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Definitions of marketing ‘ Marketing is the management process that identifies, anticipates and satisfies customer requirements profitably’ The Chartered Institute of Marketing
‘ The right product, in the right place, at the right time, and at the right price’  Adcock et al
‘ Marketing is the human activity directed at satisfying human needs and wants through an exchange process’ Kotler 1980
‘ Marketing is a social and managerial process by which individuals and groups obtain what they want and need through creating, offering and exchanging products of value with others’ Kotler 1991
Implications of marketing Who are our existing / potential customers? What are their current / future needs? How can we satisfy these needs? Can we offer a product/ service that the customer would value? Can we communicate with our customers? Can we deliver a competitive product of service? Why should customers buy from us?
The marketing concept choosing and targeting appropriate customers positioning your offering interacting with those customers controlling the marketing effort continuity of performance
Successful marketing requires: P rofitable O ffensive (rather than defensive) I ntegrated S trategic (is future orientated) E ffective (gets results)  Hugh Davidson 1972
Marketing management process Analysis/Audit - where are we now? Objectives  - where do we want to be? Strategies - which way is best? Tactics - how do we get there? (Implementation - Getting there!) Control - Ensuring arrival
Why is marketing planning necessary? Systematic futuristic thinking by management better co-ordination of a company’s efforts development of performance standards for control sharpening of objectives and policies better prepare for sudden developments
Why is marketing planning necessary? Systematic futuristic thinking  by management better co-ordination of company efforts development of better performance standards for control sharpening of objectives and policies better prepare for sudden new developments managers have a vivid sense of participation
Criticisms of marketing planning Formal plans can be quickly overtaken by events Elements of the plan my be kept secret for no reason gulf between senior managers and implementing managers the plan needs a sub-scheme of actions
Objectives of the marketing plan Acts as a roadmap assist in management control and monitoring the implementation of strategy informs new participants in the plan of their role and function to obtain resources for implementation to stimulate thinking and make better use of resources
Assignment of responsibilities, tasks and timing Awareness of problems, opportunities and threats Essential marketing information may have been missing if implementation is not carefully controlled by managers, the plan is worthless!
The contents and structure of the marketing plan The executive summary table of contents situational analysis and target market marketing objectives marketing strategies  marketing tactics schedules and budgets financial data and control
Cautionary notes for effective planning Don’t blindly rely on mathematical and statistical calculations. Use your judgement as well Don’t ever assume that past trends can be exploited into the future forever if drawing conclusions from statistical data, make sure the sample size is sufficiently large
Behavioural planning problems Planning recalcitrance: resistance and non-co-operation by managers in planning fear of uncertainty in planning: a lack of comfort in planning activities political interests in planning activities:resource bargaining, padding of requirements, and avoidance of consensus planning avoidance: compliance rather than commitment to planning
Standard Planning Framework Analysis - where are we now? Objectives - where do we want to be? Strategies - which way is best? Tactics - how do we ensure arrival? Control - are we on the right track?
Marketing Information Systems Marketing Research What is Marketing Research? Process Terminology Techniques MKIS - Marketing Information Systems  What is MKIS Components of an electronic MKIS
Marketing Research ‘ the systematic gathering, recording and analysing of data about problems relating to the marketing of goods and services’ American Marketing Association
The Marketing Research Process Set objectives Define research Problem Assess the value of the research Construct a research proposal Specify data collection method Specify techniques of measurement Select the sample Data collection Analysis of results Present in a final report
Terminology of Marketing Research Primary data - collected firsthand Secondary data - already exists, desk research Quantitative research - statistical basis Qualitative research - subjective and personal sampling - studying part of a ‘population’ to learn about the whole
Marketing Research Techniques Interviews face-to-face telephone postal questionnaire Attitude measurement cognitive component (know/believe about an act/object) affective component (feel about an act/object) conative component (behave towards an object or act)
Likert scale strongly agree agree neither agree nor disagree disagree strongly disagree Semantic differential scales - differences between words e.g.  practical v impractical  Projective techniques sentence completion psychodrama (yourself as a product) friendly martian (what someone else might do)
Group discussion and focus group Postal research questionnaires Diary panels - sources of continuous data In-home scanning - hand-held light pen to scan barcodes Telephone research Observation home audit direct observation In-store testing
What is MKIS? ‘ MKIS (MIS) is a set of procedures and methods for the regular, planned collection, analysis and presentation of information for use in marketing decisions’ American Marketing Association
The components of a computerised MKIS Model Bank Data Bank Statistical Bank MKIS Display unit Marketing Manager
The components of a computerised MKIS Data bank - raw data e.g historical sales data, secondary data Statistical bank -  programmes to carry-out sales forecasts, spending projections A model bank - stores marketing models e.g Ansoff’s matrix, Boston Matrix Display unit - VDU and keyboard
The Marketing Environment and Competitor Analysis SWOT analysis PEST analysis Five forces analysis
SWOT analysis Strengths (internal) Weaknesses (internal) Opportunities (external) Threats (external)
 
PEST analysis Political factors Economic factors Socio-cultural factors Technological factors
Political/legal Monopolies legislation Environmental protection laws Taxation policy Employment laws Government policy Legislation Others?
