MARKETING

MANAGEMENT

Definition of Marketing
the process of planning and
executing the conception,
pricing, promotion, and
distribution of ideas,
goods, and services to
create exchanges that
satisfy individual and
organizational objectives.

The Marketing Concept Focus on the Customer

Market focus
Customer orientation
Co-ordinated marketing
Profit seeking

Drawbacks of Marketing Concept

ignores public

influences values &

ideas

Recent Development
-- Societal Marketing Concept
Concerns public welfare
and social responsibility
e.g. CLP

The role of Marketing

Marketing Analysis
Marketing Planning
Marketing Implementation

Marketing Control

Marketing Research
Gathering, recording
and analysis of data
to solve a specific
problem that is too
important to be answered by guessing
an informational input to decisions

What M.R. can tell ?

How satisfied the consumers are
How products are perceived
Evaluate the sales potential
Determine the effectiveness of ad
Predict the impact of price changes

The Marketing Research Process

Defining the Problem & Research Objectives
Developing the Research Plan
Implementing the Research Plan

Interpreting and Reporting the Findings

1. Defining the problem and

research objectives
to find out the real problem but not the
symptom
set the research objectives
research approaches:
exploratory

descriptive
causal

2.

Developing research plan

Determine specific information needs

Source of information
secondary data
Internal
External

primary data

 Planning primary data collection

research approach

contact methods
sampling plan
research instruments

Research approach
Observational research
survey research
focus group

experimental research

Contact methods
Telephone survey
mail questionnaires
personal interviews

Sampling plan
sampling unit

sampling size
sampling procedure

Sampling Techniques
Probability Sampling

All population members have a known

probability of being in the sample
Simple Random Sampling
Each population member, and each possible
sample, has equal probability of being
selected
Stratified Sampling

The chosen sample is forced to contain

units from each of the segments or strata of
the population

Sampling Techniques (Contd.)

Cluster Sampling
Involves dividing population into subgroups
Random sample of subgroups/clusters is
selected and all members of subgroups are
interviewed
Very cost effective
Useful when subgroups can be identified that
are representative of entire population

Research instrument
The most common instrument is questionnaire
what questions to ask

question structure
wording of question

order of question

Implementing the research plan

collecting and
analyzing data

Interpreting and reporting the

finding
Interpret the findings, draw conclusions and
report to management
the manager will
utilize these findings
to make decisions

Consumer behaviour
refers to the buying
behaviour of final
consumers
it includes the analysis
of factors that
influences purchase
decisions and product
use

Definition
Consumer behaviour studies how individuals,
groups,and organizations select, buy, use, and dispose
of goods, services, ideas,or experiences to satisfy their
needs and desires.

Consumer Behaviour
Marketing
and other
stimuli

Buyers
black box

Buyers
response

Internal factors
1.

Perception
the process by which we select organize and
interpret these stimuli into a meaningful and
consistent picture

2.

Motivation
to fulfill some kind of need
Self-actualization Needs

Esteem
Needs
Esteem
Needs
Social Needs
Security Needs
Physiological Needs

3. Learning
creates changes in
behaviour through
experience and
practice

4. Attitude
Consistently favourable or unfavourable
evaluation, feelings and tendencies toward an
idea.

5. Personality
refers to the unique
psychological characteristics
that lead to relatively consistent
and lasting responses

E.g. Vita Distilled Water

6. Demographic factors
such as age, sex, income,
education, occupation,.

Industrial Buying behaviour

Industrial market
Consists of all the individuals and
organizations acquiring goods and services

that enter into the production of other

products and services that are sold, rented,
or supplied to others

Types of buying situations

Straight rebuy
modified rebuy
new task buying

Industrial buying process

Recognise the problem
determine product needs and describe
product specifications
search for suppliers
assess and select suppliers
evaluate overall performance

Participants in the industrial

buying process
Users
influencers

buyers
deciders

gatekeepers

Factors affecting industrial buying

behaviour: External factors

Level of demand
economic outlook
budget constraints
supply conditions
political/legal and competitive environmental
changes
rate of technological change

: internal factors
Organizational influences
interpersonal influences

Differences between consumer

market and industrial market
Buying motive:
Industrial market
Businesses do not buy
products for final
consumption. Instead,
they make purchases to
be used directly or
indirectly in meeting the
needs of final
consumers.

