Introduction to Marketing

Australia

Adelaide

What is marketing?

What is your most recent purchase?

Why did you buy it? What features did it have? Where did you get it? What was the price? How did you know about it?

Marketing Myopia
by Ted Levitt

Evolution of Marketing
Societal Marketing Orientation The Marketing Orientation

The Selling Orientation

The Product Orientation

Marketing versus Production Orientation

We make information accessible () We lease books () PO:

MO:

PO: MO: PO:

MO:

Movie producer

The Marketing Concept

Customer Satisfaction

Profit (other objective)

Total Company Effort

Societal Marketing Concept

Customer Satisfaction

Company Profit and Societal Welfare

Total Company Effort

Marketing Management

The Marketing Concept

Customer Satisfaction

Profit (other objective)

Total Company Effort

Mass Marketing vs. Target Marketing

Everyone is the same

Everyone is different

Slide 13

Slide 13

Marketing Strategy
Environment

TARGET MARKET A similar group of customers to whom a company wants to appeal

MARKETING MIX

Product

Price

Place

Promotion

Olympus mini
Displayed in lifestyle stands

$US349

Cross promotion with fashion items

Marketing Plan
is a written statement of a marketing strategy and the time-related details for carrying out the strategy. Outlines in detail:
What marketing mix is offered. To what target market. For how long. What resources (costs) are needed and at what rate. What results are expected. What control procedures will be used.

How do they fit together?

Target market Marketing strategy Marketing mix

+
Time related details + control procedures

Marketing plan

+
Other marketing plans

A companys marketing program

Family historian Outdoor Enthusiasts

The Professional

Party People

Marketing Management Process

Analysis Planning Implementation Control

Analysis

Slide 19

The Marketing Audit

A marketing audit is an analysis and evaluation of a firms marketing strategy For both the individual and group assignments you will be analyzing the marketing strategy of FlyDubai You will need to collect all of your own data using secondary sources We will be covering all aspects of an audit over the next three days

Time 9.00am 10.30am 10.30am 10.50am 10.50am 12.20pm

Thursday Feb. 2nd Introductions and Introduction to Marketing Management Morning Break Discussion of Marketing Myopia Article and Discussion of Marketing Planning, Implementation and Control Lunch Marketing Analysis Toolkit: Analyzing the Context, Company and Collaborators of the Apple Case Study

Friday Feb. 3rd Market Segmentation, Targeting and Positioning: The Fashion Channel Case Study Morning Break Market Research and Consumer Behavior: Analyzing Customers and Conducing Research Lunch Product and Brand Strategy, and Product Innovation: The Samsung Case Study

Saturday Feb. 4th Pricing Strategy: Virgin Mobile USA Case Study Morning Break Integrated Marketing Communications Strategy: Cunard

12.20pm 1.40pm 1.40pm 3.10pm

Lunch Class time devoted to analyzing the Vans Case Study

3.10pm 3.30pm 3.30pm 5.00pm

Afternoon Break Marketing Analysis Toolkit: Analyzing Competitors and conducting a SWOT Analysis on the Apple Case Study

Afternoon Break Distribution Strategy: The Apple Case Study

Afternoon Break Class Presentations on the Vans Case Study

ASSESSMENT Workshop Participation Group Presentation

DUE DATE

WEIGHTING 10%

Saturday February 4th, 3.20pm

20%

Individual Assignment Group Marketing Audit

Saturday February 18th, 11.59pm Saturday March 10th, 11.59pm

20% 50%

Analysing the Context, Company and Collaborators

Marketing Strategy
Environment

TARGET MARKET A similar group of customers to whom a company wants to appeal

MARKETING MIX

Product

Price

Place

Promotion

Environmental Context Analysis in the UAE

Demographic Environment Economic Environment Socio-cultural Environment Political and Legal Environment Technological Environment Natural Environment

Competitive Advantage Analysis

Analysis of the Business Model and Competitive Strategy Competitive Advantage Analysis

Competitive Strategies
Lower Cost Differentiation Broad Target

Cost Leadership = become low cost producer in industry

Differentiation = be unique along some dimensions that are valued by buyers Differentiation Focus = be unique in a segment or group of segments

Narrow Target

Cost Focus = become low cost producer in a segment or group of segments

Competitive Advantages

Financial strength
Production flexibility

(ADNOC) (Fisher and Paykel) (Toyota)

Channel relationships
Distribution dominance Patents Technical capability Loyal customer base

(Coca-Cola)
(GlaxoSmithKline)

(Boeing)
(Harley Davidson)

