Notes A)

24108 Marketing Foundations
UTS
How to study Marketing Foundations?
- Read the textbook.
- Go to every lecture and tutorial
- Do the Group/ Individual Assignment
- use the chapter summaries found at the end of each chapter in the textbook
- Write the textbook chapter summaries into your notebook.
- Use the tutorial/ textbook questions as the framework to form your notes.
- Work three weeks ahead of the class.
- Use the notes below and dont be afraid to add your own notes to my notes.
- Do every textbook, tutorial, I study and past paper questions
- Use the I Study (USB with extra resources such as interactive quizzes provided with the
Elliott / Waller Marketing Textbook).
- Skim read every page of my notes; there are some very good Product Notes- Electronic
Marketing Notes near the end of my notes.
- Make summaries of my summaries (make my notes shorter and add your notes).
Chapter One - INTRODUCTION TO MARKETING

Marketing set of institutions and processes for creating, communicating, delivering and
exchanging products of value for customers, clients, partners and society at large. Firms with a
market orientation perform better than firms without a market orientation. They have better
profits, sales volumes, return on investment and market share. Marketers must learn about the
needs and wants of customers. This is an ongoing process as customer preferences are
continually evolving. The best marketers are able to offer something that is unique or special to
customers e.g. I pad.
An example of marketing in action is Apple Ltd creating customer delight via market orientation
i.e. a focus on the customer. Moreover, with a clear focus on New Product Analysis coupled by
market research the company is able to achieve this objective. Apple has better profits, sales
volume return on investment and market share. The marketer has adopted marketing thinking via
mutually beneficial exchange with value creation for all parties, both parties expectations being
met and both parties benefit from the transaction.
Ethics is a set of moral principles that guide attitudes and behaviour. Corporate Social
Responsibility is the material fact that businesses have a duty to act in the best interests of the
society that sustains them. They are obliged to act ethically, within the law and fulfil
requirements such as philanthropy, protecting the natural environment, providing products that
benefit society and generating employment and wealth. Qantass corporate social responsibility
(the spirit of Australia) is used as leverage to earn more cash money via support of community
organisations such as Clean up Australia, Land Care and the Prime Ministers Disability Awards.
The marketing organisation has not fulfilled its obligations to all stakeholders if it merely acts
within the law. The organisation must act in the best interests of most stakeholders such as
shareholders, employees, customers, partners and government.
1 | M A R K E T I N G F O U N DAT I O N S
Marketing can be used by not for profit organisations such as the Salvation Army that aims to
advance the welfare of the less fortunate and needy. This can be via Integrated Marketing
Communications or promotion in online news media to generate donations to help the needy.
A contemporary product that demonstrates how marketers stimulate demand is I phone. The
products augmentation such as special features that differentiates I phone from competing
products e.g. a digital high definition camera which allows users to take pictures when they
want.
Advertisements that are product focused include BMW the ultimate driving machine, while
advertisements that are customer focused include NAB more give less take.
.
The Marketing Process
The marketing process involves answering two questions. The first question is what customers
we serve (market segmentation and targeting). The second question is how we best serve
targeted customers (differentiation and positioning).
1.
2.
3.
4.
5.
Understand the marketplace and customer needs and wants

Design a customer-driven marketing strategy
Construct an integrated marketing program that delivers superior value
Build profitable relationships and create customer delight
Capture value from customers to create profits and customer equity
Simple Marketing Concepts

-
Needs, wants and demands products as bundles of benefits, look for best
value for money
Needs things that are vital for survival e.g. housing, food and
water.
Wants a non-necessary desire e.g. designer clothes and perfume.
Demands wants backed by buying power
Products offered to market to satisfy need or want (e.g. goods, experiences,
place, information)
Value, satisfaction and quality
Value customers overall perception of the utility of a product
based on what is received and what is given. Utility is the
usefulness of a product.
V = Quality/ Price
= Benefits expected/ benefits received
Customer satisfaction extent to which perceived performance
meets expectations
Quality how well products satisfies want
Exchange, transactions and relationships
Exchange the mutually beneficial transfer of products of value
between buyer and seller. It involves:
1. value creation for all parties
2. both parties benefit from the transaction
3. Both parties expectations must be met e.g. quality and

price.
An example of an exchange is the Cancer Council Australia runs Television
advertisements encouraging people to protect their skin from sun damage.
People become aware that they should wear protective clothing when in the
sun. The Cancer Council meets its objectives because more people are
wearing protective clothing when in the sun. Long term benefits will arise for
society as the rate of skin cancer drops for the Australian population.
Transaction marketings unit of measurement; trade of value
Relationship marketing creating, maintaining and enhancing
strong value-laden relationships with customers and other
stakeholders.
A market is a group of customers with heterogeneous needs and wants e.g.
Geographic markets (China, Australia and the UK), Demographic markets (Baby
boomers, Gen X and Gen Y) and Product markets (water bottle and pain killer).
Designing Customer-Driven Marketing Strategy

6. Marketing management analysis, planning, implementation and control of
programs designed to create, communicate and deliver value to customers
and facilitate managing customer relationships in ways that enable the
organisation to meet its objects and those of its stakeholders
Selective Customer to Serve

Demand management understand and monitor nature of consumer demand;
build profitable relationships, cost of attracting new customer is five times
higher than keeping existing one
Creating excitement
The Marketing Evolution

1. Trade (bartering and exchange of products).
2. Production orientation what could be made? Henry Ford said that you can
have any car that you want as long as its black (because black was the
cheapest car to produce)
3. Sales orientation consumers wont buy unless organisations undertake
large-scale promotional efforts (e.g. life insurance). Hey come and buy the
blue car, we know you can get black but blue is better says the used car
salesman.
4. Marketing orientation focus on the customer and finding out what they need
and want.
5. Societal market orientation- used as a selling point and leverage to target
socially aware customers i.e. Corporate Social Responsibility and Ethics.
Selling and Marketing Concepts

Concept
Selling
Starting Point
Factory
Focus
Existing products
Means
Selling and
Ends
Profits through
Marketing Market
Customer Needs
promoting
Integrated
Marketing
sales volume
Profits through
customer
satisfaction
Philosophies
7. Social marketing concept balance between ideas of SOCIETAL (HUMAN

WELFARE) + COMPANY (PROFITS) + CONSUMERS (SATISFACTION)
Preparing an Integrated Marketing Program
8. Outlines which customers the company will serve and how it will create value
9. Developed to deliver value to target customers
10.
Builds relationships; consists of marketing mix
Managing the Marketing Mix

PRODUCT good, service or idea offered to the market for exchange.
PRICE the amount of money a business demands in exchange for its
products.
11.
PROMOTION advertising, personal selling, online marketing
12.
PLACEMENT channel management
13.
Physical evidence used to measure satisfaction i.e. as services are
intangible
14.
Process in high-contact services, customers involved in creating and
enjoying experiences
15.
People many service experiences involve interacting with people;
relationships
Customer Relationship Management (CRM)

16.
Overall process of building and maintaining profitable customer
relationships by delivering superior value and satisfaction
17.
Deals with all aspects of acquiring, keeping and growing customers
Relationship Building Blocks: Customer Value and Satisfaction

18.
Customer perceived value evaluation of difference between benefits
and costs
19.
Customer satisfaction products perceived performance and buyers
expectations
Capturing Value from Customers

20.
Creating customer loyalty and retention delighted customers remain
loyal and will tell others about their positive experience with brand; losing a
customer is losing more than a sale
21.
Growing share of customer through variety and cross-selling e.g.
restaurants want share of stomach whilst banks want share of wallet
22.
Building customer equity - the combined discounted customer lifetime
value of all a companys current and potential customers
Chapter Two MARKETING ENVIRONMENT

The Marketing Environment is all the internal and external forces that affect a marketers ability
to create communicate and deliver products of value. Marketers must influence their
environment. They use environmental analysis to break the marketing environment into smaller
bits to make it easier to understand. The internal environment is the people and processes
within an organisation that affect a marketers ability to create, communicate and deliver
products of value e.g. marketing information system and sales force.
The Micro environment is the forces within an organisations industry. It is not
directly controllable by the organisation. It consists of customers, clients,
competitors and partners.
Partners include (LFWARS) Logistic firms (storage and transport), financiers
(banking and insurance), wholesalers (B2B), advertising agencies, retailers (B2C)
and suppliers. Marketers must ensure their products provide their target market
with greater value than their competitors products.
The Macro environment is the forces outside of an organisations industry. It includes Political,
Economic, Socio cultural, Technological and Legal forces.
Political forces include lobbying for favourable treatment at the hands of government and
lobbying for favourable regulation.
Economic forces are how much money individuals and organisations have to spend and how
they choose to spend it. They include prices, income and availability of credit.
Socio cultural factors affect peoples attitudes, beliefs, behaviours, preferences, customs and
lifestyles. Social Cultural factors include demographics such as statistics about a population: age,
gender, ethnicity, educational attainment and marital status. Furthermore, the natural
environment is an example of a social cultural theme that has recently emerged.
Technological forces allow a better way of doing things. Technology changes expectations and
behaviours of customers and clients and have huge effects on how suppliers work.
Legal factors include legislation enacted by elected officials. Laws and regulations fall under the
following categories: privacy, fair trading, consumer safety, prices, contract terms and
intellectual property.
Situational Analysis involves assessing an organisations current position in the market place. A
marketing plan communicates how marketers plan to get from the current situation to where
senior management thinks the organisation should be.
Marketing metrics are used to measure the current performance and the outcomes of past
activities. It includes Return on Investment, Customer satisfaction, Market share and Brand
Equity.
-Return on investment Cost and benefit analysis which takes into account sales volume,
marketing investment (cost, share of voice) and bottom line (profit, share of industry profit).
-Customer satisfaction- churns (the percentage of customers lost) and number of complaints
received/ resolved.
-Market share is defined as the percentage share of total industry profits including the percentage
improvement in the market share growth/ decline.
-Brand equity- awareness (the percentage of the total target market) and loyalty (repeat purchase
behaviour).
A SWOT analysis is used to identify strengths (those attributes of the organisation that help to
achieve its objectives), weaknesses (those attributes of the organisation that hinder it in trying to
achieve its objectives); opportunities (factors that are helpful to achieve the organisations
objectives) and threats (factors that are harmful to achieving the organisations objectives).
Strengths and weaknesses are internal; opportunities and threats are external.
.
SWOT Analysis of Qantas
Strengths
- highest safety standard
- employees strong commitment to the Qantas Group
- Named one of the worlds top airlines in the prestigious Skytrax World Airline Awards.
Weaknesses
- operations deemed as inferior to competitors
- strikes
Opportunities
- transitioning the business from cost centres to profit centres
Threats
- Security concerns
- Increased competition
- The federal governments Workplace Relations policy
- Rising fuel prices
-
Respond to the Marketing Environment

Some companies view marketing environment as uncontrollable, others take on
environmental management perspective.
Marketing management should aim to be proactive rather than reactive
wherever possible
Chapter Three MARKET RESEARCH

Market Research (MR) is gathering information and knowledge about the market. For example,
a business that makes bird houses involves understanding, creating (production and operations),
communicating (promotion e.g. on Channel Nine on TV on a show such as The Voice Australia)
and delivering (e.g. a store such as Kmart or Target because older people are not as tech savvy).
The above stated market research process is interlinked and ongoing. Moreover, if a business
creates what it perceives to be a profitable product but if there are hardly any customers, then the
firm needs to do market research to find out why the consumers are not buying. The results of
market research are fed into a Marketing Information System (MIS), which holds and
organises all of the organisations marketing information. The MIS is in house (internal
environment).
Market research involves five major components:
- defining the research problem (profit or sales related clause)
designing the research methodology (design) e.g. dropping prices by 5 per cent increases
sales by twenty per cent i.e. actionable results
collecting data
analysing data and drawing conclusions
presenting the results and making recommendations.
What the research is intended to answer is known as the research problem e.g. 1) why is
the sale of sultanas down at the Pymble Woolworths? 2) Why is Apples brand image taking
a hit? As the research project proceeds the research problem may need to be redefined. A
market research brief should be prepared to guide the project. A market research brief
specifies the research problem, the info required, the time frame and the budget. A planned
methodology to answer the research problem is known as the research design. Types of MR
include exploratory, descriptive or causal research. Exploratory research gathers more
information about a loosely defined problem e.g. a focus group. Descriptive research is
used to solve well defined problem by clarifying more about certain phenomena e.g. healthy
product range for MC Donalds Quick Service Restaurants (food done fast) . Causal
research tests if a variable affects an outcome e.g. effect of coupons on pizza sales at Pizza
Hut.
MR draws on two types of data. Secondary data is data already exists. Primary data gathers
specifically for the current research project. Research methods can be quantitative or
qualitative research. Quantitative research collects data that can be represented numerically and
analysed statistically. Experimentation, neuroscience and observation are quantitative research
methods e.g. the survey. Qualitative research obtains rich and detailed info that underlie
observable behaviour. Interviews and focus groups are the most qualitative research methods.
MR tries to find out about the population by studying a small part of it and generalising the
results (sample).
Probability sampling ensures every member of a population has a known chance of being
selected in the sample. Non Probability sampling provides no way of knowing the chance of a
member being selected in the sample.
Once a research project has been designed, it must be implemented in compliance with the
design via project management. Data must be carefully collected and organised so that it can be
efficiently analysed. Quantitative data can be statistically manipulated to identify trends and
patterns in the data. Qualitative data can be reduced to allow statistical analysis but much of the
rich detail can be lost. Qualitative data analysis can lead to further research in the form of
quantitative research. Data analysis allows conclusions to be drawn and recommendations
formulated. The findings and recommendations of the market research project should be
presented in a concise and clear manner.
Two types of probability sampling methods are random sampling and stratified sampling. In a
random sample each member of the population has an equal opportunity of being for the sample.
In a stratified sample the population is divided into different groups based on some characteristic
e.g. age and gender and then from each groups a random sample is chosen.
Two types of non probability sampling methods are quota sampling and convenience sampling.
A quota sample divides the population into groups based on a number of characteristics. In a
convenience sample, participants are selected based on convenience e.g. interviewing your
friends and family for a project.
Unethical market research examples
Sugging selling under the guise of market research.
Frugging- fund raising under the guise of market research.
Chapter Thirteen International Marketing

Globalisation is the process via international individuals, organisations and government
become interconnected and similar. Barriers have diminished facilitating greater
interconnections between different countries and their people. This has resulted in close
interdependence in terms of trade, finance, living standards and security.
Chapter 4 Consumer Behaviour (CB)

Factors influencing consumer behaviour Summary
Situational factors include physical, social, time, motivational and mood factors.
Group factors- cultural (sub cultural and social class) and social (reference groups, family, roles
and status).
Individual factors- personal (demographics e.g. age, occupation and income; lifestyle,
personality and self concept) and psychological (motivation, perception, beliefs and attitudes and
learning).
Case Study: New business ventures built on understanding consumer behaviour
(Wotif.com)
Consumer behaviour involves getting inside the heads of consumers and understanding their
psychological values. Wotif.com has clear target market i.e. International business travellers and
has built a business by selling last minute cheap hotels. If you see a target market not being
served, create a product and make cash money.
Consumer behaviour is the study of the behaviour of individuals and households who buy
products for personal consumption. It provides an understanding of the reasons behind the
decisions consumers make which is central to creating an effective marketing mix. Consumer
behaviour is influenced by situational, group and individual factors. Situational factors are the
circumstances in which consumers make purchasing decisions. They relate to physical, social,
time, motivation and mood factors. Group factors comprise cultural and social influences.
Cultural influences affect the behaviours of society: culture, sub culture and social class. Culture
is the system of knowledge, values and beliefs by which society defines it. National cultures can
be described according to Hofstedes cultural dimensions: power distance, uncertainty
avoidance, individualism, masculinity and long term orientation.
-Power distance- the degree of inequality among people that is acceptable within a culture.
Western societies tend to score low on power distance manifesting their relatively egalitarian
cultures, whereas Asian societies score high in power distance, reflecting greater social
inequality. Less social inequality (20 per cent) New Zealand, Australia (38 per cent), United
States of America (40 per cent); more social inequality Japan (55 per cent), Singapore (75 per
cent) and India ( 79 per cent).
-Uncertainty avoidance- the extent to which people in a culture feel threatened by uncertainty
and relies on mechanisms to reduce it.
-Individualism is the extent to which people focus on their goals over those of the group.
Western societies are generally individualistic, whereas Asian societies are more collectivist.
- Masculinity is the extent to which traditional masculine values (e.g. status, assertiveness and
success) are valued over traditional feminine values (solidarity, quality of life).
A sub culture is a group of individuals who share common attitudes, values and behaviours that
distinguish them from the broader culture in which they are immersed. A social class is a group
of individuals who share common rank within the social hierarchy. Social influences are those
that influence an individual to conform to group norms. A reference group is any group to which
an individual looks for guidance including membership, aspirational and dissociative reference
group. An opinion leader is any reference group member who provides influential advice to
other group members. Innovators introduce innovations, early adopters including opinion leaders
drive adoption by early majority, late majority and laggards. Family influences are a vital
influence on consumer behaviour with many purchasing decisions made by certain members or
combinations of members of the household. Personal and psychological factors influence
consumer behaviour independently of social circumstances. Personal characteristics include
demographic, lifestyle and personality. Psychological characteristics include motivation which is
the internal drive to satisfy unfulfilled needs or achieve goals. According to Maslows hierarchy
of needs individuals try to satisfy lower order biogenic needs such as food and sleep ahead of
higher order psychogenic needs such as learning? Another psychological characteristic is
perception, how an individual manages meaning to external stimuli including marketing
communications. Beliefs and attitudes are a vital influence on consumer behaviour as they
10 | M A R K E T I N G F O U N D A T I O N S
determine the context in which product evaluations are made. Effective marketing needs to
appeal to the cognitive, affective and behavioural components of consumer attitudes. The
consumer decision making process comprises of need/want recognition, information search,
evaluation of options, purchase and post purchase evaluation. Consumer decisions involve
different levels of involvement:
- Habitual decision making involves low involvement such as buying bread and milk.
- Limited decision making involve limited information to evaluate options e.g. buying
appliances and clothing.
- Extended decision making involve high involvement and is usually for once in a life time
purchase e.g. a car, wedding ring, house or wedding dress.
Cognitive dissonance is second thoughts about the wisdom of a purchase (post purchase
evaluation/ regret).
Roles in the Buying Process
Chapter 5- Business Buying Behaviour

The business market can be divided into reseller, producer, government and institutional
markets. Reseller markets comprise marketing intermediaries that buy products in order to sell
and lease them to another party for profit. Producer markets comprise businesses and
professionals that buy products in order to produce other products, or in their daily business
operations. Govt markets comprise federal, state and local govts that buy products in order to
provide services to citizens. Institutional markets comprise non public and not for profit
organisations that buy and sell products.
There are vital differences in the reflection of business markets and consumer markets. Business
markets involve high value purchases (lots of money), high volumes (lots of money) and regular
repeat purchases. Price and other conditions of the sale are open to negotiation. There are far
fewer buyers and sellers in business markets. Products alternatives are subject to extensive
formal evaluation with decisions made by committees. The relationships between buyers and
sellers tend to be long term and involve extensive after sales support. Demand in business
markets tends to fluctuate much more than demand in consumer markets.
Many business products are used in the production of another product. This creates a situation of
joint demand, where demand for one product is related to demand for another product. Because
business products are one of many used in the production of other products, demand for them
tends to be relatively unresponsive to changes in price. This is known as inelastic demand.
Demand tends to be relatively inelastic within an industry but can be elastic in relation to
individual companies. Business purchases take the form of a straight rebuy, modified rebuy or
new task purchase, each of which leads to different levels of engagement in the purchase
decision making process. The group of people who make business purchasing decisions is the
buying centre.
Chapter 6 MARKET SEGMENTATION, TARGETING AND

