Strategic Marketing

What is a product?
A product is any offering by a company to a market that serves to satisfy customer needs and wants.
It can be an object, service, idea,etc.

New Product Development
Most new product development is an improvement on existing products
Less than 10% of new products are totally new concepts.

Success rate of new products
The success rate of new products is very low – less than 5%. ‘You have to kiss a lot of frogs to find a prince.”
Product obsolescence is rapid with improvements in technology
Shorter PLCs

Consumer goods classification
Convenience goods
Shopping goods
Specialty goods
Unsought goods

Product classification
Durable
Non – durable
Services

Industrial goods classification
Materials and Parts
- raw materials
- manufactured materials and parts
Capital items
Supplies and business services

Brand
A name becomes a brand when consumers associate it with a set of tangible and intangible benefits that they obtain from the product or service
It is the seller’s promise to deliver the same bundle of benefits/services consistently to buyers

A Brand Marks what People Think and Feel
It is a rational and emotional formula based on the sum of trust, relevance, and significance that relates people to a firm, a product, or a service throughout their life.

Brand Management
Some Key Terms
Brand Awareness
Brand Loyalty
Motivation
Desire to Buy Brand
Perceived Quality
Satisfaction
Negative Product Image
Positive Product Quality
Brand Equity

The Dimensions in Brand Building
Brand identity
Brand awareness
Familiarity and knowledge of the brand
Consideration to evaluate the brand
Purchase
Brand loyalty (or brand equity)

A Manager‘s Goal must be to Build Brand Equity
A brand can only be strong if it has a strong supply of loyal customers
Brand equity therefore can be defined as a measure of strength of consumers‘ attachment to a brand.

Brand Equity
Source: Interbrand , The World Biggest Brands

Brand
Management
A Conceptualized
Sector Overview
The Brand
Awareness/Effectiveness
Sector
The Brand
Awareness/Loyalty
Sector
The Brand
Loyalty/Quality
Sector

The Brand Awareness/Effectiveness Sector

The Brand Awareness/Loyalty Sector

Brand Awareness/Loyalty Sector

Brand Loyalty/Quality Sector

Brand Power
Customer will change brands for price reasons
Customer is satisfied. No reason to change.
Customer is satisfied and would take pains to get the brand
Customer values the brand and sees it as a friend
Customer is devoted to the brand

BRAND EQUITY
Brand equity is the value of the brand beyond the tangible assets (eg: NIKE, HARRODS, ADIDAS)
The four elements of brand equity include:
Brand name awareness
Brand loyalty
Recognition
Preference
Insistence
Perceived brand quality
Brand associations

Brand Equity – Competitive Advantages
Reduced marketing costs
Trade leverage
Can charge a higher price
Can easily launch brand extensions
Can take some price competition

BRAND BEHAVIOURS
Brand New at the V&A identified seven “Brand Behaviours”
Authenticity: Levi’s
Authority: Domestos, Mr.Muscle
Friendly: Apple Mac
Status: Burberry, Versace, Dior
Loyalty: Manchester United
Irreverence: FCUK, Diesel
Conscience: Body Shop, Ecover

BRAND STRATEGY OPTIONS
Line extensions – Crisp manufacturer (Estrella)
Brand extensions- Virgin airlines to mobiles
Multibrands- Kellogg’s
New brands- New and fresh brands

Brand positioned -range of association
Product Attribute: Heinz position its product on the attributes of
No artificial colouring
Usage Occasion- the convenience store SPAR (eight till late shops); Kit Kat (Have a Break have a Kit kat- links the brand to tea and coffee breaks in the UK market)
Users- Ecocover cleaning products
Activities-Lucozade is positioned as an isotonic drink for sporting activities
Personality- Harley Davidson motorbikes (macho products with free spirits)
Origin- Audi is positioned in the UK market as (From Germany –quality engineering “ Vorsprung durch technik”
Competitors- Pepsi Cola (choice of next generation) in blind tasting tests younger generation prefer it in comparison to its competitors products
Product Class- Kellog’s nutrigrain bars are morning bars and a substitute for
traditional breakfast
Symbol- Esso used symbol of tiger to position itself in the market

