Session 6: Marketing
Exercise: Consumer Behavior
• What were your two most recent purchases?
• Why did you choose these brands?
Definition of Marketing
• Marketing is a societal process by which
individuals and groups obtain what they need
and want through creating, offering, and freely
exchanging products and services of value with
others.
• “The aim of marketing is to make selling
superfluous. The aim of marketing is to know
and understand the customer so well that the
product or service fits him and sells itself.”
- Peter Drucker
Types of Marketing
• Product – creating exchanges
for tangible goods (ex.: Dial
soap)
• Service – creating exchanges for
intangible goods (ex.: Prudential
life plan)
• Person – designed to create
favorable actions toward
persons (ex.: Erap for President
Movement)
Types of Marketing
• Place – designed to attract people to places (ex.:
Wow Philippines campaign)
• Cause – designed to create support for ideas,
causes, or issues or to get people to change
undesirable behaviors (ex.: “Get street children
off the streets” campaign)
• Organization – designed to attract donors,
members, participants, or volunteers (ex.: World
Wildlife Fund, Ateneo de Manila University)
Types of Marketing
• Experiences – By orchestrating several
services and goods, a firm can create, stage
and market experiences. Ex.: Walt Disney
World’s Magic Kingdom
Types of Marketing
• Events – Marketers promote time-based
events, like the World Cup, anniversaries,
trade shows, sports fests, artistic
performances.
Types of Marketing
• Properties – Intangible rights of ownership of
either real property (real estate) or financial
property (stocks and bonds)
• Information – Packaged knowledge or
capability can be produced and marketed as a
product. Ex. Software, CDs, Internet
Go: The 3Cs of Marketing
3C Element
Key Objectives
Customers
To satisfy the needs, wants and expectations of
target customers
Competition
To outperform competition
Company
To ensure corporate health and profit
3Cs: Key Result Areas
•
Sales – result from satisfying customers’ needs and wants. These presuppose that
demand has been created, as more sales will come when more demand is created.
– New users: Who uses the product or service? Who can we add? Ex.: Red Bull
formulated for both blue collar workers and those on the night shift
– Extended users: Who can still use the product or service? Ex.: Coke Zero
formulated to cater to people who do not like or cannot take the sugar content of
regular Coke
– New usage: For what purpose is the product or service used? Ex.: Swatch
promotes various designs of the watches instead of the traditional function (to tell
time). Arm & Hammer repositioned its baking soda as a new way to deodorize
refrigerators. Glutatione was originally intended to boost liver function until its
whitening side effect was discovered. Viagra was originally intended for angina
pectoris (chest pain) before it was used for treating erectile dysfunction.
– More usage: When and in what occasions is the product used? Ex.: Del Monte
comes out with recipes to encourage more usage of its products. Conzace soft gel
vitamin not just a multivitamin; anti-acne med too.
3Cs: Key Result Areas
• Market share – ratio of your brand’s sales versus the
total sales in your market
- While companies would naturally define its target
competitors, it is actually the consumers themselves
who ultimately decide the competitive frame, or the
list of related products or services that consumers
consider when exercising their purchasing power.
- Marketers must understand the competitive frame of
their target consumers, and strive to have a more
attractive product value compared to their direct
competition as well as those providing strong
substitutes.
3Cs: Key Result Areas
• Profit – indispensable component for a firm to
continuously satisfy its customers. Profit must
always go hand-in-hand with honor.
- Companies must be a force for good and
require their suppliers to be aligned with
them. Ex.: Wal-Mart launched a green
revolution in 2009 by requiring all its suppliers
to comply with environmentally-friendly
packaging and processes or else...
Marketing Effectiveness
• “Better than before” – must be the norm for evaluating
the company’s sales vs. the industry’s growth rate and
its year-ago figure.
• “Better than others” – must be demanded by the
company in improving market share which reflects how
they fare against competition and substitutes. The key
is in knowing the source of competitive advantage.
• “Better than expected” – must be practiced in
evaluating profit performance, especially when a
corporate budget is prepared. Key is maximizing
revenues while avoiding non-strategic expenses that do
not contribute to business-building.
Marketing’s Core Concepts
• Target markets and segmentation – market
segments are identified by examining
demographic, psychographic, and behavioral
differences among buyers. The segments that
present the greatest opportunity are the target
markets. For these chosen target markets, the
firm develops a market offering.
• Marketplace/marketspace – Marketplace is the
physical market, i.e., where goods and services
are physically exchanged. Marketspace is a digital
space where one goes shopping on the Internet.
