Traps in new product development

It is a relatively simple matter to fall into one of the five traps associated with developing new products competitive delusion, market scope, competence, illusory innovation and marketing analysis and strategy (Figure 8.9). Competitive delusion refers to the situation where companies believe that their approach is right and that they can capture a large share of the market without much opposition. Under such assumptions development launch plans are likely to be much too ambitious. For this...

Components of direct marketing

Direct marketing consists of three components the development of an effective customer database direct response advertising which leads to the sale and the direct building of customer relationships to increase sales and profits. Direct marketing is an approach to marketing which is driven by a database which implies that the company knows who its customers are, and communicates with them in appropriate ways through enhanced and refined means of communications the driver is the database. It is a...

Managing channel conflict

Channel Power And Conflict

Channel conflict arises when one channel member perceives another to be impeding the achievement of its goals. The frustration arises from a restriction of role performance. For example, large retailers, especially large supermarkets, frequently have objectives which are incompatible with those of small manufacturers. Domain conflict may also exist when manufacturers compete with some of their own wholesalers. Price competition for an identical product sold through different channels may give...

Functions of marketing channels

Channels of distribution provide three major benefits. The first benefit is a time benefit which means having the product available when the user wants it. Fashion fairs take place months before the relevant season. Ladies fashion shoes for the summer season, for example, are produced during the previous winter. Long lead times such as these are required to produce the necessary quantities and to transport the finished product to retail outlets. Location is the second benefit. Since few...

Information on marketing practices

Current marketing practices have the virtue that no matter how inefficient they may be, users have demonstrated that they know how to use them. For this reason the organization needs to understand how products and services are advertised and promoted in the market, the physical distribution system in operation, the channels used, pricing policies and customer service practices. If the organization is new to the market, it will collect this information for the first time whereas if it already...

Business strategies

A precursor to deciding appropriate business strategies for the organization is to carry out a SWOT analysis. While there are many specific activities Figure 6.3 Key business strategies that organizations can engage in to exploit opportunities and strengths while neutralizing threats and avoiding or correcting weaknesses, the more important business strategies with a marketing focus include cost leadership, product differentiation, segment focus and imitation (Figure 6.3). An organization that...

Strategic goals for distribution

The organization has five strategic distribution goals (Cateora and Graham 2002, pp. 459-61) cost, management control, coverage, character and continuity commonly referred to as the five Cs (Figure 13.3). In regard to cost, companies must consider the capital or investment cost of developing a marketing channel and also the cost of maintaining it. The maintenance costs cover the direct expenditure of a sales force or the margins and commissions of distributors. Marketing channel costs,...

Selecting and motivating intermediaries

Channel partners are frequently criticized by manufacturers because they do not stress a given brand or because their salesman's knowledge of the product is not adequate or because they neglect certain customers. Shortcomings from the manufacturer's point of view may be understandable from the intermediary's viewpoint, since distributors focus on product assortments. Consequently, there is no point in manufacturers developing a mismatch of hastily improvised trade deals, uninspired dealer...

Positioning in the business system

The objective of the organization is to manage the business system to achieve an increase in the level of perceived value added or a reduction in the price charged. In that way the total perceived value to the customer exceeds the collective cost to the organization of performing the value activities embodied in the final product. Positioning for competitive advantage in this sense is based on the organization's ability to manage the business system to provide the final customer with the...

Idea generation and screening

Idea Generation And Screening

In the process of new product development the organization first analyses the current market situation and the capabilities in the organization and simultaneously carries out a market opportunity analysis and search Figure 8.7 . The first step in the process is to generate new ideas and concepts which involve a continuous, systematic search for new product opportunities. In this regard it is generally believed that customers are the best source of new ideas, followed by competitors and the...

Core products and benefits

Fundamental to every product is a core benefit that is the basic service or benefit the customer seeks. The core benefit is the first and central dimension of the product and involves the physical appearance of the product, its quality, and its ability to satisfy user needs including functional utility Figure 8.1 . The core product allows customers to solve problems and satisfy basic needs, e.g. in the case of a car it may be transport to work, shopping trips or socializing. Having identified...

Building equity in the brand

Brand value or brand equity is a measure of the intrinsic utility of a brand to customers. It is the outcome of long-term investments designed to build a sustainable, differential advantage for the company relative to competitors. The key components of brand equity are brand awareness and brand image. Awareness derives from the strength of the brand in the customers' memory which is reflected by the customers' ability to identify the brand under different conditions - familiar brands tend to be...

Process of market positioning

To simplify the buying process customers position organizations and services in their minds. A position is a complex set of perceptions, impressions and feelings and it is important to note that customers position the organizations value offering with or without its help. It would seem good advice that organizations should not leave positioning to chance. It can strengthen its current position, search for a new unoccupied position valued by customers and focus on commanding that position or it...

Cultural values and social influences

Individual and family decisions are affected by individual and social values. Values are centrally held enduring beliefs which guide actions and judgements in specific situations and in more general circumstances as people orient themselves in their environment Rokeach 1973, p. 160 . There are many types of values people possess moral values, express political values and satisfy utility values which are often mixed together. The significance of values is determined by their function in...

Role of product design

Product design means searching for a set of key features or appeals that are special or even unique to the product or customer group. By agreeing on the basic benefits, the organization is in a better position to serve customer needs. Product design is considered as 'the designation of the key benefits the product is to provide, the psychological positioning of these benefits versus competitive products, and the fulfilment of the product promises by physical features' Urban and Hauser 1980, p....

Marketing performance and financial objectives

Marketing Financial Objectives

The starting point for any marketing plan is usually a corporate financial requirement by which the organization must meet a financial objective, e.g. 20 per cent ROI or similar objective. It then becomes the function of the marketing area to attempt to meet that requirement through its marketing and sales activities. In situations where the financial requirement is greater than the current long-run sales forecast, there is a gap which must somehow be filled. There are two generic approaches to...