Consumer market
For direct consumption

Differences between consumer

market and industrial market
Size of purchase:
Industrial market

Consumer market

Tend to be larger

Tend to be smaller

Differences between consumer

market and industrial market
Frequency of purchase:
Industrial market

Consumer market

Less frequent

More frequent

Differences between consumer

market and industrial market
Buyer-seller relationship:
Industrial market

Consumer market

Stable and long term Businesses that

relationship with seller
produce products for
sale to final consumers
often have little contact
with customers

Differences between consumer

market and industrial market
Product:
Industrial market

Consumer market

More complex,
customized; product
support is critical.

Less complex,
standardized; product
support is important

Differences between consumer

market and industrial market
Price:
Industrial market

Consumer market

Competitive bidding
and negotiation; list
prices on standard
products

List prices

Differences between consumer

market and industrial market
Distribution:
Industrial market

Consumer market

More direct (shorter)

Less direct (longer)

Differences between consumer

market and industrial market
Promotion:
Industrial market

Consumer market

Emphasis on
personal selling

Emphasis on
advertising

Marketing strategy
the plan of action for accomplishing the
marketing objectives
consists of
specific strategies for target market
marketing mix
marketing expenditure level

Analyze and select target

market
Market
the set of all actual and potential buyers of
a product

 steps of selecting target market

market segmentation
market targeting
market positioning

Step 1

Marketing
Segmentation

Market segmentation
the act of dividing large, heterogeneous
(dissimilar) markets into smaller,
homogeneous (similar) submarkets.

Advantages of segmentation
Precise market definition
better analysis of competition

rapid response to changing market needs

effective resources allocation

effective strategic planning

Dimensions for segmenting

consumer markets
Geographic segmentation
dividing the market into different geographical
units.

Demographic segmentation
dividing the market into groups based on
variables like age, sex, family size, family
life cycle, income, occupation, education,
religion, race, nationality,
popular because of
consumer needs vary closely with demographic
variables
easier to measure

Psychographic segmentation
based on social class, lifestyle, or
personality characteristics

Segmentation by benefits
base on what a product will
do rather than consumer
characteristics

Criteria for effective

segmentation
Substantial enough to serve
Accessible by marketing means

Differentiable:
conceptually distinguishable and responding

differently

 Actionable:
effective programs can be designed for
attracting target customers
Measurable:
size of market segment, purchasing power and

profile of target customers

Step 2

Market Targeting

 to reveal the firm market-segment

opportunities

to evaluate the various segments

segment size and growth
segment structural attractiveness
company objectives and resources

Undifferentiated marketing
A firm decides to ignore market
segment differences and go after
the whole market with one offer. E.g.
McDonald

Differentiated marketing
A firm decides to target several
market segments and design
separate offers for each
E.g. Giordano: men, ladies

Concentrated marketing
A firm goes after a large share of
one or a few sub-markets.
Selected segments
Specific products
Specific markets

Step 3

Market
Positioning

Market positioning
to arrange for a product to occupy a clear,
distinctive and desirable image relative to
competing products in the minds of target
consumers.

Purpose:
to reinforce or develop an image concerns
a product in customer mind

Ways of positioning
Product features
product benefits
associating the product with a use or
application
user category

Steps of positioning
1.

Identifying a set of possible competitive

advantages

2.

Selecting the right competitive

advantages

3.

