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Summary Marketing

Marketing (Hogeschool Utrecht)

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Chapter 1: Marketing
What is Marketing?
A social and managerial process by which individuals and groups obtain what they need and
want through creating and exchanging products and value with others.
Marketing must be understood not in the old sense of making a sale telling and
selling but in the new sense of satisfying customer needs
Trying to find new customers, keep current customers by improving product appeal
and performance, learning from product sales results and managing repeat
performance.
Marketing process
1. Understand the marketplace and customer needs and wants
Needs (states of felt deprivation), wants (the form that human needs take as
shaped by culture and individual personality), demands (human wants that
are backed by buying power)
Market offering: some combination of products services, information or
experiences offered to a market to satisfy a need or want
Customer Value (the consumers assessment of the products overall
capacity to satisfy his or her needs), satisfaction (the extent to which a
products perceived performance matches a buyers expectations. If the
products performance falls short of expectations, the buyer is dissatisfied. If
performance matches or exceeds expectations, the buyer is satisfied or
delighted) and quality
Exchange (the act of obtaining a desired object from someone by offering
something in return), transactions (a trade between two parties that
involves at least two things of value, agreed upon conditions, a time of
agreement and a place of agreement), relationship marketing (the process
of creating, maintaining and enhancing strong, value laden relationships
with customers and other stakeholders).
Markets (the set of all actual and potential buyers of a product or service)
and marketing system
2. Design a customer-driven marketing strategy
Select customers to serve: dividing market into segments >> deciding
segments to go after
Choose a value proposition: deciding how to serve targeted customer >>
differentiate yourself from the competition
Marketing concept (p.17)
3. Construct an integrated marketing programme that delivers superior value
Company outlines marketing strategy: selecting customers/target market
>> choosing a value proposition >> handling competition
Marketer constructs a marketing programme that will deliver value to
customer.
Marketing programme: 4Ps and 4Cs
4. Build profitable relationships and create customer delight
Customer relationship management: the overall process of building and
maintaining profitable customer relationships by delivering superior
customer value and satisfaction.
5. Capture value from customers to create profits and customer equity
Customer value

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Customer lifetime value: value of entire stream of purchases that a

customer would make over a lifetime.
Customer satisfaction

Chapter 3: Strategic Marketing

Mission statement a statement of the organisations purpose what it wants to
accomplish in the wider environment
Criteria of a Mission Statement:
Market oriented
Realistic
Specific
Motivational
Consistent with the market environment
Strategic Objectives
Are measurable goals
Tools to achieve the mission
Strategic Audit
Internal audit an evaluation of the firms entire value chain
External audit a detailed examination of the markets, competition, business and economic
environment in which the organisation operates.
SWOT analysis a distillation of the findings of the internal and external audits which draws
attention to the critical organisational strengths and weaknesses and the opportunities and
threats facing the company.
Opportunities:
Economic climate
Demographic changes
Market
Technology

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Threats:
Competitive activity
Channel pressure
Demographic changes
Politics
Strengths/ Weaknesses
Should focus on only factors critical for success
They are relative not absolute
i.e. measured relative to competitors
Business portfolio the collection of businesses and products that make up the company
Analysing the current business portfolio
Deciding which businesses should receive more, less or no investment
Develop growth strategies for adding new products or businesses to the portfolio
A strategic business unit (SBU) is a unit of the company that has a separate mission and
objectives, and which can be planned independently from other company business.
The Boston Consulting Group box

Stars: high-growth, high-share businesses or products that often require heavy

investment to finance their rapid growth.
Cash cows: low-growth, high-share businesses or products; established and
successful units that generate cash that the company uses to pay its bills and
support other business units that need investment.
Question marks: low-share business units in high-growth markets that require a lot
of cash in order to hold their share or become stars.
Dogs: low-growth, low-share businesses and products that may generate enough
cash to maintain themselves, but do not promise to be large sources of cash

Developing growth strategies

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Market penetration: a strategy for company growth by increasing sales of current

products to current market segments without changing the product
Product development: a strategy for company growth by offering modified new
products to current market segments
Market development: a strategy for company growth by identifying and developing
new market segments for current company products
Diversification: a strategy for company growth through starting up or acquiring
businesses outside the companys current products and markets

