Marketing Principles

In a nutshell

compiled by: Joyce Natalie Yang, MBEcon

Strategic Tactical
marketing marketing

Determine Compose

marketing mix decisions that

Segments support the product positioning
Product
Target group
Price
Positioning Place
Promotion
 POSITIONING strategy
development
product decisions

positioning
strategy

promotion decisions target distribution decisions

market

price decisions
Segmenting Consumer Markets

Geographic

Demographic

Psychographic

Behavioral
Segmentation Samples
• Consumer market

• Geographic:
• continents, global regions, countries, population density, climate
• Demographic:
• by age, life stage, gender, family size, income, education, marital
status, generation
• Social:
• culture, religion, race, nationality, social class, attitude, benefit,
usage rate, psychographics

• Organizational buyers Market

• company size, purchase quantity, product application, organization

type, location, purchase status, attribute importance.
 MARKET TARGETING
Patterns of Target Market Selection
M1 M2 M3

Single Segment Concentration
 P1

P2
P3
M1 M2 M3
P1
Selective Specialization
 P2
P3
M1 M2 M3
P1
Product Specialization P2
P3

M1 M2 M3
P1
Market Specialization P2
P3

M1 M2 M3
P1
Full Market Coverage P2
P3
 Positioning
Placing a product at a certain point or location within a market in the minds
of prospective buyers

Possible approaches
• Attributes
• Price/quality
• Competitors
• Application
• Product user/class

Copyright  ©  2012  by  South  Western,  a  division  of  Cengage  Learning.  All  rights  reserved.
unique selling proposition
• VALUE PROPOSITION; proposing the value of the product/service to
clients.

• ADDED VALUE TO CUSTOMERS; A SUPERIOR ATTRIBUTE;

EXAMPLES:

• BMW’S DRIVABILITY; lexus for quality

• APPLE IPOD’S APPEALING DESIGN

• UPS OFFERS COMPLETE SUPPLY CHAIN SOLUTIONS

• RUSTAN’S: SUPERIOR CUSTOMER RELATIONSHIP

• SAVE MORE: SUPERIOR VALUE

unique selling proposition

• IS THE VALUE PROPOSITION UNIQUE? (a point of

difference)

• IS THE STRATEGY FEASIBLE? (HAVE RESOURCES

AND CAPABILITIES TO EXECUTE THE STRATEGY)

• IS THE u.s.p. relevant to target customers?

• is the U.S.P. SUSTAINABLE? (NOT Easily copied)
unique selling proposition (u.s.p.)
EMOTIONAL/ SELF
PRODUCT ATTRIBUTE
EXPRESSIVE
BENEFIT
BENEFITS

APPEALING
BRAND DESIGN
FAMILIARITY

QUALITY
VALUE SYSTEMS
PROPOSITION SOLUTIONS

CORPORATE SOCIAL
VALUE PROGRAMS

SUPERIOR
NICHE CUSTOMER
SPECIALIST RELATIONSHIP
generic strategic approaches to build
Competitive Advantage
COMPETITIVE ADVANTAGE

define by cost defined by distinctiveness

broad
low cost differentiation industry-wide
target market

(broad)
leadership
best cost
provider strategy
focused focused
specific niche
low-cost differentiation or segment
(narrow)
 



Product (Goods and Services) Decisions







 product-market decisions
ANSOFF’S MATRIX

MARKETS
EXISTING NEW
EXISTING
OFFERINGS

market penetration market development

NEW

new offering development market diversification

 critical factors in
product decisions

• design development

• branding

• Product life cycle

Copyright  ©  2012  by  South  Western,  a  division  of  Cengage  Learning.  All  rights  reserved.
Copyright  ©  2012  by  South  Western,  a  division  of  Cengage  Learning.  All  rights  reserved.
 Product decision questions
1.What are the characteristics of products and how do marketers classify products?
2.How can companies differentiate products?
3.How can a company build and manage its product mix and product lines?
4.How can companies combine products to create strong co-brands or ingredient
brands?
5.How can companies use packaging, labeling, warranties, and guarantees as
marketing tools?
6.What is a brand and how does branding work?
7.What is brand equity?
8.How is brand equity built, measured, and managed?
9.What are the important decisions in developing a branding strategy?
Service Delivery
4Ps +
People
Process
Physical Evidence
 Service Gaps:
Root Causes of Customer Failure
 Gaps That Cause Unsuccessful Service Delivery

