Professional Documents
Culture Documents
Message Decision:
• Generation
• Evaluation & Advertising
Objectives setting: Budget Decisions: Selection Evaluation:
• Execution
• Communication • Affordable approach
• Sales • Communication
• % of sales
impact
• Competitive parity
• Sales impact
• Objectives & tasks
Media Decision:
• Reach, frequency
impact
• Major media types
• Specific media
vehicles
• Media timing
Advertising
Objectives
o Consumer awareness - thinking vs. feeling
products and central vs. peripheral routes to
memory; awareness needed for high involvement;
attitude needed for low involvement
o Positive reinforcement after purchase
o Exposure oriented objectives - reach and
frequency
The Purpose of Advertising
To inform
To persuade
To remind
To Inform
Tell the market about a new product
Suggest new uses for a product
Inform the market of a price change
Explain how the product works
Describe available services
Correct false impressions
Reduce buyers’ fears
Build company image
To Persuade
Build brand preference
Encourage switching to your brand
Change buyers’ perception of product
attributes
Persuade buyers to purchase now
Persuade buyers to receive a sales call
To Remind
Remind buyers that the product may be
needed in the near future
Remind buyers where to buy it
Keep it in the buyers’ mind during off
seasons
Maintain its top-of-mind awareness
Media Options - Direct Marketing
• Strengths:
• Targetability: Specific groups by location, product usage, interests
• Cost: Controlling costs; generally very low
• Timing: No outside media deadlines
• Versatility: Personalized; conveyed detailed message
• Reach: All households
• Measurement: Response rate is easily measured
• Environment: Tangible; saves consumer time
Media Definitions
• Strengths:
• Targetability: Specific groups by location, product usage, interests
• Cost: Controlling costs; generally very low
• Timing: No outside media deadlines
• Versatility: Personalized; conveyed detailed message
• Reach: All households
• Measurement: Response rate is easily measured
• Environment: Tangible; saves consumer time
Direct Marketing (contd.)
Weaknesses:
Consumer Avoidance: Almost half of all mail gets thrown away
unopened
Image: Referred to as “junk mail”
Timing: Bulk mail takes 3-10 days to be delivered
Cost: Mailing costs continue to rise
Reach: Difficult to get new customers.
Media Options - NEWSPAPER
• Purpose: A mass media used to reach
adults 35+ with a complex, detailed
message or to advertise product.
• Strengths:
• Reach: Large mass audience
• Delivery Form: Tangible
• Prestige: Traditional medium with wide acceptance;
somewhat targetable; credible; readers tend to
have higher income & education levels
• Versatility: Ad size and timing
• Message: Illustrations; detailed message
• Targetability: Sections; zone editions
Media Options - RADIO
• Purpose: To reach a narrow target with
frequency to build awareness.
• Strengths:
Weaknesses:
Senses: No visual
Media Options - CABLE
• Purpose: Reach narrow target groups with single
exposure in chosen geography. Able to build
frequency.
• Strengths:
• Growing Medium: Increased subscribers
• Frequency: Top-of-the-mind awareness
• Senses: Includes both visual and audio
• Cost: Low; local medium
• Versatility: Tie-in opportunities
• Geographically Selective: Customized to market area
• Demographically Selective: Target specific consumer
groups
CABLE (Contd.)
Weaknesses:
• Strengths:
• Cost: Low
• Reach: Large mass audiences
• Environment: Size demands attention; 24-hours,
7 days a week
• Frequency: Highly visible
• Versatility: Target specific geography;
variety of messages
Billboards (Contd.)
Weaknesses:
o Availability: Limited
Telemarketing
o Set outbound call objectives ahead of time
o Motivate staff through direct incentives
o Consider training staff on handling rejections
Other Media Considerations
Event Marketing
o Helps build relationships
o Examples:
Deciding which
markets to enter
Deciding how to
enter the market
Deciding on the
marketing program
Deciding on the
marketing organization
Internationalization Process
No Export
Sales Subsidiaries
Production Abroad
Challenges in Going Global
Shifting borders
Unstable governments
Foreign-exchange
Corruption
Technological pirating
Cultural differences
Five International Product
and Promotion Strategies
Product
Do not change Adapt Develop new
product product product
Export Department
International Division
G REEN LAN D
R US S IA
CAN AD A
EURO PE
US A
Global Organization
M I D D LE E AST
A S IA
A F R IC A
SO UTH
AM E RI CA
AUSTRALI A
A NT A R C T IC A
Five Product Levels
Potential product
Augmented product
Expected product
Basic product
Core benefit
Product Mix
Width
Width -- number
number of
of
different
different product
product
lines
lines
Consistency
Length
Length -- total
total Product
Product MixMix --
number
number of of items
items all
all the
the product
product
within
within the
the lines
lines lines
lines offered
offered
Depth
Depth -- number
number of
of
versions
versions of
of each
each
product
product
Product-Line Length
Line Stretching
o Downmarket
o Upmarket
o Two-way
Line Filling
Line Modernization
Line Pruning
Two-Way Product-Line
Stretch: Marriott Hotels
Quality
Economy Standard Good Superior
Marriott
High Marquis
(Top
executives)
Price
Above Marriott
average (Middle
managers)
Average Courtyard
(Salespeople)
Fairfield Inn
Low (Vacationers)
An Overview of
Branding Decisions
Product Category
Existing New
