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Co-ordination of marketing programmes

Specification of impact on demand
Primary demand strategies

Increase the number of users by increasing the

willingness and ability
Increase the rate of purchase by broadening
usage, increasing level of consumption or by
increasing rate of replacement

Selective demand strategies

Expand the served market by broadening

distribution or product-line extension
Acquire competitors customers by head-tohead competition or differentiated positioning
Retain customers by maintaining satisfaction,
meeting competition and relationship
marketing
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Marketing strategy is the coordination of

marketing programs.
Middle managers are responsible for
marketing programmes, which are:
Advertising,
sales promotion,
personal selling,
customer service,
new product development

 Marketing programmes should be

consistent with marketing objectives
Marketing strategies should achieve
marketing objectives
Marketing strategies specify the impact
a firm hopes to achieve on demand
primary or selective.

Target market
selection

Type of demand
to be stimulated

All buyers in the relevant

market
(primary demand)
Buyers in one or more
segments
(selective demand)

Primary demand
Among new users
Among current users

Selective demand
In new served markets
Among competitor customers
In current customer base
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Market potential estimate

Industry sales forecast

Company sales potential
- Selective demand gap

Company sales
forecast

Unrealised market potential

- Primary demand gap

Prospector

Innovator/first mover/high risk/moves on

to new markets

Defender

Security in stable market/good marketer/

conservative range

Analyzer

Smart second / mobile defender/follows

trends more / keeps small range

Reactor

No strong ID in market/mass market type

Primary Demand

Demand for the product form or product class

that has been defined as the relevant market.

Includes potential buyers

Same characteristics as buyers but not buying.

Willingness & . . .

Related product and services

Usage problems
Value or experience compatibility
Perceived risk (high or low involvement)

. . ability to buy
Cost factors
Packaging and size factors
Spatial availability

Primary demand maps the potential for a

product.
Analyse features common to all customers.
Identify growth opportunities.

Managers seek ways to increase primary

demand through increasing
Willingness & ability to buy
Expanding size of market
(potential actual buyers)
( actual buyers increase frequency of use)

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Selective Demand
Demand for a specific brand or supplier within the
relevant market.
Includes only actual buyers
Affected by
Decision making process
High / low involvement
Extended / routine analysis

Type of purchase
New task / routine replacement / variety seeking

Perception of product attribute differences

Irrelevant Unimportant
Optional Makes the product different, but not important
Defensive Necessary to avoid elimination
Determinant Important and unique
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Aim to increase level of demand for a

product form or product class size
of market increases.
Two fundamental strategic
approaches:
Increase the number of users
Increase the rate of purchase

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Increase the number of users

useful in the introductory stage
of the life-cycle
also for products with large
market shares (at maturity stage)

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Strategies for increasing the number

of users
Firms must increase:
Willingness to buy
Ability to buy
Or both

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Strategies for increasing willingness to buy:

1.Demonstrating the existing benefits of the
product form
eg Disposable diapers - Convenience and

performance

2. Demonstrating or promoting new benefits for

existing products

eg Carnival cruise lines - Selling fun - not sea

voyages

3. Developing new products with benefits, more

appealing to certain segments
eg Light Beer - great taste, no intoxication.
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 Increasing the ability to buy using

Lower prices
Offering credit facilities
Greater availability by
more distributors,
More frequent deliveries,
less stock outs.

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Four reasons for reducing a price:

Some potential buyers who would not
buy the product at a higher price will
now buy
Increase the rate of purchase
Avoid losing customers to competitors
(defend)

Gain customers from competitors (attack)

Price is used to influence demand in
different ways
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 Increasing the rates of purchase

When the markets are mature

and sluggish
Make customers buy more often
or in higher volume

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 Strategies used to increase rate of

purchase
Broadening usage
Increase level of consumption
Increase rate of replacement
Broaden usage by expanding
Variety of uses
Usage occasions

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 Broadening variety of uses for orange

juice
At breakfast
After sports
Source of vitamin C
In cocktails
Broadening use occasions
Eftpos - for withdrawal or to pay bills
Pizza Hut - delivery service to expand
lunch time business

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 Increase level of consumption

Low price or special volume package
eg Soft drink economy size, 15 beer packs

Changing buyers perception of the

product benefits
Eg 1 pork industry (health benefits of white
meat),
Eg 2 American Express (Automatic insurance
of products purchased)

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 Increase rate of replacements by

designing strategies that encourage
replacement
Fashion industry - change design
Fridges (may last 20years) May
be replaced earlier if cost, space
utilization, or convenience can be
improved.
Planned obsolescence through
innovation

