4.3.1 Choosing a Differentiation & Positioning Strategy STEP 1 STEP 2 STEP 3 Choosing the Right Competitive Advantages Selecting an Overall Positioning Strategy Identifying Possible Value Differences & Competitive Advantages STEP 4 Developing a Positioning Statement 44
To find points of differentiation, marketers must think through the customer’s entire experience with the company’s product and services A company can differentiate along the lines of: STEP 1 Identifying Possible Value Differences & Competitive Advantages Product Differentiate on features, performance, or style and design. Example: BMW positions itself as “The Ultimate Driving Machine” that’s “designed for driving pleasure”. Services Differentiate through speedy, convenience service. Example: Singapore Airlines set itself apart through extraordinary customer service care and the grace of its flight attendants. Channels Gain competitive advantage through the way they design their channel’s coverage, expertise and performance. Example: Amazon set itself apart with its smooth-functioning direct channels. People Differentiate by hiring and training better people than their competitors do. Example: East Coast Supermarket trained its employees to provide better service to its customer. Image A company or brand image should convey a product distinctive benefits and positioning. Example: The use of symbols such as McD’s golden arches, the colourful Google Logo. The use of famous person such as Nike use Micheal Jordan for basket ball shoes and apperal collections. The use of colours such as Coca-cola (Red). 45
Several positioning strategies: STEP 2 Choosing the Right Competitive Advantages Products features/ attribute Product can be separated from its competitor based on attributes, features or benefit. Price/ quality If a product has a high price- it automatically indicates a high quality. Usage occasion When or how it can be used as a strategy to win in customer mind. Product user Prod can be positioned as superior/ so different compared competitors. Product class Company clearly identify the consumer need/want. Competitor Positioning it directly against or away from the competitors position. Choosing a Positioning Strategy How many differences to promote? Unique selling proposition Several benefits Which differences to promote? Criteria include: Important The difference delivers a highly valued benefit to the target buyer. Distinctive Competitors do not offer the difference or company can offer distinctive way. Superior Difference is superior to others ways that customers might obtain the same benefit. Communicable Difference is communicable and visible to buyers. Preemptive Company cannot easily copy the difference. Affordable Buyer can afford to pay the difference. Profitable The company can introduce the difference profitably. 46
Choosing a Positioning Strategy Value propositions represent the full positioning of the brand (the full mix of benefits on which a brand is differentiated and positioned). STEP 3 Selecting an Overall Positioning Strategy Possible value propositions (P. Kotler & G. Armstrong, 2018) (differentiation and positioning that gave the company a competitive advantage) More for more Company or Brand provide the most upscale product or service and charging a higher price to cover the higher costs. Not only offers higher quality, it also gives prestige to the buyer. Example: Starbucks coffee, Louis Vuitton handbags, Mercedes automobile. More for the same Company attack a competitor’s value proposition by positioning its brand as offering more for the same price. Example: Target positions itself as the “upscale discounter” compare to Walmart. Possible value propositions: 47
Communicating and Delivering the Chosen Position Once it has chosen a position, the company must take strong steps to deliver and communicate the desired position to its target consumers. Designing the marketing mix (4Ps) involves working out the tactical details of the positioning strategy. It must closely monitor and adapt the position over time to match changes in consumer needs and competitors’ strategies. The same for less Can be a powerful value proposition because everyone likes a good deal. Offer same brands as department stores and specialty stores but at the deep discounts. Example: Discount stores as Walmart and Amazon. Less for much less Company provide products that offer less and therefore cost less. Consumer settle for less than optimal performance in exchange for a lower price. Example: Air Asia Airline, Homestay More for less Winning value proposition. Example: First opened for business- best product selection, lowest price. 48
4.4 Exercise Chapter 4 49 1. What is market segmentation, targeting and positioning? 6m 2. In the market segmentation, describe each FOUR (4) bases for segmenting consumer markets. 12m 3. Compare the undifferentiated marketing and differentiated marketing in the target segment. 10m 4. List down the FOUR (4) steps in market positioning. 4m
