Presentation on theme: "PRINCIPLES OF MARKETING BY DR GERALD MUNYORO"— Presentation transcript:
1PRINCIPLES OF MARKETING BY DR GERALD MUNYORO CHINHOYI UNIVERSITY OF TECHNOLOGY SCHOOL OF BUSINESS SCIENCES AND MANAGEMENT DEPARTMENT OF INTERNATIONAL MARKETINGPRINCIPLES OF MARKETINGBYDR GERALD MUNYORO
2COURSE OUTLINE Introduction The significance of information and research in marketingConsumer behaviourMarket segmentationProductPricePlacePromotion
3Definitions of Marketing ‘Marketing is the management process that identifies, anticipates and satisfies customer requirements profitably’The Chartered Institute of MarketingMarketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at largeAmerican Marketing Association
4Definitions of Marketing ‘Marketing is a social and managerial process by which individuals and groups obtain what they want and need through creating, offering and exchanging products of value with others’ Kotler et al (2010)‘The right product, in the right place, at the right time, and at the right price’Adcock et al (2001)
5The Marketing concept Choosing and targeting appropriate customers Positioning your offeringInteracting with those customersControlling the marketing effortContinuity of performance
6The Marketing conceptCustomer focus, profits, and integration of organizational efforts.Customer orientationSatisfying its customers at a profit…Determining the needs and wants of target markets…Discovering the wants of a target audience and then creating the goods and services to satisfy them
7The Marketing conceptAccording to Levitt (1960), "the organization must learn to think of itself not as producing goods or services but as buying customers, as doing the things that will make people want to do business with it."Since its publication, corporate leaders have moved from product-orientation toward market-orientation.Firms overemphasize the satisfaction of customer wants and needs and as a result ignore competition.
9Marketing management process Analysis/Audit - where are we now?Objectives - where do we want to be?Strategies - which way is best?Tactics - how do we get there?(Implementation - Getting there!)Control - Ensuring arrival
10Marketing planning Systematic futuristic thinking by management better co-ordination of a company’s effortsdevelopment of performance standards for controlsharpening of objectives and policiesbetter prepare for sudden developments
11Building relationships with consumers Firms that embrace the marketing concept seek ways to build a long-term relationship with each customer. This is an important idea. Even the most innovative firm faces competition sooner or later. And trying to get new customers by taking them away from a competitor is usually more costly than retaining current customers by really satisfying their needs. Satisfied customers buy again and again. This makes their buying job easier, and it also increases the selling firm’s profits. Building mutually beneficial relationships with customers requires that everyone in an organization work together to provide customer value before and after each purchase. If there is a problem with a customer’s bill, the accounting people can’t just leave it to the salesperson to straighten it out or, even worse, act like it’s “the customer’s problem.” Rather, it’s the firm’s problem.
12Marketing’s role in non profit organisations The marketing concept is as important for nonprofit organizations as it is for business firms. However, prior to 1970 few people in nonprofits paid attention to the role of marketing. Now marketing is widely recognized as applicable to all sorts of public and private nonprofit organizations Ñranging from government agencies, health care organizations, educational institutions, and religious groups to charities, political parties, and fine arts organizations. Some nonprofit organizations operate just like a business. For example, there may be no practical difference between thegift shop at a museum and a for-profit shop located across the street. On the other hand, some nonprofits differ from business firms in a variety of ways. As with any business firm, a nonprofit organization needs resources and support to survive and achieve its objectives. Yet support often does not come directly from those who receive the benefits the organization produces.