Economic Factors Inflation Employment Disposable income Business cycles Energy availability and cost Others?
Sociocultural factors Demographics Distribution of income Social mobility Lifestyle changes Consumerism Levels of education Others?
Technological New discoveries and innovations Speed of technology transfer Rates of obsolescence Internet Information technology Others?
Source: Adapted from M. E. Porter, Competitive Strategy, Free Press, 1980, p. 4.  Threat of substitutes Potential entrants Threat of entrants Suppliers Bargaining power Substitutes Buyers Bargaining power COMPETITIVE RIVALRY Five forces analysis
Five Forces Analysis: Key Questions and Implications What are the  key forces  at work in the competitive environment? Are there  underlying forces  driving competitive forces? Will competitive  forces  change? What are the  strengths and weaknesses  of competitors in relation to the competitive forces? Can  competitive strategy  influence competitive forces (eg by building barriers to entry or reducing competitive rivalry)?
Buyer Behaviour Dominant Family Purchase - Cozenza 1985 Demographic Factors The Consumer Buying Process Maslow’s hierarchy of needs UK socioeconomic classification scheme Types of buyer behaviour The Buying Decision Process Organisational Buyer Behaviour
Dominant Family Purchase - Cozenza 1985
Demographic Factors Age Stage in family life cycle Occupation Economic circumstances Lifestyle social influence variables family background reference groups roles and status
The Consumer Buying Process Marketing Inputs Product Price Promotion Place Consumer Purchase Decisions Product Choice Location Choice Brand Choice Other Choices Psychological Inputs Culture Attitude Learning Perception Based on Cohen (1991)
Maslow’s Hierarchy of Needs Physiological Safety Social Esteem Self  Actualisation
UK socioeconomic classification scheme
Types of buyer behaviour Complex buyer behaviour e.g. Intel Pentium Processor Dissonance-reducing behaviour (brand reduces after-sales discomfort) Habitual buying behaviour e.g. salt - little difference variety seeking behaviour - significant brand differences e.g soap powder
The Buying Decision Process recognition of the need e.g a new PC choice of involvement level (time and effort justified) e.g. two week ends identification of alternatives e.g. Dell, PC World evaluation of alternatives I.e. price, customer service, software support, printer/scanner package decision - choice made e.g Epsom  action e.g buy Epsom model from Comet post-purchase behaviour I.e. use, breakdowns, etc
Organisational Buyer Behaviour ‘ The decision-making process by which formal organisations establish the need for purchased products and services, and identify, evaluate, and choose among alternative brands and suppliers’ Kotler and Armstrong 1989
Characteristics of organisational buyer behaviour Organisation purpose  - Goodyear Tyres Derived demand - follows cars and lorries Concentrated purchasing - stockholdings of rubber Direct dealings - large purchaser of basic rubber - no intermediaries Specialist activities - learns about the product Multiple purchase influences - DMU - Decision making unit
Strategic Development Product Life Cycle (Revisited in ‘Product’) Bowman’s Competitive Strategy Options New Product Development (NPD)
 
Five stages of the PLC Product development - sales are zero, investment costs are high Introduction - profits do not exist, heavy expense of product introduction Growth - rapid market acceptance and increasing profits Maturity - slowdown in sales growth. Profits level-off. Increase outlay  to compete
Decline - sales fall-off and profits drop
PLC exercise The Ford Escort  The Mini Cooper The Internet Phone Cadbury’s Fuse The Boeing 747 The Millennium Dome KIT KAT
Source: Based on the work of Cliff Bowman. See C.Bowman and D.Faulkner.  Competitive and Corporate Strategy, Irwin, 1996. Bowman’s Strategy Clock
1  Low price/low added value Likely to be segment specific 2  Low price Risk of price war and low   margins/need to be cost leader 3  Hybrid Low cost base and reinvestment in   low price and differentiation 4  Differentiation (a) Without price premium Perceived added value by user, yielding market share benefits (b) With price premium Perceived added value sufficient to bear price premium The Strategy Clock: Bowman’s Competitive Strategy Options
5  Focused differentiation Perceived added value to a  particular segment, warranting  price premium 6  Increased price/standard Higher margins if competitors  do not value follow/risk of  losing market share 7  Increased price/low value  Only feasible in monopoly  situation 8  Low value/standard price Loss of market share
New- Product Development Process New product strategy Idea generation Idea screening Concept development and testing Marketing strategy Business analysis Product development Test Marketing  Commercialisation
Products Decisions Product and Service Classification System The Product Life Cycle Introduction to product matrices Boston Matrix (Growth/Share) Ansoff’s Matrix (Product Market)
Product and Service Classification System Convenience goods - little effort, relatively inexpensive Shopping goods - e.g ‘white goods’, DIY equipment, more expensive, infrequent Speciality goods - extensive search e.g Jewellery, gourmet food Unsought goods - e.g. double glazing,
Industrial goods Installations - ‘speciality’ goods of industrial markets - plant and machinery Accessories - maintenance and office equipment Raw materials components  Business to business  e.g. consultants, accountants
Few: Few: trial of trial of early early adopters adopters Growing adopters: Growing adopters: trial of trial of product/service product/service Entry of  Entry of  competitors competitors Growing selectivity Growing selectivity of purchase of purchase May be many May be many Saturation of Saturation of users users Repeat purchase Repeat purchase reliance reliance Fight to maintain Fight to maintain share share Drop-off Drop-off in usage in usage Exit of some Exit of some competitors competitors Development Development Growth Growth Maturity Maturity Decline Decline The life product cycle model
Market Share Market Growth High Low High Low 1. Stars 3. Question Mark (Problem Child) 2. Cash Cows 4. Dogs The Boston Matrix (Growth/Share Matrix)
Market Share Market Growth High Low High Low FUSE Maverick Miniature Heroes KIT KAT MARS BAR TOPIC BOUNTY The Boston Matrix - Chocolate Bars
Diversification Market Penetration Market Development Product Development Existing Markets New Markets Existing Products New Products Ansoff’s Matrix (Product/Market Matrix)
Diversification - related or unrelated E.g. Realignments of the marketing mix E.g. Geographical  expansion Same outlets and  sales strategy  - new product Existing Markets New Markets Existing Products New Products Ansoff’s Matrix (Product/Market Matrix)
Products Decisions Product and Service Classification System? The Product Life Cycle stages? Growth/Share? Product Market?
