Introduction: What is Marketing?

INTRODUCTION: WHAT IS MARKETING? DEFINITIONS OF THE TERM “MARKETING” the promotion and selling of products or services: “the aim of marketing is to make selling superfluous” –Peter Drucker is used to create the costumer, to keep the costumer and to satisfy the customer an organizational function and a set of process for creating, communicating and delivering value for customers and for managing customer relationships in ways that benefit the organization and its stakeholders the achievement of corporate goals through meeting and exceeding customer needs and expectations better than the competition MARKETING IN PRACTICE brand management product management sales management key account management social media management marketing and research relationship management strategic management public relations management RINCIPLES OF MARKETING marketing concept= management philosophy: the goals of a company can be achieved best by identify and satisfy the needs and wants of their customers - key components: customer orientation, integrated effort and goal achievement - limitation: the pursuit of customer satisfaction is only one objective to be considered, the results of the concepts therefore could be only short termed orientations: marketing orientation -> create a product for an existing demand: the focus lies on customer needs to identify potential marketing opportunities and the market potential (the creation of products should lead to customer satisfaction) production orientation -> creates a demand for an existing product: the focus lies on production capabilities, which define the business mission and the manufacturing products (some selling strategies are often held too aggressively) market driven vs internally orientated businesses market driven organizations know about customer choice criteria and adapt their marketing mix based on this knowledge, which means they segment their customers demographically; the strategy is based on trying to understand the competition and search for existing (= latent) markets it’s important to strive for competitive advantage internally orientated businesses focus on convenience, price and performance; segmentation occurs by product; they cherish status quo and ignore competition efficiency vs effectiveness efficiency is defined by doing things right; business processes are managed to a high standard; mainly concentrating on inputs and outputs effectivenessis a description for doing the right things; it’s about making correct strategy choices and making the right products for attractive markets customer value and satisfaction customer valueis created by maximizing perceived beliefs and minimizing perceived sacrifices satisfaction is one of the main outcomes from a well working marketing strategy, it’s created by maximizing the performance of the product and to outstrip customer expectation effective marketing mixes consists of the 4 p’s: product, price, place, promotion has to ensure customer needs & creates competitive advantage opromotional mixoadvertising, personal selling, sales promotions, public relations, direct marketing, online promotion MARKETING PLANNING marketing planning is a part of strategic planning purpose: ensure that the product continues to satisfy customer needs or also the allocation of resources to each product planning questions: “where are we now?”, “whereare we heading?”, “where would we like to be?” process: finding and deciding the business mission(= statement of purpose) conducting a marketing audit: systematic examination of a business marketing environment -external (= macroenvironment) and internal (operating results, strategic issues analysis, marketing mix effectiveness, ...) SWOT analysis: method of summarizing the results of the marketing audit, internal issues (strengths and weaknesses) and external issues (opportunities and threats) setting marketing objectives: strategic thrust(defines which products to sell in which markets& the strategies for selling them) and strategicobjectives(decision on which products should be build, hold, harvest or divest BCG matrix) deciding on a core strategy: components: target markets(= market segment), competitortargets, competitiveadvantage)internally consistent marketing mix: based on understanding target customers and competition4 P’s organizing and implementing(needed to support the strategies) control(to evaluate and analyzethe results) problems: high opportunity cost, lack of reward systems, lack of relevant information, cultural and personality clashes, lack of managerial knowledge and skills recommendations for solving upcoming problems: attain senior management support, alignment between marketing planning and culture of the business, creating a reward system, depoliticize outcomes, clear communication 2. Lecture. Strategic triangle. 