Marketing Programmes

Material:
Svend Hollensen (2015), Marketing Management: A
Relationship Approach, 3rd edition.
Chapter 11 – Product and service decisions
Chapter 12 – Pricing decisions
Chapter 13 – Distribution decisions
Chapter 14 – Communication decisions

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 Assessing the external
A Assessing the
marketing situation
N
Assessing competitiveness of the firm
A - Customer behavior
L the - Identification of the firm’s
- Competitor analysis and
Y
current core competence
S intelligence
I situation - Development of the firm’s
- Analysis relationships in
S competitive advantage
the value chain
P
L
A

Marketing Research and Decision Support

N Developing marketing strategies
N
I
- SWOT analysis, strategic marketing planning and
N
Strategic portfolio analysis
G decisions - Segmentation, targeting, positioning and
& competitive strategies
I

System
M Functional
P Developing marketing programmes
L / Tactical
- 4Ps decisions (Product, Price, Place, Promotion)
E decisions
M
E
N
T Organizing, implementing and controlling the
Action
A marketing effort
T planning
I - Organizing and implementing the marketing plan
decisions
O - Budgeting and controlling
N
 Product and
Service

Price
Firm Customer
(seller) (buyer)
Distribution

Communication

Marketing mix – 4Ps model

4Ps model (McCarthy, 1960)

Product

Promotion 4Ps Price

Place
The Concept of the Marketing Mix
(Neil Borden, 1964)

1. Product planning 7. Promotion

2. Pricing 8. Packaging
3. Branding 9. Display
4. Channels of 10. Servicing
distribution 11. Physical handling
5. Personal selling 12. Fact finding and
6. Advertising analysis
7Ps model (Booms & Bitner, 1981)
Product

Process Price

7Ps
Physical
evidence Place

Participants Promotion
6Ps model (Kotler, 1984)
Product

Public
opinion
formation
Price

6Ps
Political
power Place

Promotion
5Ps model (Judd, 1987)

Product

People Price

5Ps

Promotion Place
15Ps model (Baumgartner, 1991)
Politics Partition People
Public
Product relations

Price Prioritize

Place 15Ps Probe

Promotion Plan

Positive
Profit Performance Position
implementation
 • Features • Price strategy
• Quality • Pricing
• Support services • Allowances
• Branding • Discounts
• Packaging • Payment terms
• Warranties

Product Price

Promotion Place
• Sales promotion
• Advertising • Channels
• Public Relations • Market coverage
• Messages • Assortment
• Direct marketing • Location
• Digital marketing • Logistics
 4 PACEs
4Cs 4Es 4As 4Ps
Customer Experience Acceptability Product

Cost Exchange Affordability Price

Convenience Everywhere Accessibility Place

Communication Evangelism Awareness Promotion

Services marketing
 Characteristics of a service
Intangibility Inseparability
Services cannot be seen, Services cannot be
tasted, felt, heard, or separated from their
smelled before purchase providers

Services

Variability
Quality of services Perishability
depends on who provides Services cannot be stored
them and when, where, for later sale or use
and how
Services providers
Business organizations
• Airlines, banks, hotels, insurance, consulting firms

Governments
• Courts, employment services, hospitals, postal
service, schools

Private not-for-profit organizations

• Museums, charities, churches, foundations,
hospitals
Product
Product and service
 Products
/services

Information Ideas

Market
offerings
Experiences Organizations

Persons Places
Levels of product and services Augmented Product

After
Delivery Actual Product sale
and
service
Credit
Brand Features
name Core
Customer
Value
Quality Design
level

Packaging
Product Warranty
support
3 levels of product example: TV
Product decisions
Individual
product
decisions

3 levels of Product line

decisions decisions

Product mix
decisions
 Individual product decisions

Product
Product Label and
Branding Packaging support
attributes logos
services

- Quality - Name - Container - Identify - Phone

- Features - Term - Wrapper - Describe - Email
- Style - Sign - Promote - Online
- Design - Symbol - Social media
- Mobile
 Product line decisions

Nokia 7.1 Nokia 6.2 Nokia 800 Tough Nokia 2720 Flip Nokia 110
 Product mix decisions
COMPANY

