Marketing

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Principles of Marketing Chap # 1

Title Marketing: Managing Profitable Customer Relationships.

2

Company & Marketing Strategy: Partnering to Build Customer Relationships

4 (Self)

Managing Marketing Information

5&6 (Self)

Consumer Markets and Consumer Buyer Behavior & Business Markets and Business Buyer Behavior

7

Segmentation, Targeting and Positioning: Building the Right relationship with the right customers

8

Product, Services & Branding Strategies

9

New Product Development & Product Life Cycle Strategies

10 & 11

Pricing Considerations and Approaches & Pricing Strategies

12

Marketing Channels and Supply Chain Management

14

Integrated Marketing Communication.

16 & 17

Advertising, Sales Promotion, and Public Relations, Personal Selling and Direct Marketing

18

Creating Competitive Advantage

1

Marketing: Managing Profitable Customer Relationships Marketing: A social and managerial process whereby individuals and groups obtain what they need and want through creating and exchanging products and value with each other. Core Concepts of Marketing (Refer Exhibit 1.1) Needs, Wants and Demands: Marketing Offers – Products, Services and Experiences Value and Satisfaction Exchange, Transactions and Relationships Markets Marketing Management: The art and science of choosing target markets and building profitable relationships with them. Marketing Management Orientation: The Production Concept Product Concept Selling Concept Marketing Concept Social Marketing Concept Customer Relationship Management Customer Development and retentions, customer value and satisfaction, computing cost of lost customer, what’s the need for customer retention, customer lifetime value. Customer Development process: Suspects, prospects, disqualified prospects, first time customer, repeat customer or inactive, client or inactive, advocate or inactive, partner or inactive.

2

Customer Value and Satisfaction Customer Delivered Value is the difference between total customer value and the total customer cost. Total Customer Value is the bundle of benefits customer expects from a given product or service. Total Customer Cost is the bundle of costs customers expect to incur in evaluating, obtaining and using the product or service. Satisfaction is a person’s feeling of pleasure or disappointment (Dissatisfaction) resulting from comparing a product’s perceived performance or outcome in relation to his or her expectations. IT/Internet and Marketing Company & Marketing Strategy: Partnering to Build Customer Relationships Review of Strategic Planning: BCG Matrix (Fig 2.2) Product/Market Expansion Grid (Fig 2.3) • Product Development • Diversification • Market Development • Market Penetration Value Chain: The series of Departments that carry out value creating activities, to design produce, market, deliver and support a firm’s products. Value Delivery Network: The network made up of company, suppliers, distributors and ultimately customers who partner with each other to improve the performance of the entire system. The Marketing Process: (Fig 2.4)

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The process of (1) analyzing marketing opportunities (2) selecting target markets, (3) Developing the market mix, and (4) managing the marketing effort. Market Segmentation: Dividing market into distinct groups of buyers who have distinct needs, characteristics, or behavior and who might require separate products or marketing mix. Market Segment: A group of consumers who respond in a similar way to a given set of marketing effort. Target Marketing (Targeting): The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter. Market Positioning: Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. Developing the Marketing Mix: The set of controllable tactical (strategic) marketing tools – products, price, place and promotion – that the firm blends to produce the response it wants in the target market. Four Ps and 4 Cs of Marketing Mix: (Refer Fig 2.5) • Product (Variety, Quality, Design, Features, Brand Names, packaging, Services). • Price (List Price, Discounts, Allowances, Payment Period, Credit terms) - Both of Above Relate to Target Customer • Promotion (Advertising, personal selling, sales promotion, public relations) • Place (channels, coverage, locations, inventory, transportation, logistics) – Both Relate to Intended Positioning Product = Customer Solution, Price = Customer Cost, Place = Convenience, Promotion = Communication

4

Market Segmentation, Targeting, and Position

Market Segmentation

Target Marketing

Identify the bases for segmenting the market

Develop measures of segment attractiveness.

Develop Segment Profiles

Select target segments.

Market Positioning Develop positioning for target segments Develop a marketing mix for each segment.

