Marketing Strategy

Chapter 12
Marketing Strategy
Copyright 2008 by Nelson, a division of Thomson Canada Limited
Learning Objectives
1 What is the marketing concept?

2 What are the components of the marketing mix?
3 Explain how consumers and organizations make buying
decisions?
4 What are the five basic forms of market segmentation?
Chapter 12
5 Describe the process of marketing research.
MarketingThe Right Principle

Getting
The Right Goods or Services
to
The Right People
Chapter 12
at
The Right Place, Time, and Price
using
The Right Promotion Techniques
Marketing
Marketing
The process of discovering the

needs and wants of potential buyers
and customers and then providing
goods and services that meet
or exceed their expectations.
Chapter 12
www.lscmcourse.com
What are the customers wants?
The Marketing Concept

Focus on customer wants & distinguish your
products from competitors.
Focus all of activities to satisfy these wants.
Chapter 12
Achieving long-term goals for the organization by

satisfying customer wants and needs, legally and
responsibly.
The Marketing Concept
Chapter 12
1
Customer
Value
The ratio of benefits to costs

to obtain those benefits,
(determined by the customer).
Customer
Satisfaction
The customers feeling that a

product has met or exceeded
expectations.
Relationship
Marketing
A strategy that focuses on long-term

partnerships with customers by
providing value & customer
satisfaction.
Creating a Marketing Strategy

1. Understanding the External Environment
2. Defining the Target Market
3. Creating a Competitive Advantage
Chapter 12
4. Developing a Marketing Mix
1. Understanding the External Environment

Social Forces
Demographic Forces
Economic Forces
Technological Forces
Environmental
Scanning
Political & Legal Forces
Chapter 12
Competitive Forces
2. Defining the Target Market
Chapter 12
Target Market
The specific group of consumers

toward which a firm directs
its marketing efforts.
Chapter 12
3. Creating a Competitive Advantage

Cost
Competitive
Advantage
A firms ability to produce a

product or service at
a lower cost than its competitors.
Differential
Competitive
Advantage
A firms ability to provide a unique product or

service that offers something of value besides
a
lower price.
Niche
Competitive
Advantage
A firms ability to target and effectively serve a

single segment of the market within a limited
geographic area.
10
The Marketing Mix
Product
Elements of
the
Marketing Mix
Price
Place
The Four Ps
Chapter 12
Promotion
11
Product Strategy (Ch 13)

3
Brand name
Packaging
Colours
Product -The Heart of

the
Marketing Mix
Warranty
Accessories
Chapter 12
Service program
12
Pricing Strategy
Based on demand for the product and

the cost of producing it.
Chapter 12
Also, special considerations can influence the

price (e.g. branding & loyalty).
13
Distribution Strategy (Place)
Chapter 12
Creating the means (channels) by

which a product flows
from the producer to the customer.
14
Promotion Strategy
3
Personal selling
Advertising
Public relations
Chapter 12
Sales promotion
15
Consumer Decision Making
Need Recognition
Chapter 12
Cultural, Social,
Individual and
Psychological
Factors
affect
all steps
Information Search
Evaluation
of Alternatives
Purchase
Postpurchase
Behaviour
16
4 Influences on Consumer Decision Making
Cultural: values, ideas, attitudes,

etc. based on background
Social: reference groups, leaders,

celebrities
Individual: gender, personality
& self-concept
Chapter 12
Psychological: perception, beliefs

& attitudes
17
Types of Consumer Buying Decisions
Chapter 12
Routine
Response
Behaviour
Limited
Decision
Making
Low Involvement
Short Decision Time
Low Cost
Internal Information Search
One Alternative
Extensive
Decision
Making
More Involvement
Long Decision Time
High Cost
Internal/External Search
Many Alternatives
18
Forms of Market Segmentation
Demographic
Age, Derived
education,
from
gender,
individuals
income,
position
race, social class,
in an organization
household size
Geographic
Regional location, population density,

city/county size, climate
Chapter 12
Psychographic
Lifestyle, personality, interests,

values, attitudes
Benefit
Benefits provided by the

good or service
Volume
Amount of use (light versus heavy)
19
Demographic Groups (Age)