Marketing relationship
Internal
Contribute to customer value chain (the series of departments that carry out valuecreating activities to design, produce, market, deliver and support a firms products)
Think Customer
Work together to achieve strategic objectives
Suppliers
Achieve supplier satisfaction
Marketing planning process
Executive summary
Current marketing situation the section of a marketing plan that describes the
target market and the companys position in it
SWOT analysis
Objectives and issues
Marketing strategy Customer driven > Segmentation > Targeting > Positioning >
Marketing Mix
Marketing implementation the process that turns marketing strategies and plans
into marketing actions in order to accomplish strategic marketing objectives
Budgets return on investment
Control the process of measuring and evaluating the results of marketing
strategies and plans and taking corrective action to ensure that marketing objectives
are attained

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Chapter 4: The Marketing Environment

Microenvironment
The actors close to the company that affect its ability to serve its customers the company,
suppliers, marketing intermediaries,
customer markets, competitors and
publics
Suppliers: firms and individuals that
provide the resources needed by
the company and its competitors to
produce goods and services.
Marketing intermediaries: firms
that help the company to promote,
sell and distribute its goods to final
buyers; they include physical distribution firms, marketing service agencies and financial
intermediaries.
Public: any group that has an actual or potential interest in or impact on an organisations
ability to achieve its objectives.
Financial publics: influence the companys ability to obtain funds. Banks, investment
houses and stockholders are the principal financial publics.
Media publics: include newspapers, magazines and radio and television stations that
carry news, features and editorial opinion.
Government publics: into account. Marketers must often consult the companys
lawyers on issues of product safety, truth in advertising and other matters.
Citizen action publics: help it stay in touch with consumer and citizen groups.
Local publics: e.g. neighbourhood residents, community organisations >> to deal
with the community, attend meetings, anwer questions and contribute to
worthwhile causes.

Macro environment
The larger societal forces that affect the whole microenvironment demographic, economic,
natural, technological, political and cultural forces.

Demographic forces: the study of human populations in terms of size, density, location, age,
gender, and race occupation.
Demographic trends include population growth, changing age and household structure,
pressures for migration and population diversity

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Economic environment: factors that affect consumer buying power and spending patterns.
Countries have different levels and distributions of income: Subsistence + Industrial
economies; upper, middle, lower income
Engels laws: differences noted over a century ago by Ernst Engel in how people
shift their spending across food, housing, transportation, healthcare and other
goods and services categories as family income rises (p.201)
Natural environment: natural resources that are needed as inputs by marketers or that are
affected by marketing activities.
Growing shortage of raw materials
Increased cost of energy
Increased pollution and climate change
Government intervention in natural resource management
Technological environment: forces that create new technologies, creating new product and
market opportunities.
Political environment includes laws, government agencies, and pressure groups that
influence and limit various organisations and individuals in a given society.
Cultural environment: institutions and other forces that affect societys basic values,
perceptions, preferences and behaviours.
Chapter 5: Consumer markets

Models of consumer behaviour

Consumer buying behaviour: the buying
behaviour of final consumers individuals
and households who buy goods and
services for personal consumption.
Consumer market: all the individuals and
households who buy or acquire goods
and services for personal consumption.

Factors influencing consumer behaviour

1. Cultural factors
Culture: the set of basic values, perceptions, wants and behaviours learned by a
member of society from family and other important institutions.
Subculture: a group of people with shared value systems based on common life
experiences and situations (nationalities, religion, racial groups, geographic,
regions).
Social class: relatively permanent and ordered divisions in a society whose members
share similar values, interests and behaviours.
2. Social factors
Groups
Membership groups: groups that have a direct influence on a persons
behaviour and to which a person belongs.
Reference groups: groups that have a direct (face-to-face) or indirect
influence on the persons attitudes or behaviour.
Aspirational group: a group to which an individual wishes to belong.

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Opinion leaders: people within a reference group who, because of special

skills, knowledge, personality or other characteristics, exert influence on
others
Family
Consumers buying roles:
o Initiator: The person who first suggests or thinks of the idea of buying a
particular product or service
o Influencer: a person whose view or advice influences buying decisions
o Decider: the person who ultimately makes a buying decision or any part
of it whether to buy, what to buy, how to buy, or where to buy.
o Buyer: the person who makes an actual purchase
o User: the person who consumes or uses a product or service
3. Personal factors
Age and life-cycle stage
Occupation
Economic circumstances
Lifestyle: a persons pattern of living as expressed in his or her activities
interests and opinions.
Personality and self-concept
4. Psychological
Motivation (or drive): a need that is sufficiently pressing to direct the
person to seek satisfaction of the need
Perception: the process by which people select, organise and interpret
information to form a meaningful picture of the world
Selective attention: the tendency of people to screen out most of the
information to which they are exposed
Selective distortion: the tendency of people to adapt information to
personal meanings.
Selective retention: the tendency of people to retain only part of the
information to which they are exposed, usually information that
supports their attitudes or beliefs
Learning: changes in an individuals behaviour arising from experience
Belief a descriptive thought that a person holds about something.
Attitude a persons consistently favourable or unfavourable
evaluations, feelings and tendencies towards and object or idea
The buyer decision process
Five adopter styles:
Innovators: adventurous
Early adopters: deliberate/ Rarely
leaders but adopt new ideas before
average person
Early majority: sceptical/ Adopt an
innovation only aftermost people
tried it
Late majority: tradition bound/
suspicious of changes
Laggards:

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Chapter 6: Business-to-business marketing

Business buying process is the decision-making process by which business buyers establish
the need for purchased products and services, and identify, evaluate, and choose among
alternative brands and suppliers.
Business buyer behaviour
1. Environmental
2. Organisational
3. Interpersonal
4. Individual
Business Markets vs. Consumer Markets
Fewer but larger buyers (expensive decisions)
Geographically concentrated and highly competitive (fewer locations)
Derived from final consumer demand (derived demand)
More inelastic
More fluctuations
More buyers involved in decision-making process
More professional purchasing effort
More complex and formalised buying decisions (many hours, high impact)
Based on long-tern relationships
Participants in the business buying process
Users: members of the organisation who will use the product or service; users often
initiate the buying proposal and help define product specifications.
Influence: a person whose views or advice carry some weight in making a final
buying decision.
Buyer: the person who makes an actual purchase.
Deciders: people in the organisations buying centre who have formal or informal
powers to select or approve the final suppliers.
Gatekeepers: people in the organisations buying centre who control the flow of
information to others.
Types of buying situations
Straight rebuy: a business buying situation in which the buyer routinely reorders
something without any modifications
Modified rebuy: a business buying situation in which the buyer wants to modify
product specifications, prices, terms or suppliers.
New task: a business buying situation in which the buyer purchases a product or
service for the first time.
Business buying process

Problem
recognition: the
first stage of the
business buying
process in which
someone in the
company
recognises a

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problem or need that can be met by acquiring a good or a service

General need description: the stage in the business buying process in which the
company describes the general characteristics and quantity of a needed item
Product specification: the stage of the business buying process in which the buying
organisation decides on and specifies the best technical product characteristics for a
needed item.
Supplier search: the stage of the business buying process in which the buyer tries to
find the best vendors
Proposal solicitation: the stage of the business buying process in which the buyer
invites qualified suppliers to submit proposals.
Supplier selection: the stage of the business buying process in which the buyer
reviews proposals and selects a supplier or suppliers.
Order-routine specification: the stage of the business buying process in which the
buyer writes the final order with the chosen supplier(s), listing the technical
specifications, quantity needed, expected time of delivery, return policies and
warranties.
Performance review: the stage of the business buying process in which the buyer
rates its satisfaction with suppliers, deciding whether to continue, modify or drop
them.

Institutional and government markets

Institutional markets include schools, hospitals, nursing homes, prisons and other
institutions providing care.
Often characterised by low budgets and captive patrons
Many marketers set specific needs
Governmental units include national and local units that purchase or rent goods to carry out
government functions.
Government markets
Offers large opportunities for companies
Require suppliers to submit bids; award the contract to the lowest bidder
Require considerable paperwork from suppliers lots of bureaucracy
Are asked to favour depressed business firms and areas

SUMMARY B2B MARKETS

B2B markets have:
More complex decision making unit
More rational buyers
More complex products
A limited number of buying units (80-20 rule)
Longer term buyers
More emphasis on personal relationships
Less of a drive for innovation
Rely heavily on package deals
>> B2B buyers are more demanding

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Chapter 9: Segmentation and positioning

Market segmentation: dividing large, heterogeneous markets into smaller segments that
can be reached more efficiently and effectively with products and services that match their
unique needs.