Marketing’s Core Concepts
• Marketers and prospects – marketer is the one
seeking a response (attention, sale, vote, etc.)
from another party, called a prospect.
• Product, offering, brand – needs are
addressed by a value proposition, a set of
benefits offered to customers. An offering is
an intangible value proposition made physical
(which is a combination of products, services,
information and experiences).
Marketing’s Core Concepts
• Value and satisfaction – Value is a combination
of quality, service and price (QSP), called the
customer value triad.
Value = Benefits/Costs
= Functional benefits + Emotional benefits
---------------------------------------------------------------Monetary costs + Time costs + Energy costs + Psychic costs
Before We Get Lost in the Marketing
Hoopla...
• What does knowing about Marketing have to
do with the effective and efficient running of
HR?
• How can HR professionals help Marketing
people do their jobs better?
Marketing’s Core Concepts
• Marketing channels – communication
channels deliver and receive
messages from target buyers;
distribution channels display, sell or
deliver the physical product or
services to the buyer or user.
• Supply chain – describes a longer
channel stretching from raw
materials to components to final
products that are carried to final
buyers.
Marketing’s Core Concepts
• Competition – includes all actual and
potential rival offerings and substitutes
that a buyer might consider. Types:
brand competition, industry competition,
form competition, and generic
competition.
• Marketing environment – consists not
only of the competition but also of the
task environment (production,
distribution, etc.) and the broad
environment (demographic, economic,
natural, technological, politico-legal, and
socio-cultural).
Marketing’s Core Concepts
• Marketing program – consists of numerous
decisions on the mix of marketing tools to use.
Marketing mix can be divided into the
following: product, price, place and
promotion.
Marketing Objectives
• Awareness
Before a customer buys your product or
service they must become aware of it.
Awareness is particularly important if you
have a new product or service, if your product
or service is only bought occasionally or if
your market has many competitors and you
need to maintain awareness amongst your
target market.
Marketing Objectives
• Purchase
This relates to the initial purchase and the
purchase of specific products or services in your
range.
• Purchase frequency
This relates to how often your customers buy
your product or service.
• Usage
This is different from purchase as the person who
buys your product or service may not be the one
who actually uses or consumes it.
Marketing Objectives
• Usage frequency
This relates to how often your customers use/consume
your product or service. By getting your customers to use a
little more of your product or service can actually translate
into more sales over the year. Big business marketers often
do this by introducing larger pack sizes.
• Average transaction value
This relates to the average amount each of your customers
spends per transaction with your business. A simple way of
improving the profitability of your business is to encourage
your existing customers to increase their average
transaction value i.e. purchase slightly more each time.
Marketing Objectives
• Distribution
As distribution channels available to customers grow, it
is important that you ensure your products or services
are available in the most important distribution
channels for your market so that your customers don’t
switch to your competitors.
• Customers
For your small business to grow you may decide to
focus on gaining new customers for your business or to
retain your most profitable ones.
The Four P’s of Marketing
•
•
•
•
Product
Price
Place
Promotions
4 P’s: Product
• Product – anything that can be offered to a
market to satisfy a want or a need. These can
include physical goods, services, events,
experiences, persons, places, properties,
organizations, information and ideas.
Product Levels
Core benefit: the fundamental product or service that the buyer is really buying.
Ex. In a hotel room, core benefit is “rest and sleep.”
Basic product: Ex.: hotel room includes a bed, bathroom, towels, desk, and
closet
Expected product: set of attributes and conditions buyers normally expect when
they buy the product. Ex.: clean bed, fresh towels, working lamps, and a relative
degree of quiet
Augmented product: attributes that exceed customer expectations. Ex.:
sunshine-and-surgery packages, including full medical check-ups, to attract
medical tourists from abroad
Potential product: this encompasses all possible augmentations and
transformations that the product may undergo in the future. Ex.: Singapore
airlines adding a shopping mall in its planes.
Product Mix
• Also known as product assortment, this is the set of all
products and items that a particular seller has for sale.
• Ex.: 3M product mix consists of abrasives and
adhesives; Procter & Gamble product mix used to
consist of detergents (Tide, Ariel, Mr. Clean), bath
soaps (Ivory, Safeguard, Camay), cookies (Duncan
Hines), diapers (Pampers), paper tissue (Charmin),
shortening (Crisco), shampoos (Head & Shoulders,
Rejoice, Pantene, Vidal Sassoon), coffee (Folger’s),
toothpaste (Crest), and medicine (Pepto-Bismol).
