicles: - E.g., specific TV shows; which websites; shows for product placement
Setting the Budget
Consider several factors when setting ad budgets: - Stage in the PLC, Market share, Level of competition, Ad clutter, Degree of brand differentiation Budget Setting Methods: - Affordable: level management thinks they can afford. - Advertising to Sales (A/S): percentage of current or forecasted sales or as percentage of unit sales price. - Competitive-Parity: match competitors' outlays. - Trial and Error: Half of the advertising is wasted - at least try to learn something from it
Consumer vs. Business Products
Consumer Products - bought by final consumer for personal consumption. Business Products: Materials and parts, Capital items, Supplies and services
Factors that influence consumers: Personal Factors: Age and Life-Cycle Stage
Consumer needs change over time. Difference between chronological age and perceived age. Stage of life - E.g. single, independent and working, being a parent of a young child, or being an 'empty nester' - People at the same life stage generally have more in common than those simply the same age!
Consumer Product Classes: Specialty
Consumer product with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort Strong brand preference and loyalty, little brand comparisons, and low price sensitivity High price and exclusive distribution Carefully targeted promotion by producers and resellers
Media Timing
Continuous: Deliver messages in a steady stream throughout the planning time-frame (most often one year) Pulsating: Deliver messages throughout the planning time-frame, but increase intensity when consumers are most likely to purchase (e.g. short burst before holidays) Seasonal/Discontinuous: Deliver messages only during peak times
Consumer Product Classes
Convenience, Shopping, Specialty, Unsought Marketers do not have to treat every product as unique when planning strategies Some product classes require similar marketing mixes Product classes defined based on how consumers think about and shop for products - How do consumers go about buying them?
Product Levels
Core Benefit:: What is the buyer really buying? Actual Product:: Specific attributes of the product. (brand, quality, features, design, packaging) Augmented Product:: Additional customer services and benefits. (after-sale service, warranty, product support, delivery and credit)
Cost vs. Value-Based Pricing
Cost-based pricing: Decision starts with product. Decision ends with customer. Design a Good Product Determine product costs. Set price based on cost. Convince buyers of product's value Value-based pricing: Decision starts with customer. Decision ends with product. Assess customer needs and value perceptions Set target price to match customer perceived value Determine costs can be incurred Design product to deliver desired value at target price.
Cross-Price Elasticity
Cross-price elasticity (CPE) examines the relationship between changing the price of one product and measuring the effect on the demand of a second product. - With complementary products (CPE<0), raising the price of one will yield a decrease in demand in the other (e.g. hockey sticks and pucks; hamburgers and French fries) With substitute products (CPE>0), raising the price in one product will lead to an increase in demand for the other (e.g. Iphone vs. Blackberry).
Factors that influence consumers: Culture
Culture: Learned from family, church, school, peers, colleagues, society. Includes basic values, perceptions, wants, and behaviors. Subculture: Groups of people with shared value systems based on common life experiences and situations. May be: Ascribed Achieved Social Class: Relatively permanent and ordered divisions in a society whose members share similar values, interests, and behaviors.
Successful New Product Development Process
Customer Centered - Understand customers' need and values - Understand consumers' experiences Holistic, cross-functional effort - Project teams that include individuals from all departments
Measuring Value
Customer Lifetime Value: The value of all the purchases of a particular product/brand/retailer that a customer will make over a lifetime of patronage Share of Customer: The portion of a particular customer's purchasing in the marketer's product category. Customer Equity: The total combined customer lifetime value of all of the company's customers.
PR Pros
Cutting through the clutter: can generate buzz, can be very experiential and impact purchase decisions at every stage Reaching elusive audiences: TV viewership declining Overcoming selective exposure: People avoid ads through channel surfing, DVR, ad block Overcoming negative bias towards advertising: - A news report is given more credibility, - an event is perceived as less manipulative than advertising - product placement is not registered as advertising Image of the company: Benefits beyond selling products (e.g. investors) Relatively high "bang for the buck": the credibility and the "under the radar" quality of PR can be very effective
Research: Step 2: Types of Marketing Data
Data: Facts and figures pertinent to problem Primary Data: collected for project - Observational (watching): mechanical and electronic approaches, personal approaches - Questionnaire (asking): idea generation through in-depth interviews and focus groups, idea evaluation by mail, online, telephone, surveys - Experimental (testing): causal information, test markets, A/B testing Secondary Data: already received rior to project - Internal Data: financial statements, research reports, files, customer letters - External Data: market intelligence, census, trade association studies/magazines, periodicals
Reach, Impact, Timing
Decide on level of reach, frequency and impact - Reach: percentage of people in target market exposed to the ad during a given period of time. - Frequency: number of times each member is exposed. - Media Impact: what characteristics does a medium have to have in order to achieve the advertising goals (e.g. how believable, engaging, etc.) Decide media timing - How to schedule the ads over a time frame. - Consider start, end, and pattern of exposure (e.g., continuity, pulsing)
Choosing a Positioning Strategy
Decide the Value Proposition: the full positioning of a brand - the full mix of benefits on which it is positioned. Create the associations: - Consistent message and product - Repetition of message Consumers need to process the message - we have to reach them and make sure they are interested.
Product Life Cycle: Decline
Declining sales Low cost-per-customer Declining profits Laggards are targeted Declining competition Marketing goal: minimize losses (or rejuvenate) - Product: Phase out weak items - Price: Cut price - Distribution: Use selective distribution: phase out unprofitable outlets - Advertising: Reduce to level needed to retain hard-core loyalists - Sales Promotion: Reduce to a minimal level
Research: Step 3: Interview Techniques
Depth Interviews: extended interview to uncover consumer experiences and how consumption fits with life story, evolves as information is revealed as opposed to predefined set of questions Focus Groups: moderated, small group discussions, excellent at gaining insight into consumer thoughts and feelings Projective Interviews: stimuli based interviews where participant is shown one item and asked to discuss interpretation
Channel Length
Direct Channel: no intermediaries Indirect Channels: one or more intermediaries
Price Adjustment Strategies
Discounts and Allowances: Reward and incentivize customer response - E.g. cash discount, quantity discount, Functional (trade) discount, seasonal discount, trade-in allowances, promotional allowances Promotional Pricing: Temporarily pricing below list price to create buying excitement and urgency. - E.g. special event pricing (boxing day), cash rebates, low interest financing, lower warranties, free maintenance - Loss leader strategy: popular item is priced below cost to attract customers, hoping that they will buy other, more profitable items.