POSITIONING
Sellers can take three approaches to a market. Mass marketing is the decision to mass produce
and mass distribute product and attract all kinds of buyers. One to one marketing is providing a
customised product to meet individual customer needs. Target marketing is creating a group of
customers with homogeneous needs and wants. The target marketing process involves market
segmentation, market targeting, market positioning. Market segmentation involves creating sub
groups within the total market that are homogenous. Segmentation variables used in consumer
markets include geographic, demographic, psychographic and behavioural.
In business markets, organisation size, product use and geography are used as segmentation
variables.
Market Segments
-
Segmentation involves dividing a market into direct group of buys who might
require separate products or marking mixes; classifying customers into
groups with different needs, characteristics or behaviour
Geographic geographical units such as nations, regions, neighbourhood
Demographic variables such as age, gender, life cycle, income occupation,
religion
Psychographic socioeconomic status, lifestyle, personality characteristics
Behavioural occasions, benefits sought, user status (non-user, first=time,
regular), usage rate (light, moderate, heavy), loyalty status, buyer-readiness,
attitude
Business Markets personal characteristics, demographics, operating
variables, purchasing approaches, situational factors
Evaluate Market Segments

-
Size and growth analyse data on current and projected sales growth rates;
large companies may want large current sales and high growth rates,
whereas smaller companies may find it too competitive
Structural attractiveness competitors, power of buyers, substitute products,
power of suppliers
Company objectives and resources evaluate whether segment fits with
companys goals and objects; whether the company has resources to go into
the segment
Targeting Strategies
-
Undifferentiated marketing one homogenous market; one marketing mix

Differentiated marketing several markets; several marketing mixes
(different product offerings)
Concentrated marketing one target market though market is
heterogeneous; one marketing mix
Differentiation and Positioning

-
Product position way the product is defined by consumers on important

attributes
Positioning strategies product attributes, benefits, usage occasions,
against/away from competitors, product classes
Choosing and Implementing Positioning Strategy

-
Identify value differences perceptual mapping, analyse position of brand in

mind of consumers, rating brands against each other
Identify competitive advantage understand needs and buying processes;
deliver more value
Differentiation
- Product - performance, style, design, durability, reliability, consistency
- Services - delivery, installation, repair, customer service, consulting service
- Personnel - hiring and training better employees than competitors
- Image - brand, symbols and logos, sponsorship
Selecting Overall Positioning Strategy (Positioning Statement)

Brands Value Proposition
More for more
More for the same (attack competitors
positioning)
Same for less (powerfully value
proposition)
Less for much less
Quality of
Product/Service
Most upscale
Comparable quality;
more product/service
Same quality
Cost
Higher price
Lower price
Less quality
Lower price
Lower price
More for less (winning value proposition;

hard to maintain)
More quality; more

product/service
Lower price
Communicating and Delivering the Chosen Proposition

-
Marketing mix efforts must support the positioning strategy

Position must be monitors and adapted over time to match changes in
consumer needs and competitors strategies
Chapter 7 PRODUCTS
A product is a good, service or idea offered to the market for exchange. It can be tangible,
intangible or both. Marketers analyse products using the total product concept: core, expected,
augmented and potential products.
Total Product Concept
-Core Product basic benefit bought; eg. for a car it is transportation from A to
B. For coffee it is caffeine hit). For mobile phones it is communication.
-Expected Product products characteristics (quality level, features, styling,
brand image and packaging).
-Augmented Product bundle of benefits that differentiates the product (e.g.
warranties, delivery)
e.g. for a washing machine it could be warranties, a delay function and delivery.
For a mobile phone it could be a camera.
-Potential Product- features that are being developed and prototyped. e.g. retina
recognition security for a credit card.
A product can be tangible and intangible give examples of each.

A product that is tangible and can be delivered to the consumer is a good it
includes commodities like coffee, tea, sugar, salt and minerals.
A product that is intangible and does not involve ownership is a service like a
hair cut, insurance and air plane travel.
Products can be divided into consumer products (purchased by individuals and households) and
business products (purchased by an organisation to be used in its operations or in the
production of other products).
The concept of product life cycle says that a product passes via five stages: new product
development, introduction, growth, maturity and decline.
New Product development has eight stages: idea generation, screening (eliminating unviable
ideas), concept evaluation, marketing strategy, business analysis (how the new product will
affect costs, sales and profits), product development, test marketing and commercialisation.
The product adoption process describes the stages via which a potential customer passes, first
becoming aware of the new product, then deciding to adopt/ buy the product. In this process the
consumer who accepts a new product passes via five stages: awareness, interest, evaluation, trial
and adoption.
Product differentiation is the creation of products and attributes that distinguish one product
from one and another. Most of the differentiation occurs in the augmented product layer of the
total product concept. The design, brand image. Style, quality and features are the key product
attributes that can be used to differentiate products from competitors products.
Brand is the collection of symbols (e.g. name, logo and slogan) intended to create a
differentiated image in the customers mind. Brands play a major role in the consumers choice
of a product, namely high involvement products, as well a highly popular brand with a good
reputation will more likely be chosen rather than a cheaper and unknown brand.
Consumer Product Classifications and Market Considerations
Definition
Convenience
Products
(Staple, impulse
and emergency
products)
E.g. toothpaste,
household items,
breakfast cereals
Shopping
Products
Bought
frequently, with
little engagement
in the purchasing
decision making
process.
Customer
Buying
Behaviour
Frequent
purchase, little
planning or
comparison, low
involvement
Moderate to high Less frequent,

engagement based much planning
Price
Distribution
Promotion
Low
price
Widespread
distribution,
convenient
locations
Mass
promotion by
producer
Highe Selective
r price distribution
Advertising
and personal
E.g. major
appliances,
electronics,
clothes
on quality, price
and features.
Specialty
Products
E.g. luxury goods
Unique
characteristics,
unique brand
identification,
willing to make
special purchase
effort
Know about
products or
doesnt normally
think of buying
Unsought
Products
E.g. life
insurance, blood
donation, Pest
control and
Crimsafe
and shopping
effort,
comparison of
brands on price,
quality and style
Strong brand
preference and
loyalty, little
comparison of
brands, low price
sensitivity
Little product
awareness, little
product
knowledge, little
or even negative
interest
in fewer
outlets
selling by
both
producer and
resellers
High
price
Exclusive
distribution
in one or few
outlets per
market area
Carefully
targeted
promotion by
both
producer and
resellers
Varies
Varies easy
access
helpful
(online
distribution
advantageous
)
Aggressive
advertising
and personal
selling
Product Relationships
-Product item- a particular version of a product
-Product line set of product items related by characteristics such as end use,
target market, technologies and raw materials
-Product mix set of all products that an organisation makes available to
customers.
Packaging
23.
Designing and producing the container or wrapper for product
24.
Altering packaging, secondary-use packaging, category consistent
packaging, innovative packaging, multiple packaging, handling-improved
packaging
Labelling
25.
Part of packaging, consist of printed information appearing on or with
the package
Branding
26.
Add value to product, powerful brands have consumer franchise
command strong consumer loyalty
27.
Brand equity value of brand based on extent to which it has high
brand loyalty, name awareness, perceived quality, strong brand associations
and other assets such as patents, trademarks and channel relationships
28.
Brand meanings attributes (brand brings to mind attributes such as
prestige); benefits (customers by functional and emotional benefits); values
(brand says something about buyers value); personality (brand projects
personality)
29.
Brand sponsor decision manufacturers brand, private brand,
licensing, co-branding
30.
Brand strategy line extension, brand extension, multibrands, new
brands
31.
Brand repositioning need to change product and image, change
attitudes and perceptions towards brands, need huge promotions
Overview of
branding
decisions
LECTURE 7B NEW PRODUCTS

What is a New Product
32.
New to the world (e.g. inventions)
33.
New category entry (i.e. taking company to new category)
34.
Additions to product line
35.
Product improvements
36.
Repositioning (e.g. retargeted for new use or application e.g. Dettol
hand wash + cleaning agent)
37.
Variations of the above (e.g. new to a country, new to channel,
packaging improvement)
New Product Success and Failure
38.
New customer packaged goods rail 80% of time, 33% of industrial
products fail at launch
39.
Products may fail due to negative perception, wrong timing, poor
market research, poor commnctn
New Product Development (NPD) Process
1. Idea Generation
40.
Systematic search for new product ideas
41.
Internal idea sources formal research and development, company
scientists, engineers, brainstorming
42.
External idea sources competitors, customers, distributors/suppliers,
marketing intermediaries
43.
Others e.g. trade magazines, shows and seminars, advertising
agencies, marketing research firms
2. Idea Screening
44.
Reduce number of ideas generated by spotting good ideas and
dropping poor ideas
45.
Criteria may include company objectives, production capabilities,
feasibility of target market
3. Concept Development and Testing

46.
Product idea idea for possible product company can see itself offering
to market
47.
Product concept detailed version of idea stated in terms meaningful
to customers
48.
Product image way consumers perceive an actual or potential
product
49.
Concept testing process of testing product concepts with a group of
target customers
4. Marketing Strategy Developments

50.
Designing of initial marketing strategy for new product

1. Describe target market, planned product positioning, sales, market
share, profit goals
2. Outline products planned price, distribution and marketing budget
3. Describe planned long-run sales, profit goals and marketing-mix

strategy
5. Business Analysis
51.
Review of sales, costs and profit projections to find out whether they
satisfy company objectives
52.
Assessment of financial budgets, potential markets and growth rate
6. Product Development
53.
R&D or engineering develops product concept into physical product
(prototype or test run)
54.
Development activities prototype, feasibility testing, preliminary
market strategies
55.
Large investments
56.
This stage will show whether product idea can be turned into workable
product
7. Test Marketing
57.
Introduction of product and marketing program into more realistic
market settings
58.
Consumer markets standard test markets (free samples); controlled
test markets (leaving products in certain places); simulated test markets (try
selling at particular environment)
59.
Business markets product use-test
8. Commercialisation
60.
Introducing new product into market
61.
Full scale production, full scale marketing
62.
Integration into the firm
63.
Company launching product must decide WHEN, WHERE, TO WHOM
and HOW
The Product Life Cycle (PLC)
Marketing Law
The law imposes a number of duties on the marketer. Each element of the marketing mix is
controlled in some way by the law, be it common law or by statute. They include:
- SOG legislation
- Consumer protection legislation
- Consumer credit legislation
- Debt collection
- Restrictive trade practices legislation
- Principal and agency law
- IP law
- Law of contract
- Law of torts
Chapter fourteen- Marketing Planning

Strategic Planning process of developing and maintaining a strategic fit between
organisations goals and capabilities in light of changing marketing opportunities
Marketing Plan vs. Business Plan
-Business plan incorporates plans of all business functions
-Marketing plan focuses on:

a. Customer acquisition, retention and required resources
b. Resources required to implement specific marketing functions
c. Covers one year (markets keep changing)
d. Varies in length
e. Shortcomings may include lack of realism, insufficient market,
short-run focus
Contents of Marketing Plan

1. Executive Summary brief summary, aimed at senior management, no
longer than a page
2. Current marketing situation background data on target market, product,
competition, distribution and macro-environment
3. SWOT and Issue Analysis strengths + weaknesses (internal), opportunities
+ threats (external)
4. Objectives financial and marketing objectives, Smart Measurable
Achievable Realistic Timeframe
5. Marketing Strategy specific strategies for target markets, marketing mix,
marketing expenditure level, often comes after positioning strategy
statement
6. Action Programs implementation, what will be done, when, who will do it
and how much spent?
7. Projected Profit-and-Loss Statement budget with revenue showing sales,
expenses showing cost of production, distribution and marketing
8. Controls monitoring plans progress; contingency plan
PRICING, CONSIDERATIONS & APPROACHES

Price is the amount of money charged for a product or service. Is the only element in the
marketing mix that produces revenue, all other elements represent cost. It is used as a
competitive weapon.
Importance of Pricing:
Pricing is getting more and more important due to better informed customers (e.g.
through new media) and mistakes in companies communication
Pricing has a huge impact on competitors:
Competitors can expect effects from a price change that are twice as high as those from a
change in another marketing variable
Internal Factors Affecting Pricing:

Marketing Objectives:
survival
current profit maximization (short run)
market-share leadership (long run)
product-quality leadership (high prices)
Companies often have more than one objective, which may lead to a conflict of interests!
Company Resources:
size of the company
resources.
Pricing will be a function of costs:
fixed cost
variable cost
total cost
experience cost curves, costs decline over time as a result of accumulated production
experience
Marketing Mix Strategy:
Product:
how important is the product?
is it part of a range or accessory?
quality?
Promotion:
who does the promotion?
is price a major selling point?
Place:
wholesale and retail margins store image
External Factors Affecting Pricing Decisions:
The Market and Demand:
Pricing in different types of markets
Consumer Perceptions of Price and Value
Price and Demand Relationship
Price Elasticity of Demand (sensitivity)
Competitors Prices and Offers
Other External Factors

Government regulations
Loyalty programs
Pricing for Different Types of Markets

Pure competition
Market consists of many buyers and sellers with each having little influence on market
price
Trading of uniform commodity
Monopolistic competition
Market consists of many buyers and sellers
Range of prices occurs
Oligopolistic competition
Market consists of a few sellers
Sellers are highly sensitive to each others pricing and marketing strategies
Difficult for new sellers to enter the market
A pure monopoly
Consists of one seller
Pricing is handled differently in each case
Demand:
Price and Demand Relationship
mapped on a demand curve
Price Elasticity of Demand
how sensitive will demand be in relation to changes in price for your product?
General Pricing Approaches:

Cost-based pricing:
cost-plus pricing
breakeven analysis and target profit pricing
sets the floor for the price that the company can charge for its product
Competitor Based Pricing:
economic value pricing

going-rate pricing
sealed-bid pricing
Relationship Pricing
special relationship
enrichment
shared risk and reward
Break Even Analysis and Target, Profit Pricing:
determine the price at which it will break even
Target pricing
uses concept of a breakeven chart which shows total costs and total revenue expected at
different sales volume levels
setting the price to break even on the costs of making and marketing a product, or to
make the desired profit
Value-Based Pricing:
buyers perceptions of value are the key to pricing
use non-price variables to build up perceived value in the buyers minds
price is set to match the perceived value
Cost vs. Value-Based Pricing:
Cost-Based Pricing:
Product, design a new product
Cost, total the costs of making the product
Price, sets a price that covers cost plus target profit
Value, convince buyers that at the products value at that price justifies its purchase
Customers, purchase the products
Value-Based Pricing:
Reverse of Cost-Based Pricing
Customer
Value
Price
Cost
Product
Competition-Based Pricing:
Economic Value Pricing
The price set by a company is lower than customers perceived value and lower than that of its
competitors.
Going-Rate Pricing
Price based largely on competitors prices, with less attention paid to its own costs or demand.
Sealed-bid/Tender
Company bases its price on how it thinks competitors will price (e.g., job offers, governmental
tenders).
New Product Pricing:
Market-skimming pricing
Setting a high price for a new product
Appropriate if:
Sales are less sensitive to price in early stages
Capacity constraints exist. E.g. Apple used for the Ipod a skimming strategy
Marketpenetration pricing
Setting a low price for a new product
Appropriate if:
Sales are very sensitive to price
Product faces strong potential competition. E.g. Microsoft used a penetration strategy for
Office XP in 2001
What is Price?
-
Amount charge for a product or service, or sum of values consumers

exchange for the benefits of having or using the product or service
Only element of marketing mix that produces revenue
Comprised of different components (e.g. price of production, royalties,
shipping, labour)
Price is adjusted across different products, times and customers (e.g. new
products attract higher costs, discounts for children and pensioners)
Factors to Consider when Setting Prices
Internal Factors Affecting Pricing

-
Marketing objective survival, current profit maximisation, market-share,

product-quality
Company resources, size of company
Function of costs fixed costs, variable costs, total costs, experience cost
curves
Marketing mix strategy product, promotion, place
External Factors Affecting Pricing Decisions

-
Pricing in different types of markets

Consumer perceptions of price and value
Price and demand relationship
Price elasticity (how sensitive buyers are to price)
Competitors prices and offers
Pricing in Different Markets

-
Pure competition markets with buyers and sellers with little influence on
market price (e.g. petrol)
Monopolistic competition many buys and sellers, different products and
prices
Oligopolistic competition few sellers, sellers highly sensitive to each others
pricing and marketing strategies, difficult for new sellers to enter market
Pure monopoly one seller, pricing handled differently in each case (e.g.
Australia Post)
Demand
-
Price and demand relationship can be mapped on demand curve

Price elasticity shows how sensitive demand is in relation to changes in price
General Pricing Approaches

-
Cost-based cost-plus pricing; break even analysis and target pricing

Value based buyers perceptions of value; non-price variables build up
perceived value in buyers
Competitor based economic value (cost lower than competitors and lower
than perceived value); going-rate (prices close to competitors); sealedbid/tender (how it thinks competitors will price)
Relationship pricing used when there are few customers; shared risk and
reward
New Product Pricing

-
Market skimming high price for new/innovative product, sales less sensitive
to price, appropriate if capacity constraints exist, consumers may wait for
prices to fall
Market penetration low price for new product, sell large quantities, sales
sensitive to price, product faces strong potential competition, difficult to raise
prices as product perceived as low quality
Price Adjustment Strategies

-
Discount pricing and allowances generate more sales volume
Segmented/discriminatory pricing concessions for students, cheaper times

of day
Psychological pricing - $1.99 instead of $2.00, using the lucky number 8 in
China
Promotional pricing create awareness of product
Value pricing according to delivered value (e.g. planes first, business and
economy classes
Geographic pricing transportation costs increasing cost of goods
International pricing certain products more popular in different countries
LECTURE 6 SERVICES MARKETING

What are Services?
-
Acts, performances, and experiences; deeds, processes and

performances; activities, benefits, and satisfactions, which are offered for
sale or are provided in connection with the sale of goods
Service Industry core product is service e.g. airlines (T&G)
Service Products intangible product offerings e.g. Hewlett-Packard
consultancy
Customer Service supports the companys core products, often free
Service as a process when there is: people processing, possession
processing, mental stimulus processing or information processing
IHIP Framework Intangibility

-
Cannot be stored, demand difficult to manage

Not protected by patents; can be copied
Not easy to display or communicate; quality difficult to assess
Difficult to price
Solutions tangible cues; physical evidence; personal sources of information;
create strong reputation/organisational image (T&G create strong reputation
for quality; making customers feel a million dollars and passing on word of
mouth to others)
IHIP Framework Heterogeneity

-
People are not machines; no two services will be exactly alike (hair dressers
cut differently depending on person and their mood)
Difficult to measure and control service quality
Solutions customisation to maximise profits; standardisation for faster,
cheaper, more consistent service; staff trained in service recovery (teaching
standard techniques which can be put together differently to offer a
customised haircut)
IHIP Framework Inseparability

-
Customer and service representative at the same place and time (customers
highly involved in haircuts, need to cooperate e.g. turning head to one side)
Mass production of services is difficult, if at all possible
Other customers may be involved in the production process (e.g. cinemas)
Service quality depends on what happens in real time
Solutions careful selection and rigorous training of service personnel;

strategies to manage consumers (T&G Creative Academy, apprenticeships)
IHIP Framework Perishability

