Notesale: Turn your study into money

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Marketing summary Q4
Chapter 2 – Company and marketing strategy
Developing strategies for growth and downsizing
• Product/market expansion grid
o Ansoff
o Market penetration
▪ Making more sales without changing its original product
▪ Adjustments to its product design, advertising, pricing and
distribution efforts
▪ Broader range of styles, colours and designs for different users
▪ Could also add direct to consumer distribution channels
• Own retail stores
▪ Without changing the product
o Market development
▪ Identifying and developing new markets
▪ Geographical expansion
o Product development
▪ Offering modified or new products
o Diversification
▪ Beyond its current products and markets
o Downsizing
▪ Might abandon products or markets
▪ Firm may have grown too fast or entered area where it lacks
experience
▪ Brands or businesses that are unprofitable

Chapter 9 – New product development and product life-cycle strategies
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Google: the new product “moonshot” factory
o “the googly thing is to launch it early (as a beta product) and then to iterate,
learning what the market wants – and making it great
o when it comes to new product development at google, there are no two-year
plans
o very serious about innovation
New product development strategy
o A firm can obtain new products in two ways
▪ Acquisition
• By buying a whole company, a patent or a license to produce
someone else’s product
▪ Firm’s own new product development
o 90% of new consumer products launched in Europe fail
o why do so many new products fail

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▪ company may overestimate market size
▪ product is poorly designed
▪ might be incorrectly positioned
▪ launched at the wrong time
▪ price too high
▪ poorly advertised
▪ costs of product development are higher than expected
▪ competitors fight back harder than expected
New product development process
o Idea generation
▪ Systematic search for new product ideas
▪ Internal sources
• R&D
• “intrapreneurial” programmes
• “hackdays” days “off” for employees to brainstorm on new
ideas
▪ External sources
• Customers
o LEGO; website where customers can submit their
product ideas
• Competitors
o Buy their products and see how they work
o Watch their ads
• Distributors
• Suppliers
• Other
▪ Crowdsourcing
• Inviting broad communities of people – customers, employees,
independent scientists and researchers, and even the public at
large – into the new product innovation process
• Establish research community
• Companies can use third-party crowdsourcing networks
• Develop extensive innovation networks
o Idea screening
▪ Screening new product ideas to spot good ones and drop poor ones
as soon as possible
▪ Write-up describes a product or a service, the proposed customer
value proposition, the target market and the competition
• rough estimates of market size, product price, development
time and costs, manufacturing costs, and rate of return
▪ R-W-W (real, win, worth doing)
• Is it real?
• Can we win?
• Is it worth doing?
o Answer should be yes to all questions
o Concept development and testing