Factors that influence consumers: Psychological Influences: Motivation
Discrepancy between ideal state and actual state stimulates desire to satisfy a need Physiological, Safety, Belongingness, Ego needs, Self-Actualization
Fitting Place with Product
Distribution Intensity: Intensive, Selective, Exclusive Number of Outlets: Many, Several, Few Market Coverage vs. Control: Achieve mass market selling, but less control; Balance arket coverage and control; Limited market coverage, but greater control Type of Goods: convenience goods, shopping and some specialty goods, specialty goods and industrial equipment Consumer Expectations: purchases frequently, time and place important, minimal assistance; prepared for several visits, some assistance; willing to travel, high service
Market Segmentation
Divide the market into distinct groups of buyers according to needs, or related characteristics and behaviours Segments should be homogenous within and heterogeneous without Consumers of a market segment respond in a similar, distinguishable way to marketing efforts
Integrated Marketing
Employing all elements of the marketing mix to support value proposition and reach goals of the marketing program.
Multichannel Distribution
Employing two or more different types of marketing channels to distribute products.
Product Market Expansion Grid
Existing/New Products/Markets 1. Market Penetration (EM&EP): marketing mix improvements 2. Market Development (NM&EP): adding new markets 3. Product Development (EM&NP): offering additional products 4. Diversification (NM&NP): starting up or acquiring businesses outside the current products and markets
Research: Step 3: Experiments
Experiments involve manipulating (controlling) the level of one variable and observing the response of another. Experiments are interested in two main kinds of variables: Independent variables, Dependent variables
Research: Step 3: Collecting and Analyzing Data
Explore & Describe: observation (in person/mechanical), focus groups, in-depth interviews, ethnography/netnography, secondary data analysis, survey, data mining Establish Causality: experiments, marketing models, test markets Create Normative Implications: marketing models
Research: Step 1: Research Objectives
Explore: Gather preliminary information that will help define problem and suggest hypotheses Describe: Describe things (market potential, demographics, attitudes) Establish Causality: Tests hypotheses about cause-and-effect relationships Create Normative Implications: Build predictive models to improve managerial decisions
Forms of Direct Marketing
Face-to-Face Direct-mail Catalogue Telemarketing Direct-response Television Kiosk New digital Online
Personal Selling
Face-to-face contact with consumers designed to inform and persuade consumers to buy Pros: Allows do develop a relationship with the customer (Great for complex/expensive products (higher risks, fewer sales), B2B), Effective to change consumers preferences, convictions and action Cons: Long term commitment , High costs (Many companies spend 3 X more on selling than advertising)
Two Key Categories of Issues (Consumer Behaviour)
Factors that influence consumers: Allow us to understand our consumers Consumer decision making process: This tells us how consumers make purchase decisions.
Type of Costs and Margins
Fixed Costs: don't fluctuate with changes in volume of production (advertising, PR, fixed salaries, administration, rent, utilities) Variable Costs: directly associated with volume of production (labor, materials, transportation, promotion costs) Contribution Margin: amount left over after VC to cover FC Profit Margin: amount left over after VC and FC
Evaluating the Results of Marketing Activities
For every planned marketing activity there must be clearly stated objectives and a method for measuring the success of the activity after it has been completed Metrics include: CLV, Customer Equity, Ad to Sales Ratio, NDP to Sales, Sales Increase, Customer Retention, Brand Equity
What can we do about perception?
Frequent Exposure Make the physical characteristics of a product more salient E.g. Packaging, contrast, color, size, movement Create surprise or novel experience E.g. humor appeals
Consumer Product Classes: Convenience
Frequent purchases bought with minimal buying effort and little comparison shopping Low price Widespread distribution Mass promotion by producer
Decision Process: Need Recognition
Functional vs. emotional/social needs Triggered by internal vs. external stimulus Social Triggers (e.g., friends) Marketing Triggers (e.g., advertising, salesperson, etc.) Marketing research needs to identify consumers' needs and problems Physiological, safety, social, esteem, self-actualization
Tone of Ads
Funny Positive Warm Edgy Provocative Exciting Shocking Silly Serious
Uses of Marketing Research
Gather customer insights Identifying market opportunities and problems Generate, refine and evaluate potential marketing actions Monitor marketing performance
Research: Step 3: Surveys
Gathering primary data by asking people questions about their knowledge, attitudes, preferences and behavior. Survey data is descriptive: E.g. customer satisfaction, perceptions of brand, knowledge, etc. Can analyze correlations, relationships, and differences across groups, but we cannot draw causal conclusions! Pros: can be cheap, access to large sample, representative, fairly in depth Cons: difficult to design, low response rate, response bias, non-causal
Other Price Adjustment Strategies
Geographic Pricing: account of geographic location of customers (e.g. delivery charges) International pricing: adjust for international markets Dynamic pricing: adjust continually to meet characteristics of individual consumer and situations
Pros and Cons of the Segmentation Bases
Geographic: +easy to identify, -ignores heterogeneity, -can be low correlation Demographic: +easy to identify, -ignores heterogeneity, -can be low correlation Psychographic: +reveals values, interests, helps message design, -difficult to identify Behavioral: +understand who most important customers are, message design, -difficult to identify
Segmentation Variables
Geographic: Dividing a market into different geographic units such as nations, states, regions, counties, cities, or neighborhoods. Demographic: Dividing the market into groups based on observable demographic characteristics of the population Psychographic: Dividing a market into different groups based on Shared attitudes, Behaviors, Lifestyles, Values, motivations, opinions and activities, Personality Behavioral: Divide market into groups based on consumers' product-related behaviour such as knowledge, attitudes, use, or response to a product.
