390981 Notes On Marketing Basics

develops products, prices them, promotes them and then distributes them in a way that helps a company create and sustain demand for their products. 4Ps of Marketing

Marketing a process of planning and executing the:  Conception,  Pricing,  Promotion,  Distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.

 Product: The Product management and Product marketing aspects of marketing deal with the specifications of the actual good or service, and how it relates to the end-user's needs and wants.

Marketing Activities  get attention  motivate & encourage people  facilitate them to act (buy)  get them to buy again

 Pricing: This refers to the process of setting a price for a product, including discounts.

 Promotion: This includes advertising, sales promotion, publicity, and personal selling, and refers to the various methods of promoting the product, brand, or company.

Define your product/service Promotion / promoting Distribute your product/service Maintain a relationship

 Placement or distribution refers to how the

Building and nurturing a relationship Create, expand and maintain Understand consumer behavior how people buy, what they buy, when they buy and why they buy  Customer focus (orientation):  Customer wants1 are researched,  The information is disseminated throughout the firm and products are developed  Customer satisfaction is monitored and adjustments made if necessary. 3 Assumptions of Transactional Marketing  There is a large number of potential customers  Customers and their needs are fairly homogenous  It is rather easy to replace lost customers with new on 3 Levels of Marketing Corporate 1. 'What business should we be in and what opportunities should we pursue?' This is marketing before we even have a business, idea or product. Business 2. 'How are we going to compete against the competition? 'Focused on the competition; deals with long term sustainable advantages and business models Functional 3. 'How do we create and keep customers?'; '4ps' of the marketing mix. This level of marketing defines and 1

determines what its potential customers desire

product gets to the customer; for example, point of sale placement or retailing. This fourth P has also sometimes been called Place, referring to the channel by which a product or service is sold (e.g. online vs. retail), which geographic region or industry, to which segment (young adults, families, business people), etc.

Advertising Advertising is paid communication through a nonpersonal medium in which the sponsor is identified and the message is controlled. Variations include:  publicity & public relations  product placement2 (plug on sitcom)  sponsorship & underwriting spots 3 (e.g. PBS)  sales promotion Viral Marketing viral advertising refer to marketing techniques that use pre-existing social networks to produce increases in brand awareness. Advantages:  Ease of executing the marketing campaign,  Relative low-cost (compared to direct mail)  Good targeting,  High and rapid response rate Mass Market vs. Niche Market 2

a real commercial product is used in fictional or non-fictional media, and the presence of the product is a result of an economic exchange. When featuring a product is not part of an economic exchange, it is called a product plug. 3 spots usually mention the name of the sponsor, and can resemble traditional advertising in commercial broadcasting, but there are usually legal restrictions, such as a prohibition of making product claims, announcing prices, or providing an incentive to buy a product or service.

Mass marketing is used to sell a product to a large variety of customers in large amounts. Mass marketing is the opposite of niche marketing, where a product is made especially for one person or a group of person

Marketing Innovations & Theory: exploit people's herd mentality to increase sales Mass Customization (PERSONALIZATION) 

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Adaptive customization - firms produce a standardized product, but this product is customizable in the hands of the end-user (the customers alter the product themselves) Collaborative customization - talk to individual customers to determine the precise offering that best serves the customer's needs (personalized marketing and personal marketing orientation). This information is used to specify and manufacture a product that suits that specific customer Cosmetic customization - produce a standardized physical product, but market it to different customers in unique ways.

 Product/Service Differentiation differentiating it from competitors' products as well as one's own product offerings Sources:  Differences in quality or design among output (product)  Ignorance of buyers regarding the essential characteristics and qualities of goods they are purchasing  Pervasive sales promotion activities of sellers and, in particular, advertising  Differentiation in the locations of sellers of the same good; Product/Service Positioning How are you, your product/service perceived in the market compared to the competition?

A good position is: 1. What makes you unique 2. This is considered a benefit by your target market  Re-positioning involves changing the identity of a product, relative to the identity of competing products  De-positioning involves attempting to change the identity of competing products, relative to the identity of your own product, Environment 1. What is our marketing environment? 2. What is our competitive advantage?

