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Contemporary Issues Contemporary Issues in Marketing (Contd)in Marketing (Contd)

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Marketing becoming Marketing becoming increasingly difficult today…increasingly difficult today…

► Increasingly difficult to find & keep Increasingly difficult to find & keep competitive advantage, due to:competitive advantage, due to: Rapid copying of productsRapid copying of products Shortening of PLCsShortening of PLCs Increased info available to customersIncreased info available to customers Customers growing defence against commercial Customers growing defence against commercial

messagesmessages► Kotler says that it is still possible to find Kotler says that it is still possible to find

niches to be filled by imaginative niches to be filled by imaginative entrepreneurs, e.g., Starbuckentrepreneurs, e.g., Starbuck

►Need to spot these niches and fill them in a Need to spot these niches and fill them in a way that others cannot duplicateway that others cannot duplicate

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What marketing strategies work What marketing strategies work best today?best today?

►Focusing, positioning & differentiationFocusing, positioning & differentiation►Company needs to define target Company needs to define target

market carefullymarket carefully►Must communicate a unique benefit Must communicate a unique benefit

positionposition►Differentiate in a way that competitors Differentiate in a way that competitors

will find hard to copywill find hard to copy

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6 Companies that Kotler 6 Companies that Kotler admiresadmires

► IKEA, Southwest Airlines, Wal-mart, Target, IKEA, Southwest Airlines, Wal-mart, Target, Home Depot, Dollar General, Aldi’s – these Home Depot, Dollar General, Aldi’s – these have found innovative ways of lowering have found innovative ways of lowering price/costprice/cost

► Sony, Toyota, Intel, Starbucks – these have Sony, Toyota, Intel, Starbucks – these have boosted quality to high levelsboosted quality to high levels

► Body Shop, Ben & Jerry’s, Avon, Kraft – Body Shop, Ben & Jerry’s, Avon, Kraft – these have exhibited social conciencethese have exhibited social concience

► Barnes & Noble, Charles Schwab, FedEx – Barnes & Noble, Charles Schwab, FedEx – these have innovated the business modelthese have innovated the business model

► Progressive Insurance, Tetra – these have Progressive Insurance, Tetra – these have discovered and dominated niches discovered and dominated niches

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►SegmentationSegmentation

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Mass MarketingMass Marketing

►Far from dead – Coke, McDonaldFar from dead – Coke, McDonald►Today, mass marketers need to be Today, mass marketers need to be

discerning on the channels for discerning on the channels for communicationscommunications

►However, tendency towards However, tendency towards segmentationsegmentation

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How to Segment? How to Segment?

►Demographic, Geodemographic (add Demographic, Geodemographic (add geography to demographic) geography to demographic)

► Later, Behavioral (classification according to Later, Behavioral (classification according to readiness to buy, motivation, attitude), readiness to buy, motivation, attitude), psychographic (according to lifestyle psychographic (according to lifestyle characteristics)characteristics)

► Today, loyalty segmentation (attention to Today, loyalty segmentation (attention to longer staying and profitable customers)longer staying and profitable customers)

► Internet facilitates segmentation (these Internet facilitates segmentation (these days, web sites dedicated to babies, senior days, web sites dedicated to babies, senior citizens, Hispanics, etc)citizens, Hispanics, etc)

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►TargetingTargeting

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New or Old Customers?New or Old Customers?

►Historically, companies tried to get new Historically, companies tried to get new customerscustomers

►Now, companies are paying attention to Now, companies are paying attention to keeping customers (cost 5 times as keeping customers (cost 5 times as much to get new customers)much to get new customers)

►Relationship marketing involves much Relationship marketing involves much more than maintaining a customer more than maintaining a customer relationship dept; now, need to relationship dept; now, need to consider the concept of “customer consider the concept of “customer share”share”

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NarrowcastingNarrowcasting

►Marketers must move away from Marketers must move away from broadcasting to narrowcastingbroadcasting to narrowcasting

►People no longer interested in People no longer interested in messages received thru TV/radio messages received thru TV/radio (unless ad is in an area of interest)(unless ad is in an area of interest)

►Need to define target customers and Need to define target customers and their media habits; messages then put their media habits; messages then put in focused mediain focused media

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►PositioningPositioning

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Effective marketing…Effective marketing…

► Effective marketing begins with research into Effective marketing begins with research into local marketplace to find segments not local marketplace to find segments not satisfied with current offeringssatisfied with current offerings

► Company then decides to target segments in Company then decides to target segments in which it can provide superior offeringswhich it can provide superior offerings

► Positioning, next step – companies Positioning, next step – companies communicate its offer to target market communicate its offer to target market segmentssegments

► Company cannot position before segmentation Company cannot position before segmentation & targeting& targeting

► E.g., Volvo realised attractive segment for safe E.g., Volvo realised attractive segment for safe cars. Volvo adopted the “safest car” cars. Volvo adopted the “safest car” positioning. positioning.

