intro to mktg_itm_sept-2012_session-2
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NANDA KISHORE SETHURAMANITM SEPTEMBER 2012
Introduction to MarketingWeek 2
Agenda
Targeting What is good marketing
research? Marketing research Questions Types of information Types of market research Market research summary Test Market Define Target Audience Estimate market potential Analyze market share/share of
customer Track competitors Identify market characteristics &
trends Analyze sales data Sales forecasting: Existing / new
products
Product Product Strategy Product Essentials Features and Benefits Classifying products Product line and mix Branding Packaging and Labeling
Trademarks Positioning and Brand
Building The Art of Positioning is
Marketing Positioning the game of Mind and
Heart Brand is a Promise Brand is owned by Customers Understanding Brand Drivers Brand Attributes Brand Architecture The Positioning Template
3
Segmentation, Targeting, Positioning
Research – An Introduction
Situation Analysis
StrategyDevelopment
MarketingProgram
Development
Implementation
Understand the environment and the marketIdentify threats and opportunitiesAssess the competitive position
Define the business scope and served market segmentsEstablish competitive advantagesSet performance objectives.
Product and channel decisionCommunication decisionsPricingPersonal selling decisions
Performance monitoringRefining strategies and program
The Process
Marketing Research in Practice
Programmatic Research Develops market options through market
segmentation, market opportunity analysis, or consumer attitude and product usage studies
Selective Research Tests different decision alternatives such as new
product testing, advertising copy testing, pre-test marketing, and test marketing
Evaluative Research Evaluation of performance of programs
Marketing Decision Support Systems
Characteristics of MDSS: Interactive Flexible Discovery oriented User friendly
Marketing Decision Support Systems
Four components of MDSS: Database Reports and Displays Analysis capabilities Models
Gaining Insight from a MDSS
Manager
Modeling
Analysis
Display
Database
Environment
Participants in marketing research activities
Information Users
Information Suppliers:Inside Company
Information Suppliers:Outside Company
• General management
• Planning
• Marketing and sales managers
• Product managers
• Lawyers
• Marketing research department
• Sales analysis group
• Accounting department
• Corporate strategic planning
• Research consultants
• Marketing research suppliers
• Advertising agencies
Marketing Research Process
MR Process Evolves From Answers to Five Key Questions Why should we do research? What research should be done? Is it worth doing the research? How should the research be designed to achieve
the research objectives? What will we do with the research?
MARKETING PLANNING AND INFORMATION SYSTEM
Planning system
• Strategic plans
• Tactical plans
Information system
• Databases
• DSS
1. AGREE ON RESEARCH PROCESS
• Problems or opportunities
• Decision alternatives
• Research users
Marketing Planning & Information System
2. ESTABLISH RESEARCH OBJECTIVES
• Problems or opportunities
• Decision alternatives
• Research users
Estimate the value of information
Is benefit > cost
Do not conduct marketing research
NO
Yes
2. ESTABLISH RESEARCH OBJECTIVES
• Problems or opportunities
• Decision alternatives
• Research users
5. COLLECT THE DATA
7. REPORT THE RESEARCH RESULTS AND PROVIDE STRATEGIC RECOMMENDATIONS
6. PREPARE AND ANALYZE THE DATA
Yes
The Marketing Research Process
Step 1 Research Purpose
Problem or opportunity analysis Which problems or opportunities are anticipated What is the scope of the problems and the possible
reasons? Evaluation of decision alternatives
What are the alternatives being studied? What are the criteria for choosing among the alternatives?
Research users Who are the decision makers? Are there any covert purposes?
The Marketing Research Process (Contd.)
Step 2 Research Objective
A statement, in as precise terminology as possible, of what information is needed
Should be framed to ensure information obtained will satisfy research purpose
Research QuestionHypothesis DevelopmentResearch Boundaries
The Marketing Research Process (Contd.)
Research Question Asks what specific information is required to achieve
the research purpose Sample questions to determine if a specific
advertisement should be run: Will the advertisement be noticed? Will it be interpreted accurately? Will it influence attitudes?
The Marketing Research Process (Contd.)
