1. The act or process of buying and selling in a market. 2. The commercial functions involved in transferring goods from producer to consumer. The activities of a company associated with buying and selling a product or service. It includes advertising, selling and delivering products to people. People who work in marketing departments of companies try to get the attention of target audiences by using slogans, packaging design, aprice and promotion. Investopedia Says: Many people believe that marketing is just about advertising or sales. However, marketing is everything a company does to acquire customers and maintain a relationship with them. Even the small tasks like writing thank-you letters, playing golf with a prospective client, returning calls promptly and meeting with a past client for coffee can be thought of as marketing. The ultimate goal of marketing is to match a company's products and services to the people who need and want Marketing Dictionary: marketing Process associated with promoting for sale goods or services. The classic components of marketing are the Four Ps: product, price, place, and promotion-the selection and development of the product, determination of price, selection and design of distribution

channels (place), and all aspects of generating or enhancing demand for the product, including advertising (promotion).. Insurance Dictionary: Marketing Creation of a demand for a company's products, its distribution, and services for customers who purchase that product. Actuarial research and development, underwriting efficiency, and claim payment promptness is of little value if no one is willing to purchase insurance products. Agency and marketing departments are the focus of all sales activity within an insurance company, and touch every aspect of a company by generating (1) premium income for securities, real estate, and mortgage investments; (2) sales for review by the underwriting department and their issuance by policyholder services; (3) need for data storage and retrieval by the company's data processing center; (4) legal analysis and decisions by the law department; and (5) need for corporate planning. Business Encyclopedia: Marketing The term market is the root word for the word marketing. Market refers to the location where exchanges between buyers and sellers occur. Marketing pertains to the interactive process that requires developing, pricing, placing, and promoting goods, ideas, or services in order to facilitate exchanges between customers and sellers to satisfy the needs and wants of consumers. Thus, at the very center of the marketing process is satisfying the needs and wants of customers. Needs and Wants Needs are the basic items required for human survival. Human needs are an essential concept underlying the marketing process because needs are translated into consumer wants. Human needs are often described as a state of real or perceived deprivation. Basic human needs take one of three forms: physical, social, and individual. Physical needs are basic to survival and include food, clothing, warmth, and safety. Social needs revolve around the desire for belonging and affection. Individual needs include longings for knowledge and selfexpression, through items such as clothing choices. Wants are needs that are shaped by both cultural influences and individual preferences. Wants are often described as goods, ideas, and services that fulfill the needs of an individual consumer. The wants of individuals change as both society and technology change. For example, when a computer is released, a consumer may want it simply because it is a new and improved technology. Therefore, the purpose of marketing is to convert these generic needs into wants for specific goods, ideas, or services. Demand is created when wants are supported by an individual consumer's ability to purchase the goods, ideas, or services in question. Consumers buy products that will best meet their needs, as well as provide the most fulfillment resulting from the exchange process. The first step in the exchange process is to provide a product. Products can take a number of forms such as goods, ideas, and services. All products are produced to satisfy the needs, wants, and demands of individual buyers. The second step in the satisfaction process is exchange. Exchange occurs when an individual receives a product from a seller in return for something called consideration. Consideration usually takes the form of currency. For an exchange to take place, it must meet a number of conditions. (1) There must be at least two participants in the process. (2) Each party must

offer something of value to the other. (3) Both parties must want to deal with each other. (4) Both participants have the right to accept or to reject the offer. (5) Both groups must have the ability to communicate and deliver on the mutual agreement. Thus, the transaction process is a core component of marketing. Whenever there is a trade of values between two parties, a transaction has occurred. A transaction is often considered a unit of measurement in marketing. The earliest form of exchange was known as barter. US History Encyclopedia: Marketing Marketing is the multifaceted, systematic approach to selling goods, adopted by every business and not for-profit agency and group with a message. It attempts to optimize an organization's ability to make a profit, whether monetary (profits or donations) or electoral. Marketing encompasses advertising, promotions, product design, positioning, and product development. Marketing tools include elements such as focus groups, gap analysis, concept testing, product testing, perceptual maps, demographics, psychographics (lifestyles), and choice modeling. It is powerfully aided by market research, a science that has become increasingly complex and sophisticated over the past century or more. Market research embraces qualitative and quantitative methods. Environmental analysis gives companies key information about economic conditions, consumer demographics, consumer lifestyles, industry trends, distribution channels, new technology, employee relations and supply, foreign markets, corporate image, political and regulatory changes, and key players in the business. Sophisticated data collection and analysis investigate market segmentation and target selection, product and advertising positioning, product design, pricing, mass media advertising, direct marketing, promotion, distribution channels, and sales force allocation. Market research rarely has a direct impact on income, but provides the essential data to prove or disprove client preconceptions, resolve disagreements, expose threats, quantify a population, and qualify an opportunity. The ways that research is used for strategic decision making determines its relationship to profit and market advance. Marketing has existed in every age and culture. In the United States, marketing reached its high level of sophistication as a result of the mass market. Three overlapping stages have marked the history of our republic. Until roughly the 1880s, the economy was characterized by market fragmentation. Geographical limitations were reinforced by the absence of a transportation and communications infrastructure that spanned the continent. There were hundreds of local markets and very few national brand names. Profit was determined by low sales volume and high prices.

The Augmented Marketing Mix

(AMM or the '17 Ps'), and its

relationship with Search Engine Marketing is covered in the article 'Search Engine

Marketing in Context - is it marketing?' in THE marketing leaders (TM) in 2006. The AMM contains the original '4 Ps' and an additional 13 new P's:

true branding rather than the questionable 'science' to do with brand-brain-wash) 7.I mentioned it. Precision (its more than just targeted marketing. how modern marketing is and should be seen as one rather than a function or department. lets stop doing things 'to' the prospect or customer.alone 13. how 'customer centric' we really aspire to and work to be) 12. yet this is not recognised in most business disciplines and teaching) 8. strategically or tactically change. Pleasant (good at practising corporate social responsibility and recognising both the marketing ecosystem and the wider world of sustainability and acting responsibly along the whole supply chain and outside of it) 16. 3. Pervasiveness (marketing has to permeate the organisation as its main process .but only offering what they really need.arghh . or 'a colouring in activity at the end' 10. Priority (we need to prioritise all our options to improve. Policy (how we do things around here. Process (how we do things. what product or service innovations should be introduced etc. Physical Evidence (evidential marketing .but the company must have ALL processes firmly aligned with customer need as its pivotal point) . but 'with' them . it isnt a dirty word if it fits in with the latter 'Ps' below) 9. Preside (how we run the business . People (the most important component in the whole supply chain and forgotten by marketing!) 6. in the context that they will benefit most from it 14. when they need it. 2.1. Project Management (we all manage different projects and sub-projects.) 11. Product Place Price Promotion 5. Profit (wow . Positioning (where we are in the market and the mind of the customer. a similar way to which IT has moved from a small department doing funny/fuzzy things into becoming the lifeblood of the organisation) 15.marrying up all our new innovations and improvements with real evidence from the customer and not relying on invention or 'creative(s)' . Pivot (but all of this is predicated on a real marketing and customer-centric approach leads to sustainability and health .based on the above) 17.