1. Gen Y 1979-94
quiet, listening to music with friends
2. Gen X 1965-78
latchkey children
3. Baby Boomers 1950-64

cherishes convenience
Chapter 12
4. Old Age <1950

wealthy, healthy, well educated
20
The Marketing Research Process

1. Define the Marketing Problem
2. Choose a method of research
3. Collect the data
Chapter 12
4. Analyze the research data
5. Make recommendations
21
Trends
Scanner-based research
Shopper loyalty cards
Chapter 12
One-to-one marketing
22
Chapter 12
Developing Quality Products

at the Right Price
(Product & Price)
Prepared by
Norm Althouse
University of Calgary
23
Developing Products and Pricing
Chapter 12
Creation of the
Marketing Mix
usually begins
with the
PRODUCT
Organizations prepare for

long-term success by creating
and packaging products that
add value and PRICING them
to meet the organizational
financial objectives.
24
What is a Product?
Chapter 12
Product
Any good or service,

along with its perceived
attributes and benefits,
that creates value for
the customer.
25
What is a Product?
1
Image of
Retail
Store
Service
after
Sale
Attachments
Warranty
Product
Chapter 12
Image of
Brand
Colour
Packaging
Instructions
26
Classifying Consumer Products
Chapter 12
Unsought
Product
Products that are either unknown to the

potential buyer or are known, but the buyer
does not actively seek them.
Convenience
Product
Relatively inexpensive items that require little

shopping effort and are purchased routinely
without planning.
Shopping
Product
Items that are bought after considerable planning,

including brand-to-brand and store-to-store
comparisons.
Specialty
Product
Items for which consumers search long and

hard for and for which they refuse to accept
substitutes.
27
Effective Branding (in the Product)
Easy to pronounce
Easy to recognize
Easy to remember
Short
Distinctive, unique
Describes the product
Describes the products use
Describes the products benefits
Has a positive connotation
Chapter 12
Reinforces the desired product image

Is legally protectable in home and foreign
markets
28
Levels of Brand Loyalty
Brand insistence
Brand preference
Chapter 12
Brand recognition
29
Package (in the Product)

Yes, to Protect the product
Chapter 12
but more to Help promote the product
30
Labelling (in the Product)
Persuasive
labelling
Chapter 12
Informational
labelling
Focuses on a promotional
theme or logo consumer
information is secondary
Designed to help
consumers make proper
product selections
31
Warranties (in the Product)
Warranty
Implied
Warranty
Chapter 12
Express Warranty
Full Warranty
Guarantees the quality of a good

or service.
An unwritten guarantee that the

good or service is fit for the purpose for which
it was sold.
A written guarantee.
The manufacturer must meet certain minimum

standards, including repair of defects, product
replacement, or refunds.
32
Product Development Process

1. Set new-product goals
2. Develop new-product ideas
3. Screen ideas/concepts
4. Develop the concept
Chapter 12
5. Test-market the new product

6. Introduce product to marketplace
33
The Product Life Cycle
Sales and profits
Introduction Growth
Maturity
Decline
Total
market
sales
Total
market
profits
+
$0
Chapter 12
_
Time
34
Pricing Objectives
Chapter 12
6
Profit maximization
Producing a product as long as

revenue exceeds the
cost of producing it.
Target return
on investment
The price of a product is set to

give a company the desired
profitability in terms of return
on its money.
Value pricing
Offering the target market a

high quality product at a
fair price and with good service.
35
Chapter 12
Distributing Products in a
Timely and Efficient Manner
Prepared by
Norm Althouse
36
Learning Goals
1 What is physical distribution?