Hypothesis Development A possible answer to a research question.
Generating a hypothesis Draw on previous research efforts Borrow from other disciplines such as:
Psychology Sociology Marketing Economics
Manager’s experience with related problems, coupled with knowledge and the use of judgment
Source• Theory
• Management experience
• Exploratory research
Research Question Hypothesis
Research Purpose
Research Design
Research Objective
The Marketing Research Process (Contd.)
Step 3 Estimating the Value of Information
Value depends on: Importance of decision Uncertainty that surrounds it Influence of research information on the
decision
Product A
$ 4 million
$ 1 million
$ 4 million
-$ 2.5 million
Success
Success
Failure
Failure
Introduce
Introduce
Introduce
Introduce
Do not
Do not
Illustrative Decision Models
Product B
Research Design and Implementation
Research Design The detailed blueprint to guide the
implementation of a research study toward the realization of its objectives
Categories of Research
Exploratory Research Used when seeking insights into the general nature of a
problem, the possible decision alternatives, and the relevant variables that need to be considered
Descriptive Research Provides an accurate snapshot of some aspect of the market
environment, such as: Consumer evaluation of the attributes of our product versus
competing products. The socioeconomic and demographic characteristics of the
readership of a magazine The proportion of all possible outlets that are carrying, displaying,
or merchandising our productsCausal Research
Used when it is necessary to show that one variable causes or determines the values of other variables, a causal research approach must be used
Detective Funnel
Uses Combination of All Three Research Techniques Exploratory techniques generate all
possible reasons for a problem Descriptive and Causal approaches narrow
the possible causes
Detective Funnel
Problem
Exploratory Research
Probable Causes
Causal Research
Descriptive ResearchPossible
causes of the problem
Methods & Data Collection.
Data Sources
Secondary DataPrimary Data
DATA SOURCES
SECONDARY DATA SOURCES
PRIMARY DATA SOURCES INTERNAL
RECORDS
EXTERNAL SOURCES
PUBLISHEDDATA
STANDARDIZED SOURCES OF MARKETING DATA
INTERNET
ELECTRONIC
PRINTED
•STORE AUDITS•WAREHOUSE WITHDRAWAL SERVICES•CONSUMER PURCHASE PANELS•SINGLE SOURCE DATA•NIELSEN’S TELEVISION INDEX•STARCH SCORES•ARBITRON PANEL•MULTIMEDIA SERVICES
•SALES/PATRONAGE RESULTS ( OUTCOMES )•MARKETING ACTIVITY ( INPUTS )•COST INFORMATION•DISTRIBUTOR REPORTS AND FEEDBACK•CUSTOMER FEEDBACK
•GOVERNMENT•TRADE ASSOCIATIONS•PERIODICALS•NEWSPAPERS•BOOKS•ANNUAL REPORTS•PRIVATE STUDIES
Sources of Secondary Data
Uses of Secondary Data
Can solve the problem on hand all by its ownCan lead to new ideas and other sourcesHelps to define the problem more clearlyCan help in designing the primary data
collections processHelps in defining the population / sampleCan serve as a reference base
BenefitsBenefits LimitationsLimitations
Low costLess effortLess timeAt times, more
accurateAt times, only way
to obtain data
Collected for some other purpose
No control over data collection
May not be accurateMay not be in correct
formMay be outdatedMay not meet data
requirementsAssumptions have to be
made
Benefits and Limitations of Secondary Data
Internal Sources of Secondary Data
Internal Records Accounting Data Sales Reports Inventory Management Customer Database
External Sources of Secondary Data
Published data sources (Census, publications of various trade associations)
Trade directoriesComputer retrievable databases ("online"
databases)
Practical Applications
New Product Research
New Product Research Process Generation of new product concepts Evaluation and development of those concepts Evaluation and development of the actual products Testing in the context of the marketing program
Need Identification Perceptual maps Social and environmental trends Benefit structure analysis Product users Focus-group interviews Lead user analysis
Concept Identification
New Product Research (Contd.)
