1. 1 www.studyMarketing.org

2. 2 Contents 1.Marketing Mix and Key Marketing Activities 2.Developing Market Segmentation 3.Product Planning and Development 4.Promotion Mix : Advertising, Publicity, Personal Selling and Sales Promotion 5.Distribution Planning and Pricing Strategy

3. 3 www.studyMarketing.org Marketing Mix and Market Segmentation

4. 4 www.studyMarketing.org There is only one valid definition of business purpose : to create a customer Peter Drucker

5. 5 www.studyMarketing.org Marketing Mix ProductPrice PlacePromotion Target Market

6. 6 www.studyMarketing.org Key Marketing Activities Consumer Analysis Product Planning Price Planning DistributionPlanning PromotionPlanning

7. 7 www.studyMarketing.org Key Marketing Activities Consumer Analysis Product Planning Evaluation of consumer characteristics, needs, and purchase processes Development and maintenance of products, product assortments, product positions, brands, packaging, options, and deletion of old products Price Planning Outlines price ranges and levels, pricing techniques purchase terms, price adjustments, and the use of price as an active or passive factor

8. 8 www.studyMarketing.org Key Marketing Activities DistributionPlanning Establishment of channel relations, physical distribution, inventory management, warehousing, transportation, allocation of goods, and wholesaling Promotion Planning Combination of advertising, publicity, personal selling, and sales promotion to drive sales revenue

9. 9 www.studyMarketing.org Product/Market Matrix Existing Products New Products Existing Markets New Markets Market Penetration Market Development Product Development Diversification

10. 10 www.studyMarketing.org Product/Market Matrix Achieve growth with existing products in current market Aim to increase market share Works when the market is growing or saturated Seek growth by targeting existing products to new market segments Effective when a local or regional business looks to wider its market New market segments are emerging due to changes in consumer life-style/demographics

11. 11 www.studyMarketing.org Product/Market Matrix The firms develops new products targeted to its existing market segments Effective when the firm has a core of strong brands The firm seeks growth by targeting its existing products to new market segments Diversification is utilized so that the firm does not become overly depend­ ent on one product line

12. 12 www.studyMarketing.org Market Segmentation The division of a market into different homogeneous groups of consumers Market Segment Should be: measurable accessible by communication and distribution channels different in its response to a marketing mix durable (not changing too quickly) substantial enough to be profitable

13. 13 www.studyMarketing.org Types of Market Segmentation Geographic Demographic Based on regional variables such as region, climate, population density, and population growth rate. Based on variables such as age, gender, ethnicity, education, occupation, income, and family status

14. 14 www.studyMarketing.org Types of Market Segmentation Psychographic Behavioral Based on variables such as values, attitudes, and lifestyle Based on variables such as usage rate and patterns, price sensitivity, brand loyalty, and benefits sought

15. 15 www.studyMarketing.org Step in Planning A Segmentation Strategy Determining characteristics and needs of consumers for the product category of the company Analyzing consumer similarities and differences Developing consumer group profiles Selecting consumer segment (s) Positioning company’s offering in relation to competition. Establishing an appropriate marketing plan

16. 16 www.studyMarketing.org Product Planning and Development

17. 17 www.studyMarketing.org Products : Types of Goods Types of Goods Convenience Goods Shopping Goods Specialty Goods

18. 18 www.studyMarketing.org Convenience Goods Those purchased with a minimum of effort, because the buyer has knowledge of product characteristics prior to shopping The consumer does not want to search for additional information Will accept a substitute rather than have to shop more stores

19. 19 www.studyMarketing.org Convenience Goods Staples are low-priced items that are routinely purchased on a regular basis Impulse goods are items that the consumer does not plan to buy Emergency goods are items purchased out of urgent need Convenience Goods

20. 20 www.studyMarketing.org Shopping Goods Those for which consumers lack sufficient information about product alternatives and their attributes, and therefore must acquire further knowledge in order to make a purchase decision

21. 21 www.studyMarketing.org Specialty Goods Those to which consumers are brand loyal. They are fully aware of these products and their attributes prior to making a purchase decision. They are willing to make a significant purchase effort to acquire the brand desired and will pay a higher price than competitive products, if necessary. For specialty goods, consumers will not make purchases if their brand is not available. Substitutes are not acceptable.

