Marketing management Marketing management often finds it necessary to

invest in research to collect the data required to

Marketing management is a business discipline
perform accurate marketing analysis. As such, they
which is focused on the practical application
often conduct market research (alternately marketing
of marketing techniques and the management of a
research) to obtain this information. Marketers
firm's marketing resources and activities.
employ a variety of techniques to conduct market
From this perspect, it consists of 5 steps, beginning research, but some of the more common include:
with the market & environment research. After fixing
the targets and setting the strategies, they will be  Qualitative marketing research, such
realised by the marketing mix in step 4. The last step as focus groups
in the process is the marketing controlling.  Quantitative marketing research, such
Marketing and design effective, cost-efficient as statistical surveys
implementation programs, firms must possess a  Experimental techniques such as test
detailed, objective understanding of their own markets
[3]
business and the market in which they operate.  In  Observational techniques such
analyzing these issues, the discipline of marketing as ethnographic (on-site) observation
management often overlaps with the related
Marketing managers may also design and oversee
discipline of strategic planning.
various environmental scanning and competitive
Traditionally, marketing analysis was structured into intelligence processes to help identify trends and
three areas: Customer analysis, Company analysis, inform the company's marketing analysis.
and Competitor analysis (so-called "3Cs" analysis). Marketing strategy
More recently, it has become fashionable in some
Once the company has obtained an adequate
marketing circles to divide these further into certain
understanding of the customer base and its own
five "Cs": Customer analysis, Company analysis,
competitive position in the industry, marketing
Collaborator analysis, Competitor analysis, and
managers are able to make key strategic decisions
analysis of the industry Context.
and develop a marketing strategy designed to
Marketing management employs various tools maximize the revenues andprofits of the firm. The
from economics and competitive strategy to analyze selected strategy may aim for any of a variety of
the industry context in which the firm operates. specific objectives, including optimizing short-term
These include Porter's five forces, analysis unit margins, revenue growth, market share, long-
of strategic groups of competitors, value term profitability, or other goals.
[5]
chain analysis and others.  Depending on the
To achieve the desired objectives, marketers
industry, the regulatory context may also be
typically identify one or more target customer
important to examine in detail.
segments which they intend to pursue. Customer
segments are often selected as targets because the marketing mix, meaning the mix of elements the
they score highly on two dimensions: 1) The business will employ to "go to market" and execute
segment is attractive to serve because it is large, the marketing strategy. The overall goal for the
growing, makes frequent purchases, is not price marketing mix is to consistently deliver a
sensitive (i.e. is willing to pay high prices), or other compelling value proposition that reinforces the
factors; and 2) The company has the resources and firm's chosen positioning, builds customer
capabilities to compete for the segment's business, loyalty and brand equityamong target customers,
can meet their needs better than the competition, and achieves the firm's marketing and financial
and can do so profitably.[3] In fact, a commonly cited objectives.
definition of marketing is simply "meeting needs
In many cases, marketing management will develop
profitably." [6]
a marketing plan to specify how the company will
Implementation planning execute the chosen strategy and achieve the
business' objectives. The content of marketing plans
varies from firm to firm, but commonly includes:

 An executive summary
 Situation analysis to summarize facts and
insights gained from market research and
marketing analysis
 The company's mission statement or long-
term strategic vision
 A statement of the company's key
The Marketing Metrics Continuum provides a framework for
objectives, often subdivided into marketing
how to categorize metrics from the tactical to strategic.
objectives and financial objectives
After the firm's strategic objectives have been  The marketing strategy the business has
identified, the target market selected, and the chosen, specifying the target segments to be
desired positioning for the company, product or pursued and the competitive positioning to be
brand has been determined, marketing managers achieved
focus on how to best implement the chosen strategy.  Implementation choices for each element of
Traditionally, this has involved implementation the marketing mix (the 4Ps)
planning across the "4Ps" of marketing: Product
management, Pricing, Place (i.e. sales
anddistribution channels), and Promotion.
Project, process, and vendor
management
Taken together, the company's implementation
choices across the 4Ps are often described as
Once the key implementation initiatives have been barriers may exist in a given business unit or
identified, marketing managers work to oversee the functional area that the marketing manager must
execution of the marketing plan. Marketing address in order to achieve this goal. Additionally,
executives may therefore manage any number of marketing executives often act as a "brand
specific projects, such as sales force management champion" and work to enforce corporate
initiatives, product development efforts, channel identity standards across the enterprise.
marketing programs and the execution of public
In larger organizations, especially those with multiple
relations and advertising campaigns. Marketers use
business units, top marketing managers may need
a variety of project management techniques to
to coordinate across several marketing departments
ensure projects achieve their objectives while
and also resources from finance, research and
keeping to established schedules and budgets.
development, engineering, operations,
More broadly, marketing managers work to design manufacturing, or other functional areas to
and improve the effectiveness of core implement the marketing plan. In order to effectively
marketing processes, such as new product manage these resources, marketing executives may
development, brand management, marketing need to spend much of their time focused on political
communications, and pricing. Marketers may employ issues and inte-departmental negotiations.
the tools of business process reengineering to
The effectiveness of a marketing manager may
ensure these processes are properly designed, and
therefore depend on his or her ability to make the
use a variety of process management techniques to
internal "sale" of various marketing programs equally
keep them operating smoothly.
as much as the external customer's reaction to such
Effective execution may require management of both programs.[6]
internal resources and a variety of external vendors Reporting, measurement, feedback
and service providers, such as the firm's advertising and control systems
agency. Marketers may therefore coordinate with the Marketing management employs a variety of metrics
company's Purchasing department on the to measure progress against objectives. It is the
procurement of these services. responsibility of marketing managers – in the
Organizational management and marketing department or elsewhere – to ensure that
leadership the execution of marketing programs achieves the
Marketing management may spend a fair amount of desired objectives and does so in a cost-efficient
time building or maintaining a marketing manner.
orientation for the business. Achieving a market
Marketing management therefore often makes use
orientation, also known as "customer focus" or the
of various organizational control systems, such as
"marketing concept", requires building consensus at
sales forecasts, sales force and
the senior management level and then driving
reseller incentive programs, sales force
customer focus down into the organization. Cultural
management systems, and customer relationship key concept that customer satisfaction is the main
management tools (CRM). Recently, some software goal.
vendors have begun using the term "marketing
operations management" or "marketing resource
Key part of the general corporate
management" to describe systems that facilitate an
strategy
integrated approach for controlling marketing
resources. In some cases, these efforts may be Marketing strategy is a method of focusing an
linked to varioussupply chain management systems, organization's energies and resources on a course
such as enterprise resource of action which can lead to increased sales and
planning (ERP), material requirements dominance of a targeted market niche. A marketing
planning (MRP), efficient consumer response (ECR), strategy combines product development, promotion,
and inventory management systems. distribution, pricing, relationship management and

Measuring the return on investment (ROI) of other elements; identifies the firm's marketing goals,

and marketing effectiveness various marketing and explains how they will be achieved, ideally

initiatives is a significant problem for marketing within a stated timeframe. Marketing strategy

management. Various market research, accounting determines the choice of target market segments,

and financial tools are used to help estimate the ROI positioning, marketing mix, and allocation of

of marketing investments. Brand valuation, for resources. It is most effective when it is an integral

example, attempts to identify the percentage of a component of overall firm strategy, defining how the

company's market value that is generated by the organization will successfully engage customers,

company's brands, and thereby estimate the prospects, and competitors in the market

financial value of specific investments in brand arena. Corporate strategies, corporate missions, and

equity. Another technique, integrated marketing corporate goals. As the customer constitutes the

communications(IMC), is a CRM database-driven source of a company's revenue, marketing strategy

approach that attempts to estimate the value of is closely linked with sales. A key component of

marketing mix executions based on the changes in marketing strategy is often to keep marketing in line

customer behavior these executions generate. with a company's overarching mission statement [4].

Marketing strategy Basic theory:

Marketing strategy[1][2] is a process that can allow 1. Target Audience

an organization to concentrate its limited resources 2. Proposition/Key Element
on the greatest opportunities to increase sales and 3. Implementation
[3]
achieve a sustainable competitive advantage . A
marketing strategy should be centered around the
Tactics and actions
A marketing strategy can serve as the foundation of
a marketing plan. A marketing plan contains a set of
specific actions required to successfully implement a
marketing strategy. For example: "Use a low cost
product to attract consumers. Once our organization,
via our low cost product, has established a
relationship with consumers, our organization will
sell additional, higher-margin products and services
that enhance the consumer's interaction with the
low-cost product or service."
A strategy consists of a well thought out series of
tactics to make a marketing plan more effective.
Marketing strategies serve as the fundamental
underpinning of marketing plans designed to fill
market needs and reach marketing objectives[5].
Plans and objectives are generally tested for
measurable results.
A marketing strategy often integrates
organization's marketing goals, policies, and action
sequences (tactics) into a cohesive whole. Similarly,
the various strands of the strategy , which might
include advertising, channel marketing, internet
marketing, promotion andpublic relations can
orchestrated. Many companies cascade a strategy
throughout an organization, by creating strategy
tactics that then become strategy goals for the next
level or group. Each one group is expected to take
that strategy goal and develop a set of tactics to
achieve that goal. This is why it is important to make
each strategy goal measurable.
Marketing strategies are dynamic and interactive.
They are partially planned and partially unplanned.
See strategy dynamics.
Types of strategies
Marketing strategies may differ depending on the
unique situation of the individual business. However
there are a number of ways of categorizing some
generic strategies. A brief description of the most
common categorizing schemes is presented below:
 Strategies based on market dominance - In
this scheme, firms are classified based on their
market share or dominance of an industry.
Typically there are four types of market
dominance strategies:
 Leader
 Challenger
 Follower
 Nicher
 Porter generic strategies - strategy on the
dimensions of strategic scope and strategic
strength. Strategic scope refers to the market
an
penetration while strategic strength refers to the
firm’s sustainable competitive advantage. The
generic strategy framework (porter 1984)
comprises two alternatives each with two
alternative scopes. These
be
are Differentiation and low-cost leadership each
with a dimension ofFocus-broad or narrow.
 Product differentiation (broad)
 Cost leadership (broad)
 Market segmentation (narrow)
 Innovation strategies - This deals with the
firm's rate of the new product development
and business model innovation. It asks whether
the company is on the cutting edge of
technology and business innovation. There are
three types:
 Pioneers
  Close followers Marketing departments spend quality time looking
 Late followers for "Growth Opportunities" in their categories by

 Growth strategies - In this scheme we ask identifying relevant insights (both mindsets and

the question, “How should the firm grow?”. behaviors) on their target Consumers, Shoppers and

There are a number of different ways of retail partners. These Growth Opportunities emerge

answering that question, but the most common from changes in market trends, segment dynamics

gives four answers: changing and also internal brand or operational

 Horizontal integration business challenges.The Marketing team can then

 Vertical integration prioritize these Growth Opportunities and begin to

develop strategies to exploit the opportunities that
 Diversification
could include new or adapted products, services as
 Intensification
well as changes to the 7Ps.
A more detailed scheme uses the categories[6]:
Real-life marketing primarily revolves around the

 Prospector application of a great deal of common-sense;

 Analyzer dealing with a limited number of factors, in an

 Defender environment of imperfect information and limited

resources complicated by uncertainty and tight
 Reactor
timescales. Use of classical marketing techniques, in
 Marketing warfare strategies - This scheme
these circumstances, is inevitably partial and
draws parallels between marketing strategies
uneven.
and military strategies.
Strategic models Thus, for example, many new products will emerge
from irrational processes and the rational
Marketing participants often employ strategic models
development process may be used (if at all) to
and tools to analyze marketing decisions. When
screen out the worst non-runners. The design of the
beginning a strategic analysis, the3Cs can be
advertising, and the packaging, will be the output of
employed to get a broad understanding of the
the creative minds employed; which management
strategic environment. An Ansoff Matrix is also often
will then screen, often by 'gut-reaction', to ensure
used to convey an organization's strategic
that it is reasonable.
positioning of their marketing mix. The 4Ps can then
be utilized to form a marketing plan to pursue a Green marketing
defined strategy. According to the American Marketing

There are a many companies especially those in the Association, green marketing is the marketing of

Consumer Package Goods (CPG) market that adopt products that are presumed to be environmentally

the theory of running their business centered around safe.[1] Thus green marketing incorporates a broad

Consumer, Shopper & Retailer needs. Their range of activities, including product modification,
changes to the production process, packaging market awareness among stakeholders and
changes, as well as modifying advertising. Yet prospective participants; specialized, somewhat
defining green marketing is not a simple task where complicated participation rules; and the need for
several meanings intersect and contradict each simplified participation mechanisms for small
other; an example of this will be the existence of projects, without which transaction costs can
varying social, environmental and retail definitions overwhelm the financial benefits of participation. If
attached to this term.[1]Other similar terms used the barriers are adequately addressed, greenhouse
are Environmental Marketing and Ecological gas trading can play an important role supporting
Marketing. activities that benefit people’s lives and the
environment.[1]
The legal implications of marketing claims call for
caution. Misleading or overstated claims can lead to Popularity and effectiveness
regulatory or civil challenges. In the USA, the Ongoing debate
Federal Trade Commission provides some guidance
The popularity of such marketing approach and its
on environmental marketing claims.[2]
effectiveness is hotly debated. Supporters claim that
Greenhouse gas reduction market environmental appeals are actually growing in

The emerging greenhouse gas reduction market can number–the Energy Star label, for example, now

potentially catalyze projects with important local appears on 11,000 different companies'[11] models in

environmental, economic, and quality-of-life benefits. 38 product categories, from washing

The Kyoto Protocol’s Clean Development machines and light bulbs to skyscrapers and homes.

Mechanism (CDM), for example, enables trading The difference is, however, that green—rightfully so

between industrial and developing nations, providing —is on the wane as the primary sales pitch for

a framework that can result in capital flows to products. On the other hand, Roper’s Green

environmentally beneficial development activities. Gauge shows that a high percentage of consumers

Although the United States is not participating in the (42%)[12] feel that environmental products don’t work

Kyoto Protocol, several US programs enable similar as well as conventional ones. This is an unfortunate

transactions on a voluntary and regulatory basis.[1] legacy from the 1970s when shower heads
sputtered and natural detergents left clothes dingy.
While international trade
Given the choice, all but the greenest of customers
in greenhouse gas[10] reductions holds substantial
will reach for synthetic detergents over the premium-
promise as a source of new funding for sustainable
priced, proverbial "Happy Planet" any day,
development, this market can be largely inaccessible
including Earth Day. New reports, however show a
to many smaller-scale projects, remote communities,
growing trend towards green products.[13]
and least developed localities. To facilitate
participation and broaden the benefits, several
Green marketing cases
barriers must be overcome, including: a lack of Philips Light's "Marathon"
Philips Lighting's first shot at marketing a institute energy-efficient operating practices in its
standalone compact fluorescent light (CFL) bulb was facilities worldwide.
Earth Light, at $15 each versus 75 cents for
Markeitng concept and its limitation
incandescent bulbs.[15] The product had difficulty
climbing out of its deep green niche. [15] The company
re-launched the product as "Marathon,"
underscoring its new "super long life" positioning and
promise of saving $26 in energy costs over its five-
year lifetime.[16]Finally, with the U.S. EPA's Energy
The concept of marketing is all about achieving
Star label to add credibility as well as new sensitivity organizational goals through meeting customer
to rising utility costs and electricity shortages, sales needs better than than competitors.

climbed 12 percent in an otherwise flat market.[16]

Car sharing services
Car-sharing services address the longer-term
solutions to consumer needs for better fuel savings
and fewer traffic tie-ups and parking nightmares, to
complement the environmental benefit of more open
space and reduction of greenhouse gases.[citation
needed]
 They may be thought of as a "time-sharing"
system for cars. Consumers who drive less than
7,500 miles a year and do not need a car for work
can save thousands of dollars annually by joining
one of the many services springing up, including
ZipCar (East Coast), Flex Car (Washington State),
[17]
 and Hour Car (Twin Cities). [18]
Electronics sector
The consumer electronics sector provides room for
using green marketing to attract new customers.
One example of this is HP's promise to cut its global
energy use 20 percent by the year 2010.[19] To
accomplish this reduction below 2005 levels, The
Hewlett-Packard Company announced plans
deliver energy-efficient products and services and
Three things should happen when a company is
implementing a marketing concept:
1. Company should define its offering based on its
customer needs
2. All staff in the company should accept the
responsibility for customer satisfaction
3. Company believes that by providing customer
satisfaction, it can achieve its goals, e.g. profit and
etc.
Well said, but marketing has its limitation. The
limitation mainly comes from those 3 things above
that may not be fulfilled totally. For example, in
the pursuit of survival, a CEO may decide to do
something not geared toward customer satisfaction
to a certain niche segment, e.g. product deletion,
to reduce loses for the company.
If staff don't buy in the concept due to conflicting
interest, it is also hard to achieve what we preach
in marketing concept. E.g. Union workers may
insist of a pay increase to make the pricing less
competitive.
The business world is not perfect. Marketing
concept is a guidepost to business, its
implementation is dependent upon an array of
factors affecting the organization.
to
Business performance Because BPM activities in large organisations often

management involve the collation and reporting of large volumes

of data, many software vendors, particularly those
Business performance management (BPM) is a
offering "business intelligence" tools, market
set of management and analytic processes that
products intended to assist in this process. As a
enable the performance of an organization to be
result of this marketing effort, BPM is often (wrongly)
managed with a view to achieving one or more pre-
seen as being an activity that relies on software
selected goals. Synonyms for "business
systems to work, and many definitions of BPM
performance management" include "corporate
explicitly suggest software as being a necessary
performance management" and "enterprise
component of the approach[3]
[1][2]
performance management".  If we regard BPM
and Corporate performance (CPM) as near
Definition and scope
synonyms: BPM would serve as the more Business performance management consists of a
generalized term. set of management and analytic processes,

Use of the acronym "BPM" can cause confusion with supported by technology, that enable businesses to

"business process management". Use of terms such define strategic goals and then measure and

as "corporate performance management" or manage performance against those goals. Core

"enterprise performance management" can avoid BPM processes includefinancial planning,

that confusion. operational planning, consolidation and reporting,

business modeling, analysis, and monitoring of key
BPM has three main activities:
performance indicators linked to strategy.

1. the selection of goals BPM involves consolidation of data from various

2. the consolidation of measurement
information relevant to an organisation’s
progress against these goals,
3. the interventions made by managers in light
of this information with a view to improving
sources, querying, and analysis of the data, and
putting the results into practice.
Methodologies
Various methodologies for implementing BPM exist.

future performance against these goals The discipline gives companies a top-down
framework by which to align planning and execution,
Although presented here sequentially, typically all
strategy and tactics, and business-unit and
three activities will run concurrently, with the
enterprise objectives. Reactions may include the Six
interventions made by managers affecting both the
Sigma strategy, balanced scorecard, activity-based
choice of goals, the measurement information
costing (ABC), Total Quality Management, economic
monitored, and the activities being undertaken within
value-add, integrated strategic
the organisation.
measurement and Theory of Constraints.
The balanced scorecard is the most widely adopted 7. profitability of customers by demographic
performance management methodology. segments and segmentation of customers
by profitability
Methodologies on their own cannot deliver a
full solution to an enterprise's CPM needs. Many
8. campaign management

pure-methodology implementations fail to deliver the 9. real-time dashboard on key operational

anticipated benefits due to lack of integration with metrics

fundamental CPM processes 1. overall equipment effectiveness

Metrics / key performance indicators
Some of the areas from which top management
analysis may gain knowledge by using BPM may
include:
1. customer-related numbers:
1. new customers acquired
2. status of existing customers
10. clickstream analysis on a website
11. key product portfolio trackers
12. marketing-channel analysis
13. sales-data analysis by product segments
14. callcenter metrics
The above list more or less describes what a bank
might monitor, but could also refer to a telephone
company or to a similar service-sector company.
Items of generic importance might include:

3. attrition of customers (including

1. consistent and correct KPI-related data
breakup by reason for attrition)
providing insights into operational aspects
2. turnover generated by segments of the
of a company
customers - possibly using demographic
2. timely availability of KPI-related data
filters
3. KPIs designed to directly reflect the
3. outstanding balances held by segments of
efficiency and effectiveness of a business
customers and terms of payment - possibly
4. information presented in a format which aids
using demographic filters
decision-making for management and
4. collection of bad debts within customer
decision-makers
relationships
5. ability to discern patterns or trends from
5. demographic analysis of individuals
organized information
(potential customers) applying to become
BPM integrates the company's processes
customers, and the levels of approval,
with CRM or[citation needed]
 ERP. Companies should
rejections and pending numbers
become better able to gauge customer satisfaction,
6. delinquency analysis of customers behind
control customer trends and influence shareholder
on payments
value.[citation needed]

Application software types

People working in business intelligence have of the organization will the program address?
developed tools that ease the work of BPM, What organizational mission/vision does it relate
especially when the business-intelligence task to? A hypothesis needs to be crafted that details
involves gathering and analyzing large amounts of how this initiative will eventually improve
unstructured data. results / performance (i.e. a strategy map).

Tool categories commonly used for business  baseline queries: current information-

performance management include: gathering competency needs assessing. Does

the organization have the capability to monitor
 OLAP — online analytical processing, important sources of information? What data is
sometimes simply called "analytics" (based being collected and how is it being stored? What
on dimensional analysis and the so-called are the statistical parameters of this data, e.g.,
"hypercube" or "cube") how much random variation does it contain? Is

 scorecarding, dashboarding and data this being measured?

visualization  cost and risk queries: someone should

 data warehouses estimate the financial consequences of a new BI

 document warehouses initiative. It is necessary to assess the cost of

 text mining the present operations and the increase in costs

associated with the BPM initiative. [citation
 DM — data mining
needed]
 What is the risk that the initiative will fail?
 BPO — business performance optimisation
This risk assessment should be converted into a
 EPM — enterprise performance
financial metric and included in the planning.
management
 customer and stakeholder queries:
 EIS — executive information systems
determine who will benefit from the initiative and
 DSS — decision support systems
who will pay. Who has a stake in the current
 MIS — management information systems
procedure? What kinds of customers /
 SEMS — strategic enterprise
stakeholders will benefit directly from this
management software
initiative? Who will benefit indirectly? What
 business dashboards
quantitative / qualitative benefits follow? Is the
Design and implementation specified initiative the best or only way to

Issues when implementing a BPM program might increase satisfaction for all kinds of customers?

include: How will customer benefits be monitored? What

about employees, shareholders, and distribution
 goal-alignment queries: one must first[citation channel members?
needed]
 determine the short- and medium-term  metrics-related queries: information
purpose of the program. What strategic goal(s) requirements need operationalization into clearly
 defined metrics. One must decide what metrics monitored include clicks, responses, leads, deals,
to use for each piece of information being and revenue. As marketing departments are
gathered. Are these the best metrics? How do increasingly obliged to demonstrate revenue impact,
we know that? How many metrics need to be today’s systems typically include features for
tracked? If this is a large number (it usually is), measuring the ROI of campaigns.
what kind of system can track them? Are the Customer Service and Support
metrics standardized, so they can
Recognizing that service is an important
bebenchmarked against performance in other
differentiator, organizations are increasingly turning
organizations? What are the industry standard
to technology platforms to help them improve their
metrics available?
clients’ experience while aiming to increase
 measurement methodology-related queries: [4]
efficiency and minimize costs.  Even so, a 2009
one should establish a methodology or a
study revealed that only 39% of corporate
procedure to determine the best (or acceptable)
executives believe their employees have the right
way of measuring the required metrics. How
tools and authority to solve client problems.“. [5] The
frequently will data be collected? Are there any
core for these applications has been and still is
industry standards for this? Is this the best way
comprehensive call center solutions, including such
to do the measurements? How do we know
features as intelligent call routing, computer
that?
telephone integration(CTI), and escalation
 results-related queries: someone should
capabilities.
monitor the BPM program to ensure that it
Analytics
meets objectives. The program itself may
require adjusting. The program should be tested Relevant analytics capabilities are often interwoven

for accuracy, reliability, and validity. How can it into applications for sales, marketing, and service.

be demonstrated that the BI initiative, and not These features can be complemented and

something else, contributed to a change in augmented with links to separate, purpose-built

results? How much of the change was probably applications for analytics and business intelligence.

