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Contemporary Issues in Marketing (Contd)

Contemporary Issues in Marketing (Contd). Marketing becoming increasingly difficult today…. Increasingly difficult to find & keep competitive advantage, due to: Rapid copying of products Shortening of PLCs Increased info available to customers

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Contemporary Issues in Marketing (Contd)

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  1. Contemporary Issues in Marketing (Contd) Total 47 slides

  2. Marketing becoming increasingly difficult today… • Increasingly difficult to find & keep competitive advantage, due to: • Rapid copying of products • Shortening of PLCs • Increased info available to customers • Customers growing defence against commercial messages • Kotler says that it is still possible to find niches to be filled by imaginative entrepreneurs, e.g., Starbuck • Need to spot these niches and fill them in a way that others cannot duplicate Total 47 slides

  3. What marketing strategies work best today? • Focusing, positioning & differentiation • Company needs to define target market carefully • Must communicate a unique benefit position • Differentiate in a way that competitors will find hard to copy Total 47 slides

  4. 6 Companies that Kotler admires • IKEA, Southwest Airlines, Wal-mart, Target, Home Depot, Dollar General, Aldi’s – these have found innovative ways of lowering price/cost • Sony, Toyota, Intel, Starbucks – these have boosted quality to high levels • Body Shop, Ben & Jerry’s, Avon, Kraft – these have exhibited social concience • Barnes & Noble, Charles Schwab, FedEx – these have innovated the business model • Progressive Insurance, Tetra – these have discovered and dominated niches Total 47 slides

  5. Segmentation Total 47 slides

  6. Mass Marketing • Far from dead – Coke, McDonald • Today, mass marketers need to be discerning on the channels for communications • However, tendency towards segmentation Total 47 slides

  7. How to Segment? • Demographic, Geodemographic (add geography to demographic) • Later, Behavioral (classification according to readiness to buy, motivation, attitude), psychographic (according to lifestyle characteristics) • Today, loyalty segmentation (attention to longer staying and profitable customers) • Internet facilitates segmentation (these days, web sites dedicated to babies, senior citizens, Hispanics, etc) Total 47 slides

  8. Targeting Total 47 slides

  9. New or Old Customers? • Historically, companies tried to get new customers • Now, companies are paying attention to keeping customers (cost 5 times as much to get new customers) • Relationship marketing involves much more than maintaining a customer relationship dept; now, need to consider the concept of “customer share” Total 47 slides

  10. Narrowcasting • Marketers must move away from broadcasting to narrowcasting • People no longer interested in messages received thru TV/radio (unless ad is in an area of interest) • Need to define target customers and their media habits; messages then put in focused media Total 47 slides

  11. Positioning Total 47 slides

  12. Effective marketing… • Effective marketing begins with research into local marketplace to find segments not satisfied with current offerings • Company then decides to target segments in which it can provide superior offerings • Positioning, next step – companies communicate its offer to target market segments • Company cannot position before segmentation & targeting • E.g., Volvo realised attractive segment for safe cars. Volvo adopted the “safest car” positioning. Total 47 slides

  13. Differentiation Total 47 slides

  14. Key ways today to differentiate today • Companies need to learn to compete in new ways (be creative) • Say, by developing and delivering goods faster, thru better design/styling, augment offer with more benefits • E.g., Today, Japan is working to produce more “sensuous” automobiles Total 47 slides

  15. Innovation Total 47 slides

  16. Innovation is… • Not just about better and newer products, but includes developing better systems and business models/products • Companies with good marketing and good innovation: Sony, 3M, Pfizer • IKEA, South West Airlines, Virgin, Home Depot, Barnes & Noble invented new ways to run old businesses Total 47 slides

  17. Landmark Innovations (according to Kotler) • Retail: Hypermarket, mega-retailers, • Market logistics: FedEx • Quality innovations: 6 Sigma, zero-defects, TQM • New sales channels: direct mail, telemarketing, online marketing • Physical inventions: computers, cell phone, Internet • Financial innovations Total 47 slides

  18. More… Total 47 slides

  19. Marketing Research • Online marketing offers opportunities • To learn about customers, markets, segments, competitors, distribution channels & trends Total 47 slides

  20. Additional skills required by marketing depts today • Brand building/positioning skills • Database management/data mining skills • CRM skills • PR and “buzz marketing” skills • Event management/experiential marketing skills • Direct mail/catalogue and telemarketing skills Total 47 slides

  21. Kotler’s Favourite Marketing Thinkers: • Walt Disney • Ray Croc (McD) • Howard Shultz (Starbuck) • Ingvar Kamprad (IKEA) • Sam Walton (Wal-Mart) • Richard Brenson Total 47 slides

  22. Companies that interact well with customers • Harley Davidson (create community) • Easier with good brands (branding is important) Total 47 slides

  23. Strength/Weakness of US Companies (Marketing) • S: Competitive culture & cost discipline • W: Short-term horizon Total 47 slides

  24. Part 2 Total 47 slides

  25. More on 4Ps • 4Ps  4Cs • Product  Customer value • Price  Customer costs • Place  Customer convenience • Promotion  Customer communication (not promotion!) • Kotler suggests adding 2 more Ps (part of megamarketing tools): Politics & Public Opinion (receptive govt & people) • Kotler: advertising overdone, while PR is underdone; direct marketing tools are also rising in importance Total 47 slides