22. 22 www.studyMarketing.org Services Rented- goods Service Owned-goods service Non-goods

23. 23 www.studyMarketing.org Services Rented- goods Service Owned-goods service Non-goods Involves the leasing of a good for a specified period of time. Examples include car, hotel room, apartment, and tuxedo rentals Involves an alteration or repair of a good owned by the consumer. Examples include repair services (such as automobile, watch, and plumbing), lawn care, car wash, haircut, and dry cleaning Provides personal service on the pan of the seller; it does not involve a goods. Examples include accounting, legal, and consulting services

24. 24 www.studyMarketing.org Characteristics of Services The intangible nature of many services makes the consumer's choice more diffi­cult than with goods The producer and his or her services are often inseparable The perishability of services prevents storage and increases risks Service quality may be variable

25. 25 www.studyMarketing.org Product Life Cycle Introduction GrowthMaturity Decline

26. 26 www.studyMarketing.org Product Life Cycle CharacteristicsIntroductionGrowth Marketing objectiveAttract innovators and opinion leader to new product Expand distribution and product line Industry salesIncreasingRapidly increasing CompetitionNone or smallSome Industry profitsNegativeIncreasing CustomersInnovatorsAffluent mass market Product mixOne or two basic models Expanding line DistributionDepends on productRising number of outlets PricingDepends on productGreater range of prices PromotionInformativePersuasive

27. 27 www.studyMarketing.org Product Life Cycle CharacteristicsMaturityDecline Marketing objectiveMaintain differential advantage as long as possible (a) cut back, (b) revive, (C) terminate Industry salesStableDecreasing CompetitionSubstantialLimited Industry profitsDecreasing CustomersMass marketLaggards Product mixFull product lineBest-sellers DistributionGreatest number of outlets Decreasing number of outlets PricingFull line of pricesSelected prices PromotionCompetitiveInformative

28. 28 www.studyMarketing.org New Product Planning Idea Generation Product Screening Concept Testing Business Analysis Product Development Test Marketing Commercial- ization

29. 29 www.studyMarketing.org New Product Planning Idea Generation A continuous, systematic search for new product opportunities It involves delineating sources of new ideas and methods for generating them Product Screening After the firm identifies potential products, it must screen them Many companies use a new-product screening checklist for preliminary evaluation

30. 30 www.studyMarketing.org New Product Planning Concept Testing Business Analysis Concept testing presents the consumer with a proposed product and measures attitudes and intentions at this early stage of development Concept testing is a quick and inexpensive way of measuring consumer enthusiasm Business analysis for the remaining product concepts is much more detailed than product screening Because the next step is expensive and time- consuming product development, critical use of business analysis is essential to eliminate marginal items

31. 31 www.studyMarketing.org Business Analysis Variables FactorsConsiderations Demand projections Price/sales relationship; short- and long-run sales potential; speed of sales growth; rate of repurchases; channel intensity Cost projections Total and per unit costs; use of existing facilities and resources; startup vs. continuing costs; estimates of future raw materials and other costs; econo­mies of scale; channel needs; break-even point Competition Short-run and long-run market shares of company and competitors; strengths and weaknesses of competitors; potential competitors; likely competitive strategies in response to new product by firm Required investment Product planning (engineering, patent search, product development, testing); promotion; production; distribution Profitability Time to recoup initial costs; short- and long-run total and per- unit profits; control over price; return on investment (ROI)

32. 32 www.studyMarketing.org New Product Planning Product Development Test Marketing Product development converts a product idea into a physical form and identifies a basic marketing strategy It involves product construction, packaging, branding, product positioning, and attitude and usage testing. Test marketing involves placing a product for sale in one or more selected areas and observing its actual performance under the proposed marketing plan. The purpose is to evaluate the product and pretest marketing efforts in a real setting prior to a full-scale introduction

33. 33 www.studyMarketing.org New Product Planning Commercial- ization After testing is completed, the firm is ready to introduce the product to its full target market. This is commercialization and corresponds to the introductory stage of the product life cycle Commercialization involves implementing a total marketing plan and full production

34. 34 www.studyMarketing.org Promotion Mix : Advertising, Publicity, Personal Selling and Sales Promotion

35. 35 www.studyMarketing.org Promotion Mix Advertising Publicity Personal Selling Sales Promotion Target Market

