MKTG 207 Marketing Strategy Case Presentation: Aqualisa Quartz
Marketing Planning & Problem Solving [Dr. Carter; MKTG.490] COMBINED SET OF 2 nd section MARKETING...
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Transcript of Marketing Planning & Problem Solving [Dr. Carter; MKTG.490] COMBINED SET OF 2 nd section MARKETING...
Marketing Planning & Problem Solving[Dr. Carter; MKTG.490]
COMBINED SET OF2nd section
MARKETING PLANNING TEXT SLIDES
Chapter 5: Planning Direction, Objectives, and Marketing Support
The Marketing Plan Handbook:
3rd ed.
Marian Burk Wood
5-1
Determining Marketing Plan Direction
The ultimate purpose of the marketing plan is to help the organization achieve its objectives. Goals = Long-term objective targets. Objectives= Short-term objective targets
The direction chosen must be consistent with the organization’s priorities and strengths.
5-2
Options for Marketing Plan Direction
5-3
Six Approaches to GrowthBased upon permutations of markets and products.
1-12
CURRENT MODIFIED INNOVATED
EXISTING
EXPANDED(Geographic
)
ENTIRELY NEW
Market Penetration
Market Development
Product Development
Diversification
Growth
Most business plans call for unit or dollar sale growth.
The four broad strategies for growth are: Market penetration Market development Product development, and Diversification
5-4
Market Penetration Is the growth strategy in which the
company sells more of the existing products to customers in existing markets or segments.
It is especially viable for companies that can build on established customer relationships and positive value perceptions.
5-5
Market Development Market development involves identifying
and reaching new segments or markets for existing products.
5-6
Product Development Product development is a growth strategy
in which the company sells new products to customers in existing markets or segments.
5-7
Diversification Diversification is a growth strategy of
offering new products in new markets to take advantage of new opportunities: Through internal product development
capabilities, or By starting or buying a business
5-8
Pros and Cons of Diversification
Advantage: Diversification can help avoid over-reliance on a small number of products or markets
Disadvantage: Diversification can dilute available resources and open the organization to competitive attacks on multiple fronts.
5-9
Growth Not Always Possible
Growth not always desirable or possible E.g., tough economic times
Priorities may be to: Maintain current share Seek highest possible profits Retrench
5-10
Nongrowth Strategies
Nongrowth strategies include: Filing for bankruptcy Withdrawing from certain markets Deleting products Limiting distribution Closing a division
5-11
Setting Marketing Plan Objectives
Exact objectives depends upon: The current situation. Environmental issues and keys to
success. Customers in targeted segments. The organization’s mission and goals. The chosen positioning.
5-12
Keys to Effective Objectives Specific, time-defined and measurable. Realistic, but challenging. Consistent with the mission and overall
goals. Consistent with internal environmental
analysis. Appropriate in light of opportunities and
threats.
5-13
Three Types of Objectives in Marketing PlansMarketers usually set three types of
objectives in marketing plans: Marketing objectives: Targets for
managing certain marketing relationships and activities,
Financial objectives: Targets for managing certain financial results, and
Societal objectives: Targets for achieving particular results in social responsibility.
5-14
Marketing Objectives
Targets for managing certain marketing relationships and activities:
Customer acquisition Customer retention Customer satisfaction Channel relationships Unit sales Market share Product development Order fulfillment
5-15
Financial Objectives To be effective, financial and marketing
objectives should be consistent. At times, key financial objectives may give
way to achieve a coveted marketing objective.
Financial objectives generally include: Sales volume and product targets Profitability targets Return on Investment (ROI) targets Break-even targets
5-16
Answering to Stakeholders Various stakeholders have an interest in
the activities of the organization: Customers Suppliers Employees Civic leaders Others
These stakeholders track company progress on key issues and often hold them accountable.
5-17
Societal ObjectivesFulfilling societal objectives: Polishes company and/or brand image. Shows the organization is doing something
constructive about important issues. Some of the key issues include:
“Greener” products Charitable donations Involvement in community projects Energy conservation Issue awareness
5-18
Cause Related Marketing Links the marketing of a brand, good or
service to a charitable cause. Although charitable, there is an explicit
marketing connection.
5-19
Planning Marketing Support
Before plunging into the details of planning the marketing mix, marketers need to set objectives for two aspects of marketing support:
Internal Marketing: marketing to managers and employees inside the company, and This includes upward communication
Customer Service
5-20
Internal Marketing
May take the form of: Internal newsletters Web pages Training meetings Marketing or sales meetings Other techniques
5-21
Internal Marketing Support Objectives Keep employees focused on customers. Keep employees involved in marketing. Keep employees informed about
marketing. Improve employee performance and
satisfaction.