Benefits of Using Intermediaries
Greater efficiency in making products available to customers / target markets (fewer contact points needed) Specialization of channel members allows for economies of scale Strong distribution channels can create value for the customers and competitive advantages for the channel members
Challenges of using Product Life Cycle
Hard to: - identify what stage of the PLC the product is in. - identify factors that affect product's movement through stages. - pinpoint when the product moves to next stage. - forecast sales level, length of each stage, and shape of PLC. Marketing strategy is a cause and result of PLC. Not all products follow the traditional PLC: style, fashion, fad
Common Reasons for New Product Failure
High level managers pushing idea with poor consumer insights/marketing research: Misunderstood customer preferences, Overestimation of market size Problems in product development process: Development cost too high, Development too slow Problematic marketing mix: Incorrect positioning, Poor design, Advertised poorly, Insufficient distribution network Competition
Characteristics of Consumer Purchase Decision Process
High to Low Consumer Involvement Extended, Limited and Routine Problem Solving Number of Brands Examined: Many, Several, One Number of Sellers Considered: Many, Several, Few Number of Product Attributes Evaluated: Many, Moderate, One Number of External Information Sources Used: Many, Few, None Time Spent Searching: Considerable, Little, Minimal
Decision Process: Evaluation of Alternatives
How do consumers choose between alternatives? Evaluation can range from relatively shallow to very involved: - Low Motivation= prior attitudes, intuition, heuristics, affect-based - High Motivation = careful weighting of attributes (compensatory vs. non-compensatory)
Product Position
How the product is defined by consumers on important attributes, relative to competing products.
Coordinate Marketing and Sales
Increase communication between departments Joint assignments: Marketers go along on sales calls, Sales reps weigh in on marketing strategy and tactics Create joint objectives and reward systems Marketing-Sales Liaisons or Chief Customer Officer
Items, Lines and Mixes
Individual Product: A specific version of a product that can be designated as a distinct offering among an organization's products. Product Line: A group of closely-related product items. Product Mix: All products that an organization sells.
Factors that influence consumers: Social: Family and Role & Status
Individual family members may serve different roles in group decision process: Information gatherer, Influencer, Decision Maker, Purchaser User Role: Activities people are expected to perform according to people around them. Status: General esteem given to a role by society.
Advertising: Setting Objectives
Informing - tell market about new product, new uses, price change - explain how the product works, expand usage - build company image, customer value Persuading - build brand preference, encourage switching to your brand - change perceptions of product attributes - persuade to purchase now Reminding - remind that product may be needed in the future, where to buy it - keep in consumers mind during off season - maintain awareness - Reduce post-purchase dissonance
Types of Intermediaries
Intermediary: any intermediary between manufacturer and end-user markets Agent/Broker: any intermediary with legal authority to act on behalf of manufacturer Wholesaler: any intermediary who sells to other intermediaries, usually to retailers, usually to consumer markets Retailer: an intermediary who sells to consumers Distributor: imprecise term, usually used too describe intermediaries who perform a variety of distribution functions, including selling, maintaining inventories Dealer: even more imprecise term that can mean same as distributor, retailer, wholesaler, and so forth
Decision Process: Information Search
Internal Search: Memory and Past Experience External Search: Commercial sources (advertising, sales people, webpages, packaging, displays): inform, Public sources (mass media, consumer rating organizations, internet blogs): inform and evaluate, Experiential sources (using the product): legitimate and evaluate, Personal sources (friends, family, coworkers): legitimate and evaluate Make information easily available for consumers through various sources
Line Extension
Introduce additional items in the same product category under the same name (e.g. new flavors, forms, colors) Benefits: Low cost and low risk, Good strategy to increase variety for consumers, use excess capacities, or command more shelf space Risks: Over-extending brand, Cannibalizing existing products
Decision Process:
Is consumer satisfied/dissatisfied with purchase? - Depends on expectations. - Promise only what you can deliver - Build long-lasting and profitable relationships - Increase chances for positive word-of-mouth and brand loyalty Avoid discomfort caused by uncertainty about the purchase (cognitive dissonance) - "I made the wrong decision" vs. "I am a good shopper"
What Makes a Good Segment?
Is it Plausible? Measurable, Accessible, Substantial, Differentiable, Actionable
Public Relations Toolkit: Internally Focused
Key Message Development Media Training Briefing Material Media Contact List Clipping Services & Coverage Reports Editorial Calendars Newsletters
Factors that influence consumers: Psychological Influences: Learning, Beliefs and Attitudes
Learning: Changes in behavior arising from experience, watching others (vicarious learning), through rehearsal, and through reasoning Beliefs: Descriptive thought a person holds about something. Attitudes: A consistent favorable/unfavorable evaluation towards an object, idea, etc. Difficult to change
Consumer Product Classes: Shopping
Less frequent purchases requiring more shopping effort and price, quality, and style comparisons Higher priced than convenience goods Selective distribution in fewer outlets Advertising and personal selling by producer and reseller
PR Cons
Little Control: Journalists put their own spin on press releases and sponsoring athletes can involve company in scandals (e.g. Tiger Woods, Lance Armstrong) Company can look disingenuous: product placement can backfire if it becomes too apparent Measurement difficulties: Effects are often long-term and effectiveness for non-customer target audience can be not assessed by sales Cannot fully compensate for bad or unethical practices
Consumer Product Classes: Unsought
Little product awareness and knowledge (or if aware, sometimes negative interest) Pricing and distribution vary Aggressive advertising and personal selling by producers and resellers
Product Life Cycle: Introduction
Low sales Higher cost-per-customer acquired Negative profits Innovators are targeted Little competition Marketing goal: increase awareness, induce trial - Product: Offer a basic product - Price: Use cost-plus basis to set - Distribution: Build selective distribution - Advertising: Build awareness among early adopters and dealers/resellers - Sales Promotion: Heavy expenditures to create trial
BCG Matri
Low/High Market Growth Rate and Low/High Relative Market Share LG & LS: Dog LG & HS: Cash Cow HG & LS: Question Mark HG & HS: Star
Marketing Decisions for Services
Managing Service Differentiation: Develop a differentiated offer, delivery, and image. Managing Service Quality: Be customer obsessed, set high service quality standards, have good service recovery, empower front-line employees. Be: reliable, responsive, assuring, and empathetic. Managing Service Productivity: Train current employees or hire new ones, harness technology, be aware of ways to take advantage of economies of scale.
