In my previous article I was exploring on different stages in new product development as well as the risks associated with new product concepts. The focus was on the process and the way of thinking to ensure the correct decisions are made. This is all to ensure that the product can meet the customer demands, wants and needs as well as bring profits.
Today, I would like to introduce the main concepts and strategies on marketing the product to the potential buyers and promote through different channels and tools used by marketing professionals. We will also explore some facts and movement in websites developments over the past years as well as the expansion of social media and its impact on the consumers purchasing decisions.
Branding
A brand is made of both tangible and intangible benefits. They add value and they allow higher prices because people want to buy certain brand and prepared to pay premium to do so. Management is also able to use the brand better to gain competitiveness and increase profits.
Research categories 3 types of branding:
* Attribute brands, where performance and quality plays the crucial role. This is especially helpful where customers cannot make decisions in which product is better.
* Aspirational brands, where emphasis is placed on the customer status and the consumer would often imaging the recognition of other people who would buy the product increasing the self-esteem.
* Experience brands, where the focus in the the philosophy between the customer and the brand
We must, however, remember that brand is not only about the product, but it covers everything relate to the organisation. Great brands have achieved their global status and its mainly due to exceptional management and also continuous improvements and grasp on customers needs and wants. Customer loyalty is maintained due to consistent quality as well as continuous innovation and improvements.
The strategies that covers branding are different also:
* Umbrella brands - where one brand applies to many different products
* Product brands - where which product has its distinctive brand
* Line brands - with complimentary products which share the same brand name
* Range brands - like line brands but a little broader,
* Endorsing brands - where the company trade name is associated with the products
* Source brands - where the product carries corporate name and a product name
Pricing
When determining the profile of a product or a service we often talk about the pricing strategy. So what is the purpose of pricing strategy and what is the connection to the rest of the marketing mix?
When we are talking about marketing mix, we need to make decisions on four or seven core elements, also known as the 4Ps or 7Ps.
Product including packaging and any other items on corrections to the products
Price which is what we are addressing now
Place - through which channels will you distribute the product or service
Promotion - we also need to need to determine which promotional activities we will carry out
People who will deliver the service
Process that our customers will go through to get the product or service
Physical evidence which is any tangible evidence which the customer will see, hear or in other ways receive when experiencing the service
Let us imagine that we are opening up a new cafe in town. And we specialise in confection of high quality of cakes and deserts. There are many reasons why the price matter to our newly open cafe. Firstly, we need to ensure that the price make sense to our targeted customer group. We need to link the price to the way they will position the cafe in their minds. Carding the price which doesn't correspond with the way we have positioned the cafe, would leave our customers confused.
drawing the line to the other elements of the marketing mix, we need to make sure that our price is in line with all other elements of the marketing mix.
Secondly, we need to establish the financial situation of our target customers. We also need to consider, how are they going to value our goods and services. We need to charge the price which our customers are able and willing to pay.
Thirdly, when looking at our overall strategies and opportunities we also need to ensure that the price we chose supports our goals. And finally, we want to generate adequate income to cover our costs and preferably make a healthy profit.
Marketers have different tools and theories they can use when determining the price. Once of them is price elasticity. This will look at to what extend if at all price change would impact the demand for our product or service. Additionally, cost-oriented pricing can be used. This is based on the price based on different costs involved in producing and selling our products. We can also use a competitor oriented pricing, where we based our price on knowledge we have about our competitors prices and activities. And another option is the marketing oriented pricing, which would be looking in depth on how our customers will value our product. Penetration strategies involve looking at promotional activity level.
Setting the price
One of the simplest approaches of setting a price is to adding the profit margin to the costs of producing, managing and marketing the product or service. However, price fluctuation issues may occur when the product is sold internationally. But this is just a simple way of setting a price.
