MKT1003 Principles of MarketingTopic 1 Introduction to MarketingMarketingThe process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return

A Simple Model of the Marketing ProcessNeedsStates of felt deprivation (Maslows hierarchy of needs) can uncover latent needs

WantsThe form human needs take as they are shaped by culture and individual personality

DemandsHuman wants that are backed by buying power

Utility1. Form2. Time3. Place4. Possession

Market OfferingSome combination of products, services, information, or experiences offered to a market to satisfy a need or want

Marketing myopiaThe mistake of paying more attention to the specific products a company offers than to the benefits and experiences derived from these products focus on wants instead of needs

ExchangeThe act of obtaining a desired object from someone by offering something in return that requires 5 conditions:1. At least two parties2. Mutual value3. Communication4. Delivery5. Freedom of choice

MarketThe set of all actual and potential buyers of a product or service

Marketing ManagementThe art and science of choosing target markets and building profitable relationships with them

Value PropositionThe set of benefits or values a company promises to deliver to customers to satisfy their needs

The Production ConceptThe idea that consumers will favour products that are available and highly affordable and that the organization should therefore focus on improving production and distribution efficiency

Company may focus too narrowly on their own operations and lose sight of the real objective satisfying customer needs and building customer relationships

The Product ConceptThe idea that consumers will favour products that offer the most quality, performance and features and that the organization should therefore devote its energy to making continuous product improvements

May lead to marketing myopia

The Selling ConceptThe idea that consumers will not buy enough of the firms products unless it undertakes a large-scale selling and promotion effort

Typically practiced with unsought goodsIt focuses on creating sales transactions rather than on building long-term, profitable customer relationships; the aim is to sell what the company makes rather than making what the market wants

The Marketing ConceptThe marketing management philosophy that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do

Customer-driven marketing v.s. customer driving marketing

The Societal Marketing ConceptA principle of enlightened marketing that holds that a company should make good marketing decisions by considering consumers wants, the companys requirements, consumers long-run interests and societys long-run interests

Sustainable marketing

Customer Relationship Management (CRM)The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction

Customer Perceived ValueThe customers evaluation of the difference between all the benefits and all the costs of a marketing offering relative to those of competing offers

Customer SatisfactionThe extent to which a products perceived performance matches a buyers expectations

Customer-Generated MarketingBrand exchanges created by consumers themselves both invited and uninvited by which consumers are playing an increasing role in shaping their own brand experiences

Partnership Relationship ManagementWorking closely with partners in other company departments and outside the company to jointly bring greater value to customers

Customer Lifetime ValueThe value of the entire stream of purchases that a customer would make over a lifetime of patronage

Share of CustomerThe portion of the customers purchasing th ata company gets in its product categories

Customer EquityThe total combined customer lifetime values of all the companys customers

Short-Term CustomersLong-Term Customers

High ProfitabilityButterfliesGood fit between companys offerings and customers needs; high profit potentialTrue FriendsGood fit between the companys offerings and customers needs; highest profit potential

Low ProfitabilityStrangersLittle fit between companys offerings and customers needs; lowest profit potentialBarnaclesLimited fit between companys offerings and customers needs; low profit potential

Customer Relationship GroupsStrategic PlanningThe process of developing and maintaining a strategic fit between the organizations goals and capabilities and its changing marketing opportunities

Mission StatementA statement of the organizations purpose what it wants to accomplish in the larger environment

1. Be market oriented2. Fit the market environment3. Be based on distinctive competencies4. Be motivating

Value ChainThe series of departments that carry out value-creating activities to design, produce, market, deliver and support a firms products

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

Marketing StrategyThe marketing logic by which the business unit hopes to achieve its marketing objectives1. Market Segmentation2. Target Marketing3. Market Positioning and Differentiation

Marketing MixThe set of controllable, tactical marketing tools that the firm blends to product the response it wants in the target market1. Product2. Price3. Place4. Promotion

Market SegmentationDividing a market into smaller groups with distinct needs, characteristics, or behaviours that might require separate products or marketing mixes

Market SegmentA group of consumers who respond in a similar way to a given set of marketing efforts

Market TargetingThe process of evaluating each market segments attractiveness and selecting one or more segments to enter

PositioningArranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the minds of target consumers

Marketing ControlThe process of measuring and evaluating the results of marketing strategies and plans and taking corrective action to ensure that objectives are achieved

Operating ControlChecking ongoing performance against the annual plan and taking corrective action when necessary

Strategic ControlLooking at whether the companys basic strategies are well matched to its opportunities

Marketing AuditA comprehensive, systematic, independent, and periodic examination of a companys environment, objectives, strategies, and activities to determine problem areas and opportunities and to recommend a plan of action to improve the companys marketing performance

Return on Marketing InvestmentThe net return from a marketing investment divided by the costs of the marketing investment

Topic 2 Macroenvironment and MicroenvironmentMarketing EnvironmentThe actors and forces outside marketing that affect marketing managements ability to build and maintain successful relationships with target customers

MicroenvironmentThe actors close to the company that affect its ability to serve its customers1. Company2. Suppliers3. Marketing Intermediaries4. Customer Markets5. Competitors6. Publics

MacroenvironmentThe larger societal forces that affect the microenvironment1. Demographic2. Economic3. Natural4. Technological5. Political6. Cultural Forces

High Relative Market ShareLow Relative Market Share

High Market Growth RateStarHigh growth, high-share businesses that often need heavy investment to finance their rapid growth. Eventually, growth will slow and they will turn into cash cowsQuestion MarkLow-share business units in high-growth markets that require a lot of cash to hold their share, let alone increase it. Management needs to evaluate which to be built into stars and which to be phased out

Low Market Growth RateCash CowLow-growth, high-share business units that require less investment to hold their market share and provide a lot of cashDogLow-growth, low-share businesses that may generate enough cash to maintain themselves but do not promise to be large sources of cash

Boston Consulting Group (BCG) Growth-Share MatrixExisting ProductsNew Products

Existing MarketsMarket PenetrationMaking more sales to current customers without changing its productsProduct DevelopmentOffering modified or new products to current market segments

New MarketsMarket DevelopmentIdentifying and developing new markets for its current productsDiversificationStarting up or buying businesses outside of its current products and markets

Product/Market Expansion Grid

Topic 3 Market IntelligenceCustomer InsightsFresh understandings of customers and the marketplace derived from marketing information that become the basis for creating customer value and relationships

Marketing Information System (MIS)People, equipment and procedures to gather, sort, analyze, evaluate, and distribute needed, timely and accurate information to marketing decision makers1. Assess Information Needs2. Develops Needed Information3. Analyze Information4. Distributes Information

Competitive Marketing IntelligenceThe systematic collection and analysis of publicly available information about competitors and developments in the marketplace

Marketing ResearchThe systematic design, collection , analysis, and reporting of data relevant to a specific marketing situation facing and organization

Sources of Marketing Information1. Internal Data2. Marketing Intelligence3. Marketing Research

The Marketing Research ProcessExploratory ResearchMarketing research to gather preliminary information that will help define problems and suggest hypothesis

Descriptive ResearchMarketing research to better describe marketing problems, situations, or markets, such as the market potential for a product or the demographics and attitudes of consumers

Causal ResearchMarketing research to test hypothesis about cause-and-effect relationships

Developing the Research Plan1. Determine the exact information needed2. Develop a plan for gathering it efficiently3. Present the plan to management

Secondary DataAdvantages: Can be obtained more quickly and at a lower cost Can sometimes provide data that is not directly available or too expensive to collectDisadvantages Needed information may not exist Data might not be very usable

Primary Data Collection1. Research Approaches2. Contact Methods3. Sampling Plan4. Research Instruments

Observational ResearchThe gathering of primary data by observing relevant people, actions, and situations

Ethnographic ResearchA form of observational research that involves sending trained observers to watch and interact with consumers in their natural habitat

But, could be affected by cultural differences

Survey ResearchGathering primary data by asking people questions about their knowledge, attitudes, preferences, and buying behaviour

Experimental ResearchGathering primary data by selecting matched groups of subjects, giving them different treatments, controlling related factors, and checking for differences in group responses; tries to explain cause-and-effect relationships

Probability Sample1. Simple Random Sample2. Stratified Random Sample3. Cluster (area) Sample

