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2nd Term notes summaryREMEMBER:

You have to complete these notes with the notes taken in class. Studying only this information is not enoght to pass the exam.

UNIT 04 – COMPTETITION..................................................................................................................3A. THINGS WE NEED TO KNOW...................................................................................................3B. BENCHMARKING............................................................................................................................5

What is Benchmarking?...............................................................................................................5Types of benchmarking :.............................................................................................................5What is a mistery shopper?.......................................................................................................5Steps to make a Benchmarking................................................................................................5

C. HOW TO STOP/REDUCE COMPETITORS.............................................................................6UNIT 05: SUPPLIERS...............................................................................................................................8

DEFINITION........................................................................................................................................... 8TURISTIC SUPLIERS...........................................................................................................................8HOW TO CHOSE A SUPPLIER.........................................................................................................9SUPPLIER’S BARGAINING POWER..............................................................................................9ONE OR SEVERAL SUPPLIERS?..................................................................................................10

UNIT 06: ENVIRONMENT.................................................................................................................. 11DEMOGRAPHIC..................................................................................................................................11SOCIOCULTURAL.............................................................................................................................. 12ECONOMIC........................................................................................................................................... 13LEGAL.................................................................................................................................................... 14TECHNOLOGIC................................................................................................................................... 14

UNIT 07: INTERNAL ANALYSIS......................................................................................................171. GENERAL ASPECTS.....................................................................................................................172. TECHNOLOGIAL RESOURCES:...............................................................................................174. HUMAN RESOURCES..................................................................................................................175. QUALITY.......................................................................................................................................... 187. LOCATION....................................................................................................................................... 188. PRODUCT/SERVICE....................................................................................................................18

UNIT 08. SWOT ANALISYS................................................................................................................ 19UNIT 09 - STRATEGY........................................................................................................................... 22

1. WHAT IS IT?................................................................................................................................... 222. RULES TO CREATE AN EFFECTIVE STRATEGY..............................................................223. STRATEGY I: LEADERSHIP IN COSTS.................................................................................224. STRATEGY #2: DIFFERENTIATION.....................................................................................225. STRATEGY #3: SEGMENTATION..........................................................................................236. Growing strategies...................................................................................................................... 25

UNIT 10 – PRODUCT............................................................................................................................ 2610.1. Initial aspects to consider..................................................................................................2610.2. Differences between products and services..............................................................2710.3. Product’s cycle of lyfe..........................................................................................................2710.4. Product strategy.................................................................................................................... 2710.5. Types of products..................................................................................................................2810.6. PRODUCT LEVELS.................................................................................................................29

10.6.A. BASIC PRODUCT........................................................................................................... 2910.6.B. SUPPORTING PRODUCTS..........................................................................................29

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10.6.C. SECONDARY-CLOSED.................................................................................................2910.6.D. SECONDARY– OPEN....................................................................................................29

10.7. SERVUCTION........................................................................................................................... 2910.7.A. DEFINITION....................................................................................................................2910.7.B SERVUCTION ELEMENTS..........................................................................................30

10.8 SERVICE STANDARDIZATION..........................................................................................31UNIT 11 – PRICE.................................................................................................................................... 33UNIT 12 – COMMUNICATION.......................................................................................................... 34UNIT 13 – DISTRIBUTION................................................................................................................. 35UNIT 14 – INTERNAL MARKETING...............................................................................................36UNIT 15 – DIGITAL MARKETING...................................................................................................37UNIT 16 – QUALITY.............................................................................................................................. 38UNIT 17 - CONSUMERISM................................................................................................................. 39

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UNIT 04 – COMPTETITION

A. THINGS WE NEED TO KNOW

IN GENERAL

Who are your competitors?

What is each competitor's market share?

What do their clients think about them? What are their complains?

What are their past strategies? What are their current strategies?

Location of offices, plants, and online presences

History, main dates or events, milestones.

Ownership, corporate governance, and organizational structure

Mission statement

FINANCIALS

Various financial ratios, liquidity, and cash flow, profitability

Profit growth; method of growth (organic or acquisitive)

HUMAN RESOURCES

Number of employees, skills, training, experience

Strength of management and management style

Compensations and benefits

Types of contracts: indefinite or temporary

Corporate and marketing strategies

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MARKETING: PRODUCT

Products offered, product line

New products developed, new product success rate

Brands, brand loyalty and brand awareness

Patents and licenses

Quality control certificates

MARKETING: PRICE

Pricing strategies, discounts, sales…

MARKETING: ADVERTISING

What type of media are used to market their products or services?