After studying this chapter, students will be able to: CHAPTER 5 PRODUCTS DPM10013 PRINCIPLES OF MARKETING Define product and services 1 2 Describe core customer value Describe actual product 3 4 Describe augmented product 5 Identify consumer products 6 Identify industrial products 7 Describe the stages of product life cycle COURSE LEARNING OUTCOMES Explain concepts and terminologies in the marketing field ( C2 , PLO 1 ) “ Apply the knowledge of marketing strategies and marketing mix that are relevant to the organizations’ objectives ( C3 , PLO 1 ) ” Present with confidence the marketing mix strategies to show the ability as a leader and working in a team ( A2 , PLO 6 ) 50
5.1 Marketing Mix Place Channels, Coverage, Assortments, Locations, Inventory, Transportation, Logistics Promotion Advertising, Personal Selling, Sales Promotion, Public Relations Price List Price, Discounts, Allowances, Payment Period, Credit Terms Product Variety, Quality, Design, Features, Brand Name, Packaging, Services Target Customer Intended Positioning The set of controllable tactical marketing tools (PRODUCT, PRICE, PLACE AND PROMOTION) that the firm blends to produce the response it wants in the target market. 5.2 Product and Services A form of product that consists of activities, benefits or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything Example: Banking, airline travel, home repair services, tax preparation, hotel etc. Services Anything offered to a market for attention, acquisition, use, or consumption that might satisfy a need or want Example: an Apple iPhone, a Toyota Camry & a Cafe Mocha at Starbucks Product 51
5.3 Three Different Levels of Product At the most basic level, the company asks, “ What is the customer really buying?” For example, people who buy an Apple iPad are buying entertainment, self-expression, productivity, and connectivity – a mobile and personal window to the world. Address the question: What is the buyer really buying? When designing products, marketers must first define the core, problemsolving, benefits or services that consumers seek. For example, people who buy an Apple iPad are buying much more than just a tablet computer. They are buying entertainment , self-expression, productivity and connectivity with friends and falsity. (a mobile and personal window to the world. Core Product Marketer must turn the core benefit into an actual product. They need to develop product and services features, a design, a quality level, a brand name and packaging. For example, the iPad is an actual products. Its name, parts, styling, operating system, features, packaging and other attributes have all been carefully combined to deliver the core customer value of staying connected. Actual Product 52
5.4 Product Classification Convenience Products Shopping Products Specialty Products Unsought Products Product bought by final consumers for personal consumption. Usually classify these product based how consumer go about buying them. Consumer Product Convenience Product Customer usually buys frequently, immediately & with minimum of comparison and buying effort. Usually low priced and marketers place them in many locations to make them readily available when customer need them. Examples include laundry detergent, candy, magazines, and fast food. Staples Products: consumers buy on a regular basis ( ketchup, toothpaste) Impulse Products: purchased with a little planning or search effort (magazine, chocolate) Emergency Products: when their need is urgent ( umbrella, candle) Marketer must build an augmented product around the core benefit and the actual product by offering additional consumer services and benefits. For example, the iPad is more than just digital device. It provides consumers with a complete connectivity solution. Thus, when consumers buy an iPad , Apple and its resellers might give buyers a warranty on parts and workmanship, quick services when needed, and web and mobile sites to use if they have problems or questions. Augmented Product Apple also provides access to a huge assortment of apps and accessories, along with iCloud service that integrates buyers’ photos, music, documents, apps, calendars, contact and other content across all of their devices from any location. 53
Shopping Product Are less frequently purchased consumer products and services that customers compare carefully on suitability, quality, price and style. When buying shopping products and services, consumers spend much time and effort in gathering information and making comparisons. Examples include furniture, clothing, major appliances and hotel services. Marketers usually distribute their products through fewer outlets but provide deeper sales support to help customers in their comparison effort. Specialty Product Are consumer products and services with unique characteristics or brand identifications for which a significant group of buyers is willing to make a special purchase effort. Examples include specific brands of cars, high-priced photography equipment, designer clothes, gourmet foods and services of medical or legal specialists. Buyers are willing to travel a great distance to buy specialty product. Buyers normally do not compare specialty products and invest only time needed to reach dealers carrying the wanted brands. 54