Quantitative Analysis: Measure & Strategic Importance
Market Share: Market Dominance Contribution/Profit Margin: Profitability Breakeven Analysis: Loss vs. Profit Price Elasticity: Demand & Consumer Characteristics Price Chains: Profit Distribution Across Channel Membership Marketing ROI: Measuring Marketing Effectiveness
Market Share
Market share is the percent of the total market (expressed in units or dollars) that your brand or product controls. Not all brands in a segment are sold at the same price, therefore the answer to two market share calculations will differ (unit vs. $) The first step for accurate market share calculation is to estimate the size of the target market
Customer Loyalty & Retention
Marketers must be concerned with the lifetime value of the customer - both their loyalty and their profitability Loyalty and retention increase as satisfaction levels increase Delighted customers should be the goal Loyalty programs may be useful to increase customer retention Customers have relationships with brands, just like they do with people, and these must be nurtured.
Brand Positioning
Marketers need to position their brands clearly in target consumer's minds. Three levels of brand positioning: Product attributes/Functional: Least effective, easy to copy Benefits: Associates name with desirable benefit Beliefs and Values: Taps into emotions (emotional branding)
Marketing ROI
Marketing ROI measures the return on investment of marketing based activities.
Promotion
Marketing activities that communicate information to consumers about the organization, its products, its activities to directly or indirectly expedite change Involves communicating the value of our product offering to our chosen target market.
What is Marketing?
Marketing is managing profitable customer relationships. Fundamentally, marketing includes two core activities: - Attract new customers by promising superior value. Value = Perceived Benefits - Perceived Costs - Keep and grow current customers by delivering satisfaction and building long-term relationships with customers.
Why Market Research?
Marketing research provides managers with the information needed to create long-lasting and profitable customer relationships. Companies need information about: Customer needs and wants, Marketing environment, Competition Economy and other external factors, Marketing Actions Marketing managers do not always need more information, they need better information. Information should be relevant, planned and accurate, and impartial.
Goals of Public Relations
Media relations: Encourage positive media coverage Corporate Social Responsibility (CSR): Create good-will for the company Increase awareness among key audiences/stakeholders Create a positive brand & corporate image Enhance credibility in business/financial/social community (Help) stimulate sales Crisis Management
Buyer Adoption Process
Mental processes an individual goes through from first hearing about an innovation to final adoption. 1. Awareness - aware but lack information 2. Interest - seeks information about the new product 3. Evaluation - decides whether or not to try product 4. Trial - tries product to estimate its value 5. Adoption - buy and make full use of product
Attracting Attention
Methods used to attract attention: - Attractive visuals (inc. sexual appeals) - Surprising - Entertaining/ humorous - Useful
Promotion Mix Characteristics
Mode of Communication: ((In)direct, (Non)personal) Customer Control over Situation: Low, High Amount of Feedback: Liitle, Small, Moderate, Much Speed of Feedback: Delayed, Varies, Intermediate Direction of Message Flow: One-way, Mostly one-way, Two-way Control over Message Content: Yes, Sometimes Identification of Sponsor: Yes, Sometimes Speed in Reaching Larger Audience: Fast, Moderate: Usually Fast, Slow Message Flexibility: Low, Moderate, Limited, High
Multibrands
Multiple product variations in the same product category Benefits: Establish different features to appeal to different customer segments, Increase shelf space, Capture larger overall market share Risks: Potentially lower the market share of each brand, Higher costs/managing multiple brands
Price
Narrow Definition: The amount of money charged for a product or service Broad Definition: The sum of all values that consumers exchange for the benefits of having of using the product or service
Brand Sponsorship (Ownership/Usage Rights)
National brands: Brands that share the same name as the manufacturer (aka manufacturer brands) Private (store) brands: Brands established by retailers Licensed brands: : Selling the rights to use a brand on a product Co-branding: Using two brand names on one product
Understanding Customer Needs
Need - State of felt deprivation including physical, social and individual needs Wants - Specific form of a need that is shaped by culture and personality. Objects that will satisfy needs. Demand - A 'Want' backed by buying power. Market - Set of actual and potential buyers of a product or service.
Consumer Decision Making Process
Need recognition Information Search Evaluation of Alternatives Purchase Decision Postpurchase behaviour
Research: Step 4: Reporting Findings
Need to convert from 'data' to 'insights', then develop ways to communicate these insights.
New Brands
New brand used in new product category Benefits: Diversification of portfolio, Can create distinct positions Risks: Company might be spreading its resources too thin
Dangers in New Product Development
New products improve customers' lives (better solutions, more variety) and allow companies to grow But about 80% of all new products fail or dramatically under-perform in the first year Only about 10% of new products are on the market and profitable after 3 years.
Channel Decisions
Not what do you do but who does it: - The channel will be most effective when: - each member is assigned tasks it can do best - all members cooperate to attain overall channel goals Channel Length: - The number of intermediaries - Direct Channels - no intermediaries - Indirect Channels - one or more intermediaries - More levels = less control = more complexity (and a higher potential for conflict)
Sales Promotion: Consumer Sales Promotion
Objective: Increase short term sales Free samples, contests, sales, sweepstakes, rebates, coupons
Sales Promotion: Trade Promotion
Objective: get retailers to do things discounts, advertising allowances, display allowances, free goods, push money, specialty advertising items
Major Advertising Decisions
Objectives setting: Communication objectives, Sales objectives Budget decisions: Affordable approach, Percent of sales, Competitive parity, Objective and task ___ Message Decisions: message strategy, message execution OR Media Decisions: reach, frequency, impact, major media types, specific media vehicles, media timing ___ Advertising Evaluation: Communication impact, Sales and profit impact, Return on advertising
Review Marketing Process Diagram
On Session 1 Slides
Factors that influence consumers: Social: Online Social Networks
Online communities where people socialize or exchange information and opinions. Build closer relationships by becoming part of consumers' conversations Opinion leaders and followers alike are exposed to a mixture of interpersonal and media influence Ideas spread because easily influenced people influence other easy-to-influence people
Research: Step 3: DIY Marketing Research
Online polling allows for super short questionnaire Higher response rates (15-20%) More accurate answers Faster Response Time Cheaper
Types of Public relations
Owned Media (Corporate): Online & Social Media presence, Print Materials, Retail |Re-posting positive reviews/press coverage on corporate website | Earned Media (Organic): Media, Key Influencers, Social Media, Word-of-Mouth | Product Placement | Paid Media (Traditional): Traditional & Digital advertising | Re-purposed content |
Packaging
Packaging is often the most distinctive marketing effort, with some companies spending more on packaging than ads. Packaging: Protects, Increases shelf life (Tetra Pak), Facilitates handling and storing , Provides information - Flavor, ingredients, Identifies, communicates, and promotes brand, Can differentiate (through innovative and creative designs) ~ half of all purchases are made on impulse: packaging operates as a 'five-second commercial'
Factors that influence consumers: Personal Factors: Lifestyle
Pattern of living as expressed by activities, interests, habits, ways of doing things and opinions. A characteristic bundle of behaviors that makes sense to both others and oneself in a given time and place, including social relations, consumption, entertainment, and dress.
