Setting the Product and Branding Strategy - Essay Example

Marketing Management Chapter 14: Setting the product and branding strategy This chapter addresses the issues of the overall product strategy, product and its characteristics, choosing the right product mix, and the role of brand, packaging and labeling. Philip Kotler starts with the definition of product, different from the common perception of good or service. Product is just anything that can be offered to a market and is able to satisfy a want or need. Product can be thought about within the framework of five product levels: core benefit, basic product, expected product, augmented product and potential product. Depending on the market and product characteristics, the competition takes place at one of the product levels. Six levels of product hierarchy with relation to certain other products are described and few possible classifications of the products listed. A notion of product mix, or assortment, is introduced and defined as a combination of all the products offered by a particular market player to its customers. It is characterized by the width, length, and consistency. Product line decisions are important for the product strategy and should be based on product-line and market analysis, considering optimal product-line length and issues of modernization, featuring and pruning. The second part of the chapter is devoted to the brand and brand decisions. Brand is a complex symbol; it identifies certain products and distinguishes them from the competition in the mind of the customer and in the marketplace. Building brand identity is extremely important as it allows the company to increase the differentiation of its products and receive price premiums. Building brand identity requires decisions on the brand's name, logo, colors, tagline, and symbol. Brand strategy decision includes choice between functional, image and experiential brand, and brand development and repositioning. Packaging and labeling are also important parts of the overall product strategy. Chapter 15: Designing and managing services This chapter is devoted to the marketing and management of services. It is of relevance not only for the companies of the rapidly growing service sector but also for the goods-producing services that use service differentiation. A service is defined as an essentially intangible act or performance that one party offers to another without transfer of the ownership of anything. Services can be classified as equipment-based or people-based; requiring client's presence or not; targeting personal or business need; based on the type of the service provider. Four main characteristics of the services are intangibility, inseparability, variability, and perishability. They influence significantly the development and implementation of the marketing strategies for the service firms and pose certain challenges. Marketing strategy elements for the services, besides traditional four Ps, include also people, physical evidence and process. Three main tasks the marketing of services should fulfill are differentiation of the offer from the competition, effective management of the service quality, and improving the employees' productivity. For goods-producing companies marketing of services is important while they sell not only the physical products but the product support services as well. The company should manage its product's life-cycle cost, and meet or exceed the customers' expectations. The offered services may be of several types: facilitating services (e.g. installation, financing, training), value-augmenting services (e.g. product warranties, trade-in allowances), postsale services (maintenance, repair etc.). The recent trends in the product support service include "service unbundling", accumulation of the maintenance services and outsourcing them to the third parties, increasing role of call centers and customer service representatives, and extended warranties. Chapter 16: Developing price strategies and programs This chapter looks in deep into price element of the marketing mix. It is of high importance as it determines the customers' perception of a particular product, influences their purchase intentions and the overall market position of the product. Moreover, it is the only "one element of the marketing mix that produces revenue" and is controlled by the company. For every new product in the assortment the company has to set a price and find a right positioning with regard to price-quality strategy. Setting pricing policy includes six consequent steps: selecting the pricing objective; determining demand; estimating costs; analyzing competitors' costs, prices, and offers; selecting a pricing method; and selecting the final price. The pricing methods use demand or supply bases and include markup pricing, target-return pricing, perceived value pricing, going-rate pricing, auction-type pricing, group pricing etc. Companies rarely establish single price, usually they establish a pricing structure which takes into account the market characteristics and the strategic objectives of the company. There is a number of price-adaptation strategies, including geographical pricing, price discounts and allowances, promotional pricing, discriminatory pricing and product-mix pricing. Sometimes companies find themselves in the situations when initiating or responding to price changes is necessary. In such a situation three major factors should be considered: the customers' response, competitors' response and probable duration of the change. Chapter 17: Designing and managing value networks and marketing channels The chapter tackles the increasingly important issue of managing the value networks and marketing channel systems. It starts with definition of these two categories. A value network, term that is progressively replacing the supply chain notion, is a system of partnerships and alliances that a firm creates to source, augment, and deliver its offerings. Marketing channels - sets of interdependent and interconnected organizations that are involved in the process of making the product available to the customer and overcome time, place and possession gaps - have high degree of importance because they influence all the rest of marketing variables. Depending on the number of levels they have there are zero-level channels (in case of direct selling to the customer), one-, two- and three-level channels. Marketing decisions with regard to marketing channels can be divided into two major groups: channel-design decisions and channel-management decision. Channel-design decisions take place when a company enters a new market or introduces a new product. The choice of particular channels and a preference of push strategy or pull strategy is a major decision to be made is. Four stages of channel-design include: analyzing customer needs, establishing channel objectives, identifying major alternatives, and evaluating them. Channel-management decisions should be made starting from channel-design choice and throughout the time of company's operation in a particular market. They include selecting, training, motivating, and evaluating channel members, and modifying the channel arrangements. Marketing channels do not constitute a fixed system, they change over time. Three most important recent trends include development of the vertical, horizontal, and multichannel marketing systems. Chapter 18: Managing retailing, wholesaling, and market logistics Chapter 18 addresses the topic of the marketing strategies for retailers, wholesalers, and logistics organizations. These companies are often considered to play solely the role of the go-in-betweens in the market. However, they often exercise strong power over the manufacturers and deploy the marketing strategy and tools