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Lecture 5

BU121 week 5.docx

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Department
Business
Course
BU121
Professor
Laura Allan
Semester
Winter

Description
BU121 February 5 2013 Marketing: Reaching the Customer Key Chapter Concepts: Creating Marketing Strategies • Classifying consumer products vs. classifying business products • Stages of the life cycle – Indicators of stage – Industry/product – Altering the speed of cycle • Come up with more uses for the product • Expand the market – example: Johnson and Johnson expanded users to the whole family, not just babies • Planned obsolescence: speed up the cycle so people have to keep buying more • Example: clothing may still fit but new fashion keeps coming out to replace the older products (style or fashion obsolescence, quality obsolescence- small appliances) • Functional obsolescence (technology makes certain products obsolete- example: blurays are making DVDs obsolete) – isn’t planned • Pricing – Objectives – How markups are determined and calculated – Pricing strategies • Distribution/Place – Channels and marketing intermediaries (what intermediaries are you going to put between you and the customer) – Alternative channel arrangements and strategic channel alliances – Functions of distribution channels (what are they actually going to do for you) – Intensity of distribution – related to product classification • Classification tells you how the consumer buys so you can determine how to sell Understanding Buying Decisions  Convenience good/service o Staples – branding, max exposure, shelf position  Customers don’t think about it, they buy what they always buy, the product must be visible and available o Impulse goods – max exposure, shelf position, P of P  Products should be placed near the check out o Emergency goods – near P of P, readily accessible  Shopping good/service o Homogeneous – exposure for price comparison o Heterogeneous – exposure near similar products  Specialty Good/Service – selective dist’n for exclusivity  Unsought Good/Service – aggressive promo, personal selling  Different markets classify products differently 1 BU121 February 5 2013  Important to see your product as your customer does Promotion  Objectives  Promotional mix and integrated communications  Factors affecting the mix o Push vs. pull  Trends – What direction are we going in? What changes are taking place? Keys to Success • #1 Key – Provide a unique benefit • #2 Key – Convince the customer that the product provides that unique benefit – through your product, pricing, promotion, and distribution/place decisions… • Integrated/consistent system of activities to convince the customer of the unique benefit – All parts of organization must have clear idea of unique benefit (everyone in the company must understand the consistent system) • Core Benefit Proposition (CBP) – Clear, concise statement of product’s unique benefit or value proposition – Guides all decisions • Example: You’re selling high-end computers, they’re only sold in specialty stores, they’re promoted as being high-end, and it’s priced high – If you reduce the price to boost sales it won’t work because that piece of the puzzle isn’t consistent with the whole picture Total Product Concept - Physical features necessary support CBP - Total package of benefits/value package as seen from the eyes of the consumer o Brand o Package o Service o Warranty o Delivery o Credit o Atmosphere o Image, reputation o Accessibility o Price What is a “brand’? 2 BU121 February 5 2013 - “… a collection of perceptions in the mind of the consumer” - What does that product evoke in you, what feeling does it give you - Built not only through effective communications or appealing logos – it is built through the total experience that product offers Brand Name - Communicate CBP (communicate the core benefit in the name) - Move customer through stages of recognition o Non-recognition o Brand recognition o Brand recall/awareness o Brand preference o Brand loyalty Do loyalty programs create loyalty? (Ex. Scene cards, shoppers optimum card, etc.) - Net promoter score measures loyalty - Don’t create loyalty but urge customers to behave a certain way - Advocacy is loyalty 3 BU121 February 5 2013 - 5 things drive brand loyalty - Value – consumers must see the value of the product for the price they’re paying - Accessibility – the products must be available to buy - Awareness – the customer must know of the company - Relevant differentiation – the product must actually meet a unique, relevant need; comes close to meeting our needs better than the competition - Emotional connection – the brand must connect with people on an emotional level Price (Consumers link price and product in the thinking process before they buy) - Objectives (text) - Approaches o Cost-based: mark-up (text calculation) o Competitive-based: market share o Consumer-based: value (how will customers see it) - Look at all of the different angles when determining price - Most important: support the core benefit proposition (CBP) with the price - Test Pricing - Specific Strategies/Tactics (text) o Skimming (start with a higher price to re-coop the costs, then gradually lower the prices) o Penetration (start with a lower price that’s competitive) o Odd pricing (ex. $2.99 vs. $3.00) Promotion - Advertising, Personal Selling, Sales Promotion, Publicity - Advertising: Any form of non-personal sales presentation of a long-term nature that is paid for by an identified
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