Professional Documents
Culture Documents
Learning Outcomes
New Perspectives on
Marketing
The strategy and tactics behind marketing
programs have changed dramatically in
recent years as firms have dealt with
enormous shifts in their external marketing
environments:
Digitalization and connectivity (through Internet,
intranet, and mobile devices)
Disintermediation and reintermediation (via new
middlemen of various sorts)
Customization and customerization (through
tailored products and ingredients provided to
customers to make products themselves)
Industry convergence (through the blurring of
industry boundaries)
5.3
Integrating Marketing
Programs and Activities
Creative and original thinking is
necessary to create fresh new
marketing programs that break
through the noise in the marketplace
to connect with customers.
Marketers are increasingly trying a
host of unconventional means of
building brand equity.
5.5
Product strategy
Pricing strategy
Channel strategy
5.6
Product Strategy
Performance : Levels which primary characteristics operate (low, medium, high or very high
Features : Secondary elements that complement primary characteristics
Conformance Quality: Degree at which product meets specification products
Reliability: Consistency of performance over time and from purchase to purchase
Durability : Expected economic life of the product
Serviceability : Ease of servicing the product
Style and Design : Appeal or feel of quality
5.7
Product Strategy
Perceived quality and value
Brand intangibles : Factors in addition to product
performance such as speed, accuracy, care of product
delivery and installation, the promptness, courtesy, and
helpfulness of customer service.
3- D Marketing approach by McKinsey Consulting :
Functional Benefits, Process Benefits and Relationships
Benefits
Value chain : Create customer value through primary value
creating activities (such as inbound logistics, operations,
outbound logistics, marketing and sales, & service) and
support activities (firm infrastructure, hum resources
management, technology development, procurement)
5.8
Product Strategy
Product Strategy
Relationship Marketing
Mass Customization
Making products to fit the customers exact specifications e.g. Dell
Computers, NIKEiD Website, Jerseys, Premier Account of Barclays etc.
AfterMarketing
Those marketing activities that occur after customer purchase. It is
aimed at enhancing the product consumption experience and
thereby build brand equity e.g. innovative design, effective
communication such as product manual etc.
Loyalty or Frequency programmes
Identifying, maintaining, and increasing the yield from a firms best
customers through long-term , interactive, value-added relationships.
Airlines giving free trips and upgrades based on mileage flown. It
also involves co-branding e.g. Airlines and Hotels etc.
Pricing Strategy
Price : The amount of money charged
for a product or service. It is the sum of
the values that consumers exchange
for the benefits of having or using the
product or service
Price is the only element in the
marketing mix that produces revenue,
all other elements represent costs.
5.11
Pricing Strategy
Price premiums are among the most
important brand equity benefits of building
a strong brand.
Consumer price perceptions
Consumers often rank brands according to price
tiers in a category.
The relationship between price and quality
5.12
Pricing Strategy
Value to Customers or Perceived Value for Money
Value is the benefit the customer derives from the purchase of
the product. The firm needs to understand the value that the
customer places on the benefits received and then price
accordingly. Effectively, customers assess the price and
measure the benefits received.
Factors that affect the value they place on the product:
1. Status
2. Service and after sales service quality
3. Level of differentiation from competitor products
4. Quality of any packaging
5. Product functionality
6. Any substitute products which may be available
Pricing Strategy
Setting prices to build brand equity
Value pricing
To uncover the right blend of product quality costs, and
product that fully satisfies the needs and wants of
consumers and the profit targets of the firm.
Everyday low pricing (ELPD)
Maintaining consistently low prices on major items
every day to
build brand loyalty and fend off private label inroads
and reduce
manufacturing and inventory costs e.g. Procter and
5.14
Gamble
Pricing Approaches
Value-based pricing: Setting price based on buyers
perceptions of product values rather than on cost.
The targeted value and price then drive decisions
about product design and what costs can be
incurred. Pricing begins with analysing consumers
needs and value perceptions and a price is set to
match consumers perceived value
- Market research is required to ascertain the value
buyers assign to product and that of competitors.
This can be difficult.
- If a seller charges more than buyers perceived
value, the companys sales will suffer.
