1. PRODUCT AND PRICE STRATEGY Entrp 1: Lecture 5 & 6

2. Learning Objectives Describe the marketing mix Explain the importance of branding Describe primary and secondary market research Create a marketing plan Identify marketing tools Pricing Strategy

3. Marketing Mix  Marketing is process of developing mutually satisfying relationships with customers  Four Ps in the classical marketing mix The set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market. › Product › Place › Price › Promotion 6-3

4. Marketing Mix PRODUCT Variety, quality, Design, Features, Brand name, Packaging, Services PRODUCT Variety, quality, Design, Features, Brand name, Packaging, Services PLACE Channels Coverage Locations Inventory Transportation Logistics PLACE Channels Coverage Locations Inventory Transportation Logistics PROMOTION Advertising, Personal Selling Sales Promotion Public Relations PROMOTION Advertising, Personal Selling Sales Promotion Public Relations PRICE List Price Discounts Allowances Payment Period Credit Terms PRICE List Price Discounts Allowances Payment Period Credit Terms Target Customers Intended Positioning Target Customers Intended Positioning

5. Putting Together: Marketing Mix to create awarness Product Place Price Promotion What is the Product? How is it Positioned? (a)Product as Service: SIM card; (b)Product as Product: Coffee; (c)Service as Service: Legal Advise or (d) Service as Product: DHL logistics, software etc What is the Product? How is it Positioned? (a)Product as Service: SIM card; (b)Product as Product: Coffee; (c)Service as Service: Legal Advise or (d) Service as Product: DHL logistics, software etc Create a Customer Portfolio. Contact them through personalized emails or SMS based marketing. Collaborate with partner institutions to create shared log ins. Create a Customer Portfolio. Contact them through personalized emails or SMS based marketing. Collaborate with partner institutions to create shared log ins. Free trials for 1 month. Discounted fee for 3 months and then regular charge. Charges will be based on type and variability of services. Free trials for 1 month. Discounted fee for 3 months and then regular charge. Charges will be based on type and variability of services. Distribution channels cold be banks by enabling strategic relations. AwarenessInterestTrial Create Market Make Customers dependent Market Mix Strategies

6. Marketing Mix (continued) Marketing mix from customer’s viewpoint  Four Cs marketing mix model  Customer needs and wants  Convenience  Communication  Cost to customer 6-6

7. Marketing Mix (continued) 6-7 Customer Needs (Product) Customer Needs (Product) Communication (Promotion) Communication (Promotion) Cost to Customer (Price) Cost to Customer (Price) Convenience (Place) Convenience (Place) Marketing Mix

8. Building Your Brand A brand  Incorporates customers’ perceptions of and experiences with a business  Combination of name, logo, and design that identifies a business’s products and services in consumers’ minds  Trusted brand can drive sales  Examples 6-8

9. Building Your Brand (continued) Define how you want products/services perceived by customers  Understand core elements of business  Differentiate core elements from competitors’ core elements  Identify how products/services meet customers’ needs  Decide how to convince customers that products/services best meet their needs 6-9

10. Building Your Brand (continued)  Discover words, phrases, images to put best public “face” on business  Brand names and Slogans › Simple › Easy to remember, spell, and understand › Have “snap” › May be a proper name or use personification 6- 10

11. Building Your Brand (continued)  Domain name (URL) and branding › Address associated with a Web page › Can be used to help build a brand › Single- and common-word domain names largely already taken  Office.com, Business.com, dell.com  MAKE Website Synonymous with the Brand 6- 11

12. Building Your Brand (continued) Use creative “brainstorming” to develop brand name  Create list of words or phrases and combine them in creative ways  Ask for help from friends, family, advisors Pay for professional help in developing brand name  The Namestormers, NameLab 6- 12

13. Building Your Brand (continued) Domain name (URL) registration  Managed by ICANN for the U.S. Dept. of Commerce  Top-level domains identify the general category in which a domain name is registered 6- 13

14. Building Your Brand (continued) 6- 14

15. Building Your Brand (continued) Tying URL to business name can help build a brand  amazon.com  register.com  bn.com  ey.com Some e-businesses use clever, made-up words for URL  google.com 6- 15