36. 36 www.studyMarketing.org Promotion Mix FactorAdvertisingPublicity Personal Selling Sales Promotion AudienceMass Small (one-to-one)Varies MessageUniform SpecificVaries CostLow per viewer or reader None for media space and time; can be moderate costs for press releases and publicity materials High per customerModerate per customer SponsorCompanyNo formal sponsor in that media are not paid Company FlexibilityLow HighModerate Control over content and placement HighNoneHigh CredibilityModerateHighModerate Major goalTo appeal to a mass audience at a reasonable cost, and create awareness and favorable attitudes To reach a mass audience with an independently reported message To deal with individual consumers, to resolve questions, to close sales To stimulate short-run sales, to increase impulse purchases ExampleTelevision ad for a Kodak video camera Newspaper article reporting on the unique features of a Kodak video camera Retail sales personnel explaining how a Kodak video camera works A Kodak video camera displayed at consumer photography shows

37. 37 www.studyMarketing.org Four Key Steps to Advertise Determine message content and devise an ad Specify the location of an ad (media placement) Outline a promotion schedule Choose how many variations of a basic message to utilize

38. 38 www.studyMarketing.org Things to Consider in Advertising Waste Reach Waste is the portion of an audience that is not in a firm's target market. Because media appeal to mass audiences, waste is a significant factor in advertising. Reach refers to the number of viewers or readers in the audience

39. 39 www.studyMarketing.org Things to Consider in Advertising Frequency Message permanence Frequency is how often a medium can be used. It is greatest for newspapers, radio, and television, where ads may appear daily and advertising strategy may be easily changed Message permanence refers to the number of exposures one advertisement gener­ates and how long it remains with the audience

40. 40 www.studyMarketing.org Things to Consider in Advertising Persuasive impact Clutter Persuasive impact is the ability of a medium to stimulate consumers. Television often has the highest persuasive impact because it is able to combine audio, video, color, animation, and other appeals. Clutter involves the number of ads that are contained in a single program, issue, etc. of a medium. Clutter is low when a limited number of ads is presented and high when many ads are presented.

41. 41 www.studyMarketing.org Publicity : Poor and Good Response Situation Poor Response Good Response Fire breaks out in a company plant Requests for information by media are ignored. Company spokesperson explains the cause of the fire and company precautions to avoid it and answers questions. New product introduced Advertising is used without publicity Pre-introduction news releases, product samples, and testimonials are used. News story about product defects Requests for information by media are ignored, blanket denials are issued, hostility is exhibited toward reporter of story. Company spokesperson states that tests are being conducted on products, describes procedure for handling defects, and answers questions. Competitor introduces new product The advertising campaign is stepped up. Extensive news releases, statistics, and spokespeople are made available to media to present company's competitive features. High profits reported Profits are rationalized and positive effects on the economy are cited. Profitability is explained, data (historical and current) are provided, uses of profits are detailed: research, community development. Overall view of publicity There is an infrequent need for publicity; crisis fighting is used when bad reports are circulated. There is an ongoing need for publicity, strong planning, and contingency plans for bad reports.

42. 42 www.studyMarketing.org Developing a Publicity Plan Setting objectives Outlining types of publicity Selecting media Creating publicity messages Timing publicity messages

43. 43 www.studyMarketing.org Publicity Type Example News publicityMacy's describes its decision to sell its stores in the Midwest. Business feature articleToyota explains its goals and objectives for the 2020. Service feature articleA trade association offers 10 tips on how to reduce home heating costs. Finance releaseGeneral Electric distributes quarterly financial data about the company. Product releaseIntel announces its new, fast-speed microprocessor Pictorial releaseApple distributes photos showing all of its personal computer products and related software Background editorial release Mc Kinsey presents a biography of its president and his rise through the company. Emergency publicityThe Red Cross makes a request for aid to tornado victims.

44. 44 www.studyMarketing.org Specific Personal Selling Objectives Type of ObjectiveIllustrations Demand-Oriented Information To fully explain all good and service attributes To answer any questions To probe for any further questions Persuasion To clearly distinguish good or service attributes from those of competitors To maximize the number of sales as a per cent of presentations To convert undecided consumers into buyers To sell complementary items, e.g., film with a camera To placate dissatisfied customers Reminding To ensure delivery, installation, etc. To follow up after a good or service has been purchased To follow up when a repurchase is near To reassure previous customers when making a new purchase Image-Oriented Industry and company To maintain a good appearance by all personnel in contact with consumers To follow acceptable sales practices

