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Transcript
PRINCIPLES OF MARKETING
BY
DR GERALD MUNYORO
CHINHOYI UNIVERSITY OF TECHNOLOGY
SCHOOL OF BUSINESS SCIENCES AND MANAGEMENT
DEPARTMENT OF INTERNATIONAL MARKETING
COURSE OUTLINE
1.
2.
3.
4.
5.
6.
7.
8.
Introduction
The significance of information and research in
marketing
Consumer behaviour
Market segmentation
Product
Price
Place
Promotion
Definitions of Marketing
‘Marketing is the management process that identifies,
anticipates and satisfies customer requirements
profitably’
The Chartered Institute of Marketing
Marketing is the activity, set of institutions, and
processes for creating, communicating, delivering,
and exchanging offerings that have value for
customers, clients, partners, and society at large
American Marketing Association
Definitions of Marketing
‘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 et al (2010)
‘The right product, in the right place, at the right time,
and at the right price’
Adcock et al (2001)
The Marketing concept





Choosing and targeting appropriate
customers
Positioning your offering
Interacting with those customers
Controlling the marketing effort
Continuity of performance
The Marketing concept


Customer focus, profits, and integration of
organizational efforts.
• Customer orientation
 Satisfying its customers at a profit…
 Determining the needs and wants of target
markets…
Discovering the wants of a target audience and then
creating the goods and services to satisfy them
The Marketing concept



According to Levitt (1960), "the organization must
learn to think of itself not as producing goods or
services but as buying customers, as doing the things
that will make people want to do business with it."
Since its publication, corporate leaders have moved
from product-orientation toward market-orientation.
Firms overemphasize the satisfaction of customer
wants and needs and as a result ignore competition.
The Marketing concept





Profitable
Offensive (rather than defensive)
Integrated
Strategic (is future orientated)
Effective (gets results)
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
Marketing planning





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
Building relationships with consumers
Firms that embrace the marketing concept seek ways to build a long-term
relationship with each customer. This is an important idea. Even the most
innovative firm faces competition sooner or later. And trying to get new
customers by taking them away from a competitor is usually more costly
than retaining current customers by really satisfying their needs. Satisfied
customers buy again and again. This makes their buying job easier, and it
also increases the selling firm’s profits. Building mutually beneficial
relationships with customers requires that everyone in an organization
work together to provide customer value before and after each purchase. If
there is a problem with a customer’s bill, the accounting people can’t just
leave it to the salesperson to straighten it out or, even worse, act like it’s
“the customer’s problem.” Rather, it’s the firm’s problem.
Marketing’s role in non profit organisations
The marketing concept is as important for nonprofit organizations as it is
for business firms. However, prior to 1970 few people in nonprofits paid
attention to the role of marketing. Now marketing is widely recognized as
applicable to all sorts of public and private nonprofit organizations
Ñranging from government agencies, health care organizations,
educational institutions, and religious groups to charities, political parties,
and fine arts organizations. Some nonprofit organizations operate just like
a business. For example, there may be no practical difference between
thegift shop at a museum and a for-profit shop located across the street. On
the other hand, some nonprofits differ from business firms in a variety of
ways. As with any business firm, a nonprofit organization needs resources
and support to survive and achieve its objectives. Yet support often does
not come directly from those who receive the benefits the organization
produces.
Marketing Research



Marketing research is the systematic gathering, recording and analyzing of
data about problems relating to the marketing of goods and services.
A systematic inquiry whose objective is to provide information to solve
managerial problems.
Marketing research is the function that links the consumer, customer, and
public to the marketer through information--information used to identify
and define marketing opportunities and problems; generate, refine, and
evaluate marketing actions; monitor marketing performance; and improve
understanding of marketing as a process. Marketing research specifies the
information required to address these issues, designs the method for
collecting information, manages and implements the data collection
process, analyzes the results, and communicates the findings and their
implications.
American Marketing Association
Marketing Research




Market research will give you the data you need to identify and reach your
target market at a price customers are willing to pay.
Research provides you with the knowledge and skills needed for the fastpaced decision-making environment.
Applied Research
• Emphasis on solving practical (specific) problems
• It could be exploring opportunities also
 Rectifying an inventory system that is resulting into lost sales
 Opportunity to increase stockholder wealth by acquiring another
firm
Pure Research/Basic Research
• Emphasis on problem solving but of a general nature (not specific)
 Effect of coupon as against rebate to stimulate demand
Consumer behaviour
Those activities directly involved in obtaining , consuming and
disposing of products and services, including the decision
processes that precede and follow these actions
 ‘You cannot take the consumer for granted any more’
Therefore a sound understanding of consumer behaviour is
essential for the long run success of any marketing program
Logical Positivism
 Understanding and predicting consumer behaviour
 Cause and effect relationships that govern persuasion and/or
education
 Post Modern – to understand consumption behaviour without
any attempt to influence it

