What is Marketing Strategies? We know that the main goal of a marketing manager is to develop a maintain a marketing mix that precisely matches the needs of the consumers in the target market.
TYPES OF MARKETING STRATEGIES
These are plans to meet marketing objectives. A good understanding of the marketing mix and the 7 P’s, market segmentation and product/service differentiation is needed to develop appropriate marketing strategies.
PRODUCT/SERVICE DIFFERENTIATION AND POSITIONING | MARKET SEGMENTATION
Involves dividing the total market into segments, a business then selects one of the segments to be its target market.
Ultimate aim to increase sales and profits by understanding and responding to different target customers.
A market can be divided according to 4 main variables:
- Demographic: Features of a population
- Geographic: locations, rural or urban
- Psychographic: Personality, traits
- Behavioural: Customers relationship with the product
Product/service Differentiation and Positioning
Differentiation refers to the process of developing and marketing differences between the business products/services.
It Can include a difference in price, quality, labelling, packaging, amount of features for example
Positioning refers to the technique were marketers try to create an “Image” for a product. Effects how potential buyers perceive the product.
EXAMPLE: Rolex is seen as an expensive product for high-class people
PRODUCTS – GOOD AND/OR SERVICES (BRAND, PACKAGING)
Product – goods/services
Products are good/services exchanged for the purpose of satisfying a need/want.
Can be tangible (real, physical,) or intangible (not physical, like a DVD)
The total Product concept is the combination of tangible/intangible concepts you get when buying a product
EXAMPLE: A Restaurant dinner could include food (tangible) and live music (intangible).
This is term, name, symbol or design a product/service is identified with, that distinguishes them from its competitors
Helps consumers identify certain and specific products
Reduces perceived risk of the product, you know?
Gains psychological reward that comes from purchasing a brand that has status or prestige
EXAMPLES: Mooloo milk, Mambo, apple, Sony, steam, Big M, Rockstar
For businesses, they are able to gain repeat business, encourages customers loyalty, new products are able to be introduced easily under that same brand name and promotion for one product automatically promotes their other products.
A brand symbol or logo is a graphic representation that identifies a business or product. In most cases, the brand name ad logo work together unanimously. EXAMPLE: The nike “swipe”
Some brands are privately owned by retailers or wholesales, usually for exclusivity, and the business can gain more profits from their sales. EXAMPLE: Myer used Blaq and Miss Shop
Some brands are generic brands, meaning they are ‘no name” brands. EXAMPLE: Black & gold
Involves the development of a container and the graphic design for the product
Well designed packaging can give a positive impression of the product and encourage first time customers
- Preserves the product
- Protects the product from damage
- Attracts customer attraction
- Assists the display of the the product
- makes transportation and storage easier
PRICE INCLUDING PRICING METHODS – COST, MARKET, COMPETITION-BASED
Price refers to the amount of money a customer is prepared to offer in exchange for a businesses product
Price too high and customers wont buy the product, but a price too low and customers may think the quality is inferior
Of all the elements in the marketing mix, the price is the most flexible. It can be adjusted quickly in response to competitors actions and changes in the marketplace
A businesses pricing methods are influenced by internal and external factors
There are 3 main pricing methods
A cost-based pricing method is when a business determines the total cost of producing one unit of the product, then adding any amount to cover additional costs (interest, insurance) and provide a profit margin. Formula used to calculate the price is = Cost + (cost x mark-up percentage) = price
A market-based pricing method is when a business sets a products price based on its level of demand. When demand is greater than supply, there is a shortage in the market, and the price is forced up .
A competition-based pricing method is when a business determines the price of a product based on what their competition has priced their (the same) product. It is where the price covers cost (of raw materials and cost of operating the business) and is comparable to the competitors price.
A pricing strategy can depend on a businesses marketing objectives, the life cycle of the product, its market and the level of economic activity to name a few.
