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Module 1 THE MARKETING MANAGEMENT PROCESS • identified potential exchange partners • developed offerings Marketing is a social Factors • communicated info process involving the activities • delivered products necessary to enable individuals • collected payments and organisations to obtain what they need and want Customers • Ultimate through exchanges with others • Organisational and to develop ongoing Recent Developments exchange relationships. Needs & wants • Need: gap between actual & desired state • Globalisation • Want: Specific way to satisfy need • Increased importance of service • Information Technology • Customers buy benefits, not products - Collect more data about customers Create value • Benefits, service & price determine value - New way of communicating with customers Exchange • L/T relationships make the lifetime Relationships across functions & firms customer value increase 1. Need Marketing activities 2. Benefits sought Process 3. Choice criteria 4. Product/service features 5. Brand/supplier chosen Vertical integration: Marketing channels: People Products & Services • Products: Tangible Institutions all marketing activities part of marketing • Services: Less Tangible Activities are performed by a activities are Places single organisation performed b:y • Merchant wholesalers • Individuals & Organisations (who are) Markets (consist of) • Interested & Willing (and have) •Agent middlemen • Retailers • Resources available • Facilitating agencies People’s needs: flow from basic biological and psychological human make-up Utility/price relationship enhanced: Organisations’ needs: shaped by the organisation’s strategic objectives and Benefits: relate to resource inputs, capital equipment, supplies, and services necessary ro • Possession utility • Transactional efficiency assure theri survival and well-being • Place utility • Functional effciency • Time utility People’s want:s: shaped by social influences, their past history, and consumption Experiences
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Module 1 THE MARKETING MANAGEMENT PROCESS process of analysing, planning, implementing, co- ordinating and controlling programmes involving the conception, pricing, promotion and distribution of products, services and ideas designed to create and maintain beneficial exchanges with target markets for the purpose of achieving orgartisational 1. Integrate marketing objectives objectives. and strategy with the company’s FEEDBACK Corporate and Business-level strategies and resources (FIT): 6. Control of the marketing 2. Analyse the 4Cs programme (Marketing opportunity analysis) THE MARKETING MANAGEMENT PROCESS • Company 5. Implementation of • Context (environment) the marketing programme • Customers • Competitors 4. Formulate strategic marketing programmes for specific situations Market segmentation, • New markets Targeting and • Growth markets 3. Formulate the 4Ps (Marketing mix) Positioning decisions • Mature and declining markets (Strategic Marketing programmes) • Product offering • Price MARKETING PLAN • Promotion Segmentation: divide customers • Place (distribution channels) Into market segments–distinct subset of people with similar needs, circumstances and characteristics Targeting: decide on which market Positioning: design the product that lead them to respond in a segments to focus a strategic mktg or service offering within the similar way to a particular product programme target segment or service offering or to a particular mktg strategic programme
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Module 2 CORPORATE STRATEGIES AND THEIR MARKETING IMPLICATIONS Marketing role Strategy Firm’s orientation Influencing factors Components Levels Early entrants 1. Scope 1. Corporate 1. Product orientation 1. Competitive factors Growing industry 2. Marketing orientation 2. Goals and objectives 2. Business-level (SBU) Mature industry 3. Allocation of resources 3. Functional/Marketing 3. Sales orientation 2. Stages of development Across industries 4. Sources of competitive advantage Across coutrnies (global markets) 5. Synergy 3. Strategic inertia Business activity Production orientation Marketing orientation or function Company sells what it can make; Company makes what it can sell; Product offering primary focus on functional primary focus on customers' needs and performance and cost. market opportunities. Product line Narrow. Broad. Pricing Based on production and distribution Based on perceived benefits provided. costs. Technical research; focus on product Market research; focus on identifying Research improvement and cost cutting in the new opportunities and applying new production process. technology to satisfy customer needs. Packaging Protection for the product; minimise Designed for customer convenience; a costs. promotional tool. Credit A necessary evil; minimise bad debt A customer service; a tool to attract losses. customers. Emphasis on product features, quality Emphasis on product benefits and Promotion and price. abilityto satisfy customers' needs or solve problems.
