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Marketing management dr. raafat shehata

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Marketing management course / MBA

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Marketing management dr. raafat shehata

  1. 1. Marketing management By Dr. Raafat Youssef Shehata
  2. 2. Table of contents  Introduction about marketing  Components of marketing plan  STP  Product mix  Pricing  Distribution  Promotional mix  Budgeting
  3. 3. Marketing Marketing is defined to be the process responsible for anticipation, identification , and satisfaction of customer needs through a profit
  4. 4. What is the relation between these 3 terms ProductBrandLove mark
  5. 5. Brand versus product “Products are made in the factory but brands are created in the mind” Walter Landon
  6. 6. Marketing manager  He is the bridge between the company and the customers  His functions are (APIC) Analysis Planning Implementation Control
  7. 7. What are Consumers’ Needs, Wants, and Demands? Needs - state of felt deprivation including physical, social, and individual needs i.e hunger Wants - form that a human need takes as shaped by culture and individual personality i.e. bread Demands - human wants backed by buying power i.e. money
  8. 8. Production Concept Product Concept Selling Concept Marketing Concept Societal Marketing Concept Marketing Management Philosophies
  9. 9. Production concept The production concept holds that consumers will prefer products that are widely available and inexpensive.
  10. 10. Product concept -The product concept holds that consumers will favor those products that offer the most quality, performance, or innovative features -In order to compete effectively, the product needs to have features that appeal to individual consumers. In a product-oriented firm, the products are designed to incorporate a large number of features in order to meet the needs of a large number of consumers. Unfortunately, the cost becomes too high for most people, and of course people do not want to pay for features that they are unlikely ever to use.
  11. 11. Selling concept The selling concept holds that consumers and businesses, will ordinarily not buy enough of the organization’s products, therefore, the organization must undertake aggressive selling and promotion effort.
  12. 12. Marketing concept The marketing concept holds that the key to achieving organizational goals consists of the company being more effective than competitors in creating, delivering, and communicating superior customer value to its chosen target markets. Reactive marketing orientation: understanding and meeting consumers’ expressed needs. Proactive marketing orientation: researching or imagining latent consumers’ needs through a “probe-and-learn” process e.g. Wal Mart
  13. 13. Company Orientations towards business . Marketing Concept Reactive market Understanding and meeting consumers’ expressed needs Proactive marketing Finding latent consumers’ needs through a “probe-and- learn” process.
  14. 14. Marketing Concept Evolution Production Concept Consumers prefer products that are widely available and inexpensive Product Concept Consumers favor products that offer the most quality, performance, and innovative features Selling Concept Consumers will buy products only if the company aggressively promotes/sells these products Marketing Concept Focuses on needs/wants of target markets & delivering value better than competitors
  15. 15. Bad examples marketing orientation • Pampers in Japan • Philips in China
  16. 16. The 4 P’s & 4 C’s of the Marketing Mix  4 P’s  Product  Price  Place  Promotion  4 C’s  Customer Solution  Customer Cost  Convenience  Communication
  17. 17. Planning and budgeting Chapter 2
  18. 18. Plan -It is a way of achieving something Example :the shopping list you take to the supermarket is a simple example -Planning includes: 1-Setting objectives 2-Selecting strategies , tactics and policies
  19. 19. Strategy ,Tactics and Objectives -Strategy: the method used to achieve objectives e.g. we will achieve our objective of increasing profits by growing market share in existing market -Tactics: how resources are deployed in an agreed strategy e.g. we will set up a new telephone call center and target new customers -Objectives: are quantified goals
  20. 20. The contents and structure of the marketing plan  The executive summary  Situational analysis and target market  Marketing objectives  Marketing strategies  Marketing tactics  Marketing mix  STP  Schedules and budgets  Implementation  Control
  21. 21. Situational analysis  SWOT analysis  Gap analysis  PESTEL analysis  Market analysis  Five forces analysis
  22. 22. SWOT analysis Strengths (internal) Weaknesses (internal) Opportunities (external) Threats (external)
  23. 23. Definitions A particular skill or distinctive competence which organization possesses & will aid in achieving its stated goals Strength Any aspect of the company that may hinder the achievement of stated goals. Weakness Any feature that creates advantageous conditions to the firm in relation to a particular objective or set of them Opportunities Any environmental development which present problems & may hinder the achievement of org. objectives Threats
  24. 24. PESTEL analysis  Political factors  Economic factors  Socio-cultural factors  Technological factors  Ecological  Legal
  25. 25. Political  Taxation policy  Government policy  Pressure group
  26. 26. Economic Factors  Inflation  Employment  Disposable income  Business cycles  Energy availability and cost  Others?