5-22
Customer Service
Customers have different customer service needs at different points in the buying process:
Before the sale At the moment or point of sale After the sale
5-23
Customer Service Objectives
Meet targeted segment’s needs, expectations.
Attract, retain, satisfy customers. Reinforce the product or brand
positioning. Allocate service resources appropriately. Service recovery
Customer service is rarely perfect every time
5-24
Shaping the Marketing Mix
Managers look to the key priorities of the organization as they determine action steps and allocate resources.
All tactics and programs developed : Must be consistent with mission, direction,
goals and objectives, and Support the mission, direction, goals and
objectives.
5-25
The Strategy Pyramid
5-26
Chapter 6: Developing Product and Brand Strategy
The Marketing Plan Handbook:
3rd ed.
Marian Burk Wood
6-1
Introduction Product strategy is critical to the success
of the overall marketing strategy.
Value is captured in two key areas: Product Strategy
Existing and proposed products. Branding
Value enhancement through awareness and image.
6-2
Product Strategy Product value is derived from
Features, and Benefits received
Products can be tangible goods, services, places, ideas, organizations, or people.
6-3
Designing a ServiceTangible Activities
People Processing
Item Processing
Health care
Hotels
Mass transit
Delivery service
Janitorial service
Parking garage
Intangible Activities
Mental Processing
Information Processing
Entertainment
Management consulting
Local phone service
Banking
Legal services
Accounting services
6-4
Features and Benefits
Features: Specific attributes that enable a product or service to perform its function.
Benefits: Need-satisfaction outcomes.
6-5
Mass Customization Mass Customization: Creating products,
on a large scale, with features tailored to the needs of individual customers.
Offerings should be analyzed, feature by feature, to help understand the benefits and value derived by the target customers. Try to avoid “feature bloat”.
6-6
Sample Needs, Features and Benefits
Product
Targeted Segment Need Feature Benefit
Cordless drill Do it yourselfers
Drill holes without electricity
Extra battery pack included
Drill can be used for long periods of time
Mortgage loan
First-time home buyers
Obtain money to buy a home
Low down payment
Less money needed up front to buy a home
Laser printer Small business owners
Print documents economically
Draft-quality printing mode uses less toner
Toner cartridge lasts longer, saving money
6-7
QualityQuality: Put simply, how well the product
satisfies customers. Basic functionality is only the price of entry. Superior quality attracts business. Poor quality can lead to negative word-of-mouth.
6-8
DesignDesign: Quality comes from design,
components/ingredients and processes. At the forefront of many categories. Includes “emotional quality” – the impact
of design on how it makes the customer feel.
6-9
Packaging Keeps products safe. Helps companies burnish their brand
imagery and highlight points of differentiation.
6-10
Labeling Communicates product contents, uses and
warnings. Conforms to national, regional and local laws and
requirements mandating warnings, allowable use of certain phrases, and even the size and type of words used.
Helps attract attention, stand out from retail clutter.
6-11
Product DevelopmentSteps in the Product Development Process: Idea generation. Screening of new ideas. Initial concept testing. Business analysis. Prototype design. Market testing. Commercialization. Monitoring customer reaction.
Let’s look at product strategy from the perspective of this development process…
6-12
Product Strategy andThe Product Development ProcessIdea Generation and Screening
Initial Concept Testing
Business Analysis
Design Prototype
Market Testing
Commercialization
Based on customer needs and wants
Screen out unprofitable or unsuitable ideas
Research customer value of product concepts
Refine concept based on research
Estimate development, production and marketing mix costs
Compare costs with potential share, sales, profitability to identify good candidates
Design and produce working prototypes
Test prototype functionality, customer appeal
Limited market trials or simulated testing
Test different marketing mix combinations for support
Plan targeting and timing of launch
Plan production and marketing mix support for launch
6-13
The Product Life CycleMarketers must carefully monitor the
environment to determine where their industry or product may be among the following stages of the PLC:
Introduction Growth Maturity Decline
Let’s look at product strategy from the perspective of the Product Life Cycle…
6-14
Product Strategy andthe Product Life Cycle
Introduction Growth Maturity Decline
Launch the new product.
Support launch with marketing mix programs to build customer awareness, make product available, and encourage trial.
Enhance product (new features, improved quality, added services, new packaging).
Support rising sales with expanded channel coverage, pricing for market penetration, and communications to start and reinforce customer relationships.
Add brand or line extensions.
Defend market share through competitive pricing, channel expansion, communicating differentiation, and promotion to reinforce customer loyalty.
Reposition, reformulate, or cut struggling products.
Manage profitability through careful pricing, pruning channel outlets, and minimal or highly targeted communications.
6-15
Product Mix and Product Lines Product Mix: The overall assortment of all product or services
offered. Product Lines: A group of products that are all similar in some
way. Product Mix Width: Number of lines offered. Product line Depth: Number of products in a line.