Non-Probability Sample1. Convenience Sample2. Judgement Sample3. Quota Sample

Customer Relationship Management (CRM)Managing detailed information about individual customers and carefully managing customer touch points to maximize customer loyalty

Topic 4 Consumer BehaviourConsumer Buying BehaviourThe buying behaviour of final consumers individuals and households who buy goods and services for personal consumption

Characteristics Affecting Consumer Behaviour

VALS Lifestyle ClassificationNormative Social InfluenceInfluence from others to conform to their expectations

Informational Social InfluenceUse others as a source of information

Brand PersonalityThe specific mix of human traits that may be attributed to a particular brand1. Sincerity2. Excitement3. Competence4. Sophistication5. Ruggedness

MotiveA need that is sufficiently pressing to direct the person to seek satisfaction of the need

Maslows Hierarchy of NeedsSelective AttentionThe tendency for people to screen out most of the information to which they are exposed

Selective DistortionThe tendency of people to interpret information in a way that will support what they already believe

Selective RetentionThe tendency of people to forget much of what they learn and retain information that supports their attitudes and beliefs

LearningChanges in an individuals behaviour arising from experienceMarketers can build up demand for a product by associating it with strong drives, using motivating cues, and providing positive reinforcement

High InvolvementLow Involvement

Significant Differences Between BrandsComplex Buying BehaviourUsually when product is expensive, risky, purchased infrequently and highly self-expressive.

Marketers need to know that information gathering and evaluating Is important, and need to differentiate their brands features.Variety-Seeking Buying BehaviourOften has a lot of brand switching.

Market leader will try and encourage habitual buying behaviour by dominating shelf space, running frequent reminder advertising. Challenger firms will encourage variety seeking by offering lower prices, special deals, coupons, free samples, and advertising that presents reasons for trying something new

Few Differences Between BrandsDissonance-Reducing Buying BehaviourProduct may be expensive, purchased infrequently and highly self-expressive, but with few differences in brands. Buyers may respond primarily to a good price or to purchase convenience.

Marketers after-sale communications should provide evidence and support to help customers feel good about their brand choices and avoid post-purchase dissonance.Habitual Buying BehaviourConsumer behaviour does not pass though the usual belief-attitude-behaviour sequence. Ad repetition creates brand familiarity rather than brand conviction.

Marketers often used price and sales promotion to stimulate product trial.

Buying Decision Behaviour

Buyer Decision Process

Information Search1. Personal Sources Legitimize, evaluate - e.g. buzz/vial/stealth marketing2. Commercial Sources - Inform3. Public Sources - Inform4. Experiential sources Evaluate

Cognitive DissonanceBuyer discomfort caused by post-purchase conflict

Stages in the Adoption ProcessFishbein Model (Theory of Reasoned Action)Attbrand = biei

Attbrand = Attitude towards brandbi = Belief of brands performance on attribute iei = Evaluation of attribute is importance

Categories of Adopters1. Innovators venturesome 2. Early Adopters opinion leaders3. Early Majority deliberate 4. Late Majority skeptical 5. Laggards tradition bound

Rate of Adoption (New Products)1. Relative Advantage2. Compatibility3. Complexity4. Divisibility5. Communicability6. Initial and ongoing costs7. Risk and uncertainty8. Social approval

Topic 5 - Segmentation & TargetingGeographic SegmentationDividing a market into different geographical units such as nations, states, regions, counties, cities or neighbourhoods

Demographic SegmentationDividing a market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation and nationality

Psychographic SegmentationDividing a market into different groups based on social class, lifestyle, or personality characteristics

Behavioural SegmentationDividing a market into groups based on consumer knowledge, attitude, use of, or response to a product

Occasion SegmentationDividing a market into groups according to occasions when buyers get the idea to buy, actually make their purchase, or use the purchased item

Benefit SegmentationDividing a market into groups according to the different benefits that consumers seek from the product

Intermarket SegmentationForming segments of consumers who have similar needs and buying behaviour even though they are located in different countries

Requirements for Effective Segmentation1. Measurable2. Accessible3. Substantial4. Differentiable5. Actionable

Evaluating Market Segments1. Segment Size and Growth2. Segment Structural Attractiveness Substitute Products, Relative Power of Buyers, Power of Suppliers3. Company Objectives and Resources