The term includes advertising. Trying to convince a market segment to buy something they don't want is extremely expensive and seldom successful. the activities encompassed by the marketing function are led by a Vice President or Director of Marketing. and improving the product/service continuously to protect the business from competitive encroachments. base management marketing takes over. often through market research. For a marketing plan to be successful. or customer-focused. especially large . Marketing theory and practice is justified in the belief that customers use a product or service because they have a need. The process for base management shifts the marketer to building a relationship. both formal and informal. Within most organizations. Once a marketer has converted the prospective buyer. and then builds the product or service. Marketers depend on marketing research. enhancing the benefits that sold the buyer in the first place. It is also concerned with anticipating the customers' future needs and wants. Marketers hope that this process will give them a sustainable competitive advantage. the mix of the four "Ps" must reflect the wants and desires of the consumers in the target market. organization first determines what its potential customers desire. distribution and selling of a product or service. Marketing management is the practical application of this process. Introduction A market-focused.Marketing is a social process which satisfies consumers' wants. A growing number of organizations. Two major factors of marketing are the recruitment of new customers (acquisition) and the retention and expansion of relationships with existing customers (base management). or because it provides a perceived benefit. The offer is also an important addition to the 4P's theory. to determine what consumers want and what they are willing to pay for it. nurturing the links.

sociology. particularly psychology. Marketing methods are informed by many of the social sciences. During this era. product supply exceeded demand. sellers had to employ creative advertising and skillful personal selling in order to get consumers to buy. This philosophy was possible because the demand for products outlasted supply. ushered in during 1950s. The second era of marketing. promotion. and marketing. Operational Marketing executes marketing functions to attract and keep customers and to maximize the value derived for them. as well as to satisfy the customer with prompt services and meeting the customer expectations. Product choices were nearly nonexistent because firm managers believed that a superior product would sell itself. It is also an area of activity infamous for re-inventing itself and its vocabulary according to the times and the culture. “Marketing is the process of planning and executing the conception. Market research underpins these activities. and distribution of ideas. the . is known as the sales era. firms operated under the premise that production was a seller's market.US companies. and economics. the marketing process progressed through three distinct eras—production. The marketing era emerged after firm managers realized that a better strategy was needed to attract and keep customers because allowing products to sell themselves was not effective. it aims at generating a competitive advantage relative to its competitors. firms assumed that consumers would resist buying goods and services deemed nonessential. sales. The American Marketing Association (AMA) states. goods. reporting to the Chief Executive Officer. pricing. and services to create exchanges that satisfy individual and organizational objectives". In particular. Two Levels of Marketing Strategic Marketing attempts to determine how an organization competes against its competitors in a market place. Through advertising. In the twentieth century. In the 1920s. Marketing is a wide and heavily interconnected subject with extensive publications. Operational Marketing includes the determination of the marketing mix Historical Eras of Marketing Modern marketing began in the early 1900s. it is also related to many of the creative arts. During this era. influence. To overcome this consumer resistance. Anthropology is also a small. Thus. Rather. but growing. have a Chief Marketing Officer position. firm success was measured totally in terms of production.

Adam Smith wrote that the needs of producers should be considered only with regard to meeting the needs of consumers. Today most firms have adopted the marketing concept. Before producing a product. Marketing > Marketing Concept The Marketing Concept The marketing concept is the philosophy that firms should analyze the needs of their customers and then make decisions to satisfy those needs. While this philosophy is consistent with the marketing concept. it would not be adopted widely until nearly 200 years later. under which companies not only would produce the products. but this has not always been the case. Proponents of the marketing concept argued that in order for firms to achieve their concept philosophy was adopted by many firms in an attempt to meet the specific needs of customers. better than the competition. they are not restricted to those periods and are still practiced by some firms today. The production concept prevailed into the late 1920's. To better understand the marketing concept. While these alternative concepts prevailed during different historical time frames. The Production Concept The production concept prevailed from the time of the industrial revolution until the early 1920's. The production concept was the idea that a firm should focus on those products that it could produce most efficiently and that the creation of a supply of low-cost products would in and of itself create the demand for the products. and there was little unfulfilled demand. the production concept worked fairly well because the goods that were produced were largely those of basic necessity and there was a relatively high level of unfulfilled demand. competition had increased. In 1776 in The Wealth of Nations. Around this time. the key questions were: • • Can we sell the product? Can we charge enough for it? . The key questions that a firm would ask before producing a product were: • • Can we produce the product? Can we produce enough of it? At the time. The Sales Concept By the early 1930's however. firms began to practice the sales concept (or selling concept). mass production had become commonplace. but also would try to convince customers to buy them through advertising and personal selling. Virtually everything that could be produced was sold easily by a sales team whose job it was simply to execute transactions at a price determined by the cost of production. it is worthwhile to put it in perspective by reviewing other philosophies that once were predominant. they had to satisfy the needs and wants of consumers.

Marketing was a function that was performed after the product was developed and produced. firms began to adopt the marketing concept. The marketing concept relies upon marketing research to define market segments. The management department is responsible for creating and implementing procedural policies of the firm. The accounting department is responsible for keeping track of income and expenditures. they typically set up separate marketing departments whose objective it was to satisfy customer needs. and marketing. The key questions became: • • • What do customers want? Can we develop it while they still want it? How can we keep our customers satisfied? In response to these discerning customers. the marketing team makes decisions about the controllable parameters of the marketing mix. and many people came to associate marketing with hard selling. the goal simply was to beat the competition to the sale with little regard to customer satisfaction. and these needs were not immediately obvious. Since the entire organization exists to satisfy customer needs. To satisfy those needs. many firms have structured themselves into marketing organizations having a company-wide customer focus. Aligning the marketing activities with the objectives of the firm is completed through the process of marketing management. The marketing management process involves developing . Even today. While this expanded sales department structure can be found in some companies today. nobody can neglect a customer issue by declaring it a "marketing problem" . which involves: • • • Focusing on customer needs before developing the product Aligning all functions of the company to focus on those needs Realizing a profit by successfully satisfying customer needs over the long-term When firms first began to adopt the marketing concept. management. As a means of generating revenue. finance. marketing objectives are established in alignment with the overall objectives of the firm.The sales concept paid little attention to whether the product actually was needed. and their needs. The primary responsibility of the finance department is maintaining and tracking assets. many people use the word "marketing" when they really mean sales. The Marketing Concept After World War II. customers could afford to be selective and buy only those products that precisely met their changing needs. Often these departments were sales departments with expanded responsibilities. their size.everybody must be concerned with customer satisfaction. Marketing in the Overall Business There are four areas of operation within all firms: accounting. With increased discretionary income. the variety of products increased and hard selling no longer could be relied upon to generate sales. The marketing department is responsible for generating revenue through the exchange process. Each of these four areas performs specific functions.

