Marketing Summary

From : P.Baines, C . Fill, K. Page, Oxford University; Marketing

Chapter 1: marketing principles and society

Define the marketing concept.Marketing is the process by which organizations anticipate and satisfy their customers’ needs to both parties benefit. It involves mutual exchange of benefits but over the last twenty years, the marketing concept has increasingly been amended to recognize the importance of the long-term customer relationship to an organization rather than a simple transactional focus.

Explain how marketing has developed over the twentieth century.While some writers have suggested a simple production era, sales era, marketing era development for marketing over the twentieth century, others recognize that marketing has long existed in different forms in different countries. Nevertheless, there is an increasing recognition that marketing is a more systematic organizational activity through market research, and sophisticated promotional activity, than it ever was. There is increasingly a move towards the recognition of the need for companies and organizations to behave responsibly in relation to society.

Describe the three major contexts of marketing application, i.e. consumer goods, business-to-business, and services marketing.Marketing is often divided into the above three types, recognizing that marketing activities are designed based on the context in which an organization operates.

The consumer goods marketing approach has been the dominant one stressing the 4Ps and the marketing mix.

Business-to-business marketing tends to focus more on principles of relationship marketing, particularly those required in bringing together members of a supply chain.

Services marketing stress the intangible nature of the product, the need to manage customer expectation, and levels of service quality.

Understand the contribution marketing makes to societyThe aggregate marketing system delivers us, as consumers and citizens, a wide array of products and services, either directly or indirectly through business markets, to serve our needs and wants. There is much that is positive about the aggregate marketing system and it has served to improve the standards of living of many around the world.

Assess critically the impact marketing has on societyHowever, the aggregate marketing system has its faults, by also allowing the promotion and distribution of products and services which may be inherently bad for us, and the over-consumption of things which in moderation are good for us. Understanding why we think about marketing in the way that we do is helpful in understanding both the true nature of marketing can aid and society. We suggest adopting a critical marketing perspective as a natural approach to learning marketing. As society is changing, new critical approaches to marketing are increasingly developing (e.g. the fair trade movement).

from 29 Master of management VUB 2009-2010Credits: Stefan Ifrim Marketing summary


Chapter 2: the marketing environment

Identify and define the three key areas of the marketing environment.The marketing environment incorporates the external environment, the performance environment, and the internal environment.

The external environment incorporates macro environmental factors, which are largely uncontrollable, and which an organization generally can’t influence

The performance environment incorporates key factors within an industry, which impact upon strategic decision-making.

The internal environment is uncontrollable and is the principal means, through its resources base, by which an organization influences its strategy.

Describe the key characteristics associated with the marketing environment.The external environment consists of the political, social, and technological influences, and organizations have relatively little influence on each of these. The performance environment consists of

the competitors, suppliers, and indirect service providers

who shape the way the organization achieves its objectives. Here, organizations have a much stronger level of influence.

The internal environment concerns the resources, processes, and policies an organization manages in order that it can attempt to achieve its goals. These elements can be influenced directly by an organization.

Explain Pestle analysis and show ho it is used to understand the external environment.We considered the various components of the external marketing environment in detail using the PESTLE acronym which includes the following factors;

political, economic, socio-cultural, technological, legal, and ecological.

It is important to note that some of these factors are more important than others in any particular industry. We use the acronym to identify possible factors, which may impact upon any particular organization.

Explain the environmental scanning process.The environmental scanning process consists of

the data-gathering phase, the environmental interpretation/analysis phase, and the strategy formulation phase.



The three processes are linked but over time, more attention is focused on each one more than the others so that at the end of the process, greater effort is expended on using knowledge gleaned from the external and competitive environments to formulate strategy.

Analyse the performance environment using an appropriate model.The most common technique used to analyse the performance environment is Porter’s Five Forces Model of Competitive Analysis. He concludes that the more intense the rivalry between the industry players, the lower will be the performance. On the other hand, the lower the rivalry, the greater will be the performance of the industry players. Porter’s five forces comprise:

Suppliers, Buyers, New entrants, Competitors and, Substitutes.

Understand the importance of analysing an organization’s international internal environment and identify the key resources and capabilities.An organization’s principal resources relate to the product portfolio that it carries and the financial resources at its disposal. We use product portfolio analysis, specifically the Boston Box, to help us determine whether products are stars, dogs, question marks, or cash cows, each category of which provides differing levels of cash flow an resource requirements to develop. It is important to undertake a marketing audit as a preliminary measure in order to allow proper development of marketing strategy.



Chapter 3: marketing psychology and consumer buying behaviour

Explain the consumer product acquisition processConsumer buying behaviour has both rational and irrational components although rational theories have dominated the marketing literature till the present.Although there are a variety of models of consumer buying behaviour, the consumer product acquisition model is perhaps the simplest to understand, stressing how the consumer goes through the six key stages in the product acquisition process including:

Motive development, Information gathering, Product evaluation, Product selection, Acquisition, and Re-evaluation.