3Cs. Company. Consumer. Competitor. Changing context of consumer behaviour Global consumer culture is shaping cultural values and the extent to which consumers conform to cultural norms can significantly affect how individuals respond to marketing activities Marketers should understand both local and global markets nuances. Greater social mobility and travel facilitates exposure to different cultures. Co-creation: Brands initiate dialogue with costumers. In essence, the market becomes a forum which facilitates the value creation. Culturre of posting and digital presence facilitates stronger social connections. Purchasing behavious changes with environment (more convenient food -> obesity) Consumers are individuals who buy products or services for personal consumption. Why do they buy? Depends on the personality and inner triggers. Who buys? #Porters5forces Initiator - Influencer - Decider - Buyer - User An implication of understanding who buys is that identification of the roles played within the buying centre is a prerequisite for targeting persuasive communications. As the previous discussion has demonstrated, the person who consumes the product may not be the most influential member of the buying centre, nor the decision-maker. Even when the user does play the predominant role, communication with other members of the buying centre can make sense when their knowledge and opinions may act as persuasive forces during the decision-making process. Research has suggested that the actions of others have a strong influence on individual behaviour; they imply that consumers can influence and be influenced by the behaviour of others on a mass scale How they buy Consumer decision-making process 1. Need recognition/ problem awareness (difference between the current and desired situation should be sufficient to proceed to the next stage; moreover the importance of purchase should be reasonable e.g. not too small) 2. Information search (internal search -> external search - personal+ commercial sources). Infro search is facilitated by internet usage. 3. Evaluation of alternatives 4. Purchse 5. Post-purchase evaluation of decision The Standard Economic Theory Assumptions: Consumers behave rationally and they have all the iformation about options. Customers assess options relative to their net worth. Welath influences utility. So people pick the best option to maximise their utility subject to budget constraint. Very often consumers don't act rationally due to uncertainty. Assumptions from the economic theory are very limited (behavioral approach - opposed to economic theory we assume that there's a limited processing capacity -> simplified decision methods. Consumers are subject to stimulus which leads to responce. e.g. specific product is a stimulus which causes behaviour of a consumer. but what happens within consumer's brain is a big question). Economic theory: maximise utility Behavioral approaches: don't have certain way of explaining consumer's behaviour Understanding Consumers Customers: Where do consumers buy? in which stores exactly HOW do they buy? offline/online WHAT are their choice criteria? WHO is important? not exactly the consumers who influence the decisiion about the buying (family members and their preferences) WHEN do they buy? (Anlass) Drive: Actual state <-> Desired State. Increasing Actual-Desired Gap. Companies build up on the desire of consumers. Marketing: Creating Needs & Desires Decision-Making Models (I). John Dewey (1910) 1. A difficulty is felt (need indetification). We're confronted with specific difficulties. There's need to go to the groceries. 2. The difficulty is located and defined. 3. Possible solutions are suggested. Thinking of options: stores or delivery. 4. Consequences are considered. opportunity cost. 5. A solution is accepted. Habitual: Routine purchases (milk - same brand, butter, and we don't think about them anymore) vs. New: impulsive (somebody eats ice cream and I buy it without second thought) limited decision making (not relevant or important to us, we might not even think about it) extensive deicion making (quality, expenses, information about goods) If it's a habitual or unimportant product (impulsive), we skip stages of deicions making. When a product is expensive, we go through all the stages of deicion-making. So the number of stages depends on the time of the purchase. Consumer involvement Decision-Making Models (II): Extensive 1. Need recognition/ problem awareness Functional need (as if a very important thing was broken, e.g. a phone) Routine depletion (when we don't have usual things) Emotional/ psychological need (for a specific movie or what we aware of and we want to fullfil) 2. Information search external sources internal sources (memory!) Awareness set: all brands in a product category that a consumer is aware of (we can evaluate different alternatives) 4. Evaluation of alternatives High involvement >> extensive evaluation Low involvement >> limited or no evaluation EVOKED SET: all brands consumer considers for purchase CHOICE SET: real options 5. Purchase availabilty (in stock) waiting time, opening hours 6. Post-purchase evaluation of alternatives Positive/ negative disconfirmation #Cognitivedissonance (look for satisfaction/ dissatisfaction) additional video-task about this phenomena. It's about inconsistency of two thoughts. E.G. SMOKING: "I smoke cigarettes" "Smoking is unhealthy". Ways of resolving dissonance: 1. Change a thought! 