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MARKETING
- Introduction................................................................................................................................................................ Table of Contents
- Segmentation...........................................................................................................................................................
- Positioning................................................................................................................................................................
- Marketing mix...........................................................................................................................................................
- SuperSalad SPA case.................................................................................................................................................
- Pricing.......................................................................................................................................................................
- Distribution...............................................................................................................................................................
- Branding...................................................................................................................................................................
- Communication........................................................................................................................................................
- Digital Attributes.......................................................................................................................................................
- Aqualisa Quartz Case................................................................................................................................................
Customer satisfaction Our resources and skills With the analysis of the position, we have the diagnosis of strengths and weaknesses. Through both of them we get SWOT analysis in which you can analyse objectives and strategies. It consists in: Market segmentation Market targeting Marketing positioning When we have decided the strategy, we go through programming the marketing mix: these are the 7P’s: Product Place Price Promotion Physical evidence Personnel Processes PESTEL analysis Which scenario’s factors can influence company’s success? P stands for Politics E stands for Economy S stands for Society T stands for Technology E stands for Environment L stands for Law These variables are affecting: Supply levels (capital, labour) Demand levels (consumption, investment, climate export, imports) Cost structures (price based in the equilibrium of supply and demand) There are different meanings of the term “market”: Economic theory – Collection of economic operators (buyers and sellers) who interact to make transactions involving a product. Marketing theory – mostly, customer groups “Customers, current and potential, who share a particular need or want which could be satisfied by a particular product/service”. Other meanings :
- Geographic market: a product’s area of distribution (e.g. domestic market).
- Demographic groups (e.g. the youth market)
- Product market (e.g. the shoe market)
Macro Environment – Market Qualification We have different levels of market: Potential market: market that is achieved when the marketing effort is infinite. Qualified market: market with the requisites to be available for the purchase. Available market: qualified and able to spend enough to buy the product or interest enough in the category. Served: available market that is reached by the marketing effort of the companies. Penetrated: market that has already purchased products/services in the category. Market demand: Introductory concepts 1 – Need When we talk about market we talk also about needs. “A feeling that something is missing (privation) compared with the general satisfaction of the human condition”. They can be classified: According to the real “necessity” : “true” and “false” needs. Marketing creates needs. According to the social dimension of the need : “absolute” and “relative” needs. An absolute need is a need experienced regardless of the situation of others. A relative need is a need whose satisfaction takes us beyond our peers, giving us a feeling of superiority over them. Absolute needs can be satisfied, relative needs can never be fully satisfied. According to the objectification : “generic” and “derived” needs. A generic need regards the fundamental, functional need. A derived need regards the specific “object” that can express the functionality: it is the technological answer to the generic need. Derived needs are subject to a life cycle owing to technological progress and “destructive” innovation processes. Generic needs follow their own path: they tend to be the envelope curve of needs arising over the time. Desires are influenced by social environment. Assumption: needs derive from sense of privation, which motivates human beings to go to higher-order needs once they have satisfied the lower-order ones (omeostasys). Maslow’s Hierarchy of needs
- Product/service
- Definition of “purchase”
- Unit of measure
- Customers
- Geography
- Time
- Level of aggregation Decision-making variables (marketing effort) that influence demand: Price Product/service Sales point (distribution) Publication (communication) Personal relationship Environmental variables that influence the demand: Macro-environment Economic trends Customers’ disposable income Competition system Position Complementary products Substitute products 5 – Market share The market share is an indicator of the competitive capacity of a company, product or brand. If you have a good market share you have a better possibility to communicate. In calculating the market share, you have to choose the system of reference: It is also important the concept of relative market share, which gives you information about the company market share with respect to another company.
Relative market share ( compared with themarket leader )=
Market share of the company
Market share of the leading company
Example:
Other Marketing KPI Share of awareness-brand awareness measures how familiar people are with your brand or product. Top of mind – The first brand that comes to mind when a customer is asked an unprompted question about a category. The percentage of customers for whom a given brand is top of mind can be measured. Unaided awareness – A measure of the number of people who express knowledge of a brand or product without prompting (brand recall). Aided awareness – A measure of the number of people who express knowledge of a brand or product when prompted (brand recognition). Share of marketing pressure Share of voice : how much the company spent in the communication, marketing relationships with other competitors in terms of investment.