What budget do they have?

How often, where and when do they advertise?

Advertising themes, ad agency used

MARKETING: DISTRIBUTION

distribution channels used (direct & indirect), exclusivity agreements, alliances, and geographical coverage

Promotional budgets, sales force, online promotional strategy

... and finally

Think about what are each competitor's main strengths and weaknesses, that is to say…

What potential threats do your competitors pose?

What potential opportunities do they make available for you?

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B. BENCHMARKING

What is Benchmarking?Is a tool that consist in have as a reference the best aspects of other companies. The companies could be direct competitors or other owner sector. The objective is aply the best aspects to have better results.

Types of benchmarking :According to the ambit it could be internal or external.Internal → When a company compares the different departments. In the case as an a hotel, the owner makes a evaluation about the different departments, for example the reception desk, the cleaning service and restoration service.External → When a company made a comparision with others companies.

According to the level of collaboration It could be:1. Collaborative: When a company talk with other company and show how do they do it, with that way, both can improve their companies.2. Competitive: Try to get the information of our direct competitor it could hard. Somentimes the company ask a third company to get the necessary information.3. Intrusive: The clasical copy and paste. When the company focus in a big company and they gets the information with a mistery shopper, maybe that company can´t implement all the information that they got it, but they can put a lot of things in that company.

What is a mistery shopper?The mistery shopper is a person who makes that he´s buying but the true is that person is getting information or what protocols follow that company or a specific person. It can be internal (to your own company) or external (to analyze your competitor)

Steps to make a Benchmarking.1.Planification: We identify the areas that we want compare, the information that we want and how we can get it.2.Analysis. Is focus in get a knowledge of the practices and the process in our company and the other competitor. With this, we can do a comparision .3.Adaptation and Integration. We need to define wich are our objectives areas that we want change and do it. 4.Maturity. The company only gets the madurity when they can implant the best aspects in all the important process in the company.

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C. HOW TO STOP/REDUCE COMPETITORS

How to stop competitors? Know the competitor: How we can investigate the competitor? Differentiate your product Increase your marketing Update your image Look after your existing customers Target new markets and expand your offer Look to the future

Ways to create barriers to competitors Patents Register your name and internet domain Loyalty systems (fidelity cards, etc.) Invest on Brand image Investment on Investigation and Development of new products Use exclusive suppliers Focus on an specific sector Use Exclusivity distributors Make a Minimum contract period (as in telephone companies)

Action Stop competitors Attract competitors

Prices Low down the prices High prices

Budget Minimum budget High budget

Investment Low initial investment High initial investment

Ideas Be creative and innovate

To be different

Do the same that the other companies

Know our competitors Know the weak points of our competitors and attack it

Don´t know them

Customer service Improve it To ignore them

Customer Customer loyalty Low customer satisfaction

Clients Make segments and make a customized offer

Make global offers for everyone.

Products Focus on one product Make different kind of products

Products Create a new product or market niche

Sell the same products as our competitors

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Products Improve our product Never think our product is the best in the world.

Patents Create patents of our products

Do not create patents of new and innovators products.

Advertisement Create a good communication strategy

Brand image

Do not use advertisement

Exclusive suppliers Our own suppliers and exclusive prices

Use the same suppliers with the same prices.

Benefits Small profits Big benefits

Distribution channel Exclusive distribution channel

Same channel than our competitors

Experience Wide experience To be new in the market

VOCABULARY LIST

- Budget- Investment- Weak points- Customer loyalty- Focus on- Market niche- Improve- Brand image- Wide experience- Sign- Focus on- Update- Step up- Target- Brand- Fidelity- Look to- Look after- Differentiate- Cards- Gifts

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UNIT 05: SUPPLIERS

DEFINITIONSupplier: Person or company that have to supply other companies of products and materials.

TURISTIC SUPLIERSHotels: Establishment of hospitality that occupies a building totally or partially with exclusive use of its services and that offers accommodation and dining service.Some examples are; Meliá, Ibis, Nh, etc.

