Module 7 Marketing

8/14/2019 Module 7 Marketing

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International Marketing

A little background.

Senior Project Consultant at

Hndvrksrdet International A/S andEuro Info Centre Viborg

Member of European CommissionWorking Group for Information Society

and e-business for 5 yearsBusiness and Export background

No formal IT training.


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Managed and / worked on EU projects:

e-business law database

Danish national campaign on e-businessInternet awareness raising

Online guides x 3

Agricultural portal x 2E-business training in Bolivia, Estonia, Greece,Hungary, Latvia, Lithuania, Slovenia, Spain


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Practical Matters

Programme:

Tuesday - International Marketing for ICT

14.00 Danish business example

Wednesday - Role of the consultantAfternoon - short session: Travel for business meetings Europe

Thursday morning - Branding

Thursday afternoon - 14.00 CMMI

Saturday - Kristiina Sunell

Sunday - Kristiina Sunell

Remember: Assignment III given on Thursday


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Definition:

Marketing is the art of talkingnonsense filled with meaninglessAmericanisms with a smile on your

face

Anon


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Definition:

Marketing is a management process,responsible for identifying, anticipatingand satisfying customer requirements

profitably

UK Chartered Institute of Marketing


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Based on Maslows Theory includes:

Marketing starts with human needs and wants.

Human need is a state of deprivation of basic

satisfaction Human wants are desires for specific satisfiers of

needs

Human demands are wants for specific products thatare backed by an ability and willingness to pay forthem

Marketing does not create needs Needs pre-existmarkets


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Difference between Sales and Marketing:

Selling focuses on the needs of the seller,marketing on the wants of the buyer. Sellingis preoccupied with the sellers need toconvert his product into cash; marketing withthe idea of satisfying the needs of the

customer by means of the product and thewhole cluster of things associated withcreating, delivering and finally consuming it.


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Marketing concept rests on 4 pillars

Target market Customer needs

Integrated marketing

Profitability


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Definition: Markets

Markets can be:

Needs based (e.g. dieters) Product based (e.g. shoes)

Demographic based (e.g. Youth market)

Geographical (e.g. France)

Can also cover non-customer groups such asVoter markets, labour markets etc.


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Definition: Needs

Stated needs (I want an inexpensive car)

Real needs (I want a car which is cheap torun)

Unstated needs (I expect good service fromthe dealer)

Delight needs (I buy the car and get airconditioning added free)

Secret needs (I want my friends to see me asenvironmentally conscious)


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Profitability

Most companies dont market unless:

Sales decline Slow growth

Changing buying patterns

Increased competition

Increased market expenditure


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Groupwork: What needs can I find for mycompanys products / services?


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ICT Marketing is highly complex

The sector is dependent on in-housetechnical acronyms which make marketingand understanding a nightmare

Marketing of invisible features, future

unproven needs combined with negativeemotions.


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Need for tech-heads to understand thetechnologies involved

Need for creative types to understandthe future applications possible withtechnologies

Need for ICT specialists to be rational

enough to understand the differencebetween functional knowledge andtechnical knowledge


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Offer-centric Demand-centric

Product centred Market needs

Reactive productdevelopment

Predictive productdevelopment

Cost led pricing Market pricing

Opportunistic sales Targeted sales

Scattered customerbase

Customer clusters


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Should ICT marketing be offering-centric(Market led) or demand-centric (Demand led)or should it focus on desire instead?

Most people take it for granted that when aproduct/service is useful, it should sell in

large quantities. All you need to do according to them is measure the needsof your potential customers


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Offer-centric:

Selling at people, not to people

Most common type in ICT marketing

Innovation is keyword no alternative, nohistory, no market research available

Can be only option for most new software as

demand does not exist


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Demand-centric

Starting point is target population - a sample is takenof that population, interviewed, deduce and products

are made or adapted according to results. Demand-centric forces product/service managers to

think about clients first Prevents too many far-fetched unrealistic products

and brings realism into R&D

Alleviates risk by adapting proven successfulproducts or services where there is a demand.