Unsought Product Are consumer products that a consumer either does not know about or knows about but does not normally consider buying. Most major new innovations are unsought products until consumers become aware of them through marketing. Classic examples of known but unsought products and services are life insurance, preplanned funeral services and blood donations. By their very nature, unsought products require a lot of promoting, personal selling and other marketing efforts. Market Buying Behavior Convenience Shopping Specialty Unsought Consumer Buying Behavior Frequent purchase; little planning, little comparison or shopping effort; low customer involvement Less frequent purchase; much planning and shopping effort; comparison of brands on price, quality and style. Strong brand preference and loyalty; special purchase effort; little comparison of brands; low price sensitivity Little product awareness or knowledge (or, if aware, little or even negative interest) Price Low Price Higher Price High price Varies Distribution Widespread distribution; convenient locations Selective distribution in fewer outlets Exclusive distribution in only one or a few outlets per market area Varies Promotion Mass promotion by the producer Advertising and personal selling by both the producer and resellers More carefully targeted promotion by both the producer and resellers Aggressive advertising and personal selling by the producer and resellers. Examples Toothpaste, magazines, and laundry detergent Major appliances, televisions, furniture and clothing Luxury goods, such as Rolex watches or fine crystal Life insurance and Red Cross blood donations 55
Includes raw materials, manufactured materials and parts: Raw materials consists of farm product (wheat, fruits, vegetables) and natural product (petroleum, iron, fish) Manufactured materials and parts consists of component material (cement, wires, yarn) and component parts (engine, tires) Most material and parts are sold directly to industrial users. Price and service are the major marketing factors. Materials and Parts Material And Parts Capital Items Supplies And Services Product bought by individuals and organizations for further processing or for use in conducting business. Industrial Product 56
Supplies : operating supplies (coal, paper, pencils), repair and maintenance item (paints, nails, brooms). Supplies are the convenience products of the industrial field because they are usually purchased with min of effort. Business services: maintenance and repair service ( window cleaning, computer repair), business advisory services ( legal, advertising, management consulting) Services are usually supplied under contract. Supplies and Services Are industrial products that aid in the buyer’s production or operations including installations and accessory equipment. Installations : major purchases such as buildings (factories, office), fixed equipment (generators, elevator), accessory equipment (hand tools, lift trucks), office equipment (fax machines, desks). Capital Items 57
Styles, Fashions and Fads (P. Kotler & G. Armstrong, 2018) After launching the new product, management wants the product to enjoy a long & happy life. Management is aware that each product will have a life cycle. It is the course that a product sales and profits take over its lifetime. PLC lines is a curve representing sales volume of some product from its market from the day of launching until its termination. (tell you how long a product will sell for and make a profit.) Example of Product Life Cycle 5.5 Product Life Cycle 58
The stage in which the new product is first distributed and made available for purchase . Slow sales growth . Profits are non existent / negative /low because of heavy expenses, low sales . Heavy expenses because of promotion – introduce product to customers . INTRODUCTION This stage in which a product’s sales start climbing quickly . Rapid market acceptance . Profits increase . The early adopters continue to buy and later buyer will start following their lead . Companies keep their promotion spending, offer product extensions, service, warranty . GROWTH 59
This stage in which sales growth slows or levels off. Sales growth slows because the product has achieved acceptance by most potential buyers / over capacity . Profits level off or decline . Companies should modifying the market, product and marketing mix (diversify brand and model), Firm works hard to sustain differential advantage . MATURITY This stage in which a product sales fade away . Sales fall off/ decline because technological advances and shifts on consumer tastes . Profits drop . Companies should reduce expenditure . Management must decide whether to maintain, harvest or drop DECLINE 60
