ANAS HIDAYAT, DRS, MBA, PHD
ANAS HIDAYAT, DRS, MBA, PHD Grading • Grade % A 90-100 A- 85-90 B+ 80-84 B 75-79 B- 70-74 C+ 65-69 C 60-64 C- 55-59 D 45-54 F less than 44 E Not Complete Task Schedule Meeting 1 Cultural Understanding in Business Meeting 2 Service development Meeting 3 Price Strategy Meeting 4 Distribution Strategy Meeting 5 Retailing Meeting 6 Integrated Marketing Communication Paperwork & Midterm • An individual Paper 25 % A review of marketing’s role in business strategy • An individual Paper 25 % Evaluation or developing marketing plan for a real company • Take home exam (an individual task) 30 % Developing IMC for a real company Attendance and discussion • Be active in class and in discussion 20 % Company have shifted gears from managing product portfolios to managing customer portfolios. Compiling databases on individual customers so they can understand them better and construct individualized offerings and messages They are doing less products and services standardization and more niching and customization They are replacing monologues with customer dialogues They also concerned with the ethical and social implications of their marketing decisions The first edition of Marketing Management, published in 1987, introduced the concept that companies must be customer and market driven •Marketing Departments •Senior Managements •Other Departments •Communications •Product & Services •Channels Integrated Marketing Internal Marketing Holistic Marketing Performance Marketing •Sales Revenue •Brand & Customer Equity •Ethics •Environment •Legal •Community Relationship Marketing •Customers •Channel •partners Development in Marketing • 1950s Consumer Marketing • 1960s Industrial Marketing • 1970s Societal Marketing • 1980s Service Marketing • 1990s Relationship Marketing • 2000s New Media Marketing The Best Product Product Leadership Operational Excellence The Best Total Cost Customer Intimacy The Best Total Solution Three basic values of companies’ competitive advantage The Scion Web Site Consumers can now customize the car they want to purchase Values Driven Values Driven Customers • Product Driven Market Driven Norms Bases Moral Base Customers • Power Base Ethical Base Behavior/Business Natures •Competency •Transformational •Rights Contribution Customers • •Exploitation •Profit Taking •Mislead Rights •Friendship •Transactional •Rights protections Motivation of life • Need for survive: self of existence • Need for achievement : Self Actualization • Need for Ibadah: Mission Accomplishment MODIFIED Mc FARLAND’S MOTIVATION Need for Ibadah Need for Achievement Need for Survive Mission Accomplishment Self Actualization Self Existence Modified Maslow’s Hierarchy of Needs Need for Ibadah •Mission Accomplishment Societal Mission/Khalifah •Self Actualization Need for Achievement •Esteem Self Mission/Ksatria •Social/Belongingness •Safety Need for Survive •Physiological Need No Mission/Sudra 3 Tipe Wirausaha Wirausaha untuk Survival Needs for existence Wirausaha untuk Sukses/Berprestasi Needs for actualization Wirausaha untuk Ibadah Needs for Ridlo Allah SWT Wirausaha untuk Survival • Mencari Jati Diri (Self Existence) • Orientasi Jangka Pendek • Menekankan pada Outcome • Product orientation • Profesionalisme rendah • Profit Taking • Low culture: Exploitation Wirausaha untuk Sukses/Berprestasi • Mencari Aktualisasi Diri (Self Actualization) • Orientasi Jangka Menengah • Menekankan pada Process • Service orientation • Profesionalisme Tinggi • Win-Win Solution • medium Culture: Friendship Wirausaha untuk Ibadah • Mencari Ridlo Allah SWT (Mission Accomplishment) • Orientasi Jangka Panjang • Menekankan pada Process • Halal dan Thoyib Orientation • Profesionalisme Tinggi • Win-Win Negotiation • High Culture: Taking Care Need for survive Needs for actualization Needs for Ridlo Allah SWT Subculture ads appeal to shared beliefs, values, and norms Slogan of Businesses Today We don’t sell products but we help to solve your problem Service in Businesses Manufacturers, distributors and retailers are providing value added services or excellent customer services to differentiate themselves The Nature of Services Tangibility Spectrum Salt Soft Drinks Detergents Automobiles Cosmetics Fast-food Outlets Tangible Dominant Fast-food Outlets Intangible Dominant Advertising Agencies Airlines Investment Management Consulting Teaching Any act or performance one party can offer to another that is essentially intangible and does not result in the ownership of anything Its production may or may not be tied to a physical product Government sectors: courts, employment services, hospitals, police services, fire departments, schools, regulatory services Non-profit sectors: museums, charities, churches, foundations, hospitals A good part of the business sectors: airlines, banks, hotels, insurance companies, law firms Workers in the manufacturer sectors: legal staff, accountants, computer operators Level of Customer Contact with Service Organizations HIGH • Nursing Home • Haircut• Management Consulting • Four Start Hotel • Good Restaurant • Telephone Banking • Car Repair •Airline Travel • Dry Cleaning • Motel • Fast Food • Subway • Movie Theater • Insurance • Cable TV • Internet Banking LOW • Internet Based Services Challenges for Services • Defining and improving quality • Communicating and testing new services • Communicating and maintaining a consistent image Challenges for Services • Motivating and sustaining employee commitment • Coordinating marketing, operations and human resource efforts • Setting prices • Standardization versus personalization Level of Customer Contact with Service Organizations HIGH • Nursing Home • Haircut• Management Consulting • Four Start Hotel • Good Restaurant • Telephone Banking • Car Repair •Airline Travel • Dry Cleaning • Motel • Fast Food • Subway • Movie Theater • Insurance • Cable TV • Internet Banking LOW • Internet Based Services Differences between Goods and Services Intangibility Inseparability Cannot be seen tasted, felt or smelled before purchasing From the provider Variability Depends on who provides and under what conditions Services Perishability Cannot be stored for resale or later use Intangibility Bank operation provides the fast bank in services Management show evidence to tangibilize the intangible Through