Collaborators and Complementers Analysis

Identify potential collaborators and complementers and analyze the strength and value of your relationships and identify possible opportunities to leverage:
Potential Collaborators Suppliers Retailers Influencers (e.g. bloggers) Potential Complementer Other companies who sell synergistic products

Analyzing Competitors and Conducting a SWOT

Identify Direct and Indirect Competitors

Direct competitors sell a similar product that perform the same function Indirect competitors offer substitute products that fulfil the same need

Competitor Analysis
Purpose To predict future competitive moves To identify areas of competitive vulnerability To predict competitors reactions to own strategy
Framework for competitor analysis:
Companys Current or Planned Strategy Competitor 1s Strengths and Weaknesses Competitor 2s Strengths and Weaknesses

Target Market Product Place Promotion Price Competitive Barriers Likely Response

Industry Competitive Analysis - Porters 5 Forces

Bargaining power of customers

The Industry
Threat of substitute products
Jockeying for position among competitors

Threat of New Entrants

Bargaining power of suppliers

Consumer Products Industry - Competitive Analysis

Strong
Weak buyer power of end user
Bargaining power of cu s to m ers

Strong buyer power of retailers

The Industry
Threat of su b stitute products Threat of New Entrants

Large volume important to the supplier

Bargaining power of suppliers

Some costs in switching supplier

Limited

Consumer Products Industry - Competitive Analysis

Bargaining power of cu s to m ers

Known brand provides some advantage

Threat of su b stitute products

The Industry

Large capital investment needed

Threat of New Entrants

High

Low

Brand price erosion due to store-brand private labels

Bargaining power of suppliers

Chance of small producer superior product but retail barriers

Slide 36

Strategic Planning SWOT Analysis

Internal
Strengths

External
Opportunities

Weaknesses

Threats

Strategic Planning SWOT Analysis

Strengths Pursue opportunities that are a good fit with the companys strengths Opportunities Identify ways in which the company can use its strengths to reduce vulnerability to threats Weaknesses Overcome weaknesses to pursue opportunities

Threats Establish a plan to overcome weaknesses to reduce vulnerability to threats

Simple Rules for Successful SWOT Analysis

Be realistic. Be comprehensive (use print/web resources, such as www.businessballs.com/swotanalysisfreetemplate.htm) Be specific. Prioritise the issues you identify. Have the courage to dream. Where could you go in the future? Brainstorm. Compare your practice with that of your competition. What do you do better? What do you do worse? Keep it short and simple. Recognise that SWOT is subjective. To minimise this issue: All team members prepare a SWOT and compare results.
Source: adapted from http://www.frycomm.com

Market Segmentation, Targeting & Positioning

Understanding Markets
Segmentation: involves identifying and understanding the needs of particular groups of customers.

A market: is a group of potential customers with similar needs, who are willing to exchange something of value for various need-satisfying goods or services.

From Generic Markets to Product Markets

Bicycle Riders
Extreme Recreation

Travellers

Socialisers

Exercisers

Environmentalists

Criteria for segmenting a broad product market

1. Customers within a segment are homogeneous
Similar responses to marketing mix Similar segmenting dimensions

2. Customers in different segments are heterogeneous

Different responses to marketing mix Different segmenting dimensions

3. Segment is substantial
Segment is big enough to be profitable

4. Segmenting dimensions are operational

Useful for identifying customers Helpful in deciding on the marketing mix

Possible Segmentation Dimensions

Geographic location

Country, State or Region City v Rural Density Climate

Demographic
Age Gender Family size Income & Social Class Education

Possible Segmentation Dimensions continued

Behavioural & Situation related

Benefits offered Consumption/use patterns Brand familiarity Buying situation

Psychographic
Lifestyle Interests & Opinions Personality Core Values

Target Marketing Approaches

Single target market approach (concentrated)
Select one homogeneous segment as the target

Multiple target market approach (differentiated)

Select two or more target segments Develop a different marketing mix for each segment

Combined target market approach

Combine submarkets into a single target market Develop one marketing mix for the combined target

Multiple Target Markets

Unilever Personal Care

Colgate Washing Detergent

Positioning (and differentiation)

Positioning = how customers regard proposed and/or present brands images in a market in relation to competitors offerings

Competitive advantage = the marketing mix of a company is perceived by the target market as superior to those of its competitors

Positioning the Brand

1) Identify competitors 2) Determine how your brand and your competitors are perceived by consumers (hint: trial many different adjectives on the axes) 3) Identify where the market segments are located 4) Select ideal positioning for your brand and monitor the situation

Market Research and Consumer Behaviour

Needs Analysis
Functional Symbolic Emotional Social

Consumer Decision Process

Why did you need to buy it? How did you find information about it? How did you decide on the brand? What store did you choose and why? Did you feel any regret or satisfaction?