5.6 Exercise Chapter 5 61 1. What is product? 2m 2. What is service? 2m 3. Briefly explain the convenience products and shopping product. 8m 4. Briefly explain the product life cycle. 10m
After studying this chapter, students will be able to: CHAPTER 6 PRICING DPM10013 PRINCIPLES OF MARKETING 1 Define pricing 2 Explain the three (3) major pricing strategies 3 Describe market-skimming pricing 4 Describe market-penetration pricing 5 Describe the product line pricing 6 Describe the optional product pricing 7 Describe the captive product pricing 8 Describe the by-product pricing 9 Describe the product bundle pricing COURSE LEARNING OUTCOMES Explain concepts and terminologies in the marketing field ( C2 , PLO 1 ) “ Apply the knowledge of marketing strategies and marketing mix that are relevant to the organizations’ objectives ( C3 , PLO 1 ) ” Present with confidence the marketing mix strategies to show the ability as a leader and working in a team ( A2 , PLO 6 ) 62
The amount of money charged for a product or service, or The sum of the values that customers exchange for the benefits of having or using the product or service. The only element in the marketing mix that produces revenues; all other elements represent costs. Considerations in setting price (P. Kotler & G. Armstrong, 2018) The price the company charges will fall somewhere between one that is too low to produce a profit and one that is too high to produce any demand. Competition-based Pricing Value-based Pricing Cost-based Pricing 63 6.1 Pricing 6.2 Major Pricing Strategies
6.2.1 Cost-based Pricing $ $ Whereas customer value perceptions set the price ceiling, costs set the floor for the price that the company can charge. Cost-based pricing is setting prices based on the costs of producing , distributing, and selling the product plus a fair rate of return for effort and risk. TYPES OF COSTS Costs that do not vary with production or sales. For example: Monthly bills for rent, interest, employee salaries. Costs that vary directly with the level of production. For example: Raw materials are needed in production process. The sum of the fixed and variable costs for any given level of production. Fixed Costs (Overhead) Variable Costs Total Costs Cost per Unit at Different Levels of Production per Period (P. Kotler & G. Armstrong, 2018) Management needs to know how its costs vary with different levels of production to price wisely. Target Profit Pricing Cost-Plus Pricing Break-Even Analysis TYPES OF COST-BASED PRICING 64
Example: To illustrate markup pricing, suppose a sportswear manufacturer had the following costs and expected sales: Variable cost : RM10 Fixed cost : RM300,000 Expected unit sales : 50,000 units OPTION 01 Cost-Plus Pricing (Markup Pricing) Setting prices based on the costs of producing and selling the product plus a fair rate of return for effort and risk. Add a standard markup to the cost of the product. Then the manufacturer’s sportswear cost per unit is given by: Unit cost = variable cost + fixed costs/unit sales = 10 + 300,000/50,000 = RM 16 Now suppose the manufacturer wants to earn a 20% markup on sales. Markup = Unit cost/( 1- desires return on sales) = 16/1-0.2 = RM 20 Hence, Manufacturer would charge RM20 and make profit of RM 4 per unit. Advantages Sellers are more certain about costs than about demand. When all firms in the industry use this pricing method, prices tend to be similar, so price competition is minimized. Many people feel that cost-plus pricing is fairer to both buyers and sellers. Disadvantage Ignores demand and competitors prices 65
OPTION 01 Break-Even Analysis Setting price to break even on the costs of making and marketing a product or setting price to make a target return. Break-even Chart for Determining Target Return Price and Break-event Volume Example: Variable cost : RM10 Fixed cost : RM300,000 Price : RM20 Break Even Volume = fixed cost/price-variable cost = 300,000/20-10 = 30,000 units 66
Price : Investment + Target profit Quantity RM20 : 1,000,000 + 200,000 x 20x : 1,200,000 X : 1,200,000/20 : 60,000 units Example: Variable cost : RM10 Fixed cost : RM300,000 Price : RM 20 Investment : RM1,000,000 Target profit : RM 200,000 OPTION 01 Target Return Pricing A variation of break-even pricing 67
6.2.2 Value-based Pricing Pricing decisions, like other marketing decisions, must start with customer value. When customers buy a product, they exchange something of value (the price) to get something of value (the benefits of having or using the product) Value-based pricing is setting price based on buyers’ perceptions of value rather than on the seller’s cost. The marketer cannot design a product and marketing program and then set the price. Price is considered along with all other marketing mix variables before the marketing program is set. Value-based Pricing versus Cost-based Pricing Cost-based Pricing Value-based Pricing 68 Adopted from P. Kotler & G. Armstrong (2018)
