Marketing Management

Student Name: Shehab Ibrahim Abdelmoneam Farrag

Registration Number: 15225406

Marketing Management

Final Exam
Open Book Exam

Dear students,
Greetings,
Please answer the following Five questions, carefully read
them and make your answers clear to the point, giving
examples are very much appreciated. Bare in mind that
open book exam does not mean rewriting what is in the book
or copy and paste.

The following questions are short essays questions, requiring

response of approximately 450 words each.

1- Please Discuss, the marketer’s argument for why an

organization should embrace the marketing concept.

The Answer of Questions 1

Embracing the marketing concept is the way for a

sustainable business. But before deciding to adopt the marketing
concept let’s see what other applicable concepts we have and
finally decide which concept or philosophy businesses should
adapt to be a sustainable & successful business. There are
mainly three main marketing concepts that were developed and
was the dominant concepts according to the requirements and
the resources of each era taking into consideration that every
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Student Name: Shehab Ibrahim Abdelmoneam Farrag

Registration Number: 15225406

concept of the three concepts was the dominant concept for long
period of time, but by understanding the markets and the
consumers these concepts developed sequentially from the
production concept to the selling & product concept and finally
to the marketing concept.

The production concept was the dominant concept by the

before the start of the industrial revolution era and this concept
embraced the concept that believes, that the organization decides
which product to produce and the customer would buy what the
organization produces long as it is available and affordable. The
organization embraced this concept because this organization
knows what will work in designing and producing the product
and what will not work.
Since the organization has the great knowledge and skill in
making the product, the organization also assumes it knows
what is best for the consumer. This Concept of only relying on
the organization's skill and desires for the product did not lead to
poor sales. In most of the product Concept era, organizations
could sell all the products that they made.
The success of the production Concept era is mostly due to the
time and level of technology in which it was dominant. The
production era spanned both the pre-Industrial Revolution era
and much of the time after the Industrial Revolution.
The period before the Industrial Revolution was the time when
most goods were made by hand. The production was very slow
and few goods could be produced. However, there was also a
demand for those goods, and the slow production could not fill
the demand in many cases. The existence of this shortage made
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Registration Number: 15225406

the marketing concept need in this era very little and almost
neglected.
When the mass production techniques created by the Industrial
Revolution, the volume of output was greatly increased, But the
increased production of goods did not immediately eliminate the
shortages from the pre-industrial era. The new mass production
techniques provided economies of scale allowing for lower costs
of production and corresponding lower prices for goods. Lower
prices greatly expanded the market for the goods, and the new
production techniques were struggling to keep up with the
demand, as the organization will customize the product
according to the production line not according to the customers’
needs and wants.

This situation meant that the production Concept would work

just as well in the new industrial environment. Consumers still
did not need to be consulted for the organization to sell its
products. There are many companies in Egypt is still operating
by this concept and these companies’ ability to survive now
days is because the very low competition in the field that
company have like Check Valves manufacturers and many
workshops operating in Egypt. A classic example for this era is
Henry Ford when he pioneered mass production techniques in
the automobile industry. With the techniques, he offered cars at
affordable prices to the general public. Before this time, cars
were hand made, and only the very wealthy could afford them.
The public purchased all the Model T Fords that the company
could produce. The evidence that the production Concept was
alive and Henry Ford's famous reaction to consumer requests for
more color options. He was said "you can have any color car
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Student Name: Shehab Ibrahim Abdelmoneam Farrag

Registration Number: 15225406

you want as long as it is black." As henry ford believed that

different colors would increase the cost of production and price
of the Model T's, Henry Ford, using the product Concept,
decided that lower prices were best for the public.

The selling and product era It began to be dominant

around 1930 until about 1975. The selling Concept holds that an
organization can sell any product it produces with the use of
marketing techniques, such as advertising and personal selling,
and because of the competition in this era the people will favor
products that offer the most quality, performance, and features.
Organization should therefore devote its energy to making
continuous product improvements. Organizations could create
marketing departments that would be concerned with selling the
goods, and the rest of the organization could be left to
concentrate on producing the goods. The reason for the
existence of the selling Concept was the constantly increasing
number of goods available after the Industrial Revolution.
Organizations became progressively more efficient in
production, which increased the volume of goods. With the
increased supply, competition also entered production. These
two events eventually led to the end of product shortages and
the creation of surpluses. It was because of the surpluses that
organizations turned to the use of advertising and personal
selling to reduce their inventories and sell their goods. The
selling Concept also enabled part of the organization to keep
focusing on the product, via the product Concept. In addition,
the selling Concept held that a sales or marketing department
could sell whatever the company produced so in this concept the
organization takes the product the factory produce & try to sell
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Student Name: Shehab Ibrahim Abdelmoneam Farrag

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it to the people by using advertising & personal selling and by

adding features to the customer.

The Ford Motor Company is also a good example of the selling

Concept and why this Concept does not work in many instances.
Ford produced and sold the Model T for many years. During its
production, the automobile market attracted more competition.
Not only did the competition begin to offer cars in other colors,
the styling of the competition was viewed as modern and the
Model T became considered as old-fashioned. Henry Ford's sons
were aware of the changes in the automobile market and tried to
convince their father to adapt. However, Henry Ford was sure
that his standardized low-price automobile was what the public
needed. Consequently, Ford turned to marketing techniques to
sell the Model T. It continued to sell, but its market share began
to drop. Eventually, even Henry Ford had to recognize
consumer desires and introduce a new model.

