marketing management for students 2017 - wz.uw.edu.pl · pdf filemarketing concept customer...

2017-03-28

1

Marketing Management

1

Course Outline

1. Understanding Marketing Management2. Analyzing Marketing Opportunities - Customer

Analysis3. Analyzing Marketing Opportunities - Measuring and

Forecasting Market Demands4. Analyzing Marketing Opportunities - Competitors and

SWOT Analysis5. Strategic Marketing Management 6. Designing Marketing Strategies – Introduction7. Designing Marketing Strategies - STP8. Designing Marketing Strategies - Distribution and

Price9. Designing Marketing Strategies – Product10. Designing Marketing Strategies – Promotion

2

2017-03-28

2

Lesson1

Understanding Marketing Management

3

Agenda

1. Defining marketing

2. The marketing concept

3. Company orientations toward the marketplace

4. Marketing management

4

2017-03-28

3

1. DEFINING MARKETING

5

Defining marketing

� Marketing is societal process by which individuals and groups (target market) obtain what they need and want through understanding, creating and delivering and freely exchanging products and services of value with others

Source: P. Kotler (2003). Marketing Management, 11th, Prentice Hall, Upper

Saddle River, p. 9.

6

2017-03-28

4

2. THE MARKETING CONCEPT

7

Elements of the marketing concept

8

Target market

Customer needs and value

Understanding of customer value

Creating and delivering of customer value

SatisfactionCustomer, Employee, Supplier, Shareholder

2017-03-28

5

Target market

Target marketMarket

segmentation

Product market

Market segment 1

Target market

Market segment 2

Market segment 3

Market segment 4

9

Target market Market

� Market – a collection of buyers

� Marketplace – is physical

� Marketspace – is digital

� Metamarket – a cluster of complementary products and services that are closely related in the minds of customer

10


Saddle River, p. 9-10.

2017-03-28

6

Target marketProduct market

Three dimensional concept of definition product markets (business domain):� Products (functions, technologies, or brands)

� Customer groups

� Geographical markets

11

Source: own preparation based on: D. Abell, Defining the Business. The Starting Point of Planning, Prentice Hall, Englewood Cliffs 1980; J-J. Lambin, Strategiczne zarządzanie marketingowe, PWN, Warszawa 2001, s. 190.

Customer needs and value

� Needs – are the basic human / organizational requirements

� Wants – needs become wants when they are directed to specific objects that might satisfy the need

� Customer value – ratio between what the customer gets and what he gives

12


Saddle River, p. 9-10.

2017-03-28

7

Customer needs and valueHuman needs

Self-actualization

needs

Self-actualization

needs

Esteem needsEsteem needs

Social needsSocial needs

Safety needsSafety needs

Physiological needsPhysiological needs

13Source: A.H. Maslow (1970). Motivation and Personality, 2nd ed., Prentice Hall,

Upper Saddle River.,

Customer needs and valueOrganizational needs

Direct

Understanding of customer

value

Creating of customer value

Delivering of customer value

Indirect

Capital items

Supplies

Services

14Source: own preparation .

2017-03-28

8

Customer needs and valueCustomer value

15

Customer value

Customer benefits

Product benefits

Service benefits

Personnel benefits

Image benefits

Customer cost

Price

Purchasing cost

Using cost

Source:own preparation based

on: P. Kotler (2003). Marketing

Management, 11th, Prentice

Hall, Upper Saddle River, p. 60.

Understanding of customer value

16

Market information

Marketing Research

Marketing intelligence

system

Managers experience

Managers Intuition

Source: own preparation .

2017-03-28

9

Creating and delivering customer

value – marketing mix

17

Marketing mixCreating value Delivering value

Marketing mixCreating value Delivering value

Product

Price

Personnel

Physical evidence

Target market Target market

Promotion Distribution Procedures

Source: own preparation .

18

Creating and delivering customer

value

Source: own preparation based on: R. Lauterborn (1990). „New Marketing Litany: Four P’s Passe: C-Words Take Over”, Advertising Age, 1 October p. 26

„+3P”

Personnel

Physical Evidence

Procedures

2017-03-28

10

3. ORIENTATIONS TOWARD

THE MARKETPLACE

19

Orientations toward the marketplace - 1

� Production concept

� Product concept

� Selling concept

� Marketing concept

� Customer concept

� Societal marketing concept

20


Saddle River, p. 17.

2017-03-28

11

Orientations toward the marketplace – 2

Concepts Starting point Focus Means Ends

Production Factory Widely available and

inexpensive products

High production efficiency

Low cost

Mass distribution

Profits through

volume and low cost

Product Factory Superior products Making superior products

and improving them over

time

Profits through high

quality product

Selling Factory Products Aggressive selling and

promotions

Profits through sales

volume

Marketing Target market Customer needs Integrated marketing Profits through

customer

satisfaction

Customer Individual customer Customer needs and

value

One-to-one marketing

Integration and value chain

Profits through

capturing customer

share, loyalty, and

lifetime value

Societal marketing Best long-run

interests customer

and society

Customer needs,

customer interests, and

long-run societal welfare

Integrated marketing and

education customer

Profits through

customer

satisfaction and

society’s well-being

21Source: own preparation based on: P. Kotler (2003). Marketing Management,

11th, Prentice Hall, Upper Saddle River, p. 17-27.

4. MARKETING MANAGEMENT

22

2017-03-28

12

Marketing Management -1

� Marketing management is art and science of choosing target markets and getting, keeping, and growing customers through understanding, creating and delivering superior customer value

23

Source: own preparation based on: P. Kotler (2003). Marketing Management,

11th, Prentice Hall, Upper Saddle River, p. 17-27.