13Marketing ResearchMarketing research is the systematic gathering, recording and analyzing of data about problems relating to the marketing of goods and services.A systematic inquiry whose objective is to provide information to solve managerial problems.Marketing research is the function that links the consumer, customer, and public to the marketer through information--information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process. Marketing research specifies the information required to address these issues, designs the method for collecting information, manages and implements the data collection process, analyzes the results, and communicates the findings and their implications.American Marketing Association
14Marketing ResearchMarket research will give you the data you need to identify and reach your target market at a price customers are willing to pay.Research provides you with the knowledge and skills needed for the fast-paced decision-making environment.Applied ResearchEmphasis on solving practical (specific) problemsIt could be exploring opportunities alsoRectifying an inventory system that is resulting into lost salesOpportunity to increase stockholder wealth by acquiring another firmPure Research/Basic ResearchEmphasis on problem solving but of a general nature (not specific)Effect of coupon as against rebate to stimulate demand
15Consumer behaviourThose activities directly involved in obtaining , consuming and disposing of products and services, including the decision processes that precede and follow these actions‘You cannot take the consumer for granted any more’Therefore a sound understanding of consumer behaviour is essential for the long run success of any marketing programLogical PositivismUnderstanding and predicting consumer behaviourCause and effect relationships that govern persuasion and/or educationPost Modern – to understand consumption behaviour without any attempt to influence it
16Consumer behaviour“MEET THE NEW CONSUMER and smile when you do because she is your boss. It may not be the person you thought you knew. Instead of choosing from what you have to offer, she tells you what she wants. You figure it out how to give it to her.” -Fortune EditorA new product must satisfy consumer needs, not the needs and expectations of managementUnderstanding and adapting to consumer motivation and behaviour is not an option – it becomes a necessity for competitive survival
17Consumer behaviourConsumer sovereignty presents a formidable challenge but skilful marketing can affect both motivation and behaviour if the product or service offered is designed to meet consumer needs and expectations.A sales success occurs because demand either exists already or is latent and awaiting activation by the right marketing offering.
18Consumer behaviour Dominant forces shaping Consumer Research Factors that move an economy from Production-driven to Market-drivenLevel of sophistication with which human behaviour is understood in psychology and other behavioural sciences
19Consumer behaviour Motivational Research It seeks to learn what motivates people in making choices. The techniques are such as to delve into the conscious, subconscious and the unconscious.‘women don’t buy cosmetics, they buy hope.’‘women bake cakes out of the unconscious desire to give birth’
20Consumer behaviourThe advice to footwear salesmen should be ‘Don’t sell shoes – sell lovely feet’Marketers must contend with small changing segments of highly selective buyers intent on receiving genuine value at the lowest priceAll managers must become astute analysts of Consumer motivation and BehaviourThree foundations for marketing decisionsExperienceIntuitionResearch
21Consumer behaviour Enhancing Consumer Value-added Marketers have to constantly innovate after understanding their consumers to strip out costs permanently by focusing on what adds value for the customer and eliminating what doesn’t.Individualised MarketingA very personal form of marketing that recognises, acknowledges, appreciates and serves individuals who become or are known to the marketer.Data – based marketing; DMCustomized marketing
22Consumer behaviourVariables involved in understanding consumer behaviourStimulus – ads, products, hungerpangsResponse – physical/mental reaction to the stimulusIntervening variables – mood, knowledge, attitude, values, situations, etc
23Overall Model of Consumer Behaviour External InfluencesDecision ProcessesCultureSubcultureDemographicsProblem RecognitionSocial statusReference groupsSelf-Concept&LearningInformation SearchFamilyMarketing ActivitiesAlt Eval & SelectionInternal InfluencesOutlet select & PurchasePerceptionLearningMemoryMotivesPostpurchaseProcessesPersonalityEmotionsAttitudes
24Marketing Environment A company’s marketing environment consists of the actors and forces outside marketing that affect marketing management’s ability to develop and maintain successful relationships with its target customers. 1). Being successful means being able to adapt the marketing mix to trends and changes this environment. 2). Changes in the marketing environment are often quick and unpredictable. 3). The marketing environment offers both opportunities and threats. 4). The company must use its marketing research and marketing intelligence systems to monitor the changing environment. 5). Systematic environmental scanning helps marketers to revise and adapt marketing strategies to meet new challenges and opportunities in the marketplace.
25Marketing Environment Includes:Micro environment: actors close to the company that affect its ability to serve its customers.Macro environment: larger societal forces that affect the microenvironment.Considered to be beyond the control of the organization.
26Marketing Environment 1. Micro EnvironmentalThe microenvironment consists of five components.The first is the organization’s internal environment—its several departments and management levels—as it affects marketing management's decision making.The second component includes the marketing channel firms that cooperate to create value: the suppliers and marketing intermediaries (middlemen, physical distribution firms, marketing-service agencies, financial intermediaries).The third component consists of the five types of markets in which the organization can sell: the consumer, producer, reseller, government, and international markets.