Pricing Decisions Pricing strategies Pricing exercise Ten ways to ‘increase’ prices without increasing price - Winkler
Low High Low High Economy Strategy e.g. Tesco  spaghetti Penetration e.g. Telewest  cable phones Skimming e.g. New film or  album Premium e.g. BA first  class Price Quality
Pricing strategies Premium pricing Uses a high price, but gives a good product/service exchange e.g. Concorde, The Ritz Hotel Penetration pricing offers low price to gain market share - then increases price e.g. France Telecom - to attract new corporate clients (or Telewest cable) Economy pricing placed at ‘no frills’, low price e.g. Soups, spaghetti, beans - ‘economy’ brands
Price skimming where prices are high - usually during introduction e.g new albums or films on release ultimately prices will reduce to the ‘parity’ Psychological pricing to get a customer to respond on an emotional, rather than rational basis  .e.g 99p not £1.01 ‘price point perspective Product line pricing rationale of a product range e.g. MARS 32p, Four-pack 99p, Bite-size £1.29 Pricing variations ‘ off-peak’ pricing, early booking discounts,etc e.g Grundig offers a ‘cash back’ incentive for expensive goods
Optional product-pricing e.g. optional extras - BMW famously under-equipped Captive product pricing products that complement others e.g Gillette razors (low price) and blades (high price) Product-bundle pricing sellers combine several products at the same price e.g software, books, CDs. Promotional pricing BOGOF e.g. toothpaste, soups, etc
Geographical pricing different prices for customers in different parts of the world e.g.Include shipping costs, or place onPLC Value pricing usually during difficult economic conditions e.g. Value menus at McDonalds
Ten ways to ‘increase’ prices without increasing price - Winkler Revise the discount structure Change the minimum order size Charge for delivery and special services Invoice for repairs on serviced equipment Charge for engineering, installation Charge for overtime on rushed orders Collect interest on overdue accounts
Produce less of the lower margin models in the line Write penalty clauses into contracts Change the physical characteristics of the product
Channel and Distribution Tactics Bucklin’s definition of distribution Today’s system of exchange Channel intermediaries Six basic channel decisions Selection consideration Potential Influence Strategies - Frazier and Sheth (1989) Frequencies of use of influence strategies - Frazier and Summers (1984)
A channel of distribution comprises a set of institutions which perform all of the activities utilised to move a product and its title from production to consumption Bucklin -  Theory of Distribution Channel Structure  (1966)
Negotiation Promotion Contact Transporting and storing Financing Packaging Money Goods Today’s system of exchange Producers Users
Channel intermediaries - Wholesalers Break down ‘bulk’ buys from producers and sell small quantities to retailers Provides storage facilities reduces contact cost between producer and consumer Wholesaler takes some of the marketing responsibility e.g sales force, promotions
Channel intermediaries - Agents Mainly used in international markets Commission agent - does not take title of the goods. Secures orders. Stockist agent - hold ‘consignment’ stock Control is difficult due to cultural differences Training, motivation, etc are expensive
Channel intermediaries - Retailer Much stronger personal relationship with the consumer Hold a variety of products Offer consumers credit Promote and merchandise products Price the final product Build retailer ‘brand’ in the high street
Channel intermediaries - Internet Sell to a geographically disperse market Able to target and focus on specific segments Relatively low set-up costs Use of e-commerce technology (for payment, shopping software, etc) Paradigm shift in commerce and consumption
Six basic channel decisions Direct or indirect channels Single or multiple channels Length of channel Types of intermediaries Number of intermediaries at each level Which intermediaries? Avoid intrachannel conflict
Selection consideration Market segment - must know the specific segment and target customer Changes during plc - different channels are exploited at various stages of plc Producer-distributor fit - their policies, strategies and image Qualification assessment - experience and track record must be established Distributor training and support
Potential Influence Strategies- Frazier and Sheth (1989) Indirect influence strategies - information is merely exchanged with channel member personnel Direct unmediated strategies - consequences of a poor response from the market are stressed Reward and punishment strategies - given to channel members and their firms
Direct unweighted strategy or request - producer’s wishes are communicated . No consequences are applied or mentioned Direct mediated strategies - specific action is requested and consequences of rejection are stressed e.g.1 control of retail pricing e.g.2 minimum order size e.g.3 salesperson training e.g.4 physical layout of store e.g. 5 territorial and customer restrictions
Frazier and Summers (1984) Frequencies of use of Influence Strategies
Promotions Decisions Elements in the communication process Promotions mix The promotions message Executions style Media choice? Promotional objectives
Media Message Sender Encoding Response Feedback Noise Decoding Receiver Elements in the Communication Process
Sender - party sending the message Encoding - message in symbolic form Message - word, pictures and symbols that the sender transmits Media - the communication channel e.g radio Decoding - receiver assigns meaning to symbols encoded by the sender
Response - reaction of the receiver after being exposed to the to the message Feedback - the part of the receiver’s response after being communicated to the sender Noise - unplanned static or distortion during the communication process e.g. competitor action (Creature Comforts?)