Communicating and delivering the

chosen position to the market

Marketing Mix
the set of controllable marketing variables
that the firm blends to produce the response
it wants in the target market
4 Ps

product
price
place
promotion

Product
A product is anything that can be
offered to a market for attention,
acquisition, use, or consumption and
that might satisfy a want or need
3 levels of product
core product
actual product
augmented product

Product Classification
Convenience goods
Shopping goods
Specialty goods
Unsought goods

Classification of consumer goods

Individual product decisions

Product attribute decisions
Brand decisions
Packaging decisions
Product-Support decisions

Product Line Decisions

A product line is a group of products that
are related in function, customer-purchase
needs, or distribution channels.

Product mix decisions

the set of all product lines and items that a
particular seller offers for sale
4 dimensions

width
length
depth
consistency

Why does a company need new products?

Obtain greater profits/ROI

Capture larger market share
Meet customers changing needs & tastes
Shorter product life cycle
Build competitive advantages
Planned obsolescence

New product development

Steps:
Product idea generation
Product idea screening and product
concept development
Business analysis
Product testing
Market testing
Commercialization

Product life cycle (PLC)

the course of a products sales and profit
over its lifetime
4 stages:

introduction
growth
maturity
decline

Sales and profit

Sales

Profit
Introduction

Growth

Maturity

Time

Decline

Introduction Stage
slow sales growth
profit are nonexistent

high promotion spending

a few competitors

usually focus on high-income groups

Growth Stage
rapid market acceptance
new competitors will enter

introduce new product features

market will expand

profit increases

Maturity Stage
slowdown in sales
competitors begin marking down prices,.
to find better versions of the product
drop in profit
only well-established competitors

Decline Stage
sales fall off and profits
drop

some firms withdraw from

the market

Ways to extend PLC

To increase the frequency of use
to add new user
to find new uses

to change package size, label,

or product quality

Factors influencing pricing

decisions ---- Internal Factors
1.

Business and marketing objectives

pricing objectives derive directly from

company objectives

2.

Marketing mix strategy

must coordinate with product, design,

distribution and promotion decisions

3.

Costs

set the floor for the price

External factors
1.

The market and demand

Pricing in different types of market

consumer perception of
price and value

2.

Competitors prices and offers

3.

Other external factors

economic conditions
reseller conditions

Government

Pricing Objectives
Profit maximizing objective
Market share objective

Competition objective
Social objective

Image objective

General Pricing Approaches

Cost-based approach
Buyer-based approach
Competition-based approach

Pricing Strategies for New

Products
Market-skimming pricing

Penetration pricing

Price-adjustment strategies
Discount pricing and allowances

cash discounts
quantity discounts
functional discounts
seasonal discounts
trade-in allowances
promotional allowances

 Discriminatory pricing
customer-segment pricing
product-form pricing
location pricing
time pricing

 Psychological pricing

Promotional pricing
loss leaders
special event pricing
cash rebates

Promotion tools
advertising
sales promotion
public relations
personal selling

Setting the promotion budget

Affordable method
ignores the effect of
promotion on sales

Percentage-of-sales method
wrongly view sales as the
cause of promotion rather
than as the result

Competitive-Parity
method

Objective-and-task method

Five important decisions

1. Setting objectives
to inform,
persuade, or
remind

2. Setting the advertising budget

stage in the PLC
market share
competition
advertising frequency
product differentiation

3. Creating the advertising message

message generation
message evaluation
message execution

4. Selecting advertising media

reach, frequency, impact

media types
media vehicles

media timing

5. Advertising evaluation
communication effects
sales effects

Sales promotion
A wide variety of short-term incentive tools

coupons
premiums
contests
buying allowances

to stimulate consumers, the trade partners,

and the companys own salesforce

Purposes of sales promotion

to stimulate consumer trials, to reward loyal
customers, to increase repurchase rate, to
cement long-term relationship with
retailers,
used together with advertising or personal
selling

Steps of sales promotion

Setting sales-promotion objectives
selecting sales-promotion tools
pretesting and implementing
evaluating

Public relations
Building good relations with the companys
various publics obtaining favorable publicity
building up good corporate image
handling or heading off unfavourable rumors,
stories and events