Product Mix
• A product mix may have a certain depth, width, length,
and consistency.
• The width of a product mix refers to how many
different product lines the company carries.
• The length of a product mix refers to the total number
of items in the mix.
• The depth of a product mix refers to how many
variants are offered of each product in the line.
• The consistency of the product mix refers to how
closely related the various product lines are in end use,
production requirements, distribution channels, or
some other way.
Mad About Ads!
• What is this particular ad saying about the
product?
• Who are its target markets?
• Why do you think the ad was structured that
way?
Product Line Decisions
• In offering a product line, companies normally
develop a basic platform and modules that
can be added to meet different customer
requirements. Car manufacturers build their
cars around a basic platform. Homebuilders
show a model home to which additional
features can be added. This modular
approach enables the company to offer
variety while lowering production costs.
Product Line Analysis
• Product-line managers need to know the sales
and profits of each item in their line to
determine which to build, maintain, harvest,
and divest. They also need to understand
each product’s market profile.
• Every company’s product portfolio contains
products with different margins. Every
product should have a strategic purpose that
defines why it should stay in the portfolio.
4 P’s: Price
• Price is the only P of the marketing mix that produces
revenue. The others produce costs.
• This is the easiest marketing mix element to adjust.
• Price communicates to the market the company’s
intended value positioning of its product or brand.
• Key problems in pricing: how to respond to aggressive
price cutters, how to price the same product when it
goes through different channels, how to price the same
product in different countries.
Setting the Price
• A firm must set a price for the first time when
it develops a new product, when it introduces
its regular product into a new distribution
channel or geographical area, and when it
enters bids on a contract work.
• The firm must decide where to position its
product on quality and price.
Price Segment Example: Car Industry
Segment
Example
Ultimate
Rolls Royce
Gold standard
Mercedes Benz
Luxury
Lexus
Special needs
Volvo
Middle
Toyota
Ease/convenience
Ford Fiesta
Me Too, but Cheaper
Hyundai
Price Alone
Geely
Price-Quality Strategies
Price
Product Quality
High
Medium
Low
2. High-Value
Strategy
3. SuperValue
Strategy
High
1. Premium
Strategy
Medium
4. Overcharging
strategy
5. Mediumvalue strategy
6. Goodvalue
strategy
7. Rip-off
strategy
8. False
economy
strategy
9. Economy
strategy
Low
4 P’s: Place
• Channels of Distribution
• Location
• Strategic Alliances
• Market Entry
• Learning
• Logistics
37
Systems that link
manufacturers
to customers
Place: Channels and
Marketing Decisions
• A push strategy uses the manufacturer’s sales
force, trade promotion money, and other means
to induce intermediaries to carry, promote, and
sell the product to end users.
• A pull strategy uses advertising, promotion, and
other forms of communication to persuade
consumers to demand the product from
intermediaries.
What Does a Channel Do?
•
•
•
•
•
•
Sales contact
Shipping and delivery
Inventory holding
Order processing
Invoicing
Collecting information on
customers/competitors
• Financing/Credit terms
• Customer support
39
Manufacturer
Direct Sales
MS
Distributor
Network
1
MS
2
Direct Marketing
MS
Licensing
MS
Private Label
4
MS
Retail Outlets
Dealers
Brokers
Agents
Computer to
40Computer
3
5
MS
6
MS
7
MS
8
MS
9
MS10
Multi-tentacled matrix approaches
• use portfolio of
- traditional,
- joint arrangements, and
- unconventional outlets
to fully support all market
segments/ customer niches.
Channel Design
• Indirect Sales Force
• Direct Sales Force
•
•
•
•
•
•
Smaller market size
Geographically limited
Homogeneous target
High education needs
Non-standardized products
High knowledge of
customer
• Need more control
• Need flexibility
(Distributors)
•
•
•
•
•
•
Larger market size
Geographically diverse
Heterogeneous targets
Lower education needs
Standardized products
Lower knowledge of
customer
• Less control
• Less flexibility
Why are there Changes in
Distribution Channel Design?
• Proliferation of information technology
• Polarization of customers
– Consolidation and fragmentation
• Mfg. systems that can mass-customize
• Quick shipment distribution logistics
So, what’s new?
• Old Way:
– Choose intermediaries that can reach (a.k.a push
it out to) the customer
• New Way:
– How can customers’ channel requirements be
efficiently addressed?
