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KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI) With the academic support of Ecole hôtelière de Lausanne (EHL) Scope Elements of behavioral science - Strategies of market segmentation and positioning. - The impact of marketing on uncontrollable environments in the market place - The product life cycle - Product classification and its effect on marketing strategies. - Policies of pricing and practices used within distribution channels - The role of promotion in the marketing mix - Marketing distribution systems - The components of marketing information system - King Abdul Aziz University Tourism Institute- Induction Week Academic Affairs-Word Handout Page 1 of 9 October 2010 KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI) With the academic support of Ecole hôtelière de Lausanne (EHL) Marketing concepts - Marketing Definition The process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return. - Customer Needs, Wants and Demands The Differences between Sales & Marketing Marketing: The systematic planning, implementation and control of a mix of business activities intended to bring together buyers and sellers for the mutually advantageous exchange or transfer of products. Sales: The sales process is everything that you do to close the sale and get a signed agreement or contract. The sales process consists of interpersonal interaction. It is often done by a one-on-one meeting, cold calls, and networking. It's anything that engages you with the prospect or customer on a personal level rather than at a distance. Advertising and marketing lay the ground work to warm up the lead and prepare them for the close of the sales. King Abdul Aziz University Tourism Institute- Induction Week Academic Affairs-Word Handout Page 2 of 9 October 2010 KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI) With the academic support of Ecole hôtelière de Lausanne (EHL) The selling & marketing concepts contrasted The selling & marketing concepts contrasted Element Selling Marketing Factory Market Existing products Customer needs Means Selling & promoting Integrated marketing Ends Profits through sales volume Profits through customer satisfaction Starting point Focus King Abdul Aziz University – Tourism Institute Diploma in Hospitality Management sales & marketing 1- the marketing mix Slide 13 of 20 Market Customer needs Integrated marketing Profits through customer satisfaction Marketing is - according to the official definition of the Assemblies of Marketing - deals with the areas and the following elements: (1) Clients: they specify the categories of targeted clients and potential and identify their requirements and needs. (2) Products: Maps the commodity and the potential benefits, packaging and competitive position. King Abdul Aziz University Tourism Institute- Induction Week Academic Affairs-Word Handout Page 3 of 9 October 2010 KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI) With the academic support of Ecole hôtelière de Lausanne (EHL) (3) Pricing: Pricing of products to suit the circumstances of customers and competition, taking into account production costs. (4) Information: the transfer of information on goods / services to customer segments. (5) Distribution: Planning outlets and policies to deal with it. (6) ID: strategic planning for the selling methods that are appropriate to the item / service. Develop policies and after-sales, in order to achieve a good cross-references, where the current customer attracting a new customer. And marketing deals with these aspects of the six in the order mentioned. This arrangement defines marketing steps and identifies the priority of each step in the marketing process. Sales: It is race, the final phase of marketing operations, and includes the following: (1) Identify customers and contact them and identify their needs and potential. (2) The transfer of detailed information to customers about the goods / services. (3) To answer customer inquiries and dealing with objections and convince them purchase. Completion of the sale to collect the sales value of the client and the delivery of goods / services. Sales - Push the product - end of the day numbers matter Marketing - Pull the customers towards the products / increase the reach and awareness of the product. (Performance and effort too matters) Marketing has sales as a small part in it. Sales are only concerned with transfer of goods/service. Marketing is concerned with customer satisfaction to make them aware and convince them to buy the product/service. Assignment Write an assignment about the main differences between sales and marketing King Abdul Aziz University Tourism Institute- Induction Week Academic Affairs-Word Handout Page 4 of 9 October 2010 KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI) With the academic support of Ecole hôtelière de Lausanne (EHL) MARKETING PROCESS MODEL Create value for customers & build customer relationships Understand customer needs &wants Design a customer marketing strategy Construct a marketing program that deliver superior value Build profitable relationship and create customer delight Capture value from customers to create profits and customer equity King Abdul Aziz University – Tourism Institute Diploma in Hospitality Management sales & marketing 1 – the marketing mix Slide 7 of 20 King Abdul Aziz University Tourism Institute- Induction Week Academic Affairs-Word Handout Page 5 of 9 October 2010 KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI) With the academic support of Ecole hôtelière de Lausanne (EHL) Customer – driven marketing strategy - The four major steps in designing a customer- driven market strategy : - Market segmentation - Market