MKTG 301 Exam 2

Matching process

Internal: organizations goals and capabilities

External: marketing opportunities

Steps in strategic planning

1. Defining the company mission

2. Setting company objectives and goals

3. Designing the business portfolio

4. Planning marketing and other functional strategies

Mission Statement

a statement of the organizations purpose

Nike vs. Under Armour marketing strategy

• Nike: soft ad, light colored instagram, soft colors, everyday people with dreams, inspiring

• Under Armour: intense ad, bright colors, competition intensity, famous athletes over regular people

How has Nike been changing and why?

• Their ads have become more focused on pro athletes and the ads themselves have become more intense

• This may be due to increased competition from brands such as gymshark, alo, lululemon

Characteristics of a good mission statement

• Market-oriented

• Realistic

• Specific

• Motivating

• Illustrative of distinctive competencies

BCC growth share matrix

• Star, cash cow, question mark, dog

• Market growth rate also known as “Market attractiveness”

• Relative market share also known as “company strength”

• stars will become cash cows with time

• Dogs will exit

• Cash cows put money into new products (question marks) which try to grow into stars

Criticisms of the BCC

• Limited number of variables used

• Ignores interrelationships between businesses (ex: some disney movies are dogs)

• The placement of a business in the matrix is highly dependant on definition of a market

Market penetration

• Strategy: to increase sales to current customers without changing the products being sold

• Promotion, place, price

Market development

Strategy: identify and develop new markets (geographic or demographic) for current products

Product development

Strategy: offering new or modified products to the current market

Diversification

Strategy: start up or buy businesses outside of current products and markets

Ex: Rihanna is a singer, but she started a makeup brand, Snoop Dogg

Marketing plan

1. Executive summary

2. Current marketing situation

3. SWOT analysis 

4. Objectives 

5. Marketing strategy

   1. Segmentation, targeting, and positioning (STP)

   2. The 4 Ps of the marketing mix

6. Action programs

7. Budgets

8. Controls

SWOT analysis internal

Strengths: internal capabilities that may help a company reach its objectives

Weaknesses: internal limitations that may interfere with a company’s ability to achieve its objectives

SWOT analysis external

Opportunities: external factors that the company many be able to exploit to its advantage

Threats: current and emerging external factors that may challenge the company’s performance

Market implementation

• The execution of a plan is usually the hardest part

• Successful implementation depends upon

  • Company culture

  • Employees’ shared beliefs and values

  • Organizational structure

  • Reward systems

• Implementation often ends up being more about personal relationships and or luck than plans took into account

Marketing control

• Evaluate the results of marketing strategies and plans

  • Set marketing goals

  • Measure actual vs. expected performance on goals

  • Take corrective action to close gaps between goals and performance

Segmentation

• Dividing a market into smaller groups that:

  • Have distinct needs, characteristics, or behaviors

  • Respond similarly to marketing efforts, and therefore

  • Might require their own products and marketing (4Ps)

Geographic Segmentation

Dividing a market into different geographic units (ex: country, country region, city size)

Demographic Segmentation

• Dividing a market based on demographic variables (eg: age, gender, family size, family life cycle, race, generation)

• Easier to measure than most other types of variables

• Gender segmentation: rise in gender-neutral clothing apparel to remove gender labels

Psychographic Segmentation

• Dividing a market based on

  • Social class

  • Lifestyle 

  • Personality

Behavioral Segmentation

• Based on behaviors such as

  • Benefits sought 

  • Usage occasion

  • User status

  • Usage rate

  • Loyalty status

Intermarket Segmentation

Segments of consumers who have similar needs and buying behavior even though they are located in different countries

Requirements of Effective Segmentation

• Measurable

  • Can be identified and measured

• Accessible

  • Can be reached and served

• Substantial

  • Large and profitable enough

• Differentiable 

  • Separate from other segments 

• Actionable

  • Can be marketed to by our company

Targeting

Choosing the segment that is most attractive to your organization

Evaluating Market Segments

• Internal

  • Does the segment fit ith our objectives and resources

• External 

  • How big is the segment? What is its growth potential

  • What is the competitive climate like?