Understand how consumers respond to the diffusion of innovationsConsumers respond differently to the diffusion of innovations. According to research by Rogers (1962), when an innovative product is launched onto the market, a small group of buyers, known as innovators will instantly purchase it, followed, after time, by early adopters, then by the majority of buyers, then the late majority of buyers, followed lastly by the laggards. Consequently, when developing marketing strategy, it is important to recognize that different tactics are required to persuade the different customer groups to take up a particular product or service at the different stages.

Explain the processes involved in human perception, learning, and memory in relation to customer choiceThe human perception, learning, and memory processes involved in consumer choice are complex. Marketers should ensure when designing advertising, when developing distribution strategies, when designing new goods or services, and other marketing tactics, that they (repeatedly) explain this information to consumers in order for them to engage with the information and then subsequently retain it, if it is to influence their buying decision.

Understand the importance of personality and motivation in consumer behaviourPeople are motivated in their consumer behaviour differently dependent on their personalities and, to some extent, how they feel their personality fits with a particular brand of product or service. Murray’s (1938) trait theory is useful in helping us understand our needs as consumers. Maslow’s (1943) seminal work on human needs is also particularly relevant in understanding how we are motivated to satisfy our five basic desires, ranging from physiological, safety, belongings, and esteem through to self-actualization needs.

Describe opinions, attitudes, and values and how they relate to consumer behaviourOpinions are relatively unstable positions that people take in relation to an issue or assessment of something. Attitudes are more strongly held and are more likely to be linked to our behaviour. Values are more strongly held still and are linked to our conscience.



Explain how reference groups influence consumer behaviourReference groups including such role models as parents, entertainers, and athletes have an important socializing influence on our consumption behaviour, particularly in adolescence. However,

where we live, what social class we come from, what stage of the lifecycle we are in, and which ethnic group we belong to,

all have an impact on our behaviour as consumers



Chapter 5: marketing strategy

Describe the strategic planning processThe strategic planning process commences at corporate level. Here the organization sets out its overall mission, purpose, and values. These are then converted into measurable goals that apply to the whole organization. Then, depending upon the size of the organization, the range of businesses (SBU’s) and/or products is determined and resources allocated to help and support each one. Each business and/or product develops detailed functional and competitive strategies and plans, such as a marketing strategy and plan.

Explain the key influences that impact on marketing strategyThere are three key influences on marketing strategy. These are:

Strategic market analysis, which is concerned with developing knowledge and understanding about the marketplace,

Strategic marketing goals, which are about what the strategy is intended to achieve, and

Strategic marketing action, which is about how the strategies are to be implemented.

Explain how understanding competitors can assist the development of marketing strategyAn analysis of a firm’s competitors involves answers to five key questions. These are :

Who are our competitors? What are their strengths and weaknesses? What are their strategic goals? Which strategies are they following? How are they likely to respond?

Identify the characteristics of strategic marketing goals and explain the nature of the associated growth strategiesThere are several types of strategic objective but the five main ones are:

Niche, Hold, Harvest, Divest goals

And are considered briefly. However, the vast majority of organizations consider growth to be a primary objective. Although there are different forms of growth:

Intensive, Integrated, Diversified

They are generally accepted as the main ones.

Describe different approaches and concepts associated with strategic marketing actionStrategic marketing action is concerned with ways of implementing marketing strategies. Various concepts and frameworks have been proposed and of these we considered ideas about competitive advantage, generic strategies, competitive positioning, and strategic intent.



Explain how scenario planning and SWOT analysis can help strategic marketing decision makingScenario planning is used to understand how environmental trends might influence the future of an organization and how managers can gain a better understanding of some of the uncertainties an organization faces if it pursues particular strategies. SWOT analysis is a tool used to determine an overall view of the strategic position and highlights the need for a strategy to produce a strong fit between the internal capability (strengths and weaknesses) and the external situation (opportunities and threats). SWOT analysis serves to identify the key issues and then prompts thoughts about converting weaknesses into strengths and threats into opportunities.

Outline the key elements within a marketing planThe following represent the key elements associated with the structure of a marketing plan:

Overall objectives; Product/market background; Market analysis; Marketing strategy and goals; Marketing programmes; Implementation; Evaluation; Control;

Although depicted as a linear process many organizations either do not follow this process, do not include all these elements, or undertake many of these elements simultaneously.



Chapter 6: Market segmentation and positioning

Describe the principles of market segmentation and the TSP processThe method by which whole markets are subdivided into different segments is referred to as the STP process. STP refers to three activities that should be undertaken, usually sequentially, if segmentation is to be successful. These are:

Segmentation, Targeting, and Positioning

And this chapter is structured around these key elements.