Test Marketing Designing the sell-in market test Selecting the test cities Implementing and controlling the test Timing Measurement Costs of a test market
Controlled Distribution Scanner Markets (CDSM)
Projecting Trial, Repeat and Usage Rate Using Panel Data
Other Applications
Pricing Research Research for Profit-oriented Pricing Research for Share-oriented Pricing
Distribution Research Warehouse and Retail Location Research
Center-of-gravity Simulation Computerized Simulation Models Catchment Area Analysis Outlet Location Research
Number and Location of Sales Representatives Sales effort approach Statistical analysis of sales data Field experiments Computerized models of sales force size and allocation by
market and by product line
Advertising Research
Criteria Recognition Recall Persuasion
Forced exposure, brand preference change
On-air tests -- brand preference change
Customized Measures of Communication / Attitude
Purchase Behavior Coupon stimulated
purchasing Split-cable tests
Tracking StudiesDiagnostic Testing
Copy Test Validity Qualitative Research Audience Impressions
of the Ad Adjective Checklist Eye Movement Physiological
MeasurementBudget DecisionMedia Research
Measuring print vehicle audiences
Measuring broadcast vehicles audiences
Sales Promotion Research
Promotional Tools Price Discounts Features Displays Coupons / Rebates Sweepstakes
Promotional Strategy Hi-lo Every Day Low Price (EDLP)
39
Target Market
40
41
Evaluating Segment Attractiveness
42
Let’s sell to segments with big eyes and lips
43
Factors driving a Target Marketing Strategy
44
Selling Ice Cream to EskimosSelling Ice Cream to Eskimos
46
Broad
Target Marketing Strategies
7 - 47
Target Marketing
Socially Responsible Targeting Some segments, especially children, are at special risk Many potential abuses on the Internet, including
fraud Internet shoppers Controversy occurs when the methods used are
questionable
Products
What is a product?
A product is anything that can offered to market for attention, acquisition ,use, consumption that might satisfy a want or need.
Products
GOODS SEVICES
Tangible products Intangible products
Features of product
Features of product
Associated attributes
Intangible attributes
tangibility
Exchange value
Customer satisfaction
Levels of product
Unexpected features
Luxury features
Expected features
Basic features
Basic product
Classifying Products
DurablesConsumer products Business products
Durables
Durables
Non-Durables
Services
Consumer Products
Business products
Materials and parts Raw materials and parts Manufactured materials and parts
Capital items Installation Equiptment
Suppliers and business services Maintenance and repair items Operating suppliers
Raw Materials
Farm ProductsNatural Products
Manufactured materials and parts
Capital items
Installation
Equipment
Suppliers and business services
Mainteinance and repair items
Operating Suppliers
Product mix
Product Mix
The assortment of products that a company offers to a market
Width – how many different product lines?Length – the number of items in the product
mixDepth – The no. of variants offered in a
product lineConsistency – how closely the product lines
are related in usage
Product Line & Product Mix
LAMPSLAMPS•TableTable•CeilingCeiling•TrackTrack•DeskDesk
Product Mix
Product Product Line 1Line 1
Product Product Line 2Line 2
Product Product Line 3Line 3
TABLESTABLES•KitchenKitchen•Dining RoomDining Room•EndEnd•CoffeeCoffee•OutdoorOutdoor•ConferenceConference•ComputerComputer
CHAIRSCHAIRS•Dining RoomDining Room•Living RoomLiving Room•BedroomBedroom•OutdoorOutdoor•DeskDesk
LAMPSLAMPS•TableTable•CeilingCeiling•TrackTrack•DeskDesk
PRODUCT MIX EXAMPLE
Hair Care Salty Snacks
Dental Care
Soft Drinks
Shampoo Chips Tooth Brush
Cola
Conditioner
Nuts Tooth Paste
Ginger Ale
Hair Spray Crackers Dental Floss
Root Beer
De
pth
(#
of i
tem
s)
Width (# of product lines)
Factors influencing change in product mix
Changes in market demandCost of productionQuantity of productionChanges in company desireCompetitors actions and reactions
Product Mix Strategies
Expansion of product mixContracting or dropping the product mixAlteration of existing product sTrading up/trading down strategies
Product management
PlanningForecastingMarketing of products of a company is
product management
Objectives of product management
To design product strategiesTo spot market opportunitiesTo develop strategies for each stage of
product life cycleTo generate new product ideas
Product Innovation – New Product Types
Importance of new product
To meet consumer needs and wantsTo meet competitionTo increase profitsTo avoid threats from substitutes
New Product Development Process
Step 1. Idea GenerationSystematic Search for New Product Ideas
Internal sources Customers Competitors Distributors Suppliers
Step 2. Idea ScreeningProcess to spot good ideas and drop poor
onesTechnically feasibilityFinancially viable
New Product Development Process
Step 3. Concept Development & Testing
New Product Development Process
Step 4. Marketing Strategy Development
New Product Development Process
Step 5. Business AnalysisStep 6. Product Development
New Product Development Process
Step 7. Test Marketing
New Product Development Process
Step-8 commercialization
Introducing the product into the marketIntroducing the product into the market
8-78
Source: Reprinted with permission from p. 60 of Analysis for Strategic Marketing Decisions, by George Day. Copyright © 1986 by West Publishing Company. All rights reserved.