  26. Other tools available to marketers today • Info • Software to manage info • Putting marketing plans and approaches on computer so that all Managers have access (company-wide approach rather than marketing dept’s responsibility) Total 47 slides

  27. Internet: who will benefit most? • Customers • Price more transparent • Customers able to order more specific version of product • Customers less assaulted by intrusive large-page ads • For businesses, those that align with new technologies will benefit (Yahoo!) Total 47 slides

  28. How has Internet affected 4Ps? • Price has become more important • Promotion (advertising on Internet still not too effective) • But sales promotion more effective • Place: some retailers may be affected by online buying Total 47 slides

  29. Product Total 47 slides

  30. Branding • Strong brands will be major defence against price competition • Strong brands create trust and image of better quality – customers willing to pay more • Concentrate on brand performance not image (image is ceasing to have power) • Successful brands of tomorrow: niche brands – brands that deliver unique value (in terms of 4Ps) to a focused segment • Think in terms of “brand asset management” – brands of their own PLC. Need for rejuvenation • The Internet will still allow branding, but price will also become sensitive Total 47 slides

  31. Price Total 47 slides

  32. Price • Before hypercompetition, globalisation and the internet, superior brands could charge 20-50% more. • Today, more likely 10-20% • Today, buyers propose what they pay airline tickets, hotels, etc) • Internet likely to drive down prices Total 47 slides

  33. Price – how to compete with China • Short-term: lobby for protection – but not a good solution for long term • Long term: search for better ways to offer superior value Total 47 slides

  34. Place Total 47 slides

  35. Direct selling • Direct selling is recommended by Kotler as one of the strategies for “place” (say, thru e-commerce) • However, this might be a problem if this is carried out together with a distributor – he might resent this • This problem can be dealt with by “brick-and-click” companies Total 47 slides

  36. Promotion Total 47 slides

  37. TV seems to be losing effectiveness • The average American exposed to several hundred messages per day and is trying to tune out • Growing advertising clutter, increasing number of channels, availability of zapping mechanisms and reduced TV watching by some groups • Challenge: marketers need to consider other methods of consumer attention Total 47 slides

  38. Possibilities instead of TV • Sponsorships (names on stadiums, whole teams and on individual athletes) • Mentions on talk shows • Product placement • Street level promotion: actors walking in street and asking passers-by to take photos with them on mobile phone • Celebrity endorsement • Body advertising (college kids agreed to put Dunkin doughnut logos on their forehead during match) • PR and word-of-mouth playing greater role • Internet? • Sales promotion – but don’t overdo it – may “cheapen” the brand image Total 47 slides

  39. Advertising • Kotler sees 3 choices in view of today’s developments vis-à-vis advertising: • Advertise in a number of media channels in the same time slot • Advertise on the super bowls (cricket), Olympics and major events that attract wide audience • Build giant database with names of customers/potential customers that have greatest interest in company’s offering Total 47 slides

  40. PR • Kotler thinks more should be spent for PR • More chance of getting message through • More believable • More likely to create “buzz” • Buzz marketing likely to rise in importance Total 47 slides

  41. Kotler’s Predictions on Media • Newspapers will decline in circulation • Though TV will continue to attract people, these people will pay less attention to ads • The use of radio will increase/ • Targeted magazines will increase in numbers • Billboards will increase in impact (people spending more time in their cars) • Internet, email and chat rooms will increase Total 47 slides

  42. More…what will online do to retail? • Kotler sees decline in travel agents, insurance agents, stockbrokers, car salespeople, bookstores, music stores • Retailers need to move from merely carrying goods to “more satisfying store experiences” Total 47 slides

  43. What can small stores do with competition from the likes of Walmart? • Move to specialty or superspecialty merchandising • Distinguish themselves with superior customer service • Intimately knowing customers well Total 47 slides

  44. Stakeholder marketing • Companies have moved away from vertical integration to outsourcing • Need, therefore, to maintain relationships with stakeholders (suppliers, employees, distributors, Govt, etc) to have win-win situation • Mutual trust and selecting/motivating partnerships is key to stakeholder marketing Total 47 slides

  45. Internet marketing • Need to consider (besides just having website): • Use Internet to test new products/marketing concepts using online focus groups, consumer panels • Assign someone to research competitors’ strategies, tactics and resources on the Internet • Use Internet to train/communicate with employees, dealers and suppliers • Use website to recruit new employees • Distribute coupons and samples using website • Monitor chat-room converstions Total 47 slides

  46. Kotler’s opinion on why many online companies went bust • Online marketers may be technically proficient but lack financial & marketing knowledge • They fail to build good biz model • Main reasons why they went bust: • Rushed into market, no proper market research/planning • To get customers, spent large amounts on mass marketing • Devoted too much effort to get new customers rather than stress loyalty • Didn’t understand customer behavior (online surfing/purchasing) • Websites poorly designed/poor infrastructure for shipping, etc Total 47 slides

  47. What do we do about China? • Companies can think of China as a great big market (not just a low cost competitor) • Based on your strengths/weaknesses, go into China • China will need many things Total 47 slides

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