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Module 2 CORPORATE STRATEGIES AND THEIR MARKETING IMPLICATIONS 5. Synergy 1. Scope across Corporate Corporate businesses in the • shared resources, technologies corporate portfolio • shared functional competencies • Domain: business or industry • Corporate development strategy across - conglomerate (unrelated) diversification product-market • shared resources • forward BU • shared functional competencies - vertical integration entries in the BU • backward - acquisition and divesture policies Marketing across product- • shared marketing resources • Domain: product market within market entries • shared competencies or activities BU business or industry • Business development strategy: - concentric (related) diversification 4. Source of Competitive Advantage Corporate - superior corporate resources; STRATEGY •Target market definition - more corporate R&D; • Product-line depth and breadth - better organisational • Branding policies Marketing • Product-market development plan processes or synergies • Line extension or product eliminations BU - competitive strategy; plans - BU competencies 2. Goal and Objectives Marketing - effective product positioning; aggregated across • revenue growth - superiority on one or more of the 4P’s Corporate businesses in the • profitability, ROI corporate portfolio • EPS, contribution to stakeholders 3. Allocation of Resources • sales growth, • among businesses in the corporate portfolio • new product or market growth Corporate aggregated across • profitability, ROI • across functions shared by multiple businesses product-market BU • cash flow, entries in the BU • strenghtening bases of competitive BU • among product market entries in the BU advantage • across functions within the BU • sales, market share Marketing •across 4Ps for a specific product-market entry Marketing for a specific product- • contribution margin market entry • customer satisfaction
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Module 2 CORPORATE STRATEGIES AND THEIR MARKETING IMPLICATIONS 1. Define the firm’s mission 6. Develop synergies Fit with: Sources • knowledge • firms’ internal characteristics 5. Allocate corporate resources • corporate identity and corporate brand • external environment • shared resources Criteria: Two tools: • Physical: based on existing products or technology • Portfolio models • Functional: based on customer needs + functions to perform -The BCG growth share matrix to satisfy them - growth rate: industry attractiveness • Best functional but specifying the customer group and the - market share: competitive strength •products or technologies on whihc the firm will concentrate Importance of ethic: • Social policies and ethical standards CORPORATE STRATEGY 2. Define firm’s objectives • Specific • Measurable Four components: • Performance dimension or attribute sought • Measure or index for evaluating progress • Target or hurdle to be achieved - Multifactor models (GE matrix) • Time frame within which the target is to be accomplished 4. Develop Corporate Growth strategies Trade-off when objectives are multiple 3. Gain a competitive advantage Company resources that: • other firms do not have • take a long time to develop • are hard to acquire • Value-based planning Employ resources effectively - Discounted cash flow Develop competitive and marketing strategies that provide benefits Communicate benefits effectively
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Module 3 BUSINESS STRATEGIES AND THEIR MARKETING IMPLICATIONS 4. Competitive Advantage 1. Decide how to divide the firm into SBUs Porter 1. Overall cost leadership Characteristics: 2. Differentiation • Homogeneous set of markets to serve 3. Focus (Narrow/Broad) • Unique set of product-markets • Control over resources key to success Miles & Snow • Responsibility for profitability 1. Prospectors 2. Defenders Dimensions (trade-off): 3. Analysers • Technical compatibility 4. Reactors • Similarity in customer needs • Similarity in personal characteristics Dimensions Low-cost Differentiated Prospector Analyser 2. Define SBUs’ objectives defender defender BUSINESS Mature/stable/well- Mature/stable/well- Broad/dynamic Mixture of defender Break down corporate objectives into defined domain; defined domain; domains; technology and prospector STRATEGY Scope mature technology mature technology and customer strategies subobjectives for each SBU and customer and customer segments not well Break down overall SBU objectives into segments segments established Goals and subobjectives for each product-market entry objectives• Adaptability Very little Little Extensive Mixture of de fender (new product and prospector success) strategies Effectiveness (sales growth Little Little Large Mixture of defender and increase and prospector in market share) strategies 3. Allocate resources within the SBU Efficiency High High Low Mixture of defender Two tools: (ROI) and prospector • Portfolio models strategies Resource Generate excess Generate excess Need cash for Need cash for - The BCG growth share matrix deployment• cash (cash cows) cash (cash cows) product development product development - Multifactor models (GE matrix) (question marks or but less so than do stars) prospectors • Value-based planning Synergy Need to seek Need to seek Danger in sharing Danger in sharing - Discounted cash flow operating synergies operating synergies operating facilities operating facilities to achieve to achieve and programmes– and programmes– efficiencies efficiencies better to share better to share technology/marketing technology/marketing skills skills
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Module 4 ENVIRONMENTAL ANALYSIS Demographic Physical • increase in population esp. in growing countries Technology • greenhouse effect (global warming) • population aging esp. in developed countries • internet • ethnic composition • depletion of natural resources • HIV/AIDS pandemic • genetic engineering • inadequate water supply • transistors • shift from rural to urban in growing countries • plastic Political/Legal Economic • political/legal risks (confiscation, • Gross Domestic Product (GDP) expropriation, domestication) Components of • Purchasing Power Parity (PPP) • political/legal opportunities • free-trade agreements (EU) • govt. regulation macroenvironment • interest rates • govt. deregulation • exchange rate Environmental analysis Sociocultural Opportunity/threat matrix • individual values 1. Identify macro trends changes • family structure 2. Evaluate impact on the firm’s • minority rights l/t profitability and position • leisure-time activities, etc 3. Respond Sources of macro trends • Trade associations & magazines • Local, state & federal governments • Government sources & business press • Web Output of macro trends analysis · • Quantitative data (market’s size - Events no 4 should be closely monitored. & growth rate) · - Events no 3 should probably be dropped, at least for the moment. • Qualitative data - Events no 1 should be reexamined less frequently to determine - whether the impact rating remains basically sound- .