The selling Concept assumes that a well-trained and motivated

sales force can sell any product. However, more companies
began to realize that it is easier to sell a product that the
customer wants, than to sell a product the customer does not
want. When many companies began to realize this fact, the
selling era gave way to the marketing era. The Product concept
assumes that consumers will favor products that offer the most
quality, performance, and features. Organization should
therefore devote its energy to making continuous product
improvements. These two concepts are the most popular
concepts of the marketing concepts in Egypt as most the
companied in Egypt like these concepts than the marketing
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Student Name: Shehab Ibrahim Abdelmoneam Farrag

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concept as they use the philosophy of the company know what

to produce and how to produce and the selling team shall sell
whatever the company produces.

The marketing concept and philosophy states that the

organization should do it’s best to identify & satisfy its
customers' wants and needs while meeting the organization's
goals. The best way to meet the organization's goals is also by
meeting customer needs and wants. The marketing concept's
emphasis is to understand the customers before designing and
producing a product for them. With the customer's wants and
needs incorporated into the design and manufacture of the
product, sales and profit goals are far more likely to be met.

The customer's satisfaction is the key to the organization

success, the need to understand the customer is critical.
Marketing research techniques have been developed just for that
purpose. Smaller organizations may keep close to their
customers by simply talking with them. Larger corporations
have established methods in place to keep in touch with their
customers, such as consumer panels, focus groups, or third-party
research studies. Whatever the method, the desire is to know the
customers so the organization can better serve them and not lose
sight of their needs and wants.

The idea of keeping close to the organization's customers seems

simple, but it is very easy to forget & neglect the customer's
needs and wants. Sometimes the management is so involved
with the product that their own desires and wants to begin to
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take dominance, even though they have adopted the marketing

concept.

It is easy for managers to forget the marketing concept and

philosophy so far. For example, a man realized that the area
around the campus lack to fast good food then he got a moving
bean cart near the university's campus. The bean cart was an
immediate success. By using the marketing concept, the young
entrepreneur had recognized an unmet need in the student
population and opened a business that met that need.

Unfortunately, the story does not end at this point. The bean cart
was so successful that it began to outgrow its original location
after about three years. The bean cart moved to a larger location
and built a shop, also near the university. the shop now served
full meals and had a bar for soft drinks. Within a few months,
the cafe was out of business. The owner of the shop had become
so involved with his business vision that he forgot the
customers' needs and wants. They did not want an upscale
restaurant—there were other restaurants in the area that met that
need, they just wanted a quick bean sandwich. By losing sight of
the customers' wants and needs, the owner of the sub shop lost
his successful business.

On the other hand, sometimes in the excess enthusiasm to

satisfy a customer's wants and needs, the marketing concept is
construed to mean that the customer is always right. However,
the marketing concept also states that it is important to meet
organizational goals as well as satisfy customer wants and
needs. Satisfying customer needs and organizational goals may
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Student Name: Shehab Ibrahim Abdelmoneam Farrag

Registration Number: 15225406

involve conflicts that sometimes cannot be resolved. The

organization that adopts the marketing concept will do
everything in its power to meet the needs of its customers, but it
must also must make a profit. Sometimes the wants of the
customers may include a low price or features that are not
attainable for the organization if it is to make a profit.
Consequently, the organization must hope for a compromise
between what the consumer wants and what is practical for the
business to provide.

In short, the marketing concept is the best concept and the

most consistent one because it defines how your company will
drive business to flourish and it is the evolution of all the other
concepts, so soon or later the organization will have to adopt
this concept. The organization may be forced to adopt the
marketing concept when the competition in the market
increases, as if the organization did not adopt this concept while
the competitors adopt this concept the organization will
eventually fall. The marketing concept states that a company’s
primary job is to satisfy the needs of the customer. This is
accomplished by determining what the market wants and then
best adapting your product or service to match. To achieve this
aim, everyone in the company must be dedicated to customer
satisfaction. It is also important to note that the company must
remain profitable while satisfying customer needs. Adopting the
marketing concept is not only the responsibility of the marketing
department, but also it is the responsibility of every single
person inside the organization starting from the worker to the
top management, everyone in the organization should
understand & adopt the marketing concept.
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Student Name: Shehab Ibrahim Abdelmoneam Farrag

Registration Number: 15225406

2- Markets can be segmented at different levels. Briefly

describe each and explain the benefits associated
with segmenting the market at each of the four
levels.

The Answer of Questions 2

If we are considering the marketing as a way of doing the

business, then the segmentation is the way of doing good
marketing and the way to business success. Since the marketing
concepts is to fulfill the customers’ needs and wants &
achieving the organizational goals, as the market segmentation
is the process that companies use to divide large markets into
small markets that can be reached more efficiently and
effectively with products and services that match their unique
needs, so the market segmentation is very important in
marketing and the base of good marketing & sustainable
business.
Since the most important aim of marketing is to understand and
satisfy an organizations customer and their needs better than that
of its competitors. As no two individuals are same, they have
different requirements and should be treated differently, then the
big market should be segmented to smaller markets. The
organization achieves this by implementing target marketing
strategies. Identifying different market segments is the first step
in target marketing. Thus, market segmentation is the process of
dividing the market into many groups that are mutually
exclusive, while individuals exhibiting similar traits fall under
one group. With the help of segmentation firms can anticipate
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the requirements of its potential customers, by determining the

group of people best suited for a particular product or particular
service offering.

