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Define Marketing. Distinguish product marketing and services marketing with suitable examples.
Marketing is an integrated communications-based process through which individuals and communities discover that existing and newly-identified needs and wants may be satisfied by the products and services of others. Marketing is defined by the American Marketing Association as the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.  The term developed from the original meaning which referred literally to going to market, as in shopping, or going to a market to buy or sell goods or services. The Chartered Institute of Marketing, which is the world's largest marketing body, defines marketing as "The management process responsible for identifying, anticipating and satisfying customer requirements profitably." Marketing practice tended to be seen as a creative industry in the past, which included advertising, distribution and selling. However, because marketing makes extensive use of social sciences, psychology, sociology, mathematics, economics, anthropology and neuroscience, the profession is now widely recognized a science, allowing numerous universities to offer Master-of-Science (MSc) programmes. The overall process starts with marketing research and goes through market segmentation, business planning and execution, ending with pre and post-sales promotional activities. It is also related to many of the creative arts. The marketing literature is also infamous for re-inventing itself and its vocabulary according to the times and the culture. Services marketing From Wikipedia, the free encyclopedia Jump to: navigation, search Services marketing is marketing based on relationship and value. It may be used to market a service or a product. Marketing a service-base business is different from marketing a goods-base business. There are several major differences, including: 1. 2. 3. 4. The buyer purchases are intangible The service may be based on the reputation of a single person It's more difficult to compare the quality of similar services The buyer cannot return the service
The major difference in the education of services marketing versus regular marketing is that instead of the traditional "4 P's," Product, Price, Place, Promotion, there are three additional "P's" consisting of People, Physical evidence, and Process. Service marketing also includes the servicewomen referring to but not limited to the aesthetic appearance of the business from the outside, the inside, and the general appearance of the employees themselves. Service Marketing has been relatively gaining ground in the overall spectrum of educational marketing as developed economies move farther away from industrial importance to service oriented economies. What is marketing? Marketing is the flow of goods and services from the producer to consumer. It is based on relationship and value. In common parlance it is the distribution and sale of goods and services. Marketing can be differentiated as:
Marketing of products Marketing of services.
Marketing includes the services of all those indulged may it be then the wholesaler retailer, Warehouse keeper, transport etc. In this modern age of competition marketing of a product or service plays a key role. It is estimated that almost 50% of the price paid for a commodity goes to the marketing of the product in
US. Marketing is now said to be a term which has no particular definition as the definitions change everyday. "Managing the evidence" refers to the act of informing customers that the service encounter has been performed successfully. It is best done in subtle ways like providing examples or descriptions of good and poor service that can be used as a basis of comparison. The underlying rationale is that a customer might not appreciate the full worth of the service if they do not have a good benchmark for comparisons. However, it is worth remembering that many of the concepts, as well as many of the specific techniques, will work equally well whether they are directed at products or services. In particular, developing a marketing strategy is much the same for products and services, in that it involves selecting target markets and formulating a marketing mix. Thus, Theodore Levitt suggested that "instead of talking of 'goods' and of 'services', it is better to talk of 'tangibles' and 'intangibles'". Levitt also went on to suggest that marketing a physical product is often more concerned with intangible aspects (frequently the `product service' elements of the total package) than with its physical . sales after service is very imporatant in service sector. properties. Charles Revson made a famous comment regarding the business of Revlon Inc.: `In the factory we make cosmetics. In the store we sell hope.' Arguably, service industry marketing merely approaches the problems from the opposite end of the same spectrum.
How would you reply to the small business person who says, “Marketing Research is too expensive, so the firm will just have to get by without it’?