27Marketing Environment The fourth component consists of the competitors facing the organization.The fifth component consists of all the publics that have an actual or potential interest in or impact on the organization’s ability to achieve its objectives: financial, media, government, citizen action, and local, general, and internal publics.- So the microenvironment consists of six forces close to the company that affect its ability to serve its customers:a. The company itself (including departments).1). Top management is responsible for setting the company’s mission, objectives, broad strategies, and policies. 2). Marketing managers must make decisions within the parameters established by top management. 3). Marketing managers must also work closely with other company departments. Areas such as finance, R & D, purchasing, manufacturing, and accounting all produce better results when aligned by common objectives and goals. 4). All departments must “think consumer” if the firm is to be successful. The goal is to provide superior customer value and satisfaction..
28Marketing Environment b. Suppliers.Suppliers are firms and individuals that provide the resources needed by the company and its competitors to produce goods and services. They are an important link in the company’s overall customer “value delivery system.”1). One consideration is to watch supply availability (such as supply shortages).2). Another point of concern is the monitoring of price trends of key inputs. Rising supply costs must be carefully monitored.
29Marketing Environment c. Marketing channel firms (intermediaries).Marketing intermediaries are firms that help the company to promote, sell, and distribute its goods to final buyers.1). Resellersare distribution channel firms that help the company find customers or make sales to them.2). These include wholesalers and retailers who buy and resell merchandise.3). Resellers often perform important functions more cheaply than the company can perform itself. However, seeking and working with resellers is not easy because of the power that some demand and use.Physical distribution firmshelp the company to stock and move goods from their points of origin to their destinations. Examples would be warehouses (that store and protect goods before they move to the next destination).Marketing service agencies(such as marketing research firms, advertising agencies, media firms, etc.) help the company target and promote its products.Financial intermediaries(such as banks, credit companies, insurance companies, etc.) help finance transactions and insure against risks.
30Marketing Environment d. Customer markets'. Competitors'. Publics.The company must study its customer markets closely since each market has its own special characteristics. These markets normally include:1). Consumer markets(individuals and households that buy goods and services for personal consumption).2). Business markets(buy goods and services for further processing or for use in their production process).3). Reseller markets(buy goods and services in order to resell them at a profit).4). Government markets(agencies that buy goods and services in order to produce public services or transfer them to those that need them).5). International markets(buyers of all types in foreign countries).
31Marketing Environment e. Competitors.Every company faces a wide range of competitors. A company must secure a strategic advantage over competitors by positioning their offerings to be successful in the marketplace. No single competitive strategy is best for all companies.
32Marketing Environment f. PublicsA public is any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives. A company should prepare a marketing plan for all of their major publics as well as their customer markets. Generally, publics can be identified as being:1). Financial publics--influence the company’s ability to obtain funds.2). Media publics--carry news, features, and editorial opinion.3). Government publics--take developments into account.4). Citizen-action publics--a company’s decisions are often questioned by consumer organizations.5). Local publics--includes neighbourhood residents and community organizations.6). General publics--a company must be concerned about the general public’s attitude toward its products and services.7). Internal publics--workers, managers, volunteers, and the board of directors.
33Marketing Environment 2. MACRO ENVIRONMENTThe Company’s Macro environmentThe company and all of the other actors operate in a larger macro environment of forces that shape opportunities and pose threats to the company.The company and all of the other actors operate in a larger macro environment of forces that’s have opportunities and pose threats to the company. There are six major forces (outlined below)in the company’s macro environment. There are six major forces (outlined below) in the company’s macro environment.a. Demographic.b. Economic.c. Natural.d. Technological.e. Political.f. Cultural.
34Marketing Environment a. Demographic EnvironmentDemographyis the study of human populations in terms of size, density, location, age, sex, race, occupation, and other statistics. It is of major interest to marketers because it involves people and people make up markets. Demographic trends are constantly changing. Some more interesting ones are.1). The world’s population (though not all countries) rate is growing at an explosive rate that will soon exceed food supply and ability to adequately service the population. The greatest danger is in the poorest countries where poverty contributes to the difficulties. Emerging markets such as China are receiving increased attention from global marketers.2). The most important trend is the changing age structure of the population. The population is aging because of a slowdown in the birth rate (in this country) and life expectancy is increasing.The baby boomersfollowing World War II have produced a huge “bulge” in our population's age distribution. The new prime market is the middle age group (in the future it will be the senior citizen group). There are many subdivisions of this group.a). Generation X--this group lies in the shadow of the boomers and lack obvious distinguishing characteristics. They are a very cynical group because of all the difficulties that have surrounded and impacted their group. b). Echo boomers(baby boom lets) are the large growing kid and teen market. This group is used to affluence on the part of their parents (as different from the Gen Xers). One distinguishing characteristic is their utter fluency and comfort with computer, digital, and Internet technology(sometimes called Net-Gens).
