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MARKETING YOUR PRODUCTDonald Cyr, MBA
Douglas Gray, LLB
Self-Counsel Press(a division of)
International Self-Counsel Press Ltd. USA Canada
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CONTENTSACKNOWLEDGEMENTS xv
INTRODUCTION xvii
1 WHAT IS MARKETING? 1
1. MARKETING 1
1.1 Understanding customer needs and desires 1
1.2 Selecting and developing a product 2
1.3 Developing a communication program 2
1.4 Getting your product to your customer 2
2. MARKETING MIX 2
2.1 Product 2
2.2 Price 2
2.3 Place 2
2.4 Promotion 2
3. SELLING VERSUS MARKETING 2
4. PRODUCT VERSUS SERVICE MARKETING 3
5. AVOIDING FAILURE; ENSURING SUCCESS 4
2 MARKETING PLANNING, GOAL-SETTING, AND STRATEGY 6
1. UNDERSTANDING THE PLANNING PROCESS 7
1.1 Situation analysis: “Where are we now?” 7
1.2 Identifying problems and opportunities 8
2. FORMULATING GOALS 8
2.1 What are goals, anyway? 8
2.2 Clarifying goals 9
3. YOUR PERSONAL AND COMPANY GOALS 9
4. SETTING OBJECTIVES 10
4.1 Why goals are never enough 10
4.2 The role of objectives 10
4.3 What does a typical objective look like? 10
5. INTEGRATING GOALS AND OBJECTIVES 11
6. PLANNING YOUR SPECIFIC STRATEGY 11
6.1 Evaluating alternatives 12
6.2 Designing your action plan 12
v
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6.3 Monitoring system 12
3 THE MARKETING ENVIRONMENT 24
1. DEMOGRAPHICS 24
2. TECHNOLOGY 25
3. CULTURE 26
3.1 Baby boomers 26
3.2 Baby busters 27
3.3 Seniors 28
4. ECONOMY 28
5. POLITICS 29
4 SEGMENTING YOUR MARKET AND IDENTIFYING CONSUMER BEHAVIOR 30
1. SEGMENTATION 30
2. SEGMENTING USING DEMOGRAPHICS AND PSYCHOGRAPHICS 31
2.1 Benefits segmentation 31
2.2 Gender 34
2.3 Other variables 35
3. MARKET POSITIONING 35
4. UNDERSTANDING CUSTOMER BUYING BEHAVIOR 36
4.1 Recognition of need 36
4.2 Information search 37
4.3 Evaluating the alternatives 37
4.4 Choice 37
4.5 Post-purchase feelings 38
5 RESEARCHING YOUR MARKET 40
1. AREAS TO RESEARCH 40
1.1 Who is your market? 40
1.2 What products do they buy? 40
1.3 When do they buy? 40
1.4 Who is involved in the purchase decision? 40
1.5 Where is your market? 41
1.6 Where should you sell your product? 41
1.7 Why does the market buy your product? 41
2. SECONDARY DATA 41
2.1 Government 41
2.2 Trade, professional, and business associations 41
vi MARKETING YOUR PRODUCT
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CONTENTS vii
2.3 College, university, and research organizations 41
2.4 Libraries 41
2.5 Marketing firms 41
2.6 Consultants 41
3. PRIMARY DATA 42
3.1 Sales records 42
3.2 Order-billing-shipping account 42
3.3 Sales representatives 42
3.4 Questionnaires 43
3.5 Group survey 43
3.6 Telephone survey 43
3.7 Expert opinions 43
3.8 Mail-order catalogue 43
3.9 Test market 44
3.10 Trade shows 44
3.11 Direct mail 44
6 DEVELOPING YOUR PRODUCT 45
1. WHAT BENEFITS ARE YOU OFFERING? 45
2. HOW DO YOU CONVEY THE BENEFITS OF A PRODUCT? 45
2.1 Interest value 45
2.2 Identity 46
2.3 Risk 46
2.4 Packaging 46
2.5 Branding 46
2.6 Customer contact 46
2.7 Service availability 47
3. ADDITIONAL SERVICES 47
4. PRODUCT LIFE CYCLE 47
4.1 Introduction 48
4.2 Growth 48
4.3 Maturity 49
4.4 Decline 50
7 PRICING TO SELL 53
1. WHAT ARE YOUR PRICING GOALS? 53
1.1 Maximizing your profit 53
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1.2 Getting your share of the market 54
