The goal of the phase: The goal in the growth phase is the BRAND REINFORCEMENT (repurchase). The company aims to reinforce the brand?s position by getting the consumer who had tried the product to repurchase it and continue to attract new users.
3-MATURUTY PHASE: In this phase the industrial sales reaches a plateau market saturated. The brand here attracts few new consumers and relives on repurchases. The competition increases and wars between different products starts. Profits diminish and increasing the company sales is on the expense of the competitive sales. In this phase the product differentiation and competitive advantage are very important.
The goal of the phase: Brand revitalization, which is the constant try to counter a decreasing product or market share.
Strategies to be implemented in the maturity phase
1.Market expansion: It means finding new users and new uses. Example for new users for the product: J&J [from children to adults]-COMPAG [from bissness to bissness computers to home computers]-secret deo. [From women to men]. Example for new uses for the product: ARM & HAMMER BAKING SODA [cooking-refrigerator-polish silver-cleaning carpets-litter box-laundry-bathing].
2.Product modification: Is an attempt to revitalize a product by changing it some way to increase demand (new and improved). Example for that: GOHAINA and its plastic cover.
3.Brand repositioning: It means replacing or re segmenting. Example for that: JCPENNY AND OMAR AFENDY.
4-THE DECLINE PHASE: The product enters this phase by the cause of a change in the consumer tastes or the change of technology. Example: typewriters-camera-vcrs&cassets (are on the way). The sales and profits decreases, that might happen because the hard competition. The company must to choose between two ways.
1.Deleting the brand
2.A- BRAND HARVESTING: It means decreasing the costs to almost zero, and allowing the brand to count surviving on its own. Example the drugs companies.
B- BRAND REVIVAL: Brings a brand back to life depending on the brand?s name strength. Example for that is BARBIE.
PLACE
It is the next p of the 6 p?s that makes the marketing mix. Simply it answers the question {how does a producer or a manufacturer get his product to the consumer?}.
There are two main ways to distribute your product, direct marketing and indirect marketing. When distributing a product through direct marketing, the producer sell directly to the consumer, while distributing a product through indirect marketing, the producer uses intermediates to deliver the product.
Definition of a distribution channel
A distribution channel is composed of all firms or individuals that take title or assist on taking title of a product, as it moves from the producer to the consumer.
Types of intermediates
1.RETAILERS: they sell to final consumer, used mostly by producers of fast consumer goods.
2.WHOLESALERS: they buy (take title) and resell products to other wholesaler or a retailer. They are also called distributors.
3.AGENTS: they represent the producer, they do not take title, they get a commission, and they sell on behalf of the producer in a specific geographic area.
4.BROKER: they are the link between the buyer and the seller, with out representing any of them. They do not take title, they do not have a continuing relationship with the sell, and they get a commission.
Why we use a middle man?
1.Transactional function: on making a buy and a sell, the middleman takes risks of stoking the products in an inventory (administration function).
2.Logistical function: the requiring of assembly, storage to go to retail shelf.
3.Facilitating function: obtaining information that producers need, about marketing conditions, promotion of the products, extending credit.
Types of distribution systems
1.Direct marketing: it is the avoiding of the middleman. Examples:
vMail orders
vCatalogs
vDoor-to-door (it is an open chance for theft)
vCo-owned retail outlets, this way the producers by pass the retailers and the wholesalers. Example: the public sector stores.
vTelephone sales (telemarketing).
vInteractive shopping. Example: the Internet, the television shopping cable.
2.Producer to retailer: in this case the producers by pass the wholesalers, in order to have more control on the product. This action depends to some extent on the product. This way is used mostly in durable goods (furniture, electronics). This way is expensive and time consuming so it is done in large bulks, example: fine foods in the past.
3.Franchise system: a company gives to a distributor the right of selling the company?s product under the company?s name, exclusively in an area. The distributor pays the company money in the form of royalty.
4.Producer to wholesaler: the wholesaler takes title of the product and this is used in fmcp (fast moving consumer goods), example: fine foods now.
5.Agents and brokers: they are used to sell to wholesalers and consumers, example; auto mobile.
?The longer the chain is the least the control is.?
Evaluation of distribution channels
1.The characteristics: the characteristics of your consumer and your product, influences the distribution channel. It is direct marketing if your consumers are few, and you need to reach them more closely. But it is indirect marketing if your consumer segment is large, and you do not need to reach them closely.
2.Gaining a competitive advantage: as we all know competitive advantage could be any thing, it would be the distribution channel. Example: L?eggs (stockings), they put their product where least expected, in the super market, mineral water is another example, where the company?s competitive advantage is not quality nor price as they are all the same, but it is the distribution channel and the demand.