35Marketing Environment c). Generational marketing is possible, however, caution must be used to avoid generational alienation. Many in the modern family now “telecommute”--work at home or in a remote office and conduct their business using fax, cell phones, modem, or the Internet. In general, the population is becoming better educated. The work force is becoming more white-collar. Products such as books and education services appeal to groups following this trend. Technical skills (such as in computers) will be a must in the future. The final demographic trend is the increasing ethnic and racial diversity of the population. Diversity is a force that must be recognized in the next decade. However, companies must recognize that diversity goes beyond ethnic heritage. One of the important markets of the future are that disabled people (a market larger any of our ethnic minority groups).
36Marketing Environment b. Economic EnvironmentThe economic environment -includes those factors that affect consumer purchasing power and spending patterns. Major economic trends in the United States include:1). Personal consumption (along with personal debt) has gone up (1980s) and the early 1990s brought recession that has caused adjustments both personally and corporately in this country. Today, consumers are more careful shoppers.2). Value marketing(trying to offer the consumer greater value for their dollar) is a very serious strategy in the 1990s. Real income is on the rise again but is being carefully guarded by a value-conscious consumer.3). Income distributionis still very skewed in the U. S. and all classes have not shared in prosperity. In addition, spending patterns show that food, housing, and transportation still account for the majority of consumer dollars. It is also of note that distribution of income has created a “two-tiered market” where there are those that are affluent and less affluent. Marketers must carefully monitor economic changes so they will be able to prosper with the trend, not suffer from it.
37Marketing Environment c. Natural EnvironmentThe natural environment -involves natural resources that are needed as inputs by marketers or that are affected by marketing activities. During the past two decades environmental concerns have steadily grown. Some trend analysts labelled the specific areas of concern were:1). Shortages of raw materials.Staples such as air, water, and wood products have been seriously damaged and non-renewable such as oil, coal, and various minerals have been seriously depleted during industrial expansion.2). Increased pollutionis a worldwide problem. Industrial damage to the environment is very serious. Far-sighted companies are becoming “environmentally friendly” and are producing environmentally safe and recyclable or biodegradable goods. The public response to these companies is encouraging. However, lack of adequate funding, especially in third world countries, is a major barrier.
38Marketing Environment 3). Government interventionIn natural resource management has caused environmental concerns to be more practical and necessary in business and industry. Leadership, not punishment, seems to be the best policy for long-term results. Instead of opposing regulation, marketers should help develop solutions to the material and energy problems facing the world.4). Environmentally sustainable strategies.The so-called green movement has encouraged or even demanded that firms produce strategies that are not only environmentally friendly but are also environmentally proactive. Firms are beginning to recognize the link between a healthy economy and a healthy environment.
39Marketing Environment d. Technological EnvironmentThe technological environment -includes forces that create new technologies, creating new product and market opportunities.1). Technology is perhaps the most dramatic force shaping our destiny.2). New technologies create new markets and opportunities.3). The following trends are worth watchinga). Faster pace of technological change. Products are being technologically outdated at a rapid pace.b). There seems to be almost unlimited opportunities being developed daily. Consider the expanding fields of health care, the space shuttle, robotics, and biogenetic industries.c). The challenge is not only technical but also commercial--to make practical, affordable versions of products.d). Increased regulation. Marketers should be aware of the regulations concerning product safety, individual privacy, and other areas that affect technological changes. They must also be alert to any possible negative aspects of an innovation that might harm users or arouse opposition.
40Marketing Environment e. Political EnvironmentThe political environmentincludes laws, government agencies, and pressure groups that influence and limit various organizations and individuals in a given society. Various forms of legislation regulate business.1). Governments develop public policy to guide commerce--sets of laws and regulations limiting business for the good of society as a whole.2). Almost every marketing activity is subject to a wide range of laws and regulations. Some trends in the political environment include:- Increasing legislation to:a). Protect companies from each other.b). Protecting consumers from unfair business practices.c). Protecting interests of society against unrestrained business behaviour.