Consumer behaviour



“MEET THE NEW CONSUMER
and smile when you do because she is your boss. It may not
be the person you thought you knew. Instead of choosing
from what you have to offer, she tells you what she wants.
You figure it out how to give it to her.”
-Fortune Editor
A new product must satisfy consumer needs, not the needs and
expectations of management
Understanding and adapting to consumer motivation and
behaviour is not an option – it becomes a necessity for
competitive survival
Consumer behaviour


Consumer sovereignty presents a formidable
challenge but skilful marketing can affect both
motivation and behaviour if the product or
service offered is designed to meet consumer
needs and expectations.
A sales success occurs because demand either
exists already or is latent and awaiting
activation by the right marketing offering.
Consumer behaviour
Dominant forces shaping Consumer
Research
 Factors that move an economy from
Production-driven to Market-driven
 Level of sophistication with which
human behaviour is understood in
psychology and other behavioural
sciences
Consumer behaviour



Motivational Research
It seeks to learn what motivates people in
making choices. The techniques are such as to
delve into the conscious, subconscious and the
unconscious.
‘women don’t buy cosmetics, they buy hope.’
‘women bake cakes out of the unconscious
desire to give birth’
Consumer behaviour
The advice to footwear salesmen should be ‘Don’t sell shoes –
sell lovely feet’
 Marketers must contend with small changing segments of
highly selective buyers intent on receiving genuine value at the
lowest price
 All managers must become astute analysts of Consumer
motivation and Behaviour
Three foundations for marketing decisions
 Experience
 Intuition
 Research
Consumer behaviour




Enhancing Consumer Value-added
Marketers have to constantly innovate after understanding
their consumers to strip out costs permanently by focusing on
what adds value for the customer and eliminating what
doesn’t.
Individualised Marketing
A very personal form of marketing that recognises,
acknowledges, appreciates and serves individuals who become
or are known to the marketer.
Data – based marketing; DM
Customized marketing
Consumer behaviour



Variables involved in understanding
consumer behaviour
Stimulus – ads, products, hungerpangs
Response – physical/mental reaction to the
stimulus
Intervening variables – mood, knowledge,
attitude, values, situations, etc
Overall Model of Consumer Behaviour
External Influences
Culture
Subculture
Demographics
Social status
Reference groups
Family
Marketing Activities
Internal Influences
Perception
Learning
Memory
Motives
Personality
Emotions
Attitudes
Decision Processes
Problem Recognition
Information Search
Self-Concept
&
Learning
Alt Eval & Selection
Outlet select &
Purchase
Postpurchase
Processes
Marketing Environment
A company’s marketing environment consists of the actors and forces
outside marketing that affect marketing management’s ability to develop
and maintain successful relationships with its target customers.
1). Being successful means being able to adapt the marketing mix to trends
and changes this environment.
2). Changes in the marketing environment are often quick and
unpredictable.
3). The marketing environment offers both opportunities and threats.
4). The company must use its marketing research and marketing intelligence
systems to monitor the changing environment.
5). Systematic environmental scanning helps marketers to revise and adapt
marketing strategies to meet new challenges and opportunities in the
marketplace.
Marketing Environment

Includes:
• Micro environment: actors close to the company
that affect its ability to serve its customers.
• Macro environment: larger societal forces that
affect the microenvironment.
 Considered to be beyond the control of the
organization.
Marketing Environment
1. Micro Environmental



The microenvironment consists of five components.
The first is the organization’s internal environment—its
several departments and management levels—as it affects
marketing management's decision making.
The second component includes the marketing channel firms
that cooperate to create value: the suppliers and marketing
intermediaries (middlemen, physical distribution firms,
marketing-service agencies, financial intermediaries).
The third component consists of the five types of markets in
which the organization can sell: the consumer, producer,
reseller, government, and international markets.
Marketing Environment