Marketing Management - 2

analyzing market situation

designing marketing strategies

implementing and organizing the marketing effort

controlling marketing performance

24

2017-03-28

13

Analyzing Marketing Opportunities

Customer Analysis

The Organisation’s Marketing

Environment

Theorganisation

The economy

Socialfactors

Culturalforces

Technology

Political structures

Legalstructures

Demography

Suppliers

Distributors& dealersMarket

demands

CompetitorsCustomers

2017-03-28

14

Customer Analysis

Outline

• types of customers

• the business market versus the consumer market

• DMU (decision-making unit)

• types of buying behaviour

• stages of the buying decision process

Types of Customer Markets

(odtąd)

� consumer markets

� industrial markets

� reseller markets

� government and non-profit markets

� international markets

2017-03-28

15

The Customer in Context

� Consumer buying behaviour

the decision processes and acts of individuals involved in buying and using products or services (Dibb et al, 1994)

What Influences the Buyer?

� Cultural factors� values, attitudes, beliefs, ideas, artefacts and

symbols

� Social factors� primary membership groups

� secondary member groups

� aspirational groups

� dissociative groups

� Personal factors� age, life cycle, occupation, lifestyle, personality ...

� Psychological factors� motivation, perception,

2017-03-28

16

The Buyer ‘DMU’

Initiator

first suggests buying product or service

Influencer

whose comments affect the decision

Decider

Ultimately make all or part of buying decision

Buyer

Physically makes purchase

User

Consumes product or serviceInitiate process / define specs

Help define spec, help inevaluation of alternatives

Product requirementsand suppliers

Formal authority to selectsupplier - negotiate terms

User

Source:Webster and Wind, 1972

Does Behaviour Change in

Relation to What is Purchased?

Degree of involvement

Sig

nif

ican

t d

iffe

ren

ce

betw

een

bra

nd

s

low high

few

many

HABITUAL DISSONANCE

(differing of views)

VARIETY

(seeking)

COMPLEX

Source:Assael, 1987

2017-03-28

17

Consumer Decision Making Process

� Need recognition� stimuli can be internal or external

� Information search� personal, commercial, public, experiential

� Evaluation of alternatives� forms judgement - conscious & rational

� Purchase decision� commit

� Post-purchase evaluation� re-evaluate and re-assure

The Organisational Buyer

� fewer

� highly concentrated

� close relationship between buyer and seller

� geographically concentrated buyers

� demand for industrial goods is ultimately

derived from the demand for consumer

goods

� professional purchasing

2017-03-28

18

Characteristics of Organisational Markets

� Producer markets

� purchase to make profit from using operationally or to

produce other goods

� Reseller markets

� purchase to make profit from reselling with no or minor

alteration

� Government markets

� buy to support operations - normally purchase through bids

or negotiation

� Institutional markets

� seek to achieve charitable, community, educational or non-

business goals

The Industrial Buyer ‘DMU’

Initiator

first suggests buying productor service

Influencer

whose comments affect the decision

Decider

Ultimately make all or part of buying decision

Buyer

Physically makes purchase

User

Consumes product or serviceInitiate process / define specs

Help define spec, help inevaluation of alternatives

Product requirementsand suppliers

Formal authority to selectsupplier - negotiate terms

Approvers

Gatekeepers

User

Authorise decider andbuyer proposals

Control random contactfrom sellers / flow of information

Source: Webster and Wind, 1972

2017-03-28

19

Types of Purchase

� New Task

� First time purchase, full buying process

� Modified re-buy

� E.g. faster delivery, lower price, specification

� Straight re-buy

� Routine re-purchase, same terms

� Truncated buying process

Organisational Buying Process

� recognise the problem

� develop product specification to solve problem

� search for products / suppliers

� evaluate products to specification

� select and order most appropriate product

� evaluate product and supplier performance

2017-03-28

20

Types of Purchase

Source:Robinson et al, 1967

YYYPerformance review and feedback

YPossiblyNEstablish order routine

YPossiblyNSelection of supplier

YPossiblyNDetailed evaluation of suppliers

YPossiblyNSearch for potential suppliers

YYYSpecific description of product required

YPossiblyNDetermining general need

YPossiblyNRecognition of problem

New Task

Modified Re-buy

Straight Re-buy

Phases of the buying process

Buy classes

Differences Between Industrial and Consumer Marketing

Only on major purchaseContractual normalLegal factor12

Less importantCritical to successCustomer service11

Lots, complex channelsLimited – short channelsPlace decision10

Fixed – discounts soughtDetermined before – terms vitalPrice decision9

Mass media advertisingPersonal sellingPromotional dec.8

Low technical contentTechnically sophisticatedProduct detail7

Short-tem relationshipLon-term relationshipTime effect6

Individual / family unitGroup decisionNature of buyer5

Similar group needsBespokeCustomer needs4

Immediate satisfactionEconomic needsEmphasis of seller3

PrimaryDerived or jointNature of demand2

Individual / familyMultiple influencesPurchase motiv.1

Consumer MarketingIndustrial Marketing

Impact on demand directImpact on sales direct / indirectEnvironmental13

2017-03-28

21


Competitors Analysis


Environment

Theorganisation

The economy

Socialfactors

Culturalforces

Technology


Legalstructures

Demography

Suppliers


demands


2017-03-28

22

� Porter’s five forces model

� industry’s competitive structure

� product/market battlefield

� roles in the target market

� assessing competitors strengths and weaknesses

� competitors’ reaction patterns

Outline

Porter’s Industry Analysis:

The 5 Forces Model

INDUSTRYCompetitive rivalry

POTENTIALENTRANTS

BUYERSSUPPLIERS

SUBSTITUTES

Threat ofrivalry

Bargainingpower

Threat ofsubstitution

Bargainingpower

Source: Porter, 1985

2017-03-28

23

Bargaining Power of Suppliers po

tym

• the strength of the supplier brand

• the source of supply spans only a small number

of suppliers

• switching supplier

• substitute products of suppliers

• forward integration

Bargaining Power of Buyers

• where few buyers control a large volume of the

market

• where there are a large number of smaller

suppliers fighting for a share of the market

• the cost of switching supplier is low

• the supplier’s product is a mass-market

product and not necessarily differentiated

• strong customer power

• threat of backward vertical integration

2017-03-28

24

The Threat for Potential Entrants

• economies of scale

• access to new distribution channels

• brand loyalty

• capital investment

• competitor retaliation

• regulatory influence

Threat of Substitutes

• a new product or service equivalent

• a new product replacing an existing product

• consumer substitution

2017-03-28

25

Key Factors Influencing

Competitive Rivalry

• stage of product life cycle of competing product

• use of specialized production techniques

• liquidity of competitor

• ability to achieve differentiation and brand

loyalty

• competitor intentions

• the relative size of the competitor

• barrier of exit from the industry

• number of sellers & degree of products

differentiation

Who Are Our Competitors ?

� only those companies offering similar products / services, same target market, similar technology.E.g. .. Penguin Bar = Kit-Kat 6 pack

� all companies in same product/service category.E.g. .. Penguin = Crisps (chips) / Ice-cream

� all companies manufacturing/supplying products delivering same service.E.g. .. Bus carrier = Railways, cars, planes

� all companies competing for the same spending powerE.g. .. House extension = holiday

2017-03-28

26

Who Are Our Competitors (potentially)?

� smaller companies attacking the market segment

� companies operating in other markets wishing to expand

� companies wishing to diversify

Industry’s Competitive Structure

One seller Few sellers Many sellers

Undifferentiated product

Differentiated product

Pure

monopoly

Pure oligopoly

Differentiated

oligopoly

Pure

competitive

Monopolistic competitive

....How does it matter?

2017-03-28

27

Roles in the Target Market

• market leader

• market challenger

• market follower

• market nicher

.... and main implications.....

Product/Market Battlefield

• Does competitors offers differ?

- type od product....?

- type of customer (market)...?

• Product/market battlefield map and main

findings.....

2017-03-28

28

Product/Market Battlefield

Kids Teens Adults Olderpeople

In the ear

In thepocket

Behind the ear

Identifying & Evaluating

Competitor’s SW

• First step - collecting information about: sales, market share, cost& profit levels and how they appear to be changing over time, cash flows, return on investment, investment patterns, production process, product portfolio, organisational culture, product quality, the levels of brand loyalty, targets, distribution channels, financial capabilities, management capabilities and attitudes to risk, ownership patterns.....

• Second step - assessment: comparative assessment of competitors, unweighted or weighted strength assessment.....

2017-03-28

29

Competitors’ Reaction Patterns

• the laid-back competitor (What’s the reason?)

• the selective competitor

• the tiger competitor

• the stochastic competitor

58


Measuring and Forecasting Market Demand

2017-03-28

30

59


Environment

Theorganisation

The economy

Socialfactors

Culturalforces

Technology


Legalstructures

Demography

Suppliers


demands


60

Outline - Measuring and Forecasting

Market Demand

� Market� Market potential� Market penetration � Forces that limit market penetration� Market Development Index� Accelerating Market Growth

� Market demand� Market demand (volume)� Market demand (value)� Estimating market demand

� Market share � Share development tree

� Forecasting market demand and sales

2017-03-28

31

61

Market

� Market is the set of all actual and potential buyers of a market offer (product)

Market potential

Market penetration

62

Market potential and penetration

� Market potential– the maximum number of customer who enter the market given a specific served market definition

� Market penetration – the total number of customers who have entered that market at a specific point of time

2017-03-28

32

63

Forces that limit market penetration

Forces that limit market penetration:

� Awareness

� Availability

� Ability to use

� Benefit Deficiency

� Affordability

Market penetration

Awareness

Availability

Ability to use

Benefit Deficiency

Affordability

MaximumNumber

of Potential

Customers

64

Market Development Index

Market Market Penetration

Development = x 100

Index Market Potential

2017-03-28

33

65

Market demand

� Market demand for a product is thetotal volume that would be boughtby a defined customer group in adefined geographical area in adefined period in a definedmarketing environment underdefined marketing program

66

Market demand (volume)

� Market demand (volume) = number of customers x purchase amount

� Market demand (volume) = (Existing customer x purchase amount) + (New customer x purchase amount)

2017-03-28

34

67

Market demand (value)

� Market demand (value) = number of customers x purchase amount x average price

� Market demand (value) = (Existing customer x purchase amount x average price) + (New customer x purchase amount x average price)

68

Market demand

Market demand is a function of:

� market development index

� condition of environment

� industry marketing expenditure

� marketing sensitivity of demand

2017-03-28

35

69

Estimating potential market demand

� Number of customers – secondary data (totalnumber of customers, market developmentindex, rate of enter) - n

� Purchase amount – secondary data (averageconsumption, production, export and importof products – GUS, Nielsen, GUS) andprimary data - q

� Average price – secondary data (Nielsen,IMS, GUS) – p

Q = n x q x p

70

Estimating market demand

� Multiple-factor Index Methods

where•Bi – percentage of total national buying power found in area i

•yi – percentage of national disposable personal income originating in area i

•ri – percentage of national retail sales in area i

•pi – percentage of national population located in area i

iiii pryB 2,03,05,0 ++=

2017-03-28

36

Estimating future demand (sales)

Heuristic methods

� Executive opinions

� Sales force opinions

� Survey of buyers’ intentions

Statistic methods

� Time series analysis

� Exponential smoothing

� Moving averages method

� Regression analysis

Forecasting Executive Opinions

Collect and combine the sales projections of executives in different departments

Pros:

� Easy, fast, cheap

� No statistical skills

� Forecast is joined with strategy

Cons:

� Time consume executive

� Recent experiences have heavy impact

72

2017-03-28

37

Forecasting Sales force Opinions

Asking salespeople to forecast attainable sales volume in their territories for a given time period and combining those projections to produce

total sales forecast

Pros:

� Easy, fast, cheap

� Salespeople have knowledge about customers

� Sales reps might have greater confidence in their sales quotas

� Forecast broken down for: products, territory, customers, distribution channels

� No statistical skills

Cons:

� Time consume salespeople

� Underestimate forecast

� Salespeople do not have knowledge about strategy

� Recent experiences have heavy impact

73

Forecasting Survey of buyers’ intentions

Asking potential buyers about intention to buy a certain product during a specific time period

Pros:

� Information from customers

� Forecast broken down for: products, territory, customers, distribution channels

Cons:

� Difficult, time consumed, expensive

� Problems with reach to customers

� Customers do not have disclose real intentions

74

2017-03-28

38

Forecasting Time series analysis 1

Developing on the basis of

past sales

Pros:� Objective� Fast, cheap� Forecast broken down for:

products, territory, customers, distribution channels

Cons:� Stable � Statistical skills� Stabile environment� History of sales� Sales is function of time

battfy +== )(

75

Forecasting Time series analysis 2

Year Sales Forecast

1999 120 132,7273

2000 150 135,9879

2001 145 139,2485

2002 142 142,5091

2003 143 145,7697

2004 148 149,0303

2005 150 152,2909

2006 152 155,5515

2007 156 158,8121

2008 168 162,0728

2009 165,3334

2010 168,5940

2011 171,8546 Y = 3,260606 (t) + 132, 7273

76

0

20

40

60

80

100

120

140

160

180

200

1 3 5 7 9 11 13

S

a

l

e

s

Year

Forecast - Time

series analysis

Sales

Forecast

2017-03-28

39

Forecasting Exponential smoothing 1

Forecast depends on three elements: actual sales, average sales and smoothing parameter



Cons:� Stable � Statistical skills� Stabile environment� History of sales� Forecast only next period � Sales is function of time

1

_

)1(−

+−= tt yyy αα

77

Forecasting Exponential smoothing 2

Year Sales

Average

sales

Forecast

α=0,6

Forecast

α=0,7

1999 120

2000 150 120,00

2001 145 135,00 138,00 141,00

2002 142 138,33 141,00 142,00

2003 143 139,25 140,53 140,90

2004 148 140,00 141,50 141,88

2005 150 141,33 144,80 145,60

2006 152 142,57 146,53 147,40

2007 156 143,75 148,23 149,17

2008 168 145,11 151,10 152,33

2009 147,40 158,84 161,13

2010

2011

78

0

20

40

60

80

100

120

140

160

180

0 1 2 3 4 5 6 7 8 9 10

S

a

l

e

s

Year

Exponential smoothing

Sales

Average

Forecast α=0,6

Forecast α=0,7

2017-03-28

40

Forecasting Moving averages methods 1

Average sales from three or five periods



Cons:� Stable � Statistical skills� Stabile environment� History of sales� Forecast only next period � Sales is function of time

3

123 −−−++

=ttt

t

yyyy

79

Forecasting Moving averages methods 2

Rok

Popyt

(sprzedaż)

Prognoza

popytu

(sprzedaży)

1999 120

2000 150

2001 145

2002 142 138,33

2003 143 145,67

2004 148 143,33

2005 150 144,33

2006 152 147,00

2007 156 150,00

2008 168 152,67

2009 158,67

2010

2011

80

0

20

40

60

80

100

120

140

160

180

0 1 2 3 4 5 6 7 8 9 10

S

a

l

e

s

Year

Moving averages method

Sales

Forecast

2017-03-28

41

Forecasting Regression analysis 1

Relationship between changes a past sales (the dependent variable) and one and more independent predicator variables (such as GBP, per capita income, investment)



Cons:� Stable � Statistical skills� Stabile environment� History of sales� Forecast only next period � Sales is function same predictor

variables

11)1(−−

×∆+= ttt yAy

Forecasting Regression analysis 2

Year Sales Investment

Investment

- change Forecast

1997 120 850

1998 150 830 -0,02353

1999 145 810 -0,02410 146,47

2000 142 820 0,01235 141,51

2001 143 840 0,02439 143,75

2002 148 850 0,01190 146,49

2003 150 870 0,02353 149,76

2004 152 900 0,03448 153,53

2005 156 910 0,01111 157,24

2006 168 900 -0,01099 157,73

2007 166,15

2008

2009

0

50

100

150

200

0 1 2 3 4 5 6 7 8 9 10

S

a

l

e

s

Year

Regression analysis

Sales

Forecast

2017-03-28

42

83

Macro Environmental Analysis

&

SWOT Analysis

84


Environment

Theorganisation

The economy

Socialfactors

Culturalforces

Technology


Legalstructures

Demography

Suppliers


demands


2017-03-28

43

Macro Analysis Frameworks

PEST

PESTEL

SLEPT

The PEST Framework

Political / LegalLegislative structuresMonopoly restrictionsPolitical / gov. stabilityPolitical orientationTaxation policiesEmployment legislationForeign trade regulations

Socio-CulturalDemographicsLifestylesSocial mobilityEducation levelsAttitudesConsumerismReligion

EconomicBusiness cyclesMoney supplyInflation ratesInvestment levelsUnemploymentEnergy costs

TechnologicalSpeed of changeRate of technological transferProduct life-cyclesAvailabilityCostLevels of industrial and gov. R&D expenditure