Market Segmentation: Dividing a market into smaller groups of buyers, distinct needs, characteristics, or behavior who might require separate products or marketing mixes. Segmenting Consumer Markets: Segmentation Variables in consumer markets are Geographic, Demographic, psycho graphic, Behavioral. (Refer Table 7.1) Segmenting Business Markets: Business markets also use many of the same variables used in consumer markets and can be segmented on the basis of geography, demographics (industry, company size), benefits sought, user status, usage rate and loyalty. Segmenting International Markets: Forming segments of consumers who have similar needs and buying behavior even though they are located in different countries. Requirements for Effective Segmentation: There are many was to segment markets but not all are effective, to be useful market segments must be: Measurable: The size, purchasing power, and profiles of the segment can be measured, certain segmentation variables are difficult to measure. Like left handed persons. Accessible: The market segments can be effectively reached and served. Perfume for singles. Substantial: The market segments are large or profitable enough to serve. Cars for 7 feet persons.

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Differentiable: The segments are conceptually distinguishable and respond differently to different marketing mix elements and programs. Same response of married and unmarried women to a brand of perfume. Actionable: Effective programs can be designed for attracting and serving the segment, but then the marketer must look that company is in position to act on those programs with available resources. Market Targeting: 1. Evaluating each Market segment • Segment Size & growth • Segment Attractiveness • Company objectives and resources. 2. Select Target Segment: Selection of target segments can be done very broadly (undifferentiated – mass marketing), very narrowly (micro marketing), or somewhere in between (differentiated (segmented) and concentrated (niche) marketing). These are various levels of target marketing: • Undifferentiated – Mass Marketing • Differentiated (Segmented) Marketing • Concentrated (niche) Marketing • Local Marketing – for smaller groups, cities and neighborhoods. • Individual marketing 3. Choosing the Target Marketing Strategy: Which strategy is best depends on the environment and resources of the company, products variability, its product life cycle stages. Positioning for Competitive Advantage: The way the product is defined by consumers on important attributes – the place the product occupies in consumer’s minds relative to competing products. Positioning Map: A graphic portrayal of the position that various competing products hold in the minds of consumers based on the usability and the relative market share of the products against their prices.

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Choosing a Positioning Strategy: • Identify Possible Competitive Advantages • Choosing the right Competitive Advantage o How many Differences to promote? One: Unique Selling Proposition (USP), or a company my promote two or more if the competitors are doing so. o Which Differences to promote:  Important: The difference delivers a highly valued benefit to target buyers.  Distinctive: competitors are not offering the same or we can offer it more distinctively.  Superior: The difference is superior to other ways that customers might obtain the same benefit.  Communicable: the Difference is communicable and visible to buyers.  Preemptive: Competitors cannot easily copy the difference.  Affordable: buyers can afford to pay for the difference  Profitable: the company can introduce the difference profitability. • Developing a Positing statement (Mountain Dew) •

Communicating and delivering the chosen position – Implementation

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Product, Services and Branding Strategies Product: Anything than can be offered to market for attention, acquisition, use, or consumption that might satisfy a want or need. Service: Any activity or benefit that one party can offer to another that is specially intangible and does not result in the ownership of anything.

Levels of Product and Services: Core Benefits: The core problem solving benefits or services that consumer seeks. Actual Product: developing product and service features, design, quality level, brand name and packaging. Augmented Product: building augmented product around the core benefits and actual product by offering additional consumer services and benefits. Product and Service Classification: 1.Consumer Products: Product bought by final consumer for personal consumption.

Types of Consumer Products: Convenience Product: Consumer product that the customer usually buys frequently, immediately, and with a minimum of comparisons and buying effort. Shopping Product: Consumer good that the customer in the process of selection and purchase, characteristically compares on such bases as suitability, quality, price, and style. Specialty Product: Consumer product with unique characteristics or brand identification for which a significant group of buyers is willing to make a specialty purchase effort. Unsought Product: Consumer product that the consumers wither does not know about or knows about but does not normally think of buying. 2. Industrial Products: Product bought by individuals and organizations for further processing or for use in conducting business.

