Developing Marketing Strategies

1. Developing Marketing Strategies Stage 6 Business Studies

2. At a glance • Market segmentation • Product and service • Price & pricing methods • Promotion • Place/distribution • Environmental effects on distribution

3. Market segmentation

4. Gender • In their book Why Men Don't Listen and Women Can't Read Maps, Barbara and Allan Pease quote an interesting study. • Conducted in five Western countries, asked men and women to describe the kind of person they would ideally like to be. • Men overwhelmingly chose adjectives such as bold, competitive, capable, dominant, assertive, admired, and practical. • From the same list women chose warm, loving, generous, sympathetic, attractive, friendly, and giving. • Understanding what each gender values can have an effect on every communication you have with your customers. • If you want a man to respect and trust your company, you may want to stress the adjectives he uses to describe what he admires. • If you want to win the respect of women, you may want to consider using the adjectives she uses to describe qualities she admires.

5. Feminine vs. Masculine

6. the Dodge La Femme • 1955. The United States and Panama sign the canal treaty, James Dean dies in a car crash, and Scrabble makes a dramatic entrance into the board game market. • 20 million American women were licensed to drive • Chrysler rolls out the Dodge La Femme and hails it as the first and only car designed for "your majesty, the modern American woman.” • Not apparently, what the 1950s modern American woman had in mind; the Dodge La Femme bombs and is pulled off the market the following year. • Today, almost half a century later, the Dodge La Femme lives on as a vintage car--a collector's item that offers both sentimental value and the intriguing appeal of a somewhat tainted past. • To marketers, however, the Dodge La Femme is highly valuable as a shining example of what companies shouldn't do when trying to create and market products that they hope will appeal to women.

7. "Convenient pockets are provided on the front seat backs and contain a set of lovely rainwear created especially for Milady. This consists of raincoat and hat made of fine quality nylon in color matching the interior of the car and flecked with gold to richly enhance its chic appearance. A folding umbrella is also provided and is covered with the matching nylon material.

8. Age • Consumer needs and wants change with age although they may still wish to consume the same types of product. So Marketers design, package and promote products differently to meet the wants of different age groups

9. Income

10. Lifestyle

11. Product and service

12. Core Product • Refers to the benefits the product offers to customers. • A can of drink gets rid of thirst, a meal removes hunger and a car gets you from point A to point B. • Lots of businesses compete to provide the basic benefit.

13. Augmented Product • Quality • Styling • Warranty • After sales service • A brand name that can be trusted • Provision of credit, including interest-free periods • Packaging

14. Price & pricing methods • Skimming strategies • Penetration strategies • Loss leaders • Price points

15. Skimming strategies • Skimming is a strategy where the business sets a relatively high price at first and then lowers the price over time. This strategy allows a business to recover its development strategies before increased competition forces a lower market price. • Skimming strategies refer to pricing a product at what “the market will bear”. • Nike, for example, conducts research to find the highest price they can charge to maximise their revenue. The highest price will vary between countries and so too does the Nike price. • When a product such as Playstation first came on the market, it sold for more than $500 because there was simply no competitive product on the market.

16. Penetration strategies • Penetration pricing is a strategy where a business sets a lower price (below its competitors) in order to increase market share. Usually for a specific period of time. • A successful penetration strategy will increase sales, increase market share and usually lower per unit costs through economies of scale. • Economies of scale are the cost reductions that occur from being able to buy raw materials in bulk and mechanise processes. • Penetration strategies are used to gain new market share at the expense of competitors or regain lost market share. • It is important to remember that a penetration strategy will impact on profit and needs to be carefully considered although the increase in volume may lower the cost of producing the product through the economies of scale

17. Loss leaders • Loss leaders are prices set at a very low level to encourage consideration of a product newly introduced to the market or to encourage customers to consider other products. • Example: Mobile phones are offered for free or at a low cost to subscribers who enter into a contract that is typically between 12 and 24 months • Sometimes this strategy can approach “bait advertising”, where a few products in a retail store are priced at absurdly low prices to get customers into the store. • Bait advertising is illegal.

18. Price points • Customers think of a retail price as one of a number of possible competitive prices. • It is purely psychological and refers to cut-offs in the minds of customers. A price of $9.99 is below the psychological price point of $10. • Example: Dell sells a range of computers from relatively simple functions to very complex functions. • Each model is carefully priced with a specific target market in mind. • There is a range of price points. • The price point is the psychological price reference in the minds of customers. • Low entry-level prices can create a perception of value for money for the whole product range.

19. Promotion • Promotion is about effective communication with customers. • A business could have the best product in the world but will sell very few if customers are unaware the product exists. • There are a number of techniques a business can use to communicate with its customers. • Advertising • Personal selling • Advertising • Below-the-line promotions • Public relations

20. Advertising • Paid communication with the target market and it is usually designed to be persuasive. • The marketer pays various types of media such as: • Television • Newspapers, • Magazines • Radio

21. Viral advertising • Promotes products in such a way (usually humorous) that customers want to send the advertisement (usually by e-mail) to friends.

22. Original Budweiser frogs

23. Cadbury gorillas

24. Personal Selling • Personal selling occurs where an individual salesperson sells a product, service or solution to a client. • Salespeople match the benefits of their offering to the specific needs of a client. • Use fewer resources, pricing is often negotiated as purchase tends to involve large sums of money. • Products tend to be fairly complex (e.g. financial services or new cars). • There is some contact between buyer and seller after the sale so that an ongoing relationship is built. • Client/prospects need specific information – increasingly seen as a partnership between the supplier and the retailer e.gDulux & Bunnings

25. Below the line promotion • Are non-media promotions. • Typically includes promotional activities such as: • vouchers • special offers by a store, • loyalty card offers • competitions on the back of packaging. • Point of sale advertising is included when the marketing department rather than an advertising agency develops it i.e. the promotional material on display where the product is sold. It includes things like display racks, displays, stands and posters • Are very cost effective promotions - includes special displays in retail stores that are set up by the sales representatives.

