Transcript Marketing Mix

New Paradigm for Marketing
Wong Lip Wih, B.Pharm, MSc, PhD
Marketing
A social and managerial process whereby individuals
and groups obtain what they need and want through
creating and exchanging products and value
Marketing Process
1. Analyzing market opportunities
2. Selecting target markets
3. Developing the marketing mix
4. Managing the marketing effort
The Marketing Process
• First through market segmentation, targeting and
positioning, the company decide which customer it will
serve and how.
• It identifies total market, divide into smaller segments,
select the most promising segments to be focus & served.
• Next company design best marketing mix (4 Ps), need
engages in marketing analysis, planning, implementation
and control.
Marketing Process
The four Ps of the Marketing Mix
Content of a Marketing Plan
• Executive Summary
• Current Marketing Situation
• Threat and Opportunities Analysis
• Objective,issues &STP (segemntation, targeting, positioning)
• Marketing Strategy (using 4P aspects)
• Action Programs (using 4P aspects)
• Budgets
• Controls (how programs implemented &contigency plans)
Era of Marketing
1. The Age of Early Man
• Basic needs for food (hunting)
2. The Age of Agriculture
• Cultivation, (plants, animals)
3. The Age of Machinery
• Machines invention
• Working in factories
Era of Marketing
4. The Age of Service
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Banking, hotels
Personal Computers (PC)
Information Technology
Technology driving productivity
5. The Age of Creativity
• Technology driving creativity
• Era of participation/connectivity
• Shift of paradigm
Segmentation
• First step in the making of marketing plan.
• Geographic
– Urban
– Surbarb
• Demographic
– Age
• Psychographic
– Behavioral (Regular/unplanned purchasing)
– Lifestyle (Brand minded)
Segmentation
• Member within segment do not know each other.
• Segmentation is done by company in a vertical way (top to
down).
• High budget high impact marketing
– Costly market resource
Segmentation → Communitization
• Conventional segmentation (geography, demography,
psychography, behavioral).
• New marketer must form community or utilize on community.
• Community = group of people with same interest/value
(segment member interest differ).
• Communitization
– Formed horizontally (segmentation formed vertically)
– Low budget high-impact marketing
– No market research etc
– Self maintenance
– Offline (e.g. Harley Owner Group)
– Online (e.g. Face Book)
– Hybrid (Honda Tiger mailing list)
The Value of Community
• Sarnoff’s Broadcast law
– Value obtained from a broadcast is proportional to
audience (N) i.e. N (e.g. N = 5)
• Metcalfe’s Net Work Law
– Value obtained from a community is proportional to the
square of the number of people in community (N) i.e.
N2 (52 = 25)
• Reed’s Community Law
– By utilizing different communities (exp several
networking) the value obtained can be exponential, so if
the audience in the communities N, the value is 2N (25 =
32)
The Value of Community
• In radio/TV broadcast, information is one way (no
interaction) → Sarnoff Law.
• In e-mail, there is interaction, transfer of information is
increased → Metcalf’s Law.
• In face book (for e.g.) there are interaction between
networks, so transfer of information is increased even
more → Reed’s Law
• Communitization is according to Reed’s Law
Targeting :
• The next step offer segmentation is choosing which
segment we serve → Targeting.
• Target market can be one or more segment.
• We need to do targeting as our resources are limited
(Fitting Strategy).
• If resource limited, can target one or few segment only
(niches).
• A larger company might offer complete range to serve all
market segments.
Targeting :
• Criteria used in targeting :
– Market size determines the number of consumers.
– Market growth – even if market size still small, growth
can be prospect.
– Competitors situation – be careful when there are
already many strong competitors.
– Our competitive edge – all there factor above can be
ignored if we have good competitive benefits.
Targeting → Confirming
• Target market usually determined by market size, market
growth, competitive landscape).
• Now is not targeting but confirming.
• After identifying several communities, we confirm which
community to join according to their :
– Relevance (relation, same interest/values)
– Active level (how active is the community)
– Number of community network
• E.g. Face book.
• Also can form our own “community”
– Invite relevant people
Positioning
• Arranging for a product to occupy a clear, distinctive and
desirable place relative to competing products in the mind
of target consumer.
• Toyota’s economical Echo states “At 41 mpg, it’s not you,
it’s the car”.
• Lexus avows “ the passionate pursuit of excellence”.
• Luxurious Bently promises”18 handcrafted feet of
shameless luxury”.