SV ik =
mktginviK
j∈ K
mktginv j
Meaning: marketing investment by brand I in the category K as a percentage of the total marketing investment in the category. 28/09/ “Macro” analysis : customer as a number to qualify and estimate the market of reference. “Micro” analysis : customer as an individual, with his/her own objectives, wants, behaviour. There are two types of distinct businesses: B2C : Business to Customers B2B : Business to Business When we talk about customers, analyse how the customers are buying is important because collecting information about the costs and the risks the customer incur in the buying process and finding ways to eliminate or reduce them before competitors create competitive advantage, that is the firms’ goal. The risks and costs of customers can be explicit or hidden: EXPLICIT Monetary costs Monetary risks Explicit costs and risks are seen by every competitor. This brings to a price war and a consequent contraction of the contribution margin. HIDDEN Costs: defined in terms of “effort”
- Time spent to buy the product
- Difficulty in processing the product characteristics
- Difficulty in understanding what are the most relevant information in the buying process
- … Risks: defined in terms of “poor choice”
- What if my girlfriend does not like my gift?
- What if this product is not the best solution for me?
- What if next year I won’t use this product anymore?
- … Hidden costs are seen by no one. Costs and risks firms impose on customers are industry wide practices, and because everyone impose them, they are widely accepted and invisible. However, even if they are invisible, they are still a pain for customers. If I reduce them, I can create value for the customers where no one more creates value, so I create a competitive advantage. We can assess customers’ costs and risks by providing a deep customers analysis through:
The strategic advantage that marketing (external stimuli) is ultimately trying to capture is a piece of customer’s mind in order to obtain from her good responses (product purchases). Cognitive economy states that because customers’ information processing capacity is finite, they will often trade off accuracy of results and optimal outcomes for efficiency of information storage and processing. In a world of practically infinite choices, consumers gravitate toward a brand or product they trust to deliver on its promises. Motivation When there is a state of tension pressing a person to satisfy a need, motivation is the anticipation of the satisfaction that may be obtained by carrying out a determined action. Attitude and beliefs When people have a certain attitude it’s difficult to change their beliefs. The attitude is the tendency to make enduring evaluations on objects, ideas, people and situations. Belief is a thought that someone holds about a situation, thing or fact. What are the phases of the buying process? In the buying process there are 5 phases:
- Problem recognition : it is the need recognition and can take place in different ways according to the product concerned.
- Information search : it is the search for value, searching and gathering information to provide alternatives with internal sources or internal sources (like personal, public or marketing).
- Evaluation of alternatives : value judgement, definition of decision criteria (price, perceived brand quality, performance of the product, exclusivity, etc.).
- Purchase decision : value purchase, decision about from whom and when to buy.
- Post-purchase behaviour : value in consumption or use, comparison between expectations and performance/experience, often customers skip or minimize some steps due to the label of involvement depending on importance, existence of personal consequences or effect on the customer’s social and self-life. The Initiator identifies the need, the Influencer influences the decision, the Decider makes the buying decision, the Buyer makes the purchase, and the User uses the product. B2B market is bigger 2x than B2c market. Demand Often “derived” (cyclicity, multiple effects) Particular dynamics Structure Concentrated (reduced number of clients) Stable/interdependent Relationships with customers “Balanced” negotiating power Reciprocally active “Comple2 – between groups Professional/proceduralized buying process Characterizations of industrial markets Industrial market (companies producing goods and services) Re-sellers’ market Public administration market (central and local entities and institutions) No-profit companies’ market Re-seller’s market is B2T, where T means Trader, because you have to convince traders. Public administration is B2G, where G means Governments. One example is selling washing machines to hospital.
The factors that influence the business buying process are: Situational and Environmental factors are in order to monitor, they have not too much to do with the influence of the primary demand, as it is derived. Position in the value chain means how much it is important in the value chain the product. Level of innovation means if it is a new technology or not and of course higher is the level of innovation and higher is the risk from a certain viewpoint but higher can be also the advantage if we are able to do it. The timing means if we need in one year, in one week and so on. Regarding the environmental we have to analyse the economic situation (if it is good or not), if the level of demand in increasing or not, the cost of financing (paying attention to the inflation), the political evolution, competition and technology. So, we have a lot of PEST analysis here Organizational factor in order to know in-depth. Interpersonal and Individual factors in order to know as much as possible (direct knowledge). Even if we are in B2B we have to consider the people. We have to understand who is buying in the company. It is very important to understand the situation (how the technology is going today? Position in the value chain?). Also is very important to understand the environment in order to monitor the economic situation, the level of demand, the cost of financing, the political evolution, the competition situation and the technology. Also, in the B2B there are phases of the buying process:
- Recognition or anticipation of the problem/need : Obsolescence of plants Productive capacity Development of new products Dissatisfaction Cost Etc.