proposed sales objectives. and cultural conditions. action programs. The second step is to establish marketing strategies that support the firm's overall strategic objectives. For example. as a result. Industrial structure refers to how well developed a country's infrastructure is while income distributed refers to how income is distributed among its citizens. quotas. those strategies may not be appropriate or effective. political-legal. In order to analyze marketing opportunities. Each product plan contains an executive summary. Political-legal environment is the third factor to investigate. more and more firms have set up shop at various locations around the globe. the individual and cultural attitudes regarding purchasing products from foreign countries. Firm managers must adapt their strategies to fit the unique characteristics of each international market. developing the marketing mix. International marketing occurs when firms plan and conduct transactions across international borders in order to satisfy the objectives of both consumers and the firm. All countries have their own trade system regulations and restrictions. firms scan current environmental conditions in order to determine potential opportunities. A natural component of international business is international marketing. Finally. The first step in the marketing management process is to develop the firm's overall strategic plan. and government bureaucracy all influence marketing practices and opportunities.objectives that promote the long-term competitive advantage of a firm. target countries will need to be identified and evaluated in terms of their potential sales and profits. For example. and managing the marketing effort. political stability. The first factor to consider in the international marketplace is each country's trading system. While firm managers may try to employ the same basic marketing strategies used in the domestic market when promoting products in international locations. The marketing management process includes analyzing marketing opportunities. who are then segmented into markets. and budget proposals. exchange controls. Various quantitative and qualitative techniques of marketing research are used to collect data about potential customers. possible marketing strategies. economic conditions. the last factor to be considered before entering a global market is the cultural environment. In modern times. advances in technology have improved transportation and communication methods. Thus. After selecting a market . International marketing is simply a strategy used by firms to improve both market share and profits. a list of threats and opportunities. Common trade system regulations and restrictions include tariffs. managers must establish their international marketing objectives and policies before going overseas. selecting target markets. Just as with domestic markets. The aim of the marketing effort is to satisfy the needs and wants of consumers. managers must take into account these differences in the planning process. and nontariff trade barriers. Since cultural values regarding particular products will vary considerably from one country to another around the world. Lastly. embargoes. it is necessary for marketing managers to determine the particular needs and wants of potential customers. an explanation of the current marketing situation. International Marketing International business has been practiced for thousands of years. a marketing plan is developed for each product. monetary regulations. The second factor to review is the economic environment. Unique environmental factors that need to be explored by firm managers before going global include trade systems. There are two economic factors which reflect how attractive a particular market is in a selected country: industrial structure and income distribution.

The American Marketing Association (AMA) states. a firm enters the market by establishing its own base in international locations. especially advertising and branding. It is also concerned with anticipating the customers' future needs and wants. management contracting. patent. trademark. Exporting is the simplest way to enter an international market. There are three major modes of entry into international markets: exporting. Firms join with the local international investors to establish a local business. A joint venture takes place when firms join forces with companies from the international market to produce or market a product. which includes advertising. "marketing" is the promotion of products. This use of these middlemen is sometimes called indirect exporting. communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders. distribution and selling. "Marketing is an organizational function and a set of processes for creating. Under licensing. "marketing" is the promotion of products. trade secret. Four Ps In popular usage. it is also related to many of the creative arts. sociology. The third type of joint venture is called management contracting. Finally. Four types of joint venture are licensing. Direct investment is advantageous because labor and raw materials may be cheaper in some countries. Anthropology is also a small.and establishing marketing objectives. Both groups share joint ownership and control of the newly established business. Firms can also improve their images in international markets because of the employment opportunities they create. especially advertising and branding. firms enter international markets by selling products internationally through the use of middlemen. but growing influence. the mode of entry into the market must be determined." Marketing practice tends to be seen as a creative industry. Joint ventures differ from direct investment in that an association is formed between firms and businesses in the international market. With direct investment. However. Through advertising. In popular usage. Market research underpins these activities. firms allow other businesses in the international market to produce products under an agreement called a license. However. in professional usage the term has a wider meaning of the practice and science of trading. direct investment is the last mode used by firms to enter international markets. The scientific study of marketing is a wide and heavily interconnected subject with extensive academic publications. and direct investment. The second way to enter an international market is by using the joint-venture approach. joint venture. contract manufacturing. or other items of value for a fee or royalty. in professional usage the term has a wider meaning which recognizes . The marketing literature is also infamous for re-inventing itself and its vocabulary according to the times and the culture. With this approach. The last category of joint venture is joint ownership. and joint ownership. Firms also use contract manufacturing. which arranges for the manufacture of products to enter international markets. With exporting. the firms supply the capital to the local international firm in exchange for the management know-how. The licensee has the right to use the manufacturing process. Marketing methods are also informed by many of the social sciences. which are often discovered through market research. and economics. particularly psychology.

have passed into the language. as well as a framework within which these can be used. Services marketing must account for the unique nature of services. guarantees. in the customer's eyes. Seven Ps As well as the standard four Ps (Product. for example. These are: • People: Any person coming into contact with customers can have an impact on overall satisfaction.g. at a sporting event). totaling seven and known together as the extended marketing mix. The scope of a product generally includes supporting elements such as warranties.g. services marketing calls upon an extra three. as they too can affect the customer's service experience. Pricing. and how it relates to the end-user's needs and wants.g. whereas the essence of marketing should be the outside–in approach". in Riding the Waves of Change (Jossey-Bass. The four Ps are: • • • • Product: The product aspects of marketing deal with the specifications of the actual goods or services. the 4 Ps offer a memorable and workable guide to the major categories of marketing activity. As a counter to this. Fellow customers are also sometimes referred to under 'people'. including discounts. can simply be what is exchanged for the product or services. they must be appropriately trained. (e. publicity. sales promotion. The four Ps model is most useful when marketing low value consumer products. they are generally inseparable from the total service . referring to the channel by which a product or services is sold (e. e. and personal selling. Products are often developed to meet the desires of groups of customers or even. brand. psychology or attention. business people). people are particularly important because. E. point of sale placement or retailing. suggests that one of the greatest limitations of the 4 Ps approach "is that it unconsciously emphasizes the inside–out view (looking from the company outwards). As a result of this. services. Pricing: This refers to the process of setting a price for a product. which geographic region or industry. Morgan. to which segment (young adults.[1] which a marketer can use to craft a marketing plan. His typology has become so universally recognized that his four activity sets. and support. time. Industrial or B2B marketing must account for the long term contractual agreements that are typical in supply chain transactions. Whether as part of a supporting service to a product or involved in a total service. the Four Ps. 1988). retail). well motivated and the right type of person. Relationship marketing attempts to do this by looking at marketing from a long term relationship perspective rather than individual transactions. Nevertheless. online vs.. for specific customers. in some cases. Jerome McCarthy divided marketing into four general sets of activities. Promotion: This includes advertising. The price need not be monetary . and refers to the various methods of promoting the product. families. These four elements are often referred to as the marketing mix.that marketing is customer centered. Industrial products. . or company. high value consumer products require adjustments to this model. Placement or distribution refers to how the product gets to the customer. energy. Promotion and Place). This fourth P has also sometimes been called Place.

