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25 Keys To Sales & Marketing 3

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This is the ppt translation of the third part of 25 keys to sales & marketing, an audio portable MBA course, which has been developed by New York Times publishing, with the contribution of some of …

This is the ppt translation of the third part of 25 keys to sales & marketing, an audio portable MBA course, which has been developed by New York Times publishing, with the contribution of some of the best known business academicians and practitioners of the contemporary world. This is only a reproduced graphical version of the same with no commercial motive. It has been developed for better self learning and for assistance to the large community of several business practitioners & students, who are in constant pursuit for quality stuff on-line.

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  • 1. This is the ppt translation of the third part of 25 keys to sales & marketing, an audio portable MBA course, which has been developed by New York Times publishing, with the contribution of some of the best known business academicians and practitioners of the contemporary world. This is only a reproduced graphical version of the same with no commercial motive. It has been developed for better self learning and for assistance to the large community of several business practitioners & students, who are in constant pursuit for quality stuff on-line. - Saurabh To find more stuff on business & marketing, visit – www.saurabhpassion.blogspot.com
  • 2. Key – 11 How to generate repeat purchases?
  • 3. Major concern of marketers –
    • Repurchase behavior
    • Development of brand loyalty
  • 4. From strategic point of view, how can one encourage repurchase behavior & brand loyalty???
    • Dealing with post-purchase dissatisfaction.
    • Incentive schemes on repurchase
  • 5. Dealing with post-purchase dissatisfaction - 1 (Reason of consumer dissatisfaction)
    • Cognitive dissonance – How often it happens that after purchasing an expensive product, instead of feeling satisfied and good about ourselves, we spend time debating if we made the right choice!
    • This is called Cognitive dissonance and is linked to the Cognition (thought), that is dissonant (clashing).
    • Cognitive dissonance occurs for things that are expensive & important and where the alternate, un chosen purchase choices are attractive.
  • 6. How to resolve the Cognitive Dissonance in Consumers?
    • A creative marketer knows that when a purchase is particularly involved & costly, dissonance is typically present and consumer will likely engage in a post purchase information search about chosen and un chosen alternatives.
    • However, instead of allowing the consumer to seek information , information that supports the purchase decision should be provided , by the marketer .
  • 7. Dealing with post-purchase dissatisfaction - 2 (An effective use of Incentives)
    • Another way to increase repurchase & brand loyalty is through marketing incentives .
    • (Reward customers for frequent purchases)
    Many companies reward customers in form of points that accumulate after every purchase. These points can be cashed in for free merchandise, once certain levels are reached. Reward customers in form of cash discount / cash back, on repeat frequent purchases.
  • 8. Key – 12 (Establishing a brand name is a key strategic advantage)
    • Power of a brand name –
    • Brand distinguishes a product from the competition & enables the marketer to build an image.
  • 9. Advantages of a brand name –
    • A brand can become associated with specific attributes. (e.g. Volvo is known for safety & Mercedes Benz is for craftsmanship);
    • Brand name can be used to launch new products (Marlbro used their cowboy image to come out with rugged clothing)
    • Brand name also insulates the customer from price sensitivity on behalf of the consumer. i.e. because of the brand’s reputation, consumers may be more hesitant to switch to another brand, given a price increase. Especially if brand loyalty has developed.
    • Brand identification in the market also helps shelf placement & other distribution advantages to the customers.
  • 10. Components that make an effective brand name –
    • An effective brand name should achieve many different objectives –
    • It should suggest something about the product’s benefits. The brand name is always described as supplying the consumer with a chunk of information about the product. It is helpful if that information contains a description of that product.
    • Brand name should be easy to pronounce and remember. Hence, shorter names are better.
  • 11. Focusing on Company Name Vs. Brand Name
    • In general it is the strategy of companies to promote Company Name as the brand name, instead of the product name as the brand name.
    • Logic behind this is that Company name is strong & is distinguishable in and out of itself.
    • Those companies who pursue individual brand names believe that the product should develop an image of its own. (i.e. if something negative happens to the company, there is less of a likelihood of the negativity being spread down to the level of the brand.) (this helped P & G’s product sales when the rumor of their being associated with a devil worshiping sect brought them a bad name, but their products still sold because of their own brand identity.)
  • 12. Key – 13 ( The inherent advantage of the pioneer brand )
    • Pioneer brands are remembered best amongst alternative brands.
    • Pioneer brand’s product features are perceived as more novel & attention drawing for the consumer.
    • It sets expectations about the product class. It becomes a category prototype to which all other brands are compared.
    • Pioneer brands as first in the markets can take the best position in the market.
    • This best position of the pioneer brand creates a barrier for the entry to other existing brands.
    • If people experience the pioneer brand first and like it, there is a strong likelihood that they stay with the brand, resulting in continued brand loyalty.