Product line Product line Product line

Product Product Width Product

Product
Product
Product
Depth
Product

Product Product Product Product

Product Length
 • Attributes
Brand • Benefits
positioning • Beliefs and
values

• Product’s benefit and qualities

• Easy to pronounce, recognize and remember
Brand name • Distinctive
selection • Extendable
• Translate easily into foreign languages
• Capable of registration and legal protection

• National brand
Brand • Private brand
sponsorship • Licensing
• Co-branding

• Line
Brand Brand
extensions
• Brand
strategy decisions development extensions
• Multibrands
• New brands
 Brand development strategies
Product category

Existing New

Existing Brand
Line extension
Brand name

extension

New Multibrands New brands

Developing New Product
New product development strategy

• A company
Acquisition • A patent
• A license

• Original products
New product • Product improvements
development • Product modifications
• New brands
New products face tough odds
• 60% of all new consumer packaged products fail
• Two-thirds of new product concepts are never even
launched
• Why?
• Although an ideal may be good, the company may
overestimated market size
• The actual product may be poorly designed
• It might be incorrectly positioned, launched at the
wrong time
• Prices too high
• Poorly advertised
New product development process
Idea Idea Concept
generation development
screening
and testing

Marketing
Product Business
strategy
development analysis development

Test
Commercialization
marketing
New product development
Crowdsourcing process
Product life cycle
 PLC and marketing objectives

Introduction Growth Maturity Decline

Maximize
Create Reduce
Maximize profit while
Marketing product expenditure
objectives engagement
market defending
and milk the
share market
and trial brand
share
Price
Pricing from economist’s view
Pricing from accountant’s view
Pricing framework
 Price ceiling No demand above this price

Consumer perceptions of value

Considerations
in setting price

Competition and other external

factors
Competitors’ Marketing Nature of the
strategies and strategy, marketing and
prices objectives, and demand
mix

Product costs

Price floor No profits below this price

 Customer value-based pricing
Good value pricing
• Everyday low pricing (EDLP)
• High-low pricing
Value-added pricing
• Attaching value-added features and services to differentiate a company’s offers and
charging higher prices

Set target Design

Assess
price to Determine product to
customer
match costs that deliver
needs and
customer- can be desired
value
perceived incurred value at
perceptions
value target price
 Cost-based pricing
Cost-plus pricing (markup pricing)
• Adding a standard markup to the cost of the product

Target profit pricing (break-even analysis)

• Setting price to break even on the costs of making and marketing a
product
• Setting price to make a target return

Convince
Design a Determine Set price
buyers of
good product based on
product’s
product costs costs
value
Competition-based pricing

How does the company’s market offering compare

with competitors’ offering in terms of customer value?

How strong are current competitors, and what are

their current pricing strategies?

No matter what price you charge – high or low – be

certain to give customers superior value for that price
Major Pricing Strategies
New product pricing strategies
• Market skimming pricing
• Setting a high price for a new product
to skim maximum revenues layer by
layer from the segments willing to pay
the high price.
• Market penetration pricing
• Setting a low price for a new product
in order to attract a large number of
buyers and a large market share.
Product line pricing
• Costs
differences
between
products in a
line
• Customer
evaluations of
different
features
• Competitors’
prices
Optional-product pricing
• The pricing of optional or accessory products along
with a main product
• Companies must decide which items to include in
the base price and which to offer as options

New car with ordinary rims New car with sports rims
$59,000 $60,000
Captive-product pricing
• Setting a price
for products
that must be
used along
with a main
product, such
as blades for a
razor.
By-product pricing
• Setting a price for
by-products to
help offset the
costs of disposing
of them and help
make the main
product’s price
more
competitive.
Product bundle pricing
• Combining several products and offering the
bundle at a reduced price.
Discount and allowance pricing
• Discount
• A straight reduction in price on purchases during a
stated period of time or of larger quantities.
• Cash discount, quantity discount, trade discount,
seasonal discount
• Allowance
• Promotional money paid by manufacturers to retailers in
return for an agreement to feature the manufacturer’s
products in some way.
• Trade-in allowance, promotional allowance
Segmented pricing
• Setting a product or service at two or more prices,
where the difference in prices is not based on
differences in costs.
• Conditions to apply:
• The market must be segmentable, and segments must
show different degrees of demand;
• The cost of segmenting and reaching the market cannot
exceed the extra revenue obtained from the price
difference
• The segmented pricing must be legal
Psychological pricing
• Sellers consider the
psychology of prices,
not simply the
economics