-
Services cannot be inventoried (at T&G each hair dresser can do 10 haircuts
a day)
Cannot be returned service recovery is more difficult
Managing supply and demand a challenge (no bookings mean that time is
gone, cannot get it back)
Solutions keeping customers in stock (reserve bookings if another
customer cancels booking) ; development of service recovery strategies;
creative management of supply and demand
The 7Ps - Product

-
Service products are the core of service marketing strategy (the haircut
itself)
Supplementary elements are value-added enhancements (e.g. label.M haircare range)
The 7Ps Place (and Time)

-
Service distribution can take place through physical and non-physical

channels
Some firms can use electronic channels to deliver all or some of their service
elements (e.g. information based services can be delivered almost
instantaneously electronically)
Delivery decisions when, where, how
Convenience of place and time of great importance as customers are
physically present (e.g. salons in convenient places)
The 7Ps Price

-
Generates income for the firm; key part of costs to obtain wanted benefits for
consumers
Firms need to minimise non-monetary costs to customers (e.g. time waiting,
finding parking spot, unwanted physical effort of getting to salon)
The 7Ps Promotion

-
Provides information and advice (promotions at hair expos)

Persuades the target customers of merit of service product or brand (e.g.
advertising in magazines)
Encourages customer to take action at specific time (discount coupons in

magazines, 10% discounts to students)
Customers may be involved in co-production and taught how to move

effectively through service process and shape customers roles and manage
their behaviour
The 7Ps Process

-
Actual procedure, mechanisms and flow of activities through which service is

delivered
Length: number of steps
Duration: time it takes
Logistical effectiveness: smoothness in delivery
Service delivery may follow standardised procedure that comprises a number
of activities
Activities may occur frontstage (in view of customer) or backstage (not
seen) e.g. frontstage at T&G is the process of the wash, haircut and blow-dry;
backstage is washing the towels
The 7Ps Physical Evidence

-
Setting where service is delivered; tangible components

Servicescapes physical environment where the customer and provider
interact (the salon)
Any tangible components that facilitate performance or communication of
the service (the shampoos used, the scissors and other tools)
The intangibility of service offerings makes tangible cues an essential part of
the service process
The 7Ps People

-
All humans who play a role in service delivery who influence the perceptions
of customers
Service delivery employees (front-line staff) the hairdressers themselves
General staff of the service company (the receptionist when making a
booking)
The customer
Other customers present in the servuction (service-production) and delivery
process
Service as a Process: Implications

-
People processing customers must physically enter the service factory and
cooperate with service operation; managers must think about process and
output from customers perspective
Possession processing customers less physically involved; production and
consumption are separable
Mental stimulus processing ethical standards required as customers can be
manipulated; physical presence not required; core content of service is
information based; can be inventoried
Information processing most intangible service output; transformed into
enduring forms of service output; link between information processing and
mental stimulus processing can be blurred
Using 7Ps for Services Strategy

-
Overall strategic assessment how effective is a firms services marketing

mix; is the mix well aligned with overall vision and strategy; what are
strengths/weaknesses in terms of 7Ps?
Specific service implementation who is customer; what is the service; how
effectively does the services marketing mix for a service communicate its
benefits and quality; what changes needed?
Services Marketing: Key Challenges

-
How can service quality be defined and improved

Designing and testing new services to take into account intangibility
Communication and consistency of image
Dealing with demand fluctuation
Strategic and tactical decision making when inter-functional coordination is
required
Balance between customisation and standardisation
Sustainable competitive advantage
Communicating the value and quality of something intangible to customers
Delivering service quality when employees and customers contribute to it
themselves
LECTURE 8 - PLACEMENT
Marketing Logistics Network
64.
Traditionally physical distribution; today includes logistics, marketing
logistics, integrated logistics management, supply-chain management and
materials management and physical distribution
65.
Includes procuring inputs (e.g. raw materials, equipment, capital) and
conversion to finished products and conveying them to end users
66.
Network players suppliers, purchasing agents, manufacturer,
marketers, transport agencies, end-consumer
67.
Other Ps
Product variation (colour, size, features) may impose burden on
distribution facilities
Promotion campaigns must reflect logistics delivery
Pricing source of differential advantage based on superior
logistical service, need to compare the price end-user will pay for
each channel
Marketing Channels
68.
Distribution channels are the pathways that companies use to sell their
products to end-users
69.
Network of interdependent organisations making product/service
available for use/consumption
70.
Intermediaries are organisations linking producers to other
intermediaries or to the customer through contractual arrangements to
purchase and resale products
Why Marketing Intermediaries are Used

71.
Cost manufacturer is paid immediately regardless of whether
products are eventually sold
72.
Increased coverage
73.
Consumer convenience consumers
go to once place
74.
Customised approaches to customer
needs
75.
Greater efficiency and effectiveness
76.
Improved marketing effort
77.
Reduction of number of channel
transactions
Marketing Channels adding Value
Consumer Marketing Channels
78.
Information gathering and distributing marketing research and
intelligence
79.
Promotion developing and spreading communications about an offer
80.
Contact finding and communicating with prospective buyers
81.
Matching shaping and fitting the offer to the buyers needs
82.
Negotiation reach an agreement on price and other terms of the offer
so that ownership or possession can be transferred
83.
Physical distribution transporting and storing goods
84.
Financing acquiring and using funds to cover the cost of the channel
work
85.
Risk taking assuming the risks of carrying out the
channel work
Channel Organisation Vertical Marketing Networks (VNM)
86.
Information gathering and distributing marketing research and
intelligence
87.
Consists of suppliers, wholesalers, retailers acting as unified network
88.
Network can be nominated by either the supplier, wholesaler or
retailer
89.
Types of VMN include corporate, contractual or administered
Choosing a Distribution Model

90.
New products needs to be introduced by demonstration and
explanation, retailers not appropriate; new tools and equipment need direct
marketing through commission agents (BB)
91.
Small customer bases readily accessible customers have
wholesalers or distributors target customers for direct sales through
commission agents; direct sales can help maximise profits and create good
customer relationships
92.
Personalised service local dealer network or reseller program to
provide service
93.
Buying online e-commerce website to sell direct; sell to online
retailer or distributor
94.
Own specialised sales team look for sales prospects and close deals
directly with customers
Retailing
95.
Retailing activities involved in selling goods or services directly to
final consumers for their personal, non-business use
96.
Retailers businesses whose sales come primarily from retailing;
classified through:
Retailer Marketing Decisions (Strategy) Target Market and Positioning

97.
Product (and service assortment) decide on product variables of
product assortment, services mix and store atmosphere
98.
Price price policy must fit target market and positioning, product and
service assortment and competition; either high mark-ups on lower volume
or low mark-ups on higher volumes
99.
Promotion use any or all of promotion tools (advertising, personal
selling, sales promotion, public relations and direct marketing); websites
offering information and selling direct
100.
Placement CBD, shopping centres (regional and strip), clusters of
retailers in commercial buildings or near hotels, do it yourself retail parks,
entertainment centres, arcades and conversion of historical buildings
Wholesaling
101.
All activities involved
in selling goods and services to those buying for resale or business use
102.
Wholesalers perform
one or more functions: selling and promoting, buying and assortment
building, bulk breaking, warehousing, transportation, financing, risk bearing,
market information, management services and advice
Types of Wholesalers
103.
Merchant wholesalers
independently owned business that take title to the merchandise they
handle; largest single group of wholesalers
104.
Full service
wholesalers provide full set of services (e.g. carrying stock, using salesforce, offering credit, making deliveries and providing management
assistance)
105.
Limited service
wholesalers cash and carry wholesalers, trust wholesalers, drop shippers
rack jobbers, producers cooperatives, mail order wholesalers
106.
Brokers brings
buyers and seller together and assists negotiation; paid by parties hiring
them; do not carry inventory or get involved in financing nor assume risk
107.
Agents represent
buyers or sellers on a more permanent basis; there are (1) manufacturers
agent (2) selling agent (3) purchasing agent (4) commission merchant
No lecture 9 Labour Day holiday
LECTURE 10 INTEGRATED MARKETING COMMUNICATION:

ADVERTISING
What is promotion? How do marketing communication activities assist the other elements of the
marketing mix in an organisation's marketing strategy?
Promotion is the marketing communication that makes potential customers, partners and society
aware and attracted to the benefits of a business's products. It comprises of a strategic mix of
advertising, public relations, sales promotion and personal selling. Promotion sends messages
about other parts of the marketing mix mix: product, pricing and distribution.
Integrated Marketing Communication
- Coordination of organisations promotional efforts
- Use major communication elements such as advertising, sales promotion, public
relations, direct and online marketing, personal selling.
- Meets objectives such a to inform, persuade and remind customers
How does the model of communication help in explaining how an

advertisement works? Analyse a current advertising campaign in
your answer.
The communication process: a message is encoded and sent by a sender via a message channel
to a target audience who decodes the message and responds by some form of feedback. Anything
that gets in the way of the effective communication process is known as noise. The AAMI
advertisement where Rhonda is on the beach with Ketut is very effective in communicating that
with AAMI you save so much that you can go on a holiday.
Definition
Benefits
Paid, non-personal
- Cost efficient
presentation and
- Repeats message
Advertising promotion of ideas, goods - Can control message
or services by an
- Create favourable
identified sponsor
images
- Appeal to priceShort-term incentives,
sensitive
encourage
purchase;
Sales
Generate extra
Promotion alters price-value
interest
relationship
Public
Relations
Non-personal
communication in news
story form through
medium for free
- Can measure effect

- More credible
- Low cost
Limitations
- Hard to measure
effectiveness
- Delayed feedback
- Credibility problems
- Clutter in media
- Short-term impact
- Doesnt contribute
to brand image
- Promotional wars
- Lack of control
- Can be negative
Elements in the Communication Process
Lecture 9:
Marketing Logistics Networks:
Managing the network of players providing customer fulfillment, ranging from:
suppliers (raw materials, components and capital equipment)
purchasing agents
manufacturer
marketers
transport agencies
end-consumer (managing their expectations)
Marketing Logistics Network and the Other Ps

Product:
variations (colour, size, features, styles)
may impose a burden on distribution facilities
Promotion:
campaigns must reflect logistics delivery
Pricing:
a source of differential advantage based on superior logistical service
if you use multiple channels, compare the price that the end-user will pay; if a customer
can buy from one channel at a lower price than another, your partners will rightfully have
concerns.
Marketing Channels:
A set of interdependent organisations involved in the process of making a product or service
available to users.
Distribution channels are the pathways that companies use to sell their products to endusers.
Network of interdependent organisations (or intermediaries)
making product or service available for use or consumption
Intermediaries are organisations linking producers to other intermediaries or to the
customer through contractual arrangements to purchase and resale products (i.e. transport
companies, Dan Murphys)
How Marketing Channels Add Value:
Informationgathering and distributing marketing research and intelligence.
Promotiondeveloping and spreading communications about an offer.
Contactfinding and communicating with prospective buyers.
Matchingshaping and fitting the offer to the buyers needs, including such activities as
manufacturing, grading, assembling and packaging.
Negotiationreaching an agreement on price and other terms of the offer so that
ownership or possession can be transferred.
Physical distributiontransporting and storing goods.
Financingacquiring and using funds to cover the costs of the channel work.
Risk takingassuming the risks of carrying out the channel work.
Levels and Channel Conflict:
Channel level is a layer of intermediaries who perform some work in bringing the product and its
ownership closer to the final buyer.
Channel 1, manufacturer
Consumer (no intermediary levels)
Retailer
Consumer
Wholesaler Retailer
Consumer
Channel conflict is the disagreement among marketing channel level members on goals and
roles, on who should do what and for what rewards.
Channel Organisation:
Vertical Marketing Networks (VMN) are a distribution channel structure in which producers,
wholesalers and retailers act as a unified network, one channel member owns the others.
Vertical Marketing Networks (VMN) consists of:
suppliers
wholesalers
retailers acting as a unified network
The vertical marketing network can be dominated by the suppliers, wholesaler or retailer.
Types of VMN:
corporate, combines successive stages of production and distribution under single
ownership
contractual, independent firms at different levels join together to obtain economies of
scale
wholesaler-sponsored voluntary chain, wholesalers organise voluntary chains of
independent retailers to help them compete with large corporate chain organisations
retailer cooperatives, retailers organise a new, jointly owned wholesale business
franchise organisation, a channel member called a franchisor links several stages in
the production-distribution process
administered, coordinates successive stages of production and distribution, not through
common ownership but through the power of one of the parties
Retailing
All activities involved in selling goods or services directly to final consumers for their personal,
no-business use.
Retailing Classification:
Retail stores can be classified four ways:
Amount of Service:
self service retailer, provides few or no services to shoppers, shoppers perform their own
locate-compare-select process, e.g. discount stores
limited service retailer, provides only a limited number of services to shoppers, e.g.
smaller hardware chains
full service retailer, provides a full range of services to shoppers, e.g. first class
department stores
Product Line
specialty store, carries a narrow product line with a deep assortment within that line
combination store, a combined grocery and general merchandise store
department store, carries a wide range of product lines, each line is operated as a separate
department managed by specialist buyers or merchandisers
supermarket, a large, low cost, low margin, high volume, self service store that carries a
wide variety of food, laundry and household products
convenience store, a small store located near a residential area, open long hours seven
days a week, carrying a limited line of high turnover convenience goods
superstore, twice the size of a supermarket carrying a large assortment of routinely
purchased food and no food items and services such as dry cleaning
service business, the product line is a service, e.g. hotels, airlines and restaurants
Relative Prices
discount stores, sells at lower prices, accepting lower margins and selling at higher
volume
off price retailer, buys at less than regular wholesale prices and sells at less than retail
DFO, carries the manufacturers surplus, discontinued or irregular goods
independent off-price retailer, owned and run by an entrepreneur
warehouse club, sells a limited selection of brand name grocery items, appliance and
clothing at discounts to members who pay an annual membership fee
Organisational Approach
chain store, two or more outlets that are commonly owned and controlled and employ
central buying and merchandising
voluntary chain, a wholesaler sponsored group of independent retailers that engages in
group buying and common merchandising
a contractual association between a manufacturer, wholesaler or service organisation and
independent business people who buy the right to own and operate a franchise system.
Retailer Marketing Decisions:
Target Market and Positioning Decision
must define their target markets and then decide how to position themselves.
until they define and profile their markets, retailers cannot make consistent decisions
about product assortment
Product and Service Assortment Decision
Retailers must decide on three main product variables:
product assortment
services mix
store atmosphere
Price Decision
a retailers price policy must fit its target market and positioning, product and service
assortment, and competition.
most retailers seek either high markups on lower volumes or low mark-ups on higher
volumes.
Promotion Decision
use any or all of the promotion tools advertising, personal selling, sales promotion, public
relations and direct marketing to reach consumers.
most retailers have also set up websites offering customer information and other features
and often sell merchandise directly.
Placement Decision
Central Business District (CBD)
Shopping Centres
regional shopping centres.
strip shopping centres.
Other types of store clusters include:
clusters of retailers in commercial buildings or surrounding major hotels.
Do it yourself retails parks.
entertainment centres.
arcades and the conversion of historical buildings.
Wholesaling
Wholesaling includes all activities involved in selling goods and services to those buying for
resale or business use. Wholesalers are performing one or more of the following functions:
selling and promoting
buying and assortment building
bulk breaking
warehousing
transportation
financing
risk bearing
market information
management services and advice
Types of Wholesalers:
Merchant Wholesalers
independently owned businesses that take title to the merchandise they handle. The
largest single group of wholesalers.
Full Service Wholesalers
Provide a full set of services, such as carrying stock, using a sales-force, offering credit,
making deliveries and providing management assistance.
Limited Service Wholesalers
cash-and-carry wholesalers, truck wholesalers, drop shippers rack jobbers, producers
cooperatives, mail order wholesalers.
Limited services to supplies and customers
Brokers
brings buyers and sellers together and assists in negotiation. Brokers are paid by the
parties hiring them. They do not carry inventory, get involved in financing or assume
risk.
Agents
Represent buyers or sellers on a more permanent basis. Types of agents:
1. manufacturers agent
2. selling agent
3. purchasing agent
4. commission merchant
Lecture 10:
Integrated Marketing Communication (IMC):
The concept under which a company carefully integrates and coordinates its many
communications channels to deliver a clear, consistent and compelling message about its
products
Co-ordination of the organisations promotional efforts

Uses major communication elements such as:
advertising,
sales promotion,
public relations,
direct and online marketing
personal selling.
Meets objectives such as to inform, persuade, and remind consumers
Advertising:
Any paid form of non-personal presentation and promotion of ideas, goods or services by an
identified sponsor.
Benefits:
cost efficient in reaching a large audience (unlike personal selling)
lets the advertiser repeat the message several times and in several different media (unlike
personal selling)
ability to control message (unlike publicity)
able to create favourable images (unlike some sales promotions like price discounts, buy
one get one free)
Limitations:
difficult to determine or measure its effectiveness in terms of sales, for example (unlike
sales promotion eg coupons)
delayed feedback from customers in terms of intention to buy, for example (unlike
personal selling)
credibility problems(unlike publicity)
clutter in many media (billboards, TV etc)
Sales Promotion:
Short-term incentives (activity or material) to encourage purchase of a good or service.
(Attempts to alter the price-value relationship of a product in the prospects mind, usually
for a limited time.)
Benefits:
a way to appeal to price-sensitive consumers
can generate extra interest in ads
easier to measure effects of sales promotion (such as coupons, price discounts) on sales,
for example
Limitations:
often has short-term impact only
often does not contribute to brand image (unlike advertising)
can lead to promotional wars among competitors
Public Relations:
A broad set of communication tools or methods used to create and maintain favourable
relationships between an organisation and its stakeholders (employees, customers, shareholders,
government officials, society at large etc). Example of PR Tools: Publicity Sponsorship, (even
advertising!)
Publicity, a tool of Public Relations:
It is non-personal communication in a news story form about an organisation/product transmitted
through a medium for free.
Benefits:
Publicity via news items (editorial in print/blogs/TV broadcasts etc) is more credible than
advertising in mass media.
Low cost way to communicate
Limitations:
Lack of control (unlike advertising)
Can be negative
Decisions in Developing IMC:
Identifying the Target Audience
Audience may be:
potential buyers or current users,
those who make the buying decision,
those who influence it
Identify Response Sought:

Buyer Readiness States:
Awareness Knowledge Liking
Preference
Conviction
Purchase
Selecting a Message:
Ideally the message should:
Get Attention
Hold Interest
Arouse Desire
Obtain Action
(A framework known as the AIDA model)
Message Content:
Rational Appeals
relate to the audiences self interest
show how the product will produce the benefits
Emotional Appeals
stir up positive or negative emotions that can motivate purchase
Moral Appeals
directed to the audiences sense of what is right and proper
Message Structure-there are three message structure issues:
whether to draw a conclusion or leave it to the audience?
whether to present a one-sided or two-sided argument?
whether to present the strongest argument first or last?
Message Format
communicator needs a strong format for the message.
in print ads, the communicator decides on the headline, copy, illustration and colour.
for radio, the communicator chooses words, sounds and voices.
for TV, all elements plus body language have to be planned. May be expensive now but
you save in the long run
Setting the IMC Budget and Mix:
affordable method, setting the promotion budget at what management thinks the
company can afford
percentage of sales method, setting the promotion budget at a certain percentage of
current forecast sales, or as a percentage of the sales price
competitive-parity method, setting the promotion budget to match competitors outlays
objective and task method, developing promotion budget by defining objectives,
determining the tasks that must be performed to achieve these objectives and estimating
the costs of these is the proposed promotion budget
Considerations in Developing Integrated Marketing Communication:
Companies consider many factors when developing their IMC program:
type of product and market

push versus pull strategy
buyer-readiness state
product life cycle stage
A push strategy is a promotion strategy that calls for using the sales force and trade
promotion to push the product through marketing channels to final consumers
A pull strategy is a promotion strategy that calls for spending a lot on advertising and
consumer promotion to build up consumer demand
Advertising:
An advertising objective is a specific communication task to be accomplished with a
specific target audience during a specific period of time.
Advertising objectives can be classified by purpose: whether their aim is to inform,
persuade or remind. Resulting in:
informative advertising
persuasive advertising
comparison advertising
reminder advertising
Advertising Media:
Newspapers (versus Magazines):
Advantages:
Flexibility ads for newspapers can be produced in a matter of hours, and deadline for
receiving ads is usually 24 hours before publication (unlike magazines)
Geographic selectivity local, regional, national newspapers (like magazines)
Disadvantages:
Poor reproduction quality (unlike magazines)
Lack of demographic (eg gender) or lifestyle selectivity (eg gardening enthusiasts)
(unlike magazines)
Small pass-along audience (unlike magazines)
Short life span (unlike magazines)
Television (versus Radio)
Advantages:
Greater creativity and impact (than radio)
Greater attention (than radio)
Disadvantages:
Less demographic/geographic selectivity (than radio)few local TV stations than local
radio stations
Higher cost (than radio)
Lecture 11:
Public Relations:
Major mass-communication tool.
Aims at building good relations with the companys various publics using different tools:
news
speeches
special events
written materials
audiovisual materials
corporate identity materials
community service activities
Sales Promotion
Influencing customer perception and behaviour to:
build market share,
increase sales and
reinforce brand image
Used to:
Attract new triers (Non-users, loyal users of another brand, and brand switchers)
Reward and retain brand-loyal customers
Reduce time between purchases
Turn light users into medium or heavy users
Regain past purchasers
Evaluation of performance
Sales Promotion Tools
Contests and games of skill and chance, give consumers the chance to win something of
value by luck
Samples, free or discounted goods provided at store level through the media
Redeemable coupons, a coupon carried on pack or in other media that when forwarded to
a marketer will be redeemed for a product or service
Cash-back offers, a cash discount
Cents-off deals or Price Packs, a reduced price that is marked by the producer directly on
the label or package
Premiums, goods offered free of charge or at reduced price as an incentive to buy a
product
Advertising Specialties, a article imprinted with an advertisers name, given as a gift to
consumers
Patronage Rewards, a cash, merchandise or service reward offered to consumers who

make continual use of a company[s product or service, e.g. frequent flyer plans
Point-of-Purchase, an offer ranging from a theme promotion in store to a specially
arranged selling area
Role of Personal Selling

Personal selling involves two-way, personal communication between salespeople and individual
customers
face-to-face
by telephone
through video conferences
or by other means
Sales people are concerned with producing sales but should also be concerned with
customer satisfaction and profit
Major Steps in Effective Selling:
Selling Process:
The steps that the salesperson follows when selling. These are:
Prospecting, salesperson identifies qualified potential customers
Preapproach, salesperson learns as much as possible about a prospective customer before
making a call
Presentation, salesperson tells the product story to the buyer, showing how the product
will save them money
Handling objections, salesperson seeks out, clarifies and overcomes customers objections
to buying
Closing, salesperson asks the customer to an order
Follow-up, salesperson follows up after the sale to ensure customer satisfaction and
repeat business
Personal Selling and Relationship Marketing:
Relationship marketing:
process of creating, maintaining and enhancing strong, value-laden relationships with
customers and other stakeholders
stresses profitable long-term relationships with customers by creating superior customer
value and satisfaction
Winning and keeping accounts requires more than making good products and closing lots
of sales
Direct and Digital Marketing:
This is an interactive system of marketing which uses one or more advertising media to affect a
measurable response or transaction to any location.
Internet is a public network.

Intranet:,secure websites accessed by company employees only.
Extranet, websites accessed by both employees and known customers.
Customer relationship management (CRM):

one-to-one marketing (OnetoOne)

direct marketing or direct-order marketing
E-marketing
interactive marketing
Forms of Online and Direct Marketing:

Sales Promotion
Direct print and reproduction, involves mail outs of letter, product lists and catalogues to
a list of known database of customers
Direct-response, TV and Radio, use of mass promotion media combined with a direct
response offer, usually involving telemarketing
Telemarketing, use of telephone operators to attract new customers or contact existing
customers
Integrated database marketing,
Telesales, routine order taking by telephone operators
Electronic shopping, purchasing via an electronic bulletin board or Telstras Discovery,
or via interactive cable television
Direct selling, selling directly to consumers or businesses rather than using a reseller,
such as a retailer or agent
Electronic dispensing & kiosks, a machine that dispenses products or services usually by
inserting cash or a transaction
Direct and Digital Database Use:
Direct and online database marketing
development and maintenance of electronic databases to interact with past, present and/or
potential customers and others in the marketing channel
maintain value-ladden relationships
How Are Direct and Digital Marketing Databases Used?
Marketing organisations use their databases in a number of ways:
1. identifying prospects
2. deciding which customers should receive
1. a particular offer
2. deepening customer loyalty
3. reactivating customers
4. data mining
Lecture 12:
Social and Ethical Issues in Marketing:
A number of social and ethical issues arise from marketing practice and emerge as areas
of attention for marketing scientists and regulators.
These matters generate considerable criticism of marketing practice, some of which is
justified but much of which is not.
The Impact of Marketing on Individual Consumers:
Consumer worries include:
high prices
poor-quality
dangerous products
misleading advertising claims
deceptive practices
breaches of privacy
high-pressure selling
planned obsolescence
poor service to disadvantaged consumers
The Impact of Marketing on Society:
The marketing system has been accused of adding to several evils in society:
false wants and over concern with materialism.
too few social goods.
cultural pollution.
too much political power.
Marketings Impact on Other Businesses:
There are three major problems involved:
acquisition of competitors
marketing practices that create barriers to entry
unfair competitive marketing practices
Private and Public Actions to Regulate Marketing:
There are movements that attempt too ensure that:
ethical business practices are adopted
particularly at times when executive salaries seem to be disproportionately high or when
fraud and misappropriation of company monies are uncovered (e.g. Enron)
The two major movements are:
Consumerism, an organised movement of citizens and government agencies whose aim is
to improve the rights and power of buyers in relation to sellers
Environmentalism, an organised movement of concerned citizens, businesses and
government agencies seeking to protect and improve peoples living environment
Consumerism:
Consumerism is an organised movement of citizens and government agencies to improve the

rights and power of buyers in relation to sellers
Why the push for consumerism groups?
consumers have become better educated,
products have become more complex and hazardous,
marketing organisations have raised consumers expectations
Environmentalism:
False Wants and Too Much Materialism
Too Much Political Power
Too Few Social Goods
Cultural Pollution
Eco-Systems
Pollution
Long-Term
Ethical Marketing:
approach by which organisations recognize that the task of marketing is to be both
enlightened to societys views and ethical in the organisations approach to society as a
whole and to customers.
most organisations respond positively to consumerism and environmentalism.
develop corporate marketing ethics policies.
Adopting Ethical Marketing:
Societal marketing is a principle of enlightened marketing which holds that an organisation
should make marketing decisions by considering consumers wants, the organisations
requirements and the long term interests of consumers and society.
Makes marketing decisions by considering:
consumers wants and interests,
the companys requirements and
societys long term interests.
Products may be classified according to their degree of immediate customer satisfaction and
long-term consumer benefit:
deficient products, products such as bad tasting and ineffective medicine that have
neither immediate appeal nor long term benefits
pleasing products, products that give high immediate appeal nor long term benefits
salutary products, products that give high immediate satisfaction, but they may hurt
consumers and society in the long run
desirable products, products that give both high immediate satisfaction and high long
term benefits
PART THREE: DEVELOPING THE MARKETING MIX

CHAPTER NINE: NEW PRODUCTS
1. Identify the challenges companies face in creating a new-product development strategy.
A new product is a product that is new in any way for the company concerned. It can be;
1. New to the world innovations
2. New category entries
3. Additions to product lines- eg vehicles
4. Product improvements
5. Repositioning- products re-targeted for new use, application or to a new user
6. Variations of the above-variations such as new to the country or new to the
channel are not commonly accepted as new products
Organisations must develop new products. Their current products face limited life spans and
must be replaced by newer products. But new products can fail95% never reach the market,
<3% of those that survive last for 5 years-the risks of innovation are as great as the rewards. The
key to successful innovation lies in a total company effort, strong planning and a systematic
new-product development process. A new product can be obtained through acquisition or
internal new-product development process.
New product success is based on;
Reasons for product failure;
Product superiority/quality
Bad timing
Economic advantage to the

user-value for money
Insignificant point of difference
Poor quality
Overall company/project fit
Technological capability
Familiarity with the company
Poor marketing execution

markets too small or
inaccessible
Market needs, growth, size
Lack of top management

commitment
Competitive situation-ease of
entry into the market
Must have an adequate budget

to meet sales goals
Defined opportunity
Project definition-how well

defined the product & project
are internally
New-product development- the dev of original products, product improvements, product

modifications and new brands through the companys own R&D efforts.
Common reasons for new product failure include the inability of potential consumers to see the
product concept or how it might apply to them, no perceived need or perceived inferior product,
wrong timing, poor market research and poor marketing implementation as well as inadequate
promotional budget and lack of support.
To create successful new products, a company must understand its consumers, markets and
competitors and develop products that deliver superior value to customers. M orgs also need to
understand how leading-edge users and opinion leaders are involved in spreading positive word
of mouth in the diffusion process.
Challenges:
Keen competition
Meeting growing social and gov constraints
Many companies cannot afford or raise the funds needed for new product
development
High degree of complexity and a multitude of decisions
Conflicting set of mgt demands that product innovators must comply with
The new-product development process consists of 8 stages:

1. ideas generation,
2. ideas screening,
3. concept development and testing,
4. marketing strategy development,
5. business analysis,
6. product development,
7. test marketing and
8. commercialisation.
2. List different sources for ideas generation and discuss how an idea moves ahead through
ideas screening, concept development and concept testing.
Ideas generation - the systematic search for new product ideas.
Sources of new ideas include;
Internal sources sales force
Customers
Competitors
Distributors
Retailers
Wholesalers
Suppliers
Ideas screening - Screening new product ideas in order to spot good ideas and drop poor ones as
soon as possible. It aims to reduce the number of ideas as product development costs rise greatly
in later stages. The company only wants to go ahead with the product ideas that will turn into
profitable products.
Screening criteria includes;
Company objectives
Production capacity
Production capability
Marketing capability
Product risk
Product fit
Concept development & testing involves testing new product concepts with a group of target
consumers to find out if the concepts have strong consumer appeal. It considers:
1. Product idea An idea for a possible product that the company can see itself
offering to the market.
2. Product concept- a detailed version of the idea stated in terms that are
meaningful to customers. The idea that consumers favour products that offer
the most quality, performance and features and that the organisation should
therefore devote its energy to making continuous product improvements.
3. Product image- the way consumers perceive an actual or potential product.
4. Concept testing- process of testing product concepts with a group of target
consumers.
Example: The Hydro Car

Concept 1an inexpensive small sized vehicle designed as a second family car to be used
around town (ideal for loading groceries and hauling children, and easy to enter).
Concept 2a medium-cost, medium-sized car designed as an all-purpose family car.
Concept 3a medium-cost sporty compact appealing to young people.
Concept 4an inexpensive sub-compact appealing to conscientious people who want basic
transportation, low fuel cost and low pollution.
3. Outline how a potential product advances from a concept to a product through marketing
strategy development, business analysis and product development.
Marketing strategy development - Designing an initial marketing strategy for a new product
based on the product concept, i.e. the process of designing an initial marketing strategy for a new
product. It consists of 3 parts:
1. Describe target market, planned product positioning, and the sales,
market share and profit goals for the first few years
2. Outline products planned price, distribution and marketing budget for the
first year.
3. Describe planned long-run sales, profit goals and marketing-mix strategy.
Business analysis- A review of the sales, costs and profit projections for a new product to find
out whether these factors satisfy the companys objectives. If they do, the product can move to
the product-development stage. It involves the assessment of financial budgets, potential market
and growth rate.
Product development- so far the product only exists on paper. R & D or engineering develops the
product concept into a physical product. It is a strategy for promoting company growth by
offering modified or new products to current market segments; developing the product concept
into a physical product to ensure that the product idea can be turned into a workable product.
Development activities incl. prototype, feasibility testing, preliminary market strategies. This
step involves large investments.
4. Explain the purpose of test marketing and distinguish between standard, controlled and
simulated test markets.
Test marketing the stage of new-product development in which the product and marketing
program are introduced into more realistic market settings.
It gives the marketer experience with marketing the product, finding potential
problems and learning where more information is needed before going to the
great expense of full introduction.
The basic purpose is to test the product itself in real market situations.
It also allows the company to learn how consumers and dealers will react to
handling, using and repurchasing the product.
Thus a good test market can provide a wealth of information about the potential
success of the product and its marketing program.
Consumer markets;
o
Standard test markets- test the new consumer product in situations

like those it would face in a full-scale launch. The results are used to
forecast national sales and profits, to discover potential product problems
and to fine-tune the marketing program.
Controlled test markets- several research firms keep controlled panels

of stores that have agreed to carry new products for a fee. The company
with the new product specifies the # of stores and the geo locations it
wants. The research firm delivers the product to participating stores and
controls shelf location, amount of shelf space, displays and point-ofpurchase promotions and pricing, according to specified plans. Sales
results are tracked to determine the impact of these factors on demand.
Take less time than standard test markets & usually cost less.
Simulated test markets- Company or research firm shows a sample of

consumers the ads and promos for a variety of products, incl the new
product being tested. The consumers are given a small amount of money
& are invited into a real or lab store where they may keep the money or
use it to buy items. The company notes how many consumers buy the
new product and competing brands. This provides a measure of trial
purchase and assesses the commercials effectiveness against competing
commercials. Consumers are then asked the reasons for their purchase or
non-purchase. Some weeks later they are interviewed to determine
product attitudes, usage, satisfaction & repurchase intentions.
Business markets; product-use tests.
5. Evaluate the product life-cycle theory, detailing the extent to which you accept the
sequence of the introduction, growth, maturity and decline stages.
Product life cycle- The course of a products sales and profits during its lifetime. Each product
has a life cycle marked by a changing set of problems and opportunities. Managements goal is
to maximise lifetime and sales. Company needs to recover all R&D costs. The sales of the
typical product follow an S-shaped curve made up of 5 stages. Exact shape and length is not
known in advance.
1. The cycle begins with the product development stage when the company finds
and develops a new product idea.
2. The introduction stage is marked by slow growth and low profits as the
product is being pushed into distribution. The new product is first distributed and
made available for purchase.
3. If successful, the product enters a growth stage marked by rapid sales growth
and increasing profits. During this stage the company tries to improve the
product, enter new market segments and distribution channels and reduce its
prices slightly.
4. Then comes a maturity stage in which sales growth slows down and profits
stabilise. The company seeks strategies to renew sales growth, including
market, product and marketing-mix modification.
5. Finally, the product enters a decline stage in which sales and profits dwindle.
The companys task during this stage is to identify the declining product and
decide whether it should be maintained, harvested or dropped. If dropped, the
product can be sold to another firm or liquidated for salvage value.
Marketers apply it to describe how products and markets work;
Forecasting product performance or for developing m strategies presents some

practical problems
Managers may have trouble identifying which stage of the PLC the product is in
Difficult to forecast the sales level at each PLC stage, the length of each stage
and shape of the PLC curve
Yet when used carefully, the PLC concept can help in developing good m
strategies for diff stages of the PLC.
Stage
Introduction
Application
Starts when the new product is first launched
Profits are negative or low bc of low sales and high dist and
promotion expenses
Goals: inform consumers of the new product & get them to

try it
Focus selling on those buyers who are the readiest to buyusually the higher-income groups
Strategy 1: Mgt might launch the new product with a high

price and low promotion spending. High price helps to recover
as much gross profit per unit as possible and low promo
spending keeps m spending down.
-Used when: the m is ltd in size, when most consumers in the
m know about the product and are willing to pay a high price
and when there is little immediate potential competition.
Growth
Strategy 2: introduce its new product with a low price and

heavy promo spending. This promises to bring the fastest m
penetration and highest m share.
-Used when: m is large, potential buyers are price sensitive
and unaware of the product, potential comp is strong and the
cos unit manufacturing costs fall with the scale of production
and accumulated manufacturing experience.
Early adopters will cont to buy and later buyers will follow their
lead, esp if they hear favourable word of mouth
Attracted by the opportunities for profit, new competitors will

enter the m
Theyll introduce new product features and the m will expand
in comps = # dist outlets and sales jump just to build

reseller inventories
Prices remain where they are or fall only slightly
Companies keep their promo spending at the same or a

slightly higher level; educating the m remains a goal but now
the co must also meet the comp
In high-tech m, the early growth stage is typified by niche

strategies with customer-tailored solutions e.g. spreadsheet
packages were first targeted at financial professions only. .
During rapid growth, strategies change towards more massmarket solutions involving a common standard infrastructure.
E.g. enormous growth in laser and ink jet printers to multibillion dollar industry led by Hewlett Packard reflects this. HP
geared up for huge production and extended dist channels and
kept driving for lower price points.
Profits increase during this growth stage as promo costs are

spread over a large volume and unit manufacturing costs fall.
The co uses several strategies to sustain rapid m growth as

long as possible:
-improves product quality and adds new product features and
models.
-enters new m segments and new dist channels.
-shifts some advertising from building product awareness to
building production conviction and purchase
-lowers prices at the right time to attract more buyers.
Maturity
Co faces trade-off bw high m share and high current profit: by

spending a lot on product improvement, promo and
distribution, it can capture a dominant position but it gives up
the max current profit in the hope of making this up in the next
stage.
This stage lasts longer than previous stages and poses strong
challenges to marketing management
Most products are in the maturity stage of the PLC
High-tech products require a change in strategy towards

more customised solutions that focus on specific adaptations
of the infrastructure for added value through mass
customisation.
M extension occurs through more targeted niche-based

strategies e.g. most marketers of printers target home users
with a low-cost ink-jet printer that automatically connects to a
digital camera and even displays digital photos. Companies
such as Brother and HP conduce niche campaigns promoting
their compact, portable printers to appeal to those with ltd
space, multifunction devices for those who do not have a fax,
and higher-performance colour printers for people wanting to
create their own promotional material.
Slowdown in sales growth results when many producers have

many products to sell = this overcapacity leads to >
competition
Competitors mark down prices, increase their advertising and

sales promos and push up R&D budgets to find better versions
of the product. These = drop in profit.
Some of weaker competitors drop out & eventually the

industry contains only well established competitors
Attack is the best defence so product managers should

consider modifying the market, product and the marketing mix.
1. Market modification:
-co tries to increase consumption of the current product by
looking for new users and new m segments. E.g. Johnson &
Johnson targeted the adult m with its baby powder and
shampoo.
-Also look for ways to increase usage among present
customers. E.g. Golden Circle offers recipes and convinces
customers that canned fruit is good and easy to use.
-May also want to reposition the brand to appeal to a larger
or faster growing segment. E.g. Nescafe appealed to the
beach-going segment by offering trials of iced coffee as a cool
and refreshing drink, aiming to increase its usage beyond rinks
at coffee lounges and in cooler weather.
2. Product modification: change a products characteristicsquality, features of style to attract new users and more usage.
Decline
3. M Mix modification: prices can be cut to attract new users and

competitors customers, a better advertising campaign can be
launched, aggressive sales promotion (trade deals, contests
etc) can be used, the co can move into larger m channels
using mass merchandisers if these channels are growing
and/or it can offer new or improved services to buyers.
Decline may be slow e.g. canned foods across the globe or
rapid as for VCR games
Reasons: technological advances, shifts in consumer tastes

and increased competition.
As sales and profit decline, some cos withdraw from the m.