• Gap between consumer expectation and management perception

• Gap between management perception and service-quality specifications

• Gap between service-quality specifications and service delivery

• Gap between service delivery and external communications

• Gap between perceived service and expected service

 



Distribution Decisions 





Determining Distribution Intensity

o Intensive distribution - Distribution of a product

through all available channels

o Selective distribution - Distribution of a product

through a limited number of channels

o Exclusive Distribution - Distribution of a product

through a single wholesaler or retailer in a specific
geographic region
Vertical Marketing Systems

Three categories of VMSs

Corporate systems
Administered systems
Contractual systems
Supply Chain
of a Manufacturing Company
Global Retailing Strategies
 



Pricing Decisions

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 Pricing Strategies
• Skimming pricing strategy - The use of a high price
relative to competitive offerings (EX: LVMH, Benz)

• Penetration pricing strategy - The use of a relatively low

entry price compared with competitive offerings,
based on the theory that this initial low price will help
secure market acceptance

• Competitive pricing strategy - Designed to deemphasize

price as a competitive variable by pricing a good or
service at the level of comparable offerings

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 Skimming Vs. Penetration Pricing

PROMOTION
HIGH
PRICE LOW

HIGH
Rapid - skimming Slow - skimming
strategy strategy

LOW
Rapid -penetration Slow – penetration
strategy strategy
 Psychological Pricing

•Pricing policy based on the belief that certain prices

or price ranges make a good or service more
appealing than others to buyers

•Includes prestige pricing

•Odd pricing - Setting prices at odd numbers just

under round numbers

•Unit pricing - Prices stated in terms of some

recognized unit of measurement or a standard
numerical count

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 Product-Line Pricing

• Practice of setting a limited number of prices for a

selection of merchandise and marketing different
product lines at each of these price levels

• Helps retailers differentiate product lines

• Allows customers to focus on desired prices ranges

• Retailers may have difficulty making price changes on

individual items as necessary

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 Promotional Pricing
Pricing policy in which a lower-than-normal price
is used as a temporary ingredient in a firm’s
marketing strategy

Example: “Buy one pair, get the second pair for

one cent” sale

Must be managed carefully because customers

may come to expect them and wait for them

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 Loss Leaders and Leader Pricing

• Loss leader - Product offered to consumers

at less than cost to attract them to stores
in the hope that they will buy other
merchandise at regular prices

• Leader pricing - Variant of loss-leader

pricing in which marketers offer prices
slightly above cost to avoid violating
minimum-markup regulations and earn a
minimal return on promotional sales

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 Promotion Decisions
(Integrated Marketing Communications)
 Events &
Digital
Marketing
marketing

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 Budgeting for Promotional Strategy

• Promotional budgets may differ not only in

amount but also in composition

• B2B markets allocate more to personal

selling than advertising

• Reverse is true for consumer goods

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Copyright  ©  2012  by  South  Western,  a  division  of  Cengage  Learning.  All  rights  reserved.
 Measuring the Effectiveness of Promotion

Direct sales results test - Based on the specific

impact on sales revenues for each dollar of
promotional spending

Indirect evaluation - Concentrating on quantifiable

indicators of effectiveness such as recall and
readership

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 Measuring Online Promotions

Cost per impression - Relates the cost of an ad to

every thousand people who view it

Cost per response (click-through) - Relates the cost of

an ad to the number of people who click it

Conversion rate - Percentage of visitors to a Web

site who make a purchase

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