* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Download CHAPTER II CONCEPTUAL FRAMEWORK
Perfect competition wikipedia , lookup
Planned obsolescence wikipedia , lookup
Celebrity branding wikipedia , lookup
Service parts pricing wikipedia , lookup
Customer experience wikipedia , lookup
Consumer behaviour wikipedia , lookup
First-mover advantage wikipedia , lookup
Brand awareness wikipedia , lookup
Visual merchandising wikipedia , lookup
Viral marketing wikipedia , lookup
Marketing plan wikipedia , lookup
Digital marketing wikipedia , lookup
Guerrilla marketing wikipedia , lookup
Market penetration wikipedia , lookup
Food marketing wikipedia , lookup
Neuromarketing wikipedia , lookup
Direct marketing wikipedia , lookup
Street marketing wikipedia , lookup
Marketing communications wikipedia , lookup
Pricing strategies wikipedia , lookup
Product placement wikipedia , lookup
Market segmentation wikipedia , lookup
Product lifecycle wikipedia , lookup
Brand loyalty wikipedia , lookup
Customer satisfaction wikipedia , lookup
Youth marketing wikipedia , lookup
Marketing mix modeling wikipedia , lookup
Green marketing wikipedia , lookup
Multicultural marketing wikipedia , lookup
Brand equity wikipedia , lookup
Target audience wikipedia , lookup
Brand ambassador wikipedia , lookup
Predictive engineering analytics wikipedia , lookup
Marketing channel wikipedia , lookup
Customer engagement wikipedia , lookup
Integrated marketing communications wikipedia , lookup
Emotional branding wikipedia , lookup
Target market wikipedia , lookup
Segmenting-targeting-positioning wikipedia , lookup
Advertising campaign wikipedia , lookup
Global marketing wikipedia , lookup
Marketing strategy wikipedia , lookup
28 CHAPTER II CONCEPTUAL FRAMEWORK 2.1. THE MARKETING PROCESS Marketing is about creating value for customers, in order to capture value from customers in return. The value creation process consists of five Understand the marketplace and customer needs and wants Design a customer-driven marketing strategy Construct integrated marketing program that deliver superior value Build profitable relationship and create customer delight Create value for customers and build customers relationship major phases, as described in Figure 2.1. Capture value from customers to create profit and customer equity Figure 2.1 The Marketing process (Kotler and Keller, 2009) Value creation in the marketing process is the outcome of segmentation, targeting, positioning and differentiation. 29 2.1.1. Market Segmentation Market segmentation is the process of dividing the market into smaller groups of buyers with distinct needs, characteristics, or behavior. There are many ways of segmenting consumer market, either based on geographic, demographic, psychographic and behavioral, as described in Figure 2.2. Geographic Segmentation Nations, Regions, States, Counties or Neighborhoods Demographic Segmentation Age, Gender, Income, Occupation, Education, or Race Psychographic Segmentation Social Class, Lifestyle, or Personality Behavioral Segmentation Occasions, Benefits, User status, Usage rate Figure 2.2 The Marketing segmentation (Kotler and Keller, 2009) 2.1.2. Targeting, Positioning and Differentiation Market targeting is the process of evaluating market segments attractiveness and select one or more market segments to enter. Positioning consists of arranging market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. The term differentiation refers to actually 30 differentiating the firm’s market offering to create superior customer value. Target market consists of a set of buyers who share common needs or characteristics that the company decides to serve. In selecting target market, there are four strategies: mass marketing, segmented marketing, niche marketing, and micromarketing. Table 2.1 Targeting Strategies (Kotler and Keller, 2009) Targeting Description Strategy Measurable Size, Purchasing power, Profiles of segments can be measured. Accessible Segments must be effectively reached and served. Substantial Segments must be large or profitable enough to serve. Differential Segments must respond differently to different marketing mix elements and actions. Actionable Must be able to attract and serve the segments. 31 Product position is the way product is defined by consumers on important attributes –the place the product occupies in consumer’s minds relative to competing product. This position should be summed up in a positioning statement. 2.2. PRODUCT 2.2.1. Perceived Quality as Product Differentiation Product is a bundle of physical, service and symbolic attribute designed to satisfy a customer’s wants and needs. In order to offer higher value for customer, product has to differentiate itself from others. Quality, along with price, reliability or performance can serve as the basis for product differentiation. To be specific, Garvin proposed a framework to discuss ways of competing strategically on quality, based on eight dimensions: performance, features, reliability, conformance, durability, serviceability, aesthetics and perceived. Table 2.2 Garvin’s eight product quality dimensions (Garvin, 1987) Dimension Definition Performance The primary operating characteristics of a product. Features The secondary characteristics of a product 32 that supplement its basic functioning. Reliability The product’s probability or failure-free performance over a specified period of time. Conformance The degree of which a product physical and performance characteristics meet design specifications. Durability A measure of useful product life, i.e. the amount of use a customer gets from a product before it detoriates or must be replaced. Serviceability The ease, speed, courtesy, and competence of repair. Aesthetics How the product looks, feels, sounds, tastes or smells, a matter of personal preference. Perceived Quality based on image, brand name, or advertising rather than product attributes andis subjectively assessed. The eight product quality dimension is the outcomes of three approaches in defining quality: product-based, user-based and manufacturing-based. Table 2.3 Approach to quality and its outcome Approach Description and Outcomes 33 Product-based This view of quality is based on measurable characteristic of the product. Differences in ingredients or attribute of the product are considered to reflect differences in quality. Outcome: performance, features and durability. User-based Quality is the degree to which a product or service meets or exceeds customer expectations, and is deeply subjective. Outcome: aesthetics and perceived quality Manufacturing- Quality is defined as conformance to based specifications or design standards. Outcome: conformance and reliability Consumer’s perception on quality (perceived quality) has an effect on product decision. Claims of product quality have become strategically crucial to maintaining a competitive advantage. 