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Module 5 INDUSTRY ANALYSIS AND COMPETITIVE ADVANTAGE Product-life cycle Industry: 1.Introduction Competitive advantage Definition: 2.Growth group of firms that offer a 3.Shakeout product or class of products 4.Maturity that are similar and are 5.Decline close substitute for one another Levels of analysis: • Generic category • Product class Driving forces • Product type (macroenvronmental trends) • Changes in the industry’s l/t growth rate • Changes in key buyer segments • Diffusion of proprietary knowledge • Changes in cost & efficiency Stages in product life cycle Five competitive Stage • Changes in gvt regulations forces (Porter)) Introduction Growth Shake-out Mature Decline characteristics Degree to which Market growth Moderate High Levelling off Insignificant Negative Critical success factors rate (net of (concerned with one or management inflation) can perform on Technical change High Moderate Limited Limited Limited more of the 4 Ps) in product de sign these factors Segments Few Few to many Few to many Few to many Few Industry attractiveness Competitors Small Large Decreasing Limited Few Profitability Negative Large Low Large for high- Low market-share- Adoption process: Adopters categories: holders 1.Awareness Rate of diffusion • Innovators Firm's normative responses 2.Interest of innovation • Early adopters Strategic Stimulate Build share Build share Hold share Harvest 3.Evaluation • Early majority marketing primary 4.Trial objectives demand • Late majority Product Quality Continue Rationalise Concentrate on No change 5.Adoption Rate of adoption: • Laggards improvement quality features improvement • Risk Product line Narrow Broad Rationalise Hold length of Reduce length of • Relative advantage Market segments line line • Relative simplicity Price Skimming vs Reduce Reduce Hold or reduce Reduce penetration selectively • Compatibility with current behaviour • Ease of small-scale trial Channels Selective Intensive Intensive Intensive Selective • Ease of communication of benefits Communications High High High High to Reduce declining
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Module 6 UNDERSTANDING CONSUMER BUYING BEHAVIOUR Social Influences Psychological and Personal Characteristics Culture High-Involvement Low- involvement • Perception and Memory Subculture High-involvement process Social class 1. Problem identification • brand familiarity (impulse purchasing) • brand comparison on the shelf • exposure • upper (reference) • change in actual state • attention • upper middle (quality) • change in desired state • brand evaluation after purchase (may develop brand loyalty) • comprehension • middle (traditional) 2. Info Search (Memory) • retention • working (impulse) • inertia vs brand loyalty Factors 3. Evaluation of alternatives Influences: • lower (compen. and brand loyalty • product • selectivity • Experience Product dimensions or attributes Reference Groups (formal/informal) • situational • cost - perceptual vigilance/defense • Social acceptability Family • Value-related considerations • performance - memory limitations • young singles • personal • Demographic characteristics • social • perceptual organisation • married withchildren • Personality • availability - categorisation • married without children Costs of info • environmental and usage situation - integration • middle without children • opportunity 4. Purchase = product purchase process •Attitudes • older marrieds and unmarrieds • psychological 5. Post-purchase evaluation • Compensatory models Sources of info • aspirations or expectations - Fishbein model • personal Evaluating and • performance evaluation • Non- compensatory models • public legitimising function • Brand loyalty • commercial Inforrming function • Repeated patronage Psychographics Types of consumer decision making • Demographics Extent of involvement • Life Style Extent of decision making High Low • strivers Extended (information search; Complex decision making (cars, Limited decision making, • achievers consideration of brand homes, vacations) including variety seeking and • pressured alternatives) impulse purchasing (adult • adapters cereals and snack foods) • traditionals Habit/routine (little or no Brand loyalty (athletics shoes, Inertia (frozen vegetables, paper information search; focus on one adult cereals, cologne, towels) brand) deodorant)
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Module 6 UNDERSTANDING CONSUMER BUYING BEHAVIOUR High- involvement consumer behaviour Low-involvement consumer behaviour • Consumers are information processors. • Consumers learn information at random. • Consumers are information seekers. • Consumers are information gatherers. • Consumers represent an active audience for • Consumers represent a passive audience for advertising. advertising. • Consumers evaluate brands before buying. • Consumers buy first. If they do evaluate brands, it is done after the purchase. Consumers seek to maximise expected • Consumers seek an acceptable level of satisfaction. They compare brands to see satisfaction. They buy the brand least likely to • which provides the most benefits related to give them problems and buy on the basis of a their needs and buy on the basis of a few attributes. Familiarity is the