• Reference price is price that buyers carry in their

minds and refer to when looking at a given
product.
• The reference price might be formed by noting
current prices, remembering past price, or
assessing the buying situation.
Promotional pricing
• Temporarily pricing products below the list price,
and sometimes even below cost, to increase short-
run sales.
• Special event pricing
• Cash rebate
• Low-interest financing
• Longer warrantees
• Free maintenance
Dynamic and online pricing
• Adjusting
prices
continually to
meet the
characteristics
and needs of
individual
customers and
situations
• Real-time pricing
Place
Value delivery network

Upstream Downstream
Distribution channels
Marketing channels
 Contacts without a distributor

Manufacturer Customer

Manufacturer Customer

Manufacturer Customer
 Contacts with a distributor

Manufacturer Customer

Manufacturer Distributor Customer

Manufacturer Customer
 Channel levels
Producer Producer Producer

Indirect marketing channel

Direct marketing channel

Wholesaler
Retailer
Retailer

Consumer Consumer Consumer

Channel 1 Channel 2 Channel 3
Distribution strategies
Marketing channels
Managing distribution channels
“Banana split” model
Promotion
 Advertising

Personal Consistent, Public relations

selling
clear, and
compelling
company and
brand
messages

Sales Direct & Digital

promotion marketing
Communication process
Steps in developing marketing
communication
Target audience
Who is your target audience?
• Current users/ potential buyers
• Individuals, groups, special publics, general publics
Affect to decisions
• What will be said
• How it will be said
• When it will be said
• Where it will be said
• Who will say it
 Communication objectives

Awareness Knowledge Liking

Purchase Conviction Preference

 Design a message

Effective message
• Attention, interest, desire, action (AIDA model)

Design a message
• Message content
• Rational
• Emotional
• Moral
• Message structure
• Message format
Communication channels and media

Personal communication channels

• Word-of-mouth (WOM)

Non-personal communication channels

• Newspaper, magazines, direct mail
• Broadcast media (TV, radio)
• Display media (billboards, posters)
• Online media (email, company websites
Setting promotion budget
Percentage
Affordable
of Sales

Objective Competitive
and Task parity
Shaping the promotion mix
Advertising

Personal
Public relations
selling

Sales Direct & Digital

promotion marketing
Advertising
 Advertising Message decisions

decisions
Message strategy
Advertising
Message execution evaluation
Objectives
Budget decisions
setting
Communication
Affordable impact
approach Sales and profit
Communication Media decisions impact
objectives Percent of sales Return on
Competitive advertising
Impact and
Sales objectives parity
engagement
Objective and
Major media types
task
Specific media
vehicles
Media timing
 Setting advertising objectives
Informative advertising
Communicating customer value Suggesting new uses for a product
Building a brand and company image Informing the market of price change
Telling the market about new product Describing available services and support
Explaining how a product works Correcting false impressions

Persuasive advertising
Building brand preference Persuading customer to purchase now
Encouraging switching to a brand Creating customer engagement
Changing customer perceptions of product value Building brand community

Reminder advertising
Maintaining customer relationships Reminding consumers where to buy the
product
Reminding consumers that the product Keeping the brand in a customer’s mind
may be needed in the near future during off-seasons
Setting the advertising budget
Percentage
Affordable
of Sales

Objective Competitive
and Task parity
 Slice of Testimonial
Message execution
Lifestyle life evidence

Mood
Scientific
Scientific
evidence
evidence
Fantasy or
image

Technical Personal
Musical expertise symbol
 Selecting advertising media
Determining reach, frequency, impact,
and engagement

Choosing among major media types

Selecting specific media vehicles

Choosing media timing

 Advertising media selection
• Percentage of people in the target market
Reach who are exposed to an ad campaign

• How many times the average person in

Frequency the target market is exposed to a message

• Qualitative value of message exposure

Impact through a given medium

• Ratings, readership, listenership, and click-

Engagement through rates
Choosing major media types Digital,
mobile,
Outdoor Television
social
media

Newspapers
Direct
mail

Radio Magazines
Selecting specific media vehicles
• Television vehicles
• Magazine vehicles
• Online and mobile vehicles: Twitter, Facebook,
Instagram, YouTube
Deciding on media timing
• Schedule the advertising over time
Evaluating ad effectiveness

Communication effects
• Pre- and post-evaluations

Sales and profit effects

• Past sales & profits with past ad
expenditures comparison
• Experiments
Public Relations - PR
 Press
relations
Public Relations

