LTW 2012 - 00 Marketing Basics
Upcoming SlideShare
Loading in...5

Like this? Share it with your network


LTW 2012 - 00 Marketing Basics






Total Views
Views on SlideShare
Embed Views



3 Embeds 497 484 12 1


Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
Post Comment
Edit your comment

LTW 2012 - 00 Marketing Basics Document Transcript

  • 1. Global Marketing and Sales Doing Business in Latin America 00. Marketing BasicsThis presentation (and extra material) belongs to Natalia Ceruti´s Global Marketing Course, within the Leading the Way to Success in Latin America Program. Should not be copied, nor reproduced, in full or in parts, without Natalia Ceruti´s permission. · The Very Basics
  • 2. First things, firstMarketing consists of the activity, institutions, and processes that create, communicate, deliver, andexchange offerings that have value for stakeholders and society. · First things, firstMarketing consists of the activity, institutions, and processes that create, communicate, deliver, andexchange offerings that have value for stakeholders and society. ·
  • 3. Value Value: difference (between benefits and sacrifices) perceived by a Customer, among the company´s offering and the competence´s offering.Value Proposition is the set of benefits or values a company promises to deliver to customers to satisfy their needs.Perceived Benefit Perceived Sacrifice• Product or Service • Price (Money)• Additional Services • Time• Personal Value • Effort• Image • Psychological Cost V=B-S · Value Double mission Value for Value for Customer Shareholder VALUE FOR MONEY MONEY FOR MONEY ·
  • 4. Controllable & · Marketing Strategy & ·
  • 5. · Porter´s Five ·
  • 6. Michael Porter• Four basic competitive positioning strategies 1. Overall cost leadership 2. Differentiation 3. Focus 4. Middle-of-the-roaders · Michael Porter Overall cost leadership strategy is when a company achieves the lowest production and distribution costs and allow it to lower its prices and gain market share. Differentiation strategy is when a company concentrates oncreating a highly differentiated product line and marketing program so it comes across as an industry class leader.Focus strategy is when a company focuses its effort on serving few market segments well rather than going after the whole market. Middle-of-the-roaders are companies without a clear strategy. Companies that pursued a clear strategy would achieve superior performance, others would not succeed. ·
  • 7. Consumer Markets & Consumer Behaviour Consumer Behaviour Consumer Buyer Behavior refers to the buying behavior offinal consumers - individuals and households who buy goods and services for personal consumption.Consumer Market refers to all of the personal consumption of final consumers. ·
  • 8. Model of Consumer Behaviour Stimuli Marketing: Other: Product Economical Price Technological Place Political Promotion Cultural Black Box Individual Decision Characteristics Process Responses Product Brand Shop Timing · Model of Consumer ·
  • 9. Cultural Factors Culture is the learned values, perceptions, wants, and behavior from family and other important institutions.Subculture are groups of people within a culture with shared value systems based on common life experiences and situations (Hispanic, African American, Asian, Mature, etc.).Social Classes are society’s relatively permanent and ordereddivisions whose members share similar values, interests, and behaviors. Social class is measured by a combination ofoccupation, income, education, wealth, and other variables. · Social Factors Membership Groups have a direct influence and to which a person belongs.Aspirational Groups are groups to which an individual wishes to belong. Reference Groups are groups that form a comparison or reference in forming attitudes or behavior. Opinion Leaders are people within a reference group withspecial skills, knowledge, personality, or other characteristics that can exert social influence on others. Buzz Marketing & Social Marketing. ·
  • 10. Social FactorsFamily is the most important consumer-buying organization in society. Social Roles and Status are the groups, family, clubs, andorganizations to which a person belongs that can define role and social status. · Personal FactorsAge and life-cycle stage Economic situation (trends in):•Youth: younger than 18 •Personal income•Getting started: 18-35 •Savings•Builders: 35-50 •Interest rates•Accumulators: 50-60•Preservers: over 60 Occupation affects the goods and services bought by consumers. Lifestyle is a person’s pattern of living as expressed in his or her psychographics. Measures a consumer’s AIOs (activities, interests, and opinions) to capture information about a person’s pattern of acting and interacting in the environment. ·
  • 11. Personal Factors Personality refers to the unique psychological characteristicsthat lead to consistent and lasting responses to the consumer’s environment. Brand Personality refers to the specific mix of human traits that may be attributed to a particular brand (Sincerity, Excitement, Competence, Sophistication, Ruggedness).Self-Concept refers to people’s possessions that contribute to and reflect their identities. · Psychological FactorsMotive is a need that is sufficiently pressing to direct the person to seek satisfaction. Motivation Research refers to qualitative research designed to probe consumers’ hidden, subconscious motivations. Herzberg’s Maslow’s Freud’s Two-Factor Hierarchy Theory Theory of Needs Behavior Behavior is Behavior is guided by guided by is driven by subconscious motivating lowest, motivations and hygiene unmet need factors ·