Flights:   A route made by an airplane or other aerial vehicle, whether or not it is scaling, between the point of origin and the destination.

Train or boat:   Medium of transport apart of the plane that you contract to move to places in case that you don’t like planes or don’t exist an airport.

Car hire: It's a company that offer people cars to rent. The cars can be rented for a long time or just a few weeks, depending of your travel.

Some of these companies are: Sixt, Goldcar, EuropCar, Avis, Hertz, etc.

Rent of spaces for events: Some people travel for work, and sometimes they have to make a presentation of a product, or they have to make a meeting. But usually people make banquets for a wedding, for a family, etc.

Some of these companies are: Monico Catering, Sky Center, Totalismo, etc.

Tickets for shows, cultural or sports:   You can find people that the only reason of their travelling id to see something in special like a show. This kind of suppliers work with the travel agencies giving them the opportunity of offer their clients the option of go to a known or renowned show.

Some of these companies are: EventFactory, Ticketea, Flashoteling, etc.

Travel insurance: is an insurer product that let the consumer achieve travels, being protect and carefree to could enjoy it. E.g: Allianz, Axa Assistance, Europe Assistance, FIATC INSURANCES, Mapfre, Race, Zurich..

Combined trip:   is one that exceeds twenty-four hours or includes a night's stay, and combines, at least, two tourist services (transportation, accommodation, meals or guided tours) as a part of the trip, and sold that for a price global.

Foreign excharge: This normative promote the rise of suppliers of specialized services in currency like an alternative of bank. Ebury is the most important financial services company, specialized in international payments and currency exchange.

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Representation of suppliers, destination and travel agencies ;  in this case, the company doesn't act as a mere distributor, but acquires the product and then sells it, so is assuming the risk of operation. The company when buying a product assumes a risk because then it may not be able to sell it to customers.

HOW TO CHOSE A SUPPLIER- Price- Reliability- Location- Optimization of the service- Payment method- Commissions- Warranty- After purchase service- Prestige- Range of products- Exclusivity in product and price- Who are their clients- Bargaining power - Threat of “Forward Integration”

SUPPLIER’S BARGAINING POWER

The following conditions indicate that a supplier group is powerful:

It is dominated by a small number of companies and is more concentrated than the industry to which it sellsIt is not required to contend with substitute products for sale in the industryThe industry is not one of the supplier’s important customersIts products are an important part of the buyer’s businessIts products are differentiated or there are built-up switching costsIt poses a definite threat of forward integration

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ONE OR SEVERAL SUPPLIERS?

-       With one supplier:

ADVANTAGES DISADVANTAGESNo comparision Just one optionAll products Less offersMore quality More expensive

-       With several suppliers:

ADVANTAGES DISADVANTAGESChoose the best Difficult decissionDiferent prices Extraordinary costsBetter offers Competition

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UNIT 06: ENVIRONMENT

DEMOGRAPHICTourism has been transformed in recent years, to the many changes that have been generated in the world, both demographic, economic and socio-cultural, and from the point of view of the tastes and motivations of the tourists themselves.

It is important to inform us about these data, since tourism is unpredictable and has changes.Changes in supply, demand, quality, improvements, values, lifestyles, social trends ..All this we must take into account in our company to adapt what needs and looks for the customer.

POINTS TO CHECK:

Population size Age Gender Sexual Orientation Size of the family Population by family life cycle Income Professions Education level Socioeconomic status Religion nationality Cultures Races The death rate and birth rate Population movements

EXAMPLES OF DEMOGRAPHIC ANALYSIS From the demographic point of view,

1. The tourist flows in the last decades are getting old, which has a reflection on the tastes and needs of these tourists, who are increasingly older. The continued decline in the birth rate has resulted in a decline in young consumers, while the number of older travelers increases.For example, The number of trips abroad by young Europeans (between the ages of 15 and 24) has dropped by 10% since 2007.

2. In the last decade, family structures have also changed, with the emergence of new family models (such as single parents,social trends, fashion, social network...), who have specific needs when traveling. You have to know the needs of the new family models and customize the offer for each one.

3. Another population group that is changing the sector are young people born between 1981 and 1995 (approximately), who have a different concept of

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traveling to their parents and demand a very different communication and services. They are known as Milenians.

