The Marketing Process The marketing process: –Analyzing marketing opportunities –Selecting target markets –Developing the marketing mix, and –Managing the marketing effort Three key steps: –Market segmentation –Target marketing –Market positioning Figure 2.4

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

Types of Competition Three Types 1. Direct (first level) Companies or individuals that offer the same products or services as perceived by the target customer. 2. Indirect (second level) Companies or individuals that offer the same benefits as perceived by the target customer. 3. Invisible competition People or businesses that have the capacity or desire to provide the same products, services or benefits that you do.

Competitive Intelligence Competitive intelligence (CI)  The process of learning, collecting and using information about your competitors for the purpose of growing your business. Requires a well-researched understanding of  Your target customers  Your current competition  Your future customer

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

The Competitive Edge Niche or Focus Strategy Three Broad Competitive Strategies Three Broad Competitive Strategies Differentiation Strategy Cost Leadership Strategy

Competitor Analysis Two methods to evaluate potential competitors are: 1. Competitive test matrix  A grid showing the strengths and weakness of your competitors. 2. Competitive SWOT  For each competitor, evaluate its internal strengths and weaknesses and external opportunities and threats.

The Competition Life Cycle Embryonic Growth Mature Decline Key Stages of the Life Cycle Key Stages of the Life Cycle

Your Competitive Positioning Strategy CUSTOMERS COMPETITION Figure 5.4

TARGET MARKET (6 - O’s) SELLER’S MIX (The P’s) UNCONTROLLABLE FACTORS *Demographics*Globalization*Political *Economy*Environmental* Research*Legal * Government* Technology* War* Terrorism

Reviewing the Outputs -Types of distribution -Distribution strategies (consumer & business) -Types of promotion -Promotional strategies (consumer & business) -Price Elasticity (Sensitivity) -Pricing strategies (lifecycle/product type) -Pricing policies Product PromotionPricing Marketing Mix Elements Place -Product types -Product tangibility - Product lifecycle -New product development Analytic Tools: Research Balance & Gaps Assessment Measurement, Monitoring & Evaluation Marketing Objectives & Strategy

The Four P’s of the Marketing Mix The marketing mix: –Set of controllable, tactical marketing tools –Product, price, place, and promotion –Blended to produce the desired response in the target market Internal consistency helps to be successful Represents the seller’s view of the market Figure 2.5

The 4 P’s Versus 4 C’s A different (buyer’s) way of looking at the four P’s Product Price Place Promotion Customer solution Customer cost Convenience Communication

Four Service Characteristics Service: any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything Figure 10.5

Three Levels of Product Core product: –Problem solving services or benefits of consumers’ purchase Actual product: –A product’s parts, quality, features, design, brand name and other attributes received Augmented product: –Additional consumer services and benefits built around core and actual product –Add value/ differentiate product from competition

The Total Product Concept Brand Warranty and service Product image Package and label Physical or Functional Characteristics of a Good or Service 10-3 A total bundle of physical, service, and symbolic characteristics designed to satisfy customer wants.

Marketing the Product: Brand Equity Brand association Brand loyalty Brand awareness Perceived quality Brand Equity How well and widely a brand is known Customer assessment of how well a product meets expectations Connections consumers make between products and their perceptions (Brand Image) Level of commitment a consumer has to a brand (familiar, preference and insistence) Represents the value customers (and the stock market) place on the sum of the history the customer has had with a brand.

Stages in the Product Life Cycle A product’s progress through introduction, growth, maturity, and decline stages. Objective: Stimulate DemandStimulate purchase & repurchase Protect volume from competition Protect volume from shifting consumer preference Overlap of Life Cycle for Products A and B

What is a Price? Price: the amount of money charged for a product or service, or the sum of values exchanged for the benefits of having or using the product or service Also known as rent, tuition, fee, fare, rate, interest Historically, most pricing was dynamic, arrived at through negotiation Fixed price policy more recent Price is the only marketing mix element that produces revenue therefore it is a key element in the strategy Pricing best practices: –Develop a 1% pricing mindset –Consistently deliver more value –Price strategically, not opportunistically –Know your competition –Make pricing a process Source: Paul Hunt, Strategic Pricing Division, The Advantage Group, Toronto, Ontario

Costs Costs set the floor, or lowest amount that should be charged - Ideally covering all costs plus margin for profit Fixed costs: costs that do not vary with production - overhead (rent, utilities, insurance, management salaries) Variable costs: costs that vary directly with the level of production (raw materials, labour, supplies) Total costs: the sum of fixed and variable cost. Average cost to produce decreases as volumes increase (Economies of scale)

PRICE OPTIONS Prestige Odd Externally Guided Skim the Cream Penetration Full Cost Demand

