Marketing Strategy in Service Business - amegaro@unisa.it - Programme • Marketing and Service Marketing: an overview • Marketing plan • Complexity management • New approaches: Relationship Marketing and Many-to-Many network; Experiential marketing; Unconventional marketing • Service Theories: from S-D logic & Service Science to service ecosystems & service systems • Technologies as Decision Support Systems for marketing strategies Case studies Examples Project work Agenda: Lesson 2 • Operational marketing Examples Operational Marketing & The 4 Ps 2.1 Marketing Mix is the set of decisions concerning the kind of product, the kind of packaging, the price, the place, the communication that are the marketing variables controllable by firms, the 4 Ps. PRODUCT PRICE PLACE PROMOTION Marketing Mix N.B.= marketing mix decisions should comply with a «dual coherence» between: • Internal (between the different single «Ps»); • External (coherent with positioning and corporate image). A product is everything that can be offered to consumers to satisfy their needs. It can be a physical object and can involve people, places, institutions, ideas. Products should comply with firm’s proposal to satisfy the need of buyers. Packaging, visual identity, brand, accessories (1) Product Ingredients, components, raw materials, shape (service: equipment, structures for delivery) Basic attributes Other attributes It depends on market and product’s vision and strategies  commodity or convenience goods: mass consumers goods (water, pasta, bread and food sector in general) highly replaceable and low price  luxury goods (exclusive cars, high quality fashion): targeted at market niches or at consumers with high spending capacity Different targeting, different products  shopping goods: products devoted to customers with medium spending capacity and that requires careful evaluation (professional services, travels, services not easily replaceable) Example: Pasta Market To be effective, the brand should have the following features: - Originality - Ease of pronunciation - Memorability - To be translatable in other languages - Coherence with the product The Brand It is a name, a symbol, a picture, a logo or a combination of these elements to identify products and services of one or more suppliers to distinguish them from competitors’ products. DistributorsProducers Manufacturer brand Retail brand The Brand “A brand is a customer experience represented by a set of images and ideas; it often refers to a symbol such as a name, logo, slogan, and design scheme. Brand recognition and other reactions are created by the accumulation of experiences with the specific product or service, both directly relating to its use and through the influence of advertising, design, and media commentary.” (American Marketing Association) The main goals of branding The main goals of branding • Protection and rights; The main goals of branding • Identification of producers • Awareness • Association with the level of quality of the product • Differentiation from other products (or from different products of the same company but characterized by a different marketing mix); • Possibility for the customer to make comparisons with other products; • Impact on consumer’s behaviors; • Opportunity to retain customers. The main goals of branding The expressive capacity of the brand: Brand identity: incorporates all the elements used by the company to convey the characteristics of the brand to the market, such as name, logo, mission, know-how, products, prices, advertising and relationship with stakeholders. It corresponds to the desired image. Brand image: refers to the perception that consumers have of the brand, regardless of the company's will. It corresponds to the perceived image. The main goals of branding The Brand identity is the set of expressive elements used by the company to communicate with consumers, a set of unique associations that the company aspires to create and maintain. It expresses the way in which the company presents itself to consumers and represents the way in which it intends to be perceived by the market. The main goals of branding The payoff (also tagline) is a short phrase associated with a company logo. It completes its identity, defines the brand and makes it recognizable and consistent. The payoff is an expression that reflects the identity of the brand; it tends to be catchy and easily memorable. The main goals of branding The claim, or slogan (also headline) is an expression linked to a single advertising campaign and can serve to express certain qualities of a product, the values of a company or to distinguish the brand from its competitors, but is then abandoned/neglected at the end of the campaign in favor of a new claim, which will accompany the next one. The main goals of branding The brand image summarizes the brand positioning, personality and reputation and affects the purchasing behavior of