6-16
Line Extensions & Brand Extensions Line Extension: Putting an established brand on a new product
and adding it to an existing product line. A low fat version of Lay’s potato chips.
Brand Extension: Putting an established brand on a new product in a different category for a new customer segment. E.g., Snicker’s brand ice cream.
6-17
Product Line and Mix Decisions
DECISION RESULTNew product Lengthens product line
Line extension Lengthens product line
New line Widens product mix
Brand extension Widens product mix
Product deletion Shortens product mix
Line deletion Narrows product mix
6-18
Planning Branding Branding gives a product a distinct identity and differentiates it
from competitive products using: words, designs, and symbols.
In terms of branding, a product may carry: Company name and individual brand.
Courtyard by Marriott
Individual name. Gap, Old Navy
Private-label brand. Wal-Mart
Multiple Brands (co-branding, ingredient branding). Dell PC with Intel computer chips
6-19
Brands Should Be….
Meaningful. Recognizable and memorable. Capable of being legally
protected. Suitable for international
markets.
Branding and Positioning Branding not only identifies a particular
product, but it sets it apart from the competition (both direct and indirect).
Positioning: What the target group perceives about your brand relative to how they perceive the competition.
6-20
The Power of Brand Equity Brand Equity: the extra value customers
perceive that enhances their long-term loyalty to a brand. Can insulate a company against competitive threats. Can help new products achieve acceptance.
The Value of Strong Brands: Encourages brand loyalty. Boosts customer lifetime value.
The total amount that a customer spends on a brand or with a company during the life of their relationship.
6-21
Pyramid of Brand Equity
Salience
Performance Imagery
Judgments Feelings
Resonance
6-22
Chapter 7: Developing Pricing Strategy
The Marketing Plan Handbook:
3rd ed.
Marian Burk Wood
7-1
Unique Aspects of Pricing Pricing directly produces revenues,
whereas other marketing functions require investments of money, time and effort.
Most pricing decisions can be implemented relatively quickly, while other elements of the marketing mix usually take longer to implement.
7-2
Fixed vs. Dynamic Pricing Fixed Pricing: customers in the targeted
segment pay the price set (fixed) by the marketer.
Dynamic Pricing: Prices vary from customer to customer or situation to situation.
7-3
Value Marketers must research and analyze
value from the customers perspective Marketers must also consider how the
product’s value will be communicated to customers.
Customers’ perceptions of value and price sensitivity can be used to deal with imbalances in supply and demand.
7-4
Weighing Benefits vs. Total Price
7-5
Price Elasticity
Price elasticity is the level of demand for a product at different price points.
Price elasticity is calculated by dividing the percentage change in unit sales demanded by the percentage change in price.
Demand is said to be “elastic” when a small price change significantly increases or decreases demand.
Demand is said to be “inelastic” when a price change does not significantly change the number of units demanded.
7-6
Price Elasticity (cont’d)
Change in Price Inelastic Demand
Elastic Demand
Small Increase Demand drops slightly
Demand drops significantly
Small Reduction
Demand rises slightly
Demand rises Significantly
7-7
Factors Impacting ElasticityIn general, customers tend to be less sensitive to a product’s
price when they: Are considering a relatively small amount. Are unaware of or can’t easily compare substitutes and
prices. Would incur costs or difficulties in switching products. Perceive that the product’s quality, status, or another benefit
justifies the price. Are spending a relatively small amount or are sharing the
cost. Perceive the price as fair. Are buying products bundled rather than separately.
7-8
Cost-Based Pricing / Value-Based Pricing
Cost-based pricing: Start with the product and its cost. Set a price that covers the cost. Communicate value to customers.
Value-based pricing: Research customers perceptions of value and
the price they are willing to pay. Find a way to make the product at a
reasonable cost (target costing) to return a reasonable profit or achieve other objectives.
7-9
Cost-Based Pricing / Value-Based Pricing
Of the two methods, cost-based is more common.
7-10
Planning Pricing Decisions Pricing decisions must be:
Value-based Profit-driven Proactive
When planning pricing, marketers must examine: Objectives External influences
Tend to suggest the price “ceiling”. Internal influences
Tend to suggest the price “floor”.
7-11
Pricing to Meet the Firm’s Objectives The pricing strategy must be consistent
with the firm’s overall goals and objectives
Due to market realities, organizations may have to trade off market share growth with profitability.
7-12
Samples of Pricing Objectives
Type of Objective Sample Pricing Objective
Financial For profitability: Set prices to achieve gross margin of 40%.For ROI: Set prices to achieve full-year ROI of 18%.
Marketing For higher market share: Set prices to achieve a market share increase of 5% within 6 months.For customer acquisition: Set prices to attract 1500 new customers from January to June.
Societal For philanthropy: Set prices to raise $10,000 for charity during the second quarter of the year.For energy conservation: Set prices to sell 500 alternative fuel vehicles nationwide during August.