In a world where perception is everything, businesses often think that professional Marketing Research is too expensive. Now, who can argue with perception, let alone Marketing budgets, most of them on shaky ground these days? In today’s economy, a business could easily argue against expensive luxury services like Marketing Research. Still, as I hear from business leaders about their woes in this time of fiscal crisis, my reaction is “expensive compared with what?” The Marketing Analysts offers a broad line of inexpensive marketing services that have traditionally been too costly for small, medium, and medium-large companies. Just like some of the world’s largest Marketing firms, we offer the same services that create, evaluate and strengthen brands. However, unlike other marketing firms, our predictive marketing research methodologies are superior and produce more reliable results. Further, we can offer prices that even small businesses can afford because we can capitalize on advanced technological and proprietary marketing software technologies that our competitors lack. The Marketing Analysts is a Marketing firm with offices in Dallas, Texas; Fort Myers, Florida; Sofia, Bulgaria; Cologne, Germany; Ismailia, Egypt and Moscow, Russia to provide one-stop, high quality, low cost solutions for your special marketing needs. Our Marketing Research competencies include measuring attitudes and behaviors to explain accurately and predict market share, revenue, and bottom line impact of a client’s actions. Our team of consultants has been successfully designing, executing and analyzing Marketing Research studies since 1996. We help our clients launch better products and services, attract and retain valuable customers, and build stronger brands. Whether you are looking for advice on how to optimize the development and launch of a new
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What are the steps in the consumer decision making process? Do all consumers decisions involve these steps.
Buyer decision processes are the decision making processes undertaken by consumers in regard to a potential market transaction before, during, and after the purchase of a product or service. More generally, decision making is the cognitive process of selecting a course of action from among multiple alternatives. Common examples include shopping, deciding what to eat. Decision making is said to be a psychological construct. This means that although we can never "see" a decision, we can infer from observable behaviour that a decision has been made. Therefore we conclude that a psychological event that we call "decision making" has occurred. It is a construction that imputes commitment to action. That is, based on observable actions, we assume that people have made a commitment to effect the action. In general there are three ways of analysing consumer buying decisions. They are:
Economic models - These models are largely quantitative and are based on the assumptions of rationality and near perfect knowledge. The consumer is seen to maximize their utility. See consumer theory. Game theory can also be used in some circumstances.
Psychological models - These models concentrate on psychological and cognitive processes such as motivation and need recognition. They are qualitative rather than quantitative and build on sociological factors like cultural influences and family influences.
Consumer behaviour models - These are practical models used by marketers. They typically blend both economic and psychological models.
Nobel laureate Herbert Simon sees economic decision making as a vain attempt to be rational. He claims (in 1947 and 1957) that if a complete analysis is to be done, a decision will be immensely complex. He also says that peoples' information processing ability is very limited. The assumption of a perfectly rational economic actor is unrealistic. Often we are influenced by emotional and non-rational considerations. When we try to be rational we are at best only partially successful. Models of buyer decision making In an early study of the buyer decision process literature, Frank Nicosia (Nicosia, F. 1966; pp 9-21) identified three types of buyer decision making models. They are the univariate model (He called it the "simple scheme".) in which only one behavioural determinant was allowed in a stimulus-response type of relationship; the multi-variate model (He called it a "reduced form scheme".) in which numerous independent variables were assumed to determine buyer behaviour; and finally the "system of equations" model (He called it a "structural scheme" or "process scheme".) in which numerous functional relations
(either univariate or multi-variate) interact in a complex system of equations. He concluded that only this third type of model is capable of expressing the complexity of buyer decision processes. In chapter 7, Nicosia builds a comprehensive model involving five modules. The encoding module includes determinants like "attributes of the brand", "environmental factors", "consumer's attributes", "attributes of the organization", and "attributes of the message". Other modules in the system include, consumer decoding, search and evaluation, decision, and consumption.  General model A general model of the buyer decision process consists of the following steps: 1. 2. 3. 4. 5. Problem recognition; Gathering Information Alternative education Purchase decision Post-purchase behavior/buyer's remorse (cognitive dissonance)
There are a range of alternative models, but that of AIUAPR, which most directly links to the steps in the marketing/promotional process is often seen as the most generally useful;
AWARENESS - before anything else can happen the potential customers must become aware that the product or service exists. Thus, the first task must be to gain the attention of the target audience. All the different models are, predictably, agreed on this first step. If the audience never hears the message, they will not act on it, no matter how powerful it is.
INTEREST - but it is not sufficient to grab their attention. The message must interest them and persuade them that the product or service is relevant to their needs. The content of the message(s) must therefore be meaningful and clearly relevant to that target audience's needs, and this is where marketing research can come into its own.
UNDERSTANDING - once an interest is established, the prospective customer must be able to appreciate how well the offering may meet his or her needs, again as revealed by the marketing research. This may be no small achievement where the copywriter has just fifty words, or ten seconds, to convey everything there is to say about it.
