Transcript Chapter 8 - Cloudfront.net

Chapter 8
Marketing Your
Product
Developing Your Marketing Mix
Which would you buy?
Which would you buy?
What is a Marketing Plan?
• Market: Group of potential customers
• Marketing Plan: way of presenting your business
to your customers.
▫ Communicate the value of your product or service
• Consists of 2 primary parts:
▫ Marketing Goals
▫ Strategies for reaching your goals (marketing mix)
Part 1: Marketing Goals
• Each marketing plan is unique to business.
• To start: write down everything you want to
accomplish
• As time goes on, update, modify and adjust goals
as you begin to research and see how attainable
they actually are.
• Should match your business plan.
• Goals are more specific and “action-orientated”
▫ Measurable in practicable ways
▫ “I want to increase the number of customers in my
store” (too general) ADD: “ by 25%” more
measurable.
Marketing Goals
• Require a time frame
▫ Short range: within next year? Months?
▫ Mid-range: within the next 2-5 years?
▫ Long range: within the next 10-20 years?
• Keep in mind:
▫ Motive: “why do you want to reach each objective?”
▫ Consistency: make sure goals don’t conflict with one
another, will cause frustration and decrease chance of
accomplishing them.
▫ Cost: budget! Money, energy, time, investment.
What is Your Market Share??
• Percentage given to a market population that is buying a
product or service from a particular business.
• Based on level of competition in target market
• Large corporations or small businesses.
• Hard to capture a large percentage to start
• Unique product to market??
Sample: Market Share (Nielsen)
Sample: Market Share: Energy Drinks
Share of Energy
Drink Market
(% dollar sales)
2008
Drink
Drink
Top 7
Based on Dollar
sales
2010
Red Bull
40
Red Bull
$ 2.2 billion
Monster
23
Monster Energy
$ 1.5 billion
Rockstar
12.3
Rockstar
$ .4 billion
AMP
8
NOS
$ .2 billion
Full Throttle
4
Doubleshot
$ .18 billion
Doubleshot
2
Amp
$ .14 billion
NOS
1.5
Full Throttle
$ .11 billion
Part 2: Marketing Mix
5 P’s = marketing mix = recipe for success!
People
Product
Place
Price
Promotion
People
• Target market customers are key to setting up all
other strategies in marketing plan.
• Include:
▫ Detailed Customer Profile
▫ Description of Staff needed to carry out marketing
plan; Your marketing department
Product
• Description of what your business will provide to meet
the needs of your target market.
▫ Using market research
• What most appeals to your customer base?
• Product Mix=different products and services a business
sells.
▫ Mix depends on product image you want to communicate
▫ Also number and type of markets you are targeting
• Important to identify features such as: color, size,
quality, hours, warranties, delivery, and installation.
Product
• Every product has features
• Other important factors to consider:
1.
Branding: name, symbol or design used to identify
your product.
2. Packaging: box, container or wrapper in which the
product is placed.
3. Labeling: where information about product is listed.
• All will help differentiate product from others on
market.
PACKAGING
LABELING
Place, Price, Promotion
• Place: Selling and delivery methods
▫ How and where will customers be able to buy or
receive you product or service??
• Price: What is reasonable?
▫ Strategy may vary over time
• Promotion: Process used to make potential
customers aware of product or service
▫ How can you influence them to buy?
Attracting Customers to YOU
• Product needs to include:
▫ Features: what it does and how it appears to the senses (sight,
sound, taste, smell, and touch)
▫ Benefits: reasons why customers chose to buy it (saving time,
increase social status, protecting the family, getting rid of a
problem, improving a relationship, reducing worry,
entertainment, saving money)
▫ Design: label and packaging (color, artwork, etc.)
▫ Packaging: how can you emphasize the product (bottle, box, bag,
container)
What can you do?
• CREATE A BRAND= marketing strategy that can create
an emotional attachment to your product in the mind of
the consumer.
▫ Perception is key…
 (high class, “premium brand”
 Lower quality “base line brand”
• CREATE a strong image by influencing potential and
existing customers = product positioning
• CREATE a Brand mark= logo
Customer Loyalty
Ultimate Goal = keep customer coming back!
• Feelings or attitudes that incline a customer to
return to a company to shop and purchase there
again the same product, service or brand.
• Superiority might not work alone against
competition.
• Product can be copied or imitated.
• Pricing can always be challenged.