7-13
External Pricing InfluencesKey external influences on pricing strategy
include: Customers Competitors Channel Members Legal, Regulatory and Ethical Concerns
7-14
Customers Consumer Customers
Perceptions of value, behavior, and attitudes all affect consumers reaction to pricing.
Research shows consumers allow some latitude in the range of prices deemed acceptable.
Business Customers Globalization has increased range of choices. Customers frequently search for the lowest price.
Willing to switch suppliers frequently. Emphasis on building relationships, thereby increasing
switching costs.
Customers tend to set the price “ceiling”.
7-15
Competitors By analyzing prices, special deals and
probable costs of competing products, a company can get a better sense of: The alternatives available to customers, and Competitors’ pricing objectives and strategies.
Pricing is highly visible in many industries, often exerting downward pressure on profits and limiting pricing options.
7-16
Reacting to Competitors’ Changes in Pricing Strategy
7-17
Channel Members Companies must consider the pricing
expectations and marketing objectives of their distribution partners: wholesalers and retailers.
The marketer must also consider that the Internet is bringing wholesale and retail prices down in many categories, due to: More efficient transaction capabilities, Convenient price comparisons, and Higher competition – sometimes from unexpected
sources.
7-18
Sample of Consumer Pricing in the Retail Channel
Note the % increase in price required by each channel intermediary.
7-19
Legal and Regulatory ConcernsCompanies need to comply with a variety of
pricing laws and regulations. Some of these include:
No price collusion. No minimum retail price. No price discrimination. No predatory pricing. Price limits.
7-20
Ethical ConcernsSome examples of ethical decisions in
pricing: Is it ethical to raise prices during an
emergency, when products may be scarce or particularly valuable?
Should a company set a high price for an indispensable product, knowing that some customers will be unable to pay?
How far in advance should customers be notified of planned price increases?
7-21
Internal Pricing Influences
Key external influences on pricing strategy include:
Costs and break-even objectives. Targeting and positioning strategy. Product strategy. Other marketing decisions.
7-22
Costs and Break-even Objectives
Costs typically establish the theoretical “floor” of the pricing range.
Break-even point: the sales level at which revenues cover costs.
Costs and break-even are more easily calculated for existing products in existing markets.
For new products, marketers must rely on forecasts and/or expert estimates of costs and expected sales volumes.
7-23
Total, Fixed and Variable Costs
The total cost consists of both fixed and variable cost.
Fixed costs: Overhead expenses such as rent and payroll, which do not vary with volume.
Variable costs: Expenses such as raw materials, which do vary with volume.
7-24
Average Cost/Unit Once the marketer knows the total costs, they
can divide the total by the number of units produced to compute the average cost per unit.
The marketer can then compute this average cost at various output levels, corresponding to different assumptions about demand.
This provides important insight to the marketer at how the price could be set at each level of demand to recover total costs, or earn a targeted level of profit.
7-25
Break-even ExampleThe break-even formula is: Break-even volume = fixed cost/price-
variable cost. Example:
Fixed cost = $40,550 Variable cost = $45 per unit Price = $995 per unit Therefore:
Breakeven = $40,550/$995 - $45 Breakeven = $40,550/$950 Breakeven = 42.6 units (roundup to 43 units)
7-26
Targeting and Positioning StrategyThe price must be appropriate to support the
targeting and positioning strategy. Target Market:
A target of price–sensitive customers would likely require lower price points.
A target of affluent customers would likely tolerate higher price points.
Positioning A product positioned as being a “good value” will
likely require a lower price point, A product positioned as a luxury good, or as a status
symbol would best be supported by a higher price point.
7-27
Product StrategyPricing can be used to manage the product’s
movement through the life cycle: Introduction: Decision between skim and
penetration pricing. Growth: Pricing used to stimulate demand, drive
toward break-even point. Maturity: Pricing used to defend market share,
retain customers, pursue profitability and expand into additional channels.
Decline: Pricing can be used to stimulate demand and “clear out” old products, or to “milk” existing products for profitability at end of life.
7-28
Skim PricingMore appropriate when the firm is more focused on
profitability, rather than unit volume.Most likely to occur at early stages and late stages of
the PLC.Favorable conditions: Considerable differentiation. Quality-sensitive customers. Sustainable advantage. Few competitors. Few substitutes. Difficult competitor entry.
7-29
Penetration PricingMore appropriate when business is focused on
building unit volume.Most likely to occur at the early stages of the PLC.Favorable conditions: No/Limited differentiation. Price-sensitive customers. No sustainable advantage. Many competitors. Many substitutes. Easy competitor entry.
7-30
Skim and Penetration Pricing
Note: Under skim pricing, prices start higher and are maintained higher over time.