  • Are there a lot of substitute products?

  • How much power do suppliers and customers hold

Differentiated (segmented) Marketing

• Targets several market segments and designs separate offers for each

• Ex: one membership, four brands; Gap, Banana Republic, Old Navy, and Athleta are all one company

Concentrated (niche) Marketing

• Targets a large portion of one or a few small segments or niches

• Ex: fish food brand Tetra is the most used by everyone who owns a fish

Micromarketing

• Tailoring products and marketing programs to suit the taste of specific locales and/or individuals

  • Local marketing (ie: Family Clothesline)

  • Individual marketing

• Individual marketing

  • Markets-of-one marketing or one-to-one marketing

  • Main tool: mass customization

  • Ex: custom chipotle bowl, snap pizza, etc

Positioning

• The key concept to be communicated to the target customer

• The place in the product occupies in the consumer’s mind relative to competing products

Competitive Advantage

• Differentiate your brand based on:

  • Product

  • Services 

  • Channels 

  • People

  • Image 

Vertical Differentiation

one product is clearly better

Horizontal Differentiation

“better” is a matter of opinion

Positioning Statement

• a statement that summarizes company or brand positioning

• slogans are based on positioning

• format: to (target market) who (need), (brand) is (concept) that (point-of-difference)

Product decisions are driven by

• customer behavior

• marketing information

• macroenvironment

• microenvironment

• strategy

types of consumer products

• convenience

• shopping

• specialty

• unsought

Convenience products

• Frequent purchase, little planning, little comparison

• low price

• widespread distribution

• mass promotion

Shopping products

• less frequent purchase, some comparison of brands on price, quality, style

• higher price

• selective distribution in fewer outlets

• advertising and personal selling by both the producer and resellers

Specialty products

• strong brand preference and loyalty, special purchase effort, little comparison of brands, low price sensitivity

• highest price

• exclusive distribution in only one or a few outlets per market area

• more carefully targeted promotion by both the producer and resellers

• luxury goods like rolex watches or fine crystal

Unsought products

• little product awareness

• price varies

• distribution varies

• aggressive advertising and personal selling by the producer and resellers

• ex: blood donations, life insurance

Other “products”

• industrial product

• organizations: for-profit (businesses) and nonprofit (schools, churches, etc)

• People: politicians, entertainers, pro athletes, doctors, lawyers, etc

• places: tourism, country-of-origin, immigration, etc

• Ideas: public health campaigns, environmental campaigns, family planning, human rights, etc

Three levels of product decisions

1. individual product decisions

2. product line decisions

3. product mix decisions

labeling

• identifies the product or brand

• supporting the brand’s positioning

• adds personality to the brand

Product line decisions

• number of items in a product line

• adjust length by: stretching downward (less expensive), upward (more expensive, higher end) or both directions

Product mix

All of the product lines and items that a particular seller offers

Product mix dimensions

• Width: the number of different product lines carried

• Length: the number of items in a line

• Depth: the number of versions offered of a product in a line

• Consistency: how closely related various lines are

What is a brand?

• A marker of identification for a product

• A promise to a customer

• Brand identity and brand consistency lead to feelings of trust

Brand Equity

• The positive effect that knowing the brand name has on customer response to the product

• Higher brand equity provides

  • Greater awareness and loyalty

  • Basis for strong profitable customer relationships

  • Willingness to buy over competitors and or willingness to pay a premium for the brand

Desirable brand name qualities

• Suggests product’s benefits and qualities

• Easy to pronounce, recognize, and remember

• Distinctive

• Extendable, not limited to one particular product

• Translates easily into foreign languages

• Capable of being registered and legally protected

3 qualities to make brand names more memorable

• Rhyme (ex: fitbit)

• Alliteration (ex: vineyard vines)

• Repetition (ex: M&Ms)

Law of shape

horizontal is the ideal shape for a logo

Line extension

• existing brand name, existing product

• Introduction of additional items within the current product category under the same brand name (ex: new flavors, forms, colors, ingredients, or package sizes)