  27. 27. Socio-cultural factors  Demographics  Distribution of income  Social mobility  Lifestyle changes  Consumerism  Levels of education  Others?
  28. 28. Culture  Language  Religion  Superstitions  Etiquette  Customs  Traditions  Notion of time
  29. 29. Market analysis  Market size  Growth rate  Market trends
  30. 30. Objectives Objective should be SMART S Specific M Measurable A Achievable R Realistic T Time related
  31. 31. Strategies  SWOT strategies  Competitive strategies (Porter )  Growth strategies (Ansoff)
  32. 32. SWOT strategies  Matching & Conversion are 2 major strategic options from a SWOT analysis; to match the strengths to the opportunities & to convert the weakness & threats to strengths & opportunities. WeaknessStrength ThreatsOpportunities Conversion Conversion
  33. 33. 1. Market Penetration 2. Market Development 3. Product Development 4. Diversification Existing Markets New Markets Existing Products New Products Product/Market Expansion Grid
  34. 34. Market Penetration  making more sales to current customers without changing its products.  How? Add new stores in current market areas, improvements in advertising, prices, etc.
  35. 35. Market Development  identify and develop new markets for its current products.  How? Review new demographic (senior consumers) or geographic (Asian, European & Australian) markets.
  36. 36. Product Development  offering modified or new products to current markets.  How? Increasing food offerings, extend to Frappuccino drinks.
  37. 37. Diversification  start up or buy businesses outside current products and markets.  How? Currently testing two new restaurant concepts – Cafe Starbucks and Circadia, or branded casual clothing.
  38. 38. Porter’s Generic Strategies Michael Porter has proposed three generic strategies that provide a good starting point for strategic thinking: • Overall cost leadership (WalMart) • Differentiation (Sainsbury) • Focus.
  39. 39. The marketing budget  How much the company intend to spend Methods: 1. Task method 2. Percentage of sales 3. Competitive parity 4. All you can afford 5. Same as Last Time (S.A.L.T.)
  40. 40. S.T.P Market segmentation Market Targeting Market Positioning
  41. 41. Market Segmentation “Market segmentation is a natural result of the vast differences among people.” Donald Norman
  42. 42. Connecting With Customers  Market Segmentation: determining distinct groups of buyers (segments) with different needs, characteristics, or behavior.  Market Targeting: evaluating each segment’s attractiveness and selecting one or more segments to enter.  Market Positioning: arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. i.e. Chevy Blazer is “like a rock.”
  43. 43. Steps in Market Segmentation, Targeting, and Positioning
  44. 44. Segmentation Variables
  45. 45. Geographic segmentation  Cars in California always have air conditioning  Cars in Sweden have headlights that stay on constantly because of the poor quality of the light for much of the year
  46. 46. Psychographic segmentation personality  The home insurance market may segment into those who afraid of crime , those who afraid of natural disasters and those who are afraid of accidental damage to their property
  47. 47. Lifestyle segmentation The Jeep Cherokee is aimed at lifestyle segment that favors an outdoor ,adventure-some ,fun- seeking style of life
  48. 48. Targeting Once the firm has identified its market-segment opportunities, it has to decide how many and which ones to target. Marketers are increasingly combining several variables in an effort to identify smaller, better-defined target groups.
