Marketing 1.Purpose and Roles of Marketing 2.The Product Life Cycle 3.The Four P’s of Marketing Purpose of Marketing 1. To sell what a business produces (goods) and/ or offers (services). 2. To manage a business’s brand and brands Producing & Marketing Goods and Services Marketing Defined An organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders More money is spent in business-tobusiness marketing than in marketing products to final consumers! Marketing Activities You see: Ads Brand names on packages/clothes Product descriptions on websites Interactions w/salespeople Less Obvious: Storing products Moving products (distribution) Estab./accepting credit Arranging payment Gathering data Testing products Marketing Businesses Advertising agencies Marketing research firms Transportation companies (trucking, railroad, and air freight move products) Shipping and delivery companies Financial companies (issue/manage credit cards) Wholesalers/retailers (distribution) Functions of Marketing 1. To sell what a business produces (goods) and/ or offers (services). 2. To manage a business’s brand and brands Sales Product Management Information Management Pricing Promotion & & Distributing Advertising 7 Marketing Functions (1 & 2) 1. Product/Service Management Designing, developing, maintaining, improving, and acquiring products and services that meet customers’ needs 2. Distribution Determines the best ways for customers to locate, obtain, and use the products and services of an org. 7 Marketing Functions – 3 & 4 3. Selling 4. Communicating directly with potential customers to determine and satisfy their needs • Face-to-face • Phones, instant messaging, videoconferencing, etc. Marketing Information Management Obtains and organizes information needed to make marketing decisions. (Market research) 7 Marketing Functions – 5 & 6 5. Financial Analysis 6. Budgeting for marketing activities, obtaining funds, and providing financial assistance to customers for purchasing products/services Pricing Setting and communicating the value of products and services. • Low enough for willing customers, high enough to make a profit 7 Marketing Functions - 7 7. Promotion Advertising (television, newspapers, magazines, radio, direct mail, etc.) is used to encourage customers to buy. Other methods include contests, product displays, sponsorships, and public relations activities Involves communication with consumers to encourage purchases. Marketing Planning 2 steps Marketing Strategy- a company’s plan that identifies how it will use marketing to achieve its goals. Step One = Identifying a target market • A clearly identified group of consumers with similar wants and needs that the business wants to satisfy. Adolescents, Children (age) Males, Females (sex) Middle-aged females (age & sex) Hispanics, African Americans (ethnicity) Physically handicap children (need) Medical personnel (profession) Step #2 The Four P’s of Marketing – The Marketing Mix 1. 2. 3. 4. Product and Services Price Place (Channels of Distribution) Promotion The 4 P’s of marketing are interrelated. For example, if your product is targeting low-income families, you are not going to sell it for a price that a wealthy family can afford. You are also not likely going to advertise funeral homes during Saturday morning cartoons. A company must consider all 4 P’s of marketing to create an effective marketing campaign that results in product/service sales. Companies must master selling the right product at the right price at the right time. 1. Products and Services Product and service development take into consideration: 1. Quality 2. Design and packaging 3. Features 4. Benefits 5. Warrantees and after sale services 1. Product and Services Quality If you can improve the quality of your product, you will gain new customers If you can produce a cheaper version, even while decreasing the quality, you may still gain sales through a new customer base. Consider products whose quality have improved over time…. 1. Product Design, Packaging and Labeling Consumers often pick one competing product over another because of the way it looks. i.e. A Ford sedan versus a GM sedan. Design includes every detail from colour, thread type, shape, button fly vs. zipper, plastic versus aluminum etc. 1. Product Design, Packaging and Labeling Will it be packaged in glass, plastic, cardboard, paper, tin, a combination, etc? Will it be resealable, need a hand grip? What information do we legally have to provide on the label? What additional information do we want to include on the label? 1. Product and Services Features Features are perks or specific functions a product or service offers. For example: A HD LCD flat screen TV offers a contrast of 40,000:1 while another offers 1,000,000:1. Viewing features may include 60 Hertz, 120 Hertz, or 240 Hertz. Detergent may come in liquid, powder, or solid form. Foods may add additional nutrients to their products. 1. Products and Services Benefits Consumers purchase items due to some benefit it will provide to them. Cosmetics advertise the benefit of “beauty” and/or “youthfulness", if you purchase their products. Macdonald’s offers a “healthy choice” menu to appeal to the trend of healthier eating. 1. Product Warrantees and After Sales Services Depending on the business or service , business may consider offering warrantees, delivery services, installation, gift wrapping, free parking, coffee, etc. All additional sales services help the store to be competitive. 2. Price Pricing decisions must take into consideration the following variables among others. 1. The cost of production, fixed costs and/or unit purchase cost. 2. The price/quality relationship. 3. Who the target market is? 4. Competitor pricing? 5. Price sensitivity – how much sales will go up or down when the price goes up and down and still be able to make a profit. Fixed Costs The costs of running the business irregardless of how many items it sells. For example, rent, hydro, telephone bill, equipment, etc. 3. Place (Distribution Channel) Distribution Channel Methods or path products follow from being produced to making its way into the hands of consumers. Companies decide which distribution channel(s) they will use. Specialty Channels of Distribution Telemarketing Vending Machines E - Commerce Network Marketing Catalogue Sales Door-to-Door Sales Now it’s time to………. Go to kahoot.it 4. Promotion and Advertising Promotion Includes any attempt to sell a prdouct. Note: Advertising is one example of many different types of promotions. Promotions include: 1. Publicity 2. Public Relations 3. Sales promotions such as coupons, contests, premiums, samples, and special events. 