Chapter 6
Slide 22
Strategies to Maintain
Customer Loyalty
• Listen and respond to feedback
• Strategies for maintaining loyalty
▫ Superior service
▫ More convenient hours than others
▫ No hassle/easy return policies
▫ Store-specific credit cards / gift cards
▫ Personal notes or cards
▫ Frequent buyer programs
 Rewards, points, redemption cards, etc.
Distribution Strategies
•Various ways a product can reach the consumer.
•How will you get your product into hands of
customers?
•How can you ensure that your product will be
available when needed?
•More cost efficient the channel is, the lower you can
keep the product’s price.
•More time efficient the channel is, the fast it gets to
customers.
2 Main Options
Direct Channel
Indirect Channel
Direct vs. Indirect Channels
• Direct Channel
▫ product  producer  consumer
• Indirect Channel
▫ Product producer  one or more
intermediaries  consumer
▫ Intermediary (bridge) agents, brokers,
wholesalers, distributors, retailers.
Indirect Channel Example
• Manufacturer of cell phones (Apple)
• Wholesaler (Fancy Phones) buys phone from Apple
• Retailer (Verizon) buys phones for the stores.
• Consumer goes to Verizon to purchase Apple I
phone.
How many intermediaries are there?
3 Basic Distribution Strategies
• #1: Exclusive: retailer/dealer has sole right to sell a product in
a certain area.
▫ Signed agreement in place that retailer can’t sell competing
products.
 Ex) Fast food fountain soda machines, vending machines.
• #2) Intensive: opposite of exclusive; sell a product at a variety
of stores.
 Ex) Colgate toothpaste is sold CVS, Walgreens, Shoprite,
etc.
• #3) Selective: sold in moderate outlets, but not everywhere in
a particular area.
 Ex) Car dealers select dealerships based on space and
target market.
Pricing Strategies
• Based on target market and potential profits for
your company.
• Price should be:
▫ Low enough customers want to buy from you and
NOT the competition.
▫ High enough you will earn a profit.
Determine Price Objective
• What do you want the price to say about your
product?
• What do you want the price to accomplish for
your business?
• Keep in mind your:
▫ business plan goals
▫ marketing brand & goals
▫ What can your target market afford? (research)
4 Types of Pricing Objectives
• #1) Build or maintain image
▫ Create an image of the product in mind of the
consumer
 Ex) generic vs. brand
luxury vs. basic
• #2) Increase sales volume (quantity)
▫ What is the competition doing?
▫ Higher price = lower sales
▫ Lower price = higher sales
4 Types of Pricing Objectives
• #3) Obtain or Expand Market Share
▫ Initial launch of product may be a lower price
▫ Once established, possibly raise price
• #4) Maximize Profits
▫ Introduce product with a high price to max profits
▫ If competition imitates or takes attention away
from you, drop prices
3 Types of Pricing Strategies
• Depends on product mix, price objective & target
market
• #1) Demand Based: focuses on how much
consumers willing to pay.
▫ Most useful when:
 Product is considered unique
 Has a greater value than others
 You can charge the max amount.
▫ Examples??
3 Types of Pricing Strategies
• #2) Competition Based: focuses on how much
the competition is charging?
▫ Consider:
 Are you going to charge the same? More? Less?
 How are you going to stay competitive?
 Continually focuses on research & competition
• #3) Cost Based: focuses on how much does it
cost your business to provide product?
▫ Consider:
 Markup or markdown costs
Price Adjustments
• For indirect channels of distribution, price will be
adjusted as it moves through different intermediaries.
• Retail store buys a product from a wholesaler, an
additional amount is added to price to make a profit
==Markup price
Calculating Markup Prices
• Wholesale cost x Markup % / 100 = Markup amount
• Wholesale cost + markup amount= markup price
(retail price)
Markup Price Example
• You sell shampoo to a local drug store. The
whole sale cost is $5.05. The markup amount is
30%.
▫ What is the total mark up amount?
 $1.51
 $5.05 x 30 / 100
OR $5.05 x .30
What is the retail cost to sell in the drug store?
▫ $6.56
▫ $5.05 + 1.51 = $6.56
Markdown Cost
• Retailer wants to reduce the price (sale items) of
the product.
• Often use this method:
▫ Overstocked
▫ Need to make room for new shipments
▫ Change in customer demand
 Ex) clothing store needs to get rid of summer clothes
to make room for fall clothes; change of season.
• To avoid losing money, make sure that they
markdown price is NOT LESS than the
wholesale price.
Calculating Markdown Price
• Retail price x Markdown Percentage/100=Markdown
Amount
• Retail Price-Markdown Amount= Markdown (sale price)
• Example: Macy’s wants to move the inventory of
summer shorts quickly, due to end of the season. It
places all denim shorts on sale for 25% off. The retail
price is set for $35.99.