Market segmentation is the division of a market into different groups of customers with distinctly similar needs and product/service requirements. The second important part of the STP process is to determine which, if any, of the segments uncovered should be targeted and made the focus of a comprehensive marketing programme. Having segmented the market and determined the size and potential of market segments and selected specific target markets, the third part of the STP process is to position a brand within the target markets.

Explain characteristics and differences between market segmentation and product differentiationThe market segmentation concept is related to product differentiation. If you aim at different market segments, you might adapt different variations of your offering to satisfy those segments, and equally if you adapt different versions of your offering, this may appeal to different market segments with an increasing proliferation of tastes in modern society, and increasing disposable incomes in some market segments. As a result, marketers have sought to design product and service offerings around consumer demand (market segmentation) more than around their own production needs (product differentiation).

Explain how market segmentation can be undertaken in both consumer and B2B marketTo segment a market, we use data based on differing consumer, user, organizational, and market characteristics. These differ for consumer (B2C) and business (B2B) markets. To segment consumer goods and service markets, we use market information we have collected based on certain key customer-, product-, or situation-related criteria (variables). These are classified as segmentation bases and include:

Profile (e.g. who are my market and where are they?); Behavioural (e.g. where? when, and how does my market behave?); Psychological criteria ( e.g. why does my market behave that way?).

To segment business markets there are two main groups of interrelated variables used: organizational characteristics and buyer characteristics.

Describe different targeting strategiesOnce identified, the organization needs to select its approach to target marketing. Four differing approaches can be considered. These include undifferentiated (entire market with one strategy), differentiated (target different segments with different strategies), concentrated or niche (only target one segment from many segments), and customized target marketing (target individual customers with individual strategies).



Explain the concept of positioningPositioning is important because it is the means by which products and services can be differentiated from one another and so give consumers a reason to buy. Positioning encompasses two fundamental elements.

The first concerns the physical attributes, the functionality and capability that a brand offers, for example, a car’s engine specification, its design, and carbon emissions.

The second positioning element concerns the way in which a brand is communicated and how consumers perceive the brand relative to other competing brands in the marketplace. This element of communication is vitally important, as it is not what you do to a product, it is what you do to the mind of a prospect (Ries and Trout, 1972) that determines how a brand is really positioned in a market.

Illustrate how the use of perceptual maps can assist the positioning process

To illustrate the use of perceptual maps in the positioning process an example of brand management is used. We displayed the differing attributes of a selection of retailing brands on a perceptual map. We discussed how these could illustrate the existing level of differentiation between brands;

indicate how our brand and competing brands are perceived in the marketplace;

provide insight into how a market operates; and reveal strengths and weaknesses that can assist strategic decisions about

how to differentiate the attributes that matter to customers and how to compete more effectively in the market.

The perceptual maps and key market drivers for this market are presented.



Chapter 9: Products, services, and branding decisions

Explain the nature an characteristics of products and describe the product/service spectrumA product encompasses all the tangible and intangible attributes related not just to physical goods but also services, ideas, people, places, experiences, and even a mix of these various elements. Anything that can be offered for use and consumption, in exchange for money or some other form of value, is referred to as a product. The product/service spectrum recognizes that many products combine physical goods with a service element.

Identify and describe the various types of products and explain particular concepts relating to the management of productsConsumer and business products are classified in different ways but both classifications are related ti the way customers use them. Consumer products are bought to satisfy personal and family needs and industrial and business products are bought either as a part for the business’s operations or in order to make other products for resale. In order to meet the needs of different target markets, most organizations offer a range of products and services, which are grouped together in terms of product lines and product mix.

Understand how the management of products changes over the different stages of the lifecycle and explain the process by which new products are developed and adopted by marketsProducts move through a sequential pattern of development, referred to as the product lifecycle. It consists of five distinct stages, namely:

Development, Birth, Growth, Maturity, and Decline.

Each stage of the cycle represents a different set of market circumstances and customer expectations that need to be met with different strategies.

Describe the principles of branding and explain the different types of brandBrands are products and services that have added value. Brands help customers to differentiate between the various offerings and to make associations with certain attributes or feelings with a particular brand. There are three main types of brands:

Manufacturer, Distributor, and Generic brands

Explain the benefits that branding offers both customers and organizationsBrands reduce risk and uncertainty in the buying process. They provide a snapshot of the quality and positioning helping customers understand how one brand relates to another. As a result, branding helps consumers and organizations to buy and to sell products easily, more efficiently, and relatively quickly.



Understand why the value of a brand is important and explain some of the issues associated with measuring brand equityBrand equity is a measure of the value of a brand. It is an assessment of a brand’s wealth, sometimes referred to as goodwill. Financially, brands consist of their physical assets plus a sum that represents their reputation or goodwill, with the latter far exceeding the former. There are two main views about how brand equity should be valued, namely a financial and a marketing perspective.