random? Sales analytics let companies monitor and

understand client actions and preferences, through
sales forecasting, data quality, and dashboards that
Marketing
graphically display key performance
Systems for marketing (also known as marketing indicators (KPIs).
automation) help the enterprise identify and target its
Marketing applications generally come
best clients and generate qualified leads for the
with predictive analytics to improve segmentation
sales team. A key marketing capability is tracking
and targeting, and features for measuring the
and measuring multichannel campaigns, including
effectiveness of online, offline, and search marketing
email, search, social media, and direct mail. Metrics
campaign[1] Web analytics have evolved significantly burden of re-entering records and contact data into a
from their starting point of merely tracking mouse separate SFA system. Conversely, lack of
clicks on Web sites. By evaluating “buy signals,” integration can have negative consequences:
marketers can see which prospects are most likely system isn’t adopted and integrated among all
to transact and also identify those who are bogged departments, several sources might contact the
down in a sales process and need assistance. same clients for an identical purpose Owing to these
[4]
 Marketing and finance personnel also use factors, many of the top-rated and most popular
analytics to assess the value of multi-faceted products come as integrated suites.
programs as a whole. Small Business
These types of analytics are increasing in popularity Basic client service can be accomplished by a
as companies demand greater visibility into the contact manager system, an integrated solution that
performance of call centers and other support lets organizations and individuals efficiently track
[4]
channels,  in order to correct problems before they and record interactions, including emails,
affect satisfaction levels. Support-focused documents, jobs, faxes, scheduling, and more. This
applications typically include dashboards similar to kind of solution is gaining traction with even very
those for sales, plus capabilities to measure and small businesses, thanks to the ease and time
analyze response times, service quality, agent savings of handling client contact through a
performance, and the frequency of various issues. centralized application rather than several different
Integrated/Collaborative pieces of software, each with its own data collection
system.[citation needed]
 In contrast these tools usually
Departments within enterprises—especially large
focus on accounts rather than individual contacts.
enterprises—tend to function in their own little
They also generally include opportunity insight for
worlds.[6] Traditionally, inter-departmental interaction
tracking sales pipelines plus added functionality for
and collaboration have been infrequent and rivalries
marketing and service. As with larger enterprises,
not uncommon. More recently, the development and
small businesses are finding value in online
adoption of the tools and services has fostered
solutions, especially for mobile
greater fluidity and cooperation among sales,
and telecommuting workers.
service, and marketing. This finds expression in the
concept of collaborative systems which uses Social Media
technology to build bridges between departments. Social media sites like Twitter and Facebook are

For example, feedback from a technical greatly amplifying the voice of people in the

support center can enlighten marketers about marketplace, and are predicted to have profound

specific services and product features clients are and far-reaching effects on the ways companies

asking for. Reps, in their turn, want to be able to manage their clients.[7] This is because people are

pursue these opportunities without the time-wasting using these social media sites to share opinions and
experiences on companies, products, and services.
As social media isn’t moderated or censored,
individuals can say anything they want about a
company or brand, whether pro or con.
Increasingly, companies are looking to gain access
to these conversations and take part in the dialogue.
More than a few systems are now integrating to
social networking sites. Social media promoters cite
a number of business advantages, such as using
online communities as a source of high-quality leads
and a vehicle for crowd sourcing solutions to client-
support problems. Companies can also leverage
client stated habits and preferences to personalize
and even “hyper-target” their sales and marketing
communications.[7]
Some analysts take the view that business-to-
business marketers should proceed cautiously when
weaving social media into their business processes.
These observers recommend careful market
research to determine if and where the phenomenon
can provide measurable benefits for client
interactions, sales, and support.[8]
Non-profit and Membership-based
Systems for non-profit and membership-based
organizations help track constituents and their
involvement in the organization. Capabilities typically
include tracking the following: fund-raising,
demographics, membership levels, membership
directories, volunteering and communications with
individuals.
Many include tools for identifying potential donors
based on previous donations and participation. In
light of the growth of social networking tools, there
may be some overlap between social/community
driven tools and non-profit/membership tools.
Strategy
Choosing and implementing a system is a major
undertaking. For enterprises of any appreciable size,
a complete and detailed plan is required to obtain
the funding, resources, and company-wide support
that can make the initiative successful. Benefits must
be defined, risks assessed, and cost quantified in
three general areas:
 Processes: Though these systems have
many technological components, business
processes lie at its core. It can be seen as a
more client-centric way of doing business,
enabled by technology that consolidates and
intelligently distributes pertinent information
about clientss, sales, marketing effectiveness,
responsiveness, and market trends. Therefore,
before choosing a technology platform, a
company needs to analyze its business
workflows and processes; some will likely need
re-engineering to better serve the overall goal of
winning and satisfying clients. Moreover,
planners need to determine the types of client
information that are most relevant, and how best
to employ them.[2]
 People: For an initiative to be effective, an
organization must convince its staff that change
is good and that the new technology and
workflows will benefit employees as well as
clients. Senior executives need to be strong and
visible advocates who can clearly state and
support the case for change. Collaboration,
teamwork, and two-way communication should
be encouraged across hierarchical boundaries,
 especially with respect to process improvement.  Poor integration: For many companies,
[9]
integrations are piecemeal initiatives that
address a glaring need: improving a particular
 Technology: In evaluating technology, key client-facing process or two or automating a
factors include alignment with the company’s favored sales or client support channel.[3] Such
business process strategy and goals; the ability “point solutions” offer little or no integration or
to deliver the right data to the right employees; alignment with a company’s overall strategy.
and sufficient ease of use that users won’t balk. They offer a less than complete client view and
Platform selection is best undertaken by a often lead to unsatisfactory user experiences.[3]
carefully chosen group of executives who
understand the business processes to be  Toward a solution: overcoming siloed
automated as well as the various software thinking. Experts advise organizations to
issues. Depending upon the size of the company recognize the immense value of integrating their
and the breadth of data, choosing an application client-facing operations. In this view, internally-
can take anywhere from a few weeks to a year focused, department-centric views should be
or more.[2] discarded in favor of reorienting processes
Implementation toward information-sharing across marketing,
sales, and service.[3] For example, sales
Implementation Issues
representatives need to know about current
Dramatic increases in revenue, higher rates of client
issues and relevant marketing promotions
satisfaction, and significant savings in operating
before attempting to cross-sell to a specific
costs are some of the benefits to an enterprise.
client. Marketing staff should be able to leverage
Proponents emphasize that technology should be
client information from sales and service to
implemented only in the context of careful strategic
better target campaigns and offers. And support
and operational planning.[10] Implementations almost
agents require quick and complete access to a
invariably fall short when one or more facets of this
client’s sales and service history.
prescription are ignored:

 Poor planning: Initiatives can easily fail Privacy and data security system
when efforts are limited to choosing and
One of the primary functions of these tools is to
deploying software, without an accompanying
collect information about clients, thus a company
rationale, context, and support for the workforce.
must consider the desire for privacy anddata
[11]
 In other instances, enterprises simply
security, as well as the legislative and cultural
automate flawed client-facing processes rather
norms. Some clients prefer assurances that their
than redesign them according to best practices.
data will not be shared with third parties without their
[3]
prior consent and that safeguards are in place to
prevent illegal access by third parties.
 Product - A tangible object or an intangible
service that is mass produced or manufactured
on a large scale with a specific volume of units.
Intangible products are service based like
the tourism industry & the hotel industry or
codes-based products like cellphone load and

Marketing mix credits. Typical examples of a mass produced

tangible object are the motor car and the
disposable razor. A less obvious but ubiquitous
mass produced service is a computer operating
system. Packaging also needs to be taken into
consideration.
 Price – The price is the amount a customer
pays for the product. It is determined by a
number of factors including market share,
competition, material costs, product identity and
the customer's perceived value of the product.
The business may increase or decrease the
price of product if other stores have the same
product.
 Place – Place represents the location where
a product can be purchased. It is often referred
The four main fields of the Marketing mix. to as the distribution channel. It can include any
physical store as well as virtual stores on the
The term "marketing mix" was first used in 1953
Internet.
when Neil Borden, in hisAmerican Marketing
 Promotion represents all of the
Association presidential address, took the recipe
communications that a marketer may use in the
idea one step further and coined the term
marketplace. Promotion has four distinct
"marketing-mix". A prominent marketer, E. Jerome
elements:advertising, public relations, word of
McCarthy, proposed a 4 P classification in 1960,
mouth and point of sale. A certain amount of
which has seen wide use. The four Ps concept is
crossover occurs when promotion uses the four
explained in most marketing textbooks and classes.
principal elements together, which is common in
Four Ps film promotion. Advertising covers any

Elements of the marketing mix are often referred to communication that is paid for, from cinema

as 'the four Ps': commercials, radio and Internet adverts through

 print media and billboards. Public relations are Cs (Commodity, Cost, Channel, Communication).
where the communication is not directly paid for Koichi Shimizu proposed a four Cs classification in
and includes press releases, sponsorship deals, 1973.[1][2]
exhibitions, conferences, seminars or trade fairs
The four elements are:
and events. Word of mouth is any apparently
informal communication about the product by 1. Commodity (Original meaning of Latin:
ordinary individuals, satisfied customers or Commodus=convenient) : the product for
people specifically engaged to create word of the consumers or citizens. Not product out.
mouth momentum. Sales staff often plays an 2. Cost (Original meaning of Latin: Constare=
important role in word of mouth and Public It makes sacrifices) : producing cost, selling
Relations (see Product above). cost, purchasing cost and social cost.
Broadly defined, optimizing the marketing mix is the 3. Channel (Original meaning is a Canal) :
primary responsibility of marketing. By offering the Flow of commodity : marketing channels.
product with the right combination of the four Ps 4. Communication (Original meaning of
marketers can improve their results and marketing Latin:Communio=sharing of meaning) :
effectiveness. Making small changes in the marketing communication : It doesn't
marketing mix is typically considered to be a tactical promote the sales.
change. Parm Bains says making large changes in
The Four Cs can be compared to the Four Ps.
any of the four Ps can be considered strategic. For
This system is basically the four Ps[3] renamed and
example, a large change in the price, say from
reworded to provide a customer focus. The four
$19.00 to $39.00 would be considered a strategic
Cs Model provides a demand/customer centric
change in the position of the product. However a
version alternative to the well-known four Ps supply
change of $130 to $129.99 would be considered a
side model (product, price,place, promotion) of
tactical change, potentially related to a promotional
marketing management. This is a part of 7Cs
offer.
compass model.
The term 'marketing mix' however, does not imply Four Cs（2）
that the 4P elements represent options. They are not
trade-offs but are fundamental marketing issues that The Four Cs model is more consumer-oriented and

always need to be addressed. They are the attempts to better fit the movement from mass

fundamental actions that marketing requires whether marketing to niche marketing. The Product part of

determined explicitly or by default. the Four Ps model is replaced by Consumer or

Consumer Models, shifting the focus to satisfying the
Four Cs（1）
consumer needs. Another C replacement for Product
A formal approach to this customer-focused is Capable. By defining offerings as individual
marketing mix is known as Four capabilities that when combined and focused to a
specific industry, creates a custom solution rather short-term and long-term. It is also related
than pigeon-holing a customer into a product. Pricing to Marketing ROI and Return on Marketing
is replaced by Cost reflecting the total cost of Investment (ROMI).
ownership. Many factors affect Cost, including but Introduction
not limited to the customer's cost to change or
implement the new product or service and the Marketing effectiveness has four dimensions:

customer's cost for not selecting a competitor's

 Corporate – Each company operates within
product or service. Placement is replaced
different bounds. These are determined by their
by Convenience. With the rise of internet and hybrid
size, their budget and their ability to make
models of purchasing, Place is becoming less
organizational change. Within these bounds
relevant. Convenience takes into account the ease
marketers operate along the five factors
of buying the product, finding the product, finding
described below.
information about the product, and several other
 Competitive – Each company in a category
factors. Finally, the Promotions feature is replaced
operates within a similar framework as
byCommunication which represents a broader
described below. In an ideal world, marketers
focus than simply Promotions. Communications can
would have perfect information on how they act
include advertising, public relations, personal
as well as how their competitors act. In reality, in
selling, viral advertising, and any form of
many categories have reasonably good
communication between the firm and the consumer.
information through sources, such as, IRI or
The Four Cs model has been criticized for simply
Nielsen. In many industries, competitive
being nothing more than the Four Ps with different
marketing information is hard to come by.
points of emphasis.[4] In particular, the Four Cs
 Customers/Consumers – Understanding
inclusion of customers in the marketing mix is
and taking advantage of how customers make
criticized, since customers are a target of marketing,
purchasing decisions can help marketers
while the other elements of the marketing mix
improve their marketing effectiveness. Groups of
are tactics. The Four Cs also exclude numerous
consumers act in similar ways leading to the
strategies for product development, distribution, and
need to segment them. Based on these
pricing, while assuming that consumers want two-
segments, they make choices based on how
way communications with companies.
they value the attributes of a product and the
brand, in return for price paid for the product.
Consumers build brand value through
Marketing effectiveness
information. Information is received through
Marketing effectiveness is the quality of how many sources, such as, advertising, word-of-
marketers go to market with the goal of optimizing mouth and in the (distribution) channel often
their spending to achieve good results for both the characterized with the purchase funnel,
 aMcKinsey & Company concept. Lastly,
consumers consume and make purchase
decisions in certain ways.
 Exogenous Factors – There are many
factors outside of our immediate control that can
impact the effectiveness of our marketing
activities. These can include the weather,
interest rates, government regulations and many
others. Understanding the impact these factors
can have on our consumers can help us to
design programs that can take advantage of
these factors or mitigate the risk of these factors
if they take place in the middle of our marketing
campaigns.
prior to the campaign to 28% following it.
(See references below,Bang)
3. Marketing Execution – By improving how
marketers go to market, they can achieve
significantly greater results without
changing their strategy or their creative
execution. At the marketing mix level,
marketers can improve their execution by
making small changes in any or all of the 4-
Ps (Product, Price, Place and Promotion)
(Marketing) without making changes to the
strategic position or the creative execution
marketers can improve their effectiveness
and deliver increased revenue. At the

There are five factors driving the level of marketing program level marketers can improve their

effectiveness that marketers can achieve: effectiveness by managing and executing

each of their marketing campaigns better.
1. Marketing Strategy – Improving marketing It's commonly known that consistency of a
effectiveness can be achieved by employing Marketing Creative strategy across various
a superior marketing strategy. By media (e.g. TV, Radio, Print and Online),
positioning the product or brand correctly, not just within each individual media
the product/brand will be more successful in message, can amplify and enhance impact
the market than competitors’ of the overall marketing campaign effort.
products/brands. Even with the best Additional examples would be improving
strategy, marketers must execute their direct mail through a better call-to-action or
programs properly to achieve extraordinary editing web site content to improve its
results. organic search results, marketers can
2. Marketing Creative – Even without a improve their marketing effectiveness for

change in strategy, better creative can each type of program. A growing area of

improve results. Without a change in interest within (Marketing Strategy) and

strategy,AFLAC was able to achieve Execution are the more recent interaction

stunning results with its introduction of the dynamics of traditional marketing (e.g. TV

Duck (AFLAC) campaign. With the or Events) with online consumer activity

introduction of this new creative concept, (e.g. Social Media). (See references

the company growth rate soared from 12% below, Brand Ecosystems) Not only direct
 product experience, but also any stimulus techniques were developed by econometricians and
provided by traditional marketing, can were first applied to consumer packaged goods,
become a catalyst for a consumer brand since manufacturers of those goods had access to
"groundswell" online as outlined in the good data on sales and marketing support. In the
book Groundswell. recent times MMM has found acceptance as a
4. Marketing Infrastructure (also known trustworthy marketing tool among the major
as Marketing Management) – Improving the consumer marketing companies.
business of marketing can lead to
significant gains for the company.
Marketing mix model
Management of agencies, budgeting,
motivation and coordination of marketing Marketing mix modeling is an analytical approach
activities can lead to improved that use historic information, such as syndicated
competitiveness and improved results. The point-of-sale data and companies’ internal data, to
overall accountability for brand leadership quantify the sales impact of various marketing
and business results is often reflected in an activities. Mathematically, this is done by
organization under a title within a (Brand establishing a simultaneous relation of various
management) department. marketing activities with the sales, in the form of a
5. Exogenous Factors - Generally out of the linear or a non-linear equation, through the statistical
control of marketers, external or exogenous technique of regression. MMM defines the
factors also influence how marketers can effectiveness of each of the marketing elements in
improve their results. Taking advantage of terms of its contribution to sales-volume,
seasonality, interests or the regulatory effectiveness (volume generated by each unit of
environment can help marketers improve effort), efficiency (sales volume generated divided by
their marketing effectiveness. cost) and ROI. These learnings are then adopted to
adjust marketing tactics and strategies, optimize the
marketing plan and also to forecast sales while
Marketing mix modeling simulating various scenarios.
Marketing mix modeling is a term of art for the use
of statistical analysis such
as multivariate regressions on sales and
marketing time series data to estimate the impact of
various promotional tactics on sales and then
forecast the impact of future sets of promotional
tactics. It is often used to optimize promotional
tactics with respect to sales revenue or profit. The
Elements in MMM
This is accomplished by setting up a model with the
sales volume/value as the dependent variable and
independent variables created out of the various
marketing efforts. The creation of variables for
like Advertising Adstock transformations. Typical
output of such analyses include a decomposition of
total annual sales into contributions from each
marketing component, a.k.a Contribution pie-chart.
Another standard output is a decomposition of year-

Marketing Mix Modeling is a complicated affair and over year sales growth/decline, a.k.a ‘Due-to charts’.

is as much an art as it is a science. Once the

variables are created, multiple iterations are carried
out to create a model which explains the
volume/value trends perfectly. Further validations
are carried out, either by using a validation data, or
by the consistency of the business results.

Components
Marketing-mix models decompose total sales into
two components:

Base Sales: This is the natural demand for the Elements measured in MMM
product driven by economic factors like pricing, long- Base and incremental volume
term trends, seasonality, and also qualitative factors
The very break-up of sales volume into base
like brand awareness and brand loyalty.
(volume that would be generated in absence of any
Incremental Sales: Incremental sales are the marketing activity) and incremental (volume
component of sales driven by marketing and generated by marketing activities in the short run)
promotional activities. This component can be across time gain gives wonderful insights. The base
further decomposed into sales due to each grows or declines across longer periods of time
marketing component like Television while the activities generating the incremental
advertising or Radio advertising, Print volume in the short run also impact the base volume
Advertising(magazines, newspapers etc.), in the long run. The variation in the base volume is a
Coupons, Direct Mail, Internet, Feature or Display good indicator of the strength of the brand and the
Promotions and Temporary Price Reductions. Some loyalty it commands from its users.
of these activities have short-term returns (Coupons, Television advertising
Promotions), while others have longer term returns
For the TV advertising activity, it is possible to
(TV, Radio, Magazine/Print).
examine how each ad execution has performed in
Marketing-Mix analyses are typically carried out the market in terms of its impact on sales volume.
using Linear Regression Modeling. Nonlinear and MMM can also provide information on TV
lagged effects are included using techniques
effectiveness at different media weight levels, as
measured by Gross Rating Points in relation to sales
volume response within a time frame, be it a week or
a month. Information can also be gained on the
minimum level of GRPs (threshold limit) in a week
that need to be aired in order to make an impact,
and conversely, the level of GRPs at which the
impact on volume maximizes (saturation limit) and
that the further activity does not have any payback.
While not all MMM's will be able to produce definitive
answers to all questions, some additional areas in
which insights can sometimes be gained include: 1)
the effectiveness of 15-second vis-à-vis 30-second
executions; 2)comparisons in ad performance when
run during prime-time vis-à-vis off-prime-time
dayparts; 3) comparisons into the direct and the halo
effect of TV activity across various products or sub-
brands. The role of new product based TV activity
and the equity based TV activity in growing the
brand can also be compared
Trade promotions
Trade promotion is a key activity in every marketing
plan. It is aimed at increasing sales in the short term
by employing promotion schemes which effectively
increases the customer awareness of the business
and its products. The response of consumers to
trade promotions is not straight forward and is the
subject of much debate. Non-linear models exist to
simulate the response. Using MMM we can
understand the impact of trade promotion at
generating incremental volumes. It is possible to
obtain an estimate of the volume generated per
promotion event in each of the different retail outlets
by region. This way we can identify the most and
least effective trade channels. If detailed spend
information is available we can compare the Return
on Investment of various trade activities like Every
Day Low Price, Off-Shelf Display etc. We can use
this information to optimize the trade plan by
choosing the most effective trade channels and
targeting the most effective promotion activity
Pricing
Price changes of the brand impacts the sales
negatively. This effect can be captured through
modeling the price in MMM. The model provides the
price elasticity of the brand which tells us the
percentage change in the sales for each percentage
change in price. Using this, the marketing manager
can evaluate the impact of a price change decision.
Distribution
For the element of distribution, we can know how the
volume will move by changing distribution efforts or,
in other words, by each percentage shift in the width
or the depth of distribution. This can be identified
specifically for each channel and even for each kind
of outlet for off-take sales. In view of these insights,
the distribution efforts can be prioritized for each
channel or store-type to get the maximum out of the
same. A recent study of a laundry brand showed that
the incremental volume through 1% more presence
in a neighborhood Kirana store is 180% greater than
that through 1% more presence in a supermarket.
[1]
 Based upon the cost of such efforts, managers
identified the right channel to invest more for
distribution.
]Launches
When a new product is launched, the associated
publicity and promotions typically results in higher
volume generation than expected. This extra volume
cannot be completely captured in the model using
the existing variables. Often special variables to
capture this incremental effect of launches are used.
The combined contribution of these variables and
that of the marketing effort associated with the
launch will give the total launch contribution.
Different launches can be compared by calculating
their effectiveness and ROI.
Competition
The impact of competition on the brand sales is
captured by creating the competition variables
accordingly. The variables are created from the
marketing activities of the competition like television
advertising, trade promotions, product launches etc.
The results from the model can be used to identify
the biggest threat to own brand sales from
competition. The cross-price elasticity and the cross-
promotional elasticity can be used to devise
appropriate response to competition tactics. A
successful competitive campaign can be analyzed to
learn valuable lesson for the own brand.
.
Limitations
While marketing mix models provide much useful
information, there are two key areas in which these
models have limitations that should be taken into
account by all of those that use these models for
decisionmaking purposes. These limitations,
discussed more fully below, include:
1) the focus on short-term sales can significantly
under-value the importance of longer-term equity
building activities; and
2) when used for media mix optimization, these
models have a clear bias in favor of time-specific
media (such as TV commercials) versus less time-
specific media (such as ads appearing in monthly
magazines); biases can also occur when comparing
broad-based media versus regionally or
demographically targeted media.
In relation to the bias against equity building
activities, marketing budgets optimized using
marketing-mix models may tend too much towards
efficiency because marketing-mix models measure
only the short-term effects of marketing. Longer term
effects of marketing are reflected in its brand equity.
The impact of marketing spend on [brand equity] is
usually not captured by marketing-mix models. One
reason is that the longer duration that marketing
takes to impact brand perception extends beyond
the simultaneous or, at best, weeks-ahead impact of
marketing on sales that these models measure. The
other reason is that temporary fluctuation in sales
due to economic and social conditions do not
necessarily mean that marketing has been
ineffective in building brand equity. On the contrary,
it is very possible that in the short term sales and
market-share could deteriorate, but brand equity
could actually be higher. This higher equity should in
the long run help the brand recover sales and
market-share.
The second limitation of marketing mix models
comes into play when advertisers attempt to use
these models to determine the best media allocation
across different media types. The traditional use of
MMM's to compare money spent on TV versus
money spent on couponing was relatively valid in
that both TV commercials and the appearance of
coupons (for example, in a FSI run in a newspaper)
were both quite time specific. However, as the use of
these models has been expanded into comparisons
across a wider range of media types, extreme
caution should be used.
Even with traditional media such as magazine
advertising, the use of MMM's to compare results
across media can be problematic; while the
modelers overlay models of the 'typical' viewing
curves of monthly magazines, these lack in
precision, and thus introduce additional variability
into the equation. Thus, comparisons of the
effectiveness of running a TV commercial versus the
effectiveness of running a magazine ad would be
biased in favor of TV, with its greater precision of
measurement. As new new forms of media
proliferate, these limitations become even more
important to consider if MMM's are to be used in
attempts to quantify their effectiveness. For
example, Sponsorship Marketing, Sports Affinity
Marketing, Viral Marketing, Blog Marketing and
Mobile Marketing all vary in terms of the time-
specificity of exposure.
Market segmentation
Market segmentation is a concept
in economics and marketing. A market segment is
a sub-set of a market made up of people or
organizations sharing one or more characteristics
that cause them to demand similar product and/or
services based on qualities of those products such
as price or function. A true market segment meets all
of the following criteria: it is distinct from other
segments (different segments have different needs),
it is homogeneous within the segment (exhibits
common needs); it responds similarly to a market
stimulus, and it can be reached by a market
intervention. The term is also used when consumers
with identical product and/or service needs are
divided up into groups so they can be charged
different amounts. These can broadly be viewed as
'positive' and 'negative' applications of the same
idea, splitting up the market into smaller groups.
While there may be theoretically 'ideal' market
segments, in reality every organization engaged in a
market will develop different ways of imagining
market segments, and create Product
differentiation strategies to exploit these segments.
The market segmentation and corresponding
product differentiation strategy can give a firm a
temporary commercial advantage.
Positive" market segmentation
Market segmenting is dividing the market into groups
of individual markets with similar wants or needs that
a company divides the market into distinct groups
who have distinct needs, wants, behavior or who
might want different products & services. Broadly,
markets can be divided according to a number of
general criteria, such as by industry or public versus
private although industrial market segmentation is
quite different from consumer market segmentation,
both have similar objectives. All of these methods of
segmentation are merely proxies for true segments,
which don't always fit into convenient demographic
boundaries.
Consumer-based market segmentation can be
performed on a product specific basis, to provide a
close match between specific products and
individuals. However, a number of generic market quality and price. After the perceptual map has been
segment systems also exist, e.g. the Nielsen Claritas devised, a firm would consider the marketing
PRIZM system provides a broad segmentation of the communications mix best suited to the product in
population of the United States based on the question.
statistical analysis of household and Top-Down and Bottom-Up
geodemographic data.
Describes model of segmentation as the top-down
The process of segmentation is distinct
approach: You start with the total population and
from targeting (choosing which segments to
divide it into segments. He also identified an
address) and positioning (designing an appropriate
alternative model which he called the bottom-up
marketing mix for each segment). The overall intent
approach. In this approach, you start with a single
is to identify groups of similar customers and
customer and build on that profile. This typically
potential customers; to prioritize the groups to
requires the use of customer relationship
address; to understand their behavior; and to
management software or a database of some kind.
respond with appropriate marketing strategies that
Profiles of existing customers are created and
satisfy the different preferences of each chosen
analysed. Various demographic, behavioral,
segment. Revenues are thus improved.
and psychographic patterns are built up using
Improved segmentation can lead to significantly techniques such as cluster analysis. This process is
improved marketing effectiveness. Distinct segments sometimes called database marketing or micro-
can have different industry structures and thus have marketing. Its use is most appropriate in highly
higher or lower attractiveness (Michael Porter). With fragmented markets. McKenna (1988) claims that
the right segmentation, the right lists can be this approach treats every customer as a
purchased, advertising results can be improved and "micromajority". Pine (1993) used the bottom-up
customer satisfaction can be increased leading to approach in what he called "segment of one
better reputation. marketing". Through this process mass
Positioning customization is possible.