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Product and Service Decisions: A. Individual Product and Service decisions: 1. Product and Service Attributes • Product quality • Product Features • Product Style and Design 2. Branding: A name, term, sign, symbol, or design, or a combination of these intended to identify the goods or service of one seller or group of sellers and to differentiate them from those of competitors. 3. Packaging: The activities of Designing and producing the container or wrapper for a product. 4. Labeling: Labels may range from simple tags attached to products to complex graphics that are part of package, labels identify products, describe various product features, promote product through attractive graphics. 5. Product Support services: A company’s offer usually includes some support services, which can be major or minor part of the total offering. Support services are those services associated with product, which augment the core and actual product. B. Product Line Decisions A group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges. A. Product Mix (Product Assortment) Decisions The set of all product-lines and items that a particular seller offers for sale. Product mix has four important dimensions: width: number of different product lines company caries, length: total brands within each brand, depth: number of versions offered of each product in the line, and consistency: how closely related the various products lines are in end use, production requirements, distribution channels, or some other way.

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Branding Strategy: Brands are powerful assets that must be carefully developed and managed. Brand Equity: A powerful brand has high brand equity. Brand equity is the positive differential effect that knowing the brand name has on customer response to the product or service. Building Strong Brands: Major brand strategy decision involve the following: Brand Positioning: Marketers position their brands clearly in target customer’s minds at any of the three levels, attributes, benefits, beliefs and values. Brand Name Selection: A good brand name could add greatly to a product’s success. Desirable qualities for brand names include (1) it should suggest something about product’s benefits and qualities. (2) Should be easy to pronounce, recognize and remember. (3) Should be distinctive (Lexus, Kodak, Oracle, Godiva) (4) Should be extendable (5) Should easily translate in other languages (6) should be capable of registration and legal protection. Brand Sponsorship: A brand can be sponsored by (1) Manufacturer’s Brand (2) Private / Store Brand (Ketchup at Hotels, Restaurants, Airlines), (3) Licensing (Celebrities, Characters etc), (4) Co Branding (Credit Cards / Mobile Phone Connection). Brand Development: A company has four choices when it comes to developing brands: (Figure 8.4) 1. Line Extension: Using a successful brand name to introduce additional items in a given product category under the same brand name, such as new flavors, forms, colors, added ingredients, or package sizes. 2. Brand Extension: Using a successful brand name to launch a new or modified product in a new category. 3. Multi Brands: Having multiple brands in same category. (Supreme & Lipton, Haleeb & Dairy Queen) 4. New Brands: Sometimes companies introduce new brand if existing brand is fading or when a company enters a new market or introduces a product. Managing Brands: Companies must manage the brands carefully. First, brand positioning must be continuously communicated to consumers, and then companies should periodically audit their brands to assess their strengths and weaknesses.

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Services Marketing: Nature and Characteristics of a Service: Service Intangibility: Services cannot be seen, tasted, felt, heard, or smelled before purchase. Service Variability: Quality of services depends on who provides them and when, where and how. Service Inseparability: Services cannot be separated from their providers. Service Perishability: Services cannot be stored for later sale or use.

Marketing Strategies for Service Firms: The Service-Profit Chain: Successful service companies focus both on their customers and employees, Service Profit chain links services firm’s profits with employee and customer satisfaction. The chain consists of five links: •

Internal Service Quality: Superior employee selection and training, a quality work environment, and strong support for those dealing with customers, which results in ….



Satisfied and Productive Service Employees: more satisfied, loyal, and hardworking employees, which result in ….



Greater service Value: more effective and efficient customer value creation and service delivery, which results in ….



Satisfied and loyal customers: satisfied customers who remain loyal, repeat purchase and refer other customers, which result in …



Healthy service profits and growth: superior service firm performance

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New Product Development & Product Life Cycle Strategies New Product Development: The development of original products, product improvements, product modifications, and new brands through the firm’s own R&D efforts.