• In positioning product, a company must identify its
competitive advantages either by
– Charging lower price or
– Offering more benefits ( to justify higher price).
Positioning Statement
To target group, brand name is the brand of frame reference
that benefits, points of difference because of reason why
Example
To those at risk of a CV event who benefit lipid lowering,
Pravachol is the brand of statin that provides the optimal
balance of proven, complete efficacy and safety because of
it’s LDL lowering greater than 90 % of patients will get to
NCEP goal
Positioning → Clarifying
• In conventional term, positioning is how we want the
customers to perceive our products.
• Example in same product category Volvo = safety, BMW
= ultimate driving machines, Mercy = symbol of luxury.
• Positioning can change with time, affected by various
factors.
• By clarifying, we clarify sharper further our product
character, continuously.
• Not just slogan / tag line, but clarifying your persona.
• Clarifying can be self process within community.
Positioning → Clarifying
• Example : MAC versus PC (Apple versus Window).
– Personalified by characters of inventors (Steve Jobs &
Bill Gates)
– Virus version (PC easily infected by virus)
– Restarting version (PC 'hang' easily)
• Example : Airbus A 380 series of advertising.
– Greener (Green Forest version)
– Cleaner (Island with blue sky)
– Smarter (Swimming dolphins)
– Quieter (Fishing on a lake)
Strategy for winning the mind share
• In strategy, we need to have customer knowledge.
Segmentation
Communitization
Targeting
Confirming
Positioning
Clarifying
• 3 Cs to win the mind share.
Tactics for winning market share
• If strategy is at Strategic Business Unit (SBU) level,
tactic is at operational level (daily activities at market).
• In tactics, we must have competitor knowledge.
• Tactics consisit of:
Selling
(capture tactic, transaction oriented)
Marketing Mix
(product, price, place, promotion)
Differentiation
(context & content)
Coding
Crowd Combo
Commercialization
Marketing – Mix → Crowd Combo
• Market has turned into crowd.
• Crowd = more people oriented (individual contribution
play more role now).
• Community = people with same interest / value while
crowd = individuals.
• Product
Marketing Price
Mix
Place
Promotion
Co-creation
Currency
Communal Activation
Conversation
Crowd Combo
Marketing – Mix → Crowd Combo
• Example : Frappuccino launch in Shanghai Starbucks.
• Launched by Starbucks (Shanghai) in 2007.(bottling by Pepsi)
• A film “A Sunny Day” short movies shown in train station.
• A few minutes segments (40 days).
• Communitizing the crowd (different individuals passengers).
• They will now have same interest (watching to the end episode).
• Crowd will then turned into confirmed community.
Differentiation → Coding
• Differentiated in content (what is offered) and context (how it is
offered) supported by good infrastructure (enabler to offer) in
the form of technology, personels and facilities.
• Differentiation can be copied by competitor.
• Customers blurred with our differentiation.
• Need to encode differentiation into DNA of product or
customers.
• Example : DNA 11 case study (personalized art)
– www.dna11.com for size, color preference input
– Also kits for genetic information
– Company must now differentiate up to DNA level, more
connected with customers
Differentiation → Coding
• Example : My DNA fragrance.
• Clicking www.mydnafragrance.com.
• Input of personal preference plus sending back DNA
information.
• Will design personalized perfume that is different for
everyone else.
• Every product will be different and the customers, will get
product with personal identity.
KFC Secret Recipe- Guarding the DNA
• Recipe kept in special room & building only
known to 2 persons in whole company
• Recently relocated with heavily guarded security
• KFC employs multi source (supplier) to keep
confidential ingredient information
• It is the “DNA” of KFC
• Authenticity if the key in New Wave Marketing
Types of Authenticity
• James Gilmore & joseph Pine – Harvard Business Sch Press
• Natural Authenticity – derived from the nature/earth, non
synthetic, eg.organic food
• Original Authenticity – originality in design/concept,
eg.iPhone, iPad
• Exceptional authenticity – anything/service of highest
care/standard eg Singapore Girls
• Referential Authenticity – authenticity of referring to a
case/phenomenon eg.Call on Duty (refer to WW II)
• Influential authenticity – inspiring us to do good for mankind,
eg.conflict=free diamond, recycled paper
When Coke Zero meets Silent Disco
• Event organized by Embassy club in collaboration with
Coke.
• At Carnival Beach,Ancol, use Paul van Dyk as DJ.