key. multiattribute comparison of brands. Personality and lifestyle characteristics are • Personality and lifestyle are not related to • related to consumer behaviour because the consumer behaviour because the product is not Marketing decisions for high-nvolvement versus product is closely tied to the person's self- closely tied to the person's self- identity and low-involvement products or services identity and belief system. beliefs. - - Reference groups influence consumer • Reference groups exert little influence on • behaviour because of the importance of the consumer behaviour because products are not Marketing mix Marketing decisions where the Marketing decisions where the product to group norms and values. strongly related to their norms and values. element consumer exhibits high involvement consumer element exhibits low involvement Product For long-term success, one or more For long-term success, one or more decisions compelling product benefits are compelling product benefits are necessary, regardless of the level of necessary, regardless of the level of consumer involvement. consumer involvement. Pricing Price, unless substantially lower, is Price offers can be effective in gaining decisions likely to be of secondary importance to trial. A sustained low price, compared performance criteria . High price may to competitors (such as for private label suggest high quality or status, to the goods in supermarkets), may provide seller's benefit. Demonstrable consumer sufficient inertia for repeat purchase. benefits are more likely than price to drive consumer choice. Promotional Consumers are interested in the Consumers are not interested in the decisions information that sellers provide. information that sellers provide. Large Promotional vehicles that communicate advertising budgets and a clear focus in greater detail (e.g., print advertising, on a single demonstrable consumer Internet, infomercials, personal selling benefit are probably necessary to get are likely to be effective. the message across. Distribution Consumers will be relatively less Consumers will be relatively more decisions concerned with convenience in concerned with convenience in Purchasing. Relatively less extensive purchasing. Relatively more extensive distribution is necessary distribution is necessary.
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Module 7 UNDERSTANDING ORGANISATIONAL MARKETS AND BUYING BEHAVIOUR Purchase processes and buyer-seller relationships Purchase motives • use of professional buying specialists Market demographics • derived from consumer demand following prescribed procedures Organisational buyers: • relatively inelastic • closer buyer-seller relationship • fewer in number • more erratic • presence of multiple buying influences • larger • more cyclical • more apt to buy on specifications • geographically concentrated Goods Services Raw Materials Organizational Markets Business Services Natural Buying Centre • intangible and evaluated after purchase: • limited supply; few producers; • Users long-term relationship, supplier’s qualifications, • bulky and low unit value: • Influencers experience and reputation critical short distribution channels • Gatekeepers • price not important/indicator of quality Farm • Buyers • tailored: personal selling important • few producers; seasonal: long distribution • Deciders • purchased by executives channels; • standardised: branding not important, • little promotion Component Materials and Parts Straight rebuy • Modified rebuy • high volume: sold directly; • New–task buying • steady and reliable supply important with JIT; • web auctions important Installations Recognition of a Search for information Evaluation and Purchase Performance • few potential customers; problem or need about products selection of suppliers decision evaluation • large average sale; and suppliers and • tailored: personal selling and system feedback design service important; • Derived demand • Value analysis • Vendor analysis • Purchasing contract: • sold directly • Requirement planning • Make-or-buy decisions Unethical practices - Long-term contract Accessories • Determining product • Information about potential -Reciprociity - Spot market contracts • disomogeneous category: specifications suppliers -Bribes or auctions no unique marketing strategy -Alliances and Operating Supplies partnerships • small quantity-purchases: • JIT purchasing long distribution channels; arrangements • price important; • little brand loyalty
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Module 8 MEASURING MARKET OPPORTUNITIES: FORECASTING AND MARKET RESEARCH FORECASTING Definition: design, Market knowledge collection, analysis systems: and reporting of • Internal records research to gather • Mktg databases Object: Approaches: Cautios & Caveats data related to a • Competitive particular market intelligence (CI) • Market potential • Top-down • Eplicit assumptions challenge or situation • Client contact mgmt • Penetrated • Bottom-up: • Multiple methods market - market segments •Anchoring bias • Sales forecast - product lines • Capacity constraints as forecast MARKET RESEARCH Methods • Influence of incentive pay • Implicit assumptions Data sources/ of awareness and Problem/ Types od data/ Design distribution coverage objectives Approaches