Positioning Strategies:       

Product Attributes: What are the specific product attributes? Benefits: What are the benefits to the customers? Usage Occasions: When / how can the product be used? Users: Identify a class of users. Against a Competitor: Positioned directly against a competitor. Away from a Competitor: Positioned away from competitor. Product Classes: Compared to different classes of products.

Positioning Differences  Important: The difference delivers a highly valued benefit to the target buyers  Distinctive: Competitors do not offer the difference, or the company can offer it in a more distinctive way  Superior: The difference is superior to other ways that the customer might obtain the same benefit  Communicable: The difference can be explained and communicated to the target buyers  Preemptive: Competitors cannot easily copy the difference  Affordable: Buyers can afford to pay the difference  Profitable: Company can introduce the difference profitably Segmentation Variables: Main Segments (subsets)  Geographic  Demographic (age, gender, income, occupation, religion)  Psychographic (personality, value, attitude)  Behavioral (benefit sought, brand loyalty)  Who are the Innovators and Early adopters?

Venturesomeness: the willingness and desire to be daring in trying something new and different  Social integration: frequent and extensive contact with others in one’s area  Cosmopolitan: point of view extending beyond the immediate neighborhood or community  Social mobility: upward movement on the social scale  Privilegedness: attitude and possession of money (less risky to try something new)  Upselling a marketing technique where the customer is offered a higher-priced version of a product or an additional product to the original sale.

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Matching: fitting the offer to the buyer's needs Negotiation: reaching agreement on price and terms Physical distribution: transporting and storing the goods Financing: getting and using funds to cover the costs of channel work Risk taking: assuming the risks the channel work.

Distribution • Retail • Online • In Person • In House Pricing Strategies   

Target Market: Each class has different risk tolerances. • • • • •

Innovators4 First 5% - 10% that adopt the product Early Adopters Next 10% - 15% Early Majority Next 30% Late Majority Next 30% Laggards Remaining 20%

Product Adaptability  Relative advantage of the product: How superior is the innovation to the product or other problem-solving methods it was designed to compete against?  Compatibility: Does it fit with current product usage and customer activity?  Complexity: Will difficulty or confusion arise in understanding the innovation’s basic idea?  Divisibility: How easily can trial portions of the product be purchased?  Communicability: How likely is the product to appear in public places where it is easily seen and studied by potential users? Distribution Channels Functions

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New Product Pricing Strategies Market-Skimming: Initially set high prices to "skim" revenue layer by layer from the market. Works when:    

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Information: gathering and distributing marketing research Promotion: developing and communicating offers Contact: communicating with prospective buyers

Quality and image support the higher price Enough buyers want the product at that price Cost of producing a small volume cannot be high Competitors should not be able to enter the market easily

Market Penetration: Set a low initial price in order to penetrate the market quickly and deeply to win a large market share. Works when:   

Market is highly price sensitive Production and distribution costs fall as sales volume increases Low price must help keep out the competition

Price Adjustment

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What is the purpose of a distribution channel? •

Product Line: Setting price steps between product line items Optional Product: Pricing optional or accessory products Captive Product: Pricing products that must be used with the main product By-Product: Pricing low value by product to get rid of them Product Bundle: Pricing bundles of products sold together

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Discount & Allowance: reduced prices to reward customer responses such as paying early or promoting the product Discriminatory: adjusting prices to allow for differences in customers, products, and locations Psychological: adjusting prices for psychological effects. Ex: $299 vs. $300 Value: adjusting prices to offer the right combination of quality and service at a fair price Promotional: temporarily reducing prices to increase short-run sales

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Geographical: adjusting prices to account for geographic location of customer. International: adjusting prices in international markets

Promotion Promotion is the specific mix of advertising, personal selling, sales promotion, and public relations a company uses to pursue its advertising and marketing objectives         

Shows Direct Mail Web Page Posters Event Listings Reviews Radio Word of Mouth Press Releases

 Evangelism Marketing or Word of Mouth advanced form of word of mouth marketing (WOMM) in which companies develop customers who believe so strongly in a particular product or service that they freely try to convince others to buy and use it.  Consumers have become increasingly mediasavvy, hard-sell advertising messages do not function well  Branded content - branded content programs are able to blend the advertising message in a seamless and transparent fashion, while still getting the information across to the consume