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Demand-centric

However, there are also a number of danger areas:

Innovative concept products are not alwaysunderstood by target group

Market research often based on small groups andexpensive

For many products in ICT sector, too many variablesto give accurate results: pay-per-use, by the minute,by the hour, packaged use-as-much-as-you-likeprices, combined packaged and usage-based pricesetc


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Desire-centric

Assumes non-rational decision making:

More creative, more sophisticated and morereliant on sociology than on accountancy

More geared to B2C market than B2B butconsiderable overlaps exist

Not suitable to government/official tendering


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Examples of Reverse-Engineering marketing

Most shareware is based on this principle Globally Microsoft has beta-testing for 30days on software with right to use afterwards

Corel/Jasc Paintshoppro cheaper

alternative to Photoshop, tested andupgraded by users.


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S W O T

Internal factors PEST

Market Selection

Marketing PlanFour Ps Action Plan


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Marketing plan/strategy development

Following testing, marketing strategy

consists of 3 parts:Part 1: Target market size, structure and

behaviour; planned product positioning;

and sales, market share and profitgoals in the first year.


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Example 1:

Target market for instant breakfast drink is familieswith children who are receptive to a new convenient,nutritious and inexpensive form of breakfast. Thecompanys brand will be positioned at the higher-price, higher-quality end of the instant breakfast drinkcategory. The company will aim initially to sell500.000 cases or 10% of the market with a loss inthe first year not exceeding $1,3 million. The secondyear will aim for 700.000 cases or 14% of the marketwith a planned profit of $ 2,2 million.


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Marketing strategy development

Part 2:

Outlines the products planned price,distribution strategy and marketingbudget for the first year (s)


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Example 2:The product will be offered in three flavours inpackets of 6 to a box for retail price $2,49. 48 boxesto a case and case price to distributors is $ 24. For

the first two months, dealers will get 1 free case forevery 4 bought, plus advertising allowance. Freesamples given door to door and discount couponsgiven in newspapers. Sales promotion budget is $2,9 million and advertising budget is $ 6 million split50/50 between national and local. Two thirds into TVand one third into newspapers. Advertising willemphasize nutrition and convenience. $100.000 willbe spent in year 1 on market research to audit storesand consumer panels.


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Marketing strategy development

Part 3:

Describes the long run sales and profitgoals and marketing mix strategy overtime


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Example 3:

The company intends to win a 25% market share andrealise a post tax return on investments of 12%. Toachieve this, product quality will start high and beimproved over time through technical research. Pricewill initially be set at a high level and reducedgradually to expand the market and meetcompetition. Total promotion budget will be boostedeach year by 20% with initial advertising/promotionsplit 65:35 moving to 50:50 slowly. Market researchreduced to $60.000 after year 1


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Groupwork:

Make a case suggestion for one

company from your work group


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Marketing strategy development in introductorystages:

Rapid Skimming strategy (High Price/HighPromotion) Slow Skimming strategy (High Price/Low

Promotion)

Rapid Penetration strategy (Low Price/HighPromotion) Slow Penetration strategy (Low Price/Low

Promotion)


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Segmentation of ICT Markets

B2C (Business to Consumer) ICT products marketing Most popular type of ICT marketing and inevitably draws on

standard consumer marketing techniques. New technology and hi-tech products are increasingly

successful with general public and ICT consumer marketing isnaturally closer to marketing of household appliances - mainlysound and video systems

Traditional products such as computers, PDAs etc. and soundand video products are now merged into hybrid devices whichcombine high-end multimedia with IT to produce increasinglysophisticated systems


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B2B (Business to Business)

SMEs

SMEs are more varied in shape or form and aremore difficult to describe with large differences insize, number of employees, revenue, internationalpresence, ownership

Selling to SMEs can vary between consumer

(SOHO) and corporate marketing The smaller the target customers, the more ICT

marketing techniques and know-how will benecessary to maximize the hit-rate/contact-cost ratio


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B2C2B (Business to Consumer to Business)

Change in marketing power?

INTEL stickers on PCs influencemanufacturers making industrial purchasingchoices

INTEL, also subsidises PC manufacturersadvertising campaigns therefore putting evenmore pressure on them so that they promoteINTEL chips


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Segmentation of ICT MarketsC2B (consumer to business)

The most important activity in e-commerce isntselling. Its buying. Quite often that doesnt meanbuying online but checking, comparing, analysingquality and price before buying in traditional stores or

services

Italian researcher Giancarlo Livraghi


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Understand:

Your product

Channel opportunity

Existing channel structure in each region

Channel agent

Business to Business software solutions

Own directsales

VAR and /or

SI

End user

OEMLocal distributor

Agents


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Channel choice is also related to the sales cycle of theproduct:

Longer sales cycles usually require more direct methods

Product related factors which stretch the cycle include High price Immature technology

Complicated whole product Big organisational impact


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Questions:

Where do our competitors earn money?