45. 45 www.studyMarketing.org Personal Selling Process Prospecting (blind, lead) Approach Customer Wants Sales Presentation Answering Questions (questions and objections) Close Follow up (satisfaction, referrals, repurchase)

46. 46 www.studyMarketing.org Types of Sales Promotion TypeCharacteristicsIllustration CouponsManufacturers or retailers advertise special discounts for customers who redeem coupons. P&G mails consumers a 25-cents- off coupon for Sure deodorant, which can be redeemed at any supermarket. Refund or rebate A consumer submits proof-of- purchase (usually to the manufacturer) and receives an extra discount. First Alert home fire alarms provides $5 rebates to consumers submitting proof of purchase. SamplesFree merchandise or services are given consumers, generally for new items. When Sunlight dishwashing liquid was introduced, free samples were mailed to consumers. Contests or sweepstakes Consumers compete for prizes by answering questions (contests) or filling out forms for random drawings of prices (sweepstakes). Publishers Clearinghouse sponsors annual sweepstakes and awards automobiles, houses, and other prices.

47. 47 www.studyMarketing.org TypeCharacteristicsIllustration Bonus or multipacks Consumers receive discounts for purchasing in quantity Some stores run I-cent sales, whereby the consumer buys one item and gets a second one for a penny. Point-of- purchase displays In-store displays remind customers and generate impulse purchases. Chewing gum sales in supermarkets are high because displays arc placed at checkout counters. Special events Manufacturers or retailers sponsor celebrity appearances, fashion shows, and other activities. Virtually every major league baseball team has an annual "Old Timers' Day," which attracts large crowds. GiftsConsumers are given gifts for making a purchase or opening a new account. Savings banks offer a range of gifts for consumers opening new accounts or expanding existing ones. Types of Sales Promotion

48. 48 www.studyMarketing.org Sales Promotion Advantages It helps attract customer traffic and maintain brand or store loyalty Quick results can be achieved Some forms of sales promotion (calendars, t-shirts. Pens, etc) provide value to the consumer and are retained by them; and these forms can provide a reminder function Impulse purchases can be increased through in-store displays

49. 49 www.studyMarketing.org Sales Promotion Disadvantages The image may be lessened if it continuously runs promotions Consumers may view discounts as representing a decline in product quality When coupons, rebates, or other special deals are used frequently, consumers may not make purchases if the items are sold at regular prices. Instead, they will stock up each time there is a promotion.

50. 50 www.studyMarketing.org Sales Promotion Disadvantages Sometimes sales promotions shift the focus away from the product onto secondary factors. Consumers may be attracted by calendars, coupons, or sweepstakes instead of by product quality, functions, and durability. In the short run this generates consumer enthusiasm. In the long run this may have adverse effects on a brand's image and on sales, because a product- related differential advantage has not been developed.

51. 51 www.studyMarketing.org Distribution Planning and Pricing Strategy

52. 52 www.studyMarketing.org Distribution Planning Distribution planning is systematic decision making regarding the physical movement and transfer of ownership of a product from producer to consumer. It includes transportation, storage, and customer transactions. Distribution functions are carried out through a channel of distribution, which is comprised of all the organizations or people involved in the process. These organizations or people are known as channel members or middlemen.

53. 53 www.studyMarketing.org Intensity of Channel Coverage Characteristics Exclusive Distribution Selective Distribution Intensive Distribution ObjectivesPrestige image, channel control and loyalty, price stability and high profit margins Moderate market coverage, solid image, some channel control and loyalty, good sales and profits Widespread market coverage, channel acceptance, sales volume and profits Channel members Few in number, well-established reputable stores Moderate in number, well-established, better stores Many in number, all types of outlets CustomersFew in number, trend setters, willing to travel to store, brand loyal Moderate in number, brand conscious, somewhat willing to travel to store Many in number, convenience- oriented

54. 54 www.studyMarketing.org Intensity of Channel Coverage Characteristics Exclusive Distribution Selective Distribution Intensive Distribution MarketingEmphasis Personal selling, pleasant shopping conditions, good service Promotional mix, pleasant shopping conditions, good service Mass advertising, nearby location, items in stock MajorDisadvantages Limited sales potential May be difficult to carve out a niche Limited channel control ExamplesAutomobiles, designer clothes, caviar Furniture, clothing, watches Groceries, household products, magazines