Promotions Mix Personal selling Telemarketing Direct mail Trade fairs and exhibitions Commercial television Newspapers and magazines Radio Cinema Point of sale displays Packaging
The Promotional Message Grab ATTENTION Excite INTEREST Create DESIRE Prompt ACTION AIDA
Execution styles Slice of life  e.g. OXO Lifestyle e.g. After Eight mints Fantasy e.g .Turkish Delight Mood or image e.g. Timotei shampoo Musical e.g .Gap Personality symbol e.g. Richard Branson
Technical expertise e.g.Vorsprung durch Technik - Audi Scientific evidence e.g. Whiskers Testimonial evidence e.g. Ian Botham
Media choice? Marketing objectives Definition of problem e.g falling awareness Evaluation of different tools choice of optimum mix of promotional methods Integration into overall marketing communication programme
Exercise - What beliefs and expectations do you have about the following brands? How far are these due to promotion as opposed to personal experience ? Fairy liquid Persil washing powder Midland Bank Virgin Radio Nissan Tesco
Promotional objectives To support sales increases To encourage trial To create awareness To inform about a feature or benefit To remind To reassure To create an image To modify attitudes
Implementation The implementation process An action checklist Total quality and marketing Managing the organisation/stakeholder interface Activities to establish and build customer relationships Relationship marketing McKinsey 7-S framework
Marketing Strategy Tactical  Decisions Implementing the Marketing Mix Monitoring  Results Internal  Factors External Factors Adaptation of  strategy/tactics The Marketing Implementation Process Berman and Evans 1985
Implementation problems Internal problems e.g change of management External problems e.g. changing competition Poor planning e.g. Hoover’s flight tickets Poor intelligence e.g. 1985 Coca-Cola Poor execution
Implementing a programme -  an action checklist Agree the implementation strategy Agree a timeframe Draw up detailed implementation plans Set up a team of stakeholders Establish good project management Personalise the case for change Ensure participation
Create a sense of purpose and urgency to tackle real problems which have prevented progress in the past motivate be prepared for conflict Be willing to negotiate Anticipate stress Build skills Build in the capacity for learning Monitor and evaluate
Total Quality and Marketing Quality is what customers say it is. Juran and TQM zero defects right first time continuous improvement Statistical process control (SPC) New relationships with suppliers (JIT) Quality Assurance e.g BS EN ISO 9000
Managing the organisation/stakeholder interface External and internal relationships Accountability of managers Marketer projects an image and style Ethical responsibilities towards consumers Social responsibility dangerous products e.g. cigarettes dishonest marketing and promotion the abuse of power the availability of information
Activities to establish and build customer relationships Need for long term relationships UACCA - ‘expensive’ in promotional terms Build sales to existing customers Improving service quality Auditing the fulfilment of customer needs Cause a cultural change to a marketing orientation - Marketing Myopia Levitt (1960)
Relationship marketing The consistent application of up-to-date knowledge of individual customers to product and service design . . . . In order to develop a continuous and long-term relationship’  Cram Not mass marketing. Aimed at individual. Customer retention not attraction Long term, ongoing relationships Regular customer contact Spirit of trust
Mckinsey 7-S framework Strategy Structure Systems Share values Style Skills Staff

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Marketing Planning

  • 1. Definitions of marketing ‘ Marketing is the management process that identifies, anticipates and satisfies customer requirements profitably’ The Chartered Institute of Marketing
  • 2. ‘ The right product, in the right place, at the right time, and at the right price’ Adcock et al
  • 3. ‘ Marketing is the human activity directed at satisfying human needs and wants through an exchange process’ Kotler 1980
  • 4. ‘ Marketing is a social and managerial process by which individuals and groups obtain what they want and need through creating, offering and exchanging products of value with others’ Kotler 1991
  • 5. Implications of marketing Who are our existing / potential customers? What are their current / future needs? How can we satisfy these needs? Can we offer a product/ service that the customer would value? Can we communicate with our customers? Can we deliver a competitive product of service? Why should customers buy from us?