3.Legal regulations: this may restrict the choice of the middleman. Examples: 1- a company requests that a middleman only handle the company?s product line, it is called ?exclusive dealing contract?. 2- a company gives the wholesaler the sole right to sell the company?s product in a certain area, it is called ?exclusive sales territory?. 3- a company requests a middleman to take a slow product, to get another fast product.
4.Product characteristics: depends on the movement of the product, is it an fmcg or not, the technology level.
5.Company characteristics: a company just starting may have enough leverage to get its product exactable by wholesalers.
Structure of a distributing system
1.Length of the channel: the shorter the channel is the more the control is
2.Intensity of distribution: this depends on the nature of the product, it is sub classified in to: A-intensity distribution: sells in many out lets (super market, pharmacy), it is non-durable goods and frequently used. In this case you have less control on the price and display. B-selective distribution: you distribute your product in a limited number of out lets. Example for that is television and microwave (durable goods). C- exclusive distribution: the company grants middlemen the exclusive territorial right to sell their product in a certain area (some times for prestige image).
3.Selecting specific intermediates: you have to know if they can deliver your product to the final market at a reasonable cost, their size (known or unknown), financial resources, experience, coverage, service level and delivery, reptilian, product expertise.
Channel strategy
1.Push policy: pushes the product down to promote the product to the next level down the channel. Example for the push strategy is a new unknown company.
2.Pull strategy: you promote your product directly to the consumer to increase consumer demand, which pulls the product demand up. Example for the pull strategy is a well-known company like Procter and gable.
the pull and push strategy
Place:
Pricing can determine the success or the failure of a product. The price must be consistent with the quality.
?What increased the importance of pricing?
1.Sharp recession: the recession makes the consumers more prices sensitive, because of the decrease in the purchase power. This makes price a prime weapon in competing brands.
2.Foreign competition: competition creates a down wards force on prices.
3.Fragmentation (separation) of many segments: different segments demanding different price levels.
4.Deregulations: privatization and the government took its hand out, increased private sector intense price competition.
?Influential factors that determine price.
1.Market demand: the law of demand and supply.
2.Production and distribution cost: mass production enables producers to produce more products to more consumers cheaply.
3.Competition: you lower your prices to compete (availability vs. price).
4.Corporate objectives: prestige and positioning. Example L?Oreal (hair color), their slogan is ?because you worth it?. Price is influenced by corporate objectives.
5.Other factors: segments, consumer income, supply and raw materials, government.
Pricing strategy:
1.Competitive pricing
This strategy is applied mostly in the fast moving consumer goods, as every food company in the world, they try to reduce the cost and sell cheaper.
2.Comparative pricing
You show the consumer the regular price and the selling price.
3.Skimming pricing
If you are the only one that produces a product, then you start with high prices to recover that start-up cost. After a time interval you reduce the price.
4.Penetration pricing
Start with very law prices to penetrate the market quickly. Then after a time interval you higher your prices, example cigarettes, you create loyalty and traffic then higher the prices.
5.Promotional pricing
? Buy one get one free?, ?buy one take two?. Most of the cases it happen to clean inventory.
6.Loss leader pricing (retail only)
You advertise one product with very low price to create traffic in your store, and you sell another products.
7.Prestige pricing
Example: L?Oreal, BTM, Marie laui. This is not competition on the basis of price.
PROMOTION
Definition of promotion: promotion is a combination of communication strategies to convey brand benefits (information) to customer (target audience) and influence to buy.
Objectives of promotion:
1-To create awareness: especially for new products, or an old product as a particular new aspect.
2-Stimulating the demand:
1)Primary demand for the whole category, sometimes it occurs with old products to simulate the category demand, with out a specific product. The government, industry, and trade do this. In case of new product or inventions it is called pioneer promotion example cd rom.
2)Selective demand; trying to simulate demand for a particular brand.
3-Encouraging product trail: even after awareness is created, it is worth it to try it.
4-Identifying prospects: through phones, mails, coupons, and magazines.
5-To retain loyal customer: it is more cheaper and more profitable to retain loyal customer than getting new one. Example laughthansa ?miles and more?.
6-Facilitate reseller support: two-way relation ship between the retailer and the producer to share promotion costs.
7-Combat competition: you have to use promotion to fight back. This helps you to protect your market share, but it may not necessarily increase profit.
Types of promotion:
1)Sales promotion: (non-media advertising), example offers, discounts, special deals, coupons, premiums, sampling, displays, conferences, contests.