it is often vital to offer potential customers the chance to see what a service would be like. Emerging technologies will continue to push this idea forward. testimonials or demonstrations. Analysis of profitability of product concept. thus improving the chance for success.0. a service cannot be experienced before it is delivered. The historical problem with marketing is that it is "interruptive" in These "passive customer bases" will ultimately be replaced by the "active customer communities". means that potential customers could perceive greater risk when deciding whether to use a service. Design and testing of product concept.number of product lines in a range. • • • • Personalization: The author here refers to customization of products and services through the use of the Internet. what should be the product directions and even which ads to run. This is most apparent in TV advertising. .number of product items in a product line. Participation. Idris Mootee devised a “New 4Ps” model in 2001 to supplement the traditional marketing 4Ps. Product Scope • • Breadth -. Web 2. To reduce the feeling of risk. which makes it intangible. Brand engagement happens within those conversations. but this concept is further extended with emerging social media and advanced algorithms. This is done by providing physical evidence. Peer-to-Peer': This refers to customer networks and communities where advocacy happens. Participation: This is to allow customer to participate in what the brand should stand for. Depth -. Peer-to-Peer and Predictive Modeling.[2] They are Personalization.• • Process: This is the process(es) involved in providing a service and the behaviour of people. This. trying to impose a brand on the customer. such as case studies. Early examples include Dell on-line and Amazon. marketers have needed to adapt a broader perspective on these elements. which can be crucial to customer satisfaction. Predictive Modeling: This refers to neural network algorithms that are being successfully applied in marketing problems (both a regression as well as a classification problem).0 and Marketing New 4Ps The original 4Ps concept idea was developed to help marketers manage the four most important aspect of marketing. Steps in product design • • • • Design and development of product ideas. therefore. P2P is now being referred as Social Computing and will likely to be the most disruptive force in the future of marketing. Physical evidence: Unlike a product. This concept is laying the foundation for disruptive change through democratization of information. With the Internet and the Web 2. Selection of and sifting through product ideas.

simple language Easily pronounced and remembered Distinct from names of other products Easily added to an existing range Easily registered for legal protection Pricing . convenient.• Design and testing of physical product.two or more products packaged in the same container Kaleidoscopic packaging -.packed. Forms of packaging • • • • • • Specialty packaging -. well-designed Point of difference in service and supply of product. Packaging and trademarks Requirements of good packaging • • • • • • • • • Appropriately designed for target market Eye-catching Suitable to product Compliant with retailers' requirements Promotes image of enterprise Distinguishable from competitors' products Strong. for the retailer or wholesaler Significance of a trademark • • • • • Distinguishes one company's goods from those of another Serves as advertisement for quality Protects both consumers and manufacturers Used in displays and advertising campaigns Used to market new products Requirements of a good trademark • • • • • • Reflects products' advantages Good. Difference in uniform product design "the look & feel" from the packaging (the box) to the product its be thrown away after use Packaging for resale -.emphasizes the elegant character of the product Packaging for double-use Combination packaging -.packaging changes continually to reflect a series or particular theme Packaging for immediate consumption -. into appropriate quantities.

Objectives • • • • • • • Definite sales volume Achieve profit Larger market share Maintain market share Eliminate competition Advantages of mass production Satisfactory return on capital Factors influencing price-determination • • • • • • • • Production and distribution costs Substitute goods available Normal trade practices Fixed prices Reaction of distributors Reaction of consumers Nature of demand: o Elastic o Inelastic Form of market: o Perfect competition o Monopolistic competition o Monopoly o Oligopoly' Steps to determine price • • • • Determine market share to be captured Set up price strategy Estimate demand Evaluate competitors' reactions Distribution Channels • • • Manufacturer to consumer (most direct) Manufacturer to wholesaler to retailer to consumer (traditional) Manufacturer to agent to wholesaler to retailer to consumer Manufacturers .Pricing refers to the amount of money exchanged for a product. This value is determined by utility to the consumer in terms of money and/or sacrifice that he is prepared to give for it.

Middlemen unable to transport. Manufacturer does not have a wide assortment of goods to enable efficient marketing. Reasons for indirect selling methods • • • • • • Manufacturer does not have the financial resources to distribute goods. Too many consumers in a large area. Manufacturer has no knowledge of efficient distribution. Wholesalers. difficult to reach. Manufacturer unable to convince wholesalers or retailers to stock product. retailers and agents not actively selling. Manufacturer wishes to use capital for further production.Reasons for direct selling methods • • • • • Manufacturer wants to demonstrate goods. High profit margin added to goods by wholesalers and retailers. Distribution channels already established. Wholesalers Reasons for using wholesalers • • • • • • • Bear risk of selling goods to retailer or consumer Storage space Decrease transport costs Grant credit to retailers Able to sell for the manufacturers Give advice to manufacturers Break down products into smaller quantities Reasons for bypassing wholesalers • • • • • • • • • Limited storage facilities Retailers' preferences Wholesaler cannot promote products successfully Development of wholesalers' own brands Desire for closer market contact Position of power Cost of wholesalers' services Price stabilisation Need for rapid distribution Ways of bypassing wholesalers • • • • • Sales offices or branches Mail orders Direct sales to retailers Travelling agents Direct Orders Agents .