  • 12. Psychological Factors Perception is the process by which people select, organize,and interpret information to form a meaningful picture of the world from three perceptual processes.Selective Attention is the tendency for people to screen out most of the information to which they are exposed. Selective Distortion is the tendency for people to interpretinformation in a way that will support what they already believe. Selective Retention is the tendency to remember good points made about a brand they favor and to forget good points about competing brands. · Psychological Factors Learning is the changes in an individual’s behavior arising from experience and occurs through interplay of: Drives, Stimuli, Cues, Responses, Reinforcement.Belief is a descriptive thought that a person has about something based on: Knowledge, Opinion, Faith. Attitudes describe a person’s relatively consistent evaluations, feelings, and tendencies toward an object or idea. ·
  • 13. Types of Buying Decision Behavior • Complex buying behavior • Dissonance-reducing buying behavior • Habitual buying behavior • Variety-seeking buying behavior · Types of Buying Decision Behavior Complex Buying Behaviour: Consumers are highly motivated in a purchase and perceive significant differences among brands.• Purchasers are highly motivated when: • Product is expensive • Product is risky • Product is purchased infrequently • Product is highly self-expressive ·
  • 14. Types of Buying Decision Behavior Dissonance-reducing Buying Behavior occurs whenconsumers are highly involved with an expensive, infrequent, or risky purchase, but see little difference among brands.Post-purchase Dissonance occurs when the consumer notices certain disadvantages of the product purchased or hears favorable things about a product not purchased. · Types of Buying Decision BehaviorHabitual Buying Behavior occurs when consumers have low involvement and there is little significant brand difference. Variety-seeking Buying Behavior occurs when consumers have low involvement and there are significant brand differences. ·
  • 15. Market Segmentation Segmenting Consumer Markets Geographic Segmentation divides the market into differentgeographical units such as nations, regions, states, counties, or cities.Demographic Segmentation divides the market into groups based onvariables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality. Age and Life-Cycle Stage Segmentation is the process of offeringdifferent products or using different marketing approaches for different age and life-cycle groups. Gender Segmentation divides the market based on sex (male or female). ·
  • 16. Segmenting Consumer MarketsIncome Segmentation divides the market into affluent or low- income consumers. Psychographic Segmentation divides buyers into different groups based on social class, lifestyle, or personality traits.Behavioral Segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product.Occasion Segmentation divides buyers into groups according to occasions when they get the idea to buy, actually make purchases, or respond to a product. · Segmenting Consumer Markets Benefit Segmentation requires finding the major benefitspeople look for in the product class, the kinds of people wholook for each benefit, and the major brands that deliver each benefit.User Status divides buyers into ex-users, potential users, first- time users, and regular users of a product. Usage Rate divides buyers into light, medium, and heavy product users. Loyalty Status divides buyers into groups according to their degree of loyalty. ·
  • 17. Segmenting Consumer Markets Multiple Segmentation Bases are used to identify smaller, better-defined target groups. Geodemographic Segmentation is an example ofmultivariable segmentation that divides groups into consumer lifestyle patterns. · Market - Product Grid ·
  • 18. Requirements for Effective SegmentationMeasurable in terms of size, purchasing power, and profiles of thesegments.Accessible refers to the fact that the market can be effectively reachedand served.Substantial refers to the fact that the markets are large and profitableenough to serve.Differentiable refers to the fact that the markets are conceptuallydistinguishable and respond differently to marketing mix elements andprograms.Actionable refers to the fact that effective programs can be designedfor attracting and serving the segments. · Evaluating Market Segments• Segment size and growth • Smaller versus larger segments • Growth potential• Segment structural attractiveness • Competition • Substitute products • Power of buyers • Power of suppliers• Company objectives and resources • Competitive advantage • Availability of resources • Consistent with company objectives ·
  • 19. Target Marketing Strategies Undifferentiated Marketing targets the whole market with one offer. (Mass marketing. Focuses on common needs rather than what’s different). Differentiated Marketing targets several different market segments and designs separate offers for each one. (Goal is to achieve higher sales and stronger position. More expensive than Undifferentiated Marketing). Concentrated Marketing targets a small share of a large market. (Limited company resources. Knowledge of the market. More effective and efficient). · Target Marketing Strategies Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations. (Local marketing. Individual marketing).• Local Marketing involves tailoring brands and promotion to the needs and wants of local customer groups (Cities, Neighborhoods, Stores). • Benefits: • Increased marketing effectiveness in competitive markets • More customer-specific offerings • Challenges: • Increased manufacturing and marketing costs • Less economy of scale • Logistics • Dilution of company image• Individual Marketing involves tailoring products and marketing programs to the needs and preferences of individual customers (One-to-one marketing, Mass customization, Markets-of-one marketing) ·
