MARK1012 MARKETING

FUNDAMENTALS
DEFINITION OF MARKETING;
Management function responsible for assuring that every aspect of the
organisation focuses on customer relationships by delivering superior value
Social and managerial process by which individuals and groups obtain what they
need and want through creating, offering, and exchanging products of value with
others.
Process by which companies create value for customers and build strong customer
relationships in order to capture value from customers in return. *

**Micromarketing how an individual organisation directs its marketing activities and

allocates its resources to benefits its customers
**Macromarketing study of aggregate flow of a nations goods and services to benefit
society

What does marketing function and marketers do?

Marketers;
Identify customer needs
Design goods and services (& ideas) to meet these needs
Communicate information about those to prospective buyers
Make them available to prospective buyers
Price them to reflect costs, competition and customers ability to buy
Provide necessary after-sale service and follow-up to ensure customer satisfaction
Marketing;
Converts societal needs into profitable opportunities
Create customers through the creation of utilities
THE MARKETING PROCESS;
Step 1; understand the marketplace and customer needs, wants and demands
Step 2; Design a customer driven marketing strategy
Step 3; Construct an integrated marketing program that delivers superior value
Step 4; Build profitable relationship and create customer delight
Capture value and customers to create profits and customer equity

Step 1; Core Marketing Concepts;

Needs, Wants and Demands

Needs; a state of felt deprivation of some basic satisfaction. Not created by society or by
marketers, they are natural and exist in the very texture of human biology. Eg food, clothing
shelter.
Wants; desires for specific satisfiers of the deeper needs. Continually shaped and reshaped
by social forces eg families, religion, school, business organsations. Eg muslims want halal
meat.
Demands; wants for specific products that are backed by an ability and willingness to buy
them. Wants become demands when backed by purchasing power. Eg many people want a
lexus, only a few can buy them.

Products, Value, Cost & Satisfaction

Products; anything that can be offered to satisfy a need or want
Value, cost, satisfaction; consumers product choice set.
Value perceived benefits gained from having or using the product minus cost of
obtaining it.
Customers are value maximizers within the bounds of search costs and limited
mobility, knowledge and income. Their satisfaction is linked to value. Satisfaction is
the level of a persons felt state resulting from comparing a products perceived
performance or outcome in relation to persons expectation

Exchange, Transactions and relationships

Exchange; way to obtain products or services
Marketing occurs when people decide to satisfy needs and wants through exchange.
Conditions that must be satisfied simultaneously for an exchange to take place are;
There must be 2 parties (seller and buyer)
Each must have something to offer
Each must be willing to deal and free to decide
Each must be able to communicate and deliver
Transactions; the basic unit of exchange
Relationship; building long-term relationship
Markets and Marketers
Markets; all the potential customers sharing a particular need or want who might be
willing and able to engage in exchange to satisfy that need or want
Marketing; managing markets to actualise potential exchanges for the purpose of
satisfying human needs and wants. Involves works that marketers have to perform
(marketers must create value for customers and potential exchanges and to bring out
profitable customer relationships)
Marketer; someone seeking a resource for someone else and willing to offer something of
value in exchange

Step 2; Designing a customer-driven marketing strategy

Marketing Management;
Successful marketing activities need to be managed and so marketing management
involves the analysis, planning, implementation and control of these activities
The aim is to design a customer-driven marketing strategy that produces profitable
customer relationships by facilitation exchanges that result in customer value by
meeting or exceeding customer expectation.
Analysis, planning, implementation and control of programs designed to create,
communicate and deliver value to customers, and facilitate managing customer
relationships in ways that enable the organisation to meet its objectives and those of
its stakeholders.

Managing Demand;
Marketing management involves managing demand, which in turn involves managing
customer relationship.
Negative demand; major part of the market dislikes the product eg dental work,
vaccinations
No demand; consumers are unaware/uninterested in the product
Latent demand; there is more demand than being satisfied eg more fuel-efficient
cars
Declining demand; demand for the product is declining
Irregular demand; demand pattern is irregular ie seasonal eg public transport,
museums.
Full demand; company is satisfied with the volume it sells
Overfull demand; demand is more than the company can handle eg national parks
carrying more tourists than they can handle
Unwholesome demand; demands for unwholesome products

Designing a customer-driven marketing strategy;

Selecting customers to serve; to exceed customer expectations, marketing
managers must be able to meet the quality and quantity of product demanded by
customers so that the optimal demand of the product is reached. This may require
demarketing ie temporary or permanent reduction of demand for the product
 Creating excitement; involves increasing customer involvement and interaction to
develop and strengthen relationships
Choosing a value proposition; a marketing organisations value proposition is the
set of benefits or values it promises to deliver to customers to satisfy their needs. Eg
Coles promises quality food cost less at Coles; whereas Woolworths say they are
the fresh food people

Evolution of Marketing Philosophies;

The Production Concept; Consumers will favour those products that are widely available
and low in costs. Management should focus on improving production and distribution
efficiency
Example; Hong Kong based HNH International, marketing its Naxos Label low-cost
classical music.
The Product Concept; Consumers will favour those products that are of high quality,
performance or innovative features. Thus, an organisation should devote energy to making
continuous product improvements.
Example; Goldstars Chaos washing machine.
The Selling Concept; Consumers, if left alone, will not buy enough of companys products.
Management emphasis must be on aggressive selling and promotion effects
Example; Most Asian firms practice this, insurance, blood donations.
The Marketing Concept; the key to achieving organisational goals consists in determining
the needs and wants of target markets and delivering the desired satisfactions more
effectively and efficiently than competitors. Four main pillars of marketing concepts are;
target market, customer needs, coordinated marketing and profitability.
The Societal Marketing Concept; the organisations task is to determine the needs, wants
and interests of target markets and to deliver the desired satisfactions more effectively and
efficiently than competitors in a way that preserves or enhances the consumers and the
societys well being. Three main pillars of societal marketing concept are; company profit,
customer need and want satisfaction and public interest.

Step 3; Preparing an Integrated Market Plan

To deliver on its value proposition;
The firm must first create a need-satisfying market offering (product)
Decide on how much it will charge for it (price)
How it will make it available to target customers (place)
Communicate with target customers, persuading them to buy this (promotion)
The firm must blend all these marketing mix tools into a comprehensive, integrated
marketing program to deliver the intended value to chosen customers.

Step 4; Building Customer Relationships

Customer relationship management (CRM) encompasses all facets of getting initial
customers, keeping those customers and getting new customers.
Customer perceived value;
 The customers evaluation of the difference between all the benefits and all the costs
of a marketing offer relative to those of competing offers
Relates to the notion of exchange
Customer satisfaction;
The extent to which a products perceived performance matches a buyers
expectations
Although, a customer-centred firm seeks to deliver high customer satisfaction
relative to competitors, it does no attempt to maximize customer satisfaction. A
company can always increase customer satisfaction by lowering its price and
increasing services but this may result in lower profits therefore purpose of
marketing is to generate customer value profitably.
Relationship level;
Marketers realize that they dont want relationships with every customer so
companies are targeting fewer, more profitable customers selective relationship
management.
Marketers can use specific marketing tools to develop stronger bonds with
consumers eg offering frequency marketing programs eg Everyday Reward cards for
people who buy frequently and get discounts

The Changing Nature of Customer Relationships

Earn customer loyalty through special offering and handlings

Preferred customers must be served in a deeper, more lasting way; preferably
connecting more directly
Direct marketing is more successful in increasing sales
Customer managed relationship; Relationships in which customers empowered by
technologies interact with companies and with each other to shape their relationships

Challenges and changes;

New Marketing Challenges;
Changing marketing landscape
Rapid Globalisation
Uncertain world economy challenge is to balance the brands value proposition
with the current times while also enhancing its long-term equity.
Technology dependence
Nonprofit marketing
New Marketing System Goals;
Maximize quality of life
Maximize choice
Maximize consumption
Maximize satisfaction

LECTURE2;
Company-Wide Strategic Planning; Defining Marketing Role
All companies must look ahead and develop long-term strategies to meet the
changing conditions in their industries
Each company must find the game plan that makes the most sense, given its specific
situation, opportunities, objectives and resources
The hard task of selecting an overall company strategy for long-run survival and
growth is called strategic planning.

Strategic Planning;
Is the process of developing and maintaining a strategic fit between the
organisations goals and capabilities and its changing marketing opportunities.
Sets the stage for the rest of the planning in the firm.
Companies usually prepare annual plans, long-range plans and strategic plans
The annual and long-range plans deal with the companys current businesses
and how to keep them going.
The strategic plan involves adapting the firm to take advantage of
opportunities in its constantly changing environment.
Steps in the Strategic Planning Process;
A process that matches an organisations resources and capabilities to its market
opportunities
Define the Mission
Set organisational or SBU objectives
Design the business portfolio
Develop growth strategies
Define the Mission
Answers are documented in the Mission statement statement of the
organisations purpose ie what it wants to accomplish in the larger environment.
BHP Billiton Our purpose is to create long-term value through discovery,
development and conversion of natural resources, and the provision of innovative
customer and market-focused solutions
Setting Objectives;
The company turns its mission into detailed supporting objectives for each level of
management
Strategic business units (SBUs) key businesses that make up the company (sub-
businesses/segments of a large corporation) eg Goodman Fielders SBUs include
Meadow Lea, White Wings, Pampas, Mighty Soft, Wonder White etc.
Usually relates to Sales, Profitability, Market standing, ROI, Customer Satisfaction
Objectives should be SMART (Specific, Measurable, Attainable, Realistic, Timely)
The Business Portfolio;
The collection of businesses and products that make up the company
Designing the Business Portfolio
The best business portfolio is the one that best fits the companys strengths and
weaknesses to opportunities in the environment
Business portfolio planning involves 2 steps
 The company must analyse its current business portfolio and decide which
businesses should receive more, less or no investment
It must shape the future portfolio by developing strategies for growth and
downsizing.

The BCG
Growth-Market Strategy Matrix;
 Help companies make effective decisions about how the company should grow
Market growth rate measure of market attractiveness
Relative market share company strength in the market
4 Possible Strategies for each SBU;
The company can invest the build its shares
It can invest just enough to hold its share.
It can milk it short-term cash flow, or harvest
It can divest by selling it or phasing out
Each SBU has a life cycle. As time passes, SBUs change their positions in the growth-share
matrix.
Matrix approaches can be difficult, time consuming, and costly to implement
These approaches focuses on classifying current business but provide little
advice for future planning
Many companies have dropped matrix methods in a favour of customized
approaches better suited to their specific situations.
Developed Growth (Downsizing) Strategies; Marketing has the main responsibility for
achieving profitable growth for the company. One useful device for identifying growth
opportunities is the product/market expansion grid.

Market penetration eg adjustments to product design, advertising, pricing and

distribution effects, Sass & Bide increasing range of styles and colours in its original
apparel line
Market development expanding internationally, bringing products to more young
women in Asia.
Product development; offering modified/ new products to current markets, egging
adding denim products.
Diversification; moving to performance leisurewear or shoes instead of just clothing.
Planning Marketing; Partnering to build customer relationships;
Marketing plays a key role in the companys strategic planning
By providing a guiding philosophy the marketing concept; building
profitable relationships with important consumer groups
 By providing inputs to strategic planners; identifying attractive marketing
opportunities
By designing strategies for reaching the units objectives
In addition to customer relationship management, marketers must also practice
partner relationship management with
Other company departments to develop an effective value chain
Others in the marketing system to improve the performance of the customer
value delivery network
Guided by the strategy, the company develops;
Customer driven marketing strategies (segmentation, target marketing,
positioning, differentiation etc.)
Integrated market mix product, price, placement logistics, people, process,
physical evidence and promotion.