Explain how packaging and labelling can contribute to a brand’s successPackaging has a functional role to protect and preserve products during transit, and while they remain in store or on a shelf prior to purchase and consumption. Another role is to communicate elements of a package’s content to help customers, particularly in consumers market, to make brand choice decisions. Labels are important because they can deliver information about product usage, they can promote the brand, and third, they enable the brand owners to comply with various regulations and statutory requirements.



Chapter 10: Price decisions

Define price, and understand its relationship with costs, quality, and valuePrice, costs, quality, and value are all interrelated. Price is what a product or service is sold for and cost is what it is bought for. When value is added to a good or service, the price that can be obtained for that good exceeds the cost. The two are often confused and assumed even by major international dictionaries to be the same thing. They are not. Quality is a measure of how well a product or service satisfies the need it is designed to cater for. Value is a function of the quality of a good or service as a proportion of the price paid.

Explain the concept of price elasticity of demandPrice elasticity of demand is an important concept in marketing. It allows us to determine how the quantity of a good and services relates to the price at which it is offered . Inelastic goods and services are defined as such because increases (decreases) in price produce relatively smaller decreases (increases) in sales volume, where elastic goods have larger similar effects. We need to understand this concept in order to understand demand-oriented pricing mechanisms.

Describe how consumers and customers perceive priceUnderstanding how customers and consumers perceive pricing is important when setting prices. Customers tend to have an idea of reference prices based on either what they ought to pay for a good or service, what others would pay, or what they would like to pay. Their knowledge of actual prices is actually limited to well-known and frequently bought and advertised goods and services. Consequently, customers tend to rely on price cues such as odd-number pricing, sale signs, the purchase context, and price bundles to determine whether or not value exists in a particular offering.

Recognize which pricing policies are most appropriate for which situationsThere are a variety of different pricing policies in operation, which can be used, dependent on whether you are pricing for a consumer or industrial product or service. They tend to be either:

Cost oriented (based on what you paid for it and what mark-up you intend to add);

Competitor oriented (the so-called ‘going rate’ or based on what price competitors sell a product or service at);

Demande oriented (based on how much of a good or service can be sold at what price); or

Value oriented (what attributes of the product or service are of benefit to your customer and what will they pay for them)

Understand how to price new products and servicesThe two dominants approaches to pricing new products and services are the market skimming price method and the market penetration pricing method. The former is favoured when a company needs to recover its R&D investments quickly, when customers are price insensitive or of unknown price sensitivity, when product lifecycles are short, and barriers to entry to competitors are high. The latter is favoured when these conditions are not in existence.



Understand the conditions under which a price war is more or less likely to ignitePrice wars can devastate companies within industries. Research indicates that it is usually better to avoid price wars by recognizing the early warning signals. Eleven signals are outlined which indicate when price wars are more likely including :

factors related to the industry (e.g. low growth rates), the firm itself (e.g. where the product is of strategic importance to the

company), the product category (e.g. where it is a commodity), and the nature of the customers (e.g. where they are price sensitive), and two

factors which reduce the incidence of price wars, including when competitors have a reputation for swift retaliatory pricing actions and when there are intermediate levels of market power.



Chapter 11: An introduction to marketing communications

Explain three models of communication and describe how personal influences can enhance the effectiveness of marketing communication activitiesThe linear or one-way model of communication is the traditional mass media interpretation of how communication works.The two-way model incorporates the influence of other people in the communication process whilst the interactional model explains how communication flows not just between sender and receiver but also through a network of people.

Describe the nature, purpose, and scope of marketing communicationsMarketing communications, or promotion as it was originally called, is one of the Ps of the marketing mix. It is used to communicate an organization’s offer relating to products, services, or the overall organization. In broad terms the management activity consists of several components. There are the communications experienced by audiences relating to both their use of products and the consumption of associated services. There are communications arising from unplanned or unintended experiences and there are planned marketing communications.

Understand the role and various tasks of marketing communicationsThe role of marketing communications is to engage audiences and there are four main tasks that it can be used to complete. These tasks are summarized as DRIP, that is, to differentiate, reinforce, inform, or persuade audiences to behave in particular ways. Several of these tasks can be undertaken simultaneously within a campaign.

Explain the key characteristics associated with developing promotional messagesThe main issues associated with message development concern the balance between providing sufficient product/service-related information and emotional content. When the customer experiences high involvement, the informational content should dominate. When audiences experience low involvement the emotional aspects should be emphasized.

Understand the models used to explain how marketing communication is considered to workThese models have evolved from sequential approaches such as AIDA and the hierarchy of effects models. A circular model of the attitude construct helps understanding of the tasks of marketing communication, namely to:

inform audiences, to create feelings and a value associated with products and services, and to drive behaviour.