Org

an

isa

tio

n

2017-03-28

44

SWOT Analysis

SWOT analysis draws together key strengths, weaknesses, opportunities and threats that have been derived as a result of the marketing audit, i.e. the macro and micro analysis and assessment

SWOT Analysis

Financial resources, product portfolio, economies of scale, technical capability,management ability, innovative design, profitability, R&D, marketing intelligence

Global markets, investment opportunities, diversification, technology innovation, internet,

Lack of skilled labour, high workforce turnover, lack of financial investment, poor internal communications, lack of management commitment, supplier relationships, management weaknesses, over-capacity

Global markets, competitive activity, competitive investment, supplier desertion, substitute products, market saturation, resistance to change

Internal

External

Strengths Weaknesses

Opportunities Threatsconvert

convert

2017-03-28

45

Marketing Objectives

S Specific - descriptive, succinct and provide clarity throughout the organization as to what is to be achieved

M Measurable - clearly state tangible targets that can be measured in the future

A Aspirational - challenging but achievable, motivational

R Realistic - based on sound market analysis, financial, human & physical resources should underpin the objectives

T Timebound - a timescale should be set against the achievment of each objective in order for performance measurement to be undertaken

Marketing Objectives e.g.

� rate of return on investment

� net profits

� cash flow

� total sales revenue

� sales volume

� market share

� consumer awareness

� number of distribution outlets

� average realized price

2017-03-28

46

Designing Marketing Strategies

S- T - P

S - T - P

Outline

� market segmentation

� market targeting

� positioning

2017-03-28

47

� Segmenting� Dividing market according to some set of criteria into

relatively homogeneous groups of customers

� Targeting� Involves determining the atracttiveness and profitability

of created segments and then choosing the strategy

� Positioning� Creating value and image of company’s offer, which

should lead to getting a distinguished and importantplace in consumers’ minds through differentiation anddeveloping competitive advantage

93

STP – What Is It?

SEGMENTATION

2017-03-28

48

Phases in STP Procedure

Segmenting 1. Identification of segmentation criteria2. Dividing the market3. Defining a profile of each segment

Targeting 1. Segment attractiveness assessment2. Choosing market strategy

Positioning 1. Differentiation tools2. Positioning process

95

Segmentation: Conditions

Do customers have similarneeds and wants?

Can we collect informationabout the segment?

Are the segments profitable?

Can the segmentsbe reached?

SEGMENTATION

SENSITIVITY

MEASURABILITY

ACCESSABILITY

SIZEABLE

Internally homogeneous, externally heterogeneous

2017-03-28

49

Segmentation

� Basis for segmentation:

� geographics

� demographics

� geodemographics

� psychographics

� behaviour

• Gender, age, family size, family life cycleDemographics

• Size of town, administrative, climateGeographic

•Education, job, social class, religion, race, nationality, income

Socio-economical/ demographic

•Personality, lifestyle, innovativeness, risk taking

Psychographic

•Status, consumption level, brand loyalty, attitude towards the product, purchase readinessBehavioral

• type of prefered benefits, place of purchase, reason of purchasePreferencial

98

Segmentation Criteria 4 B2C

2017-03-28

50

Family life cycle

� Single

� DINKS

� Full Nest

� Empty nest

� Survival

99

� Typical segmentation criteria: region,

voivodship, district, municipality, town

� Also: climate, population density

� Advantages: easy access to info

� Disadvantages: too general, ignores other

important characteristics

� Needs also other criteria

Geographical Criteria

2017-03-28

51

Socio-economic Grading

� A� Upper middle class

� B� Middle class

� C1� Lower middle class

� C2� Skilled working class

� D� Manual workers

� E� Lowest subsisence

Geodemographic Segmentation

� analysis of people according to where they live

� based on belief that people live in homogenous neighbourhoods

� ‘birds of a feather flock together’

� Acorn

� Mosaic

2017-03-28

52

The Acorn Segmentation

� Thriving (19,7%)

� Expanding (11,6%)

� Rising (7,8%)

� Settling (24,1%)

� Aspiring (13,7 %)

� Striving (22,7 %)

� As an example of a more detailed breakdown, group Aspiringcontains the following groups:

- new home owners, mature communities (9,7%): council areas, some new home-owners; mature home-owning areas, skilled workers; low rise estates, older workers, new home-owners

- white collar workers, better off multi-ethnic areas (4%): home-owning multi-ethnic areas, young families; multioccupied town centres, mixed occupations, multi-ethnic areas, white collar workers

� Typical segmentation basis:

Occasions – ordinary vs special

Expected benefits – quality, service, savings, speed

User status – non-user, ex-user, potential, regular

Usage intensiveness – occasional, average, intensive

Loyalty – none, average, strong

Purchase readiness – unaware, aware, informed, interested,

wanting to buy

Attitudes toward the product – enthusiastic, positive,

neutral, negative, hostile

Behavioral Criteria

2017-03-28

53

� Type of preferred benefits

� Low price, economy, convenience, durability, reliability, etc.

� Preferred purchase place

� Modern-traditional trade

� Electronic-stationary trade (click vs brick)

� Reasons of purchase

� business, holidays, family (trip)

� For self, gift

105

Preferences Require empirical

research

� Segmentation basis include: lifestyle, personality,

interests, etc.

� Basic areas of marketer’s interest include:

Social behavior – free time activity, recreation, sport, holidays,

shopping habits

Interests – music, books/magazines, science, history, fashion

Opinions – social issues, aesthetics, economical, political, cultural,

religious, educational

Psychographic Criteria

2017-03-28

54

Business Markets Segmentation

� demographic

� industry, company size, location

� operational variables

� technology, user or nonuser status, customer capabilities

status

� purchasing approaches

� general purchase policies, purchasing criteria, nature of

existing relationships

� situational factors

� urgency, specific applications, size of orders

� personal characteristic

� buyers-seller similiarity, attitudes towards risk, loyality

•Organization size, geographical scope, industry, type of organization, user status, locationMain

•technology, average product usage, average order size, financial capabilitiesOperational

•Organizational structure, supply funcion, way of dealing with transactions

Attitude towards purchase

•Preferred benefits, ways of obtaining products, length of contract Preferrences

•Buyer-seller likeliness, loyalty, risk taking

Personal qualities

108

Segmentation Criteria 4 B2B

2017-03-28

55

Cost Effective Segmentation

� Measurable� Can you define what it is?

