Transcript Document

Overview of Marketing Management
for Technical Products
City University of Hong Kong
Engineers in Society ( EE3014 )
Calvin CHUI
6 November, 2009
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Contents
–Marketing
–Product
–Price
–Delivery
–Quality
–Q&A
References
• Cyr, Donald G., Gary, Douglas A., “Marketing Your
Product”, Self-Counsel Press, 2003, pp. 53-58, 79-83
• Jackson, Ralph W., “Sales and Sales Management”,
Prentice Hall, 1996, pp. 50-65
• Kotler P., “Principles of Marketing”, Prentice Hall,
1994, pp. 6-11, 535-539
• Louis E. Boone, David L. Kurtz, “Contemporary
Marketing Wired”, The Dryden Press, 1998, pp.47-49
• Tony P., “Strategic Marketing: An Introduction” New
York Routledge, 2000, pp.47-48
Marketing
• Marketing is not only a sale – “selling”
and “promotion” – but in the new sense
of satisfying customer needs
• Marketing is a social and managerial
process by which individuals and groups
obtain what they need and want through
creating and exchanging products and
value with others
Marketing – Four Ps
•Product
•Price
•Promotion
•Placement
Marketing - Product & Price
• Product
– The product management and product
marketing aspects of marketing deal with
the specifications of the actual goods or
service, and how it related to the end-user’s
needs and wants
• Price
– This refers to the process of setting a price
for a product, including discounts
Marketing - Promotion & Placement
• Promotion
– This includes advertising, sales promotion,
publicity, and personal selling, and refers to
the various methods of promoting the
product, brand, or company
• Placement
– Placement or distribution refers to how the
product gets to the customer; for example,
point of sale placement or retailing
Case – iPhone 3G
• Please apply marketing Four Ps
on Apple’s iPhone 3Gs
Source: www.apple.com
Marketing 7Ps ( 3 more)
• People
– Any person coming into contact with customers can
have an impact on overall satisfaction
• Process
– This is the processes involved in providing a service
and the behavior of people, which can be crucial to
customer satisfaction
• Physical Evidence
– Unlike a product, a service cannot be experienced
before it is delivered, which makes it intangible
Product
• A successful product must benefit your
customers
– Identify the need of your customers
– Understand your customer’s perceived
needs
• e.g. Sofa is not just a chair
or a piece of furniture; it
provides comfort as well as
reflecting personality and
lifestyle
Source: www.yanhodesign.com
Product - Product Value
• Interest Value
– The pleasure derived from using the product
• Identity
– Personality and lifestyle
• Risk
– Possibility and importance of a bad
purchase
• Packaging
– Minor in the past; important in today
– Protection, attraction, transportation and
promotion
Example - Packaging
• Functions of the
product package
– To attract target
customers
– To identify the
product
– To keep the product
together
Example - Packaging
• Functions of the
product package
– To provide a
description of the
product function
– To protect the
product
Product - Product Value
• Branding
– Name, symbol, or design to identify your
products from those of your competitors
• Helps customer identify your product
• Protect your product features from imitation
• Build a corporate image
• Example: A BMW’s new Mini, you could get a bigger car at
lower price, but that would be zero-prestige low-priced car.
People will pay more for the small Mini instead. This is
luxury defined, being able to pay extra for style
Price
• Pricing is an ongoing concern
• Pricing relates to industry supply and
demand
• Pricing relates to customer perception of
the product benefits
• Today’s pricing strategies need to
combine hard data from an activitybased cost system with soft data from
marketing
Price - Price Structure
• Unit Cost = (Total Variable Costs + Fixed Costs) /
Units Sold
–
–
–
–
Total Variable Costs = $10,000
Fixed Costs = $10,000
United Sold = 5,000
then Unit Cost = $4.0 per unit
• Fixed cost represents the overhead expenses that
don’t change with the volume of work (e.g rent,
depreciation, insurance and administrative expenses)
• Variable cost represents expenses that can change
based on the volume of work (e.g. material, labor,
overtime pay and commission on sales)
Price - Price Structure
• Markup
– Selling Price = Unit Cost + (Unit Cost x Rate
of Return)
• Selling Price = $4.0 + ($4.0 x 15%)
• Selling price = $4.60
– Markup = [(Unit Price – Unit Cost) / Unit
Cost] x 100%
• Markup = [(4.6 – 4.0) / 4.0] x 100%
• then Markup = 15%
Price - Price Structure
• Margin
– Selling Price = Unit Cost / (1 – Desired
Return on Sales)
• Selling Price = $4.0 / (1 – 13%)
• Selling Price = $4.6
– Margin = [(Unit Price – Unit Cost) / Price] x
100%
• Margin = [($4.6 – 4.0) / $4.6] x 100
• then Margin = 13%
Price - Pricing Strategy
• Profit Maximization
– Setting a price level to attain the highest
possible current profit
• Market Share
– Pay attention to your competition and set
your price to obtain market share
– Of course this would happen when
competitive products are similar and where
the market is price sensitive
Price - Pricing Strategy
• Obtain ROI (Return on Investment)
– Establish a price that will provide a certain
percentage return on investment