Managing the Marketing Effort;

Managing the marketing process requires the four marketing management functions
of analysis, planning, implementation, and control
Marketing analysis is;
Performed to understand the markets and marketing environment the
company faces. SWOT analysis is used to evaluate the companys strengths
(S), weaknesses (W), opportunities (O) and threats (T)
Strengths include capabilities, resources and positive situational factors
Weaknesses include negative internal factors and negative situational factors
Opportunities are favourable external factors
Threats are unfavourable external factors
Contents of Marketing Plan;
Section Description
i. Executive Summary and Table of Brief overview of the proposed plan
Contents
ii. Current Marketing Situation Background data on the market, product,
competition, distribution and macro
environment
iii. SWOT and Issue Analysis Identify main: strengths, weaknesses,
opportunities, threats facing product line
iv. Objectives Define financial objectives and marketing
goals such as sales volume, market share and
profit
v. Marketing Strategy Present broad marketing approach that will
be used to achieve the plans objectives
vi. Action Programs Present special marketing programs
designed to achieve business objectives
vii. Projected Profits and Loss Statements Forecast the plans expected financial
outcomes
viii. Controls Indicates how the plan will be monitored

Implementing Market Plan;

Marketing implementation is the process that turns marketing strategies and plans
into marketing actions in order to accomplish strategic marketing objectives
Implementation involves day-to-day, month-to-month activities that effectively put
the marketing plan to work
Whereas marketing planning addresses the: what and why of marketing activities,
implementation addresses the who, where, when and how
Marketing Organisation for Implementation
Marketing departments must be designed so it can carry out the strategies/plans
that are developed
Small companies; one person may perform all the marketing functions. In
large companies there is the Chief Marketing Officer (CMO), assisted by many
specialists to deal with marketing
 Marketing departments can be arranged as a;
Functional organisation in which different activities are headed by a
functional specialist eg sales, advertising etc
Geographic organisation if a company sells nationally or globally
Production management organisation if the company has many different
products or brands
Market or customer management organisation, in companies that sell one
product to different kinds of markets/customers
Combination of all these forms if the company is very large.
The Relationship between Analysis, Planning, Implementation and Control

Controlling and Evaluating Performance

Marketing control is the process of measuring and evaluating results of marketing
strategies and plans, and taking corrective action to ensure that marketing
objectives are attained
Operating control involves checking ongoing performance against the
annual plan and taking corrective action when necessary
Strategic control is checking that the companys basic strategies are well
matched to its opportunities.
Measuring and managing return on the market investment
Marketing managers must ensure that their marketing dollars are being well spent
Return on marketing investment (or marketing ROI) is the net return from a
marketing investment divided by the costs of the marketing investment. It
measures the profits generated by investments in marketing activities
Marketing ROI may be measured in terms of brand awareness, sales or
market share
Many companies are developing marketing dashboards sets of
marketing performance measures in a single display used to monitor
strategic marketing performance using customer-centred measures of
marketing impact such as customer acquisition, customer retention, and
customer lifetime value

Strategic Planning Summary;

Planning can help making sense of changing environment
Most organisations operate according to formal plans
Managers are often too busy and have no time for planning
Organisations failing to plan are planning to fail
The need for flexibility has led to a resurgence in the process of scenario planning

Micro vs Macro Environments;

Microenvironments;
The forces close to the organisation that affects its ability to serve its customers;
The organisation
Channel firms (resellers, retailers etc)
Customer markets
Competitors and publics
Macro-environments;
The larger societal forces that affect the organisations whole micro-environment;
Demographic forces
Economic forces
Natural forces
Technological forces
Political forces
Actors in Microenvironments;
MICROENVIRONMENTS;
Marketing management is responsible for attracting and building relationships with
customers by creating customer value and satisfaction. However, marketing managements
success in this will depend on the following actors in the organisations microenvironment.
The Marketing Organisation;
Senior management
Sets the organisations mission, objectives, broad strategies and policies
Must approve marketing plans before they can be implemented
Marketing managers
Must make decisions within the plans made by senior management
In designing marketing plans, marketing management takes other organisation
groups into account such as;
Top management
Finance
Research and development
Purchasing
Manufacturing
Accounting

Suppliers;
An important link in the organisations overall customer value delivery system
Marketing managers must watch for;
Supply availability
 Supply shortages or delays
Labour strikes
Price trends of supplies
All of these can damage customer satisfaction in the long run
Rising supply costs may force price increases that can harm the organisations sales
volume

Marketing Intermediaries I;
Intermediaries link the firm with its customers
Marketing intermediaries help an organisation to promote, sell and distribute its
goods to final buyers. They include;
Resellers help the organisation find customers to make sales to them
Physical Distribution Firms help the organisation stock and move goods
from their point of origin to their destinations.
Marketing Intermediaries II;
These are the facilitating agencies such as
Marketing research companies, advertising agencies, media firms, export
consulting agencies and marketing consulting firms that help the
organisation target and promote its products to the right markets.
Financial Intermediaries;
These include; banks, credits organisations, insurance organisations and other
businesses that help the finance transactions or insure against the risk associated
with the buying and selling of goods

Customers;
The marketing organisation must study its customer markets closely. The
organisation can operate in 5 types of customer markets;
Consumer markets
Business markets
Reseller markets
Government markets
International markets
*Consumer buying for ultimate consumption eg buying a coke for me to drink
Customer anyone who buys things. Eg uni buying a coke for me to teach class (coke is
not mine, its unis)
All consumers are customers, but all customers are not consumers.

Competitors;
Every organisation faces a wide range of competitors
The marketing concept states that, to be successful, an organisation must
provide greater customer value and satisfaction than its competitors.
No single competitive marketing strategy is best for all organisations
Each marketer should consider its own size and industry position compared
with those of its competitors.
Types of Publics;
Publics are any group that has an actual or potential interest, or impact on, an
organisational ability to achieve its objectives. Eg media, government, financial,
citizen-action, local, general and internal.

Major Forces in the Organisations Macro-Environment;

Demographic Environment;
Growing Ethnic Diversity
Age Structure
Education
Geographic shifts
Changing family structure

Economic;
Economic development
 Change in income
Inflation
Changing consumer spending pattern
Discretionary spending

Political & Legal

Legislation regulating Business
Changing government agency enforcement
Increased emphasis on ethics
Globalisation & trade agreements

Technological;
Face pace of change
High research and development budget
Concentration on minor improvement
Increased regulation

Natural;
Shortage of raw materials
Increase cost of energy
Increased pollution
Resource preservation by government

Cultural Environment;
The cultural environment is made up of institutions and other forces that affect
societys basic values, perceptions, preferences, and behaviours
People grow up in a particular society that shapes their basic beliefs and values. And
help them develop a world view that defines their relationships to themselves and
others
The following cultural characteristics can affect marketing decisions;
Persistence of cultural values core & secondary beliefs
Sub-cultures
Shifts in secondary culture value.

LECTURE 3;

Marketing Information and Research

Marketing managers need information to provide superior value and satisfaction for
customers. Customer gives money and information to companies.
Why Marketers need information?
To understand Marketing Environment
To remain informed about Competition
To develop and implement Strategic Planning
To learn about customer needs.
A well-designed marketing information system (MIS/MkIS) begins and ends with the user.
MIS assesses information that Marketers need or are likely to need.
How are needs assessed?
Talking to marketing managers
Surveying their decision environment to determine what information is
desired, needed, and feasible to offer
The MIS next develop information and helps managers to use it more effectively

Developing Information
Internal records provide a wealth of raw information for decision
Summaries of orders, inventories, schedules, shipments, and balance sheets
Could be transformed into trends that can be linked to management
decisions on marketing mix changes
Marketing intelligence provides everyday information about environmental
variables that managers need to implement and adjust marketing plans. Sources
for intelligence may be internal, external or both
Marketing Research links the consumers, customer and public to the marketer
through an exchange of information. Only when you have a problem, need to solve it
then you undertake marketing research and then when problem is solve, research is
closed.

Information from within the company

Internal records eg sales reports, financial reports, marketing campaign results etc

Marketing Intelligence;
A method by which marketers obtain information about everyday happenings in the
marketing environment.
Mystery shoppers people who observe companies eg hotels and airlines to see
how they will behaviour in certain situations eg pushing them to their limit, being
mean.
Marketing Research;
Process of collecting, analyzing and interpreting data about customers, competitors
and the business environment to improve marketing effectiveness
Syndicated research - Data collected and compiled by research agencies on a
regular basis and sold to several firms
Custom research primary data collected to provide answers to specific
questions eg asking for name and asking for age. Secondary data someone else
has found the information and given it to you.

Marketing Research Information;

Reduces uncertainty or error in decision-making. It is used to
Accurately identify marketing opportunities and problems
Offer a more reliable production
 Generate, refine and evaluate marketing actions to provide a competitive
edge
Facilitate a more efficient expenditure of funds
Monitor marketing performance
Improve the understanding of marketing as a process
Lead to the discovery of new business opportunities

2 types of marketing research;

Qualitative Research
Studies involving a small number of individuals. The primary tool in
qualitative research is the focus group; includes online focus groups and
teleconferences and one-on-one interviews.
Quantitative Research
Studies involving many people. There is no stated number of people

The Marketing Research Process I

Define the problem & Set research objectives
You must know the problem. The researcher and marketer must work
together to define the problem and set the objective
Develop the research plan
Involves determination of information needed and developing a plan to
collect them
Implement the Research plan
Involves actual collecting, processing and analysis of information
Interpreting and Reporting findings
Research must be interpreted for the user and reported to the manager.
Determining the Research Design
Research Design A plan that specifics what information marketers will collect and what
type of study they will undertake
Secondary Data data that has been collected for some purpose other than the problem at
hand
Primary Data data from research conducted to help in making a specific decision
Collecting Primary Information
Research approaches
Manual
Mechanical (scanner)
Survey Research
Most common
Different methods of data collection
Experimental Research
May be difficult

Online Survey Methods

 May involve observation, experiments, focus groups or surveys using email
Online survey methods offer speed
Many people dislike unsolicited emails which may be dismissed as Spam
Privacy of information may concern respondents as might fear of computer damage
due to worms and viruses
Software development costs may be high
Focus Group I
An 1-3hour interview conducted by a trained moderator in a non-structured and
natural manner with a small group of 8-12 homogenous, prescreened respondents
Objectives
Generate new product or service ideas
Understand consumer vocabulary useful for ad campaigns
Reveal customer needs, motives, perceptions and attitudes generating
future research objectives
Facilitate understanding of the quantitative studies

Sampling
Conducting research using the whole population of interest is not only impossible
(cost, time, resources etc), it is also not necessary
Researchers using samples to conduct research and from that infer about the
population
A sample is a segment of the population that has been selected to represent
the population as a whole
Sampling Plans address who (sampling unit), how many (sampling size),
and how to choose decisions of drawing a sample (probability or non-
probability).
Samples must be selected carefully. There are two major types of sampling;
Probability sampling and non-probability sampling

