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

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  • 1. Competitors & Customers<br />Chp 3<br />
  • 2. Strategic Management & Planning notes<br />http://opentuition.com/acca/p3/p3-notes-view-online/<br />
  • 3. Cycle of competition<br />Incumbent<br />Entrant<br />Builds Barriers<br />Attacks soft market segments<br />No response<br />Widens attack to adjacent segments<br />Reinforces barriers<br />Starts price wars<br />Attacks entrant’s home market<br />Restart the cycle in adjacent market<br />
  • 4. Product Life Cycle<br />Product launch – happy life<br />Cover costs<br />Earn profits<br />Length not know in advance<br />Coca-Cola, Gillette, Budweiser, American Express, Wells-Fargo, and Tabasco<br />
  • 5. PLC – S Curve<br />
  • 6. Introduction Stage<br />Product launch<br />Takes time<br />Slow growth<br />Negative profits<br />High promotion and distribution cost<br />
  • 7. Growth Stage<br />Product, if satisfies market, enters growth stage<br />Sales climb quickly<br />Early adopters continue, new join through favorable word of mouth<br />New competitors enter market<br />Competition – increase in sale points<br />Spread of sales, unit cost reduces<br />Sustain rapid growth<br />New market segments<br />Prices may be lowered to attract more customers (iPod)<br />
  • 8. Maturity<br />At some point sale slows down, product enters maturity stage<br />Lasts longer<br />Marketing management most of the time deals with mature products<br />More producers selling the same product<br />Greater competition<br />Prices down, increase in sales promotion<br />Drop in profit<br />Well established competitors stay<br />
  • 9. Maturity<br />Product manager should modify market, product and marketing mix<br />Market: increase consumption of product, new users, present users<br />Product: quality, features, style (milk pak, Honda City)<br />Four Ps<br />
  • 10. Decline Stage<br />Eventually dip<br />Oat meal, VHS tapes, VCR, Tape recorders<br />Reasons: technology, consumer tastes, increased competition, profits decline, withdrawal from market<br />Furthermore: <br />Weak product costly to firm<br />Management time<br />Price adjustments<br />Advertising/sales efforts<br />Reputation of other co products affected<br />Old Spice/ co can sell brands<br />
  • 11. Industry life cycle(chemical, food, automobile, air line, textile, consulting, elderly services, waste treatment etc)<br />Industries may display a life cycle<br />Introduction<br />Growth<br />Shakeout<br />Maturity<br />Decline (carriage/rail road, A/V, print media, oil dependent)<br />
  • 12. Inception Stage<br />Attracts trend setters<br />High price<br />Poor financial results<br />Channels of distribution<br />Monitor success<br />
  • 13. Growth stage<br />Expansion of capacity to meet target market share objectives<br />Reduce prices, penetrate<br />Maintain barriers<br />Promotion to attract more buyers<br />Keep investors aware of the benefits of the products to secure further financing<br />Search for additional markets<br />Reducing cost of production<br />Product development<br />
  • 14. Shakeout stage<br />Weak businesses discontinue<br />More focus on existing customers, and less on new acquisitions<br />
  • 15. Maturity stage<br />Maximize current financial returns from products<br />Defend market position<br />Modify markets<br />Modify product to make it cheaper or of greater benefit<br />Intensify distribution<br />Mergers and mutual agreements<br />
  • 16. Decline<br />Minimize expenditure (reduce promotion and product refinement)<br />Weed out variations (sell core products)<br />Narrow distribution<br />Plan exit and identify time to leave the industry<br />
  • 17. Strategic group analysis(Food & Beverage)<br />Organizations with similar strategic characteristics, following similar strategies or competing on similar bases<br />Product diversity<br />Geographical coverage<br />Extent of branding<br />Pricing policy<br />Product quality<br />Distribution method<br />Target market segment<br />
  • 18. Integrated Marketing Mix<br />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.<br />Product: goods n services<br />Price: amount of money consumers have to pay to obtain the product<br />Place: includes activities to make the product available to target consumers.<br />Promotion: includes activities that communicate the merits of the product and persuade target customers to buy it.<br />
  • 19. Extended Marketing Mix<br />People<br />Processes<br />Physical Evidence<br />
  • 20. Levels of Product and Services<br />3 levels: each level adds to customer value<br />The core benefit. E.g. Blackberry<br />Actual product: features, design, quality level, a brand image, and packaging. E.g. Blackberry: actual product, its name, parts, styling, features, and packaging.<br />Augmented product. Offer consumer services and benefits. (warranty, instructions, quick repair and maintenance when needed)<br />
  • 21. What is a product?<br />Anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need.<br />Include physical objects, services, events, persons, places, organizations, ideas, or mixes of these entities. iPod, Camry, BigMac. Doctor’s advice, vacation service, financial services.<br />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.<br />
  • 22. Product and Service Classification<br />Consumer Product: product bought by final consumer for personal consumption<br />Include:<br />Convenience product: that the customer usually buys frequently, immediately, and with a minimum comparison and buying effort: soap, candy, newspaper, fastfood.<br />Shopping product: that the customer usually buy carefully on suitability, quality, price, and style: furniture, clothing, appliances, hotel, travel service.<br />
  • 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.<br />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.<br />
  • 24. Industrial Product<br />Product bought by individuals and organizations for further processing or for use in conducting a business.<br />Materials and parts (wheat, cotton, livestock, crude petroleum) (iron, cement, wires, tires, motors)<br />Capital items (buildings, generators, trucks etc)<br />Supplies and services (lubricants, coal, paper, pencils, paints, brooms, conservancy items<br />
  • 25. Customer Driven Marketing Strategy<br />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)<br />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.<br />
  • 26. Market Targeting: The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter.<br />A company should target segments in which it can profitably generate the greatest customer value and sustain it over time.<br />
  • 27. Niche Marketing<br />When a company decides to serve only one or few special segments or “market niches”, it is involved in niche marketing.<br />Such “nichers” specialize in serving customer segments that major competitors overlook or ignore.<br />Ferrari – 1500 cars in US.<br />Ferrari Superamerica $287,020<br />Ferrari FXX super sports car $ 2 million<br />Jones Soda<br />
  • 28. Market Differentiation & Positioning<br />Actually differentiating the market offering to create superior customer value.<br />Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.<br />BMW: “the ultimate driving machine”<br />Ford: “built for the road ahead”<br />Mastercard: “priceless experience”<br />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.<br />

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