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DifferentiationDifferentiation

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Key ways today to differentiate Key ways today to differentiate todaytoday

►Companies need to learn to compete Companies need to learn to compete in new ways (be creative)in new ways (be creative)

►Say, by developing and delivering Say, by developing and delivering goods faster, thru better goods faster, thru better design/styling, augment offer with design/styling, augment offer with more benefitsmore benefits

►E.g., Today, Japan is working to E.g., Today, Japan is working to produce more “sensuous” automobilesproduce more “sensuous” automobiles

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InnovationInnovation

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Innovation is…Innovation is…

►Not just about better and newer Not just about better and newer products, but includes developing products, but includes developing better systems and business better systems and business models/productsmodels/products

►Companies with good marketing and Companies with good marketing and good innovation: Sony, 3M, Pfizergood innovation: Sony, 3M, Pfizer

► IKEA, South West Airlines, Virgin, Home IKEA, South West Airlines, Virgin, Home Depot, Barnes & Noble invented new Depot, Barnes & Noble invented new ways to run old businessesways to run old businesses

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Landmark Innovations Landmark Innovations (according to Kotler)(according to Kotler)

► Retail: Hypermarket, mega-retailers, Retail: Hypermarket, mega-retailers, ►Market logistics: FedExMarket logistics: FedEx►Quality innovations: 6 Sigma, zero-defects, Quality innovations: 6 Sigma, zero-defects,

TQMTQM►New sales channels: direct mail, New sales channels: direct mail,

telemarketing, online marketingtelemarketing, online marketing► Physical inventions: computers, cell phone, Physical inventions: computers, cell phone,

InternetInternet► Financial innovationsFinancial innovations

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More…More…

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Marketing ResearchMarketing Research

►Online marketing offers opportunitiesOnline marketing offers opportunities►To learn about customers, markets, To learn about customers, markets,

segments, competitors, distribution segments, competitors, distribution channels & trendschannels & trends

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Additional skills required by Additional skills required by marketing depts todaymarketing depts today

►Brand building/positioning skillsBrand building/positioning skills►Database management/data mining skillsDatabase management/data mining skills►CRM skillsCRM skills►PR and “buzz marketing” skillsPR and “buzz marketing” skills►Event management/experiential Event management/experiential

marketing skillsmarketing skills►Direct mail/catalogue and telemarketing Direct mail/catalogue and telemarketing

skillsskills

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Kotler’s Favourite Marketing Kotler’s Favourite Marketing Thinkers:Thinkers:

►Walt DisneyWalt Disney►Ray Croc (McD)Ray Croc (McD)►Howard Shultz (Starbuck)Howard Shultz (Starbuck)► Ingvar Kamprad (IKEA)Ingvar Kamprad (IKEA)►Sam Walton (Wal-Mart)Sam Walton (Wal-Mart)►Richard BrensonRichard Brenson

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Companies that interact well Companies that interact well with customerswith customers

►Harley Davidson (create community)Harley Davidson (create community)►Easier with good brands (branding is Easier with good brands (branding is

important)important)

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Strength/Weakness of US Strength/Weakness of US Companies (Marketing)Companies (Marketing)

►S: Competitive culture & cost disciplineS: Competitive culture & cost discipline►W: Short-term horizonW: Short-term horizon

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►Part 2Part 2

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More on 4Ps More on 4Ps

► 4Ps 4Ps 4Cs 4Cs Product Product Customer value Customer value Price Price Customer costs Customer costs Place Place Customer convenience Customer convenience Promotion Promotion Customer communication (not Customer communication (not

promotion!)promotion!)► Kotler suggests adding 2 more Ps (part of Kotler suggests adding 2 more Ps (part of

megamarketing tools): Politics & Public megamarketing tools): Politics & Public Opinion (receptive govt & people)Opinion (receptive govt & people)

► Kotler: advertising overdone, while PR is Kotler: advertising overdone, while PR is underdone; direct marketing tools are also underdone; direct marketing tools are also rising in importance rising in importance

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Other tools available to Other tools available to marketers todaymarketers today

► InfoInfo►Software to manage infoSoftware to manage info►Putting marketing plans and Putting marketing plans and

approaches on computer so that all approaches on computer so that all Managers have access (company-wide Managers have access (company-wide approach rather than marketing dept’s approach rather than marketing dept’s responsibility)responsibility)

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Internet: who will benefit Internet: who will benefit most?most?