� Accessible� If you can define it - can you get at it?

� Substantial� Is it large enough to be profitable?

� Unique� What makes it different from other segments?

� Appropriate� Does it meet your resources and objectives, can it be actioned?

� Stable� Can you predict how it will develop?

Segment Attractiveness

Demand Criteria

Current size

Growth dynamics

Potential size

Competition Criteria

Number of competitors

Exit barriers

Offerdifferentiation

Substitutes

Accessability Criteria

Company awareness

Access to distribution

Adjustment

110

Segment Attractiveness Assessment

2017-03-28

56

Mass marketing

Full-scopemarketing

Selectivemarketing

Concentratedmarketing –big segment

Concentratedmarketing –

smallsegment

Nichemarketing

1-2-1 marketing

111

Market Targeting Options

Positioning

� positioning is how the product is perceived and evaluated by the target audience relative to competitor products

� companies must differentiate products or services

� positioning must promise the benefit the customer will receive

� should not be all things to all people

� should be believable

2017-03-28

57

Identification of attributes which distinguishthe offer on the market

Defining competitors’ market position

Market position selection – positioning process

Matching the offer with positioning strategy

Communication

113

Positioning - Phases

114

Choosing Market Position – Positioning

• 1 dimension

• 2 dimensions

• Multidimentional

How many differences

• Important

• Out-standing

• Safe

• Connected

• Additional criteria

Whatdifferences

• Strengthening current position

• Seeking new position

• Competition repositiongHow

2017-03-28

58

Positioning Strategies

… Overall Focus Options

� attribute

� customer benefit

� price and quality

� use / application

� product user

� product class

� competitor

Major Positioning Errors

� underpositioning - brand does not have a clear identity in the eyes of the customer

� overpositioning - buyers may have too narrow image of a brand

� confused positioning - too many claims might be made for a brand

� doubtful positioning - positioning may not be credible in the eyes of buyer

2017-03-28

59


Product

Product

Outline

� product decisions

- product mix decisions

- product attributes

- new product development

- product life cycle

2017-03-28

60

� Product – everything (set offunctional, social & psychologicalbenefits for a customer), which canbe offered for consumption, usage,spending time, etc., in order tosatisfy customer’s needs in theexchange process

119

Product – definition

� Tangible goods

� Services

� Celebrities

� Organizations

� Places

� Ideas

� Events

� Symbols

120

Types of Product

2017-03-28

61

1. Market assortment planning

2. Individual product attributes

3. New product planning

4. Product life cycle

121

Marketing Decisions Regarding Product

� Assortment width

� Length of product line

� Depth of product type

� Assortment integrity

� Product system

122

Market Assortment

2017-03-28

62

number of assortment groups in the company

123

Assortment Width

variety of product types and brands within each of the assortment group

124

Assortment Length

2017-03-28

63

125

Assortment Length

Brand A

Brand B

Startingpoint

Brand C

Brand B

Brand A

Up-stretching

Down-stretching

Brand A Brand A

Brand B Brand B

Brand D Brand D

Brand C

Up&downstretching

126

Assortment Length

Brand A

Brand B

Startingpoint

Brand C

Brand B

Brand A

Filling-in theline

Modernizingthe line

Brand A

Brand A

Brand C

Brand B

Brand B

Brand D

Brand C

Deleting productforms

2017-03-28

64

� Variety of item options within a particular product type

127

Assortment Depth

� customer� Are the products offered to the same customer group?

� functional� Are assortment groups complementary or satisfy different needs?

� technological� Can the same machines, technology, know how be used to produce these goods?

� supply� Can the same materials, resources and components be used?

� distribution� Cant the same distribution channels and sales methods be used?

� promotional� Can the same promotion forms and tools be used?

� logistics� Can the goods be offered, transported, stored in the same way?

� vertical� Is company’s activity a part of the same market system (industry, branch)?

128

Market Assortment Integrity

2017-03-28

65

Product - levels

Product Levels

Core productTangible(formal)

product

Augmented

(enhanced) product

packaging

brand

quality

features

styling

core benefit ...

installation

delivery

credit

warranty

after sale service

2017-03-28

66

� Set of benefits offered to consumers within a particular product

� basic benefits

� supplementing benefits

drill – making holes

car – transportation

beer – entertaining way of satisfying thirst

Core Product

Sum of utilitarian and functional value (quality) in a particular project offered in a packaging(sometimes) and under a certain brand name –which allows realization of a particular set of benefits delivered in a product

� Technical characteristics� Technical parameters� Accordance of quality with technical parameters� Style� Size � Identification, instruction� Packaging � Brand (name, logo)

Formal Product

2017-03-28

67

Brand

Brand

Brand - name, sign, symbol,pattern or a combination of all theabove, given by a seller in order toidentify and differentiate theproduct among the competition

2017-03-28

68

Functions:

� Identification

� Guarrante

� Promotional

Meaning of a brand:

� qualities

� benefits

� values

� culture

� personality

� user

Brand: Decisions

� YES

� NO –GENERIC products

1. Shall We Brand?..

2017-03-28

69

� Producer

� Intermediary

� Mixed

2. Who Is The Sponsor?

� create own

� buy

� licence

3. How Can We Obtain a Brand?

2017-03-28

70

� individual brand name

� family brand (the same for all theassortment)