Therefore price setting strategy should considered and take into consideration the following stages:
Evaluate the factors that will impact the price, such as market structure, competitor prices, or the value of the product itself
Considerations of the business overall and corporate strategy and how the product price will affect it
Constantly monitor the pricing as it may be necessary to increase of decrease the pricing, depending on customer behaviours, their changing wants and needs as well as market activities
Additionally, a product price does not need to be the same and standardised across different markets. Each unique market and segment will have its unique characteristics and the price strategy would need different approaches.
We will be looking at the frequency of purchase for example. The more frequently the product is purchased the more sensitive the prices will be. Additionally the degree of necessity of the product or services are often considered when setting the prices. Where the products or services are essential for particular customer group than the price change will not affect the market itself significantly. Degree of availability of the product will also play role in the price structure.
But the most important considerations with setting the prices is how the customers and competitors will react. We know that the more quality and uniqueness, increased benefits of the product will influence the buying decisions as well as the competitors activities. In fact, the prices of competitors are crucial. Attention must be given to the prices set by competitors and decisions should be made whether the price should meet the competitors prices or set prices higher or lower.
Product promotion
One of the ways to promote a product is using the web. At first websites were documents without any pictures in them. During the early days, the e-mail was the only significant business tool. The website moved through the data driven websites, where the content was separated from the actual website, which made the change in the content a lot easier without changing changes in the code of the website. We could see them now, that in the early days the website were a big business brochures. With the move through the e-commerce in the 90s where the web was growing very quickly, where people were able to buy online in the early 2000s. Now, we do know that sales online are doubling every year. Some mail order companies are looking at just to be dealing online.
Being at your home and able to search and buying without any pressure and your convenience is one of the major benefits or websites. Now, we have google, where we can find these products therefore the search engines have been important in the development in the consumer purchasing online. E-bay and other purchasing communities emerged supporting the consumer with the purchasing activities.
We also now can trust websites more because the creditibity of the cooperate is transferred to their websites. But its not only the credibility that brings the customers, its also the easy of use, because we can purchase items now without any problems and there is a huge advantage of that. Nowadays, we have easy to use website for major leading brands.
More complex messages are being delivered to present the product and make them available for the consumers on the websites. Nowadays there is a movement and focus into more experimental purchasing, with videos and colours presenting the product for the buyers. There is more experience when purchasing the products online now, than we have had before with a flat picture or representation of the product. With the expansion of websites we have given a great advancement to the catalog sale.
Within the business to business activity the transformation is seen with the smart businesses which embrace the web purchasing with open arms. There are great advantages of online selling of business to business. You can put your whole business catalogue online, you can put your testimonials, white papers and all your business materials that we would of delivered without the internet. Now, those can be delivered using the internet.
However, there are still business to business companies that believe that their business is not appropriate to the web, but according to marketing specialists believe that the top leadership could not learn quick enough about the power of the web. Therefore we have split communities, those who use the websites for their online sale business-to-business and those who do not.
Lifestyle blogging is growing as well with the use of social media platforms such as Twitter or Instagram. The focus there is on what we are doing right now. When the social media platforms first came out with people sharing their day-to-day activities and lifestyles the business environment could not see the benefits of using these tools. However some smart businesses started creating communities of their buyers and groups of buyers, and staring creating a market online offering people products, advising on new developments, offering discounts and so on.
Recently we see there is over 500 million active social media users, which is over halve of the internet population. And what we see now is how social media has really taken off. Consumers look at youtube videos, we have people who are blogging and reading blogs. We have also seen a change in publishing where anyone can be a publisher now. We really see the change in the lifestyle in the context of information distribution through the social media.
The idea is that once the product has been developed it must be promoted. This is to ensure that the customer knows about the product existence, its benefits and how to but it. However, advertising can be expensive and should be targeted carefully.
One of the strategies is the standardisation of the advertising which can bring significant costs reductions of the advertising activities. It is based on targeting them all different market segments together. It makes it easier to control as well as save time and costs. However centrally generated communication may prove to be inadequate to certain segments. Additionally, use of different media may be more beneficial to different segments as opposed to standardisation of all of them together. Different markets may also have a different level of maturity and different messages would need to be considered to different markets.
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