2 What are distribution channels and their functions?
3 What is wholesaling, and what are the types of

wholesalers?
4 How can supply chain management increase efficiency
and customer satisfaction?
Chapter 12
5 What are the trends in distribution?
37
Principles Distribution (Place)
Chapter 12
Distribution
The use of distribution

(logistics) systems to enhance
the value of a product.
38
Physical Distribution
Management of the acquisition

of raw materials to the factory
Chapter 12
The Role
of
Distribution
Management of the movement of

products from the producer to
industrial users and consumers
39
Supply Chain
1
Suppliers of
Raw Materials
Chapter 12
CD
Factory
Wholesale
or
Distribution
Centre
Retailers,
Wholesalers,
Distribution
Centres
Customers
Finished
CDs
40
Distribution Channels
Chapter 12
2
Agents and
Brokers
Agents are sales representatives

of manufacturers and wholesalers,
and brokers are entities that bring
buyers and sellers together.
Industrial
Distributors
Independent wholesalers that buy

related product lines from
manufacturers and sell them to
industrial users.
Wholesalers
Firms that sell finished goods to

retailers, manufacturers, and
institutions.
Retailers
Firms that sell goods to consumers

and to industrial users for their
own consumption.
41
Functions of Distribution Channels
Reduce the number of transactions
Ease the flow of goods
Chapter 12
Perform needed functions
42
Functions of Distribution Channels
Sorting out
Ease the
flow of goods
Accumulating
Chapter 12
Allocating
43
Vertical Integration
3
Forward Vertical
Integration
Occurs when a manufacturer

acquires a marketing channel closer
to the customer
Chapter 12
when a wholesaler or retailer

Backward Vertical Occurs gains
control over the
Integration
production process
44
Chapter 12
The Intensity of Market Coverage

Exclusive
Distribution
A manufacturer selects only one

or two dealers in an area to market
its products.
Selective
Distribution
A manufacturer selected a limited

number of dealers in an area (but
more than one or two) to market
its products.
Intensive
Distribution
A manufacturer tries to sell its

products wherever there are
potential customers.
45
Chapter 12
The Intensity of Market Coverage
46
The Two Categories of Wholesalers
Manufacturer
Often
selective
or
exclusive
distribution
Often
intensive
distribution
Wholesaling
intermediaries
Merchant
wholesalers
Fullservice
Agents and
brokers
Limitedservice
Chapter 12
Retailers or
industrial users
Customers
47
Responsibilities of Supply Chain Managers

Make channel strategy decisions
Coordinate the sourcing and procurement of raw
materials
Schedule production
Process orders
Manage inventory
Transport and store supplies and finished goods
Chapter 12
Coordinate customer service activities
48
Trends in Distribution
Category Management: suppliers
manage the product for the
retailer
Chapter 12
Information Sharing: POS (point

of sale data shared with suppliers
& even manufacturers
49
Chapter 12
15
Chapter
15
Using Integrated Marketing

to
Promote Products
(Promotion)
Prepared by
Norm Althouse
50
Learning Goals
1 What are the goals of promotional strategy?
2 What are the elements of the promotional mix, and how
does integrated marketing communications make use of
them?
3 ID the factors that affect the promotional mix.
Chapter 12
4 Discuss the trends in Promotion.
51
Integrated Marketing Communications
Chapter 12
Promotion
The attempt by marketers to

inform, persuade, or remind
consumers and industrial
users to engage in the
exchange process.
52
Promotional Goals
1
1. Creating awareness
2. Getting consumers to try products

3. Providing information
4. Keeping loyal customers
5. Increasing the amount and frequency of use
Chapter 12
6. Identifying target customers
53
Elements of the Promotional Mix
Personal
Selling
Advertising
Promotional
Mix
Chapter 12
Public
Relations
Sales
Promotion
54
Integrated Marketing Communications