� mixed brand

4. How To Brand?

� Higher price

� Convenient ordering

� Allows legal protection of a product

� Helps building customer loyalty

� Facilitates market segmentation

� Helps building company’s image

Benefits From Branding

2017-03-28

71

� Pre&post sales services

� Guarantee – length and scope

� Service – speed and scope

� Alternative usage forms

� Loans

� Return policy

� Re-buying of the used product

� Sale of certified products

Enhanced Product

time

introduction growth maturity decline

profit

Cycle - Profit Relationship

2017-03-28

72

The Process of NPD

� idea generation

� screening

� concept development and testing

� marketing strategy

� business analysis

� product development

� market testing

� commercialisation


Promotion

2017-03-28

73

Promotion

� promotion tools- advertising- sales promotion- public relations- personal selling- direct selling

Direct

Marketing

Advertising

Public

Relations

Personal

Selling

Sales

Promotion

Principle Methods

2017-03-28

74

Communication at Work

� Differentiates

� between competitors, substitutes and alternatives.

� Reminds

� and re-enforces past transactions. Makes future dealings desirable.

� Informs� makes potential customers / users aware of offer. Essential to

diffuse information.

� Persuades

� influences the decision making process. Makes the exchange desirable.

A management process through which an organisation

enters into a dialogue with its various audiences ….

…. the objective of the process is to (re)position the

organisation and/or their offerings, in the mind of each

member of the target audience in a consistent and

likeable way.

Source: Fill, 1999

Marketing Communications

2017-03-28

75

Website

Direct

marketingExhibitions Branding Perception

Public

relations

Corporate

identity

Commerce

Personal

selling

Word of

mouth

AdvertisingField

marketing

Packaging

Sponsorship

Internal

marketing

Sales

promotion

Point of

Purchase

?

�Consumer Audience

�Channel Audience

�Stakeholder Audience

The ‘Promotional’ Toolbox - a Bag of

Marbles

Push and Pull Strategy

� Push strategy - decision to concentrate communications effort on the members of the distribution channel, i.e. the wholesaler and retailers

� Pull strategy - in contrast to the push, creating demand for the product through direct communication with the customers

� both push & pull strategy - in order to assert as much influence as possible on the supply chain and the customer

2017-03-28

76

Possible Communications Objectives

� clarification of customer needs

� increasing brand awareness

� increasing product knowledge

� improving brand image

� improving company image

� increasing brand preference

� stimulating search behaviour

� increasing trial purchase

� increasing repeat purchase

� increasing word-of-mouth recommendation

� improving financial position

� increasing co-operation from the trade

� enhancing the reputation with key stakeholder

� building up management ego...

Advertising

� Is any paid form of non-personal presentation and promotion of ideas, goods or services by an identified sponsor

� Major decisions (5 Ms):

- Mission: What are the advertising objectives?

- Money: How much can be spend?

- Message: What message should be sent?

- Media: What media should be used?

- Measurement: How should the results be evaluated?

2017-03-28

77

� Wide range

� Low cost of reaching a single customer

� High control

� Appeals to emotions

� Feedback may be delayed

� Highly standardized message

� Some forms very expensive

� Limited information capacity

Pros Cons

• High visibility� Appeals to emotions� Close in time and space� Originality…

• Accessible information� repetitive� Associated with info already known:

memories, tradition, stereotypes

• Persuasive

Good Advertisement:

2017-03-28

78

� TV commercials

� Radio commercials

� Newspaper and magazine ads

� Exhibition and POS

� Outdoor

� Internet

Advertising Tools

Sales Promotion

A range of tactical marketing techniques

designed within a strategic marketing

framework to add value to a product or service

in order to achieve specific sales and marketing

objectives

Short-term incentives motivating customers to

(faster) purchase decision or buying more;

intermediaries are encouraged to sell more and

more actively

2017-03-28

79

Customer incentives

- Free samples

- Lotteries and contests

- Discounts

- Coupons

- Refunds

- Presentations, degustation, demonstrations

- Prizes for loyalty

Intermediaries’ incentives

- Price discounts

- Help with exhibitions

- Product samples

- Information and promotion materials

- Influencing the staff

- Exhibitions, trade shows, etc

- Refunds

Sales Promotion

+ quick feedback

+ liked by buyers

+ increases impulse shopping

+ adds value to a product

+ develops cooperation in distribution channels

- Can be used in short-term

- Later customers do not want to buy products on regular conditions

- Worsens company’s image

- May push customer’s attention towards less important factors (price-payment)

Pros Cons

2017-03-28

80

Public Relations

PR is a planned and sustained efford to establish

and maintain goodwill and mutual understanding

between an organization and its publics (e.g.

Customer groups, local and central government, the

general public, financial institution, the media,

employees)

Public Relations Objectives

� to create and maintain the corporate and brand image

� to enhance the position and standing of the organization in the eyes of public

� to communicate the organization’s ethos, philosophy, corporate values

� to disseminate information to the public

� to undertake damage limitation activities to overcome poor publicity for the organization

� to raise the company profile and forge stronger, lasting, customer and supply chain relationships

2017-03-28

81

+ high credibility+ lower costs+ can be used when

advertising is prohibited

+ mass receiver+ can reach customers

avoiding advertising

- Low control over the place, time, and content of information presented

- Difficulty in planning activities

- Impossible to familiarize customers with offer details

Pros Cons

Public Relations

� publicity

� internal communication and with co-

operators

� sponsoring

� corporate identity

� lobbying

� crisis communication

2017-03-28

82

Personal Selling

An interpersonal communication tool which involves

face-to-face activities undertaken by individuals, often

representing an organization, in order to inform,

persuade or remind an individual or group to take

appropriate action, as required by the sponsor’s

representative

+ Fast feedback

+ Information range can be easily adjusted

+ Possibility of info exchange

+ Relatively high effectiveness of seller’s personal influence on purchase decisions