research Collect data Problem: Data sources: Data collection method Problem: unclear • Primary • Observation Collector bias Quantitative Observation- Based Surveys objectives • Secondary • Survey 1. statistical methods Based on existing • buyers’ intention (cheaper and • Experiment (based on past history data (better if faster) Contact method: • buyers’current Analyse data - used for established secondary sources behaviour Types of data: • Face-to-face firms/products) are available)-used • Quantitative • Mail • salesforce • Qualitative • Telephoone 2. conjont analysis for existing products opinion (used for new Approaches: • Fax Report results products forecast) • Quantitative: • E-mail - questionnaires • Internet Judgement or Market Tests Mathematical • Qualitative (often Design the sampling plan Analogy conducted first): • population Intution Used for new • Experimental l(in • Chain ratio - focus groups • sample size products when research laboratories) calculation - interviews • method other methods • Live test (with real • Use of indices - probability or random are N/A advertising & promotion (BPI, CDI, BDI) - non-probability or & distribution in stores) convenience
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Module 9 MARKET SEGMENTATION AND TARGET MARKETING MARKET SEGMENTATION process by which a market is divided into distinct customer subsets of MARKET TARGETING people with similar needs and characteristics that lead them to respond in similar ways to a particular product offering and strategic marketing which segment to target based on programme. evaluation of relative attractiveness of each segment, the benefits sought and Objectives: Criteria or descriptors Process the firm's relative strengths. 1. Identify a homogeneous 1. Demographic 1. Choose criteria to measure segment that differs from others Consumer markets attractiveness and competitive 2. Specifcy criteria that define • age; sex; income position Strategies: segment • occupation; education Attractiveness 1. Mass 3. Determine the size and market • race/ethnicity • Customer needs and behaviour • Differentiation potential of each segment Industrial markets • Market or market segment size and • Undifferentiated • macrosegmentation (caracteristics of growth rate 2. Niche buyers’ organisations) • Macro trends (demographic, 3. Growth • microsegmentation (caracteristics of sociocultural, economic, individuals) political/legal, techonolgical, physical) 2. Geographic Competitive position 3. Geodemographic • Opportunities • demographic + geographic Global markets • Firm and competitor capabilities and 4. Behavioral Factors resources Consumer needs • Attractiveness of target industry • benefit sought (Porter’s 5 forces, capacity, driving Country as a Inter-country • choice criteria forces) segment segmentation Product-related behaviour 2. Weight Each Factor • product usage 3. Assess the current position of • loyalty each target market on each factor • purchase predisposition (market-attractiveness/competitive- • purchase influence posiiton matrix) General behaviour 4. Project Future Position for Each • life styles (VALS2) Segment (changes in market • social class attractiveness and/or competitive Organisational or firm bahaviour position) • purchasing structure (centralised/not) 5. Choose Segments to Target, • buying situation (straight, modified, new) Allocate Resources
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Module 9 MARKET SEGMENTATION AND TARGET MARKETING Market- attractiveness/ competitive position matrix - Implications of alternative positions within the market- attractiveness/ competitive position matrix for target market selection, strategic objectives and resource allocation
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Module 10 POSITIONING Definition: designing product offerings and developing strategic marketing programmes that collectively create an enduring competitive advantage. Refers to: • the place a product or brand occupies in customers' minds relative to their needs and competing products or Porter’s strategies: brands (customer need considerations) • the marketer's decision making intended to create such 1. Overall cost leadership a position (competitive considerations) 2. Differentiation 3. Focus Physical POSITIONING Perceptual • Technical orientation. • Consumer orientation. • Physical characteristics. • Perceptual attributes. • Objective measures. • Perceptual measures. • Data readily available. • Needs marketing research. • Physical brand properties. • Perceptual brand positions and positioning intensities. • Large number of dimensions. • Limited number of dimensions. Dimensions • Represents impact of product specifications and • Represents impact of product specifications and price. • Direct R&D implications. communication. o Simple physically-based • R&D implications need to be interpreted. attributes: directly related to a single physicall dimension such as price, quality, power, or size. Complex physically-based attributes. Ex: speed of a computer system, roominess of a car, and a product's or service's being user friendly. Essentially abstract attributes: influenced by physical characteristics, but not related to them in any direct way. Ex.: sexiness of a perfume, quality of a French wine, and prestige of a car.