ATTITUDES - but the message must go even further; to persuade the reader to adopt a sufficiently positive attitude towards the product or service that he or she will purchase it, albeit as a trial. There is no adequate way of describing how this may be achieved. It is simply down to the magic of the copywriter's art, or based on the strength of the product or service itself.
PURCHASE - all the above stages might happen in a few minutes while the reader is considering the advertisement; in the comfort of his or her favourite armchair. The final buying decision, on the other hand, may take place some time later; perhaps weeks later, when the prospective buyer actually tries to find a shop which stocks the product.
REPEAT PURCHASE - but in most cases this first purchase is best viewed as just a trial purchase. Only if the experience is a success for the customer will it be turned into
repeat purchases. These repeats, not the single purchase which is the focus of most models, are where the vendors focus should be, for these are where the profits are generated. The earlier stages are merely a very necessary prerequisite for this! This is a very simple model, and as such does apply quite generally. Its lessons are that you cannot obtain repeat purchasing without going through the stages of building awareness and then obtaining trial use; which has to be successful. It is a pattern which applies to all repeat purchase products and services; industrial goods just as much as baked beans. This simple theory is rarely taken any further - to look at the series of transactions which such repeat purchasing implies. The consumer's growing experience over a number of such transactions is often the determining factor in the later - and future - purchases. All the succeeding transactions are, thus, interdependent - and the overall decision-making process may accordingly be much more complex than most models allow for.  Cognitive and personal biases in decision making It has been suggested that this article or section be merged into List of cognitive biases. (Discuss) It is generally agreed that biases can creep into our decision making processes, calling into question the correctness of a decision. Below is a list of some of the more common cognitive biases.
• • • • • • • • • • •
Selective search for evidence - We tend to be willing to gather facts that support certain conclusions but disregard other facts that support different conclusions. Premature termination of search for evidence - We tend to accept the first alternative that looks like it might work. Conservatism and inertia - Unwillingness to change thought patterns that we have used in the past in the face of new circumstances. Experiential limitations - Unwillingness or inability to look beyond the scope of our past experiences; rejection of the unfamiliar. Selective perception - We actively screen-out information that we do not think is salient. Wishful thinking or optimism - We tend to want to see things in a positive light and this can distort our perception and thinking. Recency - We tend to place more attention on more recent information and either ignore or forget more distant information. Repetition bias - A willingness to believe what we have been told most often and by the greatest number of different of sources. Anchoring - Decisions are unduly influenced by initial information that shapes our view of subsequent information. Group think - Peer pressure to conform to the opinions held by the group. Source credibility bias - We reject something if we have a bias against the person, organization, or group to which the person belongs: We are inclined to accept a statement by someone we like.
Incremental decision making and escalating commitment - We look at a decision as a small step in a process and this tends to perpetuate a series of similar decisions. This can be contrasted with zero-based decision making.
Inconsistency - The unwillingness to apply the same decision criteria in similar situations.
Attribution asymmetry - We tend to attribute our success to our abilities and talents, but we attribute our failures to bad luck and external factors. We attribute other's success to good luck, and their failures to their mistakes.
Role fulfillment - We conform to the decision making expectations that others have of someone in our position. Underestimating uncertainty and the illusion of control - We tend to underestimate future uncertainty because we tend to believe we have more control over events than we really do.
Faulty generalizations - In order to simplify an extremely complex world, we tend to group things and people. These simplifying generalizations can bias decision making processes.
Ascription of causality - We tend to ascribe causation even when the evidence only suggests correlation. Just because birds fly to the equatorial regions when the trees lose their leaves, does not mean that the birds migrate because the trees lose their leaves.
how to print notes
The actions a person takes in purchasing and using products and services, including the mental and social processes that precede and follow these actions. The behavioral sciences help answer questions such as : Why people choose one product or brand over another, How they make these choices, and How companies use this knowledge to provide value to consumers
I. CONSUMER PURCHASE DECISION PROCESS
Behind the visible act of making a purchase lies a decision process that must be investigated.
