· In this assignment, we need to write a MS word format marketing plan memo and create a PPT, the things you need to do is:
1. Write the Executive Memo
a. It is double spacing, font Times New Roman, size 12-point and one inch (2.54 cm) all margin.
b. 3 page double space.
2.
Write an outline and main points of this marketing plan for a power point presentation, including the main points of: total of 2 page double space
a. Background and Objectives
b. Situation Assessment and Analysis
c. Market Summary
d. Marketing Strategy
e. Financials
f. Controls
g. Conclusion
Remember you don’t need to create the power point for me, but write done the main points of each part of the PPT based on your memo and the product you want to bring to market.
Assignment Details Below!!! Read Carefully!!!
· Each student needs to
create
a fictional product or service or both that s/he would like to bring it to the market. You, then, become the expert on the product/service, the environment and the industry in which your company operates. You are encouraged to look up books, news and also articles about that industry such as in Business Week, Forbes, Fortune, the Wall Street Journal, Marketing Communications, Media-Scope and/or Advertising Age, …, etc. Must be creditable sources.
· You should use the course material (and additional material as you see fit) for this assignment to formulate a full marketing plan.
· This assessment has two items:
1. Executive Memo to your boss
Use very specific language when you preparing the memo. Before submitting your document, do ask yourself honestly, “Does this memo contain all of the information my boss needs to make a decision in my favor?” If not, revise the memo.
2. PowerPoints
Say, your boss buys in then how are you going to convince him/her by an oral presentation? No limitation in the number of slides. You do your own judgment call, but say they can be used for around 15 to 20 minutes presentation. City University of Hong Kong Department of Media and Communication
Executive Memo to your boss in MS Word format: (a sample, idea for you to carry on):
To:
From: (Your full name. Initial in pen)
Subject:
Date:
(Your wordings for each of these sections will vary according to your own situation but you must use these headings and a page limit to one page; 2 pages top.)
1. Goods—Physical goods constitute the bulk of production and
marketing efforts
2. Services—A growing portion of business activities are focused on
the production of services. Developed economies usually have a
70–30 services to goods mix
3. Events—Marketers promote time-based events such as trade
shows, artistic performances, and the Olympics
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COM5111 SemB 2019-20
Ten Entities of Marketing (2/3)
4. Experiences—By orchestrating several services and goods, a firm
can create and market experiences such as Walt Disney World’s
Magic Kingdom
5. People—Celebrity marketing is a major business
6. Places—Cities, states, regions, and whole nation complete actively
to attract tourists, factories, company headquarters, and new
residents
7. Properties—Properties are intangible rights of ownership of either
real property or financial property
15
COM5111 SemB 2019-20
Ten Entities of Marketing (3/3)
8. Organizations—Organizations actively work to build a strong,
favourable, and unique image in the minds of their target public
9. Information—The production, packaging, and distribution of
information are major industries
10. Ideas—Every market offering includes a basics idea. According to
Charles Revson: In the factory, we make cosmetics; in the store
we sell hope
16
COM5111 SemB 2019-20
The Eight Demand States
1. Negative demand—Consumers dislike the product and may even pay a
price to avoid it
2. Non-existent demand—Consumers may be unaware or uninterested in the
product
3. Latent demand—Consumers may share a strong need that cannot be
satisfied by an existing product
4. Declining demand—Consumers begin to buy the product less frequently or
not at all
5. Irregular demand—Consumer purchases vary on a seasonal, monthly,
weekly, daily, or even hourly basis
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COM5111 SemB 2019-20
The Eight Demand States (cont’d)
6. Full demand—Consumers are adequately buying all products put into the
marketplace
7. Overfull demand—More consumers would like to buy the product than can
be satisfied
8. Unwholesome demand—Consumers may be attracted to products that have
undesirable social consequences
18
COM5111 SemB 2019-20
The Concept of a ‘Market’
• Economists describe a market as a collection of buyers and
sellers who transact over a particular product or product class
• Marketers use the term “market” to cover various groups of
customers. The five basic markets are:
a. Resource Markets
b. Government Markets
c. Manufacturer Markets
d. Intermediary Markets
e. Consumer Markets
19
COM5111 SemB 2019-20
Structure of Flows in a Modern Exchange Economy
20
COM5111 SemB 2019-20
The Flows in a Market System
Sellers and buyers are connected by four flows:
• Seller sends goods, services, and communications (Ads,
Direct mail) to the market
• In return they receive money and information(attitude and
sales data)
• There is an exchange of money for goods and services
• There is an exchange of information
21
COM5111 SemB 2019-20
A Simple Marketing System
22
COM5111 SemB 2019-20
Key Customer Markets
A. Consumer Markets
Consumer goods and services such as soft drinks and cosmetics, spend a great
deal of time trying to establish a superior brand image
B. Business Markets
Companies selling business goods and services often face well-trained and well-
informed professional buyers who are skilled in evaluating competitive offerings
C. Global Markets
Companies face challenges and decisions regarding which countries to enter, how
to enter the country, how to adapt their products/services to the country, and how
to price their products
D. Nonprofit and Governmental Markets
Companies selling to these markets have to price carefully because these
organizations have limited purchasing power
23
COM5111 SemB 2019-20
Marketplaces, Marketspaces, and Metamarkets
• The marketplace is physical
• The marketspace is digital
• The metamarket is a cluster of complementary products and
services that are closely related in the consumer’s mind but
spread across a diverse set of industries
24
COM5111 SemB 2019-20
Core Marketing Concepts
1. Needs, wants, and demands
2. Target markets, positioning, segmentation
3. Offerings and brands
4. Value and satisfaction
5. Marketing channels
6. Supply chain
7. Competition
8. Marketing environment
25
COM5111 SemB 2019-20
1. Needs, Wants, and Demands
• Needs (basic human requirements, needs become wants
when they are directed to specific objects that may satisfy
the need)
• Marketers do not create needs,
needs pre-exist marketers
• Marketers influence wants
26
COM5111 SemB 2019-20
I Want It, I Need It…
Five Types of Needs
1. Stated needs (the customer wants an
inexpensive car) e.g COM5108
2. Real needs (the customer wants a car whose
operating cost, not its initial price, is low)
e.g. AN ELECTIVE
1. Unstated needs (the customer expects good
service from the dealer)
2. Delight needs (the customer would like the
dealer to include an onboard navigation
system)
3. Secret needs (the customer wants to be
seen by friends as a savvy consumer)
27
COM5111 SemB 2019-20
2. Target Markets, Positioning, and Segmentation
A. Identify and profile distinct groups of buyers who might
prefer or require varying products and services mixes by
examining
• Demographic information
• Psychographic information
• Behavioral information
B. Target market: which segments do we focus on?
C. Market offering—what do we offer? What proposition to we
make to customers?
28
COM5111 SemB 2018-19
Positioning
• The offering is positioned in the
minds of the target buyers as
delivering some central
benefit(s)
• For example, Volvo develops its
cars for buyers to whom
automobile safety is a major
concern
• Volvo, therefore, positions its car
as the safest a customer can buy
29
COM5111 SemB 2018-19
3. Offerings and Brands
• Value proposition: a set of benefits they offer to customers to
satisfy their needs
• The Brand: is an offering from a known source
30
COM5111 SemB 2019-20
4. Value and Satisfaction
1. The buyer chooses the offering he or she perceives to deliver the
most value, the sum of the tangible and intangible benefits and
costs to her
2. Value is a central marketing concept
3. Customer value triad is the combination of quality, service, and
prices (QSP). Value perceptions increase with quality and service
but decrease with price
31
COM5111 SemB 2019-20
5. Marketing Channels
Marketing Channels: To reach a target market, the marketer
uses three kinds of marketing channels:
a. Communication channels
b. Distribution channels
c. Service channels
32
COM5111 SemB 2019-20
Creating New Channels—Coffee Vending in Japan
Coca-Cola—Coca-Cola in Japan popularized the idea of canning coffee and making it
available through vending machines. While Americans can enjoy a hot cup of coffee in
most places, Japanese traditionally drink ocha or green tea. However, Coca-Cola found
that the Japanese enjoy coffee but just cannot get it readily. Hence, in a country where
vending machines are a common form of retailing, Coca-Cola’s Georgia-brand canned
coffee can be bought from many of the thousands of vending machines to suit Japanese
lifestyle needs.