1.3 Obtaining a return on your investment 54
2. ATTAINING YOUR PRICING GOALS 54
2.1 Cost-plus pricing 54
2.2 Target market share 56
2.3 Price skimming 56
2.4 Penetration pricing 56
2.5 Prestige pricing 56
3. DEMAND-ORIENTED PRICING 56
3.1 Price elasticity 57
3.2 Prices and profits 57
4. SETTING A PRICE 58
8 ADVERTISING 62
1. ADVERTISING CAMPAIGN 62
1.1 Target market 62
1.2 Market research 63
1.3 Advertising objectives 63
1.4 Message development 63
1.5 Message potency 63
2. MEDIA SELECTION 64
2.1 Newspapers 64
2.2 Magazines 65
2.3 Radio 65
2.4 Television 66
2.5 Direct mail 66
2.6 Media mix 66
3. TIMING 67
4. MESSAGE EXECUTION 67
4.1 Headline 67
4.2 Copy 67
4.3 Layout 68
5. ADVERTISING BUDGET 68
5.1 Task method 68
5.2 Mechanical method 68
6. SALES PROMOTIONS 69
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CONTENTS ix
7. LEGAL DOS AND DON’TS WHEN ADVERTISING 69
9 PUBLIC RELATIONS 71
1. PUBLICITY 71
2. DOS AND DON’TS 72
3. DIFFERENCES BETWEEN PUBLICITY AND ADVERTISING 75
10 DISTRIBUTION: GETTING THE PRODUCT TO YOUR CUSTOMER 79
1. METHODS OF DISTRIBUTION 79
1.1 Producer to customer 79
1.2 Producer to retailer to customer 80
1.3 Producer to wholesaler to retailer to customer 81
1.4 Producer to agent to wholesaler to retailer to customer 81
2. DISTRIBUTION CONSIDERATIONS 82
2.1 The customer 82
2.2 Product characteristics 82
2.3 The go-between 82
2.4 Producer characteristics 82
2.5 Warehousing 83
2.6 Inventory control 83
2.7 Packaging 83
2.8 Material handling 83
2.9 Order processing 83
2.10 Transportation 83
11 RETAILING YOUR PRODUCT 86
1. RETAIL CLASSIFICATIONS 86
1.1 Convenience stores 86
1.2 Large department stores 86
1.3 Specialty stores 87
1.4 Discount retailers 87
1.5 Nonstore retailer 87
2. CONSUMER MOTIVES 87
3. TYPES OF SHOPPERS 88
3.1 Inactive shoppers 88
3.2 Active shoppers 88
3.3 Service shoppers 88
3.4 Traditional shoppers 88
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3.5 Dedicated fringe shoppers 88
3.6 Price shoppers 88
3.7 Transitional shoppers 88
4. CHOOSING A LOCATION 88
4.1 Choosing an area 88
4.2 Choosing a specific site 89
12 MARKETING ON THE INTERNET 91
1. WHO WILL YOUR CUSTOMERS ON THE INTERNET BE? 91
2. SERVICES INTERNET CUSTOMERS EXPECT 92
3. WHAT PRODUCTS CAN BE SOLD ON THE INTERNET? 93
4. ADVANTAGES OF THE INTERNET 93
5. IS THE INTERNET RIGHT FOR YOUR BUSINESS? 94
6. CUSTOMER CONCERNS ABOUT THE INTERNET 95
7. POOR ADVERTISING ON THE INTERNET 95
8. WEB SITE PITFALLS TO AVOID 96
9. KEY TIPS TO DEVELOPING YOUR WEB MARKETING 97
10. CREATING A GREAT WEB SITE 98
10.1 Present a professional corporate image 98
10.2 Establish the product benefits early 98
10.3 Anticipate customer questions 98
10.4 Create a dynamic message 98
10.5 Creating a domain name 99
10.6 How to design an effective Web site 99
10.7 Gathering customer information from the Internet 100
11. LEGAL ISSUES 102
12. CONCLUSION 102
13 THE COMPETITIVE EDGE 103
1. TYPE OF COMPETITION 103
1.1 Monopoly (one firm) 104
1.2 Oligopoly (few firms, same product) 104
1.3 Differentiated oligopoly (few firms, similar product) 104
1.4 Monopolistic competition (many firms, different products) 104
1.5 Pure competition (many firms, similar products) 104
2. GAINING THE COMPETITIVE EDGE 104
2.1 Operational efficiency 105
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2.2 Customer service 105
2.3 Product leadership 106