New Product Development Process: 1. Idea Generation The systematic Search for New product ideas. Sources of data for idea generation could be internal or external. 2. Idea Screening Screening new product ideas in order to spot good ideas and drop poor one as soon as possible. 3. Concept Development & Testing Product Concept is a detailed version of the new-product idea stated in meaningful consumer terms. And a Product Image is how a consumer perceives a product. Concept Testing is the act of testing new-product concept with a group of target consumers to find out if the concepts have strong consumer appeal. 4. Marketing Strategy Development Designing an initial marketing strategy for a new product based on the product concept. 5. Business Analysis A review of the sales, costs and profit projections for a new product to find out whether these factors satisfy the company’s objectives. 6. Product Development Developing the product concept into a physical product in order to ensure that the product idea can be turned into workable product.

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7. Test Marketing The stage of new-product development in which the product and marketing programs are tested in more realistic market settings. Test Marketing can be done in following three types of markets: a. b.

c.

Standard Test Markets: Where companies test market in a selected city or store. This is always costly and takes more time. Controlled Test Markets: Where companies test market using specialist stores or consultants who are experts and have established procedures of testing many kinds of products. Simulated Test Markets: Where companies do all the test marketing activities but on a closed focus consumer group, it is considered better than earlier two because it is less costlier, saves time and keeps the competitors unaware of companies new products.

8. Commercialization Introducing a new product into the market.

Organizing for New-Product Development: Sequential Product Development: A new-product development approach in which one company department works to complete its stage of the process before passing the new product along to the next department and stage. Simultaneous (or team based) product Development: An approach to developing new products in which various company departments work closely together, overlapping the steps in the product-development process to save time and increase effectiveness.

13

Product Life Cycle Strategies The course of a product’s sales and profits over its lifetime. It involves five distinct sages: product development, introduction, growth, maturity, and decline. 1. Product Development: begins when the company finds and develops a newproduct idea. During product development, sales are zero and the company’s investment costs mount. 2. Introduction: It’s a period of slow sales growth as the product is introduced in the market. Profits are nonexistent in this stage because of the heavy expenses of product introduction. 3. Growth: is a period of rapid market acceptance and increasing profits. 4. Maturity: is a period of slowdown in sales growth because the product has achieved acceptance by most potential buyers. Profit level off or decline because of increased marketing outlays to defend the market against competition. 5. Decline: is the period when sales fall off and profits drop.

The Special Life Cycles of Style, Fashion & Fad Style: A basic and distinctive mode of expression Fashion: A currently accepted or popular style in a given field. Fad: A temporary period of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity.

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Pricing Products: Pricing Considerations, Approaches, and Strategies Price: The amount of money charged for a product or service, or the sum of the value that consumers exchange for the benefits of having or using the product or service. Factors Affecting Pricing Decisions: Internal Factors: •Marketing Objectives •Marketing Mix Strategy •Costs (Fixed, Variable, Total) •Organizational Consideration (Pricing Authority: Who should price) External Factors: •The market and demand •Price Differences in different markets •Consumer Perception of Price and Value •Analyzing the Price-Demand relationship •Price Elasticity of Demand •Competitors’ Costs, Prices, and Offers •Other External Factors

General Pricing Approaches: Cost Based Pricing (Cost Plus Pricing): Adding a standard markup to the cost of the product. Variable Cost Fixed Costs Expected unit sales

$ 10 $ 300,000 $ 50,000

Unit Cost = Variable Cost + Fixed Costs / Unit Sales Unit Cost= 10 + 300,000 / 50,000 = 16 Markup Price = Unit Cost / (1 – Desired Return on Sales)

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Markup Price (Cost Based Price) = 16 / (1-0.20) = 20 Breakeven Analysis Target Profit Pricing: Setting price to break-even on the costs of making and marketing a product; or setting price to make a target profit. (Figure 10.6 & Table 10.1) Break Even Volume = Fixed Cost / Price – Variable Cost Breakeven Volume = $ 300,000 / $20 -$10 Value Based Pricing: Setting price based on buyers’ perceptions of value rather than on the seller’s cost. (Figure 10.7). Value pricing is the right combination of quality and good service at a fair price. Competition Based Pricing: Setting prices based on the prices that competitors charge for similar products.

