adbms lecture 2.ppt

7/29/2019 ADBMS lecture 2.ppt

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Why is marketing planning

necessary? Systematic futuristic thinking by

management

better co-ordination of a companys

efforts

development of performance standards

for control sharpening of objectives and policies

better prepare for sudden developments


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This Is a Need

Needs - state of felt

deprivationincluding physical,

social, and

individual needs.


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This Is a Want

Wants - form that a

human needtakes, as shaped

by culture and

individualpersonality.


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Need / Want Fulfillment

Needs and Wants

Fulfilled through a

Marketing Offer : Some combination of

products, services,

information, or

experiences offered to amarket to satisfy a need or

want.


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This Is Demand

Demand

Wants Buying Power


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What is a Market?

Markets,virtual and

meta markets The set of actual andpotential buyers of a

product.

These people share a

need or want that can

be satisfied throughexchange

relationships.


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Marketing FunctionsEnvironmental analysis and marketing research:

Monitoring and adapting to external factors that affect success or failure,

such as the economy and competition; and collecting data to resolve

specific marketing issues.

Broadening the Scope of Marketing:

Deciding on the emphasis to place, as well as the approach to take, on

societal issues, global marketing, and the Web.

Consumer analysis:

Examining and evaluating consumer characteristics, needs and

purchase processes; and selecting the group(s) of consumers at which

to aim marketing efforts.


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Marketing Functions continuedProduct planning (including goods, services, organizations, people,

places, ideas):

Developing and maintaining products, product assortments, productimages, brands, packaging, and optional features, and deleting faltering

products.

Distribution planning:

Forming logistical relationships with intermediaries, physical

distribution, inventory management, warehousing, transportation,allocating goods and services, wholesaling, and retailing.

Promotion planning:

Communicating with customers, the general public, and others throughsome type of advertising, public relations, personal selling, and/or salespromotion.


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Customer Service

Customer Service tends to be intangible, but quite meaningful, to

many customers.

In todays highly competitive, global marketplace, the level of customer

service a firm provides can affect its ability to attract and retain

customers more than ever before.


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Marketing Performers

OrganizationalConsumer

Marketing

Specialist

Manufactureror Service

Provider

Retailer

Wholesaler

Basic MarketingPerformers

FinalConsumer


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Marketing Performers

Include:

Consumers

Manufacturers

Service Providers

WholesalersRetailers

Marketing Specialists


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What is Marketing Myopia?

Marketing nearsightednessmanagements failure torecognize the scope of its business.

Endangers future growth because the company isfocusing on a product rather than customer

Companys are usually to narrowly defined.


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AVOIDING MARKETING MYOPIA

Marketing myopiaManagements failure to recognize the scope of itsbusiness.


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Avoiding Marketing Myopia

Broadly define company goals toward customerneeds.

MCI: We are a telephone company. or We are acommunications company.

Northwest Airlines: We are in the airline business.or We are in the transportation business.


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Product Price

Place Promotion

Marketing Mix (4ps)

Slide 1

The marketing mix principles are controllable variables

which have to be carefully managed and must meet the

needs of the defined target group. All elements of the mix are

Linked and must support each other.
http://www.learnmarketing.net/http://www.learnmarketing.net/


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The Marketing Mix

The tools available to a business to gain the

reaction it is seeking from its target market in

relation to its marketing objectives 7PsPrice, Product, Promotion, Place, People,

Process, Physical Environment

Traditional 4Ps extended to encompass growth of

service industry


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Marketing Mix (4ps)

Slide 2 Product

Product Decisions

Branding Quality Features

We must remember that Marketing is fundamentally about providing the correct bundle of

benefits to the end user, hence the saying Marketing is not about providing products or

services it is essentially about providing changing benefits to the changing needs and

demands of the customer (P.Tailor7/00)

Benefits offered


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Marketing Mix (4ps)

Slide 3 Pricing

Pricing Strategies

Penetration

Skimming

Competition

Product Line

Bundle

Psychological

Pricing is the only mix which generates a turnoverfor the organisation. The remaining 3ps are the

variable cost for the organisation. It costs to

produce and design a product, it costs to distribute

a product and costs to promote it. Price must

support these elements of the mix. Pricing is

difficult and must reflect supply and demand

relationship.