consumers. For companies, it is necessary to consider to analyze and enhance it, to allow a positive attitude towards the brand and brand loyalty. Product Lifecycle BCG Matrix Two main tools (1) Product Lifecycle DEMAND TIME Introduction Growth Maturity Decline Revitalization Product Lifecycle High decrease in sales and profits. Slow sales growth and negative economic results due to the huge expenses. Development Introduction Maturity Rapid market acceptance, with improved profits Product acceptance by potential buyers which leads to stabilization of sales and profits. Sales development deriving from changes: • in the offer (new uses of product, quality improvements, expansion of the range, introduction of accessories, etc.; • In the demand (new needs satisfied with the product, new market segments, new channels, new consumer habits, new trends in users’ needs). Revitalization Decline Decline Product Lifecycle: Implications DEMAND Introduction Growth Maturity TIME Low High Negative Early Adopters Few Rising Rising Medium Innovators Increasing Stable Stable Low Low High Decreasing Majority Laggers Descending Reduction DeclineMaturityGrowthIntroduction (2) BCG Matrix Question MarkStar Cash cow Dog (2) BCG Matrix (2) BCG Matrix Relative market share (2) BCG Matrix Market growth rate (2) BCG Matrix (2) BCG Matrix (2) BCG Matrix Cash cow (2) BCG Matrix Dog (2) BCG Matrix Star (2) BCG Matrix Question mark (2) BCG Matrix: an application Relative market share Marketgrowth (1+2) BCG Matrix & Product Lifecycle It is the “measure” of the main effort sustained by consumers to satisfy their needs. (2) Price N. B. It is the “P” more influenced by external factors (competition in the sector) and that depends on the company's ability to manage the other three variables. There are no standard procedures to settle prices, but there are three different orientations that price policies: • Profit-oriented goals; • Sales-oriented goals. Price decisions are based on the long-term, since they refer to the phase of introduction and can influence the price throughout the entire lifecycle. There are two main strategies: Proposal of a price lower than competitor’s products Proposal of a price higher than competitors’ products New product’s Price PENETRATION PRICING SKIMMING PRICING Price higher than market’s expectations • High unit contribution margin; • Low number of early consumers. Suitable products: innovative The firm can keep on establishing high prices SKIMMING POLICY Price lower than market’s expectations • High volumes of sales; • Reduced contribution margin; • High number of early consumers. Suitable product: goods not differentiated from technical viewpoint, with higher competition and consumers with high price sensitivity. Over time, price is stable but contribution margin increases. PENETRATION POLICY The firm can choose to reduce prices when attractive segments lose their potential and can be re-targeted at broader segment New product’s Price 1,19 € 0,67 € 0,95 € Example: Pasta Market 1,80 € The main activities of distribution are: • Deposit at the end of the production process; • Transport; • Support transactions with customers; • Promotion and information communication with the customer; • Selection, assembly, packaging and adaptation of the product in the final phase of delivery to the customer; • Negotiation of the conditions of sale; • Execution of after-sales services (assistance, guarantee, maintenance); • Acquisition and management of the financial resources necessary to carry out the activities. (3) Place: Distribution Distribution channels are a «set of institutions that perform the complex activities needed to deliver and transfer the product, with the related property right, from producers to consumers» Distribution channels permit firms to reach their market. The decisions related to distribution concern the definition of the activities that organizations carry out directly and indirectly. Direct channel Indirect channel Activities are managed without engaging external actors Producers reach consumers directly. (e.g. selling on catalogue, by phone, through emai) Some activities are entrusted to third parties. Every stakeholder engaged in one of the activities performs a different step of distribution channel. The more individuals are engaged, the more the number of intermediate phases in the channel increases. The composition of Channels Producer Producer Producer Producer Consumer Retailer Consumer Consumer Consumer Retailer Retailer Stockist Stockist Agent DIRECT CHANNEL SHORT INDIRECT CHANNEL LONG INDIRECT CHANNEL Distribution Channels Example: Pasta Market Producer Retailer Consumer SHORT INDIRECT CHANNEL Large-scale distribution •Hypermarket: more than 2,5 m² •Supermarket: from 400 m² too 2.500 m² Retailers for commodity goods less than 100 m² Traditional point of sales The source/ sender (a firm or an organization) develops a message (e.g. an advertising campaign) and