Personal Selling vs. Other Tools
Personal Selling more important if product has high value, is custom made, is technically complex, there are few customers, or customers are concentrated Advertising & Sales Promotion more important if product has low value, is standardized, is simple to understand, there are many customers, or customers are geographically dispersed
Product Placement
Planned insertion of a brand/product into a movie/TV show/music video/video game/ other media program for the purpose of influencing viewers - Increased brand awareness - Form positive attitudes - Low cost/view and long lasting - Opportunities for cross-branding
Types of Associations (Product Positioning)
Position should relate to the needs that are important for the target market. Should be rooted in company's sustainable competitive advantage. Might consider connections between our brand and the product category, the price, and even the competition. Goal is to differentiate from competitors.
Positioning
Positioning involves creating psychological associations between our product offering and the elements we think are important In psychology this is known as a schema - an associative network of related concepts and ideas (distinctive, positive, easily recalled) Arranging for a product to occupy a clear, distinctive, and desirable place in consumers' minds relative to the competition. Note: This is the process whereby a product position is developed
Public Relations Toolkit: Externally Focused
Press Releases/Pitches Media Kits Speaking Opportunities Awards Bylined Articles Event Management Tradeshows & Special Events (& SWAG) Media & Analyst Tours Websites Annual Reports Crisis Management
Budgeting: How much should you spend?
Previous advertising spending (and results) can guide marketers in current media planning (e.g. what media vehicles to select, how much money to spend) Advertising response function: Spending for advertising and sales promotion increases sales or market share up to certain level but then produces diminishing returns
Price Elasticity
Price Elasticity (PE) measures how responsive demand would be to a change in price. PE<1 Inelastic: decrease price leads to less than proportional increase in demand, consumer not price sensitive, increase price, increase profit PE>1 Elastic: decrease price leads to greater than proportional increase in demand, consumer price sensitive, lowering price increases profits PE=1 Unit Elastic: increase/decrease in price yields proportional change in demand, price is not critical factor
Factors Affecting Setting a Price
Price Floor: Product Costs Internal Factors: Marketing Objective (positioning, pricing objective, coordinate pricing with other 3 P's) External Factors: Nature of Demands (market type, price-demand), Competitors (competitor's costs, prices, and possible reactions), Environment (economic conditions ipact costs & influence buyer perceptions of price & value, resellers' value, government restriction)
Psychology of Pricing
Price and Quality: - Higher-priced products perceived as higher quality, discounted products may signal problems. - Consumers use price less as a signal when quality can be judged. Odd Pricing and other 'Number' Effects: - Numeric digits have symbolic and visual qualities that psychologically influence the buyer...especially the 9. - Fractional prices suggest to consumers that goods are marked at the lowest possible price. - Judgments of numerical differences are anchored on left-most digits. Pain-of-Paying: - Disutility of spending money - Reduced when payment is de-coupled from experience (i.e. credit card, pre-paying for a vacation) - Higher Spending - More Impulse Purchases
Why is Pricing Important?
Price and the Marketing Mix - Only element to produce revenues - Revenue pays for every activity; what's left is profit - Most flexible element - Can be changed quickly Common Pricing Mistakes - Reducing prices too quickly to get sales (i.e. long term effects of sales promotions are generally negative) - Pricing based on costs, not customer value
Price Chain
Price chain is a tool that lets us observe how the costs and prices change through the distribution chain. Ultimately it's helpful to determine the retail price of products given the profit goals of channel members. Manufacturer, Wholesaler, Distributor, Retailer, Consumer
Research: Step 2: Strengths/Weakness of Data Types
Primary: - Strength: data specifically designed for study, data is current - Weaknesses: far more costly, takes longer time Secondary: - Strength: time & cost savings - Weaknesses: may be out of date, definitions may not fit, may not be specific enough
Factors that influence consumers: Psychological Influences: Perception
Process by which sights, sounds, smells, tastes, and textures are selected, organized, and interpreted by consumers - Selective Attention: consumers screen out information - Selective Distortion: people interpret information to fit with their beliefs - Selective Retention: people retain points to support attitudes - Subliminal?
Managing Channel Conflict: Option 2: Vertical Marketing Systems
Producer, Wholesalers, and Retailers act as a unified system - Aim: Maximize the profit of the entire channel - Benefits should include greater control, less conflict, and economies of scale due to the size of the system Different types of VMS - Corporate VMS: The whole channel is owned by the same company - Contractual VMS: Firms are contractually bound - Administered VMS: Leadership determined by the power of one or a few dominant channel members
Marketing Mix (4 P's)
Product Price Promotion Place
Possible Differentiation
Product Differentiation (features, style, performance, design) Services Differentiation (speed, convenience, careful delivery) Channel Differentiation (coverage, expertise) Brand Image Differentiation (convey benefits and positioning) People Differentiation (hiring, training)
Product Mix Pricing Strategies
Product Line Pricing: Setting price steps among products in a product line, based on cost differences and customer perceptions of value. Optional-Product Pricing: The pricing of optional or accessory products along with a main product. Captive-Product Pricing: Setting a price for products that must be purchased along with the main product. By-Product Pricing: Setting a price for by-products to make the main product's price more competitive or cover the costs of disposal. Product Bundle Pricing: Setting one price for a set of products.