SOCIOCULTURAL

From the sociocultural point of view, the importance of the effects of tourism on society and the culture of the receiving area will depend on the socio-cultural differences between visitors and residents (religious, lifestyle, beliefs, behavior, values...). The more difference, the more impact.

Even when there is no direct contact between visitor and resident, the simple observation of the visitors, can cause changes in the attitudes or scales of values on the part of the inhabitants.

The sociocultural impact can be positive or negative.1. Positive : Accelerate social changes, tolerance and well-being, break

barriers between clases, Cultural exchange between different people, greater economic opportunities to improve the quality of life, preservation of historical places, monuments, customs, folklore, gastronomy.

2. Negative : social tension to economic differences , for example : Places dominated by poverty, occupation of the most qualified jobs by foreign workers, lower wage remuneration for national workers . As a result, crime, prostitution, gambling, terrorism and drug-related conflicts have been evident in some destinations. Sometimes tourists are considered as elements through which they can do business and get publicity (for example, in the case of terrorism or kidnappings).

OTHER POINTS WE CAN CHECK• Education level of consumers• Cultural services consumption• Assessment of the time in general and the leisure time in particular.• Relation to citizen security or stability of the country and spending on leisure• Upward values such as solidarity, care for the environment, protection of nature.•   Low values such as the cult of success, the lack of business ethics.• Level of equality of women at work• Work / private life reconciliation• Changes in life expectancy• Changes in lifestyles

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• Trends in education• New social groups• Citizen security• Responsible consumption• Investments in culture or social guarantees• Less time for housework•   Higher level of information and alternative occupancy of leisure (cable TV,

travel)•   Sensitization with the environment•   Global trade: global purchase (buy locally anywhere in the world)• Etc.•

EXAMPLE OF SOCIAL ANALYSEShttp://businessculture.org/northern-europe/uk-business-culture /

ECONOMICOn the other hand, on the economic level, globalization has made travel today more affordable for many people.

1. The new emerging economies of China, Russia, India or Brazil are generating new tourist flows that have to be known and know how to attend. Its tourists have more specific needs that it is important to know to make them satisfied and help us to prescribe the tourist destination. Example : China has become one of the major issuing markets worldwide(can spend 900 euros on each purchase).

2. In recent years new forms of cheaper travel have also arisen, for example blablacar allows to travel with other people and distribute expenses.

Other example : Some families prefer to stay in a private house, because apart

from leaving them more economical, they have more space.

POINTS WE CAN CHECK• The rent per capita• Minimum wage• Gross Domestic Product (GDP)• Consumer Price Index (CPI)• Consumer Confidence Index (CCI)• Economic growth• Inflation• Employment/Unemployment rate• Interest rates on loans and mortgages• Fiscal policy• Exchange rates• Balance of payments

Etc.

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LEGALMake a list of laws in your country that might affect your company (creating the company, opening licences, law protection, contracts with employees, etc.)

When undertaking a project, we must take into account which laws limit or favor the activities of the our business The existence of political stability infuses security to society in general and to the business sector in particular. Good stability will have a greater impact on both indoor and outdoor investments.

POINTS TO CHECK:

– Business law you will be under.– Tax law you will be under– Legal changes that may affect the business– Is there any price control law?– Is there an international treaty that could affect my business?– Are there legal differences between the autonomous regions or in

other countries that may cause the company to move its address?– Are there legal guarantees necessary to exercise?– Are there power groups that prevent access to new businesses?– Data protection laws– Consumer protection laws– International commerce laws– Competition laws– POLITICAL: Is the current political party good or bad for my

business? why? How can affect international politics to my business? for example Brexit or Donald Trump election.

–SPECIAL CONSIDERATION IS NEEDED WHEN TALKING ABOUT ENVIRONMENTAL ANALYSIS

– Laws of ecological protection (environment).– Laws of protection of natural resources.– Laws or guidelines on environmental degradation and sustainable

tourism.– Restrictions on supplies (pool water or hotel water, for example)– Restrictions in access of tourism to natural or protected areas.

TECHNOLOGIC

The use of technology affects every business development regardless of the size Technological infrastructure affects the culture, efficiency and relationships of a business. Security is affected as well.