16. Building Your Brand (continued) Brand names, domain names, trademarks are becoming more interchangeable  Make certain a URL does not infringe on the brand or trademark of an existing company 6- 16

17. Market Research  Collecting and analyzing data to make business decisions › Primary research  Uses quantitative or qualitative methods to physically collect and analyze data and then publish the results › Market research company examples  NPD Group  Forrester  IDC  Frost & Sullivan  Gartner 6- 17

18. Market Research (continued)  Secondary research › Collects data from secondary sources who have already performed the primary research › Resources for secondary research  Reports published by market research companies  Industry white papers  Government databases  Trade associations  Professional journals: Mckinsey Quarterly 6- 18

19. Creating a Marketing Plan and Strategize Provides the details for the marketplace analysis section of a business plan Plan elements  Executive Summary  Situational Analysis  Objectives, Strategies, and Tactics  Budget and Performance Measures 6- 19

20. Creating a Marketing Plan and Strategize (continued) Situational Analysis section  Explains what is known about the marketplace  Market size (Total Shipments X Average Unit Price)  Market segments  Target market  Market Positioning 6- 20

21. Creating a Marketing Plan and Strategize 6- 21 Identify Bases for Segmenting Market Develop Relevant Market Segment profiles Forecast Total Potential Within each segment Determine Marketing Program to serve each segment Analyze Competitive Forces within each Segment Forecast own market share for each segment Estimate Cost benefit for Each Segment Do Benefits outweigh Costs for each segment? Decision on selection of target segments Stage1 Stage 2 Stage 3 Stage 4 Stage 5

22. Marketing Strategy 2 - 22

23. 2 - 23  Customers grouped by:  Geographic  Demographic  Psychographic  Behavioral  Market segment is a group of consumers who respond in similar ways to marketing efforts 1. Market Segmentation 2. Target marketing 3. Market Positioning Marketing Strategy Strategy

24. Market Segmentation Clinique for Men products are designed for a segment of men who will pay more for skin care products. 2 - 24 Marketing in Action

25.  Evaluation of each segment’s attractiveness  Selection of segments with greatest long-term profitability  A company can choose one or several segments to target Marketing Strategy Strategy 1. Market Segmentation 2. Target marketing 3. Market Positioning

26. Target Markets Business Week magazine targeted to business professional who don’t have much time Marketing in Action 2 - 26

27. 2 - 27  The place the product occupies in the consumer’s mind  Products are positioned relative to competing products  Marketers look for clear, distinctive and desirable places in positioning Marketing Strategy Strategy 1. Market Segmentation 2. Target marketing 3. Market Positioning

28. Target Positioning Amazon.com was created to make shopping hassle- free and from home Marketing in Action 2 - 28

29. Creating a Marketing Plan and Strategize (continued) Objectives, Strategies, and Tactics section  Objectives describe marketing mission  Strategies identify what is to be accomplished  Tactics detail how it will be done Budget and Performance Measures section  A budget estimates the cost of the plan  Performance measures evaluate the results of plan implementation 6- 29

30. Marketing Tools Search tool submissions  Search engines use spiders to browse the Web and locate new pages to build indexes  Directories use human submissions of Web page information to build indexes  Most modern search tools use a combination of both means to build indexes  E-businesses can submit Web page information to multiple search tools 6- 30

31. Marketing Tools (continued) Search engine optimization (SEO)  Build Web pages that are easy to index by search engines  Relevant inbound links (most important)  Use good HTML tags/structure  Write clear and on-topic Web page text  Use descriptive page titles  Avoid frames and dynamic content  Use text navigation links  Use meta tags: used to add information to a web page that a web browser can see. 6- 31 Note: using certain Web page design elements, such as frames, flash content, and image navigation links, can make it more difficult for a spider or to index a Web page.