Research Instruments;
Research instruments may include mechanical or electronic devices.
The survey questionnaire defined as a carefully selected array of questions is
the most common research instrument
Question in a questionnaire could be;
Open-ended respondents give their own responses
Closed-ended researches provide answers for the respondent to choose
from eg dichotomous, multiple choice or scaled questions

Presenting the Research Plan

Summarise the plan in a written proposal covering;
Management problems addressed
Research objectives
Information to be obtained
Sources of secondary data
Methods for collecting primary data
How the results will help management decision making
 Research costs

Implementing the research plan;

Involves collecting, processing and analyzing the information
Data collection
May be carried out by the MR staff or outside agencies
Is usually the most expensive and most prone to error
Data processing
May be done by machine reading or checked and coded manually for
computer analysis
Data analyses
May be undertaken using various software packages
SPSS and/or AMOS are used to test the goodness if fit of the data to the
hypothesised model

Interpreting and reporting the findings;

Interpretation
Generally done by the researchers, often with the help of marketing
managers
Is very important
Even the best designed research may become meaningless if interpreted
wrong
Must be objective; not biased or any reason whatsoever
Market research in small business and non-profit organisations
Many of the marketing research techniques discussed today can be used by SMEs or
NPOs in a less formal matter and at little or no expense
Conduct informal surveys using small convenience samples
Obtain good marketing information simply by observing things around them
Conduct their own simple experiments eg taste tests
Small organisations can obtain most of the secondary data available to large
businesses
International Marketing Research
International marketing researchers follow the same steps as domestic researchers
From defining the research problem and developing a research plan to
interpreting and reporting the results
These researchers face more problems
As their markets often vary greatly in the levels of economic development,
cultures and customs, and buying patterns. Good secondary data is more
difficult to come by for these studies

Public Policy and Ethics in Marketing Research

When properly used, marketing research
Benefits both the sponsoring company and its customers
Helps the company to make better marketing decisions, resulting in products
and services that meet the needs of the customers more effectively.
When misused, marketing research
 Can abuse and annoy customers eg intrusions on consumer privacy, misuse
of research findings and an increase in Codes of Practice.

LECTURE4;

Consumer and Business Market Behaviour

A Model of Consumer Buying Behaviour
The Consumer Market; All the individuals and households who buy or acquire goods and
services for personal consumption. This model represents the buying behaviour.

Culture I
Culture refers to the set of basic values, perceptions, wants and behaviours learned
by a member of society from family and other important institutions
Culture is a major influence on our wants and general behaviour
Global marketers must be fully aware of the cultures in each market they
intend to serve and adapt their marketing strategy accordingly
Marketers constantly seek to identify cultural shifts, or trends, that may
impact on demand for their products and services (eg the trend toward
healthier lifestyles, and increasing concern for environmental issues)

Culture II
The most basic influence on a persons values, priorities, and beliefs.
Social class; determined by a combination of occupation, income, education, wealth
and other variables.
Subculture; distinct group within the larger culture that have identified patterns.
Reference groups
Family and households; family of orientation (parents), renting units (associational
groups) and family of procreation (spouse and children) are the most basic
reference groups

Social Influences;
Social factors, such as the consumers household type and reference groups, as well
as social roles and status influences buying decisions
Companies must take them into account when designing their marketing
strategies
Groups
Membership groups
Reference groups
Opinion leaders
Roles and Status

Personal Factors I
Age and Life-Cycle Stage
Changes in buyers age and family structure over time affect their choice.
 Occupation
Carries with it distinct consumptive needs, White collar workers need
different clothes than blue collar workers
Also, occupations usually carry their own subcultural norms and values that
influences buy behaviour.
Education
People with higher education levels tend to hold positions that influence
dress standards and such purchases as computers and reading materials
Economic situation
Means constrain buyer behaviour for almost everyone

Personal Factors II
Consumer lifestyle; a persons pattern of living as expressed in his or her activities,
interest and opinions.
Psychographics; the techniques of measuring lifestyles and developing
lifestyle classification; it involves measuring the major AIO dimensions
(activities, interests, opinions)
Lifestyle captures something more than just social class or personality. It profiles a
persons whole pattern of acting and interacting in the world.
In Australia, the Roy Morgan Research Centre operates omnibus research into
consumer opinions and trends. When used carefully, the lifestyle concept can
help the marketer to understand changing consumer values and how they
affect buying behaviour.

Personal Factors III

Personality and self-concept; personality refers to the unique psychological
characteristic that lead to relatively consistent and lasting response to our
environment. Self-concept is ones self-image; we are what we have
Complex; closely tied to motivation; usually described in terms of self-
confidence, dominance, sociability, autonomy, defensiveness, adaptability
and aggressiveness
Can be useful for analyzing consumer behaviour. Has been applied to brands
people have a tendency to give products and brands human
characteristics (five brand personality traits; sincerity, excitement,
competence, sophistication and ruggedness)
Consumers are more likely to choose brands with personalities that match
their own. The Im a Mac ads personifying the brand with a human
character illustrates Apples strategy to assign the personality traits of
coolness and youthfulness to the Mac
In order to understand consumer behaviour the marketer must first understand the
relationship between self-concept and possessions.

Psychological influences
Motivation;
The internal urge directing a person to do something to satisfy that urge
 When buying something we ask
Why?
What am I really seeking?
What needs am I trying to satisfy?
A person has many needs at any given time
Motivation Theories;
Sigmund Freud; people are largely unconscious about the real psychological forces
shaping their behaviour
Abraham Maslow sought to explain why people are driven by particular needs at
particular times and developed the need hierarchy. Needs states vary in their
intensity or motivation

Perception
Perception is the process by which people select, organise and interpret information
to form a meaningful picture of the world
Our actions are influenced by our perception of the situation
Perceptual processes
Selective attention; exposed to many, remember a few
Selective distortion; interpret to support views held
Selective retention; remember things to support attitudes and beliefs
Learning
Refers to changes in behaviour arising from experience
Learning theory helps marketers build demand by associating a product with drives
(strong internal stimulus that calls for action), using motivating cues (minor stimuli
determining when, where and how one responds) and providing positive
reinforcement.

Psychological Factors III; Beliefs and Attitudes

An attitude describes a persons relatively consistent evaluations, feelings and
tendencies towards an object or idea (eg German precision products are the best in
the world.)
A belief is a descriptive thought or conviction that a person holds about something,
and involves holding an opinion. (This new company needs better sales force)
Incorrect beliefs about products or bran image can block sales
People acquire their beliefs and attitudes through acting and learning.

Tricomponent Attitude Model

Cognitive; beliefs and attitudes not influenced by emotion
Affective; emotional responses such as liking or disliking
Conative; Intention to purchase or purchase itself.

Consumer Buying Roles

Roles and Status each relationship of a person with his or her group carries with
it certain roles and status carrying consumptive responsibilities
People play several roles
Initiator; I think we should buy a phone
 Influencer; yeah I think thats a good idea
Decider; Alright, lets buy the phone
Buyer; Okay, I shall go to buy it now at the mobile shop
User; the person who uses the product

Types of Consumer Buying Decisions

Routine Response Behaviour;
Little involvement in selection process
Frequently purchased low cost goods
May stick with one brand
Buy first/evaluate later
Quick decision eg soft drink, ballpoint pen, and petrol.
Limited Decision Making;
Low levels of involvement
Low to moderate cost goods
Evaluation of a few alternative brands
Short to moderate time to decide eg clothing
Extensive Decision Making;
High levels of involvement
High cost goods
Evaluation of many brands
Long time to decide
May experience cognitive dissonance eg House, car, camera, some clothing, choice of
accountant, doctor etc.

Consumer Decision Process;

Need Recognition problems are recognized when people sense a difference
between an actual state and some desired state
Information search efforts varies from heightened awareness corresponding to
increased receptivity for relevant information to active information search modes
where the person expends some energy to obtain.
Evaluation of Alternative Compares products attributes of the alternatives against
degrees of importance each attribute has in meeting needs, beliefs about the
product.
Purchase Decision involves deciding to buy or not to buy
Post-purchasing behaviour involves comparing the expected performance of the
product against the perceived performance received. Results in cognitive
dissonance.

The Buyer Decision Process for New Products

A new product is a good, service or idea that is perceived by some potential
customers as new
Adoption process mental process through which individual passes from first
learning about an innovation to final adoption
There are five stages in the Adoption Process
 Awareness consumer becomes aware of new product, but lacks
information about it
Interest seeks information about product
Evaluation considers whether trying new product makes sense
Trial tries new product on small scale to improve estimate of value
Adoption decides to make full and regular use of new product
Individual differences in innovativeness
People differ greatly in their readiness to try new products
Some are Innovators of the new technology, some are early adopters, and
some early majority, some late majority and some are laggards.

Influence of Product Characteristics on the Rate of Adoption

Relative advantage; the degree to which an innovation appears superior to existing
products
Compatibility; the degree to which the innovation fits the values and experiences of
potential consumers.
Complexity; the degree to which the innovation is difficult to understand or use.
Divisibility; the degree to which the innovation may be tried on a limited basis
Communicability; the degree to which the results of using the innovation can be
observed or described to others.

Business-to-Business Markets
Business markets are all the organisations that buy goods and services to use in the
production of other products and services or for the purpose of renting them to others at a
profit.
Types of Business Markets
The industrial market those who buy to make other products and services that
are sold, rented or supplied to others
The reseller market those who acquire goods for the purpose of reselling or
renting them to others at a profit
The institutional and government market government units ie federal, state and
local that purchase or rent goods and services for carrying out the functions of
government
Characteristics of Business Markets;
In some ways business markets are similar to consumer markets. Both involve people who
assume buying roles and make purchase decisions to satisfy needs. However, business
markets also differ in many ways from consumer markets.
Market Structure and Demand
Fewer buyers
Larger buyers
Close supplier-customer relationships
Geographically concentrated buyers
Derived demand
Inelastic demand total demand of many business products is not affect much by
price changes, especially in short run
 Fluctuating demand demand for many business goods and services tends to
change more quickly than demand for consumer goods and services.
Nature of buying unit;
Professional purchasing
Several buying influences
Types of decisions and decision processes;
More complex and formalized decisions
Direct purchasing
Reciprocity
Lease

A model of Business Buying Behaviour;

 Business Buying Behaviour I
Major types of Buying Situations;
Straight Rebuy the buyer reorders something without modifications
Modified Rebuy the buyer seeks a change in specifications, prices, terms or
suppliers
New Task here the company is buying the product for the first time and faces the
greater costs and risks.
Systems buying and selling the buyer seeks a packaged solution to a problem from a
single seller who offers a set of interlocking products and the coordination, implementation
and control procedures for operating them

Business Buying Behaviour II

Participants in the Business buying process;
Users are members of the organisation who will use the product
Influencers are the people who affect the buying decision
Buyers are those with the formal authority to select suppliers and to arrange terms
of purchase
Deciders have the formal or informal power to select or approve the final suppliers
Gatekeepers are those who control the flow of information to others.

