1. Head-to-Head Positioning
2. Differentiated Positioning

Perceptual Map – a means of displaying via two dimensions the location products or brands occupy in the minds of consumers.

 Perceptual mapping is most often used tool to position/reposition the product relative to competitors

4 Targeting Strategies:

1. Undifferentiated (Mass marketing) – one product targeted at all segments.
2. Concentrated (Niche Marketing) – one product targeted at one segment.
3. Differentitated – Multiple products targeted at multiple segments
4. Customized (1-to-1 Marketing) – customized product for each customer.

Criteria to use in choosing target segments:

• market size,
• expected growth,
• competitive position,
• cost of reaching the segment,
• compatibility with the organization’s objectives and resources.

1. have common needs

2. respond similarly to a marketing action.

Step Segmentation Process:

1. Group potential buyers into segment

2. Group products to be sold into categories

3. Develop market-products grid and estimated size of market

Two ways to segment Markets:

Based on Customer Characteristics – Geographic, Demographic, Psychographic variables

Based on Buying Situations – Usage, Benefits Sought, Frequency.

Market Product Grid:

Marketing Synergies run horizontally across for each market segment.

Product Synergies run vertically down for each product

Channel Members: Producer, Distributor/Agent/Broker, Wholesaler/Dealer, Retailer, Customer

Functions of a Marketing Channel

• Transactional Function
• Logistical Function
• Facilitating Function

Channel Structures:

• Traditional Channel or Online Channel
• Direct or Indirect Channel

Channel Conflicts:

• Vertical Channel Conflict- between members at different levels

• • Disintermediation: when one channel member by-passes another member and buys or sells direct
  • Profit Sharing: distribution of profit margins among channel members
  • Inadequate selling effort by retailers:

• Horizontal Channel Conflict – between members at the same level

• • Increased distribution coverage
  • The same brand carried by different types of retailers
  • “Free Riding” Problem

Factors Influencing Channel Choice:

• Target Market Coverage

• • Intensive
  • Extensive
  • Selective

• Buyer Requirements

• Information, Convenience, Variety, Service.

 Pull Strategy: direct promotional mix at ultimate consumers, direct-to-consumer promotions, rebates, etc;.  consumers ask retailers for the product, who then orders it from wholesalers – demand stimulation works upward thru the channel

Consumer response to  promotions (Hierarchy of Effects):

Setting Promotion Objectives:

1. Percentage of Sales
2. Competitive Parity
3. All-you-can-Afford Budgeting
4. Objective and Task Budgeting

Sales Promotion – a mass communication technique that offers short-term incentives to encourage purchase or sales of a product or service.

Consumer Promotions - rebates, coupons, deals, free-samples, point-of-purchase display, contests, sweekstakes; any sales promotions that reaches consumers directly.

Trade Promotions – trade allowances, merchandise, case, financial allowance, quantity discounts, co-operative advertising; promotions given to channel intermediaries

2. Technical problem (product’s defect)

3. Wrong moment of launch

4 Adopter categories:

• Innovators
• Early Adopters
• Late Adopters
• Laggards

Managing PLC:

Product Modification: changing product characteristics to boost sales (new color, flavor, product variant, etc)

Market Modification:

• Finding New Users (e.g. Sony launching video games for Under 13 age group)
• Increasing Use (e.g. Crest advertising to brush twice daily, increase consumption)
• Finding New Use situations (e.g. Arm & Hammer baking soda, used to deodorize refrigerators)

Product Repositioning: changing the place a product occupies in a consumer’s mind relative to competitors (perceptual map)

Repositioning Strategies

• Reacting to competitor Positioning
• Reaching a New Market
• Catching a rising trend
• Changing the value offered.
• Trading Up
• Trading Down – Downsizing

Premium Pricing

Use a high price where there is a uniqueness about the product or service. This approach is used where a a substantial competitive advantage exists. Such high prices are charge for luxuries such as Cunard Cruises, Savoy Hotel rooms, and Concorde flights.

Penetration Pricing

The price charged for products and services is set artificially low in order to gain market share. Once this is achieved, the price is increased. This approach was used by France Telecom and Sky TV.

Economy Pricing

This is a no frills low price. The cost of marketing and manufacture are kept at a minimum. Supermarkets often have economy brands for soups, spaghetti, etc.

Price Skimming

Charge a high price because you have a substantial competitive advantage. However, the advantage is not sustainable. The high price tends to attract new competitors into the market, and the price inevitably falls due to increased supply. Manufacturers of digital watches used a skimming approach in the 1970s. Once other manufacturers were tempted into the market and the watches were produced at a lower unit cost, other marketing strategies and pricing approaches are implemented.

Serv ice Gap

Gap 1 : Knowledge Gap

Gap 2 : Standard Gap

Gap 3 : Delivery Gap

Gap 4 : Communication Gap

Gap 5 : Service Gap

1. Spreading

Increase Number of Customer

Enlarge Area of Coverage

2. Coverage

Improvement of Call

Improvement of Route and Call Plan

Increase Number of Salesperson

Increase Number of Customer Transaction

Increase Frequency of Transaction

3. Penetration

Increase Value of Transaction

Increase Variant of Product