Creating a market segment may allow a firm or other

Once a market segment has been identified (via
organistion to set itself apart from other competitors.
segmentation), and targeted (in which the viability of
servicing the market intended), the segment is then Using Segmentation in Customer
subject to positioning. Positioning involves Retention
ascertaining how a product or a company is
Segmentation is commonly used by organizations to
perceived in the minds of consumers.
improve their customer retention programs and help
This part of the segmentation process consists of ensure that they are:
drawing up a perceptual map, which highlights rival
goods within one's industry according to perceived
 Focused on retaining their most profitable  Whether they are at high risk of canceling
customers their service
 Employing those tactics most likely to retain  Whether they are profitable to retain
these customers  What retention tactics are likely to be most

The basic approach to retention-based segmentation effective

is that a company tags each of its active customers The idea is to match up active customers with
with 3 values: customers from historic retention data who share

Tag #1: Is this customer at high risk of canceling similar attributes. Using the theory that “birds of a

the company's service? (Or becoming a non- feather flock together”, the approach is based on the

user) assumption that active customers will have similar

One of the most common indicators of high-risk retention outcomes as those of their comparable

customers is a drop off in usage of the company's predecessors.[2]

service. For example, in the credit card industry this From a technical perspective, the segmentation
could be signaled through a customer's decline in process is commonly performed using a combination
spending on his card. of predictive analytics and cluster analysis.

Tag #2: Is this customer worth retaining? Illustration of retention-based segmentation

This determination boils down to whether the post- proces
retention profit generated from the customer is
predicted to be greater than the cost incurred to
retain the customer.[1]

Tag #3: What retention tactics should be used to

retain this customer?
For customers who are deemed “save-worthy”, it’s
essential for the company to know which save
tactics are most likely to be successful. Tactics
commonly used range from providing “special”
customer discounts to sending customers
communications that reinforce the value proposition
of the given service.

Process for tagging customers

The basic approach to tagging customers is to utilize
historical retention data to make predictions about
active customers regarding:
s:
 for statistical data analysisused in many fields,
including machine learning, data mining, pattern
recognition, image analysis and bioinformatics.

Price Discrimination
Where a monopoly exists, the price of a product is Market Segmentation Index
likely to be higher than in a competitive market and
Market Segmentation Index or Celli Index of
the quantity sold less, generatingmonopoly profits for
Market Segmentation, named after the Italian
the seller. These profits can be increased further if
economist Celli G. GianLuca, is a measure of market
the market can be segmented with different prices
segmentation. This Index, is a comparative measure
charged to different segments (referred to as price
of the degree of monopoly power in two distinctive
discrimination), charging higher prices to those
markets for products that have the same marginal
segments willing and able to pay more and charging
costs. The degree of market segmentation is defined
less to those whose demand is price elastic. The
as the degree of monopoly power of the producing
price discriminator might need to create rate
firm or exporting country. Higher is the average unit
fences that will prevent members of a higher price
value (AUV) of the same product sold in the primary
segment from purchasing at the prices available to
market compared to the benchmark market, greater
members of a lower price segment. This behaviour
is the degree of monopoly power in that market and
is rational on the part of the monopolist, but is often
therefore higher is the degree of market
seen by competition authorities as an abuse of a
segmentation.
monopoly position, whether or not the monopoly
itself is sanctioned. Examples of this exist in the Pp/Ps = C, p ≠ s (1)

transport industry (a plane or train journey to a Pp and Ps are respectively the prices the producing
particular destination at a particular time is a country set in the primary market (primary market or
practical monopoly) where Business Class market of interest) Mp and the secondary market
customers who can afford to pay may be charged (benchmark) Ms, C is the Market Segmentation
prices many times higher than Economy Class Index (MSI), which measures the degree of
customers for essentially the same service. segmentation of the producing country in the two
Microsoft and the Video industry generally also price markets. The MSI was extrapolated from the Lerner
very similar products at widely varying prices Index of market power in the form L=(P-MC)/P in the
depending on the market they are selling to. case of multiple market segments.

Proposition 1
Cluster analysis or clustering is the assignment of
a set of observations into subsets (called clusters) If C > 1 then a monopolist country has a higher
so that observations in the same cluster are similar degree of monopoly power in segment Mp than
in some sense. Clustering is a method
of unsupervised learning, and a common technique
segment Ms and therefore this country has a greater
incentive to specialize in Mp.
Proposition 2
If C < 1 then a monopolist country has a lower
degree of monopoly power in segment Mp than
segment Ms and therefore this country has a greater
incentive to specialize in Ms.
Personalized marketing
Personalized marketing (also
called personalization, and sometimes called one-to-
one marketing) is an extreme form of product
differentiation. Whereas product differentiation tries
to differentiate a product from competing ones,

Proposition 3 personalization tries to make a uniqueproduct

offering for each customer.
If C ≈ 1 then a monopolist country experience no
Personalized marketing had been most practical in
difference in the degree of monopoly power between
interactive media such as the internet. A web site
segment Mp and segment Ms and therefore this
can track a customer's interests and make
country has no monopolistic incentive to specialize
suggestions for the future. Many sites help
in either markets.
customers make choices by organizing information
From Learner Index to Market Segmentation and prioritizing it based on the individual's liking. In
Index (MSI) some cases, the product itself can be customized
Assumption 1: Marginal costs for the monopolist firm using a configuration system.
are the same for every market segment More recently, personalized marketing has become
Applying Lerner index L=(P-MC)/P to two distinctive practical with bricks and mortar retailers. The market
market segments we get the degree of monopoly size, an order of magnitude greater than that of the
power in market segment Ms as Ls=(Ps-MC)/Ps and Internet, demanded a different technological
Mp as Lp=(Pp-MC)/Pp. Ps is the price charged in Ms approach now available and in use. Many retailers
while Pp is the price charged in Mp. attract customers to the physical store by offering
discounted items which are automatically selected to
This result confirms the validity of the Market
appeal to the individual recipient. The interactivity
Segmentation Index, which is a comparative
occurs through the offer redemptions recorded by
measure of the degree of monopoly power in two
the point of sale systems, which can then update
distinctive markets for products that have the same
each model of the individual shopper.
marginal costs. The result says that when the price
Personalization can be more accurate when based
in the primary market is strictly greater than the price
solely upon individual purchasing records because
in the secondary market then the Lerner's Index is
of the simplified and repetitive nature of some bricks
higher in the primary market and therefore the
and mortar retail purchasing, for example grocery
Market Segmentation Index would also be higher for
superstores.
the primary market.
Don Peppers and Martha Rogers, in their ground including purpose, offerings, strategies,
breaking book on the subject, The One to One infrastructure, organizational structures, trading
Future (Peppers, D. and Rogers, M. 1993) speak of practices, and operational processes and policies.
managing customers rather than products, Business model design template
differentiating customers not just products,
measuring share of customer not share of market,
and developing economies of scope rather
than economies of scale. They also describe
personalized marketing as a four phase process:
identifying potential customers; determining their
Business model design template: Nine building blocks and
needs and their lifetime value to the company;
their relationships, Osterwalder 2004[2]
interact with customers so as to learn about them;
and customize products, services, and Formal descriptions of the business become the
communications to individual customers. building blocks for its activities. Many different

Some commentators (including Peppers and business conceptualizations exist; Osterwalder's

Rogers) use the term "one-to-one marketing" which work and thesis (2010[1], 2004[2]) propose a single

has been misunderstood by some. Seldom is there reference model based on the similarities of a wide

just one individual on either side of the transaction. range of business model conceptualizations. With

Buyer decision processes often involve several his business model design template, an enterprise

people, as do the marketer's efforts. However, the can easily describe their business model

excellent metaphor refers to the objective of a single

 Infrastructure
message source (store) "to" the single recipient
 Key Activities: The activities
(household), a technological analogy to a "mom and
necessary to execute a company's business
pop" store on a first name basis with 10 million
model.
customers.
 Key Resources: The resources that
are necessary to create value for the
Business model customer.
A business model describes the rationale of how  Partner Network: The business
an organization creates, delivers, and captures alliances which complement other aspects
value[1] - economic, social, or other forms of value.
of the business model.
The process of business model design is part
of business strategy.  Offering
 Value Proposition: The products and
In theory and practise the term business model is
services a business offers. Quoting
used for a broad range of informal and formal
Osterwalder (2004), a value proposition "is
descriptions to represent core aspects of abusiness,
 an overall view of .. products and services  Cost Structure: The monetary
that together represent value for a specific consequences of the means employed in
customer segment. It describes the way a the business model. A company's DOC.
firm differentiates itself from its competitors  Revenue Streams: The way a
and is the reason why customers buy from a company makes money through a variety of
certain firm and not from another." revenue flows. A company's income
 Customers

Marketing performance measurement

and management
Marketing performance measurement and
management (MPM) is a term used by marketing
professionals to describe the analysis and
improvement of the efficiency andeffectiveness of
marketing.[1] This is accomplished by focus on the
alignment of marketing activities, strategies, and
metrics with business goals.[2] It involves the creation

Business Model Canvas: Nine business model of a metrics framework to monitor marketing

building blocks, Osterwalder, Pigneur, & al. 2010[1]
 Customer Segments: The target
audience for a business' products and
services.
 Channels: The means by which a
company delivers products and services to
customers. This includes
company's marketing and distributionstrateg
y.
 Customer Relationship: The links a
company establishes between itself and its
different customer segments. The process of
managing customer relationships is referred
to as customer relationship management.
 Finances
performance, and then develop and utilize marketing
dashboards to manage marketing performance.
[3]
 This strategy is used by several companies such
as IBM,Intel, and Citrix.[3][4][5]
Performance management is one of the key
processes applied to business operations such as
manufacturing, logistics, and product development.
the
The goals of performance management are to
achieve key outcomes and objectives to optimize
individual, group, or organizational performance.
MPM however, is more specific. It focuses on
measuring, managing, and analyzing marketing
performance to maximize effectiveness and optimize
the return of investment (ROI) of marketing.[6] Three
elements play a critical role in managing marketing
performance—data, analytics, and metrics. [3]
Data and analytics channels, geographies and so on with incremental
sales. The concepts and tools of these models date
back over 30 years. With the increased usage of
the Internet, social networking sites, mobile
advertising, and text messaging, interest in them is
increasing. models.[5]

Metrics and management

Market-mix models

One of the core methodologies to measure

marketing effectiveness is the collection of
appropriate data.[3] The gathering of right types of
data, and its accuracy, is crucial in measuring the
marketing performance. Agreement between the
marketing department and the senior management Histograms help analyze metrics

is important in selecting appropriate data to be

Measurement and metrics enable marketing
collected.[1][7]
professionals to justify budgets based on returns and
While data collection is relatively simple, a thorough to drive organizational growth and innovation. As a
analysis to make sense of collected data is critical. result, marketers use these metrics and performance
By thoroughly analyzing the data, organizations can measurement as way to prove value and
gather actionable business insights to improve the demonstrate the contribution of marketing to the
marketing effectiveness and marketing efficiency. organization.[1][6]
For example, organizations can use the analytics
Popular metrics used in analysis include activity-
can to drive the marketing return on investment, and
based metrics that involves numerical counting and
make faster and better business decisions.[5]
reporting. For example, tracking downloads, Web
One common use of these analytics is optimizing site visitors, attendees at various events are types of
marketing spending by using market mix models-- activity-based metrics. However, they seldom link
models that measure the impact of marketing marketing to business outcomes. Instead, business
activities, competitive effects, and market outcomes such as market share, customer value,
environment on sales of a product. The consumer and new product adoption offer a better correlation.
packaged goods (CPG) industry extensively uses MPM focuses on measuring the aggregated
this method, and it is now being adopted elsewhere. effectiveness and efficiency of the marketing
These models use data to create a model that organization.[4] Some common categories of these
establishes the link between spend in various specific metrics include marketing's impact on share
of preference, rate of customer acquisition, average
order value, rate of new product and service
adoptions, growth in customer buying frequency,
volume and share of business, net advocacy and
loyalty, rate of growth compared to competition and
the market, margin, and customer engagement. [4] In
addition, MPM is used to measure the monitoring of
operational efficiency and external performance.[1]
Level
Executive
level
Operational
Dashboard level
Tactical level
A "dashboard" is like a speedometer that marketing
professionals use to report marketing performance
Professionals involved in MPM implementation use a
dashboard to report the marketing performance.
[8]
 The dashboard is where all data and metrics are
collated and presented as useful information for the
organization. Marketing professionals create these
dashboards from metrics and KPIs. Organizations
can then use this information to proceed with their
marketing. In essence, a dashboard is a multilayered
performance management tool that enables
organizations to measure, monitor and manage
business activity by using both financial and non-
financial measures. The dashboard provides
Function Description
Monitors and measures performance against business outcomes
Strategic level
and marketing objectives
Marketing
management
Tracks performance of core marketing strategies and processes
Functions and Analyzes performance at project or activity level as they relate
individuals to the first two
analysis into the progress of the organization toward
achieving each defined objectives.[5]
A good dashboard consists of three layers:
An ideal dashboard should show the progress of
marketing, help assess productive areas, and help in
the decision making. In addition, dashboards provide
an indication on the value of marketing and also
helps to align marketing with the business.[5]
Processes
MPM professionals develop closed-loop business
processes for data collection, performance target
setting, measurement and reporting.[1][9][5]
Processes must describe a document the step-by-
step actions that marketing must take to follow the
process consistently. A valuable aid is the process
map. Process mapping is a technique to create a
clearly defined objective to meeting business results.
It provides a systematic description of the actions
taken by marketing personnel as they use a specific
set of activities to produce a defined set of
outcomes. It can also help identify skills the
organization may need to implement the plan. In
addition, an organization can use the process map
to identify technology and training requirements. For
organizations committed to implementing ISO 9001,
process maps are an integral part of quality
management.[1]
The Marketing Metrics Continuum provides a framework for
how to categorize metrics from the tactical to strategic.
The marketing metrics continuum provides
framework for how to categorize metrics from the
tactical to strategic. By navigating this metrics
continuum, from activity-based to predictive,
marketers can move towards more effective
marketing measurement and align measurement
and metrics with business outcomes.[5]
System and tools
According to Marketing Metrics in Action: Creating a
Performance-Driven Marketing Organization,[5] the
creation of a performance-driven organization
requires two elements: a set of standards and
processes for identifying and accessing relevant
data, and the ability to generate performance metrics
from the data.[5]
The use of systems and tools make it possible to
determine the performing investments and the
contribution of marketing efforts to the overall
success of the organization. Without the
implementation and use of these system and tools,
creating a performance-driven marketing
[5]
organization is difficult to achieve.
Management and skills
A Forrester Research and Heidrick and Struggles
study titled The Evolved CMO, found that 20% of the
115 chief and senior marketing professionals
needed a further understanding in marketing
measurement, customer relationship
management (CRM), and customer data analytics.
[10]
 Marketing professionals must be able to tap into
customer information that enables them to provide a
strategic guidance the organization requirements.
This allows them extend business into emerging
markets and bring innovative products to market.[11]
a Professionals skilled in measurement, analytics, and
data-management can serve as catalysts of growth.
They can anticipate customer requirement and
develop marketing capabilities of their organization.
These marketing professionals can then assess how
to measure the impact of marketing on the business
and translate the metrics to simple charts, data, and
figures that the top management of the organization
(CEOs, CFOs, and other CxOs) can understand.[5]
A United States-based study conducted
management consultants Bersin
Associates state that "today more than 40% of US
corporations believe that 'driving a performance-
based culture' is one of their top three talent
strategies."[12] Cultures that foster an environment of
teamwork and employee development, and resource
empowerment achieve higher quality outcomes.
Similar to other optimization processes (for example
a six sigma quality management program), MPM
requires a culture of accountability within the
organization.[2] Without a disciplined approach,
success of implementation of MPM to drive
productivity would not yield tangible results.[1]
Stakeholders
Stakeholders for MPM implementation include
the Chief Marketing Officer (CMO), Chief Financial
Officer (CFO), and marketing operations
professionals.[5]
Marketing accountability of an organization lies with
the CMO. CMOs are deeply involved with the MPM
professionals to define marketing objectives,
determine investments and prove the value of
marketing in the organization. Marketing operations
and analysis professionals are responsible for the
creation of new metrics and processes to measure
and improve operations performance. They are
expected to evaluate and implement systems to
improve marketing efficiency and effectiveness.  In
addition, they are faced with the challenges of
collecting data and analytics essential to the
development, and the deployment of marketing
dashboards and creating the marketing operations
road map. The chief financial officer of a company or
public agency is the corporate officer primarily
by
responsible for managing the financial risks of the
and
business or agency. This officer is also responsible
for financial planning and record-keeping, as well as
financial reporting to higher management. As
marketing is a crucial vertical of any organization,
the CFO is an important stakeholder for any
marketing and other finance-related tasks.[5]
Marketing myopia
Marketing myopia is a term used in marketing as
well as the title of an important marketing paper
written by Theodore Levitt.[1][2] This paper was first
published in 1960 in the Harvard Business Review;
a journal of which he was an editor.
Some commentators have suggested that its
publication marked the beginning of the modern
marketing movement. Its theme is that the vision of
most organizations is too constricted by a narrow
understanding of what business they are in. It
exhorted CEOs to re-examine their corporate vision;
and redefine their markets in terms of wider
perspectives. It was successful in its impact because
it was, as with all of Levitt's work, essentially
practical and pragmatic. Organizations found that
they had been missing opportunities which were
plain to see once they adopted the wider view. The
paper was influential. The oil companies (which
[6]
represented one of his main examples in the paper)
redefined their business as energy rather than
just petroleum; although Royal Dutch Shell, which
embarked upon an investment program in nuclear Marketing research is often partitioned into two sets
power, subsequently regretted this course of action. of categorical pairs, either by target market:

One reason that short sightedness is so common is

 Consumer marketing research, and
that people feel that they cannot accurately predict
 Business-to-business (B2B) marketing
the future. While this is a legitimate concern, it is
research
also possible to use a whole range of business
prediction techniques currently available to estimate Or, alternatively, by methodological approach:

future circumstances as best as possible.

 Qualitative marketing research, and
There is a greater scope of opportunities as the
 Quantitative marketing research
industry changes. It trains managers to look beyond
Consumer marketing research is a form of
their current business activities and think "outside
applied sociology that concentrates on
the box". George Steiner (1979) claims that if a
understanding the preferences, attitudes, and
buggy whip manufacturer in 1910 defined its
behaviors of consumers in a market-based
business as the "transportation starter business",
economy, and it aims to understand the effects and
they might have been able to make the creative leap
comparative success of marketing campaigns. The
necessary to move into the automobile business
field of consumer marketing research as a statistical
when technological change demanded it.[3]
science was pioneered by Arthur Nielsen with the
People who focus on marketing strategy, various founding of the ACNielsen Company in 1923.[2]
predictive techniques, and the customer's lifetime
Thus, marketing research may also be described as
value can rise above myopia to a certain extent. This
the systematic and objective identification, collection,
can entail the use of long-term profit objectives
analysis, and dissemination of information for the
(sometimes at the risk of sacrificing short term
purpose of assisting management in decision
objectives).
making related to the identification and solution of
problems and opportunities inmarketing.[3] The goal

Marketing research of marketing research is to identify and assess how

Marketing research is the systematic gathering,
recording, and analysis of data about issues relating
to marketing products and services. The term is
commonly interchanged with market research;
however, expert practitioners may wish to draw a
distinction, in that market research is concerned
specifically with markets, while marketing research is
concerned specifically about marketing processes.[1]
changing elements of the marketing mix impacts
customer behavior.
Role of marketing research
The task of marketing research is to provide
management with relevant, accurate, reliable, valid,
and current information. Competitive marketing
environment and the ever-increasing costs attributed
to poor decision making require that marketing
research provide sound information. Sound more involved in decision making, whereas
decisions are not based on gut feeling, intuition, or marketing managers are becoming more involved
even pure judgment. with research. The role of marketing research in
managerial decision making is explained further
Marketing managers make numerous strategic and
using the framework of the "DECIDE" model:
tactical decisions in the process of identifying and
satisfying customer needs. They make decisions D

about potential opportunities, target market Define the marketing problem

E
selection, market segmentation, planning and
implementing marketing programs, marketing Enumerate the controllable and

performance, and control. These decisions are uncontrollable decision factors

C
complicated by interactions between the controllable
Collect relevant information
marketing variables of product, pricing, promotion,
I
and distribution. Further complications are added by
Identify the best alternative
uncontrollable environmental factors such as general
D
economic conditions, technology, public policies and
Develop and implement a marketing plan
laws, political environment, competition, and social
E
and cultural changes. Another factor in this mix is
Evaluate the decision and the decision
the complexity of consumers. Marketing research
process
helps the marketing manager link the marketing
variables with the environment and the consumers. It The DECIDE model conceptualizes managerial

helps remove some of the uncertainty by providing decision making as a series of six steps. The

relevant information about the marketing variables, decision process begins by precisely defining the

environment, and consumers. In the absence of problem or opportunity, along with the objectives and

relevant information, consumers' response to constraints.[4] Next, the possible decision factors that

marketing programs cannot be predicted reliably or make up the alternative courses of action

accurately. Ongoing marketing research programs (controllable factors) and uncertainties

provide information on controllable and non- (uncontrollable factors) are enumerated. Then,

controllable factors and consumers; this information relevant information on the alternatives and possible

enhances the effectiveness of decisions made by outcomes is collected. The next step is to select the