3. CHOOSING A COMPETITIVE EDGE 107
4. ASSESSING YOUR COMPETITION 107
14 MANAGEMENT IN A COMPETITIVE WORLD 112
1. WHAT HAPPENED IN THE PAST 112
2. WHAT CHANGED 113
3. THE IMPORTANCE OF FRAME OF MIND 113
4. MANAGEMENT STYLE 113
5. HOW DOES IT WORK? 114
6. MANAGEMENT PROCESS 114
6.1 Flexibility 114
6.2 Management fads 114
7. ADAPTIVE MANAGEMENT 114
8. MANAGING DUALITY 117
15 SELLING AS A MARKETING TECHNIQUE 120
1. ORGANIZATION 120
1.1 Office location 121
1.2 Reception 121
1.3 Layout and decor 121
1.4 Dress code 121
2. WHO SHOULD YOU HIRE TO SELL? 121
3. PERSUASION 121
4. MAKING CONTACT 122
5. HOW TO SELL EFFECTIVELY 122
5.1 Pre-approach 122
5.2 Appraisal 122
5.3 Presentation 122
5.4 Objections 123
5.5 Closing 123
5.6 Follow-up 123
6. HOW TO MAKE THE SALES JOB EASIER 123
16 IMPLEMENTING THE MARKETING PLAN 126
1. CONTROLLING IMPLEMENTATION 126
2. SETTING A SCHEDULE 126
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3. STAYING ON SCHEDULE 127
4. DIFFERENT RESULTS THAN EXPECTED? BECOME AN MD 127
4.1 The diagnostic process 127
4.2 Getting well again 128
5. COMMON PITFALLS TO AVOID WHEN MARKETING 128
6. SYSTEMATIC MARKETING DIAGNOSIS 129
17 INTERNATIONAL MARKETING 132
1. GOING INTERNATIONAL 133
2. ASSESSING YOUR GLOBAL MARKET 133
2.1 Political environment 133
2.2 Economic considerations 134
2.3 Cultural differences 134
3. MARKET RESEARCH 135
4. STRATEGIES FOR INTERNATIONAL MARKETING 136
5. PRODUCT 136
5.1 Same product 136
5.2 Product adaption 136
6. PROMOTION 137
7. PRICE 138
7.1 Cost factors 138
7.2 Marketing factors 138
7.3 Economic factors 138
8. DISTRIBUTION 139
8.1 Exporting 139
8.2 Indirect export 139
8.3 Direct exporting 140
8.4 Licensing 140
8.5 Franchising 140
8.6 Manufacturing 141
8.7 Joint ventures 141
9. GLOBAL MANAGEMENT 141
9.1 Pitfalls 142
9.2 Looking through a window, not a mirror 142
18 LEGAL CONSIDERATIONS 143
1. PRODUCT LIABILITY 143
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CONTENTS xiii
1.1 Contract liability 143
1.2 Tort liability 144
1.3 Strict liability 145
2. PRODUCT LIABILITY INSURANCE 145
2.1 Product liability coverage 145
2.2 Completed operations liability coverage 145
2.3 Claims made versus occurrence coverage 145
2.4 Declarations 145
2.5 Exclusions 146
2.6 Insuring agreements 147
2.7 Definitions 147
2.8 Limits of liability 147
2.9 Deductibles 147
2.10 Conditions 147
3. SPECIAL INSURANCE 148
3.1 Product mixing 148
3.2 Product withdrawal 148
3.3 Product damage 148
3.4 Product failure 148
3.5 Product extortion 148
3.6 Professional liability 148
4. DOING BUSINESS WITHOUT INSURANCE 149
5. LOSS PREVENTION 149
APPENDIXES
1 Researching your market 151
2 Advertising 159
3 The marketing plan 169
GLOSSARY 175
BIBLIOGRAPHY 179
BONUS CD-ROM 181
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xiv MARKETING YOUR PRODUCT
TABLES
1 Segmentation 32
SAMPLES
1 Average product life cycle 47
2 News release 73
3 Advertising versus publicity 74
4 Leaders versus managers: Approaches to strategy 115
5 Working groups versus teams: How they function within a company 116
WORKSHEETS
1 Assessing the competition 108
2 Forecasting demand from research results 158
3 Advertising 164
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(c) develop a program to tell your cus-tomers about the benefits of your prod-uct, and
(d) ensure that your products get to yourcustomer.
