Marketing Strategy Final

Product
The sum of physical, psychological and sociological satisfactions that the buyer derives from purchase, ownership and consumption.
Tangible Product
The physical entity or service offered to the buyer
Extended Product
The tangible product along with the whole cluster of services that accompany it
Generic Product
The essential benefits the buyer expects to receive from the product.

For example, many personal care items bring the user a sense of self-enhancement and security in addition to the tangible benefits they offer.

Agricultural Products and raw materials
These goods are grown or extracted from land of sea, such as iron ore, wheat, and sand. In general, these products are generally homogeneous, sold in large volumes, and low value per unit
Organizational Good
Such products are purchased by business firms for the purpose of producing other goods or for running the business. This category includes the following:

a) raw materials and semi finished goods
b) Major and minor equipment, such as basic
machinery, tools, and other processing facilities.
c) Parts or components, which become an integral
element of some other finished goods.
d) Supplies or items used to operate the business
but that do not become part of the final
product.

Consumer Goods
Can be divided into three classes

a) Convenience Goods, such s fast foods, which
are purchased frequently without much effort
(impulse goods too)
b) Shopping Goods, including appliances,
purchased with some time and energy
c) Specialty Goods, unique and require a special
purchase effort

Multi-Branding
A company uses competing brand names to sell products of different uses and benefits.

(EX: Proctor & Gamble)

Family Branding
Multiple products marketed under the same company name.

(EX: Apple)

Line Extensinon
Brand name used to facilitate entry into a new market segment

(EX: Tide Pods, Diet Dr. Pepper)

Brand Extension
current brand is used to
enter completely different product class

(EX: Special K Cereal Drinks, Coach Perfume)

CoBranding
two or more brands are used
or integrated into a product

(EX: Betty Crocker Hershey Turtle Brownies)

Brand Equity
the differential effect that knowing the brand name has on customer response to the product or its marketing
Process of Developing And nurturing a brand
1) Product quality when the product does fairly well
2)Consistent advertising and other marketing communications in which the brand tells their story and tells it well
3) Distribution intensity whereby customers see the brand wherever they shop
4) Brand personality whereby the brand stands for somthing
Elements of Brand Equity
Brand Loyalty
Name Awareness
Perceived Loyalty
Brand Associations
Other Proprietary Brand Assets
increasing value to customers Provides value to firms by enhancing
-Efficiency and effectiveness of marketing programs
-Brand Loyalty
-Prices/margins
-Brand Extensions
-Trade Leverage
-Competitive Advantage
Product Life Cycle Strategy Dimensions
Basic Objectives
Product
Pricing
Channels
Promotion
Decision Factors after Product Decline
New Product Features
New Uses
New Markets
Reaching Status Quo
Facts about new products
• New product sales increase faster than current products
• How long can an existing product be a competitive advantage?
• 3M derives 30% of its revenues from products less than four years old.
• 33-90% of new products are failures
Five Categories of New Products
-New to the World
-New Category Entries
-Additions to Product Lines
-Product Improvements
-Repositioning
New to the world
Products that are inventions

(EX: Polaroid Camera, First Car, In-Line Skates)

New Category Enteries
Products that take a firm into a category new to it, but that are not new to the world.

(EX: PG Liquid Shampoo, Hallmark Gift Items)

Additions to Product Lines
Products that are line extensions, flankers, and so on, to the firm’s current markets.

(EX: Tide Liquid Detergent, Bud Light, Apple’s Power Mac)

Product Improvements
Current products made better;

virtually every product on the market has been improved, often many times.

Repositioning
Products that are re-targeted for a new use or application

A classic case is arm and hammer baking soda, which has been re-positioned several times (baking, toothpaste, cat litter, refrigerator freshener)

Time to Market
The elapsed time between product definition and product availability
Importance of Time to Market
-First product to market = competitive advantage in profits and market share
-Successful time based innovations can be attributed to the use of short
-Give managers to product class and brand family levels
– Favoring national launches over regional tests
– Take into consideration the quality level, production features, product design, product features, product design, and product safety levels
New Product Sales Forcast
Why do products fail
Lack of differentiation, poor positioning, poor
quality, over promising, lack of support, no
value, misread market, misread costs, poor
distribution, timing, changes in the market…
New Product Sales/Development Process
Idea Generation
Idea Screening
Project Planning
Product Development
Test Marketing
Commercialization
New Product Adoption/Sales
• Market Size
• Awareness
• Trial
• Availability
• Repeat purchase
Strategic Goals of Marketing Communication
Create Awareness
Build Positive Awareness
Identify Prospects
Build Channel Relationships
Retain Customers
IMC addresses consumer processes of….
• Awareness of the product
• Comprehension of what it can do
• Conviction that is has value
• Purchasing/Ordering
Promotion/Communication Mix
Advertising
Sales Promotion
PR
Personal Selling
Direct/Interactive Marketing
Advertising
Strength: Awareness & Conviction
Weakness: Ordering
Sales Promotion
Strength: Comprehension
Weakness: Conviction & Ordering
PR
Strength: Awareness
Weakness: Comprehension, Conviction, ordering
Personal Selling
Strength: Ordering
Weakness: Awareness
Factors influencing advertising decisions
The Expenditure Question
The Allocation Question
The Allocation Question
Deciding the most effective way of spending advertising dollars
Message Strategy
Saying the Right Things in the ads themselves
Media Mix
use the appropriate media in the right amounts at the right time to reach the target market
Expenditure Question
How much to spend on advertising
Percent of Sales
Most Popular*
Takes a percentage figure and applies it to past or future sales
Per-Unit Expenditure
Fixed monetary amount is spent on advertising for each unit
All you can afford
The availability of current revenues sets the upper limit of the ad budget
Competitive Parity
Advertising is defensive, the budgets are based on those of competitors or other members of the industry
Research Approach
Advertising media are researched in terms of their productivity by the use of media reports and research studies.
Task Approach
Formulates tasks and finds what it takes to accomplish