There are distinct stages in converting strangers to customers (seeClient Path Marketing) that govern the communication medium that should be used. They have an expert knowledge of the purchasing function. They operate within a specific area and sell related lines of goods but have limited authority regarding price and sales terms. Advertising • • • • Paid form of public presentation and expressive promotion of ideas Aimed at masses Manufacturer may determine what goes into advertisement Pervasive and impersonal medium Functions and advantages of successful advertising • • • • • • • • • • Task of the salesman made easier Forces manufacturer to live up to conveyed image Protects and warns customers against false claims and inferior products Enables manufacturer to mass-produce product Continuous reminder Uninterrupted production a possibility Increases goodwill Raises standards of living (or perceptions thereof) Prices decrease with increased popularity Educates manufacturer and wholesaler about competitors' offerings as well as shortcomings in their own.• • • • • Commission agents work for anyone who needs their services. Objectives • • • Maintain demand for well-known goods Introduce new and unknown goods Increase demand for well-known goods Requirements of a good advertisement • • Attract attention Stimulate interest . selling all of the products of the manufacturer. Promotion Marketing communications breaks down the strategies involved with marketing messages into categories based on the goals of each message. Buying agents buy goods on behalf of producers and retailers. Selling agents act on an extended contractual basis. Brokers specialize in the sale of one specific product. They do not acquire ownership of goods but receive del credere commission. Factory representatives represent more than one manufacturer. They receive a brokerage. They have full authority regarding price and terms of sale.

Offerings and Business Models Marketing in the past focused mainly on basic concepts like the 4 Ps. better than the competition. offerings and business models that other companies find hard to . Marketing in the future will be based on a more strategic approach to competitive marketing success.[3] Marketers will consciously build and allocate resources. Successful marketing was based on who could create the better brand or the lowest price or the most hype. relationships.• • Create a desire Bring about action Seven steps in an advertising campaign • • • • • • • Market research Setting out aims Budgeting Choice of media Design and wording Coordination Test results Personal sales Oral presentation given by a salesman who approaches individuals or a group of potential customers: • • • Live. wants and behaviors of customers. interactive relationship Personal interest Attention and response Sales promotion Short-term incentives to encourage buying of products: • • Instant appeal Anxiety to sell Publicity • • • • Stimulation of demand through press release giving a favourable report to a product Higher degree of credibility Effectively news Boosts enterprise's image Beyond the 4 Ps Resources. and primarily on the psychological and sociological aspects of marketing. Competitive advantage was created by directly appealing to the needs. Relationships.

product in competitive marketing is dying. policies). History attests to many products that were commercial failures in spite of being technological breakthroughs. including the nature of the product itself. physical (plant and equipment). This does not mean the four P approach is dead.match. The starting point is always the consumer. Business Models The concept of product vs. This implies that the company focuses its activities and products on consumer demands. simply that it has been expanded upon. Relationships Success in business. the sense of identifying market changes and the product innovation approach. competencies. Marketers must aggressively build relationships with consumers. This system is basically the four Ps renamed and reworded to provide a customer focus. Value. Access). The rationale for this approach is that there is no point spending R&D funds developing products that people will not buy. Information. business model. It's slowly becoming business model vs. partners and even competitors if they want to have success in today's competitive marketplace. Business model innovation can make the competition's product superiority irrelevant.[4] A formal approach to this customer-focused marketing is known as SIVA[5] (Solution. legal (trademarks and patents). Resources Companies with a greater number of resources than their competitors will have an easier time competing in the marketplace. consumer wants are the drivers of all strategic marketing decisions.(customer-vendor) The marketing strategies that are focused on building and leveraging win-win relationships are called Community marketing strategies. as in life. Generally there are three ways of doing this: the customer-driven approach. Small companies usually have a harder time competing with larger corporations because of their disadvantage in resource allocation. as most marketing is. There are four type of relationships (1)win-win (2)win-lose (3)lose-lose (4)lose-win. No strategy is pursued until it passes the test of consumer research. Some argue that community marketing is not created. and informational (knowledge of consumers and competitors). organizational (structure. distributors. In the consumer-driven approach. . Resources include: financial (cash and cash reserves). but rather is the cultivation of a natural social response. Blog Reference. Every aspect of a market offering. human (knowledge and skill). is driven by the needs of potential consumers. customers. Customer focus Many companies today have a customer focus (or customer orientation). is based on the relationships you have with people. Business model innovation allows a marketer to change the game instead of competing on a level playing field.

place. marketers must ensure that they have a varied and multi-tiered approach to product innovation. promotion) of marketing management. successfully focus on product innovation (Such as Nintendo who constantly change the way Video games are played). Product innovation drives the process and marketing research is conducted primarily to ensure that a profitable market segment(s) exists for the innovation.Access: Where can the customer find the solution. This model was proposed by Chekitan Dev and Don Schultz in the Marketing Management Journal of the American Marketing Association. It is claimed that if Thomas Edison depended on marketing research he would have produced larger candles rather than inventing light bulbs. -> -> -> Solution Information Value Product focus In a product innovation approach.Value: Does the customer know the value of the transaction. such as research and development focused companies. what will be their reward? .Solution: How appropriate is the solution to the customers problem/need . what might they have to sacrifice.The SIVA Model provides a demand/customer centric version alternative to the well-known 4Ps supply side model (product. then tries to develop a market for the product. price. what it will cost. because of the ex post status of consumer research. do they know enough to let them make a buying decision . When pursuing a product innovation approach. The rationale is that customers may not know what options will be available to them in the future so we should not expect them to tell us what they will buy in the future. Product Promotion Price Place ->Access The four elements of the SIVA model are: . marketers can aggressively over-pursue product innovation and try to overcapitalize on a niche. How easily/locally/remotely can they buy it and take delivery. what are the benefits. However. Many firms. Many purists doubt whether this is really a form of marketing orientation at all. and if so how. The model focuses heavily on the customer and how they view the transaction. and presented by them in Market Leader the journal of the Marketing Society in the UK. who from. . the company pursues product innovation.Information: Does the customer know about the solution. Some even question whether it is marketing.