Major Influences on Business Buying;

Environmental Organisation Interpersonal Individuals Buyers
Level of primary Objectives Authority Age
Demand
Economic Policies Status Education
outlook
Cost of money Procedures Empathy Job Position
Supply Organisational Persuasiveness Personality
conditions Structure
Rate of Systems Risk attitudes
technological
change
Political and
regulatory
developments
Competitive
Developments
Stages in Business Buying Process;

Problem Recognition can result from internal or external stimuli (emerge from an
identified shortage or ideas for improvement recognized by buyers)
General Need Description describes the overall characteristics and quantities of the
needed item
Product specification requires that a team must translate general needs into product
specifications. An engineering value analysis team may look at alternative designs to
reduce production costs.
Supplier Search conducts a search for the best vendors meeting specifications.
Proposal Solicitation invites qualified suppliers to submit proposals covering the terms of
supply and support.
Suppliers selection selects suppliers based upon a combination of technical competence
and service record and reputations.
Order-Routine Specification specifies the details of the suppliers contract listing
technical specifications, delivery terms, policies for return and warranties, and quantities
needed.
Performance Review will review how the supplier contract is working for the company
and may continue, amend or drop the seller.

Comparisons of Business & Consumer Buying Situations;

Buying Step Industrial Consumer
1. Need or problem Anticipates Reacts
recognition
2. General need description Extensive Limited
3. Product specification Precise/Technical Benefits
4. Information/supplier Extensive Limited
search
5. Proposal Solicitation Formal Verbal
6. Supplier selection Extensive Limited analysis
7. Order-routine specification Calculated re-order Not routinised
8. Post-purchase Extensive comparisons and Little comparisons
performance review benchmarking
LECTURE5;

Market Segmentation
Some truths about Markets;
All markets both B2C (business to consumer) and B2B - recognize that they
cannot appeal to all buyers in those markets or appeal in the same way
Buyers are too numerous, too widely scattered and too varied in their needs
and buying practices
Different companies vary widely in their abilities to serve different segments
of the market
Rather than trying to compete in an entire market, often against superior
competitors, each company must identify the parts of the market that it can serve
best.

Designing a customer driven marketing strategy;

Select customers to serve
Decide on a value proposition
Create value for targeted customers;
Segmentation divide the total market into smaller segments
Differentiation differentiate the market offering to create superior customer
value
Targeting select the segment or segments to enter
Positioning Position the market offering in the minds of the target customers

Segmenting; the process of dividing the total market for a good or service into several
smaller groups such that the members of each group are similar with respects to the
factors that influence demands.
Target Marketing; evaluates each segments attractiveness and selects one or more
segments to enter. A target group is a group of customers (people or organisations) for
whom a seller designs a particular marketing mix.

Segmentation
Segmentation is necessary because customers in a market have;
Differences in buying habits
 Differences in the way the good or service is used
Different motives for buying
Markets are segmented by;
Intuition based on experience and judgment
Mimicking competitors and earlier market entrants
Performing a structured analysis that includes
Identifying the current and potential wants that exist within a market
Identifying the characteristics that distinguish segments
Finally, determining who has each want.

Steps in Segmentation, Targeting, Positioning and Differentiation

Market Segmentation
Identify Bases for Segmentation
Develop Profiles of Segments
Market Targeting
Develop Measures of Attractiveness
Select Target Segment(s)
Market Positioning
Develop Positioning for each Segment
Develop Marketing Mix for each Segment
Product Differentiation
Decide on a value proposition

Bases for Segmenting Consumer Markets;

Geographic eg country, region, population density, population size, climate
Demographic eg Age and life cycle, gender, income, education, occupation, religion,
nationality
Psychographic eg socio-economic status, values, personality
Behavioural eg purchase occasion, benefits sought, user sought, user rate, loyalty
status, readiness stage, attitude towards product

Geo-demographic Segmentation;

Why use Age to Segment?

Consider these bodily changes that accompany aging;
Colour discrimination older people have difficulty distinguishing pastels
and the green-blue-violet part of the colour spectrum. This have impact on
packaging, brochures and displays
Glare Glare in packaging, posters and floors in retail stores should be toned
down or eliminated
Hearing 25% of people over 65 experience hearing loss; marketers using audio
communicators should select spokesperson who have deeper tones
Taste sensitivity by age 80, two-thirds of our taste sensitivity is lost (most for
sweet tastes, least for sour tastes). Marketers should consider odour amplification
to enhance the palatability of foods and beverages.
 Touch at age 65, a 5 degree change in temperature is needed to equal the
sensitivity of a 30-year-old would have for a 1 degree change.

A Segmentation Example;
Female department stores shoppers have been classified into 5 types, based on
demographics, values and attitudes. The groups and their descriptive names are:
Fashion statements - most affluent and educated, use credit cards, expected to be
treated well by retail personnel
Wanna-buys similar to fashion statements but with less income. Enjoy buying on
impulse.
Family values represent large families, often are professionals, buying focuses on
children or the home
Down to basics most likely to have children, not college educated, careful
spenders, prefer not to use credit, like coupons
Matriarchs older, often retired, they like department stores but are risk averse
and have few purchase plans

Identifying and Analysing Business Market Segments;

Bases for segmenting business markets;
Demographics
Operating variables
Purchasing approaches
Situational factors
Personal characteristics

Signode Corporations Four Segments

Programmed Buyers this group buys products as a routine purchase, pays full price,
and accepts below average service. This segment is highly profitable.
Relationship buyers this group views Signodes packaging as moderately important.
They are knowledgeable about competitors offerings. They remain loyal if prices are
competitive. Typically, they receive a small discount and modest level of service.
Transaction buyers this group sees Signodes products as very important to their
business. They are price and service sensitive. They receive above average service and a
10% discount. They will switch for a better price.
Bargain Hunters this group sees Signodes products as very important to their
business and demands the deepest discount and highest level of service. They know their
suppliers and bargain hard. Their large volume is needed but they are not very profitable.

Segmenting International Markets

Segmenting customers with similar needs and buying behaviour even though they
are located in different geographical locations.
Factors for segmenting international markets
Intermarket form segments of consumers who have similar needs and
buying behaviours even those they are located in different countries
Geographic eg South Asia, Middle East, Australasia
 Economic eg NIE, OECD, ECM, income levels
Political/Legal eg Politically volatile, type and stability of government
Cultural eg common language, religion, customs

Requirements for Effective Segmentation

Measureable organisations must be able to identify and measure each segment
Accessible the market segment can be effectively reached and served
Substantial should be large enough to be profitable
Differentiable organisation must be able to distinguish the segment and respond
to its needs differently
Actionable marketers should be able to design effective programs to serve the
market

Evaluating Market Segments I

Segmentation reveals the market segment opportunities facing a firm. The firm has to
evaluate the various segments and choose ones to serve.
Size and growth select the segment with the right size growth (eg go for the
Niche market)
Company objectives and resources company must evaluate its own objectives,
resources, constraints, strengths and weaknesses
Structural attractiveness desirable size and growth does not ensure high
profitability. Structural factors (competition, substitutes, power of buyer/seller) are
important

Evaluating Market Segments II

Segment size and growth
Collect and analyse data on current dollar sales, projected sales growth rates
and expected profit margins for the various segments to select segments that
have the right size and growth characteristics, but right size growth is
relative matter.
Segment structural attractiveness
Desirable size and growth may not provide attractive profitability. The
company must examine several major structural factors that affect long-run
segment attractiveness.
Marketing organisation objectives and resources
Positive size growth and structural attractiveness must match the companys
own objectives and resources in relation to that segment. Some attractive
segments could be quickly dismissed because they do not mesh with the
companys long-run objectives.

Market Targeting Strategies I

After evaluating different segments, the company must decide which and how many
segments it will target. A target market consists of a set of buyers who share common
needs that the company decides to serve.
Niche marketing want a certain portion of each segment, which is done by concentrated
marketing.

Marketing Targeting Strategies II

Ignore market segmentation; focus on what is common rather than what is different.
Design a product and marketing program that appeals to largest numbers of buyers.
Eg Steel, Apples
Target several markets and design separate offer for each. Cater for every purse,
price and personality (Toyota). Eg; Coles Myer Supermarket, Bi-Lo, Myer Stores
Go for large share of one or few sub-markets rather than for small shares of many
markets.

**Market Positioning of the Product

After deciding which segment or segments of the market to enter, the firm must
decide which position it wants to occupy in those segments
Positioning is customers perceptions of a product image or benefits vs
competitions product
Product position is the way the product is defined by customers on important
attributes
Drive is positioned as an all purpose family washing detergent; softly as a
washing detergent for delicate fabrics such as wool
Positioning is different from product differentiation.
Differentiation value is created by the value proposition used by marketers
for the segmented market.
Value proposition refers to the features that differentiate a product from
competitors offerings

Choosing a Differentiation and Positioning Strategy

A three-step process;
 Identifying a set of differentiating competitive advantages upon which to build a
position
Identifying and choosing the right competitive advantages
Selecting an overall positioning strategy

Step 1: identifying a set of differentiating competitive advantages upon which to build

a position
Can be done through perceptual mapping analysis
Perceptual map is a multidimensional map which identifies factors that discriminate
between brands
It is a useful tool for plotting moves over time by competitors as well as the results
of a firms own bran positioning strategy.

Perceptual Mapping
A perceptual map is a graphic representation of how consumers in a market
perceive a competing set of products relative to each other. It is a multidimensional
map which identifies factors that discriminates between brands
Based upon research using existing or prospective consumers, management
determines those dimensions most important to consumers in evaluating brands
and how consumers see competitive products in terms of their performance on
these dimensions
Not only are perceptual maps valuable in determining consumers perceptions of
existing products, they may offer insights to new product opportunities. Gaps in the
perceptual space may suggest positions for new offerings in the market

Step 2; Identifying and choosing the right competitive advantage I

Consumer typically chooses products and services that give them the greatest value.
Competitive advantage can be provided by
Product differentiation
Highly standardized products (chicken, steel, aspirin) vs highly differentiated
eg motorcars, commercial buildings and furniture. Features, performance,
style, design, consistency, durability, reliability and reparability are all areas
of possible differentiation
Service differentiation
Differentiate the services that accompany the product. Many possibilities
exist such as delivery, installation, repair and customer training services.
Personnel differentiation
By hiring and training better people than their competitors. Personnel
differentiation requires a company to select its customer-contact people
carefully and train them well.
Image differentiation
Work to establish images that differentiate them from competitors
A company or brand image should convey a singular and distinctive message
that communicates the products major benefits and positioning
Symbols can provide strong company or brand recognition and image
differentiation
 A company can also create an image through the types of event it sponsors
Channel differentiation
Gain competitive advantage through the way they design their channels
coverage, expertise and performance. Eg resellers or other intermediaries.
How many differences to promote? Which differences to promote?
In general, a company needs to avoid three major positioning errors;
Underpositioning - failing to position the company at all
Overpositioning giving buyers too narrow a picture of the company eg
Kentucky Fried Chicken KFC cost $150 million to differentiate from
McDonalds.
Confused positioning leaving buyers with a confused image of the company
A difference is worth establishing to the extent it satisfies the following criteria
Important the difference delivers a highly valued benefit
Distinctive competitors do not offer the difference
Superior the difference is superior to other ways in which the customers
may obtain the same benefit
Communicable the difference is communicable and visible to buyers
Pre-emptive - competitors cannot easily copy the differences
Affordable the buyers can afford the difference
Profitable the difference can be introduce the difference profitably.