targeting - Differentiation - Positioning - Market segmentation is dividing a market into smaller groups with distinct needs , characteristics , or behaviours who might required separate products or marketing mix - Market targeting The process of evaluating each market segment attractiveness and selecting one or more segments to enter. - Differentiation Actually differentiating the firm market to create superior customer value. - Positioning Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target markets King Abdul Aziz University Tourism Institute- Induction Week Academic Affairs-Word Handout Page 6 of 9 October 2010 KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI) With the academic support of Ecole hôtelière de Lausanne (EHL) MAJOR BASES OF MARKET SEGMENTATION - Geographic segmentation Such as nations, states, regions, countries, cities. - Demographic segmentation - Such as age, gender, family size, family life cycle, income, occupation, education, religion, and nationality - Behavioural segmentation Such as knowledge of buyers, attitudes, uses or responses to a product - Psychographic segmentation Such as social class, lifestyle King Abdul Aziz University Tourism Institute- Induction Week Academic Affairs-Word Handout Page 7 of 9 October 2010 KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI) With the academic support of Ecole hôtelière de Lausanne (EHL) Product life cycle (PLC) PLC is the course of a product sales and profits over its lifetime. Stages of PLC: 1- Product development 2- Introduction 3- Growth 4- Maturity 5- Decline 1-Product development: Begins when the company find and develop a new product idea, sales are zero & high investment cost 2- Introduction: It starts when the new product is first launched. It takes time, and sales growth is apt to be slow. Profits are negative or law because of the law sales and high distribution and promotion expenses. 3- Growth: is a period of rapid market acceptance and increasing profits .Promotion Costs are spread over a large volume and unit manufacturing costs fall . 4- Maturity: is a period of slowdown in sales because the product has achieved acceptance by most potential buyers. Profit level off or decline. 5- Decline: is the period when sales fall off and profits drop King Abdul Aziz University Tourism Institute- Induction Week Academic Affairs-Word Handout Page 8 of 9 October 2010 KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI) With the academic support of Ecole hôtelière de Lausanne (EHL) The 4P's of Marketing - The Marketing Mix These are the basic elements of the MARKETING PLAN for any business PRODUCT: The business has to produce a product that people want to buy. They have to decide which ‘market segment’ they are aiming at – age, income, geographical location etc. They then have to differentiate their product so that it is slightly different from what is on offer at present so that people can be persuaded to ‘give them a try. King Abdul Aziz University Tourism Institute- Induction Week Academic Affairs-Word Handout Page 9 of 9 October 2010 KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI) With the academic support of Ecole hôtelière de Lausanne (EHL) PROMOTION: Customers have to be made aware of the product. The two main considerations are target market and cost. A new business will not be able to afford to advertise on national television, for instance and would not wish to because its market will be local to start with. Leaflets, billboards, advertisements in local newspapers, Yellow Pages and ‘word of mouth’ would be more appropriate. PRICE: The price must be high enough to cover costs and make a profit but low enough to attract customers. There are a number of possible pricing strategies. The most commonly used are: PENETRATION PRICING – charging a low price, possibly not quite covering costs, to gain a position in the market. This is quite popular with new businesses trying to get a ‘toehold. CREAMING – the opposite to penetration pricing, this involves charging a deliberately high price to persuade people that the product is of high quality. Luxury car makers often use this strategy. COST PLUS PRICING – this is the most common form of pricing. Costs are totaled and a margin is added on for profit to make the total price. PLACE: The business must have a location that it can afford, and that is convenient and suitable for customers and any supplier. King Abdul Aziz University Tourism Institute- Induction Week Academic Affairs-Word Handout Page 10 of 9 October 2010 KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI) With the academic support of Ecole hôtelière de Lausanne (EHL) What Are The “4 Cs”? The “4 Cs” marketing mix definition seeks to turn traditional marketing thinking on it's head by looking sales and marketing in a customer-centric way. Instead of looking at how each aspect of marketing is seen by the business, you look at these from the customer's perspective. The point in using “4 Cs” instead of “4 Ps” is not an exercise in semantics. Rather, key into the thinking behind the exercise which is to get you to see thing from your customers' point of view. King Abdul Aziz University Tourism Institute- Induction Week Academic Affairs-Word Handout Page 11 of 9 October 2010 KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI) With the academic support of Ecole hôtelière de Lausanne (EHL) Customer Value (Not Product!) A product is something you make which people come and buy. However, today, you can no longer succeed by making what you want and must instead find out what customer's want. Focusing on Customer Value allows you to reset your perceptions around what it is you are creating and bringing to the market, be it a product, service or