Describe what culture is and explain how it can impact on the use of marketing communications in international environmentsCulture refers to the values, beliefs, ideas, customs, actions, and symbols that are learned by members of particular societies. Culture is important because it provides



individuals, within a society, with a sense of identity and an understanding of what is deemed to be acceptable behaviour. Culture is learned, the elements are interrelated, and culture is shared amongst members of a society or group.Organizations that practise marketing communication in international environments have to be fully aware of the cultural dimensions associated with each of their markets. In addition they need to consider whether it is better to use a standardized approach and use the same unmodified campaigns across all markets, or adapt campaigns to meet the needs of local markets.



Chapter 12: Communication tools and techniques

Describe the configuration and role of the marketing communications mixOrganizations use the marketing communication mix to engage their various audiences. The mix consists of five tools:

Advertising, Sales promotions, Public relations, Direct marketing, and Personal selling.

Advertising uses paid-for media to convey messages to the target audiences. Tools and media are not the same, as the former are methods or techniques whereas the media are the means by which messages are conveyed to the target audiences.

Explain the role and characteristics of each of the primary tools of the communication mixEach of the tools communicates messages in different ways and achieves different outcomes.

Advertising can differentiate, reinforce, and build awareness but is not very good at getting responses or driving behaviour.

Sales promotions are persuasive, public relations can inform audiences and differentiate organizations and brands, whilst direct marketing is strong at generating responses from target audiences: that is, persuading them to behave in particular ways. The final tool, personal selling, is competent at all the DRIP tasks but excels at persuasion.

Understand and set out the criteria that should be used to select the right communication mixUsing a set of criteria can help simplify the complex and difficult process of selecting the right marketing communications mix. There are five key criteria:

The degree to which a tool and the message conveyed is controllable, The credibility of the message conveyed, The costs of using a tool, The degree to which a target audience is dispersed, and The task that marketing communication is required to accomplish.

Explain the characteristics of the different media and how they are categorizedEach medium has a set of characteristics that enable it to convey messages in particular ways to a target audience. For example:

television uses the sight and sound, radio just sound, outdoor usually just sight, and digital media can use sound, touch and sight.

In order to make sense of the vast array of available media it is helpful to use a categorization system. Three media categories can be identified: classes, types, and vehicles. There are six main classes of media, such as :

Media, Broadcast,



Print, Outdoor, Digital, In-store, Other media.

With each type of medium there are a huge number of different media vehicles that can be selected to carry a client’s message.

Discuss some of the changes that are happening in the media and communication landscapeMedia and audience fragmentation reflects on some of the dramatic changes that have occurred within marketing communications, and the media in particular. Not only has the number of media expanded as a result of developments in technology but the number and type of leisure activities pursued by audiences have increased. This reduces the size of audiences available for commercial advertising, which in turn has motivated client organizations to find new ways of communicating with their target audiences. Mass media advertising is giving ground to online and digital media, the marketing communication industry is undergoing transition and restructuring, and new communication methods, such as social networking and branded entertainment are emerging.



Chapter 13: Managing marketing communications: strategy, planning, and implementation

Understand the nature and characteristics of marketing communication strategyThe development of marketing communication strategy is a management activity that should be guided, primarily, by the nature, characteristics, and communication needs of the audience, rather than the communication tools or the media at the disposal of the organization. There are three types of audience and hence three types of strategy. These audiences are:

Target customers (a pull strategy), Channel intermediaries (a push strategy), and An organization’s stakeholder network (a profile strategy).

Explain how marketing communication activities are planned and implementedMarketing communication planning is a systematic process that involves a series of procedures and activities that lead to the setting of marketing communication objectives and the formulation of plans for achieving them. The marketing communications planning framework (MPCF) provides a structure and checklist though which the sequence of decisions that marketing managers undertake when preparing, implementing, and evaluating communication strategies and plans can be signed. The framework reflects a deliberate or planned approach to strategic marketing communications, one which may not always occur in practice.

Explain the different activities associated with managing marketing communicationsThere is a large range of tasks associated with managing marketing communications.

At one level, there are decisions to be made about the overall strategy and direction of the marketing communications, and issues associated with the process and, of course, the content of marketing communications plans.

At another level, decisions need to be made about the right mix of tools and media necessary to engage with target audiences, and to decide about what is to be said in the message and how it is to be presented.

Behind all these activities are issues associated with the management of resources, both human and financial, and the agency relationships necessary to generate the communication materials. Once implemented, management are still involved through the control, monitoring, evaluation, and feedback processes.

