Marketing vocabulary
Rate of adoption: relative advantage (superior to existing), compatibility (fit with target market), complexity, divisibility (be used on a limited basis?), communicability.
Brand equity:$ amount attributed to the value of the brand based on intangible qualities that create value. Strong brand equity leads to customer loyalty, better employees, increase visibility in stock market, greater cooperation, less vulnerable to marketing mistakes, brand opportunity such as brand extensions, brand licensing and co-branding.
Brand strength: measured by differentiation, relevance, knowledge, esteem, customer equity.
Brand position: product attributes (least strong), desirable benefits (strong), strong beliefs and values (strongest).
Influencing decisions at the point of purchase: represents brand, positioning, quality and price, convenience.
Pricing strategies: customer value based pricing (buyers’ perception of value-price ceiling), competition based pricing (price based on competitors’ prices) cost based pricing (cost of production, distribution, fair return-price floor).
Cost based pricing: Design good product ⇒determine product costs ⇒set price based on costs ⇒convince buyers of product’s value. Price is considered before marketing program is set.
Value based pricing: Assess customer needs and value perceptions ⇒set target price to match customer perceived value ⇒determine costs that can be incurred ⇒design product to deliver at target price. Product driven, rather than value. Fixed cost does not change, variable depend on level of production. Cost plus = adding standard markup to the cost of product. Break even or target return pricing.
Affecting price decision: Internal (overall marketing strategy, objectives, marketing mix, organizational considerations), external (market competition, demand, environmental factors, price cut work with elastic, price increase work with inelastic demand). Recession led to customers becoming more value conscious, firms repositioning brands to enhance value, firms cut prices or feature more affordable items. Other factors include resellers reaction to price, govt reaction or price control, social concerns.
New product pricing strategies:
Market skimming (high price, fewer but more profitable, use when product quality and image can support, competitors cannot easily enter market), market penetration (low price to penetrate, attract large # of buyers, use when market is price sensitive, costs fall as sales volume increases, competition can be kept out of market with low pricing).
Price adjustment strategies: Discount and allowance pricing (D: cash, quantity, seasonal, A: trade in, promotional), segmented (two or more prices, location based, time based, product form, customer segment),psychological (influence perception of quality), promotional (discount, special event, rebates, low interest, longer warranties, free maintenance), geographical (free on board pricing, uniform delivered, zone), dynamic (adjusting prices to meet needs of individual customers and situations), international (international prices, economic, competition, laws, wholesaling, customer perception, costs, marketing objectives). Price change due to excess capacity, falling demand. Price increases due to cost inflation, over demand. Avoid price gouging.
Competitors response to price change: (reduce price to match, raise perceived value, improve quality, launch low price brand).
Product mix pricing:
Product line pricing (setting price steps in a line based on cost differences), optional product (pricing optional or accessories sold to main product), captive product (must be used with main product), by product (make a main product’s price more attractive, eg. Wood products), product bundle (combine several products offering at a lower price).
Retailer types: specialty, department, supermarkets, convenience stores, discount, off price, superstores, warehouse clubs.
Retailing strategy:
product (merchandising, private labels-generics, services offered, atmospherics),
pricing (mark ups-downs, EDLP),
distribution (location, hours of operation, placement of products in stores),
Promotion (instore info, coupons)
Retail trends and development: New retail forms but shorter retail life cycles, innovations explained by wheel of retailing, slowed economy and consumer spending, growth of online retailing, retail tech. providing competitive tools, blurring of channels eg. Superstore into grocery.
Promotion: getting the right message to the right audience through the right media.
Promotion mix: advertising, sales promotion, personal selling, public relations, direct marketing.
Integrated marketing communications: consistent, clear and compelling company and brand messages, blend of promotional tools (advertising⇔personal selling⇔public realations⇔direct marketing⇔sales promotion).
Communication process:
sender (adjust messages for receivers and communication channel),
encoding (marketer uses symbols, images, language, message to reach customers),
channel of communication (media used to send message),
receiver (consumer),
response (customer purchase, complaint or compliment, redemption, increase in store traffic or sales),
feedback (to the marketer, increase sales, website hits, increased brand awareness).
Push strategy: Producer⇒(top of arrow: producer marketing activities such as personal selling, trade, promotion)Resellers and wholesalers⇒(top of arrow: reseller marketing activities such as personal selling, advertising, sales promotion)consumers
Pull strategy: Producers⇐(top of arrow: demand)resellers and wholesalers⇐(top of arrow: demand)consumers(producers⇒consumers)
Telus IMC example: Simple messages in plain language, animal/nature themes, music, multiple media such as tv, radio, billboards, display ads, vans.
Nature of advertising: reach masses of geographically dispersed buyers at a low cost per exposure, can repeat a message many times, consumers view advertised products as more legitimate, impersonal one way communication, cost varies.
Advertising objectives classified as: informative advertising, persuasive (special type: comparative), reminder. Informative at beginning, persuasive throughout, reminder at end.
Developing advertising strategy: creating advertising messages, selecting advertising media.
Message strategy: identify customer benefits, appeal that is meaningful, believable, distinctive, develop compelling creative concept, ad execution that captures target market.
Advertising decisions: consumer generated messages (what people want), media selection (choosing among media types, selecting media vehicles, timing, reach, frequency and impact).
Media: tv, print, newspaper, internet, outdoor, product placement, flyers, direct mail.
Promotion should move customers toward action: (AIDA Model)Awareness-think, Interest-feel, Desire-feel, Action-do.
Promotions: consumer, trade, business, sales force.
Nature of sales promotion: includes a wide assortment of tools, attracts consumer attention, offers strong incentives to purchase, dramatize product offers, reward quick consumer responses, effects are short lived.
Channel/trade promotions: trade shows, discounts.