A firm bases its price on how its thinks competitor will price rather than on its own costs or on the demand. The firm wants to win a contract & winning the contract requires pricing less than others. Competition-based pricing is setting prices based on competitors’ strategies, prices, costs and market offerings. Consumers will base their judgments of a product’s value on the prices that competitors charge for similar products. The goal is to set prices according to the relative value created versus competitors. 6.2.3 Competition-based Pricing How does the company’s market offering compare with competitors’ offerings in provides greater value? How strong are the current competitors and what are their current pricing strategies? In assessing competitors’ pricing strategies, a company should ask several questions. Based on competitors price. Might charge the same as, more than, or less than Going- rate pricing Sealed-bid pricing Types of Competition-based Pricing Types of Value-based Pricing Good-Value Pricing Offering just the right combination of quality and good service at a fair price. In many case, this has involved introducing lessexpensive versions of established brand name product or new lower-price lines. For example, Walmart launched an extreme-value store brand called Price First. Attaching value-added features and services to differentiate a company’s offers and charging higher prices. Value-added Pricing Rather than cutting process to match competitors, they add quality, service and value-added features to differentiate their offers and thus support their higher prices. 69
6.3 New Product Pricing Strategies Market-skimming pricing The product’s quality and image must support its higher price, and enough buyers must want the product at that price. The costs of producing a smaller volume cannot be so high that they cancel the advantage of charging more. Competitors should not be able to enter the market easily and undercut the high price. Setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales. For example, with new generation of Apple iPhone, iPad, or Mac computer, new models start at a high price then work their way down as newer models are introduced. This strategy makes sense only under certain condition: Market-Penetration pricing The market must be highly price sensitive so that a low price produces more market growth. Production and distribution costs must decrease as sales volume increases. The low price must help keep out the competition, and the penetration pricer must maintain its low-price position. Setting a low price for a new product in order to attract a large number of buyers and a large market share. For example, AGIT Globs used penetration pricing to quickly build demand for its Wavestorm surf boards. Several conditions must be met for this low-price strategy to work: 70
6.4 Product Mix Pricing Strategies Setting price between product line items Product line pricing Pricing optional or accessory product sold with the main product Optionalproduct pricing Pricing lowvalue by product to get rid of them By product pricing Pricing product that must be used with the main product Captive product pricing Pricing bundles of products sold together Product bundle pricing Setting the price steps between various product in a product line based on cost differences between the product , customer evaluation of different features and the competitor’s prices. Company usually develop product lines rather than single product. Clothing stores – offer men suits (RM180, RM280, RM320) –shows that low, average and high quality. Company task is establish perceived quality differences that support the price differences. Product Line 71
Company – offering to sell or accessory products along with their main product. Pricing these option is a sticky problem. Company must decide which item to include in the base price and which to offer as option. Car – may choose to order GPS, Phone charger, services plan Optional Product Product that must be used with a main product Is called two part pricing E.g.; Razor blades used with special handle Polaroid prices its camera low because it makes its money on the film it sells. Mechanical pencil with bullet Printer with cartridge Main products are priced low Set high mark up on captive product Captive Product 72
Using by product pricing , manufacturer will seek a market for these byproduct pricing. They should accept any price that covers more than the cost of storing. This practice allows the company to reduce the main product’s price to make it more competitive. By-product can even turn out to be profitable. Example: Chicken processors sell feathers to mattress and pillow makers By Product Company combine several of their product and offer the bundle at a reduced price. Example: Hotels sell specially priced packages that include room, meals and entertainment. Product Bundle 73