Segmenting consumer markets

Geographic segmentation dividing the
market into different geographical units
such as nations, regions states,
countries, cities, or neighbourhoods.
Demographic segmentation dividing
the market into groups based on
demographic variables such as age,
gender, family size, family life cycle,
income, occupation, education religion,
race, generation and nationality.
Psychographic segmentation dividing a market into different groups based on social class,
lifestyle or personality characteristics.
Behavioural segmentation dividing a market into groups based on consumer knowledge,
attitude, use or response to a product.
Geodemographics segmentation is applying segmentation on a geographic and at the same
time on a demographic basis. Marketers can use multiple segmentation bases to identify
smaller, better-defined target groups.
Intermarket segmentation means forming segments of consumers who have similar needs
and buying behaviour even though they are from different countries.
Market targeting
Evaluating the segments identified during the segmentation process and deciding how many
and which segments it can serve best.
Requirements for effective segmentation:
Measurable, Accessible, Substantial, Differentiable, Actionable

Types of target marketing strategy

Undifferentiated marketing (mass-marketing): a market-coverage strategy in which a firm
decides to ignore market segment differences and go after the whole market with one offer.
Differentiated marketing (segmented marketing): a market-coverage strategy in which a firm
decides to target several market segments and designs separate offers for each.
Concentrated (niche) marketing: a market0coverage strategy in which a firm goes after a
large share of one or a few submarkets.
Micromarketing: a form of target marketing in which companies tailor their marketing
programmes to the needs and wants of narrowly defined geographic, demographic,
psychographic or behavioural segments. (local marketing & individual marketing)
Differentiation and positioning
Companies must decide on a value proposition how it will
Create differentiated value
For targeted segments and

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What positions it wants to occupy in those segments

Products position the way the product is defined by consumers on important attributes
the place the product occupies in consumers minds relative to competing products.
Sources of differentiation:
Product
Services
Channels
People
Image
Chapter 10: Competitive strategy
3 steps in analysing competitors:
1. Identifying the companys competitors
Product competition
Product category competition
Industry competition
Market competition
(Inter) -national competition
Current and potential competitors
* must avoid competitor myopia which is a company is more likely to be buried by its
latent competitors than its current ones.
2. Assessing competitors objectives, strategies, strengths, weaknesses
Determine competitors objectives (cost leadership, technological leadership,
service leadership, market share growth)
Identify competitors strategies
Assessing competitors strengths and weaknesses
Estimating competitors reactions
* This process called Benchmarking which is the process of comparing the companys
products and processes to those of competitors or leading firms in other industries to find
ways to improve quality and performance.
3. Selecting which competitors to attack or avoid
Strong or weak competitors
Close or distant
Good or bad
Michael Porters basic competitive strategies:
Overall cost leadership: the company works hard to achieve the lowest production and
distribution costs
Differentiation: the company concentrates on creating a highly differentiated product line
and marketing programme so that it comes across as the class leader in the industry.
Focus: the company focuses its effort on serving a few market segments well rather than
going after the whole market.
Treacy & Wiersema: Value disciplines for delivering customer value
Operational excellence: it works to reduce costs and create a lean and efficient valuedelivery system. It serves customers who want reliable, good-quality products or services,
but who want them cheaply and easily.

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Customer intimacy: it specialises in satisfying unique customer needs through a close

relationship with and intimate knowledge of the customer.
Product leadership: it aims to make its own and competing products obsolete. Product
leaders are open to new ideas, relentlessly pursue new solutions, and work to get new
products to market quickly.

Marketing strategy stages of a company:

Entrepreneurial marketing: creative, start-up company, gain attention
Formulated marketing: formal marketing strategy, large companies, marketing
department
Intrepreneurial marketing: stuck in formulated marketing, focus back on creativity
Competitive position
A market leader is a firm in an industry with the largest market share; it usually leads other
firms in price changes, new product introductions, distribution coverage and promotion
spending.
A market challenger is a runner-up firm in an industry that is fighting hard to increase its
market share
A market follower is a runner-up firm in an industry that wants to hold its share without
rocking the boat.
A market nicher is firm in an industry that serves small segments that the other firms
overlook or ignore.
Strategies by market leadership role
Leaders: expand market, protect & expand market share
Challenger: full frontal attack, indirect attack
Follower: follow closely, follow at a distance
Nicher: target by customer, market, quality-price, service

Chapter 11: Product and branding strategy

PRODUCT
Anything that can be offered to a market for attention, acquisition, use of consumption that
might satisfy a want or need. It includes physical objects, services, persons, places,
organisations and ideas
Core Product the core problem solving services or benefits that consumers are really
buying when they obtain a product
Actual Product a products parts, quality level, features, design, brand name, packaging
and other attributes that combine to deliver core product benefits
Augmented Product additional
consumer services and benefits built
around the core and actual products