• What is the markdown price??
▫ $27.00
▫ $35.99 x .25
OR
$35.99 x 25 / 100
Section 8.2
Promoting Your Product
Principles of Promotion
• Type of communication we find throughout our
daily lives.
• One of the 5 P’s of marketing
• Must be done effectively to get the expected
results.
Getting Customers: AIDA
• Popular communication model used by
companies to plan, create and manage
promotions.
A: Attention
I: Interest
D: Desire
A: Action
Getting Customers: AIDA
A: Attention: 1st step to grab
attention of potential
customers.
- Especially if a new product.
- Example: Celebrity
Endorsements.
I: Interest: after you get
attention, you want to keep it.
-What is the message you are
trying to convey to audience?
-Clearly communicate ideas.
D: Desire: What can you do to
make your product desirable?
-Example: demonstrate how
product works, is your product
a bargain?
-Infomercials, Commercials, You
Tube, Social Media, etc.
A: Action: Get customers to
take action= PURCHASE!
-Example: limited time offer,
convenience, easy to order,
availability.
Elements of a Promotional Mix
• Promotion takes on many different forms; with
same goal= BUILD A FAVORABLE AWARENESS!
▫ WILL NOT succeed if customers don’t know about your
business.
• Promotional Mix: strategy for promoting business
using some or all of the following 6 techniques:
▫
▫
▫
▫
▫
▫
Advertising
Visual Merchandising
Public Relations
Publicity
Sales Promotion
Personal Selling
Elements of a Promotional Mix
• Advertising: public promotional PAID
message for an identified sponsor or
company.
• Print, direct mail, radio, tv, product
placement, internet, outdoor, social
media
Advertising Techniques
• #1: Brand Advertising
▫ Wants you to remember the particular brand name and product
▫ Used to introduce a new product OR reinforce customer loyalty
▫ Jingles & Slogans
▫ http://www.youtube.com/watch?v=hF_qgfIDHLs&NR=1
• #2: Informative Advertising
▫ Designed to influence you to buy a product by educating you about the product’s benefits.
▫ Infomercials
▫ http://www.youtube.com/watch?v=TqHSIiAXdSU
• #3: Comparative Advertising
▫ Win your purchase by comparing to a competitor’s product.
▫ Convince you to buy the advertised product vs. the competitor product.
▫ Ads are typically slanted in favor of one vs. the other
▫ http://www.youtube.com/watch?v=BpOvzGiheOM
• #4:Defensive Advertising
▫ Counter attacks a comparative advertisement
▫ Commonly used to respond to claims made by other companies
▫ http://www.youtube.com/watch?v=MSiSIzXKMXw
Product Placement
The process by which a manufacturer (or advertiser) pays a fee in order for
branded products to be prominently displayed in a movie, television show,
or other media production.
http://www.youtube.com/watch?v=PrPV9o8HXvs (tv)
http://www.youtube.com/watch?v=M1HXXcVFySM
(Seinfeld)
http://www.complex.com/music/2014/07/blatant-beats-by-dre-productplacement-in-music-videos/
Elements of a Promotional Mix
Visual Merchandising:
• Artistic displays to attract
customers in the store.
• Visual promotion in stores.
• What will catch your potential
customer’s eye?
Elements of a Promotional Mix
• Public Relations: activities aimed at creating
goodwill towards the company or product.
▫ Companies partner with charities to help promote
product.
▫ Announcements, press release, community events,
contests
• Publicity: form of promotion for which a
company does NOT pay; free advertising. (see
next slide)
Elements of a Promotional Mix
• Non-paid form of communication that calls
attention to your business through media
coverage.
• May be good or bad publicity.
• Typically free
▫ Using a celebrity could raise price
• Largely out of business ‘s control
▫ Ex) Bad publicity: local restaurant food health
code violation. Lose business over bad publicity.
Elements of a Promotional Mix
• Sales Promotion: short term activity; product
demonstrations, coupons, free samples, temporary
specials. MOTIVATES customers.
• Personal Selling: Direct one to one efforts by company
sales reps and builds customer relationships.
▫ Premiums/giveaways: pens, t-shirts, mugs, calendars
▫ Telemarketing
▫ Networking
360 Marketing
• Combination of various promotional strategies
• Highly effective technique
• Ex: John’s Bagels uses direct mail to reach his
customers; coupons in the direct mail flyer;
social media to target younger demographics;
print ads and community events to promote his
business.