Marketing week 7 8 9_10

Promotion & Communication

Jon Kittojkitto@theibam.co.uk

Hierarchy-of-effects models

Table 3.1 Hierarchy-of-effects models

Based on: Barry, T.E. and Howard, D.J. (1990), ‘A Review and Critique of the Hierarchy of Effects in Advertising’, International Journal of Advertising, 9, 121–35.

Purchase Decision

High LowDecision Complex LimitedMaking Decision Decision

Making MakingHabit Brand Inertia

Loyalty

Involvement

Communication Process

Sender Encoding

Message

Decoding Receiver

ResponseFeedback

Media

http://www.youtube.com/watch?v=YV8zGNe7Ebg http://www.youtube.com/watch?v=F8nQyPNuA5I

Purpose of Communication

Differentiate http://www.youtube.com/watch?v=ib-Qiyklq-Q http://www.youtube.com/watch?v=po0jY4WvCIc

Remind http://www.youtube.com/watch?v=HT3lWeJ1GT0

Inform http://www.youtube.com/watch?

v=uNcQaQZV67A

Persuade http://www.youtube.com/watch?v=at1y7iHmjXQ

Advertising

“Non- personal paid for communications targeted through mass media with the purpose of achieving set objectives such as creating awareness or encouraging trial. It is a means of reaching large audiences in a cost effective manner”

Sales Promotion

Offers buyers additional inducement to buyCan be targeted at consumers, intermediaries and the sales forceReach new customersReduce distributor riskReward behaviourRetentionAssist segmentationImprove efficiency

Public Relations

Attempts to shape attitudes and opinionsUsed to communicate with all stakeholdersUseful in profile strategyUsed in crisis management

Personal Selling

Involves face to face dialogueGives flexibility of messageImmediate feedback gainedVery useful in business to business marketsVery useful when products and services are complex

Direct marketing

Used to create a personal dialogue with customers and stakeholders (not through an intermediary)Widely usedTechnology enabled

More Profits, More Investment

IdentifyProspects

Target Media

Sell Products

Get CustomerInformation Build Database

& Analyse

Talk to CustomersRegularly

Cross-sell, Up-sellRenewal

Increase CustomerLifetime Value

Analyse Database

Spiral ofProsperity

Perceptual Mapping

More Perceptual Mapping

4 Cs Framework

Communications Deliver a Personal Message Reach a Large Audience Level of Interaction

CredibilityCost

Absolute Cost Cost per Contact Wastage Size of Investment

Control Ability to Target Flexibility

Price

Jon Kittojkitto@theibam.co.uk

Factors affecting pricing decisions

Pricingdecisions

Internal factors -Marketing objectivesMarketing mixCostsOrganisation for pricing

External factors -Nature of market &demandCompetitionOther environmentalfactors

General Pricing Approaches

Cost-plus pricing Break-even analysis & target profit

pricing

Value-based pricingGoing-rate pricing Sealed-bid pricing

Breakeven ChartSales

Breakeven Point

Fixed Costs

Variable Costs

Total Costs£

Units

New Product Pricing Strategies

Market-skimmingHigh price charged‘Just’ worthwhile for some segments to adopt new productAs competitors enter market, price is lowered

Market-penetrationLow initial price chargedAttract large volume sales quicklyLarge market shareHigh volume sales save costsEconomies of scale on production and distribution

Product Mix Pricing Strategies

Product-line pricing setting price steps between products in a product line

Optional product pricing accessory products sold with main product

Captive product pricing product must be used with a main product

By-product pricing products produced as part of the process involved in

producing another product

Product-bundle pricing combining several products and setting a discounted

price

Nature Of Marketing Channels

Channel of Distribution A group of individuals and organisations

that direct the flow of products from producers to customers

Marketing Intermediary A middleman who links producers to other

middlemen or to those who ultimately use the product.