The purchase decision process is the stages a buyer passes through in making choices about w Five Stages of Consumer
alternative evaluation, purchase decision, and
A. Problem Recognition: Perceiving a Need
Perceiving a difference between a person's ideal and actual situations big enough to trigger a
Can be as simple as noticing an empty milk carton or it can be activated by marketing efforts.
B. Information Search: Seeking Value The information search stage clarifies the options open to the consumer and may involve
Scanning one’s memory to recall previous
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two steps of information search External search
Often sufficient for frequently purchased p
When past experience or knowledge is ins
The risk of making a wrong purchase decis
o 1. 2.
The cost of gathering information is low.
The primary sources of external information are:
Personal sources, such as friends and fam
Public sources, including various product-r
Marketer-dominated sources, such as adve
C. Alternative Evaluation: Assessing Value The information search clarifies the problem for the consumer by (1) Suggesting criteria to use for the purchase. (2) Yielding brand names that might meet the criteria. (3) Developing consumer value perception.
A consumer's evaluative criteria represent both
the objective attributes of a brand (such as locate speed on a portable CD player) the subjective factors (such as prestige).
These criteria establish a consumer's evoked set
the group of brands that a consumer would consider acceptable from among all the br
she is aware D. Purchase Decision: Buying Value Three possibilities From whom to buy
which depends on such conside
Terms of sale
Past experience buying
When to buy
which can be influenced by store atmosphere time pressure a sale
pleasantness of the sho
experience. Do not buy E. Postpurchase Behavior: Value in Consumption or Use
After buying a product, the consumer compares it with expectations and is either satisfied or d Satisfaction or dissatisfaction affects
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consumer value perceptions consumer communications repeat-purchase behavior.
Many firms work to produce positive postpurchase communications among consumers and con
sellers and buyers.
Cognitive Dissonance. The feelings of postpurchase psychological tension or anxiety a consum
Firms often use ads or follow-up calls from salespeople in this postpurchase stage to try to con
decision. F. Involvement and Problem-Solving Variations
Consumers may skip or minimize one or more steps in the purchase decision process dependin
the level of involvement the personal, social, and economic significance of the purchase
Three characteristics of high-involvement purchase
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is expensive, can have serious personal consequences, or
could reflect on one’s social image.
Three general problem-solving variations exist in the consumer purchase decision process:
Routine Problem Solving
Virtually a habit
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involves little effort seeking external information and evaluating a
Typically used for low-priced, frequently purchased products. Involves the use of moderate information-seeking efforts.
Limited Problem Solving
Extended Problem Solving
Often used when the buyer has little time or effort to spend. Each stage of the consumer purchase decision process is used Considerable time and effort on
external information search and in identifying
Involvement and Marketing Strategy G. Situational Influences The purchase task Five situatio nal influenc es Social surroundings Physical surroundings Temporal effects Antecedent states
Used in high-involvement purchase situations.
Low and high consumer involvement has important implications fo
products that are market leaders from their challengers.
The reason for engaging in the decision. Including others present when a purchase decision is made. Such as decor, music, and crowding in retail stores. Such as time of day or the amount of time available. Which include the consumer’s mood or amount of cash on hand
II. PSYCHOLOGICAL INFLUENCES ON CONSUMER BEHAVIOR directing marketing efforts. A. Motivation and Personality 1. Motivation
Concepts such as motivation and personality; perception; learning; values, beliefs and attitudes; and lifestyle are use
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is the energizing force that causes behavior that satisfies a need. Needs are hierarchical
Once basic physiological needs are met, people seek to satisfy learned needs. Physiological needs
preservation Safety needs
being. From lowest to highest, the hierarchy is:
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achievemen status prestige
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Self-actualization needs 2. Personality
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A person's consistent behavior or responses to recurring situations.
Research suggests that key traits affect brand and product-type preferences.
Cross-cultural analysis also suggests that residents of different countries have a national character, o
characteristics common among people of a country or society. Personality characteristics are often revealed in a person’s self-concept, which is the way people see
others see them.
The process by which an individual uses information to create a meaningful picture of the world by
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Perception is important because people selectively perceive what they want and it affects how people
1. Selective Perception
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comprehension, and retention
in the human brain’s attempt to organize and interpret infor
Consumers can pay attention to messages that are consisten
attitudes and beliefs
Selective comprehension Selective retention
Consumers can ignore messages that are inconsistent.
o o o o o
Involves interpreting (distorting?) information so that it is co
person's attitudes and beliefs.