Those remaining might reduce the # of their product offerings,
drop the smaller m segments and marginal trade channels or
cut the promo budget and reduce their prices further.
Carrying a weak product can be very costly to the firm- profit

as well as hidden costs: it may take up too much of mgts
time, it often requires frequent price and inventory
adjustments, it requires advertising and salesforce attention
that might be better used to make healthy products more
profitable, its failing reputation can cause customer concerns
about the co and its other products.
Biggest cost may lie in the future- keeping weak products

delays the search for replacements, creates a lopsided product
mix, hurts current profits and weakens the cos foothold on the
future.
1st task: for cos is to identify those products in the decline

stage by regularly reviewing sales, m shares, cost and profit
trends
2nd: for each declining product mgt must decide whether to

maintain, harvest or drop it.
-Maintain= brand w/out change in hope that competitors will
leave the industry. Or mgt may decide to reposition the brand
in the belief that it will move back into the growth stage
-harvest= reducing various costs (plant and equipment,
maintenance, R&D, advertising, salesforce) and hoping that
sales hold up. If successful, it will the cos profits in te short
run.
Drop= the product from the line. It can sell it to another firm or
simply liquidate it at salvage value.
Tab l e 9 . 6
Summary of product life-cycle characteristics, objectives and strategies
Introduction
Characteristics
Sales
Costs
Profits
Growth
Low sales
Rapidly rising sales
High cost per customer Average cost per
customer
Negative
Rising profits
Maturity
Decline
Peak sales
Low cost per customer
Declining sales
Low cost per customer
High profits
Declining profits
Customers
Competitors
Innovators
Few
Early adopters
Growing number
Middle majority
Stable number,
beginning to decline
Laggards
Declining number
Create product
awareness and trial
Maximise market share Maximise profit while Reduce expenditure and

defending market share milk the brand
Marketing objectives
Strategies
Product
Price
Distribution
Advertising
Sales promotion
Offer a basic product
Offer product
extensions, service,
warranty
Use cost-plus
Price to penetrate
market
Build selective
Build intensive
distribution
distribution
Build product
Build awareness and
awareness among early interest in the mass
adopters and dealers
market
Use heavy sales
Reduce to take
promotion to entice trial advantage of heavy
consumer demand
Diversify brand and

models
Phase out weak items
Price to match or best

competitors
Build more intensive
distribution
Stress brand differences
and benefits
Cut price
Increase to encourage
brand switching
Go selective: phase out

unprofitable outlets
Reduce to level needed
to retain hard-core
loyals
Reduce to minimal level
Fads- Fashions that enter quickly, are adopted with great zeal, peak early and decline fast. Tend to
attract only a limited following. Often have a novel or quirky nature.
Fashion- A currently accepted or popular style in a given field. Fashions pass through many stages;
1. A small # of consumers taken in interest in something new to set themselves apart
2. Other consumers become interested out of a desire to copy the fashion leaders
3. The fashion becomes popular and is adopted by the mass market.
Style- A basic and distinctive mode of expression. A style has a cycle showing several periods of
renewed interest.
6. Explain the differences experienced by technology products in the technology adoption cycle.
A variation of the classic life-cycle model is the technology adoption cycle. This refers to the adopted
acceptance pattern of a technology innovation identifying different stages of adoption with different
adopter groups. It highlights the challenge of crossing the chasm from attracting innovators to
attracting early adopters.
1. The early market a time of excitement, customers are technology enthusiasts
and visionaries
2. The chasm-a time of despair, early markets interest disappears, mainstream m still
not accepting the immaturity of the solutions available
3. The bowling alley-a period of niche based adoption in advance of the general
marketplace, driven by compelling customer needs and willingness of suppliers to
design niche-specific whole products.
4. The Tornado-period of mass m adoption, general marketplace switches over to new
technology.
5. Main Street- period of further dev, base technology infrastructure has been
deployed and goal now is to extend its potential.
6. End of life- often come very soon with high tech innovations, bc price and
performance are driven to unheard-of levels
8.
Commercialisation
New product
development
Introducing a new product into the market. It involves;
Full scale production
Full scale marketing
Integration into the firm
The company launching a new product must make 4 decisions:

when (seasons, gift-giving times, a lot of products launched at
xmas time), where (local area), to whom (women, mothers,
opinion leaders) and how.
The dev of original products, product improvements, product modifications

and new brands through the companys own R&D efforts.
Speeding up new product development through;

1. Sequential product development- A new product dev approach in which one
company department works individually to complete its stage of the process
before passing the new product along to the next department and stage.
2. Simultaneous product development - An approach to dev new products in
which various company departments work closely together, overlapping the
steps in the product dev process to save time and increase effectiveness.
CHAPTER TEN: PRICING CONSIDERATIONS AND APPROACHES

1. Discuss how marketing objectives, marketing-mix strategy and costs and other company
factors affect pricing decisions
Price- the amount of money charged for a product or service, or the sum of the
values consumers exchange for the benefits of having or using the product or
service.
It is the only element of the m mix that produces revenue, all other elements
represent costs
Pricing structure usually covers different items in a firms product line
Adjustments of product prices to reflect changing costs and demand and to

account for variations in buyers and situations
the price the co charges will be between 1 that is too low to produce a profit and
1 that is too high to produce any DD
Marketing objectives
Some of the most common objectives are:
Marketing-mix strategy
Survival- low price hoping to increase DD

Current profit maximisation- set a price that will max
profits
Market-share leadership- maintaining dominance=
undercut competition by setting prices as low as possible
Product-quality leadership- charge a premium (high
price to cover high quality and high cost of R&D)
Other objectives- prices can be set to keep customer
loyalty or avoid gov intervention, can be temporarily
reduced to create excitement for a product or to draw
customers into a retail store.
Price decisions must be coordinated with product
design, distribution and promotion decisions to form a
consistent and effective m program
Decisions made for other m mix variables may affect

pricing decisions e.g. producers who use many resellers
who are then expected to support and promote their
products may have to build larger reseller margins into
their prices
Sometimes
the
intended
price
determines
what
product features can be offered and what production

costs can be incurred. E.g. Yamaha, a traditional
marketer of high-quality specialised music equipment,
designed a mini stereo system to compete with Sony and
Phillips. It had discovered a m segment for affordable
stereos and designed models to sell within the price
range the segment was willing to pay. Here, price was a
crucial product-positioning factor that defined the
products market, competition and design
Costs
Some firms use target costing- starts with a target

cost and works back
Often the best strategy is not to charge the lowest price,

but rather to differentiate the m offer to make it worth
a higher price
If the product is positioned on non-price factors then

decisions about quality, promotion and distribution will
strongly affect price
If price is a critical positioning factor then price will

strongly affect decisions made about other m mix
elements
Costs set the floor for the price that the co can charge for
its product
The co wants to charge a price that covers all its costs

for producing, distributing and selling the product, and
also delivers a fair rate of return for its effort and risk
Types of costs-fixed costs: dont vary with production or sales levels

-variable costs: vary directly with the level of
production
-total costs: sum of fixed and variable costs for any
given level of production
-production level costs
-costs as a function of production experience:
average cost tends to fall with accumulated production
experience (experience curve: the drop in the average
per-unit production cost that comes with acc production
experience)
-organisational considerations: mgt must decide who
within the org should set prices
2. List and discuss factors outside the company that affect pricing decisions &
3. Explain how price setting depends on consumer perceptions of price and on the pricedemand relationship
1. THE MARKET AND DEMAND
Pricing in diff types of markets:

o Pure comp- m consists of many buyers and sellers with having little
influence on m price. Trading of uniform commodity. E.g. wheat,
vegetables, fin securities.
o Monopolistic comp- many buyers and sellers, range of prices occurs bc
sellers can differentiate their offers to buyers.
o Oligopolistic comp- few sellers who are highly sensitive to each others
pricing and m strategies. Product can be uniform (aluminium, acid) or
non-uniform (food processors, cars). It is difficult for new sellers to enter
the m.
o Pure monopoly- a single seller. E.g gov monopoly- Aus Post. Pricing is
handled differently in each case.
Consumer perceptions of price and value:

o In the end, the consumers will decide whether a product price is right
o Effective buyer-oriented pricing involves understanding how much
value consumers place on the benefits they receive from the product and
then setting a price that fits this value
o Bc consumers vary in the values they assign to different product features,
marketers often vary their pricing strategies for different price segments.
They offer diff sets of product features at different prices.
Analysing the price demand relationship:

o Each price charged by a co will lead to a diff level of DD
o DD curve- shows the # of units the m will buy in a given time period, at
diff prices that might be charged
o Normally, DD and price are inversely related= higher price=lower DD.
o Luxury goods DD curve slopes upwards (direct rship)
o Impact of non-price factors on DD are shown through shifts in the DD
curve rather than movements along it
E.g. Dairy Farmers Thick and Creamy Yoghurt- increased product
quality
Price elasticity of DD:

o Price elasticity- a measure of the sensitivity of DD to changes in price
Formula- % change in quantity demanded
% change in price
o Inelastic DD- DD hardly changes with a small change in price
the less elastic the DD, the more it pays for the seller to raise the
price
Elastic DD- DD changes greatly with a change in price

If DD is elastic, sellers will consider lowering their price
A lower price will produce more total revenue
buyers are less price sensitive when:
the product they are buying is unique or when it is high in quality,
prestige or exclusiveness e.g. antique car, art, first class airlines.
substitute products are hard to find or when they cant easily
compare the quality of substitutes e.g insurance policies, mobile
phone plans.
the total expenditure for a product is low relative to their income or
when the cost is shared by another party
2. COMPETITORS PRICES AND OFFERS
the cos pricing strategy may affect the nature of the comp it faces e.g. if Timex
follows a high-price, high-margin strategy, it may attract comp.
the co needs to learn the price and quality of each comps offer
4. OTHER EXTERNAL FACTORS
Economic conditions- economic factors- inflation, boom or recession and IR
affect pricing decisions bc they affect the costs of producing a product and
consumer perceptions of the products price and value
Gov- laws affecting price.
o Trade Practices Act- prohibits price fixing, resale price maintenance and
forms of price discrimination as well as predatory pricing by
monopolistically positioned competitors and deceptive pricing
o ACCC- plays a major role in investigating possible breaches
5. Compare the four general pricing approaches

I.
Cost-based pricing (product-driven)

Cost-plus pricing: adding a standard markup to the cost of the product
(simplest method). E.g. construction companies.
o
Mark-ups are smallest on staple goods and high on products such as fresh
chicken, seasonable items and perishables, specialty items, slower
moving items, items with high storage and handling costs and items with
inelastic DD.
Mark-up pricing only works if that price actually brings in the expected
level of sales.
Key reasons for popularity: increased certainty, minimise price comp &
perceived fairness
II.
Breakeven analysis and target profit pricing: setting price to breakeven on

the costs of making and marketing a product or to make the desired profit.
o
Used by many Aus importers; and by public utilities which are constrained
to make a fair return on their I.
Uses the concept of a breakeven chart which shows the total cost and
total revenue expected at diff sales vol levels.
As price increases, breakeven vol drops. It is imp to consider the analysis

in a competitive context.
Breakeven volume = fixed cost / (unit sell price unit variable cost)
Value-based pricing
Setting price based on buyers perceptions of value rather than on the sellers
costs
E.g. various prices diff restaurants charge for the same items due to the value
added by the atmosphere and service
Co uses non-price variables in the m mix to build up perceived value in the

buyers mind
III.
Competition-based pricing
Economic value pricing: costs perceived by customers extend well beyond

trhe price charged (eg may incl installation costs). Equip purchases are
evaluated over their economic lives and comparisons bw competitors go beyond
straight price assessment. Thus, moving away from price comparisons to
differentiating products on the basis of economic value to customers. E.g.
aircraft tyre manufacturer prices its tyres on basis of cost per one hundred
landings instead of cost per tyre.
Going-rate pricing: setting price based largely on following competitors prices

rather than on co costs or DD. In oligopolistic industries that sell a commodity
such as steel cos normally charge the same price. Is quite popular.
Sealed-bid/tenders: setting price based on how the firm thinks competitors

will price rather than its own costs or DD- used when a co bids for jobs.
IV.
Relationship Pricing (not important!)

Concerned with managing customer expectations and the rship so that a
continuous stream of transactions results and the lifetime value of each
customer is optimised.
6. Describe the major strategies for pricing new products

1. Market skimming pricing: setting a high price for a new product to skim max
revenue from the segments willing to pay the high price; the co makes fewer but
more profitable sales. E.g. Apple adopted this with the release of its iPod MP3
player. It is effective when:
o
The products quality and image are consistent with a high price
There are enough buyers to purchase the product at that price
the costs of producing a small vol are not so high that there is an
inadequate margin
when the firm has a new product that is patent-protected like many new
ethical drugs or contains design benefits that arent easily emulated by
competitors
2. Market penetration pricing: setting a low price for a new product in order to
attract a large number of buyers and a large market share. E..g Microsoft,
warehouse stores and discount retailers use it. Several conditions favour setting
a low price:
o
M must be sensitive to diff price levels so that a low price produces more
rapid m trial and more m growth
Production and dist costs fall as sales vol increases
Low price may help to keep out or delay comp
Adopted for many FMCG bc they are e.g. of continuous innovation
Pricing for an imitative new product is rather difficult: position on quality or price?
7. Comprehend the way in which companies establish a set of prices that maximises the
profits from the total product mix
The strategy for setting a price on an offer has to be changed when the product is part of a mix.
Pricing is difficult bc the various g/s have related DD and costs and face different degrees of
comp.
Strategy
Product/service line pricing
Optional produce/service
pricing
Captive product/service
pricing
Description
Setting the price steps bw various products in a product line,
based on cost differences bw the products, customer evaluations
of different features and competitors prices.
Pricing of optional or accessory products along with a main
product. E.g. car companies must decide which items to build
into the base price and which to offer as options.
Pricing of products that must be used along with a main product
such as blades for a razor or film for a camera. Also ink
(consumables) for inkjet printers (captive products).
Two-part pricing: a strategy for pricing services in which price
is broken into a fixed fee plus a variable usage rate.
By-product pricing
Product-bundle pricing
Setting a price for by-products in order to make the main

products price more competitive. E.g. in the production of
processed meats, petroleum products, chemicals and other
products, there are often by products. The manufacturer will
seek a market for these by products and should accept any price
that covers more than the cost of storing and delivering them.
This allows the seller to reduce the main products price to
make it more competitive.
Combining several products and offering the bundle at a
reduced price. E.g. sport teams sell season tickets.
8. Explain how companies adjust their prices to take into account different types of
customers and situations
Companies apply a variety of price-adjustment strategies to account for differences in consumer
segments and situations;
Discount pricing allowances- co est cash discounts, quantity discounts,

functional discounts, seasonal discounts and allowances.
Segmented pricing- co sets different prices for different customers, product

forms, places or times. E.g. toothpaste tubes vs. pumps, train fares for seniors,
students, children, Happy Hour.
Psychological pricing- co adjusts the price to communicate more effectively a

products intended position.
Promotional pricing- co decides on loss-leader pricing (supermarkets), special

event pricing and psychological discounting.
Value pricing- co offers just the right combination of quality and good service
at a fair price.
Geographic pricing- co decides how to price to distant customers, choosing

from such alternatives as FOB pricing, uniform delivered pricing, zone pricing,
basing-point pricing and freight-absorption pricing.
International pricing- co adjusts its price to meet diff conditions and

expectations in diff world markets.
CHAPTER ELEVEN: PLACEMENT

Placement covers many concepts including physical distribution, location, channels of
distribution and logistics management. The appropriate assortment of products must be in the
right place, at the right time and in the right condition to maximise customer satisfaction.
Logistics is an area of potentially high cost savings and improved customer satisfaction.
Traditionally, management focused on the physical distribution of goods. Now it
focuses on the logistics of making and distributing products.
1. Describe the nature of marketing logistics network management
Marketing logistics network - system of efficiently and effectively making and getting
products and services to end-users. It involves coordinating the activities of the entire chain to
deliver maximum value to customers. It begins earlier than physical distribution and includes;
Procuring inputs (raw materials, K equipment)
Conversion of these to finished products &
Conveying them to end users
No such network can both maximise customer service and minimise logistics costs. Instead, the
goal of marketing logistics management is to provide a targeted level of service at an
affordable cost, where the customer perceives value. Marketing logistics networks management
also entails managing marketing distribution channels; the major functions include effective
and efficient conversion operations, order processing, warehousing, inventory management and
transportation.
Marketing Logistics Decisions includes making trade-offs to meet customers service
requirements;
1. Cycle time reductions
6. Warehouse numbers and costs
2. Conversion operations location
7. Inventory levels and costs
3. Purchasing decisions
8. Transport type and costs
4. Manufacturing and operations

process decisions
9. Restructure the marketing

channels
5. Order processing and costs
There is a critical interaction bw logistics & each of the firms marketing functions & this
requires careful coordination.
Product variations may impose a burden on distribution facilities

Promo campaigns must realistically coordinate with potential logistics delivery
Pricing may be the firms differential advantage based on superior logistical
service
2. Describe the nature of marketing channels and explain why marketing

intermediaries are used
Marketing channels refer to a network of interdependent organisations (or intermediaries)

involved in the process of making a product or service available for use or consumption by the
consumer or industrial user. The functions of marketing channels are:
1.
2.
3.
4.
5.
6.
7.
8.
Information; gathering and distributing marketing research and intelligence