Managing Brand Equity
Brand Equity needs to be nourished and replenished. We must not flog the brand for equity to be diluted or dissipated
Store brands

Advantages of branding
Easy for the seller to track down problems and process orders
Provide legal protection of unique product features
Branding gives an opportunity to attract loyal and profitable set of customers
It helps to give a product category at different segments, having separate bundle of benefits
It helps build corporate image
It minimises harm to company reputation if the brand fails

Brand parity
Consumers buy from a set of acceptable/ preferred brands

Umbrella Brand
Products from different categories under one brand
Dangerous to the brand if the principal brand fails
Sometimes the company name is prefixed to the brand. In such cases the company name gives it legitimacy. The product name individualises it.

Naming the Brand
Product benefits
Product qualities
Easy to pronounce
Should be distinctive
Should not have poor meanings in other languages and countries

Brand strategy
Line extension – existing brand name extended to new sizes in the existing product category
Brand extension – brand name extended to new product categories
Multibrands – new brands in the same product category
New brands – new product in a different product category
Cobrands –brands bearing two or more well known brand names

Brand Positioning- Associations
Product Attribute: Heinz is positioned on
attributes of no artificial colouring, flavouring or preservatives

Brand Repositioning
This may be required after a few years to face new competition and changing customer preferences

Labels
Identification
Grade classification
Description of product
Manufacturer identity
Date of mfg., batch no.
Instructions for use
Promotion

Labels as a marketing tool
Labels need to change with time or packaging changes to give it a contemporary and fresh look

Factors Causing the Decline of the Traditional Marketing Paradigm
This perspective is no longer sufficient
The powerful forces of industry globalization
The “value” movement
Rapid advances in technology
Shift in the balance of power toward customers have coalesced to change the rules for business success

The Transition from the
Traditional Marketing Concept
The traditional marketing paradigm (the
4 Ps) is losing some of its influence among marketers.
It focuses on the transaction and the core product, taking a short-term perspective; customer attraction (conquest marketing) is the overriding goal.
The 5th P is people – more important!

Relationship Marketing Defined
“To establish, maintain, and enhance (usually but not necessarily long-term) relationships with customers and other partners, at a profit, so that the objectives of the parties involved are met. This is achieved by a mutual exchange and fulfillment of promises.”
___Grönroos (Service Management and Marketing, 1990)

Relationship Marketing -
Goals and Outcomes
Whereas the goal of traditional marketing is customer acquisition, under relationship marketing the focus shifts to creating value
The objective is to create more value through interdependent, collaborative relationships with customers, the outcome is customer retention
Relationship marketing is ongoing, constantly looking for opportunities to generate new value
Retaining customers requires marketers to exhibit care and concern after they have made a purchase
The sale often represents only the beginning of the relationship between the buyer and seller

Supplier Rankings of Relationship Enablers *
Johnson, W. and Weinstein, A. (1999) Based on a study of Motorola and Lucent Marketing Managers.
TRUST
COMMITMENT
DEPENDENCE
INFORMATION EXCHANGE
COOPERATION

4 Levels of Relationship Marketing*
*Source: Berry, L. (1995)

Customer Relationship Management (CRM)
Definition of CRM
CRM is a business strategy that involves selecting and managing customer relationships to optimize the long-term value of a company
Goal of CRM
The goal of CRM is to acquire, grow, and retain the right customer relationships -- those with the best long-term profit potential
(Bob Thompson, founder of CRMGuru.com)

Customer Relationship Management (CRM)
as Collaboration
CRM is about collaborating with customers and partners so they receive superior value
Interactions with customers regardless of the sales channel should be constantly managed to optimize the value of those relationships
Effective CRM systems provide a “360 degree” view of the customer, including the frequency, response, and quality of customer interactions