- High cost of reaching a customer and passing the info

- Low effectiveness when a customer does not know much about the offer

- Only a very limited number of customers can be reached

Pros Cons

2017-03-28

83

Direct Marketing

� Direct Marketing

� Personal, persuasive communication by people both employed and not employed by the company

� OR

� An interactive system of marketing which uses one or more advertising media to effect a measurable response and or transaction at any location (US Direct Marketing Association)

Direct Marketing

� Includes

� Direct Mail

� Telemarketing

� Magazine Inserts

� Door to Door Distributions

� Mail Order

� Features

� Advertising and selling combined

� Results are measurable

� High degree of flexibility

� Easily controllable

� Highly selective

� Economic

2017-03-28

84

Direct Marketing Benefits

� ability to target to the ‘individual’

� allows personalisation

� supplies a response mechanism and

reinforcement for other media

� scope for vast use of different creative

formats

� highly sophisticated testing

The Principal Characteristics of

Communications Tools

Advert. Sales

promotion

PR Personal

selling

Direct

marketing

Communications

Ability to deliver

personal

messages

Low Low Low High High

Scope forreaching large

audiences

High Medium Medium Low Medium

Degree of

interactionLow Low Low High High

Perceived

credibility by

target audiences

Low Medium High Medium Medium

2017-03-28

85



Advert. Salespromotion

PR Personalselling

Directmarketing

Costs

Absolute costs High Medium Low High Medium

Cost per contact Low Medium Low High High

Wastage levels High Medium High Low Low

Level ofinvestment

High Medium Low High Medium



Advert. Salespromotion

PR Personalselling

Directmarketing

Control

Scope for

targeting specific

audiences

Medium High Low Medium High

Management’s

ability to adjust

the deployment

of the tool wscircumstances

change

Medium High Low Medium High

2017-03-28

86


Distribution

Distribution

Outline

� selecting marketing channels- direct vs. indirect channels- number of channel levels- number of intermediaries- vertical marketing systems

2017-03-28

87

Distribution channels

The distribution channel consists of agroup of individuals or organizations thatassists in getting the product to the rightplace at the right time.

Selecting the Channels of Distribution

• What are the product characteristics and how do they affect methods of distribution?

• Who are our customers?

• Where are our customers?

• What are our customers requirements?

• How, when and where do they want to buy our products?

• What are our competitors doing by way of distribution?

• What is the cost of distribution?

• What are the legal and regulatory constraints of distribution?

2017-03-28

88

Company Sales Force or

Manufacturer’s Sales Agency?

Selling costs ($)

Level of sales ($)

Company sales force

Manufacturer’s sales agency

Channel Design Decisions

• channels levels

• number of intermediaries at each channel level

• vertical marketing systems

2017-03-28

89

Channel Levels

• short vs. long channel (from one to three level)

• key factors:

- average order size

- geographic concentration of customers

- seasonality of sales

- geographical distance from producer to market

- perishability of the product

Number of intermediaries

Three strategies:

• intensive distribution - as many available outlets as possible hold this product; products for which consumers require a great deal of location convenience

• selective distribution - more than a few but less than all of the intermediaries

• exclusive distribution - severely limiting the number of intermediaries; even only one outlet in a certain geographic area supplies a product

2017-03-28

90

Intensive distribution

Key characteristic include:

• maximum number of outlets covered to maximize availability

• target outlets in as many geographical regions as possible

• consumer convenience products

• high number of purchasers

• high purchase frequency

• impulsive purchase

• low price

Selective distribution


• medium level of customers - but likely to be significant

• less intensive distribution f outlets

• retailers may require specialist knowledge

• shopping based products

• purchase is occasional

• purchase is more likely to be planned

• medium price

2017-03-28

91

Exclusive distribution


• relatively few customers

• limited retail outlet

• close retailer/customer relationship

• speciality products

• infrequent purchase

• high involvement and planned purchase

• high price

Impact of Internet on Channel Decisions

• Significant for financial services, leisure industry & others...

• Endless potential benefits: improve corporate image, improve customer service, increase visibility, create market growth opportunities, lower overall business costs, increase speed of transactions, improve management of information, constraints removal of time and distance, ability to full competitive area, cost-effectiveness, more effective/closer relationships....

(an insight into the views of 300 executives from across Europe, source: Chaffey et al.,

2000)

2017-03-28

92

. Designing Marketing Strategies

Price

Price

Outline

� setting price

- calculation of price range- selecting the final price

2017-03-28

93

Price decisions

� selecting the pricing objective

� determining demand

� estimating costs

� analyzing competitors’ costs, prices and

offers

� selecting a pricing method

� selecting the final price

Selecting the Pricing Objective

� survival

� maximum current profit

� maximum current revenue

� maximum sales growth

� maximum market skimming

� product-quality leadership

2017-03-28

94

Determining Demand

� price sensitivity

� price elasticity of demand

Estimating Costs

� fixed costs

� variable costs

� total costs

2017-03-28

95

Analyzing Competitors’ Costs,

Prices and Offers

� typical methods

� main findings

Selecting a Pricing Method

� markup pricing

� target-return pricing

� perceived-value pricing

� value pricing

� going-rate pricing

� auction-type pricing

� group pricing

2017-03-28

96

Selecting the Final Price

� psychological pricing

� gain-and-risk-sharing pricing

� influence of other marketing-mix elements

� company pricing policies

Adapting the Price

� geographical pricing

� price discounts

� promotional pricing

� discriminatory pricing

marketing management for students 2017 - wz.uw.edu.pl · pdf filemarketing concept customer...

Documents