33
COM5111 SemB 2019-20
6. Supply Chain
• The supply chain is a longer channel stretching from raw materials to
components to finished products carried to final buyers
– E.g. The supply chain for woman’s purses starts with hides, and move
through tanning operations, cutting operations, and Manufacturing, with
the marketing channels bringing the products to customer
34
COM5111 SemB 2019-20
7. Competition
Includes all the actual and potential rival offerings and
substitutes a buyer might consider
Apple—When Apple introduced the iPad, it took a huge
bite off the sales of dedicated e-book readers such as
Amazon’s Kindle and Sony’s Reader. Apple sold over
45
0,000 iPads in less than a week when it was first
launched. When the iPad2 was launched in 2011, sales
were estimated in the range of 400,000 to 600,000 units
during the first three days on the market. A survey found
that most of those who bought the iPad2 did not own the
previous version. The introduction of the iPad thus posed
a significant competition to the Kindle, forcing Amazon to
improve on its tablet device. Amazon responded by
introducing a more friendly version. Apple, in turn,
introduced the iPad Mini.
Apple’s iPad changed the e-book
reading landscape by affording
readers an alternative to Amazon’s
Kindle and Sony’s Reader.
35
COM5111 SemB 2019-20
8. Marketing Environment
Task environment: includes the actors engaged in producing,
distributing, and promoting the offering
Broad environment includes the following aspects:
• Demographic
• Economic
• Physical
• Technological
• Political–legal
• Social–cultural
36
COM5111 SemB 2019-20
Major Societal Forces
1. Network information
2. Globalization
3. Deregulation
4. Privatization
5. Heightened competition
6. Industry convergence
7. Retail transformation
8. Disintermediation
9. Consumer buying power
10. Consumer information
11. Consumer participation
12. Consumer resistance
37
COM5111 SemB 2019-20
New Company Capabilities
1. Marketers can use the Internet as a powerful information and sales channel
2. Researchers can collect fuller and richer information about markets,
customers, prospects and competitors
3. Marketers can tap into social media to amplify their brand message
4. Marketers can facilitate and speed external communication among customers
5. Marketers can send ads, coupons, samples, and information to customers who
have requested them or given the company permission to send them
6. Marketers can reach consumers on the move with mobile marketing
7. Companies can produce individually differentiated goods
8. Companies can improve purchasing, recruiting, training, and internal and
external communications
9. Companies can facilitate and speed internal communication among their
employees by using the Internet as a private Intranet
10. Companies can improve their cost efficiency by skillful use of the Internet
38
COM5111 SemB 2019-20
The Marketing Concept
• The marketing concept holds that the key to achieving
organizational goals consists of the company being more
effective than competitors in creating, delivering, and
communicating superior customer value to your chosen
target markets
• Marketing is NOT selling!
39
COM5111 SemB 2019-20
The Marketing Concept
• Theodore Levitt drew a perceptive contrast between the
selling and marketing concepts:
–Selling focuses on the needs of the seller
○marketing on the needs of the buyer
–Selling is preoccupied with the seller’s need to convert his product
into cash
○marketing with the idea of satisfying the needs of the customer
by means of the product and the whole cluster of things
associated with creating, delivering, and finally consuming it
40
COM5111 SemB 2019-20
Social Responsibility Marketing
• The societal marketing concept holds that the organization’s
task is to determine the needs, wants, and interests of target
markets and to deliver the desired satisfactions more
effectively and efficiently than competitors in a way that
preserves or enhances the consumer’s and society’s long-
term well-being
• Sustainability has become a major corporate concern in the
face of challenging environmental forces
41
COM5111 SemB 2019-20
The societal marketing concept calls upon marketers
to build social and ethical considerations into their
marketing practices.
42
COM5111 SemB 2019-20
The Four P’s
43
COM5111 SemB 2019-20
The Evolution of the Marketing Mix
44
• People reflect internal marketing
and the fact that employees are
critical to marketing success
• Processes reflect all the creativity,
discipline, and structure brought to
marketing management
• Programs reflect all of the firm’s
consumer-directed activities
• Performance is holistic marketing to
capture the range of possible
outcomes/measures that have
financial and non-financial
implications, and implications
beyond the company itself
COM5111 SemB 2019-20
Complementary View of the Four P’s
45
COM5111 SemB 2019-20
Marketing Management Tasks
1. Develop market strategies and plans
2. Capture marketing insights and Performance
3. Connecting with customers
4. Building strong brands
5. Shaping the market offerings
6. Delivering value
7. Communicating value
8. Creating successful long-term growth
46
COM5111 SemB 2019-20
Checklist of questions that marketing managers
need to ask
(2017). Marketing Management: An Asian perspective (7th
ed.). Harlow, United Kingdom: Pearson Education Limited.
What is this referencing format?
Is it the correct format?
Something wrong about this referencing format?
48
COM511
1
Fundamentals of Marketing Communication
Week
2
DEVELOPING MARKETING STRATEGIES AND PLANS
SemB 2019-20
Outlines
1. Recap – previous lecture and assignments
2. How does marketing affect customer value?
3
. How is strategic planning carried out at different levels of the organization?
4. What does a marketing plan include?
COM5111 Week 2 SemB 2019-202
Traditional View of Marketing
• The traditional view of marketing is that the firm makes
something and then sells it (sellers’ point of view)
• The traditional view will not work, however, in economies where
people face abundant choices
• New belief: marketing begins with the planning process
COM5111 Week 2 SemB 2019-203
Marketing and Customer Value
• The task of any business is to deliver customer value at a profit
• A company can win only by fine-tuning the value delivery process
and choosing, providing, and communicating superior value
COM5111 Week 2 SemB 2019-204
Value creation and delivery consists of three parts:
1. Choosing the value (segment the market, select target
market, develop “offering”)
2. Providing the value (product features, prices, and
distribution channels)
3. Communicating the value (sales force, internet,
advertising, and communication tools)
COM5111 Week 2 SemB 2019-205
Value Delivery Network (also called a supply chain)
• To be successful, a firm also needs to look for competitive
advantages beyond its own operations, into the value chains
of suppliers, distributors, and customers
COM5111 Week 2 SemB 2019-206
The Value Chain (Porter)
• Michael Porter’s Value Chain identifies nine
strategically relevant activities that create
value and costs in a specific business (five
primary and four support activities)
• The primary activities cover the sequence of
bringing materials into the business (inbound
logistics), converting them into final products
(operations), shipping out final products (
outbound logistics), marketing them (marketing
and sales), and servicing them (service)
• The support activities—procurement, technology
development, human resource management, and
firm infrastructure—are handled in certain
specialized departments, as well as elsewhere
COM5111 Week 2 SemB 2019-207
The firm’s success depends
not only on how well each department performs its work
but also on how well the various departmental activities
are coordinated to conduct core business processes
Application of the Value Chain Model
• The firm’s task is to examine its costs and performance in
each value-creating activity and look for ways to improve it
• The firm should estimate its competitors’ costs and
performances as benchmarks against which to compare
its own costs and performance
• It should go further and study the “best of class” practices
of the world’s best
companies
COM5111 Week 2 SemB 2019-208
Core Business Processes
1. The market sensing process (marketing intelligence)
2. The new offering realization process (research and development)
3. The customer acquisition process (defining target markets and
consumers)
4. The customer relationship management process (deeper understanding of
consumers)
5. The fulfillment management process (receiving, shipping, and collecting payments)
COM5111 Week 2 SemB 2019-209
Finding capabilities inside and outside the organization
(profit or non-profit)
• Strong companies develop superior capabilities in these core business
processes (also slide #38 from Lecture 1)
• Strong companies also re-engineer the workflows and build cross-functional
teams responsible for each process
• Many companies have partnered with suppliers and distributors to create a
superior value delivery network
COM5111 Week 2 SemB 2019-2010
Core Competencies
• The key, then, is to own or nurture the resources and
competencies that make up the essence of the business—
outsource if competency is cheaper and available. (E.g Nike
uses Asian manufacturers)
• A core competency has three characteristics
1. Makes a significant contribution to perceived customer
benefits
2. Has applications in a wide variety of markets
3. It is difficult for competitors to imitate
Companies own and control most of the
resources that entered their businesses
COM5111 Week 2 SemB 2019-2011
Maximizing Core Competencies
• Business realignment (case study: Kodak, 2004, 2011) may
be necessary to maximize core competencies. It has three
steps:
1. (re) defining the business concept or “big idea”;
2. (re) shaping the business scope; and
3. (re) positioning the company’s brand identity
CA ultimately derives from how well the company has fitted its core competencies and
distinctive capabilities into tightly interlocking activity systems
COM5111 Week 2 SemB 2019-2012
Competitive Advantage
• Competitive advantage also accrues to companies that
possess distinctive capabilities or excellence in broader
business processes
• Three distinctive capabilities:
1. market sensing
2. customer linking
3. channel bonding
COM5111 Week 2 SemB 2019-2013
Asian Companies Adopt three Main Strategies
(McKinsey) to harness their core competence
• Expand quickly to capture global market opportunities
• Become atomizers
• Become asset light by using intangibles
• Fostering human capital, exploiting network effects, creating synergies on reputation
COM5111 Week 2 SemB 2019-2014
The Central Role of Strategic Planning
Companies focus on the customer and are organized to respond effectively to
changing customer needs. They have well-staffed marketing departments, and
their other departments also accept the concept that the customer is king
COM5111 Week 2 SemB 2019-2015
The Strategic Planning, Implementation,
and Control Processes
COM5111 Week 2 SemB 2019-2016
Corporate and Division Strategic Planning
All corporate headquarters undertake four planning activities:
i. Defining the corporate mission
ii. Establishing strategic business units (SBUs)
iii. Assign resources to each SBU
iv. Assessing growth opportunities
COM5111 Week 2 SemB 2019-2017
Defining the Market
• A target market definition tends to focus on selling a product or
service
• Pepsi could define its target market as everyone who drinks a cola
beverage and competitors would therefore be other cola
companies
• A strategic market definition could be everyone who might drink
something to quench his or her thirst
COM5111 Week 2 SemB 2019-2018
Establishing Strategic Business Units (SBUs)
• Companies often define themselves in terms of products: They are in the
“auto business” or the “clothing business.”
