Contemporary Issues in
Marketing (Contd)
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Marketing becoming increasingly
difficult today…
► Increasingly
difficult to find & keep competitive
advantage, due to:




Rapid copying of products
Shortening of PLCs
Increased info available to customers
Customers growing defence against commercial
messages
► Kotler
says that it is still possible to find niches to
be filled by imaginative entrepreneurs, e.g.,
Starbuck
► Need to spot these niches and fill them in a way
that others cannot duplicate
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What marketing strategies work best
today?
► Focusing,
positioning & differentiation
► Company needs to define target market
carefully
► Must communicate a unique benefit position
► Differentiate in a way that competitors will
find hard to copy
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6 Companies that Kotler admires
► IKEA,
Southwest Airlines, Wal-mart, Target, Home
Depot, Dollar General, Aldi’s – these have found
innovative ways of lowering price/cost
► Sony, Toyota, Intel, Starbucks – these have
boosted quality to high levels
► Body Shop, Ben & Jerry’s, Avon, Kraft – these
have exhibited social concience
► Barnes & Noble, Charles Schwab, FedEx – these
have innovated the business model
► Progressive Insurance, Tetra – these have
discovered and dominated niches
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► Segmentation
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Mass Marketing
► Far
from dead – Coke, McDonald
► Today, mass marketers need to be
discerning on the channels for
communications
► However, tendency towards segmentation
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How to Segment?
► Demographic,
Geodemographic (add geography to
demographic)
► Later, Behavioral (classification according to
readiness to buy, motivation, attitude),
psychographic (according to lifestyle
characteristics)
► Today, loyalty segmentation (attention to longer
staying and profitable customers)
► Internet facilitates segmentation (these days, web
sites dedicated to babies, senior citizens,
Hispanics, etc)
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► Targeting
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New or Old Customers?
► Historically,
companies tried to get new
customers
► Now, companies are paying attention to
keeping customers (cost 5 times as much to
get new customers)
► Relationship marketing involves much more
than maintaining a customer relationship
dept; now, need to consider the concept of
“customer share”
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Narrowcasting
► Marketers
must move away from
broadcasting to narrowcasting
► People no longer interested in messages
received thru TV/radio (unless ad is in an
area of interest)
► Need to define target customers and their
media habits; messages then put in focused
media
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► Positioning
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Effective marketing…
► Effective
marketing begins with research into local
marketplace to find segments not satisfied with
current offerings
► Company then decides to target segments in
which it can provide superior offerings
► Positioning, next step – companies communicate
its offer to target market segments
► Company cannot position before segmentation &
targeting
► E.g., Volvo realised attractive segment for safe
cars. Volvo adopted the “safest car” positioning.
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Differentiation
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Key ways today to differentiate today
► Companies
need to learn to compete in new
ways (be creative)
► Say, by developing and delivering goods
faster, thru better design/styling, augment
offer with more benefits
► E.g., Today, Japan is working to produce
more “sensuous” automobiles
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Innovation
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Innovation is…
► Not
just about better and newer products,
but includes developing better systems and
business models/products
► Companies with good marketing and good
innovation: Sony, 3M, Pfizer
► IKEA, South West Airlines, Virgin, Home
Depot, Barnes & Noble invented new ways
to run old businesses
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Landmark Innovations (according to
Kotler)
► Retail:
Hypermarket, mega-retailers,
► Market logistics: FedEx
► Quality innovations: 6 Sigma, zero-defects, TQM
► New sales channels: direct mail, telemarketing,
online marketing
► Physical inventions: computers, cell phone,
Internet
► Financial innovations
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More…
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Marketing Research
► Online
marketing offers opportunities
► To learn about customers, markets,
segments, competitors, distribution
channels & trends
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Additional skills required by
marketing depts today
► Brand
building/positioning skills
► Database management/data mining skills
► CRM skills
► PR and “buzz marketing” skills
► Event management/experiential marketing
skills
► Direct mail/catalogue and telemarketing
skills
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Kotler’s Favourite Marketing
Thinkers:
► Walt
Disney
► Ray Croc (McD)
► Howard Shultz (Starbuck)
► Ingvar Kamprad (IKEA)
► Sam Walton (Wal-Mart)
► Richard Brenson
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Companies that interact well with
customers
► Harley
Davidson (create community)
► Easier with good brands (branding is
important)
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Strength/Weakness of US Companies
(Marketing)
► S:
Competitive culture & cost discipline
► W: Short-term horizon
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► Part
2
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More on 4Ps
► 4Ps




 4Cs
Product  Customer value
Price  Customer costs
Place  Customer convenience
Promotion  Customer communication (not promotion!)
► Kotler
suggests adding 2 more Ps (part of
megamarketing tools): Politics & Public Opinion
(receptive govt & people)
► Kotler: advertising overdone, while PR is
underdone; direct marketing tools are also rising
in importance
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Other tools available to marketers
today
► Info
► Software
to manage info
► Putting marketing plans and approaches on
computer so that all Managers have access
(company-wide approach rather than
marketing dept’s responsibility)
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Internet: who will benefit most?