Brand extension

• existing brand, new product

• Using a successful brand name to launch a product in a new category

• Ex: snoop dogg using his brand name in music to launch a pet product line

Multibranding

• existing product, new brands

• Multiple brands by the same company in the same product category

New brands

• new product, new brand

• used when existing brands are either unsuitable for brand extension or the company doesn’t want to dilute them

4 service characteristics

1. intagibility

2. variability

3. inseperability

4. perishability

New product development process

1. idea generation

2. idea screening

3. concept development and testing

4. marketing strategy development

5. business analysis

6. product development

7. test marketing

8. commercialization

Idea generation

• The systematic search for new product ideas

• Internal sources

  • Company employees at all levels

• External sources

  • Customers, competitors, distribution, suppliers, outsourcing partners

Idea screening

• Screening process to reduce # of ideas by spotting good ones and dropping poor ones

• Describe product target market, and competition

• Estimate market size, product price, development time, and costs, manufacturing costs, and rate of return

• Evaluate against a set of company criteria for new products

Concept development and testing

• Translate your product idea into a detailed concept stated in meaningful consumer terms (what will the consumer get out of this product)

• A descriptor of product that provides [benefit, feelings, results]

• Test concepts with a group of target consumers to find out level of appeal

• In doing so, describe the product and elicit responses to the concept

Marketing strategy development

An initial marketing strategy is designed for the new product, consisting of:

1. Target market and initial objectives

• Target market; planned product positioning; and goals for sales, market share, and profit for the first few years

2. Launch tactics

• Price, distribution, and marketing budget for the first year

3. Long-term objectives

• Long-run sales and profit goals, marketing mix (4Ps) to be used

Business analytics

• Does the idea make business sense?

• Involves a review of the sales, costs, and profit projections to assess fit with company objectives

• Assess risk under various scenarios

• If the results are positive, project moves to the product development phase

Product development

Develop from concept into actual product “prototype”

Investment increases considerably; moving from idea into realm of reality

Product testing often happens alongside development

Test marketing

• Product and marketing program introduced in a limited setting

• Can be expensive and time consuming, and shows your plans to competitors

Commercialization

• “LAUNCH”

• Must decide when and where to initially introduce the product

• Must develop a market rollout plan

  • Where to go next

New products failures

• Only 10% of new products are still on the market and profitable after 2 years

• Less than 2% are considered truly successful

• Failure is due to problems at any stage of the marketing process

Stages of a product life cycle

1. Introduction

2. Growth

3. Maturity

4. Decline

Introduction stage

• Product is first launched

• Cost of informing and acquiring customers is high, and sales (as well as sales growth) are usually low

• Profits are usually negative

• Objective: create product awareness and trial

Growth stage

• If the product gains traction, sales start growing rapidly

• Higher unit sales lead to lower average costs per unit sold, and profitability can be achieved

• Objective: maximize market share

• The growth in sales will lead to a number of competitors entering the marketing, fighting over initial customers

Maturity stage

• Sales level off

• Many people already have the product, some are re-buying or upgrading

• Production costs are usually low, so those with high market share can still make good profits

• Objective: defend market share, try to get customers to switch to your product

Ways to grow during maturity stage

• Modify the market

  • Target new segments or increase usage among current customers

• Modify the product

  • Deliver an improved product to get new or repeat customers 

• Modify the rest of the marketing mix

  • Add services, cut prices, change distribution, change promotion

Decline stage

• Sales fall, as people do not need to buy the product anymore

• Unit sales and prices fall; difficult to remain profitable despite low production costs

• Some niche products may do well as competitors exit the market

• Objective: reduce expenses to stay profitable, milk the product and invest elsewhere, if able restart PLC, otherwise look for a way out on time

Styles, fashions, fads

• Style is a basic but distinctive mode of expression (ex: formal wear vs casual wear)

• Fashion is a popular style in a given field (ex: Uggs) 

• Fad is a fashion that enters quickly, is adopted quickly, and declines fast (ex: pet rocks)

Problems of the product life cycle

• Reality is never as “clean” and clear as the PLC curve

• It can be hard to even identify which stage of the PLC a product is really in

• Hard to forecast the length of each stage of the PLC

• Strategy is both a result and a cause of the PLC