• Market definitions of a business, however, describe the business are
superior to product definitions
• A business must be viewed as a customer-satisfying process, not a
goods-producing process
• Basic needs and customer groups endure forever. Transportation is a
need: the bicycle, the automobile, the railroad, the airline, and the truck
are products that meet that need
COM5111 Week 2 SemB 2019-2019
Strategic Business Units (SBUs)
The purpose of identifying the company’s strategic business units is
to develop separate strategies and assign appropriate funding
• A business can define itself in terms of three dimensions:
customer groups, customer needs, and technology
• An SBU has three characteristics:
i. It is a single business, or a collection of related businesses,
that can be planned separately from the rest of the company
ii. It has its own set of competitors
iii. It has a manager responsible for strategic planning and profit
performance, who controls most of the factors affecting profit
COM5111 Week 2 SemB 2019-2020
Assigning Resources to Each SBU
• Once it has defined SBUs, management must decide how to allocate
corporate resources to each
• Several portfolio-planning models introduced to provide an
analytical means for making investment decisions
• The GE/McKinsey Matrix classifies each SBU according to the extent
of its competitive advantage and the attractiveness of its industry
• Management would want to grow, “harvest” or draw cash from, or
hold on to the
business
• Another model, from Boston Consulting Group, called the BCG’s
Growth-Share Matrix, uses relative market share and annual rate of
market growth as criteria to make investment decisions
COM5111 Week 2 SemB 2019-2021
Assessing Growth Opportunities
• Assessing growth opportunities involves planning new businesses,
downsizing, and terminating older businesses. If there is a gap
between future desired sales and projected sales, corporate
management will need to develop or acquire new businesses to
fill it
COM5111 Week 2 SemB 2019-2022
The Strategic-Planning Gap
COM5111 Week 2 SemB 2019-2023
Strategic Options
• The first option is to identify opportunities for growth within
current businesses (intensive opportunities). Improving current
business
• The second is to identify opportunities to build or acquire
businesses related to current businesses (integrative
opportunities). Thru backward, forward or horizontal
integration
• Third is to identify opportunities to add attractive unrelated
businesses (diversification opportunities). Outside the present
business
COM5111 Week 2 SemB 2019-2024
Marketing Innovation
• Innovation in marketing is critical. Imaginative ideas on strategy
exist in many places within a company
• Senior management should identify and encourage fresh ideas
from three groups that tend to be underrepresented in strategy
making: employees with youthful perspectives
employees who are far removed from company headquarters
employees who are new to the industry
• Each group is capable of challenging company orthodoxy and
stimulating new ideas
COM5111 Week 2 SemB 2019-2025
Business Unit Strategic Planning
5C
Five competitive Forces Model
SWOT
COM5111 Week 2 SemB 2019-2026
Business Mission and SWOT
The Business Mission
Each business unit needs to define its specific mission within
the broader company mission
SWOT Analysis
The evaluation of a company’s strengths, weaknesses,
opportunities, and threats is called SWOT analysis. It involves
monitoring the external and internal marketing environment
COM5111 Week 2 SemB 2019-2027
External Environment (Opportunity and Threat) Analysis
• A business unit must monitor key macroenvironment forces and
significant microenvironment actors that affect its ability to earn
profits
• It should set up a marketing intelligence system to track trends
and important developments and any related opportunities and
threats
• Good marketing is the art of finding, developing, and profiting
from these opportunities
COM5111 Week 2 SemB 2019-2028
Marketing Opportunity Analysis
• A marketing opportunity is an area of buyer need and interest in
which there is a high probability that a company can profitably
satisfy that need
• There are three main sources of market opportunities
• The first is to offer something that is in short supply. This requires
little marketing talent, as the need is fairly obvious
COM5111 Week 2 SemB 2019-2029
Marketing Opportunity Analysis
• The second is to supply an existing product or service in a
new or superior way. How?
— The problem detection method asks consumers for their
suggestions, the ideal method has them imagine an ideal version
of the product or service, and the consumption chain method
asks them to chart their steps in acquiring, using, and disposing
of a product
• This last method often leads to a totally new product or
service
COM5111 Week 2 SemB 2019-2030
Environmental Threats
• An environmental threat is a challenge posed by an unfavorable
trend or development
• That would lead, in the absence of defensive marketing action, to
lower sales or profit
• Threats should be classified according to seriousness and
probability of occurrence
COM5111 Week 2 SemB 2019-2031
Internal Environment (Strengths and Weaknesses) Analysis
• It is one thing to find attractive opportunities and another to be
able to take advantage of them
• Each firm must evaluate its internal strengths and weaknesses
• See the Marketing Memo: Checklist for Performing Strengths and
Weaknesses Analysis
COM5111 Week 2 SemB 2019-2032
Checklist for Assessing Strengths and Weaknesses (1/2)
COM5111 Week 2 SemB 2019-2033
Checklist for Assessing Strengths and Weaknesses (2/2)
COM5111 Week 2 SemB 2019-2034
Goal Formulation
• Once the company has performed a SWOT analysis, it can proceed
to develop specific goals for the planning period
• This stage of the process is called goal formulation
• Managers use the term “goals” to describe objectives that are
specific with respect to magnitude and time
COM5111 Week 2 SemB 2019-2035
Goal Formulation
The firm sets objectives, and then manages by objectives
(MBO). For MBOs to work they must meet four criteria:
1. They must be arranged hierarchically, from the most to least
important
2. Objectives should be stated quantitatively whenever possible
3. Goals should be realistic
4. Objectives must be consistent
COM5111 Week 2 SemB 2019-2036
Strategy Formulation
• Goals indicate what a business unit wants to achieve; strategy is a
game plan for getting there
• Every business must design a strategy for achieving its goals,
consisting of a marketing strategy and a compatible technology
strategy and sourcing strategy
COM5111 Week 2 SemB 2019-2037
Porter’s Generic Strategies
1. Overall cost leadership—The business work hard to achieve the lowest
production and distribution costs so that it can price lower than its
competitors and win a large market share
Firms pursuing this strategy must be good at engineering,
purchasing, manufacturing, and physical distribution
They need less skill in marketing
The problem with this strategy is that other firms will usually
compete with still lower costs and hurt the firm that rested its
whole future on cost
COM5111 Week 2 SemB 2019-2038
Porter’s Generic Strategies
2. Differentiation—The business concentrates on achieving superior
performance in an important customer benefit area valued by a large part
of the market
The firm cultivates those strengths that will contribute to the intended
differentiation
Thus, the firm seeking quality leadership, for example, must make
products with the best components, put them together expertly,
inspect them carefully, and effectively communicate their quality
3. Focus—The business focuses on one or more narrow market segments.
The firm gets to know these segments intimately and pursues either cost
leadership or differentiation within the target segment
COM5111 Week 2 SemB 2019-2039
Application of Porter Generic Strategies
• According to Porter, firms pursuing the same strategy directed to the same target
market constitute a strategic group
• The firm that carries out that strategy best will make the most profits
• Firms that do not pursue a clear strategy and try to be good on all strategic
dimensions do the worst
COM5111 Week 2 SemB 2019-2040
Program Formulation and Implementation
• A great marketing strategy can be sabotaged by poor implementation
• Marketing must estimate its costs
• In implementing strategy, companies must not lose sight of the multiple
stakeholders involved and their needs
COM5111 Week 2 SemB 2019-2041
Feedback and Control
• As it implements its strategy, the firm needs to track the results and monitor new
developments
• A company’s strategic fit with the environment will inevitably erode because the
market environment changes faster than the company’s 7 S
• It is more important to “do the right thing” (effectiveness) than “to do things right”
(efficiency). The most successful companies excel at both
COM5111 Week 2 SemB 2019-2042
Feedback and Control
1. Haier stands by its quality products. It was
prepared to destroy its products if they do not
meet quality standards as they come off the
production line.
2. Today, Haier is the second largest refrigerator
manufacturer in the world.
COM5111 Week 2 SemB 2019-2043
Product Planning: The Nature and Contents of a Marketing Plan
• Working within the plans set by the levels above them, product managers come up
with a marketing plan for individual products, lines, brands, channels, or customer
groups
• Each product level (product line, brand) must develop a marketing plan for
achieving its goals
• A marketing plan is a written document that summarizes what the marketer has
learned about the marketplace and indicates how the firm plans to reach its
marketing objectives
COM5111 Week 2 SemB 2019-2044
Marketing Plans
• A marketing plan is one of the most important outputs of the marketing process. It
provides direction and focus for a brand, product, or company
• Nonprofit organizations use marketing plans to guide their fund-raising and
outreach efforts, and government agencies use them to build public awareness of
nutrition and to stimulate tourism
COM5111 Week 2 SemB 2019-2045
Marketing Plan Criteria
COM5111 Week 2 SemB 2019-2046
The Marketing Plan
• The marketing plan is the central instrument for directing and coordinating
the marketing effort
• The marketing plan operates on two levels: strategic and tactical
A. The strategic marketing plan lays out target markets and the value proposition. (What?;
defines marketing and competitive positions => the best marketing opportunities. E.g.
segmentation)
B. The tactical marketing plan specifies the product, promotion, merchandising, pricing,
sales channels, and service. (How and Who?; defines day to day marketing activities.
E.g. price discounting)
COM5111 Week 2 SemB 2019-2047
Marketing Plan Contents
Executive summary
Situation analysis
Market Summary
Marketing strategy
Financial projections
Implementation controls
COM5111 Week 2 SemB 2019-2048
Marketing Plan Contents (1)
1. Executive summary—The marketing plan should open with a brief summary of the
main goals and recommendations
2. Situation analysis—This section presents relevant background data on sales, costs,
the market, competitors, and the various forces in the macro-environment
○How is the market defined, how big is it, and how fast is it growing? What are the relevant
trends and critical issues? All this information is used to carry out on a SWOT (strengths,
Management: An Asian perspective (7th ed.). Harlow, United Kingdom:
Pearson Education Limited.
COM5111 Week 2 SemB 2019-2058
COM5
11
1 SemB
2
0
19
–
20
COM511
1
Fundamentals of Marketing Communication
Week
3
Marketing Information & Customer Insights
Photo source: www.scmp.com
COM5111 SemB 2019-20COM5111 SemB 2019-20
Learning Objectives
3-1 Describe the environmental forces that affect the company’s ability to
serve its customers
3-2 Explain how changes in the demographic and economic environments
affect marketing decisions
3-3 Identify the major trends in the firm’s natural and technological
environments
3-4 Explain the key changes in the political and cultural environments
3-5 Discuss how companies can react to the marketing environment
2
COM5111 SemB 2019-20COM5111 SemB 2019-20
A Company’s Marketing Environment
The marketing environment includes the actors and forces outside marketing
that affect marketing management’s ability to build and maintain successful
relationships with target customers
Microenvironment consists of the actors close to the company that affect
its ability to serve its customers—the company, suppliers, marketing
intermediaries, customer markets, competitors, and publics
Macroenvironment consists of the larger societal forces that affect the
microenvironment—demographic, economic, natural, technological,
political, and cultural forces
Learning Objective 1
3
Study Seek
COM5111 SemB 2019-20COM5111 SemB 2019-20
The Microenvironment
Learning Objective 1
4
Marketing management’s job is to build relationships with customers by creating customer value and satisfaction
COM5111 SemB 2019-20COM5111 SemB 2019-20
The Microenvironment
The Company
In designing marketing plans,
marketing management takes other
company groups into account
• Top management
• Finance
• R&D
• Purchasing
• Operations
• Accounting
Learning Objective 1
• Provide the resources to produce
goods and services
• Treat as partners to provide
customer value
Suppliers
5
Critical Questions
• What type of collaboration does there need to be between the
departments?
• How might projects be integrated between marketing and finance?
• How might projects be integrated between marketing and
information systems?
$, Availability, quality
shortage, delay …
COM5111 SemB 2019-20COM5111 SemB 2019-20
The Microenvironment
Marketing Intermediaries
Marketing intermediaries are firms that
help the company to promote, sell, and
distribute its goods to final buyers
Learning Objective 1
Resellers
Physical
distribution
firms
Marketing
services
agencies
Financial
intermediaries
6
COM5111 SemB 2019-20COM5111 SemB 2019-20
The Microenvironment
Competitors
Firms must gain strategic advantage by positioning their
offerings strongly against competitors’ offerings in the minds of
consumers
Learning Objective 1
7
Own size and
industry position
COM5111 SemB 2019-20COM5111 SemB 2019-20
The Microenvironment
Publics
Any group that has an actual or potential
interest in or impact on an organization’s
ability to achieve its objectives:
• Financial publics
• Media publics
• Government publics
• Citizen-action publics
• Local publics
• General public
• Internal publics
Learning Objective 1
Customers
• Consumer markets
• Business markets
• Reseller markets
• Government markets
• International markets
8
Seller needs to study these
COM5111 SemB 2019-20COM5111 SemB 2019-20
The Macro environment
Learning Objective 2
9
vulnerable to the often turbulent and changing forces
COM5111 SemB 2019-20COM5111 SemB 2019-20
The Macroenvironment
Demographic Environment
• Demography is the study of human populations—size, density, location,
age, gender, race, occupation, and other statistics
• Demographic environment involves people, and people make up markets
• Demographic trends include changing age and family structures,
geographic population shifts, educational characteristics, and population
diversity
Learning Objective 2
10
COM5111 SemB 2019-20COM5111 SemB 2019-20
The Macroenvironment
Demographic Environment
• Baby Boomers – born 1946 to 1964 (spending more carefully)
• Generation X – born between 1965 and 1976 (overlooked, research, quality)
• Millennials – born between 1977 and 2000 (filled with devices, social media,
financially strapped)
• Generation Z – born after 2000 (kids, tweens and teens)
Learning Objective 2
11
COM5111 SemB 2019-20COM5111 SemB 2019-20
The Macroenvironment
Demographic Environment
Generational marketing is important in segmenting people by
lifestyle or life stage instead of age
Learning Objective 2
12
Critical Question
Do marketers need to create
separate products and marketing programs
for each generation?