• Attracted > 25,000 audience (teenager, student, young
professionals).
• Most attractive one is Silent Disco
– Make use of wireless headphone
– Clubbers dance in ‘silent mode’
• Silent = zero here as if no music loudness and no sugar
When Coke Zero meets Silent Disco
• Good example of experiential connector
– Event based experiential connector (e.g. Coke Silent
Disco)
– Screen based experiential connector (communal see
like movie/TV and personal laptop/handphone)
– Identity brand experiential connector (I like Monday
program by Hard Rock, Victoria Season Fashion
Show sponsorship)
The Law of Honesty
• Explosive growth of communication has made people defensive
about companies trying to sell them anything.
• When a message starts by admitting a problem, people
tend to almost instinctively open their mind.
• With that open mind, we are in position to drive in the positive, which
is your selling idea
– AVIS is only No : 2 in rent-a-cars (---- we try harder)
– With a name like Smucker’s, it has to be good
– The 1990 VW will stay ugly longer (--- A car that ugly must be
reliable)
– Joy. The most expensive perfume in the world
– Listerine fought back Scope’s “good tasting mouthwash” with “The
taste that you hate twice a day”
•
Cautions :
– Your negative must be widely perceived as negative
– Next, you have quickly shift to the positive
– The purpose honesty is not to apologize.
Product → Co-Creation
• Product tend to be “static”, one way direction from producer.
• Co-Creation is more dynamic, interactive, from multi source.
• Cellular phone nowadays customized with different cover,
decorations, wallpapers etc.
• Design of Nokia Communicator (input from customers).
• Components of Nokia from various countries.
• Domino’s Pizza – Big Fantastic Deal (BFD) builder.
– Online order based on customers own recipe
– Can give personalized names for own menu
– All recipe& names listed&ranked on database
– Most creative winner get $ 500 award
– Low budget high impact
Customization vs Customerization
• Customization involves taking initiatives to customize the
market offering e.g. Levi’s sales persona takes the person
measurements and the company customize the jean at
the factory.
• Customerization, the company leaves it to the individual
customers to design the offering e.g. Jean customers may
take their own measurements and add specific features
that they may want, e.g. colorful patches. So company
becomes facilitator & customers moves from consumer to
prosumer
Price → Currency
• Conventional pricing :
– Market based pricing
– Cost based pricing
– Value based pricing
– Competitor based pricing
– Reverse based pricing
• While price is usually stable, currency has greater
flexibility.
• Applicable if product ingredients / spare parts is currency
dependent.
• Airline ticket is good example.
Price → Currency
• Radiohead in 2007 launched Rainbow album with “It’s up
to you” price during Oct – Nov 2007, digital download
offer
– In Day 1, about 1.2 million downloads (3000 unpaid,
remaining pay average of £4)
– In one year, 3 millions copies sold as download
– Extremely big publication and awareness
– After that, Radiohead concert attracted 1.5 millions
audience
– Extreme example of horizontal pricing process
between producer and consumers
Price → Currency
Flexible pricing from advertising at face book
• At face book, can request placement according to our
daily budget
– Pay for click (how much our max bid /click /day)
– Pay for views
• Total bill charged will therefore not exceed our budget.
• In Google, additional cost per action when there is a
sales transaction.
• Low budget high impact marketing, expense paid after
sales is generated.
Innocentive : Crowdsourcing for Solutions
• Set up in 2002, it is a mediators for “Seekers” (Companies
looking for problem solving) and “Solvers” (people/institution
providing solution).
• Already > 160,000 solvers from 175 countries world wide
(60 disciplines).
• Innocentive is an example of Crowdsourcing.
• Crowdsourcing is outsourcing done via various sources
(vendors).
• It is lower cost due to “pay by results”.
• An example of R (Resource) = G (Global)
Innocentive : Crowdsourcing for Solutions
• In R = G business model, access in most important, and not
possession of resource
– We do not need to own various resources (skills,
machinery etc).
– Just need collaborate via internet.
• T-Ford Car (all resources from Detroit) while i Pod, the
hardware from Japan, Korea & USA while the music
contents is from all over world.
Case Study
When David Kills Goliath : Air Asia vs MAS
• MAS established since 1947, Air Asia started Dec 2001.
• Air Asia positions itself as ‘low fare airless’ with tag line
“Now everyone can fly”.
• In fact Tony Fernandez boasted in office an “The smallest
Airline office in the world”.
