Marketing function is undergoing significant changes

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Marketing function is undergoing significant
changes

• Increased globalization of markets on both the
  supply and demand sizes
• Implications of new technology, advance in
  telecommunications and the world wide web
• Computer applications and extensive databases
• Redesigned organizational structures

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Think global

• Product, Price, Place (distribution) promotion
• are the conventional managerial marketing
  activities
• Why everything becomes obsolete one day?
• Due to............................................
  ...............

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The marketing process are seen as the pivotal
concept and four core marketing processes are

• The marketing strategy process
• The marketing management process
• The order generation, fulfillment and service
  process
• The new product development process

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New product management

• How many new products do you observe in the past
  week?
• Why bother to have new product?
• Is it true that new product is the future of the
  company or the big threat?
• One product can build or kill the company

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Product Manager

• What is the job description (JD) of Product
  Manager?
• Assignment 1
• Please submit next week the detail of Product
  Manager Job Description.////////////////

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Product management

• Who handle product management?
• Marketing Manager
• Product Manager
• Assistant Brand Manager

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What is a new product?

• 1.New to the world
• 2.New category entries
• 3.Additions to product lines
• 4.Product improvements
• 5.Repositionings

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quality
value
time
cost
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Questions for discussion

• Is new product management an art or a science?
• Can innovation really be taught?
• Does this field of activity have a unique
  vocabulary? Invention and Innovation
• Inventionthe dimension of uniqueness the
  form,formulation,function of something.
• Innovationthe overall process which an invention
  is transformed into a commercial product that can
  be sold profitably

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Questions for discussion

• New product management means management of the
  entire process form early strategic thinking
  through launch to final success in the market
  place.
• New products development means the middle portion
  of the process form the idea to the shipping dock

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The key concepts for managing a new product
program
finish
gtContinuous new product process evolution gtthe
launch should be tracked through to
success gtMarketing requirements gtA pretechnical
product definition gtAugmented product
concept gtTriple stream process gtCommitment to a
unique superior product gtProject managed by a
leader, core group, and Support gtActive
corporate support gtContinuous stakeholder
involvement gtOpportunity identification and
mission statement gtThe organization needs a
specific bundle of capabilities gtHigher level
strategy
start
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Inflow of resources
Strategic planning
Concept Generation
Pre-technical Evaluation
Technical Development
commercialization
The Product Innovation Process
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Inflow of Resources

• SBU Mission/Strategy
• People Dollars
• Buildings
• Equipment
• etc

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Strategic Planning

• Ongoing Marketing
• Ongoing corporate planning
• Special opportunity analysis
• Underutilized resources
• New resources
• External mandate
• Internal mandate

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Concept Generation

• Ideation process
• Problem solving
• Demand derived
• New fashion (created)
• New dream

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Pre-technical Evaluation

• Highlight the idea
• Immediate screen, like or dislike the idea
• User screening
• Technical screening
• Product description or product definition
• The first list of customer needs
• Product protocol
• Agreement between various groups before extensive
  technical gets under way

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Technical Development

• Resource preparation
• Organization
• Design
• speed

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Commercialization

• Marketing
• Launch plan
• New product concept/details
• Target group/market potential/market size/demand
• Projected sales
• Marketing activities
• Media plan/budget
• Projected income statement

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Measuring the market

• Setting a boundary to the market
• Who buys what, when,where,how and why
• How many? How often? For how long?
• Key measures for market
• Size of market in value or volume
• Trend can tell the market potential
• Historical record can tell future market

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Mass marketing

• Attempt to sell to everyone in the market
  assuming that demand is homogeneous one
  marketing mix is used for all customers

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Market segment

• Market segment is a subdivision of any total
  market where customers,while buying the same type
  of general product as any other customers in the
  total market, nevertheless buy it in a particular
  form or place or manner and use it in a
  particular way i.e. liquid soup in the hotel and
  household

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How to measure the market segment

• Measurability
• Accessibility
• Substance
• Defensibility
• Durability
• Competitive capability

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Level of market definition
Prod. Mkt.
Gen. market
Usage or Application segments
Gas Electricity Solid fuel oil
Space heating Process heating Cooking Decoration I
ndustrial input
energy
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Target Marketing

• Using a specially designed marketing mix to
  target a small market with greater precision
  permits closer buyer-seller relationships

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Target marketing strategies

• Multiple segmentation focus on two or more
  distinguishable market segments each segment is
  treated as a unique market, with its own unique
  marketing mix
• Single segmentation Niche marketing is focused
  on a single segment that seeks special benefits
  seller must have distinct advantage over
  competitors and provide superior goods and
  services

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Market size

• Info. Collection
• Mkt research
• Mkt intelligence
• Acctg. MIS data
• Sales and retail data

• Mkt decision making
• What mkt?
• What competitive pos.?
• What mktg mix?
• What strategic?
• What tactics?

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Pricing
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Questions for Pricing

• What kind of pricing is mostly used in Discount
  Store?
• When discount given to senior citizen, what this
  is called?
• Home theatre is normally used this pricing, when
  free DVD player is given away with Plasma TV.
• Free 128 MB card when purchase DSC.