  49. 49. Undifferentiated Marketing  Appeals to a broad spectrum of people  Efficient due to economies of scale  Effective when most consumers have similar needs  Example: Wal-Mart
  50. 50. Differentiated Marketing  Develops one or more products for each of several customer groups with different product needs  Appropriate when it is possible to identify one or more segments with distinct needs for different types of products  Example: L’Oreal (Elseve, L’Oreal, Lancome)
  51. 51. Concentrated Marketing  Entails focusing efforts on offering one or more products to a single segment  Useful for smaller firms that do not have the resources to serve all markets  Example: Rolex – Rolls Royce – Porsche
  52. 52. Positioning How the customers are perceiving the product versus other products in the market
  53. 53. Domino’s positioning  A good hot pizza, delivered to your door within 30 minutes of ordering, at a moderate price
  54. 54. Positioning criteria 1. Benefits 2. Specific product features e.g. speed 3. User category 4. Against another products 5. Occasion 6. Hybrid basis
  55. 55. Perceptual map Brands can be positioned against competitive brands on product maps
  56. 56. Chapter 4 Products and services
  57. 57. What is a Product?  A PRODUCT is anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or need.  Includes:  Physical Objects  Services  Events  Persons  Places  Organizations  Ideas  Combinations of the above
  58. 58. What is a Service?  A SERVICE is a form of product that consist of activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything.  Examples include:  Banking  Hotels  Tax preparation  Home repair services
  59. 59. Unsought Products  New innovations  Products consumers don’t want to think about  Require much advertising & personal selling i.e Life insurance, blood donation Product Classifications: Consumer Specialty Products  Special purchase efforts  High price  Unique characteristics  Brand identification  Few purchase locations i.e Lamborghini, Rolex Shopping Products  Buy less frequently  Higher price  Fewer purchase locations  Comparison shop i.e Clothing, cars, appliances Convenience Products  Buy frequently & immediately  Low priced  Mass advertising  Many purchase locations i.e Candy, newspapers
  60. 60. Product portfolio (product assortment or product mix)  A company product portfolio is all the product lines and items that the company offers for sale  Portfolio aspects: -Width “breadth” -Length -Depth
  61. 61. Product Mix Decisions Procter & Gamble's Product Mix Baby Care Beauty Care Fabric & Home Care Food & Beverage Crest Tartar Protection Crest Cavity Protection Crest Multicare Six Toothpastes in Line Health Care  Width – number of different product lines  Length – total number of items the company carries within product lines  Depth – number of versions offered of each product in line
  62. 62. P&G’s Product Width and Depth
  63. 63. Strategic business unit (SBU)  A division , product line , or other profit center within the parent company Each of a firm’s Strategic Business Units (SBU ) has six attributes: 1- A specific target market 2- Its own senior marketing executive 3- Control over its resources 4- Its own marketing strategy 5- Clear-cut competition 6- Distinct differential advantages
  64. 64. Question Marks • High growth, low share • Build into Stars or phase out • Require cash to hold market share Stars • High growth & share • Profit potential • May need heavy investment to grow Cash Cows • Low growth, high share • Established, successful SBU’s • Produce cash Dogs • Low growth & share • Low profit potential Relative Market Share High Low MarketGrowthRate LowHigh Analyzing Current SBU’s: BCG Growth-Share Matrix ?
  65. 65. Criticisms of BCG 1-It concentrates only on 2 dimensions 2-The matrix assumes a relationship between profitability and market share
  66. 66. Time Product Develop- ment Introduction Profits Sales Growth Maturity Decline Losses/ Investments ($) Sales and Profits ($) Sales and Profits Over the Product’s Life From Inception to Demise Product Life Cycle
  67. 67. Criticisms of PLC 1. The stages are not always easily defined 2. Not all the products go through each stage 3. Strategic decisions can change the cycle 4. The life cycle varies between different industries
  68. 68. New-Product Development
  69. 69. Original Products Product Improvements Product Modifications New Brands Acquired Companies Acquired Patents Acquired Licenses New-Product Development Strategy Strategies for Obtaining New-Product Ideas
  70. 70. Degrees of newness 1. Completely new product 2. Partially new product 3. Major product change 4. Minor product change
  71. 71. Causes of New-Product Failures  One study estimated that as many as 80% of new consumer packaged products fail.  Only about 40% of new consumer products are around 5 years after introduction.  Why?  Overestimation of market size,  Product design problems,  Product incorrectly positioned, priced, or advertised,  Product may have been pushed despite poor marketing research findings,  Costs of product development, or  Competitive actions.
  72. 72. Major Stages in New- Product Development
  73. 73. 1.Idea Generation Customers Employees Distributors Competitors R & D Consultants Creative Thinking Sources of New-Product Ideas On Line http://www.ideo.com
  74. 74. 2. Idea Screening  Helps spot good ideas and drop poor ones as soon as possible.  Many companies have systems for rating and screening ideas which estimate:  Market Size  Product Price  Development Time & Costs  Manufacturing Costs  Rate of Return  Then, the idea is evaluated against a set of general company criteria.