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In PESTLE analysis, technological factors are variables which relate to the existence, availability, and development of technology. This could include things from computational power to engine efficiency.

there is also a need which is covered by technology, and it’s safety and this is more internal

example:

There has to be an alarm system in case of a crime scenethere has to be security camerasthere has to be alarms in case of fire there has to be fire extinguishers

More internal factors:

Security in cryptography: a computer program to save important files and private stuff

More Factors:

Emergence of innovative technology:

Mobile payments are slowly being introduced, which might make a morning cup of coffee more attractive to many customers (and in doing so increase their potential market). Like the case of Starbucks

Technological factors include ecological and environmental aspects

It could be posible that the place you have chosen for your business, the electricity’s been replaced by solar energy, so you need to adapt to it.

Biotechnological developments: Developments in agriculture, Medicine or industries.

Trends used in technology:

The continuing emergence of the internet is also a large technological factor. 

Internet connectivity

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Wireless charging: used to charge electronical divices

IOT (internet-of the-things) which means to have everything interconnected like those Smart homes

AR and VR (augmented reality and virtual reality: these kind of technologies were used in Fitur to get more people interested

Automation: is the use of various control systems for operating equipment such as machinery, processes in factories, switching on telephone networks, etc

Mobile divices/media statistics

This helps to understand how consumers behave when using different types of mobile devices and what their preferences are.E-commercethe media used in this business is the internet, everything onlineB2C (Business-to-Consumer): companies that trade with the consumers

this is the most knowncompanies like Amazon, open english, riplay.com, etc.

Apps usethe use of applications in companies now a days is getting more important, travel agencies, Banks, telephone companies, italki, even the pope uses twitterSocial neworksWe all know how important they are in our lives, and companies know too

the use of social networks wil help us to know what people think about us so that we can interact and improve.

Patent registration:

Improvement PatentsThese patents protect the differences between a new product and previously existing products and services of the same kind.

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Addition inventions. An addition invention adds something to what came before. The Gillette Mach3 razor, for example, had three blades where previous razors had two.

Substitution inventions. Jeff Bezos, substituted the "one-click" purchasing feature for the prior virtual shopping cart model -- a substitution invention.

UNIT 07: INTERNAL ANALYSIS

1. GENERAL ASPECTS General aspects of the company, as an introduction. We can talk about: Origin: how it began, who founded it, for what purpose, how it evolved, etc. Business culture and politics. Values, mission, vision. Level of internal communication in the company. Example: https://www.mercadona.es/es/conocenos/sala-de-prensa/memorias-anuales/memorias-2015

2. TECHNOLOGIAL RESOURCES: What do we have and what do we need? Search and compare different equipment. Do we have experts in the technologies we need? How much would it cost us to get them? Do we know the equipment that is used in our company or are underutilized? Are we developing new applications? Do we have CRM? How much would it coast to apply one? 3. THE FACILITIES. Description of the premises we need, square meters, conditions. How will my decoration be? What will my office lightning be like? How will my uniforms be? What furniture do I need and what will it look like? Etc.

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4. HUMAN RESOURCES Organization chart. Define and quantify jobs, their functions and specific activities. Management style and decision making Experience. The one we have and the desirable one. Company Manual Temporality. Qualification required Continuous training plan. Possible hiring aid Compensation program Costs Internal marketing plan

5. QUALITY Objective criteria, Levels and quality controls measurable in the provision of the service. Existing and applicable quality programs and standards

6. ECONOMIC RESOURCES:Approximate budget I need Sources of funding and chances / difficulties to obtain it. Current results if I'm already working. What is our economic situation? Business resources. What is our ability to sell our services? Do we have customer databases? Can we get them? Do we have good commercials? Possibility to hire them? Profit margins.Possibilities to lower them further if necessary? Do we have contacts to make a good communication campaign? For a company already in progress: Analysis of existing product portfolio Market share of the products we have Customer Databases

7. LOCATION Location of the company: municipality, zone (industrial area, commercial center, downtown, etc.) Proximity to communication routes. Map of the area Supplies and services required Possibility of supply of raw materials Needs of facilities, machinery, furniture… Etc.

8. PRODUCT/SERVICE Only General characteristics >>> We will see the product in detail in the corresponding section.

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Is it different from the competition? Are we innovative? Are we ready for the future? Is it protected against competitors?