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Pricing

• Perceived Value VS Actual price
• Perceived valuegt Pricegt Variable Cost
• Pricegt Perceived valuegt Variable Cost
• Pricegt Variable Costgt Perceived value

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Pricing

• Factors that affect price
• Threat of new entrants, new model, new technology
• Power of buyers/suppliers/substitute products
• Rivalry
• Capacity situation (demand vs. supply)

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Pricing

• Skimming price or Prestige Pricing - (price
  above or comparable with the competitive product)
• Penetration price( price much lower than the
  competitive product)
• For introductory stage, both is depended on
  elasticity of demand

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Pricing in PLC

• Pricing in introduction stage must capture the
  market share (Penetration Pricing)
• pricing in growth stage depends on the
  competition in the market, aimed for maintaining
  market share and company margin
• At maturity stage,many close substitute products
  are available, margins reach the low level to
  protect the sales volume
• Loss leader is conducted during decline stage
  when product loses distinctiveness

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Psychological pricing

• Odd pricingis the using odd numbers (19.99),
  howabout 19.88
• Prestige pricing is setting price high for
  products with unique or unusual distinctiveness
• Psychological Discounting is the fake price for
  discounting purpose

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Some specific pricing tactics

• Price Bundling-(offer customer a package)
• Line Pricing- (offer both high and Low priced
  brand)
• Complementary Pricing- (together selling with
  sustainable need)
• Value Pricing- (Fast food)
• EDLP

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Some specific pricing tactics

• Differential Pricing- (customers behavior is
  heterogeneous)
• Direct Price Discrimination- (coupon is good
  tool)
• Second-market Discounting- (sell extra production
  at a discount to different mkt.
• Periodic Discounting- (play with timing)

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Some specific pricing tactics

• Competing against the Private Labels-(mostly in
  supermarket items)
• Pricing and the Internet
• What is the mechanism?
• Buyer/seller negotiation
• Auctions and eExchanges

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Strategic pricing models

• The market-base pricing model begins with 3
  elements,the needs of customers, the features of
  product and the benefits provided by major player
  in the market
• The cost-plus pricing model a price whereby a
  firm establishes a desired profit margin and adds
  the amount of cost of manufacturing, distribution
  and marketing cost.

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Price Ethic??

• Discount all year long
• Extremely discount (90 off)
• So many free items/premium
• Call in 10 minute will get more discount
• Expired goods sale, especially food, underware

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Product strategy

• Classification of goods
• Consumer goods
• Convenience goods consumer items are purchased
  with a minimum outlay of time and effort
• Shopping goods consumer items are purchased
  after comparison with other available offerings
• Specialty goods consumer items are purchased for
  specific attributes after considerable effort

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Product strategy

• Classification of goods
• Organizational goods goods purchased by business
  in order to produce other goods or for operations
  ie. Agricultural, raw material, manufactured
  organizational products,

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Product strategy

• Classification of goods
• By consumption patterns
• Durable goods
• Non durable goods
• services

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Product strategy

• Classification of goods
• By nature of products
• Traveling product
• Cosmetic product
• Electronic product
• Automobile
• Stationary
• Manufactured product
• Etc.

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Product determination

• Product mix the composite of products a company
  offers
• Product line those items in the mix that are
  closely related
• Product width refers to how many different
  products are offered
• Product depth refers to how many items of each
  type are sold
• Line extension process of building either the
  depth or the width of product offering

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Consumer Adoption Process

• 1 Awareness. The individual becomes aware of the
  innovation but lacks information about it
• 2 Interest The individual is stimulated to
  search for information about the innovation
• 3.Evaluation the individual considers whether to
  try the innovation
• 4.Trial The individual tries the innovation on a
  small scale to test its usefulness
• 5.Adoption The individual decides to make use of
  the innovation on a regular basis

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Adoption theory

• 1.Innovators are the first people to accept a new
  product 2.5
• 2.Early Adopters 13.5 of innovation acceptors
• 3.Early Majority Adopters 34
• 4.Late Majority Adopters 34
• 5 The last 16 of adopting public is Laggards

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Ch 8 Developing Product Strategy

• 1.Setting Objectives
• 2.Selection of Strategic alternatives
• 3.Selection of customer targets
• 4.Choice of competitor targets
• 5.Statement of the core strategy.
• 6.Supporting marketing mix
• 7.Supporting functional programs

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Setting Objectives

• Hierarchy of objectives

Level 0
Company Mission/Vision
Corporate objectives
Level 1
Corporate Strategies
Divisional objectives
Level 2
Divisional Strategies
Level 3
Product/Brand objectives
Brand Strategies
Level 4
Program objectives
tactics
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Strategic Alternatives

• Increasing Sales / Market Share
• Market Development Strategies
• Market Penetration Strategies
• Increasing Profitability
• Decreasing Inputs
• Increasing Outputs

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Choice of Customer Targets

• Customer acquisition (getting new customers)
• Customer retention (keeping current customers)
• Customer expansion (increasing usage, cross
  selling)
• Customer deletion (now or future customers)
• pg261

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Choice of Competitor Targets

• For a penetration strategy that involves stealing
  competitors customers
• For market leaders take defensive steps, and
  focus on the strong second
• For strong second might focus on offensive
  warfare and target at the leader
• For weak followers seek market niches

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The core strategy

• The core strategy defines the differential
  advantage to be communicated to the target
  customers referred to as Product positioning 2
  basic categories.
• Cost/Price Strategy
• Non-price strategy total product concept
• Generic product
• Expected product
• Augmented product
• Potential product

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product differentiation

• Quality technology, desire, customer service,
  reliability durability (industrial products)
• Status and image
• Branding
• Convenience and service
• Distribution channels

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Brand Equity

• Refers to a set of assets (and liabilities)
  linked to a brands name and symbol that adds to
  ( or subtracts form) the value provided by the
  actual physical product or service to a firm and
  that firms customers.
• Brand loyalty, Brand awareness, perceived
  quality, Brand association, other brand assets,
  etc.

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10 guildlines for building strong brand

• Brand identity
• Value proposition
• Brand position
• Execution
• Consistency over time

• Brand system
• Brand leverage
• Tracking
• Brand responsibility
• Invest