Undifferentiated (Mass) MarketingA market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with on offer

Differentiated (Segmented) MarketingA market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each

Concentrated (Niche) MarketingA market-coverage strategy in which a firm goes after a large share of one or a few segments of niches

MicromarketingThe practice of tailoring products and marketing programs to the needs and wants of specific individuals and local customer groups. It includes local and individual marketing

Local MarketingTailoring brands and promotions to the needs and wants of local customer groups cities, neighbourhoods, and even specific stores

Individual MarketingTailoring products and marketing programs to the needs and preferences of individual customers

Choosing a Targeting Strategy1. Company Resources2. Product Variability3. Products Life-Cycle Stage4. Market Variability5. Competitors Marketing Strategies

Topic 6 Positioning & Service MarketingProduct PositionThe way the product is defined by consumers on important attributes the place the product occupies in consumers minds relative to competing products

Competitive AdvantageAn advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices

Product, services, channels, people or image

Unique Selling Propositions1. Important2. Distinctive3. Superior4. Communicable5. Pre-emptive6. Affordable7. Profitable

Positioning StatementA statement that summarizes company or brand positioning it takes the form: To (target segment and need) our (brand) is (concept) that (point of difference)

Positioning Pitfalls1. Under Positioning2. Over Positioning3. Confused Positioning4. Doubtful Positioning

Points of Difference Unique associations with a brand Clear superiority

Points of Parity Associations shared with other brands Necessary but not sufficient for brand choice Negate competitors POD On par with competitors especially when consumers are sophisticated and competition intense

Service1. Intangible2. Inseparable3. Variable4. Perishable

Managerial Implications1. Reliability2. Tangibles3. Responsiveness4. Assurance5. Empathy

Service-Profit ChainThe chain that links service firm profits with employee and customer satisfaction

Interactive MarketingInternal MarketingExternal Marketing

Internal MarketingOrienting and motivating customer-contact employees and the supporting service people to work as a team to provide customer satisfaction

Interactive MarketingTraining service employees is the fine art of interacting with customers to satisfy their needs

Topic 7 Product & BrandingLevels of Products1. Core Customer Value2. Actual Product3. Augmented Product

Consumer ProductBought by the final consumers for personal consumption

Convenience ProductConsumer product that the customer usually buys frequently, immediately, and with minimum comparison and buying effort

Shopping ProductConsumer product that the customer, in the process of selection and purchase, characteristically compares on bases such as suitability, quality, price, and style

Specialty ProductConsumer product with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort

Unsought ProductConsumer product that the consumer may know about but does not normally think of buying

Industrial ProductProduct bought by individuals and organizations for further processing or for use in conducting a business

Product LineA group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges

Line StretchingA company lengthens its product line beyond its current range

Downward Stretching (By Higher End Firms) Obtain faster growth at lower end Exploit established quality image Pre-empt potential entrants Respond to attack at high endRisks Competitive retaliation at high end Dealer resistance Cannibalization Image dilution

Upward Stretching (By Lower End Firms) Obtain higher margins at higher end Full-line objective Add prestigeRisks Competitive retaliation Consumer scepticism Poorly trained dealers and sales force

Two-Way Stretching (By Mid Market Firms) Hold of competitors at low end Attract affluent consumers at high endRisks Customers trading down Image confusion Resource drain

BrandA name, term, sign, symbol, or design, or a combination of these that identifies the products or services of one seller of group of sellers and differentiates them from those of competitors

Packaging1. Packaging Concept2. Packaging Elements3. Product Safety4. Environmental Concerns

Brand EquityThe positive differential effect that knowing the brand name has on customer response to the product or service

Brand Strategy Decisions1. Brand Positioning2. Brand Name Selections3. Brand Sponsorship4. Brand Development

Brand Positioning Product Attributes Product Benefits Beliefs and Values Emotions

Brand Name Selection Suggest benefits and qualities Easy to pronounce, recognize and remember Distinctive Extendable Translate easily into foreign languages Capable of registration and legal protection

Individual BrandingAdvantages No association in case of failure Can market several brands in competition with each other Create advancement within firm More control over distributionDisadvantages High cost of promoting individual brand No capitalization on established reputation