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Marketing Mix (4ps)

Slide 4 Promotion

Promotional Mix

Advertising

PublicRelations

Sales

Promotion

Personal

Selling

Direct

Mail

Internet/

E-commerce

A successful product or service means nothing

unless the benefit of such a service can be

communicated clearly to the target market. An

organisations promotional mix can consist of:


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Marketing Mix (4ps)

Slide 5 Place

Manufacturer

Consumer

Manufacturer

Retailer

Consumer

Direct Distribution Indirect Distribution


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Product anatomy


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Product definition

A product is a physical good, service, idea, person or

place that is capable of offering tangible and intangibleattributes that individuals or organisations regard as so

necessary, worthwhile, or satisfying that they are

prepared to exchange money, patronage or some other

unit of value in order to acquire it.


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WHAT IS A PRODUCT?

People buy want satisfaction, not objects. Example: Consumers buy televisions because they want

entertainment, not because they want a box with a screen.

Product Bundle of physical, service, and symbolic attributes designed to

satisfy a customers wants and needs.

WHAT ARE GOODS AND SERVICES?

Services Intangible tasks that satisfy the needs of consumer and business

users.

Goods Tangible products that customers can see, hear, smell, taste, or

touch.


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The anatomy of a product

Figure 7.1


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Product layers

All four layers of a product contribute to the buyers

satisfaction.

The outer two depend on the core product to determine

how they are realised.


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Product based classifications

Durable products - last for many uses and over a longperiod before having to be replaced.

Non-durable products - can be used once or a fewtimes before having to be replaced.

Service products - intangible products comprisingactivities, benefits or satisfactions that are not embodied

in physical products, e.g. financial services, holidays,etc.


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User based classifications: consumer goods/services

Convenience goods - relatively inexpensive, frequentpurchases which respond to routine response buying

situations.

Shopping goods - represent more of a risk and anadventure to consumers.

Speciality goods - high risk, expensive and infrequently

purchased products.

Unsought goods - e.g. sudden emergencies.


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User based classifications: B2B goods/services

Capital goods - buildings and fixed equipment thatcontribute to production.

Accessory goods - items that give peripheral support tothe production process.

Raw materials.

Semi-finished goods.

Components and parts.

Supplies and services.


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The product mix

The sum of all the products and variants offered by an

organisation.

The product mix can be split into the following:

Product lines.

Product items.

Product line length.

Product line depth.

Product mix width.


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Marketing mix Blending of the four

strategy elements product, place

promotion, and priceto fit theneeds and preferences of a specific target

market. Marketers develop strategies to

sell both tangible goods and intangibleservices.


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CLASSIFYING GOODS AND SERVICES FORCONSUMER AND BUSINESS MARKETS

Consumer (B2C) products Product destined for use by ultimate

consumers.

Business (B2B) products. Product that contributes directly or indirectly to

the out- put of other products for resale; also called industrial or

organizational product.

Some products fall into both categories.

Example: Prescription drugs, which are marketed to doctors and

to end users.


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QUALITY AS A PRODUCT STRATEGY

Total quality management (TQM) Continuous effort to improve productsand work processes with the goal of achieving customer satisfaction and

world-class performance.

WORLDWIDE QUALITY PROGRAMS

Leadership of several large U.S. corporations led to quality revolution ofthe 1980s.

U.S. Congress established the Malcolm BaldrigeNational Quality Award to

recognize excellence in

quality management.

ISO 9002 standards implemented by the European Union define

international criteria for quality management and assurance.

U.S. member body of ISO is National Institute of Standards and

Technology.
http://www.quality.nist.gov/Improvement_Act.htmhttp://www.iso.org/iso/en/ISOOnline.frontpagehttp://www.nist.gov/http://www.nist.gov/http://www.nist.gov/http://www.nist.gov/http://www.iso.org/iso/en/ISOOnline.frontpagehttp://www.quality.nist.gov/Improvement_Act.htm


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DEVELOPMENT OF PRODUCT LINES

Product line Series of related products offered by one company.

DESIRE TO GROW

Growth potential limited if company focuses on a single product.

Example: L. L. Bean began selling a single style of boots but has

grown by selling a variety of products.

ENHANCING COMPANYS POSITION IN THE MARKET

Entire lines of products make company more important to consumers and

marketing intermediaries.

OPTIMAL USE OF COMPANY RESOURCES

Spreading operations costs over a series of product lines reduces the

average production and marketing costs of each product.
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THE PRODUCT MIX

Assortment of product lines and individual product offerings that thecompany sells.