The fourth component consists of the competitors facing the organization.
The fifth component consists of all the publics that have an actual or
potential interest in or impact on the organization’s ability to achieve its
objectives: financial, media, government, citizen action, and local, general,
and internal publics.
- So the microenvironment consists of six forces close to the company that affect its
ability to serve its customers:
a. The company itself (including departments).
1). Top management is responsible for setting the company’s mission, objectives,
broad strategies, and policies. 2). Marketing managers must make decisions within
the parameters established by top management. 3). Marketing managers must also
work closely with other company departments. Areas such as finance, R & D,
purchasing, manufacturing, and accounting all produce better results when aligned
by common objectives and goals. 4). All departments must “think consumer” if the
firm is to be successful. The goal is to provide superior customer value and
satisfaction.
Marketing Environment
b. Suppliers.
Suppliers are firms and individuals that provide the
resources needed by the company and its competitors
to produce goods and services. They are an important
link in the company’s overall customer “value
delivery system.”
1). One consideration is to watch supply availability
(such as supply shortages).
2). Another point of concern is the monitoring of
price trends of key inputs. Rising supply costs must
be carefully monitored.
Marketing Environment
c. Marketing channel firms (intermediaries).






Marketing intermediaries are firms that help the company to promote, sell, and distribute its
goods to final buyers.
1). Resellers
are distribution channel firms that help the company find customers or make sales to them.
2). These include wholesalers and retailers who buy and resell merchandise.
3). Resellers often perform important functions more cheaply than the company can perform
itself. However, seeking and working with resellers is not easy because of the power that
some demand and use.
Physical distribution firms
help the company to stock and move goods from their points of origin to their destinations.
Examples would be warehouses (that store and protect goods before they move to the next
destination).
Marketing service agencies
(such as marketing research firms, advertising agencies, media firms, etc.) help the company
target and promote its products.
Financial intermediaries
(such as banks, credit companies, insurance companies, etc.) help finance transactions and
Marketing Environment
d. Customer markets'. Competitors'. Publics.


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

The company must study its customer markets closely since each market has its
own special characteristics. These markets normally include:
1). Consumer markets
(individuals and households that buy goods and services for personal consumption).
2). Business markets
(buy goods and services for further processing or for use in their production
process).
3). Reseller markets
(buy goods and services in order to resell them at a profit).
4). Government markets
(agencies that buy goods and services in order to produce public services or transfer
them to those that need them).
5). International markets
(buyers of all types in foreign countries).
Marketing Environment
e. Competitors.
Every company faces a wide range of competitors. A
company must secure a strategic advantage over
competitors by positioning their offerings to be
successful in the marketplace. No single competitive
strategy is best for all companies.
Marketing Environment
f. Publics

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
A public is any group that has an actual or potential interest in or impact on an
organization’s ability to achieve its objectives. A company should prepare a
marketing plan for all of their major publics as well as their customer markets.
Generally, publics can be identified as being:
1). Financial publics--influence the company’s ability to obtain funds.
2). Media publics--carry news, features, and editorial opinion.
3). Government publics--take developments into account.
4). Citizen-action publics--a company’s decisions are often questioned by consumer
organizations.
5). Local publics--includes neighbourhood residents and community organizations.
6). General publics--a company must be concerned about the general public’s
attitude toward its products and services.
7). Internal publics--workers, managers, volunteers, and the board of directors.
Marketing Environment
2. MACRO