In order to successfully implement a market segmentation

strategy, a business must employ market research techniques to
find patterns of similarity among customer preferences in a
market. Ideally, customer preferences will fall into distinct
clusters based upon identifiable characteristics of the population.

For the management to be pursued by a marketer, the customer

segments should be:1) identifiable and measurable; 2) large
enough to be profitable; 3) reached effectively (for example, its
members must tend to view the same television programs, read
the same publications, or shop in the same places); 4) responsive
to marketing; and 5) stable and not expected to change quickly
6) differentiable meaning that the needs and wants of this
segment are unique compared to other segments. A company
might elect to serve a single market segment or attempt to meet
the needs of several segments.

Determining how to segment a market is one of the most

important questions a marketer must face. Creative and effective
market segmentation can lead to the development of popular
new products, but unsuccessful segmentation can cost a great
deal of money and still not yield the desired results. There are
three main types of segmentation bases for businesses to
consider—descriptive bases, behavioral bases, and benefit bases
—each of which breaks down into numerous potential customer
traits.
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Student Name: Shehab Ibrahim Abdelmoneam Farrag

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Descriptive bases for market segmentation include a variety of

factors that describe the demographic and geographic situation
of the customers in a market. They are the most commonly used
segmentation bases because they are easy to measure, and
because they often serve as strong indicators of consumer needs
and preferences. Some of the demographic variables that are
used as descriptive bases in market segmentation might include
age, gender, religion, income, and family size, while some of the
geographic variables might include region of the country,
climate, and population of the surrounding area.

Behavioral & physiographical bases for market segmentation

are generally more difficult to measure than descriptive bases,
but they are often considered to be more powerful determinants
of consumer purchases. They include those underlying factors
that help motivate consumers to make certain buying decisions,
such as personality, lifestyle, and social class. Behavioral bases
also include factors that are directly related to consumer
purchases of certain goods, such as their degree of brand loyalty,
the rate at which they use the product and need to replace it,
their occasions of the purchases and their readiness to buy at a
particular time.

Businesses that segment a market based on benefits hope to

identify the primary benefit that consumers seek in buying a
certain product, then supply a product that provides that benefit.
This segmentation approach is based upon the idea that market
segments exist primarily because consumers seek different
benefits from products, rather than because of various other
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Student Name: Shehab Ibrahim Abdelmoneam Farrag

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differences between consumers. One potential criticism to this

approach is that consumers do not always know or cannot
always identify a single benefit that influences them to make a
purchase decision. Many marketers use a combination of bases
that seem most appropriate when segmenting a market. Using a
single variable is undoubtedly easier, but it often turns out to be
less precise.

In general, customers are willing to pay a premium for a product

that meets their needs more specifically than does a competing
product. Thus, marketers who successfully segment the overall
market and adapt their products to the needs of one or more
smaller segments stand to gain in terms of increased profit
margins and reduced competitive pressures. Small businesses, in
particular, may find market segmentation to be a key in enabling
them to compete with larger firms. But the potential gains
offered by market segmentation must be measured against the
costs, which—in addition to the market research required to
segment a market—may include increased production and
marketing expenses.

3-. The decline stage of the product life cycle (PLC) has
its own special challenges for marketers. Briefly define
the five strategies that a marketer can use for
rejuvenating a declining product. What determines
which strategy should be implemented? Please give
examples.
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Student Name: Shehab Ibrahim Abdelmoneam Farrag

Registration Number: 15225406

The Answer of Questions 3

The declining stage is very challenging period in the product life
cycle as in this stage to any marketer. The characteristics of this
period is illustrated in the following paragraph.
A product is in the decline stage when the consumer is no longer
interested in the product and sales volume declines rapidly.
Costs: During the decline stage, the cost to warehouse a product
with stagnant sales increase with each passing day.
Product price, sales volume, and profitability: The price also
plummets during the decline stage, making it very difficult to
recoup the original cost of the product and the increasing
warehouse costs. The costs increase while the profitability, sales
volume, and product price are declining.
Demand: The lack of consumer interest, plus the cost of
warehousing the product, may be the deciding factors to
liquidate the product to discounters. Sometimes an entrepreneur
can change or repackage the declining product and reintroduce it
successfully into the market. An entrepreneur should not wait
until a product reaches the decline stage before introducing a
new or modified product.
Competition: During the decline stage, there are declining
number of competitors.
Benefits of the Decline Stage are; Cheaper Production, even
during the Decline stage, there may be opportunities for some
companies to continue selling their products at a profit, if they
are able to reduce their costs. By looking at alternative
manufacturing options, using different techniques, or moving
production to another location, a business may be able to extend
the profitable life of a product.
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Cheaper Markets, for some manufacturers, another way to

continue making a profit from a product during the Decline
stage may be to look to new, cheaper markets for sales. In the
past, the profit potential from these markets may not have
justified the investment need to enter them, but companies often
see things differently when the only other alternative might be to
withdraw a product altogether.