Promotion; developing and spreading communications about an offer
Contact; finding and communicating with prospective buyers
Matching; shaping & fitting the offer to the buyers needs, incl such activities
as manufacturing, grading, assembling and packaging
Negotiation; reaching an agreement on price and other terms of the offer
Physical distribution; transporting and storing goods
Financing; acquiring & using funds to cover the costs of the channel work
Risk taking; assuming the risks of carrying out the channel work
Intermediaries are organisations linking producers to other intermediaries or to the customer

through contractual arrangements to purchase and resale products. They are used because of:
Cost
Increased coverage
Consumer convenience
Customized approaches to customer needs
> efficiency
Improved marketing effort
Marketing intermediaries can reduce the overall costs of market exchanges by efficiently
performing certain functions.
3. Explain the organisation and behaviour of marketing channels
Marketing channels are complex behavioural networks in which people and companies interact
to accomplish individual, company and channel goals. Some channel networks consist only of
informal interactions among loosely organized firms; others consist of formal interactions
guided by strong organisational structures. Channel networks do not stand still, new types of
intermediaries surface and whole new channel networks evolve.
Marketing distribution channel decisions are among the most complex and challenging
decisions facing the firm. Each channel network creates a different level of sales and costs. Once
a marketing channel has been chosen, the firm must usually stick with it for a long time. The
chosen channel strongly affects, and is affected by, the other elements in the marketing mix.
A marketing channel consists of dissimilar firms that have banded together for their common
good. Ideally, because the success of individual channel members depends on overall channel
success, all channel firms should work together smoothly. By cooperating, they can more
effectively sense, serve and satisfy the target market. Although channel members are dependent
on one another, they sometimes act alone in trying to meet their own short-run best interests.
This may result in channel conflict - a disagreement among marketing channel members on
goals and roles- who should do what and for what rewards.
Horizontal conflict- conflict between firms at the same level of the channel
(ie communication difficulties inhibit coordination) e.g. Franchisees of large
fast food chains might complain about the pricing practices of other
franchisees in the same image chain.
Vertical conflict- even more common and refers to conflicts between
different levels of the same channel. E.g. when Kmart started in Australia,
some paint manufacturers were wary about supplying them with the
manufacturers branded product because of the potential backlash that
would occur from other retailers who stocked the brand.
Some conflict may be in the form of healthy competition.
Marketing channels in the services context;
Experiences arent shipped or moved but in this context consider

o Physical facilities for delivery
o Location
o Direct distribution vs. channels
o Web-based delivery, contact centres, etc.
The channel will perform better if it contains a company, agency or mechanism that has the
power to assign roles and manage conflict. In recent years, new types of channel organisations
have appeared that provide stronger leadership and improved performance.
Conventional marketing channel: consists of one or more independent producers or
suppliers, wholesalers or retailers where each is a separate business seeking to maximize its
own profits, even at the expense of profits for the network as a whole.
Vertical marketing
Horizontal marketing
Hybrid marketing channel
networks (VMN):
networks
networks (aka multichannel
networks)
A
distribution
channel A channel arrangement in Multichannel
distribution
structure in which producers, which 2 or more companies at systems in which a single firm
wholesalers and retailers act one level join together to sets up 2 or more marketing
as a unified network- one follow a new marketing channels to reach one or
channel member owns the opportunity.
more marketing segments.
others, has contracts with
them or wields so much Companies might join Benefit- > sales as
forces
with
multi-consumer
power that they all cooperate.
Can be dominated by
the
retailers,
wholesaler
or
producers.
They
achieve
economies
through
size, bargaining power
and
elimination
of
duplicated services.
3 major types:
1. Corporate
VMNscombines successive
competitors and noncompetitors.
Usually
formed
to
move
into
new
markets (esp. global
markets)
segments are reached

Risksmay
offend
existing
channel
members
who
cry
unfair
competition,
channel members are
sometimes
compensated
by
exclusive or special
allowances.
E.g.
Inghams
sells
dressed
chicken
portions to KFC as well
stages of production &

distribution
under
single ownership.
2. Contractual
VMNsconsists
of
independent firms at
different
levels
of
production
&
distribution who join
together
through
contracts to obtain
more economies or
sales impact than they
could achieve alone. 3
types of contractual
include;
wholesalersponsored
voluntary
chains (networks in
which
wholesalers
organize
voluntary
chains of independent
retailers to help them
compete with large
orgs),
Retailer
cooperatives
(networks in which
retailers organize a
new, jointly owned
business to carry on
wholesaling
and
possibly production) &
franchise organisations
(a channel member
called
a
frachisor
links several stages in
the
productiondistribution process. It
includes manufacturersponsored
retailer
franchise
networks,
manufacturersponsored wholesaler
franchise networks &
service-firm-sponsored
retailer
franchise
networks).
3. Administered
VMNscoordinates successive
stages of production &
distribution
through
the size and power of
one of the parties.
as to a myriad of
independent
takeaway food shops and
also
sells
breaded
portion-controlled
chicken products to
every part of the food
services industry, incl
McDonalds and KFC.
It has been argued that the Web will revolutionise the distribution of marketing channels by;
Rebuilding the supply chain

Transforming or obliterating channels
Speedily conveying and receiving information
Improving communication with channel members
Allowing firms to reach distant parts of the world
Providing customers with the option of worldwide vendors
Providing services instantaneously across international borders
Offering web-enhanced services for each distribution function
Cheaper channels
Establishing LT relationships
4. Discuss traditional & online store retailing and the different ways of classifying
stores: by amount of service provided, breadth and depth of the product line,
relative price levels, control of outlets and type of store cluster.
Retailing includes all activities involved in selling g/s directly to final consumers for their
personal, non-business use. Retailers can be classified as store retailers and non-store retailers.
Although most g/s are sold through bricks and mortar' stores, direct and online forms of
retailing have seen rapid growth. This was followed by a falling away as mistakes were made
due to initial stock market support for, and then a retreat from, flawed business models for online
intermediaries.
Retailing classifications:
1. Amount
service
of
2. Product
sold
Diff products needs diff amounts of service and customer

service preferences vary.
Three levels of potential service;
o Self service retailer
o Limited service retailer
o Full service retailer
Self Service Technologies (SSTs): technological interfaces that allow

customers to create services themselves, without direct assistance from
service personnel. E.g. automated hotel check-in and check-out
facilities, ATMs, self-service kiosks, retail self scanners & internetbased tools such as self-booking services (flights). Adv cost
reduction, offer consistent service & dont have to I money and time in
training. Dis- v impersonal.
line(s) Retailers can be classified by the length and breadth of their product
assortments:
3. Relative prices
Most retailers charge regular prices and offer normal quality goods and
customer service. Some offer higher quality g/s at higher prices.
Retailers which feature low prices are:
4. Control
outlet
of
5. Type of
cluster
store
Specialty stores
Department stores e.g. David Jones
Combination stores e.g. Woolies and Liquorland
Supermarkets
Convenience stores
Mass merchants e.g. Bunnings
Hypermarkets
Service businesses
Discount stores sells standard merchandise at lower

prices by accepting lower margins & selling at higher
volume.
Off price retailers retailers that buy at < retail, usually
carry a changing and unstable collection of higher-quality
merchandise, often left over goods, overruns and
irregulars obtained from manufacturers at reduced prices.
E.g. factory outlets.
Catalogue showrooms a retail operation that sells a
wide selection of high mark-up, fast-moving brand name
goods at discount prices.
Corporate chains 2 or more outlets that are commonly
owned & controlled, employ central buying and
merchandising & sell similar lines of merchandise.
Retailer cooperatives a group of independent retailers
that band together to set up a jointly owned central
wholesale operation and conduct joint merchandising and
promotion efforts.
Voluntary chains- a wholesaler-sponsored group of
independent retailers that engages in group-buying and
common merchandising.
Franchise organisations a contractual association
between
a
manufacturer,
wholesaler
or
service
organisation (the franchisor) and independent business
people (franchisees) who buy the right to own and operate
1 or more units in the franchise system.
Merchandising
conglomeratescompanies
that
combine several different retailing forms under central
ownership and share some distribution and management
functions.
Most stores cluster to increase their customer pulling power & to give
consumers the convenience of one-stop shopping. Main types are;
CBD the area of business at the heart of a city or town

Shopping centre- a group of retail businesses planned,
developed, owned and managed as a unit.
Community shopping centre- a centre containing 15-50
retail stores & even a branch of a discount department or
variety store, a supermarket, specialty stores, professional
offices & sometimes a bank.
Strip community centre- a group of retail businesses

located along an arterial road.
5. Compare the different types of wholesalers, including full-service and limited-service

merchant wholesalers, brokers & agents, & manufacturers sales branches.
Wholesaling includes all the activities involved in selling goods or services to those who are
buying for the purpose of resale or for business use. Wholesalers perform many functions,
including;
1.
2.
3.
4.
5.
6.
7.
8.
selling and promoting

buying and assortment building
bulk breaking, warehousing
transporting
financing
risk bearing
supplying market information
Providing management services
and advice.
Types of wholesalers:
1. Merchant
wholesalers
2. Brokers
agents
Ind owned businesses that take title to the

merchandise they handle
Largest single group of wholesalers
Include:
o Full service wholesalers- provide a full
set of services
o Limited service wholesalers- cash &
carry wholesalers (fish markets), truck
wholesalers (food vans that go to hospitals),
drop shippers (at wharf sites inv dropped
in), rack jobbers (serve grocery and
pharmaceutical
retailers),
producers
cooperatives (assemble farm produce to sell
in local markets) & mail order wholesalers.
and Broker
A wholesaler who does not take title to goods and whose

function is to bring buyers and sellers together and assist in
negotiation.
Are paid by the parties hiring them

Do not carry inv, get involved in financing or
assume risk
Agent
A wholesaler who represents buyers or sellers on a more
permanent basis, performs only a few functions and does not
take title to the goods.
Types
o
o
o
o
They are paid a commission for aiding buying and

selling.
of agents include;
Manfacturers agent
Selling agent
Purchasing agent
Commission merchant
3. Manufacturers Wholesaling by sellers or buyers themselves rather than
sales through independent wholesalers.

branches
& Manufacturers often set up their own sales
offices
branches and offices to improve inv control, selling
& promotion
Sales branches carry inv & are found in such
industries as timber and car equipment & parts
Some large retailers set up purchasing offices in
major market centres elsewhere in the world.
These purchasing offices perform a role similar to
that of brokers or agents but are part of the
buyers org.
6. Explain the wholesaler marketing decisions of target market and

positioning and marketing-mix decisions, and describe trends in
wholesaling.
Trends in wholesaling;
Consolidation will reduce the # of firms in the industry

The remaining wholesalers will grow
Distributors will need to learn how to compete effectively over

wider and more diverse areas
The increased use of technology will help management
The distinction between large retailers and wholesalers will

continue to blur
Wholesalers will continue to increase their services to retailers:

pricing, advertising, information etc.
CHAPTER TWELVE: IMC 1: ADVERTISING & PUBLIC

RELATIONS
1. Describe integrated marketing communication (IMC) and

classify IMC media, tools and technologies.
IMC- the concept under which a company carefully integrates and coordinates its
many communication channels to deliver a clear, consistent and compelling message
about the org and its products. It aims to most effectively meet objectives such as to
inform, persuade and remind consumers as well as to reinforce their attitudes and
perceptions.
It entails coordinating the orgs promotional efforts using major communication
elements such as
Advertising
Sales promotion
PR
Direct and online marketing
Personal selling
Tab l e 1 2 . 1
A classification of integrated marketing communication media, tools and technologies
Integrated marketing communication

category
Mass communication
Targeted communication
In-store communication
One-to-one communication
Media, tools and technologies

Advertising via FTA-TV; radio; newspapers; magazines; outdoor;
cinema; cooperative advertising; motion pictures. With or without sales
promotion incentives.
-to a large diverse market
Pay-TV (satellite, cable and narrowcast microwave TV with no backchannel); home shopping (FTA-TV or pay-TV); public relations; door-todoor selling; catalogues; telephone directories (Yellow Pages); events
(Formula One championship); sponsorships; mobile and static trade
exhibitions; automatic vending machines. With or without sales
-to more specific groups.
Retail counter selling; merchandising; location-TV and radio (narrowcast
or closed); aisle displays; electronic aisle messaging; point-of-purchase
media (e.g. trolley advertising); packaging. With or without sales
-at point of purchase, throughout store, at end of aisles
Database marketing in all its forms: direct mail; interactive TV;
telemarketing (telephone or fax); telesales; electronic dispensing and
kiosks; direct selling (home and office); online value transformation.
With or without sales promotion incentives.
2. Outline the steps in developing IMC including identifying the target

audience, and determining the response sought.
1. Sender-Party sending the message to another party

2. Encoding-Process of putting thought into symbolic form
3. Message-Set of symbols that the sender transmits-the actual advertisement
4. Media- Communication channels through which the message moves from sender to
receiver
5. Decoding-Process by which the receiver assigns meaning to the symbols encoded
by the sender-a consumer watches the ad and interprets the words and illustrations it
contains
6. Receiver-Party receiving the message sent by another party-the consumer who
watches the ad.
7. Response-Reactions of the receiver after being exposed to the message-any of
hundreds of possible responses.
8. Feedback-Part of the receiver's response communicated back to the sender.
9. Noise- Unplanned static or distortion during the communication process that results
in the receiver getting a different message from the one which the sender sent
Identifying the Target audience:
M communicator starts with a clear target audience in mind. Audience may be
potential buyers or current users, those who make the buying decision or those who
influence it. Audience may be ind, groups, special publics or the general public
Determining response sought:
The m communicator needs to know where the target audience now stands and to
what state it needs to be moved. The target audience may be in any of 6 buyerreadiness states:
1. Awareness-of the product or org. May be through simple name
recognition. This process can begin with simple messages repeating
the name.
2. Knowledge- effective communicators need to learn how many people
in their t audience have little, some or much knowledge about the
product or org.
3. Liking- if the audience looks unfavourably on the org or its products,
the communicator must learn why and then dev a m communication
campaign to create favourable feelings.
4. Preference- communicators must try to build consumer preference,
promoting the products quality, value, performance and other
features.
5. Conviction- the communicators job is to build conviction that taking
the next step and buying the brand is the right thing to do.
6. Purchase- communicator must lead consumers to take the final step.
Actions might incl offering the product at a low price, offering a
premium or letting consumers try it on a limited basis.
3. Describe the communication process: selecting a message, selecting the media,

selecting a message source and collecting feedback.
Selecting a message:
Ideally the message should (AIDA model):

o Get ATTENTION
o Hold INTEREST
o Arouse DESIRES
o Obtain ACTION
Message content- the communicator has to work out an appeal or

theme that will produce the desired response:
o Rational appeals- relate to the audiences self-interest. Show
that the product will produce the desired benefits. E.g. car adsprice, features
o Emotional appeals- attempt to stir up either or + emotions
that can motivate purchase. E.g. fear, guilt, shame.
o Moral appeals- directed to the audiences sense of what is right
and proper. E.g. social causes, save the world.
Message structure- communicator must decide

o Whether to draw a conclusion or leave it to the audience
(principle of closure)
o Whether to present a one-sided or two-sided argument (onesided usually more effective)
o Whether to present the strongest arguments first or last
Message format- need a strong format to effectively deliver the

message. This varies in print, radio and TV mediums.
Selecting the media:

There are two broad types of communication channels the communicator can select
from:
Personal communication channels channels, through which two

or more people communicate directly with each other, including faceto-face, person-to-audience, over the telephone or through the mail.
Also, word-of-mouth and opinion leaders.
Non-personal communication channels media that carry

messages without personal contact or feedback, including media (print
media, broadcast media and display media), atmosphere (designed
environments that create or reinforce the buyers leanings towards
buying a product) and events (occurrences staged to communicate
messages to target audiences).
Selecting the message source:
Messages impact on the audience is also affected by how the audience

views the sender
Messages delivered by highly credible sources are more persuasive
E.g. marketers hire well-known actors and athletes to deliver their
messages
Three factors most found in a credible source are expertise,

trustworthiness and likeableness
Collecting Feedback:
After sending the message the communicator must gauge its effect on
the target audience
This involves asking the target audience whether they remember the
message, how many times they saw it, what points they recall, how
they felt about the message, and their past and present attitudes
towards the product and company.
The communicator would also like to measure behaviour resulting from
the message
4. Define the ways of setting an integrated marketing communication budget:

affordable, percentage-of-sales, competitive parity and objective-and-task methods.
Method used to
set total
advertising
budget
1. Affordable
method
Definition
Advantages
Disadvantages
Setting the promotion

budget at what
management thinks
the company can
afford. They begin
with the total
revenues, deduct
operating expenses
and capital outlays,
and then devote some
portion of the
remaining funds to
the IMC element in
question.
2. % of sales
method
Setting the
promotion budget
at a certain % of
current or forecast
sales or of the
sales price. E.g.
car companies
usually budget a
fixed % for IMC
based on the
planned car price.
Spending is
likely to vary
with what
the company
can afford
Helps
management
to think
about the
relationship
between
marketing
communicati
ignores the
effect of
marketing
communicati
on on sales
volume,
leading to an
uncertain
annual IMC
budget,
which makes
long range
market
planning
difficult.
often results
in
underspendi
ng.
It wrongly
views sales
as the cause
of IMC rather
than the
intended
result.
The budget is
based on
availability of
funds rather
than on
opportunities
on spending,
selling price
and profit per

unit
It supposedly
creates
competitive
stability
because
competing
firms tend to
spend about
the same %
of their sales
on IMC
3. Competiti
ve Parity
Method
Setting the promotion

budget to match
competitors outlays.
Two arguments
support this method:
.
It may
prevent the
increased
spending
sometimes
needed to
turn around
falling sales.
Because the
budget
varies with
year to year
sales, long
range
planning is
difficult.
It does not
provide any
basis for
nominating a
specific %,
except what
has been
done in the
past or what
competitors
are doing.
Neither
argument is
valid.
1. Competitors
budgets
represent the
collective
wisdom of the
industry
2. Spending what
competitors
spend helps
prevent
promotion wars
4. Objective
and task
method
Developing the
promotion budget by
1. Defining
specific
objectives
2. Determining
the tasks that
must be
performed to
makes mgt
spell out its
assumptions
about the
relationship
between
dollars spent
and IMC
results
is the most
difficult
method to
use.
achieve those
objectives
3. Estimating the
costs of
performing
these tasks.
The sum of
these costs is
the proposed
promotion
budget
5. Explain IMC media, tools and technologies advertising, PR, direct and online
marketing, sales promotion and personal selling and the factors involved when
setting the IMC program; type of product and market, push vs pull strategies, buyerreadiness states and lifecycle stage.
IMC media, tools and technologies
Orgs need to divide budget among major marketing communication categories,
specific media, tools and technologies. Mix of marketing communication needed to
achieve marketing objectives defers greatly between companies, even those within the
same industry.
Tool
Advertising
PR
Adv
Advertisings
public
nature
suggests that the advertised
product is standard and
legitimate.
Lets the seller repeat a

message many times and it
lets
the
buyer
receiving
compare the messages of
various competitors.
Very expressive, letting the

company
dramatise
its
products through the artful use
of print, sound and colour.
Can be used to build up a long
term image of a product and
also to trigger quick sales.
Can
reach
masses
of
geographically
spread
out
buyers at a low cost per
exposure.
Believability is higher to
readers than ads
Can reach many prospects
who avoid sales people and
ads
Like advertising PR can
dramatise a company or
product
Dis
it is impersonal and cant be
as persuasive as a company
sales person.
Is
asynchronous
communication (able to carry
on
only
a
one-way
communication
with
the
audience).
Can be very costly.
Direct and
Online
Marketing
Sales
Promotion
E.g. scattergram dropped in post office

boxes, mailouts left in household
letterboxes addressed to the
householders by name
There is a very large privacy

issue when we look into the
means by which direct
marketers gain their database
info, who they sell it to and how
it is used
SMEs make up 90% of business

firms in Australia and given
their lower costs of direct
marketing, this aspect of
promotion has been keenly
adopted
Attracts consumer attention

and provides info that may
lead the consumer to buy the
product
The offer strong incentives to
purchase with inducements or
contributions that give
additional value to consumers
They invite and reward quick
response
Can be used to dramatise
product offers and boost
sagging sales
Sales promotion efforts are

usually short-lived and may
not be effective in building long
run brand preference
oral presentation in a conversation with

one or more prospective purchasers for
the purpose of making sales.
Requires a longer term

commitment than advertising
Is the companies most
expensive IMC tool
Personal
Selling
Involves personal interaction

between 2 or > people so each
person can observe the others
needs and characteristics and
make quick adjustments
Also lets relationships spring up
The buyer usually feels a >
need to respond and listen
Factors involved when setting the IMC program
Type of product and market