Consumers do not remember all the information they see, re
Consumers see or hear messages without being aware of the
This is a hotly debated issue with more popular appeal than
Research suggests that such messages have limited effects
2. Perceived Risk
Consumes cannot anticipate the outcomes of a purchase
Believe that there may be negative consequences.
Marketers try to reduce a consumer's perceived risk and encourage purchases by strategies such as p Free trial of a product
Securing endorsements from influential people
Providing warranties and guarantees.
Those behaviors that result from
1. Behavioral Learning
The process of developing automatic responses to a situation built up
through repeated exposure to it. Four variables central to how consumers learn from repeated experience are: drive A need that moves an individual to action A stimulus or symbol perceived by consumers The action taken by a consumer to satisfy the drive. The reward.
response reinforcem ent
Marketers use two concepts from behavioral learning theory: Stimulus generalization
Occurs when a response elicited by one stimulus (cue) is ge
1Using the same brand name for different products is an ap
Refers to a person's ability to perceive differences in stimuli
The advertising for Bud Light beer is an example of this conc
2. Cognitive learning
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3. Brand loyalty
Involves making connections between two or more ideas or simply observing the outcomes of others’ behaviors
and adjusting one's accordingly.
Is a favorable attitude and consistent purchase of a single brand over time.
Brand loyalty differs across countries
D. Values, Beliefs, and Attitudes 1. Attitude Formation
A learned predisposition to respond to an object or class of objects in a consistently
favorable or unfavorable way.
Value s Belief s
Shaped by our values and beliefs, which are learned. personally or socially preferable modes of conduct or states of existence that are
enduring. consumer's subjective perception of how well a product or brand performs on different
2. Attitude Change Approaches to try to change consumer attitudes E. Lifestyle Lifestyle is a mode of living that is identified by activiti es How a person spends time and resources
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Changing beliefs about the extent to which a brand Changing the perceived importance of attributes.
Adding new attributes to the product.
interes What a person considers important in the ts opinio ns environment what a person thinks of self and the world
The analysis of consumer lifestyle
helps to segment and target consumers for new and existing products.
Values and Lifestyles (VALS) Program
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Developed by SRI International Identified eight interconnected categories of adult lifestyles
based on a person’s self-orientation and resources. Resources
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Three patterns of attitudes and activities that help people reinforce The three patterns are oriented toward
income education selfhealth eagerness to intelligence
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their social self-image.
III. SOCIOCULTURAL INFLUENCES ON CONSUMER BEHAVIOR
Sociocultural influences evolve from a formal and informal relationships with other people. Influences Include
11 11 11 11 11
A. Personal Influence
Reference groups The family Social class Culture
Opinion leaders Aspects of personal influence important to marketing Word of mouth
individuals who exert direc
People influencing each ot
Power of word of mouth ha
Internet and e-mail B. Reference Groups important influence on the purchase of luxury products but not of necessities. : Membership group Three groups have clear marketing implications Aspiration group Dissociative group C. Family Influence
Reference groups are people to whom an individual looks as a basis for self-appraisal or as a source of person
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one to which a person actually belongs
one with which a person wishes to be id
one from which a person wants to main
in values or behaviors
Family influences on consumer behavior result from three sources:
Consumer Socialization Family Life Cycle
passage through the family life cycle
decision making within the family.
Consumer socialization is the process by which people acquire the skills, knowledge, and attit consumers
The distinct phases that a family progresses through from formation to
Each phase bringing with it identifiable purchasing behaviors.
Family Decision Making
Two decision-making styles exist:
spouse-dominant (either wife or husband is responsible)
joint decision making (most decisions are made by both
husband and wife).
Increasingly, preteens and teenagers are assuming these roles for the
family, given the prevalence of working parents and single-parent households. D. Social Class
The relatively permanent, homogeneous divisions in a society into which people sharing simila Determinants of social class include
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source of income (not level of income)
Social class is a basis for identifying and reaching particularly good prospects for products and
Upper classes are targeted by companies for items such as financial investments, exp
Middle classes represent a target market for home improvement centers and
Lower classes are targeted for products such as sports and scandal magazines.