Time (years)
Pro
du
ct c
ateg
ory
sal
es(r
eal
do
llar
s)P
rofi
t p
er u
nit
(rea
l d
oll
ars)
Profit/unitSales
Life cycleextension
GrowthCompetitiveturbulence
Maturity Decline orextension
Introduction
8-3
Product Life Cycle
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
Low sales Low sales
High cost per customerHigh cost per customer
NegativeNegativeCreate product awareness and
trialCreate product awareness and
trial
Offer a basic productOffer a basic product
Use cost-plus basis Use cost-plus basis
DistributionDistribution Build selective distributionBuild selective distribution
AdvertisingAdvertising Build awareness among innovators,early adopters
Build awareness among innovators,early adopters
Marketing Strategies: Introduction Stage
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
Rapidly rising sales Rapidly rising sales
Average cost per customerAverage cost per customer
Rising profitsRising profits
Maximize market shareMaximize market share
Offer product extensions, service, warranty
Offer product extensions, service, warranty
Penetration PricingPenetration Pricing
DistributionDistribution Build intensive distributionBuild intensive distribution
AdvertisingAdvertising Build awareness in the mass marketBuild awareness in the mass market
Marketing Strategies: Growth Stage
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
Peak salesPeak sales
Low cost per customerLow cost per customer
High profitsHigh profits
Maximize profit while defending market share
Maximize profit while defending market share
Diversify brand and modelsDiversify brand and models
Price to match or best competitors
Price to match or best competitors
DistributionDistribution Build more intensive distributionBuild more intensive distribution
AdvertisingAdvertising Stress brand differences and benefits
Stress brand differences and benefits
Marketing Strategies: Maturity Stage
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
Declining salesDeclining sales
Low cost per customerLow cost per customer
Declining profitsDeclining profits
Reduce expenditure and milk the brand
Reduce expenditure and milk the brand
Phase out weak itemsPhase out weak items
Cut priceCut price
DistributionDistribution Go selective: phase out unprofitable outlets
Go selective: phase out unprofitable outlets
AdvertisingAdvertising Reduce to level needed to retain hard-core loyal customers
Reduce to level needed to retain hard-core loyal customers
Marketing Strategies: Decline Stage
Causes of New Product Failures
Overestimation of Market SizeProduct Design ProblemsProduct Incorrectly Positioned, Priced or
AdvertisedCosts of Product DevelopmentCompetitive ActionsTechnical problemsPoor planningInadequate promotionPoor packingFault pricing
84
Segmentation, Targeting, Positioning
7 - 85
Positioning
Positioning: The place the product occupies in consumers’
minds relative to competing products. Typically defined by consumers on the basis of
important attributes. Involves implanting the brand’s unique benefits
and differentiation in the customer’s mind. Positioning maps that plot perceptions of brands
are commonly used.