• Secret is cut down all unnecessary fees
– Pioneer in the online ticketing
– Bypass travel agent fees
– Optional food, luggage, seat position etc
• MAS sales dropped every year, making MAS from “flag
carrier” to “lost carrier”.
Place → Communal Activation
• Place = marketing channel, distribution
– Wholesale
– Retail
• Traditional
• Modern
– Supermarket
– Dept. Stores
– Convenience Stores
• Due to direct contact with consumer,retailer earn >producer
– For e.g. Wall Mart can earn 3 times more than P&G
Place → Communal Activation
• Communal activation = Activating a Community via the
leader/activists.
• Handling activists of the community easier and more
efficient than conventional distribution channels.
• Activists speak common language, understand
anxiety/desire of the community.
• Consumer/community will believe activists more than
distributor.
Example of Communal Activation
• If a musician with no budget wants music production, can
raise own fund find via sellaband
• By singing in at www.sellaband.com, up load music.
• 5000 parts @$10/parts, ’believer’ (fan) can buy parts.
• When $50,000 collected, Sellaband will arrange recording
and production (CD and downloads).
• Believer (fan) will get copies according to parts purchased
(can sell CD themselves above $10).
• Musician, believer and Sellaband all get profit.(win-win )
• Example of Co-creation and Communal Activation (Fan
community as consumers but as distribution channel as
well)
Promotion → Conversation
• Promotion = inform, persuade, remind
– Advertising (non personal promotion)
– Public Relations (maintaining corporate image)
– Personal Selling (personal presentation by sales
force)
– Direct Marketing (phone, email, internet)
– Sales promotion (short term incentives)
• Promotion is top-down, one-two-many.
• Conversation is horizontal, two ways, peer-to-peer,
many-to-many, discussions of common truth.
Promotion → Conversation
• In brand activation company does selling broadcasting
messages, in communal activation, company facilitate
conversation among community members.
• Promotion (e.g. ATL/TV) is still needed, as long as it can
trigger conversation among community (consumer).
• Power of conversation : Citizen Journalism
– Rumour of Steve jobs heart attack
– Ohmy News role in south Korean President election.
– Aceh Tsunami coverage
Obama : The Era of Internal Presidency
• Franklin D. Roosevelt = the first radio presidency, JFK the
first television presidency, Obama = the first internet
presidency.
• Internet played mayor role in Obama Victory.
• www.barackobama.com
– Connected with facebook, Myspace, Youtube, Flickr,
Digg, Twitter, Eventful, Linkedln, Black Planet, Faithbase,
Eons, Glee, MiGente, My Batanga, Asia Av, DNC Party
Builder.
• Application for i phone and ring tone download (free) also
available
Obama : The Era of Internal Presidency
• Obama Store (T Shirt, glass, hat etc)
• Social networking site : my.barackobama.com
– Supporters forum can share and discuss campaign
issue.
– My Blog allow us to tell our own stories.
– Supporters can be sorted by interest or place.
– Contact voters allow us to encourage our friends to vote.
– Fundraising section enable us to contribute according to
our own budget as well as our friends during fundraising
Selling
→ Commercialization
• Selling : 'capture' tactic
– Feature selling
– Benefit selling
– Solution selling
• Selling in one way (Producer → Consumer).
• Commercialization is two way exchange of value, is not
direct but via ‘engagement’ at same / horizontal level.
Selling → Commercialization
• E.g. Product RED
– To get certified (use RED logo) must fulfill certain
environmental criteria.
– Part of sales of product will be donated to Global Fund
(African HIV Patients).
– In 3 years, $100 millions generated in Global Fund.
– Compared to direct donation, with product RED logo, we
can encode our product/company with DNA of
“conscious image”.
• E.g. Victoria Secret’s Fashion Show (VSFS)
– Here VS ties emotional relations with it’s community via
annual Fashion Show.
– Annual parade of VS angels
– Display of bra/lingerie costing millions dollar
The Hunt for Pirates of Caribbean by Volvo
• “The Hunt” is a competition program by Volvo in 2007 at
times of “Pirate of Caribbean – At World’s End” film release.
• It is an online and offline puzzle competition globally
organized in 22 countries.
• Map and information at www.volvocars.com/thehunt
as well as at local dealers.
• Create huge amount of fans, discussion forum.
• Volvo has done Co-creation, Currency, Communal Activation,
Conversation and Commercialization simultaneously.
• Volvo has successfully encoded adventure/fun DNA ratio the
XC 90 SUV