Stratergies (marketing) Flashcards
Market segmentation
WHAT: The process of breaking the total market into segments/parts
WHY: By focusing in on one or more parts of the market (e.g geographical → China) a BUS can understand the needs of the customers in this group and provide better products for that group of customers (targets) and implement appropriate strategies targeting this group.
HOW: BDGP (demographic, geographic, psychological)
Behavioural Segmentation (PRODUCT/PROMO STRAT) → Based on people’s knowledge or attitude towards purchase occasion, benefit sought, usage rate, loyalty cards (based on actual purchase and or consumption behaviour
Product Positioning, Product/Service differentiation
Product/Service differentiation:
WHAT: IS the process of developing and promoting differences between the BUS products or services and those of its competitors
Product Positioning:
WHAT: Product positioning refers to the perceptions consumers have about a products image (relative to comp)
WHY: Make the consumers believe that a product will best meet a consumers needs.
Products Goods or services:
WHAT: Goods or services that can be offered in an exchange for the purpose of satisfying a need or want
→ Real physical objects that can be touched and owned; they are TANGIBLE
→ Financial advice, television programs and sporting events provide an INTANGIBLE service for our use or enjoyment, not for ownership.
Branding
WHAT: A brand is a logo, name symbol or design that distinguishes a competitors products
WHY: Can be identified easily, familiarity with brand means consumers are more inclined to buy that brand
→ What separates competitors → Leads to high profit margins → LT brand loyalty and increased sales → Ability to charge a higher price → represents a good reputation and high quality
POS: 1. Easier to introduce new products 2. Provides a competitive advantage 3. Well known brand names are very valuable financially
NEG: 1. Need to be consistent to maintain a good reputation 2. Costs associated in building the brand
3. Difficult to obtain in established markets.
Packaging
WHAT: The characteristics of a product container (3P’s Protects, promotes, persuades)
→ Packaging is both a functional component as well as an important marketing/persuasive tool
WHY: Aims → Identification, containment, protection, safety and attractiveness
HOW: → Attention is paid to colour, size, placement of brand name and other information - shape, texture, amount of info on the back, graphics and illustration
OTHER: → Nature of the packaging can determine price
→ Packaging is often evaluated and changed to meet demand needs
LABELLING: → Laws about marketing → AUS/NZ food standards code 16 require compliance of ingredients and nutritional info on the company website.
ADV: 1. attractiveness. 2. Image. 3. Awareness
DIS: 1. Time 2. cost 3. may fail
Price
WHAT: Refers to the amount of money a customer is prepared to offer in exchange for a product.
→ A measure of value to the buyers and sellers
→ Buyers see price as a measure of benefit
→ Sellers need prices to cover costs and provide profits
→ A BUS pricing decisions are influenced by a variety of external and internal influences.
WHY: → Impact on sales, thus market share and profitability
→ Needs to be correct - impact on product positioning and point of difference,
IMPLICATIONS: → Needs to be considered throughout the product life cycle
→ Prices will be adjusted when the product is launched and price will influence the success of the marketing strategy
Price methods (CMC)
- Cost based (markup) - Add together the direct material cost, direct labor cost, overhead costs for a product and add it up to a markup % to create a profit margin in order to derive the price of the product (generally luxury goods)
- Market based - Based on supply and demand → Whatever the market is prepared to pay (fruit/real estate)
- Competition based - Pricing compared to the comp. Must cover the costs of production. Comp pricing is used more often by BUS selling similar products since services can vary from BUS to BUS whilst the attributes of products are mostly the same. (most common) WHY → When there is a high degree of comp with similar goods.
BELOW → Undercutting the comp is often used to break into a market (5% cheaper usually)
ABOVE → Because the product/BUS has a product with more features or superior positioning or quality
EQUAL → Following the price established by a price leader is an easy option for a BUS because it avoids having to undertake market research to find out what consumers are willing to pay.
STRATS - Price skimming
(Established brand, introduction stage, innovative, market leader, limited comp)
WHAT: Involves charging the highest price that customers
→ Over time the price is lowered to bring in a larger number of buyers, at the highest price that customers are willing to pay
→ If demand for the new product is expected to be inelastic, then the employment of a high price low volume strat may be appropriate
ADV: 1. Quick generation of cash flow to offset product development and launch costs 2. May limit demand so the firm is able to better balance demand with limited supply capacity
DIS: 1. May attract comp who sell similar for less 2. May limit the demand for the product
Strats - Penetration, price points, loss leaders
PENETRATION (Not number 1 in the market, still make a profit)
WHAT: Price is set at a lower price than the comp with the aim to increase market share. This encourages consumers to at least trial the product (High volume and low price strat)
LOSS LEADERS (coles put milk at the back so additional purchases are made)
WHAT: Prices set very low to encourage purchase or to encourage the additional purchases. Financial loss however may be made up for by the additional purchases
PRICE POINTS
WHAT: The use of price points strategy whereby a BUS sets different prices for similar products. The products are differentiated by their features. BUS usually in maturity
Price and quality interaction
Price and Quality interaction:
WHAT: When consumers perceive that price is directly correlated with quality
→ High cost goods are perceived to be high quality and low cost are perceived to be low quality
→ Not always the case but can be such as apple is high price high quality
→ Psychology of pricing refers to the image, price, value and promotion (purchasing done through an evaluation of value)
PROMO - ADVERTISEMENT
WHAT: A paid communication about products and services designed to be persuasive.
WHY: Attention getting, disturb and stir emotion and communicating to the target market
→ Primarily designed to persuade but can entertain, inform, remind and instruct
HOW: → Youtube, facebook, Instagram, newspapers, TV, radio, posters, brochures, email
→ Is a paid message that communicates
ADS: 1. Adds to the brand/product perception 2. Makes consumers aware of existence 3. Informative to consumers
DIS: 1. Costly 2. Can be difficult to be successful 3. Lots of people skip ads.
PROMO - Personal selling
Personal Selling:
WHAT: Direct interpersonal communication techniques to convey messages across customers
ADS: 1. Opportunity to receive immediate feedback 2. Information can be expanded to customers
3. Real-life demonstration is often more convincing
DIS: 1. Very time consuming 2. Customers may be reluctant to sales pitches 3. Effectiveness is reliant on the skill of the sales person.
Opinion Leaders
WHAT: Are people or organizations with influence, who filter ideas and info and use the media to spread their ideas to the wider community. Often seen as effective message senders in the communication process.
→ Respected on their views → Internet and social media sites have increased the importance of opinion leaders the importance → Celebrities are often used
EXAMPLES: → Choice magazines for their info on product features
→ Respected wine and food reporters who provide reviewers of restaurants and wine makers
→ Bus leaders such as Bill gates and Rupert murdoch
Word of mouth
WHAT: Person to person communication. A technique which relies on a verbal recommendation of a product or service
→ Marketers are reliant on methods such as phone conversations text messages, web dialogue, blog posts, message board threats instant messages/emails
WHY: Highly effective method of reaching the target market (Cost effective) → Less expensive → 10 people told about bad experiences * Can’t control the communication (could be negative impact of a brand)
PLACE
WHAT: The chain of BUS which a good or service passes until it reaches the end consumer. The point where the sale or exchange between a BUS and the consumer occurs.
→ It involves distributing the product and service
→ Products are moved to consumers using a series of organisations or individuals in a chain or distribution channel.
WHY: → Can be costly (freight warehousing and inventory management) and therefore can impact profitability
→ Influences the types of customers the product attracts, the perception of products in a market.
→ Allows customers to access products