Individual Product
Product attributes: Quality, differentiating features, style and design Branding: A name, term, sign, symbol, design, or a combination of these, that identifies the maker or sellers of a product or service Packaging: The design of the container or wrapper Labeling Product support services
Product Line Decisions
Product line is a group of products that are closely related because they: function in a similar manner, are sold to the same customer groups , are marketed through the same types of outlets, fall within given price ranges Product line decisions are based on the line length (# of products in a line) Can manage the line length by - Line stretching - Adding products that are higher or lower priced than existing products in the line. - Line filling - Adding more products within the present price range.
Product Mix Decisions
Product mix (aka product assortment): All of the product lines and items that a particular seller offers for sale. Width: # of different product lines. Depth: # of variants in each product line. Consistency: How closely related the lines are.
How do Retailers Compete?
Product selection: breadth vs. depth Service and atmosphere: full vs. limited, functional vs. immersive Price/quality/quantity levels - appealing to broadly different segments; Choice of each depends on target market - lower prices for: lower quality, less selection, larger quantities Location: physical location as well as non-store locations
Marketing Management Philosophies
Production Concept "Make" Product Concept "Make Better" Selling Concept "Make & Sell" Marketing Concept "Sense & Respond" Societal Marketing Concept "Triple Bottom Line"
Differentiation must...
Promote differences that are: - Important: highly valued by the target market - Distinctive: competitors do not offer the benefit - Superior: difference is better than competitors - Communicable: benefit can be communicated to target market - Preemptive: competitors cannot easily copy the difference - Affordable: target market can afford it - Profitable: company can afford to offer it profitably
Promotion Mix Strategy
Promotional Objective: - Inform: describe product, suggest uses, advertise, etc. - Persuade: build brand preferences, encourage switching, encourage purchase, etc. - Remind: maintain awareness, remind where to buy, Push vs. Pull: Push is producer to retailer/wholesaler to consumer. Pull is consumer to retailer/wholesaler to producer back to consumer
Sales building promotions vs. Franchise building promotions
Promotions that focus on price (esp. price-offs and rebates) can erode brand equity. However promotions increase awareness and knowledge of the brand, stimulates trial, support customer identities as smart shoppers, differentiate from competition, and can even improve image of brand (e.g. premiums)
Advertising
Pros: Reach a wide audience that can be geographically dispersed (mass audience), Low cost per exposure, Message can be repeated many times, Provides legitimacy , Both for image building and generating sales Cons: Very expensive $$$, Impersonal, Disruptive, One-way communication
Factors that influence consumers
Psychological: motivation, perception, learning, beliefs and attitudes Personal: age and life cycle stage, occupation, economic situation, lifestsyle, personality and self-concept Social: reference group, family, roles and status Cultural: culture, subculture, social class
Situational Influences
Purchase Task: reason for decision (own vs. gift) Social Surroundings: other people around? Physical Surroundings: décor, music, crowding, etc. Temporal Effects: time of day, time available, etc. Antecedent States: mood, cash on hand, etc.
Product Life Cycle: Growth
Rapidly rising sales Average cost-per-customer decreases Rising profits Early adopters/Early majority targeted Growing competition Marketing goal: capitalize on increasing demand; sustain growth - Product: Offer product extensions, service, warranty - Price: Penetration pricing - Distribution: Build intensive distribution - Advertising: Build awareness and interest in the mass market - Sales Promotion: Reduce expenditures to take advantage of consumer demand
Factors that influence consumers: Social: Reference Groups
Reference group serves as a direct (face-to-face) or indirect point of compression in turn influencing a person's attitudes or behavior. - Membership groups: groups of people we belong to - Aspirational groups: people or groups that we admire or idealize - Dissociate/avoidance groups: people or groups that we wish to avoid belonging to.
Other Brand Performance Measures
Relative Satisfaction: consumer preference for your product compared to market or competitors Awareness: percentage of target market who are aware of your brand Commitment/Loyalty: consumer switching rate Relative Perceived Quality: perceived quality of your brand compared ot market/competitors Availability: % total possible retail outlets carrying your brand
Research: Step 1: Defining the Problem
Research is often needed just to identify the cause of a problem. Immediately identifiable problems are typically symptoms.
Roles of Intermediaries
Role #1: Logistics - the physical movement and storage of products. Role #2: Customer Contact - market coverage and contact with customers Role #3: Collect and Disseminate Info - about current customers, competitors and other forces in the market Role #4: Promotion - dissemination of persuasive communications designed to attract customers Role #5: Financing and Risk Taking - intermediaries share the cost of the financing required to carry inventory and assume some of the inherent risks of business
Customer Driven Market Strategy
Role of marketing management is to: - Analyze customer markets - Design marketing strategy - Communicate value propositions - Serve customers - Build profitable relationships What customers to serve (target market)? How can we serve them best (value proposition)?
When the Community is the Brand
Role of the marketer is to build platforms upon which community members interact. Enabling members to form stronger bonds with each other, ultimately leads to a stronger brand community with deeper sense of belonging. Ex: eBay, Wikipedia, Facebook
Sales Promotion in the Marketing Budget
Sales curve: Innovative productst with clear benefits/strong brand name will reach threshold sooner; Coupons, free samples, etc. let you reach threshold sooner (sometimes at expense of profits); Wearout with saturaion and diminshing returns thus target specific segaents rather than simple increasing spending Marginal analysis curve: Once communication expenditures deliver diminishing returns, further expenditures can decrease profits
Product Life Cycle: Maturity
Sales peak Low cost-per-customer High profits Middle majority targeted Competition begins to decline Marketing goal: maintain sales level - Product: Diversify brand and models - Price: Set to match or beat competition - Distribution: Build more intensive distribution - Advertising: Stress brand differences and benefits - Sales Promotion: Increase to encourage brand switching
Using Reference Groups
Seeding products to members of aspirational reference groups (e.g., celebrities) Encourage word-of-mouth to increase influence of membership group Associate competitor product with dissociative reference group
Target Marketing
Select the best segment(s) to cultivate to grow demand or even to reduce demand (demarketing)
Segmented Price Strategies
Selling a product or service at two or more prices, where the difference in prices is not based on differences in costs. Types: 1. Customer-segment (e.g., student/senior pricing at movie theaters) 2. Product-form (e.g., Costco!) 3. Location pricing (e.g., different prices for concert tickets) 4. Time pricing (e.g., peak v. off-peak pricing for electricity) Necessary Conditions: - Lower priced segments can't resell to higher priced segments* - Competitors cannot undersell segments charging higher prices* - -Must reflect real differences in buyers' perceived value (or demand) - Market must be segmentable - Pricing must be legal
Product/Service Continuum
Service alone may be a product; also may be part of a product - Services are important: We live in a service economy ≈ Account for 68% of Canada's GDP, almost 75% of employment, and nearly 53% of consumer spending. Remember, consumers are not buying good or service, but a set of need-fulfilling devices.