E. Culture and Subculture
Culture refers to the set of values, ideas and attitudes that are accepted by a homogeneous group of people a
Subcultures - groups within the larger, or national, culture with unique values, ideas, and attit three largest racial/ethnic subcultures in the U.S
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African-Americans Asians .
Each of these groups exhibits sophisticated social and cultural behaviors that affect their buyi
1. African-American Buying Patterns African-Americans have the largest spending power of the three subcultures While price conscious, they are motivated by product quality and choice.
Respond to products and advertising that appeal to their African-American pride and heritage
2. Hispanic Buying Patterns
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Hispanics represent the largest subculture About 50% are immigrants The majority are under the age of 25. Marketing to Hispanics has proven to be a challenge because
The diversity of this subculture
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The language barrier.
Sensitivity to the unique needs of Hispanics by firms has paid huge dividends.
3. Asian Buying Patterns The Asian is the fastest growing subculture. About 70% of Asians are immigrants Most are under the age of 30.
Asians represent a diverse subculture, including Chinese, Japanese, Filipinos, Koreans, Asian-I Two groups of Asian-Americans have been identified:
Assimilated Asians are
conversant in English highly educated exhibit buying patterns very much like "typical" American consumers.
recent immigrants who cling to their native languages and customs.
Discuss the role of personal selling and advertising in promoting industrial products. How does it compare to consumer product promotion.
Industrial marketing is the marketing of goods and services from one business to another. Industrial goods are those which are used in Industry for producing a Different end product from one or more rawmaterials. The word "industrial" means machinery run by power to produce goods and services. But "industrial marketing" is not confined to these types of business activities. Broadly, marketing could be split into consumer marketing (B2C "Business to Consumer") and industrial marketing (B2B "Business to Business").
 B2B Business to Business (or "Industrial")
Typical examples of a B2B selling process are...
An organization is seeking to build a new warehouse building. After carefully documenting their requirements, it obtains three proposals from suitable construction firms and after a long process of evaluation and negotiation it places an order with the organization that it believes has offered the best value for money.
An organization has significant need for legal services and obtains submissions from two law firms. Analysis of the proposals and subsequent discussions determines that there is no price advantage to placing all of the work with one firm and the decision is made to split the work between the two firms based on an evaluation of each firm's capabilities.
A sales representative makes an appointment with a small organization that employs 22 people. He demonstrates a photocopier/fax/printer to the office administrator. After discussing the proposal with the business owner it is decided to sign a contract to obtain the machine on a fully maintained rental and consumables basis with an upgrade after 2 years.
The main features of the B2B selling process are...
• • • • •
Marketing is one-to-one in nature. It is relatively easy for the seller to identify a prospective customer and to build a face-to-face relationship. Highly professional and Trained people in Buying processes are involved.In many cases two or three decision makers have to be considered in purchasing industrial products. High value considered purchase. Purchase decision is typically made by a group of people ("buying team") not one person. Often the buying/selling process is complex and includes many stages (for example; request for expression of interest, request for tender, selection process, awarding of tender, contract negotiations, and signing of final contract).
Selling activities involve long processes of prospecting, qualifying, wooing, making representations, preparing tenders, developing strategies and contract negotiations.
See also B2B definition.
 B2C Business to Consumer (or "Consumer")
Examples of the B2C selling/buying process are...
A family are at home on a Sunday night and are watching television. An advertisement appears that advertises home delivered pizza. The family decides to order a pizza. Walking down a supermarket aisle, a single man aged in his early 30's sees a hair care product that claims to reduce dandruff. He pick's the product and adds it to his shopping cart.
A pensioner visits her local shopping mall. She purchases a number of items including her favourite brand of tea. She has bought the same brand of tea for the last 18 years.
The main features of the B2C selling process are...
• • • • • • •
Marketing is one-to-many in nature. It is not practical for sellers to individually identify the prospective customers nor meet them face-to-face. Lower value of purchase. Decision making is quite often impulsive (spur of the moment) in nature. Greater reliance on distribution (getting into retail outlets). More effort put into mass marketing (One to many). More reliance on branding. Higher use of main media (television, radio, print media) advertising to build the brand and to achieve top of mind awareness.