4. Advertising Publicity Company public exposure obtained most often through company related events or incidents that are reported in the media. Example: World-wide recall of a certain product due to a potentially dangerous outcome of its use. Publicity does not cost the company anything, and can be both positive or negative depending on what happened and how the company chooses to respond to the events and media attention. Consider Tiger Woods, Johnson and Johnson and the Tylenol scare Public Relations Publicity paid for by the company A Public Relations (PR) spokesperson may release certain information about a new product launch or other company related information The company may sponsor a major event like Coca-Cola being a major sponsor for the 2009 winter Olympic games Sales Promotions Coupon Facts Canadian consumers are exposed to more than 1200 coupons a year Only about 5% of coupons are redeemed (used by customers) The larger the value of the coupon, the higher the redemption rate. Sales Promotions Contests Provide an exciting way to increase brand recognition Legally, anyone enter a company contest (No purchase required) The law forbids gambling in contests, thus winners often have to answer a skill-testing question to win. Sales Promotions Premiums Giveaways that consumers receive free with purchase of a product. Can be an unrelated product that sometimes carries the logo of the company and/or product. Companies often use loyalty cards to encourage purchases. Sales Promotions Samples Trial sizes may be delivered to your door Trial sizes may be given out at various stores Food sampling is often done in stores such as Costco Sales Promotions Special Events Authors visit book stores to autograph newly published books Sports heroes, music and movie celebrities take part in special events to promote their new shoe or instrument or perfume. May include other types of sales promotions such as contests, samples, etc. Advertising Advertising One-way, paid-for promotion of a business’ goods and services. Business control what information is communicated unlike publicity. Rules For Creating Good Advertising AIDA 1. Attract Attention 3. Build Desire 2. Gain Interest 4. Get Action Attract Attention 1. Print Advertisements A good headline with the Brand name in it and is rarely more than seven words. Example: “Sprite: Obey Your Thirst” 2. Broadcast Ads Sound, unusual visuals, an attractive person, a famous celebrity or hilarious moment is often used to attract attention The key is to hold the attention for up to 60 seconds. Gain Interest 1. Print and Broadcast Ads Simple and easy to read Clear message and to the point Avoid clutter Build Desire Connect the brand name with benefit(s) achieved with the use of the advertised product or service. What problem does your product or service solve? The more benefits the viewer or reader can identify with, the greater the desire created. Get Action Advertisements should ask for the sale. Summarize reasons to buy Include the logo, brand name, contact information Types of Advertising Mediums 1. 2. Direct-to-home – flyers, brochures, catalogues, internet Out-of-home - billboards, buses, subways, public benches, transit shelters 3. 4. 5. 6. 7. Radio Television Newspaper Magazines The Internet Comparing Types of Advertisements When contemplating which advertising medium to use, companies will consider the following variables: 1. 2. 3. 4. 5. 6. 7. 8. Reach Frequency Selectivity Durability Lead-time Mechanical requirements Clutter Costs Branding Branding Usually represented by a name (brand name), a logo and/or a trademark and/or a slogan. Purpose of Branding Branding is used to help a company distinguish itself and its products from competitors’ products – thus helping to creating an image for the company. Brand Names Brand names should: 1. be distinctive and stand out from the competition. 2. be easy to pronounce 3. easy to remember Brand Names Examples: Bib-Label Lithiated Lemon-Lime Soda (1929 product name) vs. 7’Up Logo or Trademark A symbol or that is associated with a company and/or product. It helps promote awareness and brand recognition of a company and/or product. Logo or Trademarks Three possible forms of logos: 1. 2. 3. Monogram Visual Symbol Abstract symbol Logos or Trademarks Monogram A stylized rendering of the company’s initials or a combination of initials and numbers Sometimes used to update an image that has become outdated. Logos or Trademarks Visual Symbols Usually line drawings of people, animals, or things When seen the logo becomes directly associated with the brand name. Logos or Trademarks Abstract Symbol Shapes that carry a visual message but are not representative of actual things. Slogans Slogans A short, catchy phrase that is usually attached to the company’s name and logo. Examples: 1. I’m lovin it. 2. Priceless 3. It’s in you to give Comparing Media Reach/Circulation The number of people who are exposed to the message. Frequency The number of times an audience will see or hear the ad over a given period of time Selectivity The ability of the medium to focus on a specific target audience. Durability How long the advertisement will last (ie. 30 second commercial versus a 30 day billboard) Comparing Media Lead-Time How much time before the ad needs to be ready for print or airing. Mechanical requirements How complex is it to prepare the ad for medium? (i.e. radio vs. tv) Clutter How many other ads are nearby and competing for the same audience’s attention? The more clutter, the less effective. Costs One must consider the costs to prepare and the space and time in the medium to run it. One must weigh the costs with the many of the other variables outlined above. Media Rating Chart TV Radio Mag. News. Out of home Direct to home Internet Specialty Reach 8 7 7 7 10 10 7 3 Frequency 1 1 8 3 9 1 10 8 Selectivity 6 7 10 3 1 9 10 5 Durability 1 1 10 7 9 3 10 10 Lead-time 2 9 1 8 2 4 10 4 Mechanical Req. 3 9 2 7 1 4 8 10 Clutter 3 2 3 4 7 2 2 9 Costs 3 6 6 6 3 7 9 5 Measuring Marketing Effectiveness Effective marketing will: 1. Increase Brand Equity Increases value of the brand in the marketplace For example, Coca-cola’s brand equity is valued at $77.8 billion (2012). Measuring Marketing Effectiveness Good marketing will develop brand awareness where consumers can identify what type of product or service the brand represents. Better marketing will develop brand loyalty where customers prefer and support a particular brand. Best marketing will develop brand insistence where the customer will not accept any other substitutes over a particular brand name. The greater the brand insistence, the greater the brand equity.