Management then determines how much it takes to accomplish the tasks

Push Marketing
Aiming promotional efforts at distributors, retailers, sales personnel to gain their cooperation
Pull Marketing
Involve aiming promotional efforts to directly at customers to encourage them to ask the retailer for the product.
What Promotion CAN do
-Inducing the customer to try the product
-Rewarding the consumer loyalty for brand loyalty
– Encouraging the consumer to trade up or purchase larger sizes
-Stimulating the consumer to make repeat purchases for products
-reacting to competitor efforts
-reinforcing and serving as a complement to advertising and personal selling efforts
What Promotion CANT do
-Generate Long-term buyer commitment to a brand in many cases
-to change, except on a temporary basis, declining sales of product
-to convince buyers to purchase an otherwise unacceptable prodcut
-to make up for lack of advertising or sales support for a product
Objectives of sales force
Information provision
Persuasion
After Sale Service
Sales Relationship-Building Process
-Prospecting
-Planning the sales call
-Presenting
-Responding
-Obtaining Commitment
-Building a long-term relationship
Ways to Organize Sales force
-Geographic
-Product
-Customer
Geographic Sales force Structure
provides practical benefits of limiting the distance each salesperson must travel to see customers and prospects

(Worldwide)

Product Sales force Structure
Useful when sales force must have specific technical knowledge of the product

(Worldwide)

Customer Sales force Structure
When different sets of buyers have large or significantly different needs

(national)

Types of Sales Force Compensation
-Salary
-Commission
Why Intermediaries are important in channels
• Perform functions more cheaply and
efficiently
• Access to consumers
• Economies of scale and scope
• Bring supply and demand together
Major Types of Marketing Intermediaries
Middleman
Merchant Middleman
Agent
Wholesaler
Retailer
Broker
Manufacturer agent
Distributor
Jobber
Facilitating Agent
Middleman
an independent business concern that operates as a link between producers and ultimate consumers or organizational buyers
Merchant Middleman
a middleman who buys the goods outright and takes title to them
Agent
A business unit that negotiates purchases, sales, or both but does not take title to the goods in which it deals
Wholesaler
a merchant establishment operated by a concern that is primarily engaging in buying, taking title to, usually storing and physically handling goods in large quantities
Retailer
A merchant middleman who is engaged primarily in selling to ultimate consumers
Brokers
Serves as go between, assumes risks, but no physical custody of products, and is not looked upon as a permanent representitive
Manufacturer’s agent
Agent that generally operates on an extended contractual basis, handles noncompeting but related goods
Distributor
a wholesale middleman, especially in lines where selective or exclusive distribution is common at the wholesaler level
Jobber
buys from manufacturers and sells to retailers
Facilitating agent
a business firm that assists in the performance of distribution tasks other than buying, selling, or transferring title (transportation company, warehouses)
Functions of Channel Distribution
Buying
Selling
Risk-taking
assorting
storing
sorting
transporting
financing
grading
marketing information and research
Relationship Marketing
marketing with the conscious aim to develop and manage long-term and/or trusting relationships throughout the channel often lead to higher-quality products with lower costs.

These benefits may account for the increased use of vertical marketing systems.

Pricing Objectives and Related Strategies
-Penetration Pricing
-Price Skimming
Price Skimming
– Initial high price indicates a strong pricequality
relationship
– Used by firms with first-mover advantage with
high level of panache and exclusivity
• Electronics
• Pharmaceuticals
– Used effectively in niche markets with few
competitors
Penetration Pricing
– Used to gain maximum market share
– Price sensitive customers
– Firm’s internal efficiencies lead to cost
advantages which allows lower price
– Sometimes used for new product introduction
• Be careful with penetration pricing
Cost Consideration
• Markup pricing
• Cost-plus pricing
• Rate-of-return pricing
offensive Goals for going global
1) increase long term growth and profit prospects
2) maximize total sales revenue
3) take advantage of economies of scale
4) improve overall market position
Defensive Goals for Going Global
1) compete with foreign companies on their own turf
2) gain access to technological improvements made in other countries
3) take advantage of significant operating cost differences
4) preempt competitors global moves
5) avoid being locked out of future markets by arriving to late
Multi-Domestic Strategy
Pursues different strategies in each of its foreign markets
Global Strategy
sees the world as one market and pits its resources against the competition in an integrated fashion
Problems with international expansion
Cultural Misunderstanding
Political Uncertainty
Import Restrictions
Exchange Controls and Ownership Restrictions
Economic Conditions
Global Growth Strategies
Exporting
Licensing
Franchising
Joint Ventures
Strategic Alliance
Direct Ownership