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
ENVIRONMENT
The Company’s Macro environment
The company and all of the other actors operate in a larger macro
environment of forces that shape opportunities and pose threats
to the company.
The company and all of the other actors operate in a larger macro environment of
forces that’s have opportunities and pose threats to the company. There are six
major forces (outlined below)in the company’s macro environment. There are six
major forces (outlined below) in the company’s macro environment.
a. Demographic.
b. Economic.
c. Natural.
d. Technological.
e. Political.
f. Cultural.
Marketing Environment
a. Demographic Environment
Demography
is the study of human populations in terms of size, density, location, age, sex, race, occupation, and other
statistics. It is of major interest to marketers because it involves people and people make up markets.
Demographic trends are constantly changing. Some more interesting ones are.1). The world’s population
(though not all countries) rate is growing at an explosive rate that will soon exceed food supply and ability
to adequately service the population. The greatest danger is in the poorest countries where poverty
contributes to the difficulties. Emerging markets such as China are receiving increased attention from
global marketers.2). The most important trend is the changing age structure of the population. The
population is aging because of a slowdown in the birth rate (in this country) and life expectancy is
increasing.
The baby boomers
following World War II have produced a huge “bulge” in our population's age distribution. The new prime
market is the middle age group (in the future it will be the senior citizen group). There are many
subdivisions of this group.
a). Generation X--this group lies in the shadow of the boomers and lack obvious distinguishing
characteristics. They are a very cynical group because of all the difficulties that have surrounded and
impacted their group. b). Echo boomers
(baby boom lets) are the large growing kid and teen market. This group is used to affluence on the part of
their parents (as different from the Gen Xers). One distinguishing characteristic is their utter fluency and
comfort with computer, digital, and Internet technology(sometimes called Net-Gens).
Marketing Environment
c). Generational marketing is possible, however, caution must be used to
avoid generational alienation. Many in the modern family now
“telecommute”--work at home or in a remote office and conduct their
business using fax, cell phones, modem, or the Internet. In general, the
population is becoming better educated. The work force is becoming more
white-collar. Products such as books and education services appeal to
groups following this trend. Technical skills (such as in computers) will be
a must in the future. The final demographic trend is the increasing ethnic
and racial diversity of the population. Diversity is a force that must be
recognized in the next decade. However, companies must recognize that
diversity goes beyond ethnic heritage. One of the important markets of the
future are that disabled people (a market larger any of our ethnic minority
groups).
Marketing Environment
b. Economic Environment
The economic environment -includes those factors that affect consumer purchasing
power and spending patterns. Major economic trends in the United States include:
1). Personal consumption (along with personal debt) has gone up (1980s) and the
early 1990s brought recession that has caused adjustments both personally and
corporately in this country. Today, consumers are more careful shoppers.
2). Value marketing
(trying to offer the consumer greater value for their dollar) is a very serious strategy
in the 1990s. Real income is on the rise again but is being carefully guarded by a
value-conscious consumer.
3). Income distribution
is still very skewed in the U. S. and all classes have not shared in prosperity. In
addition, spending patterns show that food, housing, and transportation still account
for the majority of consumer dollars. It is also of note that distribution of income
has created a “two-tiered market” where there are those that are affluent and less
affluent. Marketers must carefully monitor economic changes so they will be able
to prosper with the trend, not suffer from it.
Marketing Environment
c. Natural Environment
The natural environment -involves natural resources that are needed as inputs by
marketers or that are affected by marketing activities. During the past two decades
environmental concerns have steadily grown. Some trend analysts labelled the
specific areas of concern were:
1). Shortages of raw materials.
Staples such as air, water, and wood products have been seriously damaged and
non-renewable such as oil, coal, and various minerals have been seriously depleted
during industrial expansion.
2). Increased pollution
is a worldwide problem. Industrial damage to the environment is very serious. Farsighted companies are becoming “environmentally friendly” and are producing
environmentally safe and recyclable or biodegradable goods. The public response to
these companies is encouraging. However, lack of adequate funding, especially in
third world countries, is a major barrier.
Marketing Environment
3). Government intervention
In natural resource management has caused environmental concerns to be
more practical and necessary in business and industry. Leadership, not
punishment, seems to be the best policy for long-term results. Instead of
opposing regulation, marketers should help develop solutions to the
material and energy problems facing the world.
4). Environmentally sustainable strategies.
The so-called green movement has encouraged or even demanded that
firms produce strategies that are not only environmentally friendly but are
also environmentally proactive. Firms are beginning to recognize the link
between a healthy economy and a healthy environment.
Marketing Environment
d. Technological Environment
The technological environment -includes forces that create new technologies,
creating new product and market opportunities.
1). Technology is perhaps the most dramatic force shaping our destiny.
2). New technologies create new markets and opportunities.3). The following trends
are worth watching
a). Faster pace of technological change. Products are being technologically outdated
at a rapid pace.
b). There seems to be almost unlimited opportunities being developed daily.
Consider the expanding fields of health care, the space shuttle, robotics, and
biogenetic industries.
c). The challenge is not only technical but also commercial--to make practical,
affordable versions of products.
d). Increased regulation. Marketers should be aware of the regulations concerning
product safety, individual privacy, and other areas that affect technological changes.
They must also be alert to any possible negative aspects of an innovation that might
harm users or arouse opposition.
Marketing Environment
e. Political Environment
The political environment
includes laws, government agencies, and pressure groups that influence
and limit various organizations and individuals in a given society. Various
forms of legislation regulate business.
1). Governments develop public policy to guide commerce--sets of laws and
regulations limiting business for the good of society as a whole.
2). Almost every marketing activity is subject to a wide range of laws and
regulations. Some trends in the political environment include:
- Increasing legislation to:
a). Protect companies from each other.
b). Protecting consumers from unfair business practices.
c). Protecting interests of society against unrestrained business
behaviour.
Marketing Environment
-Changing government agency enforcement. New laws and their
enforcement will continue or increase.
3). Increased emphasis on ethics and socially responsible actions. Socially
responsible firms actively seek out ways to protect the long-run interests of
their consumers and the environment.
a). Enlightened companies encourage their managers to look beyond
regulation and “do the right thing.”
b). Recent scandals have increased concern about ethics and social
responsibility.
c). The boom in e-commerce and Internet marketing has created a new set
of social and ethical issues. Concerns are Privacy, Security, Access by
vulnerable or unauthorized groups.
Marketing Environment
f. Cultural Environment
The cultural environment
is made up of institutions and other forces that affect society’s basic values, perceptions,
preferences, and behaviours. Certain cultural characteristics can affect marketing decisionmaking. Among the most dynamic cultural characteristics are:
1). Persistence of cultural values. People’s core beliefs and values have a high degree of
persistence.
Core beliefs and values are passed on from parents to children and are reinforced by schools,
churches, business, and government. Secondary beliefs and values are more open to change.
2). Shifts in secondary cultural values. Since secondary cultural values and beliefs are open to
change, marketers want to spot them and be able to capitalize on the change potential.
Society’s major cultural views are expressed in:
a). People’s views of themselves. People vary in their emphasis on serving themselves versus
serving others. In the 1980s, personal ambition and materialism increased dramatically, with
significant implications for marketing. The leisure industry was a chief beneficiary.
b). People’s views of others. Observers have noted a shift from a “me-society” to a “wesociety.” Consumers are spending more on products and services that will improve their lives
rather than their image.
Marketing Environment