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Non-durable product a consumer product that is normally consumed in one or a few uses
Durable product a consumer product that is usually used over an extended period of time
and that normally survives many uses
Consumer product a product bought by final consumers for personal consumption
Convenience product a consumer product that the customer usually buys frequently,
immediately, and with a minimum of comparison and buying effort
Shopping product a consumer product that the customer, in the process of selection and
purchase, characteristically compares on such bases as suitability
Specialty product a consumer product with unique characteristics or brand identification
for which a significant group of buyers is willing to make a special purchase effort
Unsought product a consumer product that the consumer either does not know about or
knows about but does not normally think of buying
Industrial product a product bought by individuals and organisations for further
processing or for use in conducting a business
Product Decisions:

Product attributes: quality, features, style and

design
Branding: name, term, sign, symbol or design,
or a combination of these that identifies the
goods or services of one seller or group of
sellers and differentiates them from those of
competitors
Packaging: activities of designing and
producing the container or wrapper for a
product
Labelling
Product-support services: services that augment actual products
At what levels are product decisions made?

Product mix decisions:

Adding new product lines: widening
its product mix
Lengthen: its exiting product lines
to become a more full line company
Deepening: add more product
versions of each product
Pursue more or less product line
consistency depending upon goals
Product line stretching increasing the product line by lengthening it beyond its current
range
Downward stretch
Upward stretch
Two-way stretch

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BRANDS
Are the major enduring assets of a company
Brand equity is the positive differential effect that knowing the brand name has on
customer response to the product or service
Building strong brands
Brand positioning: attributes, benefits, beliefs and values, personality
Brand name selection: suggest products benefits, easy to pronounce/remember,
distinctive, short, capable of registration
Brand sponsorship:
Branding development:

Line extension: extending an

existing brand name to new
forms, colours, sizes, ingredients
or flavours of an existing product
category.
Brand extension: extending an
existing brand name to new
product categories.
Chapter 12: Product development & PLC

Strategy

What influences product?

9 steps in new-product development

Idea generation: the systematic search for new-product ideas

Idea screening: screening new-product ideas in order to spot good ideas and drop
poor ones as soon as possible

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Concept development and testing: an early state of an new product + testing new
product concepts with a group of target consumers to find out whether the
concepts have strong consumer appeal
Marketing strategy development: designing an initial marketing strategy for a new
product based on the product concept
Business analysis: a review of the sales, costs and profit projections for a new
product to find out whether these factors satisfy the companys objectives
Product development: developing the product concept into a physical product in
order to ensure that the product idea can be turned into a workable product
Test marketing: the stage of new product development where the product and
marketing programme are tested in more realistic market settings
Commercialisation: introducing a new product into the market

Product life cycle (PLC)

1. Product development: begins when the company finds and develops a new product
idea. During product development, sales are zero and the companys investment
costs mount.
2. Introduction: is a period of slow sales growth as the product is being introduced in
the market. Profits are non-existent in this stage because of the heavy expenses of
product introduction.
3. Growth: is a period of rapid market acceptance and increasing profits
4. Maturity: is a period of slowdown in sales growth because the product has achieved
acceptance by most potential buyers. Profits level off or decline because of
increased marketing outlays to defend the product against competition.
5. Decline: is the period when sales fall off and profits drop.
INTRODUCTION STAGE

GROWTH STAGE

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MATURITY STAGE

DECLINE STAGE

Chapter 13: Marketing Services

Nature and characteristics of a service
A service is any activity or benefit that one party can offer to another which is essentially
intangible and does not result in the ownership of anything.

4 Service Characteristics

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Service Intangibility: a major characteristic of services they cannot be seen, tasted,

felt, heard or smelt before they are bought
Service Inseparability: a major characteristic of services they are produced and
consumed at the same time and cannot be separated from their providers, whether
the providers are people or machines
Service Variability: a major characteristic of services their quality may vary greatly
depending on who provides them and when, where and how
Service Perishability: a major characteristic of services they cannot be stored for
later sale or use

Marketing strategies for service firms:

3 Ps: People, Process, Physical evidence
The service-profit chain:
1. Internal service quality
2. Satisfied and productive service employees
3. Greater service value
4. Satisfied and loyal customers
5. Healthy service-profits and growth
Internal marketing: marketing by a service firm to train and effectively motivate its customer
contact employees/ all the supporting service people to work as a team to provide customer
satisfaction
Interactive marketing: marketing by a service firm that recognises that perceived service
quality depends heavily on the quality of buyer-seller interaction