COM5111 SemB 2019-20COM5111 SemB 2019-20
The Macroenvironment
Demographic Environment
• Changing (American) family
• What kind of changes?
• Changes in the workforce
• What kind of changes?
Learning Objective 2
13
COM5111 SemB 2019-20COM5111 SemB 2019-20
The Macroenvironment
Demographic Environment
Geographic Shifts in Population
• Growth in U.S. West and South and decline in Midwest
and Northeast
• How about China or Europe or any place (e.g. Hong Kong) you
would like to discuss?
• Change in where people work
• Telecommuting
• Home Office
Learning Objective 2
14
Critical Questions
• Why do you think these
geographic shifts in population
are happening?
• Where will you choose to live
when you finish your education?
Why?
COM5111 SemB 2019-20COM5111 SemB 2019-20
The Macroenvironment
Demographic Environment
Markets are becoming more diverse
• International
• National
• Ethnicity
• Gay and lesbian
• Disabled
Learning Objective 2
15
COM5111 SemB 2019-20COM5111 SemB 2019-20
The Macroenvironment
Economic Environment
Learning Objective 2
16
COM5111 SemB 2019-20COM5111 SemB 2019-20
The Macroenvironment
Economic Environment
Changes in Consumer Spending
Value marketing involves offering financially cautious buyers
greater value—the right combination of quality and service at a
fair price
Learning Objective 2
17
What changes might there be in U.S. vs. China?
Any thoughts?
COM5111 SemB 2019-20COM5111 SemB 2019-20
The Macroenvironment
Economic Environment
Income Distribution
Over the past several decades, the rich have grown richer, the
middle class has shrunk, and the poor have remained poor
Learning Objective 2
18
COM5111 SemB 2019-20COM5111 SemB 2019-20
The Macroenvironment
The
Natural Environment
The natural environment is the physical environment and the natural
resources that are needed as inputs by marketers or that are affected by
marketing activities
Learning Objective 3
19
COM5111 SemB 2019-20COM5111 SemB 2019-20
The Macroenvironment
The Natural Environment
Trends in the Natural Environment
• Growing shortages of raw materials
• Increased pollution
• Increased government intervention
• Developing strategies that support environmental sustainability
Learning Objective 3
20
COM5111 SemB 2019-20COM5111 SemB 2019-20
The Macroenvironment
Natural Environment
Environmental sustainability involves
developing strategies and practices that
create a world economy that the planet
can support indefinitely
Learning Objective 3
21
COM5111 SemB 2019-20COM5111 SemB 2019-20
The Macroenvironment
Technological Environment
• Most dramatic force in changing the
marketplace
• New products, opportunities
• Concern for the safety of new products
Learning Objective 3
22
COM5111 SemB 2019-20COM5111 SemB 2019-20
The Macroenvironment
Political and Social Environment
Legislation regulating business is intended to protect
• companies from each other
• consumers from unfair business practices
• the interests of society against unrestrained business
behavior
Learning Objective 4
23
COM5111 SemB 2019-20COM5111 SemB 2019-20
The Macroenvironment
Political and Social Environment
• Increased emphasis on ethics
• Socially responsible behavior
• Cause-related
marketing
Learning Objective 4
24
COM5111 SemB 2019-20COM5111 SemB 2019-20
The Macroenvironment
Cultural Environment
The cultural environment consists of institutions and other forces
that affect a society’s basic values, perceptions, and behaviors
Why?
Learning Objective 4
25
How they think and consume?
COM5111 SemB 2019-20COM5111 SemB 2019-20
The Macroenvironment
Cultural Environment
Core beliefs and values are persistent and are passed on from parents to
children and are reinforced by schools, churches, businesses, and
government
Secondary beliefs and values are more open to change and include
people’s views of themselves, others, organizations, society, nature, and the
universe
Learning Objective 4
26
COM5111 SemB 2019-20COM5111 SemB 2019-20
Responding to the Marketing Environment
Views on Responding
Uncontrollable
• React and
adapt to
forces in the
environment
Proactive
• Take
aggressive
actions to
affect forces
in the
environment
Reactive
• Watch and
react to
forces in the
environment
Learning Objective 5
27
“There are three kinds of companies: those who make things happen, those who watch things happen, and those who
wonder what’s happened.”
COM5111 SemB 2019-20COM5111 SemB 2019-20
Marketing Information to gain Customer Insights
Learning Objectives
4-1 Explain the importance of information in gaining insights about
the marketplace and customers
4-2 Define the marketing information system and discuss its parts
4-3 Outline the steps in the marketing research process
4-4 Explain how companies analyze and use marketing
information
4-5 Discuss the special issues some marketing researchers face,
including public policy and ethics issues
28
COM5111 SemB 2019-20COM5111 SemB 2019-20
Marketing Information and
Customer Insights
Customer insights are fresh marketing
information-based understandings of customers
and the marketplace that become the basis for
creating customer value, engagement, and
relationships
29
Learning Objective 1
COM5111 SemB 2019-20COM5111 SemB 2019-20
Marketing Information and Customer Insights
Customer insights
• Fresh and deep insights into customer needs and wants
• Important but difficult to obtain
▪ Needs and buying motives not obvious
▪ Customers usually can’t tell you what and why
• Better information and more effective use of existing information
30
Learning Objective 1
COM5111 SemB 2019-20COM5111 SemB 2019-20
Marketing Information and Customer Insights
Managing Marketing Information
• Companies are forming customer insights
teams
▪ Include all company functional areas
▪ Collect information from a wide variety of sources
▪ Use insights to create more value for their customers
31
Learning Objective 1
COM5111 SemB 2019-20COM5111 SemB 2019-20
Marketing Information and Customer Insights
Managing Marketing Information
Marketing information system (MIS) refers to the people
and procedures dedicated to assessing information needs,
developing the needed information, and helping decision
makers to use the information to generate and validate
actionable customer and market insights
32
Learning Objective 1
COM5111 SemB 2019-20COM5111 SemB 2019-20
Marketing Information and Customer Insights
33
Learning Objective 1
Marketing Information System – to develop customer insights, make marketing decisions, and manage customer relationships
1
2
3
0
COM5111 SemB 2019-20COM5111 SemB 2019-20
Assessing Marketing Information Needs
A marketing information system (MIS) provides information to the
company’s marketing and other managers and external partners such as
suppliers, resellers, and marketing service agencies
34
Learning Objective 2
COM5111 SemB 2019-20COM5111 SemB 2019-20
Assessing Marketing Information Needs
Characteristics of a Good MIS
Balancing the information users would like to have against what they need
and what is feasible to offer
User’s
Needs
MIS
Offerings
35
Learning Objective 2
COM5111 SemB 2019-20COM5111 SemB 2019-20
Developing Marketing Information
Marketers obtain information from:
Internal data
Marketing intelligence
Marketing research
36
Learning Objective 2
COM5111 SemB 2019-20COM5111 SemB 2019-20
Developing Marketing Information
Internal Data
Internal databases are collections of consumer and market information
obtained from data sources within the company network
37
Learning Objective 2
COM5111 SemB 2019-20COM5111 SemB 2019-20
Developing Marketing Information
Competitive Marketing Intelligence
Competitive marketing intelligence is the systematic collection and
analysis of publicly available information about consumers, competitors, and
developments in the marketing environment
38
Learning Objective 2
COM5111 SemB 2019-20COM5111 SemB 2019-20
Marketing Research
Marketing research is the systematic design, collection, analysis, and
reporting of data relevant to a specific marketing situation facing an
organization
39
Learning Objective 3
COM5111 SemB 2019-20COM5111 SemB 2019-20
Marketing Research
Defining the Problem and Research Objectives –
guides the entire research process
Exploratory research
Descriptive research
Causal research
40
Learning Objective 3
to gather preliminary
information that will help
define the problem and
suggest hypothesesdescribes marketing problems,
situations, or markets , such as
the market potential for a
product or the demographics
and attitudes of consumer
research tests hypothesis about
cause-and-effect relationships
COM5111 SemB 2019-20COM5111 SemB 2019-20
Marketing Research
Developing the Research Plan
• Outlines sources of existing data
• Spells out the specific research
approaches, contact methods,
sampling plans, and instruments to
gather data
present the plan to management
41
Learning Objective 3
COM5111 SemB 2019-20COM5111 SemB 2019-20
Marketing Research
Developing the Research Plan
Management problem
Research objectives
Information needed
How the results will help
management decisions
Budget
42
Learning Objective 3
presented in a
written proposal
COM5111 SemB 2019-20COM5111 SemB 2019-20
Marketing Research
Developing the Research Plan
Secondary data is information that already exists somewhere, having been
collected for another purpose
Primary data is information collected for the specific purpose at hand
43
Learning Objective 3
COM5111 SemB 2019-20COM5111 SemB 2019-20
Marketing Research
Gathering Secondary Data
Advantages
Lower cost
Obtained quickly
Cannot collect
otherwise
Disadvantages
– data may not be
Relevant
Accurate
Current
Impartial
44
Learning Objective 3
COM5111 SemB 2019-20COM5111 SemB 2019-20
Marketing Research
Primary Data Collection
Research Approaches
Contact Methods
Sampling Plan
Research Instruments
45
Learning Objective 3
COM5111 SemB 2019-20COM5111 SemB 2019-20
Marketing Research
46
Learning Objective 3
Planning Primary Data Collection
COM5111 SemB 2019-20COM5111 SemB 2019-20
Marketing Research
Primary Data Collection
Research Approaches
• Observational research involves gathering primary data by observing
relevant people, actions, and situations
• Ethnographic research involves sending trained observers to watch and
interact with consumers in their “natural environments.”