There are mainly five strategies that the marketer can use in
order to give the kiss of live to the declining product which are;
(1) Increase the firm’s investment so as to either dominate the
market or strengthen its competitive position. (2) Maintain the
firm’s investment level until the uncertainties about the industry
are resolved. (3) Decrease the firm’s investment level
selectively, by dropping unprofitable customer groups, while
simultaneously strengthening the firm’s investment in lucrative
niches. (4) Harvest the firm’s investment to recover cash
quickly. (5) Divest the business quickly by disposing of its
assets as advantageously as possible. The appropriate decline
strategy depends on the industry’s relative attractiveness and the
company’s competitive strength in that industry, GE matrix can
help choosing which strategy to follow.
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GE matrix
Market attractiveness refers to refers to the attractiveness of the
market or the industry in which the company business units
operate. The factors affecting the Market Attractiveness are
Market Size, Market growth and growth potential, Market
profitability, Competition, Market Predictability, New
Opportunities, Macro environmental and economic factors

Business Unit Strength refers to the competitive position of each

of the business units. It specifies the strength, market share,
market position of the Business units. The factors affecting the
Business Unit Strength are Assets and market under the
Business Unit, Relative brand strength compared to others,
Market share and growth in market share, Brand Loyalty,
Distribution network and population reach, R&D, Patents and
Innovations, More investment and access to capital.

There are many stories and examples that illustrates what

strategies the companies used to rejuvenate a declining product.
For example, what Johnson & Johnson Tylenol crisis and how
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they used the increasing investment strategy to defend a faded

Tylenol to defend a willing product as well to defend the brand
position. when we apply GE matrix we find that the market
attractiveness is high and the business unit strength is high, so
this led Johnson & Johnson to invest more in this declining
product and because of the seamless crisis management and
marketing strategies they succeeded in converting the Tylenol
declining product to a growing product. But if Johnson and
Johnson failed in this the may be forced to divest their business.
Also, what Nokia is doing right now is a good example of the
declining stage strategies as the mobile market is very growing
& strong market and Nokia business unit strength is medium
then they invest to regain their position and they even started to
adapt themselves to this market and to accept to use android on
their phones.

In short declining stage, maybe the most challenging stage for

the marketers but a professional & careful management of this
period can led to great benefits or at least avoid great & huge
losses.

4-.Boston consulting group matrix is important for

marketing managers to control the company’s
portfolio. Please discuss and explain how you could do
that while showing the BCG relationship with the
PLC.please give examples.
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Student Name: Shehab Ibrahim Abdelmoneam Farrag

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The Answer of Questions 4

The BCG Matrix and the Product Life Cycle are two
important tools for marketing managers that relate to different
aspects of a product's performance, as the BCG looks at market
share and market growth and how they impact on cash usage
and generation, and the PLC looks at sales/revenues over time
and levels of profitability. Boston Consulting Group (BCG)
Matrix. Businesses must keep their product offerings relevant
and profitable to stay in operation. The Boston Consulting
Group developed a tool, called the BCG matrix, for categorizing
a firm's products in relation to the overall product lifecycle.
Product life cycle is based on the observation that products
develop, similar to animals, through distinct phases of maturity
that differ in amount of resources required and produced. The
BCG matrix places each product a company offers according to
the growth rate of the business and the relative market share the
product controls. Identifying which quadrant of the BCG matrix
a product offering falls into provides valuable guidance to
management about the future of that product Stars.
Products that enjoy a high relative position in terms of market
share in growing market are referred to as stars. They require
large investments to maintain the market share, but often
produce enough revenue to cover their expenses. Firms should
make it a top priority to maintain the market share of products in
the star quadrant of the BCG matrix to increase sales.
As the product enters maturity, and growth rates decline below
10 percent, maintaining market share will require less
investment, yet produce similar revenue, and become cash cows.
Cash Cows
Cash cows produce substantial profits for their companies
because they require little investment to maintain their high
share of the market. Managers should divert profits from cash
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cows to help defend market share of star products, develop new

products for emerging markets, or turn struggling products
around. While cash cows often provide the largest profit margin
in a company portfolio, firms interested in maintaining long-
term profitability must invest in defending and creating star
products that will become cash cows'
Low market-share products that show low growth are referred to
as dogs. Managers should minimize the number of dogs in the
product portfolio. While many managers seek the challenge of
trying to turn a dog product around, additional scrutiny should
be given to any investment in dog products. Firms should decide
whether to find a niche in the product's market to control or
divest from the product entirely to free up resources for more
profitable ventures.
Question Marks the most troubling quadrant on the BCG matrix
is filled with products in high-growth markets that control
relatively weak positions within their markets. These products,
called question marks, require large investments to develop.
Even with substantial funding, a question mark product is at a
disadvantage due to the fierce competition in high growth
markets. Managers should consider the likelihood and means of
increasing market share, such as specializing in a niche market,
before allocating additional resources to question marks. If a
question mark is unlikely to capture a niche market or stand out
against the better-established competition. the firm should divest
to increase its overall profitability

Some limitations of the BCG matrix model include; The

first problem can be, how we define market and how we get data
about market share. A high market share does not necessarily
lead to profitability at all times. The model employs only two
dimensions’ market share and product or service growth rate.
Low share or niche businesses can be profitable too (some Dogs
can be more profitable than cash Cows). The model does not
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reflect growth rates of the overall market. The model neglects

the effects of synergy between business units. Market growth is
not the only indicator for attractiveness of a market There are
probably even more aspects that need to be considered in a
particular use of the BCG model Product Life Cycle (plc).