marketing managers. [4] best alternative based on chosen criteria or

measures of success. Then a detailed plan to
Traditionally, marketing researchers were
implement the alternative selected is developed and
responsible for providing the
put into effect. Last, the outcome of the decision and
relevant information and marketing decisions were
the decision process itself are evaluated.
made by the managers. However, the roles are
changing and marketing researchers are becoming
Marketing research characteristics
First, marketing research is systematic.
systematic planning is required at all the stages of
the marketing research process. The procedures
followed at each stage are methodologically sound,
well documented, and, as much as possible,
planned in advance. Marketing research uses the
scientific method in that data are collected and
analyzed to test prior notions or hypotheses.
Marketing research is objective. It attempts to
provide accurate information that reflects a true state
of affairs. It should be conducted impartially. While
research is always influenced by the researcher's
research philosophy, it should be free from the
personal or political biases of the researcher or
the management. Research which is motivated by
personal or political gain involves a breach of
professional standards. Such research
deliberately biased so as to result in predetermined
findings. The motto of every researcher should be,
"Find it and tell it like it is." The objective nature of
marketing research underscores the importance of
ethical considerations, which are discussed later in
the chapter.
Marketing research involves the identification,
collection, analysis, and dissemination
information. Each phase of this process is important.
We identify or define the marketing research
problem or opportunity and then determine what
information is needed to investigate it.,
inferences are drawn. Finally, the findings,
implications and recommendations are provided in a
format that allows the information to be used for
management decision making and to be acted upon
directly. It should be emphasized that marketing
research is conducted to assist management in
Thus decision making and is not: a means or an end in
itself. The next section elaborates on this definition
by classifying different types of marketing research.
Comparison with other forms of
business research
Other forms of business research include:
Market research is broader in scope and examines
all aspects of a business environment. It asks
questions about competitors,market structure,
government regulations, economic trends,
technological advances, and numerous other factors
that make up the business environment
(see environmental scanning). Sometimes the term
refers more particularly to the financial analysis of
companies, industries, or sectors. In this case,
is financial analysts usually carry out the research and
provide the results to investment advisors and
potential investors.
Product research - This looks at what products can
be produced with available technology, and what
new product innovations near-future technology can
develop (see new product development).
of
Advertising research - is a specialized form of
marketing research conducted to improve the
efficacy of advertising. Copy testing, also known as
"pre-testing," is a form of customized research that
and
predicts in-market performance of an ad before it
airs, by analyzing audience levels of attention, brand
linkage, motivation, entertainment, and
communication, as well as breaking down the
ad’s flow of attention and flow of emotion. Pre-
testing is also used on ads still in rough (ripomatic or
animatic) form.
Classification of marketing research
Organizations engage in marketing research for two
reasons: (1) to identify and (2) solve marketing
problems. This distinction serves as a basis for
classifying marketing research into problem
identification research and problem solving research.
Problem identification research is undertaken to help
identify problems which are, perhaps, not apparent
on the surface and yet exist or are likely to arise in
the future. Examples of problem identification
research include market potential, market share,
brand or company image, market characteristics,
sales analysis, short-range forecasting, long range
forecasting, and business trends research. Research
of this type provides information about the marketing
environment and helps diagnose a problem. For
example, The findings of problem solving research
are used in making decisions which will solve
specific marketing problems.
The Stanford Research Institute, on the other hand,
conducts an annual survey of consumers that is
used to classify persons into homogeneous groups
for segmentation purposes. The National Purchase
Diary panel (NPD) maintains the largest diary panel
in the United States.
Standardized services are research studies
conducted for different client firms but in a standard
way. For example, procedures for measuring
advertising effectiveness have been standardized so
that the results can be compared across studies and
evaluative norms can be established. The Starch
Readership Survey is the most widely used service
for evaluating print advertisements; another well-
known service is the Gallup and Robinson Magazine
Impact Studies. These services are also sold on a
syndicated basis.
Customized services offer a wide variety of
marketing research services customized to suit
a client's specific needs. Each marketing
research project is treated uniquely.
Limited-service suppliers specialize in one or a
few phases of the marketing research project.
Services offered by such suppliers are classified as
field services, coding and data entry, data analysis,
analytical services, and branded products. Field
services collect data through mail, personal, or
telephone interviewing, and firms that specialize in
interviewing are called field service organizations.
These organizations may range from small
proprietary organizations which operate locally to
large multinational organizations with WATS line
interviewing facilities. Some organizations maintain
extensive interviewing facilities across the country
for interviewing shoppers in malls.
Coding and data entry services include editing
completed questionnaires, developing a coding
scheme, and transcribing the data on to diskettes or
magnetic tapes for input into the computer. NRC
Data Systems provides such services.
Analytical services include designing and
pretesting questionnaires, determining the best
means of collecting data, designing sampling plans,
and other aspects of the research design. Some
complex marketing research projects require
knowledge of sophisticated procedures, including
specialized experimental designs, and analytical
techniques such as conjoint analysis
multidimensional scaling. This kind of expertise can
be obtained from firms and consultants specializing
in analytical services.
Data analysis services are offered by firms, also
known as tab houses, that specialize in computer
analysis of quantitative data such as those obtained
in large surveys. Initially most data analysis firms
supplied only tabulations (frequency counts) and
cross tabulations (frequency counts that describe
two or more variables simultaneously). With the
proliferation of software, many firms now have the
capability to analyze their own data, but, data
analysis firms are still in demand.
Branded marketing research products and
services are specialized data collection and analysis
procedures developed to address specific types of
marketing research problems. These procedures are
patented, given brand names, and marketed like any
other branded product.
Types of marketing research
Marketing research techniques come in many forms,
including:
Ad Tracking – periodic or continuous in-market
research to monitor a brand’s performance using
measures such as brand awareness,
preference, and product usage. (Young, 2005)
Advertising Research – used to predict copy
testing or track the efficacy of advertisements for any
medium, measured by the ad’s ability to get
attention, communicate the message, build the
and brand’s image, and motivate the consumer to
purchase the product or service. (Young, 2005)
Brand equity research - how favorably do
consumers view the brand?
Brand association research - what do consumers
associate with the brand?
Brand attribute research - what are the key traits
that describe the brand promise?
Brand name testing - what do consumers feel
about the names of the products?
Commercial eye tracking research - examine
advertisements, package designs, websites, etc by
analyzing visual behavior of the consumer
Concept testing - to test the acceptance of a
concept by target consumers
Coolhunting - to make observations and predictions
in changes of new or existing cultural trends in areas
such as fashion, music, films, television, youth
culture and lifestyle
Buyer decision processes research - to determine
what motivates people to buy and what decision-
making process they use
Copy testing – predicts in-market performance of
brand
an ad before it airs by analyzing audience levels
of attention, brand linkage,motivation, entertainment,
and communication, as well as breaking down the
ad’s flow of attention and flow of emotion.
Customer satisfaction research - quantitative or
qualitative studies that yields an understanding of a
customer's of satisfaction with a transaction
Demand estimation - to determine the approximate
level of demand for the product
Distribution channel audits - to assess distributors’
and retailers’ attitudes toward a product, brand, or
company
Internet strategic intelligence - searching for
customer opinions in the Internet: chats, forums,
web pages, blogs... where people express freely
about their experiences with products, becoming
strong "opinion formers"
Marketing effectiveness and analytics - Building
models and measuring results to determine the
effectiveness of individual marketing activities.
Mystery Consumer or Mystery shopping - An
employee or representative of the market research
firm anonymously contacts a salesperson and
indicates he or she is shopping for a product. The
shopper then records the entire experience. This
method is often used for quality control or for
researching competitors' products.
Positioning research - how does the target
market see the brand relative to competitors? - what
does the brand stand for?
Price elasticity testing - to determine how sensitive
customers are to price changes
Sales forecasting - to determine the expected level
of sales given the level of demand. With respect to
other factors like Advertising expenditure, sales
promotion etc.
Segmentation research - to determine
the demographic, psychographic, and behavioural
characteristics of potential buyers
Online panel - a group of individual who accepted to
respond to marketing research online
Store audit - to measure the sales of a product or
product line at a statistically selected store sample in
order to determine market share, or to determine
whether a retail store provides adequate service
Test marketing - a small-scale product launch used
to determine the likely acceptance of the product
when it is introduced into a wider market
Viral Marketing Research - refers to marketing
research designed to estimate the probability that
specific communications will be transmitted
throughout an individuals Social Network. Estimates
of Social Networking Potential (SNP) are
combined with estimates of selling effectiveness to
estimate ROI on specific combinations of messages
and media.
All of these forms of marketing research can be
classified as either problem-identification research or
as problem-solving research.
There are two main sources of data - primary and research, if the findings are very hard to interpret for
secondary. Primary research is conducted from the marketing managers.
scratch. It is original and collected to solve the
problem in hand. Secondary research already
Marketing research methods
exists since it has been collected for other purposes.
It is conducted on data published previously and Methodologically, marketing research uses the
usually by someone else. Secondary research costs following types of research designs:[5]
far less than primary research, but seldom comes in Based on questioning:
a form that exactly meets the needs of the
researcher.  Qualitative marketing research -
generally used for exploratory purposes
A similar distinction exists between exploratory
- small number of respondents - not
research and conclusive
generalizable to the whole population -
research. Exploratory research provides insights
statistical significance and confidence
into and comprehension of an issue or situation. It
not calculated - examples include focus
should draw definitive conclusions only with extreme
groups, in-depth interviews,
caution. Conclusive research draws conclusions:
and projective techniques
the results of the study can be generalized to the
whole population.  Quantitative marketing research -
generally used to draw conclusions -
Exploratory research is conducted to explore a
tests a specific hypothesis - uses
problem to get some basic idea about the solution at
random samplingtechniques so as to
the preliminary stages of research. It may serve as
infer from the sample to the population -
the input to conclusive research. Exploratory
involves a large number of respondents
research information is collected by focus group
- examples
interviews, reviewing literature or books, discussing
include surveysand questionnaires.
with experts, etc. This is unstructured and qualitative
Techniques include choice
in nature. If a secondary source of data is unable to
modelling, maximum difference
serve the purpose, a convenience sample of small
preference scaling, and covariance
size can be collected. Conclusive research is
analysis.
conducted to draw some conclusion about the
Based on
problem. It is essentially, structured and quantitative observations:
research, and the output of this research is the input
to management information systems (MIS).  Ethnographic studies -, by nature
qualitative, the researcher observes
Exploratory research is also conducted to simplify
social phenomena in their natural setting
the findings of the conclusive or descriptive
- observations can occur cross-
 sectionally (observations made at one
time) or longitudinally (observations
occur over several time-periods)
examples include product-use analysis
and computer cookie traces.
also Ethnography and Observational
techniques.
 Experimental techniques -, by nature
quantitative, the researcher creates a
quasi-artificial environment to try to
control spurious factors,
manipulates at least one of the variables
- examples include purchase
laboratories and test markets
Researchers often use more than one research
design. They may start with secondary research to
get background information, then conduct a focus
group (qualitative research design) to explore the
issues. Finally they might do a full nation-wide
survey (quantitative research design) in order to
devise specific recommendations for the client.
Business to business market research
Business to business (B2B) research is inevitably
more complicated than consumer research. The
researchers need to know what type of multi-faceted
approach will answer the objectives, since seldom is
it possible to find the answers using just one
method. Finding the right respondents is crucial in
B2B research since they are often busy, and may
not want to participate. Encouraging them to “open
up” is yet another skill required of the B2B
researcher. Last, but not least, most business
research leads to strategic decisions and this means
that the business researcher must have expertise in
developing strategies that are strongly rooted in the
research findings and acceptable to the client.
-
There are four key factors that make B2B market
research special and different to consumer markets:
See [6]
The decision making unit is far more complex in B2B
markets than in consumer markets
B2B products and their applications are more
then complex than consumer products
B2B marketers address a much smaller number of
customers who are very much larger in their
consumption of products than is the case in
consumer markets
Personal relationships are of critical importance in
B2B markets.
Marketing research in small businesses and
nonprofit organizations
Marketing research does not only occur in huge
corporations with many employees and a large
budget. Marketing information can be derived by
observing the environment of their location and the
competitions location. Small scale surveys and focus
groups are low cost ways to gather information from
potential and existing customers. Most secondary
data (statistics, demographics, etc.) is available to
the public in libraries or on the internet and can be
easily accessed by a small business owner.
Below some steps that could do by SME (Small
Medium Entreprise) to analyze the market [7]:
Provide secondary and or primary data (if
necessary);
Analyze Macro & Micro Economic data (e.g. Supply
& Demand, GDP,Price change, Economic growth,
Sales by sector/industries,interest rate, number of
investment/ divestment, I/O, CPI, Social anlysis,etc);
Implement the marketing mix concept, which is
consist of: Place, Price, Product,Promotion, People,
Process, Physical Evidence and also Political &
social situation to analyze global market situation);
Analyze market trends, growth, market size, market
share, market competition (e.g. SWOT analysis, B/C
Analysis,channel mapping identities of key channels,
drivers of customers loyalty and satisfaction, brand
perception, satisfaction levels, current competitor-
channel relationship analysis, etc),etc.;
International Marketing Research follows the same
path as domestic research, but there are a few more
problems that may arise. Customers in international
markets may have very different customs, cultures,
and expectations from the same company. In this
case, secondary information must be collected from
each separate country and then combined, or
compared. This is time consuming and can be
confusing. International Marketing Research relies
more on primary data rather than secondary
information. Gathering the primary data can be
hindered by language, literacy and access to
technology.
Commonly used marketing research
terms

Market research techniques resemble those used in

Determine market segment, market target, market
political polling and social science research. Meta-
forecast and market position;
analysis (also called the Schmidt-Hunter technique)
refers to a statistical method of combining data from
Formulating market strategy & also investigating the
multiple studies or from several types of
possibility of partnership/ collaboration (e.g. Profiling
studies.Conceptualization means the process of
& SWOT analysis of potential partners, evaluating
converting vague mental images into definable
business partnership.)
concepts. Operationalization is the process of

Combine those analysis with the SME's business converting concepts into specific observable

plan/ business model analysis (e.g. Business behaviors that a researcher can

description, Business process, Business strategy, measure. Precision refers to the exactness of any

Revenue model, Business expansion, Return of given measure. Reliability refers to the likelihood

Investment, Financial analysis (Company History, that a given operationalized construct will yield the

Financial assumption, Cost/Benefit Analysis, same results if re-measured. Validityrefers to the

Projected profit & Loss, Cashflow, Balance sheet & extent to which a measure provides data that

business Ratio,etc). captures the meaning of the operationalized

construct as defined in the study. It asks, “Are we
measuring what we intended to measure?”
International Marketing Research
Applied research sets out to prove a specific What is the reputation of the supplier? Do they
hypothesis of value to the clients paying for the complete projects on schedule? Are they known for
research. For example, a cigarette company might maintaining ethical standards? Are they flexible? Are
commission research that attempts to show that their research projects of high quality?
cigarettes are good for one's health. Many
What kind and how much experience does the
researchers have ethical misgivings about doing
supplier have? Has the firm had experience with
applied research.
projects similar to this one? Do the supplier's
personnel have both technical and nontechnical
Sugging (from "SUG", for selling under the guise of
expertise? In other words, in addition to technical
market research) forms a sales technique in which
skills, are the personnel assigned to the task
sales people pretend to conduct marketing research,
sensitive to the client's needs and do they share the
but with the real purpose of obtaining buyer
client's research ideology? Can they communicate
motivation and buyer decision-making information to
well with the client? [8]
be used in a subsequent sales call.
The cheapest bid is not always the best one.
Frugging comprises the practice of soliciting funds Competitive bids should be obtained and compared
under the pretense of being a research organization. on the basis of quality as well as price. A good
Selecting a research supplier practice is to get a written bid or contract before
beginning the project. Decisions about marketing
A firm that cannot conduct an entire marketing
research suppliers, just like other management
research project in-house must select an external
decisions, should be based on sound information. [8]
supplier for one or more phases of the project. The
firm should compile a list of prospective suppliers Careers in marketing research
from such sources as trade publications,
Some of the positions available in marketing
professional directories, and word of mouth. When
research include vice president of marketing
deciding on criteria for selecting an outside supplier,
research, research director, assistant director of
a firm should ask itself why it is seeking outside
research, project manager, field work director,
marketing research support. For example, a small
statistician/data processing specialist, senior analyst,
firm that needs one project investigated may find it
analyst, junior analyst and operational supervisor. [9]
economically efficient to employ an outside source.
The most common entry-level position in marketing
Or a firm may not have the technical expertise
research for people with bachelor's degrees
undertake certain phases of a project or political
(e.g., BBA) is as operational supervisor. These
conflict-of-interest issues may determine that a
people are responsible for supervising a well-defined
project be conducted by an outside supplier. [8]
set of operations, including field work, data editing,
When developing criteria for selecting an outside
and coding, and may be involved in programming
supplier, a firm should keep some basics in mind.
and data analysis. Another entry-level position for
BBAs is assistant project manager. An director, call for managing the work of others and
assistant project manager will learn and assist in require more general skills. To prepare for a career
questionnaire design, review field instructions, and in marketing research, students usually:
monitor timing and costs of studies. In the marketing
research industry, however, there is a growing Vice-President of Marketing Research: This is the

preference for people with master's degrees. Those senior position in marketing research. The VP is

with MBA or equivalent degrees are likely to be responsible for the entire marketing research

employed as project managers.[9] operation of the company and serves on the top
management team. Sets the objectives and goals of
A small number of business schools also offer a
the marketing, research department.
more specialized Master of Marketing
Research (MMR) degree. An MMR typically Research Director: Also a senior position, the
prepares students for a wide range of research director has the overall responsibility for the
methodologies and focuses on learning both in the development and execution of all the marketing
classroom and the field. research projects.

The typical entry-level position in a business firm

Assistant Director of Research: Serves as an
would be junior research analyst (for BBAs) or
administrative assistant to the director and
research analyst (for MBAs or MMRs). The junior
supervises some of the other marketing research
analyst and the research analyst learn about the
staff members.
particular industry and receive training from a senior
staff member, usually the marketing research
(Senior) Project Manager: Has overall
manager. The junior analyst position includes a
responsibility for design, implementation, and
training program to prepare individuals for the
management of research projects.
responsibilities of a research analyst, including
coordinating with the marketing department and Statistician/Data Processing Specialist: Serves as
sales force to develop goals for product exposure. an expert on theory and application of statistical
The research analyst responsibilities include techniques. Responsibilities include experimental
checking all data for accuracy, comparing and design, data processing, and analysis.
contrasting new research with established norms,
and analyzing primary and secondary data for the Senior Analyst: Participates in the development of
purpose of market forecasting. projects and directs the operational execution of the
assigned projects. Works closely with the analyst,
As these job titles indicate, people with a variety of
junior analyst, and other personnel in developing the
backgrounds and skills are needed in marketing
research design and data collection. Prepares the
research. Technical specialists such as statisticians
final report. The primary responsibility for meeting
obviously need strong backgrounds in statistics and
data analysis. Other positions, such as research
time and cost constraints rests with the senior Simply, there are five major and important steps
analyst. involved in the research process:

Analyst: Handles the details involved in executing 1. Defining the Problem.

the project. Designs and pretests the questionnaires 2. Research Design.
and conducts a preliminary analysis of the data. 3. Data Collection.
4. Analysis.
Junior Analyst: Handles routine assignments such
5. Report Writing & presentation.
as secondary data analysis, editing and coding of
questionnaires, and simple statistical analysis. A brief discussion on these steps is:

Field Work Director: Responsible for the selection, 1. Problem audit and problem definition - What

training, supervision, and evaluation of interviewers is the problem? What are the various

and other field workers.[10 aspects of the problem? What information is

needed?
2. Conceptualization and operationalization -
Quantitative marketing research
How exactly do we define the concepts
Quantitative marketing research is the application involved? How do we translate these
of quantitative research techniques to the field of concepts into observable and measurable
marketing. It has roots in both thepositivist view of behaviours?
the world, and the modern marketing viewpoint that 3. Hypothesis specification - What claim(s) do
marketing is an interactive process in which both the
we want to test?
buyer and seller reach a satisfying agreement on the
4. Research design specification - What type of
"four Ps" of marketing: Product, Price, Place
methodology to use? - examples:
(location) and Promotion.
questionnaire, survey
As a social research method, it typically involves the 5. Question specification - What questions to
construction of questionnaires and scales. People ask? In what order?
who respond (respondents) are asked to complete 6. Scale specification - How will preferences be
the survey. Marketers use the information so rated?
obtained to understand the needs of individuals in 7. Sampling design specification - What is the
the marketplace, and to total population? What sample size is
create strategies and marketing plans. necessary for this population? What
Scope and requirements sampling method to use?-
examples: Probability Sampling:- (cluster
Typical general procedure
sampling, stratified sampling, simple
random sampling, multistage
 sampling, systematic sampling)
& Nonprobability
sampling:- (Convenience
Sampling,Judgement Sampling, Purposive
Sampling, Quota Sampling, Snowball
Sampling, etc. )
8. Data collection - Use mail, telephone,
internet, mall intercepts
9. Codification and re-specification - Make
adjustments to the raw data so it is
compatible with statistical techniques and
with the objectives of the research -
examples: assigning numbers, consistency
checks, substitutions, deletions, weighting,
dummy variables, scale transformations,
scale standardization
10. Statistical analysis - Perform various
descriptive and inferential techniques (see
below) on the raw data. Make inferences
from the sample to the whole population.
Test the results for statistical significance.
11. Interpret and integrate findings - What do
the results mean? What conclusions can be
drawn? How do these findings relate to
similar research?
12. Write the research report - Report usually
has headings such as: 1) executive
summary; 2) objectives; 3) methodology; 4)
main findings; 5) detailed charts and
diagrams. Present the report to the client in
a 10 minute presentation. Be prepared for
questions.
The design step may involve a pilot study to in order
to discover any hidden issues. The codification and
analysis steps are typically performed by computer,
using software such as DAP or PSPP. The data
collection steps, can in some instances be
automated, but often require significant manpower to
undertake. Interpretation is a skill mastered only by
experience.
Statistical analysis
The data acquired for quantitative marketing
research can be analysed by almost any of the
range of techniques of statistical analysis, which can
be broadly divided into descriptive
statistics and statistical inference. An important set
of techniques is that related to statistical surveys. In
any instance, an appropriate type of statistical
analysis should take account of the various types of
error that may arise, as outlined below.
Reliability and validity
Research should be tested for reliability,
generalizability, and validity. Generalizability is the
ability to make inferences from a sample to the
population.
Reliability is the extent to which a measure will
produce consistent results. Test-retest reliability
checks how similar the results are if the research is
repeated under similar circumstances. Stability over
repeated measures is assessed with the Pearson
coefficient. Alternative forms reliability checks how
similar the results are if the research is repeated
using different forms. Internal consistency reliability
checks how well the individual measures included in
the research are converted into a composite
measure. Internal consistency may be assessed by
correlating performance on two halves of a test
(split-half reliability). The value of the Pearson
product-moment correlation coefficient is adjusted
with the Spearman-Brown prediction formula to Validity implies reliability : a valid measure must be
correspond to the correlation between two full-length reliable. But reliability does not necessarily imply
tests. A commonly used measure is Cronbach's α, validity :a reliable measure need not be valid.
which is equivalent to the mean of all possible split- Types of errors
half coefficients. Reliability may be improved by
Random sampling errors:
increasing the sample size.

Validity asks whether the research measured what it  sample too small

intended to. Content validation (also called face  sample not representative
validity) checks how well the content of the research  inappropriate sampling method used
are related to the variables to be studied. Are the  random errors
research questions representative of the variables
Research design errors:
being researched. It is a demonstration that the
items of a test are drawn from the domain being  bias introduced
measured. Criterion validation checks how  measurement error
meaningful the research criteria are relative to other  data analysis error
possible criteria. When the criterion is collected later
 sampling frame error
the goal is to establish predictive validity. Construct
 population definition error
validation checks what underlying construct is being
 scaling error
measured. There are three variants of construct
 question construction error
validity. They are convergent validity (how well the
research relates to other measures of the same Interviewer errors:

construct), discriminant validity (how poorly the

 recording errors
research relates to measures of opposing
 cheating errors
constructs), and nomological validity (how well the
 questioning errors
research relates to other variables as required by
theory) .  respondent selection error

Respondent errors:
Internal validation, used primarily in experimental
research designs, checks the relation between the
 non-response error
dependent and independent variables. Did the
 inability error
experimental manipulation of the independent
 falsification error
variable actually cause the observed results?
External validation checks whether the experimental Hypothesis errors:

results can be generalized.

 type I error (also called alpha error)
  the study results lead to the pricing, however, a better question for a vendor
rejection of the null hypothesis even though to ask is - How much do customers value the
it is actually true products, services, and other intangibles that the
 type II error (also called beta error) vendor provides.

 the study results lead to the  What are the pricing objectives?

acceptance (non-rejection) of the null  Do we use profit maximization pricing?
hypothesis even though it is actually false  How to set the price?: (cost-plus pricing,
demand based or value-based pricing, rate of
return pricing, or competitor indexing)
Pricing
 Should there be a single price or multiple
Pricing is a fundamental aspect of financial pricing?
modeling, and is one of the four Ps of the marketing  Should prices change in various
mix. The other three aspects are product, promotion, geographical areas, referred to as zone pricing?
and place. It is also a key variable
 Should there be quantity discounts?
inmicroeconomic price allocation theory. Price is the
 What prices are competitors charging?
only revenue generating element amongst thefour
 Do you use a price skimming strategy or
Ps, the rest being cost centers. Pricing is the manual
a penetration pricing strategy?
or automatic process of applying prices to purchase
 What image do you want the price to
and sales orders, based on factors such as: a fixed
convey?
amount, quantity break, promotion or sales
 Do you use psychological pricing?
campaign, specific vendor quote, price prevailing on
 How important are customer price sensitivity
entry, shipment or invoice date, combination of
(e.g. "sticker shock") and elasticity issues?
multiple orders or lines, and many others.
Automated systems require more setup and  Can real-time pricing be used?

maintenance but may prevent pricing errors. The  Is price discrimination or yield management

needs of the consumer can be converted into appropriate?

demand only if the consumer has the willingness  Are there legal restrictions on retail price

and capacity to buy the product. Thus pricing is very maintenance, price collusion, or price

important in marketing. discrimination?