New-Product Pricing Market skimming pricing: setting a high price to skim maximum revenues from segments willing to pay (new technology) Market penetration pricing: setting a low price for a new product to attract a large number of buyers and achieve a large market share Advantage to be gained by large volumes early in life cycle Figure 7.7 Skimming price drops in steps

Price Adjustment Strategies Table 12.2 Discount and Allowance pricing Segmented pricing Psychological pricing Promotional pricing Geographical pricing International pricing Reducing prices to reward customer responses such as paying early Adjusting prices to allow for differences in customers, products, or locations Adjusting prices for psychological effect; reference pricing Temporarily reducing prices to increase short-run sales Adjusting prices to account for geographic location of customers Adjusting prices for international markets

Promotional Mix Promotional mix The key to connecting with customer is your promotional mix—all the elements that you blend to maximize communication with your customer.

PROMOTION Direct marketing: –Direct communications with targeted individuals to obtain an immediate response and lasting customer relationships Integrated marketing communications: –Coordinating/integrating to deliver a clear, consistent, and compelling message on all communication channels –Leverage: the overall effect is greater than the sum of its parts

Steps in Developing Effective Communications Identifying the target audience: –Will determine what, how, when, where, and who will say it Determining the desired response: –Will depend on what “stage” of the purchase decision process the buyer is presently at Buyer Readiness Stages: The stages that buyers normally pass through when making purchase decisions Figure 15.3

PROMOTION Advertising Publicity Personal Selling Special Promotions

PROMOTION Advertisingpaid, non-personal Institutional Brand Sales Classified

Relationship between Advertising and the Product Life Cycle For product advertising to be effective it must accomplish three key objectives: Informative Advertising Sales Introduction Persuasive Advertising Reminder-Oriented Advertising Time Growth MaturityDecline InformPersuadeRemind

PROMOTION Publicitynot paid, non-personal * high credibility * off-guard * dramatization

Public Relations Public relations: –Building good relations with the company’s various publics –obtaining favourable publicity, –building a good corporate image, and –handling or heading off unfavourable rumours, stories, and events Public relations functions: –Press relations –Product publicity –Public affairs –Lobbying –Investor relations –Development Public relations tools: –News, speeches –Special events –Mobile marketing –Published materials –Website –Public service activities

PROMOTION Personal Sellingperson-to-person *Product awareness & preference *Closing a sale *Negotiating price and terms * High end of preference scale

Customer Service and Quality Some Market Facts If you provide quality service, you can: Charge up to 10 percent more for your product or service  Increase sales growth  Reduce costs  Gain new customers  Make word-of-mouth advertising work for youAND Increase Profits!Increase Profits!

PROMOTION Special Promotions short term buy incentives Consumer Trade Sales-force promotions

Direct Mail Discount Coupons Promotion in Cyberspace Branding Yourself Promotional Mix Catalogues Paid media advertising Paid media advertising Point-of- purchase displays Working visibly Direct Mail Free Ink and Free Air Trade Shows Industry Literature Personal Selling Promotional Mix Money-Back Guarantees Business Cards

Integrated Marketing Communication (IMC) Applied Advertising Sales Promotion Public Relations Purpose: Awareness and preference building Timing: Introduction and Growth Stages Types: Informative, Persuasive, Reminder, Retail Personal Selling Direct Response Purpose: Incentive Timing: Late Growth, Maturity, Decline Stages Types: POP, Specialty, discount and loyalty programs Purpose: Fostering product and company goodwill Timing: Introduction and Growth stages (builds credibility) Types: Sponsorship, Publicity Purpose: Stimulate immediate sales Timing: Introduction, Growth, Maturity Stages Types: Direct Mail, Internet banners, TV Purpose: Complex, customized sales, personal references Timing: Introduction, Growth and Maturity Stages Types: Order processing, Creative selling

Guerrilla Marketing An important part of your promotional mix will be your “ guerrilla marketing ” promotional strategies — unconventional methods of getting the customer ’ s attention at minimal cost.

Push Versus Pull Promotional Strategies Refers to the direction of promotional effort Exists as a range, yet most companies use a combination of both Consumer goods use primarily pull; advertising Industrial goods use primarily push; personal selling Figure 15.4

Plotting Your Future Checklist qWhat is your marketing strategy? qWhat prices will you charge? qWhat are your promotional mix, goals and objectives? qWhat stimulates your target market to buy or use your product or service? qWhat has your primary and secondary research told you about promoting your business?

Plotting Your Future Checklist qDevelop a promotional strategy for your business. qHow will you cost out your promotional budget? qDoes your business have a unique twist for a possible publicity story? qWhy did you select the business name you are using?