Business Marketing Minor Marketing Fundamentals M 21439

Business / Marketing Minor Marketing Fundamentals M 21439 Session 4: Marketing Mix Tools

Key Concepts Theories relating to the analysis of : - Product - Physical Evidence - Price - People - Place - Process - Promotion

Product

Product Offer Potential Product Augmented Product Tangible Product Core Product Source: Brassington, F. & Pettitt, S. (2000) Principles of Marketing 2 nd ed, UK: FT/Prentice Hall

SALES VOLUME Product Life Cycle Introduction Growth Maturity Saturation Decline TIME Source: Palmer, A. (2000) Principles of Marketing UK: Oxford

Product Life Cycle Introduction: New product launched to innovators and early adopters Growth: Rapid rate of growth, targeting early majority Maturity: Rate of growth begins to slow down Saturation: Market has ceased to grow. Mainly replacement demand Decline: Changes in consumers’ preferences or technology lead to a fall in. Source: Palmer, A. (2000) Principles of Marketing UK: Oxford sales

SALES VOLUME (Rogers 1962)Pattern of Adoption for a New Product Innovators Early Adopters Majority Late Majority Laggards TIME Source: Palmer, A. (2000) Principles of Marketing UK: Oxford

Major Elements of Brand Equity Source: Adapted with the permission of The Free Press, a division of Simon & Schuster, Inc. , from Managing Brand Equity: Capitalizing on the Value of a Brand Name by David A. Aaker. Copyright © 1991 by David A. Aaker.

World’s Most Valuable Brands Brand Coca-Cola Marlboro IBM Mc. Donalds Disney Sony Kodak Intel Gillette Budweiser Brand Value ($ millions) 47, 978 47, 635 23, 701 19, 939 17, 069 14, 464 14, 442 13, 274 11, 992 11, 985 Source: Dibb. S, Simkin. L, Pride. W & Ferrell. O(2001) Marketing – Concepts and Strategies 5 th ed, US: Houghton Mifflin

UK’s Top 10 Brands, 1998 Brand Owner Coca-Cola Walker’s crisps Nescafe coffee Sales (£m) 580+ Advert Spend (£m) 31. 41 Pepsi. Co 400 – 405 6. 88 Nestle 285 – 290 6. 24 Andrex toilet tissue Kimerley-Clark 205 – 300 9. 25 Ariel laundry products Persil laundry Procter & Gamble Lever Bros 200 – 205 21. 91 195 – 200 20. 59 products nappies Pampers 190 – 195 11. 62 Pepsi Proctor & Gamble Pepsi. Co 190 – 195 10. 91 Stella Artois lager Whitbread 165 – 170 3. 92 Muller yoghurt Muller 160 - 165 2. 46 Source: Brassington, F. & Pettitt, S. (2000) Principles of Marketing 2 nd ed, UK: FT/Prentice Hall

Packaging An important part of the product that not only serves a functional purpose, but also acts as a means of communicating product information and brand character. Source: Brassington, F. & Pettitt, S. (2000) Principles of Marketing 2 nd ed, UK: FT/Prentice Hall

Functions of Packaging • Functional: packaging must protect the product in storage, in shipment and often in use • Promotional: packaging used to add value to the brand. Can be achieved through a combination of materials, shape, graphics and colour Source: Brassington, F. & Pettitt, S. (2000) Principles of Marketing 2 nd ed, UK: FT/Prentice Hall

Price

Factors Influencing Customers’ Price Assessments Functional Quality PRICE ASSESSMENT Financial Operational Personal Source: Brassington, F. & Pettitt, S. (2000) Principles of Marketing 2 nd ed, UK: FT/Prentice Hall

External Influences on the Pricing Decision Demand & price elasticity Customers & consumers PRICE DECISION Competitors Legal & regulatory Channels of distribution Source: Brassington, F. & Pettitt, S. (2000) Principles of Marketing 2 nd ed, UK: FT/Prentice Hall

Factors Affecting Price Decisions External Factors Internal Factors - Marketing objectives - Marketing mix strategy - Costs - Organisational considerations Pricing decisions - Nature of the market and demand - Competition - Other environmental factors (economy, resellers, government) Source: Kotler. P & Armstrong. G (2001) Principles of Marketing 9 th ed, USA: Prentice Hall

Price/Quality Strategies Low QUANTITY ECONOMY PRICING High SUPER VALUE (short-term penetration) PRICE EXPLOITATION High (short-term skimming) PREMIUM STRATEGY Source: Adcock. D, Halborg. A & Ross. C (2001) Marketing – Principles & Practice 4 th ed, UK: Prentice Hall

General Pricing Approaches • Cost-Based Pricing: - Cost-plus pricing - Break-even pricing • Value-Based Pricing • Competition-Based Pricing Source: Kotler. P & Armstrong. G (2001) Principles of Marketing 9 th ed, USA: Prentice Hall

New-Product Pricing Strategies • Market-Skimming Pricing: setting a high price for a new product to skim maximum revenues • 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 Source: Kotler. P & Armstrong. G (2001) Principles of Marketing 9 th ed, USA: Prentice Hall

Price-Adjustment Strategies STRATEGY DESCRIPTION Discount & allowance pricing Reducing prices to reward customer responses such as paying early or promoting the product Adjusting prices to allow for differences in Segmented pricing customers, products or locations Psychological pricing Promotional pricing Geographical pricing Adjusting prices for psychological effect International pricing Adjusting prices for international markets Temporarily reducing prices to increase shortrun sales Adjusting prices to account for the geographical location of customers Source: Kotler. P & Armstrong. G (2001) Principles of Marketing 9 th ed, USA: Prentice Hall