 Do price points already exist for the product
Questions involved in pricing
category?
Pricing involves asking questions like:  How flexible can we be in pricing? : The
more competitive the industry, the less flexibility
 How much to charge for
we have.
a product or service? This question is that a
typical starting point for discussions about
  The price floor is determined  support a product's positioning and be
by production factors like costs (often only consistent with the other variables in
variable costs are taken into account), the marketing mix
economies of scale, marginal cost, and  price is influenced by the type of
degree of operating leverage distribution channel used, the type of
 The price ceiling is determined by promotions used, and the quality of the
demand factors like price elasticity and price product
points  price will usually need to be
 Are there transfer pricing considerations? relatively high if manufacturing is
 What is the chance of getting involved in expensive, distribution is exclusive, and
a price war? the product is supported by

 How visible should the price be? - Should extensive advertising and promotional

the price be neutral? (ie.: not an important campaigns

differentiating factor), should it be highly visible?  a low price can be a viable

(to help promote a low priced economy product,
or to reinforce the prestige image of a quality
product), or should it be hidden? (so as to allow
marketers to generate interest in the product
unhindered by price considerations).
 Are there joint product
pricing considerations?
 What are the non-price costs of purchasing
the product? (eg.: travel time to the store, wait
time in the store, disagreeable elements
associated with the product purchase - dentist ->
pain, fishmarket -> smells)
 What sort of payments should be accepted?
(cash, check, credit card, barter) Pricing
What a price should do
A well chosen price should do three things:
 achieve the financial goals of the company
(e.g., profitability)
 fit the realities of the marketplace (Will
customers buy at that price?)
substitute for product quality, effective
promotions, or an energetic selling effort
by distributors
From the marketer's point of view, an efficient
price is a price that is very close to the maximum
that customers are prepared to pay. In economic
terms, it is a price that shifts most of the
consumer surplus to the producer. A good pricing
strategy would be the one which could balance
between the price floor (the price below which the
organization ends up in losses) and the price ceiling
(the price beyond which the organization
experiences a no demand situation).
Definitions
Pricing is the process of determining what a
company will receive in exchange for its products.
Pricing factors are manufacturing cost, market place,
competition, market condition, Quality of product.
The effective price is the price the company
receives after accounting for discounts, promotions,
and other incentives.
Price lining is the use of a limited number of prices
for all your product offerings. This is a tradition
started in the old five and dime stores in which
everything cost either 5 or 10 cents. Its underlying
rationale is that these amounts are seen as
suitable price points for a whole range of products by
prospective customers. It has the advantage of ease
of administering, but the disadvantage of inflexibility,
particularly in times of inflation or unstable prices.
A loss leader is a product that has a price set below
the operating margin. This results in a loss to the
enterprise on that particular item, but this is done in
the hope that it will draw customers into the store
and that some of those customers will buy other,
higher margin items.
Promotional pricing refers to an instance where
pricing is the key element of the marketing mix.
The price/quality relationship refers to
perception by most consumers that a relatively high
price is a sign of good quality. The belief in this
relationship is most important with complex products
that are hard to test, and experiential products that
cannot be tested until used (such as most services).
The greater the uncertainty surrounding a product,
the more consumers depend on the price/quality
hypothesis and the more of a premium they are
prepared to pay. The classic example of this is the
pricing of the snack cake Twinkies, which were
perceived as low quality when the price was
lowered. Note, however, that excessive reliance on
the price/quantity relationship by consumers may
lead to the raising of prices on all products and
services, even those of low quality, which in turn
causes the price/quality relationship to no longer
apply.
Premium pricing (also called prestige pricing) is the
strategy of consistently pricing at, or near, the high
end of the possible price range to help attract status-
conscious consumers. A few examples of
companies which partake in premium pricing in the
marketplace includeRolex and Bentley. People will
buy a premium priced product because:
1. They believe the high price is an indication
of good quality;
2. They believe it to be a sign of self worth -
"They are worth it" - It authenticates their
success and status - It is a signal to others
that they are a member of an exclusive
group;
3. They require flawless performance in this
application - The cost of product
the malfunction is too high to buy anything but
the best - example : heart pacemaker.
The term Goldilocks pricing is commonly used to
describe the practice of providing a "gold-plated"
version of a product at a premium price in order to
make the next-lower priced option look more
reasonably priced; for example, encouraging
customers to see business-class airline seats as
good value for money by offering an even higher
priced first-class option.[citation needed]
 Similarly, third-
class railway carriages in Victorian England are said
to have been built without windows, not so much to
punish third-class customers (for which there was no
economic incentive), as to motivate those who could
afford second-class seats to pay for them instead of The 9 Laws of Price Sensitivity
taking the cheaper option.[citation needed]
 This is also
In their book, "The Strategy and Tactics of Pricing",
known as a potential result of price discrimination.
Thomas Nagle and Reed Holden outline 9 laws or
The name derives from the Goldilocks story, in factors that influence a buyer's price sensitivity with
which Goldilocks chose neither the hottest nor the respect to a given purchase:
coldest porridge, but instead the one that was "just
1) Reference Price Effect[2]
right". More technically, this form of pricing exploits
Buyer’s price sensitivity for a given product
the general cognitive bias of aversion to extremes.
increases the higher the product’s price relative to
This practice is known academically as "framing". By
perceived alternatives. Perceived alternatives can
providing three options (i.e. small, medium, and
vary by buyer segment, by occasion, and other
large; first, business, and coach classes) you can
factors.
manipulate the consumer into choosing the middle
choice and thus, the middle choice should yield the 2) Difficult Comparison Effect

most profit to the seller, since it is the most chosen Buyers are less sensitive to the price of a known /

option. more reputable product when they have difficulty

comparing it to potential alternatives.
Demand-based pricing is any pricing method that
uses consumer demand - based on perceived value 3) Switching Costs Effect

- as the central element. These include : price The higher the product-specific investment a buyer

skimming, price discrimination and yield must make to switch suppliers, the less price

management, price points, psychological sensitive that buyer is when choosing between

pricing, bundle pricing, penetration pricing, price alternatives.

lining, value-based pricing, geo and premium 4) Price-Quality Effect

pricing. Pricing factors are manufacturing cost, Buyers are less sensitive to price the more that
market place, competition, market condition, quality higher prices signal higher quality. Products for
of product. which this effect is particularly relevant include:

Multidimensional pricing is the pricing of a product image products, exclusive products, and products

or service using multiple numbers. In this practice, with minimal cues for quality.

price no longer consists of a single monetary amount 5) Expenditure Effect

(e.g., sticker price of a car), but rather consists of Buyers are more price sensitive when the expense
various dimensions (e.g., monthly payments, accounts for a large percentage of buyers’ available
number of payments, and a downpayment). income or budget.
Research has shown that this practice can
6) End-Benefit Effect
significantly influence consumers' ability to
The effect refers to the relationship a given purchase
understand and process price information [1]
has to a larger overall benefit, and is divided into two
parts: Pricing at the market level focuses on the
Derived demand: The more sensitive buyers are to competitive position of the price in comparison to the
the price of the end benefit, the more sensitive they value differential of the product to that of
will be to the prices of those products that contribute comparative competing products.
to that benefit.
Pricing at the transaction level focuses on managing
Price proportion cost: The price proportion cost
the implementation of discounts away from the
refers to the percent of the total cost of the end
reference, or list price, which occur both on and off
benefit accounted for by a given component that
the invoice or receipt.
helps to produce the end benefit (e.g., think CPU
and PCs). The smaller the given components share
of the total cost of the end benefit, the less sensitive
buyers will be to the component's price. Tactics
7) Shared-cost Effect
Micromarketing is the practice of tailoring products,
The smaller the portion of the purchase price buyers
brands (microbrands), and promotions to meet the
must pay for themselves, the less price sensitive
needs and wants of microsegmentswithin a market.
they will be.
It is a type of market customization that deals with
8) Fairness Effect pricing of customer/product combinations at the
Buyers are more sensitive to the price of a product store or individual level.
when the price is outside the range they perceive as
Pricing Mistakes
“fair” or “reasonable” given the purchase context.
Many companies make common pricing mistakes.
9) The Framing Effect
Bernstein's article "Supplier Pricing Mistakes"
Buyers are more price sensitive when they perceive
outlines several which include:
the price as a loss rather than a forgone gain, and
they have greater price sensitivity when the price is
 Weak controls on discounting
paid separately rather than as part of a bundle.[3]
 Inadequate systems for tracking competitor
Approaches selling prices and market share
 Cost-Up pricing
Pricing as the most effective profit lever. [4] Pricing
can be approached at three levels.The industry,  Price increases poorly executed

market, and transaction level.  Worldwide price inconsistensies

 Paying sales reps on dollar volume vs.
Pricing at the industry level focuses on the overall
addition of profitability measures
economics of the industry, including supplier price
changes and customer demand changes.

Product management
Product management is an organizational lifecycle Product management often serves an inter-
function within a company dealing with the planning disciplinary role, bridging gaps within the company
or forecasting or marketing of a product or products between teams of different expertise, most notably
at all stages of the product lifecycle. between engineering-oriented teams and business-
oriented teams. For example product managers
Product management (inbound focused) and product
often translate business objectives set for a product
marketing (outbound focused) are different yet
by Marketing or Sales into engineering
complementary efforts with the objective of
requirements. Conversely they may work to explain
maximizing sales revenues, market share, and profit
the capabilities and limitations of the finished product
margins. The role of product management spans
back to Marketing and Sales.
many activities from strategic to tactical and varies
based on the organizational structure of the Product planning
company. Product management can be a function
 Identifying new product candidates
separate on its own or a member of marketing or
 Gathering market requirements
engineering.
 Determine business-case and feasibility
While involved with the entire product lifecycle,
 Scoping and defining new products at high
product management's main focus is on drivingnew
level
product development. According to the Product
 Evangelizing new products within the
Development and Management Association
company
(PDMA), superior and differentiated new products -
 Building product roadmaps,
ones that deliver unique benefits and superior value
particularly Technology roadmaps
to the customer - is the number one driver of
 Working to a critical path and ensuring all
success and product profitability.[1]
products are produced on schedule
Aspects of product management
 Ensuring products are within price margins
Depending on the company size and history, product and up to spec
management has a variety of functions and roles.  Product Life Cycle considerations
Sometimes there is a product manager, and  Product differentiation
sometimes the role of product manager is held by  Detailed Product planning
others. Frequently there is Profit and Loss (P&L) Product marketing
responsibility as a key metric for evaluating product
manager performance. In some companies, the  Product positioning and outbound

product management function is the hub of many messaging

other activities around the product. In others, it is  Promoting the product externally with press,

one of many things that need to happen to bring a customers, and partners

product to market.  Bringing new products to market

 Monitoring the competition

Product life cycle management 1. costs are high

Product life cycle management is the succession 2. slow sales volumes to start
of strategies used by management and as 3. little or no competition -
a product goes through its product life cycle. The competitive manufacturers
conditions in which a product is sold changes over 1. Market watch for acceptance/segment
introduction
time and must be managed as it moves through its stage growth losses
succession of stages. 4. demand has to be created
Product life cycle 5. customers have to be prompted
to try the product
The product life cycle goes through multiple phases,
6. makes no money at this stage
involves many professional disciplines, and requires
many skills, tools and processes. Product life cycle 1. costs reduced due to

(PLC) has to do with the life of a product in the economies of scale

market with respect to business/commercial costs 2. sales volume increases

and sales measures; whereas product life cycle significantly
management (PLM) has more to do with managing 3. profitability begins to rise
2. Growth
descriptions and properties of a product through its stage 4. public awareness increases
development and useful life, mainly from a 5. competition begins to increase
business/engineering point of view. To say that a with a few new players in
product has a life cycle is to assert four things: establishing market
6. increased competition leads to
 that products have a limited life,
price decreases
 product sales pass through distinct stages,
3. Mature stage
each posing different challenges, opportunities, 1. costs are lowered as a result of

and problems to the seller, production volumes increasing

and experience curve effects
 profits rise and fall at different stages of
product life cycle, and 2. sales volume peaks and market
saturation is reached
 products require different marketing,
financial, manufacturing, purchasing, and human 3. increase in competitors

resource strategies in each life cycle stage. entering the market

4. prices tend to drop due to the
The different stages in a product life cycle are:
proliferation of competing
products
Stage Characteristics
 5. brand differentiation and industry, fast-food industry, petro-chemical industry,

feature diversification is are just a few that demonstrate a macro-

emphasized to maintain or environment that overall has not terminated even

increase market share while micro-entrants over time have come and gone.

6. Industrial profits go down Lessons of the product life cycle

(PLC)
1. costs become counter-optimal
2. sales volume decline or It is claimed that every product has a life period, it is
stabilize launched, it grows, and at some point, may die. A
4. Saturation
3. prices, profitability diminish fair comment is that - at least in the short term - not
and decline
stage 4. profit becomes more a all products or services die. Jeans may die, but
challenge of clothes probably will not. Legal services or medical
production/distribution services may die, but depending on the social and
efficiency than increased sales political climate, probably will not.

Even though its validity is questionable, it can offer a

Request for deviation useful 'model' for managers to keep at the back of

In the process of building a product following defined their mind. Indeed, if their products are in the

procedure, an RFD is a request for authorization, introductory or growth phases, or in that of decline, it

granted prior to the manufacture of an item, to perhaps should be at the front of their mind; for the

depart from a particular performance or design predominant features of these phases may be those

requirement of a specification, drawing or other revolving around such life and death. Between these

document, for a specific number of units or a specific two extremes, it is salutary for them to have that

period of time. vision of mortality in front of them.

Market identification However, the most important aspect of product life-

A "micro-market" can be used to describe cycles is that, even under normal conditions, to all

a Walkman, more portable, as well as individually practical intents and purposes they often do not exist

and privately recordable; and then Compact Discs (hence, there needs to be more emphasis on

("CDs") brought increased capacity and CD-R model/reality mappings). In most markets the

offered individual private recording...and so the majority of the major brands have held their position

process goes. The below section on the "technology for at least two decades. The dominant product life-

lifecycle" is a most appropriate concept in this cycle, that of the brand leaders which almost

context monopolize many markets, is therefore one of

continuity.
In short, termination is not always the end of the
cycle; it can be the end of a micro-entrant within the In the criticism of the product life cycle, Dhalla &

grander scope of a macro-environment. The auto Yuspeh state:

...clearly, the PLC is a dependent variable which is Another factor is that differing products would
determined by market actions; it is not an independent
possess different PLC "shapes". A fad product would
variable to which companies should adapt their marketing
programs. Marketing management itself can alter the hold a steep sloped growth stage, a short maturity
shape and duration of a brand's life cycle.[1] stage, and a steep sloped decline stage. A product
such as Coca Cola and Pepsi would experience
Thus, the life cycle may be useful as a description,
growth, but also a constant level of sales over a
but not as a predictor; and usually should be firmly
number of decades. It can probably be said that a
under the control of the marketer. The important
given product (or products collectively within an
point is that in many markets the product or brand
industry) may hold a unique PLC shape, and the
life cycle is significantly longer than the planning
typical PLC model can only be used as a rough
cycle of the organisations involved. Thus, it offers
guide for marketing management. This is why its
little practical value for most marketers. Even if the
called the product life cycle.
PLC (and the related PLM support) exists for them,
their plans will be based just upon that piece of the
curve where they currently reside (most probably in
Supply chain
the 'mature' stage); and their view of that part of it
will almost certainly be 'linear' (and limited), and will
not encompass the whole range from growth to
decline.

Limitations
An illustration of a company's supply chain; the arrows stand
The PLC model is of some degree of usefulness to for supplier-relationship management, internal SCM and
marketing managers, in that it is based on factual customer-relationship management[1] (cf. Chen/Paulraj, 2004)
assumptions. Nevertheless, it is difficult for
A supply chain is a system of organizations,
marketing management to gauge accurately where a
people, technology, activities, information and
product is on its PLC graph. A rise in sales per se is
resources involved in moving a product or service
not necessarily evidence of growth. A fall in
from supplier to customer. Supply chain activities
sales per se does not typify decline. Furthermore,
transform natural resources, raw materials and
some products do not (and to date, at the least, have
components into a finished product that is delivered
not) experienced a decline. Coca
to the end customer. In sophisticated supply chain
Cola and Pepsi are examples of two products that
systems, used products may re-enter the supply
have existed for many decades, but are still popular
chain at any point where residual value is recyclable.
products all over the world. Both modes of cola have
Supply chains link value chains.[2]
been in maturity for some years.
Supply chain modeling

A diagram of a supply chain. The black arrow represents the
flow of materials and information and the gray arrow
represents the flow of information and backhauls. The
elements are (a) the initial supplier, (b) a supplier, (c) a
manufacturer, (d) a customer, (e) the final customer.
There are a variety of supply chain models, which
address both the upstream and downstream sides.
The SCOR (Supply Chain Operations Reference)
model, developed by the Supply Chain Council,
measures total supply chain performance. It is a
process reference model for supply-chain
management, spanning from the supplier's supplier
to the customer's customer.[4] It includes delivery and
order fulfillment performance, production flexibility,
warranty and returns processing costs, inventory
and asset turns, and other factors in evaluating the
overall effective performance of a supply chain.
The Global Supply Chain Forum (GSCF) introduced
another Supply Chain Model. This framework [5] is
built on eight key business processes that are both
cross-functional and cross-firm in nature. Each
process is managed by a cross-functional team,
including representatives from logistics, production,
purchasing, finance, marketing and research and
development. While each process will interface with
key customers and suppliers, the customer
relationship management and supplier relationship
management processes form the critical linkages in
the supply chain.
The American Productivity & Quality Center (APQC)
Process Classification Framework (PCF) SM is a
high-level, industry-neutral enterprise process model
that allows organizations to see their business
processes from a cross-industry viewpoint. The PCF
was developed by APQC and its member companies
as an open standard to facilitate improvement
through process management and benchmarking,
regardless of industry, size, or geography. The PCF
organizes operating and management processes
into 12 enterprise level categories, including process
groups and over 1,000 processes and associated
activities.
Marketing plan
A marketing plan is a written document that details
the necessary actions to achieve one or more
marketing objectives. It can be for a product
or service, a brand, or a product line. Marketing
plans cover between one and five years. A
marketing plan may be part of an overall business
plan. Solid marketing strategy is the foundation of a
well-written marketing plan. While a marketing plan
contains a list of actions, a marketing plan without a
sound strategic foundation is of little use.
The marketing planning process
Marketing process be realised by the marketing mix
in step 4. The last step in the process is the
marketing controlling. In most organizations,
"strategic planning" is an annual process, typically
covering just the year ahead. Occasionally, a few
organizations may look at a practical plan which
stretches three or more years ahead.
To be most effective, the plan has to be formalized,
usually in written form, as a formal "marketing plan."
The essence of the process is that it moves from the
general to the specific, from the overall objectives of
the organization down to the individual action
plan for a part of one marketing program. It is also
an interactive process, so that the draft output of
each stage is checked to see what impact it has on
the earlier stages - and is amended.
Marketing planning aims and
objectives
Behind the corporate objectives, which in
themselves offer the main context for the marketing
plan, will lie the "corporate mission," which in turn
provides the context for these corporate objectives.
In a sales-oriented organization, the marketing
planning function designs incentive pay plans to not
only motivate and reward frontline staff fairly but also
to align marketing activities with corporate mission.
bn
This "corporate mission" can be thought of as a
definition of what the organization is, of what it does:
"Our business is …". This definition should not be
too narrow, or it will constrict the development of the
organization; a too rigorous concentration on the
view that "We are in the business of making meat-
scales," as IBM was during the early 1900s, might
have limited its subsequent development into other
areas. On the other hand, it should not be too wide
or it will become meaningless; "We want to make a
profit" is not too helpful in developing specific plans.
Abell suggested that the definition should cover
three dimensions: "customer groups" to be served,
"customer needs" to be served, and "technologies"
[1]
to be utilized  . Thus, the definition of IBM's
"corporate mission" in the 1940s might well have
been: "We are in the business of handling
accounting information [customer need] for the
larger US organizations [customer group] by means
of punched cards[technology]."
Perhaps the most important factor in successful
marketing is the "corporate vision." Surprisingly, it is
largely neglected by marketing textbooks, although
not by the popular exponents of corporate strategy -
indeed, it was perhaps the main theme of the book
by Peters and Waterman, in the form of their
"Superordinate Goals." "In Search of Excellence"
said: "Nothing drives progress like the imagination.
The idea precedes the deed." [2] If the organization in
general, and its chief executive in particular, has a
strong vision of where its future lies, then there is a
good chance that the organization will achieve a
strong position in its markets (and attain that future).
This will be not least because its strategies will be
consistent and will be supported by its staff at all
levels. In this context, all of IBM's marketing
activities were underpinned by its philosophy of
"customer service," a vision originally promoted by
the charismatic Watson dynasty. The emphasis at
this stage is on obtaining a complete and accurate
picture.
A "traditional" - albeit product-based - format for a
"brand reference book" (or, indeed, a "marketing
facts book") was suggested by Godley more than
three decades ago:
1. Financial data—Facts for this section will
come from management accounting,
costing and finance sections.
 2. Product data—From production, research
and development.
3. Sales and distribution data - Sales,
packaging, distribution sections.
4. Advertising, sales promotion, merchandising
data - Information from these departments.
5. Market data and miscellany - From market
research, who would in most cases act as a
source for this information. His sources of
data, however, assume the resources of a
very large organization. In
organizations they would be obtained from
a much smaller set of people (and not a few
of them would be generated by the
marketing manager alone).
The structure of the facts book will be designed to
match the specific needs of the organization, but one
simple format - suggested by Malcolm McDonald -
may be applicable in many cases. This splits the
material into three groups:
1. Review of the marketing environment. A
study of the organization's
customers, competitors and the overall
economic, political, cultural and technical
environment; covering developing trends,
as well as the current situation.
2. Review of the detailed marketing
activity. A study of
company's marketing mix; in terms of the 7
Ps - (see below)
3. Review of the marketing system. A study
of the marketing organization, marketing
research systems and the current marketing
objectives and strategies. The last of these
is too frequently ignored. The marketing
system itself needs to be regularly
questioned, because the validity of the
whole marketing plan is reliant upon the
accuracy of the input from this system, and
`garbage in, garbage out' applies with a
vengeance.
most  Portfolio planning. In
addition, the coordinated planning of the
individual products and services can
contribute towards the balanced
portfolio.
 80:20 rule. To achieve the
maximum impact, the marketing plan
must be clear, concise and simple. It
needs to concentrate on the 20 percent
of products or services, and on the 20
percent of customers, which will account
for 80 percent of the volume and 80
percent of the profit.
markets,  7 P's: Product, Place, Price
and Promotion, Physical Environment,
People, Process. The 7 P's can
sometimes divert attention from the
customer, but the framework they offer
can be very useful in building the action
the plans.
It is only at this stage (of deciding the marketing
objectives) that the active part of the marketing
planning process begins. This next stage in
marketing planning is indeed the key to the whole
marketing process.
The "marketing objectives" state just where the
company intends to be at some specific time in the
future.
James Quinn succinctly defined objectives in
general as: Goals (or objectives) state  what is to be
achieved and  when  results are to be accomplished,
but they do not state 'how' the results are to be
achieved.[3] They typically relate to what products (or
services) will be where in what markets (and must
be realistically based on customer behavior in those
markets). They are essentially about the match
between those "products" and "markets." Objectives
for pricing, distribution, advertising and so on are at
a lower level, and should not be confused with
marketing objectives. They are part of the marketing
strategy needed to achieve marketing objectives. To
be most effective, objectives should be capable of
measurement and therefore "quantifiable." This
measurement may be in terms of sales volume,
money value, market share, percentage penetration
of distribution outlets and so on. An example of such
a measurable marketing objective might be "to enter
the market with product Y and capture 10 percent of
the market by value within one year." As it is
quantified it can, within limits, be unequivocally
monitored, and corrective action taken as necessary.
The marketing objectives must usually be based,
above all, on the organization's financial objectives;
converting these financial measurements into the
related marketing measurements.He went on to
explain his view of the role of "policies," with which
strategy is most often confused: "Policies are rules
or guidelines that express the 'limits' within which
action should occur."Simplifying somewhat,
marketing strategies can be seen as the means, or
"game plan," by which marketing objectives will be
achieved and, in the framework that we have chosen
to use, are generally concerned with the 8 P's.
Examples are:
1. Price - The amount of money needed to buy
products
2. Product - The actual product
3. Promotion (advertising)- Getting the product
known
4. Placement - Where the product is located
5. People - Represent the business
6. Physical environment - The ambiance,
mood, or tone of the environment
7. Process - How do people obtain your
product
8. Packaging - How the product will be
protected
In principle, these strategies describe how the
objectives will be achieved. The 7 P's are a useful
framework for deciding how the company's
resources will be manipulated (strategically) to
achieve the objectives. It should be noted, however,
that they are not the only framework, and may divert
attention from the real issues. The focus of the
strategies must be the objectives to be achieved -
not the process of planning itself. Only if it fits the
needs of these objectives should you choose, as we
have done, to use the framework of the 7 P's.
The strategy statement can take the form of a purely
verbal description of the strategic options which
have been chosen. Alternatively, and perhaps more
positively, it might include a structured list of the
major options chosen.
Detailed plans and programs
At this stage, you will need to develop your overall
marketing strategies into detailed plans
program. Although these detailed plans may cover
each of the 7 P's, the focus will vary, depending
upon your organization's specific strategies. A
product-oriented company will focus its plans for the
7 P's around each of its products. A market or
geographically oriented company will concentrate on
each market or geographical area. Each will base its
plans upon the detailed needs of its customers, and
on the strategies chosen to satisfy these needs.
 Realistic - They should be achievable.
 Agreed - Those who are to implement them
and should be committed to them, and agree that
they are achievable. The resulting plans should
become a working document which will guide
the campaigns taking place throughout the
organization over the period of the plan. If the
marketing plan is to work, every exception to it
(throughout the year) must be questioned; and
the lessons learned, to be incorporated in the
next year's planning.