- Definition of the functional and/or technical specifications : compilation of a purchase specification.
- Search for information : Through institutional or personal sources, qualification lists, vendor lists, etc.
- Requests for an offer : offers are marketing document thus they must also inspire confidence and position the company.
- Evaluation of the alternatives
- Decision
- Post purchase : very important in a product lifecycle cost approach (assistance, maintenance, spare parts, etc.). In the buying process there is not a single buyer, but a “Purchase centre” with various people and functions involved. Actors in the buying process: Initiator : identifies a need and believes it can be satisfied by buying a good or service; activates the process.
14/10/
Segmentation
Segmentation recognizes that there are different people, and they have different needs. There are groups of customers: same needs in the same group and different needs in different group. We have one market with a lot of different segments. There are a lot of criteria to build segments. Segmentation is important because if a company is able to see that there is a segment that maybe in the future will grow, and if we are big enough to make an offer, we are able to do the product for the people taking a competitive advantage. One of today’s most important needs present in the market is Sustainability. It is important to try to see the groups and divide the market in different segments and targeting. As a company, we segment the market, but when we don’t have enough money, we don’t have the capacity to follow all the groups so, we decide just one target to follow. Starting with the product, we can start segmentation understanding who will buy the product. There is too much diversity is a lot of markets. There are different desires and resources in different countries, so it implies different money capability and needs. Segmentation is a trade-off between two extremes : “All customers are similar”: one product for everyone, one plan for all customers – Undifferentiated marketing approach (or mass marketing). “Each customer is a market”: unique products, one plan for each customer – One-to- one marketing approach. “Segmentation is a marketing process through which the company divides the market into various sub-groups, with different demand profiles but internally homogeneous, on the basis of which management develops specific marketing plans to best satisfy their requirements.” Market segments have two main characteristics: Internal similarity and External diversity. Segmentation’s aim is to give insights to markets in order to define the best possible marketing program for every specific group of customers. I have to analyse the market, the trends of the market, applying SWOT analysis and into the marketing plan we have to define the segments we want to target and what is our value proposition, the price, the product, the place and the promotion that means communication, the channel distribution, the place, stores or maybe agreement with big chains and so on. When we talk about a segment, it is important to follow these characteristics to have a good segment: Measurability : it must be possible to measure the size and buying the power of the segments. Accessibility : real possibility of obtaining the segment using marketing actions. Homogeneity : within the segment as regards one or more characteristics (describers). Heterogeneity compared with other segments. Importance : a segment large enough to justify a targeted marketing action. Duration : possibility of exploiting the segment for a particular period of time. The advantages of segmentation are the followings: Reduction in diversity More focus of resources and professionals Possible creation of entry barriers Improvement in customer satisfaction
Assist in product design and pricing decisions. Provide implication for the content and channel of marketing communication. Aware of ethically, politically, or religiously sensitive issues. … Customer behaviours are used to: Sustain and even expand the usage of current users. Convince non-users with the product/brand benefits over the competing product/brand. High usage intensity indicates customers loyal to the brand, who purchase in multiple occasions and multiple POS. If customers are loyal to POS instead, being present in the right channel has higher priority. Purchase process: regular or impulsive, etc. Roles in purchase process … Marketers have to move customers along the Marketing Funnel: follow clients along the marketing channels and check the abandonment rate at any stage in order to redesign the process. Customer needs are used to: Design the product addressing the needs Design the marketing communication addressing the motivation which customers are more likely to respond to. Segmentation by customer – B2B markets An insightful and actionable approach to segmentation does not necessarily mean to choose one best from the different approaches, but rather combining them in a sensible way. We need to understand out segmentation, who are in the segment (demographic, geographic characteristics) what are they doing (behaviour), and why are they doing that (needs). Different dimensions provide rich understanding of a segment. Their relevance, however, may vary according to the decision in need to be supported. Marketing strategies can be: Undifferentiated : a single marketing plan for the whole market. Differentiated : various marketing plans for the different segments. Concentrated : a single marketing plan concentrated on only one segment.