some other value. Everything begins and ends with your customer and you exist to serve their needs. Value is what your customer is concerned about, not you, your fabulous product or anything else you do. Value is how you define marketing mix “products” and what you should seek to engage your customer with. It is the value you provide that defines you in the marketplace. Cost (Not Price!) Instead of thinking of price as something you charge, think of cost as something customers pay. This simple adjustment once again opens up a whole new way of thinking about sales and marketing. When you define marketing mix cost you tune into the customer dilemma of deciding how to spend limited money to satisfy unlimited wants. Are you providing enough capital to compete effectively? Your motivation in going to market should not be to maximize your gain but to maximize customer value. Therefore, you should ask how you can provide more for the same cost to the customer instead of asking to make more profit from a product. King Abdul Aziz University Tourism Institute- Induction Week Academic Affairs-Word Handout Page 12 of 9 October 2010 KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI) With the academic support of Ecole hôtelière de Lausanne (EHL) Convenience (Not Place!) The day is not far off when the majority of shopping will not take place in shops or through the traditional distribution channels of business. Your customers today are governed by purchase when, where and how it is convenient to them. Thinking about convenience not only allows you to open up to newer ways of connecting with customers and distributing products, but helps you shift into the mindset of providing an optimum overall experience for customers. To define marketing mix in terms of convenience reminds you that customers today are very busy and have many choices. It is no longer your right as a business owner but a privilege when customers choose you. Make it as easy as possible for them to do so. Communication (Not Promotion!) The final new market mix definition replaces the traditional notion of “Promotion” with Communication. This final concept of how you define marketing mix from the customer's perspective ties into creating Interactive Marketing Communication. “Promotion” hearkens back to the day's of mass marketing which does not work anymore. Just like you cannot simply build a “good product” and expect people to buy it, so customers no longer believe everything you say at face value. Instead of virtuous pronouncement about how good your product or service is, customers today seek to be engaged and have meaningful interactions with you. You must therefore strive for two-way communication and building relationships King Abdul Aziz University Tourism Institute- Induction Week Academic Affairs-Word Handout Page 13 of 9 October 2010 KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI) With the academic support of Ecole hôtelière de Lausanne (EHL) Promotion mix Marketing mix is part of your marketing plan. It defines product, place, price and promotion. The promotion mix targets raising product or brand awareness, communicating the unique value proposition of your product and gaining acceptance of your products. The primary purpose and focus of promotional mix is to get the desired result: the sale of your product. There are more than seven common promotion mix tactics and while most businesses do not use all of these tactics to promote and sell their products, they do use a mix of these tactics. The Top 4 Promotion Mix Tactics: 1. Personal selling is one of the most common of the promotion tactics. Most companies will hire people to do the selling: sales representatives, account managers, inside sales representatives, retail sales, sales agents, or telemarketers. Face-to-face selling is one of the most common methods of selling, although sales by phone, and more recently, sales by email, are becoming well used. These are not necessarily as effective, but they are low cost sales tactics. 2. Advertising is another common promotion tactic. Advertising focuses on brand recognition and identity; not on the product alone. Advertising can be a costly tactic that only the big businesses can invest in; particularly advertising on television which can cost anywhere from $100,000 to over $1 million for a national broadcast in prime time (for a 30-second spot!). This cost is in addition to the cost of producing the commercial. Advertising in industry or consumer magazines is less expensive and typically you can target your advertisement to a specific industry or region. Other advertising can include car or bus 'wraps', events (such as sports, music, art), and billboards. The Internet is becoming a very popular place to advertise, and on a relative basis, it is more affordable. 3. In the retail marketplace, consumer promotion is very common. Buy one, get one free. Coupons for discounted or free product. Free trial packages. Cash discounts or refunds. Contests that give back cash, prizes, or products. The commitment by marketers to consumer promotion is that this form of promotion can be designed to be very measurable. Coupons, contests, and packaging can be coded to report redemptions and to report sales increases and/or decreases related to consumer promotion. Additionally, packaging new products as a trial, with a mature or declining product, can often provide an opportunity to up-sell and extend the declining product's life-cycle. 