Again, the most important element is, indeed, that of

Content of the marketing plan
the detailed plans, which spell out exactly what
programs and individual activities will take place A marketing plan for a small business typically
over the period of the plan (usually over the next includes Small Business Administration Description
year). Without these specified - and preferably of competitors, including the level of demand for the
quantified - activities the plan cannot be monitored, product or service and the strengths and
even in terms of success in meeting its objectives.It weaknesses of competitors
is these programs and activities which will then
constitute the "marketing" of the organization over 1. Description of the product or service,

the period. As a result, these detailed marketing including special features

programs are the most important, practical outcome 2. Marketing budget, including the advertising

of the whole planning process. These plans must and promotional plan

therefore be: 3. Description of the business location,

including advantages and disadvantages for
 Clear - They should be an unambiguous marketing
statement of 'exactly' what is to be done. 4. Pricing strategy
 Quantified - The predicted outcome of each 5. Market Segmentation
activity should be, as far as possible, quantified, Medium-sized and large
so that its performance can be monitored. organizations
 Focused - The temptation to proliferate The main contents of a marketing plan are:[4]
activities beyond the numbers which can be
realistically controlled should be avoided. 1. Executive Summary

The80:20 Rule applies in this context too. 2. Situational Analysis

 3. Opportunities / Issue Analysis - SWOT  participants
Analysis  demographics
4. Objectives  psychographics
5. Strategy  buyer motivation and expectations
6. Action Program (the operational marketing  loyalty segments
plan itself for the period under review) 6. Current Situation - Internal
7. Financial Forecast  company resources
8. Controls  financial

In detail, a complete marketing plan typically  people

includes:[4]  time
 skills
1. Title page
 objectives
2. Executive Summary
 mission statement and
3. Current Situation - Macroenvironment[5]
vision statement
 economy
 corporate objectives
 legal
 financial objective
 government
 marketing objectives
 technology
 long term objectives
 ecological
 description of the basic
 sociocultural business philosophy
 supply chain  corporate culture
4. Current Situation - Market Analysis 7. Summary of Situation Analysis
 market definition  external threats
 market size  external opportunities
 market segmentation  internal strengths
 industry structure and strategic  internal weaknesses
groupings
 Critical success factors in the
 Porter 5 forces analysis industry
 competition and market share  our sustainable competitive
 competitors' strengths and advantage
weaknesses 8. Marketing research
 market trends  information requirements
[6]
5. Current Situation - Consumer Analysis   research methodology
 nature of the buying decision  research results
9. Marketing Strategy - Product[7]  break even analysis at various
 product mix prices

 product strengths and weaknesses 12. Marketing Strategy - promotion

 perceptual mapping  promotional goals

 product life cycle  promotional mix

management and new product  advertising reach, frequency, flights,
development theme, and media
 Brand name, brand image,  sales force requirements,
and brand equity techniques, and management
 the augmented product  sales promotion
 product portfolio analysis  publicity and public relations
 B.C.G. Analysis  electronic promotion (eg.: Web,
 contribution margin analysis or telephone)

 G.E. Multi Factoral analysis  word of mouth marketing (buzz)

 Quality Function  viral marketing

Deployment
10. Marketing
[9]
 - segmented marketing
and market share objectives
 by product,
 by customer segment,
 by geographical market,
 by distribution channel.
11. Marketing Strategy - Price
 pricing objectives
 pricing method (eg.: cost
demand based, or competitor indexing)
 pricing strategy (eg.: skimming, or
penetration)
 discounts and allowances
 price elasticity and
sensitivity
 price zoning
13. Marketing Strategy - Distribution
Strategy [8]  geographical coverage
actions  distribution channels
 physical distribution and logistics
 electronic distribution
14. Implementation
 personnel requirements
 assign responsibilities
 give incentives
 training on selling methods
plus,  financial requirements
 management information
systems requirements
 month-by-month agenda
 PERT or critical path
customer analysis
 monitoring results and benchmarks
 adjustment mechanism
 contingencies (What if's)
 15. Financial Summary model. Strategic Planning, including SWOT
 assumptions and SCAN analysis, has been the subject of much

 pro-forma monthly income research.

statement
 Strengths: attributes of the person or
 contribution margin analysis
company that are helpful to achieving
 breakeven analysis
the objective(s).
 Monte Carlo method
 Weaknesses: attributes of the person or
 ISI: Internet Strategic Intelligence
company that are harmful to achieving
16. Scenarios
the objective(s).
 Prediction of Future Scenarios
 Opportunities: external conditions that
 Plan of Action for each Scenario
are helpful to achieving the objective(s).
17. Appendix
 Threats: external conditions which could
 pictures and specifications of the do damage to the objective(s).
new product
Identification of SWOTs are essential because
 results from research already
subsequent steps in the process of planning for
completed
achievement of the selected objective may be
derived from the SWOTs.

SWOT analysis First, the decision makers have to determine

whether the objective is attainable, given the
SWOT analysis is a strategic planning method used
SWOTs. If the objective is NOT attainable a
to evaluate
different objective must be selected and the
the Strengths, Weaknesses, Opportunities,
process repeated.
and Threats involved in aproject or in
a business venture. It involves specifying the The SWOT analysis is often used

objective of the business venture or project and in academia to highlight and identify strengths,

identifying the internal and external factors that are weaknesses, opportunities and threats It is

favorable and unfavorable to achieving that particularly helpful in identifying areas for

objective. The technique is credited to Albert development

Humphrey, who led a convention at Stanford Matching and converting

University in the 1960s and 1970s using data
Another way of utilizing SWOT
from Fortune 500 companies.
is matching and converting.
A SWOT analysis must first start with defining a
desired end state or objective. A SWOT analysis
may be incorporated into the strategic planning
Matching is used to find competitive not state an objective are provided below
advantages by matching the strengths to under "Human Resources" and "Marketing."
opportunities. Internal and external factors
Converting is to apply conversion strategies to
The aim of any SWOT analysis is to identify
convert weaknesses or threats into strengths
the key internal and external factors that are
or opportunities.
important to achieving the objective. These
An example of conversion strategy is to find come from within the company's unique value
new markets. chain. SWOT analysis groups key pieces of

If the threats or weaknesses cannot be information into two main categories:

converted a company should try

 Internal factors –
to minimize or avoid them.[1]
The strengths and weaknesses internal
to the organization.
Evidence on the Use of SWOT
 External factors –
SWOT analysis may limit the strategies The opportunities and threats presented
considered in the evaluation. J. Scott by the external environment to the
Armstrong notes that "people who use SWOT organization. - Use
might conclude that they have done an a PEST orPESTLE analysis to help
adequate job of planning and ignore such identify factors
sensible things as defining the firm's objectives
The internal factors may be viewed as
or calculatingROI for alternate
strengths or weaknesses depending upon
strategies." [2] Findings from Menon et al.
their impact on the organization's
(1999) [3] and Hill and Westbrook (1997) [4] have
objectives. What may represent strengths
shown that SWOT may harm performance. As
with respect to one objective may be
an alternative to SWOT, Armstrong describes a
weaknesses for another objective. The
5-step approach alternative that leads to better
factors may include all of the 4P's; as well
corporate performance.[5]
as personnel, finance, manufacturing
These criticisms are addressed to an old capabilities, and so on. The external
version of SWOT analysis that precedes the factors may include macroeconomic
SWOT analysis described above under the matters, technological change, legislation,
heading "Strategic and Creative Use of SWOT and socio-cultural changes, as well as
Analysis." This old version did not require that changes in the marketplace or
SWOTs be derived from an agreed upon competitive position. The results are often
objective. Examples of SWOT analyses that do presented in the form of a matrix.
SWOT analysis is just one method of
categorization and has its own
weaknesses. For example, it may tend to
persuade companies to compile lists
rather than think about what is actually
important in achieving objectives. It also
presents the resulting lists uncritically and
without clear prioritization so that, for
The SWOT-landscape systematically
example, weak opportunities may appear
deploys the relationships between overall
to balance strong threats.
objective and underlying SWOT-factors and
It is prudent not to eliminate too quickly provides an interactive, query-able 3D
any candidate SWOT entry. The landscape.
importance of individual SWOTs will be
The SWOT-landscape grabs different
revealed by the value of the strategies it
managerial situations by visualizing and
generates. A SWOT item that produces
foreseeing the dynamic performance of
valuable strategies is important. A SWOT
comparable objects according to findings
item that generates no strategies is not
by Brendan Kitts, Leif Edvinsson and
important.
Tord Beding (2000).[6]
Use of SWOT Analysis
Changes in relative performance are
The usefulness of SWOT analysis is not continually identified. Projects (or other
limited to profit-seeking organizations. units of measurements) that could be
SWOT analysis may be used in any potential risk or opportunity objects are
decision-making situation when a desired highlighted.
end-state (objective) has been defined.
SWOT-landscape also indicates which
Examples include: non-profit
underlying strength/weakness factors that
organizations, governmental units, and
have had or likely will have highest
individuals. SWOT analysis may also be
influence in the context of value in use
used in pre-crisis planning and
(for ex. capital value fluctuations).
preventive crisis management. SWOT
analysis may also be used in creating a Corporate planning
recommendation during a viability study.
As part of the development of strategies
and plans to enable the organization to

SWOT - landscape analysis achieve its objectives, then that

organization will use a
 systematic/rigorous process known  Monitoring results – mapping against
as corporate planning. SWOT plans, taking corrective action which
alongside PEST/PESTLE can be used as may mean amending
a basis for the analysis of business and objectives/strategies.[8]
environmental factors.[7]
Marketing
 Set objectives – defining what the
In many competitor analyses, marketers
organization is going to do
build detailed profiles of each competitor in
 Environmental scanning
the market, focusing especially on their
 Internal appraisals of the
relative competitive strengths and
organization's SWOT, this needs to
weaknesses using SWOT analysis.
include an assessment of the
Marketing managers will examine each
present situation as well as a
competitor's cost structure, sources of
portfolio of products/services and an
profits, resources and competencies,
analysis of the product/service life
competitive positioning and product
cycle
differentiation, degree of vertical
 Analysis of existing strategies, this integration, historical responses to industry
should determine relevance from the developments, and other factors.
results of an internal/external appraisal.
Marketing management often finds it
This may include gap analysis which will
necessary to invest in research to
look at environmental factors
collect the data required to perform
 Strategic Issues defined – key factors
accurate marketing analysis.
in the development of a corporate plan
Accordingly, management often
which needs to be addressed by the
conducts market research
organization
(alternately marketing research) to
 Develop new/revised strategies –
obtain this information. Marketers
revised analysis of strategic issues may
employ a variety of techniques to
mean the objectives need to change
conduct market research, but some
 Establish critical success factors – the
of the more common include:
achievement of objectives and strategy
implementation  Qualitative marketing research, such as
 Preparation of operational, resource, focus groups
projects plans for strategy  Quantitative marketing research, such
implementation as statistical surveys
  Experimental techniques such as test
markets
Environmental scanning
 Observational techniques such as
ethnographic (on-site) observation Environmental scanning is a process of gathering,

 Marketing managers may also design analyzing, and dispensing information for tactical or

and oversee various environmental strategic purposes. The environmental scanning

scanning and competitive intelligence process entails obtaining both factual and subjective

processes to help identify trends and information on the business environments in which a

inform the company's marketing company is operating or considering entering.

analysis. There are three ways of scanning the business

Using SWOT to analyse the market position environment:

of a small management consultancy with

 Ad-hoc scanning - Short term, infrequent
specialism in HRM.[9]
examinations usually initiated by a crisis

Stren Weak Opport Threat  Regular scanning - Studies done on a

gths nesses unities s regular schedule (e.g. once a year)
 Continuous scanning (also called continuous
Reput Shorta Well Large learning) - continuous structured data collection
ation ge of establis consult
and processing on a broad range of
in consult hed ancies
market ants at position operati environmental factors
place operati with a ng at a
ng well minor Most commentators feel that in today's turbulent
level defined level
rather market business environment the best scanning method
than niche available is continuous scanning because this allows
partner
level the firm to act quickly, take advantage of
opportunities before competitors do and respond to
environmental threats before significant damage is
Expert Unable Identifie Other
ise at to deal d small done.
partne with market consult
r level multi- for ancies Macro environment
in discipli consulta looking
HRM nary ncy in to Environmental scanning usually refers just to the
consul assign areas invade
tancy ments other the macro environment, but it can also include
becaus than market industry, competitor analysis, marketing
e of HRM place
size or research (consumer analysis), new product
lack of
development (product innovations) or the company's
ability
internal environment.
Macro environmental scanning involves analysing:  anti- monopoly laws

Economy  Sunday closing laws

 municipal licences
 GDP per capita  laws that favour business investment
 economic growth Technology
 unemployment]] rate
 inflation]] rate  efficiency of infrastructure, including: roads,
ports, airports, rolling stock, hospitals,
 consumer and investor confidence
education, healthcare, communication, etc.
 inventory levels
 industrial productivity
 currency exchange rates
 new manufacturing processes
 merchandise trade balance
 new products and services of competitors
 financial and political health of trading
 new products and services of supply chain
partners
partners
 balance of payments
 any new technology that could impact the
 future trends
Government company
 cost and accessibility of electrical power
 political climate - amount of government Ecology
activity
 ecological concerns that affect the firms
 political stability and risk
production processes
 government debt
 ecological concerns that affect customers'
 budget deficit or surplus
buying habits
 corporate and personal tax rates
 ecological concerns that affect customers'
 payroll taxes
perception of the company or product
 import tariffs and quotas Socio-cultural
 export restrictions
 restrictions on international financial flows  demographic factors such as:
 population size and distribution
Legal  age distribution
 education levels
 minimum wage laws
 income levels
 environmental protection laws
 ethnic origins
 worker safety laws
 religious affiliations
 union laws
 attitudes towards:
 copyright and patent laws
  materialism, capitalism,
enterprise
 individualism, role of family, role of
government, collectivism
 role of church and religion
 consumerism
 environmentalism
 importance of work, pride
accomplishment
 cultural structures including:
 diet and nutrition
 housing conditions
Potential suppliers
 Labour supply
 quantity of labour available
 quality of labour available
 stability of labour supply
 wage expectations
 employee turn-over rate
 strikes and labour relations
 educational facilities
 Material suppliers
 quality, quantity, price, and stability
of material inputs
 delivery delays
 proximity of bulky or heavy material
inputs
 level of competition among suppliers
 Service providers
 quantity, quality, price, and stability
of service facilitators
 special requirements
Stakeholders
free  Lobbyists
 Shareholders
 Employees
 Partners
Scanning these macro environmental variables for
threats and opportunities requires that each issue be
rated on two dimensions. It must be rated on its
of potential impact on the company, and rated on its
likeliness of occurrence. Multiplying the potential
impact parameter by the likeliness of occurrence
parameter gives a good indication of its importance
to the firm.
Responses
When an issue is detected, there are generally six
ways of responding to them:
 opposition strategy - try to influence the
environmental forces so as to negate their
impact - this is only successful where you have
some control over the environmental variable in
question
 adaptation strategy - adapt your marketing
plan to the new environmental conditions
 offensive strategy - try to turn the new
influence into an advantage - quick response
can give you a competitive advantage
 redeployment strategy - redeploy your
assets into another industry
 contingency strategies - determine a broad
range of possible reactions - find substitutes
 passive strategy - no response - study the
situation further
Porter five forces analysis serve its customers and make a profit. A change in
any of the forces normally, requires a business unit
to re-assess the marketplace given the overall
change in industry information. The overall industry
attractiveness does not imply that every firm in the
industry will return the same profitability. Firms are
able to apply their core competencies, business
model or network to achieve a profit above the
industry average. A clear example of this is the
airline industry. As an industry, profitability is low and
A graphical representation of Porter's Five Forces yet individual companies, by applying unique
business models, have been able to make a return
Porter's five forces is a framework for the industry
in excess of the industry average.
analysis and business strategy development
developed by Michael E. Porter of Harvard Business Porter's five forces include - three forces from

School in 1979. It uses concepts 'horizontal' competition: threat of substitute products,

developing, Industrial Organization (IO) the threat of established rivals, and the threat of new

economics to derive five forces that determine the entrants; and two forces from 'vertical' competition:

competitive intensity and therefore attractiveness of the bargaining power of suppliers and the bargaining

a market. Attractiveness in this context refers to the power of customers.

overall industry profitability. An "unattractive" This five forces analysis, is just one part of the
industry is one where the combination of forces acts complete Porter strategic models. The other
to drive down overall profitability. A very unattractive elements are the value chain and the generic
industry would be one approaching "pure strategies.
competition".
The Five Forces
Three of Porter's five forces refer to competition from
The threat of substitute products or
external sources. The remainders are internal
services
threats. It is useful to use Porter's five forces in
The existence of products outside of the realm of the
conjunction with SWOT
common product boundaries increases
analysis(Strengths, Weaknesses, Opportunities,
the propensity of customers to switch to alternatives:
and Threats).

Porter referred to these forces as the micro  Buyer propensity to substitute

environment, to contrast it with the more general  Relative price performance of substitute
term macro environment. They consist of those  Buyer switching costs
forces close to a company that affect its ability to  Perceived level of product differentiation
 Number of substitute products available in
the market
 Ease of substitution. Information-based
products are more prone to substitution, as
online product can easily replace material
product.
 Substandard product
 Quality depreciation
The threat of the entry of new
competitors
Profitable markets that yield high returns, will
draw firms. This results in many new entrants, which
eventually will decrease profitability. Unless the entry
of new firms can be blocked by incumbents, the
profit rate will fall towards a competitive level (perfect
competition).
 The existence of barriers to
entry (patents[1], rights, etc.)The most attractive
segment is one in which entry barriers are high
and exit barriers are low. Few new firms can
enter and non-performing firms can exit easily.
 Economies of product differences
 Brand equity
 Switching costs or sunk costs
 Capital requirements
 Access to distribution
 Customer loyalty to established brands
 Absolute cost advantages
 Learning curve advantages
 Expected retaliation by incumbents
 Government policies
 Industry profitability; the more profitable the
industry the more attractive it will be to new
competitors
The intensity of competitive rivalry
For most industries, the intensity of competitive
rivalry is the major determinant of the
competitiveness of the industry.
 Sustainable competitive
advantage through innovation.
 Competition between online and offline
companies; click-and-mortar -v- brick-and-
mortar
 Level of advertising expense.
 Powerful competitive strategy
 The visibility of proprietary items on the
Web.[1]
[2] used by a company which can intensify
competitive pressures on their rivals. How will
competition react to a certain behavior by another
firm? Competitive rivalry is likely to be based on
dimensions such as price, quality, and innovation.
Technological advances protect companies from
competition. This applies to products and services.
Companies that are successful with introducing new
technology, are able to charge higher prices and
achieve higher profits, until competitors imitate them.
Examples of recent technology advantage in have
been mp3 players and mobile telephones. Vertical
integration is a strategy to reduce a business' own
cost and thereby intensify pressure on its rival.
The bargaining power of customers  Supplier switching costs relative
(buyers)
to firm switching costs
The bargaining power of customers is also described  Degree of differentiation of inputs
as the market of outputs: the ability of customers to  Impact of inputs on cost or differentiation
put the firm under pressure, which also affects the  Presence of substitute inputs
customer's sensitivity to price changes.
 Supplier concentration to firm concentration
ratio
 Buyer concentration to firm concentration
 Employee solidarity (e.g. labor unions)
ratio
 Supplier competition - ability to forward
 Degree of dependency upon existing
vertically integrate and cut out the buyer
channels of distribution
 Bargaining leverage, particularly in
New product development
industries with high fixed costs In business and engineering, new product
 Buyer volume development (NPD) is the term used to describe
 Buyer switching costs relative the complete process of bringing a newproduct or
to firm switching costs service to market. There are two parallel paths

 Buyer information availability involved in the NPD process: one involves the idea

 Ability to backward integrate generation, product design, and detail engineering;

 Availability of existing substitute products the other involves market research and marketing
analysis. Companies typically see new product
 Buyer price sensitivity
development as the first stage in generating and
 Differential advantage (uniqueness) of
commercializing new products within the overall
industry products
strategic process of product life cycle
 RFM Analysis
management used to maintain or grow their market
share.
The bargaining power of suppliers The process
The bargaining power of suppliers is also described
as the market of inputs. Suppliers of raw materials, 1. Idea Generation is often called the "fuzzy

components, labor, and services (such as expertise) front end" of the NPD process

to the firm can be a source of power over the firm,  Ideas for new products can be

when there are few substitutes. Suppliers may obtained from basic research using

refuse to work with the firm, or, e.g., charge a SWOT analysis (Strengths,

excessively high prices for unique resources. Weaknesses, Opportunities & Threats),
Market and consumer trends,
company's R&D department,
 competitors, focus groups, employees,  Will the product be
salespeople, corporate spies, trade profitable when manufactured and
shows, or Ethnographic discovery delivered to the customer at the
methods (searching for user patterns target price?
and habits) may also be used to get an 3. Concept Development and Testing
insight into new product lines or product  Develop the marketing and
features. engineering details
 Idea Generation or Brainstorming of  Investigate intellectual
new product, service, or store concepts property issues and
- idea generation techniques can begin search patent data bases
when you have done your  Who is the target market
OPPORTUNITY ANALYSIS to support and who is the decision maker in
your ideas in the Idea Screening the purchasing process?
Phase (shown in the next development  What product features must
step). the product incorporate?
2. Idea Screening  What benefits will the
 The object is to eliminate unsound product provide?
concepts prior to devoting resources to  How will consumers react to
them. the product?
 The screeners should ask several  How will the product be
questions: produced most cost effectively?
 Will the customer in  Prove feasibility through
the target market benefit from the virtual computer aided rendering,
product? and rapid prototyping
 What is the size and growth  What will it cost to produce
forecasts of the market it?
segment/target market?
 Testing the Concept by asking a
 What is the current or sample of prospective customers what
expected competitive pressure for they think of the idea. Usually
the product idea? via Choice Modelling.
 What are the industry sales 4. Business Analysis
and market trends the product idea
 Estimate likely selling price based
is based on?
upon competition and customer
 Is it technically feasible to feedback
manufacture the product?
  Estimate sales volume based upon  Produce and
size of market and such tools as place advertisements and
the Fourt-Woodlock equation other promotions
 Estimate profitability and breakeven  Fill the distribution pipeline with
point product
5. Beta Testing and Market Testing  Critical path analysis is most useful
 Produce a physical prototype or at this stage
mock-up 8. New Product Pricing
 Test the product (and its packaging)  Impact of new product on the entire
in typical usage situations product portfolio
 Conduct focus group customer  Value Analysis (internal & external)
interviews or introduce at trade show  Competition and alternative
 Make adjustments where necessary competitive technologies
 Produce an initial run of the product  Differing value segments (price,
and sell it in a test market area to value, and need)
determine customer acceptance  Product Costs (fixed & variable)
6. Technical Implementation  Forecast of unit volumes, revenue,
 New program initiation and profit
 Finalize Quality management These steps may be iterated as needed. Some steps
system may be eliminated. To reduce the time that the NPD
 Resource estimation process takes, many companies are completing
 Requirement publication several steps at the same time (referred to
 Publish technical as concurrent engineering or time to market).
communications such as data sheets Most industry leaders see new product development
 Engineering operations planning as a proactive process where resources are

 Department scheduling allocated to identify market changes and seize upon

 Supplier collaboration new product opportunities before they occur (in

 Logistics plan contrast to a reactive strategy in which nothing is

done until problems occur or the competitor
 Resource plan publication
introduces an innovation). Many industry leaders see
 Program review and monitoring
new product development as an ongoing process
 Contingencies - what-if planning
(referred to ascontinuous development) in which the
7. Commercialization (often considered post-
entire organization is always looking for
NPD)
opportunities.
 Launch the product
For the more innovative products indicated on the Rand), and a pictorial mark (Girl Scouts of the USA by Saul

diagram above, great amounts of uncertainty and Bass).

change may exist, which makes it difficult or

A brand is a name, sign, symbol, slogan or anything
impossible to plan the complete project before
that is used to identify and distinguish a
starting it. In this case, a more flexible approach may [1][
specific product, service, or business. A legally
be advisable.
protectedbrand name is called a proprietary name.

Concepts
Brand is the image of the product in the market.
Some people distinguish the psychological aspect of
a brand from the experiential aspect. The
experiential aspect consists of the sum of all points
of contact with the brand and is known as the brand
experience. The psychological aspect, sometimes
Brand
referred to as the brand image, is a symbolic
construct created within the minds of people and
consists of all the information and expectations
associated with a product or service.

People engaged in branding seek to develop or align

the expectations behind the brand experience,
creating the impression that a brand associated with
a product or service has certain qualities or
characteristics that make it special or unique. A
brand is therefore one of the most valuable elements
in an advertising theme, as it demonstrates what the
brand owner is able to offer in the marketplace. The
art of creating and maintaining a brand is
called brand management. Orientation of the whole
organization towards its brand is called brand
orientation.

Brand Awareness
Brand awareness refers to customers' ability to
recall and recognize the brand under different
Three famous logos: an abstract mark (Chase
conditions and link to the brand name,logo, jingles
Bank by Chermayeff & Geismar), a logotype (IBMby Paul
and so on to certain associations in memory. It helps A global brand is one which is perceived to reflect
the customers to understand to which product or the same set of values around the world.Global
service category the particular brand belongs to and brands transcend their origins and creates strong,
what products and services are sold under the brand enduring relationships with consumers across
name. It also ensures that customers know which of countries and cultures.
their needs are satisfied by the brand through its
Global Brands are brands which sold to international
products.(Keller)
markets. Examples of Global Brands include Coca-
Brand Salience Cola, McDonald's, Marlboro, Levi's etc.. These
Brand salience measures the awareness of the brands are used to sell the same product across
brand."To what extent is the brand top-of-mind and multiple markets, and could be considered
easily recalled or recognized? What types of cues or successful to the extent that the associated products
reminders are necessary?" (Keller) are easily recognizable by the diverse set of
consumers.
How do customers remember?