Describe the ways organizations determine their marketing communication budgetsThere are number of ways organizations determine their marketing communication budgets. These range from the largely inaccurate and inappropriate methods such as inertia, arbitrary, an media multiplier approaches to the more commonly used percentage of sales and the most reliable objective and task methods. In addition to these methods, some companies relate their advertising investment decisions to :



How much their competitors are spending (competitive parity), How much is invested in advertising by the industry as a whole (advertising to sale

ratio), and The relationship between the amount each brand invests in advertising as a

percentage of the total amount invested in advertising (share of voice)

Comprehend the process, procedures, and operations used to manage client-agency operations and relationships

Clients select agencies to produce and distribute communication materials. There is an established procedure concerning the selection of the ‘right’ agency. This involves the search, credentials presentation, pitching, and contracting phases. Once selected the client-agency relationship is normally managed through the ‘briefing” process. This system is based on the provision of written documents that provide information to help other perform their part of the marketing communication process effectively and efficiently. Agencies designate different tasks to different roles, so account planners, managers, creative team, and media planners are connected internally, an externally to their client, through the briefing process.

There are three main types of brief, namely: Client, Creative, and Media briefs.

Originally, these briefs were handwritten but, of course, new technology has helped transform the speed, accuracy, and dissemination of these important operational documents. There a re three main ways which agencies are rewarded financially for their work. These are traditional commission system, which is giving way to a combination of payment-by-result and fee-based methods.

Explain the principles associated with the measurement and evaluation of marketing communication activitiesThe measurement and evaluation of marketing communication activities is indisputably an important aspect of the managerial task. There are three main perspectives for the evaluation of marketing communications. The first perspective concerns the degree to which a marketing communications campaign achieved the goals it was created to achieve. The second perspective concerns the contribution made by each activity within a campaing, most notably each communication tool, medium, and message.

The third perspective concerns the systems and processes associated with the marketing communications planning process.

Evaluating the effectiveness of marketing communications should take place before, during, and after exposure to each campaign activity.



Chapter 14: Channel management and retailing

Define what a channel of distribution is and key considerations in channel strategy and decision makingDistribution channels can be defined as organized networks of agencies and organizations, which, in combination, perform all the activities required to link producers and manufacturers with consumers, purchasers, and users.

Distribution channels decisions are about managing which channel best suits the organization’s objectives. The key consideration which reveals itself here is the importance of optimizing the balance between the three elements of economics, coverage, and control.

Define and discuss the differing types of intermediaries and their roles in the distribution channelAn intermediary is and independent business concern that operates as a link between producers and ultimate consumers or end-industrial users. If using an indirect or hybrid channel structure, the next strategic decision is what type of intermediaries to use. The key difference between the various types is that not all intermediaries take legal title of the product offering or physical possession of it. There are several different types of intermediaries; these include:

Agents, Merchants, Distributors, Franchise, Wholesalers, And retailers.

Differentiate between differing distribution channel structures and selection criteria. The relationship between producers, intermediaries, and customers will form either a ‘direct’, or ‘indirect’, or ‘hybrid’ channel structure. A direct structure involves selling directly to customers. An indirect structure involves using intermediaries.A hybrid structure will involve both.

The degree of efficiency that an intermediary can introduce to the performance of distribution tasks determines what form a channel structure will take. At the simplest level, direct channels offer maximum control but sometimes at the expense of reaching you target market. Indirect channels can maximize coverage but often at the expense of control as the intermediaries start ‘playing’ with the marketing mix strategies and demand a share of the profits in return for their involvement. Hybrid strategies often result in greater channel conflict as the intermediaries feel the organization that is supplying them is also the competitor.

Discuss the factors influencing channel design, structure, and strategyIn setting down a distribution channel strategy, most organizations make key decisions in order to serve their customers and establish and maintain buyer-seller relationships. The first decision is the selection of the structure of the channel. If it is decided that intermediaries will be required, management then need to consider the type of market coverage that will be required; the number and type of intermediaries to use; and how to



manage the relationships between channel members. These choices are important as they can affect the value that is ultimately provided to customers.

Distinguish between the logistical functions, identifying key considerations for effective managementLogistics management concerns all the activities that, when added together, relate to the flow of products from the organization to the customer or end customer. It includes decision areas such as production scheduling, plant location, and purchasing which are traditionally marketing management decisions. It is important to understand that they require a marketing focus and marketing insight.

Define the role, function, and importance of retailers in the distribution channelDistributing consumer products begins with the producer and ends with the end consumer. However, between the two there is usually an intermediary called a retailer. Retailing is all the activities directly related to the sale of goods and services to the ultimate end consumer for personal and non-business use. This is also called the retail trade. A retailer or retail store is a business enterprise whose primary function is to sell ultimate consumers for non-business use. However, they all have in common two key features;

They link producers and end consumers and They perform an invaluable service for both.

Compare and contrast the differing types of retailersTypes of retailing establishments can be classified as differentiated by two key characteristics;

Marketing strategy employed (i.e. product, price, and service) Store presence (i.e. store or non-store retailing)

Examples include: department stores, discount stores, convenience stores, limited line retailers, speciality retailers, category killer stores, supermarkets, and superstores. In addition to the underlying marketing strategy, retailing establishments can be further characterized according to store or non-store presence.