4. Public relations (PR) are another common promotion tactic. Public relations include writing and distributing press releases (to the local newspaper, the national newspapers, to online PR sites, to radio and television, to magazines, and more). The key for effective PR is to identify and understand your target audience, the key message or messages you want to deliver, the credibility of your organization, and King Abdul Aziz University Tourism Institute- Induction Week Academic Affairs-Word Handout Page 14 of 9 October 2010 KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI) With the academic support of Ecole hôtelière de Lausanne (EHL) the recognition that PR is not a sales tactic but an identity (whether corporate, brand or product) building tactic. The most effective promotional program is usually one that uses a variety of tactics and techniques. It is important to measure the effectiveness of the program you engage in, and adjust your promotional program to increase effectiveness and outcome (sales). Advantages and Disadvantages of Each Element of the Promotional Mix Mix Element Advertising Advantages Good for building awareness Disadvantages Impersonal - cannot answer all a customer's questions Effective at reaching a wide audience Repetition of main brand and product positioning helps build customer trust Personal Selling Highly interactive - lots of communication between the buyer and seller Not good at getting customers to make a final purchasing decision Costly - employing a sales force has many hidden costs in addition to wages Excellent for communicating complex / Not suitable if there are thousands of detailed product information and features important buyers Relationships can be built up - important if closing the sale make take a long time Sales Promotion Can stimulate quick increases in sales by If used over the long-term, customers targeting promotional incentives on may get used to the effect particular products Too much promotion may damage the Good short term tactical tool brand image Public Relations Often seen as more "credible" - since the Risk of losing control - cannot always message seems to be coming from a third control what other people write or say party (e.g. magazine, newspaper) about your product Cheap way of reaching many customers if the publicity is achieved through the right media King Abdul Aziz University Tourism Institute- Induction Week Academic Affairs-Word Handout Page 15 of 9 October 2010 KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI) With the academic support of Ecole hôtelière de Lausanne (EHL) Personal selling Introduction Personal selling can be defined as follows: Personal selling is oral communication with potential buyers of a product with the intention of making a sale. The personal selling may focus initially on developing a relationship with the potential buyer, but will always ultimately end with an attempt to "close the sale" Personal selling is one of the oldest forms of promotion. It involves the use of a sales force to support a push strategy (encouraging intermediaries to buy the product) or a pull strategy (where the role of the sales force may be limited to supporting retailers and providing after-sales service). What are the main roles of the sales force? Kotler describes six main activities of a sales force: (1) Prospecting - trying to find new customers (2) Communicating - with existing and potential customers about the product range (3) Selling - contact with the customer, answering questions and trying to close the sale (4) Servicing - providing support and service to the customer in the period up to delivery and also post-sale (5) Information gathering - obtaining information about the market to feedback into the marketing planning process (6) Allocating - in times of product shortage, the sales force may have the power to decide how available stocks are allocated King Abdul Aziz University Tourism Institute- Induction Week Academic Affairs-Word Handout Page 16 of 9 October 2010 KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI) With the academic support of Ecole hôtelière de Lausanne (EHL) What are the advantages of using personal selling as a means of promotion? • Personal selling is a face-to-face activity. • • The sales message can be customized to meet the needs of the customer. • The two-way nature of the sales process allows the sales team to respond directly and promptly to customer questions and concerns • Personal selling is a good way of getting across large amounts of technical or other complex product information. • The face-to-face sales meeting gives the sales force chance to demonstrate the product. • Frequent meetings between sales force and customer provide an opportunity to build good longterm relationships. Main disadvantages of using personal selling The main disadvantage of personal selling is the cost of employing a sales force. Sales people are expensive. In addition to the basic pay package, a business needs to provide incentives to achieve sales (typically this is based on commission and/or bonus arrangements) and the equipment to make sales calls (car, travel and subsistence costs, mobile phone etc). In addition, a sales person can only call on one customer at a time. This is not a cost-effective way of reaching a large audience. King Abdul Aziz University Tourism Institute- Induction Week Academic Affairs-Word Handout Page 17 of 9 October 2010 KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI) With the academic support of Ecole hôtelière de Lausanne (EHL) Advertising Marketing definition Is a form of communication intended to persuade an audience (viewers, readers or listeners) to purchase or take some action upon products, ideas, or services? It includes the name of a product or service and how that product or service could benefit the consumer, to persuade a target market to purchase or to consume that particular brand. These messages are usually paid for by sponsors and viewed via various