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Chapter 14: Pricing

What is price?
The amount of money charged for a product or service, or the sum of the values that
consumers exchange for the benefits
benefits of having or using the product or servie.
servie
Factors to consider when setting prices

Customer
perceptions of
value
(Price ceiling:
no demand above
this price)

Other internal and

external
considerations
Marketing strategy,
objectives and mix
Nature of the
market and
demand
Competitors'
strategies and
prices

Product costs
(Price floor:
no profits below
this price)

Cost-based pricing involves setting prices based on the costs of producing, distributing and
selling the product plus a fair rate of return for the companys effort and risk. Costs take two
forms, fixed and variable

Product

Cost

Price

Value

Customers

Value-based pricing uses buyers perceptions of value, not the sellers cost as the basis for
setting price

Customers

Value

Price

Cost

Product

What
hat are other factors affecting price?

Internal
Overall marketing strategy,
objectives, and mix
Organisational considerations

External
Nature of the marketing & demand
Competitors strategies & prices
Environmental factors

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The Experience curve refers to the drop in the average per-unit production cost that comes
with accumulated production experience.
Cost per unit as a function of accumulated production:

Break-even pricing means setting price to break even on the costs of making and marketing

a product

New-product pricing strategies

Market skimming means setting a high price for a new product to skim maximum revenues
layer by layer from the segments willing to pay the high price; the company makes fewer
Market penetration means setting a low price for a new product to attract large numbers of
buyers and a large market share
Product mix
Product line pricing: setting the price steps between various products in a product line
based on cost differences between the products, customer evaluations of different features
and competitors prices
Optional-product pricing: the pricing of optional or accessory products along with a main
product
Captive-product pricing: setting a price for products that must be used along with a main
product, such as blades for a razor and film for a camera
By-product pricing: setting a price for by-products (items produced as a result of the main
factory process, such as waste and reject items) in order to make the main products price
more competitive

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Product-bundle pricing: combining several products and offering the bundle at a reduced
price
Price-adjustment strategies
Discount and allowance pricing
Cash discount: a price reduction to buyers who pay their bills promptly
Quantity discount: a price reduction to buyers who buy large volumes
Quantity premium: a surcharge paid by buyers who purchase high volumes of a
product
Trade discount (or functional discount): a price reduction offered by the seller to
trade channel members that perform certain functions, such as selling, storing and
record keeping
Seasonal discount: a price reduction to buyers who buy merchandise or services out
of season
Trade-in allowance: a price reduction given for turning in an old item when buying a
new one
Promotional allowance: a payment or price reduction to reward dealers for
participating in advertising and sales-support programmes
Segmented pricing: selling a product or service at two or more prices that allows for
differences in customers, products and locations, rather than based on differences in costs
Psychological pricing: a pricing approach that considers the psychology of prices and not
simply the economics; the price is used to say something about the product
Promotional pricing: temporarily pricing products below the list price, and sometimes even
below cost, to increase short-run sales
Geographical pricing: setting prices for customers located in different parts of the country of
world
Dynamic pricing: charging different prices depending on individual customers and situations
International pricing

Price changes

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Chapter 15: Integrated Marketing

Communication

Promotional mix (marketing communications mix) is the specific mix of advertising, sales
promotion, public relations, personal selling and direct marketing tools that the company
uses to persuasively communicate customer value and build customer relationships
Advertising: any paid form of non-personal presentation and promotion of ideas,
goods or services by an identified sponsor
Sales promotion: short term incentives to encourage purchase or sale of a product
or service
Public relations: building good relations with the companys various publics by
obtaining favourable publicity, building up a good corporate image, and handling or
heading off unfavourable rumours, stories and events
Personal selling: personal presentation by the firms sales force for the purpose of
making sales and building customer relationships
Direct marketing: direct connections with carefully targeted individual consumers
both to obtain an immediate response and to cultivate lasting customers
The marketing communications system

Integrated Marketing Communication (IMC)

The concept under which a company carefully integrates and coordinates its many
communications channels to deliver a clear, consistent and compelling message about the
organisation and its products

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Elements in the communication process