Place, people, equipment, communication material, symbols, price Implications Services cannot be inventoried Services cannot be patented Services cannot be readily displayed or communicated Pricing is difficult Inseparability Implications Barbers cannot give haircut without being present Customers participate in and affect the transaction When clients have strong provider preferences, the provider can raise its price to share its limited time Customers affect each other Employees affect the service outcome Decentralization may be essential Mass production is difficult Strategy exist for getting around the limitation of inseparability, the providers can learn to work with larger groups Variability Implications Because the quality of service depend on who provide them, when and where, and to whom, services are highly variable Service delivery and customer satisfaction depend on employee actions Some firms offer service guarantees to reduce consumer perception risks Service quality depends on many uncontrollable factors Management need to invest in hiring and training procedures, standardizes the service performance, monitor customer satisfaction There is no sure knowledge that the service delivered matches what was planned and promoted Perishability The right services must be available to the right customers at the right places at the right times and right prices to maximize the profitability Doctors charge patients for missed appointments because the service value exist only at the time of the appointment Implications It is difficult to synchronize supply and demand with services Services cannot be returned or resold Marketing Development: Ps & Cs Customer Solution Product Customer Cost Price Marketing Mix Promotion Communication Place Convenience Services Marketing Mix Marketing Mix for Services PRODUCT PLACE PROMOTION PRICE Physical good features Channel type Promotion blend Flexibility Quality level Exposure Salespeople Price level Accessories Intermediaries Advertising Terms Packaging Warranties Outlet location Sales promotion Transportation Publicity Product lines Storage Branding Differentiation Allowances Marketing Development: 7Ps People Processes Product 7Ps Physical Evidence Price Promotion Place Services Marketing Mix Expanded Marketing Mix for Services (continued) PEOPLE PHYSICAL EVIDENCE PROCESS Employees Facility design Flow of activities Customers Equipment Number of steps Communicating culture and values Signage Level of customer involvement Employee research Employee dress Other tangibles Evidence of Service from the Customer’s Point of View Operational flow of activities Contact employees Customer him/herself Other customers People Steps in process Flexibility vs. standard Technology vs. human Process Physical Evidence Tangible communication Servicescape Guarantees Technology Website Listening, to understand what customers really want Reliability, most important dimension of service quality Basic Service, must deliver promise and do what they are supposed to do Service design, to develop a holistic view of the service Recovery, to satisfy customers who encounter a service problem Surprising customers, surprising them with competence, commitment and understanding Fair play, take effort to be fair to customers and employees Teamwork, by improving employee motivation and capabilities Employee research, to conduct research with employees why service problem occur Servant leadership, quality service come from inspired leadership throughout the organization Holistic Marketing in Services Company External Marketing Internal Marketing Employees Interactive Marketing Customers Pricing Inconvenience High Price Location/hours Price Increases Wait for Appointment Unfair Pricing Deceptive Pricing Wait for Service Core Service Failure Service Mistakes Billing Errors Service Catastrophe Service encounter failures Uncaring Impolite Unresponsive Unknowledgeable Response to Service Failure Negative Response Competition Found Better Service Ethical Problems Involuntary Switching Cheat Customer moved No Response Hard Sell Provider Closed Reluctant Response Unsafe Conflict of Interest Gap between consumer expectation and management perception Gap between management perception and service quality specification Gap between service quality specification and service delivery Gap between service delivery and external communications Gap between perceived service and expected service Customer Perceptions of Service Quality and Customer Satisfaction Price means to the consumers, it is the cost of something, and to the seller is revenue-the ultimate source of profit Price is the perceive value that is exchanged for something else Perceived Value of a product means the relationship between the consumer's expectations of product quality to the actual amount paid for it. There are some economists who assert that "value" is always a subjective quality. Value derived entirely from the psychology of market participants. It is often expressed as the equation : Value = Benefits / Price or alternatively: Value = Quality received / Expectations Price is the key to revenues – the lifeblood of an organization Revenue is what pays for every activity – production, finance, advertising so on. What’s left over (if any) is profit Managers strive to charge a price that will earn a fair rate of return on investment To achieve this goal, they must choose the price that is not too high or too low, means that price must equal the perceived value to target consumers • Pricing decisions are really complex and difficult though, many marketers neglect their pricing strategies. • Marketers must take into account many factors in making pricing decision: the company, the customers, the competition, and the marketing environment • Pricing decision must be consistent with the firm’s marketing strategy and its target markets and brand positioning Pricing is not just a number on a tag Price comes in many forms and performs many functions In some way to be price that we pay for goods or services: rent, fees, tuition, fares, rates, tolls, retainers, wage, and commissions Synonyms for Price • Rent • Special assessment • Tuition • Bribe • Fee • Dues • Fare • Salary • Rate • Commission • Toll • Wage • Premium • Tax • Honorarium Most history, prices were set by negotiation by between buyers