media. Advertising can also serve to communicate an idea to a large number of people in an attempt to convince them to take a certain action. Types of advertising - Digital advertising Television advertising / Music in advertising The TV commercial is generally considered the most effective mass-market advertising format, as is reflected by the high prices TV networks charge for commercial airtime during popular TV events. Radio advertising Radio advertising is a form of advertising via the medium of radio. Radio advertisements are broadcast as radio waves to the air from a transmitter to an antenna and a thus to a receiving device. Airtime is purchased from a station or network in exchange for airing the commercials. While radio has the obvious limitation of being restricted to sound, proponents of radio advertising often cite this as an advantage. Online advertising Online advertising is a form of promotion that uses the Internet and World Wide Web for the expressed purpose of delivering marketing messages to attract customers. Product placements Covert advertising, also known as guerrilla advertising, is when a product or brand is embedded in entertainment and media. For example, in a film, the main character can use an item or other of a definite brand. King Abdul Aziz University Tourism Institute- Induction Week Academic Affairs-Word Handout Page 18 of 9 October 2010 KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI) With the academic support of Ecole hôtelière de Lausanne (EHL) - Physical advertising Press advertising Describes advertising in a printed medium such as a newspaper, magazine, or trade journal. This encompasses everything from media with a very broad readership base, such as a major national newspaper or magazine, to more narrowly targeted media such as local newspapers and trade journals on very specialized topics. A form of press advertising is classified advertising, which allows private individuals or companies to purchase a small, narrowly targeted ad for a low fee advertising a product or service. Another form of press advertising is the Display Ad, which is a larger ad (can include art) that typically run in an article section of a newspaper. Billboard advertising: Billboards are large structures located in public places which display advertisements to passing pedestrians and motorists. Most often, they are located on main roads with a large amount of passing motor and pedestrian traffic; however, they can be placed in any location with large amounts of viewers, such as on mass transit vehicles and in stations, in shopping malls or office buildings, and in stadiums. Mobile billboard advertising are generally vehicle mounted billboards or digital screens. These can be on Mobile billboards dedicated vehicles built solely for carrying advertisements along routes preselected by clients, they can also be specially equipped cargo trucks or, in some cases, large banners strewn from planes In-store advertising In-store advertising is any advertisement placed in a retail store. It includes placement of a product in visible locations in a store, such as at eye level, at the ends of aisles and near checkout counters, eye-catching displays promoting a specific product, and advertisements in such places as shopping carts and in-store video displays. Coffee cup advertising Coffee cup advertising is any advertisement placed upon a coffee cup that is distributed out of an office, café, or drive-through coffee shop. This form of advertising was first popularized in Australia, and has begun growing in popularity in the United States, India, and parts of the Middle East Street advertising This type of advertising first came to prominence in the UK by Street Advertising Services to create outdoor advertising on street furniture and pavements. Working with products such as Reverse King Abdul Aziz University Tourism Institute- Induction Week Academic Affairs-Word Handout Page 19 of 9 October 2010 KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI) With the academic support of Ecole hôtelière de Lausanne (EHL) Graffiti and 3d pavement advertising, the media became an affordable and effective tool for getting brand messages out into public spaces. Celebrity branding This type of advertising focuses upon using celebrity power, fame, money, popularity to gain recognition for their products and promote specific stores or products. Advertisers often advertise their products, for example, when celebrities share their favorite products or wear clothes by specific brands or designers. Celebrities are often involved in advertising campaigns such as television or print adverts to advertise specific or general products. Purpose of Advertising Informing The most obvious purpose of advertising a product is informing. Through advertising, established businesses can announce new and existing products or services they are trying to sell to the public. Likewise, a new company can use advertising to inform the public about its business. Advertising is a strategy used to grab the attention of potential customers. Advertisements use language and communication techniques that appeal to consumers. Influencing In some cases, it is not enough to simply inform the consumer about a product. Therefore, influencing the consumer to buy the product or service is another important technique used by companies. By using strategic language or images in an ad, businesses can influence consumers to buy their product. Strategic language and imagery in advertising helps point out the strengths of a product or service, which can influence consumers' purchasing decisions. Reminding Another function of advertising is to remind consumers about a product or service. There are many brands