Marketing Strategy

1. Who the target market is and the needs it will address, including functional and emotional fulfilment.
2. The features, advantages and benefits of the product, the unique selling proposition and key differentiators from competition.
3. The businesses’ goals for the product.

Product Development

We can guide you through this process if you are considering new products/services or considering enhancements.

Place in the strategic marketing mix refers to distribution. Distribution itself is the method of getting goods or services to the end consumer. There are many factors to consider, including item type, customer base and logistics.

Direct distribution is where the product or service is delivered from the business direct to the consumer. An area of interest to many businesses is utilisation of e-commerce for product delivery. Although nothing new, Covid-19 has prompted many firms to invest in direct distribution using an e-commerce interface.

Indirect distribution utilises an intermediary to offer the product or service to the consumer. In an e-commerce situation affiliate marketing is a mechanism many organisations employ to widen their reach for online products. Traditional retail utilises intermediaries and an intensive distribution strategy where placement of a product across multiple locations is required.

Exclusive Distribution is an arrangement where the manufacturer appoints selected resellers for its products. This strategy can be very effective where the distribution partner has well developed sales channels and a large customer base and works well for highly coveted goods where buyers will often switch in order to obtain them. Apple at one stage had an exclusive agreement with AT&T distributing the iPhone. People switched phone companies to buy the highly desirable product.

Selective Distribution is a favoured channel for providers of branded goods such as clothing, furniture, and whiteware. The distribution is more targeted than the indirect approach, and may include store-in-store, where for example a brand has dedicated, branded space in a retailer’s store. Selective distribution may go hand in hand with direct distribution, in either a retail environment or online.

Different distribution channels include wholesaler, retailer, franchise, or manufacturer’s representative.

There are a number of factors that determine the price a seller asks.

Advantages are higher margin and profit, improved brand perception, both for the product and the company a a whole. It can also serve as a barrier to entry for competitors. For example IBM Computers were able to charge a premium for their product. At its prime, IBM dominated the landscape. The premium price made it hard for competitors, buyers felt good about paying more to deal with (perceptually) “the best” and the high price offered protection for executives. The saying “Nobody ever got fired for buying IBM” is now in sales folklore.

Economy pricing is a strategy where low price is applied to a product with low production, marketing and promotion costs. Profit on each unit is low, however the upside is volume. Generic supermarket brands, $2 shops and many unbranded items sold online use this method of pricing.

Psychology Pricing

There are a number of options available to marketers to stimulate sales.

FOMO – fear of missing out. This is where a seller posts an attractive price but controls supply with a time constraint. For example “50% OFF, 1 Day Sale”. If you want the offer, you must act today. Many retailers base their pricing model using this tactic.

Charm pricing or price ending – a pricing strategy that relies on the fact that certain prices have a psychological impact. Prices ending in “9” or “5” have the effect of illusion – that the item is of a lower price than it is. Although an old study from 1997 Marketing Bulletin research showed just how common this tactic is.

Penetration Pricing – sometimes known as introductory pricing, is a tactic where price is set low to quickly achieve market share. It can be appropriate for a new product, where competition is high or where the product or service offering is new. It is commonly used by telcos and ISPs who offer a discount for the first three months of a 12 or 24 month contract.

Price Skimming can occurs where a product has limited competition. This is a common practice used by drug manufacturers while their product is covered by patent. Once generic or alternative brands offering the same or similar benefits become available, the premium brand reduces their price. A good example is the price skimming strategy used by Viagra. Once competitors using the active ingredient Sildenafil came on the market once the patent had expired price dropped.

Bundle pricing, value pricing, promotional pricing and cost-based pricing are other tactics used by sellers of products or services.

Promotion deals with the mechanisms available to marketers to increate demand and create sales for a product or service.

Using the above promotional mechanisms marketers create interest and demand for their product or service. The AIDA technique shown below is often used by marketers to manage this process.

This element of the marketing mix consider the influence people themselves have as part of perception management. Documenting standards for customer service (who, what, where, when, how and why), timeliness of response, appearance, and attitude are important where a number of employees deliver the product or service experience and consistency is required as part of the marketing promise .

The following diagram also illustrates the various components of the marketing mix.

PRODUCT OR SERVICE LAUNCH STRATEGY