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
c). People’s views of organizations.
People are willing to work for large organizations but expect them to become
increasingly socially responsible. Many companies are linking themselves to
worthwhile causes. Honesty in appeals is a must.
d). People’s views of society.
This orientation influences consumption patterns. “Buy American” versus buying
abroad is an issue that will continue into the next decade.
e). People’s view of nature.
There is a growing trend toward people’s feeling of mastery over nature through
technology and the belief that nature is bountiful. However, nature is finite. Love of
nature and sports associated with nature are expected to be significant trends in the
next several years.
f). People’s views of the universe.
Studies of the origin of man, religion, and thought-provoking ad campaigns are on
the rise. Currently, Americans are on a spiritual journey. This will probably take the
form of “spiritual individualism.”
MARKETING MIX



The term "marketing-mix," was first coined by Neil Borden, the president
of the American Marketing Association in 1953. It is still used today to
make important decisions that lead to the execution of a marketing plan.
The various approaches that are used have evolved over time, especially
with the increased use of technology.
Usually referring to E. Jerome McCarthy's 4 P classification for developing
an effective marketing strategy, which encompasses: product, price, place
(distribution) and promotion. When it's a consumer-centric marketing mix,
it has been extended to include three more Ps: people, process and
physical evidence, and three Cs: cost, consumer and competitor.
Depending on the industry and the target of the marketing plan,
marketing managers will take various approaches to each of the four Ps.
Combination of marketing elements used in the sale of a particular
product. The marketing elements center around four distinct functions,
sometimes called the Four Ps: product, price, place (of distribution), and
promotion. All these functions are considered in planning a marketing
strategy, and any one may be enhanced, deducted, or changed in some
degree in order to create the strategy necessary to efficiently and
PRODUCT



Defining “Product”-Anything that you can “sell”
Product
• Anything offered to a market for attention,
acquisition, use, or consumption that might
satisfy a need or want.
Service
• Any activity or benefit that one party can offer
to another that is essentially intangible and
does not result in ownership of anything.
What is a product?



Products, Services, and Experiences
• Market offerings, pure tangible goods,
pure services, experiences
Levels of Product and Services
• Core benefit, actual product, and
augmented product
Product and Service Classifications
• Consumer products
• Industrial products
Core ... Actual ... Augmented product
Types of Consumer Products




Convenience
Shopping
Specialty
Unsought
Convenience




Frequent purchases bought with
minimal buying effort and little
comparison shopping
Low price
Widespread distribution
Mass promotion by producer
Shopping




Less frequent purchases requiring
more shopping effort and price,
quality, and style comparisons.
Higher than convenience good
pricing
Selective distribution in fewer outlets
Advertising and personal selling by
producer and reseller
Speciality




Strong brand preference and loyalty,
requires special purchase effort, little
brand comparisons, and low price
sensitivity
High price
Exclusive distribution
Carefully targeted promotion by
producers and resellers
Unsought




Little product awareness and
knowledge (or if aware, sometimes
negative interest)
Pricing varies
Distribution varies
Aggressive advertising
and personal selling by producers
and resellers
Types of Consumer Products
Types of Consumer Products
Industrial goods