Family BrandingAdvantages Easier and less costly to introduce Capitalize on reputationDisadvantages Failure may cause association Greater burden to maintain consistent quality

Existing ProductsNew Products

Existing Brand NameLine ExtensionsExtending an existing brand name to new forms, colours, sizes, ingredients, or flavours of an existing product categoryBrand ExtensionsExtending an existing brand name to new product categories

New Brand NameMultibrandsIntroducing additional brands in an existing product categoryNew BrandsIntroducing a new brand in a new product category

Brand DevelopmentManaging New-Product Development Customer-Centered Team-Based Systematic

Why New Products Fail? Poor understanding of customer needs Poor execution of marketing strategy

Topic 8 Pricing Considerations and Strategies

Marketing Objectives1. Survival Low prices hoping to increase demand2. Current Profit Maximization Choose the price that produces the maximum profit3. Market Share Leadership Lowest possible prices to become the market share leader4. Product Quality Leadership High prices to cover higher performance quality and R&D

Marketing Mix StrategyPrice decisions must be coordinated with product design, distribution, and promotion decisions to form a consistent and effective marketing program

Organizational ConsiderationsMust decide who within the organization should set prices

The Market & DemandSets the upper limit in the 4 market structures

CustomerPrice elasticity of demand

Pricing Objectives1. Attract new customers2. Profitably retain existing customers3. Prevent competition from entering market4. Stabilize the market5. Keep loyalty and support of resellers6. Avoid government intervention7. Help sales of other products

Competition-Based PricingSetting prices based on competitors strategies, costs, prices and market offerings1. Going-Rate Pricing2. Sealed-Bid Pricing

Cost-Based PricingSetting prices based on the costs for producing, distributing, and selling the product plus a fair rate of return for effort and risk

Cost-Plus (Mark-up) PricingAdding a standard mark-up to the cost of the product

Break-Even (Target Profit) PricingSetting prices to break even on the costs of making and marketing a product, or setting prices to make a target profitBased on standard volume that requires good demand estimates

P = VC + FC/X + rK/X

Value-Based PricingSetting prices based on buyers perceptions of value rather than on the sellers costs

Company cannot design the product then set the price

Market Skimming PricingSetting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales

Market Penetration PricingSetting a low price for a new product to attract a large number of buyers and a large market share

Product Line PricingSetting the price steps between various products in a product line based on cost differences between the products, customer evaluation of different features, and competitors prices

Optional-Product PricingThe pricing of optional or accessory products along with a main product

Captive-Product PricingSetting a price for products that must be used along with a main product, such as blades for razors and cartridges for printers

By-Product PricingSetting a price for by-products to make the main products price more competitive

Product Bundle PricingCombining several products and offering the bundle at a reduced price

Discount and Allowance PricingReduction in price during a stated period of time / Promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturers products in some way

Segmented PricingSelling a product or service at two or more prices, where the difference in prices is not based on differences in cost

Psychological PricingA pricing approach that considers the psychology of prices and not simply the economics; the price is used to say something about the product

Reference PricesPrices that buyers carry in their minds and refer to when they look at a given product

Promotional PricingTemporarily pricing products below the list price, and sometimes even below cost, to increase short-run sales Creates deal-prone customers Erode brand equity Lead to industry price wars

Geographical PricingSetting prices for customers located in different parts of the country or world

Dynamic PricingAdjusting prices continually to meet the characteristics and needs of individual customers and situations

Experience CurveThe drop in the average per unit production cost that comes with accumulated production experience

Responses to a Price Change1. Hold current price2. Reduce price3. Raise perceived value4. Improve quality and increase price5. Launch low-price fighting-brand if segment is price sensitive

Topic 9 - PlacementValue Delivery NetworkThe network made up of the company, suppliers, distributors and ultimately customers who partner with each other to improve the performance of the entire system

Marketing ChannelA set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user

Channel FunctionsTransactional Contact Risk-Taking Negotiation PromotionLogistical Matching Physical DistributionFacilitating Information Financing

Channel ConflictDisagreement among marketing channel members on goals and roles who should do what for what rewards

Conventional Distribution ChannelA channel consisting of one or more independent produces, wholesalers, and retailers, each a separate business seeking to maximize his own profits