send it through given means of communication (television, press, front-office employees, sales staff etc. ) to the recipients (target-market). (4) Promotion: Communication Sender Encoding Sender Decoding NOISE Receiver CodeCode ChannelMessage Message Response Context of Sender Context of Receiver 1. Selection of Receiver 2. Selection of communication goals 3. Development of strategic planning Communication Strategy 4. Budgeting 5. Development of the message 6. Selection of media 7. Programming times and modalities of action 8. Definition of the standards for performance monitoring 9. Evaluation of effectiveness • existing consumers • potential consumers • acquired consumers • competitor’s consumers • suppliers • shareholders • employees • Salespersons • intermediaries • public institutions • public opinion 1. Selection of Receivers In the target market Other receivers-stakeholders (with different roles in the buying process) Communication Strategy Depending on TARGET: • Encourage the demand • To inform the market • Persuade consumers to buy (to guide users’actions by indicating addresses, phone number, etc.) • To create or to strengthen the image of a brand/ product • To boost the institutional image of a brand To enhance the effectiveness of strategies, goals should be: • measurable • based on market research • addressed to a defined target • realistic • coherent with marketing plan • supervised periodically 2. Selection of Communication Goals Communication Strategy 3.Development of Communication Plan (Strategy) • Main goals related to the total strategy • Integrated set of communication forms for each stakeholders • Selection of the concept (creative idea) that should lead the content of the message • Selection of communication means and vehicles for each target Communication Strategy 4. Budgeting 5. Development of Communication Mix Strategy • Advertising • Sales Promotion • Public Relations • Sales persons (front-office employees) 6. Development of the Message Content based on: • target and marketing goals (tone of voice) • brand strategies (reputation, image, identity…repositioning) • stage of product’s lifecycle Communication Strategy • 8. Programming of times and modalities • 9. Definition of standards for performance monitoring • 10. Evaluation of effectiveness Specific measurable vehicles (newspaper, radio channel, television channel, websites) 7. Selection of Media Based on: • The kind of product • The features of market • The characteristics of communication Forms (advertising, sales promotion, P.R., salesperson) General means (television or press) Communication Strategy The set of forms (means, instruments) through which businesses can realize communication ADVERTISING SALES PERSON SALES PROMOTION PUBLIC RELATIONS Communication Mix • The nature of product • The analysis of target market (size of market and geographical location) • Phase of the product’s lifecycle Communication Mix: main criteria push (targeted at retailers, and/or at sales personnel) • Channel strategies: pull (targeted at final consumers) SALES PROMOTION •Mass communication •Impersonal •Targeted at consumers and retailers •For product revitalization in the phase of maturity or decline or to enhance users’ loyalty •Standard message •Rapid effectiveness •Nonconstant message •Absence of direct feedback Communication Mix Lever Man features of communication Pros Cons ADVERTISING •Mass communication (high size market). •Impersonal •For commodity goods in the phase of introduction •Targeted at consumers. •Standard and measurable message •Absence of direct feedback •High general costs Communication Mix Levers Salespersons •Focused one-toone communication •Personal •Usually for manufacturing goods •Targeted mainly at consumers (retailers, too) •Direct feedback •High costs per contact. Communication Mix Lever Man features of communication Pros Cons Public relations •Mass communication. •Impersonal. •Srengthen brand image. •No direct costs • Reliability of message •No direct feedback •Not controllable/ measurable message Communication Mix Levers Age Breakdown (Social media users) Brand strategic objectives Brand personality Real communication and visual signals: Brand Identity FIT Media Planning Off-lineOn-line • To enhance the exposure to brand’s messages; • To raise traffic on official «traditional» media (website, online and offline stores, blogs, social networks, applications, magazines, brochures, etc..); • To encourage and monitor (?) Word-of-mouth. • Receivers/Stakeholders: TARGET WHY? WHAT? TO WHOM? • To check performances: measurement HOW?• Communication mix: FORMS- MEANS- VEHICLES WHERE? WHEN? Media Planning • Goals: DESIRED EFFECTS • Content: Tone of voice • Geographic context • Timing WHICH RESULTS? The intensity and the extensiveness can vary based on the kind of platform selected and on the target Social Media Plan Antonietta Megaro amegaro@unisa.it THANK YOU. Questions? Comments?