The product life cycle has 4 very clearly defined stages,

each with its own characteristics that mean different things for
business that are trying to manage the life cycle of their
particular products. Introduction Stage This stage of the cycle
could be the most expensive for a company launching a new
product. The size of the market for the product is small, which
means sales are low, although they will be increasing. On the
other hand, the cost of things like research and development,
consumer testing, and the marketing needed to launch the
product can be very high, especially if
it's a competitive sector. The growth stage is typically
characterized by a strong growth in sales and profits, and
because the company can start to benefit from economies of
scale in production, the profit margins, as well as the overall
amount of profit, will increase. This makes it possible for
businesses to invest more money in the promotional activity to
maximize the potential of this growth stage. During the maturity
stage, the product is established and the aim for the
manufacturer is now to maintain the market share they have
built up. This is probably the most competitive time for
most products and businesses need to invest wisely in any
marketing they undertake. They also need to consider any
product modifications or improvements to the production
process which might give them a competitive advantage.
Eventually, the market for a product will start to shrink, and this
is what's known as the decline stage. This shrinkage could be
due to the market becoming saturated (i.e. all the customers who
will buy the product have already purchased it), or because the
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consumers are switching to a different type of product. While

this decline may be inevitable, it may still be possible for
companies to make some profit by switching to less-expensive
production methods and cheaper markets

The relationship between the BCG Matrix and the product

life cycle the horizontal axis of the BCG Matrix represents
market Share and the vertical axis indicates anticipated market
growth. The corporate business is divided into four categories
they are cash cows, stars, question marks, dogs. The product life
cycle is a new product progresses through a sequence of stages
from introduction to grow, maturity, and decline. The four
categories of corporate business correspond to the four stages of
the product life cycle (1) Question marks businesses correspond
to the introduction stage of the product life cycle. Question
marks businesses are in an attractive industry but hold a small
market share percentage. In the introduction stage the firm seeks
to build market share rapidly build product awareness and
develop a market for the product. (2) Starts businesses
correspond to the growth stage of the product life cycle. Start
businesses are in a fast-growing market, and hold a dominant
share of that market. Their contribution to cash flow depends on
their need for resources. In the growth stage, the firm seeks to
build brand preference and increase market share. Market share
tends to stabilize. (3) Cash cows businesses correspond to the
maturity stage of the product life cycle. Cash cows businesses in
this generate large amounts of cash but their prospects for future
growth are limited in the maturity stage, the market reaches
saturation. The primary objective is to defend market share
while maximizing profit. (4) Dogs businesses in this category do
not producer consumer much cash. However, they hold no
promise for improved performance. In decline stage, there is a
downturn in the market as sales decline discontinue the product
liquidating remaining inventory or sell off.
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There are many differences between the BCG Matrix and

the product life cycle and the following paragraph illustrates this
difference. The corporate business is divided into four
categories from two aspects of market share and anticipated
growth rate however the product life cycle is divided into four
stages from two aspects of sales and time. The BCG Matrix can
roughly judge enterprise's overall operating conditions but the
product life cycle only reflects the market performance of a
single product. The BCG matrix mainly studies the allocation
and use of corporate resources, but the product life cycle mainly
studies the use of the product marketing strategy. The BCG
matrix can reflect corporate a variety of different business
conditions, but the product life cycle cannot reflect all
businesses and product in the curve

There are many examples that illustrates the usage of BCG

& PLC together to truly judge the overall business performance
& to manage the products portfolio. The following paragraph
illustrates some example of the usage of the PLC & the PCG for
coca cola in 2001 by using the PLC & BCG we can classify the
products as the following images.
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Coca-Cola BCG & PLC IN 2001

Another example from different industry is google and the

BCG matrix which is illustrated in the following image.
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From this BCG matrix, we can conclude that in the

maturity stage google have; google search engine, google
maps & advertising. In the growth stage google have You
tube, android, google translate, Gmail& google +. In the
Introduction stage google have google Docs, google drive
& google glass. In the decline stage google have Orkut,
google news, google group and google reader

To sum it up every marketing manager should know how

to connect between the PLC & the BCG matrix in order to
be able to manage the product portfolio more efficiently.
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5-. What are the aims and tools of promotion, and

explain why promotion is important for companies.
Please explain with definition the promotional tools
and briefly describe what are the elements that
determine choosing what tools will be used to promote
a product or a service.

The Answer of Questions 5

Nowadays, Marketing entitles more than just the

renewing a product, pricing it appealingly, and making it
accessible to target customers. In addition, companies
must communicate with customers, and what they
communicate should not be missing to chance as every
company need to make promotion in order to be able to
sell the products effectively.