Various Possible Positioning Strategies

Examples of Positioning Strategies

Position
On specific product attributes (Hyundai Excel low price)
On the benefits offered (Colgate Cavity prevention)
According to usage occasions (Sustagen replaces body fluids)
For certain classes of users (Mothercare baby products)
Against a competitor (Tandy and Compaq vs IBM)
Away from competitors (7-up vs Coke and Pepsi)
 For different product classes (Margarines vs butter; margarines vs cooking oil)
Using combination strategies (J&Js affinity Brand is a hair conditioner for women
over 40 product class and user)

Selecting an Overall Positioning Strategy

The full position of a brands value proposition
Company and brand positioning should be summed up in a positioning statement
More for more positioning involves providing the most upscale product or
service and charging a higher price for higher costs
The same for less - a powerful value proposition offering good deals
More for the same companies can attack a competitors more for
more positioning by introducing a brand offering of comparable quality at
a lower price.
Less for much Less meets the demands for products that offer less and
cost less
More for less a winning value proposition but may be impossible to
maintain in the long run

Developing a Positioning Statement Product

Company and brand positioning should be summed up in a positioning statement of
the form;
To (target segment and need) our (brand) is (concept) that (point of
difference)
Example; To busy, mobile professionals who need to be always in the loop,
Blackberry is a wireless connectivity solution that allows you to stay connected to
data, people and resources while on the go, easily and reliably - more so than
competing technologies
The positioning statement addresses 3 key questions;
Who is the target customer?
 Why should the customer buy?
What are we selling?

Step 3; Design marketing program to communicate benefits and persuade customers.

After selecting a position, the company must take strong steps to deliver and
communicate the desired position to target customers
The marketing mix efforts must support the positioning strategy
Designing the marketing mix involves working out the tactical details of the
positioning strategy
The position must be monitored and adapted over time to match changes in
consumer needs and competitors strategies
The position should evolve gradually as it adapts to the ever changing marketing
environment

LECTURE 6 & 7;

Products
Products and Services
Products (Tangible) anything that can be offered to a market for attention, acquisition,
use or consumption that might satisfy a want or need
Services (intangible) a form of product that consists of activities, benefits, or
satisfactions offered for sale that are essentially intangible and do not result in the
ownership of anything.
There is nothing called pure product or pure service.

Three Product Levels

Core Product refers to the use-benefit, problem-solving service that the consumer is
really buying when purchasing a product.
Actual product is the tangible product or intangible service that serves as a
medium for receiving core product benefits. Has 5 characteristics;
Quality level refers to production performance
Features includes combinations of product attributes
Styling consists of design and aesthetic or ergonomic aspects of the product
Brand Name may help consumers position and identify the product
Packaging serves to both protect the product and to promote it to
consumers.
Augmented Product consists of the measures (eg credit deliver, warranties,
installation and after sale services) taken to the help the consumer put the actual
product to sustained use.
EXAMPLE; QANTAS
Consumer Product Classifications
Consumer products are those bought by final consumers for personal consumption.
Types of Consumer Products;
Convenience products purchased frequently with a minimum of comparison and
buying effort. Eg staples, impulse, emergency
Shopping products are compared on such bases as suitability, quality, price and
style
Unsought goods unknown to the buyer or not normally considered for purchase;
require special marketing effort.
Specialty have unique characteristics or identification with buyers and are
specifically sought by the consumer.
Classification of consumer goods;

Industrial Products
Are goods purchased by individuals and organisations for further processing or for
use in conducting a business
Differ from consumer goods in terms of the purpose for which the product was
purchased.
 Can be classified in the follow three groups according to how they enter the
production process and what they cost
Materials and parts raw materials and manufactured materials and parts
that enter the manufacturers product completely. Usually are bulky and
low priced
Capital items goods and services that enter the finished product partly,
including installations (buildings and fixed equipment) and accessory
equipment (portable factory equipment and tools, office equipment). Do not
become part of the finished product, but aid in the production process
Supplies and services goods and services that do not enter the finished
product at all (eg maintenance and repair services, advisory services)

Services
Any activity or benefit that one party can offer to another that is essentially
intangible and does not result in the ownership of anything
Service organisations; offer their customers something that is essentially
intangible: the interaction does not result in the ownership of anything that
endures
Some services are highly capital-intensive; others are more people-based. Several
factors are cited as distinguishing almost pure services from almost pure goods;
Intangibility, high involvement and personal nature of services, variability of
service encounters, synchronous conversion, delivery and consumption,
perishability and the fact that specific service quality measures are
employed.

Service Characteristics;
Intangibility of services almost pure services eg a haircut has no physical element
like coffee
High involvement and personal nature of services when your teeth are cleaned,
you are receiving a personalized service
Perishability of services almost pure services eg rock concert, cannot be stored
like coffee. Once the concert is over, only its memory is left.
Synchronous delivery and consumption almost pure services eg learning-to-drive
sessions or aerobic instruction session, require you to interact in real time as the
service is consumed.
Variability of service encounters almost pure services eg a restaurant or ocean
cruise involve interaction between a patron/guest and customer service personnel.
They are not necessarily the same every time.

Marketing Strategies for Service Firms

In a service business, the customer and front-line service employee interact to create the
service. The service-profit chain consists of five links;
Internal service quality: superior employee selection and training, a quality work
environment, and strong support for those dealing with customers, which in turn
results in...
 Satisfied and productive service employees: more satisfied, loyal, and
hardworking employees which results in
Greater service value: more effective and efficient customer value creating and
service delivery, which results in
Satisfied and loyal customers: satisfied customers who remain loyal, repeat
purchase, and refer other customers, which results in
Healthy service profits and growth: superior service firm performance.
Service marketing requires;
Internal marketing: ie must orient and motivate its customer-contact employees and
supporting service people to work as a team to provide customer satisfaction
External marketing: what this course is covering
Interactive marketing: since service quality depends on the quality of the buyer-
seller interaction during the service encounter.
Service companies face three major marketing tasks:
Increase their service differentiation
Service quality and
Service productivity
Good service recovery can turn angry customers into loyal ones.

Extending the goods and service classification

Organisation marketing: consists of activities undertaken to create, maintain, or
change the attitudes and behaviour of target customers towards an organisation (eg
CBA/Sydney Rail)
Place marketing: involves activities undertaken to create, maintain or change
attitudes or behaviours toward particular places (eg marketing of tourism
destinations or holiday resorts)
Event and experience marketing: often linked to other marketing offerings eg
major sporting events such as the Cricket World Cup often include destination
marketing, and marketing communications to involve the local community.
Person marketing: consists of activities undertaken to create, maintain or change
attitudes or behaviours towards particular people (eg celebrities Oprah Winfrey,
Angelina Jolie; sports stars Tiger Woods; politicians Julia Gillard, Barack
Obama; business leaders Bill Gates, Donald Trump)
Ideas can also be marketed eg political policies and environmental and social
causes
Social marketing: use of commercial marketing concepts and tools in programs
designed to bring about social change (eg campaigns to reduce speeding and drink
driving, pollution or food wastes are just some of the many examples of social
marketing activities.
Non-profit marketing: involves activities by organisations not motivated by profit,
which ultimately lead to a donation, bequest or some other contribution.

Individual and Service Decisions;

Product Attributes;
Product Quality the ability of a product to perform its functions. Includes
attributes eg durability, reliability, precision, ease of operations, and quality
consistency. Has lead to adoption of total quality management (TQM).
Product features consumers seek value and need-satisfaction. Features
irrelevant to consumers are undesirable. They cost extra money. Product feature
decisions must be carefully tied to consumer needs and perceptions of received,
affordable value and company cost
Product design combines attention to style (appearance) with enhanced
performance. Style alone may attract attention but not improve performance.

Branding;
A brand is a name, term, sign, symbol, design, or combination of these, that identifies the
goods and services of one seller of group of sellers and differentiates them from those of
competitors. Brands are the major enduring asset of a company as they;
Facilitates easy product recognition and repeat purchase
Simplifies the introduction of new products and allow control over channel of
distribution
Develops permanent price-quality image of the product.
Powerful brand names have consumer franchises they command consumer loyalty.
Brand Equity;
The added value that knowledge about a brand brings to a product over and above
its basic functional qualities.
The foundations of brand equity;
Extensive brand awareness and
Strong, unique and favourable brand associations (eg VOLVO Safety)
Measures of Brand Strength;
Differentiation (what makes the brand stand out)
Relevance (how consumers feel it meets their needs)
Knowledge (how much consumers know about the brand)
Esteem (how highly consumers regard and respect the brand)
Brand Valuation;
High level of consumer brand awareness and loyalty
More leverage in bargaining with resellers
More easily launch line and brand extensions
Defence against fierce price competition
Forms the basis for building strong and profitable
Building Brand Names;
Cost of establishing a brand name is very high, often ranges between 50-150million
dollars. Yet chances for success in establishing a brand name are rather low.
Coca Cola equity = A$81 billion.
 Companies with strong brands often attempt to build brand portfolios by acquiring
brands with strong brand equity from other companies.

Major Branding Decision

Brand Decision the company must decide

whether or not to place a brand name on its product or use generic names. Brands usually
command higher profit margins than non-brands.
Brand Name Selection a good brand name should;
Suggest something about the products benefits (Navigator Netscape)
Be easy to pronounce and remember (Total, Tide)
Be distinctive (Lexus)
Translate easily to foreign languages (Exxon, translated in 54 languages) and be
eligible for registration and legal protection

Brand Sponsorship
A manufacturer has four sponsorship options
The product may be launched as a manufacturers brand (or national brand) eg IBM,
Kellogg. Are owned by the producer
The manufacturer may sell to resellers who give it a private brand (also called a
store brand or distributor brand). Private brands (Inghams chicken also sold by
Coles as Farmland and savings) are created and owned by a reseller
The manufacturer can market licensed brands using other brands name under
licence (Gucci, Barbie, Calvin Klein)
Two companies can join forces and co-brand a product. Use of two established
brand-names (Visa and Commonwealth Bank)
Mixed-brand strategies combine both approaches (IBM and its Secondary brand
sold through direct mail)
Brand Development Strategy
 Line Extension - company introduces
additional items in a given product category under the same brand name. The vast majority
of new product introductions are line extensions. Eg add decaf coffee.
Brand extension (brand leveraging) a company seeks to extend existing brand
qualities to launch new products or modified products in a new category. Eg Quaker
oatmeal Quaker Granola Bar
Multibrands (Flanker) develops two or more products in the same product category.
Eg P & G pioneered multibranding
New Brands a company creates a new brand name when it enters a new product
category for which none of the companys current brand names are appropriate eg Coca
Cola Dasani.

Megabrand Strategy; involves weeding out weaker brands and focusing their marketing
dollars only on brands that can achieve the number one or two market share positions in
their categories.
Brand Repositioning;
Brands must be constantly evaluated in relation to competitive and market changes.
Repositioning can be challenging to marketers because the strengths (or
weaknesses) of a brands image may make altering its position difficult to
communicate to the target market.
Reposition Kentucky Fried Chicken to KFC
Kraft repositioned its Velveeta Brand from cooking cheese to good tasting,
natural and nutritious snack cheese
Should be done carefully

Packaging Concept;
Deals with what the package should be or do for the product in support of
marketing objectives
Includes designing and producing the container or wrapper for a product
The package includes the immediate container (that holds the product for use), a
secondary package (discarded prior to use) and a shipping package ( necessary for
storage and shipping).