2. Change behaviour! 3. Add a thought! ex.: I smoke< but I also do many other healthy things. 4. Trvialize the inconsistency - it's not a big deal. Consistency is a way of understanding a world - that's why we want to restore incosistency. It's also physically uncomfortable to experience cognitive dissonance. It's a moment when you feel you have a choice - that's when you feel uncomfortable because you are made to do smth against your own beliefs (like writing an essay on the topic you don't agree to). But if you feel you don't have a choice - than it's no problem. Negative consequences: Decisions Models (III) High Involvement The Fishbein and Ajzen model of reasoned action (purchase is dependant variable) !!! Subjective norms (good/bad brand, what social group thinks) Low involvement The Ehrenberg and Goodhart repeat purchase model !!!! Post Purchase Evaluation Marketing Mix (performance, ads, quality) -> Perceived Performance of Product/ Service (should be the same or better) Customer Expectations -> Customer satisfaction -> Loyalty Willingness to Pay Word of Mouth (+ next time we can ask for a higher price). loyal customers also buy more often Managerial Questions 1. Need recognition How does the customer recognize a need for the product? (prior or on the spot) 2. Information Search How does the use search for information? Which sources are credible? What are key touch points? 3. Alternative evaluation What is the set of alternatives considered? How are alternatives evaluated? 4. Purchase How was the final product purchased? 5. Post Purchase evaluation The Buying Centre - 5 different roles B2B - more than one person is involved into the decision-making process and most often it's a very formal process Potential Members of the buying centres. Hard to identify who has which role. One person can execute all the roles. Roles: 6. Initiator - recognises needs 7. Influencer - recomendations 8. Decider - money-giver 9. Buyer - executes the buying process 10. User Influencer: reference Groups "...group of people that influences an individual's attitude or behaviour" Membership Groups: Member belongs to the reference group, which influences beliefs about suitable, acceptable and/or impressive consumption choices Aspiration Groups: Individual wishes to belong to the reference group, seeks to adopt attitudes and/or lifestyle. Influence of reference groups on individuals: Socialisation (family, culture), Self-consept, conformity, social comparison. Brand Community: Harley Davidson Classification of Consumer Motifs: Primary motives & secondary motives Rational motives & emotional motives Conscious motives & dormant motives Context can make a product more utalitarian and more hedonic (Mercedes - hedonic one) Depending on the goup (utalitarian or hedonic) one can adjust th brand campaign Choice criteria: Technical: reliability; durability; performance delivery; style; convenience... Social: Status of product; Social belonging; convention; fashion; norms... Economic: price; value for money;running costs; residual value. Personal: self-image; risk reduction; ethics; emotions; motivations... 3. Lecture. Competitors Agenda 1. Industry attractiveness Competitor identification: industry Industry - a groupof firms that market products/servies that are close substitutes for each other. ! an industry-based definition of competition might be too narrow Competitive structure: #Porters5forces Porter Model 1. Intensity of rivalry within the industry competitors 2. Threat of new Entrants (for some markets not relevant, in some established industries: like automobile industry, exception for Tesla). Threat of new entrants is determined by entry barriers: capital requirements (big money needed like with train industry; in Austria - Westbahn und ÖBB) economies of scale (if there're already companies to cover the demand, than it is harder to enter market ) switching costs (e.g. when a person has a contract with a mobile provider, sometimes it is not money costs but psychological costs like with switching from iPhone to Xiomi) brand identity (like with apple and coca-cola - they have large loyal audience) patents government policy (the stricter the government policy, the lower the threat of new entrants) CASE STUDY: When Nespresso introduced capsule machines, Nestle and Nespresso all of a sudden became rivalries on the market of coffee and Melitta was their rival too because it produced filters suitable for an absolutely different type of coffee-machine. #substitute is not the competing brand in the same industry, it is a product that can be used alternatively for treating the same problem. 