2)Advertising: (mass promotion, non-personal selling). Reaches many people, very difficult to measure but not impossible. The objective of advertising is to inform, educate, persuade, and remind.
3)Publicity: ?any time you are news?. It is a free advertisement. It is done by public relations (contacts, reputation).
4)Personal selling: it is an industrial type of selling, store clerk, sales reps.
5)Collateral materials: It is an accessory advertisement material prepared by companies to achieve marketing and public relations objectives. Example brochures, booklets, catalogs, videotapes, annual reports.
Promotion through the product life cycle:
1.Introduction stage: advertisement role is to create awareness. Spending more money on trade promotion to push the product to the market, and to pull the consumer to try the product. Advertisement and sales promotion expenses are high.
2.Growth stage: advertisement expenses increase little or maintain. Adv. Strategy shifts from awareness to product benefits. Sales promotion drops as many consumers have already tried the product.
3.Maturity stage: sales promotion is likely to increase because of the competition strategies that are applied in this stage.
4.Decline stage: cut back in all promotion expenses.
Promotional mix:
1.Sales promotion: why does it becoming popular?. Because of the increase of competition, the large adv. Expenses, less people reading and watching television. The problem with the sales promotion is that the consumer get used to it, and the company cannot stop it, and this leads to a decrease in the company?s profit.
2.Publicity: The advantages of publicity are the creditability because it is in the news, cheap, supports the company?s image. The disadvantage of the publicity is the no control on your reputation ? it can back fire in your face?.
3.Advertising: there are two main types of adv. The broadcast media and the print media.
1-Television: although people are less watching television but they are still watching.
2-Radio: the radio is phasing out.
3-News paper: good for timely adv. And geographic segmentation and psycho graphic section.
4-Magazines: more psycho graphic than geographic, but does not have the newspaper reach, also it is picked up more than one person and more than one time.
5-Direct mail: very specific segment, by the name. It is not well known in EGYPT.
6-Outdoor: billboards, side of transportation. It has fantastic and wide exposure.
7-Interactive: C.D., computers, internat, e-commerce.
8-Non-traditional media: not one from the above, video rentals, television screens in stores.
Advertising Plan
1-Identifying the target market: this should influence the positioning of your product and of your advertisement.
2-Establish advertising objectives: this means that we must determine how much adv. Effort is needed to influence the targeted group. Example (I want to reach a certain percent of my target audience) then (increase the number of times the TA see your ad.)
3-Develop the advertising budget: the size of the budget depends on your objective, is it reaching or frequently reaching.
4-Develop the advertising strategy
A)Information oriented maintenance: the strategy designed to reinforce the positioning of a brand by giving information about it.
B)The image oriented maintenance strategy: this strategy reinforces the brand or the company?s positioning through imaginary. Example (dove soap is associated with softness and smoothness)
C)Information oriented change strategy: designed to revitalize brands by advertising to a new product features.
D)Image oriented change strategy: designed to revitalize a brand through imaginary and symbolism. Example (new slogan)
5-Develop an advertising massage:
A)Emotional vs. rational appeal: usually emotions play a great role because an emotion increases involvement.
B)Fear appeal: focuses on the potential problems of using and not using a certain product. Example (insurance)
C)Hummer appeal: people do like to laugh, but using this tool may be negative. Example (stupid, too good so people do not remember the product) and it is too risky.
D)Spots persons: very effective tool that makes the advertisement memorable.
E)Comparative appeal: comparing your product with your competitor. Example (Arial and Persil)
F)Subliminal appeal: massage is shown subconscious, so quickly, consumer conscious perceive it only at a subconscious level.
6-Selects the media: print, TV, interactive, radio, or what?
7-Evaluate the effectiveness of the advertisement :
?Sales increases compared to the advertising expenses.
?Effects of the advertisement on the consumers and your focus group.
?You can use various ways to measure media on message delivery rate and so.
Criticism and defense of promotion
1-Although it does inform and help consumers to make decisions, it has its flaws. It invades every day life and it is everywhere.
2-Keeps prices lower. Promotion creates demand, which leads to more profitability.
3-Does promotion creates need? No it does no create a need, but capitalizes them.
Marketing research:
Definition: systematic gathering, recording, and analyzing of data about problems or situations related to the marketing of goods and services.
The research starts by initial assumptions (idea. Theory, opinion) based on our experience. Then to be sure about such assumptions we make research, which either confirm or modify or deny our assumptions. Then you end up with new assumptions, which in fact is a marketing plan.