Session 1 Flashcards
Elements of marketing strategy
Standard
1. Product/market selection: who will be served what?
2. Price: price for product and payment options
3. Distribution systems: channel between us & ultimate customer
4. Market commuications: Ads, telemarketing, influencers etc.
These form marketing mix
Optional:
1. Plant location; could determine physical boundaries of marnet
2. Brand strategy: family name/ specific product name
Definition of product
package of advantages & disadvantages obtained by customer upon purchase
perceived value
What customer thinks he will get
potential value
What the buyer could recognize through market communications
Market segmentation
Dividing market in smaller ‘segments’ of customers with characteristics more similar to other in that group than customers in any other group
product/ market selection criteria
- Serve markets where product will produce most value
- Long-term growth potential of market
- It’s financially attractive to commit resources to this
- Competitive position is positive: market leaders, first-mover
- Company-product: What’s the influence of new offering on existing product line?
Factors to consider for market segmentation
- Perceived value
- Use (frequency, type, etc.)
- Demography, geography, psychography
Influencers of price
- Supply and demand
- Cost factors
- Competition
- buyer bargaining power
- Product value
Cost factors in pricing
With high fixed costs, companies tend to choose volume over profit margin
With high variable costs, one wants higher margins
Influence of competition on pricing
Solutions?
More competition means more competitive prices. Solutions:
1. Product differentation: introducing unique features gives some pricing freedom
2. Decrease retail store resellers to avoid intrabrand competition
3. Price leeadership: Price setting by market leader
Buyer bargaining power
Power of buyer to push down price by buying product from competitors. If company is highly dependent buyers it will lower prices more quickly.
Different types of pricing tactics
- Skimming prices: Introduce product at high price, lower over time. Full benefit of consumer surplus
- Penetration pricing: Introduce product at low price to conquer market share quickly.
Disadvantages of penetration pricing
- Product has to be free of defect
- Distribution channels must have enough capacity
- Distribution channels have to be in place and operate efficiently
- Short testing periods
Elements of distribution system
- Sales reps/agents
- Distributors
- Retail outlets
- Internet
sales reps/ agents
People that stay in contact with distributors and retail outlets selling the company’s product.
Reps (in employ, fixed costs) vs agents (independents, variable costs)
Distributors
Organisations that ship product to retailers, where they will be made available for small-ticket sales.
Retail outlets
shops that sell products in small-ticket volume
Internet
Online shopping reduces transaction costs. There are more security concerns.
Effective distribution channel management
- Choose selective distribution to prevent intrabrand competition.
- Superior quality line & breath
- Build up interdependent relationships with distributors and retailers
- Keep an active salesforce at a local level
Market communications
Everything the company tries to communicate to the market in the form of advertisements, posters, marketing efforts.
For effective communications, the decision making process and unit should be understood
pull strategies
End-market strategy to pull customer through the door. This is often very costly, like marketing campaigns
Factors in choosing communication channel
Communication channel depends on:
1. Cost
2. Conversion rates
3. Communication goal in connection to stage in decision making process.
push strategies
Incentivizing retailers to sell your product in their stores. This is important when product presentation and after-sale service are important.
Decision making unit
The people/ peoples making the purchasing decision (wife, husband, whole family, children)