  75. 75. 1. Develop New Product Ideas into Alternative Detailed Product Concepts 2. Concept Testing - Test the New-Product Concepts with Groups of Target Customers 3. Choose the One That Has the Strongest Appeal to Target Customers 3. Concept Development Product Image is the Way Consumers Perceive an Actual or Potential Product
  76. 76. 4. Marketing Strategy Part One Describes Overall: Target Market Planned Product Positioning Sales, Market Share, & Profit Goals Part Two Describes First-Year: Product’s Planned Price Distribution Marketing Budget Part Three Describes Long-Run: Sales & Profit Goals Marketing Mix Strategy
  77. 77. 5 .Business Analysis Considerations in Business Analysis Stage Demand Cost Sales Profitability
  78. 78. If No, Eliminate Product Concept Business Analysis Review of Product Sales, Costs, and Profits Projections to See if They Satisfy Company Objectives 6. Product Development If Yes, Move to Product Development
  79. 79. Product Development  In new product development products can be tested at three levels 1. Alpha testing: does the product work in the laboratory ? 2. Beta testing :does it work in the customers “In-use” situation? 3. Gamma testing : does it do what the customer wants?
  80. 80. 7. Test Marketing  Product and marketing program are introduced into more realistic market settings.  Can be very expensive and time consuming.  Test the following:  Positioning strategy,  Advertising,  Distribution,  Pricing,  Branding,  Packaging,  Budget levels.
  81. 81. When is the Right Time to Introduce Product? Where to Launch a New Product? Introducing the New Product into the Market 8. Commercialization
  82. 82. Adoption Adoption is the process by which consumers incorporate the product into the buying pattern Innovators and early adopters are thought to operate as opinion leaders
  83. 83. Stages in the Adoption Process  Awareness: Consumer becomes aware of the new product, but lacks information about it.  Interest: Consumer seeks information about new product.  Evaluation: Consumer considers whether trying the new product makes sense.  Trial: Consumer tries new product on a small scale to improve his or her estimate of its value.  Adoption: Consumer decides to make full and regular use of the new product.
  84. 84. Adopter Categories
  85. 85. 1-Relative advantage: The degree to which potential consumers perceive a new product is superior to existing substitutes 2-Compatibility: The degree to which potential consumers feel a new product is consistent with their present needs, values and practices 3-Complexity: The degree to which a new product is difficult to understand or use 4-Trialability: The degree to which a new product is capable of being tried on a limited basis 5-Observability: The ease with which a product’s benefits or attributes can be observed, imagined or described to potential consumers Product characteristics that influence diffusion
  86. 86. Relative Advantage  A product innovation is perceived as better than existing alternatives  Positively correlated with an innovation’s adoption rate  Exist when a new product offers:  Better performance, increased comfort, saving in time and effort, or immediacy of reward
  87. 87. Compatibility  An innovation is perceived to fit into a person’s way of doing things  The greater compatibility, the more rapid a product’s rate of adoption  Overcome perception of incompatibility through heavy advertising to persuade consumers
  88. 88. Complexity  The more complex the product, the more slowly a product’s rate of adoption  Overcome perception of complexity with demonstrations, personal selling, and emphasis on ease of use
  89. 89. Trialability  An innovation can be used on a limited basis prior to making a full-blown commitment  The trial experience serves to reduce the risk of a consumer’s being dissatisfied with a product after having permanently committed to it through outright purchase
  90. 90. Observability  The product user or other people can observe the positive effects of new product usage  The higher the visibility, the more rapid the adoption rate
  91. 91. Packaging 5 key functions: 1. Protection 2. Distribution 3. User convenience 4. Promotion 5. compliance
  92. 92. Service Service is an activity or a benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything.
