Marketing 24

Concepts

Types of Products

• Search goods: attributes can be easily evaluated before purchase (e.g. a book, a car)
• Experience goods: quality is difficult to evaluate before purchase (e.g. a restaurant, a movie)
• Credence goods: quality is difficult to evaluate even after purchase (e.g. a medical procedure, a legal service)

Competitors

Definition: competitors are companies that are trying to satisfy the same customer need and/or serve the same customer group.

There are 4 different kinds of competitors:

1. Brand competitors: market products of similar features and benefits to the same customers at similar prices (e.g. Coke vs Pepsi)
2. Product competitors: compete in the same product class, but with products that are different in features and price (e.g., iPad vs. Kindle)
3. Generic competitors: market very different products that solve the same problem or satisfy the same basic customer need (e.g., theater vs. bar vs. travel to Vegas for fun)
4. Total Budget competitors: compete for the limited financial resources of the same customer (e.g., how to spend $500? Disney or Charity)

Customer Lifetime Value

Definition: a measure of the total income a business can experience to bring in from a typical customer for as long as that person or account remains a client

Target Segment Selection

Below is the selection criteria for target segments

1. Do we have a value proposition? - can we develop a plan that will appeal and create value for this segment?
2. Do we have a differentiated advantage? - Are we better than competitors in this segment in the customer’s eyes?
3. Will this segment be valuable/profitable to our organization - is this segment profitable enough to justify a unique marketing plan, does this segment fit with our company strategy and objectives?

This also gives us a criteria to compare two segments

Characteristics of Good Segment

• Size: size and purchasing power to ensure profitability
• Growth: there’s enough room for a (small) segment to grow strong in the future
• Accessibility: segments can be effectively reached and served, at an affordable cost
• Competitive situation: current market share, number of current and future competitors
• Adaptation cost: The cost of adapting one or more marketing mix components to target the segment and to meet its needs

Positioning

Key Elements of Positioning

• Target: specific customer in a profitable and actionable segment
• Frame/Category: the product category or comparative frame of reference
• Differentiated Advantage: the differentiated advantage compared to relative
• Value proposition/Benefit: compelling reason to believe! Key capabilities that solve a customer’s problem, the key benefits the customer receives

Thus we simply say that position should be…

• Valuable to customers
• Clear & not confusing
• Consistent with the target segment and consistent over time

Positioning Statement

For target market, brand offers the feature or benefit among all frame of reference because point of differentiation.

Example: AVIS

To business people who rent cars, Avis is the company who will provide the best service because the employees own the company.

Example: Home Depot

To do-it-yourselfers, Home Depot offers the best prices because we are the largest building supply company.

ACID Test

A way to test if our evaluation is good:

• Does our positioning statement create a clear position that results in customer preference?
• Is our evaluation comprehensive?
• Is our target segment actionable and profitable?

Perceptual Map

A 2D graphical representation of how customers perceive brands in a product category, based on key attributes or dimensions. It helps marketers understand competitive positioning and identify market opportunities.

The two axes are:

1. Quality / Price Ratio
2. Customer Service

Product Benefits

• Functional Benefits
  • Usually product related
  • E.g. “This car has 4 doors”
• Emotional
  • I buy this brand because it makes me feel…
• Self Expressive
  • I buy this brand because I am/become…
• Social
  • I buy this brand because I belong to/the type of people I relate to are…

Brand Equity

There are 4 things that go into brand equity

• Unique brand personality & associations
• Brand Awareness
• Perceived brand quality
• Brand preference

Push Vs Pull Strategy

A push strategy makes use of the distribution channels and sales force to generate demand for the product. — Aimed at intermediaries

A pull strategy creates demand for the product among consumers, who then demand it from retailers, who in turn demand it from wholesalers and manufacturers. — Aimed at customers

Good Advertising

The AIDA model for good advertising. Good advertising should…

• Attract Attention
• Hold Interest
• Create Desire
• Obtain Action

Pricing

Types of Related Pricing

Complementary product pricing involves pricing two or more products that enhance each other’s value when used together

Captive pricing is a type of complementary product pricing where one product is the main product and the other is a necessary complement (e.g. razor and blades)

Value-Based Pricing

This involves assigning a value to the product based on the benefits it provides to customers, rather than just the cost of production. It requires understanding customer needs and preferences, as well as the competitive landscape. Consider this, we can assign a value to a screen being flat over fat, then we add that value onto our product to basically “build the complex value of our product” and price it like that.

e.g. flat screen TVs go for $200 more than fat screen TVs, so we can assign a value of $200 to the flatness of the screen and price our TV accordingly.

Factors in Strategic Pricing

There are 3 key factors in pricing descisions

• Customer
  • Channels
  • End Users
• Competition
  • Pricing Strategy
  • Response
• Company
  • Objectives
  • Costs

Integrated Marketing Communications

Definition: the process of coordinating and integrating all marketing communication tools, avenues, and sources within a company into a seamless program that maximizes the impact on customers and other stakeholders.

There are 5 tools we have for integrated marketing communications:

1. Advertising
2. Personal Selling
3. Public Relations
4. Direct and digital marketing
5. Sales promotion