  • 6. The marketing concept choosing and targeting appropriate customers positioning your offering interacting with those customers controlling the marketing effort continuity of performance
  • 7. Successful marketing requires: P rofitable O ffensive (rather than defensive) I ntegrated S trategic (is future orientated) E ffective (gets results) Hugh Davidson 1972
  • 8. Marketing management process Analysis/Audit - where are we now? Objectives - where do we want to be? Strategies - which way is best? Tactics - how do we get there? (Implementation - Getting there!) Control - Ensuring arrival
  • 9. Why is marketing planning necessary? Systematic futuristic thinking by management better co-ordination of a company’s efforts development of performance standards for control sharpening of objectives and policies better prepare for sudden developments
  • 10. Why is marketing planning necessary? Systematic futuristic thinking by management better co-ordination of company efforts development of better performance standards for control sharpening of objectives and policies better prepare for sudden new developments managers have a vivid sense of participation
  • 11. Criticisms of marketing planning Formal plans can be quickly overtaken by events Elements of the plan my be kept secret for no reason gulf between senior managers and implementing managers the plan needs a sub-scheme of actions
  • 12. Objectives of the marketing plan Acts as a roadmap assist in management control and monitoring the implementation of strategy informs new participants in the plan of their role and function to obtain resources for implementation to stimulate thinking and make better use of resources
  • 13. Assignment of responsibilities, tasks and timing Awareness of problems, opportunities and threats Essential marketing information may have been missing if implementation is not carefully controlled by managers, the plan is worthless!
  • 14. The contents and structure of the marketing plan The executive summary table of contents situational analysis and target market marketing objectives marketing strategies marketing tactics schedules and budgets financial data and control
  • 15. Cautionary notes for effective planning Don’t blindly rely on mathematical and statistical calculations. Use your judgement as well Don’t ever assume that past trends can be exploited into the future forever if drawing conclusions from statistical data, make sure the sample size is sufficiently large
  • 16. Behavioural planning problems Planning recalcitrance: resistance and non-co-operation by managers in planning fear of uncertainty in planning: a lack of comfort in planning activities political interests in planning activities:resource bargaining, padding of requirements, and avoidance of consensus planning avoidance: compliance rather than commitment to planning
  • 17. Standard Planning Framework Analysis - where are we now? Objectives - where do we want to be? Strategies - which way is best? Tactics - how do we ensure arrival? Control - are we on the right track?
  • 18. Marketing Information Systems Marketing Research What is Marketing Research? Process Terminology Techniques MKIS - Marketing Information Systems What is MKIS Components of an electronic MKIS
  • 19. Marketing Research ‘ the systematic gathering, recording and analysing of data about problems relating to the marketing of goods and services’ American Marketing Association
  • 20. The Marketing Research Process Set objectives Define research Problem Assess the value of the research Construct a research proposal Specify data collection method Specify techniques of measurement Select the sample Data collection Analysis of results Present in a final report
  • 21. Terminology of Marketing Research Primary data - collected firsthand Secondary data - already exists, desk research Quantitative research - statistical basis Qualitative research - subjective and personal sampling - studying part of a ‘population’ to learn about the whole
  • 22. Marketing Research Techniques Interviews face-to-face telephone postal questionnaire Attitude measurement cognitive component (know/believe about an act/object) affective component (feel about an act/object) conative component (behave towards an object or act)
  • 23. Likert scale strongly agree agree neither agree nor disagree disagree strongly disagree Semantic differential scales - differences between words e.g. practical v impractical Projective techniques sentence completion psychodrama (yourself as a product) friendly martian (what someone else might do)
  • 24. Group discussion and focus group Postal research questionnaires Diary panels - sources of continuous data In-home scanning - hand-held light pen to scan barcodes Telephone research Observation home audit direct observation In-store testing
  • 25. What is MKIS? ‘ MKIS (MIS) is a set of procedures and methods for the regular, planned collection, analysis and presentation of information for use in marketing decisions’ American Marketing Association
  • 26. The components of a computerised MKIS Model Bank Data Bank Statistical Bank MKIS Display unit Marketing Manager
  • 27. The components of a computerised MKIS Data bank - raw data e.g historical sales data, secondary data Statistical bank - programmes to carry-out sales forecasts, spending projections A model bank - stores marketing models e.g Ansoff’s matrix, Boston Matrix Display unit - VDU and keyboard
  • 28. The Marketing Environment and Competitor Analysis SWOT analysis PEST analysis Five forces analysis
  • 29. SWOT analysis Strengths (internal) Weaknesses (internal) Opportunities (external) Threats (external)
  • 30.  
  • 31. PEST analysis Political factors Economic factors Socio-cultural factors Technological factors
  • 32. Political/legal Monopolies legislation Environmental protection laws Taxation policy Employment laws Government policy Legislation Others?
  • 33. Economic Factors Inflation Employment Disposable income Business cycles Energy availability and cost Others?