– Such as 10 percent ROI after tax
• Price Skimming
– Setting a high price to maximize early cash
recovery before catering to more
price sensitive segment of the
market
Delivery
• Bring your product to your target
customer or market
• Make your product available at a time
and place that is convenient to your
target customer
• Make it easy for your customer to buy
Delivery - Methods
• Producer -> Customer
– The simplest and most direct marketing
channel
– From producer to customer
• Open markets – fish markets, meat and fresh produce
markets and flea markets
• Door-to-door
• Trade shows
• Street vending
• Product inserts
• Internet
Delivery - Methods
• Producer -> Retailer -> Customer
– Department stores
– Manufacturer’s sales representative
• Independent salesperson who distributes products to retailers
• Producer -> Wholesaler -> Retailer -> Customer
– Small producers sell to wholesalers who then sell to small
retailers
– This approach allows indirect contact between thousands of
producers and retailers
• Producer -> Agent -> Wholesaler -> Retailer ->
Customer
– Agent’s main function is to bring buyers and sellers together
Delivery – Distribution Consideration
• Customer
– Number of customers
• When we have a large number of customers, we may need
a go-between (or middleman) to serve them
– Purchasing patterns
• If customers buy on a frequent basis, a greater number of
go-betweens is required. E.g. drinks and sundries
– Geographic dispersion
• Producers may set up their own sales outlets in densely
populated areas, but use go-betweens in less concentrated
areas
Delivery – Distribution Consideration
• Product Characteristics
– Perish-ability
• Perishable products suitable for direct or short distribution
route to the end user
• E.g. fresh produce and fashionable goods
– Product Value
• Products of high value or custom-made products are
generally sold directly to the customer
– Convenience Goods
• Products such as staples, impulse goods, and emergency
supplies require a go-between to give the product
maximum exposure
Quality
• Today’s customers have high expectations and they
are managing their consumption more carefully
• The customer defines quality, not the manufacturer.
If you know what your customers want and what
influences them, you’ve got the competitive edge
• Customer demand more than just a fair price; they are
seeking added value. Value is the customer’s
perception of the balance between the quality of
goods or services that a firm provides and their price.
– Example: Lexus and Infiniti are in vogue because they
emphasize quality and value
Quality
• Quality consists of the capacity to satisfy
wants
(Edwards C.D., “The Meaning of Quality”, Quality Progress, Oct. 1968)
• Quality is the degree to which a specific
product conforms to a design or
specification
(Gilmore H.L., “Product Conformance Cost” Quality Progress, June 1974)
• Quality is the degree of excellence at an
acceptable price and the control of
variability at an acceptable cost
(Broh R.A., “Managing Quality for Higher Profits”, McGraw Hill 1982)
Quality
• Product Quality
– Performance
• How well a product performs the task it was designed to do?
– Durability
• How long the product will last?
– Features
• What special features does the product have which makes it
superior to competitive offering?
– Reliability
• Can one expect the same kind of quality every time that the
product is used?
– Fit and finish
• Does the product look and feel like a quality product?
Quality
• Service Quality
– Tangibles
• Do the physical facilities, equipment and appearance of personnel
associated with the service promote confidence in the quality of
the service?
– Reliability
• Is there evidence of an ability to perform the promised service
properly the first time?
– Competence
• Do the personnel possess knowledge and skill and have they an
ability to convey trust and confidence?
– Communication
• Are customers kept informed about the service offered in the
language they can understand? Do the providers of the service
listen to what the customers have to say?
Quality – Customer Satisfaction
• Quality is usually referred to several critical
dimensions that can be identified and
measured, such as number of defects,
durability and reliability
• Quality also includes the intangible
components of customer satisfaction, the
ability of a good or service to meet or exceed
buyer needs and expectations
• “Quality is what your customer says it is – not
what you say it is. To find out about your
quality, ask your customer.”
(Feigenbaum A.V., Quality Management Consultant)
Quality – Customer Satisfaction
• Kano’s model of customer satisfaction
Delight
Immediate
happiness
Not
unhappy
Disappointed
Customer Satisfaction
excitement
performance
unspoken
basic
expressed
expected
Actual Product
Performance
Quality – Customer Satisfaction
• Kano’s model explains that for some
customer attributes, customer
satisfaction is dramatically increased
with only a small improvement in
performance, while for other customer
attributes, customer satisfaction is
increased only a small amount even
when the product performance is greatly
improved
Q&A
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Thank You !
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