Brand Name
Existing
Line Brand
Extension Extension
New
Multibrands New
Brands
Good Brand Names:
Lack Poor
Foreign
Distinctive
Language
Meanings
Easy to:
Suggest Suggest
Pronounce
Product Product
Recognize
Qualities Benefits
Remember
Why Package Crucial as a
Marketing Tool
Self-service - usage eg. boil in bag
Company & brand image - Leggs
Opportunity for innovation - Colgate
pump
Point of sale impact - reaches the right
people at the right time - Wine bottle
Labels
Promote
Promote
Describe
Describe
Identify
Identify
Categories of Service Mix
Pure Tangible
Major Pure
Tangible Good
Hybrid Service Service
Good w/
w/ Goods
Services
Intangibility
Intangibility Inseparability
Inseparability
Services cannot
Services cannot Services cannot
cannot
be seen,
be seen, tasted,
tasted, Services
felt, heard,
heard, or
or be separated
be separated
felt, from their
from their
smelled before
smelled before providers
purchase
purchase providers
Services
Services
Variability
Variability Perishability
Perishability
Quality of
Quality of Services cannot
cannot
services depends
services depends Services
on who
who provides
provides be stored
be stored for
for
on later sale
later sale or
or use
use
them and
them and when,
when,
where, and
where, and how
how
Intangibility Inseparability
Inseparability
Intangibility
Use cues
cues toto Increase
Increase
Use productivity of
productivity of
make itit tangible
make tangible providers
providers
Services
Services
Variability
Variability Perishability
Perishability
Standardize
Standardize Match supply
supply
service
service Match
production and demand
and demand
production
&& delivery
delivery
Three Types of Marketing
in Service Industries
Company
Internal External
marketing marketing
Cleaning/ Financial/
maintenance banking Restaurant
services services industry
Expected service
Gap 5
Perceived service
Gap 1
Service delivery (including External
pre- and post-contacts) communi-
Gap 4 cations to
Marketer
Gap 3 consumers
Translation of perceptions
to service-quality specifications
Gap 2
Management perceptions
of consumer expectations
Determinants of Service
Quality
Reliability
Assurance
Tangibles
Empathy
Responsiveness
Importance-Performance
Analysis
Extremely important
A. Concentrate here B. Keep up the good work
12
Excellent performance
3
Fair performance
4 5
7 6
9 8
10
11 12
13 14
C. Low priority D. Possible overkill
# = Attributes
Slightly important
Service
Excellence
Strategic Concept
Top-Management Commitment
High Standards
Monitoring Systems
Satisfying Customer Complaints
Satisfying Both Employees & Customers
Managing Productivity
Complaint Resolution
Performance Evaluation
-By customers
-By managers
-By employees
Key Concepts in Services Positioning
Internal Company Analysis
Involvement of Functional Areas Especially Operations
Training in the “Service Concept”
More Segmentation Possible
o Ex Amex
o Temporal Separation and Physical Separation
Attributes
o Experience Qualities
o Credence Qualities – Faith
o Positioning, Choice Criteria and Preference
Communicating the Concept – Symbols
o Merrill Lynch – “Bullish”
o Allstate – Good hands people
o State Farm – Like a good neighbor
o Nationwide – Is on your side
o Prudential – The rock
Fuzzy Positioning in Services – Anti-Marketing
Asset Utilization and Yield
Management
Service capacity is a function of resource
o Human
o Physical
o Financial
Most services build a service delivery system with an inherent constraints
on capacity
o Disney - Wait times
o Hotel - Number of rooms
o Trains and airlines - Seats, schedules, vehicles, parts inventory, etc
o FedEx - Planes, route drivers, etc
Service firms try to maximize Asset Revenue Generating Efficiency
(ARGE)
ARGE = % Capacity Utilization X Actual Price/ Maximum Price
Or Total Revenue/ Maximum Revenue
Portfolio of Customers
Unprofitable
o Differentiate by needs
actionable
Improve convenience
Provide a benefit
Years with 3 5 7
Company
Total $800 $1000 $1,300
Commisions
High Premium
Premium High Super
Product Quality
Value
Value Value Value
Med Medium
Overcharging Good-Value
Value
Low False
Rip-Off Economy
Economy
Setting Pricing Policy
1. Selecting the pricing
objective
2. Determining demand
3. Estimating costs
4. Analyzing competitors’
costs, prices, and offers
5. Selecting a pricing
method
Fixed
Fixed Costs
Costs Variable
Variable Costs
Costs
(Overhead)
(Overhead)
Costs
Coststhat
thatdon’t
don’t Costs
Coststhat
thatdo
dovary
vary
vary
varywith
withsales
salesor
or directly
directlywith
withthe
the
production
productionlevels.
levels. level
levelof
ofproduction.
production.
Executive
ExecutiveSalaries
Salaries Raw
Rawmaterials
materials
Rent
Rent
Total
Total Costs
Costs
Sum
Sumof
ofthe
theFixed
Fixedand
andVariable
VariableCosts
Costsfor
foraaGiven
Given
Level of Production
Level of Production
The Three C’s Model
for Price Setting
Loss-leader pricing
Special-event pricing
Cash rebates
Low-interest financing
Longer payment terms
Warranties & service contracts
Psychological discounting
Psychological Pricing
Most Attractive?
A $2.19 Better Value?
32 oz.
Psychological
reason to price this
way?
B $1.99
26 oz.
Variables
Customer Segment
Product-form
Location
Time
Price-Reaction Program for
Meeting a Competitor’s Price Cut
Hold our price
Has competitor No at present level;
cut his price? continue to watch
competitor’s
Yes No No price
Is the price Is it likely to be How much has
likely to
significantly Yes aprice
permanent Yes his price been
cut? cut?
hurt our sales?