Involvement in the purchase

The level of concern, or interest in, the purchase process, once the purchase process has been triggered by the need to consider a particular purchase. The level of perceived personal importance. Essentially the level of risk: financial, social and physical.

Involvement and types of decision making

Low purchase involvement High purchase involvement

Habitual decision making

Limited decision making

Extended decision making

Market Research
Secondary data
= information that has previously been collected or published Examples: data from SCAD, computer databases, internal reports, industry trade associations and the Internet

Primary data
= information specifically collected to solve a current problem Examples: surveys, experiments and observational studies

Qualitative Research
Seeks in-depth, open-ended responses - not yes or no answers Examples of qualitative methods
Personal in-depth interviews Focus groups Projective techniques Observation and ethnography

Can provide good ideas or hypotheses Responses may not be representative of the population

Quantitative Research
Seeks structured responses that can be summarised in numbers
e.g. percentages, averages or other statistics

Utilises sampling
= a fraction of the relevant population

Methods include
surveys observation experimentation

Data is more generalizable

Product and Brand Strategy

What is a product?

Levels of a Product
Augmented Product
Delivery & Credit Warranty

Actual Product
Product Support Quality level Brand name After-sales Service

Core Product
Features

Benefit

Style & Design

Packaging

Product Classes
Consumer Industrial

Convenience Shopping Specialty Unsought

Raw Materials Manufactured materials and parts Capital items Supplies and Business Services

Product Lifecycle

Product Mix Decisions

Width: number of different product lines Length: total number of items in product lines Depth: number of versions of each product

Product Mix all the product lines & items offered

Identifying Opportunities for Development

Brand Development Strategies

Existing Product Category New Brand Extension

Existing Brand name

Line Extension

New

Multibrands

New Brands

Evaluating Opportunities:
Product Portfolio Management (BCG Matrix)

 Build Share: here the company can invest to increase market share Harvest: here the company reduces the amount of investment in order to maximise the short-term cash flows and profits from the SBU. Divest: the company can divest the SBU by phasing it out or selling it - in order to use the resources elsewhere Hold: here the company invests just enough to keep the SBU in its present position

Apple - Portfolio Management (BCG Matrix)

GE Strategic Planning Grid

Samsung Case
What product lines do they have? Use the BCG matrix/GE grid to determine strategies for both the Consumer Electronics and Appliances products and the Information Technology products What should they do with the issue of branding?

What about services?

Analysing Satisfaction: The GAPs Model

CUSTOMER
Expected product and service Total Gap Perceived product and service

Gap 1

COMPANY

Product and service delivery Customer-driven product and service designs and standards

Gap 3

Gap 4

External communications to customers

Gap 2 Company perceptions of customer expectations

Slide 76

Which Gap?
Etisalat advertising emphasises Amazing TV + Supersonic Internet + High Quality Landline. Customers not living in the city find that, although they bought the highest Internet speed, they are still experiencing slow downloads and are dissatisfied.

Gap 4

Analysing Satisfaction: The GAPs Model

CUSTOMER
Expected product and service Total Gap Perceived product and service

Gap 1

COMPANY

Product and service delivery Customer-driven product and service designs and standards

Gap 3

Gap 4

External communications to customers

Gap 2 Company perceptions of customer expectations

Slide 78

Which Gap?
A restaurant manager understands that customers expect to be served within 20 minutes of ordering. They schedule 2 waiters during peak dining times, who cant provide that speed of service and customers become very dissatisfied with waiting for their meals.

Gap 2

Analysing Satisfaction: The GAPs Model

CUSTOMER
Expected product and service Total Gap Perceived product and service

Gap 1

COMPANY

Product and service delivery Customer-driven product and service designs and standards

Gap 3

Gap 4

External communications to customers

Gap 2 Company perceptions of customer expectations

Slide 80

Which Gap is it?

The owners of a new hotel direct the architects to design all rooms with a view of the pool or the beach because they believe seeing people in swimwear will make the customers feel like they are on holiday. Some customers are dissatisfied with seeing customers in very revealing swimwear.

Gap 1

Analysing Satisfaction: The GAPs Model

CUSTOMER
Expected product and service Total Gap Perceived product and service

Gap 1

COMPANY

Product and service delivery Customer-driven product and service designs and standards

Gap 3

Gap 4

External communications to customers

Gap 2 Company perceptions of customer expectations

Slide 82

Which Gap?
To make building a plastic Christmas tree easier for customers the producers have found that customers should start from the bottom and work upwards. Thus, they have included instructions to help customers with their construction. Many customers do not read the instructions and are dissatisfied with hitting their head on upper branches.