COM5111 SemB 2019-20COM5111 SemB 2019-20
Marketing Research
Primary Data Collection
Research Approaches
• Survey research involves gathering primary data by asking people
questions about their knowledge, attitudes, preferences, and buying
behavior
• Experimental research involves gathering primary data by selecting
matched groups of subjects, giving them different treatments, controlling
related factors, and checking for differences in group responses
48
Learning Objective 3
COM5111 SemB 2019-20COM5111 SemB 2019-20
Marketing Research
Focus Group—Personal Contact Method
• Six to 10 people
• Trained moderator
• Challenges
▪ Expensive
▪ Difficult to generalize from small group
▪ Consumers not always open and
honest
49
Learning Objective 3
COM5111 SemB 2019-20COM5111 SemB 2019-20
Marketing Research
Online Contact Methods
Advantages
• Low cost
• Speed
• Higher response rates
• Good for hard to reach
groups
50
Learning Objective 3
COM5111 SemB 2019-20COM5111 SemB 2019-20
Marketing Research
Primary Data Collection
Sampling Plan
A sample is a segment of the population selected for marketing research to
represent the population as a whole
• Who is to be studied?
• How many people should be studied?
• How should the people be chosen?
51
Learning Objective 3
COM5111 SemB 2019-20COM5111 SemB 2019-20
Marketing Research
52
Learning Objective 3
Types of samples
COM5111 SemB 2019-20COM5111 SemB 2019-20
Marketing Research
Primary Data Collection
Research Instruments–Questionnaires
• Most common
• In person, by phone, or online
• Flexible
• Researchers must be careful with wording and ordering of
questions
▪ Closed-ended
▪ Open-ended
• Useful in exploratory research
53
Learning Objective 3
COM5111 SemB 2019-20COM5111 SemB 2019-20
Marketing Research
Primary Data Collection
Mechanical Research Instruments
Mechanical
devices
People
meters
Checkout
scanners Neuro-
marketing
54
Learning Objective 3
COM5111 SemB 2019-20COM5111 SemB 2019-20
Marketing Research
Implementing the Research Plan
• Collecting the information
• Processing the information
• Analyzing the information
Interpreting and Reporting Findings
• Interpret findings
• Draw conclusions
• Report to management
55
Learning Objective 3
COM5111 SemB 2019-20COM5111 SemB 2019-20
Analyzing and Using Marketing Information
Customer Relationship Management (CRM)
CRM involves managing detailed information about individual customers and
carefully managing customer touch points to maximize customer loyalty
56
Learning Objective 4
COM5111 SemB 2019-20COM5111 SemB 2019-20
Analyzing and Using Marketing Information
Customer Relationship Management
CRM Touchpoints
Customer
purchases
Sales force
contacts
Service and
support
calls
Web and
social
media sites
Satisfaction
surveys
Credit and
payment
interactions
Marketing
research
studies
57
Learning Objective 4
COM5111 SemB 2019-20COM5111 SemB 2019-20
Analyzing and Using Marketing Information
Distributing and Using Marketing Information
Information distribution involves making information available in a timely,
user-friendly way
• Intranet
• Extranet
58
Learning Objective 4
COM5111 SemB 2019-20COM5111 SemB 2019-20
Other Marketing Information Considerations
Marketing Research in Small Businesses and
Nonprofit Organizations
International Market Research
Public Policy and Ethics
• Customer privacy
• Misuse of research findings
59
Learning Objective 5
COM5111 SemB 2019-20COM5111 SemB 2019-20
60
Coronavirus
Free
Good Health
1Sources: Getty Images
COM51
11
Pricing
strategy
COM5111 Semester B 2019-
20
Week 6
27th February 2020
2
Critical questions
1. How do consumers process and evaluate prices?
2. How should a company initially set prices for products and/or
services?
3. How should a company adapt prices to meet varying circumstances
and opportunities?
4. When should a company initiate a price change?
5. How should a company respond to a competitor’s price change?
3
• Rent
• Tuition
• Fee
• Fare
• Rate
• Toll
• Premium
• Honorarium
• Special assessment
• Bribe
• Dues
• Salary
• Commission
• Wage
• Tax
Not just a number on a tag …
Many forms; performs many functions; and made up of many components
A major
determinant
of buyer
choice
Synonyms for price
4
Understanding Pricing
• Pricing in a digital world
✓ Get instant vendor price comparisons
✓ Name your price and have it met
✓ Get products free
✓ Monitor customer behavior & tailor offers
✓ Give customers access to special prices
✓ Let customers decide the price
✓ Negotiate prices in online auctions and exchanges
B__
S_____
5
Understanding Pricing
• A changing pricing environment
– Sharing economy
– Bartering
• Florida Barter
• www.swap.com
– Renting
A severe recession in 2008–2009
New millennial generation (new attitudes and values to consumption)
It is about a
brand’s luxury
connotation
6
Understanding Pricing
• How companies price
– Small companies: (boss)
– Large companies: (division/product line managers)
• How companies should price
– Understanding of consumer pricing psychology
– a systematic approach to setting, adapting, and changing prices
Common mistakes
• Calculate and add
• Not revising often enough – make change
• Set independently
• Not varying: e.g. purchase occasions
7
Consumer psychology and
pricing
( how consumers perceive prices )
How they consider the actual but not the state price
Interpret price in different ways
Reference prices
Price-quality inferences
Price endings
Comparing an observed price to an internal reference price they
remember or an external frame of reference
Many consumers use price as an indicator of quality
Many sellers believe prices should end in an odd number
Imaging pricing
Ego-sensitive
products
“Left to right”
9 – discount
8
Possible consumer reference prices
sellers often attempt to manipulate them
e.g. products among expensive competitors
Source: Adapted Winer, R. S. (1988). Behavioral perspectives on pricing: buyers’ subjective perceptions of price revisited. In T. Devinney, T. M. (Eds.), Issues in Pricing: Theory
and Research, (pp. 35-57). Lexington, MA: Lexington Books.
9
Price cues
• ‘Left-to-right’ pricing (€299 versus €300) €34 to €39; €34 to €44
• Odd number discount perceptions
• Even number value perceptions
• Ending prices with 0 or 5 (easy to process and retrieve)
• ‘Sale’ written next to price (spur demands)
10
Sales signs and prices that end in 9 become less
effect
ive the more they employed.