  • 34. Sociocultural factors Demographics Distribution of income Social mobility Lifestyle changes Consumerism Levels of education Others?
  • 35. Technological New discoveries and innovations Speed of technology transfer Rates of obsolescence Internet Information technology Others?
  • 36. Source: Adapted from M. E. Porter, Competitive Strategy, Free Press, 1980, p. 4. Threat of substitutes Potential entrants Threat of entrants Suppliers Bargaining power Substitutes Buyers Bargaining power COMPETITIVE RIVALRY Five forces analysis
  • 37. Five Forces Analysis: Key Questions and Implications What are the key forces at work in the competitive environment? Are there underlying forces driving competitive forces? Will competitive forces change? What are the strengths and weaknesses of competitors in relation to the competitive forces? Can competitive strategy influence competitive forces (eg by building barriers to entry or reducing competitive rivalry)?
  • 38. Buyer Behaviour Dominant Family Purchase - Cozenza 1985 Demographic Factors The Consumer Buying Process Maslow’s hierarchy of needs UK socioeconomic classification scheme Types of buyer behaviour The Buying Decision Process Organisational Buyer Behaviour
  • 39. Dominant Family Purchase - Cozenza 1985
  • 40. Demographic Factors Age Stage in family life cycle Occupation Economic circumstances Lifestyle social influence variables family background reference groups roles and status
  • 41. The Consumer Buying Process Marketing Inputs Product Price Promotion Place Consumer Purchase Decisions Product Choice Location Choice Brand Choice Other Choices Psychological Inputs Culture Attitude Learning Perception Based on Cohen (1991)
  • 42. Maslow’s Hierarchy of Needs Physiological Safety Social Esteem Self Actualisation
  • 44. Types of buyer behaviour Complex buyer behaviour e.g. Intel Pentium Processor Dissonance-reducing behaviour (brand reduces after-sales discomfort) Habitual buying behaviour e.g. salt - little difference variety seeking behaviour - significant brand differences e.g soap powder
  • 45. The Buying Decision Process recognition of the need e.g a new PC choice of involvement level (time and effort justified) e.g. two week ends identification of alternatives e.g. Dell, PC World evaluation of alternatives I.e. price, customer service, software support, printer/scanner package decision - choice made e.g Epsom action e.g buy Epsom model from Comet post-purchase behaviour I.e. use, breakdowns, etc
  • 46. Organisational Buyer Behaviour ‘ The decision-making process by which formal organisations establish the need for purchased products and services, and identify, evaluate, and choose among alternative brands and suppliers’ Kotler and Armstrong 1989
  • 47. Characteristics of organisational buyer behaviour Organisation purpose - Goodyear Tyres Derived demand - follows cars and lorries Concentrated purchasing - stockholdings of rubber Direct dealings - large purchaser of basic rubber - no intermediaries Specialist activities - learns about the product Multiple purchase influences - DMU - Decision making unit
  • 48. Strategic Development Product Life Cycle (Revisited in ‘Product’) Bowman’s Competitive Strategy Options New Product Development (NPD)
  • 49.  
  • 50. Five stages of the PLC Product development - sales are zero, investment costs are high Introduction - profits do not exist, heavy expense of product introduction Growth - rapid market acceptance and increasing profits Maturity - slowdown in sales growth. Profits level-off. Increase outlay to compete
  • 51. Decline - sales fall-off and profits drop
  • 52. PLC exercise The Ford Escort The Mini Cooper The Internet Phone Cadbury’s Fuse The Boeing 747 The Millennium Dome KIT KAT
  • 53. Source: Based on the work of Cliff Bowman. See C.Bowman and D.Faulkner. Competitive and Corporate Strategy, Irwin, 1996. Bowman’s Strategy Clock
  • 54. 1 Low price/low added value Likely to be segment specific 2 Low price Risk of price war and low margins/need to be cost leader 3 Hybrid Low cost base and reinvestment in low price and differentiation 4 Differentiation (a) Without price premium Perceived added value by user, yielding market share benefits (b) With price premium Perceived added value sufficient to bear price premium The Strategy Clock: Bowman’s Competitive Strategy Options
  • 55. 5 Focused differentiation Perceived added value to a particular segment, warranting price premium 6 Increased price/standard Higher margins if competitors do not value follow/risk of losing market share 7 Increased price/low value Only feasible in monopoly situation 8 Low value/standard price Loss of market share
  • 56. New- Product Development Process New product strategy Idea generation Idea screening Concept development and testing Marketing strategy Business analysis Product development Test Marketing Commercialisation
  • 57. Products Decisions Product and Service Classification System The Product Life Cycle Introduction to product matrices Boston Matrix (Growth/Share) Ansoff’s Matrix (Product Market)
  • 58. Product and Service Classification System Convenience goods - little effort, relatively inexpensive Shopping goods - e.g ‘white goods’, DIY equipment, more expensive, infrequent Speciality goods - extensive search e.g Jewellery, gourmet food Unsought goods - e.g. double glazing,
  • 59. Industrial goods Installations - ‘speciality’ goods of industrial markets - plant and machinery Accessories - maintenance and office equipment Raw materials components Business to business e.g. consultants, accountants
  • 60. Few: Few: trial of trial of early early adopters adopters Growing adopters: Growing adopters: trial of trial of product/service product/service Entry of Entry of competitors competitors Growing selectivity Growing selectivity of purchase of purchase May be many May be many Saturation of Saturation of users users Repeat purchase Repeat purchase reliance reliance Fight to maintain Fight to maintain share share Drop-off Drop-off in usage in usage Exit of some Exit of some competitors competitors Development Development Growth Growth Maturity Maturity Decline Decline The life product cycle model
  • 61. Market Share Market Growth High Low High Low 1. Stars 3. Question Mark (Problem Child) 2. Cash Cows 4. Dogs The Boston Matrix (Growth/Share Matrix)
  • 62. Market Share Market Growth High Low High Low FUSE Maverick Miniature Heroes KIT KAT MARS BAR TOPIC BOUNTY The Boston Matrix - Chocolate Bars
  • 63. Diversification Market Penetration Market Development Product Development Existing Markets New Markets Existing Products New Products Ansoff’s Matrix (Product/Market Matrix)
  • 64. Diversification - related or unrelated E.g. Realignments of the marketing mix E.g. Geographical expansion Same outlets and sales strategy - new product Existing Markets New Markets Existing Products New Products Ansoff’s Matrix (Product/Market Matrix)
  • 65. Products Decisions Product and Service Classification System? The Product Life Cycle stages? Growth/Share? Product Market?
