Marketing Principles

1. Marketing Principles Product, Price, Promotion & Place Oct 23rd, 2009

2. The Marketing Mix 2 of 25 Product • Development • Management • Features/benefits • Branding • Packaging • After-sales service Promotion • Communication mix • Advertising • Sales promotion • Sales • Public relations • Direct marketing Price • Costs • Profitability • Value for money • Competitiveness • Incentives Place • Access to market • Channel structure • Channel management • Retailer image • Logistics

3. Communications Mix – How to decide • Who is the intended market? – B2B • What is objective of MarCom Initiative? • What is nature of Product? • What is product Life Cycle Stage? • What are competitors doing? • What is available budget for MarCom? • Use Push Strategy/Pull Strategy(Push utilizes personal selling for trade market, pull advertising)

4. Objectives of MarCom Initiative? (Promotion) • Hierarchy of effects – we can advance out target customer through certain stages: (Figure 12.2 pg 424, Marketing Best Practices) Unawareness Awareness Marcom should move consumers from one goal to the next Which type Marcom for which level? Beliefs/Knowledge Attitude Purchase Intention Purchase

5. Top 6 Ad Campaigns • Volkswagen, "Think Small", Doyle Dane Bernbach, 1959 • Coca-Cola, "The pause that refreshes", D'Arcy Co., 1929 • Marlboro, The Marlboro Man, Leo Burnett Co., 1955 • Nike, "Just do it", Wieden & Kennedy, 1988 • McDonald's, "You deserve a break today", Needham, Harper & Steers, 1971 • DeBeers, "A diamond is forever", N.W. Ayer & Son, 1938 Source: Advertising Age Periodical, Crain Publishing; 2006

6. Communications Mix • All covered in Previous IMC slides Advertising Sales promotion Sales (Personal Selling) Public relations Direct marketingSee slides from 23/10/09 **Review Chapter 12 of the book

7. Place – Distribution – Chap 10 • A marketing channel (distribution channel) is defined as a network of organizations that creates time, place and possession utilities for consumers and business users** Can be NB to success of your business, it led to failure of Virgin Cola and many others who had all the other Ps under control except PLACE. Products/services are essentially useless unless time, place and possession utilities are added to get them to the consumer. Source: Marketing Principles and Best Practices (2005) K. Douglas Hoffman, Michael R. Czinkota, Peter R. Dickson, Patrick Dunne, Abbie Griffin, Michael D. Hutt, Balaji C. Krishnan, , Robert F. Lusch, Illka A. Ronkainen3rd Edition

8. Marketing Channel Structure • Three basic dimensions1. Length of the channel 2. Intensity at various levels 3. The types of intermediaries involved

9. Marketing Channel Structure • Length of channel- See Fig 10.1 book Can range from 2 or 3 levels – Dell.ie Up to 10 levels - some channels in Japan Manufacturer – Agent – Wholesaler – Retailer – ConsumerFacilitating agencies don’t take title to the goods so aren’t considered part of the channel structure. (Transport, warehouse, insurance companies etc)

10. 10 of 25 Marketing Channel Structure • Intensity of Channel You can have intensive, selective or exclusive number of intermediaries

11. Determinants of channel structure • Distribution tasks that need to be performed • The economics of performing distribution tasks • Management’s desire for control of distribution Channels can change quickly over time, - Music, Fast Food, Alcohol

12. Distribution Tasks • Distribution exists because there are discrepancies between production and consumption: - 4 basic groups- Discrepancies in quantity – production too big - Discrepancies in assortment – 000s of products- Discrepancies in time – prod not needed immed.- Discrepancies in place – Made in China!

13. Performing Distribution Tasks • Specialization or Division of LabourLet some channel members develop expertise and specialize in particular areas • Transaction Efficiency At all costs, reduce the number of transactions required between manufacturer and consumer See Fig 10.3 & 10.4 of book

14. Management’s Desire for Control Depending on the type of product or service that you are trying to distribute, you may require intense control of the channel, even if this means less economies of scale. Gucci vs. Fruit of the Loom

15. Marketing Channel Management Major Decision Areas of channel management1. Formulating Channel Strategy 2. Designing the channel structure 3. Selecting the channel members 4. Motivating the channel members 5. Coordinating channel strategy with the marketing mix 6. Evaluating channel member performance**Getting channel management right is an easy way to beat competitors, example in book – WD 40. This P is most difficult P to be challenged quickly by competitor!

16. Formulated Channel Strategy Channel Strategy is the broad set of principles by which a firm seeks to achieve its distribution objectives to satisfy its customers. Look at some examples of different distribution channel choicesCDs – HMV or Play.com or Download?

17. Designing the Channel Structure Four phases of channel design: 1: Setting distribution Objectives – Dell wanted to inform the customer 2: Specifying the distribution tasks that need to be performed by the channel – store, order process etc 3: Considering alternative channel structures – length etc 4: Choosing an optimal channel structure – common sense, type of product, distance etc See Fig. 10.7 of book

18. Selecting Channel Members This is the last phase of channel design: 1: Developing Selection Criteria ** 2: Finding Prospective channel members 3: Evaluating prospective channel members against certain criteria 4: Converting prospective members into actual members ** See fig. 10.8 of book – Next Slide

19. Selection Criteria for channel members Credit & Financial Condition Sales Strength Attitude Product Lines Management Ability Prospective Channel Member Reputation ManagementSucession Market Coverage Sales Performance Market Coverage Source: Marketing Principles and Best Practices (2005) K. Douglas Hoffman, Michael R. Czinkota, Peter R. Dickson, Patrick Dunne, Abbie Griffin, Michael D. Hutt, Balaji C. Krishnan, , Robert F. Lusch, Illka A. Ronkainen3rd Edition

20. 20 of 25 Motivating Channel Members Refers to actions taken by manufacturers to get channel members to implement their channel strategy: 1: You have to learn about the needs and problems of channel members – McDonalds Campaign 55 situation** 2: Offer support to channel members to help meet their needs and solve their problems – VMS (vert mgmt sys) 3: Provide ongoing leadership There were strings attached to Campaign 55, but McDOnalds competitors had no strings

21. Coordinating channel strategy with the marketing mix 1: Product strategy may depend on channel strategy; eg. For frozen goods, perishables etc 2: Pricing strategy and channel strategy; the advertised price must be the available price, even after channel members have added their markup 3: Promotion strategy and channel strategy; if manufacturer invests time and money in promotion, retailer should engage in similar effort

22. Logistics in marketing channels Can be divided into traditional management of logistics and newer supply chain approaches. The newer approach can save €€€€€s for manufacturer Transportation Materials Handling Order Processing Inventory Control Warehousing Packaging

23. Outputs of the logistics system Customer Service; is the desired outcome of a well designed logistics system It can include:*Time from order receipt to shipment- Japanese JIT (Just in Time)*Order size and assortment constraints *Percentage of items out of stock – rarely happens! *Percentage of orders filled within a given number of days*Percentage of orders filled*Percentage of customer orders that arrive in good condition*Order Cycle Time*Ease & flexibility of order placement

24. Distribution & Logistics – Chap 10 This section is all covered in chapter 10 of the book. Next section on November ?? will cover: Marketing Strategies