and sellers One price policy for all buyers is used it because sellers carry out so many items Price has operated as determinant of buyer choice. The result is heavy discounting and sales promotion in market Company do their pricing in a variety of ways Small companies are often set by the boss Large company are handled by division or product line managers Pricing Strategies Penetration Pricing Penetration Pricing Price set to ‘penetrate the market’ ‘Low’ price to secure high volumes Typical in mass market products – chocolate bars, food stuffs, household goods, etc. Suitable for products with long anticipated life cycles May be useful if launching into a new market Market Skimming Market Skimming •Many are predicting a firesale in laptops as supply exceeds demand. •Copyright: iStock.com High price, Low volumes Skim the profit from the market Suitable for products that have short life cycles or which will face competition at some point in the future (e.g. after a patent runs out) Examples include: Playstation, jewellery, digital technology, new DVDs, etc. Value Pricing Value Pricing Price set in accordance with customer perceptions about the value of the product/service Examples include status products/exclusive products •Companies may be able to set prices according to perceived value. •Copyright: iStock.com Loss Leader Loss Leader Goods/services deliberately sold below cost to encourage sales elsewhere Typical in supermarkets, e.g. at Christmas, selling bottles of gin at £3 in the hope that people will be attracted to the store and buy other things Purchases of other items more than covers ‘loss’ on item sold e.g. ‘Free’ mobile phone when taking on contract package Psychological Pricing Psychological Pricing Used to play on consumer perceptions Classic example - £9.99 instead of £10.99! Links with value pricing – high value goods priced according to what consumers THINK should be the price Going Rate (Price Leadership) Going Rate (Price Leadership)) In case of price leader, rivals have difficulty in competing on price – too high and they lose market share, too low and the price leader would match price and force smaller rival out of market May follow pricing leads of rivals especially where those rivals have a clear dominance of market share Where competition is limited, ‘going rate’ pricing may be applicable – banks, petrol, supermarkets, electrical goods – find very similar prices in all outlets Tender Pricing Tender Pricing Many contracts awarded on a tender basis Firm (or firms) submit their price for carrying out the work Purchaser then chooses which represents best value Mostly done in secret Price Discrimination Price Discrimination Charging a different price for the same good/service in different markets Requires each market to be impenetrable Requires different price elasticity of demand in each market •Prices for rail travel differ for the same journey at different times of the day •Copyright: iStock.com Destroyer Pricing/Predatory Pricing Destroyer/Predatory Pricing Deliberate price cutting or offer of ‘free gifts/products’ to force rivals (normally smaller and weaker) out of business or prevent new entrants Anti-competitive and illegal if it can be proved Absorption/Full Cost Pricing Absorption/Full Cost Pricing Full Cost Pricing – attempting to set price to cover both fixed and variable costs Absorption Cost Pricing – Price set to ‘absorb’ some of the fixed costs of production Marginal Cost Pricing Marginal Cost Pricing Marginal cost – the cost of producing ONE extra or ONE fewer item of production MC pricing – allows flexibility Particularly relevant in transport where fixed costs may be relatively high Allows variable pricing structure – e.g. on a flight from London to New York – providing the cost of the extra passenger is covered, the price could be varied a good deal to attract customers and fill the aircraft Marginal Cost Pricing Example: •Aircraft flying from Bristol to Edinburgh – Total Cost (including normal profit) = £15,000 of which £13,000 is fixed cost* •Number of seats = 160, average price = £93.75 •MC of each passenger = 2000/160 = £12.50 •If flight not full, better to offer passengers chance of flying at £12.50 and fill the seat than not fill it at all! •*All figures are estimates only Contribution Pricing Contribution Pricing Contribution = Selling Price – Variable (direct costs) Prices set to ensure coverage of variable costs and a ‘contribution’ to the fixed costs Similar in principle to marginal cost pricing Break-even analysis might be useful in such circumstances Target Pricing Target Pricing Setting price to ‘target’ a specified profit level Estimates of the cost and potential revenue at different prices, and thus the break-even have to be made, to determine the mark-up Mark-up = Profit/Cost x 100 Cost-Plus Pricing Cost-Plus Pricing Calculation of the average cost (AC) plus a mark up AC = Total Cost/Output Influence of Elasticity Influence of Elasticity Any pricing decision must be mindful of the impact of price elasticity The degree of price elasticity impacts on the level of sales and hence revenue Elasticity focuses on proportionate (percentage) changes PED = % Change in Quantity demanded/% Change in Price Influence of Elasticity Price Inelastic: % change in Q < % change in P e.g. a 5% increase in price would be met by a fall in sales of something less than 5% Revenue would rise A 7% reduction in price would lead to a rise in sales of something less than 7% Revenue would fall Influence of Elasticity Price Elastic: % change in quantity demanded > % change in price e.g. A 4% rise in price would lead to sales falling by something more than 4% Revenue would fall A 9% fall in price would lead to a rise in sales of something more than 9% Revenue would rise Steps in Setting Price • Select the price objective • Determine demand • Estimate costs • Analyze competitor price mix • Select pricing method • Select final price Step 1: Selecting the Pricing Objective • Survival: short run objectives with plaguing over capacity, intense competition or changing consumer want • Maximum current profit: Set price that maximize current profit • Maximum market share: Set a higher sales of volumes leads to lower unit cost (Market Penetration Pricing) Maximum market skimming: Price start with high and slowly drop