7 - 87
Identifying possible competitive advantages
Choosing the right competitive advantage
Choosing a positioning strategy
Differentiation can be based on Products Services Channels People Image
Topics Topics
Choosing a Positioning Strategy
7 - 88
• How many differences to promote? Unique selling
proposition Several benefits
• Which differences to promote? Criteria include: Important Distinctive Superior Communicable Preemptive Affordable Profitable
Topics Topics Identifying possible
competitive advantages
Choosing the right competitive advantage
Choosing a positioning strategy
Choosing a Positioning Strategy
7 - 89
• Value propositions represent the full positioning of the brand
• Possible value propositions: More for More More for the Same More for Less The Same for Less Less for Much Less
Topics Topics Identifying possible
competitive advantages
Choosing the right competitive advantage
Choosing a positioning strategy
Choosing a Positioning Strategy
7 - 90
Positioning statements summarize the company or brand positioning EXAMPLE: To (target segment and need) our (brand)
is (concept) that (point-of-difference)
Developing a Positioning Statement
7 - 91
Companies must be certain to DELIVER their value propositions.
Positions must be monitored and adapted over time.
Communicating the Positioning
1. Identify Basesfor Segmenting the Market
2. Develop Profilesof Resulting Segments
3. Develop Measuresof Segment Attractiveness
4. Select TargetSegment(s)
5. Develop Positioningfor Each Target Segment
6. Develop MarketingMix for Each Target Segment Market
Positioning
MarketTargeting
Market Segmentation
Market Segmentation Process
(KAPFERER)
Brand Identity Prism
KAPFERER represents brand identity diagrammatically as a six-sided prism as shown
below:
Internalisation
Externalisation
Constructed Source/Sender
Constructed Receiver
Brand Identity Prism
Physique according to him is the basis of the brand. E.G. the physique of Philips is “technology and
reliability” while for the brand Tata it is “trust”
Personality is same as Aaker, it answers the question “what happens to this brand when it becomes a person?”
Culture symbolizes the organization, its country-of-origin and the values it stands for. E.G. traditional brands like balsara, dabur and zandu.
Brand Identity Prism
Relationship is the handshake between consumer and the organisation. E.G. the relationship with “safola” is safety.
Reflection is the consumer’s perception for what the brands stands for. E.G. coke’s image more attract youth.
Self-image is what the consumer think of himself. E.G. benz Car owner think that since he has bought
the car he is treating himself to one of the best car in the world.
Let us understand the model in detail…
What is a Brand???
“ A Brand is a complex symbol. It is the intangible sum of a product’s attributes, its name, packaging and price, its history, reputation, and the way it’s advertised. A brand is also defined by consumer’s impression of people who use it, as well as their own experience ”- David Ogilvy
Now let us look at how Brand Experience is differentiated…
Brand Experience are of Two types
The External Brand Experience includes
NameLogoAdvertisingBrand IdentityEnvironmentsProducts & Service
The Internal Brand Experience includes
Business ProcessCustomer RelationsBrand ValuesTrainingQualityStaff MotivationRecruitment PoliciesTechnology etc..
Now let us look at the Brand Identity Prism based on Kapferer model and the 6 key dimensions in it
Internalisation
Externalisation
Constructed Source
Constructed Receiver
-Business Process -Customer Relations -Brand Values -Training-Quality -Staff Motivation-Recruitment Policies -Technology etc..
-Name -Logo-Advertising -Brand Identity-Environments -Products & Service
Physical Product features, symbols & attributes
Personality Character & attitude
Relationship Beliefs & association
Culture Set of Values
Reflection Customer’s view of the brand
Self-Image Internal mirror of customer as user of brand
Let us now understand the prism with some examples…
For Sify India let us look at how they have built the brand basis the Kapferer Model
Sify India
Physical Kite Symbol, Online Access
Personality Innovative & Tech savvy
Culture Customer centric & Indian
Self -image "net" way of life empowered
Reflection Consistent & dependable performer
Relationship Best guide to the net
Sify India
Physical Kite Symbol, Online Access
Personality Innovative & Tech savvy
Culture Customer centric & Indian
Self -image "net" way of life empowered
Reflection Consistent & dependable performer
Relationship Best guide to the net
End of Day 2
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