See also B2C definition.
 Blurring between the definitions
As in all things, the definitions are not clear cut. For example, an organisation that sells electronic components may seek to distribute its products through marketing channels (see channel (marketing)), and be selling relatively low value products. However, the final purchaser is still a business. Equally there are big ticket items purchased by nonbusiness consumers (houses and motor vehicles being the obvious examples). However, even though these definitions are blurred, sales and marketing activities aimed at B2B are distinctly different from B2C (as outlined above).
 Competitive tendering
Industrial marketing often involves competitive tendering (see tender, tendering). This is a process where a purchasing organisation undertakes to procure goods and services from suitable suppliers. Due
to the high value of some purchases (for example buying a new computer system, manufacturing machinery, or outsourcing a maintenance contract) and the complexity of such purchases, the purchasing organisation will seek to obtain a number of bids from competing suppliers and choose the best offering. An entire profession (strategic procurement) that includes tertiary training and qualifications has been built around the process of making important purchases. The key requirement in any competitive tender is to ensure that...
• • • • • • • •
The business case for the purchase has been completed and approved. The purchasing organisation's objectives for the purchase are clearly defined. The procurement process is agreed upon and it conforms with fiscal guidelines and organisational policies. The selection criteria have been established. A budget has been estimated and the financial resources are available. A buying team (or committee) has been assembled. A specification has been written. A preliminary scan of the market place has determined that enough potential suppliers are available to make the process viable (this can sometimes be achieved using an expression of interest process).
It has been clearly established that a competitive tendering process is the best method for meeting the objectives of this purchasing project. If (for example) it was known that there was only one organisation capable of supplying; best to get on with talking to them and negotiating a contract.
Because of the significant value of many purchases, issues of probity arise. Organisations seek to ensure that awarding a contract is based on "best fit" to the agreed criteria, and not bribery, corruption, or incompetence.
 Bidding process
Suppliers who are seeking to win a competitive tender go through a bidding process. At its most primitive, this would consist of evaluating the specification (issued by the purchasing organization), designing a suitable proposal, and working out a price. This is a "primitive" approach because...
There is an old saying in industrial marketing; "if the first time you have heard about a tender is when you are invited to submit, then you have already lost it." While flippant, the previous point illustrates a basic requirement for being successful in competitive tendering; it is important to develop a strong relationship with a
prospective customer organization well before they have started the formal part of their procurement process.
 Non-tender purchasing
Not all industrial sales involve competitive tendering. Tender processes are time consuming and expensive, particularly when executed with the aim of ensuring probity. Government agencies are particularly likely to utilise elaborate competitive tendering processes due to the expectation that they should be seen at all times to be responsibly and accountably spending public monies. Private companies are able to avoid the complexity of a fully transparent tender process but are still able to run the procurement process with some rigour.
 Developing a sales strategy/solution selling/technical selling
The "art" of technical selling (solution selling) follows a three stage process...
Stage 1: Sell the appointment: Never sell over the telephone. The aim of the first contact with a propsective purchaser is to sell the appointment. The reason is simple; industrial sales are complex, any attempt to sell over the phone will trivialise your product or service and run the risk of not fully understanding the customer's need.
Stage 2: Understand their needs: The best method of selling is to minimise the information about your goods or services until you have fully understood your customer's requirements.
Stage 3: Develop and propose a solution. The solution is (of course) developed from your (or the firm that you represent's) product or service offerings.
The important point about solution selling is that it is essential not to sell the solution before you understand the customer's requirements; otherwise you are highly likely to unwittingly sell them on how ill-suited your solution is to meeting their requirements. To illustrate; imagine a couple seeking the services of an architect start their first meeting with the inevitable "we want to build a house." If the architect leapt in at that point and proceeded to show them his favourite design influence "the Mediterranean look" only to discover that they hate "Mediterranean" and wanted something "a bit more Frank Lloyd Wright" he will have gone most of the way toward alienating the sale.