Product and
Development brand
publicity
Functions

Investors
Lobbying
relations
Major
Public
PR service News
tools activities

Corporate - Logos
- Conferences Special - Business form
identify
events
- Sponsorships - Business card

materials - Company cars and

trucks

- Reports

Audiovisual Written - Brochures

- Articles
materials materials - Newsletter
- Magazines
Personal Selling
 Personal selling

Sales
Salespeople Agents
representatives

District Account Sales

managers executives consultants

Sales engineers
 Role of the sales force

Linking the company with its customers

• Represent the company to customers
• Represent customers to the company

Coordinating marketing and sales

• Joint meetings and spelling out communication
channels
• Create joint objectives and reward systems for
sales and marketing teams
Managing the sales force

Designing sales Recruiting and

Training
force strategy selecting sales
salespeople
and structure people

Evaluating Supervising Compensating

salespeople salespeople salespeople
Sales force strategy and structure

Sales force structures

• Territorial sales force structure
• Product sales force structure
• Customer (or market) sales force structure

Sales force strategies

• Outside sales forces (travel to call customer in the field)
• Inside sales forces (telemarketers, online sellers)
• Team selling
Recruiting and selecting sales people
• Money • Lay out detailed
• A desire for • Organized plans
recognition • Follow through
• Satisfaction of in a timely way
competing and
winning
Intrinsic A discipline
motivation work style

Ability to
build
Ability to
relationships
close a sale
with
customers
• Customer • More sales
problem solvers
 Training salespeople

Formats Goals

• Seminars • Different types

• Sales meetings of consumers
• Online learning needs
• E-learning • Buying motives
• Buying habits
Compensating salespeople
Commissions
Salary Bonuses
Reward
A fixed A variable
amount amount

Fringe
Expenses
benefits
Supervising and motivating salespeople

Supervising Motivating
• Call plan • Organizational climate
• Time-and-duty analysis • Sales quotas
• Sales force automation • Positive incentives
systems
Evaluating sales force performance

Work Sales
plans reports

Call Customer
reports surveys

Return on Expense
sales
investment reports
 Personal selling process
Prospecting and
Pre-approach Approach
qualifying

Handling Presentation and

Closing
objections demonstration

Follow-up
Sale Promotion
 Sales promotion
Consumer
Final buyers promotions
Boost customer-brand engagement

Retailers
Trade Getting retailers to carry new items, more
and promotions inventory, more shelf space
wholesalers

Business Business
Stimulate purchases, reward customers
customers promotions

Members of
Sales force
the sales promotions
Support for current and new products
force
 Major sales promotion tools

Consumer Trade promotions Business

promotions • Discount promotions
• Samples • Free goods • Conventions and trade
• Coupons • Specialty advertising shows
• Rebates (cash refunds) items • Sales contest
• Point-of-purchase
• Contests and games
• Event sponsorships
Developing the promotion program
Determine the size of the incentive

Set conditions for participation

Determine how to promote and distribute the

promotion program itself

Set the length of the promotion program

Evaluation
Direct and Digital Marketing
 Direct marketing models

Early direct • Catalog companies

• Direct mailers
marketing • Telemarketers

• Smartphone
New direct • Tablets
marketing • Online social and mobile
media
Benefits of direct and digital marketing
Convenient Low-cost

Real-time marketing
Easy Buyer Seller Efficient

Private Speedy
Forms of direct and digital marketing
Face-to-face
Digital and social media marketing
Online selling

Traditional direct marketing

marketing:
websites, Catalog
online Build direct marketing
advertising, customer
email, online engagement Telemarketing
videos, blogs and
community Direct-
Social media response TV
marketing marketing
Mobile Kiosk
marketing marketing
Online marketing

Websites and branded web communities

Online advertising

Email marketing

Online videos

Blogs and other online forums

Social media marketing

Advantages
• Interactive
• Immediate and timely
• Cost-effective
• Engagement and social sharing capabilities

Challenges
• Hard to measure
• Hard to control
Mobile marketing
Direct mail marketing
Catalog marketing
Telemarketing
Direct-response TV marketing
Kiosk marketing
Communication process
From seller to buyer initiative
Push versus pull strategies
Communication tools
Trade fairs and exhibitions
Role of internet communication
Bowling and Pinball model
6C model