UNIT 08. SWOT ANALISYS The ultimate purpose of the SWOT analysis is to know the present and to help set long-term objectives. The elements of the SWOT analysis are as follows: Internal origin (me, my company) Strengths: capabilities, resources and positions reached in certain business and market areas that help take advantage of opportunities or overcome threats: technology, image, costs ... Internal origin (me, my company) Weaknesses: Capacities, resources and positions achieved that limit opportunities to take advantage of opportunities External origin Opportunities: forces from the environment, competition or market, which are occasions that the company must take advantage of to improve its position. External origin Threats: Forces coming from the environment, the competition or the market that can present difficulties for the company. Conclusion, analysis and recommendations Once the SWOT analysis is completed we place the results in an table to analyze it.

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… and now let’s analyse

TOTAL POSITIVE VALUE TOTAL NEGATIVE VALUE BALANCE BIGGEST S BIGGEST W BIGGEST O BIGGEST T Conclusions and analysis Final recomendations about A. Competitive advantage B. Objectives A. Our competitive advantage Usually the combination of our main strength and our main opportunity is going to be our competitive advantage The competitive advantage must be: Important: valued by customers. Distinctive: must provide a benefit that does not provide the competitors. B. Objetives Analyzed the SWOT and established the competitive advantage we will define our objectives

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Definition of 1 main long-term objective (three to five years) Definition of 1 main objective in the short term Definition of several secondary objectives in the short and long term.

OBJECTIVES SHOULD BE

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UNIT 09 - STRATEGY

1. WHAT IS IT?• Choosing a strategy is to choose which path is the one that best suits us to

take the company from the point where it is up to its objectives.• It will try to clarify the business future in the medium and long term (3 to

5 years)• It is responsibility of the management.

2. RULES TO CREATE AN EFFECTIVE STRATEGY• A. EXISTENCE: Decided, written and announced.• B. CONTINUITY: designed to last• C. ADAPTABILITY: must be flexible enough to adapt to unpredictable

circumstances.• D. POSITIONING: Is the way that customers think about us in relation to

similar competitors' products.• This positioning is very difficult to change once in the client's mind, so

efforts should be maximum at the beginning of the activity. • It is useful to perform a "positioning map" as a graphic representation of

the place of the products in the consumer's mind • Positioning Advantages• Better identification of customer needs• Grow faster if you get a solid position in the chosen segment.• The company creates a more refined product or service offer.• The selection of distribution channels and communication is easier.• The company faces fewer competitors in an specific segment• Positioning: Common mistakes.  • Underdevelopment: Confusing positioning. trying to reach “everybody”

we will not reach “anybody”. The range of products may be wide or positioning changed frequently.

• Overdevelopment: Excessive segmentation / specialization • Doubtful positioning: It is difficult for the consumer to believe the

promises about the brand due to the price or features of the product. The brand promises too much.

3. STRATEGY I: LEADERSHIP IN COSTS.• This strategy is based on productivity and involves close monitoring of

costs.• The main goal is to get advantages in costs in relation to the other

competitors, which will allow the company offering products or services at lower prices.

  

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4. STRATEGY #2: DIFFERENTIATION• WHAT IS IT?• The company has a market power for the distinctive qualities of the

product or the service, important for the consumer and that differentiate them from the competitors.

• It is based on creating services sufficiently differentiated to be perceived as something unique by the consumer.

5. STRATEGY #3: SEGMENTATIONIf it is not profitable or realistic to develop a new product / service, there is always the possibility of taking an existing one and concentrating on a particular segment.More frequent segmentation

• Geographical• Demographical• Psicographic• Behavioral

DIFFERENT STRATEGIES ADVANTAGES AND DISADVANTAGESREMEMBER: you have to complete this table with the notes you take in class

GOOD BAD

COSTS LEADERSHIPmore clients /low segmentation risk Low

benefit per salewider range of products easy to copy

more competitors

Agressive competition

big cash-flow less quality

fast growthhuman resources not motivated

not specialized

fast positioningrelationship with supliers can be hard

low risk segmntationdifficult to stay in the long term

Doesn’t need a lot of promotion.

big initial investment and large scale productionit requires been only aspirant

Whole sector crisis risk

very agressy competitionlow investment y depvelopping new products

Low innovation

very poor brand imagelow loyaltyMore complains

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DIFFERENCIATION

less competitors

big investment in research and development

innovation >> less competition investment in patentsmore loyal clients slower positioningmore benefit per sale risk of not suceedless initial investment less clientsless investment in human resources higher pricegood human resources motivation higher salaries

better qualityBig investment in communication

very good brand imagemore probaly to survive in the long termMore options to make discountsSEGMENTATION