  93. 93. Products, Services, and Experiences Pure Tangible Good Pure Service Soap Tangible Good With Accompanying Services Auto With Accompanying Repair Services Hybrid Offer Restaurant Service With Accompanying Minor Goods Airline Trip With Accompanying Snacks Doctor’s Exam
  94. 94. Nature and Characteristic of a Service
  95. 95. Service characteristics & how to deal with each of them (Marketing response)
  96. 96. * Provide tangibility through: -Physical appearance of facility -Furnishings -Employee uniforms -Logo -Website -Packaging 1-Intangability
  97. 97. 2-Perishability -The perishability of services is not a problem when demand is steady however when demand fluctuates service firms have difficult problems . Example :because of rush- hour demand public transportation companies have to own much more equipment -Adjust pricing to influence demand -Capacity management: adjusting services to match demand
  98. 98. 3-Inseparability -Employee training -Disintermediation
  99. 99. 4-Variability -Service guarantees - Improving service delivery process - TQM
  100. 100. Chapter 5 Pricing
  101. 101. Old Russian proverb There are two kinds of fools in any market. One does not charge enough. The other charges too much
  102. 102. Pricing Pricing is the monetary value placed upon a product /service by the marketer Revenue =price x quantity Profit =revenue – cost
  103. 103. Types of Cost Factors that Affect Pricing Decisions Total Costs Sum of the Fixed and Variable Costs for Any Given Level of Production Variable Costs Costs that do vary directly with the level of production Raw materials Fixed Costs (Overhead) Costs that don’t vary with sales or production levels Executive Salaries, Rent
  104. 104. Breakeven analysis The point at which total revenue is exactly equal to the total cost of production and marketing
  105. 105. Breakeven Analysis or Target Profit Pricing 2 4 6 8 10 12 200 400 600 800 1,000 Total Revenue Total Cost Fixed Cost Target Profit ($2 million) Sales Volume in Units (thousands) CostinDollars(millions) Tries to Determine the Price at Which a Firm Will Break Even or Make a Certain Target Profit.
  106. 106. Breakeven analysis Breakeven analysis = fixed cost / contribution per unit
  107. 107. Factors Affecting Price Decisions
  108. 108. 4 Cs on price setting Cost Company Customer Competitor
  109. 109. Marketing Objectives Survival Low Prices Hoping to Increase Demand. Current Profit Maximization Choose the Price that Produces the Maximum Current Profit, Etc. Market Share Leadership Low as Possible Prices to Become the Market Share Leader. Product Quality Leadership High Prices to Cover Higher Performance Quality and R&D. Internal Factors Affecting Pricing Decisions: Marketing Objectives
  110. 110. Price Product Design Distribution Promotion Nonprice Positions Internal Factors Affecting Pricing Decisions: Marketing Mix Strategy
  111. 111. Market and Demand Competitors’ Costs, Prices, and Offers Other External Factors Economic Conditions Reseller Reactions Government Actions Social Concerns External Factors Affecting Pricing Decisions
  112. 112. Pure Competition Many Buyers and Sellers Who Have Little Effect on the Price Monopolistic Competition Many Buyers and Sellers Who Trade Over a Range of Prices Pricing in Different Types of Markets Market and Demand Factors Affecting Pricing Decisions Oligopolistic Competition Few Sellers Who Are Sensitive to Each Other’s Pricing/ Marketing Strategies Pure Monopoly Single Seller
  113. 113. Price Elasticity of DemandPrice Quantity Demanded per Period A. Inelastic Demand - Demand Hardly Changes With a Small Change in Price. P2 P1 Q1Q2 Price Quantity Demanded per Period P’2 P’1 Q1Q2 B. Elastic Demand - Demand Changes Greatly With a Small Change in Price.
  114. 114. Price Elasticity of Demand Change in quantity demanded % Change in price % -When elasticity is greater than 1 ----- Elastic -When elasticity is less than 1 ----- Inelastic
  115. 115. Pricing methods
  116. 116. Strengths of cost plus pricing 1. It is an easy method to be calculated 2. It can be seen to be fairer to both buyers and sellers 3. It provides a means of trying to ensure that all overheads are met in addition it tries to allow for profit return
  117. 117. Weaknesses of cost plus pricing 1. It takes no account of other elements in the marketing mix like product or place 2. It may be difficult to identify direct costs and overheads for each item 3. It does not reflect customers perceptions :cheap price =poor product 4. It does not consider the needs of customers 5. It does not consider the elasticity of demand for the product
  118. 118. Methods for Setting Prices Going-Rate Company Sets Prices Based on What Competitors Are Charging Sealed-Bid Company Sets Prices Based on What They Think Competitors Will Charge? ? Competition-Based Pricing
  119. 119. New-Product Pricing Strategies (Pioneer Pricing strategies) Market-Skimming  Setting a High Price for a New Product to “Skim” Maximum Revenues from the Target Market.  Results in Fewer, But More Profitable Sales.  I.e. Intel  Use Under These Conditions:  Product’s Quality and Image Must Support Its Higher Price.  Costs Can’t be so High that They Cancel the Advantage of Charging More.  Competitors Shouldn’t be Able to Enter Market Easily and Undercut the High Price.