Sender and Receiver are the major parties in a communication

Message and Media are major communication tools
Primary communication functions
Encoding: the process of putting the intended message or thought into symbolic
form
Decoding: the process by which the receiver assigns meaning to the symbols
encoded by the sender
Response: the reactions of the receiver after being exposed to the message
Feedback: the part of the receivers response communicated back to the sender
Noise: the unplanned static or distortion during the communication process, which
results in the receiver getting a different message from the one the sender sent
Steps in developing effective communication
1. Identifying the target audience
2. Determining the communication objectives
3. Designing a message
o Define message content: appeal produces the desired response
o Define message structure: headline, copy, illustration, colour
o Define message format: layout and design
4. Choosing media
o Personal communication channels: word-of-mouth influence
o Non-personal communication channels: media that carry messages without
personal contact or feedback, including media, atmospheres and events
o Message source: the company, the brand name, the salesperson of the
brand, or the actor in the ad who endorses the product
5. Collecting feedback
Methods of setting a total advertising budget
Affordable method: setting the promotion budget at the level management thinks
the company can afford
Percentage-of-sales method: setting the promotion budget at a certain percentage
of current or forecasted sales or as a percentage of the unit sales price
Competitive-parity method: setting the promotion budget to match competitors
outlays
Objective and task method: developing the promotion budget by (1) defining
specific objectives, (2) determining the tasks that must be performed to achieve
these objectives, and (3) estimating the costs of performing these tasks. The sum of
these costs is the proposed promotion budget

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Promotion mix strategies

Push strategy: a promotion strategy that calls for using the sales force and trade
promotion to push the product through channels. The producer promotes the
product to channel members to induce them to carry the product and to promote it
to final consumers
Pull strategy: a promotion strategy that calls for spending a lot on advertising and
consumer promotion to induce final consumers to buy the product. If the strategy is
effective, consumers will then demand the product from channel members, who will
in turn demand it from producers
Push strategy

Pull strategy

Factors in designing promotion mix strategies

Type of product/market
Buyer-readiness stages are the stages that consumers normally pass through on
their way to purchase
Product life-cycle stage
Chapter 16: Advertising and Public Relations
Advertising is any paid form of non-personal presentation and promotion of ideas, goods or
services by an identified sponsor
Important decisions in advertising

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3 primary purposes of advertising:

Consideration for setting the advertising budget

Stage in the product life-cycle
Market share
Competition and clutter
Advertising frequency
Product differentiation
Developing advertising strategy
1. Creating advertising messages
Execution styles:
Slice of life: shows typical people using product in normal setting
Lifestyle: shows how product fits in your lifestyle
Fantasy: creates fantasy around product
Mood or image: builds mood around product
Musical: singing about product
Personality symbol: creates character that represents product
Technical expertise: shows companys expertise in making product
Scientific evidence: presents scientific evidence that brand is better
Testimonial evidence: features highly likable source endorsing product
2. Selecting advertising media
Deciding on reach, frequency and impact
Choosing among chief media types
Selecting specific media vehicles
Deciding on media timing
International advertising decisions:
Standardisation or differentiation
Centralisation or decentralisation
Media planning, buying and costs
International advertising regulations

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Public Relations (PR): building good relations with the companys carious publics by
obtaining favourable publicity, building up a good corporate image, and handling or heading
off unfavourable rumours, stories and events. Major PR functions include press relations,
product publicity, public affairs, lobbying, investor relations and development

Major public relations decisions

Setting public relations objectives
Choosing public relations messages and
vehicles
Implementing the public relations plan
Evaluating public relations results

Chapter 18: Direct and Online marketing

Direct marketing: direct communications with
carefully targeted individual customers to both obtain an
immediate response and cultivate lasting customer
relationships

Growth and benefits of direct marketing

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Direct-mail marketing is marketing through mailings that include letters, catalogues, ads,
CDs, DVDs, samples, foldouts sent to prospects on mailing lists.
Customer database is an organised collection of comprehensive data about individual
customers or prospects, including geographic, demographic, psychographic and buying
behaviour data

Online marketing: company efforts to market products and services and build customer
relationships
nships over the Internet
Online marketing domains:

Types of online marketers:

1. Bricks-and-mortar
mortar marketers

Seller

Store
(physical)
channels

Consumers

2. Click-only
only marketers (or dotcom companies)

Seller

Store
(online)
channels

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Consumers

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3. Clicks-and-mortar marketers

Brick-and-mortar
Store channels
Seller

Consumers

Online
store channels
Setting up for online marketing

Creating
a website

Ads online

Creating
Web communities

Using e-mail

Conducting
online marketing

Online advertising is advertising that appears while consumers are surfing on the Web,
including display ads (banners, interstitials and pop-ups and pop-unders), search-related
ads, online classifieds (advertisements are grouped into categories or classes) and other
forms including content sponsorships, alliances and affiliates and viral advertising
Chapter 19: Managing Marketing
Channels
Supply chains