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Module 11 PRODUCT DECISIONS • Convenience • Convenience • Shopping Services • Shopping • Speciality Products • Speciality • Unsought • Unsought Characteristics Quality Marketing mix Quality Branding Packaging Servicing Intangibles Provides differentiation 4Ps plus: Provides differentiation Dimensions • people (the customer Consumer’s benefits • protects • delivery care) Dimensions • simplifies shopping • facilites use reliability • tangible • reliability • physical evidence (the • Performance • facilitates info process • promotes • warranty environment, literature, • Reliability • confirms right choice • provides info • repair & • responsiveness • assurance packaging, etc.) • Features • helps ensure quality • increases safety maintenance • processes (from enquiry • Conformance • may statisfystatus needs • important in the • complaint/ • empathy and booking systems to • Durablity Seller’s benefits mktg of services Inquiry after-sales service) • Serviceablity Improves: handling •Aeasthetics • mktg programmes • credit Marketing-strategy implications of classification fit & finish) effectiveness • training Examples Strategy elements stressed • Perceived Quality • brand loyalty • claim Maximum distribution (product (brand name) • profit from competitive settlement Convenience Toothpaste, soap, razor blades, availability), consumer advertising advantage • fast price goods magazines, many packaged food (awareness and brand recognition), • channel relationship quotation & services products, haircuts merchandising (in store displays) - Alllows brand extension • fast order processing Available in limited number of stores, Shopping Colour televisions, cars, major personal selling important, limited to Manufacturer Retailer and distributor appliances, homes, car repair, extensive advertising, seller often brands brands goods - & services family doctors offers financing, warranties and post purchase service Individual Family Cobranding Global Limited distribution, high price, • lowers risk • lower costs • For a new segment Speciality Musical instruments, stereo goods equipment, some brands of men's strong advertising to promote brand • mutliple brand • association • For an existing uniquenessand where available segment if it adds & services clothing, college consultants entries within (pos./neg.) locally the same • easier product value Unsought Certain medical services, personal Strong promotion, including personal product class • modifications goods liability insurance, encyclopaedias selling (pos./neg.) & services
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Module 11 PRODUCT DECISIONS PRODUCT LINES DECISIONS Short-line/Long-line Line stretching Brand extension Product systems • Extent to which the • lenghten the product • use established brand • sell package (products + market can be line for another product service segmented • add items with different class • require compatibility • How the company wants size/price/quality • association (pos./neg.) between system to position itself • serve new market components • What stage of the market segments • scale economies evolution is Tyoes: • close buyer-seller - early stage: short relationship • upward - in the L/T: long • downward • two-way stretches Line filling Line extension Dropping products • lenghten the product • introduce new products, • eliminate weak products line • higher cost based on their • add items • extended technological contribution to profits • add/drop features base • tap new market Objectives: segments • satisfy more customers • increase sales & profits • full-line supplier to dealers • ward off competitors
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Module 11 PRODUCT DECISIONS Reasons: Causes of failure: New products: • changes in technology Introduction of me-too products • New to the world • macroenvironment factors • competition Causes of success: • New to the firm • Product-line extensions • customers and suppliers • Product linked to an attractive market • Product improvements • Strong market capabilities NEW PRODUCT DEVELOPMENT Ideas Generation and Initial Screen Second screen Decision Post-development Pre-coomercialisation Post-launch Strategic fit: Sources review decision business analysis review • Does the idea align • company’s staff with the company’s • R&D people mission? • salesforce • Does it takes • PM advantage of or • mktg researchers Testing and sttrenghten its • distributors competencies? • competitors validation •Are the resources Field test markets available? • Maktg plan for the product implemented in a small Preliminary assessment Detailed Development geographic area Full production & investigation • Opportunity to evaluate market launch • product design • Customer, market and • product features results Commercialisation strategies: • Idea technical and market feasibility competitive analysis • price • Slow and expensive • move directly to a roll out • Primary research • channels Laboratory test markets region by region or nationally • Secondary research • launch in the product in 10% • brand name • Steps • packaging - awareness of country, check results and • communication - trial then roll out globally - repeat buying • Low cost and confidentiality • Suitable fot small range of products • No or little info about distribution