7-31
Pricing for Special Situations
Special situations: For survival: Price to cover costs at very
least. For bankruptcy: Price to liquidate stock
and raise money quickly. For aggressive growth: Set prices to
return slim or no profit margins in the short run.
7-32
Impact of Other Marketing Mix Variables Channel members, suppliers and logistics
Each independent business partner has its own business objectives which must be balanced with the objectives of the organization.
Promotion strategy Higher-priced products often promoted differently and
through different media than lower-priced products. Pricing is a challenge for companies that market
through personal selling, when customers expect to negotiate prices with salespeople.
7-33
Adapting Prices Involves the activity of modifying and fine-
tuning prices within an acceptable range. Sometimes prompted by changes in
customer behavior. The chosen adaptation depends on the
company’s: Resources and capabilities Goals and strategic direction, and Marketing plan objectives
7-34
Pricing Adaptations
Some typical pricing adaptations include: Discounts Allowances Bundling or Unbundling Product Enhancement Segment Pricing
7-35
Pricing Adaptations (cont’d)Pricing
AdaptationIn Consideration
of ,,, ExamplesDiscounts Buying in volume
Buying out of season
Quantity discounts
Cash discounts
Functional discounts
Allowances Participating in special promotions
Bringing in old products and trading up to new products
Discounts
Extra payments
Extra product allocations
Trade-in allowances
Bundling or unbundling
Buying multiple products together
Buying parts of a product separately
Increasing discounts as one purchases more items together.
Lower overall prices as one purchases parts of an offering
Product Enhancement Maintaining the current price point
Raising the price point
Adding more for same price
Adding complementary products or services
Segment Pricing Special requirements of specific segments
Child’s menu
Senior citizen discount
7-36
Chapter 8: Developing Channel and Logistics Strategy
The Marketing Plan Handbook:
3rd ed.
Marian Burk Wood
8-1
Channel Strategy
8-2
How, when and where to make goods and services available to customers.
Decisions must be based upon: Other elements of the marketing mix strategy. A thorough understanding of the targeted
segment. An understanding of the environment. The product’s characteristics and its stage in
the product life cycle.
The Value Chain A series of interrelated, value-added
functions plus the structure of organizations performing them.
On the inbound side: To obtain the inputs needed for creating the goods and services.
On the outbound side: To meet demand by making the product or service available.
8-3
Major Links in the Value Chain
During the planning process, marketers analyze how value is added at each connection in the value chain.
8-4
Three Flows in the Value ChainChannel and logistics involves managing the three
value-chain flows: Products: Refers to physical items such as raw
materials and product packaging on the inbound side and finished products on the outbound side.
Data: Refers to information such as the number of items ordered, customer requirements and feedback, and other information that adds value.
Money: Refers to payments for supplies, reseller or customer payments for finished goods, and other money movements between participants.
8-5
Adding Value Through the Chain Each participant adds value to satisfy the
needs of the next link. The price paid by each successive
participant reflects the value added by the previous link.
Customers at the end of the chain ultimately pay for the combined value added by all participants.
8-6
Services and the Value Chain Marketers planning for service business
face the same supply chain challenges as those who manage tangible goods.
However, because services are generally produced and consumed simultaneously, marketers must plan flows to more accurately match supply and demand.
8-7
Planning Channel StrategyEach organization must make decisions
regarding: Which channel functions must be covered
by someone other than the organization? Who will handle each function? How many channel levels to use?, and How many and what type of channel
members to choose?
The answers to these questions will vary from product to product and market to market.
8-8
Types of Channel Functions Matching volume, amount, or offer to
customer needs. Providing intermediaries and customers
with product and market information. Contacting and negotiating with
customers to maintain relationships and complete sales.
Transporting and storing products prior to purchase.
8-9
Decisions Regarding Channel FunctionsThe configuration of functions must be
tailored to products and markets. Determine which functions are best
handled by the firm and which are best handled by an intermediary.
Determine who the channel intermediary should be.
Determine the compensation for the intermediary.
8-10
Channel LevelsEach channel level adds value in some way.Basic channel level configurations: Zero-level: direct linking of the seller to the
buyer. One-level: The seller works with a single type of
intermediary. Typically a manufacturer – retailer configuration.
Multiple-level: The seller works with tow or three levels of distribution partners. Typically a manufacturer – wholesaler – retailer
configuration.
8-11
Channel Levels Illustrated
8-12
Reverse Channels To return products for exchange, repair or
recycling. Can be used to build relationships with
customers and the community. Must take into consideration the laws and
regulations that may govern their reverse channel strategy.
Can also represent profit opportunities for enterprising companies.
8-13
Channel Members
Key considerations include: Customer needs and habits Financial considerations Product’s life cycle Product’s positioning The target segment Relations with channel members should
be reexamined periodically.