55. 55 www.studyMarketing.org Methods of Channel Cooperation FactorManufacturer ActionChannel Member Action New-product introduction Thorough testing, adequate promotional support Good shelf location and space, enthusiasm for product, assistance in test marketing DeliveryPrompt filling of orders, adherence to scheduled dates Proper time allowed for delivery, shipments immediately checked for accuracy PromotionSales force training, sales force incentives, development of national advertising campaign, cooperative programs Attractive in-store displays, knowledgeable salespeople, participation in cooperative programs Product quality Product guaranteesProper installation and servicing of products

56. 56 www.studyMarketing.org Pushing and Pulling Strategy Manufacturer Channel members Consumers Manufacturer Channel members Consumers Pushing Strategy Pulling Strategy

57. 57 www.studyMarketing.org Price Planning A Price Represents the value of a good or service for both the seller and the buyer Price Planning Systematic decision making by an organization regarding all aspects of pricing

58. 58 www.studyMarketing.org Factors Affecting Pricing Decisions ConsumersCompetitors ChannelMembers Government Cost Total Effects on Price Decisions

59. 59 www.studyMarketing.org Consumers and Price Decisions Consumers The relationship between price and consumer purchases and perceptions is explained by two economic principles — the law of demand and price elasticity of demand The law of demand states that consumers usually purchase more units at a low price than at a high price The price elasticity of demand defines the sensitivity of buyers to price changes in terms of the quantities they will purchase

60. 60 www.studyMarketing.org Elastic Demand Elastic demand occurs if relatively small changes in price result in large changes in quantity demanded Numerically, price elasticity is greater than 1 With elastic demand, total revenue goes up when prices are decreased and goes down when prices rise Inelastic demand takes place if price changes have little impact on quantity demanded Price elasticity is less than 1 With inelastic demand, total revenue goes up when prices are raised and goes down when prices decline In-elastic Demand Consumers and Price Decisions

61. 61 www.studyMarketing.org Unitary Demand Unitary demand exists if changes in price are exactly offset by changes in quantity demanded, so that total sales revenue remains constant. Price elasticity is 1 Consumers and Price Decisions

62. 62 www.studyMarketing.org Competitors and Price Decisions Competitors Another element contributing to the degree of control a firm has over prices is the competitive environment within which it operates

63. 63 www.studyMarketing.org Market- controlled price environment Characterized by a high level of com­ petition, similar goods and services, and little control over price by individual companies Characterized by moderate competi­tion, well-differentiated goods and services, and strong control over price by individual firms Company- controlled priced environment Competitors and Price Decisions

64. 64 www.studyMarketing.org Government- controlled price environment Characterized by prices set by the government. Examples are public utilities, buses, taxis, and state universities Competitors and Price Decisions

65. 65 www.studyMarketing.org Channel Members and Price Decisions ChannelMembers A wholesaler or retailer can gain stronger control over price by stressing its importance as a customer to the manufacturer, refusing to carry unprofitable product, stocking competitive items, and developing strong dealer brands so that consumers are loyal to the seller and not the manufacturer Sometimes retailers engage in selling against the brand, whereby they stock merchandise, place high prices on it, and then sell other brands for lower prices. This is often done to increase the sales of their own brands

66. 66 www.studyMarketing.org Channel Members and Price Decisions ChannelMembers To ensure channel member cooperation with price decisions, the manufacturer needs to consider four factors: channel member profit margins, price guarantees, special deals, and the impact of price increases

67. 67 www.studyMarketing.org Government and Price Decisions Government

68. 68 www.studyMarketing.org Cost and Price Decisions Cost Pricing Decisions

69. 69 www.studyMarketing.org Price Strategy Cost-based Price Strategy Demand-based Price Strategy Competition- based Price Strategy Price Strategy

70. 70 www.studyMarketing.org Price Strategy Cost-based Price Strategy Demand-based Price Strategy With a cost-based price strategy, the marketer sets prices by computing merchandise, service, and overhead costs, and then adding the desired profit to these figures The marketer sets prices after researching con­sumer desires and ascertaining the range of prices acceptable to the target market

71. 71 www.studyMarketing.org Price Strategy Competition- based Price Strategy The marketer sets prices in accordance with competitors Prices may be below the market, at the market, or above the mar­ket, depending on customer loyalty, services provided, image, real or perceived differences between brands or stores, and the competitive environment