A value delivery network is a

network made up of the company,
suppliers, distributors and customers who partner with each other to improve the
performance of the entire system

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A marketing channel (or distribution channel)

channel) is a set of interdependent organisations
involved in the process of making a product or service
service available for use or consumption by
the consumer or business user
How a marketing intermediary reduces the number of channel transactions

Role of intermediaries

Key functions performed by channel members

Information: marketing research
Promotion: communicate offers
Contact: finding buyers
Matching: fitting offer to buyers need
Negotiation: agreeing on price and terms
Distribution: transporting/ storing goods
Financing: using funds to cover costs
Risk taking: assuming risks
Marketing channel levels

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Conventional marketing channel vs. Vertical marketing

system
CMC: a channel consisting of one or more
independent producers, wholesalers and
retailers, each a separate business seeking to
maximise its own profits, even at the expense of
profits for the system as a whole.
VMS: a distribution channel structure in which
producers, wholesalers and retailers act as a
unified system. One channel member owns the
others, has contracts with them, or has so much
power that they all cooperate.
Main types off vertical marketing systems (VMS)

A franchise organisation is the most common type of contractual relationship. It exists

between a manufacturer, wholesaler or service organisation and independent
businesspeople (franchisees) who buy the right to own and operate one or more units in
the franchise system.
Manufacturer-sponsored
sponsored retailer franchise system: independent business people
agree to meet various conditions of sales/service
Manufacturer-sponsored
sponsored wholesaler franchise system: licensing wholesalers
Service-firm-sponsored
sponsored retailer franchise system: licensing service to retailers to
bring service to customers
Horizontal marketing system: two or more companies at one level join together to follow a
new marketing opportunity
Vertical marketing system: by working together can combine marketing resources to
accomplish more than any one company could alone

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Administered VMS: a vertical marketing system that coordinates successive stages of

production and distribution, not through common ownership or contractual
contractual ties, but
through the size and power of one of the parties
Corporate VMS: a vertical marketing system that combines successive stages of production
under single ownership channel leadership is established through common ownership
Contractual VMS: a vertical marketing system in which independent firms at different levels
of product ion and distribution join together through contracts to obtain more economies or
sales impact than they could
Multichannel distribution system (hybrid marketing channels)

4 activities to design a channel system

Analysing customer needs: what does customer want? Add on/ assortment
Setting channel objectives: which segments to serve? What can be done by
yourself?
Identifying channel alternatives: e.g. intermediaries. Focus on
n wholesalers and
retailers
Evaluating channel alternatives
Number of marketing intermediaries:
Intensive distribution:
Stocking product in as many outlets as possible
Convenience goods
Exclusive distribution
Giving limited number of dealers right to distribute
Selective distribution
Use of more than one but fewer than all intermediaries
Use of selected retailer network
Evaluating channel alternatives
1. Economic: how much sales, costs, profitability for each channel?
2. Control: how much control to give over marketing, distribution?
3. Adaptive: how adaptive is the channel to environmental changes?
Channel management decisions
Selecting channel members
Managing motivating channel members
Evaluating channel members

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Market logistics includes all the tasks involved in planning, implementing and controlling the
physical flow of goods, services and related information from points of origin to points of
consumption or use to meet customer requirements at a profit.

Inbound
logistics
Suppliers

Outbound
logistics

Company

Resellers

Customers

Reverse
logistics
Integrated logistics management is the logistics concept that emphasizes teamwork, both
inside the company and among all the marketing channel organisations to maximise the
performance of the entire distribution system.
Major logistics function:
Warehousing
Inventory management
Transportation
Logistics information management
Future channel trends
Growth of non-store retailing
Retail convergence
Rise of mega-retailers
Growing importance of retail technology
New retail forms and short life cycles
Global expansion of retailers
Blurring of lines between retailers and wholesalers

Chapter 20: Global market place

Global marketing is marketing that integrates or standardises marketing actions across
geographic markets
Go global: more profit, more global market share, more customers, brand-awareness, own
market satisfied, mission statement goes global
Major decisions in international marketing: (6 steps)
1. Looking at the global marketing environment
2. Deciding whether to go international
3. Deciding which markets to enter
4. Deciding how to enter the market
5. Deciding on the global marketing programme

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6. Deciding on the global marketing organisation

Expanding globally
Preferences + buyer behaviour
Price products competitively
Competitors
Adapt cultures
International experience (cross cultural awareness
Understand regulations and politics

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