Discuss the key strategies and operational considerations in retailing strategiesMost retailing occurs through fixed stores, with existing operators having ‘sunk’ investments in physical fabric. The physical location of a store is seen as a source of competitive advantage, providing crucial entry barriers to competitors, and is in most cases an expensive asset. There are several characteristics that make store retailing unique from the customer viewpoint. First and foremost, the retail environment provides the sensation of touch, feel, and smell. For many products categories, such as clothing books, and perfumes, this aspect provides the customer with valuable data points before the purchase decision can be made. Furthermore, the customer might interact with in-store staff, who might give professional suggestions to assist the customer in the purchase process. However, the use of these access points and their commercial value may require major reassessment with the rise in non-store retailing.



Chapter 15: Services marketing and non-profit marketing

Explain what a service is and describe the relationship between products and servicesA service is any act or performance offered by one party to another that is essentially intangible. Consumption of these services does not result in any transfer of ownership even through the service process may be attached to a physical product. There is a spectrum of product/service combinations. At the one extreme there are pure products with no services, such as grocery products. At the other end of the spectrum are pure services where there is no tangible product to support, such as education and dentistry. In between, there is a mixture of product/service arrangements.

Explain the main characteristics of a serviceUnlike products, services are considered to be processes and different because of their distinguishing characteristics. These are based around:

Their intangibility (you can touch a product but not a service), Perishability (products can be stored but you cannot store a service), Variability (each time a service is delivered it is different but products can

be identical), Inseparability (services are produced and consumed simultaneously), and A lack of ownership (you cannot take legal possession of a service).

These are important because they shape the way in which marketers design, develop, deliver, and evaluate the marketing of services.

Understand the different service processes and outline each element of the services marketing mixA process is a series of sequential actions that lead to predetermined outcomes. Four main service process categories can be identified;

people processing, possession processing, mental stimulus processing, and information processing.

As a result of various shortcomings of the traditional marketing mix, an extended version has been developed in order to account for particular characteristics associated with services. The three additional Ps are People, Physical evidence, and Processes.

Explain the term service encounters and describe how service management should seek to maintain service performanceA service encounter is best understood as a period of time during which a customer interacts directly with a service (Shostack, 1985). There are three levels of customer contact: high-contact services, medium-contact services, and low-contact services. As more services are introduced so opportunities for service variability and service failure also develop. One response to this problem has been the ‘industrialization’ of services. Other methods of maintaining service performance include

branding, the way a service is identified and understood, and internal marketing, the processes and communications used to develop employees as part of the brand.



Explain the principles associated with measuring service qualityService quality is based on the idea that a customer’s expectations of the service they will receive shapes their perception of the actual service encounter. In essence, therefore, customers compare the perceived service with the expected service.

SERVQUAL is a major model used to measure service quality. It is a disconfirmation model and is based on the difference between the expected service and the actual perceived service.

Understand the principles of non-profit marketingThere are three main types of non-profit organization;

public sector, charities, and the newly emerging social enterprise sector.

They share many characteristics, for example, they al work with multiple stakeholders and have multiple objectives, there is limited customer choice with respective to the services offered, and they all need to demonstrate full transparency and accountability for their actions.



Chapter 16: Business-to-business marketing

Explain the main characteristics of business marketsBusiness markets are characterized by four main factors;

The nature of demand, The buying processes, International dimensions, and The relationships that develop between organizations.

Understand the different types of organizational customersThere are a range of organizations that make up business markets and these are classified as:

Commercial, Government, and Institutional.

These organizations buy products and services to make goods for resale to their customers but they also consume items that are required to keep their offices and manufacturing units functioning.

Describe the different types of goods and services that are sold and bought in business marketsProducts and service bought and sold through business markets are categorized as:

Input goods, Equipment goods, and Supply goods.

Explain the main processes and stages associated with organizational buying and purchasingOrganizational buying behaviour can be understood to be a group buying activity in which a number of people with differing roles make purchasing decisions that affect the organization and the achievement of its objectives. Buying decisions can be understood in terms of different types of decision (buyclasses) and different stages (buyphases)

Understand the principles of key account managementSome suppliers refer to some of their strategically important customers as key accounts. Relationships with these customers move through various stages, called KAM development cycles. Each stage is marked by particular characteristics and part of the role the key account manager is to ensure that all contact between the supplier and the customer builds on strengthening the inter-organizational relationship.

Explain what business-to-business marketing isB2B marketing is concerned with the identification and satisfaction of business customer’s needs. This requires that all stakeholders benefit from the business relationship and associated transactions. Customers derive satisfaction by purchasing goods and services that are perceived to provide them an/or their organizations with particular value.

Be able to compare business and consumer marketingBoth have a customer orientation and work backwards from an understanding of customer needs. In addition both require information about customers and competitors in order to achieve their objectives.



