Further Thoughts About Differentiated Products

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Further Thoughts About Differentiated Products

• AG BM 102

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"Many a small thing has been made large by the
right kind of advertising." Mark Twain
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Introduction

• Payoff is clear
• Doing it right is harder
• Need clear vision of where you are going

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What are your Goals?

• Sales volume?
• Market share?
• Market rank?

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Source Advertising Age
Total Market 10 bil. cases
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Who is your customer?

• One night on evening news three soup ads in 3
  minutes
• Who eats canned soup?
• Some clues who watches network news?
• Who is pictured in ads?
• Middle aged women one meets another at airport

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Chiquita Bananas

• What is the message?
• Who is the customer?

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Marketing Mix

• The 4 Ps
• Product
• Price
• Place
• Promotion

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Two Types of Promotions

• Pull Promotions
• Consumer-Directed
• Mass media advertising
• Coupons
• Packaging
• Push Promotions
• Trade-Oriented
• Give favorable pricing and merchandising
  attention to a brand or product.

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Food Processors and Retailers in Advertising

• Food Processors
• Account for one-half of the total food industry
  advertising expenditures.
• Food processors account for 25 of the total
  advertising outlays by all processors.
• Food Retailers
• Account for 30 of the total food industry
  advertising expenditures.
• Food retailers spend more on advertising than
  any other group of retailers.

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Marketing Strategy
A planned course of action for securing the
desired response from a carefully defined market.
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Marketing strategy includes

• 1. Carefully selected customers
• 2. Clearly defined objectives
• 3. A uniquely differentiated product
• 4. Distribution, pricing, and promotional
  policies consistent with the above.

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Marketing strategy focuses on

• Markets to be served
• Products to be offered

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Marketing Plan Outline
1. Industry Attractiveness Analysis An
assessment of the industry and environmental
factors affecting the product/service.
2. Competitor Analysis An assessment of the
competitors activities and predictions future
competitor product strategies.
Situation Analyses
3. Company Analysis An assessment of the
organizations strengths, weaknesses,
constraints, and ultimately responsive
strategies, either exploiting strengths or
correcting or compensating for weaknesses.
4. Customer Analysis An examination of the
basic aspects of consumer behavior in terms of
who they are and why and how they buy.
5. Market Potential, Forecasting, and Budget A
forward-looking activity that helps the
entrepreneur determine appropriate strategic
objectives.
Strategy
6. Marketing Strategy The plan for achieving
the organizations objectives by developing a
sustainable competitive advantage through the
markets entered and the programs used to serve
them.
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Who is your competition?

• What product are you worried about? Progresso
  Soup showed Campbells Chicken and Stars and then
  their soup with more ingredients
• How will you distinguish your product?
• How will they respond?

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Five Forces Determining Industry Structural
Attractiveness
Porter (1980)
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Bases for Industry Analysis
Competitive Factors
Market Factors
Environmental Factors

• Size
• Growth
• Stage in life cycle
• Cyclicity
• Seasonality
• Marketing mix
• Profits
• Financial ratios

• Power of buyers
• Power of suppliers
• Rivalry
• Threat of substitutes
• Concentration
• Capacity utilization
• Entries and exits

• Technology
• Economic
• Social
• Political
• Regulatory

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Examples of Competition Levels
Ice cream
Tea
Beer
Regular colas
Juices
Diet-Rite cola
Wine
Product Form
Diet Pepsi
Diet lemon limes
Video rentals
Product Category
Diet Coke
Fruit Flavored colas
Lemon limes
Coffee
Fast food
Bottled water
Generic Competition
Baseball cards
Budget Competition
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Ottos Pub Brewery

• Brew Pub on North Atherton
• Variety of unique beers
• Fancy sandwiches
• http//www.ottospubandbrewery.com
• Draw a circle of competition

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Customer Profile

• 1. Who they are
• purchaser
• user
• 2. What they buy
• amount
• brand, features
• usage situation

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Customer Profile

• Where they buy.
• When they buy.
• How they choose
• consumer behavior
• 6. Why they select a product (customer value)
• functional
• service
• image

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Customer Profile

• 7. Will they buy it (again)?
• satisfaction
• intention
• 8. Sensitivity to marketing mix
• product, price, place, promotion

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Ottos

• Who is customer?
• What will they buy?
• When will they buy?
• How do they choose?
• Will they buy it again?
• How do you reach them?

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Customer Analysis
There is only one boss--the customer. And he can
fire everybody in the company from the chairman
on down, simply by spending his money somewhere
else. --Sam Walton
Listen to the whispers and you wont have to hear
the screams. --Cherokee saying
People are not all the same--Person
Variability People make choices depending on
the situation--Situational variability
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Concluding Comments

• Differentiating a product is difficult
• Maintaining the differentiation is also difficult
• Do it right and payoff is there