2.2.2. Branding Brand is a name, term, sign, symbol, design or some combination that identifies the products of one firm while differentiating these products from competitor’s offering. Brand 34 management is about managing customer’s perception toward product therefore it is crucial for marketer to clearly position their brand in target customer’s mind. There are three level of brand positioning: (1) Based on product attributes. At this level, the brand is positioned in line with certain product characteristics, features, uniqueness or ingredients. (2) Based on benefits. The brand is positioned beyond product attribute, to the benefit the product will bring to customer’s life. (3) Based on beliefs and values. At the final stage, the brand is positioned to touch customer’s emotional level, to their beliefs and values of using or purchasing the product. 2.2.2.1. Brand development strategies Business has four strategies to develop a brand, as shown in figure 2.6. These strategies are from whether it’s a existing or new brand and whether the product category fall as existing or new. 35 Figure 2.3 Brand development strategies (1) Line Extension. The company extends the existing brand name to new forms, colors, sizes, ingredients or flavor of an existing product category. In this strategy, the company is leveraging the muscle of existing brand to introduce new product in the same category. However, there is a risk that overextended brand name might lose its specific meaning, or causing confusion and frustration among consumers. (2) Brand Extension occurs when the company extends current brand name to new or modified products in a new category. This strategy gives new products instant recognition and faster acceptance but there is risk of consumer confusion. (3) Multibrand is introducing new brand names in the same category. Multibranding offers a way to establish different features and appeal to different buying motives. However, 36 drawback of this strategy is that each brand only obtains small market share or even small profit. (4) New brand is a strategy when company decided to introduce a new brand when entering a new product category. The risk is that the company might have lots of brand that requires abundant resources to manage, resulting in low profitability. Another strategy to develop brand is creating umbrella brand and flanker brand. Umbrella brand is the core product. Customer’s accumulated exposure and experience with the core product solidifies certain image and quality expectation. Umbrella branding involves the transfer of quality perception derived from the core product to the line extension that uses the same brand name. 2.2.2.2. Brand name as differentiation A great deal of brand strategy goes into the creation of specific brand names. However difficult, a good brand name can boost a product success. Research (del Rio, Vazquez, Iglesias, 2001) suggest that product investments are aimed not only at attempting to attain a technical or functional differentiation, but also at promoting brand name related benefits. 37 Robertson (Robertson, 1989) suggested guidance in selecting brand name for product, service or company. Brand name should: (1) be a simple word, (2) be a distinctive word, (3) be a meaningful word, (4) be a verbal or sound associate of the product class, (5) elicit a mental image, (6) be an emotional word, (7) make use of the repetitive sounds generated by alliteration, assonance, consonance, rhyme and rhythm, (8) make use of morphemes and phonemes. 2.3. INTEGRATED MARKETING COMMUNICATIONS In the concept of integrated marketing communications, company carefully integrates its many communications channel to deliver a clear, consistent, and compelling message about the organization and its brands. The channels used for communication is called marketing communications mix, that consist of advertising, sales promotion, public relations, personal selling and direct marketing. Table 2.4 Marketing communications mix (Kotler, 2008) Promotion Tools Description Advertising Any paid form of non-personal presentation and promotion of ideas, goods or services by an identified sponsor. Sales Promotion Short-term incentives to encourage purchase. 38 Building good relations with the company’s Public Relations various publics. Personal presentation by the firm’s sales Personal selling force for the purpose of making sales and building customer relationships. Direct Direct connections with carefully targeted marketing individual consumers to both obtain immediate response and cultivate lasting customer relationship. 2.3.1. Customer Response Marketing communication objectives include: (1) Building awareness about product or service. (2) Reinforce the message to sustain a desired level of retention with respect to key benefits, and name recognition over time. (3) Stimulate action, to motivate target customers to take a specific action in relatively short time. There are five hierarchy of customer response to the marketing communication activities: aware, comprehend, interested, intentions and action. On each phase, customer might response negatively to become unaware, don’t comprehend, not interested and no action. 39 Figure 2.4 Marketing communication phase and customer response However, there are potential causes of low customer response. The causes of poor response are described in table 2.5. Table 2.5 Marketing causes of low levels of customer response Poor response Marketing Causes Problem Low Marketing Poor media selection, awareness Communications insufficient frequency, poor ad copy Poor Marketing comprehension Communications Low interest Insufficient frequency, poor ad copy. Product positioning Insufficient benefits, weak 40 value proposition, poor ad copy. Low intentions Price and High price, need for low- transaction cost cost trial, high switching cost. Low purchase Distribution and in- Not readily available, hard level store to find in-store, insufficient sales or service.