You can see that if he had "kept his powder dry" for a bit longer and first discovered what they were looking for, he could have better understood which way to skew his pitch. He was equally capable of designing in a Frank Lloyd Wright style. The marketing function is able to support this solution sell through tactics like account-based marketing – understanding the requirements of a specific target organization and building a marketing program around these. As research shows, sales success is heavily weighted towards suppliers who can understand their audience before selling to them (in UK research, 77 per cent of senior decision-makers believe that the marketing approaches made by new suppliers are poorly targeted and make it easy to justify staying with their current supplier)  . Sales force management has a critical function in industrial selling, where it assumes a greater role than other parts of the marketing mix. Typical industrial organisations are highly dependent on the ability of its sales people to build relationships with customers. During periods of high demand (economic boom) the sales force often become mere order takers and struggle to respond to customer requests for quotations and information. However, when economic downturn hits it becomes critical to direct the sales force out selling.
 From cannon fodder to preferred tenderer
The term "cannon fodder" derives from the World Wars and refers to the massing of undertrained and recently recruited troops sent to the fronts to face the enemy. It was noted that such troops invariably had a short survival rate but provided the tactical advantage of distracting the enemy while professional soldiers mounted a flanking manoeuvre and came around from the side or from behind the enemy. In adopting the term to Industrial Marketing it means those bids being submitted that have no chance of winning but are involved to make up the numbers (you can't have only one bid in a "competitive" tender process; that wouldn't satisfy the requirements of probity (for example in government tenders, or for private enterprise the requirement to "truly test the market" and to "keep them honest"). The reader might be wondering why anybody would go to all of the work of submitting a tender when they had no chance of winning; for the same reason that troops were sent in to battle to die; they thought they had a real chance.
 The key features of a successful industrial sales organisation
In industrial marketing the personal selling is still very effective because many products must be customized to suit the requirements of the individual customer. Indicators such as the sales tunnel give information on the expected sales in the near future, the hit rate indicates whether the sales organization is busy with promising sales leads or it is spending too much effort on projects that are eventually lost to the competition or that are abandoned by the prospect.
 The internet and B2B marketing
The "dotcom" boom and bust of the late 90's saw significant attempts to develop a new retailing business model; on-line shopping. Many entrepreneurs (and their investors) discovered that merely having a website (no matter how innovative) was insufficient to generate sales; the amount of conventional main media advertising required to promote the sites burnt cash at a faster rate than they could generate through on-line sales. They also presumed that consumers would eschew the irksome shopping experience (driving, parking, poor service etc.) for the wonder and convenience of shopping on-line. Some did; but not in sufficient numbers. There were many unforeseen problems and apart from some notable exceptions (Amazon.com and others) the B2C online model was a spectacular failure. However, the same cannot be said of B2B selling where some quite impressive results have been achieved.
3 a) Why do many firms use a family brand? What are the risks associated with this strategy if a new product is sub-standard? Family branding is a MARKETING strategy that involves selling several related PRODUCTS under one BRAND NAME. It is contrasted with individual branding in which each product in a portfolio is given a unique identity and brand name. There are often economies of scope associated with family branding since several products can efficiently be promoted with a single advertisement or campaign. Family branding facilitates NEW PRODUCT INTRODUCTIONS by providing a 'foot-in-the-door' in potential customers' evoked set. When considering purchasing a new type of product, potential customers will tend to evoke in their minds a product with a familiar brand name. Being a part of this evoked set could lead to trial purchase, product acceptance, or other advantages. -1) Brand image of parent brand act as Differentiating factor for product in extremely competitive market. -2) Extra cost of Brand creation is not required. -3) Umbrella branding help to create dependent perception about product as parent Brand. -4) Brands get abound in business.
-5) Umbrella branding helps to give positioning to product. -6) Advertising and promotional efforts should be combined for all the products falling under family brand. -7) New product launch become easier and cheaper. - 8) New product find ready recognition and market set up.
Family branding imposes on the brand owner a greater burden -to maintain consistent quality and BRAND EQUITY . -If the quality of one product in the brand family is compromised, it could reduce sales of all the others. Family branding should only be done when a PRODUCT LINE consists of products of similar quality.
Consider the following statement and discuss: “The only thing that channel intermediaries do is to increase price for the consumer.”
4 a) b)
Discuss the stages in New Product Development process giving suitable examples What is cyber marketing and how is it different from conventional marketing? Discuss the limitations of cyber marketing.
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