Pricing Strategy
8 Steps to Better Pricing
1.Assess what value your customers place on a product or
service
2. Look for variation in the way customers value the product
3.Assess customers price sensitivity
4. Identify an optimal pricing structure
5. Consider competitors reactions
6. Monitor prizes realized at the transaction level
7.Access customers emotional response
8. Analyze whether the returns a worth the cost to serve
5.16
Channel Strategy
Marketing Channels
Set of interdependent organizations involved
in the process of making a product or
service available for use or consumption.
The manner by which a product is sold or
distributed can have a profound impact on
the resulting equity and ultimate sales
success of a brand.
5.17
Channel Strategy
Channel strategy includes the design
and management of intermediaries
such as wholesalers, distributors,
brokers, and retailers.
5.18
Channel Design
Direct channels
Selling through personal contacts from the
company to prospective customers by mail, phone,
electronic means,
in-person visits, and so forth
Indirect channels
Selling through third-party intermediaries such as
agents
or broker representatives, wholesalers
or distributors, and retailers or dealers
Push and pull strategies
Web strategies
5.19
Functions of Members of
Marketing Channel
Physical distribution refers to transporting and
storing goods
Financing refers to acquiring and using funds to
cover the costs or carrying out the channel work
Risk taking refers to assuming the risks of carrying
out the channel work
Types of Distribution
Channels Consumer Goods
Channels
Channel Level
A layer of intermediaries that performs some
work in
bringing the product and its ownership closer
to the final
buyer
Manufacturer
Consumer
Channel 1
Channel 2
Manufacturer
Channel 3
Manufacturer
Channel 4
Manufacturer
Retailer
Wholesaler
Retailer
Consumer
Consumer
Consumer
Establishing Channel
Strategies
Channel strategy decisions involve
the following :
1.The selection of the most effective
distribution channel,
2.The most appropriate level of
distribution intensity
3.The degree of channel integration
Establishing Channel
Strategies :Channel Selection
Why will Procter and Gamble sell its brands through
supermarkets rather than
selling direct to consumers ? Why Dell will sell direct to end
users and not
necessarily through retailers?
1.Market Factors :
2.Producer Factors
3.Product/Brand Factors
4.Competitive Factors
Establishing Channel
Strategies :Channel Selection
1. Market Factors :
Buyer Behaviour,
Buyer needs information, installation &
technical assistance etc.
Willingness of channel intermediaries to
market product
The profit margins demanded by
wholesalers & retailer and commission by
sales agents
The number and size of buyers
The location and geographical
concentration of customers
Establishing Channel
Strategies :Channel Selection
Producer Factors
Resource availability : Financial and
Managerial resources
Product Mix
Desired Degree of Control of Channel
Operations
(price, stocking of new products etc)
Competitive Factors
Control of traditional channels of
distribution through franchise or exclusive
dealing arrangements
Indirect Channel
1. Availability is critical
2. After sales service is important
Establishing Channel
Strategies :Distribution Intensity
3 broad options are intensive, selective and
exclusive:
1. Intensive
2. Selective
is a strategy when a producer uses more than one but fewer
than
all of the intermediaries willing to carry the producers products
Televisions
Appliances
Establishing Channel
Strategies :Distribution Intensity
3. Exclusive is a strategy in which the
producer gives only
a limited number of dealers the exclusive
right to
distribute its products in their territories e.g.
only one
wholesaler, retailer or industrial distributor is
used in a
geographic area.
Luxury automobiles
High-end apparel
Channel Support
Two such partnership strategies are retail
segmentation activities and cooperative
advertising programs.
Retail segmentation
Retailers are customers too
Cooperative advertising
A manufacturer pays for a portion of the
advertising that a retailer runs to promote the
manufacturers product and its availability in
the retailers place of business.
5.33
Key Points
1. All of the four Ps not just promotion have important
roles to play in the creation and maintenance of brand
equity.
2. The products and services that firms design are the
cornerstones of customer-based brand equity.
3. Pricing strategy must be based on consumers and the
competition, as well as cost and quality considerations.
5. Channel members should be thought of and treated as
valuable customers whose image and actions can hurt
or enhance brand equity.
Tutorials
Choose a product category. Profile all
the brands in the category in terms
of pricing strategies and perceived
value.