In addition, there is a close match in terms of the purpose, approach, and content between the extended problem-solving, limited problem-solving, and routinized response behaviour phases of consumer buying and the new task, modified rebuy, and rebuy states associated with organizational buying.



Chapter 17: Relationship marketing

Explain the concept of perceived value and the main characteristics of the value chainValue is a customer’s estimate of the extent to which an offering can satisfy their needs. Value can be generated in many ways, not just products and prices. One important source of value is the relationships generated through buyer-seller relationships.

Organizations interact with other organizations in order to provide superior value for their customers. The quality, duration, and level of interdependence between organizations vary considerably, and this value can be visualized as a continuum. At one end of the continuum are transactional exchanges, characterized by a long-term orientation, where there is complete integration of systems and processes and the relationship is motivated by partnership and mutual support.

Understand the differences between the 4Ps and the relationship approach to marketingRelationship marketing is a more contemporary marketing theory than the 4Ps. Rather than focusing on products and prices and customer attraction, it is the retention of customers and the relationship between buyers, sellers, and other stakeholders that is at the heart of this relatively new approach.

There are three main approaches or schools of thought associated with relations marketing. These are:

The Nordic school, The Anglo-Australian school, and The Industrial marketing and purchasing group (IMP).

Describe the different stages of the customer relationship lifecycle Customer acquisition Development Retention Decline/termination

Explain the principles and economics of customer retention and consider the merits of loyalty programmesCustomer profitability analysis reveals that some customers are more profitable than others. Relationship marketing is based on the premise that retained customers are more profitable customers. Loyalty is an important concept within relationship marketing and the loyalty ladder model illustrates the critical point that different customers represent different value to organizations. This suggests that there are many different forms of loyalty and that different marketing strategies are required to reach each of them.

Understand the principles of trust, commitment, power, conflict, and customer satisfaction and explain how they are interlinkedThere are several key concepts associated with the management of customer relationships. The main ones are:

Trust, Commitment, Satisfaction, Power, and Conflict.



These are interrelated and the management of customer relationship should be based on the principles of reducing the influence of both power and the incidence of conflict in order to build customer trust, gain customer commitment, and, through loyalty and retention, generate customer satisfaction.

This approach should increase the perceived value of the relationship for all parties.

Describe ways in which organizations try to provide customer service and supportThe principal aim of customer contact centres and CRM systems is to provide both buyers and sellers with superior value by enabling suppliers to gain access to real-time customer information, in order to satisfy their customers’ needs appropriately.



Chapter 18: new technology and marketing

Define what we mean by ‘electronic marketing’.Electronic marketing is the process of marketing accomplished or facilitated through the application of electronic devices, appliances, tools, techniques, technologies, and or systems. This definition acknowledges the use of a wide array of electronic resources to improve the effectiveness and efficiency of the marketing process by aiding the management and implementation of marketing activities.

Compare and contrast electronic marketing with other frequently used terms such as interactive and Internet marketingInteractive marketing is described as creating situation or mechanism through which a marketer and a customer (or stakeholder) interact usually in real time. As such as not all interactive marketing is electronic (e.g. face-to-face sales); not all direct marketing is electronic (e.g. print direct mail).

In contrast, internet or online marketing is a form of electronic marketing limited in technical context and is thus a tool-based definition denoting the use of only internet-based technologies. (e.g. web, email, intranet, extranet). This excludes the use of electronic broadcast media and stand-alone management information systems, amongst others. These terms are in contrast to electronic marketing as defined above, as encompassing a broader definition.

Discuss and evaluate the key technology characteristics across which electronic technologies may differThe characteristics of technology which marketing practitioners increasingly need to take into consideration when planning the adoption and use of electronic resources include:

Vividness, Synchronicity, Pacing, Interactivity, and Mode of transfer.

These structural properties across which electronic resources may differ and can be compared have an impact on the nature of the user experience, and the achievement of marketing objectives. As such, marketers need to be increasingly aware of their effect and their marketing implications.

Consider the use of electronic technologies to achieve marketing objectives through the management and implementation or core marketing servicesGiven the rapid development of electronic resources, and their use by the marketing profession, marketers further need to refrain from concentrating on specific technologies (e.g. web marketing, SMS marketing, mobile marketing), and focus on the activities for which these technologies are used. The electronic marketing activity management (EMAM) framework is one such approach that can assist the classification of electronic resources when planning what electronic resources to use for certain tasks, in order to achieve marketing objectives. EMAM outlines fiv core marketing activities for which we use electronic resources; these activities include;

Data acquisition, Information provision, Communication, and Relationship management, Transaction management; and



Distribution and logistics management.

In essence, the most important aspect of electronic technology for marketing is not how innovative and unique technologies are, but rather what they will allow you to do differently, more effectively, and/or more efficiently.


Marketing Summary

Documents

Transcript of Marketing Summary