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 Primary demand strategies are less

widely used than selective demand
strategies
Useful when there are gaps between
market potential and industry sales
Analysis of buying process may help
to identify factors limiting ability and
willingness to buy
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Market potential estimate

Industry sales forecast

Company sales potential
- Selective demand gap

Company sales
forecast

Unrealised market potential

- Primary demand gap

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 Designed to improve the competitive

position of the product, service or business
in the segment
Fundamental focus is on market share
Sales gains at the expense of competitors
Three different types:
Expanding the served market
Acquire new customers from competitors
Retain current customers
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 Expanding the served market

Broaden distribution
Product line extensions
Acquiring competitors customers
When industry sales are growing
slowly and close to market potential
In high growth industries who are
moving location

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 Customer Acquisition strategies

must be perceived as more effective
in meeting customers needs
must use determinant attributes of
each segment
Two basic strategic options:
Head to head positioning
Differentiated positioning

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 Head to head positioning

Offer basically the same benefits
Outdo competitors on:
Superior marketing effort
Cost/price leadership
Superior marketing effort
Outdo competition on quality
Outspending on advertising
Wider variety and wider availability
Faster delivery
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 Head-to-head
Price/Cost leadership
same quality at lower price (eg Air Lines,
Telephone services)
Avoid head to head competition
May be vulnerable to an aggressive new brand
offering different benefits
Spend more money to gain retailer and
distributor support
Increase advertising spend may not produce
comparable increase in sales
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 Differentiated positioning
Benefit/attribute positioning
Emphasise unique attributes, packaging, benefits
Levers 2000 bar soap - deodorant and moisturiser

Customer oriented positioning

Cater to a specific customer type (niche)

Buyer characteristics eg Govt. agencies, Universities.

Specialised needs eg Specialised hospital services.
Unique product use eg Cold remedies for nighttime.
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Retention strategies
Retain current customers - (Each new

customer costs about five times as much as an

existing customer in promotional cost)

Used by firms with dominant market

share.

lines up with defender strategy (increase

promo. spend to hold out competitors.)

Small market share firms with entrenched

positions in particular segments.
typical niche business (operating on close
relationship with customers)

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 Strategies make a customer stay:

Maintain a high level of customer
satisfaction
Meet competitors offerings
Establish strong relationships
(economic and interpersonal)

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 To maintain satisfaction
Maintain customer beliefs on superior
product quality
reassure high quality in advertisements

Provide additional information about

the product/service to enhance
effective use
free seminars

Maintenance & repair, complaint

management.

Keep after sales service standards high to

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 Meeting competition offerings

Do better on:
Price

Cheaper, or better value.

Quality

Find out expectations and exceed them.

Features and Options

Can offering be made to fit customers

better?

Advertising

More / more effective (?)

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 Relationship marketing
Develop formal interpersonal ties with
the buyer to enhance repeat business
Loyalty cards thru to service agreements

Use economic incentives

Contracts - protection against price

increase
Memberships - Annual fees, Season
tickets
Put computer terminals at customers
offices
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 Basic options are:

Line extensions
Bring out new product with significant
differences to existing

Flankers
Separate brand to cover weakness in main
brand.

Combination brands
Promoting (product+brand) to boost sales
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Product Objective
To achieve viable level
of sales for new
product.

To achieve viable
market share (for new
brand)

Market share growth

Marketing Strategy
Primary - Increase
number of users

Selective - Acquisition
of customers
Selective - Acquisition
of customers
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Product Objective
Market share
maintenance

Cash flow
maximisation

Marketing Strategy
Selective - Retention of
customers or acquisition
of customers new to the
market
Selective - Retention of
customers
Primary - Increase
purchase rate

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Product Objective
Sustaining
profitability

Harvesting

Marketing Strategy
Selective - Retention
of customers (limited
segments)
Selective - Retention
with minimum effort

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Managers can use more than one strategy

simultaneously
Consider the impact of strategy on
complementary and substitute products
Feasibility of a strategy depends on problems
and opportunities

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Market analysis provides information on:

1. Who buys the product form/who does not

2. Situations product is used/not used
3. Factors influencing willingness and ability to buy
( manager can select strategies to increase the
number of users or rate of use using above
information primary demand)

4. Factors influencing buyers choice process

( this gives insights to segmentation opportunities
selective demand)
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Competitive analysis help to determine:

Who are the competitors?

What is the intensity of competition?

How to compete effectively against

Direct brand competitors
using selective demand strategies.

Indirect product class competitors

using primary demand strategies.

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Market measurements provide information

on:
Industry growth rates
Size of primary demand gap
Profitability
By combining productivity estimates with
profitability analysis can determine profit
consequences of strategies and programs

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