Product concept is a detailed version of the new product idea stated
in meaningful consumer terms
▪ Concept development
• Create different concepts and test on customers which one is
liked the best
▪ Concept testing
• Calls for testing product concepts with groups of target
consumers
• Ask questions towards consumers
Marketing strategy development
▪ Designing an initial marketing strategy for a new product based on
the product concept
▪ Marketing strategy statement consists of three parts
• Target market
• Planes value proposition; and the sales
• Market share and profit goals for the first few years
Business analysis
▪ A review of sales, costs and profit projections for a new product to
find out whether these factors satisfy the company’s objectives
▪ Review of sales, costs and profit projections
▪ Company uses sales and cost figures to analyse a new product’s
financial attractiveness
Product development
▪ Developing the product concept into a physical product to ensure that
the product idea can be turned into a workable market offering
▪ R&D department and engineering will test 1-2 prototypes
• 3D printing and digital simulations
• computer simulations are replacing conventional approaches
because they are cheaper, quicker and more accurate
▪ products undergo rigorous tests to make sure that they perform
safely and effectively, or that consumers will find value in them
Test marketing
▪ The stage of new product development in which the product and its
proposed marketing programme are tested in realistic market settings
▪ Test its entire marketing programme
• Targeting and positioning strategy, advertising, distribution,
pricing, branding and packaging and budget levels
▪ Controlled or simulated test markets can be used
▪ Panel of shoppers who report all of their purchases in participating
stores
• Shelf placement, price and in-store promotions can be tested
• Television viewing information
▪ Simulated test markets take place in a lab or online
Commercialisation
▪ Introducing a new product into the market
▪ Introduction timing is important
▪ Where to launch the new product
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Single location
A region
National market
International market
o Market rollout over time
Managing new product development
Customer-centred new product development
o New product development that focuses on finding new ways to solve
customer problems and create more customer-satisfying experiences
o Differentiated products that solve major customer problems, and offer a
compelling customer value proposition
o Companies that directly engage their customers in the new product
innovation process had twice the return on assets and triple growth in
operating income of firms that did not
▪ Customer involvement
o E
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Intuit “Design for Delight” (D4D) philosophy
▪ Employees see customers at home and see how they use the product
▪ Deep customer empathy
o LEGO
▪ Observation of children at home
Team-based new product development
o New product development in which various company departments work
closely together, overlapping the steps in the product development process
to save time and increase effectiveness
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it can gain a
dominant position for making up losses in the current later
Maturity stage
o The product life-cycle stage in which a product’s sales growth slows or levels
off
o Many competitors
▪ Some of the weaker competitors already drop out
o Good offense is the best defence
o Consider modifying the market, product and marketing mix
o Modifying the market
▪ Increase consumption by finding new users and new market segments
o Modifying a product
▪ Changing characteristics such as quality features, style or packaging,
or technology platforms to inspire more usage among current
customers to attract new users
o Modifying the marketing mix
▪ New improved services
Decline stage
o The product life-cycle stage in which a product’s sales fade away
▪ Technological advances, shifts in consumer tastes and increased
competition
▪ Keep or get rid of the product
▪ Sell to another company
For PLC strategies and explanations see table 9
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”
• Brands represent consumers’ perceptions and feelings about a product and its
performance – everything that a product or service means to consumers
• Young & Rubicam’s BrandAsset Valutor measures brand strength along four
consumer perception dimensions
o Differentiation (what makes a brand stand out)
o Relevance (how consumers feel it meets their needs)
o Knowledge (how much consumers know about a brand)
o Esteem (how highly consumers regard and respect a brand)
o Brands with strong brand equity rate high on all four dimensions
o Brand must be distinct
o High brand equity provides a company with many competitive advantages
• Brand value is total financial value of a brand
• Powerful brand forms the basis for building strong and profitable customer
relationships
o Customer equity
o Brand equity should build loyalty from customers
• Building strong brands
o Brand positioning
▪ Attributes
▪ Benefits
▪ Beliefs and Values
• “love, sleep and play”
• emotions, successful brands engage customers on a deep,
emotional level
• focus on inner child
• promise must be simple and honest
o Brand name selection
▪ Selection
• It should suggest something about a product’s benefits and
qualities
• It should be easy to pronounce, recognise and remember
• The brand name should be distinctive

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Brand name

It should be extendable (can expand into other categories
varying from those products the company started with)
• translatable
▪ Protection
• Trademarks
• Patents
• Sometimes names exist already
o Brand sponsorship
▪ Manufacturer’s brand
• Strong promotional programs are needed
▪ Private brand
• Retailer brands
• Advantages of local promotions
▪ Licensing
• Fees need to be paid for licensing
▪ Co-branding
• Occurs when two established brand names of different
companies are used on the same product co-branding offers
many advantages
• Can take advantage of the complementary strengths of two
brands
• Can also have limitations
o Complex legal contracts and licenses
o Brand development
▪ Line extensions
• Occur when a company extends existing brand names to new
forms, colours, sizes, ingredients or flavours of an existing
product category – low-cost, low-risk
▪ Brand extensions
• Extending an existing brand name to new product categories
• Starbucks
o Teavana
• Gives a new product instant recognition and faster acceptance
▪ Multi-brands
• Many different brands in a given product category
• Way to establish different features that appeal to different
customer segments, lock up more reseller shelf space, and
capture larger market share
▪ New brands
• Toyota created separate brand Lexus
Product category
Existing
New
Line extension
Brand extension
Existing
New

Multi-brands

New brands

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Managing brands
o Brand’s positioning must be continuously communicated to consumers
o Advertising campaigns can help create name recognition, brand knowledge,
and perhaps even some brand preference
o Brands are not maintained by advertising but by customers’ brand
experiences but by customers’ engagement with brands and customers’
brand experiences
o Everyone in the company has to live the brand
o Do internal brand building with employees
o Companies need to periodically audit their brands’ strengths and weaknesses