Public relations tools

Create news
speeches
special events
written materials
audiovisual materials
corporate identity materials
contributing money and time to publicservice activities

Major public relations

decisions
Setting public relations objectives
choosing public relations messages and
vehicles
implementing the public relations plan
evaluating public relations results

Steps of sales management

Setting salesforce objectives

designing salesforce strategy
structure, size and compensation
recruiting and selecting
training
supervising
evaluating

Personal Selling Process

Prospecting
Preapproach
Approaching the prospect
Making the presentation
Handling Objections

Close the sale

Follow up

Factors affecting the

promotion mix
Type of product/market
push vs. pull strategy
buyer readiness state

PLC stage

Placing Products
The role of distribution is getting a product
to its target market.
Channels of distribution: the routes
followed by products as they change
ownership in the movement from production
to consumption

Distribution channel functions

Information

Negotiation

promotion

physical distribution

contact

financing

matching

risk taking

Designing distribution channel

Selecting the proper type of distribution
channel
selecting the types of middlemen
determining the intensity of distribution

Meaning of logistics
the movement of all
materials :
raw materials : from
the sources to the
processing point
finished goods :
from the plant to
ultimate customers

 concerns with the management of physical

flow

Major logistics activities

Transportation

Protective packaging

inventory maintenance acquisition

order processing

product scheduling

warehousing

information
maintenance

materials handling

Definition
Service is an activity or benefit that one party can
offer to another that is essentially intangible and
does not result in the ownership of anything.
Its production may or may not be tied to a
physical product
Diamond
medical diagnosis

The Servuction system

5 elements influence the service:
Organization and system (invisible)
Environment (visible)
Contact personnel / service provider
Customer A
Customer B

The
Servuction System

Characteristics of service
Intangibility
inseparability

heterogeneity
perishability
fluctuating demand

Marketing Mix for Services

Product
Price
Promotion
Place
People
Process
Physical evidence

Product
Tangiblize the intangible
core and supplementary services
customization vs. standardization

the service mix

Price
Customer being inseparable in the
process, outlay by customers include:
Time
Physical effort
Psychological burdens (mental effort,
negative feelings)
Negative sensory burdens (unpleasant
sensations affecting any of the 5 senses)

Price
Good understanding of the costs is
needed as decrease of above burdens
justify higher pricing
Difficult to define a unit of service,
considering:
Visible vs. invisible
Difference in speed
Direct contact vs. impersonal channel

Promotion
Different from advertising for goods

Intangible nature
vivid information that produce a clear impression on the
senses, e.g. symbols
Services are harder for customer to evaluate
Use tangible cues, e.g. high calibre personnel (DHL)

Strong organizational image

Use personal information source, e.g.
celebrity endorsements
Engaging in post-purchase communication

Place
Identify core services
Reduce contact of low contact element e.g.
download application forms
Use of technology to create new channels:
e.g. Octopus for ticketing, online shopping

Convenience
Number of outlets
Location
scheduling

Fluctuating Demand
Supply side
Cross training
Use part time staff
Rent or share facilities &
equipment
Schedule down time during
period of low capacity (take
vacation)
Extra service hours
Use technology
Use price

Demand side
Price discrimination
Reservation
Overbook
Queuing (make the waiting
more tolerable)
Shift demand
Change the salespersons
assignment
Create promotional events

People
Importance of customer contact personnel
Internal marketing (customer focus philosophy,
bonus, awards, recognition as incentive)

Ritzcarlton

Internal Marketing

Process
Customer involvement in production
Educate customers in using technology or selfservice

Develop service oriented internal process

Logistic support
Empowerment of staff for service recovery

Physical Evidence
Intangible nature makes service difficult to
evaluate
Communicate through corporate image, word
of mouth, pricing physical evidence, warranty,
awards
ritzcarlton

Judge by process, post-purchase information

search needs re-assurance

Meaning of CRM
the process of creating,
maintaining, and enhancing
strong, value-laden
relationships with
customers and other

stakeholders.