    • It is important to note that in a given product class, only 1 brand can be the pioneer brand. All other brands are by definition, the followers.
  • 13. 2 laws that support the pioneer advantage –
    • Many companies promote the idea that they were the 1 st in the product class or they invented the product class. It is because identifying the second brand in a category or product class is not easy.
    • Law of leadership - It is better to be first than to be better.
    • Law of category – If you are not the first in a category, than set up a new category that you can be 1 st in.
  • 14. How can the pioneer brand advantage be maintained overtime???
    • Considering that the unique feature of being a pioneer brand in a particular product class is not replicable, it is important that this unique characteristic/standing is emphasized in all marketing communication.
    • Let consumers know it. Don’t let them forget it. (Emphasizing this in advertising or in packaging)
    • (Words like – World’s first/pioneer/the original/only/etc.)
  • 15. Does it mean that the follower brands are in no position to compete at all??? Does it mean that their existence can not be justifiable & hence profitable???
    • NO…..
    • IT IS NOT SO!
  • 16. How can the follower brand compete ???
    • Various examples in the history show that brands, who once pioneered a product class or a category are no more the pioneers in that category / or are not existent at all.
    • Position against other followers and not directly against the pioneer. Follower brands should be distinct and should be positioned away from the pioneer. (If follower brand is positioned too close to the pioneer, it is overshadowed.)
    • Better strategy would be to segment the market. Copy a differentiated entrant rather than the pioneer. It allows the late entrance to develop a degree of prominence, reduce their price sensitivity, & increase the price sensitivity of the pioneer.
  • 17. How can the follower brand compete ???
    • Emphasize new ness - One of the greatest perceptual weakness that the consumer has for the pioneer brand is that because the pioneer came early than all other brands in the market, it may not be up-to-date in the latest technological developments in the product class.
    • So, follower brand should position itself by emphasizing its quality of being new or latest in the market & hence more attuned to the consumer preferences.
    • (A reasonable positioning of the follower brand can be new & improved, over the pioneer competition)
  • 18. How can the follower brand compete ???
    • Be a fast follower - Enter the market quickly after the pioneer. The shorter the time period when the pioneer brand is alone in the market, less is the pioneer advantage. It is imperative that follower brands enter the market as soon as possible, after the pioneer does.
    • Market leadership is also an advantage attainable by a follower brand. Consumer perceptions of market leader is sometimes more favorable than the pioneer brand. Market leader is distinguishable and unique. (Inference of consumer is that if you sell more than the competition, you must be better.)
  • 19. Key – 15 Can new products give new life to a company ?
    • UNDERSTANDING
    • P R O D U C T S
    • & THEIR
    • L I F E C Y C L E .
  • 20. Product Life Cycle
    • Product life cycle is shrinking at a rate, which is faster than at any time in the history.
    Product development Introduction Growth Maturity Decline A very short Timeline of the product life cycle
  • 21. Understanding the Product Life Cycle –
    • Many competitors have now entered the market. Profits reach peak & now begin to decline. Investments must be made to advertise & retain in the competitive environment.
    Product development Introduction Growth Maturity In this stage most ideas are created; more than 95% of ideas are killed before they see the light of day; Sales growth is very slow, as market takes time to understand the product & realize its presence; Development costs are too high & profits are very less. Period of market expansion & acceptance. It is at the latter part of this stage that profits begin to turn +ve as sales may increase at breakneck speed.
  • 22. Understanding the Product Life Cycle –
    • Sales & Profits both start decreasing because of
    • Market Saturation & new , better products .
    DE CL I NE
  • 23. Shrinkage of product life cycle –
    • As the time from product development to decline decreases, the pressure to introduce new products increase .
    • There is a very narrow time period in the product life cycle, when the company earns profit (from latter part of growth to the early part of maturity).
    • Therefore, when that period shrinks, there is pressure to introduce new products, which begin there journey in the product life cycle, hitting the sweet spot, where they make profits.
    • It is not easy to continually introduce new & improved products and convince the consumers that such products are needed or wanted. Hence because the product life cycle is shrinking, the marketing in the business environment has become more competitive than it ever was.
  • 24. Why new products often fail & how to minimize the risk?
    • Lack of marketing research & knowledge of the right questions to ask.
    • Market may be overestimated
    • Competitors may present a difficult challenge
    • Price was too low or too high
    • Product positioning may be incorrect
  • 25. How can one cut down the failure rate of new products ?
    • Extensive marketing research & a continual effort to know the desires and product benefits sought by the consumers.
    • Avoid new product decisions as a function of sample size of one. (Who decides on account of gut feel). It is the target market/prospects who should wave the green flag.
    • Creative approaches to new product development also increases the success rate.
  • 26. Key – 16 Issues relating to an effective product strategy –
    • Creative marketers think creatively, not only for today but also for tomorrow.