1.1 Understanding customer needsand desires
We all tend to assume that others’ needs are thesame as our own. Understanding your cus-tomers means finding out what they really want,and recognizing that their needs and desiresmay be very different from your own. Market re-search can reduce the uncertainty and risk ofdeciding what products you should present.Marketing does not try to impose a product thatis not required or wanted. Effective marketing isuser-oriented, not seller-oriented.
1. MARKETINGRemember when “Made in Japan” implied aninexpensive, poor-quality product? Today, manyJapanese products are recognized as high-quality industry leaders. This change in percep-tion is due to effective marketing. Many peopleconsider marketing simply as pricing gimmicks,advertising, and hard-sell. On the contrary, mar-keting is an essential management functionneeded to create a demand for your product.The core concept of marketing is the exchangeof value between two parties: the buyer and theseller. This means that in your marketing plan-ning, your primary functions are to —
(a) understand the needs and desires ofpresent and potential customers,
(b) select and develop products that wouldbest satisfy those customers within thelimits of your resources,
WHAT IS MARKETING?CHAPTER 1
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2.1 Product
A product is designed to satisfy consumerneeds. Product strategy includes decisionsabout its uses, quality, features, brand name,style, packaging, guarantees, design, and op-tions. Decisions about changes in the productcharacteristics are needed as the product goesthrough its life cycle (see Chapter 6).
2.2 Price
Besides being the amount you charge customersfor your product, price involves managementpolicies on discounts, allowances, credit terms,payment periods, transit payments, etc.
2.3 Place
Placing your product means providing it at theright place at the right time. Distribution strate-gies involve decisions on such things as store lo-cation and territories, inventory levels, shelflocation, type of shipments.
2.4 Promotion
Promotion is informing and persuading yourtarget market of the value of your product. Themajor promotional tools are advertising, per-sonal selling, publicity, and sales promotion.Which media you use is also an important partof promotion.
3. SELLING VERSUSMARKETING
Despite rhetoric of catering to customer needsand solving problems, sales-oriented organiza-tions have traditionally consisted of talkativesalespeople trying to foist their products on cus-tomers. Don’t you make that mistake!
1.2 Selecting and developing aproduct
A marketing-oriented business does not attemptto be all things to all people. Once you haveidentified the needs and characteristics of sev-eral markets, decide which one to serve on thebasis of profit potential, market size, and yourcompany’s goals and available resources. Eachmarket will be different, so you have to designdifferent product benefits to meet each marketrequirement.
1.3 Developing a communicationprogram
Once you develop appropriate products for yourdifferent markets, you must decide how to com-municate the benefits of each product. Youmight use promotion, advertising, personal sell-ing, public relations, and media selection. Allthese marketing tools are explored in this book.
1.4 Getting your product to yourcustomer
Getting your product to your customer meansoffering your product at the right place, at theright time, and at the right price. It means mak-ing it easy for your customer to find and buyyour product.
2. MARKETING MIXFour variables make up the marketing mix:product, price, place, and promotion. You as abusiness person can control, vary, and use thesevariables to influence your customers.
These variables are interrelated and formthe total package that will determine the degreeof your marketing success. Following is a briefdescription of the four variables; each is dis-cussed in detail in later chapters.
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WHAT IS MARKETING? 3
A sales representative has many responsi-bilities ranging from simply taking orders tobuilding goodwill, trade selling, prospecting,and negotiating contracts. Personal characteris-tics that are required include empathy, patience,persuasive ability, and persistence. The stereo-typical image of a sales representative is of anextroverted, joke-telling socialite trying to foisthis product on you. But the best salespeopletake the time to listen to a client’s needs andprovide solutions to fit those needs.
4. PRODUCT VERSUS SERVICEMARKETING
Although product marketing has much in com-mon with service marketing, the strategy is notthe same. Services are performed and con-sumed while products are manufactured andpossessed. The following service sector attri-butes are different from those of the productindustry:
(a) Services are intangible, which makes itdifficult for the consumer to inspectthe services before purchase. Servicescannot be displayed, physically demon-strated, or illustrated in the same man-ner as a product. For example, unlikeproducts such as books or cameras,legal services cannot be seen, felt,tasted, smelled, or touched before theyare bought. Because consumers can seefew physical attributes prior to the pur-chase, they may feel there is a greaterrisk associated with the selection of aservice.
(b) Services are simultaneously consumedand produced. The person rendering theservice requires the consumer to be pres-ent throughout the service delivery. Forexample, medical examinations, beauty
The marketing-oriented organization seeksto make a profit by serving the needs of cus-tomers and solving their problems. The market-ing concept is concerned with the fair exchangeof value between the consumer and the organi-zation. Marketing is different from sales in thatyou first determine the customer’s needs andthen design a product or service to satisfy thoseneeds.