Characteristics of a Good CRM System
● A good CRM system is capable of describing customer relationships in sufficient detail so that management, salespeople, customer service and even suppliers have direct and real-time access to customer information
● The information gathered should help match customer needs with product/service offerings, remind customers of service requirements, predict future purchases, and alert the company when a customer’s purchase behavior has changed
● A key feature of CRM is sharing the customer experience across the organization and supply chain

CRM BUSINESS DRIVERS
Automation/Productivity/Efficiency
Competitive Advantage
Customer Demands and Requirements
Increased Revenue Cost or Price Reduction
Speed/Saving Time
Keeping Track of All Aspects of Business
Customer Support
Inventory Control/Resource Management
Better/Expanded Communication
Integration
Customer Satisfaction
Accessibility
ConformityStandardization
33%
22%
15%
14%
10%
9%
7%
7%
6%
6%
6%
6%
4%
4%
0% 5% 10% 15% 20% 25% 30% 35%
Source: AMR Research, 2002

CRM & Critical Customer Data
Companies should continuously gather critical customer data known as BADI
☛Behaviors (how often and where customers visit)
☛Attitudes (customers satisfaction, service
quality assessments)
☛ Demographics
☛Insights (share of market,
share of wallet)

The Customer Relationship
Philosophy and Techniques
● Customer relationships are improved by
responding to customer needs
● Companies who successfully practice relationship marketing have mastered mass customization
● In many markets it is not only possible, but imperative to
mass customize for customers
● New technology enables efficient customization of products and services, even when the customer base is quite large

TARGET MARKETING STRATEGIES
Undifferentiated marketing
-Single product for all segments
Concentrated marketing
-Ideal product for one segment
Differentiated marketing
-Develop different products (and mixes) for different market segments

PRODUCT POSITIONING
Real positioning
Psychological positioning

REAL POSITIONING
Based on attribute, eg pack size, price, return on investment etc.
Concrete / objective properties
High
Price
Large Small
Pack size
Low

PSYCHOLOGICAL POSITIONING
‘Positioning starts with a product. A piece of merchandise, a service, a company, or even a person... but positioning is not what you do to a product. Positioning is what you do to the mind of the prospect’.
Ries and Trout 1982
Reality is not important
Consumer perception is

PSYCHOLOGICAL POSITIONING
What is the position of the product in the mind of the consumer?
Ries and Trout’s 6 steps question framework for successful
positioning
1.What position do you currently own?
2. What position do you want to own?
3. Whom you have to defeat to own the position you want.
4. Do you have the resources to do it?
5. Can you persist until you get there?
6. Are your tactics supporting the positioning objective you set?

POSITIONING STRATEGIES

COMPETITIVE POSITIONING
Competitive positioning is concerned with how customers perceive the alternative offerings on the market compared to each other
Hooley, Saunders and Piercy(1998)
Positioning applies to these levels:
Companies: In grocery retailing in the UK Tesco, Sainsbury and Asda. Positioning is based on these identities
Products and services: Dyson vacuum cleaner compared to similar priced products from Hoover
Brands: Brand identities Coca-Cola vs Pepsi

DEVELOPMENT OF A POSITIONING STRATEGY
Identify competitors
Determine how the competitors are perceived and evaluated
Determine the competitors’ positions
Analyse the consumers’ behaviour, motivations, attitudes
Select the position
Monitor the position

PERCEPTUAL MAPPING
Perceptual Mapping is a graphics technique to visually display the perceptions of customers or potential customers.
What do we see?
Position of a product, product line, brand, or company is displayed relative to their competition.
Perceptual Maps can have any number of dimensions but the most common is two dimensions.

PERCEPTUAL MAP OF CAR MARKET
Has a class of its own
A car I’d be proud to own
Distinctive looking
Conservative looking
Appeals to older people
Traditional
Has spirited performance
Appeals to younger people
Fun to drive , sporty
Very practical
Economical to run
Affordable