They are more influential when consumers’ price knowledge is poor when …
When to use price cues
• Customers purchase item infrequently
• Customers are new
• Product designs vary over time
• Prices vary seasonally
• Quality or sizes vary across stores
• How about Limited availability? (e.g. three days only)
11
Watch this video for tips on pricing from a marketing executive: www.youtube.com/watch?v=4phxRH6vk-I
Pricing a new product must take into account the conditions of the market and competitors’ prices
Setting the right price
12
Select the price objective
Determine demand
Estimate costs
Analyze competitor price mix
Select pricing method
Select final price
Where to position its market offering (e.g. product) on quality and price
Steps in setting price
(slide #14 – #36)
13
Step 1: selecting the price objective
1. Survival
2. Maximum current profit
3. Maximum market share (e.g. TI. Slide #14)
4. Maximum market skimming (e.g. Sony, Apple. Slide #15)
• Other objectives (e.g. university, nonprofit hospital, social service agency)
14
Conditions favouring a market- penetration pricing strategy
Market-penetration pricing involves setting a low price for a new
product in order to attract a large number of buyers and a large
market share. So lead to lower unit costs and higher long-run profit
• Market is highly price sensitive and low prices stimulate market growth
• Production and distribution costs fall with accumulated production
experience
• Low price discourages actual and potential competition
15
Conditions favouring a market-skimming pricing strategy
Market-skimming pricing (or price skimming) strategy sets high initial
prices to “skim” revenue layers from the market.
Certain conditions:
• A sufficient number of buyers have high demand
• Unit costs of producing a small volume are not so high as to cancel
advantage of charging what traffic will bear
• High initial price does not attract more competitors to the market
• High price communicates superior product image
16
Price sensitivity
Estimating
demand curves
Price elasticity
of demand
What affects price
sensitivity?
attempt to measure
their demand curves
using several
different methods
Step 2: determining demand
17
normally a inverse relationship between price and demand
So when the demand curse slopes upward?
Inelastic and elastic demand
Each price will lead to a different level of demand and have a different impact on a company’s marketing objectives
• Prices should reflect the value that consumers are willing to pay.
or
Prices should primarily just reflect the cost involved in making a
product.
49
Recap: can you explain
1. How do consumers process and evaluate prices?
2. How should a company initially set prices?
3. How should a company adapt prices to meet varying
circumstances and opportunities?
4. When should a company initiate a price change?
5. How should a company respond to a competitor’s price change?
50
Your main goal is to pull people into the funnel in hopes
of turning a fraction of them into paying customers
Estée Lauder
Gillette & HP
Ryanair (seat, pay)
Marketing insight: giving it all away
• Stick to the free offer (Freemium Strategy)
• Have a product that truly stands out
• Make sure the product works
• Keep improving the product
• Make access to product within one click (easy access)
• Know your up-selling plan from the beginning
• Identify a range of revenue sources
51
Further readings
• Bertini, M., & Wathieu, L. (2010). How to Stop Customers from
Fixating on Price. Harvard Business Review.
• Gourville, J., & Soman, D. (2002). Pricing and the Psychology of
Consumption. Harvard Business Review.
• Mohammed, R. (2018). The Good-Better-Best Approach to Pricing.
Harvard Business Review.
• Nagle, T., Hogan, J., & Zale, H. (2018). The strategy and tactics of
pricing: A guide to growing more profitably (6th ed.). New York, NY
; Abingdon, Oxon : Routledge.
• Siggelkow, N., & Terwiesch, C. (2019). 5 questions to consider when
pricing smart products. Harvard Business Review.
52
Watson (2018) Retail information technology
“Virtual makeup”
53
Watson (2018) Retail information technology
Change price tag within 10 to 12 seconds
54
Hey you, it’s time to start your Individual Assignment (40%)
Due on 19th March 2020
• Haven’t you?
• A quick review?
– Can someone do it?
• Someone has already started, am I right?
– Which stage are you now?
COM
5
11
1
Fundamentals of Marketing Communication
Week
4
Sem B
2
01
9
–
20
Segmentation and Targeting
COM
51
11 SemB 20
19
-20
COM5111 SemB 2019-20
Learning Objectives for Week 4
1. What are the different levels of market segmentation?
2. In what ways can a company divide a market into segments?
3
. What are the requirements for effective segmentation?
4. How should consumer and business markets be segmented?
5. How should a company choose the most attractive target
markets?
6
. Conclusion
2
COM5111 SemB 2019-20COM5111 SemB 2019-20
Importance of Market Segmentation
• Companies cannot connect with all customers in large, broad, or diverse
markets
• A company then needs to identify which market segments it can serve
effectively
• This decision requires a keen understanding of consumer behavior and
careful strategic thinking
• To develop the best marketing plans, managers need to understand what
makes each segment unique and different
• Identifying and satisfying the right market segments is often the key to
marketing success
3
COM5111 SemB 2019-20COM5111 SemB 2019-20
Target Marketing
• To compete more effectively, many companies are now
embracing target marketing
• Effective target marketing requires that marketers:
a. Identify and profile distinct groups of buyers who differ in their
needs and Preference (market Segmentation)
b. Select one or more market segments to enter (market
Targeting)
c. For each target segment, establish and communicate the
distinctive benefit(s) of the company’s market offering (market
Positioning)
4
COM5111 SemB 2019-20
CONSUMER MARKETS
Geographic Segmentation
Demographic Segmentation
Psychographic Segmentation
Behavioral Segmentation
5
COM5111 SemB 2019-20COM5111 SemB 2019-20
Bases for Segmenting Consumer Markets
(up to slide number
40
)
• Market segmentation divides a market into well-defined groups
• A market segment consists of a group of customers who share a similar set of needs
and wants
• The marketer’s task is to identify the appropriate number and nature of market
segments and decide which one(s) to
target
• There are two broad groups of variables are used to segment consumer markets
a. Descriptive characteristics: geographic, demographics, and psychographic
(slide number 6 –
25
)
b. Behavioral considerations: consumer responses to benefits, usage occasions, or
brand
s (slide number
26
– 40)
• Regardless of which type of segmentation scheme we use, the key is adjusting the
marketing program to recognize customer differences
6
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Major Segment
Variables for Consumer
Markets
7
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Major Segment Variables for Consumer Markets
(cont’d)
Example of Income Segmentation: Kraft in Rural
Indonesia
Kraft—In Indonesia, consumer goods companies are adapting their marketing strategies to target this
group of consumers. Although tastes are becoming more Westernized, rural consumers are still extremely
price sensitive. Television ads are thus adapted to make the products more approachable and affordable.
These ads are increasingly peppered with rural scenes and down-to-earth-looking characters peddling
products in small-pack sizes. Kraft’s confectionery and cheese products are sold by 1 million outlets
throughout Indonesia. Its Bisquat milk biscuits sells more than 200 million packets each month. The small
packets costs 500 rupiah (6 cents) and are also available in a softcake version called bolu. Kraft has
researched on the Indonesian rural consumers. A typical young Indonesian boy’s dietary and personal
preferences meant he requires snacks four times a day, of which two may be served outside the home.
Hence, Kraft offers products in biscuit and softcake forms, and in smaller packages to be sold at snack
kiosks in towns and villages.