Where are the complementing products sold?

Is there a need to support the channel and the customersimultaneously?

What is the support call response time requirement?

Do we need to establish a local office?

Who are the channel members?


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Innovation Project Management Businesses are getting more and more

familiar with project management or basictasks scheduling

Emergence of complex innovation projects On time delivery of projects becomes

increasingly demanding

In the automotive industry, new products areon average typically 18 months behindschedule (ILM 2003)


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Innovation Project Management

ICT is being introduced massively in all types of

industrial and commodity products to matchoverwhelming demand for more, better, newerfunctionality.

Endless piling up of layer upon layer of electronicsand software which makes major projects very

complex Security issues

Managing projects is a matter of managing people,not figures


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Orbital project management method is bestpractice for handling complexity.It enables projects to get started morequickly, more efficiently and improves projectsuccess rates:Proactive problem solving helps tacklingissues even before they crop-up, i.e. beforeits too late and before they generate a band-

wagon effect on the overall project-schedule.Often referred to this way of handling projectsas managing projects through Murphys Law.Downside can be seen as negative


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Traditional product cycle


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Cyclical product cycle


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Innovation product cycle


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PC hardware / software markets are reneweddue to obsolescence not due to fatigue

Alternatively, new functionality has been

implemented - multimedia online usage, orDVD-COM burning, new flat screens, whichincreases social pressure

When PC penetration gets anywhere close tothat of refrigerators (i.e. 99%, and 90% from1975), they will probably still be replacedfaster than refrigerators


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Evolution of equipment rates


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According to Geoffrey Moore, 80% of ICT products andservices dont cross the chasm

Ideal life cycle cut in half First come techno-enthusiasts, who are ready to buy any type

of new technology as long as the prestige it gives is high andvisible. Price for them is nota valid criterion, in fact the otherway around

The more expensive, the more exclusive, the more desirable.E.g. buying expensive 30,000 plasma TV screens was highlyvaluable for those who wanted to be the first to try flat TV

screens and show them off to their friends


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Early adopters come next. Early adopters are ahead ofmarkets and they have a good feel for technologies, which aremeant to become mainstream one day. Tend to be morerealistic than techno-enthusiasts. They know they have to wait

for a technology to catch up, until its price becomes reasonable- even though its still too high.

The third category of users (right after the so called chasm) ismade of early pragmatists who will only start buying newtechnology when they are certain that it will become

mainstream. Pragmatists tend to discard gadgets and theyhave a tendency to buy that technology which brings realsolutions to their problems.


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Gartner report 2004 on ICT storage marketshowing cycle times


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Life cycle of software

Software evolves all the time withpatches, upgrades etc

Ca. 70% of software cost is

maintenance Overwhelming majority of software is

sold based on licence recurring sales


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Software cost structure


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Magic quadrant Robert Metcalfe

Large network access must be made before short termrevenues can be targeted.

Marketing of network-centric products/services almostalways involves an extensive investment phasededicated to very costly infrastructure unless Internet isused.

Pervasive access to the Internet is what it makes it

successful for building new networked applicationsDespite poor security enforcement, the Internet is sosuccessful because of this very pervasiveness andubiquity.


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Magic quadrant Robert Metcalfe


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Example: MintelHighly secure, but less accessible services will most of the time be more successful than highly secure, hardly accessible services.In other words, first comes access, then usage and lastly, securityis enforced to preserve usage. The well-spread belief that security

and protection are drivers to system usage is, in my mind, a badidea. Looking at what happened in France in the 1980s with theroll-out of the Minitelsystem is tale-telling. At that time, FranceTelecom was still a government-owned PTT and not the modernprivatised service-provider we know today. FT decided back then toequip each and every household with a free Minitelterminal. Theextraordinary life span (20 years) of this service made it an amazing

cash-cow for the telecom operator generating humongous revenues[81].


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I t ti l M k ti


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Group work:

Turning B2B leads into real sales

Documents

Module 7 Marketing