41Marketing Environment -Changing government agency enforcement. New laws and their enforcement will continue or increase. 3). Increased emphasis on ethics and socially responsible actions. Socially responsible firms actively seek out ways to protect the long-run interests of their consumers and the environment. a). Enlightened companies encourage their managers to look beyond regulation and “do the right thing.” b). Recent scandals have increased concern about ethics and social responsibility. c). The boom in e-commerce and Internet marketing has created a new set of social and ethical issues. Concerns are Privacy, Security, Access by vulnerable or unauthorized groups.
42Marketing Environment f. Cultural EnvironmentThe cultural environmentis made up of institutions and other forces that affect society’s basic values, perceptions, preferences, and behaviours. Certain cultural characteristics can affect marketing decision-making. Among the most dynamic cultural characteristics are:1). Persistence of cultural values. People’s core beliefs and values have a high degree of persistence.Core beliefs and values are passed on from parents to children and are reinforced by schools, churches, business, and government. Secondary beliefs and values are more open to change.2). Shifts in secondary cultural values. Since secondary cultural values and beliefs are open to change, marketers want to spot them and be able to capitalize on the change potential. Society’s major cultural views are expressed in:a). People’s views of themselves. People vary in their emphasis on serving themselves versus serving others. In the 1980s, personal ambition and materialism increased dramatically, with significant implications for marketing. The leisure industry was a chief beneficiary.b). People’s views of others. Observers have noted a shift from a “me-society” to a “we-society.” Consumers are spending more on products and services that will improve their lives rather than their image.
43Marketing Environment c). People’s views of organizations.People are willing to work for large organizations but expect them to become increasingly socially responsible. Many companies are linking themselves to worthwhile causes. Honesty in appeals is a must.d). People’s views of society.This orientation influences consumption patterns. “Buy American” versus buying abroad is an issue that will continue into the next decade.e). People’s view of nature.There is a growing trend toward people’s feeling of mastery over nature through technology and the belief that nature is bountiful. However, nature is finite. Love of nature and sports associated with nature are expected to be significant trends in the next several years.f). People’s views of the universe.Studies of the origin of man, religion, and thought-provoking ad campaigns are on the rise. Currently, Americans are on a spiritual journey. This will probably take the form of “spiritual individualism.”
44MARKETING MIXThe term "marketing-mix," was first coined by Neil Borden, the president of the American Marketing Association in It is still used today to make important decisions that lead to the execution of a marketing plan. The various approaches that are used have evolved over time, especially with the increased use of technology.Usually referring to E. Jerome McCarthy's 4 P classification for developing an effective marketing strategy, which encompasses: product, price, place (distribution) and promotion. When it's a consumer-centric marketing mix, it has been extended to include three more Ps: people, process and physical evidence, and three Cs: cost, consumer and competitor. Depending on the industry and the target of the marketing plan, marketing managers will take various approaches to each of the four Ps.Combination of marketing elements used in the sale of a particular product. The marketing elements center around four distinct functions, sometimes called the Four Ps: product, price, place (of distribution), and promotion. All these functions are considered in planning a marketing strategy, and any one may be enhanced, deducted, or changed in some degree in order to create the strategy necessary to efficiently and effectively sell a product.
45PRODUCT Defining “Product”-Anything that you can “sell” Product Anything offered to a market for attention, acquisition, use, or consumption that might satisfy a need or want.ServiceAny activity or benefit that one party can offer to another that is essentially intangible and does not result in ownership of anything.