  120. 120. Example of skimming pricing Apple launched its iPhone in this way, a high price was set and product availability was through a specific telephone network (rather than being available on all networks)
  121. 121. Strengths of skimming pricing 1. It allows for quick recovery on investment in the new product 2. It provides prestigious/quality image to customers 3. Higher prices are likely to appeal to innovator groups
  122. 122. Weaknesses of skimming pricing 1. It may encourage the competitors to enter the market quickly 2. It results in lower levels of sales and so fewer economies of scale 3. It may attract attention from regulatory bodies
  123. 123. Skimming  It is commonly used in consumer electronics market  Recent research shows that customers are aware of skimming in electronics markets and are delaying purchases of new electronic devices until the prices drop
  124. 124. New-Product Pricing Strategies Market Penetration  Setting a Low Price for a New Product in Order to “Penetrate” the Market Quickly and Deeply.  Attract a Large Number of Buyers and Win a Larger Market Share.  I.e. Dell  Use Under These Conditions:  Market Must be Highly Price-Sensitive so a Low Price Produces More Market Growth.  Production/Distribution Costs Must Fall as Sales Volume Increases.  Must Keep Out Competition & Maintain Its Low Price Position or Benefits May Only be Temporary.
  125. 125. Strengths of penetration pricing 1. Large sales volume 2. Economy of scale 3. Prevent competitors from entering the market
  126. 126. Weaknesses of penetration pricing 1. It is often difficult to raise price after using this policy 2. It may not be appropriate due to costs of R&D and competitor positions
  127. 127. New-Product Pricing  Skimming Price A very high, premium price Product is new & highly desirable with unique benefits Demand is highly inelastic Allows the company to recover R&D & promotional costs There is a high barrier for entry to competitors  Penetration Pricing A very low price to encourage consumers to buy The objective is to sell more at a short period of time Discourage competitors to enter the market (increase entry barriers)  Trial Pricing Pricing a new product low for a limited period of time in order to lower the risk for consumers Win customer acceptance first, and then make profits later
  128. 128. Perceived value pricing  Is perhaps one of the most marketing oriented ways of setting prices  The price is set on the perceived value of the product to the customer  The marketer uses other elements of the mix (product or promotion ) to build the perceived value of the product or service in the mind of customers
  129. 129. Demand pricing  This method is customer-oriented, because prices are set at a level that will ensure that demand for the product is at a point that will meet corporate objectives. For example, a company may be able to produce economically at a particular level, so the price will be set to ensure that demand reaches that level, no more and no less. Alternatively, demand pricing can be used to determine the point at which profit will be maximized, i.e. the point at which a further increase in price will reduce the production run past the most economical point.
  130. 130. EDLP - An important type of value pricing is everyday low pricing which involves charging a constant , everyday low price with few or no temporary price discounts. In contrast , high –low pricing involves charging higher prices on an everyday basis ,but running frequent promotions to temporarily lower prices on selected items below the EDLP level The king of EDLP is Wal-Mart that practically defined the concept
  131. 131. Pricing for Multiple Products  Price bundling (e.g., monitor, keyboard, CPU in a computer package)  Captive pricing (e.g., razors and razor blades)
  132. 132. Product Mix-Pricing Strategies  Optional-Product  Pricing optional or accessory products sold with the main product. i.e camera bag.  Captive-Product  Pricing products that must be used with the main product. i.e. film.
  133. 133. Temporarily Pricing Products Below List Price Through: Promotional Pricing Special-Event Pricing Cash Rebates Low-Interest Financing Longer Warranties Free Maintenance Discounts Loss Leaders
  134. 134. Psychological Pricing  Considers the psychology of prices and not simply the economics.  Customers use price less when they can judge quality of a product.  Price becomes an important quality signal when customers can’t judge quality; price is used to say something about a product.
  135. 135. Odd-even pricing Certainly it is less effective in some markets. An extension of this type of pricing is found in China, where some numbers are regarded as lucky; collectively, pricing that creates perceptions of this type is called psychological pricing.