over times Product-quality leadership: premium price with intensively loyal customer base Step 2: Determining Demand • Price sensitivity • Estimating demand curves: measuring using different methods Survey, price experiment, statistical analysis • Price elasticity of demand: marketers need to know how responsive or elastic, demand would be to a change in rice The company wants to charge a price that covers its cost of producing, distributing and selling the products, including a fair return for its effort and risk. Step 3: Estimating Costs • Types of Costs: A company’s cost take two form: fixed cost and variable cost • Accumulated Production: set experience curve pricing focused on manufacturer and marketing cost • Target Costing: Cost change with production scale and experience It is complicated because the competitors can put different interpretations on lower price or a price cut; that the company is trying to steal the market, that company is doing poorly and trying to boost its sales, or the company wants the whole industry to reduce prices to stimulate total demand Step 5: Selecting a Pricing Method • Markup pricing • Target-return pricing • Perceived-value pricing • Value pricing • Going-rate pricing • Auction-type pricing Unit Cost Markup Price = 1-desired return on sale Fixed Cost Unit Cost : Variable Cost + -------------------Unit Sales Desired return X invested capital Unit Cost + Unit Sales $ $ $ $ $ $ $ $ 90,000 is tractor price 7,000 is for durability 6,000 is for reliability 5,000 is for services 2,000 is for services 110,000 values 10,000 discount 100,000 Final Price Caterpillar used perceived value to set prices on its construction equipments Charging fairly low price for a high quality offering It is a matter of reengineering company’s operation to become the low cost producer Type of value pricing is everyday low pricing which take place at the retail level Firms bases its price largely on competitor’s prices Charging the same, more or less than major competitor In oligopolistic industries charge the same price. Smaller firms follow the leader Growing more popular especially with the growth of the internet. E-bay as an example Auction-Type Pricing • English auctions: One seller and many buyers • Dutch auctions: One seller and many buyers or one buyer and many sellers • Sealed-bid auctions: would be supplier can submit only one bid and cannot know the other bids Pricing Must Be Coordinated with Other Factors Pricing Considerations Price Must Be Consistent With Perceptions of the Product Higher Prices Communicate Higher Product Quality Lower Prices Reflect Bargain or “Value” Perceptions Price, Advertising and Distribution must be be Unified Unified In In Identifying the Product Position A Product Positioned as High Quality While Carrying a Lower Price than Competitors Will Confuse Customers © 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin The Marketing System Manufacturers and producers Agriculture and raw materials suppliers Marketing intermediaries Retailers Agents-brokers Wholesalersdistributors End users Consumer Industrialinstitutional Facilitating organizations Financial Transportation Advertising Other Why Use Channel Intermediaries? Without Intermediaries Milk P1 Bread P2 C1 Reducing Transaction Costs ShampooP3 C2 Soap P4 C3 With Intermediaries P1 P2 P3 P4 Wholesaler or Retailer C1 C2 C3 MARKETING CHANNELS Marketing channel: system of marketing institutions that promotes the physical flow of goods and services, along with ownership title, from producers to consumer or business user; also called a distribution channel Channel Function and Flows • Marketing channels performs the work of moving goods from producers to consumers • It overcome the time, place and possession gaps that separate goods and services from those who need or want them Marketing Channels • Marketing intermediary: wholesaler or retailer that operates between producers and consumers or business users; also called a middleman • Wholesaler: marketing intermediary that takes title to goods and then distributes these goods further; also called a jobber or distributor Marketing Channels Manufacturers/producers Agents/brokers Wholesalers/ distributors Retailers Retailers Consumers and organizational end users Types of Marketing Channels •Direct Selling • Direct channel: marketing channel that moves goods directly from a producer to ultimate user • Direct selling: strategy designed to establish direct sales contract between producer and final user Dell Dell Computer: A Direct Seller of Computers Types of Marketing Channels Consumer Goods Types of Marketing Channels Business Goods Services Types of Marketing Channels • Dual Distribution: Network that moves products to a firm’s target market through more than one marketing channel • Reverse Channels: Channels designed to return goods to their producers The Role of Marketing Channels in Marketing Strategy • Channels provide the means by which the firm moves the goods and services it produces to ultimate users – Facilitate the exchange process by cutting the number of contacts necessary – Standardize exchange transactions – Facilitate searches by both buyers and sellers Channel is a Vital Link in the Chain Selecting Selecting Distribution Channel Decisions Managing Managing Motivating Terms and Responsibilities of channel members • Price policy, calls for the producer to establish a price list and schedule of discounts • Conditions of sale, refers to payment terms and producer guarantees • Distributors’ territorial rights, defines the distributors’ territories • Mutual services and responsibilities, must be carefully spelled out especially in franchised and exclusive agency channels • Factors influencing Marketing Channel Strategies Characteristics of Short Channels Market factors Product factors Characteristics of Long Channels Business users Consumers Geographically concentrated Geographically diverse Extensive technical knowledge and regular servicing required Little technical knowledge and regular servicing not required Large orders Small orders Perishable Durable Complex Standardized Expensive Inexpensive Producer factors Competitive factors Characteristics of Short Channels Characteristics of Long Channels Manufacturer has adequate resources to perform channel functions Manufacturer