6.5 Exercises Chapter 6 74 1. Briefly explain pricing. 2m 2. Describe the THREE (3) types cost in the cost-based pricing 8m 3. Explain the good-value pricing and value added pricing. 6m 4. What is market skimming pricing and market penetration pricing. 10m
After studying this chapter, students will be able to: CHAPTER 7 MARKETING CHANNEL DPM10013 PRINCIPLES OF MARKETING Define marketing channel 1 2 Explain the functions of marketing channel Describe direct marketing channel 3 4 Describe indirect marketing channel 5 Describe the type of intermediaries COURSE LEARNING OUTCOMES Explain concepts and terminologies in the marketing field ( C2 , PLO 1 ) “ Apply the knowledge of marketing strategies and marketing mix that are relevant to the organizations’ objectives ( C3 , PLO 1 ) ” Present with confidence the marketing mix strategies to show the ability as a leader and working in a team ( A2 , PLO 6 ) 75
SUPPLY CHAIN Upstream Partners : firms that supply raw material, component parts, information, finances and expertise needed . Downstream Partner: marketing channels such as wholesaler, retailers whose form a vital link between firm and its customers. BUSINESS MARKET CONSUMER MARKET Retailer Manufacture r Producer Wholesale r Consume r A set of interdependent organizations (intermediaries) involved in the process of making a product or service available for use or consumption by the consumer or business user. 76 7.1 Define Marketing Channel / Distribution Channel
7.2 Functions of Marketing Channel Negotiation Reaching an agreement on price and other terms of the offer so that ownership or possession can be transferred. Physical distribution Transporting and storing goods. Financing Acquiring and using funds to cover the costs of the channel work. Mostly they have finance capabilities to give a credit business transaction. Risk taking Assuming the risks of carrying out the channel work Information Gathering and distributing marketing research and intelligence information. Promotion Developing and spreading persuasive communications about an offer and product. Contact Finding and communicate with prospective buyers. Matching Shaping and fitting the offer to the buyer’s needs, including activities such as manufacturing, grading, assembling and packaging. 7.3 Term Used For Marketing Intermediaries Middleman Any intermediary between manufacture r and enduser Agent or Broker Any intermedi ary with legal authority to act on behalf of the manufactu rer Wholesaler An intermediary who sells to other intermediarie s, usually to retailers; usually applies to consumer markets Retailer An intermediary who sells to consumers Distributor An imprecise term, usually used to describe intermediari es who perform a variety of distribution functions. Dealer An even more imprecise term that can mean the same as distributor; retailer; wholesaler and so forth. 77
Indirect Marketing Channel Direct Marketing Channel A marketing channel containing one or more intermediary levels A marketing channel that has no intermediary level 7.4 Major Channel Alternatives Consumer Market Channels Business Market Channels Channel 1 Channel 2Channel 3 Channel 4 Channel 1 Channel 2 Channel 3 Channel 4 78
Producer Consumer Producer Business User Consumer Market Channels Business Market Channels Retailer Agent/Broker Producer Consumer Producer Business User Contains one intermediary level In consumer markets, this level is typically a retailer. For example the makers of televisions, cameras, furniture, major appliances and many other products sell their goods directly to large retailers such as Carrefour, Makro, Giant and Tesco which then sell the goods to final consumers. CHANNEL 2 Consumer Market Channels Business Market Channels Called a direct marketing channel has no intermediary levels. It consists of a company selling directly to consumers. For example Avon, Amway And Tupperware sell their products door to door or through home and office sales parties. CHANNEL 1 79
Retailer Agent/Broker Producer Consumer Producer Business User Consumer Market Channels Business Market Channels Wholesaler Industrial Distributor Retailer Agent/Broker Producer Consumer Producer Business User Contains three intermediary levels; broker/ agent, wholesaler, and retailer. Usually, manufacturers used this channel to distribute their products such as canned food, jewelry, apparel and etc. For example, Tiffany, Giordano, GAP, Maybelline CHANNEL 4 Consumer Market Channels Business Market Channels Wholesaler Industrial Distributor Agent/Broker Retailer Contains two intermediary levels, a wholesaler and a retailer This channel is often used by a small manufacturers of food, hardware and other products For example Nestle, Unilever, etc CHANNEL 3 80
7.5 EXERCISE CHAPTER 7 81 1. Define marketing channel. 2m 2. Describe the function of marketing channel. 16m 3. Differentiate consumer market channel and business market channel. 8m