Consumer promotions: samples, bonus packs, premiums, contests, coupons.
Consumer promotions: short term sales or enhance customer brand involvement.
Trade promotions: retailers to carry new items, buy more inventory, buy ahead, promote firms brand, shelve space.
Sales force objectives: include gaining more sales force support for current or new products or getting new accounts.
Business promotion: generate business leads, stimulate purchases, reward customers, motivate sales people.
Business promotion tools: conventions, trade shows, sales contests.
Sales promotion: support other promotion mix tools, reinforce product’s positions, reward programs.
Trade promotions: directed to retailers.
Developing sales promotion: decide on size of the incentive, set conditions for participation, decide how to promote and distribute promotion program, evaluate the promotion program.
Sales promotion growth: several factors have contributed to the rapid growth of sales promotion, product managers are facing more pressure to increase their current sales, companies face more competition from less differentiated brands, advertising efficiency has declined, consumers have become more deal oriented, resulted in promotion clutter.
Cross promotion: marketing partners share promotional costs, includes co-branding and co-marketing.
Co-branding: partners closely linked to their brands on a single product.
Co-marketing: partners join together to sell their products in an allied campaign.
Service marketing design: contributing factors – intangibility, inseparability, variability, perishability. Must focus to increase service differentiation, quality, productivity.
Direct marketing: connecting directly with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships.
Direct marketing has undergone a dramatic transformation: most firms use direct marketing as a supplemental channel or medium, in the new model, direct marketing constitutes a new and complete model for doing business, some firms employ the direct model as their only approach.
Shaping the overall promotion mix: less public, immediate and customized, interactive, well suited to highly targeted marketing efforts and to building one to one relationships.
Forms of direct marketing: online, new digital, kiosk, direct response television, telemarketing, catalogue, direct mail, face to face.
Benefits of direct marketing:
buyers (convenient, easy to use, greater control, access to products, access to wealth of comparative info., reach consumers in remote locations, immediate and interactive),
sellers (builds customer relationships, low cost and speedy way to reach markets, offers improved logistical efficiencies, greater flexibility, access to buyers that could not be reached through other channels).
Choosing a promotional mix: promotion objectives⇒marketing strategy (segmentation eg. Teens, what type of communication and media are appropriate?, intended positioning)⇒nature of the product(type of product, product life cycle stage, price/margin)⇒nature of the market(characteristics, competitor’s strategies)⇒nature of each promotional tool(advertising, PR)⇒resources (finance&human)
Strategies vs tactics: a goal first, then strategy, then tactics. A strategy is a conceptualization of how the goal can be achieved and a tactic is an action you can take to execute the strategy.
Example: business goal-turn the tide and increase baking soda sales, strategy-new reasons for their current customers to come back to buy more baking soda, strategic idea to lead in different direction, tactics-tv ads, infomercials, retail promotions, etc.
Planning a promotional strategy: figure out your key message and appeal. Ensure it is believable and consistent with your marketing strategy and 4Ps.
Determine promotional mix (push and pull).
Create your promotional tools (advertising, public relations, personal selling, sales promotion, direct marketing).
Develop promotional tactics within the 5 tools. Monitor, control and adapt.
Criticisms of marketing:
pricing (falsely advertising wholesale or factory prices),
promotion (misrepresenting a product’s features),
packing (exaggerating package contents, misleading labels).
Competition Bureau prevents deceptive practices.
Consumerism: an organized movement of citizens and govt agencies to improve rights
.Marketing ethics: cover distributor relations, advertising standards, customer service, pricing, product development.
Portfolio analysis: evaluation of the company’s key businesses called the
strategic business unit (SBUs).
BCG Growth Share Matrix uses market growth rate relative to market share to classify SBUs into four groups-Cash cow, Star, Question mark, Dog. Product focuses on creating customer value such as
actual product: packaging, brand name, design, features, augumented product: product support, delivery, warranty, etc. Increasing product life cycle: increase frequency of use, number of users, new users, change package size, labels, quality and innovate to stimulate demand.
Sustainable marketing principles:
customer oriented marketing (satisfy the need of a defined group of customers both now and in the future),
customer value (long run consumer loyalty with improvements in value consumers receive through quality, features and convenience),
innovative (seek real product and marketing improvement),
sense of mission (should define mission in broad social terms than narrow product terms, eg. Dove desire to become more than just selling beauty products, but emphasising on real beauty),
societal (considers consumers’ long run wants and interest).
Societal classification(long run-immediate): Deficient (L-L), salutary (H-L), pleasing (L-H), desirable (H-H).
Market/product expansion: (E=existing, N=New, M/P market/product), market penetration (EM-EP), market development (NM-EP), product development (EM-NP), diversification (NM-NP).
Setting advertising budget: affordable method, percentage of sales, competitive-parity, objective and task (defining specific objectives, determine tasks that must be performed to acheive objetives, eliminate costs of performing these tasks).
Advertising strategy: creating message, selecting media.
Selling process: prospecting and qualifying, preapproach, approach, presentation and demonstration, handling objections, closing(sale), follow-up.Marketing Process:Step 1-strategic business planning, then (chart below) then, then step 7-monitor & control
Marketing mix: 4Ps-product(variety, quality, design, features, brand name, packaging, services), price(list price, allowances, discounts, payment period, credit terms), place(channel, coverage, assortments, locations, inventory, transport, logistics), promotion(advertising, personal selling, sales promotion, public relations).
Product growth strategies/(brand development) /sustainable marketing | Existing Products/now | New Products/future |
Existing Markets/now | Market penetration (line extension) marketing concept | Product development (brand extension) strategic planning concept |
New Markets/future | Market development (multibrands) societal marketing concept | Diversification (new brands) sustainable marketing concept |