Developing Marketing StrategiesStage 6 Business Studies

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

Market segmentation

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.

Feminine vs. Masculine

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.

"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.

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

Income

Lifestyle

Product and service

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.

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

periods Packaging

Price & pricing methods

Skimming strategies Penetration strategies Loss leaders Price points

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.

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

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.

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.

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

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

Viral advertising Promotes products in such a way (usually humorous) that

customers want to send the advertisement (usually by e-mail) to friends.

Original Budweiser frogs

Cadbury gorillas

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.g Dulux & Bunnings

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.

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

Qantas PR during recent engine

explosion incident Sydney, 11 November 2010

A380 Update - Qantas Confirms International Network AvailabilityQantas 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 2010Qantas Continues A380 Engine Inspection ProgramQantas 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 2010Qantas Celebrates 90 Years as Australia's Leading AirlineHollywood 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 2010Update on Qantas ServicesQantas 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 2010Qantas Update on QF32 and Qantas A380 OperationsUPDATED 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 OperationsUPDATED 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 2010Qantas Refutes Engineers Union ClaimsQantas 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 2010Statement on QF32 Air Return to Singapore - Aircraft has Landed SafelyA Qantas A380 aircraft operating QF32 from Singapore to Sydney experienced an engine issue soon after take off and returned to Singapore.

Sydney, 01 November 2010QantasLink Q400 Takes Taronga Western Plains Zoo to the SkiesA 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.

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.

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

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.

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.

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.

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.

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