Materials and parts
• Farm products
• Natural products
• Component materials
• Component parts
Capital items
• Installations
• Equipment
Supplies and business services
• Maintenance and repair
• Advisory services
Industrial goods





Installations - major capital items, such as new
factories, heavy equipment and machinery, and
custom-made equipment.
Accessory equipment - includes less expensive
and shorter-lived capital items than installations
and involves fewer decision makers.
Component parts and materials - become part
of a final product.
Raw materials - farm and natural products used
in producing other final products.
Supplies - expense items used in a firm’s daily
operation that do not become part of the final
product.
Product Classifications
Durability and tangibility



Nondurable
• Tangible
• Rapidly consumed
• Example: Milk
Durable
• Tangible
• Lasts a long time
• Example: Oven
Services
• Intangible
• Example: Tax preparation
Product mix dimensions
• Width: number of product lines
• Length: total number of items
in mix
• Depth: number of product
variants
• Consistency: degree to which
product lines are related
New Product Development
•
Expensive, time-consuming, and risky.
•
Only 1/3 of new products become success
stories.
•
Each step requires a “go or no-go”
decision.
New Product Development
New Product Development Stages



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

Stage 1: Generating ideas for new offerings
Stage 2: Idea Screening
Stage 3: Concept development and business
analysis phase
Stage 4: Product development
Stage 5: Test marketing
Stage 6: Commercialization
Causes of New Product Failures






Overestimation of Market Size
Product Design Problems
Product Incorrectly Positioned, Priced or Advertised
Costs of Product Development
Competitive Actions
To create successful new products, the company must:
• understand it’s customers, markets and competitors
• develop products that deliver superior value to
customers.
Generating ideas for new offerings






Systematic Search for New
Product Ideas
Internal sources
Customers
Competitors
Distributors
Suppliers
Screening


Process to spot good ideas and drop poor
ones
Criteria
•
•
•
•
•
Market Size
Product Price
Development Time & Costs
Manufacturing Costs
Rate of Return
Concept development and
business analysis phase



1) Develop Product Ideas into Alternative
Product Concepts.
2) Concept Testing - Test the Product
Concepts with Groups of Target Customers.
3) Choose the Best One
Product development
Business Analysis
-Review of Product Sales, Costs,
and Profits Projections to See if
 They Meet Company Objectives
 If Yes, Move to Product
Development

Test marketing






Standard Test Market
Full marketing campaign in a small number of
representative cities.
Controlled Test Market
A few stores that have agreed to carry new
products for a fee.
Simulated Test Market
Test in a simulated shopping environment to a
sample of consumers.
Commercialization

LAUNCHING NEW PRODUCTS IN
THE MARKET
-Unleashing the Power of
Branding through Trademarks
The Stages of the Product
Life Cycle
• Development
• Introduction/Launch
• Growth
• Maturity
• Saturation
• Decline
• Withdrawal
The Product Development Stage


Initial Ideas – possibly large number
May come from any of the following –
•
•
•
•
•
•
Market research – identifies gaps in the market
Monitoring competitors
Planned research and development (R&D)
Luck or intuition – stumble across ideas?
Creative thinking – inventions, hunches?
Futures thinking – what will people be
using/wanting/needing 5,10,20 years hence?
Product Development Stage
• New ideas/possible inventions
• Market analysis – is it wanted? Can it be
produced at a profit? Who is it likely
to be aimed at?
• Product Development and refinement
• Test Marketing – possibly local/regional
• Analysis of test marketing results and
amendment of product/production
process
• Preparations for launch – publicity,
marketing campaign
Introduction Stage
Full-Scale Launch of New Products








• Advertising and promotion campaigns
• Target campaign at specific audience?
• Monitor initial sales
• Maximise publicity
• High cost/low sales
• Length of time – type of product
High failure rates
Little competition
Frequent product modification
Limited distribution
High marketing and production costs
Negative profits
Promotion focuses on awareness and information
Intensive personal selling to channels
Growth
Offered in more sizes, flavors, options







• Increased consumer awareness
• Revenues increase-Initial healthy profits
• Costs - fixed costs/variable costs, profits may be made
• Monitor market – competitors reaction?
Increasing rate of sales-Sales rise
Entrance of competitors
Market consolidation
Promotion emphasizes brand ads
Goal is wider distribution
Prices normally fall
Development costs are recovered
Maturity
Many consumer products are in Maturity Stage