3. Threat of substitutes Buyer's willingness to switch relative price, performance (reusable capsels as a change for normal capsules) switching costs 4. Buyers (bargaining power of buyers) Factors of buyer power high number of suppliers/small number of buyers (high bargaining power of customers) level of product specialization (standardized): ex. with some super-local items like vintage comics collection possibility of backwards integration - supplier isn't needed, e.g. during corona crisis peple started backing their own bread 5. Suppliers (bargaining power of suppliers) small number of suppliers/high number of buyers (during the lack of goods, like COVID and masks - prices are ridiculously high) level of product specialization (specialized) possibility of forward intergration (supplier produce the goods of its buyers; intel starts producing computers) ... #CompetitorAnalysis 5 different step 1. Identifying Competitors (we already did it with 5 forces model). Product form/ products substitutes/ generics/ new entrants e.g.: VotivKino and big cinemas - indirect competitors/ other ways of entertainment/ home cinema/ DVDs 2. Auditing Competitor Capabilities (analysis of strengths and weaknesses of our competitors) Evaluation of competitor's resources: financial/ technical capabilities (like Swarovsky and their crystals) / managerial (like Steve Jobs and strategic thinking with Apple)/ marketing assets (Coca-Cola - strong brands with market capabilities)/ S+W (strengths & weaknesses) Strengths and Weaknesses analysis: Market leaders and market followers. Example: Brenchmarking means that we compare two companies and evaluate them using a number of criterias like costumer's loyalty and satisfaction, you name it. 3. Infer #CompetitorsObjectives /Thrust - identifz goals/directions Build: Increase sales/ market share Market expansion Winning market share M&A/ Strategic alliances (buying speicfic brands) Hold: Defend current position Monitor market (reacting competitors to defend position) Confronting competitors to defend position Niche: pursue small market segment (Porsche, Jaguar) Market segmentation Focused Research & Development Differentiation Think small Harvest: improve proft margin (not interested in introducing technologies; just pursue money without investing) cash-cow Eliminate R&D Cut promotion Increase price Narrow product line Divest: company terminates specific product or SBU (strategic business unit) CEO of Lufthansa, Carsten Spohr: 'After the corona-crisis we think whether we want to reintroduce commercial business flights' Withdraw quickly to minimize costs It is important both for us to determine our strategic objectives and also know our rivals' strategic objectives. #StrategicThrust introduced in 1957 by Ensos Framework of how companies grow. Two dimensions - Products and Markets. Market penetration strategy: achieved with strong marketing activities - grow achieved at expenses of competitors Market development: internationalisation - bringing sucessful products to a new foreign market Product development: new product for existing customers Diversification: new products go to new markets (iPod) 4. Deduce (выявить) Competitor Strategies Target segments/ differential advantages Competitive adavantage - the achievement of superior performance through differentiation to provide superior customer value, or by managing to achieve lowest delivered cost. The very same idea: you better products (superior performance) than competitors or alternatively cheaper. #Porter #genericstrategies #competetiveadvantages Niche strategy might be base either on cost or differentiation. #differentiation #costleadership #nichestrategy competitive base competitive scope Differentiation Leader: your goods are best on a very large market Differentiation Focuser: same but small sector Cost leader: very cheap products on a broad market Cost focuser: same but niche Many industries can only take very few cost leaders. e.g. airlines - a lot of diferentiation leaders, but just few cost leaders Ryanairs, Easywings. Source of Advantage Differentiation: Place (smell in stores, Massimo Dutti) Product Price (luxury goods) Promotion Costs: offers location timing (Zara, produces items 6-8 weeks before they're in store -> cost advantages) capacity usage policy decisions relationships institutional factos 5. Estimate competitor Response patterns (reaction to our actions) Backward integration - buyer produces product of its supplier. car company begins to produce wheels. Forward integration - supplier produces product of its buyers. Company that produces wheels suddenly produces cars. 4. Lecture. 