Two main types: Merchants Functional middlemen

Channel design decisions

Analyse customer service needs - marketing channels deliver appropriate value to the customerDefining channel objectives and constraints - which segments to serve and which channel to use for eachIdentifying key channel alternatives - direct marketing, broker, agent, intermediary, wholesaler, retailer, e-commerceEvaluating alternatives - economic, control, level of flexibility criteria

Channel For Consumer Products

Producer

Agents or Brokers

Wholesalers

Retailers

Consumers

Channel For Industrial Products

Producer

Agents

Industrial Distributors

Industrial DMUs

Channel Integration (Dibb, Simkin, Pride & Ferrell 2000)

VerticalThe combinationof two or morestages of the

channel underone management

HorizontalThe combination

of institutions at the same

level of channel operation under

one management

Supply chain

Suppliers Procurement- Manufacturing - Physical distribution

Channels Customers

Major Logistics Functions - Outsourcing

Order processingWarehousingInventoryTransportation Others

Services

Jon Kitto

Business Week said…Ask most executives how innovation can spur their growth, and they'll immediately think about changes in their product lineup. Wrong. They should be thinking "services." As a percentage of GDP today, services comprise 82% of our economic output. The number has been increasing for years. The crossover point from products to services actually happened in 1987. Yet when we think of innovation, most of us are still thinking products -- iPods, Mini Coopers, Treo's, and the like still dominate our mindshare about what's cool.

We are what we do… Not what we own… (Live Work)

Intangible Cannot be owned

Perishable Cannot be stocked

Variable Can be customised

Inseparable From the people who produce them

The extended marketing mix

The additional elements deal with the characteristics of services

People good training for service staff, appearance of staff, staff

carefully selected, and held more accountable

Process fast service tills, part time staff to cover highest periods of

demand, easy booking systems for appointments, on-line

Physical evidence internal and external appearance of premises, short

queues, modern equipment, pleasant waiting areas, add-ons, extras

Product PricePromotion Place

SERVQUAL

Determinants of perceived service quality

Dimensions of quality

Access

Credibility Knowledge Reliability Security

Competence

Communication

Courtesy

Responsiveness

Tangibles

Word of Past Buyers’ Advertising mouth experience needs

Expectedservice

Perceivedservice

Perceived servicequality

International

Jon Kitto

The trend towards globalisation

Domestic markets

Infrequent foreign marketing

Regular foreign marketing

International marketing

Global marketing

Factors for consideration

LanguageCulture & traditionLegal & regulatory requirementsBuying habits and motivational factors

Standards of livingMedia availability and usageThe competitive environment

Structural Choices

Exporting - sending products abroad and selling through intermediaries or own sales representatives

Licensing -form of joint venture, licensing the right to a local firm to use a process, trademark, etc for a fee or royalty

Joint ventures -joining with local firm to produce or market a product

Direct ownership - entering foreign market by developing manufacturing facilities

International Marketing Mix

Arguments for Adaptation

Differing customer needsInfrastructure variationsVarying levels of educationEconomic, cultural and political conditions varyInconsistent local management experience, abilities and skills

Arguments for Standardisation

Larger number of buyer similaritiesEasier to control campaigns from central sourceTechnological advances allow a consistent brand image to be maintainedEconomies of scale

Business-to-Business

Decision Making Unit (DMU)

User -end user, may initiate request and help specify

Influencer -technical personnel or specialists, help specify, provide information

Buyer -formal authority holders, help specify, select vendors, negotiate

Decider -final approver (often also buyer)

Gatekeeper -control information flow to others, can prevent sales people gaining access

Types of buying decision

Straight re-buy - goods re-ordered without modificationModified re-buy - opportunity for competitors to enter discussions, essential service quality is goodNew buy - greater risk or cost, the fuller decision making unit involved

Factors influencing industrial buying behaviour

ENVIRONMENTAL Levels of demand Economic prospects Interest rates The pace of technological change Political and legal structures Competitive structures

ORGANISATIONAL Objectives Policies Structures Systems & degree of centralisation Processes and procedures Managerial attitudes to risk Financial l resource Previous experiences

BUYING CENTRERoles in DMUGroup processesInterpersonalinteractions

INDIVIDUALPersonal objectivesJob positionAttitude to riskPrevious experiencesTechnical knowledgeMotivation

BUYINGDECISION

SOURCE: Adapted from Webster and Wind, 1972