Since, marketing communications are all activities

and messages inform, persuade, and influence the
consumer in making a purchase decision". Thus, this essay
will address the role and characteristics of each of the
primary tools of the Promotion mix, which are mainly:
advertising, sales promotion, public relations (non-
personal communication tools) and personal selling and
direct marketing (personal communication tools). We will
also discuss the criteria that should be used to select the
right promotion mix and investigate the changes that are
happening in the media and communication landscape. For
example, thanks to information communication
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technologies, people can communicate through traditional

media and also through newer type of media or digital
media (fax machines, mobile phones, and computers).

The newer technologies have motivated more

organizations to shift from mass communication to a more
targeted communication and one-to-one dialogue. For
example, the BBC broadcasts its news programs on TV,
Internet and now on mobile phones to reach diverse and
spread out audiences even when they are moving from one
destination to another one.

Marketing communications are means by which

firms' attempt to inform, persuade, and remind consumers
(directly or indirectly) about the products and brands that
they sell. In addition, marketing communications also can
act as a differentiator; particularly in markets where there
is little to separate competing products and brands.

Therefore, the DRIP elements of marketing

communications help in disassociating one brand from
another and position them so that consumers' purchasing
confidence and positive attitudes are develop.

The main components of DRIP Elements are illustrated in

the following paragraphs
Differentiate: burger King differentiates itself from market
leader McDonald's by stating that its burgers are flame
grilled for a better taste.
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Reinforce: Specs avers Opticians work to bring people

back into the eyecare market.

Inform/ make aware: The Environment Agency and Flood

Action Week-to inform various organizations, such as Met
Office, Local Media and general public of the new flood
warning codes.

Persuade: So, Good milk is better for us than ordinary

milk.

The marketing promotion mix consists of set of tools

that can be used in various combinations and different
degrees of intensity in order to communicate with the
target audience. In addition, to these tools or methods of
communication, there is a media, or a means by which
marketing communications messages are conveyed. Tools
and media should not be confused as they have different
characteristics and seek to achieve different goals. The
Primary Tools are: advertising, sales promotions, personal
selling, direct marketing and public relations; Media:
television, radio, press, the Internet etc.…

Each communication tool has its own role, unique

characteristics and costs. For instance, Packard Bell trusts
on promotion and advertising to retailers, whereas Dell
relies on further direct marketing. Thus, organizations
should be able to choose the right ones or even to choose a
combination of the right ones to achieve their marketing
goals and objectives.
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There are many examples of marketing communications:

using three tools of the promotion mix and how TV
advertising fails to provide a positive feedback to
customers by choosing the wrong tools and media.

Advertising has been defined by Wong et al... (2005)

as "Any paid form of non-personal presentation and
promotion of ideas, goods, or services by an identified
sponsor." The key difference between advertising and
other forms of promotion mix is that it is impersonal and
communicates with large number of people through paid
media channels.

Advertising is a good way to inform and persuade,

whether the purpose is to sell Nokia mobile phones
worldwide or to encourage smokers to give up the habit.
Advertising is used in order to stimulate a response from
the target audience. The basic role of advertising is
Attention, Awareness, Knowledge, Liking, Desire,
Preference, Action and persuasion. The response may be
perceptual in nature: for example, the consumer develops
specific views or opinions about the product, service or
brand, or these feeling are altered by the ad. The response
could be behavioral: for instance, the consumer buys the
product or increasing the amount that he or she buys.
Furthermore, Advertising objective can be classified by
primary purpose- whether to inform, persuade or remind
target audiences about the products, services or even the
brand of the organizations.
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Advertising characteristics can be used to build up a long-

term image for the product (coca- cola ads; Mercedes-
Benz car ads) or trigger quick sales (a Sears's ad or when
department stores like Debenhams and Selfridges advertise
for a weekend sales). Advertising agencies also use
celebrities to target the right people about their products
and services. For example, Christiano Ronaldo is the brand
ambassador of Calvin Klein. Just the presence of
advertising might have an effect on sales: Consumers
might believe that a heavily advertised brand must offer
'good value'.

Certain forms of advertising (TV) can require a large

budget, whereas other forms (newspaper). Because of the
many forms and uses of advertising, it is difficult to
generalize.

Advertising strong theories states that advertising is highly

flexible as it offers the options of reaching an extremely
large audience or focusing on a small, precisely defined
segment of the population. For example, McDonald’s
advertising focuses on a large audience of potential fast-
food consumers, ranging from children to adults, whereas
advertising for DeBeers' diamonds focuses on a much
smaller and specialize target market. spreading-
advertising permits the seller to go over a message several
times. It also enables the buyer to obtain and contrast the
messages of different competitors. "Large-scale
advertising says something positive about the seller's size,
popularity, and success. For example, Unilever advertises
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many of its products (cleaning products, foods, cosmetics)

on TV, in magazines, and through outdoor television.
Amplified expressiveness- Advertising provides
opportunities for dramatizing the business and its products
through the clever exercise of print, sound, and color. For
instance, all of us recognize virgin advertisements due to
its brand color, "red". Impersonality- the viewers does not
feel forced to pay attention or react to advertising.
Advertising is a 'monologue' in face of, not a 'dialogue
‘with, the viewers. Advertising can attain lots of
geographically scattered buyers at a low-cost coverage.
For example, the cost of a four-color, one page
advertisement in the Sunday Telegraph magazine is £7000.
Because the magazine reaches 700, 000 readers, the cost of
reaching 1,000 subscribers is only £10.