Better service

we really know client's needs

less clients (segmentation risk)

less publicityHight salaries: pay for experience and training

exclusive group of clients

more expensive price than low cost implies less demand

bigger benefit than low cost slow positioning

motivated human resources Specialized

Big investment in marketing research, polls, client’s opinión, CRM software, etc

high loyalty of clientsclient becomes a "seller"Low investment in publicitygood brand imagelow initial investment

6. Growing strategies• 6.I.Diversification

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• This strategy is usually applied by companies that have been in the market for a long time and are stuck in terms of growth.

• A diversification strategy involves entering into new sectors.• Types• It is called concentric when the company leaves its sector to add new

activities complementary to the existing ones.• On the other hand a strategy of pure diversification implies the entry into

new activities unrelated to the current activities of the company.• Advantages

It allows the company to expand by testing new products and sectors, locating new market niches. By diversifying your offer you minimize the risk if any of your products or sectors collapses.

• DisadvantageIt involves a very high investment in research and development.It will be very difficult to compete with existing companies because we will find very specialized entities with high levels of knowledge and experience that will be very difficult to overcome.

• 6.II. The Alliances.• The intensification of competition forces companies to establish business

networks, strategic alliances and different cooperation mechanisms.• Advantages

Achieve economies of scaleAchieve access to local markets.

• advantages• Cost reduction. Through economies of scale or scope.• Avoid, share or reduce risks. The cooperation of several companies allows

sharing the risks.• Access to technological knowledge. It might be an alternative to acquire

knowledge or skills.• .• disadvantages• It requires great trust in the ally• Often duplicate paperwork• It is necessary to establish very clearly the responsibilities and duties of

each one.

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UNIT 10 – PRODUCT

UNIT 10 INDEX10.1. Initial aspects10.2. Differences p/s10.3. Cycle of life10.4. Product strategies10.5. Product Types10.6. Product Levels10.7. Servuction10.8. Standardization

10.1. Initial aspects to considerYou can differentiate two types of variables that affect the company: Uncontrollable and controllable.The outside of the company is uncontrollable although through a good analysis can be foreseen.The inside of the company offers us 4 variables that if controllable: Product, Price, Advertising and DistributionRememberWe must adapt our product to the needs of each client.rememberClients project psychological attributes on the products or companies. Do you have a clear idea of your personality as company? The personality of your product? If you are already working… what’s your position in client’s mind and what’s the position you want? Some examples of psicological adjectives you might use to define your company or your product

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10.2. Differences between products and servicesMake a list of differences between products and servicesREMEMBER: you have to complete this table with the notes you take in class

10.3. Product’s cycle of lyfeREMEMBER: you have to complete this table with the notes you take in class

10.4. Product strategySingle Brand

Multiple brands

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Secondary brands

Secondary brands examplesGroup BSH brands:- Bosch- Siemens- Balay- Gaggneau- Neff- Ufesa- Lynx- Other countries: [Grecia]: Pitsos; [Turquia]: Profilo; [Perú]: Cóldex, Thermador, Constructa, Viva, Junka, ZelmerSecondary brandsGroup ELECTROLUX: 1ª brand , ELECTROLUX. 2ª brand: AEG, ZANUSSI, CORBERÓ Y FRIGIDAIRE.Group FAGOR. 1ª Brand, FAGOR (en España), in France: BRANDT. Second brand: EDESA, ASPES, DE DIETICH.

Distributor brand

Alliance brand

10.5. Types of products

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10.6. PRODUCT LEVELS

10.6.A. BASIC PRODUCTINCLUDESCORE PRODUCT: The dominant benefit or satisfaction that a customer expects from a good or service he or she buys. (coffee, sleep in a hotel, etc.)FACILITATING PRODUCTS. The ones that must be present to use the core product. (cup, spoon, plate, sugar)ACTUAL PRODUCT: Location, athmosphere, decoration, style, brand image, other clients…http://www.letslearnfinance.com/10-core-product-examples.html

10.6.B. SUPPORTING PRODUCTSCOMPLEMENTARY GOODS, ADD-ONS Added to differenciate from competitors. Free of charge for the client, small gifts (chocolate in a coffee, wifi… )

10.6.C. SECONDARY-CLOSED (Often called PERIPHERAL products) The value of some product purchases can be enhanced with add-on products that the client must pay separately but just available for users of the basic product. Minibar at a hotel, wifi, guarantee, customer service, a swimming pool in a hotel, etc.