26. Public relations • PR is any purposeful communications between an organisation and its publics that aim to generate goodwill • PR is proactive and future orientated, and has the goal of building and maintaining a positive perception of an organisation in the mind of its publics • Planned and sustained effort to establish and maintain goodwill and mutual understanding between an organisation and its publics

27. Qantas PR during recent engine explosion incident • Sydney, 11 November 2010 • A380 Update - Qantas Confirms International Network Availability • Qantas has confirmed an updated schedule for its international network to ensure minimum disruption to passengers following the grounding of its Airbus A380 fleet. • Sydney, 08 November 2010 • Qantas Continues A380 Engine Inspection Program • Qantas is continuing an intensive inspection program on all Rolls-Royce engines in its A380 fleet, but operations will be recovered and significant disruptions to passengers should cease within the next 24 hours. • Sydney, 06 November 2010 • Qantas Celebrates 90 Years as Australia's Leading Airline • Hollywood superstar John Travolta today helped Qantas kick off its 90th anniversary celebrations, with the first of a series of major events during November. • Sydney, 06 November 2010 • Update on Qantas Services • Qantas has made updates to its scheduled services on Saturday 6 November and Sunday 7 November due to the grounding of its Airbus A380 fleet. • Sydney, 05 November 2010 • Qantas Update on QF32 and Qantas A380 Operations • UPDATED 2.00PM 5 NOVEMBER 2010 The Qantas B747-400 dispatched as a relief flight last night to Singapore to bring passengers affected by yesterday's QF32 engine failure was scheduled to depart Singapore at 10.30am local time. QF8032 is expected to arrive in Sydney at 8.45pm tonight. • Sydney, 05 November 2010 • Qantas Update on QF32 and Qantas A380 Operations • UPDATED 6.30AM 5 NOVEMBER 2010 Qantas' special relief flight was dispatched last night from Sydney to bring passengers affected by yesterday's QF32 engine failure, and air return to Sydney. This flight will depart Singapore at 10.30am local time. • Sydney, 05 November 2010 • Qantas Refutes Engineers Union Claims • Qantas today strongly refuted claims by the Federal Secretary of the Australian Licenced Aircraft Engineers Association (ALAEA) that Qantas engineers had been stood down as a result of yesterdays QF32 engine incident. • Sydney, 04 November 2010 • Statement on QF32 Air Return to Singapore - Aircraft has Landed Safely • A Qantas A380 aircraft operating QF32 from Singapore to Sydney experienced an engine issue soon after take off and returned to Singapore. • Sydney, 01 November 2010 • QantasLink Q400 Takes Taronga Western Plains Zoo to the Skies • A QantasLink Bombardier Q400 aircraft showcasing the images of Taronga Western Plains Zoo animals was welcomed to the airline's fleet today to help promote regional tourism.

28. Place/Distribution • The place/distribution process is about allowing the customers access to the product when they want it. • The distribution channel links the point of manufacturing to the final customer. • In most cases the manufacturer will need intermediaries such as wholesalers and retailers to reach the final customer. • As customers are widespread it would be very expensive to deal directly with the each individual customer. Imagine the cost to Edgell of sending a single can of peas to a customer in Burke.

29. Distribution options • Intensive • Chosen when the manufacturer wants to use as many outlets as possible. Coca-Cola is an example • Selective • Used when the manufacturer wants the product widely distributed but not quite to the degree of intensive distribution. Groceries, clothing and furniture are examples • Exclusive • Often made for products positioned at the top of the market. With a high-quality product, the price indicates the exclusivity, and the promotion and distribution also supports the exclusivity. Example cars such as Rolls-Royce

30. Distribution issues • Transport • Cost-reduction advances in transport have been very significant. • The most important is standardisation of packaging to ensure that pantechnicons and containers are fully loaded and that a business is minimising its unit cost of transport. • Another significant cost saving is the adoption of pallets and the fitting of automatic “roll on roll off ” (RORO)conveyor belt technology to trucks. This means the driver can load and unload without assistance.

31. Warehousing • The technological advances here have also led to significant cost reductions. • Reductions are so considerable that a competitor must follow when there is an upgrading in warehouse technology e.g. Coles & Woolworths have completed major distribution centres. These centres are very different from the old sheds where goods used to be warehoused. They are totally sealed, have no lights or windows. They are totally automated and run by computers. Very few people work in these centres and they warehouse and distribute incredibly large amounts of product.

32. Inventory refers to the product stored in case customers want it. • Having a product available when the customer wants it is an important aspect of customer service. • It is also an important aspect of the total cost of the product.

33. Environmental effects on distribution Technology • Most significant changes (=significant cost reductions) have been in the areas of: • Containerisation, • Conveyor belt technology and automation of warehousing. • Internet technology has had two main effects. • The potential for the customer to link into the manufacturer’s computers to check whether products are in stock or to find out what are the delays. • The second is the development of Internet shopping where customers check inventory on their computers, order what they want and have it delivered to their houses.

34. Local government • Is the tier of government with the responsibility for planning and zoning of land in its area. • E.g for retail activities where previously it consisted of strip developments in the main street of a suburb or town now it is about development of malls • Local government is important because all the environmental changes will impact on the lifestyles of people living in the local government area. • The impacts include: • Noise and other types of pollution from the traffic and large trucks servicing the centres • Ensuring adequate e.g. parking facilities available to support development of large shopping malls