• Sales reach peak
• Declining sales growth -Prices and profits fall
• Cost of supporting the product declines
• Ratio of revenue to cost high
• Sales growth likely to be low
• Market share may be high
• Competition likely to be greater
• Price elasticity of demand?
• Monitor market – changes/amendments/new strategies?
Saturated markets
Extending product line
Stylistic product changes
Heavy promotions to dealers and consumers
Marginal competitors drop out
Niche marketers emerge
Saturation


New entrants likely to mean market is ‘flooded’
Necessity to develop new strategies becomes more pressing:
• Searching out new markets:
 Linking to changing fashions
 Seeking new or exploiting market segments
 Linking to joint ventures – media/music, etc.
• Developing new uses
• Focus on adapting the product
• Re-packaging or format
• Improving the standard or quality
• Developing the product range
Decline and Withdrawal
Rate of decline depends on change in tastes or adoption of
substitute products
•
•
•
•
•
•
•
•
Product outlives/outgrows its usefulness/value
Fashions change
Technology changes
Sales decline -Long-run drop in sales
Large inventories of unsold items
Cost of supporting starts to rise too far
Elimination of all nonessential marketing expenses
Decision to withdraw may be dependent on availability of
new products and whether fashions/trends will come
around again?
MANAGING THE PRODUCT
LIFE CYCLE

Modifying the Product
-Alter product quality
-Enhance performance
-Change appearance

Modifying the Market
-Finding New Users
-Increase use
-Create new use situations
EXTENDING THE PRODUCT LIFE CYCLE
Repositioning



Reacting to a Competitor’s Position-never compete
head on
Catching a Rising Trend-baby aspirin is now low dose
aspirin to reduce heart attacks
Changing the Value Offered
Trading Up-add bells & whistles to raise price
Trading Down- remove bells & whistles to lower price
Downsizing-reduce contents but maintain price
Five Profiles of Product Adopters
The Boston Matrix
• A means of analysing the product
portfolio and informing decision making
about possible marketing strategies
• Developed by the Boston Consulting
Group – a business strategy and
marketing consultancy in 1968
• Links growth rate, market share and
cash flow
Classifies Products into four
simple categories



Stars – products in markets experiencing high growth
rates with a high or increasing share of the market
- Potential for high revenue growth
Cash Cows:
• High market share
• Low growth markets – maturity stage of PLC
• Low cost support
• High cash revenue – positive cash flows
Classifies Products into four
simple categories

Dogs:
• Products in a low growth market
• Have low or declining market share
(decline stage of PLC)
• Associated with negative cash flow
• May require large sums of money to
support

Is your product starting to embarrass
your company?
Classifies Products into four
simple categories






Problem Child:
Products having a low market share
in a high growth market
Need money spent to develop them
May produce negative cash flow
Potential for the future?
Problem children – worth spending
good money on?
Implications

Dogs:
• Are they worth persevering with?
• How much are they costing?
• Could they be revived in some way?
• How much would it cost to continue
to support such products?
• How much would it cost to remove
from the market?
Implications

Problem Children:
• What are the chances of these products
securing a hold
in the market?
• How much will it cost to promote them
to a stronger position?
• Is it worth it?
Implications

Stars:
• Huge potential
• May have been expensive to develop
• Worth spending money to promote
• Consider the extent of their product life
cycle in decision making
Implications

Cash Cows:
• Cheap to promote
• Generate large amounts of cash –
use for further R&D?
• Costs of developing and promoting
have largely gone
• Need to monitor their performance –
the long term?
• At the maturity stage of the PLC?
Product Identification



Branding and trademarks are keys to success in
business and in the global market
The AMA definition of a brand:
“A name, term, sign, symbol, or design, or a
combination of these, intended to identify the goods
or services of one seller or group of sellers and to
differentiate them from the competition.”
What is Branding



Branding -- is the process by which the name or
the identify of an owner, a company/enterprise or
organization, is communicated.
Branding allows a company to differentiate its
products and services from the competition by
creating a bond with its customers. It aims to
create customer loyalty.
This way, a company takes a position in the
marketplace.
What is Branding



Brand - name, term, sign, symbol, design, or some
combination that identifies the products of one firm
and differentiates them from competitors’ offerings.
Brand name - part of the brand consisting of words
or letters included in a name used to identify and
distinguish the firm’s offerings from those of
competitors.
Trademark - brand that has been given legal
protection granted solely to the brand’s owner.
What is Branding