Labelling Decisions;
Labels;
Identify products distinguish one product from others; and support brand
strategies
 Describe product by providing information about contents, production,
freshness, and instructions on safe and effective use
Promote products through the use of colour and graphics can stimulate and
arouse customer attention for the product.
Must satisfy legal regulation

Product Line & Mix Decisions

Product Line Decisions

Product line length; the number of products in the line.
A line is too short if adding items increases profits; too long if dropping
items increases profits. Company objective of full-line offerings may decrease
strict profit criterion on length
Product line stretching; lengthening a companys product line
Downward stretch offers items to lower end of the market
Upward stretch introduces items to high end of market
Two-way stretch extends the line both upward and downward.
Product line filling; adding items within the existing product range of the line
Produce line featuring; selecting a few items to receive special marketing attention
to either increase volume of the featured items or draw customers closer to other
products in the line.

Product Mix Decisions

Product mix the set of merchandise offered by a firm to its customers
Assortment dimensions
Width number of different product lines marketed by a single firm
Length number of items sold by a firm within each product line
Depth number of shapes and model designation of the product
Consistency how closely related the various product lines are in end use,
production requirements, distribution channels or other ways
Optimizing the product mix
The optimum product mix for a firm varies across time
The mix is a function of engineering, production, and marketing skills
available; the financial resources and the objectives of the organisation.
For long-term growth expand product mix continuous (expand when you add a
new product, you can discard an old one)

Product Mix Strategy of General Motors;

Product Line Stretching Decisions

New Products
Rapid changes in tastes, technology and competition, prompt customers to want
new and improved products
New products; include original products, modifications, new brands
Newness depends on who makes the assessment buyer or seller
Success of a new product depends on a unique superior product new
features, higher quality and value in use.
A company can obtain new products in two ways
Acquisition buying a whole new company, patent or licence to produce
someone elses product
New product development
Degree of newness to buyer/seller impacts the amount of risk taken and influences
the new product development process.
Product Newness
New to the world products that create entirely new markets
New product lines entries into existing markets that are new to the firm
Line extensions new products allowing firms to extend served market through
different benefits
Improvement to existing products replacements for existing products
Repositioning modest technical improvements that allow a product to offer new
applications
Cost reduction version of existing products providing comparable performance at
lower cost.

New-product success and failure

A high rate of new product failure
80% of new consumer goods
33% new B2B products
Reasons why new products fail
Negative perception
Wrong timing
Poor market research
Poor marketing communications etc
Identify successful products and find out what they have in common
Develop a superior product
Have a well defined product concept prior to development
Inadequate promotional budget and support may cause failure
Top management commitment is vital
A company must understand its consumers, markets and competitors.

New Product Development Process

Idea generation this stage is the systematic search for new product ideas
Sources for new product ideas include internal sources, customers, competitors
products, distributors & suppliers, and other sources
Screening this stage focuses on reducing the number of ideas by dropping poor
ideas as soon as possible
Helps reduce cost and focus attention more productively
Concept Development and Testing this stage involves translation ideas into
product concepts or detailed versions of the ideas stated in meaningful consumer
terms. Concepts are then tested on target consumers
Marketing Strategy. Consists of three parts;
Describe the target market
Outline the products projected price, distribution and budget for the first
year, and
Describe long-run sales, profit goals and marketing mix strategy
 Business Analysis - reviews the sales, costs and profit projections for the product
to find out if they satisfy overall company objectives
Product development involves converting the product concept into a physical
product to ensure that the idea is a viable product
Test marketing involves implementation of marketing program in one or more
realistic market settings.
Commericalisation - actual introduction of new product into the marketplace. The
company must make decisions involving when to introduce, where, to whom and
how.

Managing new-product Development

Customer-centred new-product development; focuses on finding new ways to solve
customers problems and create more customer-satisfying experiences
Team-based new-product development; company departments work together in
cross-functional teams, overlapping the steps in the product development process to
save time and increase effectiveness
Systematic new-product development; The NPD process should be systematic and
holistic to ensure that new ideas that may emerge do not falter. Good management
system to manage new-product ideas.

Common Organisational Arrangements

How companies organise for new product development is also important for its success.
Product managers he/she is closest to the market and as such is the most
knowledgeable of all. However he/she may be preoccupied with existing products
and lack specific knowledge and skills related to new product development.
New-product managers a new manager assigned to the task of new product
development; however he/she might think in terms of modifications and line
extensions.
New-product committees uses specialists from several functional areas to
evaluate new product concepts and plans
New-produce departments sets up a separate department with the line and
staff authority to develop new products. The department manager also has access to
top management.
New-product venture teams brings together specialists from other operating
departments and reassigns them to the venture team.
Product Life Cycle

PLC is used to describe tangible

goods and services.
From the point between growth and maturity, the product has a good future so
other companies try to compete with your product
In introduction phase, there is no profit as no one knows the product yet so
companies need to spend money to promote the product.

Product Life Cycle Stages;

Introduction Stage
Promote the product heavily to inform the market about its debut
Low/negative products may lead to set high prices to offset expenses
Adopt skimming strategies to generate high profits now or penetration strategies
to build market share and dominate the market for larger profits once the
market stabilizes
Growth Stage
The produce experiences both increasing sales and competition
Promotion costs are spread over larger volume and strategic decisions focus on
growth strategies
Strategies include adding new features, improving quality, increasing distribution,
and entering new market segments.
Maturity Stage
Slower growth over a longer period of time. Growth stage decisions are
inappropriate
Must modify
The market to increase consumption
The product (quality, feature, and style improvements) to attract new
users
The market mix to improve competitive position
Decline Stage
Cost of managing the product may exceed profits
Management may keep the brand as competitors drop out, harvest the brand by
reducing costs of support for short-term profit, or divest (ie drop) the product.

Different Types of PLC

Video game console and software life cycles by product class and product form
Typical Fashion, Style and Fad.

Product Life Cycle Stage Characteristics

Product Life Cycle Stage Strategies

Managing the PLC during the Decline Stage
The three ways to manage a product through its life cycle include;
Product modification strategies; altering a product characteristic, such as quality,
performance, or appearance to try and increase and extend its sales and life cycle.
Market modification strategies; increasing a products use among existing customers,
to create new use situations, or to find new customers eg sodium bicarbonate was
once used to bake cakes but now it is use to clean things
Product repositioning strategies; changing the place a product occupies in a
consumers mind relative to competitive products.
A firm can reposition a product by changing one or more of the four Ps.
Length of a Product Life Cycle
How long is a product life cycle? What determines its length?
There is no exact time that a product takes to move through its life cycle
As a rule, consumer products have shorter life cycles than business products.
The availability of mass communication vehicles inform consumers faster
and shortens life cycles
Also, technological change tends to shorten product life cycle as new product
innovation replaces existing products.

LECTURE8;

Integrated Marketing Communication

The Marketing Communication System

Why do we need IMC?

From the media side
Fragmented media
Overlapping media
From consumer side
 More complex, co-existent lifestyles
More choices of information courses
Less enduring brand loyalty
From business side
Retailer becomes more powerful

The nature of marketing communications network management

The new marketing communication landscape;
Consumers are changing
Marketing strategies are changing
There are changes in communications technology
The shifting marketing communications model
Dominance of mass media is declining. Companies are doing less broadcasting and
more targeted narrowcasting
Media costs are rising, audiences are shrinking, ad clutter is increasing and viewers
are gaining control of message exposure through technologies
The need for integrated marketing communications
Companies are required to carefully integrate its many communications channels to
deliver a clear, consistent, and compelling message about the organisation and its
brands

Integrated Marketing Communication (IMC)

IMC entails co-ordinating the organisations promotional efforts using the
promotion mix comprising the following communications elements to
communicate clear, consistent, and compelling company and brand messages.
An organisations IMC program consists of a specific blend of these elements to meet
objectives such as to inform, persuade, and remind customers as well as to reinforce
their attitudes and perceptions most effectively.
Promotion Mix;
Each of these elements has unique characteristics and costs
Advertising
Sales promotion
Personal selling
Public relations
Direct/online marketing

Hence IMC is about communications.

Why Communicate?
INFORM
Makes consumers aware of new products
Informs them about specific brands
Educates them about product features and benefits
PERSUADE
Persuade customers to try new products/brands/services
Create demand for entire product category
Build secondary demand
 REMIND
Keeps companys brand fresh in consumers memory
Create top-of-mind awareness
ADD VALUE
Innovation
Improving quality
Altering consumer perceptions
Deliver sales promotion
ASSIST OTHER EFFORTS
Assists sales representatives
Pre-sell products
Provide salespeople with valuable introduction

IMC and the whole Marketing Mix

An IMC approach is not just concerned with advertising and sales promotion. It covers all
the traditional areas of marketing product, price, place/distribution and promotion
Segmentation
Targeting positioning strategy
Marketing Mix Strategy
Product
Price
Place/distribution
Promotion

Factors in developing IMC

Issues for Setting the Promotion Mix
Type of product and Market what are you selling and to whom?
Push or pull tells you whether promotion is done by you or by your
intermediaries
Stage in PLC
Buyer Readiness state

Setting the IMC Mix

The total marketing communication budget must be divided among;
Media advertising
Sales promotion
Personal selling generally used by B2B
Public relations
Direct and online marketing
Must blend the mix to achieve the stated marketing objectives. Companies within the same
industry differ greatly in how they design their IMC mixes eg KFC and Coca-Cola does not
use the same kind of promotion mix.
The Nature of each Promotion tool
ADVERTISING
Advantages;
Can each mass of geographically dispersed buyers at a low cost per exposure, and it
enables the seller to repeat a message many times
Large-scale advertising says something positive about the sellers size, popularity
and success
Consumers tend to view advertised products as more legitimate
Long term advantage - increase awareness, which increases sales. Advertising does
NOT directly increase sales
Disadvantages;
Impersonal and cannot be as directly persuasive as can company salespeople
Can carry on only a one-way communication with the audience
Advertising can be very costly

Sales Promotion
Sales promotion includes a wide assortment of tools coupons, contests, cents-off
deals, premiums and others
Advantages;
Attract consumer attention
Offer strong incentives to purchase
Can be used to dramatize product offers and to boost sagging sales
Invite and reward quick response.
Short term advantage wants to get rid of stock by lowering cost
Disadvantages;
Sales promotion effects are often short-lived
They are often not as effective as advertising or personal selling in building long-run
brand preferences and customer relationships

Personal Selling
More appropriate for B2B marketing
Advantages;
The most effective tool at certain stages of the buying process, particularly in
building up buyers preferences, convictions and actions
Involves personal interaction between two or more people
With personal selling, the buyer usually feels a greater need to listen and respond
Shortcomings;
A sales force requires a longer-term commitment than does advertising
Companys most expensive promotion tool

Public Relations and Direct Marketing

Public Relations (PR)
Public relations is very believable news stories, features, sponsorships and
events seem more real and believable to reader than ads do
 Public relations can reach many prospects who avoid salespeople and
advertisements
Public relations can dramatize a company or product
Publicity is prayed for because if picked up by media, they can say good things about
it, but advertising is paid for. Eg 4 cents of this product will be donated to Red Cross.
Direct Marketing
Although there are many forms of direct marketing, they all share four distinctive
characteristics;
Direct marketing is less public
Direct marketing is immediate
Direct marketing is customized
Direct marketing is interactive

Promotion Mix Strategies

Advertising and Major Advertising Decisions

Advertising is only one element of IMC; its job is to help communicate the brands value
proposition to target customers. It must blend with other IMC elements.
Possible Advertising Objectives;

Setting the Advertising budget

Affordable method set at the level the company can afford
Percentage-of-sales method set at a certain percentage of current or forecast
sales
Competitive-parity method set to match competitors outlays
Objective-and-task method set by defining specific objectives and determining
the promotional tasks required to achieve these objectives

Developing the advertising strategy

Advertising strategy consists of two main elements;
Creating advertising messages
Selecting advertising media
A large advertising budget does not guarantee a successful advertising campaign
Two advertisers can spend the same amount of advertising yet have very
different results
The first step in creating effective advertising messages is to decide what general
message will be communicated to consumers.