After studying this chapter, students will be able to: CHAPTER 8 INTEGRATED MARKETING COMMUNICATION DPM10013 PRINCIPLES OF MARKETING Define integrated marketing communications 1 2 Explain the objective to inform Explain the objective to persuade 3 4 Explain the objective to remind 5 Describe advertising 6 Describe sales promotion Describe personal selling 7 8 Define public relations 9 Describe direct marketing COURSE LEARNING OUTCOMES Explain concepts and terminologies in the marketing field ( C2 , PLO 1 ) “ Apply the knowledge of marketing strategies and marketing mix that are relevant to the organizations’ objectives ( C3 , PLO 1 ) ” Present with confidence the marketing mix strategies to show the ability as a leader and working in a team ( A2 , PLO 6 ) 82
IMC is the concept under which a company carefully integrates and coordinates its many communications channels to deliver a clear, consistent and compelling massage about the organization and its product. HOW? Advertising Sales Promotion Public Relation Personal Selling Direct Marketing 8.1 Integrated Marketing Communication (IMC) Strategies to make the consumer aware the existence of a product or service. It`s not only about advertising. The specific blend of promotion tools that company uses to persuasively communicate customer value and build customer relationship. 8.2 Promotion Mix Promotion is any communication used to inform, persuade and remind people about an organization’s or individual’s goods, services, image, ideas, community involvement or impact on society. 83 8.3 Objective of Promotion Mix
TO INFORM OBJECTIVES Communicating customer value Building a brand and company image Telling the market about a new product Explaining how a product works Suggesting new uses for a product Informing the market of a price change Describing available services and support Correcting false impressions Heavily used when introducing a new product category. In this case, the objective is to build primary demand. Example: Early producers of big screen HDTVs first had to inform consumers of the image quality and size benefits of the new products. TO PERSUADE OBJECTIVES Building brand preference Encouraging switching to a brand Changing customer perceptions of product value Persuading customers to purchase now Creating customer engagement Building brand community Becomes more important as competition increases. The company’s objective is to build selective demand. Example: Once HDTVs became established, Samsung began trying to persuade consumers that its brand offered the best quality for their money. 84
TO REMIND OBJECTIVES Maintaining customer relationships Reminding consumers that the product may be needed in the near future Reminding consumers where to buy the product Keeping the brand in a customer's mind during off-seasons Important for mature products; it helps to maintain customer relationships and keep consumers thinking about the product. Example: Expensive Coca-Cola television ads primarily build and maintain the Coca-Cola brand relationship rather than inform consumers or persuade them to buy it in the short run. ADVERTISING PUBLIC RELATIONS PERSONAL SELLING SALES PROMOTION 8.4 Elements Marketing Promotion Mix DIRECT MARKETING Any paid form of nonpersonal presentation and promotion of goods, services or ideas by an identified sponsor Building good relations with company’s various publics by obtaining favorable publicity, building up a good corporate image and handling unfavorable rumors, stories and events. Shortterm incentive s to encourag e the purchase or sale of a product or service. Engaging directly with carefully targeted individual consumers and customer communities to both obtain an immediate response and build lasting customer relationships Selling a product service one to one. Personal presentation by the firm’s sales force for the purpose of making sales and building customer relationships. 85
DEFINITION Any paid form of non-personal presentation and promotion of ideas, goods, or services by an identify sponsor. For example: broadcast, print, online, mobile, outdoor and other forms. 8.4.1 Advertising Profiles of Major Media Types (P. Kotler & G. Armstrong, 2018) 86
DEFINITION Short-term incentives to encourage the purchase or sale of a product or service. Example: Discounts, coupons, displays, demonstrations and events. OBJECTIVES Attract consumer attention Offer strong incentives to purchase Reward quick response MAJOR TOOLS FOR CONSUMER Sample A small amount of A product offered to customers for trial. (Perfumes) Coupon Certificate that gives buyers A saving when they purchase A specified product (Pizza Hut’s coupon) Price off (cents-off deal) Reduced price that is marked by the producer directly on the label or package. (10 instead of 12) Premiums Prizes, gifts consumers receive when purchasing products. (Shampoo with shower gel) Contests Solve questions and you win something (who would win the million) Bonus packs Additional or extra number of items is placed in A special product package (3 with price of 2, 20%extra) 87 8.4.2 Sales Promotion