8-14
Distribution Intensity Intensive Distribution: In many outlets for
maximum market coverage. Selective Distribution: In a number of
selected outlets. Exclusive Distribution: In few outlets for
exclusivity within each market.
8-15
Distribution Intensity (cont’d)Distribution Intensity Value to Marketer Value to Customer
Intensive Increase unit sales.
Market impulse items.
Cover more of each market.
Convenient.
Lower prices due to competition.
Selective Reduce dependence on a few outlets.
Control costs.
See product.
Receives sales help.
Obtain some services as needed.
Exclusive Support product or brand positioning.
Better supervise service, etc.
Receive personalized attention.
Access to delivery, alterations, customizations, etc.
8-16
Influences on Channel Strategy
8-17
Planning for Logistics
Marketer’s Balancing Act: Being responsive to customers needs while still meeting internal financial targets.
8-18
Logistics Decisions
8-19
Influences on Logistics Decisions The organization’s approach to social
responsibility. Cost constraints and the marketer's
logistics budget.
8-20
The Logistics Strategy
The marketing plan need not contain very detail of the logistics strategy. But it should contain:
A general outline, An explanation of the balance of total
costs versus responsiveness, and An indication of how logistics functions
will support other marketing decisions.
8-21
Chapter 9: Developing Integrated Marketing Communication
The Marketing Plan Handbook:
3rd ed.
Marian Burk Wood
9-1
Integrated Marketing Communications Every marketing plan anticipates the use
of marketing messages. For maximum effect, marketers should
coordinate the content and delivery of all marketing communications to ensure consistency and support the positioning and direction.
This approach is known as integrated marketing communications.
9-2
Five Basic Promotion ToolsIntegrated Marketing Communications
consists of five basic tools:
1. Advertising
2. Sales Promotion
3. Public Relations
4. Direct Marketing
5. Personal Selling
9-3
IMC StrategyThe IMC strategy involves:
1. Defining target audiences,
2. Establishing objectives and a budget,
3. Analyzing pertinent issues,
4. Selecting appropriate IMC tools, and
5. Planning appropriate pre- and post- implementation research to evaluate effectiveness.
9-4
Choosing the Target Audience Target market can vary from end
customers to employees to distribution partners.
Target markets need to be understood in as much detail as possible: To help shape the message. To help choose the appropriate tool.
9-5
“Push” and “Pull” Strategies
Push strategy: the company targets intermediaries, encouraging them to carry and promote the product.
Pull strategy: The company encourages end consumers to ask intermediaries for the product.
9-6
Understanding Target Market Consumer Behavior IMC can be used to move the audience through
a series of responses corresponding to beliefs, behavior and feelings about the product or brand.
The order that the consumer moves through these responses is dependent upon whether the good or service is “low involvement” , “high involvement”, or “experiential”.
The marketer should understand the response model for a given product or category when setting objectives.
9-7
Low Involvement, High Involvement & Experiential Models of Behavior
Under high involvement, beliefs precede all subsequent steps.
Under low involvement, behavior precedes feelings.
Under experiential, feelings, precede both behavior and beliefs.
9-8
Setting Objectives
Objectives can be related to influencing beliefs, influencing feelings, or influencing behaviors.
Objective Sample
Influencing Beliefs “Achieve 25% awareness of Product A among the target audience within 4 months.”
Influencing Feelings “Achieve 18% preference for Product E among the target audience within 3 months.”
Influencing Behavior
“Achieve 9% trial of Product C among the target audience within 6 months.”
9-9
Setting the BudgetFactors to be considered when setting the
IMC budget: Overall marketing budget. Objectives to be achieved. Competitive circumstances. Potential ROI (Return on Investment).
9-10
Examining IssuesTypes of issues that can impact IMC
strategy: Legal Regulatory Technological Ethical Cultural Competitive
9-11
Choosing IMC Tools
9-12
Word of Mouth and Buzz Marketing When possible, marketers want to spark positive
word-of-mouth (WOM) communication: Information spread by WOM has more credibility
because it comes from a personal source. However, the outcome of WOM is unpredictable, and
cannot often be accurately measured. Buzz marketing: When the company seeks to
generate more intense WOM, it may provide communicators with samples or coupons.
9-13
Planning Research The marketing plan should allow for pre-testing
and post-implementation research to evaluate the IMC activities.
Pre-testing: To find out if the target audience understands the message and retains information.
Post-implementation: To determine whether or not the IMC program has achieved its objectives and which elements of the plan were particularly effective.
9-14
Using IMC Tools Marketers typically use multiple tools in
any one campaign. Marketers should consider the overall
effect when planning the IMC program. Careful coordination of content and delivery
across messages and media is essential for consistency.
9-15
AdvertisingTwo basic decisions: Message Media
9-16
Message Appeal
Message Appeal: determined by the ad’s wording, format and design, graphics, sound, and other elements. Types of appeals include:
Rational: Using facts and logic to stimulate a response.