  • 66. Pricing Decisions Pricing strategies Pricing exercise Ten ways to ‘increase’ prices without increasing price - Winkler
  • 67. Low High Low High Economy Strategy e.g. Tesco spaghetti Penetration e.g. Telewest cable phones Skimming e.g. New film or album Premium e.g. BA first class Price Quality
  • 68. Pricing strategies Premium pricing Uses a high price, but gives a good product/service exchange e.g. Concorde, The Ritz Hotel Penetration pricing offers low price to gain market share - then increases price e.g. France Telecom - to attract new corporate clients (or Telewest cable) Economy pricing placed at ‘no frills’, low price e.g. Soups, spaghetti, beans - ‘economy’ brands
  • 69. Price skimming where prices are high - usually during introduction e.g new albums or films on release ultimately prices will reduce to the ‘parity’ Psychological pricing to get a customer to respond on an emotional, rather than rational basis .e.g 99p not £1.01 ‘price point perspective Product line pricing rationale of a product range e.g. MARS 32p, Four-pack 99p, Bite-size £1.29 Pricing variations ‘ off-peak’ pricing, early booking discounts,etc e.g Grundig offers a ‘cash back’ incentive for expensive goods
  • 70. Optional product-pricing e.g. optional extras - BMW famously under-equipped Captive product pricing products that complement others e.g Gillette razors (low price) and blades (high price) Product-bundle pricing sellers combine several products at the same price e.g software, books, CDs. Promotional pricing BOGOF e.g. toothpaste, soups, etc
  • 71. Geographical pricing different prices for customers in different parts of the world e.g.Include shipping costs, or place onPLC Value pricing usually during difficult economic conditions e.g. Value menus at McDonalds
  • 72. Ten ways to ‘increase’ prices without increasing price - Winkler Revise the discount structure Change the minimum order size Charge for delivery and special services Invoice for repairs on serviced equipment Charge for engineering, installation Charge for overtime on rushed orders Collect interest on overdue accounts
  • 73. Produce less of the lower margin models in the line Write penalty clauses into contracts Change the physical characteristics of the product
  • 74. Channel and Distribution Tactics Bucklin’s definition of distribution Today’s system of exchange Channel intermediaries Six basic channel decisions Selection consideration Potential Influence Strategies - Frazier and Sheth (1989) Frequencies of use of influence strategies - Frazier and Summers (1984)
  • 75. A channel of distribution comprises a set of institutions which perform all of the activities utilised to move a product and its title from production to consumption Bucklin - Theory of Distribution Channel Structure (1966)
  • 76. Negotiation Promotion Contact Transporting and storing Financing Packaging Money Goods Today’s system of exchange Producers Users
  • 77. Channel intermediaries - Wholesalers Break down ‘bulk’ buys from producers and sell small quantities to retailers Provides storage facilities reduces contact cost between producer and consumer Wholesaler takes some of the marketing responsibility e.g sales force, promotions
  • 78. Channel intermediaries - Agents Mainly used in international markets Commission agent - does not take title of the goods. Secures orders. Stockist agent - hold ‘consignment’ stock Control is difficult due to cultural differences Training, motivation, etc are expensive
  • 79. Channel intermediaries - Retailer Much stronger personal relationship with the consumer Hold a variety of products Offer consumers credit Promote and merchandise products Price the final product Build retailer ‘brand’ in the high street
  • 80. Channel intermediaries - Internet Sell to a geographically disperse market Able to target and focus on specific segments Relatively low set-up costs Use of e-commerce technology (for payment, shopping software, etc) Paradigm shift in commerce and consumption
  • 81. Six basic channel decisions Direct or indirect channels Single or multiple channels Length of channel Types of intermediaries Number of intermediaries at each level Which intermediaries? Avoid intrachannel conflict
  • 82. Selection consideration Market segment - must know the specific segment and target customer Changes during plc - different channels are exploited at various stages of plc Producer-distributor fit - their policies, strategies and image Qualification assessment - experience and track record must be established Distributor training and support
  • 83. Potential Influence Strategies- Frazier and Sheth (1989) Indirect influence strategies - information is merely exchanged with channel member personnel Direct unmediated strategies - consequences of a poor response from the market are stressed Reward and punishment strategies - given to channel members and their firms