within a specific product category and consumers may forget about or overlook some brands because there are so many options. By using advertising to remind consumers, companies can establish their product or service in consumers' minds. Adding Value Advertising adds value to a brand by influencing consumers to perceive the brand in a certain way. Advertising is influential by nature; therefore, different elements within an ad, such as the text and images, can be positioned in order to add value to the brand. For example, a car advertisement in a magazine may include text that emphasizes the high quality materials and labor used in making the car. This ad achieves the goal of adding value to the brand because it King Abdul Aziz University Tourism Institute- Induction Week Academic Affairs-Word Handout Page 20 of 9 October 2010 KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI) With the academic support of Ecole hôtelière de Lausanne (EHL) assures the consumers that it is a high-quality car. Advertising plays up the strong points of a product or service, which in turn adds value to the brand. Assisting with Other Company Efforts Another purpose of advertising is to assist with other company efforts. For example, without advertising, consumers may not hear about special promotions, such as sales and coupons. Advertising also assists salespersons because it educates consumers about the products before they get to the point of purchase. This is advantageous because it allows salespersons to spend more time on making the sale instead of spending time explaining the product to the consumer. King Abdul Aziz University Tourism Institute- Induction Week Academic Affairs-Word Handout Page 21 of 9 October 2010 KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI) With the academic support of Ecole hôtelière de Lausanne (EHL) Consumer Promotions Consumer promotions can provide your business with a short-term boost in product sales or services requested. However, promotions should be thought of as an “add-on” to your existing brand advertising and marketing strategies. If you are considering running special consumer promotions, there is good rationale for incorporating them into your marketing mix. Reasons to Promote: Create a general hype in sales Launch a new product or service, generating initial trial Announce news about an existing product or service, e.g., a new form, package size, product use, bonus offer, extended service, location, etc. Offset new competition or other competitive threat Induce repeat purchases, product upgrades or services used Announce a tie-in product or service, e.g., free suntan product with the purchase of sunglasses Capitalize on holiday or seasonal occasions, e.g., Valentine’s Day, President Day Sales, Back-to-School Sales, Holiday Sales Enhance product or service awareness Who Is Your Primary Target For the Promotion? When planning a promotion, it is important to know which customers you are trying to reach. Will your promotion target new users or current customers? Deciding on a target audience will depend on factors such as current sales trends, competitive activity, seasonality or a combination of factors. Targeting your customers is key to a promotion’s success. You also need to know your customers’ behavior, reading or listening habits or use of the Internet. Once you have determined which customers to target and how to reach them, you can decide how to best use your available funds. What Is Your Promotion Budget? Your marketing budget should include an allocation for promotions, both planned and contingency (i.e., for unexpected events). How you create awareness of the promotion will depend on how much money you have to spend. Think about hidden promotional costs, which can reduce the cost efficiency of the promotion if overlooked. Luckily, there are many forms of media available at all different price ranges. Just be sure that the cost of your promotion will not outweigh the benefit. What Type of Promotion Works Best? Promotions come in different forms, with different budgets, and can yield very different results. Sometimes it is a good idea to conduct a test promotion before launching a large-scale effort. This can help you to stay within your promotion budget and ensure that your promotion tactics are sound. King Abdul Aziz University Tourism Institute- Induction Week Academic Affairs-Word Handout Page 22 of 9 October 2010 KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI) With the academic support of Ecole hôtelière de Lausanne (EHL) As a starting point in figuring out what promotion will work best for your business, research common promotion techniques in your industry and review the effectiveness of competitors’ promotions. Examples of common, effective promotions include: Short-term price reductions such as coupons, rebates or bonus offers On-pack premiums or cross/companion product promotions, like a free toothbrush with toothpaste One free month of service for new customers Free services for referring a new customer, for example a Laundromat offering free wash and dry Analyze the benefits and drawbacks of each promotion type before you launch your promotion. For example, will offering bonus packs or extended discounts postpone future purchases which potentially could impact profits? Could frequent cost reductions negatively impact your brand image? How much will deep promotional price reductions affect profits? Some other factors to consider include ease of implementation (which you want) and ease of duplication by competition (which you don’t want). What Are the “Econometrics” of the Promotion? In simpler terms, did your promotion pay off? Did it generate sufficient incremental sales or in-store traffic