►CustomersCustomers Price more transparentPrice more transparent Customers able to order more specific Customers able to order more specific

version of productversion of product Customers less assaulted by intrusive Customers less assaulted by intrusive

large-page adslarge-page ads For businesses, those that align with new For businesses, those that align with new

technologies will benefit (Yahoo!)technologies will benefit (Yahoo!)

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How has Internet affected How has Internet affected 4Ps?4Ps?

►Price has become more importantPrice has become more important►Promotion (advertising on Internet still Promotion (advertising on Internet still

not too effective)not too effective)►But sales promotion more effectiveBut sales promotion more effective►Place: some retailers may be affected Place: some retailers may be affected

by online buyingby online buying

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ProductProduct

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BrandingBranding

► Strong brands will be major defence against price Strong brands will be major defence against price competitioncompetition

► Strong brands create trust and image of better Strong brands create trust and image of better quality – customers willing to pay morequality – customers willing to pay more

► Concentrate on brand performance not image Concentrate on brand performance not image (image is ceasing to have power)(image is ceasing to have power)

► Successful brands of tomorrow: niche brands – Successful brands of tomorrow: niche brands – brands that deliver unique value (in terms of 4Ps) to brands that deliver unique value (in terms of 4Ps) to a focused segmenta focused segment

► Think in terms of “brand asset management” – Think in terms of “brand asset management” – brands of their own PLC. Need for rejuvenationbrands of their own PLC. Need for rejuvenation

► The Internet will still allow branding, but price will The Internet will still allow branding, but price will also become sensitive also become sensitive

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PricePrice

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Price Price

►Before hypercompetition, globalisation Before hypercompetition, globalisation and the internet, superior brands could and the internet, superior brands could charge 20-50% more.charge 20-50% more.

►Today, more likely 10-20%Today, more likely 10-20%►Today, buyers propose what they pay Today, buyers propose what they pay

airline tickets, hotels, etc)airline tickets, hotels, etc)► Internet likely to drive down pricesInternet likely to drive down prices

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Price – how to compete with Price – how to compete with ChinaChina

►Short-term: lobby for protection – but Short-term: lobby for protection – but not a good solution for long termnot a good solution for long term

►Long term: search for better ways to Long term: search for better ways to offer superior valueoffer superior value

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PlacePlace

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Direct sellingDirect selling

►Direct selling is recommended by Direct selling is recommended by Kotler as one of the strategies for Kotler as one of the strategies for “place” (say, thru e-commerce)“place” (say, thru e-commerce)

►However, this might be a problem if However, this might be a problem if this is carried out together with a this is carried out together with a distributor – he might resent thisdistributor – he might resent this

►This problem can be dealt with by This problem can be dealt with by “brick-and-click” companies“brick-and-click” companies

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PromotionPromotion

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TV seems to be losing TV seems to be losing effectivenesseffectiveness

►The average American exposed to The average American exposed to several hundred messages per day several hundred messages per day and is trying to tune outand is trying to tune out

►Growing advertising clutter, increasing Growing advertising clutter, increasing number of channels, availability of number of channels, availability of zapping mechanisms and reduced TV zapping mechanisms and reduced TV watching by some groupswatching by some groups

►Challenge: marketers need to consider Challenge: marketers need to consider other methods of consumer attentionother methods of consumer attention

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Possibilities instead of TVPossibilities instead of TV► Sponsorships (names on stadiums, whole teams and Sponsorships (names on stadiums, whole teams and

on individual athletes)on individual athletes)► Mentions on talk showsMentions on talk shows► Product placementProduct placement► Street level promotion: actors walking in street and Street level promotion: actors walking in street and

asking passers-by to take photos with them on asking passers-by to take photos with them on mobile phonemobile phone

► Celebrity endorsementCelebrity endorsement► Body advertising (college kids agreed to put Dunkin Body advertising (college kids agreed to put Dunkin

doughnut logos on their forehead during match)doughnut logos on their forehead during match)► PR and word-of-mouth playing greater rolePR and word-of-mouth playing greater role► Internet?Internet?► Sales promotion – but don’t overdo it – may Sales promotion – but don’t overdo it – may