Product mix widthNumber of product lines a firm offers.

Product mix lengthNumber of different products a firm sells.

Product mix depthVariations in each product that the firm markets in itsmix.

PRODUCT MIX DECISIONS

Firms evaluate the effectiveness of the width, length, and depth to make

decisions about adding or eliminating products from their offerings.

Line extensionadding individual offerings that appeal to different market

segments while remaining closely related to the existing product line.


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THE PRODUCT LIFE CYCLE

Product life cycle Progression of a product through introduction, growth,maturity, and decline stages.


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Stage 1: Market Introduction

Sales are low as the new idea is first introduced to themarket.

Customers may not be aware of the products benefitsand features and may not be aware of the product

itself. Most companies experience losses during the market

introduction stage.

A lot of money is spent on promotion and product

development to build product awareness. Promotion is aimed at innovators and early adopters.

Pricing:

Low penetration pricing

High skim pricing


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Stage 2: Market Growth

Rapid growth in sales and profits

More product awareness

Competitors see the opportunity and enter the

market.

Some competitors will copy the product or may try

to make it better or more appealing to other target

markets.

The new entries result in more product variety.


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Additional features and support services may

be added to:Combat competition

Retain customers

Promotion is aimed at a broader audience.

More distribution channels are established.


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Stage 3: Market Maturity Most common stage in the cycle.

Sales begin to level off.

The competition gets tougher as morecompetitors have entered the market.

Increased competition creates a downwardmovement in prices.

Industry profits are largest, but it is also whenindustry profits begin to decline.

Promotion is targeted to create branddifferentiation.


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Stage 4: Sales Decline

Sales continue to decline.

Shrinking market

New products replace the old.

Firms will often try to use extension strategies.

Companies may be able to keep some sales by

appealing to their most loyal customers.


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When in the decline stage, a firm may:

Maintain: enhance the product by finding new uses

or by adding new features.

Harvest: reduce costs and continue to offer the

product to a targeted niche.

Discontinue: sell the product to another firm, or

liquidate inventory.


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Example: New Flavor of Pepsi

Stage 1: Market IntroductionPepsi bottles the new flavored product and places

it on the market for consumers.

Pepsi also spends a lot of money advertising the

new flavor creating awareness.

Stage 2: Market Growth

Customers like the flavor and begin to make

routine purchases.

Coke introduces their competing flavor.


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Stage 3: Market Maturity

More competitors enter the market taking some of

Pepsis profits.

Stage 4: Sales Decline

Customers have moved on to the next new flavor.

Some loyal fans stay behind.


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Pros

The product life cycle is a useful model

when deciding possible stages of a product orservice.

Useful to help demonstrate how marketingstrategies can vary at different stages of a

product's life.

Promotion


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Cons

Tends to be backward looking

We only know which stage we have been inafter it has been completed.

Only looks at a single product when mostfirms have many products.


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EXTENDING THE PRODUCT LIFE CYCLE

Product life cycles can be extended indefinitely as a result of marketersdecisions.

INCREASING FREQUENCY OF USE

Convincing current customers to buy a product more frequently boosts

total sales even if no new buyers enter the market.

Example: Custom Printed M&Ms that allow consumers to order

their own initials or sayings.

INCREASING THE NUMBER OF USERS

Attracting new customers who have not previously used the product.

Example: Walt Disney markets its theme parks to adults.
http://www.mymms.com/http://www.disneyweddings.com/http://www.disneyweddings.com/http://www.mymms.com/


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FINDING NEW USES

New applications extend a products life cycle.

WD-40 identified the top 2,000 uses for its oil.

CHANGING PACKAGE SIZES, LABELS, OR PRODUCT

QUALITY

Example: Food marketers produce packages designed to appeal to one-person households.

Example: Krafts 100-calorie Snack Packs, which package snacks in 100

calorie amounts.
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PRODUCT DELETION DECISIONS

Marketers prune product lines and eliminate marginal products to preservelimited resources.

Firms may carry poor performing items to carry a complete product line.

Example: Grocery stores carry bulky, low-unit value items like

salt to meet shopper demand.

Shortages or raw materials can prompt a firm to discontinue production.

Firm may drop products that dont fit into the direction in which it plans to

grow.

adbms lecture 2.ppt

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