Marketing is really about listening to yourcustomer. In a sales-oriented organization,salespeople listen with the intent to reply; inmarketing, you listen with the intent to under-stand.
Inventing a product without first checkingif it is needed is similar to having your opto-metrist give you his personal eyeglass prescrip-tion without first examining your own eyes. In a market-oriented organization your first pri-ority is to find out if a product is needed before offering it.
In a marketing-oriented organization, thesales manager’s responsibilities relate mainly tothe following:
(a) Determining sales objectives
(b) Establishing a sales force size andstructure
(c) Formulating sales implementation programs
(d) Recruiting, training, and supervisingthe sales force
(e) Formulating a motivating compensa-tion package
(f) Setting budget and sales expenses
(g) Developing sales forecasts
(h) Establishing ties between the differentfunctional groups
(i) Evaluating sales representatives
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4 MARKETING YOUR PRODUCT
failures can be attributed to poor marketing. Inorder of priority, the most common reasons forproduct failure are the following:
(a) Misunderstanding the market: Failure toproperly analyze market needs andhabits leads to a poor understanding ofthe benefits your customer was lookingfor. You must be careful not to assumethat what you want to offer is what yourcustomer wants.
(b) Product quality: The quality, value, andperformance of your product may notmeet your customers’ expectations ormay be inferior to the competition.
(c) Lack of marketing effort: Failure to pro-vide the required training, support, andfollow-up for an effective marketing effort erodes the commitment andteam effort critical to the success of anybusiness.
(d) Poor planning: Failure to set realisticgoals, objectives, and tasks often leadsto higher costs than anticipated, whichin turn results in a higher price. Higherprices often mean lower sales volumes.It is common to over-estimate the rev-enue and underestimate the cost ofbringing a product to market.
(e) Competition: The competition’s quickreaction to copy and improve on yourproduct or overcrowd the market couldforce you out of business.
(f) Failure to adapt: Not revising goals,maintaining inflexible attitudes, arro-gance or overconfidence, and unantici-pated obstacles can lead to failure.Adaptability and ongoing reassessmentof your goals is practical and realistic.
salons, and travel tours all take placewith both the customer and agent pres-ent. This characteristic limits the scaleof a service operation to the number ofqualified personnel available. Regardlessof the size of the office, a dentist cantreat only so many patients per hour.
(c) The quality of a service is affected bythe client’s own input. A psychiatrist,doctor, or psychologist requires the patient’s cooperation. A managementconsultant’s advice depends on theclient’s honest disclosure of informa-tion in order for the recommendationsto be appropriate and effective.
(d) Services cannot be inventoried becausemost are performed by people. Emptyseats in an airplane or unused electricpower represents lost business and can-not be stored for the next day.
(e) Services are not standardized; the qual-ity of service varies depending onwhere and when it is performed. For ex-ample, different sales representatives ina travel agency have varying levels ofexperience. Depending on the expertiseof the sales representative you use, youmay or may not be advised of the mosteconomical travel package. In the prod-uct industry, however, machines ensurestandardization. In a service organiza-tion, the quality and consistency ofservice is highly dependent on the per-son giving the service.
5. AVOIDING FAILURE;ENSURING SUCCESS
Statistics vary, but the majority of new productsfail. Studies indicate that 75 percent of product
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WHAT IS MARKETING? 5
(b) Have a unique product: Most successfulproducts are either superior to and/ordifferent from those of the competition.Successful businesses care about productquality and the services they provide.
(c) Technical competence: Have technicalcompetence in the production or distri-bution of your product. Gain knowl-edge and experience in the industryand a “hands-on” understanding ofwhat is happening. Provide meaningfulrewards to employees for good work.
(d) Competitive pricing: Are your pricescompetitive compared to similar prod-ucts? Do you offer added value? Doyou have sufficient margins to coveryour costs and give incentive to yourdistributors?
(g) Lack of technical competence: Not as-sessing your strengths and weaknesses,or marketing a product you are unfa-miliar with or do not have technicalcompetence or production expertise in,can lead to failure.
This book provides many practical tips andinformation that will contribute to the successof your business. As you read this book, keep in mind the four main reasons why a productsucceeds:
(a) Use of an effective marketing approach:Answering the basic marketing ques-tions and acting on that information isessential to the success of your product.Stay in touch with your customers; findout what they really need and want andwhere you stand in the market.
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