The tendency of a brand to be thought of in a buying

situation is known as “brand salience”. Brand Benefits of Global Branding
salience is “the propensity for a brand to be noticed
In addition to taking advantage of the outstanding
and/or thought of in buying situations” and the higher
growth opportunities, the following drives the
the brand salience the higher it’s market penetration
increasing interest in taking brands global:
and therefore its market share. Salience refers not to
•economies of scale (production and distribution)
what customers think about brands but to which
ones they think about. •lower marketing costs

Brands which come to mind on an unaided basis are •laying the groundwork for future extensions
likely to be the brands in a customer’s consideration worldwide
set and thus have a higher probability of being
•maintaining consistent brand imagery
purchased. Advertising weight and brand salience
•quicker identification and integration of innovations
are cues to customers indicating which brands are
(discovered worldwide)
popular, and customers have a tendency to buy
popular brands. Also, an increase in the salience of •preempting international competitors from entering
one brand can actually inhibit recall of other brands, domestic markets or locking you out of other
including brands that otherwise would be candidates geographic markets
for purchase.
•increasing international media reach (especially
with the explosion of the Internet) is an enabler
Global Brand
•increases in international business and tourism are market, however an interesting thing about local
also enablers brand is that the local branding is mostly done by

Global Brand Variables consumers then by the producers. Examples of

The following elements may differ from country to
country: •corporate slogan
•products and services
•product names
•product features
•positionings
•marketing mixes (including pricing, distribution,
media and advertising execution)
These differences will depend upon:
•language differences
•different styles of communication
•other cultural differences
•differences in category and brand development
•different consumption patterns
Local Brands in Sweden are Stomatol, Mijerierna
etc..[4] [5]
Brand name
The brand name is quite often used interchangeably
within "brand", although it is more correctly used to
specifically denote written or spoken linguistic
elements of any product. In this context a "brand
name" constitutes a type of trademark, if the brand
name exclusively identifies the brand owner as the
commercial source of products or services. A brand
owner may seek to protect proprietary rights in
relation to a brand name through trademark
registration. Advertising spokespersons have also
become part of some brands, for example:Mr.
Whipple of Charmin toilet tissue and Tony the
Tiger of Kellogg's. Local Baranding is usually done
by the consumers rather then the producers.
Types of brand names

•different competitive sets and marketplace Brand names come in many styles. [6] A few include:
conditions Acronym: A name made of initials such as UPS or
IBM
•different legal and regulatory environments
Descriptive: Names that describe a product benefit
•different national approaches to marketing (media,
or function like Whole Foods or Airbus
pricing, distribution, etc.)
Alliteration and rhyme: Names that are fun to say
Local Brand and stick in the mind like Reese's Pieces or Dunkin'
A brand that is sold and marketed (distributed and Donuts
promoted) in a relatively small and restricted Evocative: Names that evoke a relevant vivid image
geographical area. A local brand is a brand that can like Amazon or Crest
be found in only one country or region. It may be Neologisms: Completely made-up words like Wii or
called a regional brand if the area encompasses Kodak
more than one metropolitan market. It may also be a Foreign word: Adoption of a word from another
brand that is developed for a specific national language like Volvo or Samsung
Founders' names: Using the names of real people symbolizes the brand's differentiation from
like Hewlett-Packard or Disney competitors.
Geography: Many brands are named for regions
Brand identity is what the owner wants to
and landmarks like Cisco and Fuji Film
communicate to its potential consumers. However,
Personification: Many brands take their names
over time, a products brand identity may acquire
from myth like Nike or from the minds of ad execs
(evolve), gaining new attributes from consumer
like Betty Crocker
perspective but not necessarily from the marketing
The act of associating a product or service with a communications an owner percolates to targeted
brand has become part of pop culture. Most consumers. Therefore, brand associations become
products have some kind of brand identity, from handy to check the consumer's perception of the
common table salt to designer jeans. brand.[8]
A brandnomer is a brand name that
Brand identity needs to focus on authentic qualities -
has colloquially become a generic term for a product
real characteristics of the value and brand promise
or service, such as Band-Aid or Kleenex, which are
being provided and sustained by organisational
often used to describe any kind of adhesive bandage
and/or production characteristics[9][10].
or any kind of facial tissue respectively.

Brand identity
A product identity, or brand image are typically the Visual Brand Identity
attributes one associates with a brand, how the
brand owner wants the consumer to perceive the
brand - and by extension the branded company,
organization, product or service. The brand owner
will seek to bridge the gap between the brand image
and the brand identity. Effective brand names build a
connection between the brand personality as it is
perceived by the target audience and the actual
product/service. The brand name should be
conceptually on target with the product/service (what
the company stands for). Furthermore, the brand
name should be on target with the
brand demographic.[7] Typically, sustainable brand
names are easy to remember, transcend trends and
have positive connotations. Brand identity is
fundamental to consumer recognition and
The visual brand identity manual for Mobil Oil(developed even a range of subsidiary brands (such
by Chermayeff & Geismar), one of the first visual identities to as Cadbury Dairy Milk, Cadbury Flake or Cadbury
integrate logotype, icon, alphabet, color palette, and station Fingers in the United States).
architecture to create a comprehensive consumer brand
Individual branding
experience.
Each brand has a separate name (such as Seven-
The recognition and perception of a brand is highly Up, Kool-Aid or Nivea Sun (Beiersdorf)), which may
influenced by its visual presentation. A brand’s visual even compete against other brands from the same
identity is the overall look of its communications. company (for example, Persil, Omo, Surf
Effective visual brand identity is achieved by the and Lynx are all owned by Unilever).
consistent use of particular visual elements to create
Attitude branding and Iconic brands
distinction, such as specific fonts, colors, and
Attitude branding is the choice to represent a
graphic elements. At the core of every brand identity
larger feeling, which is not necessarily connected
is a brand mark, or logo. In the United States, brand
with the product or consumption of the product at
identity and logo design naturally grew out of the
all. Marketing labeled as attitude branding include
Modernist movement in the 1950’s and greatly drew
that of Nike, Starbucks, The Body Shop, Safeway,
on the principals of that movement – simplicity (Mies
and Apple Inc.. In the 2000 book No Logo,[12] Naomi
van der Rohe’s principle of "Less is more") and
Klein describes attitude branding as a "fetish
geometric abstraction. These principles can be
strategy".
observed in the work of the pioneers of the practice
of visual brand identity design, such as Paul "A great brand raises the bar -- it adds a greater sense of
purpose to the experience, whether it's the challenge to do
Rand, Chermayeff & Geismarand Saul Bass.
your best in sports and fitness, or the affirmation that the
Brand parity cup of coffee you're drinking really matters." - Howard
Schultz (president, CEO, and chairman of Starbucks)
Brand parity is the perception of the customers that
all brands are equivalent.[11]

Branding approaches
Company name
Often, especially in the industrial sector, it is just the
company's name which is promoted (leading to one
of the most powerful statements of "branding"; the
saying, before the company's downgrading, "No one
ever got fired for buying IBM").

In this case a very strong brand name (or company

name) is made the vehicle for a range of products
(for example, Mercedes-Benz or Black & Decker) or
The color, letter font and style of the Coca-Colaand Diet No-brand" branding
Coca-Cola logos in English were copied into Recently a number of companies have successfully
matching Hebrew logos to maintain brand identity in Israel.
pursued "No-Brand" strategies by creating

Iconic brands are defined as having aspects that packaging that imitates generic brandsimplicity.

contribute to consumer's self-expression and Examples include the Japanese company Muji,

personal identity. Brands whose value to consumers which means "No label" in English (from 無印良品 –

comes primarily from having identity value comes "Mujirushi Ryohin" – literally, "No brand quality

are said to be "identity brands". Some of these goods"), and the Florida company No-Ad

brands have such a strong identity that they become Sunscreen. Although there is a distinct Muji brand,

more or less "cultural icons" which makes them Muji products are not branded. This no-brand

iconic brands. Examples of iconic brands are: Apple strategy means that little is spent on advertisement

Inc., Nike and Harley Davidson. Many iconic brands or classical marketing and Muji's success is

include almost ritual-like behaviour when buying and attributed to the word-of-mouth, a simple shopping

consuming the products. experience and the anti-brand movement. [13][14][15] "No

brand" branding may be construed as a type of
branding as the product is made conspicuous
There are four key elements to creating iconic through the absence of a brand name.
brands (Holt 2004): Derived brands

1. "Necessary conditions" - The performance In this case the supplier of a key component, used

of the product must at least be ok preferably by a number of suppliers of the end-product, may

with a reputation of having good quality.
2. "Myth-making" - A meaningful story-telling
fabricated by cultural "insiders". These must
be seen as legitimate and respected by
consumers for stories to be accepted.
3. "Cultural contradictions" - Some kind of
mismatch between prevailing ideology and
emergent undercurrents in society. In other
words a difference with the way consumers
are and how they some times wish they
were.
4. "The cultural brand management process" -
Actively engaging in the myth-making
process making sure the brand maintains its
position as an icon.
wish to guarantee its own position by promoting that
component as a brand in its own right. The most
frequently quoted example is Intel, which secures its
position in the PCmarket with the slogan "Intel
Inside".
Brand extension
The existing strong brand name can be used as a
vehicle for new or modified products; for example,
many fashion and designer companies extended
brands into fragrances, shoes and accessories,
home textile, home decor, luggage, (sun-) glasses,
furniture, hotels, etc.
Mars extended its brand to ice cream, Caterpillar to
shoes and watches, Michelin to a restaurant
guide, Adidas and Puma to personal
hygiene. Dunlop extended its brand from tires to
other rubber products such as shoes, golf balls,
tennis racquets and adhesives.
There is a difference between brand extension and
line extension. A line extension is when a current
brand name is used to enter a new market segment
in the existing product class, with new varieties or
flavors or sizes. When Coca-Cola launched "Diet
Coke" and "Cherry Coke" they stayed within the
originating product category: non-alcoholic
carbonated beverages. Procter & Gamble (P&G) did
likewise extending its strong lines (such as Fairy
Soap) into neighboring products (Fairy Liquid and
Fairy Automatic) within the same category, dish
washing detergents.
Individual brand names naturally allow greater
flexibility by permitting a variety of different products,
of differing quality, to be sold without confusing the
consumer's perception of what business the
company is in or diluting higher quality products.
Once again, Procter & Gamble is a leading exponent
of this philosophy, running as many as ten detergent
brands in the US market. This also increases the
total number of "facings" it receives on supermarket
shelves. Sara Lee, on the other hand, uses it to keep
the very different parts of the business separate —
from Sara Lee cakes through Kiwi polishes to L'Eggs
pantyhose. In the hotel business, Marriottuses the
name Fairfield Inns for its budget chain
(and Ramada uses Rodeway for its own cheaper
hotels).

Cannibalization is a particular problem of a

Multi-brands "multibrand" approach, in which the new brand takes

Alternatively, in a market that is fragmented amongst business away from an established one which the

a number of brands a supplier can choose organization also owns. This may be acceptable

deliberately to launch totally new brands in apparent (indeed to be expected) if there is a net gain overall.

competition with its own existing strong brand (and Alternatively, it may be the price the organization is

often with identical product characteristics); simply to willing to pay for shifting its position in the market;

soak up some of the share of the market which will the new product being one stage in this process.

in any case go to minor brands. The rationale is that Private labels

having 3 out of 12 brands in such a market will give
With the emergence of strong retailers, private
a greater overall share than having 1 out of 10 (even
label brands, also called own brands, or store
if much of the share of these new brands is taken
brands, also emerged as a major factor in the
from the existing one). In its most extreme
marketplace. Where the retailer has a particularly
manifestation, a supplier pioneering a new market
strong identity (such as Marks & Spencer in
which it believes will be particularly attractive may
the UK clothing sector) this "own brand" may be able
choose immediately to launch a second brand in
to compete against even the strongest brand
competition with its first, in order to pre-empt others
leaders, and may outperform those products that are
entering the market.
not otherwise strongly branded.
Individual and Organizational Brands
There are kinds of branding that treat individuals and
organizations as the "products" to be
branded. Personal branding treats persons and their
careers as brands. The term is thought to have been
first used in a 1997 article by Tom Peters.[16] Faith
branding treats religious figures and organizations
as brands. Religious media expert Phil Cooke has
written that faith branding handles the question of
how to express faith in a media-dominated culture.
[17]
 Nation branding works with the perception and
reputation of countries as brands.
Brand building tools
There are various tools used by the marketers to
build their brands. In early days, TV advertisement
was the most effective brand building tool.there were
very few TV channels and people watched movies
and ads with equal interest. Nowadays, most of the
viewers are ignoring the ads. In fact, many more are
simply not watching TV or switched to internet and
other recreational activities.So the major challenge
to the marketers is to use effective tools, in order to
attract the attention of the consumers to their
brands.
some of the important brand building tools are:
1.Public relations 2.Press releases 3.Sponsorships
4.Corporate websites 5.Exhibitions 6.Event
marketing 7.Public facilities 8.Online advertisements
9.broadcast media
Brand equity
Brand equity refers to the marketing effects or
outcomes that accrue to a product with its brand
name compared with those that wouldaccrue if the
same product did not have the brand name [1][2][3][4].
And, at the root of these marketing effects is
consumers' knowledge. In other words, consumers'
knowledge about a brand makes
manufacturers/advertisers respond differently or
adopt appropriately adept measures for the
marketing of the brand [5][6]. The study of brand
equity is increasingly popular as some marketing
researchers have concluded that brands are one of
the most valuable assets that a company has [7].
Brand equity is one of the factors which can increase
the financial value of a brand to the brand owner,
although not the only one [8].
Measurement
There are many ways to measure a brand. Some
measurements approaches are at the firm level,
some at the product level, and still others are at
the consumer level.
Firm Level: Firm level approaches measure the
brand as a financial asset. In short, a calculation is
made regarding how much the brand is worth as
an intangible asset. For example, if you were to take
the value of the firm, as derived by its market
capitalization - and then subtract tangible assets and
"measurable" intangible assets- the residual would
be the brand equity.[7] One high profile firm level
approach is by the consulting firm Interbrand. To do
its calculation, Interbrand estimates brand value on
the basis of projected profits discounted to a present
value. The discount rate is a subjective rate
determined by Interbrand and Wall Street equity
specialists and reflects the risk profile, market
leadership, stability and global reach of the brand [9].
Product Level: The classic product level brand
measurement example is to compare the price of a
no-name or private label product to an "equivalent"
branded product. The difference in price, assuming
all things equal, is due to the brand [10]. More recently
a revenue premium approach has been
advocated [4].
Consumer Level: This approach seeks to map the
mind of the consumer to find out what associations
with the brand that the consumer has. This approach
seeks to measure the awareness (recall and
recognition) and brand image (the overall
associations that the brand has). Free association
tests and projective techniques are commonly used
to uncover the tangible and intangible attributes,
attitudes, and intentions about a brand [5]. Brands
with high levels of awareness and strong, favorable
and unique associations are high equity brands[5].
All of these calculations are, at best, approximations.
A more complete understanding of the brand can
occur if multiple measures are used.
Positive brand equity vs. negative
brand equity
A brand equity is the positive effect of the brand on
the difference between the prices and that the
consumer accepts to pay when the brand known
compared to the value of the benefit received.
There are two schools of thought regarding the
existence of negative brand equity. One perspective
states brand equity cannot be negative,
hypothesizing only positive brand equity is created
by marketing activities such as advertising, PR, and
promotion. A second perspective is that negative
equity can exist, due to catastrophic events to the
brand, such as a wide product recall or continued
negative press attention (Blackwater or Haliburton,
for example).
Colloquially, the term "negative brand equity" may
be used to describe a product or service where an
brand has a negligible effect on a product level when
compared to a no-name or private label product. The
brand-related negative intangible assets are called
“brand liability”, compared with “brand equity” [11].
Family branding vs. individual
branding strategies
The greater a company's brand equity, the greater
the probability that the company will use a family
branding strategy rather than anindividual
branding strategy. This is because family branding
allows them to leverage the equity accumulated in
the core brand. Aspects of brand equity includes:
brand loyalty, awareness, association, and
perception of quality .
Product (business)
The noun product is defined as a "thing produced
by labor or effort"[1] or the "result of an act or a
process"[2], and stems from the verbproduce, from
the Latin prōdūce(re) '(to) lead or bring forth'. Since
1575, the word "product" has referred to anything
produced[3]. Since 1695, the word has referred to
"thing or things produced". The economic or
commercial meaning of product was first used by
political economist Adam Smith[4]
In marketing, a product is anything that can be
offered to a market that might satisfy a want or
need[5]. In retailing, products are calledmerchandise.
In manufacturing, products are purchased as raw
materials and sold as finished
goods. Commodities are usually raw materials such
as metals and agricultural products, but a commodity
can also be anything widely available in the open
market. In project management, products are the
formal definition of the project deliverables that make
up or contribute to delivering the objectives of the
project.
In general usage, product may refer to a single item
or unit, a group of equivalent products, a grouping of
goods or services, or an industrial classification for
the goods or services.
A related concept is subproduct, a secondary but
useful result of a production process.
Product groups
Tangible and Intangible Products
Products can be classified as tangible or
intangible. [6] A tangible product is any physical
product that can be touched like a computer,
automobile, etc. An intangible product is a non-
physical product like an insurance policy.
In its online product catalog, retailer Sears, Roebuck
and Company divides its products into departments,
then presents products to shoppers according to (1)
function or (2) brand.[7] Each product has a Sears
item number and a manufacturer's model number.
The departments and product groupings that Sears
uses are intended to help customers browse
products by function or brand within a
traditional department store structure.[8]
Sizes and colors
A catalog number, especially for clothing, may group
sizes and colors. When ordering the product, the
customer specifies size, color and other variables.
[9]
 example: you walk into a store and see a group of
shoes and in that group are sections of different
colors of that type of shoe and sizes for that shoe to
satisfy your need.
Product line
A product line is "a group of products that are closely
related, either 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."[10]
Many businesses offer a range of product lines
which may be unique to a single organization or may
be common across the business's industry. In 2002
the US Census compiled revenue figures for the
finance and insurance industry by various product
lines such as "accident, health and medical
insurance premiums" and "income from secured
consumer loans".[11] Within the insurance industry,
product lines are indicated by the type of risk
coverage, such as auto insurance, commercial
insurance and life insurance.[12]
National and international product Pricing objectives
classifications
Pricing objectives or goals give direction to the
Various classification systems for products have whole pricing process. Determining what your
been developed for economic statistical purposes. objectives are is the first step in pricing. When
The North American Industry Classification deciding on pricing objectives you must consider: 1)
System (NAICS) classifies companies by their the overall financial, marketing, and strategic
primary product [this is not even close to true, objectives of the company; 2) the objectives of your
NAICS is a production-oriented classification product or brand; 3) consumer price
system, not a product-oriented classification system elasticity and price points; and 4) the resources you
--- the NAFTA signatories are working on a system have available.
that classifies products called NAPCS as a
Some of the more common pricing objectives are:
companion to
NAICS http://www.census.gov/eos/www/napcs/napc  maximize long-run profit
s.htm.]. The European Union uses a "Classification  maximize short-run profit
of Products by Activity" among other product
 increase sales volume (quantity)
classifications.[13] The United Nations also classifies
 increase monetary sales
products for international economic activity reporting.
 increase market share
[14]

 obtain a target rate of return on

[citation
The Aspinwall Classification System investment (ROI)
needed]
 (Leo Aspinwall, 1958) classifies and rates  obtain a target rate of return on sales
products based on five variables:
 stabilize market or stabilize market price: an
objective to stabilize price means that the
1. Replacement rate (How frequently is the
marketing manager attempts to keep prices
product repurchased?)
stable in the marketplace and to compete on
2. Gross margin (How much profit is obtained
non-price considerations. Stabilization of margin
from each product?)
is basically a cost-plus approach in which the
3. Buyer goal adjustment (How flexible are the
manager attempts to maintain the same margin
buyers' purchasing habits with regard to this
regardless of changes in cost.
product?)
 company growth
4. Duration of product satisfaction (How long
 maintain price leadership
will the product produce benefits for the
 desensitize customers to price
user?)
 discourage new entrants into the industry
5. Duration of buyer search behavior (How
 match competitors prices
long will consumers shop for the product?)
 encourage the exit of marginal firms from better than quantitative research at probing below
the industry the surface in order to understand what drives and
 survival motivates behaviour.

 avoid government investigation or Because of the low number of respondents involved

intervention and the idiosyncratic nature of some data collection
 obtain or maintain the loyalty and methods (e.g. unstructured interviews), findings from
enthusiasm of distributors and other sales qualitative marketing research should be applied to
personnel larger populations with caution. They are however,
 enhance the image of the firm, brand, very valuable for exploring an issue and are used by
or product almost all researchers at various points during large
 be perceived as “fair” by customers and research campaigns.
potential customers The main types of qualitative
 create interest and excitement about a research are
product
 discourage competitors from cutting prices  Depth Interviews
 use price to make the product “visible"  interview is conducted one-on-one,
 build store traffic and lasts between 30 and 60 minutes

 help prepare for the sale of the business  best method for in-depth probing of
(harvesting) personal opinions, beliefs, and values

 social, ethical, or ideological objectives  very rich depth of information

 get competitive advantage  very flexible

Qualitative marketing research  probing is very useful at uncovering
hidden issues
Qualitative marketing research is a set of research
techniques, used in marketing and the social  they are unstructured (or loosely

sciences, in which data is obtained from a relatively structured)- this differentiates them

small group of respondents and not analyzed from survey interviews in which the same

with inferential statistics. This differentiates it from questions are asked to all respondents

quantitative analyzed for statistical significance.  can be time consuming and

responses can be difficult to interpret
The role of qualitative research
 requires skilled interviewers -
Qualitative research tools are used primarily to expensive - interviewer bias can easily be
define a problem and generate hypotheses. They introduced
are often used as the prelude to quantitative
research in order to identify determinants, and
develop quantitative research designs. They can be
  there is no social pressure on
respondents to conform and no group
dynamics
 start with general questions and
rapport establishing questions, then proceed
to more purposive questions
 laddering is a technique used by
depth interviewers in which you start with
questions about external objects and
external social phenomena, then proceed to
internal attitudes and feelings
 hidden issue questioning is
technique used by depth interviewers in
which they concentrate on deeply felt
personal concerns and pet peeves
 symbolic analysis is a technique
used by depth interviewers in which deeper
symbolic meanings are probed by asking
questions about their opposites
 Focus Groups
 an interactive group discussion lead
by a moderator
 unstructured (or loosely structured)
discussion where the moderator encourages
the free flow of ideas
 usually 8 to 12 members in the
group who fit the profile of the target group
or consumer but may consist of two
interviewees (a dyad) or three interviewees
(a triad) or a lesser number of participants
(known as a mini-group)
 usually last for 1 to 2 hours
 usually recorded on video/DVD
 may be streamed via a closed
streaming service for remote viewing of the
proceedings
 the room usually has a large window
with one-way glass - participants cannot see
out, but the researchers can see in
 inexpensive and fast
 can use computer and internet
technology for on-line focus groups
 respondents feel a group pressure
to conform
a  group dynamics is useful in
developing new streams of thought and
covering an issue thoroughly
 see  focus group for a more detailed
description
 Projective Techniques
 these are unstructured prompts or
stimulus that encourage the respondent to
project their underlying motivations, beliefs,
attitudes, or feelings onto an ambiguous
situation
 they are all indirect techniques that
attempt to disguise the purpose of the
research
 examples of projective techniques
include:
 word association - say the
first word that comes to mind after
hearing a word - only some of the words
in the list are test words that the
researcher is interested in, the rest are
fillers - is useful in testing brand names -
variants include chain word association
and controlled word association
  sentence completion - consumer behavior beyond basic age-
respondents are given incomplete gender variables.
sentences and asked to complete them  Examples of random sample
 story completion - interviewing include telephone interviewing,
respondents are given part of a story mailing-questionnaire's/booklets, personal
and are asked to complete it interviewing,
 cartoon tests - pictures of  Consumer response for this type of
cartoon characters are shown in a qualitaitve reserch could be product usage,
specific situation and with dialogue personal opinion, events and activities
balloons - one of the dialogue balloons consumers participate in.
is empty and the respondent is asked to  One key benefit of the random
fill it in probability sampling technique is the ability
 thematic apperception tests to project your results as they are reflected
- respondents are shown a picture (or back to or representitive of your universe.
series of pictures) and asked to make For example how many consumers in a city
up a story about the picture(s) are republican, democrat, independent, or
 role playing - respondents indiferent.
are asked to play the role of someone
else - researchers assume that subjects Newer Methods
will project their own feelings or
behaviours into the role  Observational Research
 third-person technique - a
One of the more fundamental uses of qualitative
verbal or visual representation of an
research is understanding fundamental consumer
individual and his/her situation is
behaviour through Observational research. The
presented to the respondent - the
roots for this come from Anthropological studies
respondent is asked to relate the
where trained researchers went to observe tribes /
attitudes or feelings of that person -
cultures / societies - for periods as long as a couple
researchers assume that talking in the
of years.
third person will minimize the social
Nowadays, this kind of research is being
pressure to give standard or politically
supplemented by more cutting edge fields like
correct responses
neuro-science where the observation is
 Random Probability Sampling
accompanied by measuring brain activity. This is
 This type of qualitative research
under the assumption that very often our brain
conducts random interviews within a defined
reacts without us even knowing it and asking
universe, e.g. a city- to understand
questions or pure observation by themselves are not associations where membership is subject to
enough to really pinpoint what goes on.... compliance with industry standards.