46What is a product? Products, Services, and Experiences Market offerings, pure tangible goods, pure services, experiencesLevels of Product and ServicesCore benefit, actual product, and augmented productProduct and Service ClassificationsConsumer productsIndustrial products
48Types of Consumer Products ConvenienceShoppingSpecialtyUnsought
49ConvenienceFrequent purchases bought with minimal buying effort and little comparison shoppingLow priceWidespread distributionMass promotion by producer
50ShoppingLess frequent purchases requiring more shopping effort and price, quality, and style comparisons.Higher than convenience good pricingSelective distribution in fewer outletsAdvertising and personal selling by producer and reseller
51SpecialityStrong brand preference and loyalty, requires special purchase effort, little brand comparisons, and low price sensitivityHigh priceExclusive distributionCarefully targeted promotion by producers and resellers
52UnsoughtLittle product awareness and knowledge (or if aware, sometimes negative interest)Pricing variesDistribution variesAggressive advertising and personal selling by producers and resellers
55Industrial goods Materials and parts Farm products Natural products Component materialsComponent partsCapital itemsInstallationsEquipmentSupplies and business servicesMaintenance and repairAdvisory services
56Industrial goodsInstallations - major capital items, such as new factories, heavy equipment and machinery, and custom-made equipment.Accessory equipment - includes less expensive and shorter-lived capital items than installations and involves fewer decision makers.Component parts and materials - become part of a final product.Raw materials - farm and natural products used in producing other final products.Supplies - expense items used in a firm’s daily operation that do not become part of the final product.
57Product Classifications Durability and tangibilityNondurableTangibleRapidly consumedExample: MilkDurableLasts a long timeExample: OvenServicesIntangibleExample: Tax preparation
58Product mix dimensions Width: number of product linesLength: total number of items in mixDepth: number of product variantsConsistency: degree to which product lines are related
59New Product Development Expensive, time-consuming, and risky.Only 1/3 of new products become success stories.Each step requires a “go or no-go” decision.
61New Product Development Stages Stage 1: Generating ideas for new offeringsStage 2: Idea ScreeningStage 3: Concept development and business analysis phaseStage 4: Product developmentStage 5: Test marketingStage 6: Commercialization
62Causes of New Product Failures Overestimation of Market SizeProduct Design ProblemsProduct Incorrectly Positioned, Priced or AdvertisedCosts of Product DevelopmentCompetitive ActionsTo create successful new products, the company must:understand it’s customers, markets and competitorsdevelop products that deliver superior value to customers.
63Generating ideas for new offerings Systematic Search for New Product IdeasInternal sourcesCustomersCompetitorsDistributorsSuppliers
64Screening Process to spot good ideas and drop poor ones Criteria Market SizeProduct PriceDevelopment Time & CostsManufacturing CostsRate of Return
65Concept development and business analysis phase 1) Develop Product Ideas into Alternative Product Concepts.2) Concept Testing - Test the Product Concepts with Groups of Target Customers.3) Choose the Best One
66Product development Business Analysis -Review of Product Sales, Costs, and Profits Projections to See ifThey Meet Company ObjectivesIf Yes, Move to Product Development
67Test marketing Standard Test Market Full marketing campaign in a small number of representative cities.Controlled Test MarketA few stores that have agreed to carry new products for a fee.Simulated Test MarketTest in a simulated shopping environment to a sample of consumers.
68Commercialization LAUNCHING NEW PRODUCTS IN THE MARKET -Unleashing the Power of Branding through Trademarks
69The Stages of the Product Life Cycle DevelopmentIntroduction/LaunchGrowthMaturitySaturationDeclineWithdrawal
71The Product Development Stage Initial Ideas – possibly large numberMay come from any of the following –Market research – identifies gaps in the marketMonitoring competitorsPlanned research and development (R&D)Luck or intuition – stumble across ideas?Creative thinking – inventions, hunches?Futures thinking – what will people be using/wanting/needing 5,10,20 years hence?