Emotional: Evoking feelings to stimulate a response.
9-17
Choosing Media Each medium has characteristics that
convey the message in a different way. Two key decisions in planning media:
Reach Frequency
9-18
Media Choices Television Radio Outdoor Newspaper Magazine Internet Direct Mail Other
9-19
Sales Promotion
Influences customer behavior by reducing perceived price or enhancing perceived value for a limited time.
Sale promotion techniques vary depending on the target audience; Consumer promotions: Targeting end
consumers. Trade promotions: targeting channel members
and salespeople.
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Consumer Promotions
Consumer Promotions Sampling Coupons Rebates Refunds Premiums Sweepstakes and
contests Bonus packs Loyalty programs
Objectives Building awareness Encouraging product trial
or usage Encouraging speedy
response Reinforcing loyalty Supporting advertising or
other IMC activities Defending against
competitors
9-21
Trade PromotionsTrade Promotions Allowances and
incentives Sales contests Training and support Point-of-purchase
materials
Objectives Enhancing product
knowledge Building commitment Reinforcing focus and
loyalty Supporting
advertising or other IMC activities
Defending against competitors
9-22
Public RelationsPurpose: To open the lines of communication and
develop positive relationships with the company’s stakeholder groups:
Customers and prospects Employees and job applicants Channel members Suppliers Government officials Local community groups Special interest groups Financial community
9-23
Objectives for PR Activities
Understanding stakeholders’ perceptions and attitudes.
Managing the company’s image. Communicating views and information. Building brand and product awareness.
9-24
Direct Marketing Through mail, broadcast and print media,
the Internet, and other media. Direct marketing is cost-effective for:
Precise targeting, and The use of customized messages.
Marketers can easily measure results. To be effective, the direct marketing
message must be relevant to the target audience and not be perceived as junk mail or spam.
9-25
Personal SellingMore appropriate if the target audience: Requires customized goods and services. Needs assistance assessing needs. Makes large purchases. Requires individual attention for other reasons.
The one-to-one nature of personal selling supports strong customer relationships.
For an immediate sale, or for a sale in the future.
9-26
Personal Selling Decisions Whether to hire salespeople or work with
an outside sales agency. How many salespeople are needed, and
how they will be organized. Related to sales staff, how to:
Recruit Train Manage Motivate Compensate
9-27
The Personal Selling Process1. Identifying and qualifying prospects.
2. Planning the presales approach.
3. Making sales contact.
4. Addressing objections.
5. Closing the sale.
6. Following up after the sale.
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Chapter 10: Planning Performance Measurement and Implementation Control
The Marketing Plan Handbook:
3rd ed.
Marian Burk Wood
10-1
Measurement and ControlMeasurement Forecasts of future sales and costs, Budgets allocating financial resources, Schedules identifying the timing of marketing tasks,
and Metrics to gauge progress toward achieving
objectives.
Control Identify Analyze Correct
10-2
Overview of Measurement Tools
10-3
Forecasts Are future projections of what sales and costs
are likely to be in the months and years covered in the plan.
Can never be more than good estimates. However, still should be as accurate as possible. Need to be reviewed often. Must account for the effect that marketing
activities will have on the direction and velocity of sales.
10-4
Forecasts of Sales and Costs External factors to consider:
Demand Threats Opportunities
Internal factors to consider: Goals Capabilities Constraints
10-5
Types of Forecasts Market and segment sales Company product sales Cost of sales Sales and costs by channel
Creating the forecasts is only part of the task. Next, month-to-month and year-to-year changes must be estimated in order to examine trends and rates of change.
10-6
Sources of InformationFor Forecasting Value-chain partners Primary research:
Studies of buying patterns and buying intentions.
Secondary research: Trade associations. Government statistics. Industry analyst reports.
Judgment is typically used to fine-tune the estimates.
10-7
Judgment-based Forecasting
10-8
Forecasting New Products Forecasting for new products is even more
challenging than for existing products. Bass model appropriate when:
The company has been able to collect sales data for even a brief period , and
The product is similar to an existing product or technology with a known sales history.
When the product is so innovative that it establishes a new product category, companies will: Use simulated test markets. Look at sales patterns of products with similar
market behavior.
10-9
Budgets Budgets are time-defined allocations of
financial outlays for specific functions, programs, customer segments or geographic regions.
Enable marketing managers to: Allocate expenses, and Compare estimates with actual expenses.
10-10
Examples of Budgeting Policies
Insist that budget preparation follow internal financial calendars.
Specify profit hurdles. Specify particular assumptions about expenses
and allocations. Mandate particular formats or supporting
documentation. Based upon best-case, worst-case and most-
likely scenarios. Adjusting budgets monthly instead of annually.