A way by which companies launch and sell
goods & services.
A brand name is sometimes made of a part
or the totality of a trademark name
It communicates the essence of a products
or its line, including why it is great and how
it is better than all competing products.
It reflects in general a prestigious (aesthetic)
image in order to attract more consumers.
Brands can convey six levels
of meaning
• Attributes
• Benefits
• Values
• Culture
• Personality
• User
Brand identity decisions
include
• Name
• Logo
• Colors
• Tagline
• Symbol

Consumer experiences create
brand bonding, brand advertising
does not.
Brand Categories



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Manufacturer’s brand - brand offered and promoted by a
manufacturer. Examples: Tide, Jockey, Gatorade, Swatch, and
Reebok.
Private or store brand - brand that is not linked to the
manufacturer but instead carries a wholesaler’s or retailer’s
label. Examples: Sears’ DieHard batteries and Wal-Mart’s
Ol’Roy dog food & Member’s Mark brand
Family branding strategy - a single brand name used for
several related products. Examples: KitchenAid, Johnson &
Johnson, Hewlett-Packard, and Dole
Individual branding strategy - giving each product within a
line a different name. Examples: Procter & Gamble products
Tide, Cheer, and Dash.
Brand Loyalty





Brand recognition - consumer is aware of the brand
but does not have a preference for it over other
brands.
Brand preference - consumer chooses one firm’s
brand over a competitor’s.
Brand insistence - consumer will seek out preferred
brand and accept no substitute for it.
Brand equity - added value that a respected and
successful name gives to a product.
Brand awareness - product is the first one that comes
to mind when a product category is mentioned.
Packages and Labels




Important in product identification and play an
important role in a firm’s overall product
strategy.
Choosing right package is especially important
in international marketing.
Must meet legal requirements of all countries
in which product is sold.
Universal Product Code - bar code read by
optical scanner.
SUCCESSFUL BRANDING
Attracts / catches the consumers

Marketers should attempt to create or facilitate awareness, acceptability,
preference, and loyalty among consumers.
Valuable and powerful brands enjoy high levels of brand loyalty.
Attracts / catches the consumers
Developing a brand is part of every strategic business plan
Target what customers care about: articulate precise values and qualities that
are relevant and of direct interest
Emphasize features that are both important to consumer and quite
differentiated from competitors
Communicate constant innovating brand image at all levels of operation

Aaker identified five levels of customer attitudes toward brands:






•
•
•
•
•
Will change brands, especially for price. No brand loyalty.
Satisfied -- has no reason to change.
Satisfied -- switching would incur costs.
Values brand, sees it as a friend.
Devoted to the brand.
Brand Decions

Key Challenges
To brand or not
Brand sponsor
Brand name
Brand strategy
Brand repositioning

Advantages of branding
•
•
•
•
•
Facilitates order processing
Trademark protection
Aids in segmentation
Enhances corporate image
Branded goods are desired by retailers and distributors
Key Challenges



Brand sponsor:
Options include:
• Manufacturer (national) brand
• Distributor (reseller, store, house, private) brand
• Licensing the brand name
Brand name: Strong brand names:
• Suggest benefits
• Suggest product qualities
• Are easy to say, recognize, and remember
• Are distinctive
• Should not carry poor meanings in other languages
Key Challenges

Brand strategy

Varies by type of brand
• Functional brands
• Image brands
• Experiential brands
Line extensions
Brand extensions
Multibrands
New brands
Co-branding





Key Challenges

Brand repositioning

A brand report card can be used to audit a
brand’s strengths and weaknesses.
Changes in preferences or the presence of a
new competitor may indicate a need for
brand repositioning.

Packaging and Labeling

Packaging and Labeling

Packaging includes:
• The primary package
• The secondary package
• The shipping package
Many factors have influenced the increased use of packaging as a marketing
tool.


Developing an effective package:
• Determine the packaging concept
• Determine key package elements
• Testing:
 Engineering tests
 Visual tests
 Dealer tests
 Consumer tests
Packaging and Labeling


Labeling functions:
• Identifies the product or brand
• May identify product grade
• May describe the product
• May promote the product
Legal restrictions impact packaging for
many products.
What is a Trademark?


A BRAND NAME - A KIND OF VISIT
CARD THAT PROMOTES THE IMAGE
OF A COMPANY AND ITS RANGE OF
GOODS & SERVICES.
“A sign distinguishing goods or services
produced or sold by one enterprise (from
those of other enterprises)”.
Types of Trademarks?






Trade marks: to distinguish goods
Service marks: to distinguish services
Collective marks: to distinguish goods or
services by members of an association
Certification marks
Well-known marks: benefit from stronger
protection
Tradename (Brand name)