lacks adequate resources to perform channel functions Broad product line Channel control important Limited product line Channel control not important Manufacturing feels satisfied with marketing intermediaries’ performance in promoting products Manufacturer feels dissatisfied with marketing intermediaries’ performance in promoting products Determining Distribution Intensity Distribution intensity: number of intermediaries through which a manufacturer distributes its goods • Intensive distribution: channel policy in which a manufacturer of a convenience product attempts to saturate the market • Selective distribution: channel policy in which a firm chooses only a limited number of retailers to handle its product line • Exclusive distribution: channel policy in which a firm grants exclusive rights to a single wholesaler or retailer to sell its products in a particular geographic area A conventional marketing channel: comprise an independent producers, wholesalers and retailers A vertical marketing system: comprises producers, wholesalers and retailers acting as unified system Vertical Marketing Systems • Vertical marketing system (VMS): planned channel system designed to improve distribution efficiency and cost effectiveness by integrating various functions throughout the distribution chain – Forward integration – Backward integration Types of VMS • Administered marketing system: VMS that achieves channel coordination when a dominant channel member exercises its power • Corporate marketing system: a VMS in which a single owner operates at each stage in its marketing channel Examples of VMS •Corporate VMS Sherwin-Williams make paint but also owns and operates 3,000 outlets •Administered VMS Relies on Distribution programming. Manufacturer establish a department within the company called distributor relations planning Types of VMS • Contractual marketing system: VMS that coordinates channel activities through formal agreements among channel members like: – Wholesaler-Sponsored Voluntary Chains – Retail Cooperatives – Franchises Types of Contractual VMS • Wholesaler-sponsored voluntary chains, wholesalers organize voluntary chains of independent retailers to help them standardize their selling practices • Retailer cooperative, retailer take an initiative and organize a new business entity to carry on wholesaling and some possible of production • Franchise organizations, a channel member called a franchisor might link several successive stages in the production distribution process Goal Incompatibility. An example, set up different price between manufacturers and wholesalers Unclear roles and rights. An example, territory boundaries and credit for sales often produce conflict Logistics Logistics and Supply Chain Management • Supply (value) chain: sequence of suppliers that contributes to the creation and delivery of a good or service – Upstream management – Downstream management The Supply Chain of a Manufacturing Company Physical Distribution • A company’s physical distribution system contains the following elements: – Customer Service – Transportation – Inventory Control – Protective packaging and materials handling – Order Processing – Warehousing Allocation of Physical Distribution Expenditures Major Modes of Transportation – Railroads – Motor Carriers – Water Carriers – Pipelines – Air Freight – Inter-modal Coordination Comparison of Transport Modes Mode Speed Dependability in Meeting Schedules Frequency Availabil- Flexibility of ity in in Shipments Different Handling Locations Cost Rail Average Average Low Low High Water Very slow Average Very low Limited Very high Very low Truck Fast High High Very extensive Average High Pipeline Slow High High Very limited Very low Low Average Average Low Very high Air Very fast High Avera ge Retailing What is retailing? • All the activities in selling goods and services directly to final consumers • ‘…business firms engaged primarily in selling merchandise for personal or household consumption and rendering services incidental to the sale of goods (Rosenbloom 1999, p. 55). Retailing functions • Customer contact • Promotion • Information on customer demands and trends • Breaking bulk and providing assortment • Holding inventory close to the customer – location convenience • Risk taking History of retailing • barter - money-less exchange • peddlers and trading posts • 1700-1900 - industrial revolution – mass production led to the general store • 1852 - first department store in Paris ‘Bon Marche’ • 1880’s - automatic vending machines History of retailing • early 1890’s - speciality stores, chain stores and supermarkets • Post WWII - supply > demand – price cutting - discount stores, variety stores • 1950’s - urban spread and car ownership – suburban supermarkets History of retailing •1980’s - non-store retailing •direct marketing, direct selling •1990’s – e-tailing •clicks and mortar Classifications of Retailers • Store retailing – department store, supermarkets, specialty stores, convenience stores, discount stores, category killers • Non-store retailing – ATM’s, direct selling, direct marketing, vending machines, electronic shopping • Services • Various classifications Classification by ownership • Independent retailers – own and operate only one retail outlet • Chain stores – two or more similar retail establishments that are owned and operated by one firm – 57% of retail sales • Franchises – product trademark – business format Classification by retail strategy • Merchandise width – different product lines (variety) – ie department and discount stores • Merchandise depth – different brands/styles of the same product line – ie speciality stores • Consistency – degree of scrambled merchandising – ie chemists, newsagents Retailer Positioning Breadth of Product Line Broad Narrow Broad product assortment and high value added. Focus on store design, product quality, service & image Narrow product assortment and high value added. Focus on exclusive image, limited volume & high margin Broad line & low value focus on price low, good place, high volume & low margin Narrow line & low value added. Focus on cost, price by buying, merchandising, advertising & distribution Value added Classification by retail strategy Low end v high end retailers •relative emphasis on price and service •differences in retail