10.6.D. SECONDARY– OPEN Often called DERIVATIVES. They are “extras” but available for anyone client or not. Usually items that make the main product easier to use (laptop carrybag), enhance styling (cellphone cases) or extend functionality (portable keyboard for tablet devices) or secondary services (a restaurant in a hotel, food in a gas station, etc.)> Remember <Very often companies get more benefits from secondary products than basics

10.7. SERVUCTION

10.7.A. DEFINITIONOrganization in a systematic and coherent way, of physical and human elements necessary for the provision of a service of predetermined characteristics and quality (Eiglier and Langeard, 1989)It represents all the material and human elements used as well as the activities deployed to design, create and develop the service that a company wishes to propose in the market, according to a chosen quality level. The service is the result of the interaction of three basic elements: the client, the physical support and the staff in contact, In the background, the coordination of the organization's internal organization system and the presence of other clients. The concept of servuction emphasizes the importance of the process. The service, as a result, can not be separated from the way in which it is provided.

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The service encounter is described as the "moment of truth" during which customers and employees co-produce the service. The simultaneous production, consumption and distribution of a service has several consequences: on the one hand, the quality of the interaction between the customer and the company is decisive for the success of serving, On the other hand, the customer participates in the production of the service, and finally the interactions occur between the customers who consume the service. The term "servuction" is often associated with the expression "production of services".Basically, the servuction model illustrates all the factors that influence the consumer’s service experience, both visible and invisible.The invisible factors considered in a servuction model include the things that happen within the organization that the consumer does not necessarily see, but affects their experience. These may include company policies, rules and guidelines, or a company’s core values.The visible factors include the environment, the service providers, and other consumers. Very good examples of these would be the way a physical store is designed and kept organized. Another example would be the way a brand’s frontliners talk to their potential clients.

10.7.B SERVUCTION ELEMENTSThree sets of elements are required for the production of a tangible product:Human Resources,MachinesRaw materials.The product is the result of the interaction of these elements, but not in an arbitrary way, but with reactions defined in advance.In the case of services can be made the same approach, the elements necessary for the provision of the service will be:Human resourcesNot manufacturing, but service, All those who come into contact (directly or indirectly) with customersWe can distinguish between contact staff and invisible staff.Physical evidencesIt refers to the use of any physical evidence to design service environments. Physical support can be divided into two categories:Instruments and tools necessary for the service (technology, furniture, etc.) any non-living thing you need to give the service. The environment (the building, the decoration, lights, doors, elevators, ...)The costumerThe customer, who is involved in the creation of the service.Its presence is absolutely necessary since without it the service can not exist, especially if we consider the impossibility of storing a service.Internal Organization System It is therefore constituted by all the classic functions of the company: finance, marketing, personnel, supplies, cleaning, etc. Which affect the final service even if the customer does not see them.Other clientsWhen it comes to services to the general public, the provision is usually not isolated, but services are offered to several clients simultaneously.

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All of them usually have the same type of relationships with the staff in touch and with the physical support, but also a relationship will be established between clients since they are together in the same place.

10.8 SERVICE STANDARDIZATIONA. Define exactly and clearly the concept of the service to be offeredB. Define maximum capacity. As we approach maximum utilization quality decreases.C. Define the structure of the service: basic, support and secondary (open or closed)D. Create a Service DiagramService delivery diagram modelService Delivery DiagramsAllow managers and employees to better understand the servicing process, especially when there are new workers.Allow establishing quality controls. Help standardizing service.Service Delivery Diagram Model

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EXAMPLES

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UNIT 11 – PRICE

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UNIT 12 – COMMUNICATION

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UNIT 13 – DISTRIBUTION

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UNIT 14 – INTERNAL MARKETING

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UNIT 15 – DIGITAL MARKETING

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UNIT 16 – QUALITY

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UNIT 17 - CONSUMERISM

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