Rationale behind CRM

to retain current customers vs. to attract new
customers
new Marketing view: the science and art of
finding, retaining and growing profitable
customers

 challenges
changing demographics
more sophisticated competitors
overcapacity
customer lifetime value

Key concepts in relationship

building
Customer satisfaction
perceived performance > expectations
Customer loyalty and retention
create emotional affinity, not just rational
preference

share of customer
cross-selling

Tools to build lasting

customers
Frequency marketing programs
affinity program

co-marketing and co-branding

customisation and prompt response

create long term contract

Meaning of consumerism

a movement that put pressure on businesses

to consider consumer needs and interests
consumer rights

right to be informed
right to be heard
right to safety
right to choose

Why consumers need

protection?
Manufacturer may be unfair to consumers
consumers may be unable to judge the
quality
insufficient information to evaluate service
advertisements are exaggerating
concern about health

Consumer protection in Hong

Kong
Legislation

Consumer Council

Responses of businesses to
consumerism
Provide more and better information
improve product safety
quicker response to consumer complaints

provide customers with a wide range of

products and services

International marketing
The process of
focusing the
resources and
objectives on global
market opportunities

Environmental forces in
International Markets
Cultural environment
economic environment
political and legal environment

Standardization vs.
adaptation
Arguments for standardization
reduce costs
moving to a world living style

international brand

Arguments for adaptation

most exported goods needed adaptation
take care of environmental differences
max. sales and profits through customization
favours local management inputs

Methods of entering overseas

market

Exporting
contract manufacturing
licensing
franchising
joint venture
strategic alliance
direct investment
countertrade

Factors affecting the choice of

entry strategy
desired speed
firm expertise
costs
flexibility
resources
profit objectives

Marketing in the case of

economic downturn
moving down-market
lowering price
promoting image of good
quality and durable
find new markets

Contents of a Marketing Plan

Situational analysis

Marketing Objectives
Selecting the Target
Market

Developing marketing
mix
Budget

Controls

Product attribute decisions

Product quality
Product features
Product design

Brand decisions
To brand or not to brand
Brand sponsor
manufacturers brand
private brand
Licensed brands
Co-brands

Brand equity
High level of consumer awareness, loyalty
Lower marketing costs
Consumer expect stores to carry the brand
The company has more bargaining power
in channeling
High credibility
Easily launch brand extensions
Powerful brand
Defense against fierce price competition

Brand Strategy / Brand

Development
line extensions
brand extensions
Multi-brands

new brands

 Brand Positioning
Attributes
Benefits
Beliefs /values
Create surprise, passion excitement

Brand Re-positioning
Competitors close positioning cutting market
share
Customers wants may shift
Technology
www.euyansang.com

Brand Name selection

Suggest benefits and qualities

Easy to pronounce, recognize

Distinctive, extendable
Capable of registration and legal protection

Packaging decisions
to create benefits: protection, economy,
convenience and promotion
Major decisions:
the main functions
specific elements of package
selecting the package design

Product-Support Services
Decisions
deciding which product-support services
to offer
how to deliver the services to customers

Cost-based approach
Cost-plus Pricing
to add a standard mark-up to the cost

Breakeven analysis and Target Profit Pricing

Buyer-based Pricing
base on the products
perceived value

Competition-based pricing
Going rate pricing
base on competitors price

Market-skimming pricing
Set an initial high price

after initial sales slow

down, it lowers the
price to draw in the
next price-sensitive
layer of customers and
so on

Penetration pricing
set an initial low price
seek to generate
consumer interest and
stimulate trial purchase

Types of distribution channel

1.
producer

customer

2.

manufacturer

retailer

consumer

3.

manufacturer

wholesaler

retailer

consumer

4.

manufacturer
agent

wholesaler
retailer
consumer

5.

manufacturer
agent
retailer
consumer

Factors affecting choice of

distribution channel
Industrial goods vs. consumer goods
no. of customers

importance of control
characteristics of products
services

Thank You