Diffusion of innovations research explores how and why people adopt new products. Price is the cost of the product paid by consumers. Amazon. affiliate marketing. place. It targets its audience more precisely. eBay). which is appealing to supermarkets because it can "increase sales without the need to give people discounts. a Japanese chain of convenience stores which orders its products based on "sales data from department stores and research companies.g. and promotion. With consumers' eroding attention span and willingness to give time to advertising messages. managers must . Other recent studies on the "power of social influence" include an "artificial music market in which some 14. The basic idea is that people will buy more of products that are seen to be popular. the best mix of these elements is determined to reach the selected target market. known as the four P's of marketing. [6] Mechanisms to increase impulse buying and get people "to buy more by playing on the herd instinct" were shared. The Economist recently reported a recent conference in Rome on the subject of the simulation of adaptive human behavior. In an article entitled "Swarming the shelves: How shops can exploit people's herd mentality to increase sales". Custom media and Reality marketing. and is sometimes called personalized marketing or one-to-one marketing.000 people downloaded previously unknown songs" (Columbia University. price." a Massachusetts company exploiting knowledge of social networking to improve sales. and several feedback mechanisms to get product popularity information to consumers are mentioned. The use of herd behavior in marketing. services and ideas. A "swarm-moves" model was introduced by a Princeton researcher. Since these four variables are controllable. and online retailers who are increasingly informing consumers about "which products are popular with like-minded consumers" (e. including smart-cart technology and the use of Radio Frequency Identification Tag technology.. • • • • Marketing Mix Once a positioning strategy has been determined. In order to generate revenue. marketing managers seek to control the four basic elements of the marketing mix: product.• An emerging area of study and practice concerns internal marketing. marketers are turning to forms of Permission marketing such as Branded content. It typically tries to perfect the segmentation strategy used in traditional marketing. desktop advertising or online marketing. A relatively new form of marketing uses the Internet and is called internet marketing or more generally e-marketing. This is the only element in the marketing mix that generates revenue for firms. New York). Price." Large retailers Wal-Mart in the United States and Tesco in Britain plan to test the technology in spring 2007 . or how employees are trained and managed to deliver the brand in a way that positively impacts the acquisition and retention of customers (employer branding).

Prices are then gradually lowered until maximum profit is received from each level of consumer. Place. For the promotional program to be effective. Psychological pricing tends to focus on consumer perceptions. Consumers tend to focus on the lower-value fulldollar cost even though it is really priced closer to the next higher full-dollar amount. For example. With a price-skimming strategy. There are a number of pricing strategies available to marketing managers: skimming. A quantity-pricing strategy provides lower prices to consumers who purchase larger quantities of a product. personal selling. and publicity. and production costs. Various promotional tools are used to communicate messages about products. The process of moving products from a manufacturer to the final consumer is often called the channel of distribution. or services from firms and their customers. Several factors are reviewed by firm management when determining where to sell their products: distribution channels. The last variable in the marketing mix is promotion. and government regulations. ideas. penetration. product demand. and psychological. There are two basic issues involved in getting the products to consumers: channel management and logistics management.95. through the use of incentives. With odd pricing. Channel management involves the process of selecting and motivating wholesalers and retailers. economic conditions. inventory.consider factors both internal and external to the organization. sales promotion. the cost of the product may be a few cents lower than a full-dollar value. odd pricing is a common psychological pricing strategy. Penetration pricing is used when firms set low prices in order to capture a large share of a market quickly. For example. Internal factors take the form of marketing objectives. geographic locations. sometimes called middlemen. The promotional tools available to managers are advertising. External factors to consider are the target market. Promotion. and transportation methods. allowing firms to generate maximum profits from customers willing to pay the high price. if a good is priced at $19. . the marketing-mix strategy. market-coverage strategy. quantity. This blending of promotional tools is sometimes referred to as the promotional mix. consumers will focus on $19 rather than $20. competition. managers use a blend of the four promotional tools that best reaches potential customers. The goal of this promotional mix is to communicate to potential customers the features and benefits of products. the price is initially set high. Place refers to where and how the products will be distributed to consumers.

high value consumer products require adjustments to this model. Relationship marketing attempts to do this by looking at marketing from a long term relationship perspective rather than individual can simply be what is exchanged for the product or services. This fourth P has also sometimes been called Place. whereas the essence of marketing should be the outside–in approach".[1] which a marketer can use to craft a marketing plan. retail). Professor Neil Borden at Harvard Business School identified a number of company performance actions that can influence the consumer decision to purchase goods or services. Morgan. the 4 Ps offer a memorable and workable . Services marketing must account for the unique nature of services. Industrial or B2B marketing must account for the long term contractual agreements that are typical in supply chain transactions. suggests that one of the greatest limitations of the 4 Ps approach "is that it unconsciously emphasizes the inside–out view (looking from the company outwards). in Riding the Waves of Change (Jossey-Bass. Nevertheless. or company. Jerome McCarthy. including discounts.g. and personal selling. etc. 1988). services. The price need not be monetary . also at the Harvard Business School in the early 1960s. • • • • Product: The product aspects of marketing deal with the specifications of the actual goods or services. and how it relates to the end-user's needs and wants. referring to the channel by which a product or services is sold (e. sales promotion. brand.Four Ps In the early 1960s. Promotion: This includes advertising. guarantees. Professor E. Borden suggested that all those actions of the company represented a “Marketing Mix”. Placement (or distribution): refers to how the product gets to the customer. As a counter to this. These four elements are often referred to as the marketing mix. The four Ps model is most useful when marketing low value consumer products. price. psychology or attention. place and promotion. which geographic region or industry. point of sale placement or retailing. Industrial products. online vs. and support. for example. e. branding and refers to the various methods of promoting the product. energy. families.g. also referring to how the environment in which the product is sold in can affect sales. business people). time. publicity. to which segment (young adults. Pricing: This refers to the process of setting a price for a product. The scope of a product generally includes supporting elements such as warranties. suggested that the Marketing Mix contained 4 elements: product.

Process: This is the process(es) involved in providing a service and the behaviour of people. Product Product. in the customer's eyes. intangible . Promotion and Place). Predictive modeling: This refers to algorithms that are being successfully applied in marketing problems (both a regression as well as a classification problem). testimonials or demonstrations. Participation: This is to allow the customer to participate in what the brand should stand for. which makes it intangible.g. which can be crucial to customer satisfaction. they are generally inseparable from the total service . Products can be either tangible or intangible. The historical problem with marketing is that it is “interruptive” in to the major categories of marketing activity. at a sporting event). totaling seven and known together as the extended marketing mix. Tangible products are products that can be touched. means that potential customers could perceive greater risk when deciding whether to use a service. This is most apparent in TV advertising. Seven Ps As well as the standard four P's (Product. as they too can affect the customer's service experience. Physical evidence: Unlike a product. Emerging technologies will continue to push this idea forward. trying to impose a brand on the customer. a service cannot be experienced before it is as well as a framework within which these can be used. Whether as part of a supporting service to a product or involved in a total service. As a result of this. Brand engagement happens within those conversations. Pricing. thus improving the chance for success. Peer-to-Peer: This refers to customer networks and communities where advocacy happens. well motivated and the right type of person. such as case studies. The first element in the marketing mix is the product. what should be the product directions and even which ads to run. but this concept is further extended with emerging social media and advanced algorithms. people are particularly important because. therefore. This is done by providing physical evidence. P2P is now being referred as Social Computing and is likely to be the most disruptive force in the future of marketing. they must be appropriately trained. services marketing calls upon an extra three. [citation needed] These are: • • • People: Any person coming into contact with customers can have an impact on overall satisfaction. (e. Fellow customers are also sometimes referred to under 'people'. This. These “passive customer bases” will ultimately be replaced by the “active customer communities”. it is often vital to offer potential customers the chance to see what a service would be like.. new marketing 4Ps • • • • Personalization: It is here referred customization of products and services through the use of the Internet. To reduce the feeling of risk. This concept is laying the foundation for disruptive change through democratization of information. Early examples include Dell on-line and Amazon.