DEFINITION Building good relations with company’s various publics by obtaining favorable publicity, building up a good corporate image and handling unfavorable rumors, stories and events. Example: press release, sponsorships, events and webpages. MAJOR PUBLIC RELATION TOOLS News Find and create favorable news Speeches Company executives must field question from media-can build/hurt company’s image Special event News conferences, press tours, grand opening, fireworks display to laser shoes. Written materials To reach and influence target market; annual reports, brochures, articles and newsletters Audiovisual materials Films, slides and sound programs & video. Corporate identity materials Create a corporate that public immediately recognizes; logo, stationery, brochures, signs, business card Public service activities Improve public goodwill by contributing money & time. 88 8.4.3 Public Relation
DEFINITION Personal presentation by the firm’s sales force for the purpose of making sales and building customer relationships. Personal selling involves two-way, personal communication between salespeople & individual customers-whether face to face, by telephone, through video conferences or by other means. Salespeople; an individual acting for a company by performing one or more of the following activities: prospecting, communicating, servicing, and information gathering. Personal selling tools: Personal presentation Trade shows (exhibitions and fairs) THE PERSONAL SELLING PROCESS 1.Prospecting: The sales step in which a salesperson or company identifies qualified potential customers 2.Pre approach: The sales in which a salesperson learns as much as possible about a prospective customer before making a sales call 3.Approach: The sales step in which a salesperson meets the customer for the first time 4.Presentation: The sales step in which a salesperson tells the ‘value story’ to the buyer, showing how the company’s offer solves the customer’s problems 5.Handling objections: The sales step in which a salesperson seeks out, clarifies and overcomes any customer objection to buying 6.Closing: The sales step in which a salesperson asks the customer for an order 7.Follow-up: The sales step in which a salesperson follow up after the sale to ensure customer satisfaction and repeat business 89 8.4.4 Personal Selling
DEFINITION Involve engaging directly with carefully targeted individual consumers and customer communities to both obtain an immediate response and build lasting customer relationships. Sending of publicity material to a named person within an organization- use of telephone, mail, fax, email, the internet and other tools to communicate directly with specific consumers. For example, Amazon.com interacts directly with customers via its website or mobile app to help them discover and buy almost anything and everything online. Direct communications with carefully targeted individual consumers-the use of telephone, mail, fax, e-mail, the internet, and other tools to communicate directly with specific consumers. Using database marketing, markets can target small group or individual consumers, tailor, their offerings as per individual needs, and promote these offers through personalized communications. Direct marketing tools: Direct Mails Direct response Television Marketing Catalogues Marketing Telemarketing Kiosk Marketing New Digital Direct Marketing (Mobile phone marketing/Podcasts Vodcast/Interactive TV) Interactive Marketing Evolving trend in marketing whereby marketing has moved from a transaction-based effort to a conversation. All digital media ‘interactive marketing’: Videos, web sites, and motion graphic. Internet Marketing Known as digital marketing, web marketing, online marketing, search marketing or emarketing,e-mobile advertising. 90 8.4.5 Direct Marketing
8.5 Exercise Chapter 8 91 1. What is integrated marketing communication? 2m 2. Define the objective of promotion mix. 9m 3. List the elements of marketing promotion mix. 5m 4. Describe the FIVE (5) advantages of advertising. 5m 5. Define the public relation. 3m 6. Describe the personal selling process. 12m
References Kotler, P., & Armstrong, G. (2018). Principles of Marketing (17th ed.). Pearson Armstrong, G., & Kotler, P. (2016). Marketing: An Introduction (13th ed.). Pearson. Armstrong, G., & Kotler, P. (2014). Marketing: An Introduction, Global Edition (12th ed.). Pearson. Evans, J.R., & Berman, B. (2015). Marketing (12 th ed.). Textbook Media Press Kotler, P., Keller, K.L., Ang, S.H., Tan, C.T & Leong, S.M. (2017). Marketing Management: An Asian Perspective (7 th ed.). Pearson. Yusniza Kamarulzaman & Nor Khalida Abu (2017). Principles of Marketing (3rd ed.). Oxford Fajar. vi
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