Chapter 19 – The global marketplace
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Coca-Cola in Africa
Global marketing today
o Global firm
▪ A firm that, by operating in more than one country, gains R&D,
production, marketing and financial advantages in its costs and
reputation that are not available to purely domestic competitors
o Major international marketing decisions
▪ Looking at the global marketing environment
▪ Deciding whether to go global
▪ Deciding which markets to enter
▪ Deciding how to enter the market
▪ Deciding on the global marketing programme
▪ Deciding on the global marketing organisation
Looking at the global marketing environment
The international trade system
o Tariffs and duties
▪ EU import duties on Chinese solar panels
▪ China’s reaction: higher tariffs on wines coming from Europe
o Non-tariff trade barriers
▪ Biases against its bids, restrictive product standards or excessive hostcountry regulations or enforcement
▪ Walmart in India would have to purchase their goods from sellers
nearby (30% but it’s not possible)
• Walmart is now looking for partner
o The World Trade Organisation
▪ General Agreement on Tariffs and Trade (GATT) established in 1947
and modified in 1994, was designed to promote world trade by
reducing tariffs and other international trade barriers
▪ WTO replaced GATT in 1995
▪ Doha Round
▪ Covers trade in agriculture and a wide range of services, and
toughened the international protection of copyrights, patents,
trademarks and other intellectual property
▪ Main task is reducing tariffs and other international trade barriers
o Regional free-trade zones

Free-trade zones or economic communities
• A group of nations organised to work toward common goals in
the regulation of international trade
• European Union (e
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) forms in 1957
o Reducing barriers to the free flow of products, services,
finances and labour among member countries and
developing policies on trade with non-member nations
o 28 member countries
▪ more than half a billion consumers and
accounting for almost 20% of the world’s
exports
▪ Euro crisis
o NAFTA (North American Free Trade Agreement) among
USA, Canada and Mexico
▪ (CAFTA-DR)
• US, Costa Rica, the Dominican Republic,
El Salvador, Guatemala, Honduras and
Nicaragua
o UNASUR (South American Nations)
Economic environment
o First economic factor
▪ Country’s attractiveness as a market: its industrial structure
o Subsistence economies
▪ Simple agriculture
▪ Offer few market opportunities (many African countries fall into this
category)
o Raw material exporting economies
▪ Are rich in one or more natural resources but poor in other ways
▪ Revenue comes from exporting these resources
▪ Market for large equipment, tools and supplies and trucks
o Emerging economies (industrialising economies)
▪ Fast growth in manufacturing results in rapid overall economic growth
▪ BRIC
▪ Industrialisation typically creates a new rich class and growing middle
class, both demanding new types of imported goods
▪ More developed markets stagnate and become increasingly
competitive, many marketers are now targeting growth opportunities
in emerging markets
o Industrial economies
▪ Major exporter of manufactured goods, services and investment
funds
▪ Large middle class make them rich markets for all sorts of goods
o Second economic factor
▪ Its income distribution
o E
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Brazil where the gap between income is huge, Nestle adapted it to
Brazilian market
Political-legal environment
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International buying
Government bureaucracy
Political stability
Monetary regulations
How open and supportive governments are depends on the countries policies
and mentality
Cultural environment
The impact of culture on marketing strategy
o Two bad examples where Burger King portrayed the goddess Lakshmi atop a
ham sandwich that it is sacred but Hindus are vegetarian and felt really
offended at their core
o Another example is Nike having a somewhat Kung-Fu themed ad with
Michael Jordan
o IKEA set a positive example by making IKEA to “Yi Jia” which means
“comfortable home” and Chinese people are hanging out at IKEA often times
The impact of marketing strategy on cultures
o “Americanisation”
▪ world is influenced by Hollywood, McDonalds, American music
• “McDomination”
▪ it seems that everything is directed to the USA
o In contrast, Americans are also influenced by soccer etc
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Deciding which markets to enter
o Start small
o How many countries to market in
o Possible global markets should be ranked on several factors, including market
size, market growth, the cost of doing business, competitive advantage and
risk level
o Goal is to determine the potential of each market, using indicators (see table
19
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