  • 20. Choosing a Targeting Strategy• Depends on: • Company resources • Product variability • Product life-cycle stage • Market variability • Competitor’s marketing strategies · Differentiation & Positioning
  • 21. Differentiation & Positioning Product Position is the way the product is defined by consumers on important attributes - the place the productoccupies in consumers’ minds relative to competing products. (Perceptions, Impressions, Feelings)Positioning Maps show consumer perceptions of their brandsversus competing products on important buying dimensions. (Price and Orientation) · Chocolate Milk for Adults? ·
  • 22. Chocolate Milk for Adults? · Differentiation and Positioning• Choosing a Differentiation and Positioning Strategy 1. Identifying a set of possible competitive advantages 2. Choosing the right competitive advantages 3. Selecting an overall positioning strategy 4. Developing a Positioning Statement ·
  • 23. Differentiation and Positioning1. Identifying a set of possible competitive advantages to build a position by providing superior value from: • Product differentiation • Service differentiation • Channels • People • Image Competitive Advantage is the advantage over competitorsgained by offering greater value either through lower prices or by providing more benefits that justify higher prices. · Differentiation and Positioning2. Choosing the Right Competitive Advantages. A difference is worth establishing to the extent that it satisfies the following criteria: • Important • Distinctive • Superior • Communicable • Preemptive • Affordable ·
  • 24. Differentiation and Positioning Points-of-difference (PODs) are attributes or benefits consumers strongly associate with a brand, positivelyevaluate, and believe they could not find to the same extent with a competitive brand. Points-of-parity (POPs)are associations that are notnecessarily unique to the brand but may be shared with other brands. · Differentiation and Positioning PODs examples • Style • Product form • Design • Features • Ordering ease • Performance • Delivery • Conformance • Installation • Durability • Customer training • Reliability • Customer consulting • Reparability • Maintenance ·
  • 25. Differentiation and Positioning3. Selecting an Overall Strategy • More for more • More for the same • Same for less • Less for much less • More for less Value Proposition is the full mix of benefits upon which a brand is positioned. · Differentiation and Positioning4. Developing a Positioning Statement Positioning Statement states the product’s membership in a category and then shows its point-of-difference from other members of the category. ·
  • 26. Products, Services & Brands Product and Service Decisions• Individual Product and Service Decisions • Product attributes (Quality, Features, Style & Design) • Branding • Packaging • Labeling • Product support services• Product Line Decisions • Length (number of items: Stretching, Filling) ·
  • 27. Branding Brand represents the consumer’s perceptions and feelings about aproduct and its performance. It is the company’s promise to deliver a specific set of features, benefits, services, and experiences consistently to the buyers.• Advantages of Strong Brands • Improved perceptions of product performance • Greater loyalty • Less vulnerability to competitive marketing actions • Less vulnerability to crises • Larger margins • More inelastic consumer response • Greater trade cooperation • Increased marketing communications effectiveness • Possible licensing opportunities · Branding Brand Equity is the positive differential effect that knowing the brand name has on customer response to the product or service.Brand equity provides competitive advantage (Consumer awareness and loyalty, Benefits, Beliefs and Value).Customer Equity is the value of the customer relationships that the brand creates. Brand Valuation is the process of estimating the total financial value of the brand. ·
  • 28. Customer-based Brand Equity pyramid · Pricing Strategies
  • 29. Pricing StrategiesNew Product Pricing Strategies Price Adjustment Strategies • Skimming • Discount and allowance • Penetration pricing • Segmented pricing • Psychological pricingProduct Mix Pricing Strategies • Promotional pricing• Product line pricing • Geographical pricing• Optional product pricing • Dynamic pricing• Captive product pricing • International pricing• By-product pricing• Product bundle pricing Price Change • Price cuts • Price increases · Pricing Strategies ·
  • 30. New Product Pricing Strategies Market Skimming Pricing is a strategy with high initial prices to “skim” revenue layers from the market.• Product quality and image must support the price• Buyers must want the product at the price• Costs of producing the product in small volume should not cancel the advantage of higher prices• Competitors should not be able to enter the market easily · New Product Pricing Strategies Market Penetration Pricing sets a low initial price in order to penetrate the market quickly and deeply to attract a large number of buyers quickly to gain market share. • Price sensitive market • Inverse relationship of production and distribution cost to sales growth • Low prices must keep competition out of the market ·
  • 31. Product Mix Pricing Strategies Product line pricing takes into account the cost differences between products in the line, customer evaluation of their features, and competitors’ prices. Optional product pricing takes into account optional or accessory products along with the main product. Captive product pricing involves products that must be used along with the main product. · Product Mix Pricing Strategies Two-part pricing is where the price is broken into Fixed fee & Variable usage fee. By-product pricing refers to products with little or novalue produced as a result of the main product. Producers will seek little or no profit other than the cost to cover storage and delivery. Product bundle pricing combines several products at a reduced price. ·