Many purists doubt whether this is really a form of marketing orientation at all. styles. Many firms. size. marketers must ensure that they have a varied and multi-tiered approach to product innovation. because of the ex post status of consumer research. and packaging. The core product is the most basic level. actual. marketers are turning to forms of permission marketing such as branded content. The use of herd behavior in marketing. rather. options. packaging. Product focus In a product innovation approach. When planning new products. and several feedback . For example. food processors. It targets its audience more precisely. what consumers really buy in terms of benefits. consumers do not buy food processors. the augmented level of a product consists of all the elements that surround both the core and the actual product. they buy the benefit of being able to process food quickly and efficiently. then tries to develop a market for the product. service.products are those that cannot be touched. marketers can aggressively over-pursue product innovation and try to overcapitalize on a niche. successfully focus on product innovation (Such as Nintendo who constantly change the way Video games are played).[5] Mechanisms to increase impulse buying and get people "to buy more by playing on the herd instinct" were shared. It typically tries to perfect the segmentation strategy used in traditional marketing. all in an attempt to meet the needs and wants of consumers. However. Finally. With consumers' eroding attention span and willingness to give time to advertising messages. or how employees are trained and managed to deliver the brand in a way that positively impacts the acquisition and retention of customers (employer branding). When pursuing a product innovation approach. The rationale is that customers may not know what options will be available to them in the future so we should not expect them to tell us what they will buy in the future. features. such as research and development focused companies. • • • • • An emerging area of study and practice concerns internal marketing. Some even question whether it is marketing. warranties. features. and augmented. Products are typically sorted according to the following five characteristics: quality. The next level of the product is the actual product—in the case of the previous example. firm managers consider a number of issues including product quality. It is claimed that if Thomas Edison depended on marketing research he would have produced larger candles rather than inventing light bulbs. custom media and reality marketing. brand name. The Economist reported a recent conference in Rome on the subject of the simulation of adaptive human behavior. the company pursues product innovation. The basic idea is that people will buy more of products that are seen to be popular. follow-up technical assistance and warranties and guaranties are augmented product components. Diffusion of innovations research explores how and why people adopt new products. affiliate marketing. such as services. and is sometimes called personalized marketing or one-to-one marketing. and return policies. services and ideas. per se. There are three basic levels of a product: core. Product innovation drives the process and marketing research is conducted primarily to ensure that a profitable market segment(s) exists for the innovation. The augmented level provides purchasers with additional services and benefits. brand name. styling. desktop advertising or online marketing. For example. A relatively new form of marketing uses the Internet and is called Internet marketing or more generally e-marketing.

. A "swarm-moves" model was introduced by a Princeton researcher. a Japanese chain of convenience stores which orders its products based on "sales data from department stores and research companies. Design and testing of emotional product." Large retailers Wal-Mart in the United States and Tesco in Britain plan to test the technology in spring 2007 . eBay). New Product Development Steps in product design • • • • • Design and development of product ideas.effectively contain and protect the contents Provide convenience during distribution. Amazon. including smart-cart technology and the use of Radio Frequency Identification Tag technology. etc. reuse. Analysis of business instead of product concept. perfect colour. Design and testing of product concept. Other recent studies on the "power of social influence" include an "artificial music market in which some 14. Be environmentally responsible Be cost effective Appropriately designed for target market Eye-catching (particularly for retail/consumer sales) Communicate attributes and recommended use of the product and package Compliant with retailers' requirements Promotes image of enterprise Distinguishable from competitors' products Meet legal requirements for product and packaging Point of difference in service and supply of product.g. use. For a perfect product. opening. Marketing is also used to promote the businesses products and is also a great way of promoting the business its self. sale.000 people downloaded previously unknown songs" (Columbia University." a Massachusetts company exploiting knowledge of social networking to improve sales. which is appealing to supermarkets because it can "increase sales without the need to give people discounts.mechanisms to get product popularity information to consumers are mentioned. Forms of packaging . Selection of and sifting through product ideas. and online retailers who are increasingly informing consumers about "which products are popular with like-minded consumers" (e. New York). Packaging Requirements of good packaging • • • • • • • • • • • • • Functional .

which embraces all phases of activities involved in the transfer of goods and services from the manufacturer to the consumer. describe. into appropriate quantities. . Packaging is the outer wrapping of a product. identify. identification and packaging of products. promote. display." Packaging can be defined as the wrapping material around a consumer item that serves to contain. typically a product that will be offered for sale. Packaging is an important part of the branding process as it plays a role in communicating the image and identity of a company. It is the intended purpose of the packaging to make a product readily sellable as well as to protect it against damage and prevent it from deterioration while storing. Packing is recognized as an integral part of modern marketing operation. How can we define Packaging? Kotler defines packaging as "all the activities of designing and producing the container for a product. Furthermore the packaging is often the most relevant element of a trademark and conduces to advertising or communication. It is the process of preparing items of equipment for transportation and storage and which embraces preservation. Packaging is the enclosing of a physical object. protect. for the retailer or wholesaler Role of Packaging Organisation in Marketing Product and Introduction Packaging is now generally regarded as an essential component of our modern life style and the way business is organized.• • • • • • Specialty packaging — emphasizes the elegant character of the product Packaging for double-use Combination packaging two or more products packaged in the same container Kaleidoscopic packaging — packaging changes continually to reflect a series or particular theme Packaging for immediate consumption — to be thrown away after use Packaging for resale — packed. and otherwise make the product marketable and keep it clean.