Advertising weak theories states that even through the cost

per person reached may be low; the absolute monetary
outlay can be extremely high, especially for commercials
shown during popular television programs. For example,
during American Idol, Sunday Night Football, Apprentice
TV program, ad cost approximately ($342,000, $16,000,
$125,000) just for 30 seconds which might not be
affordable for other companies. These high costs can limit,
sometimes prevent, the use of advertising in a promotional
mix. Although advertising reaches many people quickly,
advertising is impersonal, measuring its effect on sales is
difficult, and it ordinarily has less persuasive impact on
customers than personal selling. Meaning, advertising is
only capable to hold on a one-way communication with
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the public, and the public does not believe that it has to
pay attention or react.

Sales promotion is the short-term incentives to

encourage the purchase or sale of a product or service.

The role of sales promotion is that the organizations plan

sales promotion to stimulate faster response from
consumers and business customers, channel members
(sometimes called trade) and the sales force. Companies
use sales promotion tools for short-run effects such as to
highlight product offers and boost sagging sales. In
addition, some marketers use them as a part of a longer-
term strategy to strengthen relationships with members of
the target audience.

Sellers use incentive-type promotions to attract new triers,

to reward loyal customers, and to increase the repurchase
rates of occasional users. Sales promotions, for example,
free sampling can often attract brand switchers, who are
primarily looking for low price, good value, or premiums.
Sales promotion includes a broad range of tools and
techniques

Strong sales promotion theories states that they attract

customer attention and provide information that may lead
to purchase, for example, Avon targets women, and
normally they do free samples of the product, which
increase awareness and enhance understanding of the
product, thus lead to purchase.
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They offer strong incentives to purchase by providing

encouragement or contributions that give additional value
to consumers, for example, the major brewers such as
Allied, Grand Metropolitan, and Whitbread use a
continuous program of variety of sales promotion
techniques to boost sales in highly competitive beer and
lager market: free drinks and prize competitions, scratch
cards and trade incentives. Moreover, sales promotions
encourage and recompense quick response. While
advertising says, 'buy our product', sales promotion offers
incentives to consumers to 'buy it now'.

Sales promotions Weak theories states that they are

usually short-lived, thus, are regularly not as useful as
advertising or personal selling in establishing a long run
brand preference. Thus, is more effective if use together
with personal selling and advertising. Heavy use of sales
promotion has been blamed for decreasing brand loyalty,
increasing consumer price sensitivity, brand -equity image
dilution, and a focus on short- run marketing planning.
This may be because, sales promotion, with its incessant
prices off, coupons, deals, and premiums, may devalue the
product offering in buyer's minds.

Personal selling or direct selling is defined as a sales

approach characterized by personal product explanations
and demonstrations, often in the consumer's home or
retailer's establishment".
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Personal selling role is to involve two-way personal

communication between sales people and individual
customers- whether face to face, by telephone, through
video conferences or by other means.

In personal selling, the individual or group activity (e.g.

sales agent or group force), conducted with the purpose of
providing information (cognitive) who develop positive
feeling (attitudinal) and stimulating purchase (behavioral).
In addition, they provide customer service and carry out
market research and intelligence work, for example, Avon
trained an effective salesforce to boost up its sales revenue
as well as in building customer relationship management.
Personal selling is the most effective tool at certain stages
of the buying process, particularly in building up buyers'
preferences, convictions and actions.

Personal selling strong theories states that: interaction-

personal selling involves an instant and interactive rapport
between two or more people. Everyone can check the
other's requirements and characteristics and make quick
adjustments.
personal selling allows all sorts of relationships to grow
up, depending from a transactional selling to a loyal
customer relationship.
personal selling enables the buyer feel under some
compulsion for having listened to the sales talk.
Interpersonal communication- it includes different forms
of communication to close the sales and build relationship.
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Personal selling weak theories states that companies often

sell their product through separate sales force, each
working independently to close sales the example of Mary
Kay. Their technical people may not be willing to lend
time to educate a customer. They may also have the
attitude that "it's our job to make the products and the sales
persons' to sell the customers". Furthermore, if the
personal selling process is not followed correctly for
instance, due to bias in your recruitment and selection
process, you may have an ineffective salesforce, which
could be detrimental to the company.

Public relations are the building of good relations

with the company's various publics by obtaining favorable
publicity, building up a good 'corporate image ', and
handling or heading off unfavorable rumors, stories and
events.
Its purpose is to develop a dialogue with prospects (e.g.
placing email address, web address, contact names and
organizational addresses prominently in all forms of
external communications)

Marketers tend to underuse public relations; so far a good

program synchronized with other communications mix
elements can be extremely effective.

Public relations Strong theories states that, New stories

and features are more real and convincing to readers than
advertising. For example, they are broadcast by journalists,
editors, etc. More confidence as it is non-paid media, for
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example, press releases, news conferences, sponsorship.