  136. 136. Chapter 6 Place or distribution
  137. 137. What is a Distribution Channel? Set of interdependent organizations involved in the process of making a product or service available for use or consumption by the consumer or business user.
  138. 138. Distribution channels  Avon cosmetics for example broke new ground by selling products door to door rather than through department stores and pharmacies  By so doing the company opened up an entirely new market among women who were house-bound for whatever reason
  139. 139. Number of Channel Levels
  140. 140. Intermediaries 1. Retailers :sell directly to consumers 2. Wholesalers: sell to retailers 3. Distributor and dealers: sell to customers through profit 4. Agents : they do not purchase the products but they earn commission 5. Franchisees e.g. KFC
  141. 141. Types of Distribution Channels  Consumer channels  Direct  Manufacturer-retailer-consumer  Manufacturer-wholesaler-retailer-consumer  Business-to-business channels  Manufacturer-industrial distributor-business customer
  142. 142. Marketing Systems  Conventional - multi-level distribution channel in which members work independently of one another  Vertical - channel in which there is cooperation among channel members at two or more different levels of the channel  Horizontal - two or more firms at the same channel level agree to work together
  143. 143. Conventional Distribution Channel Vs. a Vertical Marketing System
  144. 144. Corporate VMS Common Ownership at Different Levels of the Channel i.e. Sears Contractual VMS Contractual (formal) Agreements Among Channel Members i.e Franchising (KFC) Administered VMS Leadership is Assumed through informal agreement a Few Dominant Members i.e. Marks &Spencer Degree of Direct Control Types of Vertical Marketing Systems
  145. 145. Intensive Distribution Selective Distribution Exclusive Distribution Number of Marketing Intermediaries
  146. 146. Select a distribution channel for each of the followings 1-Rolex watches 2-Cigarettes 3-Mid priced high-fi systems
  147. 147. Chapter 7 Promotion
  148. 148. Marketing Communication Mix or Promotion Mix Product’s Design Product’s Price Product’s Package Stores that Sell the Product
  149. 149. Advertising is better for creating awareness; personal selling is more effective at promoting action and purchase behavior.
  150. 150. Communication strategies 1. Push strategy 2. Pull strategy 3. Strategy mix
  151. 151. Communications models DRIP model: D Differentiate R Remind I Inform P Persuade
  152. 152. AIDA Attention Interest Desire Action
  153. 153. Public relations The planned and sustained effort to establish and maintain goodwill and mutual understanding between an organization and its publics
  154. 154. PR people  PR people are often ex-journalists who have some contacts with the news media and who know how to create a story that will be printed in the way the company wants it to be done
  155. 155. Publicity Unpaid communication about an organization appearing in the mass media - Non personal paid ------ advertising - Personal non paid ------- personal selling - Non personal non paid ----- publicity
  156. 156. Corporate image : How a company is perceived by its publics Corporate identity: Relates to logos , preferred colors ….. Public relations
  157. 157. Public relation activities 1. Press release & video news release 2. Press conferences 3. Sponsorship 4. Exhibitions 5. Corporate social responsibility 6. Corporate literature 7. Corporate hospitality 8. Videos 9. Special events “celebrity store openings” 10. Website
  158. 158. Exhibitions Purposes 1. Public relations 2. Promotion and selling 3. Networking 4. Testing the response
  159. 159. Sponsorship It is an agreement between a company and an event organizer where the company gives money in exchange for rights to associate the company name with the event
  160. 160. Sponsorship Objectives: -Awareness creation -Media coverage by the sponsored event -Association with prestigious event -Opportunity for corporate hospitality -Internal employee motivation
  161. 161. Sales Promotion It is one of the promotional tools used to add value for a product or service on the short run
  162. 162. Rapid Growth of Sales Promotion  Sales promotion can take the form of consumer promotions, business promotions, trade promotions, or sales force promotions.  Rapid growth in the industry has been achieved because:  Product managers are facing more pressure to increase their current sales,  Companies face more competition,  Advertising efficiency has declined,  Consumers have become more deal oriented.
  163. 163. Sales Promotion Objectives  Consumer Promotions: increase short-term sales or help build long-term market share.  Trade Promotions: get retailers to:  carry new items and more inventory,  advertise products,  give products more shelf space, and  buy product ahead.
