Contemporary Issues in Marketing (Contd)

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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
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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

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6 Companies that Kotler admires

IKEA, Southwest Airlines, Wal-mart, Target, Home WalDepot, 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
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Segmentation

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Mass Marketing
Far from dead Coke, McDonald Today, mass marketers need to be discerning on the channels for communications However, tendency towards segmentation

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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)
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Targeting

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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
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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
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Positioning

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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.
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Differentiation

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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

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Innovation

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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
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Landmark Innovations (according to Kotler)

Retail: Hypermarket, mega-retailers, megaMarket logistics: FedEx Quality innovations: 6 Sigma, zero-defects, TQM zeroNew sales channels: direct mail, telemarketing, online marketing Physical inventions: computers, cell phone, Internet Financial innovations
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More

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Marketing Research
Online marketing offers opportunities To learn about customers, markets, segments, competitors, distribution channels & trends

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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
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Kotler s Favourite Marketing Thinkers:

Walt Disney Ray Croc (McD) Howard Shultz (Starbuck) Ingvar Kamprad (IKEA) Sam Walton (Wal-Mart) (WalRichard Brenson

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Companies that interact well with customers

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

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Strength/Weakness of US Companies (Marketing)

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

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Part 2

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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
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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(company-wide approach rather than marketing dept s responsibility)

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Internet: who will benefit most?

Customers
 Price more transparent  Customers able to order more specific version of product  Customers less assaulted by intrusive largelargepage ads  For businesses, those that align with new technologies will benefit (Yahoo!)
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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

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Product

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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
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Price

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Price
Before hypercompetition, globalisation and the internet, superior brands could charge 2020-50% more. Today, more likely 10-20% 10Today, buyers propose what they pay airline tickets, hotels, etc) Internet likely to drive down prices
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Price

how to compete with China

ShortShort-term: lobby for protection but not a good solution for long term Long term: search for better ways to offer superior value

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Place

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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 brickbrickandand-click companies
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Promotion

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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
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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 passerspassers-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 word-ofInternet? Sales promotion but don t overdo it may cheapen the brand image
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Advertising
Kotler sees 3 choices in view of today s developments vis--vis advertising: vis 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
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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

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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
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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

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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

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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 winsituation Mutual trust and selecting/motivating partnerships is key to stakeholder marketing
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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 chatTotal 47 slides 45

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

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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

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