Market-Skimming Prices
Set a high initial price for a new product to "skim" revenues layer by layer from the market - Prices set ABOVE the industry average price Company makes fewer, but more profitable sales When to use - Product's quality and image support higher price - Costs of smaller volume cannot be so high they cancel the advantage of charging more - Competitors should not be able to enter market and undercut price Variation - Prestige pricing. Price remains high due to the perception of prestige.
Market Penetration Pricing
Set a low initial price in order to penetrate the market and get a large volume of sales. - Price set between Average Variable Cost and Average Industry Price Can attract a large number of buyers quickly and win a large market share. When to use: - Market must be highly price sensitive so a low price produces more market growth. Production and distribution costs must fall as sales volume increases. - Must keep out competition and maintain low price or effects are only temporary.
Cost-Based Pricing
Set price based on costs for producing, distributing, and selling product plus a fair rate of return for effort and risk - Price is product driven - Cost-plus, break-even, target-return pricing Popular pricing technique because: - Sellers are more certain about cost than demand - Simplifies pricing - When all sellers use cost-based pricing, prices are similar and competition minimized - Perceived as more fair for both buyers/sellers Problem: Ignores demand and competition
Budgeting: Objective-and Task Method
Set the budget based on what objectives and task should be accomplished with promotion - Define the promotion objectives - Determine what tasks are necessary to achieve these objectives - Estimate the costs or performing these tasks Successful companies consistently spend on advertising to stay competitive and maintain brand awareness!
Evaluating Market Segments (10 Elements)
Size, Growth, Competition, Segment Saturation, Protectability, Risk, Fit, Relationship with Other Segments, Profitability, Costs
Message Execution
Slice of Life: Typical people using the product in a normal setting - solution to everyday problems Lifestyle: Shows how the product fits with a particular lifestyle. Fantasy: Creates a fantasy around the product or its use. Mood or Image: Builds a mood or image around the product (e.g. beauty, love, serenity). Testimonial Evidence or Endorsement: Everyday consumer/Highly believable or likeable source endorsing the product. Musical: Someone singing about the product. Personality Symbol: Creates a character that represents the product. Technical Expertise: Shows the company's expertise in making the product. Scientific Evidence: Presents scientific evidence that the brand is better or better likes than one or more other brands. Informational: Present information in a straight forward manner Comparative: Company is directly or indirectly compared with other brands
Market Offerings
Some combination of products, services, information or experiences, etc. offered to a market to satisfy a need or want.
What makes a good ad?
Some tips for advertising that sells: Brand Identification Start Strong Avoid Miscomprehension Avoid visual banality Show the product in use Finish with the Package Close-ups Supers
The Promotion Mix
Specific blend of advertising, public relations, personal selling, sales promotion and direct-marketing tools that the company uses to: - Persuasively communicate customer value - Build customer relationships - Encourage sales
Research: Step 2: Develop the Research Plan
Specify Constraints: Time, $$$$ Identify data needed to answer research question Primary v. Secondary Determine how to collect data KEY POINT: when designing data collection method, make sure to ask oneself two questions: - How will this information help me to answer research question/reach research objectives? - How can I use the information that I distil from the data collection to take action?
Objectives and the Customer
Stage of Decision Making (Consumer): Need Recognition, Information Search, Evaluation of Alternatives, Purchase, Post Purchase Relevant Information (Shared): Needs, Products that satisfies needs, Product that best satisfies, Affordable & obtainable, Good decision Promotion Objectives (Marketer): awareness of needs, awareness of product, information about product, communicate value, remind
Iterative Process
Stakeholders to PR Team: Closely monitor actions and opinions of all stakeholders to react to potential threats and opportunities PR Team to Stakeholders: Customize message that resonates with each stakeholder, while keeping it consistent with overall message
Media Relations
Stimulate positive media coverage: Press release, Press conference, 'Newsworthy event' Damage control: Monitor media and react to negative press and word-of-mouth
Price adjustment strategies
Strategies to adjust their basic prices to account for various customer differences and changing situations.
SWOT Analysis
Strengths, Weaknesses, Opportunities, Threats Is performed for relevant strategic business unit or a relevant customer segment. Includes implications - never put anything on a SWOT that doesn't matter to your company or business unit.
Research: Step 3: Ethnography
Studies consumers as they interact with products and services in their natural habitat. Involves extended immersion in consumers' environments to understand how they interact with their world and experience consumption. Ethnographic research has the potential to discover the kinds of customer insights that just don't emerge from traditional research questionnaires or focus groups. Netnography involves online observation of cultural phenomena (message boards, blogs, etc.)
Brand Name Selection
Suggest benefits and qualities Are easy to say, recognize and remember Are distinctive Are extendable Translate well into other languages Fit with desired positioning strategy Do not have negative associations Can be registered and legally protected
Breakeven Analysis
The break-even volume (BEV) is the volume at which the firm's total revenues equal to total cost. - # of units sold < BEV implies the firm has a loss - # of units sold > BEV implies the firm has a profit
New Product Development
The development of: Original products, Product improvements, Product modifications, and New brands through the firm' own R&D efforts OR acquisition. Systematic search for new product ideas. - Internal idea sources: Employees, R & D - External idea sources: Customers, competitors, distributors, suppliers, crowdsourcing
Evaluating Ad Campaigns
The evaluation of an advertising program should be measured based on the original goals set for the campaign. Measuring communications effects: - Copy testing - Consumer recall - Product awareness - Product knowledge - Product preference Measuring sales effect: - Past vs. current sales comparison - Experimentation
Retailing
The final stage of the distribution channel Focus is on the activities required to facilitate exchanges with ultimate consumers The nature of retailing: - Highly competitive - ~ 20% of business failures are retailers - Huge variety: all shapes and sizes - They deal with many small transactions - Retailers deal with both producers & consumers
Research: Step 3: Observational Techniques
The gathering of primary data by observing relevant people, actions, and situations Participant observation: In-person observation in natural environment (Ethnography, Netnography) Non-participant observation: E.g. pantry audit; garbageology Mechanical observation: Checkout scanners, Peoplemeters, Pay-how-you-drive monitors, Cable set-top boxes, Online Behavior
Message Strategy
The general message that is communicated to customers - the BIG IDEA The appeal should be: - Meaningful: point out important differences and/or attributes - Believable: consumers must believe that the product or service will deliver the promised benefits - Distinctive: tell how the product is better than competing brands ACM Model: - Get attention (e.g. headline) - Achieve comprehension (e.g. message) - Be memorable (e.g. tagline)
Without Intermediaries
The goal of the channel is to increase the efficiency of distribution.