► Customers
 Price more transparent
 Customers able to order more specific version
of product
 Customers less assaulted by intrusive largepage ads
 For businesses, those that align with new
technologies will benefit (Yahoo!)
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How has Internet affected 4Ps?
► Price
has become more important
► Promotion (advertising on Internet still not
too effective)
► But sales promotion more effective
► Place: some retailers may be affected by
online buying
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Product
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Branding
►
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Strong brands will be major defence against price
competition
Strong brands create trust and image of better quality –
customers willing to pay more
Concentrate on brand performance not image (image is
ceasing to have power)
Successful brands of tomorrow: niche brands – brands that
deliver unique value (in terms of 4Ps) to a focused
segment
Think in terms of “brand asset management” – brands of
their own PLC. Need for rejuvenation
The Internet will still allow branding, but price will also
become sensitive
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Price
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Price
► Before
hypercompetition, globalisation and
the internet, superior brands could charge
20-50% more.
► Today, more likely 10-20%
► Today, buyers propose what they pay airline
tickets, hotels, etc)
► Internet likely to drive down prices
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Price – how to compete with China
► Short-term:
lobby for protection – but not a
good solution for long term
► Long term: search for better ways to offer
superior value
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Place
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Direct selling
► Direct
selling is recommended by Kotler as
one of the strategies for “place” (say, thru
e-commerce)
► However, this might be a problem if this is
carried out together with a distributor – he
might resent this
► This problem can be dealt with by “brickand-click” companies
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Promotion
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TV seems to be losing effectiveness
► The
average American exposed to several
hundred messages per day and is trying to
tune out
► Growing advertising clutter, increasing
number of channels, availability of zapping
mechanisms and reduced TV watching by
some groups
► Challenge: marketers need to consider other
methods of consumer attention
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Possibilities instead of TV
Sponsorships (names on stadiums, whole teams and on
individual athletes)
► Mentions on talk shows
► Product placement
► Street level promotion: actors walking in street and asking
passers-by to take photos with them on mobile phone
► Celebrity endorsement
► Body advertising (college kids agreed to put Dunkin
doughnut logos on their forehead during match)
► PR and word-of-mouth playing greater role
► Internet?
► Sales promotion – but don’t overdo it – may “cheapen” the
brand image
►
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Advertising
► Kotler
sees 3 choices in view of today’s
developments vis-à-vis advertising:
 Advertise in a number of media channels in the
same time slot
 Advertise on the super bowls (cricket), Olympics
and major events that attract wide audience
 Build giant database with names of
customers/potential customers that have
greatest interest in company’s offering
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PR
► Kotler
thinks more should be spent for PR
► More chance of getting message through
► More believable
► More likely to create “buzz”
 Buzz marketing likely to rise in importance
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Kotler’s Predictions on Media
► Newspapers
will decline in circulation
► Though TV will continue to attract people, these
people will pay less attention to ads
► The use of radio will increase/
► Targeted magazines will increase in numbers
► Billboards will increase in impact (people spending
more time in their cars)
► Internet, email and chat rooms will increase
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More…what will online do to retail?
► Kotler
sees decline in travel agents,
insurance agents, stockbrokers, car
salespeople, bookstores, music stores
► Retailers need to move from merely carrying
goods to “more satisfying store experiences”
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What can small stores do with
competition from the likes of Walmart?
► Move
to specialty or superspecialty
merchandising
► Distinguish themselves with superior
customer service
► Intimately knowing customers well
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Stakeholder marketing
► Companies
have moved away from vertical
integration to outsourcing
► Need, therefore, to maintain relationships
with stakeholders (suppliers, employees,
distributors, Govt, etc) to have win-win
situation
► Mutual trust and selecting/motivating
partnerships is key to stakeholder marketing
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Internet marketing
► Need
to consider (besides just having website):
 Use Internet to test new products/marketing concepts
using online focus groups, consumer panels
 Assign someone to research competitors’ strategies,
tactics and resources on the Internet
 Use Internet to train/communicate with employees,
dealers and suppliers
 Use website to recruit new employees
 Distribute coupons and samples using website
 Monitor chat-room converstions
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Kotler’s opinion on why many online
companies went bust
►
►
►
Online marketers may be technically proficient but lack
financial & marketing knowledge
They fail to build good biz model
Main reasons why they went bust:
 Rushed into market, no proper market research/planning
 To get customers, spent large amounts on mass marketing
 Devoted too much effort to get new customers rather than stress
loyalty
 Didn’t understand customer behavior (online surfing/purchasing)
 Websites poorly designed/poor infrastructure for shipping, etc
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What do we do about China?
► Companies
can think of China as a great big
market (not just a low cost competitor)
► Based on your strengths/weaknesses, go
into China
► China will need many things
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