  • 32. Marketing Channels and Supply Chain Management Marketing Channels Marketing Channel is a set of independent organizations that help make a product or service available for use or consumption by the consumer or business users.• Channel members add value by bridging the major time, place, and possession gaps that separate goods and services from those who would use them.• Producers use intermediaries because they create greater efficiency in making goods available to target markets.• Intermediaries offer the firm more than it can achieve on its own through their contacts, experience, specialization, and scale of operations.• From an economic view, intermediaries transform the assortment of products into assortments wanted by consumers ·
  • 33. How Marketing Channels add Value• Information (gathering and distributing research and intelligence information about actors and forces in the marketing environment needed for planning and aiding exchange).• Promotion (developing and spreading persuasive communications about an offer).• Contacts (finding and communicating with prospective buyers).• Matching (shaping and fitting the offer to the buyer’s needs, including activities such as manufacturing, grading, assembling, and packaging). · How Marketing Channels add Value• Negotiation (reaching an agreement on price and other terms of the offer so that ownership or possession can be transferred).• Physical Distribution (transporting and storing goods).• Financing (acquiring and using funds to cover the costs or carrying out the channel work).• Risk Taking (assuming the risks of carrying out the channel work). ·
  • 34. Channel Members Channel Level refers to each layer of marketing intermediaries that performs some work in bringing the product and its ownership closer to the final buyer. Direct Marketing Channel has no intermediary levels; the company sells directly to consumers. Indirect Marketing Channels contain one or more intermediaries. · Channel Design Decisions• Designing a channel system requires: • Analyzing consumer needs • Setting channel objectives • Identifying major channel alternatives • Evaluation ·
  • 35. Integrated Marketing Communications Strategy The Promotion Mix The Promotion Mix is the specific blend of advertising, public relations, personal selling, and direct-marketing tools that the company uses to persuasively communicate customer value and build customer relationships.• Major Promotion Tools • Advertising • Sales promotion • Public relations • Personal selling • Direct marketing ·
  • 36. The Promotion MixAdvertising is any paid form of non-personal presentationand promotion of ideas, goods, or services by an identified sponsor. (Broadcast, Print, Internet, Outdoor)Sales Promotion is the short-term incentives to encourage the purchase or sale of a product or service. (Discounts, Coupons, Displays, Demonstrations)Public Relations involves building good relations with the company’s various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, andevents. (Press releases, Sponsorships, Special Events, Web) · The Promotion MixPersonal Selling is the personal presentation by the firm’s sales force for the purpose of making sales and buildingcustomer relationships. (Sales Presentations, Trade Shows, Incentive Programs)Direct Marketing involves making direct connections withcarefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships—by using direct mail, telephone, direct- response television, e-mail, and the Internet to communicate directly with specific consumers (Catalog, Telemarketing, Kiosks) ·
  • 37. Total Promotion Mix Advertising reaches masses of geographically dispersedbuyers at a low cost per exposure and enables the seller torepeat a message many times. But it is impersonal, cannot be directly persuasive as personal selling, and can be expensive. Personal Selling is the most effective method at certain stages of the buying process, particularly in building buyers’ preferences, convictions, and actions and developing customer relationships. · Total Promotion Mix Sales Promotion includes coupons, contests, cents-off deals, and premiums that attract consumer attention and offer strong incentives to purchase. It can be used to dramatize product offers and to boost sagging sales. Public Relations is a very believable form of promotion that includes new stories, features, sponsorships, and events.Direct Marketing is a non-public, immediate, customized,and interactive promotional tool that includes direct mail, catalogs, telemarketing, and online marketing. ·
  • 38. Total Promotion Mix Push Strategy involves pushing the product to the consumers by inducing channel members to carry theproduct and promote it to final consumers. Used by B2B companies.Pull Strategy is when the producer directs its marketingactivities toward the final consumers to induce them to buy the product and create demand from channel members. Used by B2C companies. · ·
  • 39. Sources• Ferrell, O.C. and Hartline, M. D. (2005). Marketing Strategy, 3rd ed. New York: Thomson Education.• Kerin, R., Hartley, S. and Rudelius, W. (2007). Marketing The Core, 2nd ed. New York: MacGraw-Hill Irwin.• Kotler, P. and Armstrong, G. (2006). Principles of Marketing, 11th ed. New Jersey: Pearson Education.• Kotler, P. and Keller, K. L. (2009). Marketing Management, 13th ed. New Jersey: Pearson Education. ·