72Product Development Stage New ideas/possible inventionsMarket analysis – is it wanted? Can it be produced at a profit? Who is it likely to be aimed at?Product Development and refinementTest Marketing – possibly local/regionalAnalysis of test marketing results and amendment of product/production processPreparations for launch – publicity, marketing campaign
73Introduction Stage Full-Scale Launch of New Products Advertising and promotion campaignsTarget campaign at specific audience?Monitor initial salesMaximise publicityHigh cost/low salesLength of time – type of productHigh failure ratesLittle competitionFrequent product modificationLimited distributionHigh marketing and production costsNegative profitsPromotion focuses on awareness and informationIntensive personal selling to channels
74Growth Offered in more sizes, flavors, options Increased consumer awarenessRevenues increase-Initial healthy profitsCosts - fixed costs/variable costs, profits may be madeMonitor market – competitors reaction?Increasing rate of sales-Sales riseEntrance of competitorsMarket consolidationPromotion emphasizes brand adsGoal is wider distributionPrices normally fallDevelopment costs are recovered
75Maturity Many consumer products are in Maturity Stage Sales reach peakDeclining sales growth -Prices and profits fallCost of supporting the product declinesRatio of revenue to cost highSales growth likely to be lowMarket share may be highCompetition likely to be greaterPrice elasticity of demand?Monitor market – changes/amendments/new strategies?Saturated marketsExtending product lineStylistic product changesHeavy promotions to dealers and consumersMarginal competitors drop outNiche marketers emerge
76Saturation New entrants likely to mean market is ‘flooded’ Necessity to develop new strategies becomes more pressing:Searching out new markets:Linking to changing fashionsSeeking new or exploiting market segmentsLinking to joint ventures – media/music, etc.Developing new usesFocus on adapting the productRe-packaging or formatImproving the standard or qualityDeveloping the product range
77Decline and Withdrawal Rate of decline depends on change in tastes or adoption of substitute productsProduct outlives/outgrows its usefulness/valueFashions changeTechnology changesSales decline -Long-run drop in salesLarge inventories of unsold itemsCost of supporting starts to rise too farElimination of all nonessential marketing expensesDecision to withdraw may be dependent on availability of new products and whether fashions/trends will come around again?
78MANAGING THE PRODUCT LIFE CYCLE Modifying the Product-Alter product quality-Enhance performance-Change appearanceModifying the Market-Finding New Users-Increase use-Create new use situations
79EXTENDING THE PRODUCT LIFE CYCLE Repositioning Reacting to a Competitor’s Position-never competehead onCatching a Rising Trend-baby aspirin is now low doseaspirin to reduce heart attacksChanging the Value OfferedTrading Up-add bells & whistles to raise priceTrading Down- remove bells & whistles to lower priceDownsizing-reduce contents but maintain price
81The Boston MatrixA means of analysing the product portfolio and informing decision making about possible marketing strategiesDeveloped by the Boston Consulting Group – a business strategy and marketing consultancy in 1968Links growth rate, market share and cash flow
82Classifies Products into four simple categories Stars – products in markets experiencing high growth rates with a high or increasing share of the market- Potential for high revenue growthCash Cows:High market shareLow growth markets – maturity stage of PLCLow cost supportHigh cash revenue – positive cash flows
83Classifies Products into four simple categories Dogs:Products in a low growth marketHave low or declining market share (decline stage of PLC)Associated with negative cash flowMay require large sums of money to supportIs your product starting to embarrass your company?
84Classifies Products into four simple categories Problem Child:Products having a low market share in a high growth marketNeed money spent to develop themMay produce negative cash flowPotential for the future?Problem children – worth spending good money on?
85Implications Dogs: Are they worth persevering with? How much are they costing?Could they be revived in some way?How much would it cost to continue to support such products?How much would it cost to remove from the market?
86Implications Problem Children: What are the chances of these products securing a hold in the market?How much will it cost to promote them to a stronger position?Is it worth it?
87Implications Stars: Huge potential May have been expensive to develop Worth spending money to promoteConsider the extent of their product life cycle in decision making
88Implications Cash Cows: Cheap to promote Generate large amounts of cash – use for further R&D?Costs of developing and promoting have largely goneNeed to monitor their performance – the long term?At the maturity stage of the PLC?
89Product Identification Branding and trademarks are keys to success in business and in the global marketThe AMA definition of a brand:“A name, term, sign, symbol, or design, or a combination of these, intended to identify the goods or services of one seller or group of sellers and to differentiate them from the competition.”
90What is BrandingBranding -- is the process by which the name or the identify of an owner, a company/enterprise or organization, is communicated.Branding allows a company to differentiate its products and services from the competition by creating a bond with its customers. It aims to create customer loyalty.This way, a company takes a position in the marketplace.
91What is BrandingBrand - name, term, sign, symbol, design, or some combination that identifies the products of one firm and differentiates them from competitors’ offerings.Brand name - part of the brand consisting of words or letters included in a name used to identify and distinguish the firm’s offerings from those of competitors.Trademark - brand that has been given legal protection granted solely to the brand’s owner.