10-11
Budgeting Methods Affordability budgeting Percentage-of-sales budgeting Comparative-parity budgeting Objective-and-task budgeting
10-12
Affordability Budgeting Budgeting what you believe you can
afford. May work for start-ups. Generally, not a good way to budget.
Doesn’t allow for the kinds of significant, ongoing investments often needed to launch major new products or enter intensely competitive markets.
Ignores profit payback calculation.
10-13
Percentage-of-sales Budgeting Management sets aside a certain percentage of
dollar sales to fund marketing programs. Based on internal budgeting guidelines or
previous marketing experience. Advantage: Simple to implement. Disadvantages:
Sales are seen as the source of marketing funding, rather than as the result of budget investments.
Difficult to justify the % set aside for marketing. Self-defeating: lower sales may lead to a lower
marketing budget.
10-14
Comparative-parity Budgeting Funding marketing by matching what
competitors spend. Advantage: Simple to implement. Disadvantages:
Ignores differences between companies. Doesn’t allow for adjustments to meet specific
marketing objectives.
10-15
Objective-and-task Budgeting
Adding up the cost of completing all of the marketing tasks needed to achieve marketing plan objectives.
Advantage: A reasonable build-up method.
Disadvantage: May add up to more than the firm can afford. Priorities may have to be established.
10-16
Budgets Within the Marketing Budget
Budgets for each marketing mix program. Budgets for each brand, segment or
market. Budgets for each region or geographic
division. Budgets for each division or product
manager. Budget summarizing all marketing
expenses.
10-17
Schedules Schedules are time-defined plans for
completing a series of tasks or activities related to a specific program or objective. Timing should be as concrete as possible.
Help avoid conflicts. Help measure progress toward
completion.
10-18
The Scheduling Process List the main tasks and activities. Assign each a projected start and end date.
Through research or experience. Determine who is responsible for each task. Develop an overall summary schedule. Develop detailed schedules for each sub-
program. Gantt charts. Critical path schedules.
10-19
MetricsMetrics: Focus employees on activities that make a
difference. Set up performance expectations that can
be objectively measured. Lay a foundation for internal
accountability and pride in accomplishments.
10-20
Main Categories of Metrics
10-21
Marketing Dashboard A marketing dashboard is a computerized,
graphical presentation that helps management track important metrics over time and spot patterns that signal deviations from the marketing plan.
Helps managers see the situation at a glance, based upon a limited number of data inputs.
Varying levels of dashboards: Corporate, divisional or functional.
10-22
Identifying MetricsMethods of identifying appropriate metrics
include: Working backward from mission, goals and
objectives. Looking for key components or activities related
to customer buying behavior. This would include metrics for each of the three
key areas: Marketing objectives, Financial objectives, and Societal objectives
10-23
Sample Marketing MetricsObjective Metric
To acquire new customers.
Measure number or percentage of new customers acquired by month, quarter, year.
To retain current customers.
Measure number or percentage of customers who continue purchasing during a set period.
To increase market share.
Measure dollar or unit sales divided by total industry sales during a set period.
To accelerate product development
Measure the time needed to bring a new product to market.
10-24
Sample Financial Metrics
Objective MetricTo increase sales revenue by product.
Measure product sales in dollars per week, month, quarter, or year.
To improve profitability. Measure gross or net margin for a set period byproduct, line, channel, marketing program or customer.
To reach break-even. Measure the number of weeks or months until a product’s revenue equals and begins to exceed costs.
10-25
Sample Societal Metrics
Objective MetricTo make products more environmentally friendly.
Measure the proportion of each product’s parts that are recyclable or have been recycled during a set period.
To build awareness of a social issue.
Measure awareness among the target audience after the program or a set period.
To conserve electricity or fuel.
Measure amount used by month, quarter, year.
10-26
Metrics Based on Customer Behavior
10-27
Using Metrics
Metrics are most valuable to the marketer when viewed in the context of:
Expected outcomes. Historical results. Competitive or industry outcomes. Environmental influences.
10-28
Keys to Success in Implementing a Marketing Plan
10-29
Controlling Marketing Plan ImplementationFour types of marketing control help
marketers gauge the effectiveness of the plan implementation:
Annual Plan, Profitability, Productivity, and Strategic Control
10-30
Four Forms of Control
10-31
Applying Control1. Set objectives.
2. Determine metrics.
3. Determine measurement intervals.
4. Measure.
5. Take corrective action, if necessary. Or modify standards and/or objectives.
10-32
Contingency PlansContingency plans are plans that organizations
have ready to implement if one (or more) of their original strategies or programs is disrupted by significant, unexpected changes.
Often prepared to show how the organization will respond in the case of emergencies such as: Computer system outages Power outages Natural disasters Etc.
Should be creative in terms of considering options, priorities and resources.
10-33