“cheapen” the brand image “cheapen” the brand image

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AdvertisingAdvertising

►Kotler sees 3 choices in view of today’s Kotler sees 3 choices in view of today’s developments vis-à-vis advertising:developments vis-à-vis advertising: Advertise in a number of media channels in Advertise in a number of media channels in

the same time slotthe same time slot Advertise on the super bowls (cricket), Advertise on the super bowls (cricket),

Olympics and major events that attract wide Olympics and major events that attract wide audienceaudience

Build giant database with names of Build giant database with names of customers/potential customers that have customers/potential customers that have greatest interest in company’s offeringgreatest interest in company’s offering

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PRPR

►Kotler thinks more should be spent for Kotler thinks more should be spent for PRPR

►More chance of getting message More chance of getting message throughthrough

►More believableMore believable►More likely to create “buzz”More likely to create “buzz”

Buzz marketing likely to rise in Buzz marketing likely to rise in importanceimportance

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Kotler’s Predictions on MediaKotler’s Predictions on Media

►Newspapers will decline in circulationNewspapers will decline in circulation► Though TV will continue to attract people, Though TV will continue to attract people,

these people will pay less attention to adsthese people will pay less attention to ads► The use of radio will increase/The use of radio will increase/► TargetedTargeted magazines will increase in magazines will increase in

numbersnumbers► Billboards will increase in impact (people Billboards will increase in impact (people

spending more time in their cars)spending more time in their cars)► Internet, email and chat rooms will increaseInternet, email and chat rooms will increase

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More…what will online do to More…what will online do to retail?retail?

►Kotler sees decline in travel agents, Kotler sees decline in travel agents, insurance agents, stockbrokers, car insurance agents, stockbrokers, car salespeople, bookstores, music storessalespeople, bookstores, music stores

►Retailers need to move from merely Retailers need to move from merely carrying goods to “more satisfying carrying goods to “more satisfying store experiences”store experiences”

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What can small stores do with What can small stores do with competition from the likes of competition from the likes of

Walmart?Walmart?►Move to specialty or superspecialty Move to specialty or superspecialty

merchandisingmerchandising►Distinguish themselves with superior Distinguish themselves with superior

customer servicecustomer service► Intimately knowing customers wellIntimately knowing customers well

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Stakeholder marketingStakeholder marketing

►Companies have moved away from Companies have moved away from vertical integration to outsourcingvertical integration to outsourcing

►Need, therefore, to maintain Need, therefore, to maintain relationships with stakeholders relationships with stakeholders (suppliers, employees, distributors, (suppliers, employees, distributors, Govt, etc) to have win-win situationGovt, etc) to have win-win situation

►Mutual trust and selecting/motivating Mutual trust and selecting/motivating partnerships is key to stakeholder partnerships is key to stakeholder marketingmarketing

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Internet marketingInternet marketing

►Need to consider (besides just having website):Need to consider (besides just having website): Use Internet to test new products/marketing Use Internet to test new products/marketing

concepts using online focus groups, consumer concepts using online focus groups, consumer panelspanels

Assign someone to research competitors’ strategies, Assign someone to research competitors’ strategies, tactics and resources on the Internettactics and resources on the Internet

Use Internet to train/communicate with employees, Use Internet to train/communicate with employees, dealers and suppliersdealers and suppliers

Use website to recruit new employeesUse website to recruit new employees Distribute coupons and samples using websiteDistribute coupons and samples using website Monitor chat-room converstionsMonitor chat-room converstions

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Kotler’s opinion on why many Kotler’s opinion on why many online companies went bustonline companies went bust

► Online marketers may be technically proficient but Online marketers may be technically proficient but lack financial & marketing knowledgelack financial & marketing knowledge

► They fail to build good biz modelThey fail to build good biz model► Main reasons why they went bust:Main reasons why they went bust:

Rushed into market, no proper market research/planningRushed into market, no proper market research/planning To get customers, spent large amounts on mass marketingTo get customers, spent large amounts on mass marketing Devoted too much effort to get new customers rather than Devoted too much effort to get new customers rather than

stress loyaltystress loyalty Didn’t understand customer behavior (online Didn’t understand customer behavior (online

surfing/purchasing)surfing/purchasing) Websites poorly designed/poor infrastructure for shipping, Websites poorly designed/poor infrastructure for shipping,

etcetc

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What do we do about China?What do we do about China?

►Companies can think of China as a Companies can think of China as a great big market (not just a low cost great big market (not just a low cost competitor)competitor)

►Based on your strengths/weaknesses, Based on your strengths/weaknesses, go into Chinago into China

►China will need many thingsChina will need many things