New Product Pricing Strategies: Market-Skimming Pricing Setting a High Price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price. The company makes fewer but more profitable sales. Market-Penetration Pricing Setting a low price for a new product in order to attract a large number of buyers and a large market share.

Product Mix Pricing Strategies: Product Line Pricing: Setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors’ prices. Optional-Product Pricing: The pricing of Optional or accessory products along with a main product.

16

Captive-Product Pricing: Setting a price for products that must be used along with a main product, such as blades for a razor and film for a camera. By-Product Pricing: Setting price for by-products in order to make the main product’s price more competitive. Product bundle pricing: Combining several products and offering the bundle at a reduced price.

Price-Adjustment Strategies Discounts and Allowance Pricing: Discount is a straight reduction in price on purchase during a stated period of time. And Allowance is promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer’s products in some way. Segmented Pricing: Selling a product or service at two or more prices, where the difference in price is not based on differences in costs. Psychological Pricing: A pricing Approach that considers the psychology of prices and not simply the economics; the price is used to say something about the product. Reference Prices are the prices that buyers carry in their minds and refer to when they look at a given product. Promotional Pricing: Temporary pricing products below the list price, and sometimes even below cost, to increase short-run sales. Geographical Pricing: FOB-Origin Pricing: A geographical pricing strategy in which goods are placed free on board a carrier; the customer pays the freight from the factory to the destination. Uniform-delivered pricing: A geographical pricing strategy in which the company charges the same price plus freight to all customers, regardless of their locations.

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Zone Pricing: A geographical pricing strategy in which the company sets up two or more zones. All customers within a zone pay the same total price, the more distant the zone the higher the price. Basing-point pricing: A geographical pricing strategy in which the seller designates some city as a basing point and charges all customers the freight cost from that city to the customer. Freight-Absorption pricing: A geographical pricing strategy in which the seller absorbs all or part of the freight charges in order to get the desired business. International Pricing: Companies selling products internationally either set a Uniform Worldwide price or they set variable prices in different countries depending on the factors including economic conditions, competitive situations, laws and regulations, and development of whole-selling and retailing system.

PRICE Changes: Initiating Price Changes: Initiating Price Cuts: A company may cut price to utilize its excess capacity and boost sales, or to lift the falling market share due to increasing price competition, or in a drive to dominate the market through lower costs. Initiating Price Increases: A successful price increase can greatly increase profits. But a major factor in price increase is cost inflation. Prices can be increased almost invisibly by dropping discounts and adding higher priced units to the line. Price rise can also be supported by company’s communication telling customers why prices are being increased. •Buyer Reaction to price changes •Competitor reactions to price changes Responding to Price Changes: Assessing and Responding to Competitor’s price changes (Figure 11.1)

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Advertising, Sales Promotion, Public Relations & Personal Selling and Direct Marketing Advertising: Any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor. Developing Advertising Program: 1. Setting Advertising Objective: A specific communication task to be accomplished with a specific target audience during a specific period of time. Possible advertising objectives can be Informative Advertising, Persuasive Advertising, Reminder Advertising. 2. Setting the Advertising Budget: A brand’s budget is determined after analyzing its stage in PLC. 3. Developing Advertising Strategy: Orchestrating a closer harmony between message and the media that deliver advertisement. 4. Creating the Advertising Message: Message Execution: •

• • • • • •

Slice of Life: This style shows one or more “typical” people using the product in a normal setting. For example two mothers at a picnic discuss the nutritional benefits of Nestle Butter. Lifestyle: This style shows how a product fits in with a particular lifestyle. MotoRazor. Jazz Octane. Fantasy: This style creates a fantasy around the product or its use. Mood or Image: This style builds a mood or image around the product, such as beauty, love, or serenity (Calmness). Tourism Ads. Musical: This style shows one or more people or cartoons characters singing about the product. TeleFun. Personality Symbol: This style creates a character that represents the products. Teeko. Technical Expertise: This style shows the company’s expertise in making the product. K&N.