92What is BrandingA way by which companies launch and sell goods & services.A brand name is sometimes made of a part or the totality of a trademark nameIt communicates the essence of a products or its line, including why it is great and how it is better than all competing products.It reflects in general a prestigious (aesthetic) image in order to attract more consumers.
93Brands can convey six levels of meaning AttributesBenefitsValuesCulturePersonalityUser
94Brand identity decisions include NameLogoColorsTaglineSymbolConsumer experiences create brand bonding, brand advertising does not.
95Brand CategoriesManufacturer’s brand - brand offered and promoted by a manufacturer. Examples: Tide, Jockey, Gatorade, Swatch, and Reebok.Private or store brand - brand that is not linked to the manufacturer but instead carries a wholesaler’s or retailer’s label. Examples: Sears’ DieHard batteries and Wal-Mart’s Ol’Roy dog food & Member’s Mark brandFamily branding strategy - a single brand name used for several related products. Examples: KitchenAid, Johnson & Johnson, Hewlett-Packard, and DoleIndividual branding strategy - giving each product within a line a different name. Examples: Procter & Gamble products Tide, Cheer, and Dash.
96Brand LoyaltyBrand recognition - consumer is aware of the brand but does not have a preference for it over other brands.Brand preference - consumer chooses one firm’s brand over a competitor’s.Brand insistence - consumer will seek out preferred brand and accept no substitute for it.Brand equity - added value that a respected and successful name gives to a product.Brand awareness - product is the first one that comes to mind when a product category is mentioned.
97Packages and LabelsImportant in product identification and play an important role in a firm’s overall product strategy.Choosing right package is especially important in international marketing.Must meet legal requirements of all countries in which product is sold.Universal Product Code - bar code read by optical scanner.
98SUCCESSFUL BRANDING Attracts / catches the consumers Marketers should attempt to create or facilitate awareness, acceptability, preference, and loyalty among consumers.Valuable and powerful brands enjoy high levels of brand loyalty.Attracts / catches the consumersDeveloping a brand is part of every strategic business planTarget what customers care about: articulate precise values and qualities that are relevant and of direct interestEmphasize features that are both important to consumer and quite differentiated from competitorsCommunicate constant innovating brand image at all levels of operationAaker identified five levels of customer attitudes toward brands:Will change brands, especially for price. No brand loyalty.Satisfied -- has no reason to change.Satisfied -- switching would incur costs.Values brand, sees it as a friend.Devoted to the brand.
99Brand Decions Key Challenges Advantages of branding To brand or not Brand sponsorBrand nameBrand strategyBrand repositioningAdvantages of brandingFacilitates order processingTrademark protectionAids in segmentationEnhances corporate imageBranded goods are desired by retailers and distributors
100Key Challenges Brand sponsor: Options include: Manufacturer (national) brandDistributor (reseller, store, house, private) brandLicensing the brand nameBrand name: Strong brand names:Suggest benefitsSuggest product qualitiesAre easy to say, recognize, and rememberAre distinctiveShould not carry poor meanings in other languages
101Key Challenges Brand strategy Varies by type of brand Functional brandsImage brandsExperiential brandsLine extensionsBrand extensionsMultibrandsNew brandsCo-branding
102Key Challenges Brand repositioning A brand report card can be used to audit a brand’s strengths and weaknesses.Changes in preferences or the presence of a new competitor may indicate a need for brand repositioning.
103Packaging and Labeling Packaging includes:The primary packageThe secondary packageThe shipping packageMany factors have influenced the increased use of packaging as a marketing tool.Developing an effective package:Determine the packaging conceptDetermine key package elementsTesting:Engineering testsVisual testsDealer testsConsumer tests
104Packaging and Labeling Labeling functions:Identifies the product or brandMay identify product gradeMay describe the productMay promote the productLegal restrictions impact packaging for many products.
105What is a Trademark?A BRAND NAME - A KIND OF VISIT CARD THAT PROMOTES THE IMAGE OF A COMPANY AND ITS RANGE OF GOODS & SERVICES.“A sign distinguishing goods or services produced or sold by one enterprise (from those of other enterprises)”.
106Types of Trademarks? Trade marks: to distinguish goods Service marks: to distinguish servicesCollective marks: to distinguish goods or services by members of an associationCertification marksWell-known marks: benefit from stronger protectionTradename (Brand name)