Vertical Marketing System (VMS)A distribution channel structure in which producers, wholesalers, and retailers act as a unified system. One channel member owns the others, has contracts with them, or has so much power that they all cooperate

Corporate VMSA vertical marketing system that combines successive stages of production and distribution under single ownership channel leadership is established through common ownership

Contractual VMSA vertical marketing system in which independent firms at different levels of production and distribution join together through contracts to obtain more economies of sales impact than they could achieve alone e.g. franchise organization

Administered VMSA vertical marketing system that coordinates successive stages of production and distribution, not through common ownership or contractual ties, but through the size and power of one of the parties

Horizontal Marketing SystemA channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity

Multichannel (Hybrid) Marketing ChannelsA distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments

DisintermediationThe cutting out of marketing channel intermediaries by product or service producers, or the displacement of traditional resellers by radical new types of intermediaries

Channel Design Decisions1. Analyzing Consumer Needs2. Setting Channel Objectives3. Identifying Major Alternatives4. Evaluate the Major Alternatives

Analyzing Consumer Needs What consumer wants Availability of resources or skills to satisfy those needs Balance needs, feasibility, costs and consumer price preferences

Setting Channel Objectives Which segments to serve and best channels to use Evaluate company, products, marketing intermediaries, competitors, environment

Identifying Major Alternatives Type of intermediaries Number of intermediaries Responsibilities of channel members

Evaluating Major Alternatives Economic criteria Control issues Adaptive criteria

Intensive DistributionStocking the product in as many outlets as possible convenience products

Exclusive DistributionGiving a limited number of dealers the exclusive right to distribute the companys products in their territories shopping and some specialty goods gain stronger distributor selling support and more control over prices, promotion, credit and services; enhances image and allows for higher mark-ups

Selective DistributionThe use of more than one, but fewer than all, of the intermediaries who are willing to carry the companys products specialty products and industrial equipment develop good working relationships and expect a better-than-average selling effort; good market coverage with more control and less cost than intensive distribution

RetailingAll activities involved in selling goods or services directly to final consumers for their personal, non-business use

Amount of Service1. Self-Service2. Limited Service3. Full Service

Product Line1. Specialty Stores narrow product line with deep assortments2. Department Stores wide variety of product lines3. Supermarkets wide variety of grocery and household products4. Convenience Stores limited line of high-turnover convenience goods5. Superstores large assortment of routinely purchased food products, non-food items and services6. Category Killer giant specialty store that carries a very deep assortment of a particular line

Relative Prices1. Discount Store accepts lower margins while selling higher volume2. Off-Price Retailers buys at less-than-regular wholesale prices and sells at less than retail3. Warehouse Club off-price retailer that sells a limited selection of brand name grocery items, applicances, clothing and a hodgepodge of other goods at deep discounts to members who pay annual membership fees

Organizational Approach1. Corporate Chain Store2. Voluntary Chain3. Retailer Cooperative4. Franchise Organization5. Merchandising Conglomerate

Retailing Trends New retail forms and shortening life cycles Growth of non-store retailing Retail convergence Rise of mega retailers Growing importance of retail technology Global expansion of major retailers Retail stores as communities or hangouts

Wheel of RetailingA concept of retailing that states that new types of retailers usually begin as low-margin, low-price, low-status operations but later evolve into higher-priced, higher-service operations, eventually becoming like the conventional retailers they replaced

WholesalingAll activities involved in selling goods and services to those buying for resale or business use

Merchant WholesalerIndependently owned business that takes title to the merchandise it handles

BrokerA wholesaler who does not take title to goods and whose function is to bring buyers and sellers together and assist in negotiation

AgentA wholesaler who representst buyers or sellers on a relatively permanent basis, performs only a few functions, and does not take title to goods

Manufacturers Sales Branches and OfficesWholesaling by sellers or buyers themselves rather than through independent wholesalers

Topic 10 Marketing CommunicationsPromotionThe specific blend of advertising, sales promotion, public relations, personal selling, and direct marketing tools that the company uses to persuasively communicate customer value and build customer relationships

Integrated Marketing Communications (IMC)Carefully integrating and coordinating the companys many communications channels to deliver a clear, consistent, and compelling message about the organization and its products