mix •markets served •location • service levels •price levels •product types •promotional strategy •store design, atmosphere (décor) Low end retailers include • warehouse food stores – Bi-lo, Franklins • variety stores – Best and Less • discount stores – K-Mart, Target • off-price chains – Silly Sollys, Crazy Clarkes • Factory seconds outlets • Weekend markets High end retailers include • Convenience stores • Supermarkets – Coles, Woolworths • Specialty stores • Department stores Type of Retailers • Store retailers • Non store retailers • Retailer organizations Specialty Store. Narrow product line Department Store. Several product lines Supermarket. Large, low cost, low margin, high volume, self service store designed to meet total needs for food and household products Convenience Store. Small store in residential area, often open 24/7, limited line of high convenience products plus takeout Discount Store. Standard or specialty merchandise, low price, low margin, high volume stores. Off Price Retailer. Leftover goods, overruns, irregular merchandise sold at less than retail Superstore. Huge selling space, routinely purchased food and household items, plus services Catalog Showroom. Broad selection of high markup, fast moving, brand name goods sold by catalog at discount. Customers pick up merchandise at the sore Self service Self selection Limited service Full service Direct selling. Doors to doors selling Direct marketing. Direct mail & catalog marketing Automatic vending by machines Buying service. Storeless retailer serving a specific clientele Corporate chain store. Two or more outlets owned and controlled, employing central buying and merchandising and selling similar lines of merchandise Voluntary chain. Wholesaler sponsored group of independent retailers engaged in bulk buying and common merchandising Retailer cooperative. Independent retailers using central buying organization and joint promotion efforts Consumer cooperative. Retails owned by its consumers Franchise organization. Contractual association between franchisors and franchisees Merchandising conglomerate. Corporation that combine several diversified retailing lines and forms under central ownership with some integration of distribution and management Target Market Product Assortment Procurement Prices Services Store Atmosphere Store activities and experiences Communications Location Central business district Regional shopping centers Community shopping centers Shopping strips Location with large stores Brands that retailer or wholesalers develop All activities in selling goods or services to choose who buy for resale or business use Merchant wholesalers. Independently owned businesses that take title to the merchandise they handle Full service wholesalers. Carry stock, maintain sales forces, offer credits, make deliveries & provide management assistance Limited service wholesalers. Cash & carry wholesalers sell a limited line of fast moving goods to small retailers for cash Brokers and Agents. Facilitate buying and selling, on commission of 2 % to 6 % of selling price, limited functions, generally specialize by product line or customer type Manufacturers’ and Retailers’ branches and offices. Wholesaling operations conducted by sellers or buyers themselves rather than through independent wholesalers Specialized wholesalers. The structure of retailing in Australia • diversity of type and size • 40% of GDP (1999) • retail turnover 1997-98 ($134,582 million) – food is major sector ($54,616 million 39.7%) • top ten retailers account for 40% of retail sales • about 170,000 retail establishments • about 1.1 million employees (13.5% of workforce) Retail Marketing Decisions • Who is our target market? • What is our positioning strategy? – Store image • What range of merchandise will we carry? – Product lines (categories), product mix (brands) – Scrambled merchandising • What services will we offer? Retail Marketing Decisions • What will the store look and feel like? – Atmosphere, décor, music etc • What pricing strategy will we use? – Everyday low prices or high/low pricing • Will we offer discounts or payment options – Credit, layby etc. • How will we promote the store? – Message, media, budgets etc. • Where will we locate? • When will we operate? Selecting a retail site • trading area characteristics • affinity • pedestrian & vehicular traffic counts • transportation access/parking • visibility MARKETING COMMUNICATIONS • MARKETER INITIATED TECHNIQUES USED TO SET UP CHANNELS OF INFORMATION AND PERSUASION WITH TARGETED AUDIENCES TO INFLUENCE ATTITUDES AND BEHAVIOR “Promotion” Message and Media • MARKETING COMMUNICATIONS MIX “Tool Box” of Media and Techniques Integration and Coordination Based on Communications Model MAJOR OBJECTIVES OF MARKETING COMMUNICATIONS Informing Persuading Reminding MARKETING COMMUNICATIONS OBJECTIVES • • • • • • • • • • • • • • • Increase Market Penetration Develop Repeat Purchase Behavior Establish Customer Relationships Increase Rate of Consumption Encourage Product Trial Stimulate Impulse Buying Stimulate Demand Differentiate the Product Establish a Product Image Influence Sales Volume Establish, Modify, or Reinforce Attitudes Develop Sales Leads Stimulate Interest Establish Understanding Build Support & Acceptance It’s Google’s World The most powerful brand in the world It’s Google’s World • Founded in 1998 – Delivers relevant search results by favoring pages linked to by other sites – Sells ads linked to search keywords – Annual revenue exceeds $10 billion • Keys to success – Simplicity – Speed – Accuracy Google Adwords • Keyword-targeting advertising – Text ads at top or side of search results – Advertisers compete for top spot – Cost is “per click” (CPC) • Contextual ads – Appear on other relevant Web sites • Site-targeted – Generates sales and branding – Cost is per thousand impressions (CPM) Google Rapidly Expanding • Beyond online search advertising – Automated purchase of radio ads – Magazine and newspaper ad-buying – YouTube – Google TV Ads – Partnership with Nielsen Media Research – New varieties of online ads Rapidly Changing Media Environment • Increasingly difficult to target audiences & communicate effectively – Consumers no longer passive recipients – They demand more than information – From a myriad of sources Integrated