3CS Company. 22.03. SWOT analysis The marketing environment SWOT: Strengths, Weaknesses, Opportunities, Threats Internal: controllable. Among strenghs can be strong brand recognition Weaknesses can steam from the concurent's competitive advantage, e.g. higher cost structure External: not controllable Opportunities: to take advantage of the opportunity the management must be skillful and recognize opportunities and act accordingly when they arise. e.g. new technologies Threats:Macro/Micro-Environment Screening Company is within two circles: Micro-environment influences the company and the company influences factors; customers, competitors, distributors - retailers, suppliers. Some of the factors are part of marketing triangle. Macro-environment - competitors and customers: influence the company directly and vice versa. Helps to structure the situation where the company is. Macro-Environment ( #PEESTAnalysis ) in most cases company doesn't chenge macro-environment Political/legal: EU regulations, national laws Ecological/physical: scarce resources, global warming, green products Technological: New processes, new products, new materials etc. Social/cultural: Age distribution, household structure, lifestyle changes - like shift in priorities during COVID etc. Economic: economic growth, interest rates, unemployment etc. Peter Drucker contest: https://www.druckerchallenge.org/home/ Corona pandemic posed threats to entertainment industry and luxury industry (elastic demand/ hedonic goods) Priming - behaviour influenced by repeating messages. Our brain perceives an event or information in the context of a previous event or information. In psychology, this is called priming, the precedence effect or fixation of an attitude. Here's a movie example - the tethering effect (also a type of priming) from the movie Focus. In order to get the right person to choose a certain number, the characters would slip the number 55 under their noses all day long. After the age of crises there's gonna be a trend for local products. Internal/External Audit Threats >> Opportunities (conversion strategy) Weaknesses >> Strengths (conversion strategy) Strenghs >> Opportunities (matching) Crucial question: Which outside trends might affect my business? And how? Which strenghs/weaknesses are relevant to success? If they're essential in my industry, I have to convert them or go to another industry. Researcher of trends: Mathias Holtz for example Germany has a repuatatiion of quality that's why some companies are trying to think of a German-sounding name of a company to create stronger brand 29.03 5. Marketing research Marketing research industry Global turnover 2018 - 47.3 Blln US Dollars Global revenue of market research from 2009 to 2015 US: 44% UK: 14% Germany 6% France 5% China 5% Other 26% Selected Marketing Research Providers Big international ones: Nielsen, GfK (German), Kantar TNS, Ipsos Austrian: Mindtake - online pannel provider where Uni WIen alumna work there, Marketmind Agenda Marketing Research Process: Research designs/ data collection methods Samples Marketing Research Process: 1. Research Planning Briefing (relevant bc Marketing Research Agency want to know what do they have to do) Research Proposal (what's the problem? what is our research objective?) 2. Study design Research Design; decision of the kind of research (qualitative/quant./experimental) Sampling: 2nd decision 3. Data collection Data Collection Method (CATI - computer assistant telephone interview, CAPI - computer assistant personal interview, etc.) Questionnaire Design 4. Data Analysis & Interpretation Quantitative: statistical analysis Qualitative: content analysis (analysis of the content of the interview) 5. Report & Presentation -> input for strategic & operational decisions (implications and recommendations) Contrasting MR purposes Types 1 type is descriptive - no analysis, usually in a form of survey, very large one. samples are large - we need our statistics. Relevant to Benchmarking: is the practice of comparing business processes and performance metrics to industry bests and best practices from other companies. Dimensions typically measured are quality, time and cost. 2 exploratory: clarification of ambiguous situations, plague box where we want to shed light text-based. finding reasons for managerial decisions. causal studies - looking into the influence of smth. 3 causal MR: cause is an independend variable and the effect is a dependend variable. the goal: compare relative effects of multi sample - medium we do not necessarily need