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Module 12 PRICING DECISIONS • SBU and mktg strategies • Company’s SW • Target market characteristics • Environmental influences: • Product characteristics PRICE-SETTING DECISION PROCESS - Economic trends • Competitor characteristics - Legal restrictions Estimate Demand & + + = Strategic Objectives Perceived value Estimate Costs Competitive Analysis Price setting Methods • Penetration Determine the ceiling of Determine the floor of • Reverse engineering to Cost oriented • Differentiation the range of feasible prices the range of feasible prices estimate competitors’ • cost plus or mark-up • Maximum profit Demand curve: Cost categories (FC, VC, TC) product costs • rate of return - skimming • negative slope (typical) • No of employees, no and • break-even - harvesting Measuring costs • positive slope • full size of outlets, efficiency Competition oriented • Survivor Demand sensitivity ratios to estimate • going rate or • Social • direct • perception/preference + •ABC competitors’ service competitive parity • awareness and attitudes costs • discount/premium Cost and volume relationships • Market share towars alternatives + • economies of scale Customer orientated • ability to pay = • experience curve • perceived value Perceived value - industrial engineering Price elaticity of demand - overall estimates • elastic - decomposiition • inelastic - compositional • unitary - importance ratings esp. for • value-in-use (reference Demand estimation industrial products and • mktg research (lab or test product + additional benefits consumer durables & cost savings) market) • consumer survey esp. for • psychological Influences • regression analysis consumer non durables - customary pricing • in-store experiments - price lining • multiple tests - psychological pricing - odd pricing - promotional pricing
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Module 13 DISTRIBUTION CHANNEL DECISIONS Rationale for mktg channels: Objectives: • Product availability Availability of human & Trade-off between costs Business’s competitive • Meeting customer financial resources and benefits: strategy service requirements CHANNEL DESIGN • Functional efficiency • Promotional effort • Scale efficiency • Market info Environmental factors • Transactional efficiency 3Ps + • Cost effectiveness Product characteristics (ex. technological developments) • Flexibility Channel design decision: Institutions: Channel design alternatives: Which objective is most important? • Merchant Wholesales Promotional effort Availability and Cost effectiveness • Agent Middlemen: Market info & postsale customer service - manufactures’ agents Services: Make-or-buy decision or reps Global: These activities must requirements Company salesforce Usually short: direct Market entry strategies be controlled by: Consumer goods and are more effcient at - sales agents from the creator or - brokers • exporting (direct(indirect) • detailed legal contracts Services high volume levels performer of service • contractual (licensing, • Strategies of retail because of economies - e-hubs to the end user incentive • Retailers franchising, contract • vertically integrated distribution • intensive of scale and because -type of merchandise manufacturing, channels • exclusive agents’commissions -broad/narrow range turnkey contruction • selective are larger - pricing policies contract, coproduction, The more important the Supply chain mgmt: - nature of premises countertrade) availability the more likely Improves customer service - method of operation • direct investment (JV, the use of wholesalers/ levels while simultaneously (lowmargin/high turnover- sole ownership) agents reducing costs high margin/low turnover) Channel alternatives Industrial goods and • Nonstore retaiing (ex. • domestic middlemen Services Flexibility Web-sites) • foreign middlemen The more important the • Facilitating Agents Channels involving availability and customer middlemen are more service the more likely flexible than veritically Consumer goods Industrial goods the use of wholesalers/ integrated systems agents Internet: • always improves the Multichannel distribution search aspect of • Dual (two-channel)(to reach availability different target segments) • improves the acquisition • Hybrid (the members perform aspect of availability only complementary functions for the if the product can be customer segment) delivered in digital form
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