Marketing Approach • Traditional mass media – Television, radio, magazines, newspapers, billboards – Now drive consumers to Web sites • Online strategies – Provide detailed information – Be experiential, entertaining, interactive – MySpace, YouTube, Facebook, wireless mobile media devices, e-mail The New Look of Advertising Interactive, Informative, Entertaining Growth of Advertising and Promotion Expenditure in Billions of Dollars Advertising Outside U.S. 2007 1980 U.S. Advertising $0 $50 $100 $150 $200 $250 $300 $350 $400 What is Marketing? • An organizational function • Processes for creating, communicating, and delivering value to customers • Managing customer relationships in ways that benefit the organization and its stakeholders Value Relationship marketing Mass customization Customer relationship management (CRM) The Scion Web Site Consumers can now customize the car they want to purchase Coordinated Marketing Elements Build Image Traditional Marketing Approach Point of purchase Interactive marketing Special events Media Advertising Public relations Direct marketing Publicity Sales promotion Packaging Direct response Contemporary IMC Approach Packaging Sales promotion Point of purchase Publicity Interactive marketing Media Advertising Direct marketing Direct response Public relations Special events Defining IMC IMC is a strategic business process used to plan, develop, execute and evaluate coordinated, measurable, persuasive brand communication programs with consumers, customers, prospects employees and other relevant external and internal audiences. The goal of IMC is to generate short-term financial returns and build long-term brand value. Contemporary Perspective of IMC Recognized as a business process IMC Importance of relevant audience Multiple relevant audiences Demand for accountability and Demand for accountability measurement of outcomes Growing Importance of IMC • Strategic integration of communications functions – Avoids duplication – Synergy among promotional tools – More efficient and effective marketing • Rapidly changing environment – Consumers – Technology – Media Behind the Growing Importance of IMC From Toward Media advertising Multiple forms of communication Mass media Specialized media Manufacturer dominance Retailer dominance General focus Data-based marketing Low agency accountability Greater agency accountability Traditional compensation Performance-based compensation Limited Internet availability Widespread Internet availability The Role of IMC in Branding • Brand identity is a combination of – Name – Logo – Symbols – Design – Packaging – Performance – Image or associations IMC plays a major role in developing and sustaining brand identity and equity The Most Valuable Brands in the World Rank Brand Brand Value (Billions) 1 Coca-Cola $65.32 2 Microsoft 58.71 3 IBM 57.09 4 General Electric 51.57 5 Nokia 33.70 6 Toyota 32.07 7 Intel 30.95 8 McDonald’s 29.39 9 Disney 29.21 10 Mercedes-Benz 23.57 Finding New Ways to Build Brands • Consumers are driving the trend – They view brands as a form of self-expression – They know more about brands and the companies that make them – Cynicism about corporations is at an all-time high – They seek and share information with other consumers via the Internet Finding New Ways to Build Brands • Get consumers involved – Apple Computer lets consumers test products in store – Starbucks positions stores as a community gathering place • Interaction can be the best marketing – MySpace – Facebook – Google Finding New Ways to Build Brands • Get consumers involved – Apple Computer lets consumers test products in store – Starbucks positions stores as a community gathering place • Interaction can be the best marketing – MySpace – Facebook – Google The Promotional Mix Advertising Direct Marketing Interactive/ Internet Marketing Sales Promotion Publicity/Public Relations Personal Selling Advertising • Paid forms of non-personal communication – About an organization, product, service, or idea by an identified sponsor – No feedback from audience – Important for products and services aimed at mass consumer markets – Cost effective The Most Common Forms of Advertising National Advertising Retail/Local Advertising Consumers Primary vs. Selective Demand Advertising Business-to-Business Advertising Professional Advertising Trade Advertising Organizations DEVELOPING AN ADVERTISING CAMPAIGN Design Creative Strategy Select Target Market Determine Advertising Objectives Evaluate Advertising Effectiveness Determine Advertising Budget Select & Schedule Media ADVERTISING STRATEGY • MESSAGE STRATEGIES Objective vs. Subjective Messages Comparative Message Techniques Emotional Techniques: Mood, Fear, Humor Celebrity Endorsements vs. Non-Celebrity Images • MEDIA STRATEGIES Broadcast: Television, Radio Print: Newspapers, Magazines, Journals Specialized: Outdoor, Transit, Direct Mail, Internet ADVERTISING STRATEGY • RELATIVE STRENGTHS AND WEAKNESSES OF STRATEGIES Effectiveness and Efficiency: Reach and Frequency Target Capabilities Cost Believability Appropriateness for Message (Image, Details) EVALUATING ADVERTISING EFFECTIVENESS Pretesting Posttesting Sales Effectiveness Evaluations Tools: •Focus Groups •Screening •Persuasion Scores Tools: •Unaided Recall Tests •Aided Recall Tests •Inquiry Evaluations Tools: •Monitor Sales Direct Marketing • Techniques used to get consumers to make a purchase from their home, office or other nonretail setting – Direct mail, catalogs, mail order, telemarketing, electronic retailing Direct Marketing Direct Mail Direct Response Advertising Internet Sales Direct Marketing Shopping Channels Telemarketing Catalogs Bose Uses Direct Response Advertising Includes call for action. Phone number, mail-in form, website address provided. Interactive/Internet Marketing • Back-and-forth communication – Users participate in and modify the form and content of information – Happens in real time • Interactive media – Internet – CD-ROMs – Kiosks – Interactive television – Digital cell phones Using the Internet as an IMC Tool The Internet Educates or informs customers Obtains customer database information A persuasive advertising medium Communicate s and interacts with buyers A sales tool or an actual sales vehicle Provides customer service and support Builds and maintains customer relationship