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• •

Scientific Evidence: This style presents survey or scientific evidence that the brand is better or better liked than one or more other brands. Safeguard(old). Testimonial Evidence or endorsement: This style features a highly believable or likeable source endorsing the product. It could be ordinary people saying how much they like a given product or a celebrity presenting the product. Sarah Jessica Parker (GAP), James Bond (Red & White).

5. Selecting Advertising Media Advantages and Limitations (Table 15.2) • Deciding on reach, frequency, and impact • Choosing among major media types (Newspaper, TV, Radio, magazine, direct mail, outdoor, and the Internet). • Selecting Specific Media Vehicles (Newspaper: Dawn/Jang or TV: PTV/Geo) • Deciding on Media Timing 6. Evaluating Advertising: The advertisement program should evaluate both the communication and the sales effects of advertising regularly. Sales Promotion: Short term incentive to encourage the purchase or sale of a product or service. Major Sales Promotion Tools: 1. Consumer Promotion Tools: • Sample: A small amount of a product offered to customer for trial • Coupon: Certificate that gives buyers a saving when they purchase a specified product. • Cash Refund Offer(Rebate): Offer to refund part of the purchase price of a product to consumers who send a “proof of purchase” to the manufacturer. • Price pack (Cents-Off deal): Reduced price that is marked by the producer directly on the label or package. • Premium: Good offered either free or at cost as an incentive to buy a product. • Advertising Specialty: Useful article imprinted with an advertiser’s name, given to a consumer, like T-shirts, mugs, pens etc. • Patronage reward: Cash or other award for the regular use of a certain company’s products or services. Hotels Honored Guests and Frequent Shopper’s cards.

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• •

Point of Purchase (PoP) Promotion: Display and demonstration that takes place at the point of purchase or sale. Contests, Sweep stakes, games: Promotional events that give consumers the chance to win something, such as cash, trips, or goods – by luck or through extra effort.

2. Trade Promotion Tools: • Discount: A straight reduction in price on purchases during a stated period of time. • Allowance: Promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturer’s product in some way. 3. Business Promotion Tools: Organizing conventions and trade shows and exhibitions, or contests between sales persons or dealers.

Public Relations: Building Good relations with the company’s various publics by obtaining the favorable publicity, building up a good “corporate image” and handling or heading off unfavorable rumors, stories and events.

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Personal Selling and Direct Marketing Personal Selling: Personal selling is the interpersonal arm of the promotion mix. Advertising consists of one-way, non-personal communication with target consumer groups. In contrast, personal selling involves two-way, personal communication between sales people and individual customers – Whether face to face, by telephone, through video or web conferences, or by other means. Sales Personal: An individual acting for a company by performing one or more of the following activities: prospecting communicating, servicing and information gathering. Managing Sales Force: The task of analysis, planning, implementation and control of sales force activities. It includes setting and designing sales force strategy, and recruiting, selecting, training, supervising, compensating and evaluating the firm’s salespeople. Designing sales force strategy and structure Recruiting and Selecting Sales People Training Sales People Compensating Sales People Supervising Sales People Evaluating Sales People Common Sales Force Structures & Forms: Territorial Sales Force Structure: A Sales Force organization that assign each salesperson to an exclusive geographical territory in which that salesperson sells the company’s full line. Product Sales Force Structure: A sales force organization under which sales people specialize in selling only a portion of the company’s products or lines.

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Customer Sales Force Structure: A sales force organization under which salespeople specialize in selling only to certain customers or industries. Outside Sales Force (For Field Sales Force): Sales people who travel to call on customers and sell by interpersonally discussion with the customers. Inside Sales Force: Inside salespeople who conduct business from their offices via telephone or visits from prospective buyers. Team Selling: Using teams of people from sales, marketing, engineering, finance, technical support, and even upper management to service large, complex accounts.