Gap 3

Distribution Strategy

Direct Distribution
Manufacturer Consumer

Indirect Distribution
Manufacturer Intermediary Consumer

It occurs when the producer uses intermediaries to reach consumers or end users

Duel Distribution (Multichannel)

A type of distribution in which a manufacturer uses several competing channels to reach the same target consumer

This can cause (horizontal) channel conflict

Why use an intermediary?

Manufacturer Consumer

Manufacturer

Consumer

Manufacturer

Consumer

Why use an intermediary?

Manufacturer Consumer

Manufacturer

Intermediary

Consumer

Manufacturer

Consumer

Marketing channel
A marketing channel consists of firms that have partnered for their common good with each member playing a specialized role.

Level of Market Exposure

Exclusive Selective Intensive Selling through all responsible and suitable wholesalers and retailers who will stock and/or sell the product Many Number of intermediaries

Selling through only one intermediary in a particular geographic region

Selling through only those intermediaries who will give the product special attention

Few

(Vertical) Channel Conflict

Remember Porters Five Forces and the Bargaining Power of Buyers and Suppliers

versus

Vertical Marketing Systems: Corporate

Manufactures

Retails

Vertical Marketing Systems: Contractual

Vertical Marketing Systems: Administered:

has a few dominant channel members without common ownership. Leadership comes from size and power.

Apple Case Study

What are Apples Distribution Objectives Explain the type of distribution system that is used by Apple. Does Apple use an exclusive, selective or intensive exposure strategy? Describe the vertical marketing system used by Apple Explain the channel conflict experienced by Apple and what do you think they should do about it (if anything).

Pricing Strategy

Organisational Pricing Policies

Cost-based Pricing
Cost-plus pricing Target profit pricing

Value-based Pricing
Good-value pricing Value-added pricing

Price flexibility
Fixed-price policy Flexible-price policy

Break Even Analysis

Demand Curves and Pricing

New Entrant Price Level Policies

Market Skimming
selling to the top of the market at a high price, before aiming at more price sensitive customers

Market-Penetration Pricing
attempting to sell to the whole market at one low price

Competitive Pricing (for imitative products)

setting prices relative to the competition

Market Skimming

Market-Penetration Pricing

Demand-Oriented Approaches
Loss Leader pricing Value-in-use pricing

On-line auctions

Customer reference prices

Psychological pricing

Product line pricing

odd-even pricing prestige pricing

Demandbackward pricing

Optional product pricing

Product Line Pricing

Captive Product Pricing

Product Bundle Pricing

Positioning may be based on price

Discounts and Allowances

Discounts
Quantity discounts Seasonal discounts Payment terms and cash discounts Consumer credit Trade discounts Sale prices Coupons Cash rebates Allowances Stocking (slotting) allowances Trade-in allowances

 Tendering
offering a specific price for each possible job, rather than setting a price that applies for all customers

Negotiated price
a price that is arrived at after bargaining between the buyer and seller

Legal Aspects of Pricing

Price fixing

Deceptive Pricing

Resale price maintenance

Bait pricing

UAE Government Pricing Policy

Virgin Mobile USA

As the Marketing Manager for Virgin USA what pricing objectives would you set? What is the nature of demand and price sensitivity amongst this market? Analyze the three price setting scenarios presented using the policies, approaches, discounts and allowances discussed. Of the three options which would you choose and why? Would you incorporate any discounts and allowances?

Integrated Marketing Communications

Basic Communications Objectives

inform

persuade

remind

Informing

Reminding

Design the Communication

What to say (message strategy) How to say it (creative strategy)

Creative styles: Unique Selling Proposition

Creative styles Resonance Brand Image

Emotion

Creative styles
Generic product style

Preemptive style

Marketing Communications Mix

Advertising Events Experiences Sponsorship

Point-of-Sale

Personal Selling

Direct Marketing

Sales Promotions

Public
Relations

Integrated Marketing Communications

Radio

Possible Effects of Sales Promotions

Push and Pull Strategies

Push Strategy Manufacturer Intermediary Customer

Pull Strategy Manufacturer Intermediary Customer

Cunard Case
What are the promotion objectives Analyze the message strategy Analyze the creative strategy What is the promotional mix? Is the promotional mix well integrated? Would you add or remove any components of the marketing mix? Is the strategy push, pull or a mix of both What are the dangers of their strategy? What are the dangers of sales promotion? Should they use a family brand?