Environmental Analysis
The marketing environment consists of actors and forces inside and outside the organization that affect management's ability to build and maintain relationships with target customers. Microenvironment: Actors close to the company that affect its ability to serve its customers Macroenvironment: Larger societal forces that affect the microenvironment. Considered to be beyond the control of the organization.
Setting Objectives
The mission of the organization is translated into detailed, quantifiable objectives The rest of the planning process is supported by these objectives Objectives are SMART: specific, measurable, achievable, relevant and timely
Communicate Positioning
The positioning message is communicated through an integrated marketing program - Advertising and other promotional tools - All other touch points (from packaging to retail outlets carrying the product) to present a common theme
Direct Marketing
The practice of delivering promotional messages directly to potential customers on an individual basis Pros: Less Public (individual), Immediate communication, Customized/tailored, Allows for interaction, Well suited for building long-term relationships Cons: One-way communication, SPAM, Requires updating
Customer Relationship Management
The process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. Building blocks of customer relationships - A customer buys from the firm that offers the highest customer-perceived value - Customer satisfaction depends on the product's perceived performance relative to a buyer's expectations.
Research: Step 3: Marketing Models and Data Mining
The process of extracting patterns from data Goal is to turn data into business intelligence. : E.g., Panel data is used by retailers to perform market basket analysis to understand the purchase behavior of customers. A model is a mathematical representation of a real life situation. Used in marketing to explain how consumers individually, or collectively respond to marketing activities and how competitors interact. Can be used to forecast, or predict, outcomes of alternative marketing actions. Like experiments, models are built on independent and dependent variables.
Marketing Strategy
The process whereby a company determines who to sell to and how to offer their product to that group. - Segmentation - Targeting - Positioning
Choosing a Value Proposition
The set of benefits that the marketer promises to deliver to customers to satisfy their needs. The proposition must: - Differentiate this value proposition from the competition - Build customer value and satisfaction through the offer Positioning: - Arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the minds of consumers. - Essentially answers the question: "Why should I choose your brand rather than a competitor's?"
Target Market Selection
The target market is the set of buyers, sharing common needs, that the company decides to serve. Ultimately we want to choose the most profitable segment(s) that fit with long-run objectives Under certain conditions, it might be viable to go after multiple segments. When doing so, you must consider: - Timing of entry - resources - Potential synergies across segments - Preempting competitive offerings - Extent of cannibalization
Paid, Owned and Earned Media
Topline: Paid (they paid us to tell you how good they are), Owned (we're good), Earned (I think they're good) Cost: Paid (often expensive), Owned (varies with volume/engagement), Earned (varies with volume/engagement) Control: Paid (High), Owned (Highest), Earned (Lowest) Credibility: Paid (low), Owned (Lowest), Earned (Highest) Push vs. Pull: Paid (Primarily Push), Owned (Push), Earned (Push & Pull) Purpose: Paid (Informative), Owned (Informative & Affirmative), Earned (Informative & Engaging) Primary Tone: Paid (Selling), Owned (Informative), Earned (Confirming & Comparing)
Message Design & Delivery
Traditionally message design was "King" With media fragmentation and new technologies, media planning (delivery of message) has become more important Message design and delivery can work hand in hand: The medium can be the message!
Differentiation must not...
Under-position: Failing to really position the company at all. Over-position: Giving buyers too narrow a picture of the company. Confused position: Leaving buyers with a confused image of a company.
Factors that influence consumers: Personal Factors: Personality
Unique psychological characteristics that distinguish a person (or a brand!) - Sincerity: down-to-earth, honest, wholesome and cheerful - Excitement: daring, spirited, imaginative, and up-to-date - Competence: reliable, intelligent, and successful - Sophistication: upper class, charming - Ruggedness: outdoorsy, tough Self-concept - how a person views themselves. - Includes perceptions of personalities, attitudes, behaviors, and social identities.
Number of Associations (Product Positioning)
Unique selling proposition (USP): Focusing on one attribute and aggressively promoting itself as being the best on that benefit Multiple selling proposition (MSP): Choosing a number of attributes and promoting them all The mix of benefits on which a product/brand is positioned is known as the value proposition.
Brand Extension
Use a successful brand name to launch a new product in a new category Benefits: Instant recognition, Faster acceptance (especially with high brand equity), Saves on advertising costs Risks: Diluting the image of the main brand, Failures can impact the main brand
Value-Based Pricing
Uses buyers' perceptions of value rather than seller's costs to set price - Consider price before setting the marketing program - Customer needs and value perceptions drive decisions with respect to what costs can be incurred Good-value pricing: Offer just the right combination of quality and service at a fair price - E.g. Everyday Low Pricing (EDLP): Charges comparatively low prices all the time, with few or no "sales." Value-added pricing: Developing features that add value to the market offering (differentiate and offer higher prices)
Important Earned Media Considerations
Why do people want to share information? [What are their goals?] How can you facilitate/manage that sharing? [Deliver on your product/service. Create opportunities that match the goals of the "sharers"] Negative vs. Positive WOM Offline vs. Online WOM
Value Delivery Network
[Operations Management: Supplier (parts, raw material), Manufacturer (product)], {Store (product), Customer}
Market Research
process of designing, gathering, analyzing, and reporting information that may be used to solve a specific marketing problem.
Positioning Map
show consumer perceptions of their brands versus competing products displaying or graphing, in two or more dimensions, the location of products, brands, or groups of products in customers' minds.