The Selling Process: The steps that salespersons follow when selling, which include prospecting, and qualifying, pre-approach, approach, presentation and demonstration, handling objections, closing and follow-up. Prospecting & Qualifying

Pre-Approach

Approach

Presentation

Handling Objections

Closing

Follow-up

•Prospecting

and Qualifying: The step in the selling process in which the sales person identifies qualified potential customers. •Pre-Approach: The step in the selling process in which the salesperson learns as much as possible about a prospective customer before making a sales call. •Approach: The step in the selling process in which the sales person meets the customer for the first time. •Presentation: The step in selling process in which the sales person tells the “product story” to the buyer, highlighting customer benefits. •Handling Objections: The Step in the selling process in which the salesperson seeks out, clarifies and overcomes customer objections to buying.

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•Closing:

The step in the selling process in which the salesperson asks the customer for an order. •Follow-up: The last step in the selling process in which the salesperson follows up after the sale to ensure customer satisfaction and repeat business.

Direct Marketing:

Direct communications with carefully targeted individual consumers – the use of telephone, mail, fax, e-mail, the internet, and other tools to communicate directly with specific consumers. Customer Database (A major Source of Direct Marketing): An organized collection of comprehensive data about individual customers or prospects, including geographic, demographic, psychographics, and behavioral data. Forms of Direct Marketing: •Telephone Marketing •Direct Mail Marketing •Catalog Marketing •Direct-Response Television Marketing (Home Shopping – Toll Free #) •Kiosk Marketing •Integrated Direct Marketing INTEGRATED DIRECT MARKETING Paid ad with a response channel

Direct Mail

Outbound Tele Marketing

Face to Face Sales Call

Continuing Communication

Creating Competitive Advantage 24

Competitive Advantage: An advantage over competitors gained by offering consumer greater value, either through lower prices or by providing more benefits that justify higher prices. Competitive Marketing Strategies: Strategies that strongly position the competitors, and that give the company the strongest possible strategic advantage. Competitor Analysis: The process of identifying key competitors, assessing their objectives, strategies, strengths and weaknesses, and reaction patterns, and selecting which competitors to attack or avoid.

Steps in Analyzing Competitor: Identifying the Company’s Competitors

Assessing competitors’ objectives, strategies, strengths and weaknesses and reaction patterns

Selection Which competitors to Attack or Avoid

• Identify the Competitors o Competitor Map (See Figure 17.2) • Assessing Competitors o Determine Competitors’ Objectives o Identifying Competitors’ Strategies o Assessing Competitors Strengths and Weaknesses o Estimating Competitors’ Reaction Patterns • Selecting Competitors to Attack or Avoid o Strong or Weak Competitors o Close or Distant Competitor o Good or Bad Competitors

Basic Competitive Strategies:

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Overall Cost Leadership: Company tries to minimize the production and distribution costs, as low costs let it price lower than it competitors and win a larger market share.



Differentiation: Company concentrates on creating highly differentiated product line and marketing program so that it comes across as the class leader in the industry.



Focus: Here the company focuses its efforts on serving a few market segments well rather than going after the whole market.

Competitive Positions 

Market Leader:

The firm in an industry with the largest market share.



Market Challenger: A runner-up firm that is fighting hard to increase its market share in an industry.



Market Follower: A runner-up firm that wants to hold its share in an industry without rocking the boat.



Market Nicher: A firm that serves small segments that the other firms in an industry overlook or ignore.

Strategies for Market Leaders, Challenger, Followers, & Nichers Market Leader Strategies

Market Challenger Strategies

Market Follower Strategies

Market Nicher Strategies

Expand Total Market Protect Market Share Expand Market Share

Full Frontal Attack Indirect Attack

Follow Closely Follow at a Distance

By Customer, Market, Quality-Price, Service, Multiple Niching.

Balancing Customer and Competitor Orientation: See Figure 17.4

Integrated Marketing Communication Strategy

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The Marketing Communications Mix / Promotion Mix Elements of Promotion Mix which require integration: • Advertising • Sales Promotion • Public Relations • Personal Selling • Direct Marketing

Integrated Marketing Communication

• What it is • Why it is needed • What would happened if promotion mix elements are not integrated

A View of Communication Process (Self)

Steps in Developing Effective Communication Buyer Readiness Stages .......

Setting the total Promotion Budget and Mix Promotion Mix Strategies (Figure 14.4) Push Strategy Pull Strategy

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