Shift in focus – customer-centric
43
Discussion
– Individually sketch what you think the channel
structure looks like for your company/organization.
– Be prepared to share it with the class
– Where do you think HR’s place is in all of this?
44
4 P’s: Promotion
Communication and Promotion Policy and
Advertising
•
•
•
•
•
Establish image
Change image
Generate sales
Send messages to public
Inform, Persuade, Remind customers about
products
Integrated Marketing Communications
Advertising
Personal selling
Sales promotion
Public relations
Direct marketing
Steps in Developing Effective
Communication
Step 1. Identifying the Target Audience
Step 2. Determining the Communication Objectives
Buyer Readiness Stages
Awareness
Knowledge
Liking
Preference
Conviction
Purchase
47
Steps in Developing Effective
Communication
Step 3. Designing a Message
Message Content
Rational Appeals
Emotional Appeals
Moral Appeals
Message Structure
Draw Conclusions
Argument Type
Argument Order
Message Format
Headline, Illustration,
Copy, & Color
Body Language
Steps in Developing Effective
Communication
Step 4. Select the Communication Channels
Personal Communication Channels
Face to Face, Telephone, Presentation
Non Personal Communication Channels
Print, Broadcast and Display Media
Step 5. Selecting the Message Source
Step 6. Measure the Communication’s Results
Factors in Setting Promotion Mix
(cont’d)
• Buyer Readiness State
– Awareness
– Liking, Preferences, and Conviction
– Purchase
• Product-Life-Cycle Stage
–
–
–
–
Introduction
Growth
Mature
Decline
50
Definition of Positioning
• All marketing strategy is built on STP -segmentation, targeting, and positioning.
• Positioning = act of designing the company’s
offering and image to occupy a distinctive
place in the mind of the target market. End
result of positioning is the successful creation
of a customer-focused value proposition, a
cogent reason why the target market should
buy your product.
Ries and Trout on
Positioning:
• Positioning starts with a product. A piece of
merchandise, a service, a company, an
institution, or even a person... But positioning
is not what you do to a product. Positioning is
what you do to the mind of the prospect.
That is, you position the product in the mind
of the prospect.
Positioning Options
• Strengthen the product’s current position in
the consumer’s mind. Ex.: 7-Up capitalized on
not being a cola drink by advertising itself as
the “Uncola”.
• Grab an unoccupied position. Ex.: Pink
Dolphin, a brand of calcium-enriched mineral
water, advertised itself as the only water with
calcium, which is essential for strong bones
and teeth.
Positioning Options
• De-position or re-position the competition in
the customer’s mind. Ex.: BMW wants to deposition Mercedes Benz with the comparison:
“The ultimate sitting machine versus the
ultimate driving machine.”
Remember This?
Operational
Excellence
It’s also a positioning
tool!
Choose Which One to
Develop Most
Product
Leadership
Customer
Intimacy
Positioning: How Many Ideas to
Promote?
• Many marketers advocate promoting only one
central benefit – a unique selling proposition
(USP). Ex.: Colgate – anti-cavity protection;
“number one”, “best”, “safest”, “lowest price”,
etc.
• Double-benefit positioning may also be
distinctive. Ex.: Volvo positions its
automobiles as both “safest” and “most
durable”.
Major Positioning Errors
• Underpositioning – customers having only a
vague idea of the brand.
• Overpositioning – buyers may have too narrow an
image of the brand.
• Confused positioning – buyers might have
confusion resulting from the company’s making
too many claims or changing the brand’s
positioning too frequently.
• Doubtful positioning – buyers may find it hard to
believe the brand claims in view of the product’s
features, price, or manufacturer.
P64 M Questions
• How can you as HR professional help the
company’s marketers?
• What facets of Marketing can you as HR
professional use to improve your and your
department’s performance? How?
• What concepts in Marketing do you need to
understand in order to become more vital as a
member of the strategic management team?
Exercise
• How would you position your company vis-àvis its major competitors?
• Compare this vs. the perceived positioning of
these competitors.
• How would you position your HR department
within the company?
Group Report
• Download the latest stockholders’ report of Globe Telecom or
PLDT/Smart. (Optional: interview corporate and/or marketing
people at these companies)
• Analyze the products, target markets, and the corporate personas.
• What were the opportunities and threats within the industry?
• What were the strategies employed? What were the marketing
programs that were done?
• Evaluate the effectiveness of the corporate strategies and the
marketing programs.