For instance, the press conference of Tiger woods to
rebuild his reputation (use of celebrities) has attracted pool
of audiences. The Ability to catch buyers off guard- PR
can reach prospects that prefer to avoid salespeople and
advertisement. Dramatization- like, advertising PR can
dramatize a company or product. The Body Shop is one of
the few international companies that have used the public
relations as an effective alternative to mass TV advertising

Public relations weak theories states that they are often

described as a marketing stepchild because of its limited
and scattered use. The public relations department is
usually located at corporate headquarters. Their staffs are
so busy dealing with various publics that public relations
programs to support the product may be ignored. Publicity
part of public relations cannot always be controlled to the
extent that other elements of the promotional mix can be.
For example, just as Perrier's contamination problems
appeared to be easing, a BBC television program showed
that "bottled at source" packaging was misleading.
Sainsbury's then refused for months to re-stock Perrier
until the wording on the packaging was altered.

Forms of Public Relations include:

Development; sponsorship used to establish new
associations (e.g. Official Sponsor of the Beijing
Olympics)
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Direct marketing are the direct connections with

carefully targeted individual consumers both to obtain an
immediate response and to cultivate lasting customer
relationships by the use of some tools like, telephone,
mail, fax, to communicate with specific consumers.

The role of direct marketing is using detailed databases to

tailor their offers and communications to the needs of
narrowly defined segments or even individual buyers in
order to provoke a change in the audience's behavior.
There are no intermediaries in direct marketing.

Direct marketing is a strong method according to the

supporters of it as it is:

Customized- the message can be prepared to appeal to the

addressed individual, for example, receiving mails from
your bank offering new deals which is suitable for you

Up-to-date: messages can be arranged in less time; use of

emails

Interactive- a message can be changed depending on the

person's response allowing a dialogue between the
customer and the communicator.

Direct marketing limitations are:

Direct marketers have to address a variety of public policy
and ethical issues. It remains a potential for customer
abuse, ranging from irritation and unfair practices to
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deception and fraud. There is also the growing concern of

invasion of privacy, for example, companies selling huge
customer databases to other companies without their
consent.

In order to select the right promotion, mix, we need to

know the strengths and weaknesses of each primary tool.
The trick is to make them work together as an interactive
unit (IMC).

Integrated Marketing Communications (IMC) is "a

comprehensive marketing communications plan that takes
into consideration all the tools of the promotion mix being
used and combines them to provide clarity, consistency,
and maximum communications impact". For example,
Avon does a lot of personal selling as well as sales
promotions, for instance, free sample given for customers
to try the products.

Strategy selected (Push or Pull) depend on type of product/

market as well as product life cycle as well as the
company's policy and objectives. However, most
marketing situations in fact involve combinations of push
and pulling strategies.

Promotion mix allocations vary between consumer and

business markets. Consumer marketers tend to spend
comparatively more on sales promotion and advertising;
business markets tend to spend comparatively more on
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personal selling. In general, personal selling is used more

"complex, costly, and risky goods and in markets with
fewer and larger sales" Kotler et al., (2006), (hence,
business market).

The size, geographic distribution, and social- economic

characteristics of an organization’s target market also help
dictate the ingredients to be included in the product
promotional mix.

Ansoff matrix can also be used as a tool that helps

businesses decide their product and market growth strategy
as well as selecting the primary tools of the promotion
mix. For example, at the market penetration, being in a
current market and current product, a combination of
advertising and sales promotion can be used.

Communication tools also vary in cost-effectiveness at

different stages of the production life cycle. In the
introduction stage, advertising, public relations have the
maximum cost effectiveness, pursued by personal selling
to achieve distribution coverage and sales promotion and
direct marketing to induce trial. In the growth stage,
demand has its own force through word of mouth. In the
maturity stage, advertising, personal selling, special
promotion all grow more important. In the decline stage,
sales promotion increases, other communication tools are
reduced.

Buyer- Readiness stage

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Communication tools vary in cost-effectiveness at

different stages of buyer readiness stage. Advertising is the
most important tool in the awareness buying stage;
customer comprehension is primary affected by advertsing
and personal selling. Customer convinction is influenced
mostly by personal selling. Closing the sale and reordering
are influenced mainly by personal selling and sales
promotion.

Conclusion

All the companies or businesses have to spend in this field

to make sure that they get the expected results from the
product and the business. If the company fails to use right
communication mix at the right time, their product will be
a waste for them and might result in little sale.

All 5 communication mix together can lead to a good

business, as they all can be used depending on life cycle of
the product. The communication objectives should be kept
in mind for a successful business. Depending on the
product the message should be designed appropriately to
reach to the audience.

Which of the following statements about marginal -6

?analysis is incorrect

a. As long as revenue received from an additional unit

exceeds the marginal cost associated with that unit, the
firm will wish to expand production.
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b. Marginal cost, after an initial decline, will tend to rise

due to inefficiencies in production and marketing
associated with increased production
c. The message of marginal analysis is to operate up to
the quantity and price level where marginal revenue
equals marginal cost
d. Marginal analysis calls for identifying the level of
output at which total revenue and total cost are equal
and beyond which profit occurs.

The Answer of Questions 6

a. D Marginal analysis calls for identifying the level of

output at which total revenue and total cost are equal and
beyond which profit occurs.
This is the incorrect statement,

Good Laaaaaaaaaauck & Best wishes