Ethics in qualitative marketing

research
Loyalty marketing
Like all research involving human participants,
Loyalty marketing is an approach to marketing,
implementing qualitative marketing research raises
based on strategic management, in which a
ethical considerations. Some research designs
company focuses on growing and retaining existing
employ a very direct approach: they clearly disclose
customers through incentives. Branding,product
the objectives of the study, the organization that
marketing and loyalty marketing all form part of the
commissioned it, and utilize transparent questions.
customer proposition – the subjective assessment
Other designs conceal the study objectives and/or
by the customer of whether to purchase a brand or
the commissioning organization, or utilize questions
not based on the integrated combination of the value
that stymie participants' attempts to learn of the
they receive from each of these marketing
study design. [1]
disciplines.
Some researchers have ethical misgivings about the
The discipline of customer loyalty marketing has
deceit involved in some approaches. They argue
been around for many years, but expansions from it
that if disguised methods are used, all respondents
merely being a model for conducting business to
should, on completion, attend a debriefing session in
becoming a vehicle for marketing and advertising
which the true purpose of the research is given and
have made it omnipresent in consumer marketing
the reason for the deception explained.
organizations since the mid- to late-1990s. Some of
In commercial qualitative marketing research, ethical the newer loyalty marketing industry insiders, such
questions center on protecting the privacy of the as Fred Reichheld, have claimed a strong link
participant and the privacy of the research sponsor. between customer loyalty marketing and customer
For this reason, qualitative marketing research firms referral. In recent years, a new marketing discipline
are often employed to execute the research and called "customer advocacy marketing" has been
guard privacy throughout the process. Firms protect combined with or replaced "customer loyalty
the privacy of participants by promising that the data marketing." To the general public, many airline miles
collected will be presented to the sponsor either in programs, hotel frequent guest programs and credit
aggregate or in a format stripped of any personally card incentive programs are the most visible
identifiable information. Likewise, firms protect the customer loyalty marketing programs.[2]
privacy of sponsors by serving as a liaison between
the sponsor and the research participant, which
eliminates a situation that would otherwise invite
Loyalty marketing impact
much deceit. Further, most research firms join
Many loyalty programs have changed the way
consumers interact with the companies from which
they purchase products or services from and how
much consumers spend. Many consumers in the US
and Europe have become quite accustomed to the
rewards and incentives they receive by being a "card
carrying" member of an airline, hotel
rental program. In addition, research from Chris X.
Moloney shows that nearly 1/2 of all credit card
users in the US utilize a points-based rewards
program. [7]
In recent years, the competition for high income
customers has led many of these loyalty marketing
program providers to provide significant perks that
deliver value well beyond reward points or miles.
Both American's AAdvantage program
Starwood Hotels' Preferred Guest program have
received industry awards, called "Freddie Awards"
by Inside Flyer Magazine and its publisher Randy
Petersen for providing perks that customers value
highly. These perks have become as important to
point in his books that one can leverage the "power
of extension" to draw new customers.[8]
The rapid expansion of frequent-flyer programs is
due to the fact that loyalty marketing relies on the
earned loyalty of current customers to attract new
loyalty from future customers. Incentive programs
or car
that are exclusive must strike a balance between
increasing benefits for new customers over any
existing loyalty plan they are currently in and
keeping existing customers from moving to new
plans. Hallmark did this through devising a program
that directly rewarded customers not only for buying
merchandise and utilizing Hallmark.com, but gaining
additional benefits through referring their friends. [9]
The most recent loyalty marketing programs rely
and
on viral marketing techniques to spread word of
incentive and inducement programs through word of
mouth.
MARKETING ENVINORMENT:

many travelers as their reward miles according to

research.

Loyalty marketing and the loyalty

business model
The loyalty business model relies on training of
employees to achieve a specific paradigm: quality of
product or service leads to customer satisfaction,
which leads to customer loyalty, which leads to
profitability. Loyalty marketing is an extension of that
effort, relying upon word-of-mouth and advertising to
draw upon the positive experiences of those
exposed to loyalty business model inspired ventures
to attract new customers. Fred Reichheld makes the The marketing environment surrounds and
impacts upon the organization. There are
three key perspectives on the marketing
environment, namely the 'macro-
environment,' the 'micro-environment' and
the 'internal environment'.
The micro-environment
This environment influences the organization
directly. It includes suppliers that deal
directly or indirectly, consumers and
customers, and other local stakeholders. The internal environment.
Micro tends to suggest small, but this can be All factors that are internal to the
misleading. In this context, micro describes organization are known as the 'internal
the relationship between firms and the environment'. They are generally audited by
driving forces that control this relationship. It applying the 'Five Ms' which
is a more local relationship, and the firm may are Men, Money, Machinery,Materials
exercise a degree of influence. and Markets. The internal environment is as
The macro-environment important for managing change as the
This includes all factors that can influence external. As marketers we call the process of
and organization, but that are out of their managing internal change 'internal
direct control. A company does not generally marketing.'
influence any laws (although it is accepted Essentially we use marketing approaches to
that they could lobby or be part of a trade aid communication and change management.
organization). It is continuously changing, The external environment can be audited in
and the company needs to be flexible to more detail using other approaches such
adapt. There may be aggressive competition asSWOT Analysis, Michael Porter's Five
and rivalry in a market. Globalization means Forces Analysis or PEST Analysis.
that there is always the threat of substitute
products and new entrants. The wider
environment is also ever changing, and the PEST Analysis.
marketer needs to compensate for changes What is PEST Analysis?
in culture, politics, economics and It is very important that an organization
technology. considers its environment before beginning
the marketing process. In fact,
environmental analysis should be continuous
and feed all aspects of planning. The
organization's marketing environment is
made up of:
1. The internal environment e.g. staff (or
internal customers), office technology, wages
and finance, etc.
2. The micro-environment e.g. our external
customers, agents and distributors,
suppliers, our competitors, etc.
3. The macro-environment e.g. Political (and
legal) forces, Economic forces, Sociocultural
forces, and Technological forces. These are
known as PEST factors.
Political Factors.
The political arena has a huge influence upon
the regulation of businesses, and the
spending power of consumers and other
businesses. You must consider issues such
as:
1.How stable is the political environment?
2.Will government policy influence laws that
regulate or tax your business?
3.What is the government's position on
marketing ethics?
4. What is the government's policy on the
economy?
5. Does the government have a view on
culture and religion?
6. Is the government involved in trading
agreements such as EU, NAFTA, ASEAN, or
others?
Economic Factors.
Marketers need to consider the state of a
trading economy in the short and long-terms.
This is especially true when planning for
international marketing. You need to look at:
1. Interest rates.
2. The level of inflation Employment level per
capita.
3. Long-term prospects for the economy
Gross Domestic Product (GDP) per capita,
and so on.
Sociocultural Factors.
The social and cultural influences on business
vary from country to country. It is very
important that such factors are considered.
Factors include:
1.What is the dominant religion?
2.What are attitudes to foreign products and
services?
3.Does language impact upon the diffusion of
products onto markets?
4.How much time do consumers have for
leisure?
5.What are the roles of men and women
within society?
6.How long are the population living? Are the
older generations wealthy?
7.Do the population have a strong/weak
opinion on green issues?
Technological Factors.
Technology is vital for competitive
advantage, and is a major driver of
globalization. Consider the following points:
1. Does technology allow for products and
services to be made more cheaply and to a
better standard of quality?
2.Do the technologies offer consumers and
businesses more innovative products and
services such as Internet banking, new
generation mobile telephones, etc?
3.How is distribution changed by new
technologies e.g. books via the Internet,
flight tickets, auctions, etc?
4.Does technology offer companies a new
way to communicate with consumers e.g.
banners, Customer Relationship Management
(CRM), etc?
Primary - Marketing
Research.
Primary marketing research is collected
for the first time. It is original and collected
for a specific purpose, or to solve a specific
problem. It is expensive, and time
consuming, but is more focused than
secondary research. There are many ways to
conduct primary research. We consider some
of them:
1. Interviews
2. Mystery shopping
3. Focus groups
4. Projective techniques
5. Product tests
6. Diaries
7. Omnibus Studies
1.0 Interviews.
This is the technique most associated with
marketing research. Interviews can be
telephone, face-to-face, or over the Internet.
1.1 Telephone Interview.
Telephone ownership is very common in
developed countries. It is ideal for collecting
data from a geographically dispersed sample.
The interviews tend to be very structured
and tend to lack depth. Telephone interviews
are cheaper to conduct than face-to-face
interviews (on a per person basis).
Advantages of telephone interviews
 Can be geographically spread
 Can be set up and conducted relatively
cheaply
 Random samples can be selected
 Cheaper than face-to-face interviews
Disadvantages of telephone interviews
 Respondents can simply hang up
 Interviews tend to be a lot shorter
 Visual aids cannot be used
 Researchers cannot behavior or body
language
1.2 Face-to-face Interviews.
Face-to face interviews are conducted
between a market researcher and a
respondent. Data is collected on a survey.
Some surveys are very rigid or 'structured'
and use closed questions. Data is easily
compared. Other face-to-face interviews are
more 'in depth,' and depend upon more open
forms of questioning. The research will probe
and develop points of interest.
Advantages of face-to-face interviews
 They allow more 'depth'
 Physical prompts such as products and
pictures can be used
 Body language can emphasize responses
 Respondents can be 'observed' at the
same time
Disadvantages of face-to-face interviews
 Interviews can be expensive
 It can take a long period of time to
arrange and conduct.
 Some respondents will give biased
responses when face-to-face with a
researcher.
1.3 The Internet
The Internet can be used in a number of
ways to collect primary data. Visitors to sites
can be asked to complete electronic
questionnaires. However responses will
increase if an incentive is offered such as a
free newsletter, or free membership. Other
important data is collected when visitors sign
up for membership.
Advantages of the Internet
 Relatively inexpensive
 Uses graphics and visual aids
 Random samples can be selected
 Visitors tend to be loyal to particular
sites and are willing to give up time to
complete the forms
Disadvantages of the Internet
 Only surveys current, not potential
customers.
 Needs knowledge of software to set up
questionnaires and methods of processing
data
 May deter visitors from your website.
1.4 Mail Survey
In many countries, the mail survey is the
most appropriate way to gather primary
data. Lists are collated, or purchased, and a
predesigned questionnaire is mailed to a
sample of respondents. Mail surveys do not
tend to generate more than a 5-10%
response rate. However, a second mailing to
prompt or remind respondents tends to
improve response rates. Mail surveys are less
popular with the advent of technologies such
as the Internet and telephones, especially
call centers.
2.0 Mystery Shopping
Companies will set up mystery shopping
campaigns on an organizations behalf. Often
used in banking, retailing, travel, cafes and
restaurants, and many other customer
focused organizations, mystery shoppers will
enter, posing as real customers. They collect
data on customer service and the customer
experience. Findings are reported back to the
commissioning organization. There are many
issues surrounding the ethics of such an
approach to research.
3.0 Focus Groups.
Focus groups are made up from a number of
selected respondents based together in the
same room. Highly experienced researchers
work with the focus group to gather in depth
qualitative feedback. Groups tend to be
made up from 10 to 18 participants.
Discussion, opinion, and beliefs are
encouraged, and the research will probe into
specific areas that are of interest to the
company commissioning the research.
Advantages of focus groups
 Commissioning marketers often observe
the group from behind a one-way screen
 Visual aids and tangible products can be
circulated and opinions taken
 All participants and the research interact
 Areas of specific interest can be covered
in greater depth
Disadvantages of focus groups
 Highly experienced researchers are
needed. The are rare.
 Complex to organize
 Can be very expensive in comparison to
other methods
4.0 Projective techniques.
Projective techniques are borrowed from the
field of psychology. They will generate highly
subjective qualitative data. There are many
examples of such approaches including:
Inkblot tests - look for images in a series of
inkblots Cartoons - complete the 'bubbles' on
a cartoon series Sentence or story
completion Word association - depends on
very quick (subconscious) responses to
words Psychodrama - Imagine that you are a
product and describe what it is like to be
operated, warn, or used.
5.0 Product tests.
Product tests are often completed as part of
the 'test' marketing process. Products are
displayed in a mall of shopping center.
Potential customers are asked to visit the
store and their purchase behavior is
observed. Observers will contemplate how
the product is handled, how the packing is
read, how much time the consumer spends
with the product, and so on.
6.0 Diaries.
Diaries are used by a number of specially
recruited consumers. They are asked to
complete a diary that lists and records their
purchasing behavior of a period of time
(weeks, months, or years). It demands a
substantial commitment on the part of the
respondent. However, by collecting a series
of diaries with a number of entries, the
researcher has a reasonable picture of
purchasing behavior.
7.0 Omnibus Studies.
An omnibus study is where an organisation
purchases a single or a few questions on a
'hybrid' interview (either face-to-face or by
telephone). The organisation will be one of
many that simply want to a straightforward
answer to a simple question. An omnibus
survey could include questions from
companies in sectors as diverse as heath
care and tobacco. The research is far
cheaper, and commit less time and effort on market research, primary marketing
than conducting your own research. research andsecondary marketing research)
We have given a general introduction to
marketing research. Marketing research is a
huge topic area and has many processes,
procedures, and terminologies that build
Customer value proposition
upon the points above. (See also lesson In the field of marketing, a customer value
on market research, primary marketing
proposition consists of the sum total of benefits
research andsecondary marketing research)
which a vendor promises that a customer will
receive in return for the customer's associated
Secondary - Marketing
payment (or other value-transfer).
Research.
Secondary marketing research, or desk In the field of strategy, a value
research, already exist in one form or proposition identifies and prioritizes the set of
another. It is relatively cheap, and can be
vendor characteristics that are specifically intended
conducted quite quickly .However, it tends to
have been collected for reasons other than to attract customers and/or generate revenues.
for the problem or objective at hand. So it Hence, a value proposition elaborates on the generic
may be untargeted, and difficult to use to
strategy of a firm.
make comparisons (e.g. financial data gather
on Australian pensions will be different to Put simply, the value proposition is what the
data on Italian pensions). There are a customer can expect and/or actually gets for his
number of such sources available to the
money/time.
marketer, and the following list is by no
means conclusive: Accordingly, a customer can evaluate a company's
 Trade associations
value-proposition on two broad dimensions with
 National and local press Industry
magazines multiple subsets:
 National/international governments
 Websites 1. relative performance: what the customer
 Informal contacts gets from a specific vendor relative to a
 Trade directories
competitor's offering;
 Published company accounts
 Business libraries 2. price: which consists of the payment the
 Professional institutes and organisations customer makes to acquire
 Omnibus surveys
the product orservice; plus the access cost
 Previously gathered marketing research
 Census data The vendor-company's marketing and sales efforts
 Public records offer a customer value proposition; the vendor-
We have given a general introduction to
company's delivery and customer-service processes
marketing research. Marketing research is a
huge topic area and has many processes, then fulfill that value proposition.
procedures, and terminologies that build
upon the points above. (See also lesson
Value proposition as a marketing
tool
A value-proposition can assist in a firm's marketing
strategy, and may guide a business to target a
particular market segment.[1] Typically, there are
three ubiquitous elements in a value proposition:
Convince (who?), that (what?), because (why?). This
framework will structure your value proposition in a
cohesive manner that makes sense internally and
externally.[2]
Whether for a product, service or a company as a
whole, this formulation can allow a firm to see if its
competencies align with the segment that it plans to
target.
Examples
The value proposition of a retailer will reflect the
(relative) importance of the following: low prices,
consistent prices, range of product categories, range
of products/brands within a category, store locations
(convenience), store ambiance, staff amity, staff
expertise/knowledge, etc.
Company A has always[citation needed] aimed to increase
its market share and growing revenue by:
1. providing superior customer service
2. product differentiation
3. operational efficiency
A strategic analysis and planning document should
contain at least five elements:
1. current situation (including problems, causes
and effects)
2. target situation
3. when to reach the target situation
4. cost of reaching the target situation
and opportunity cost analysis
5. the benefits of both the targeting and the
achievement phases
this is something a marketeer has to bear in mind
when conducting the value proposition of the
company
Analyzing Consumer Markets and
Buying Behavior 
OVERVIEW:
In addition to a company’s marketing mix and
factors present in the external environment, a
buyer is also influenced by personal
characteristics and the process by which he/she
makes decisions. A buyer’s cultural
characteristics, including values, perceptions,
preferences, and behavior learned through
family or other key institutions, is the most
fundamental determinant of a person’s wants
and behavior. Consumer markets and consumer
buying behavior have to be understood before
sound marketing plans can be developed.
The consumer market buys goods and services
for personal consumption. It is the ultimate
market in the organization of economic
activities. In analyzing a consumer market, one
needs to know the occupants, the objects, and
the buyers' objectives, organization, operations,
occasions and outlets.
The buyer's behavior is influenced by four
major factors: cultural (culture, subculture, and
social class), social (reference groups, family,
and roles and statuses), personal (age and life
cycle state, occupation, economic
circumstances, lifestyle, and personality and
self-concept), and psychological (motivation,
perception, learning, and beliefs and attitudes).
All of these provide clues as to how to reach and  Understand the stages in the buying
serve buyers more effectively. decision process

Before planning its marketing, a company needs I. Major Factors Influencing Buyer
to identify its target consumers and their Behavior
decision processes. Although many buying A. Cultural Factors
decisions involve only one decision maker, 1. Culture - values,
some decisions may involve several perceptions, and
participants, who play such roles as initiator, preferences that are the
influencer, decider, buyer, and user. The most fundamental
marketer's job is to identify the other buying determinant of a person’s
participants, their buying criteria, and their wants and behavior.
influence on the buyer. The marketing program 2. Subcultures -
should be designed to appeal to and reach the nationalities, religions,
other key participants as well as the buyer. racial groups,
geographical regions
The amount of buying deliberateness and the 3. Social Class -
number of buying participants increase with the hierarchically ordered
complexity of the buying situation. Marketers divisions in a society;
must plan differently for four types of consumer members share similar
buying behavior: complex buying behavior, values, interests and
dissonance-reducing buying behavior, habitual behavior. (see Table 6-1)
buying behavior, and variety-seeking buying B. Social Factors
behavior. These four types are based on whether 1. Reference groups - all
the consumer has high or low involvement in groups that have an
the purchase and whether there are many or few influence on attitudes or
significant differences among the brands. behavior.
2. Family - the most
In complex buying behavior, the buyer goes influential primary
through a decision process consisting of need reference group.
recognition, information search, evaluation of 3. Roles and statuses -
alternatives, purchase decision, and activities a person is
postpurchase behavior. The marketer's job is to expected to perform and
understand the buyer's behavior at each state the status associated with
and what influences are operating. This each.
understanding allows the marketer to develop an C. Personal Factors
effective and efficient program for the target 1. Age and life cycle stage -
market. people buy different
goods over their lifetime.
LEARNING OBJECTIVES: 2. Occupation and
Economic circumstances
 Understand the major factors influencing -
consumer behavior a. blue collar v.
 Know and Recognize the types of white collar
buying decision behavior b. spending income,
savings and
 assets, debts, A. Buying Roles - five different
borrowing power, roles: initiator, influencer,
and attitude decider, buyer and user
toward spending B. Buying Behavior
versus saving --- 1. Complex buying behavior
all impacts - high involvement,
product choice. significant difference
3. Lifestyle - pattern of among brands
living as expressed by 2. Dissonance-reducing
activities, interests, buying behavior - high
opinions involvement, little or no
4. Personality and self- perceived difference
concept. - each person among brands. Purchase
has distinguishing is fairly quick.
psychological 3. Habitual buying behavior
characteristics that - low involvement, little
influence buying or no brand difference
behavior. 4. Variety-seeking buying
5. Psychological Factors behavior - low
a. Motivation - involvement but
correlated to the strength of a perceived significant
need (Freud, Maslow, brand differences. May
Herzberg) occur to relieve boredom.
b. Perception - selective C. The Stages in the Buying
attention, selective Decision Process
distortion, selective 1. Problem recognition -
retention difference between actual
c. Learning - state and desired state
changes in 2. Information search - both
behavior arising internal and external
from experience. sources
d. Beliefs and attitudes - a 3. Evaluation of alternatives
belief is a descriptive - different process for
thought a person every consumer, involves
holds about weighing product
something; an attitude attributes and their ability
is a person’s enduring to deliver benefits
favorable or 4. Purchase decision - form
unfavorable a preference and intention
evaluations, to buy. Actual purchase
emotional feelings, can be influenced further
and action tendencies by attitudes of others and
toward some object or unanticipated situational
idea. factors.
II. The Buying Decision Process 5. Postpurchase behavior -
satisfaction or
 dissatisfaction will lead to influence consumer 
subsequent behavior that     family - orientation(past) 
can have both positive                     procreation(future) 
and negative effects.
    roles & status 

Personal 
    age and life cycle - family and
Analyzing Consumer Markets & Buying
psychological life cycle 
Behavior 
    occupation 
    economic circumstances 
marketing stimuli      lifestyle - person's pattern of living as
    4 P's  expressed in activities, interests, &
    other stimuli opinions 
    personality - psychological
buyers characteristics  characteristics that lead to consistent and
buyer's decision process enduring responses 
     self-concept - self image 
buyer's decision 

Psychological 
    motivation - Freud, Maslow, Herzberg 
Major Factors Influencing Consumer     perception - process by which person
Behavior  selects, organizes, and interprets 
    Cultural                          information to create
    Social  meaningful picture of world 
    Personal     learning - change by experience 
    Psychological      beliefs - thought that person hold about
something 
Cultural       attitudes - enduring evaluations,
    culture - set of values, perceptions, feelings, and tendencies toward object or
preferences, & behaviors  idea 
    subculture - includes nationalities,
religions, racial groups, & geographical
regions  The Buying Decision Process 
    social class - reflects income,     roles 
occupation, education, & residence         initiator 
(uppers, middle, working, lowers)          influencer 
        decider 
        buyer 
Social          user 
    reference groups - all groups that
     external stimuli 
Buying Decision Process     bakery, new car, ad 

Buying Behavior
Information Search 
complex- hi involvement     active 
        sources - personal 
hi brand differentiation         commercial 
        public 
Ex. - computer         experiential 
 information sets 
dissonance reducing -hi involvement         total 
        awareness 
low brand differentiation
        consideration 
        choice 
Ex. - carpet
            DECISION 
habitual- low involvement

low brand differentiation Evaluation 

    need 
Ex. - salt     benefits 
    attributes 
variety- low involvement     brand beliefs 
    image 
hi brand differentiation

Ex. - cookies  Purchase Decision 

    purchase intention 
    attitude of others 
    unanticipated situational factors 
Stages of Buying Decision Process      purchase decision
    problem recognition 
    information search      decisions 
    evaluation of alternatives          brand 
    purchase decision          vendor 
    postpurchase behavior          quantity 
        time 
        payment
Problem Recognition 
    internal stimuli  Postpurchase Decision 
    hunger, thirst, sex      satisfaction 
    actions  Procter & Gamble markets a fairly wide product mix
    use and disposal  consisting of many product lines, including paper,
food, household cleaning, medicinal, cosmetics, and
personal care products. Product mix length refers to
the total number of items the company carries
Use or Dispose within its product lines. Procter & Gamble typically
carries many brands within each line. For example,
Dispose  it sells eleven laundry detergents, eight hand soaps,
six shampoos, and four dishwashing detergents.
    temporary/permanent
Product line depth refers to the number of versions
Keep  offered of each product in the line. Thus, Procter &
    use as intended  Gamble’s Crest toothpaste comes in three sizes and
    use in another way  two formulations (paste and gel). Finally, the
    store  consistency of the product mix refers to how closely
  related the various product lines are in end use,
production requirements, distribution channels, or
some other way. Procter & Gamble’s product lines
Product Mix & Product Line
are consistent insofar as they are consumer products
that go through the same distribution channels. The
Product Line lines are less consistent insofar as they perform
different functions for buyers.
A product line is a 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. For example, Nike produces
several lines of athletic shoes, Motorola produces Managing Product Lines & Brands 
several lines of telecommunications products, and
AT&T offers several lines of long-distance telephone
services.
Product - anything that may be offered to a
market to satisfy a want or need 
Product Mix     physical goods 
A product mix (or product assortment) consists of all
    services 
the product lines and items that a particular seller
    experiences 
offers for sale. Avon’s product mix consists of four     events 
major product lines: cosmetics, jewelry, fashions,     persons 
and household items. Each product line consists of     places 
several sublines.     properties 
    organizations 
A company’s product mix has four important
dimensions: width, length, depth, and consistency.
    information 
Product mix width refers to the number of different     ideas 
product lines the company carries. For example,
         installation, equipment 
Five product levels     supplies & business services 

hotel 
    core benefit - rest & sleep  Product Mix
    basic product - bed, bathroom, etc. 
    expected product - fresh towels, clean set of all product & items offered for sale
bed, etc. 
    augmented product - fresh flowers, etc.  width - how many diff. prod. lines
    potential product -  all-suite hotels 
length - total # of items in prod. mix

depth - varients offered in prod. line

Product Hierarchy 
    need family - security  consistency - how closely related are
    product family - savings & income  product lines in end use, prod., &
    product class - financial instruments  distribution 
    product line - life insurance 
    product type - term life 
    brand - Prudential 
Product line decisions 
    item - Prudential renewable term life
    sales & profits 
insurance 
    market profile 
    length 
Product Classifications

classified according to durability, Product line length 

    line stretching 
tangibility, and use 
        downward stretch 
        upward stretch 
        two way stretch 
Durable / Nondurable      line filling - Weber's law says that
    Service  customers will notice relative rather than
 Consumer Goods  absolute differences 
    convenience 
    shopping 
    specialty  Line modernization 
    unsought  Line featuring and Pruning
 Industrial 
    materials & parts 
Brand - a name, term, sign, symbol, or
    capital goods 
design, or combination of these, intended
to identify and differentiate a good or         multibrands 
service.          new brands 
    attribute          cobrands 
    benefits      Brand Repositioning 
    values 
    culture 
    personality 
    user  Packaging & Labeling Decisions 
packaging - activities of designing and
producing the container for a product
Brand Equity
Factors contributing to increased use of
based on awareness, acceptability, packaging as marketing tool 
preference, and loyalty      self service 
Coca-Cola has brand equity of $48     affluence 
billion!!!!      company and brand image 
    innovation opportunity

Branding Decisions
Labeling 
To brand or not to brand      identify 
    Brand sponsor - manufacturers,
    grade 
distributor, licensed 
        slotting fees      describe 
    Brand name - individuals, blanket     promote
family, separate family names, 
                            company name combined
with individual product name 
                desirable qualities 
                    suggest something about
benefits 
                    suggest product qualities such
as action or color 
                    easy to pronounce, recognize,
and remember 
                    distinctive 
                    not carry poor meanings in
other countries and languages 
    Brand strategy 
        line extensions 
        brand extensions