  164. 164. Evaluation of sales promotion 1-Consumer audits: This will indicate if there has been a change in consumer behavior 2-Retail audits: Change in stock levels , distribution & market share 3-Sales force feedback 4-Sales information
  165. 165. Two-thirds of purchases result from in-store decisions
  166. 166. Point of sale display ( POS) -It refers to the in store display that can influence consumers to purchase products in shops It includes: -Shop layout and design -The way goods are presented -In store display materials
  167. 167. Personal Selling It is personal paid promotional tool in which there is a face to face contact between a company representative and a customer
  168. 168. Major Steps in Effective Selling
  169. 169. Advantages of personal selling 1. It contributes to a relatively high level of customer attention 2. Message customization 3. Two ways communications allows immediate feedback 4. It is an opportunity to develop long term relations 5. Using visual elements
  170. 170. Disadvantages of personal selling 1. The main disadvantage is the cost as a salesperson can only interact with one buyer at a time 2. The control on the message is limited
  171. 171. Direct marketing -The planned recording ,analysis and tracking of customer behavior to develop relational marketing strategies -It creates and develop direct one to one relationships -To carry out direct marketing you need Databases
  172. 172. Tools of direct marketing 1. Direct mail (mail shots) “most common” 2. E-mail 3. Mobile phone text messaging (SMS) 4. Direct response advertising 5. Catalogue marketing /brochures / website 6. Call centers and telemarketing 7. “V-Reps “ : Virtual Reps 8. Door drops 9. E-commerce
  173. 173. Forms of Direct Marketing
  174. 174. Chapter 8 Advertising
  175. 175. Advertising Execution Techniques
  176. 176. Rational advertising  Factual  Demonstration  Comparison  Slice of life
  177. 177. Demonstration  Headache remedies, floor cleaners and tyre commercials have traditionally demonstrated the pain, the dirt and the danger respectively, and have then shown how the focus brand relieves the pain (Panadol), removes the stubborn dirt (Flash) or stops in the wet on a coin (or the edge of a rooftop – Continental tyres).
  178. 178. Emotional advertising  Testimonial or endorsement  Animation  Music  Fear  Humor  Sex  lifestyle •Joy •Love •Pleasure •Pride •Safety •Security •Self-esteem •Combinations
  179. 179. Fear advertising  Fear is used in one of two ways. The first type demonstrates the negative aspects or physical dangers associated with a particular behavior or improper product usage.  Drink-driving, life assurance and toothpaste advertising typify this form of appeal.  The second approach is the threat of social rejection or disapproval if the focus product is not used.  This type of fear is used frequently in advertisements for such products as anti-dandruff shampoos and deodorants, and is used to support consumers’ needs for social acceptance and approval.
  180. 180. Animation  Animation techniques have advanced considerably in recent years, with children as the prime target audience. However, animation has been successfully used in many adult-targeted advertisements, such as those by Schweppes, Compaq, Tetley Tea, Direct Line Insurance and the Electricity Board.  The main reason for using animation is that potentially boring and low-interest/involvement products can be made visually interesting and provide a means of gaining attention.  A further reason for the use of animation is that it is easier to convey complex products in a way that does not patronize the viewer.
  181. 181. Sex advertising  Sex appeals normally work well for products such as perfume, clothing and jewellery but provide for poor effectiveness when the product is unrelated, such as cars, photocopiers and furniture.  The use of sex in advertising messages is mainly restricted to getting the  attention of the audience and, in some circumstances, sustaining interest. It can be  used openly, as in various lingerie, fragrance and perfume advertisements, such as  WonderBra and Escape; sensually, as in the H‫ن‬agen Dazs and Cointreau campaigns;  and humorously, as in the Locketts brand.
  182. 182. Media scheduling patterns 1. Continuous pattern 2. Flighting patterns 3. Pulsing
  183. 183. Communication Effects (Copy Testing) Is the Ad Communicating Well? Advertising Program Evaluation Sales Effects Is the Ad Increasing Sales? Evaluating Advertising
  184. 184. Evaluating Advertising 1-Pre-testing : -Focus group 2-Post-testing : -Recognition test -Recall test
  185. 185. Media Selection
  186. 186. Raafat Shehata Raafatshehata@Hotmail.com
  187. 187. Thank You

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