  • 84. Direct unweighted strategy or request - producer’s wishes are communicated . No consequences are applied or mentioned Direct mediated strategies - specific action is requested and consequences of rejection are stressed e.g.1 control of retail pricing e.g.2 minimum order size e.g.3 salesperson training e.g.4 physical layout of store e.g. 5 territorial and customer restrictions
  • 85. Frazier and Summers (1984) Frequencies of use of Influence Strategies
  • 86. Promotions Decisions Elements in the communication process Promotions mix The promotions message Executions style Media choice? Promotional objectives
  • 87. Media Message Sender Encoding Response Feedback Noise Decoding Receiver Elements in the Communication Process
  • 88. Sender - party sending the message Encoding - message in symbolic form Message - word, pictures and symbols that the sender transmits Media - the communication channel e.g radio Decoding - receiver assigns meaning to symbols encoded by the sender
  • 89. Response - reaction of the receiver after being exposed to the to the message Feedback - the part of the receiver’s response after being communicated to the sender Noise - unplanned static or distortion during the communication process e.g. competitor action (Creature Comforts?)
  • 90. Promotions Mix Personal selling Telemarketing Direct mail Trade fairs and exhibitions Commercial television Newspapers and magazines Radio Cinema Point of sale displays Packaging
  • 91. The Promotional Message Grab ATTENTION Excite INTEREST Create DESIRE Prompt ACTION AIDA
  • 92. Execution styles Slice of life e.g. OXO Lifestyle e.g. After Eight mints Fantasy e.g .Turkish Delight Mood or image e.g. Timotei shampoo Musical e.g .Gap Personality symbol e.g. Richard Branson
  • 93. Technical expertise e.g.Vorsprung durch Technik - Audi Scientific evidence e.g. Whiskers Testimonial evidence e.g. Ian Botham
  • 94. Media choice? Marketing objectives Definition of problem e.g falling awareness Evaluation of different tools choice of optimum mix of promotional methods Integration into overall marketing communication programme
  • 95. Exercise - What beliefs and expectations do you have about the following brands? How far are these due to promotion as opposed to personal experience ? Fairy liquid Persil washing powder Midland Bank Virgin Radio Nissan Tesco
  • 96. Promotional objectives To support sales increases To encourage trial To create awareness To inform about a feature or benefit To remind To reassure To create an image To modify attitudes
  • 97. Implementation The implementation process An action checklist Total quality and marketing Managing the organisation/stakeholder interface Activities to establish and build customer relationships Relationship marketing McKinsey 7-S framework
  • 98. Marketing Strategy Tactical Decisions Implementing the Marketing Mix Monitoring Results Internal Factors External Factors Adaptation of strategy/tactics The Marketing Implementation Process Berman and Evans 1985
  • 99. Implementation problems Internal problems e.g change of management External problems e.g. changing competition Poor planning e.g. Hoover’s flight tickets Poor intelligence e.g. 1985 Coca-Cola Poor execution
  • 100. Implementing a programme - an action checklist Agree the implementation strategy Agree a timeframe Draw up detailed implementation plans Set up a team of stakeholders Establish good project management Personalise the case for change Ensure participation
  • 101. Create a sense of purpose and urgency to tackle real problems which have prevented progress in the past motivate be prepared for conflict Be willing to negotiate Anticipate stress Build skills Build in the capacity for learning Monitor and evaluate
  • 102. Total Quality and Marketing Quality is what customers say it is. Juran and TQM zero defects right first time continuous improvement Statistical process control (SPC) New relationships with suppliers (JIT) Quality Assurance e.g BS EN ISO 9000
  • 103. Managing the organisation/stakeholder interface External and internal relationships Accountability of managers Marketer projects an image and style Ethical responsibilities towards consumers Social responsibility dangerous products e.g. cigarettes dishonest marketing and promotion the abuse of power the availability of information
  • 104. Activities to establish and build customer relationships Need for long term relationships UACCA - ‘expensive’ in promotional terms Build sales to existing customers Improving service quality Auditing the fulfilment of customer needs Cause a cultural change to a marketing orientation - Marketing Myopia Levitt (1960)
  • 105. Relationship marketing The consistent application of up-to-date knowledge of individual customers to product and service design . . . . In order to develop a continuous and long-term relationship’ Cram Not mass marketing. Aimed at individual. Customer retention not attraction Long term, ongoing relationships Regular customer contact Spirit of trust
  • 106. Mckinsey 7-S framework Strategy Structure Systems Share values Style Skills Staff