Place

Channel Structure for Consumer Goods PRODUCER Agent Wholesaler Retailer CONSUMER Source: Brassington, F. & Pettitt, S. (2000) Principles of Marketing 2 nd ed, UK: FT/Prentice Hall

Channel Structure for Organisational Markets MANUFACTURER Agent Distributor USER Source: Brassington, F. & Pettitt, S. (2000) Principles of Marketing 2 nd ed, UK: FT/Prentice Hall

Sorting activities conducted by channel members Source: Dibb, S, Simkin, Pride, Ferrell (2001) Marketing: Concepts & Strategies 4 th ed, USA: Houghton Mifflin

Value Added Services Provided by Intermediaries Value Added Services Facilitating Value Transactional Value Logistical Value -Financing -Training -Information -After sales -Risk -Marketing -Administration -Assortment -Storage -Sorting -Bulk breaking -Transportation Source: Brassington, F. & Pettitt, S. (2000) Principles of Marketing 2 nd ed, UK: FT/Prentice Hall

Promotion

Advertising “Any paid form of non-personal communication of ideas, goods or services delivered through selected media channels. ” Source: Palmer, A (2000) Principles of Marketing UK: Oxford

Sales Promotion Institute of Sales Promotions definition: “A range of tactical marketing techniques designed within a strategic marketing framework, to add value to a product or service in order to achieve a specific sales and marketing objective. ” Source: Palmer, A (2000) Principles of Marketing UK: Oxford

Public Relations Institute of Public Relations definition: “Public relations is the deliberate, planned and sustained effort to establish and maintain mutual understanding between an organisation and its publics. ” Source: Palmer, A (2000) Principles of Marketing UK: Oxford

Selling & Sales Management “A sales force provides the personal interface between a company and its customers. This contact may be face-to-face, telephone or utilising information technology. ” Source: Palmer, A (2000) Principles of Marketing UK: Oxford

Direct Marketing UK Direct Marketing Association defines direct marketing as: “Communications where data are used systematically to achieve quantifiable marketing objectives and where direct contact is invited or made between a company and its customers. ” Source: Palmer, A (2000) Principles of Marketing UK: Oxford

Promotional Mix Public Relations Sales Promotion Advertising Personal Selling Capital Equipment Organisational Home Improvements Raw Materials White Goods Consumables/Stationery Consumer fmcg Source: Brassington, F. & Pettitt, S. (2000) Principles of Marketing 2 nd ed, UK: FT/Prentice Hall

Physical Evidence

Physical Presence / Evidence Shostack (1997) identifies two types of physical evidence: 1. Essential Evidence 2. Peripheral Evidence Source: Brassington, F. & Pettitt, S. (2000) Principles of Marketing 2 nd ed, UK: FT/Prentice Hall

Essential Evidence Central to the service and is an important contributor to the customer’s purchase decision, For example, the car fleet belonging to a car hire firm. Source: Brassington, F. & Pettitt, S. (2000) Principles of Marketing 2 nd ed, UK: FT/Prentice Hall

Peripheral Evidence Less central to the service delivery and is likely to consist of items that the customer can keep or use. Source: Brassington, F. & Pettitt, S. (2000) Principles of Marketing 2 nd ed, UK: FT/Prentice Hall

People

People The nature of most services requires direct interaction between the customer/consumer and personnel representing the service provider’s organisation. ” Source: Dibb. S, Simkin. L, Pride. W. M. & Ferrell. O. C. (2001) Marketing – Concepts & Strategies US: Houghton Mifflin

Service Organisations “In many services, customers interact with one another, and the organisation’s staff also interact with one another…Employee selection, training and motivation are central considerations. ” Source: Dibb. S, Simkin. L, Pride. W. M. & Ferrell. O. C. (2001) Marketing – Concepts & Strategies US: Houghton Mifflin

Dependency of Personnel “Many services businesses are totally dependent on their personnel, as Leo Burnett, founder of the international advertising agency that bears his name, summed up: “Every evening all our assets go down the elevator” – people!” Source: Dibb. S, Simkin. L, Pride. W. M. & Ferrell. O. C. (2001) Marketing – Concepts & Strategies US: Houghton Mifflin

Service Marketing Effectiveness Service marketing effectiveness is likely to be critically affected by the actions of front-line employees who interact with customers. Source: Palmer, A (2000) Principles of Marketing UK: Oxford

Process

Purchasing & Consumption “The acts of purchasing and consumption are important in all markets – consumer, industrial or service. ” Source: Dibb. S, Simkin. L, Pride. W. M. & Ferrell. O. C. (2001) Marketing – Concepts & Strategies US: Houghton Mifflin

Direct Involvement “The direct involvement of customers/consumers in the production of most services and the perishability of these services place greater emphasis on the process of the transaction for services. ” Source: Dibb. S, Simkin. L, Pride. W. M. & Ferrell. O. C. (2001) Marketing – Concepts & Strategies US: Houghton Mifflin

Aspects of Process “Friendliness of staff and the flows of information affect the customer’s perception of the service product offer. Appointment or queuing systems become part of the service. Ease or difficulty of payment can enhance or spoil the consumption of the service. ” Source: Dibb. S, Simkin. L, Pride. W. M. & Ferrell. O. C. (2001) Marketing – Concepts & Strategies US: Houghton Mifflin