a represantative pool to look into cause-and-effect. compare different effects of independend variables on dependend variables. academic research: causal MR - highly relevant Example: causal relationship Positive WOM - word of mouth on Facebook (number of likes) (positive) -> Intention to purchase Brand X H1 (hypothesis): Positive WOM on Fb increases purchase intentions. Difference between the exploritary research where we might want to find out the causal relationships between the two variables but at the beginning we don't have a clue. Examples: 1. Are parents of children aged 0-3 years are familiar with the brands MAM, Nuk and Babylove? >> Descriptive : how many of them are familiar with certain brands 2. Are customers of Zalando satisfied with the usability of the online shop? descriptive 3. How can the usability of the online shop be optimized? exploratory 4. Does the COO (country-of-origin) influence costumers' perception of financial providers? causal 5. Are consumers willing to pay a premium price for "green" products? causal - cause: green products; effect: premium price. Study design Data: quality and reliability Data sources for research: Internal: company account's, current business model, core competences etc. External: PEST, Porter's 5 forces, competitors etc. labaratory is a bit deeper than field. Website for interesting studies in marketing: Euromonitor international. #FMCG - fast-moving consumer goods and services. Primary data: collection methods 1. Survey 2. Indepth-interview 3. Observation 4. Focus group 5. Experiments (eye-tracking with special devices when watching ads) Qualitative vs Quantitative research Quantitative: open-ended questions with what/how/when; can't be quantified (counted); uncovers motivations, feelings, preferences; uncovers in-depth info, relatively low-cost; DRAWBACK: not represantative, interpretation subjective. Qualitative: questionnaire - can be counted; set of answer options to choose between - closed-ended, predefined answer options. can be represantitative and objective; DRAWBACK: can't uncover in-depth/ detailed response, is relatively costly. ex. To what extent are you satisfied with the product?; experiment: how many new cakes sold?; observations: how many enter/walk past? How to decide which to choose? What infrmation is needed? What resources are disposal - time/ money/ skills? If resources allow, a good solution is a combination of both approaches. Focus groups are used for exploritary research and generation of new ideas for products and deeper understanding of consumer's habits. untraditional questions with hidden meaning. DRAWBACKS: external influence: acknowledging of being part of the experiment, pressure from other members of the group, observer interference. small sample size. How to draw a sample? Who is relevant? - depends on the product/service. Sampling frame: list of contacts. Population versus sample We divide We divide the entire population into groups and within these groups we calculate the average response. Goal: minimazing sampling error by choosing correct sampling method Sampling methods Non-random sampling • Convenience Sampling: easy to access, quick, cheap. - we survey people we know. Test effects: Yes. Generalizing: No. • Judgment (Purposive) Sampling: researcher selects population members who are good prospects for accurate information. • Quota Sampling: quotas for key characteristics of population are pre-defined in %, sample is drawn according to these quotas. Quick, cheap, ensures that small subgroups are represented. Based on convenience sampling, hence same drawbacks. • Snowball Sampling: use people to identify other (similar) people. Useful for hard-to-find groups • Simple Random Sampling: each person/company in sampling frame has equal chance of selection. Examples: random digital dialing, random draw from “urn” • Systematic Sampling: starting point randomly selected. Then selection of every kth element • Stratified Random Sampling: population is broken into similar subgroups (“strata”), then a random sample is drawn in each group. Increases efficiency of simple random sampling, as it reduces random sampling error. (Dis)proportional sampling possible. • Cluster Sampling: random or purposive choice of i clusters (e.g. regions), then sampling in each cluster. When we do a random approach, everyone in the population has the same chance to get into the sample; in a non-random approach not everyone has the same chance. 6. Lecture. Marketing segmentation and positioning. 