Targeting strategies: choice of target segments Buyer’s Persona and Buyer’s Journey Customer experience is a sequence of interactions between an individual and a brand occurring through a series of touchpoints, encountered along the customer journey. These interactions generate cognitive, emotional, behavioural and sensorial impacts and reactions. A buyer persona is a representation of your target customer. It is a picture you paint based on research and interviews with actual customers. It goes beyond basic demographics to include the intangible elements that make a person tick. Persona development is paramount for the success of an inbound marketing program, no matter the size or scope of your business. Generic Customer Journey (before conversion) can be divided into three stages: awareness, consideration and decision.
On the right we put Traditional cars Now why innovation and sport are equal? We have innovation similar to sports because historically the conception was the same. It is the act of “drawing” the firm’s offer and image in a way to be set in a precise position in the target customers’ mind. Sometimes you have a strait product position (analysing the strength of the product positioning into the customers’ mind and its differential elements towards competitors). Sometimes it is better to say I cannot change the brand so let’s reposition. Value curve is another tool for positioning analysis. In the value curve you put in comparison more companies over different variables (example sports, safety and so on related to automobile brands). With the value curve you see the differences, asking to the customer give me a value 1 to 5 about, for example, sports in Mercedes or others. Value curve is called Blue Ocean Canvas. Positioning critical success factors:
- Addressed to a precise customers’ segment.
- Linked to a “mental category” that already exists in the mind of the target.
- Delimited and defined.
- Simple and clear
- With a clear competitive advantage
- Long-lasting (in the limits of consumers’ behaviour changes).
- Coherent. Positioning changes can be influenced by: The environment The demand The competition When do I have to reposition? Radical change of the consumer Competitors’ strategic movement How do I have to reposition? The bran image in the customer’s mind is usually deep-seated: keep a “fil rouge” with the past to facilitate the process of product identification. Repositioning strategies are: Change the perception on one or more feature through one or more marketing leverage. New product launch on different segments (with different perceptions among customers). Focus on the same product, extending the perceptions on the product.
Coca cola case
Segmentation was not pure healthy people, people with healthy attitude but the positioning of coca cola is everything but not healthy. So, to work for healthy coca cola image is not just about the colour of the bottle for chaining consumers’ idea. So, the value positioning was not coherent with the image of coca cola. So as coca cola you should work with sustainability in other ways, like eliminating plastics.
21/10/
Marketing mix
Strategic marketing (Vision, Business mission, Objectives, Industry/Demand/Market Analysis, Pestel, Competitor Analysis, Purchasing Behaviour, STP, BI, Portfolio Analysis, SWOT) is consistent to corporate strategy and aimed at satisfying customer needs. Resulted in the definition of a suited value proposition. Operational marketing is the translation of the marketing strategy into decisions. The decisions are about concept, price, promotion and distribution of the products and services offered. Endogenous variables (marketing effort) affect demand: Product/service Pricing Distribution Promotion/Communication Personal selling Marketing mix is a set of marketing levers. The most famous model of marketing mix is the so called 4P model , where the four P are product, price, place and promotion. It is an old model. When we talk about a product we are talking about the features, the brand name, the packaging, the service and the warranty. When we talk about price , we are talking about list price, discounts, allowances, credit terms and payment period. When we talk about promotion , we are talking about television advertising, newspaper advertising, personal selling, sales promotion and publicity. Place means online, outlets, supermarket, discounts etc. Nowadays we should talk about 7P model because we are entering in a service world and in the services are also important the processes, the people and the physical evidence. People – The company’s employees are important in marketing specially when they are the one who deliver the service. Having the right people to support the company’s service is a must. Excellent front end personnel can provide support with clearly known expectations. Knowledgeable staff adds much value to the service offering. Process – The system and processes of the organization affect the execution of the service. The service companies need solid procedures and policies, customer oriented. Physical Evidence – Physical evidence refer to everything your customers see when interacting with your business. This includes: The physical environment where you provide the product or service The layout or interior design Your packaging Your branding Physical evidence can also refer to your staff and how they dress and act. To be effective, a company’s marketing mix must be designed and implemented according to some fundamental rules. The marketing mix must be:
- Consistent with customer needs.
- Consistent with the objectives of competitive advantage
- Consistent with the positioning objective.
- Capable of an effort (marketing investment) appropriate to the objectives of market share.
- Equipped with a solid “internal” consistency among its various components.
- Consistent with general corporate policies. Product A product is the result of the transformation of materials into goods that have some value to people (economic, aesthetic, symbolic).
