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BM Lecture 3 (Module E)
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BM Lecture 3 (Module E)


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  • 1. Competitors & Customers
    Chp 3
  • 2. Strategic Management & Planning notes
  • 3. Cycle of competition
    Builds Barriers
    Attacks soft market segments
    No response
    Widens attack to adjacent segments
    Reinforces barriers
    Starts price wars
    Attacks entrant’s home market
    Restart the cycle in adjacent market
  • 4. Product Life Cycle
    Product launch – happy life
    Cover costs
    Earn profits
    Length not know in advance
    Coca-Cola, Gillette, Budweiser, American Express, Wells-Fargo, and Tabasco
  • 5. PLC – S Curve
  • 6. Introduction Stage
    Product launch
    Takes time
    Slow growth
    Negative profits
    High promotion and distribution cost
  • 7. Growth Stage
    Product, if satisfies market, enters growth stage
    Sales climb quickly
    Early adopters continue, new join through favorable word of mouth
    New competitors enter market
    Competition – increase in sale points
    Spread of sales, unit cost reduces
    Sustain rapid growth
    New market segments
    Prices may be lowered to attract more customers (iPod)
  • 8. Maturity
    At some point sale slows down, product enters maturity stage
    Lasts longer
    Marketing management most of the time deals with mature products
    More producers selling the same product
    Greater competition
    Prices down, increase in sales promotion
    Drop in profit
    Well established competitors stay
  • 9. Maturity
    Product manager should modify market, product and marketing mix
    Market: increase consumption of product, new users, present users
    Product: quality, features, style (milk pak, Honda City)
    Four Ps
  • 10. Decline Stage
    Eventually dip
    Oat meal, VHS tapes, VCR, Tape recorders
    Reasons: technology, consumer tastes, increased competition, profits decline, withdrawal from market
    Weak product costly to firm
    Management time
    Price adjustments
    Advertising/sales efforts
    Reputation of other co products affected
    Old Spice/ co can sell brands
  • 11. Industry life cycle(chemical, food, automobile, air line, textile, consulting, elderly services, waste treatment etc)
    Industries may display a life cycle
    Decline (carriage/rail road, A/V, print media, oil dependent)
  • 12. Inception Stage
    Attracts trend setters
    High price
    Poor financial results
    Channels of distribution
    Monitor success
  • 13. Growth stage
    Expansion of capacity to meet target market share objectives
    Reduce prices, penetrate
    Maintain barriers
    Promotion to attract more buyers
    Keep investors aware of the benefits of the products to secure further financing
    Search for additional markets
    Reducing cost of production
    Product development
  • 14. Shakeout stage
    Weak businesses discontinue
    More focus on existing customers, and less on new acquisitions
  • 15. Maturity stage
    Maximize current financial returns from products
    Defend market position
    Modify markets
    Modify product to make it cheaper or of greater benefit
    Intensify distribution
    Mergers and mutual agreements
  • 16. Decline
    Minimize expenditure (reduce promotion and product refinement)
    Weed out variations (sell core products)
    Narrow distribution
    Plan exit and identify time to leave the industry
  • 17. Strategic group analysis(Food & Beverage)
    Organizations with similar strategic characteristics, following similar strategies or competing on similar bases
    Product diversity
    Geographical coverage
    Extent of branding
    Pricing policy
    Product quality
    Distribution method
    Target market segment
  • 18. Integrated Marketing Mix
    The set of controllable tactical marketing tools – product, price, place and promotion – that the firm blends to produce the response it wants in the target market.
    Product: goods n services
    Price: amount of money consumers have to pay to obtain the product
    Place: includes activities to make the product available to target consumers.
    Promotion: includes activities that communicate the merits of the product and persuade target customers to buy it.
  • 19. Extended Marketing Mix
    Physical Evidence
  • 20. Levels of Product and Services
    3 levels: each level adds to customer value
    The core benefit. E.g. Blackberry
    Actual product: features, design, quality level, a brand image, and packaging. E.g. Blackberry: actual product, its name, parts, styling, features, and packaging.
    Augmented product. Offer consumer services and benefits. (warranty, instructions, quick repair and maintenance when needed)
  • 21. What is a product?
    Anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need.
    Include physical objects, services, events, persons, places, organizations, ideas, or mixes of these entities. iPod, Camry, BigMac. Doctor’s advice, vacation service, financial services.
    Service is any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything.
  • 22. Product and Service Classification
    Consumer Product: product bought by final consumer for personal consumption
    Convenience product: that the customer usually buys frequently, immediately, and with a minimum comparison and buying effort: soap, candy, newspaper, fastfood.
    Shopping product: that the customer usually buy carefully on suitability, quality, price, and style: furniture, clothing, appliances, hotel, travel service.
  • 23. Specialty product: consumer product with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort: Ferrari FXX, Boss, BB, Disney.
    Unsought product: consumer product that the consumer either does not know about or knows about but does not normally think of buying: life insurance, blood donations, living funeral service.
  • 24. Industrial Product
    Product bought by individuals and organizations for further processing or for use in conducting a business.
    Materials and parts (wheat, cotton, livestock, crude petroleum) (iron, cement, wires, tires, motors)
    Capital items (buildings, generators, trucks etc)
    Supplies and services (lubricants, coal, paper, pencils, paints, brooms, conservancy items
  • 25. Customer Driven Marketing Strategy
    Market segmentation: dividing a market into distinct groups of buyers who have distinct needs, characteristics, or behavior and who might require separate products or marketing programs (geographic, demographic, psychographic, and behavioral factors)
    Market segment: a group of consumers who respond in a similar way to a given set of marketing efforts. Expensive car buyers. Cost sensitive buyers.
  • 26. Market Targeting: The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter.
    A company should target segments in which it can profitably generate the greatest customer value and sustain it over time.
  • 27. Niche Marketing
    When a company decides to serve only one or few special segments or “market niches”, it is involved in niche marketing.
    Such “nichers” specialize in serving customer segments that major competitors overlook or ignore.
    Ferrari – 1500 cars in US.
    Ferrari Superamerica $287,020
    Ferrari FXX super sports car $ 2 million
    Jones Soda
  • 28. Market Differentiation & Positioning
    Actually differentiating the market offering to create superior customer value.
    Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.
    BMW: “the ultimate driving machine”
    Ford: “built for the road ahead”
    Mastercard: “priceless experience”
    Charging low prices than competitors do or by offering more benefits to justify higher prices. If a company promises greater value, it must deliver greater value.