Consumer goods companies spend most on advertising then
sales promo, then personal selling, followed by PR
B2B of industrial goods spend most on personal selling, followed
by sales promo, advertising and PR
Personal selling is more heavily used with expensive and risky
goods and in markets with fewer and large sellers
Push versus pull strategy
Push strategy is a promotion strategy that calls for using the
salesforce and trade promo to push the product through
channels; the producer promotes the product to wholesalers, the
wholesalers promote to retailers and the retailers promote to

consumers
Pull strategy is a promo strategy that calls for spending a lot on
advertising and consumer promo to build up consumer demand;
if successful, consumers will ask their retailers for the product,
retailers will ask the wholesalers and wholesalers will ask the
producers
Most large companies use a combination of both. Recently,
consumer goods companies have been decreasing the pull portions
of their IMC mixes
Buyer-readiness state
Advertising and PR play major roles in awareness and
knowledge states
Customer liking, preference and conviction are more affected
by personal selling and advertising
Closing the sale is mostly done with direct marketing, sales
calls and sales promo
Product lifecycle stage
Intro advertising, direct marketing, online marketing and PR are
good for producing high awareness.
Early trial sales promo is useful.
Personal selling must be used to get the trade to carry the
product.
Growth stage advertising, direct marketing, online marketing
and PR continue to be powerful but sales promo can be reduced.
Mature stage sales promo becomes more important relative to
advertising.
Decline stage advertising kept at a reminder level, PR is dropped
and sales people give the product only a little attention. Sales
promo might continue to be strong.
6. Describe the nature of media advertising, including the major decisions involved:
advertising budget, setting strategy, creative execution, media selection and
evaluation in terms of communication and sales outcomes.
Setting Objectives
Advertising objectives should be based on past decisions about the

target market, positioning and marketing mix. The marketing
positioning and mix strategies define the job that advertising must
do in the total marketing program.
Advertising objective- a specific communication task to be

accomplished with a specific target audience during a specific period of
time
Different types of advertising
o Informative advertising- used when introducing a new
product category, objective is to build primary demand
o Persuasive advertising- more important as comp increases,
objective to build selective demand. Some has become
comparative advertising which compares one brand with one or
more other brands
o Reminder advertising- important for mature products, keeps
consumers thinking about the product
Setting the Advertising Budget
Factors that should be considered when setting a budget are

o Stage in product lifecycle
o Market share
o Competition and clutter
o Advertising frequency
o Product differentiation
Budget to be set for each product
Role of advertising is to affect demand for a product. Company wants
to spend the amount needed to achieve the sales goal.
Advertising Strategy
Consists of creating advertising messages and selecting

advertising media
Large advertising budget doesnt guarantee a successful advertising
campaign
Typical message execution styles
o Slice of life- shows people using product in a normal setting
o Lifestyle- shows how a product fits in with a lifestyle
o Fantasy- creates a fantasy around the product or its use
o Mood or image- builds one around the product
o Musical- shows people or cartoon characters singing a song
about the product
o Personality symbol- creates a character that represents the
product
o Technical expertise- shows companies expertise in making the
product
o Scientific evidence- presents scientific evidence that the brand
is better or better liked than another
o Testimonial evidence- features believable or likeable source
endorsing the product
Media Selection:
Four major steps in media selection are

o Deciding on reach, frequency and impact
o Selecting major media types
o Selecting specific media vehicles
o Deciding on media timing
Advertising Evaluation:
Communication effects
o Measuring the communication effect tells whether an ad is
communicating well. Called copy testing, it can be done
before or after an ad is printed or broadcast.
o Three major methods of advertising pre-testing are direct
rating, portfolio tests and lab tests.
o Two popular methods of post testing advertisements are
recall tests and recognition tests.
Sales effects
o One way to measure is to compare past sales with past
advertising expenditures.
7. Define public relations and outline the more common forms of this IMC
tool.
PR building good relations with the companies various publics by obtaining

favourable publicity, building up a good corporate image and handling or heading off
unfavourable rumours, stories and events. It is a form of major mass communication
tool. Major PR tools include press relations, product publicity, corporate
communication, lobbying and counselling.
News- some occur naturally or PR person can suggest events/activities

that would create news
Speeches-create product and company publicity
Special events- news conferences, press tours, grand openings and
fireworks to laser shows that will reach and interest target publics
Written materials- annual reports, brochures, articles and company
newsletters and magazines
Audiovisual materials- slide shows, films
Corporate identity materials- logos, stationary, brochures, signs,
business cards, uniforms, company cars
Community service activities- to improve public goodwill
8. Explain the need for socially responsible marketing communication and

how this is achieved.
Advertising:
Companies must avoid false or deceptive advertising

Sellers must avoid bait-and-switch advertising that attracts
buyers under false pretences
Personal Selling:
Companies must ensure their sales people follow the rule of fair
competition
Direct and Online Marketing:
Marketers and customers usually enjoy mutually rewarding

relationships
Unfairness, deception and fraud are the dark side that may
emerge
Growing concerns about invasion of privacy issues.
CHAPTER THIRTEEN: IMC 2: SALES PROMOTION AND

PERSONAL SELLING
1. Describe sales promotion tools and techniques that may be used to

create immediacy and close sales, as well as reward loyal
customers
Sales promotion- short term incentives to encourage purchase of a product or

service; act of influencing customer perception and behaviour to build market share
and sales which reinforces brand image. They are value-adding tools used to prompt
an immediate sale by adding urgency. May take many forms depending on the
objectives to be met, type of market and product and the budget available and has its
origins in Fast Moving Consumer Goods (FMCG).
Sales promotion is used to:
Attract new triers (non-users, loyal users of another brand and brand
switchers)
Reward and retain brand-loyal customers
Turn light users into medium or heavy users
Regain past purchasers who have ceased buying
Sales promotion objectives- are as varied as the methods used. Sellers may use
consumer promotions to increase ST sales or to help build LT market share. The
objectives may be one of the following:
Entice customers to try a new product/brand

Lure consumers away from competitors products/brands
Get consumers to load up on a mature product
Hold and reward loyal customers
In general terms, sales promo should promote the products positioning and include a
selling message along with the deal. Ideally, the objective is to build positive
consumer attitudes, stronger brand equity, > market share and increased profitability
rather than to prompt temporary brand switching. If properly designed, every sales
promo tool has consumer franchise-building potential, even where a price cut is
included.
Sales promotion tools1. Consumer promotion tools
TOOL
Samples
DEFINITION
EXAMPLE/APPLICATION
Free or discounted goods provided at store Often low-priced categories
level or through the media designed to and FMCG.
facilitate product trial. Offers of a trial of a
product. Expensive but effective way to create
awareness of and trial a new product.
Redeemable
coupons
Coupons carried on-pack or in another media

that can be forwarded to a marketer or
appointed agent and will be redeemed for a
product or service, even a discount on the
next purchase.
Cash-back
Cash discounts usually received by
offers (rebates)
forwarding a proof-of-purchase where state
legislation permits.
Cents-off deals Price deals, usually offered at retail level but
or price packs
also by direct marketers. Most common form
of promotion at store level in Australia.
Premium offers Goods offered free of charge or at reduced
price as an incentive to buy a product. Part of
the augmented product.
Advertising
Useful articles imprinted with an advertisers
specialties
name, given as gifts to consumers.
On back of shopping dockets
2 for 1 deals & in those lines

where they complement each
other well
Pack itself may be a reusable
commemorative mug
Pens, key rings and other

novelty items. Found a lot at
hotels
Patronage
Cash, merchandise or service rewards Loyalty programs e.g. Qantas
rewards
offered to consumers who make continual use Frequent Flyer programs
of a companys product or service.
at
cash
Point-ofOffers ranging from theme promotions in- 1. Displaysregister
purchase (POP) store to specially arranged selling areas.
2. Demos- e.g. cooking in
promotions
supermarkets
(food
draws us in by our
senses)
Contests
and Promotional events that give consumers the
games of chance chance to win something of value by luck or
and skill
skill. It creates interest and involvement.
2.Trade promo tools
Many sales promos aimed at consumers are accompanied by trade

promos whereby the various dpt managers at store level can win prizes
for the best merchandising display or the highest sales levels during a
promo
Manufacturers also pay allowances to retailers for such activities as
advertising, displays and physical distribution
In some industries push money (cash or incentives) is paid to dealers
or their sales force to push the manufacturers goods.
3. Business-to-business promo tools

Industrial markets also use promos to gain awareness for new
products or to increase penetration of a particular industry by
increasing business leads for their sales force.
Concentrate on conventions and trade shows and sales contests
Conventions and tradeshows- used by vendors to find new sales

leads, contact customers, introduce new products, meet customers,
sell more to existing customers and educate customers with
publications and audiovisual presentations
Sales contest- organised by business marketing to other businesses

is an attempt to give incentive to a firms sales force, a distributors
sales force or a dealer network to increase their sales performance
during a specified period.
Decisions to be made in order to develop a sales promotion program include
Size of the incentive-not too large (can you cover costs, decreases
brand image e.g. luxury products)
How to promote and distribute the program (other medias, sales
staff, PR campaign)
Length of the promotion
Sales promotion budgeting (% of total budget or the marketer can
choose the promos and estimate their total cost)
2. Discuss the role of a companys salespeople in creating value for customers and
building customer relationships
Salespeople- are involved in two-way personal communication with customers with
whom they build LT relationships.
Personal selling is the interpersonal arm of the promotion mix.

This personal communication may be through face to face, telephone,
video conferences or by other means.
They represent the co to the customers and vice versa and serve as a
critical link between a co and its customers.
Salespeople should not only be concerned about producing sales but
also producing customer satisfaction and company profit.
Salespeople can probe customers to learn more about their problems.
They can adjust the marketing offer to fit the special needs of each
customer and can negotiate terms of sale.
They can build LT personal relationships with key decision makers.
4. Identify the 6 major salesforce management steps
Salesforce management- the analysis, planning, implementation and control of

salesforce activities.
Major salesforce management steps are;
1.
2.
3.
4.
5.
6.
Designing salesforce strategy and structure

Recruiting and selecting salespeople
Training salespeople
Compensating salespeople
Supervising salespeople
Evaluating salespeople
5. Explain how companies recruit, select and train salespeople
Recruiting salespeople
The company must first decide which traits its salespeople need to possess. Among
the most common of these traits are:
Commitment to sales and job

Strong consumer orientation and linking skills
Enthusiasm
Persistence
Initiative
Self-confidence
Independence
Self-motivation
Listening skills
Recruiting procedures
After deciding on needed traits, management must recruit.

The personnel dpt looks for applicants by getting names from current
salespeople, using employment agencies, placing job ads and
contacting university students.
Selecting salespeople
Recruiting will attract many applicants from which the company must
select the best.
The selection procedure can vary from a single informal interview to
lengthy testing and interviewing.
Many companies give formal tests to sales applicants. Tests typically
measure sales aptitude, analytical and organisational skills, personality
traits and other characteristics.
Key areas of concern in recruiting and selecting are importance,
quality, selection and procedures.
Training salespeople
The average training period is 4 months

The initial period might focus on selling skills, product knowledge, the
company and the distributors that sell the companys products.
Among other things, they learn that distributors have dozens of
salespeople calling on them all the time.
After the initial training, companies often bring their salesforce back
to company HQ for follow-up training
The goals of training programs are
o Help salespeople to know and identify with the company =
describe companys history and objectives, its org, its financial
structure and facilities, and its chief products and markets
o Salespeople need to be familiar with the companys products
= sales trainees are shown how products are produced and how
they work
o Need to know customers and competitors characteristics
= training program teaches them about competitors strategies
and about different types of customers and their needs, buying
motives and buying habits
o Need to know how to make effective presentations = trained
in principles of selling
o Need to understand field procedures and responsibilities =
learn how to divide their time between active and potential
accounts, how to use an expense account, prepare reports and
route communication effectively.
6. Describe how companies compensate and supervise salespeople, and

how they evaluate salesforce effectiveness
Compensating salespeople
To attract needed salespeople, a company must have an attractive compensation
plan. These plans vary greatly both by industry and by companies within the same
industry. The level of compo must be close to the going rate for the type of sales job
and needed skills. Compensation consists of;
a fixed amount-usually a salary; gives the person a stable y

a variable amount- commissions or bonuses based on sales
performance; rewards the salesperson for > effort
expense allowances- repay salespeople for job-related expenses;
allow them to undertake needed and desirable selling efforts
fringe benefits- paid holidays, sickness or accident benefits, life
insurance and childcare; provide job security and satisfaction.
Different combinations of fixed and variable compensation give rise to 4 basic types
of compensation plans- straight salary, straight commission, salary plus bonus and
salary plus commissions.
This plan can be designed to motivate salespeople and to direct

their activities. E.g. if sales mgt wants salespeople to emphasise new
account dev, it might pay a bonus for opening new accounts.
The compo plan should direct the salesforce towards activities that
are consistent with overall marketing objectives.
More and more companies are moving away from high-commission
plans that may drive salespeople to make ST grabs for business rather
than building LT, value-laden relationships.
Supervising salespeople
Through supervision, the company directs and motivates the salesforce to do a better
job.
Most companies classify customers based on sales volume, profit

and growth potential and then they set call norms accordingly.
Companies often specify how much time their salesforces should
spend prospecting for new accounts.
One tool to help salespeople use their time efficiently is the annual
call schedule which shows which customers and prospects to call on
in which months and which activities to carry out. Another tool is time
and duty analysis.
Advances in technological developments have allowed dramatic
improvements in salesforce productivity.
Motivating salespeople
Mgt can boost salesforce morale and performance through its

organisational climate, sales quotas and positive incentives.
o Org climate- describes the feeling that salespeople have about
their opportunities, value and rewards for good performance
within the company. If they are held in high esteem, there is less
turnover and better performance.
o Sales quotas- standards set for salespeople stating the amount
they should sell and how sales should be divided among the
companys products.
Positive incentives- sales meetings, sponsoring sales contests,

honours, merchandise and cash awards, trips and profit-sharing
plans.
Evaluating salespeople
Sources of information about its salespeople are obtained from:
Expense reports
Sales reports
Work plan
Annual territory marketing plan
Call reports
Formal evaluation produces three benefits:

I.
Mgt must develop and communicate clear standards for judging

performance
Mgt must gather well rounded information about each salesperson
Salespeople know they will have to sit down one morning with the sales
manager and explain their performance
II.
III.
The formal evaluation process may involves
Comparing salespeoples performance can be misleading due to

differences such as territory potential, workload, level of comp and
company promo effort
Comparing current sales with past sales
Qualitative evaluation of salespeople-usually looks at their
knowledge of the co, its products, customers, competitors, territory and
tasks and may also rate personal traits.
7. Discuss the personal selling process, distinguishing between
transaction-oriented marketing and relationship marketing
The selling process consists of several steps that the salesperson must master. These
steps focus on the goal of getting new customers and obtaining orders from them.
However, most salespeople spend much of their time maintaining existing accounts
and building LT customer relationships.
1. Prospecting
and qualifying
2. Preapproach
Prospectingsalesperson
identifies
qualified
potential customers.
This may involve asking current customers for
names of prospects, building referral sources such
as suppliers and bankers, joining organisations to
which prospects belong or can engage in speaking
and writing activities that will draw attention,
searching for names in newspapers or directories
and using the phone/mail to track down leads.
Qualifying- identify the good leads and screen the
poor ones.
Prospects can be qualified by looking at their
financial ability, volume of business, special needs,
location and possibilities for growth.
Salesperson learns as much as possible about a

3. Approach
4. Presentation
and
demonstratio
n
5. Handling
objectives
6. Closing
7. Follow-up
prospective customer before making a sales call.

Salesperson should set call objectives, decide on
the best approach and give thought to an overall
sales strategy for the account.
Salesperson meets and greets the buyer to get the
rship off to a good start
Involves salespersons appearance, opening lines
and follow-up remarks
Presentation- salesperson tells the product story
to the buyer, showing how the product will make
or save money
Concentrate on customer benefits
Companies can use 3 styles of sales presentationcanned approach (memorised/scripted talk),
formula approach (id buyers needs, attitudes
and buying style; shows how the product will
satisfy buyers needs-follows a general plan) and
need-satisfaction
approach
(search
for
customers needs by getting customer to do most
of talking)
Any
presentation
can
be
improved
with
demonstration aids e.g. booklets, flip charts,
slides, videotapes and product samples.
Salesperson seeks out, clarifies and overcomes
customer objections to buying
Must be able to foresee these questions: is it hard
to install? Any after sales service?
Salesperson asks the customer for an order
Salespeople should know how to recognise closing
signals from the buyer, including physical actions,
comments and questions
Closing techniques- asks for the order, review
points of agreement, offer to help write up the
order, ask whether the buyer wants this model or
that one or note that the buyer will lose out if the
order is not placed now. They may offer the buyer
special reasons to close, such as a lower price or
an extra quantity at no charge.
Salesperson follows up after the sale to ensure
customer satisfaction and repeat business
This visit would reveal any problems, assure the
buyer of the salepersons interest and reduce any
buyer concern that might have arisen the sale
The principles of personal selling as just described are transaction oriented- their
aim is to help salespeople close a specific sale with a customer.
Relationship marketing: the process of creating, maintaining and enhancing strong,
value-laden rships with customers and other stakeholders.
It emphasises building and maintaining LT rships with customers by

creating superior customer value and satisfaction.
More companies are recognising that winning and keeping accounts

requires more than making good products and directing the salesforce
to close lots of sales.
Winning and keeping accounts requires more than making good
products and closing lots of sales.
CHAPTER FOURNTEEN: DIRECT AND ONLINE MARKETING
1. Explain the nature of direct and online marketing
Direct and online marketing- integrates marketing communication techniques, using

traditional and new media, with traditional and electronic fulfilment approaches and
sophisticated customer rship mgt techniques (CRM).
It is both a form of one to one communication and also a step

beyond marketing product, or info about delivery or even how to install
the product or overcome a problem.
Another feature of direct and online marketing is accessible
memory- m orgs use a database to accumulate what they learn from
customers.
A companys knowledge base- database of
frequently asked
questions or solutions to problems maintained by a company to assist
customers.
Direct marketing- an interactive system of marketing which uses one or more

advertising media to effect a measurable response and/or transaction at any location.
refers to those activities that embrace targeted media which may

serve to attract potential and current customers but which permit
transactions such as those already described, and which enable
interaction via one-to-one media.
They key point is that there is continuous interaction and not simply
episodic one-way communication and purchase activity.
Tab l e 1 4 . 1
Forms of direct and online marketing
Direct print and reproduction
Direct-response television and radio
Telemarketing
Telesales
Electronic dispensing and kiosks
Direct selling
Electronic shopping (also referred to as ecommerce/e-business. See What is online
marketing? later in this chapter)
Direct and online database marketing (see the
Making a tailored offer using printed or reproduced materials such as a