    • Should we consider stretching or shrinking our product line?
    • Companies like Honda & Toyota stretched their product lines by introducing a new broad range of cars (luxury also) for the ever changing requirements of their customers over a period of 25 years.
    • Should downward stretch be adopted? (Companies may look towards the downward stretch because of severe competition on the higher side.) - this is also something that can bring down the reputation / position of a good brand.
  • 27. Issues relating to an effective product strategy –
    • Another problem allowing stretches is that introduction of new product may eat into the sales of an existing product.
    • Existing dealers may also not be willing to handle the new products, that give rise to new problems that never existed before.
  • 28. Brand extensions – What situations contribute to their success???
    • The idea behind a brand extension strategy is that the customer will accept the new product because he is already acquainted with a well set brand name.
    • Such a strategy becomes questionable when the consumer cannot relate the original product with the new one.
    • The key to a successful brand extension is the link established between the original product and the extension in the consumer’s kind.
    • They may not have the same function. Linkage is a broader concept than just product function.
  • 29. Key – 17
    • Pricing...
    • ...a tricky affair!
  • 30. Why pricing is important?
    • Out of the 4Ps (Product/price/position/place), only PRICE is the P that generates REVENUE.
    • All the other 3Ps are costs.
    • Hence, having the right price for the target markets very essential. (Pricing too high may cause your business to stop generating sales; Pricing too low may cause your company to deflate its image.
    • Pricing as a cue for the consumer – Many people judge quality through price of the product. This price-quality has shown to be strongest when the consumer lacks product experience, the purchase is considered to be risky; & when there is little basis for making direct product comparisons.
    • Pricing stand as an indicator of quality for a product in which quality is often nebulous
  • 31. Pricing Strategies
    • COST ORIENTED
    • Or
    • DEMAND ORIENTED
  • 32. COST ORIENTED STRATEGIES
    • Very tricky because…
    • Variable factors changes as a function of the number of units sold, & the number of units sold is often a function of price.
  • 33. DEMAND ORENTED STRATEGIES
    • It focuses on buyer’s perception of value instead of the seller’s level of cost.
    • Hence, if the consumer perceives that a product is of significantly higher quality than the largest competitor, than the product can have a significantly higher price than the competition.
    • Key is to quantify the quality advantage of the product versus the competition.
  • 34. Key – 18 Effective ways to promote your product
    • Promotion is not just traditional advertising, but is much wider in scope.
    • Actually, Promotion is an umbrella concept comprising –
    • ADVRTISING, PERSONAL SELLING, SALES PROMOTION & PUBLIC RELATIONS.
  • 35. Elements of Promotion –
    • ADVERTISING –
    • Any paid form of non personal presentation of goods & services by an identified sponsor.
    • Comes in many forms like –
    • TELEVISION , INTERNET , PRINT , BILLBOARD , DIRECT MAIL , etc .
  • 36. Personal Selling
    • This form of promotion involves –
    • interpersonal relationships between customers & potential sellers through sales people .
    • If Advertising gains attention, Personal Selling is required to close the deal .
  • 37. Sales Promotion
    • This form of promotion involves
    • short term incentives to encourage the purchase of goods & services .
    • E.g.
    • Coupons, Free gifts, etc. with purchase .
  • 38. Public Relations
    • PR can be a very effective promotional tool as it is not taken in cynical light by the prospective customer , as is the case with Advertising.
    • Goal is to create good relations with one’s various publics. By obtaining a favorable publicity to enhance image or bring attention to the product or service .
  • 39. Goals of Promotion
    • Selling
    • a
    • product ?
  • 40. Stages, before a sale of a product can occur
    • In this stage, one must be made aware of one’s product or service.
    Stage - 3 Stage - 2 Stage - 1 COGNITIVE STAGE AFFECTIVE STAGE Develop a liking or preference for the product. This is the final stage that results in action or purchase. BEHAVIORAL STAGE
  • 41. Promotional Strategy For Each Stage .
    • To create awareness, sales promotion, public relations & advertising are useful.
    Stage - 3 Stage - 2 Stage - 1 COGNITIVE STAGE AFFECTIVE STAGE Liking or preference for a product is best developed through comparative advertising & personal selling. To influence action or purchase is best done through personal selling & some forms of advertising. BEHAVIORAL STAGE The most effective promotional strategy differs for each stage .
  • 42. 3 Critical steps in any promotional evaluation program
    • Determine what steps are most critical in a particular case. i.e. What the steps leading to purchase are for most consumers.
    STEP - 1 STEP - 2 STEP - 3 Determine how many people are at the moment on what steps. Determine which people on which it is most important to reach. 1 2 3 With the steps outlined below, the marketing manager can plan a promotional strategy tailored exactly to the target market.