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http://www.kraftheinzcompany.com/
https://www.youtube.com/watch?v=OX5hbTHToFM
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Generation
• Each generation or cohort is
profoundly influenced by the
times in which it grows up
• Demographers call these
groups cohorts
• They share similar outlooks
and values
• Marketers often advertise to
a cohort by using the icons
and images prominent in
their experiences
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Gen Y
• A generation group of interest to marketers is the Gen Y
• Because Gen Y members are often turned off by overt branding practices
and “hard sell,” marketers use different approaches to reach and persuade
them
• These include online buzz, student ambassadors, product placements in
computer games, and sponsoring cool events
China’s Gen Y are more entrepreneurial, more Internet connected, and know more about Westerners than
1. maintenance and repair services (window cleaning, copier repair)
2. business advisory services (legal, management consulting, advertising)
Use
15
Product Differentiation
• Form – size, shape, or physical structure of a product
• Features – varying features that supplement their basic function
• Performance quality – low, average, high, or superior (at which the product’s primary characteristics
operate)
• Conformance quality – High conformance quality; all produced units are identical and meet promised
specifications
• Durability – operating life under natural or stressful conditions, is a valued attribute
• Reliability – probability that a product will not malfunction or fail within a specified time period
• Reparability – ease of fixing a product when it malfunctions or fails
• Style – product’s look and feel to the buyer and creates distinctiveness that is hard to copy
• Customization – customized products (what a person wants—and doesn’t want—and deliver)
16
Services Differentiation
Main service differentiators:
✓Ordering ease
✓ Delivery
✓ Installation
✓ Customer training
✓ Customer consulting
✓ Maintenance and repair
✓ Returns
17
Design
• Design
– The totality of
features that affect
the way a
product
looks, feels, and
functions to a
consumer
18
Design
✓ Is emotionally powerful
✓ Transmits brand meaning/positioning
✓ Is important with durable goods
✓ Makes brand experiences rewarding
✓ Can transform an entire enterprise
✓ Facilitates manufacturing/distribution
✓ Can take on various approaches
19
THE PRODUCT HIERARCHY
The product
hierarchy stretches
from basic needs to
particular items that
satisfy those needs
Six levels
Need family
Product family
Product class
Product line
Product type
Item
20
THE PRODUCT HIERARCHY
Using life insurance as an example:
1. Need family—The core need that underlies the existence of a product family. Example: security
2. Product family—All the product classes that can satisfy a core need with reasonable effectiveness. Example:
savings and income
3. Product class—A group of products within the product family recognized as having a certain functional
coherence, also known as a product category. Example: financial instruments
4. Product line—A group of products within a product class that are closely related because they perform a similar
function, are sold to the same customer groups, are marketed through the same outlets or channels, or fall
within given price ranges
– A product line may consist of different brands, a single family brand, or an individual brand that has been line
extended Example: life insurance
5. Product type—A group of items within a product line that share one of several possible forms of the product
Example: term life insurance
6. Item (also called stock-keeping unit or product variant)—A distinct unit within a brand or product line
distinguishable by size, price, appearance, or some other attribute Example: Prudential renewable term life
insurance
21
Product Systems and Mixes
• Product system
– A group of diverse but related items that function in a compatible manner
• Product mix (product assortment)
– The set of all products and items for sale
– Various product lines
– Width
– Length
– Depth
– Consistency – how closely related the various product lines are in end use, production
requirements, distribution channels, or some other way
22
Product Width And Length For Procter &
Gamble Products
23
To Expand The Number Of Product Lines: Three Ways (1/2)
1. Undertaking a business whose profit stream will probably correlate negatively with
the profit stream of existing businesses—thereby reducing the overall risk of the
enterprise
– For example, a beverage company developing a strong position in the
water market helps offset risk of decline in the soda market if hydration
habits move heavily to water
24
To Expand The Number Of Product Lines: Three Ways (2/2)
2. Leveraging a key asset of the company that underlies the current product offerings
– For example, Procter & Gamble (P&G) has a wide variety of products across four sectors
that the company claims “share common technologies”: beauty, hair, and personal care;
baby, feminine, and family care; health and grooming; and fabric and home care
– Because many of these products also share the same distribution system, P&G is able to
leverage its established retailer relationships to market and sell its
products
3. Tapping into complementary-in-use products and thus enabling the firm to be a
“total solution supplier.”
– For example, Procter & Gamble explained the acquisition of the Gillette Company and its
Oral-B toothbrush line by noting that the union of Oral-B and Crest placed P&G oral care
as the market leader and the only major oral care company with a breadth of products
across every category: toothpaste, toothbrushes, whitening, rinse, denture care, and floss
25
Product line length
• Line stretching
– Down-market stretch
– Up-market stretch
– Two-way stretch
• Line filling
• Line modernization
• Line featuring
• Line pruning
26
Options for Product Line Length
1. A downward stretch of the line, adding a lower-priced item still capable of
satisfying the needs of some applications
2. An upward stretch of the product line, adding an item at a higher price and
performance level, able to meet the performance requirements of more
demanding applications
3. A product line fill, inserting an item of a price and performance level that fills a gap
between two existing items
– Motives: reaching for incremental profits,, trying to become the leading full-line
company, …
27Adapted from “Extend Profits, Not Product Lines” by John A. Quelch and David Kenny, Harvard Business Review, September/October 1994.
Product Line Depth Considerations
28
Product Line Analysis
• Sales and profits
to meet different customer requirements and lower production costs
carefully monitored
and protected
dropping
29
Product Line Analysis
• Market profile and image
positioned against competitors’ lines
This product map shows which competitors’ items are competing against company X’s items.
Another benefit of product mapping is that it identifies market segments.
30
Product Mix Pricing
• The firm searches for a set of prices that maximizes profits on
the total mix
Product line
pricing
Optional-
feature
pricing
Captive-
product
pricing
Two-part
pricing
By-product
pricing
Product-
bundling
pricing
develop product lines rather
than single products
so they introduce price steps
optional products with their main
products
require the use of ancillary
or captive products
be priced on their value
Pure bundling – as a
bundle.
In mixed bundling, both
individually and in
bundles
31
Product Life Cycle
32
Product Life Cycle
Introduction
• Marketing expenditures are high as awareness and knowledge of product features must be established in the target market
• Trial may be hard to induce if customers are satisfied with current options
• Distribution must be built up
Growth
• With awareness and trial achieved, the product’s performance is the dominant driver of sales
• Success may induce the entry of new competitors and require promotional spending to defend against those competitors
Maturity
• All feasible market segments have been reached and distribution channels built up
• For nondurables, sales come from replenishment only, as household penetration has leveled off
• For durables, population and income growth can be key drivers
Decline
• The rate of decline may still be a function of marketing efforts. A focus on hard-core loyal, who will make an effort
to buy even at high prices and limited distribution, may be a profit opportunity
• The discipline to phase out weak products is critical, however, lest the company and distribution channels become
overwhelmed
33
Lessons From Product Life Cycles
• Products (market offerings) have a limited life
• Sales pass through distinct stages, each posing different challenges,
opportunities and problems to the seller
• Profits rise and fall at different stages of the
product life cycle
• Products require different marketing, financial, manufacturing, purchasing
and human resource strategies at each stage
34
Strategies To Sustain Rapid Market Growth
• Improve product quality and add new product features and improved styling
• Add new models, accessory items and personalising options
• Enter new market segments
• Increase its distribution coverage and enters new distribution channels
• Shift from product-awareness advertising to
product-preference advertising
• Lower prices to attract the next layer of price-sensitive buyers
• Environmental issues are also playing an
increasingly important role in product
design and manufacturing
– changing the manufacture of their products
or the ingredients that go into them
https://www.c2ccertified.org/
39
Co-Branding
• Two or more well-known brands are combined into a joint
product or marketed together in some fashion
✓ Same-company
✓ Joint-venture
✓ Multiple-sponsor
✓ Retail
40
INGREDIENT BRANDING
• Co-branding that creates brand equity for parts that are
necessarily contained within other branded products
ingredient brands can provide differentiation and important signals of quality
41
Packaging
• All the activities of designing and producing the container for a
product
Used as a marketing tool
• Self-service: (attract attention, describe the product’s features, create
consumer confidence, and make a favorable overall impression)
• Consumer affluence: (for the convenience, appearance,
dependability, and prestige for better …)
• Company and brand image: (instant recognition, billboard effect)
• Innovation opportunity: (make their products more convenient and
easier to use)
42
Packaging
Packaging objectives
• Identify the brand
• Convey descriptive and persuasive
information
• Facilitate product transportation and
protection
• Assist at-home storage
• Aid product consumption
To achieve these objectives listed
here and satisfy consumers’
desires:
marketers must choose the
functional and aesthetic
components of packaging correctly’
43
The Color Wheel of Branding and Packaging
Color is a particularly important aspect of packaging and carries different meanings
in different cultures and market segments
44
Labeling, Warranties, and Guarantees
• Labeling
– Identifies, grades, describes, and promotes the product
• Warranties
– Formal statements of expected product performance by the
manufacturer
• Guarantees
– Promise of general or complete satisfaction
45
BACK
46
REFERENCES
Cooper, R.G. (2011). Winning at New Products: Creating Value through
Innovation. New York: Basic Books.
Dolan, R. J. (2019). Marketing Reading: Product Policy. Harvard Business
School.
Elberse, A. (2006). Principles of Product Policy – Module Note. Harvard
Business School.
Kotler, P. & Keller, K. L.(2016). A Framework for Marketing Management
(5th ed.). Boston : Pearson.
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