mailing, a printed catalogue or CD-ROM version delivered to a list or
database. Synchronous if the customer responds in real time when the offer is
received.
Interactive marketing, using FTA-TV, pay-TV, narrowcast TV and radio, as
well as interactive TV and radio. In some cases, there will be a back-channel
for order placement; in other cases, the telephone or mail is used to order.
Inbound or outbound personal selling or automated voice response unit selling
to a list or database. May be interactive in situations where a donation is made
or a vote is cast, or where orders are taken immediately the offer is made.
Outbound calls, usually order-taking with prompts, from a known and stable
database of customers; usually involves calls to intermediaries.
A range of technologies used in receiving orders and payments as well as
delivering products and services; now includes the use of smart card
technologies and digital cash, to a known database of customers or to potential
customers.
Personal selling into the home or office to potential customers or a known
clientele (database).
Recording responses, including taking orders, from inbound electronic signals
or messages, in response to communications via any number of media: FTATV, broadband interactive TV, pay-TV, narrowcast TV, the Internet (email,
secure transaction websites, and fax), quick response direct marketing where
same-day or fast-track fulfilment is involved, e.g. gifts ordered from
Wishlist.com.au.
The development and maintenance of electronic databases to interact with
section on this topic later in the chapter)
Tab l e 1 4 . 2
past, present and/or potential customers and others in the marketing channel,
on a one-to-one basis, often in real time, and where the databases are used to
maintain value-laden relationships and to generate a measurable response
and/or transactions through the integrated use of electronic network tools and
technologies.5
Mass marketing versus one-to-one marketing
Mass marketing
Average customer
Customer anonymity
Standard product
Mass production
Mass distribution
Mass advertising
Mass promotion
One-way message
Economies of scale
Share of market
All customers
Customer attraction
One-to-one marketing
Individual customer
Customer profile
Customised market offering
Customised production
Individualised distribution
Individualised message
Individualised incentives
Two-way messages
Economies of scope
Share of customer
Profitable customers
Customer retention
Online marketing- this type of marketing entails interaction with known customers
and others in the marketing channel, on a one-to-one basis, often in real time, to
maintain value-laden rships and to generate a measurable response and/or transactions
using electronic network tools and technologies.
M orgs around the world have changed both in form and value as a
result of globalisation, deregulation and digitisation.
Terms used to describe online marketing
o Intranet- secure websites accessed by company employees
only
o Extranet- websites accessed by both employees and known
customers
o Customer rship marketing (CRM)- one to one marketing,
direct order marketing, direct marketing, eMarketing and
interactive marketing.
2. Discuss the benefits of direct and online marketing to both
marketing organisations and their customers and identify the
reasons for the rapid growth in this area of IMC
Quadrant 1- m orgs are best suited to using a mass m approach

including mass media advertising, to position their brands in
consumers minds and to ensure they have merchandising space in
traditional retail outlets.
Quadrant 2- may find niche marketing most appropriate strategy to
adopt.
Quadrant 3- FMCG manufacturers have large segments of customers
who all want the same product however it is their supermarket
customers who account for the bulk of their sales.
Quadrant 4- m orgs that have customers with a wide range of
requirements and some customers are worth much more than others.
Figure above: customers have highly differentiated needs and diff

customers rep diff valuations to the business. Comp A and B are more
able to meet customers requirements. The co must realign its m
strategy by taking adv of the situation and being capable of
customising its order and interacting on a OnetoOne basis with
customers. The firm would be wise to realign by adopting an online
OnetoOne m strategy that incorporates the use of the Web in
interactive m communication and to enhance rships.
However it isnt enough to simply mount a vanity website that
remains locked into a one way mass-m communication paradigm,
completely overlooking the fact that customers today are learning
customers more so than ever before and that the use of the Web
coupled with database technology means that businesses have
become learning organisations.
Learning organisation- an org defined by its ability to innovate,
adopt and change in line with its changing env.
while widespread use of the Net is yet to reach its full potential, due
partly to the more realistic valuations being placed on new and existing
businesses that employ Net technologies by world K markets, more
sophisticated online OnetoOne m continues to dev in Australasia in 3
areas of m: m communication, m channel and CRM.
Direct and online database marketing
Entails the dev and maintenance of electronic databases to interact
with past, present and/or potential customers and others in the m
channel.
One a one-to-one basis
Often in real time
Used to maintain value-laden rships
To generate a measurable response and/or transactions through the
integrated use of electronic network tools and technologies.
M orgs use their databases in a number of ways:

Goal
Description
1. Identifying prospects
2. Deciding which
customers should
receive a particular
offer
3. Deepening customer
loyalty
Many cos generate sales leads by

advertising their products or offers.
Ads generally have a response feature
such as a toll free phone number
The database is built from these
responses
Co sorts through the database to id the
best prospects then reaches them by
mail etc in an attempt to convert them
to customers
Cos id the profile of an ideal customer
and search their databases for ind most
closely resembling this ideal type
By tracking ind responses the co can
improve its targeting precision over time
Cos can build customers interest and
enthusiasm by remembering their
preferences and sending appropriate
information, gifts or other materials
4. Reactivating
customers
5. Data mining
The database can help a co to make

attractive offers of product
replacements, upgrades or
complementary products just when
customers might be ready to act
Checking databases for patterns and
trends that might exist or to find new
connections bw data items
3. Discuss the various direct marketing techniques and their

application
Direct print and Involves mail-outs of letters, product lists, samples and paperreproduction
based and digital catalogues to a list or known database of
customers, or to a targeted group that the marketer wishes to
convert to a database entry.
Direct mail
Printed materials sent by mail and conveying offers to
customers, whether targeted to the recipient by name, or to the
business or householder by a broader targeting method.
Catalogues
A printed listing of products, often featuring high-quality
illustrations of the items on sale. Different types include; full-line
merchandise catalogues e.g. Ikea, B2B catalogues e.g.
Officeworks, specialty consumer catalogues e.g. Radio Parts
Group.
Direct-response Use of mass promotion media combined with a direct response
television, radio offer, usually involving telemarketing.
and print
Telemarketing
Use of telephone operators to attract new customers, contact
existing customers to ascertain satisfaction levels or take orders.
Major use relates to customer service. Outbound and inbound
(people ring in and out).
Telesales
Routine order taking by telephone operators. Are used by
marketing firms of all persuasions, not just by direct marketers.
Diff bw this and telemarketing is that in telesales the calls are
routinely made to regular customers such as retailers. Outbound
calls to facilitate orders on products.
Electronic dispensing machines- machines that
Electronic
dispense products and services (cash) usually by
vending
inserting cash, transaction or stored value card

EFTPOS (Electronic funds transfer at point of
sale)- retailer cash register electronically linked to
bank accounts; consumers pay directly using a
Direct selling
Electronic
shopping
cashcard or credit card, and funds may also be

credited to an account if goods are returned.
Kiosks- electronically networked mini-offices, staffed
or unstaffed, capable of dispensing information,
products and services and of receiving payments by
instalment or in full.
Selling directly to consumers or businesses rather than using a

reseller, such as a retailer or agent. E.g. door to door selling by
Tupperware, Avon, Nutrimetics.
Purchasing via an electronic bulletin board or Telstras Discovery,
or via interactive cable tv.
4. Explain how direct and online marketing campaigns are developed,

pretested, implemented and evaluated
Evaluation- the most common assessment is to compare sales before,
during and after a sales promotion or other direct and online marketing
program or campaign. The profitability of such offers and the return on I
are even more important.
Evaluating direct marketing
o Performance has multiple dimensions
o Direct and online m orgs set up programs to allow later
monitoring of such factors as;
Sales lead generation
Database generation
Fulfilment response*
Product inquiries
Sales response
Profitability
Return on the I made in programs and campaigns
Lifetime customer value
*fulfilment response-order processing, delivery response times and accuracy of

delivery must be considered when responding to product orders.
Evaluating online marketing- by considering its 3 major aspects:

Online m
Those orgs using the Net/Web in IMC seek to measure
communication
both effectiveness (did they reach the target market)
and efficiency (how cost-effectively did they reach the
target market).
Only sure way to track ind behaviour at a website is to
allow only subscriber access to the site. This works
well in the case of extranet usage by B2B and B2G
subscribers but would be unrealistic for home users to
subscribe to its particular site.
3 categories of measures are involved:
1. Web-centric measures- evaluating success of
websites in m communication began with use of web
centric measures such as analysis of;
o Hits- # of files requested by guests to a web
pg.
Log files- a record maintained by all host
servers of the IP address of the guests
computer and of every file sent out.
o Pg impressions- # of web pages viewed by a
single visitor to a site.
2. Audience-centric measures- are now favoured by
many orgs. 3rd party research companies such as
ACNielsen provide these measures using Web-user
panels. A quasi-solution to est web use identity is the
use of cookies.
Cookies- short identifier pieces of text, deposited on a
visitors computer by a website. On subsequent visits,
the website software records the cookie response and
thus measures repeat guest visits.
3. Network-centric measures- many m orgs use
services of Hitwise.com, to ascertain their
performance in their own right or to est on which
navigation sites to buy banner ad space. The
measures provided incl the # of pg downloads and
dwell-time duration on consecutive pages visited.
Hitwise also provides info on clickstream (the path
followed by website visitors).
The web is an online m channel or it may be used to
supplement traditional m channels.
Online m channels are judged in the same way that more
traditional direct m is judged- fulfilment response, in
terms of product inquiries, sales response and
profitability.
With all forms of direct and online m, it is possible to
calculate in advance what response rate will be required
to break even, as well as other vital response rates such
as average purchase levels.
Customer lifetime value- the amount by which
revenues from a customer over time will exceed the
companys costs of attracting, selling and servicing that
customer.
it is more valuable to a business to achieve qualified
customers upfront and focus on retaining them than it is
to constantly search out new customers (p 526)
o
Online m channel
performance
Rship mgt and

customer lifetime
value
5. Discuss the public policy and ethical issues facing direct and online marketers
Privacy concerns- A major direct and online m issue in most countries is PRIVACY.
Cross referencing of data
Unwanted
email
post
and
When an inds personal info such as health

status and work attendance level is
interconnected and used without permission.
One solution is to ask people which product
categories- if any- they would like to receive
information about.
Spamming- sending unsolicited email, usually
to large #s of people, with a view to making a

sale.
Concerns also exist about the means used to build the database and
the possibilities of database abuse, particularly in online m where
spamming threatens many commercial uses of the Net. Privacy
guidelines are now in place.
Direct and online database marketing- entails dev and maintenance of electronic
databases to interact with past, present and/or potential customers and others in
marketing channel.
Uses of databases
1. Identifying prospects
Ads generally have a response feature, such as a business reply
card or toll-free phone number
Database is built from these responses
2. Deciding which customers should receive a particular offer
Companies identify the profile of an ideal customer for an offer
Search of databases for individuals most closely resembling the
ideal type
By tracking individual responses, the company can improve its
targeting precision over time
3. Deepening customer loyalty
Create customised information, gifts or other materials
Customised to individual customers preferences
4. Reactivating Customers
Create attractive offers of product

complementary products
Deciding on right timing of offering
replacements,
5.Data mining
Entails checking databases for patterns and

hypothesised to exist
Entails finidng new connections between data item
upgrades
trends
that
or
are
Evaluating database performance

Profitable use of a database requires customer relationship mgt and keeping track of
sales so as to be able to predict future sales levels more accurately. Three criteria to
use are:
Recency of purchase
Frequency of purchase
Monetary value of purchase
PART FOUR: RESPONSIBLE MARKETING

CHAPTER FIFTEEN: ETHICS AND MARKETING COMPLIANCE
1. Discuss social criticisms of marketings impact on individual consumers
Consumers hold mixed or even slightly unfavourable attitudes toward m practices.
Consumers are worried about high prices, poor quality and dangerous products,
misleading advertising claims and several other marketing related problems incl
planned obsolescence.
2. Identify and define criticisms of marketings impact on society as a whole
Advertising has been a special target. Criticisms of marketings impact on society are:
False wants and too much materialism- m urges too much interest
in material possessions. People are judged by what they own rather
than by who they are.
Too much political power- advertisers are accused of holding too much
power over the mass media, limiting their freedom to report
independently and objectively. All industries promote and protect their
interests.
Too few social goods- business has been accused of overselling

private goods at the expense of public goods. E..g increase in car
ownership (private good) requires more highways, traffic control,
parking spaces and police services (public goods). Overselling private
goods results in social costs e.g. traffic congestions, air pollution,
deaths and injuries from accidents.
Cultural pollution- our senses are being assaulted constantly by

advertising.
Marketings impact on other businesses:
Critics claim that an orgs m practices can harm other companies and
reduce competition 3 major problems are:
1. Acquisition of competitors
2. M practices that create barriers to entry- large m
companies can use patents and heavy promotion spending
and tie up suppliers or dealers to keep out or drive out
competitors
3. Unfair competitive m practices- setting prices below
costs, threatening to cut off business with suppliers, or
discouraging the buying of a competitors products.
3. Outline citizen and public actions to regulate marketing consumerism,

environmentalism and regulation- and the way they affect marketing strategies
Consumerism
=An organised movement of citizens and gov agencies whose aim is to improve the
rights and power of buyers in relation to sellers
Regulation
E.g. Choice magazine- no bias, no advertising
Traditional sellers rights;
Right to introduce any product
Right to charge any price
Right to spend any amount to promote the product
Right to use any product message
Right to use any buying incentive schemes
Traditional buyers rights;

o
Right not to buy a product
Right to expect product to be safe
Right to expect the product to perform as claimed
Additional rights that consumer advocates have won are such

matters as;
o
knowing the true IR and total costs of consumer credit
true cost per unit of a brand
ingredients in a product
nutritional value of foodstuffs
product freshness
True benefits of a product (truth in advertising).
Environmentalism
= An organised movement of concerned citizens, businesses and gov agencies seeking
to protect and improve peoples living environment.
Concerned with
o
Ecosystems
Pollution
LT effects e.g. LT health
Growth issues
The marketing systems goal should to be to maximise QOL.
Want env costs included in both producer and consumer decision

making
Hit some industries hard such as steel industry
Companies have responded with green marketing developing

ecologically safer products, recyclable and biodegradable packaging,
better pollution controls and more energy-efficient operations.
o
E.g. Virgin Blue- you can choose for your flight to be carbon
neutral
Sustainable development
4. Explain the business actions towards socially responsible marketing that can
foster marketing ethics and lead to different philosophies of enlightened
marketing
Ethical marketing- an approach by orgs whereby they recognise that

the task of marketing is to be both enlightened to societys views and
ethical in the orgs approach to society as a whole and to customers.
Most m orgs have responded positively to consumerism

environmentalism in order to serve customers needs better
In adopting socially and ethically responsible marketing, m orgs often

take philosophical positions which they instil in their employees
Companies need to develop corporate marketing ethics policies

as not all managers have fine moral sensitivity
Societal marketing- a principle of enlightened marketing that holds

that an org should make m decisions by considering consumers wants
the orgs requirements, consumers long run interest and societys long
run interests.
Under the societal marketing concept, each manager must look beyond
what is legal and allowed and develop standards based on personal
integrity, corporate conscience and long-run consumer welfare.
Ethics and social responsibility require a total corporate commitment.

They must be a component of the corporate culture
and
5. Discuss the need for and value of legal compliance programs in marketing
and the issues involved in implementing them
One of the best ways to ensure that an org acts ethically and legally is
to have a culture of good ethical practice and a legal compliance
program.
Legal compliance program- a system designed to identify, manage

and reduce the risk of breaking the law.
a compliance program can also be a competitive advantage in the m

place by ensuring ethical practice, high quality performance and the
positives created by such behaviour.
Australian Standards guide business in many ways
Australian Standard AS306 is useful in guiding the implementation

of a compliance program in marketing as it draws together comments
from courts, opinions of legal practitioners and best practice. It est
requirements for
o
+ commitment to compliance
communicated to staff
at
board
and
CEO
level
+ promotion of compliance by all managers
Continuous monitoring and improvement of all compliance

procedures
Integration of all compliance procedures into the orgs day to

day operating procedures, systems and documents
Adequate #s of senior staff with high status and sufficient clout

to take responsibility for compliance
Ongoing education and training for all staff
Legal education
Legal education programs tend to cover 4 sets of rships that need to be

monitored in a compliance program:
o
Rships with competitors- to avoid m rigging, group boycotts

and price fixing
Rships with suppliers to avoid resale rice maintenance and

such vertical restraints as may serve to reduce competition
Rships with other parties such as patent licensees- to

avoid infringing intellectual property rights and patents an
licence agreements generally
Rship with the industry itself- to avoid using trade

associations or groupings of firms that might violate sections of
the legislation prohibiting arrangements or understandings that
substantially lessen competition.
Coverage of a legal compliance program
Competition law
Contract and
consumer law
Standards
Product liability
M communication
Sales and after sales
finance
Franchising
Intellectual property
(IP)
main source of Australian comp law is Part IV of the Trade

Practices Act and case decisions interpreting this legislation
Laws governing the sale of g/s deal with the matter
differently in different countries although the intent of
legislation is much the same. In Australia, the laws
governing the sale of g/s come from a three-tiered scheme
that includes common law (reported decisions of courts),
state legislation (e.g. Sale of Goods Act and Fair Trading
Act in each state) and Commonwealth legislation (Trade
Practices Act 1974).
Movement to standardise legal requirements bw countries
(eg WTO) and trading partners (e.g. Aus and NZ CERTA)
continues.
Class actions more likely in Aus with the introduction of
legislation in 92 which liberalised the ability of plaintiffs to
engage in representative or class actions.
the details of any credit sale must be spelt out
Is an area where specialised legal knowledge is required bc
of the exclusive rights and obligations granted under a
franchise agreement. 98 Franchising Code of Conduct falls
under Part IVB of the Trade Practices Act and requires a
comprehensive set of disclosures and provides a dispute
resolution procedure for franchise disputes. The Code is
enforced by the ACCC.
IP law involves such areas as copyright, trade mark, patents,
designs, trade, secrets and domain names.

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24108 Marketing Foundations

Chapter One - INTRODUCTION TO MARKETING

Understand the marketplace and customer needs and wants

Simple Marketing Concepts

3. Both parties expectations must be met e.g. quality and

Designing Customer-Driven Marketing Strategy

Selective Customer to Serve

The Marketing Evolution

Selling and Marketing Concepts

7. Social marketing concept balance between ideas of SOCIETAL (HUMAN

Preparing an Integrated Marketing Program

Managing the Marketing Mix

Customer Relationship Management (CRM)

Relationship Building Blocks: Customer Value and Satisfaction

Capturing Value from Customers

Chapter Two MARKETING ENVIRONMENT

Respond to the Marketing Environment

Chapter Three MARKET RESEARCH

Chapter Thirteen International Marketing

Chapter 4 Consumer Behaviour (CB)

Roles in the Buying Process

Chapter 5- Business Buying Behaviour

Chapter 6 MARKET SEGMENTATION, TARGETING AND

Evaluate Market Segments

Undifferentiated marketing one homogenous market; one marketing mix

Differentiation and Positioning

Product position way the product is defined by consumers on important

Choosing and Implementing Positioning Strategy

Identify value differences perceptual mapping, analyse position of brand in

Selecting Overall Positioning Strategy (Positioning Statement)

More for less (winning value proposition;

More quality; more

Communicating and Delivering the Chosen Proposition

Marketing mix efforts must support the positioning strategy

A product can be tangible and intangible give examples of each.

Moderate to high Less frequent,

LECTURE 7B NEW PRODUCTS

New Product Success and Failure

New Product Development (NPD) Process

3. Concept Development and Testing

4. Marketing Strategy Developments

Designing of initial marketing strategy for new product

3. Describe planned long-run sales, profit goals and marketing-mix

The Product Life Cycle (PLC)

Chapter fourteen- Marketing Planning

-Marketing plan focuses on:

Contents of Marketing Plan

PRICING, CONSIDERATIONS & APPROACHES

Internal Factors Affecting Pricing:

Other External Factors

Pricing for Different Types of Markets

General Pricing Approaches:

economic value pricing

Amount charge for a product or service, or sum of values consumers

Factors to Consider when Setting Prices

Internal Factors Affecting Pricing

Marketing objective survival, current profit maximisation, market-share,

External Factors Affecting Pricing Decisions

Pricing in different types of markets

Pricing in Different Markets

Price and demand relationship can be mapped on demand curve

General Pricing Approaches

Cost-based cost-plus pricing; break even analysis and target pricing

New Product Pricing