1. Identify the target audience2. Specify communications objectives3. Design the communications mix4. Set the communications budget

AIDA Model1. Get Attention2. Hold Interest3. Arouse Desire4. Obtain Action

Buyer-Readiness Stages

Personal Communication ChannelsChannels through which two or more people communicate directly with each other, including face to face, on the phone, through mail or email, or even through an Internet chat allows personal addressing and feedback

Word-of-Mouth InfluencePersonal communication about a product between target buyers and neighbours, friends, family members, and associates items which are expensive, risky or highly visible

Buzz MarketingCultivating opinion leaders and getting them to spread information about a product or service to others in their communities

Non-Personal Communication ChannelsMedia that carry messages without personal contact or feedback, including major media, atmospheres, and events

Affordable MethodSetting the promotion budget at the level which management thinks the company can affordLeads to underspending

Percentage-of-Sales MethodSetting the promotion budget at a certain percentage of current or forecasted sales or as a percentage of the unit sales priceWrongly views sales as the cause rather than the result of promotion, based on availability of funds, does not provide any basis for choosing a specific percentage

Competitive-Parity MethodsSetting the promotion budget to match competitors outlays

Objective-and-Task MethodDeveloping the promotion budget by defining specific objectives, determining the tasks that must be performed, and estimating the costs of performing these tasks

AdvertisingAny paid form of non-personal presentation and promotion of ideas, goods, or service by an identified sponsor

Major Advertising Decisions1. Setting Advertising Objectives2. Setting the Advertising Budget3. Developing the Advertising Strategy4. Evaluating the Advertising Campaigns

Advertising ObjectiveSpecific communication task to be accomplished with a specific target audience during a specific period of time1. Informative2. Persuasive / Comparative3. Reminder

Developing the Advertising Strategy1. Creating advertising messages2. Selecting advertising media Reach, frequency and impact Media types Media vehicles Media timing

Sales PromotionShort-term incentives to encourage the purchase or sale of a product or serviceBuild both short-term excitement and long-term consumer relationships Greater pressures to increase sales Differentiate offers Advertising efficiency declined due to media clutter and legal restraints

Consumer Promotion ToolsSales promotion tools used to urge short-term customer buying or to enhance long-term customer relationships Samples Coupons Cash Refunds Price Packs Premiums Advertising Specialties Patronage Rewards Point-of-Purchase Displays Contests, Sweepstakes, Games

Trade Promotion ToolsSales promotion tools used to persuade resellers to carry a brand, give it shelf space, promote it in advertising and push it to consumers

Business Promotion ToolsSales promotion tools used to generate business leads, stimulate purchases, reward customers, and motivate salespeople conventions and trade shows*Evaluate

Developing the Sales Promotion Program1. Decide on the size of incentive2. Set conditions for participation3. Decide how to promote and distribute the promotion program4. Decide on the length of the program5. Evaluate the program

Public RelationsBuilding good relations with the companys various publics by obtaining favourable publicity, building up a good corporate image, and handling or heading off unfavourable rumours, stores, and events

Personal SellingPersonal presentation by the firms sales force for the purpose of making sales and building customer relationships Order Taker Order Getter

Sales Force ManagementAnalysis, planning, implementation and control of sales force activities

Direct MarketingDirect connections with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships

Benefits to Buyers Convenient, easy and private Ready access to many products Access to comparative information Interactive and immediate

Benefits to Sellers Personalized Interact with customers Avoid the expense of maintaining a store

Direct-Mail Marketing High target-market selectivity Personalized, flexible, easy measurement of results Better prospects even though costlier

Catalogue Marketing Save on production, printing and mailing costs Unlimited space in online catalogues Attracting new customers is harder for a web than print catalogue

Telephone Marketing Junk phone calls Opt-in calling systems

Direct-Response Television Marketing Infomercials (30 minute or longer) Home shopping channels Cheaper, with toll-free number or Web address

Kiosk Marketing Information and ordering machines

Informative advertisement- To build demand- To inform availability of product feastuers and benefitsReminder Advertisement To keep the product in consumers minds

Persuasive advertisementTo build selective demand due to increasing competition

Utility time, place, form, creation, possession, application Field of experience