Creating the advertising message

Breaking through the clutter
Just to gain and hold attention, ad messages must be better planned, more
imaginative, entertaining, and rewarding to consumers
Merging advertising and entertainment
Using Madison & Vine: merge ad with entertainment: Advertainment &
brand integrations
Message Strategy
The message to be communicated to consumers; identify customer benefits
(ad appeals); develop a creative concept (big idea) to bring the message
strategy to life in a distinctive way
 Message execution
Turning the big idea into an actual ad execution to capture the target
markets attention and interest
Consumer-generated messages
Tapping consumers for message ideas or ads taking advantage of interactive
technologies

Selecting a message
Ideally a message should; (A framework known as the AIDA model)
Get Attention
Hold Interest
Arouse Desires
Obtain Action
Messages may have;
Rational appeals
Emotional appeals
Moral appeals

Advertising Appeals: Reason for a person to buy a product

Common advertising appeals that are considered desirable, exclusive and believable are
selected by marketers as the theme for a campaign.
Profit Product saves, makes or protects money
Health Appeals to body-conscious or health seekers
Love or romance Used in selling cosmetics and perfumes
Fear Social embarrassment, old age, losing health
Admiration Reason for use of celebrity spokespeople
Convenience Used for fast foods and microwave foods
Fun and pleasure Key to advertising vacations, beer, parks
Vanity and egotism Used for expensive or conspicuous items
Environmental Consciousness Centres around environmental protection

Message Execution
Typical Message Execution Styles
Slice-of-life; shows one or more people using the product in a normal setting
Fantasy; creates a fantasy around the product or its use
Lifestyle; shows how a product fits in with a lifestyle
Mood or image; builds a mood or image around the product, such as beauty, love or
serenity
Musical; shows one or more people or cartoon characters singing a song about the
product
Personality symbol; creates a character that represents the product
Technical expertise; shows the companys expertise in making the product
Scientific evidence; presents surveys or scientific evidence that the brand is better or
better liked than one or more other brands
 Testimonial evidence; features a highly believable or likeable source endorsing the
product.

Selecting Advertising Media

Deciding on reach, frequency and impact
Reach; a measure of percentage of people in the target market who are exposed to the ad
campaign during a given period of time
Frequency; a measure of how many times the average person in the target market is
exposed to the message
Media impact; the qualitative value of a message exposure through a given medium that the
advertiser must decide on its desired level
The advertiser wants to choose media that will engage consumers rather than simply
reach them. But such measures are hard to come by for most media.

Choosing among the main media types

The media planner has

to know the reach, frequency, and impact of the major media types which are;
Television
Internet
Newspapers
Direct mail
Magazines
Radio
Outdoor

Selecting Specific Media Vehicles

 The media planner must choose the best media vehicles (eg NCIS, Ch9 News)
specific media within each general media type
They must compute the cost per thousand persons (CPM) reached by a vehicle. They
must also consider the costs of producing ads for different media.
The media planner must balance media cost against several media effectiveness
factors such as;
Audience quality
Audience engagement
Editorial quality

Deciding on media timing

The advertiser must decide how to schedule the advertising over the course of a year. Some
marketers do only seasonal advertising eg Hallmark advertises its greeting cards before
major holidays. The advertiser has to choose the pattern of the ads
Continuity means scheduling ads evenly within a given period
Pulsing means scheduling ads unevenly over a given time period.

Advertising Evaluation
Measuring the communication effect (copy testing)
Three major methods of advertising pre-testing;
Direct rating
Portfolio tests
Laboratory tests
Two popular methods of post-testing advertisements;
Recall tests
Recognition tests
Evaluating advertising effectiveness and return on advertising investment;
Return on advertising investment is the net return on advertising investment divided by
the cost of the advertising investment.

International Advertising Decisions

More complex than domestic ad decisions
Major issue; standardization vs localization
Standardization reduces advertising costs, provides greater global
advertising coordination, and a more consistent global image. But it ignores
the fact that country markets differ greatly in their cultures, demographics,
and economic conditions.
Advertising media costs and availability differ vastly from country to
country. Countries also differ in the extent to which they regulate advertising
practices.
Although advertisers may develop global strategies to guide their overall
advertising efforts, specific advertising programs must usually be adapted to meet
local cultures and customers, media characteristics, and advertising regulations.

Organising for advertising;

Different companies organise in different ways to handle advertising.
 Small companies, advertising might be handled by someone in the sales department
Large companies set up advertising departments who job it is to set the advertising
budget, work with the ad agency, and handle advertising not done by the agency
Advertising agencies employ specialists who can often perform advertising tasks
better than the companys own staff.
Most large advertising agencies have the staff and resources to handle all phases of
an advertising campaign for its clients, from creating marketing plan to developing
ad campaigns and preparing, placing and evaluating ads.

Public Relations
Impact;
Can have a strong impact on public awareness at a lower cost than advertising can
If the company develops an interesting story or event, media may publicise it
The company does not pay the media for PR. So it has more credibility than
advertising
PR is often described as marketing stepchild because of its often limited and
scattered use.

Functions

Public Relations Decisions

A major mass-communication tool
Aims at building good relations with the companys various publics using different
tools
Press relations
Product publicity
Corporate communication
Lobbying
 Counselling
Major public relation tools include;
News
Speech
Special events
Written materials
Audiovisual materials
Corporate identity materials
Community service activities

Socially Responsible Advertising

Avoid false or deceptive advertising
Must not create ads that have the capacity to deceive
Avoid bait-and-switch advertising that attracts buyers under false pretences.

LECTURE9;

Integrated Marketing Communication; Sales Promotion and Personal

Selling
Integrated Marketing Communication (IMC)
IMC entails co-ordinating the organisations promotional efforts using such major
communication elements as;
Advertising
Public relations
Sales promotion
Personal selling
Direct and online marketing
An organisations IMC program consists of a specific blend of these elements to meet
objectives such as to inform, persuade and remind consumers as well as reinforce
their attitudes and perceptions most effectively.

Sales Promotion
The act of influencing customer/consumer perception and behaviour to build
market share and sales to reinforces brand image.
Consists of short-term incentives to encourage the purchase or sale of a product or
service
Used together with other promotional mix elements eg advertising, personal selling,
direct marketing etc
Closely linked with direct and online marketing
Has its origins in FMCG; but used by most organisations ie manufacturers,
distributors, retailers and not-for-profit sector.
Has many meanings
 Covers a range of incentives; used with the products promoted via either
mass media ads or by direct and online methods.

Purpose of Sales Promotion

To attract new triers (ie non-users, loyal users of other brands, and brand
switchers); to try a new product or brand
To lure customers away from competitors products or brands
To get consumers to load up on a mature product
To reward brand-loyal customers and thereby retain them
To reduce time between purchases, and even
To turn light users into medium or heavy users
The time might also be to regain past purchasers who have ceased buying

Sales Promotion Objectives

Consumer promotions
Short-term customer buying
To enhance customer brand involvement
Trade promotions
Getting retailers to carry new items and more inventory
To promote companys products
Salesforce
Getting more salesforce support
Getting salespeople to sign up new accounts
Major Sales Promotion Tools; Consumer Promotions

Developing Sales promotion programs

A number of decisions must be made in order to define the full sales promotion program;

Personal Selling
Is the interpersonal arm of the promotion mix
Involves two-way, personal communication between salespeople and individual
customers whether
Face-to-face
 By telephone
Through video conference
Or by other means
Hence, personal selling can be more effective than advertising in complex selling
situations
Personal selling can foster relationship marketing (RM)
RM process of creating, maintain and enhanced strong, value-laden relationships
with customers and other stakeholder by creating superior customer value and
satisfaction

The Role of Personal Selling

Many types of personal selling jobs;
The role of personal selling can vary greatly from one industry/company to another
The people who do the selling go by many names;
Salespeople
Sales representatives
Account executives/representatives
Agents
District managers
Marketing representative

The Role of the Salesforce

Linking the company with its customers
Coordinating marketing and sales
The sales-force serves as a critical link between a company and its customers to
producing sales

Managing the salesforce

Goal of this process is to build a skilled and motivated sales team that will help to
create customer value and build strong customer relationships

Designing Salesforce strategy and structure

Saleforce structure
Territorial salesforce structure
Product salesforce structure
Customer salesforce structure
Complex salesforce structures
Saleforce size
Workload approach
Other salesforce strategy and structure issues
Outside and inside salesforce
 Team selling
Recruiting and Selecting Sales People - Recruiting will attract many applicants from
whom the company must select the best
Training Salespeople Most companies provide continuing sales training via seminars,
sales meetings and Web e-learning throughout the salespersons career
Compensating salespeople To attract good salespeople, a company must have an
appealing compensation
Supervising salespeople continuing supervision and encouragement should be given to
new salespeople in order to help them do a better job even though they have already
received formal training.
Evaluating salespeople getting regular information from salespeople is a key factor in
ensuring effective evaluation of their performance.

Major Steps in effective selling

The Direct Marketing Model; Methods of Interacting with Customers
Direct marketing is an interactive system of marketing which uses one or more
advertising media to effect a measurable response and/or transaction at any
location
It consists of connecting directly with carefully targeted individual consumers both
to obtain an immediate response and to cultivate lasting customer relationships
Benefits for Buyers; Convenient, easy and private
Gives buyers ready access to a wealth of products and comparative information
about companies, products, and competitors
Is interactive and immediate
Gives consumers a greater measure of control
Benefits for Sellers; flexibility, cost
Can target small groups or individual consumers
Low-cost, efficient speedy alternative for reaching their markets
Can offer greater flexibility
Gives sellers access to buyers that they could not reach through other channels.