s Sales Promotion • SALES PROMOTION – Those marketing activities - other than advertising, public relations/publicity, and personal selling - that stimulate consumer purchasing and dealer effectiveness • Displays, shows and exhibitions, coupons, contests, samples Sales Promotion Coupons Samples Premiums Contest/Sweepstake Refunds/Rebates Bonus Packs Trade Allowances POP Displays Training Programs Loyalty Programs Trade Shows Events Coop Advertising Consumer-oriented Trade-oriented [For end-users] [For resellers] Sales Promotion • Most of the promotional budget now goes to sales promotion – Declining brand loyalty – Increased consumer sensitivity to “deals” – Larger and more powerful retailers are demanding more trade promotion support THE GROWTH IN SALES PROMOTION Reasons for the Growth in Sales Promotion: Consumer Factors Accountability Impact of Technology Short-Term Focus Increased Retail Power LIMITATIONS OF SALES PROMOTION Cannot Reverse Declining Sales Trend Cannot Overcome Inferior Product May Encourage Competitive Retaliation May Hurt Profit Advertising Versus Publicity Factor Advertising Publicity Control Great Little Credibility Lower Higher Reach Measurable Undetermined Frequency Schedulable Uncontrollable Cost High/Specific Low/Unspecified Flexibility High Low Timing Specifiable Tentative Publicity Vehicles Feature Articles News Releases Publicity Vehicles Press Conferences Interviews Special Events Public Relations Systematically planning and distributing information in an attempt to control and manage image and the nature of the publicity received. PUBLIC RELATIONS • EFFORTS TO IMPROVE AND MANAGE RELATIONSHIPS WITH PUBLICS Customers Stock Holders Community Government News Media • PROACTIVE vs. REACTIVE DuPont vs. Exxon • PUBLICITY Not Overtly Sponsored High Credibility PUBLIC RELATIONS Public Relations Functions Press Relations Advising Management Lobbying Product Promotions Corporate Communications Public Relations Tools Cause-related Marketing Publicity Vehicles Special Publications Community Activities Corporate Advertising Public Affairs Special Event Activities Sponsorship Personal Selling • Person-to-person communication – A seller attempts to assist and/or persuade prospective buyers to make a purchase or act on an idea Personal Selling • PERSONAL SELLING – Oral presentation in a conversation with one or more prospective purchasers for the purpose of making a sale – Personal selling represents the most popular promotional effort in terms of financial expenditures and number of people employed – Personal Selling is: • (1) Dyadic, (2) Flexible, (3) Focused (personalized), and (4) Often results directly in a sale • Other promotional elements move the customer toward the sale, personal selling closes the sale PERSONAL SELLING AND SALES MANAGEMENT • FUNCTIONS AND CONTRIBUTIONS OF PERSONAL SELLING “Boundary Spanner” Role, Relationship Management (Trust) Two-Way Information Channel (Diffusion of Product and Market Information) Facilitate Exchange PERSONAL SELLING AND SALES MANAGEMENT • ROLES OF SALESPERSON Psychologist Consultant Educator / Teacher Problem Solver Team Leader • TYPES OF SELLING POSITIONS New Business (Prospector) Existing Business (Order Taker) Detailing Support (Marketing, Technical) Integrating Marketing Communications To Build Brand Equity Sales promotion Adv. Brand Awareness Event & Experiences Public Relation & Publicity Direct & Interactive Marketing Marketing Communications Program Brand Image Brand Equity Brand Responses Word of Mouth Marketing Personal Selling Brand Relationship Direct Marketing The IMC Planning Process • Developing an integrated marketing communications plan requires Planning Executing Evaluating Controlling Basic Elements of a Marketing Plan 1. A detailed situation analysis 2. Specific marketing objectives 3. A marketing strategy and program 4. A program for implementing the strategy 5. A process for monitoring and evaluating performance MARKETING COMMUNICATIONS PLANNING Marketing Plan Review Situation Analysis Communications Process Analysis Budget Development METHODS Program Development PUSH vs. PULL Integration & Implementation Monitoring, Evaluating, Controlling Model of the IMC Planning Process Review of marketing plan Analysis of Promotional program situation Analysis of communications process Budget determination Develop integrated marketing communications program Advertising Sales promotion PR/ publicity Personal selling Direct marketing Develop objectives and strategy for each Develop message, media strategy, and tactics Integrate and implement marketing communications strategies Monitor, evaluate and control IMC Program Internet/ interactive TERIMA KASIH MOHON MAAF LAHIR DAN BATIN BILA ADA KESALAHAN SELAMA INTERAKSI DALAM PROSES BELAJAR MENGAJAR SEMOGA KETEMU DALAM SITUASI YANG LAIN AMIN Strategic Thinking Intepretivist Structuralist Common Sense (Ethically Illegitimate) Radical Rationalist (Ethically Legitimate) Radical Irrationalist (Morally Illegitimate) Functional Rationalist (Morally Legitimate) Rational Hidayah Need for survive: self of existence Need for achievement : Self Actualization Need for Ibadah: Mission Accomplishment Modified Maslow’s Hierarchy of Needs Need for Ibadah Mission Accomplishment Societal Mission/Khalifah Self Actualization Need for Achievement Esteem Self Mission/Ksatria Social/Belongingness Safety Need for Survive Physiological Need No Mission/Sudra 3 Tipe Wirausaha • Wirausaha untuk Survival Needs for existence • Wirausaha untuk Sukses/Berprestasi Needs for actualization • Wirausaha untuk Ibadah Needs for Ridlo Allah SWT Wirausaha untuk Survival • Mencari Jati Diri (Self Existence) • Orientasi Jangka Pendek • Menekankan pada Outcome • Product orientation • Profesionalisme rendah • Profit Taking • Low culture: Exploitation Wirausaha untuk Sukses/Berprestasi • Mencari Aktualisasi Diri (Self Actualization) • Orientasi Jangka Menengah • Menekankan pada Process • Service orientation • Profesionalisme Tinggi • Win-Win Solution • medium Culture: Friendship Wirausaha untuk Ibadah • Mencari Ridlo Allah SWT (Mission Accomplishment) • Orientasi Jangka Panjang • Menekankan pada Process • Halal dan Thoyib Orientation • Profesionalisme Tinggi • Win-Win Negotiation • High Culture: Taking Care
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