Integrated
Marketing
Communications
The careful coordination of

all promotional activities
to produce a consistent,
unified message that is
customer focused.
Advertising
Personal
Selling
Chapter 12
Promotional
Mix
Public
Relations
Sales
Promotion
55
Types of Advertising
Chapter 12
3
Product
Advertising
Features a specific good or service
Comparative
Advertising
Compares the companys product

with competing, named products
Reminder
Advertising
Used to keep a products name in

the publics mind
Institutional
Advertising
Creates a positive picture of a company

and its ideals, services, and roles in the
community
Advocacy
Advertising
Takes a stand on a social or economic

issue; also called grassroots lobbying
56
Advertising Media
Newspapers
Radio
Magazines
Television
Chapter 12
Direct Mail
Outdoor
Internet
57
Choosing Advertising Media: Newspapers
Weaknesses
Strengths
Geographic selectivity
Short-term commitments
Chapter 12
Immediacy
Constant readership
High individual market

coverage
Low cost
Limited demographic
selectivity
Little colour
Short-lived
58
Choosing Advertising Media: Magazines

Weaknesses
Chapter 12
Strengths
Good reproduction
Message permanence
Demographic selectivity
Regionality
Local-market selectivity
Special-interest
Relatively long ad life
Long-term advertiser
commitments
Slow audience buildup
Limited demonstration
Lack of urgency
Long lead time
May be expensive for

national coverage
59
Choosing Advertising Media: Radio
Weaknesses
Strengths
Low and negotiable costs
No visuals
High frequency
Immediacy of message
Advertising message
short-lived
Background sound
Commercial clutter
Chapter 12
Little seasonal change

in audience
Highly portable
Short scheduling notice

and short-term advertiser
commitments
Entertainment carryover
60
Choosing Advertising Media: Television
Weaknesses
Strengths
Chapter 12
Widely diversified
audience
Creative visual and audio
opportunities
Immediacy of message
Entertainment carryover
High cost
Limited demographic
selectivity
Advertising message
short-lived
Skepticism about claims
61
Choosing Advertising Media: Outdoor Ads
Weaknesses
Chapter 12
Strengths
Repetition
Short messages
Moderate costs
Flexibility
Lack of demographic
selectivity
Distractions
62
Choosing Advertising Media: Direct Mail

Weaknesses
Chapter 12
Strengths
Efficient with good

mailing list
Costly with poor mailing

list
Personalization by
computers
May never be opened
Specific demographic
market reach
Lengthy message
63
Choosing Advertising Media: Internet
Weaknesses
Strengths
Chapter 12
Inexpensive global
coverage
Available at any time
Interactive personalized
message via e-mail
Not everyone has access
Difficult to measure ad
effectiveness
Pop-up clutter
64
Advertising Costs
Cost per thousand
Factors
Influencing
Advertising
Choices
Reach
Frequency
Chapter 12
Audience Selectivity
65
Advantages of Personal Selling

Provides a detailed explanation or demonstration
of the product
Message can be varied according to the

motivations and interests of each prospective
customer
Can be directed only to qualified prospects
Costs can be controlled by adjusting the size of
the sales force in one-person increments
Chapter 12
Considerably more effective than other forms of

promotion in obtaining a sale and gaining a
satisfied customer
66
Opportunities in Sales
Wholesalers and Retailers
Selling to
Purchasing Agents
Chapter 12
Committees
67
The Selling Process
Satisfied
Customer
6. Following up sale
5. Closing sale
4. Handling objections
3. Presenting & demonstrating
Chapter 12
2. Approaching customers
1. Prospecting and qualifying
68
Qualifying Questions
1. Does the prospect have a need for our product?
2. Can the prospect make the buying decision?
Chapter 12
3. Can the prospect afford our product?
69
Sales Promotion
6
Comarketing
Special events
Sampling
Goal of Sales Promotion

is
Immediate Purchase
Coupons
Games, contests, sweepstakes
Sponsorships
Internet
Trade shows
Chapter 12
Premiums
70
Public Relations
Chapter 12
Public Relations
Any communication or
activity designed to win
goodwill or prestige for a
company or person.
71
Functions of Public Relations