32. Marketing Tools (continued) Public relations effort  Establishes and maintains a company’s public image  Timely press release is a cost-effective marketing tool  Good idea to work with a PR professional 6- 32

33. Marketing Tools (continued)  Online advertising › Banner and sidebar ad  Rectangular image  Linked to advertiser’s site › Pop-up or pop- under ads  Appear in own window above or below browser window  Linked to advertiser’s site 6- 33

34. Marketing Tools (continued)  Online advertising (continued) › Rich media ads  Interactive elements, Flash technologies, streaming media  Shoshkele and streaming media ads  Permission-based marketing › Opt-in e-mail or newsletters › Double opt-in process verifies recipient voluntarily receives messages 6- 34

35. Marketing Tools (continued)  Online advertising (continued) › Search tool or portal advertising  Featured placement at other Web sites  Pay-per-click search tool ads  Featured placement in search results lists  Featured placement on same page as search results list  Based on relevant search keywords  Yahoo!, Search Marketing, and goClick.com 6- 35

36. Marketing Tools (continued) Traditional advertising  Radio  TV  Print media  Outdoor advertising  Direct mail Used together with online advertising to acquire new customers as inexpensively as possible 6- 36

37. Marketing Tools (continued) Link exchanges  Exchange links with Web sites to boost link popularity  Drive new customers to Web site and improve SEO  Beware of link farms and link stuffing Newsgroups and Web-based forums  Participation in can indirectly promote a business 6- 37

38. Marketing Tools (continued) Word of mouth  Electronic word of mouth exploits the network effect and viral marketing  Business blogs  Put a “human face” on a business  Way to keep tabs on what customers, potential customers, and competitors are thinking and saying  Provide valuable feedback on products and services 6- 38

39. Marketing Tools (continued) RSS and Podcasting  Syndication of Web page content or audio using XML technologies Affiliate programs***  Arrangement in which an e-business pays a fee or commission when a customer clicks through from another site and makes a purchase 6- 39

40. Marketing Tools (continued) Web rings  A group of similar e-businesses linked together in a circular “chain”  Visitor can click through from site to site in the chain Awards  Can give a startup e-business more credibility in the marketplace 6- 40

41. Marketing Using Marketing to Shape Perceptions and Expectations  Perceptions and expectations of value can be as important as actual value. To influence, can use:  Preannouncements and press releases Can build “mind share” in advance of actual market share Can forestall purchases of competitors’ products  Reputation Provides signal to market of likelihood of success  Credible commitments Substantial irreversible investments can convince market of firm’s confidence and determination

42. Pricing Price influences product positioning, rate of adoption, and cash flow.  What are firm’s objectives?  Survival  Maximize current profits  Maximize market share  Typical pricing strategies for new innovations:  Market skimming strategy (high initial prices) Signals market that innovation is significant Recoup development expenses (assuming there’s demand) Attracts competitors, may slow adoption

43. Pricing  Penetration Pricing (very low price or free) Accelerates adoption, driving up volume Requires large production capacity be established early Risky; may lose money on each unit in short run Common strategy when competing for dominant design  Can manipulate customer’s perception of price Free initial trial or introductory pricing Initial product free but pay for monthly service Razor and razorblade model: Platform is cheap but complements are expensive (as in video games)

44. Distribution Selling Direct versus Using Intermediaries  Selling direct Gives firm great control over selling process, price and service Can be expensive and/or impractical  Intermediaries may include:  Manufacturers’ representatives: independent agents that may promote and sell the product lines of one or a few manufacturers. Useful for direct selling when its impractical for manufacturer to have own direct sales force for all markets.  Wholesalers: firms that buy manufacturer’s products in bulk then resell them (typically in smaller, more diverse bundles) Provide bulk breaking and carry inventory. Handles transactions with retailers and provides transportation.

45. Distribution  Retailers: firms that sell goods to public Provide convenience for customers Enable on-site examination and service  Original equipment manufacturers (OEMs): A company that buys products (or components) from other manufacturers and assembles them or customizes them and sells under its own brand name. E.g., Dell Computer Aggregates components from multiple manufacturers Provides single point-of-contact and service for customer  In some industries, information technology has enabled disintermediation or reconfiguration of intermediaries. E.g., online investing enables customers to bypass brokers; online bookselling requires retailer to provide delivery services.