6.04. Which target groups do we have and we want to sell products to? Elements of core strategies. STP: Arena. Segmentation, Targeting and Positioning. (what are our target group and what do we stand for associations) Defining competitive advantages of a company - be percieved better in the eyes of our customers (target group). Positioning defines how do we want to be percieved. Even products of broad demand like noodles are divided into sub-segments. #Segmentation : there's a big market and based on characteristics we put similar costumers into similar market segments. The characteristics of individual customers are understood. The aim of targeting is to divide market into vary homogenous groups that are very different from one another. #Targeting : me aim the most attractive groups of costumers on the market. and we decide on marketing mix strategies for the group we aim at. Agenda 1. How to segment markets. 2. How to select target segments 3. Position a brand in the target segments Market segmentation: the identification of indivuals (or organizations) with similar characteristics that have significant implications for the determination of the marketing strategy (learn by heart). These difference make the difference between marketing strategies of dif firms. B2C: How to segment a market? Profile Demographic: age, gender Socio-economic: education, income Geographic: place of live Psychographic very interesting ones Lifestyle: our tastes & preferences Personality: e.g. extroverts and introverts Behavioural Benefits sought: for a car it maybe comfort, Geschwindigkeit Purchase occasion: Christmas, Ostern, presents and deco - e.g. design matters Purchase behaviour: one and the same prodict can be bought at various places (like magazine at trafik or at metro); how frequent do you buy a specific product, e.g. when a product is on a discount than we tend to buy it more. Usage: different people use products for different purposes; like buying Coca-Cola for cleaning toilets. one can open a specific package in different ways. Perceptions/beliefs/values: Brand Personality Positioning Source: Jeniffer Aaker Some brands reflect our personality, other times we choose brands that attract us. Segmentation variables Some can be esaily measurable others not and they need to be measurable. Substantial for the marketing of the product: should make difference (e.g. gender for market of phones) Accessible: e.g. its hard to evaluate how much people drink alcohol - they will not speak about it Operational, are useful: you can not only find out who they are but also approach and target them per means that they use; one can use specific characteristics for marketing Heterogenous - different from other groups Homogenous inside the group Target marketing: the choice of which market segments to serve with a tailored marketing mix. Segmemt attractiveness Example: segmenting people who encounter a handicap of touchpad and who don't need many functions in their phone, or a segment of elderly people Segment size: large as people grow older Segment profitability: do customers can pay? Entry barriers: are there any other competitors at the market and how loyal are the customers to that particular brand? #Porters5forces Nature of competition: technical advantages etc. It's up to the company which criteria it wants to use. Very often very subjective process. Example. Segmenting the Austrian insurance company, bases its targeting on benefits and beliefs of its consumers. 7 segments. Die Vorsorger DIe Interessierten Die Gesundheitsbewussten Die Individualisten Die Rechner - want a cheap and basic one Die Desinteressierten - just one any smth Die Unrentablen Target marketing strategies Undifferentiated marketing is in 100% unsuccessful. Customized marketing: 1 marketing mix for each of the customers. is effective in B2B. or e.g. coockies help companies to offer customers. Mass customization people can individualize a product fo themselves like with nike. Example: Targeting Positioning the coice of (a) target market, and (b) a differential advantage Objective: create & maintain a distinctive place in the market for a company an/or its products. #4csframework If we have a clear picture of what the brand stands for than it's a successful positioning. The brand shouldn't change much - consistence base. Credible: consumer believes that what the brand says is credible. Competitive: should be different. Perception Mapping Spiderdiagram Benchmarking 7. Lecture. 