Digital Marketing: Internet and Mobile Marketing

Entails interacting with known customers and other in the marketing channel, on a
one-to-one basis, using electronic network tools and technologies ranging from the
internet to mobile phone networks
Enables organisations to interact with their customers in real-time, both through
the organisations website, or through social media vehicles such as Facebook and
Twitter.
Facilitates customer relationship management (CRM)
A marketing organisation that finds it customers have highly differentiated needs
and offer great variety in their returns to the organisation might well consider a
digital one-to-one marketing strategy.
Forms of direct and online marketing;
Sales promotion
Electronic dispensing & kiosks
Direct print & reproduction
Direct selling
Direct-response TV & Radio
Electronic shopping
Telemarketing
Telesales

Direct and online database marketing

Entails development and maintenance of electronic databases to interact with past,
present and/or potential customers and others in the marketing channel, on a one-
to-one basis, often in real time, and where the databases are used to maintain value-
laden relationships and to generate a measureable response and/or transactions
through the integrated use of electronic network tools and technologies
Customer database is
An organisation collection of comprehensive data about individual customers or
prospects, including geographic, demographic, psychographic, and behavioural data.
Consumer marketing; database might contain a customers demographics
(age, income, family members, birthdays), psychographics (activities,
interests and opinions) and buying behaviour (buying preferences and the
recency, frequency and monetary value RFM of past purchases)
Business-to-business marketing; database might contain the products and
services the customer has bought; past volume and prices; key contacts (and
their ages, birthdays, hobbies, and favourite foods); competing suppliers;
status of current contracts; estimated customer spending for the next few
years; and assessments of competitive strengths and weaknesses in selling
and servicing the account

How are direct and online marketing databases used?

Companies use their databases in many ways;
To locate good potential customers and to generate sales lead
To learn about customers in detail.
Databases are used to;
Identify prospects
Many companies generate sales leads by advertising their products or offers
Ads generally have a response feature, eg business reply card or toll-free
phone number. The database is built from these responses
Decide which customers should receive a particular offer
Companies identify the profile of an ideal customer for an offer
Then they search their database for individuals most closely resembling
the ideal type
By tracking individual responses, the company can improve its targeting
precision over time
Deepen customer loyalty
Companies can build customers interest and enthusiasm by remember their
preferences and by sending them appropriate information, gifts etc
Reactivate customers
Helping a company make attractive offers of product replacements, upgrades, or
complementary products just when customers might be ready to act
Data mining
Entails checking databases for patterns and trends that are hypothesised to
exist, or in order to find new connections between data item
Modern software enables open-ended queries that involve systematic
searches for relationships and patterns within and between databases

Using a Database in direct and digital marketing

Setting up an online marketing presence

Creating a search engine-optimized website

Types of websites;
Corporate and/or brand website
Marketing website
Designing effective websites;
Context
Content
Community
Customization
Communication
Connection
Commerce
Search engine marketing and placing online ads

Forms of Online Advertising

Banners; banner-shaped ads found at the top, bottom, left, right or centre of a
webpage
 Interstitials; online display ads that appear between screen changes on a website,
especially while a new screen is loading
Pop-ups; online ads that appear suddenly in a new window in front of the window
being viewed
Pop-unders; online ads that appear in a new window that evades pop-up blockers
by appearing behind the page youre viewing
Rich media; display ads are online ads that incorporate animation, video, sound,
and interactivity
Search-related ads (or Contextual advertising); online advertising in which text-
based ads and links appear alongside search engine results

Other forms of Online Promotion

Content sponsorships; companies gain name exposure on the internet by
sponsoring special content on various websites
Alliances and affiliate programs allow companies to promote each other
Viral marketing is the Internet version of word-of-mouth marketing
Viral marketing involves creating a website, video, email message or other
marketing event that is so infectious that customers will want to pass it along
to their friends
Creating or participating in Online Social Networks
Using Email
Spam; the unsolicited, unwanted commercial email messages that clog up
email boxes
Creating or participating in social media interaction
Online social networks or Web communities are website that give consumers online
places to congregate, socialize and exchange views and information eg MySpace,
Facebook and twitter.
Online social communities-blogs, social networking websites, or even virtual worlds,
where people socialize and exchange information and opinions
Mobile Marketing; Marketing conducted over the Internet but accessed via data-capable
mobile phone networks.

Evaluating online marketing results

Online marketing communications measures;
Web-centric measures (analysis of hits, log files, page impressions)
Audience centric (cookies)
Network centric
Online channel performance
CRM
Customer lifetime value

Evaluating database performance

Three main criteria have been identified as;
Recency of purchase
Frequency of purchase
Monetary value of purchase
Socially Responsible Marketing Communication
Personal selling
Must ensure their salespeople follow the rule of fair competition when they
sell the products directly
Direct and online marketing
Develop mutually rewarding relationships
Avoid unfairness, deception and fraud
The direct marketing industry has also faced growing concerns about
invasion of privacy issues

LECTURE10;

Distribution and Channels

1st P Product
2nd P Promotion
3rd P Placement (Distribution = this lecture)
Distribution is physical aspect of logistics.

Logistics Systems and Distribution

Logistics is the process of planning, implementing and controlling effective flow and
storage of materials, in-process inventory, finished goods and related information
from point of origin to point of consumption for the purpose of conforming to
customer requirements.
Marketing Logistics Network (MLN) refers to the second part of the definition
presented above
It is a system of efficiently and effectively making and getting products and
services to end-users.

The nature of marketing logistic network management (MLN)

The modern marketing organisation uses MLN to physically distribute goods and
services to customers.
MLN can help a company to identify superior suppliers and to improve
productivity in the supply chain, which ultimately brings down the
companys costs.
MLN involves the whole process of procuring the right inputs (raw materials,
components and capital equipment), converting them efficiently into finished
products and dispatching them to final destinations
The modern marketing organisation uses MLN to physically distribute goods
and services to customers
Hence, MLN can help a company to identify superior supplier and to improve
productivity in the supply chain, which ultimately brings down the
companys costs.
Hence, distribution is a subset of the logistics system.
The total cost of logistics can account for 30-40 per cent of a products cost
 A lower logistics costs can lead to a lower price; higher profit margin;
provide competitive advantages; reduce cycle time and improve customer
satisfaction and help the FMCG industry (fast moving consumer goods)
* Product has primacy over the other Ps.

Physical Distribution
Physical distribution encompasses the tasks involved in planning, implementing
and controlling the physical flow of materials and final goods from points of origins
to points of use to meet the needs of customers at a profit
Marketing Logistics functions;
Warehousing
Inventory management
Transportation
Logistics information management

Marketing Logistics;
Objectives; getting the right goods/services to the right places at the right time for
the least cost
Maximize customer service but minimize cost
Simultaneously maximizing service and reducing logistics cost is impractical
(if you increase service, you will increase cost)
Maximizing service involves large inventories, premium transportation,
multiple warehouse all of which need to be reduced by minimize costs.
Need total system approach and consideration of trade-off.

Logistics: An integrated Discipline

Total Cost analysis;
The key to managing logistic function;
Management should strive to minimize the total cost of logistics rather than cost of
each activity
Attempts to reduce the cost of individual activities may lead to increase total costs
Total cost = transport cost + facilities cost (warehouse, depot) + order processing costs +
inventory costs + handling costs + packaging costs + management costs.

Marketing Channel
A marketing channel is a set of interdependent organisations** involved in the process
of making a product or service available for use or consumption by the consumer or
industrial user.
Value addition by marketing channels and channel members by fulfilling 3 sets of
important functions;
Specialization and division of labor
Overcoming discrepancies
Providing contactual efficiency

Specialisation and division of labor

Provides economies of scale
 Aids producers who lack resources to market directly
Builds good relationships with customers

Overcoming discrepancies
Discrepancy of Quantity reduce the difference between the amount of product
produced and the amount an end user wants to buy
Discrepancy of Assortment transform the assortment of products made by
producers into the assortment wanted by consumers eg retail markets make
products from companies available for us.
Temporal Discrepancy allowing customers to buy a product when the customer
is ready to buy it eg might like something but dont have money to buy it.
Spatial discrepancy allowing the customer to buy a product irrespective of the
location of production (widely scattered markets). Eg clothes and items from
different countries that are all available in Australia.

Marketing Channels add value by performing eight specific channel functions (done by
marketing channel)
Information Gathering and distribution marketing research and intelligence
about the environment for planning purposes
Promotion developing and spreading persuasive communication about an offer
Contact finding and communicating with prospective buyers
Matching consists of shaping and fitting the offer to the buyers needs by
manufacturing, grading, assembling, and packaging.
Negotiation reaching an agreement on price and other terms
Physical Distribution involving transporting and storing of goods
Financing acquiring & using funds to cover the costs of channel
Risk taking assumes the risk of carrying out the channel work.

Contactual Efficiency
Refers to reduction and optimization of number of exchange contacts needed to
complete transactions with a view to attain a point of equilibrium between the
quality and quantity of exchange relationships between channel members
Enables mass distribution
Reduces time and financial costs of distribution
Channel Levels
Marketing channels can be described by the number of channel levels involved
A channel level is defined as each of the marketing intermediaries that perform
some work in bringing the product and its ownership closer to the final buyer.
Distribution channels can be categorized broadly as;
Direct marketing channel this is a marketing channel that has no
intermediary levels. The company sells directly to final consumers
Indirect marketing channels these contain one or more intermediary levels

Control, Conflict and Channel Organisation

Horizontal conflict occurs between firms at the same level of the channel.
Dealers and franchises of the same firm within the same market may argue about
each others competitive practices
Vertical conflict refers to problems between firms at different levels in the
channel
As traditional channel organisation lacks a specified controlling authority, new approaches
have been developed.

Channel Organisation: Vertical Marketing Networks

Vertical Market Networks; a vertical marketing network consists of producers, wholesalers
and retailers acting in as a unified system. There are three types of VMN;
Corporate VMN; the corporate combines and owns successive stages of production
and distribution
Contractual VMN; consists of independent firms at different levels of production
and distribution to obtain more economies and sales than members could achieve
alone. Has three types; wholesaler-sponsored chain, retailer cooperative, franchise
organisation
Administered VMN; coordinates distribution by the power exerted by one of its
members in the marketplace, not by contract or ownership
Innovations in Channel Organisation
Horizontal marketing systems (HMS) formed when two or more companies at one level
join to pursue a new marketing opportunity.
These may be temporary arrangements such as a join promotion or more
permanent distribution agreements
Multichannel marketing systems. Also called hybrid marketing channels, these utilize more
than one channel to reach customers more effectively and with greater flexibility.

Channel alternatives; Distribution Strategies.

Number of marketing intermediaries.
Intensive distribution utilizes as many outlets as possible and is especially
appropriate for convenience goods and common raw materials
Exclusive distribution consists of a very limited number of outlet holds all the
rights to distribute a product line. This strategy is appropriate for many high
prestige goods. Distributor selling effort is usually very strong
Selective distribution uses more than one outlet per market but less than all
available outlets. This strategy gains good market coverage and gains better than
average selling effort.

Retailers; Types of retailers

Retailing store as well as non-store, includes all the activities in selling goods or
services directly to final consumers for their personal, non-business use.
Amount of service
Self-service
Limited-service
Full-service
Product line
Specialty store; combination store
Department store; supermarkets
Convenience store; mass merchants
Superstores; hypermarkets
Organisational approach
Chain stores
Corporate chains; voluntary chain
Retailer cooperative

Retailer Marketing Decision

Retailers must define their target markets and then decide what position to adopt within
these markets. This is necessary to make consistent decisions about product assortment,
services, pricing, advertising, store dcor, or any of the other decisions that must support
their positions.