Pricing strategies will have to be modified depending on changes within the external business marketing
The different types of marketing strategies are:
- Price Skimming: Where a business charges the highest possible price for a product during the introduction stages, to recover costs quickly.
- Price penetration: Charging the lowest price possible to gain a large market share
- Loss Leader: Deliberately selling a product at a loss to attract customers
- Price Points: Selling prices at set, predetermined prices, also called price lining.
Price and Quality interaction
This refers to the images customers have of products/brands
Cheaper products may be seen as inferior or being a poorer quality
The pricing strategy, prestige or premium pricing, is where a high price is charged to give the product an aura of quality/status.
Promotion describe the methods used by a business to inform, persuade and remind a target market about its product.
Promotion attempts to:
- attract new customers
- Increase brand loyalty, by reinforcing an image of the product
- Encourage existing customers to purchase more
- Provide info to customers
The promotion mix includes
- Personal selling and relationship marketing
- Sales promotion
- Publicity and public relations
Promotion mix – Advertising
A paid, non person message communicated through a mass medium (tv, radio)
Successful advertising can increase sales and profits
Businesses are able to reach large audiences or focus on smaller markets
Advertising media is the term for the form of electronic and print communication used to reach an audience.
EXAMPLE: Mass marketing – tv, radio, billboards, e-marketing, telemarketing, direct marketing catalogues.
The type of advertising depends on the product, the size of the target market, the marketing budget, cost of adverting and the product position in the product life cycle.
Promotion mix – Personal selling and Relationship Marketing
Involves the activities of a sales rep directed to a customer in an attempt to make a sale
Involves the human aspect of promotion for expensive, complex or highly individual products
Can be an expensive promotional method, but the advantages are that:
- it can be modified to suit the individual customer,
- after sales customers , service can be provided
- Individualised assistance can create a long term relationship
EXAMPLE: Travel agent, can modify travel arrangements to suit the individual customers and can create a long term relationship with the business.
Relationship marketing is the development of long term cost effective & strong relationships with individual customers.
EXAMPLE: Coles fly buys loyalty reward program.
Promotion mix – Sales Promotion
The use of materials or activities as direct inducements to customers
It aims to:
- Entice new customers
- Encourage trial purchase of a new production
- Increase sales to existing customers
EXAMPLE: Coupons, samples (taste testing).
Promotion mix – Publicity and Public Relations
“Any publicity is good publicity”
Publicity refers to any free new story about the business or its products. The aims of publicity are to:
- enhance the image of the product/business,
- highlight the favourable features of the business and
- reduce any negative image that has been created.
Public Relations (PR) refers to activities aimed at creating favourable relations between a business and its customers.
The Communication Process
This is how marketing managers communicate with target markets.
A variety of channels of communication are used.
- Opinion leaders
- word of mouth
An opinion leader is a person who influences other, their opinions are respected. A very powerful promotion tool
EXAMPLE: The use of celebrities to promote products
Word of mouth communication occurs when people influence each other during conversation
EXAMPLE: “Nah man, maccas is filled with bogans, lets hit KFC”
The activities that make products available to customers, how and where a product can be bought by a consumer
Distribution channels (marketing channels) are routes taken to get the product from the business to the customer. Involve a number of intermediaries.
4 most common channels include:
- Producer to the consumer: Simplest, no intermediaries, EXAMPLE: Fresh fruit
- Producer to the retailer to the consumer: Retailer is intermediary, EXAMPLE: Perishables
- Producer to wholesaler to retailer to the consumer: Common, wholesales purchases and sells a large number of goods to retailers. EXAMPLE: Metcash and IGA
- Producer to an agent to wholesaler to retailer to consumer: Agent distributes product and gets paid a commission, EXAMPLE: Primary production, freq used goods.
Non-store retailer: Retailing conducted away from the usual store front, like internet stores or mail order marketing.
