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Marketing can be defined in the sense of market-oriented business leadership. This market orientation is characterized by all relevant activities and processes of the company that focus on consumers’ needs and wants (Esch 2012). To focus on consumers and the market, it is one of the basic tasks of marketing to find out about relevant consumers’ needs and wants. Therefore, it is important to thoroughly analyze consumers. Once marketers know consumers’ needs, the next step is to develop products and services that satisfy them.
In the twenty-first century, companies face changing customer values, which are observably getting more diverse. Even one and the same person can have different needs in different situations. The phenomenon of ‘hybrid consumption’ is rapidly emerging. Firms try to react to these specific needs by offering customized products. Another challenge is increased global competition. This trend is intensified by new information and communication technologies like the Internet, which make it easier to sell products worldwide. But also for consumers the world has become more complex because they are bombarded by too much information. This trend is accompanied by products becoming outdated sooner (Lim & Tang 2006). In this environment, launching new products successfully is a real challenge.
Designing Marketing Strategies
A marketing plan, as the core of marketing management, is the central instrument for directing, synchronizing, and coordinating all marketing activities. First, it is important for marketers to develop an understanding of their customers. Based on this knowledge, goals and strategies must be determined. In this context, there are three levels that need to be planned systematically: (1) the marketing goal, which represents the situation strived for; (2) marketing strategies, i.e., the roads leading to that goal; and (3) marketing instruments necessary to ‘walk the road’ (Esch et al. 2013). The classic set of marketing activities is summarized by the ‘4Ps’ (product, price, placement, promotion).
The 4Ps are the pillars of marketing, while branding is its base, on which all marketing activities are built. Therefore, it is crucial to base marketing strategies on a thoroughly planned branding strategy. To ensure that the implemented activities help the company to achieve its goals, it is important to control activities, strategies, and goals regularly. In this context, progress in the achievement of the company’s objectives has to be measured. Besides controlling the effectiveness of strategies and activities, marketers should revise whether the marketing goals are still worth striving for or whether they are outdated.
The Brand As The Base For Marketing Activities
A brand can be defined as a mental image in the minds of the target group that leads to identification and differentiation and affects people’s choices (Esch 2012). Brand identity and brand positioning together serve as the essential basis for all brand decisions. In contrast to brand image, which refers to the perception of the brand, brand identity and positioning are in the company’s sphere of action.
Principally, companies face three basic options to lead their brands: (1) product brands; (2) family brands; and (3) corporate brands. Using a product brand strategy, every product of a company forms an own-brand; this means ‘one brand = one product = one brand promise’ (e.g., Procter & Gamble, with brands like Pringles, Ariel, and Pampers). A family brand comprises several products under one brand, e.g., Maggi or Nivea. The advantage of this strategy is that all offerings of a brand profit from its existing brand image. Corporate brands are used for all products of a company. The primary aim of this strategy is to establish a clear profile of the company and its competencies.
Raising Consumers’ Brand Awareness And Brand Image With Communication
Communication is an effective instrument to build unique brand images in consumers’ minds. Integrated communication is understood as the integration of form and content of all communication activities, which unifies and reinforces the impressions made. In integrated communication, verbal as well as nonverbal elements can be used. These either transfer distinctive image associations (BMW is sporty and dynamic) or form an anchor to enhance brand awareness, e.g., by using a particular color code or symbols.
As a basic principle, communication instruments can be divided into personal and mass communication. Personal communication distinguishes itself by greater credibility of the communicator, the possibility to respond to the listener’s needs, and the information conveyed by nonverbal communication. Moreover, personal communication offers higher flexibility.
A customer’s buying cycle can be broken down into four different stages. (1) The buying cycle starts when a consumer gets in touch with a product. This first contact happens through mass communication, e.g., through TV commercials. (2) In the second stage, the consumer starts gathering more information. In this stage, personal communication is very important. (3) When a customer is finally buying a product, personal communication is essential. The assistant should give advice about special features and different models of the product. (4) While the customer is using the product, a company should stay in touch with the customer. Brochures, events, or telephone calls by the company help the company to get feedback about its product and services.
Price Elasticity And Differentiation
To find out what price leads to maximal profits, managers should estimate the demand and costs associated with the alternative prices and choose that price which leads to the highest estimated profits. There are many factors that affect a company’s cost and turnover functions; e.g., pricing has an effect on further variables, like competitors and their reactions, the product’s and brand’s image as well as consumers’ reactions. To assess the change in demand due to changes in prices, marketers need to know about consumers’ price sensitivity and price elasticity, which describe changes in demand due to a 1 percent rise in price.
Price differentiation refers to selling principally the same products to different consumers or groups of consumers at different prices. The aim of this strategy is to skim as much as possible of the consumer surplus, which can be defined as the difference in consumers’ willingness to pay and the price actually paid. One can distinguish between three different forms of price differentiation. According to first-order differentiation, prices are set individually for each customer to perfectly skim his or her willingness to pay. According to second-order differentiation, consumers decide independently to which price category they belong. By contrast, third-order differentiation does not enable consumers to choose their category themselves. Segments and the respective prices are pre-arranged by the company.
Developing An Optimal Distribution Strategy
Distribution is more than getting products to potential customers. When planning their distribution strategy, marketers must decide on whether to sell their product directly or indirectly to the end consumers, and whether their product should be distributed universally or selectively. Companies that distribute their goods directly sell their products to the end consumer without interposing any external distributors.
The indirect distribution strategy can be subcategorized based on the number of intermediaries involved. Supermarkets are often one-tier distribution systems, whereas pharmacies and florists are two-tier systems, consisting of retail and wholesale. A special form of indirect distribution is franchising, where a company’s products are distributed by legally and economically independent firms whose relationship to the producing firm is regulated by contract (e.g., McDonald’s). One of the major disadvantages of intermediaries is the producer’s loss of control, i.e., how the products are presented in the stores.
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