as well as consumer-goods, industrial producers or service companies. Retailing is a set of activities aimed at selling the product to final consumers for their personal use. There is an overwhelming variety of the retailer store types, including specialty stores, department stores, supermarkets, off-price retailers etc. Nonstore retailing exists as well and encompasses network marketing, direct marketing, automatic vending, and buying service. With regard to the breadth of the product line and value-added offered, retailers can choose one of four positioning strategies: Bloomingdale's, Tiffany, Sunglass Hut, or Wal-mart. Major aspects of the marketing decisions concern choice of the target market, product assortment and procurement, atmosphere created at the store, place and promotion. Wholesaling, on the other hand, includes all the activities that are involved in selling the product not to the final consumer, but to those who buy it to resell or utilize for business purposes. Wholesaling takes place when the wholesaler is more efficient than the manufacturer in performing one or more of the key functions. Marketing decisions include target market, product assortment, price, place, and promotion. Marketing logistics organizations make profit by offering infrastructure planning to meet demand and assuring physical flows of materials and finished goods from point A to point B as needed by the customer. Chapter 19: Managing integrated marketing communications Marketing communication is not simply about informing the customer and persuading to buy a particular product, it is the increasingly seen as an interactive process between the company and its customers during the preselling, selling, consuming, and postconsuming stages. It is a viable marketing tool and a very important factor determining the company's performance. Five major communication platforms include advertising, sales promotion, public relations, personal selling, and direct marketing. For developing effective communication with the customers it is important to understand the main stages of the communication process, and the major obstacles for receiving the intended message. Eight-step process of communications development is as follows: Identifying the target audience; Determining the objectives of communication; Designing message; Selecting channels; Establishing budget; Deciding on appropriate media mix; Measuring results; Finally, managing integrated marketing communications. Integrated marketing communications is a concept of marketing communications planning that recognizes the added value of an integrated plan. Its target is to provide clarity, consistency, and achieve maximum impact. Chapter 20: Managing advertising, sales promotion, public relation, and direct marketing The chapter expands on the topic of marketing communications and addresses the theoretical and practical aspects of four major promotional tools. Advertising is widely used promotional tool which can be defined as promotion of products or ideas, which is paid for and nonpersonal. Advertising programs are called "the five M's" which stand for Mission, Money, Message, Media, and Measurement. The advertising programs are often managed by client companies jointly with the advertising agencies that aim at increasing their clients' overall communication effectiveness. Sales promotion is basically an offering of an incentive to buy. It includes a variety of tools, mostly short-term, designed to stimulate quicker or greater purchase by consumers or incentivize trade. These tools can be grouped into three major types: consumer promotion (samples, coupons, prize drawings, POP-materials, demonstrations); trade promotion (advertising and displays allowances, discounts and free goods); business and sales-force promotion (contests, trade shows). Company's PR has a wider target audience, it intends to influence any group that has an actual or potential interest in company or can influence its performance. PR includes different programs developed to promote or protect an image of a company or its products. Major decisions are establishing the objectives, choosing the messages and corresponding vehicles, implementing the program and evaluating it. Crux of the direct marketing is the elimination of the middlemen and selling goods and services directly to the customers. Chapter 21: Managing the sales force Salesmen represent the company in the eyes of its customers; therefore, good and effectively managed sales force can be considered a valuable promotion tool. Sales representatives carry out a variety of important tasks, including prospecting, targeting, communicating, selling, servicing, information gathering, and allocating. Sales representative can act as a deliverer, order taker, missionary, technician, demand creator, or solution vendor depending on type of selling. The process of designing the sales force starts with definition of the sales force objectives and formulation of the strategy. Then the decision about the sales forces structure (major types are territorial, product, market, and complex sales structures) is made. Afterwards the management should decide on size of the sales force and level of compensation provided. The consequent on-going process of managing the sales force encompasses recruiting and selecting sales representatives, training them, supervising, motivating, establishing norms with regard to number of customer calls, and evaluating salesmen performance. A good sales representative has a firm grasp of the three fundamental principles of personal selling. First principle is professionalism and mastering the techniques of the sales- and customer-oriented approach. The salesmen should demonstrate professionalism during each of the seven steps prospecting and qualifying, preapproach, approach, presentation and demonstration, overcoming objections, closing, and follow-up. Two other aspects are effective negotiation and relationship marketing. Chapter 22: Managing the total marketing effort This chapter shifts the focus from the marketing strategy and the elements of marketing program to administration of the marketing activities within the company. Nowadays, dynamic changes of the business environment are reflected in changes in the company organization. The most distinct recent trends are reengineering, outsourcing, benchmarking, supplier partnering, customer partnering, merging, globalizing, flattening, focusing, and empowering. The marketing department evolved throughout the time as well. It started as a simple sales department and through the consequent stages (sales department with marketing functions, separate marketing department, modern marketing department, effective marketing- company) developed into process- and outcome-based company. Although marketing departments may significantly differ from each other, they all can be grouped into several categories based on the type of the department organization: by function, by geographic area, by products, or by customer markets. Marketing department is not an isolated entity within the company; it closely relates to the rest of the departments. Building a companywide marketing orientation is a difficult but rewarding task. It involves, besides the rest, dedication on the corporate level, involvement of the strong marketing talent, shift from a department focus to a process-outcome focus, empowerment of the employees, change in the reward measurement and system and many more. Besides strong marketing strategy, effective implementation and control are essential for achieving the desired goals. What and why of the strategy should be complemented by who, where, when, and how of the marketing implementation, and then by annual plan, profitability, efficiency, and strategic control. Read More