There are three main types of channels. The channel choice for how a product is distributed is important the success of the marketing plan
Intensive distribution is where a product saturates (dominates) the market. EXAMPLE: Coca-Cola saturates the soft drink market
Selective Distribution is where only a select few outlets (stores) are used to distribute the product. Considered more suitable for high end goods EXAMPLE: Jewellery
Exclusive Distribution is when only one outlet is used in a large geographic area. EXAMPLE: Harley Davidson
All the activities concerned with the efficient movement of the products from the producer to consumer
Involves the use of:
The most cost effective method of moving a business’s products, perishability and bulk are major considerations
The receiving, storing and dispatching of goods. Products in storage need to be accessed quickly, involves equipment like forklifts and conveyer belts.
Ensures a business has products available for sale without holding too much stock. Most businesses operate JIT (Just in time) inventory control, when a stock is delivered when needed.
Major distribution centres (like METCASH) are used because of their convenient access to transport and can process and deliver orders quickly.
PEOPLE, PROCESSES AND PHYSICAL EVIDENCE
These 3 P’s are part of the extended marketing mix. They apply to intangible products and services.
Refers to the quality of interaction between the customer and those within the business who will deliver the service (employees)
Consumers base their perceptions/make judgements about a business based on how employees treat them
Refers to the flow of activities a business follows to deliver a product/service
Without a tangible product, processes must be highly efficient to achieve customer satisfaction
(More efficient = higher customer satisfaction)
The environment in which the service is delivered (storefront, website)
Includes materials needed to carry out the service such as signage, logos, and website
A business should provide high-quality physical evidence to create an image of value and excellence
Using the internet to promote products or services and build relationships with customers
Refers to the application of marketing principles and techniques via electronic media (the internet)
- Banner Advertisements
- Email Marketing
It can be seen on web pages, podcasts, SMS, email, ads, banners, blogs
E-marketing can enhance a businesses image, help a business identify different markets, results can be seen instantly.,
Social media advertising
Using social media websites like face book, twitter, reddit, to deliver info on products/services to potential customers.
- Inexpensive to set up
- Easy to monitor
- Effective method to gain exposure
- No control on what people say
- Difficult to measure the number of people exposed
When a business decides to expand overseas, the marketing plan must be changed to suit the differing target markets of each country that have different needs/wants. The extended marketing mix needs to be adapted accordingly.
Some transnational companies see the planet as one large market, and offer little customization for their products (standardized approach, E.G Coca-Cola), while other companies take in the difference in each countries culture, race, religion etc.
Refers to the worldwide use of a name, term, symbol to identify the sellers item
Used for a number of reasons:
- Cost effective in terms of marketing
- Provides a uniform worldwide image
- Successful brand name can be linked to new product Introduced into the market
Some businesses can modify the product to suit local conditions
EXAMPLE: Pepsi, coke
Global marketing strategy that makes products the same all over the world.
- Assembly and production is cheaper,
- Good is able to be moved easily,
- Achieves economies of scale (cost advantages a business achieves due to size, output or scale of operation) ‘
EXAMPLE: Cosmetics, food, electrical goods ‘
A customized global marketing strategy is when the existing market mix (the 7 P’s) is modified or a new one is developed when expanding overseas
Assumes that the needs of customers are different between countries or regions EXAMPLE: Pepsi makes a local soft drink in the middle east called Shani.
Some business combine customized and standardized EXAMPLE: McDonalds: Name, logo and production methods are standardized, but the menu contains local variations
How a business determines what price its products/services will be set at across different countries
Global pricing can be achieved through
- Customized pricing
- Marketing customized pricing
- Standard worldwide pricing
Customized Pricing: Customers in different countries or regions are charged different prices for the same product
Market customized Pricing: Prices set depending on the local mark conditions. The most flexible market method as market conditions can change.
Standard worldwide price: The same price, regardless of the region or market condition
How a business will differentiate its products from competitors and achieve a market share.
To differentiate, a business must strive to develop market leadership, positive customer relationships and operational excellence..