4Ps, Product strategy, Branding 26.04. Categories, Brands and Variants The Product a product is anything that is capable of satisfying consumer needs. a brand gives a product a distinctive identity through the creation of a name, design or, more usually, some combination of these. definition of brands a brend is a set of mental associations, held by the consumer, which add to the perceived value of a product or service. Concepts of Brand Equity Impact of Branding Why are strong brands important? • Consumer perceptions and preferences • Barrier to competition • High market share, brand loyalty and profits • Base for brand extensions • Quality certification & trust -> Company value Types of Brands Manfacturer Brands (Knorr and Red Bull): are created by producers & bear their own brand name Own-label Brands (Clever and S-Budget): owned by distributers & bear retail brand name Fighter Brands: low-price variants of manufacturer brands Brand Names Family Brand Names: used for all products of the company (Siemens, Dell) Individual Brand Names: do not identify a brand with a particular company (Dove) Combinations: combine the family brand name and individual brand names (Windows, Ferrero Rocher) Co-Branding Product-based Co-Branding Link two or more existing brands from different companies produce a joint product Parallel Co-Branding: join strengths to produce a combined brand Ingredient Co-Branding: combination of an ingredient brand and a manufacturer brand Communications-based Co-Branding Link two or more brands for joint communication purposes 8. Lecture 4Ps, Product Portfolio Management 3.05. Product Mix Total set of brands marketed in a company Product Line Group of products offered by a company that are closely related in terms of their provided functions and benefits Product mix: Width&Depth Introducing New Products Examples: Line Extension. Adding new product versions to an existing product line. Brand Extension - Use of an established brand name for a new brand in the same market/product category. Brand Stretchung - Use of an established brand name in an unrelated market/product category Product Life Cycle: Marketing objectives. Introduction Phase: Strategic Objective: build market share Communication Aim: build awareness, induce trial Product: Basic Form Price: High (Skimming)/ Low (Penetration) Growth Phase Strategic Objective: build market share Communication Aim: brand preference (trial, repeat) Product: Differentiated Price: Lower (Skimming)/ Higher (Penetration) Maturity Phase Strategic Objective: hold market share Communication Aim: Brand loyalty Product: Differentiated Price: Lowest Decline Phase Strategic Objective: harvest/divest Communication Aim: budgets cut/eliminated Product: Rationalized Price: Raising The BCG Growth-Share Matrix The BCG Matrix-Strategic objectives Product Portfolio Management Use and Limitations of the PLC Use: • Product termination • Growth projections • Marketing objectives and strategies over PLC • Product planning Limitations: • Fads and classics • Marketing effects • Unpredictability • Misleading objective and strategy prescriptions Use and Limitations of the BCG Matrix Use • Product Portfolio Management • Managerial Decision Tool • Marketing objectives and strategies for specific product (lines) Limitations • Simplified approach • Competitive activities not considered • Interdependence between products ignored • Division in low/high growth vague GE Model - General Electric Market Attractiveness – Competitive Position Model 9. Lecture A stereo-typical M.C. process Communication objectives Ex. of objectives • Create awareness • Remind and reinforce • Stimulate trial • Position products in consumer’s minds • Correct misconceptions • Provide support for the sales force The Communication Process 4Ps, Market communication Pull versus Push Strategies Classical Communication Tools Sales Promotion Sales promotions are incentives to consumers (or trade) designed to stimulate purchase. Types of Sales Promotion: • Money off • Bonus packs • Free samples • Coupons • Competitions • Premium packages •… Effects of Sales Promotion Direct marketing “The distribution of products, information and promotional benefits to target consumers through interactive communication in a way that allows response to be measured.” Types of direct marketing methods: • Direct mail • Direct response advertising • Catalogue marketing • Mobile marketing • Inserts • Door-to-door leaflets Sponsorship “A business relationship between a provider of funds, resources or services and an individual, event or organization which offers in return some rights and association that may be used for commercial advantage” Objectives: • Gaining publicity • Positive image transfer • Promotional Opportunities Selection criteria: • Communication objectives • Target market • Cost • Risk Product placement "Deliberate placing of products and/or their logos in movies and TV" Motifs for PP: • Mass-media reach • Targeting • Credibility • Positive associations Risks: • Lack of success • Lack of prominence • Audience annoyance PR (Public Relations) “The management of communications and relationships to establish goodwill and mutual understanding between an organization and the public” Objectives of PR: • Foster reputation • Promote products • Create goodwill of customers • Create goodwill of employees • Attracting & keeping good employees • Create goodwill of suppliers/distributors • Overcome misperceptions/unfavorable publicity