Press relations
Product publicity
Corporate communications
Public affairs
Lobbying
Chapter 12
Employer and investor relations

Crisis management
72
Factors that Affect the Promotional Mix

Nature of the Product
Market Characteristics
Available Funds
Chapter 12
Push and Pull Strategies
73
Push and Pull Promotional Strategies

PUSH STRATEGY
Manufacturer
promotes to
wholesaler
Wholesaler
promotes to
retailer
Retailer
promotes to
consumer
Consumer
buys from
retailer
Orders to manufacturer
PULL STRATEGY
Chapter 12
Manufacturer
promotes to
consumer
Consumer
demands
product
from retailer
Retailer
demands
product
from wholesaler
Wholesaler
demands
product from
manufacturer
Orders to manufacturer
74
Trends in Promotion
Growth of Internet Advertising
Application of Technology
Chapter 12
Guerrilla Marketing
75
Guerrilla Marketing
Guerrilla Marketing
Chapter 12
(Street Marketing
and
Diffusion Marketing)
Proactive efforts to spread

positive word-of-mouth
information and to
encourage product usage.
76

Marketing Strategy

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Chapter 12

Copyright 2008 by Nelson, a division of Thomson Canada Limited

1 What is the marketing concept?

5 Describe the process of marketing research.

Copyright 2008 by Nelson, a division of Thomson Canada Limited

MarketingThe Right Principle

The process of discovering the

Copyright 2008 by Nelson, a division of Thomson Canada Limited

The Marketing Concept

Achieving long-term goals for the organization by

Copyright 2008 by Nelson, a division of Thomson Canada Limited

The Marketing Concept

The ratio of benefits to costs

The customers feeling that a

A strategy that focuses on long-term

Copyright 2008 by Nelson, a division of Thomson Canada Limited

Creating a Marketing Strategy

4. Developing a Marketing Mix

Copyright 2008 by Nelson, a division of Thomson Canada Limited

1. Understanding the External Environment

Political & Legal Forces

Copyright 2008 by Nelson, a division of Thomson Canada Limited

2. Defining the Target Market

The specific group of consumers

Copyright 2008 by Nelson, a division of Thomson Canada Limited

3. Creating a Competitive Advantage

A firms ability to produce a

A firms ability to provide a unique product or

A firms ability to target and effectively serve a

Copyright 2008 by Nelson, a division of Thomson Canada Limited

The Marketing Mix

Copyright 2008 by Nelson, a division of Thomson Canada Limited

Product Strategy (Ch 13)

Product -The Heart of

Copyright 2008 by Nelson, a division of Thomson Canada Limited

Based on demand for the product and

Also, special considerations can influence the

Copyright 2008 by Nelson, a division of Thomson Canada Limited

Distribution Strategy (Place)

Creating the means (channels) by

Copyright 2008 by Nelson, a division of Thomson Canada Limited

Copyright 2008 by Nelson, a division of Thomson Canada Limited

Consumer Decision Making

Copyright 2008 by Nelson, a division of Thomson Canada Limited

4 Influences on Consumer Decision Making

Cultural: values, ideas, attitudes,

Social: reference groups, leaders,

Psychological: perception, beliefs

Copyright 2008 by Nelson, a division of Thomson Canada Limited

Types of Consumer Buying Decisions

Forms of Market Segmentation

Regional location, population density,

Lifestyle, personality, interests,

Benefits provided by the

Amount of use (light versus heavy)

Copyright 2008 by Nelson, a division of Thomson Canada Limited

Demographic Groups (Age)

3. Baby Boomers 1950-64

4. Old Age <1950

Copyright 2008 by Nelson, a division of Thomson Canada Limited

The Marketing Research Process

2. Choose a method of research

3. Collect the data

4. Analyze the research data