to justify the additional costs? Did your customer “load-up” or buy-in heavily, delaying future purchases? Will there be repeat purchases sufficient enough to pay for the promotion? These are important questions to answer when planning your promotion, as well as when evaluating it after the fact. In many cases a promotion will only generate a short-term switch in customer choice, but this can still be important for product or service growth. Promotion Evaluation Evaluation is the most critical, yet the most overlooked, step in any promotion. Most promotion planners fail to incorporate measurement devices to assess whether the promotion worked or not. Consequently, except for a “gut feeling,” they never really know if their promotion was successful. To measure the success or failure of a promotion, you must set specific, measurable, realistic objectives prior to launching the promotion. Post-promotion, evaluate your success by comparing original objectives and criteria to actual outcomes. This overview on creating your promotion can give you a good starting point, but sometimes it is best to consult with a promotion professional. If you’re planning to promote, seek help from your nearest . King Abdul Aziz University Tourism Institute- Induction Week Academic Affairs-Word Handout Page 23 of 9 October 2010 KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI) With the academic support of Ecole hôtelière de Lausanne (EHL) Market Research Definition Market Research is a systematic, objective collection and analysis of data about a particular target market, competition, and/or environment. Purpose of Marketing Research Marketing research is a crucial management tool for helping businesses to discover whether or not the product or service that they are providing is actually desired by their customer base. An example of a market research strategy is convening a focus group to determine how a demographic experiences interactions with a company. Market research should be conducted constantly to ensure that the business is still meeting the needs of a changing market. Types of Marketing Research Marketing research incorporates the science of understanding human behavior in order to better understand how consumers choose products. It asks questions related to the "whys" of consumerism. Studies incorporate one or more of the following areas. Consumer Satisfaction Research This is a broad area that includes home and store surveys, telephone chats and mail-in questionnaires. Exit interviews, either by phone or in person, are part of this technique. Brand Name Surveys Some products sell based simply on the brand name. Marketing research determines what brands are immediately recognized and the reasons for this identification. New product names are surveyed using this technique. Test Marketing This research method is the most recognized. Store sample tables, individual samples that arrive in the mail, and automobile test drive offers all fall within this category of research marketing. King Abdul Aziz University Tourism Institute- Induction Week Academic Affairs-Word Handout Page 24 of 9 October 2010 KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI) With the academic support of Ecole hôtelière de Lausanne (EHL) Concept Testing money is spent developing a potential flop, businesses bring in focus groups to discuss the concept for the product. These meetings are held in many geographic locations around the country. Segmentation Research This type of marketing research is frequently used to determine the groups of consumers buying, or interested in, a specific product. Age, income, education level and geographic location are key factors for Segmentation Research. Comparison or Positioning Research This research answers the question of how well one product compares against a similar product made by other manufacturers. How to Conduct Market Research Market research is the process of gathering as much information as possible about your customers and how they view your company and products. With enough information, you can determine the best marketing strategy for your business. Instructions 1 Determine the goal of your research. Do you need to improve customer service or increase sales? Are you looking for the right market for a new product? 2 Use trade journals, marketing magazines, government reports and chamber of commerce market profiles to determine the demographics of your market. These publications also provide data on purchasing trends that will clue you in on the buying habits of your target market. 3 Conduct mail and telephone surveys using randomly selected addresses and telephone numbers in your local area. King Abdul Aziz University Tourism Institute- Induction Week Academic Affairs-Word Handout Page 25 of 9 October 2010 KING ABDUL AZIZ UNIVERSITY TOURISM INSTITUTE (KAUTI) With the academic support of Ecole hôtelière de Lausanne (EHL) 4 Collect information from existing customers. Use questionnaires, personal interviews and focus groups to get feedback on your products and services. If you have a Web site, start a chat room or message board and encourage customers to participate. 5 Observe customers at various points of contact in your business, including reception, sales, and customer service. Watch for glitches in your operation and how your employees interact with the customers. 6 Analyze your sales records. Knowing your best customers and most profitable products can help you to better focus your marketing efforts. 7 Organize the research data you've collected and determine - or reevaluate - your marketing strategy based on the results. King Abdul Aziz University Tourism Institute- Induction Week Academic Affairs-Word Handout Page 26 of 9 October 2010