wooden crate etc. ensuring protection from bacteriological attacks. lot number. Protection and preservation Requirements A basic function of package is to protect and preserve the contents during transit from the manufacturer to the ultimate consumer. Information includes: quantity. from hazardous substances and contaminants. ingress and egress of moisture. Hazards of Transport There * * * * are four Drops Compression Vibration Climatic main hazards and of transport impacts forces variations . price. tampering pilferage etc. To function successfully.Functional 1. Eg: fiberboard. vapour. the use of unambiguous. colour. Types of packaging An important distinction is to be made here between two types of packaging o Transport packing: The product entering in to the trade need to be packed well enough to protect against loss damage during handling. A better packaging help to maintain the quality of the product and reachability of the product in the consumer's hand without spillages It gives better image to the organisation. This containment function of packaging makes a huge contribution to protecting the environment. chemical reaction etc. and from infestation. It is the protection during transport and distribution. dirt. drying atmospheres). When international trade is involved and different languages are spoken. tobacco etc. A package should preserve the contents in 'Factory Fresh' condition during the period of storage and transportation. Eg: beverages. size. moisture. insect infection. 3. o Consumer Packing: This packaging holds the required volume of the product for ultimate consumption and is more relevant in marketing. Communication A major function of packaging is the communication of the product. transport and storage. Protection is required against transportation hazards spillage. From climatic effects (heat and cold. Packaging protects the interests of consumers. A package must communicate what it sells. Containment Most products must be contained before they can be moved from one place to another. how to use it and other utility informations. It is the interest further that to get appropriate communication to the consumer about the product. inventory levels. distribution routes. readily understood symbols on the distribution package is essential. contamination by foreign material. 2. elapsed time since packaging. and merchandising and premium data. the package must contain the product.

o Inclined Impact Test: This test help to study the extend of damage in a way of crushing. distortion. on empty containers. o Vibration Test: This test is to determine the ability of the container to withstand vibration and the protection offered by materials used for interior packing. o Drum test: This test help to evaluate loaded shipping containers with respect to general overall durability and for the protection afforded to the contents against certain hazards of handling and shipment. o Rolling Test: This test helps to evaluate the overall strength of the container and the cushioning material provided inside and any failure of the content. Various Climatic Tests o Rain Test: This test is conducted in a simulated rain condition to assess its impact on the test area for two hours. which protects the article from damage due to shock and vibration. The main functions of cushioning materials can be detailed as follows: o o Shock Protection protection against against vibration abrasion o Protection of grease proof and water proof barriers at ponut of contact with solid blocks o Protection of moisture vapour barriers at points of contact with sharp edges of the article itself. cracking. o Compression Test: This test is carried out. o Fungus Resistance Test: This test is to evaluate all the materials used in the fabrication of shipping containers for fungus resistance.Various Mechanical Tests o Drop Test: This test help to measure the ability of the container and inside packing materials to provide protection to its contents and to measure the ability of the container to withstand rough handling. breaking. o Protection of small projections . o Sand and Dust Test: This test is to evaluate the resistance of a package to the penetration of sand and dust. generally. o Salt Spray Test: This test is to evaluate the resistance of a package to corrosion by salt spray and to serve as a general standard for corrosion. to measure the ability of the container to resists external compressive loads applied to faces or applied to diagonally opposite edges or corners. and shifting during handling storage and transport which occurs to the container and its content. Importance of Cushion Materials Cushioning is that part of packaging.

* The paramount concern of packaging is the reachability of the product without any damage. (freight by volume) * Loss and Damage cost: It is related to the loss and damage during operation. feed back cost. pilot test cost. final trial cost etc. transportation delivery etc. appeal. easier to identify or promote or to send out a message. air etc. * Can make the important difference to a marketing strategy by meeting customers' needs better. packages sales: package * Obsolescence Cost: This cost involves when changes in the packaging materials. labeling – unitizing. No matter where and how the products are transported or shipped. * Packaging plays a key role in brand promotion and management. cleaning the package product filling – closing. * Storage of filled packages: This includes the cost incurred to shift the goods from one form of packaging to another.o Filling of void space in the container o Other secondary purposes Packaging Cost The most important aspect when we look into packaging is the packaging cost. heavy materials of construction. * Packaging operation costs: This includes the cost involved in operations like. field testing cost. * Storage and handling cost of empty packages: This include the handling cost of bulky packages. packages and labels happen. * Package developmental cost: This include the evaluation cost. Importance of packaging: An Overview Some of the major significance of packaging can be detailed as follows: * Can make a product more convenient to use or store. handling cylindrical slums etc. stenciling. drums etc. Packaging cost include the following: * Material cost: It means the cost of the pack and quality control cost. Packaging is of great importance in the final choice the consumer will make. * Transportation cost of filled packages: This involves the transportation cost by sea. because it directly involves convenience. * * Insurance Effect of cost: It varies on depending The on the vulnerability that influence of package on sales. consumer research cost. they arrive at the customer's door in working condition without need of repair or . information and branding.

This makes the many good facilities feel like dolphins caught in tuna nets. Effort should be there to understand the importance of packaging there by to avoid the loss and damage cost incurred during transport and delivery. One director of nurses. writing in this magazine not too long ago. Packaging makes a product. but the solution is local.adjustment. In the recent past packaging has been increasingly recognized as a significant factor in the nations export promotion effort. it is obviously easier to market and sell. The problem of a negative image might be national. Further. The volume of exports depends not only on the quantity of the production and prices. The administrator of a good nursing facility in Illinois cannot change the image of a bad facility in Maine. Conclusion The significance of packaging has come to be increasingly recognized in export as well as in marketing of a wide range of consumer goods and industrial products within the country. horror and death. "Facilities of varying quality are grouped together in the public's eye into one stereotype across the nation. When something is attractive and appealing. It is within the power of each and every administrator to improve the quality of care and enhance the quality of life their residents receive. "Packaging" For Marketing Success . and one that will remain into the foreseeable future. integrity and performance of a company's previous delivery. Marketing is difficult enough without pre-existing image problems tagging along. Goods damaged in transit or arriving at the destination in an unacceptable condition tarnishes the reputation of the manufacturer as well as the country as a whole. Perhaps the greatest "packaging" challenge that long-term care facilities face today. It is one of neglect. is their overall negative image. with "horror stories" prominently featured in the press and broadcast media. * Packaging is especially important in certain industry where future sales may be based largely on the quality. packaging has a crucial role to play in the fetching higher unit values for our consumer goods (like tea and cashew) through the substitution of the bulk packs by consumer packs.good service key to marketing long-term care facilities Long-term care facilities in this new millennium must learn how to package their products to gain a marketing advantage. The many positive stories simply never make it to public view!" What Is the Solution? Every long-term care facility must become involved in trying to improve the industry's image. besides colossal wastage of scarce economic resources. more attractive and appealing to customers. any product. but also to a substantial extends on the standards of packaging adopted for the products. The national or state associations can't do it. Professional associations can give . Keep in mind that a conscious effort on the part of marketing managers can increase the volume of sales and there by improve the reputation of the product and organisation. summed it up rather succinctly when she wrote. only individual facilities can. The last two years especially have been extraordinarily difficult.

they purchase the services of every department. what good is it if the facility has high-quality nursing care Monday through Friday but things go to pot on the weekends or holidays when the nursing assistants fail to show up (the very days." What good is it marketwise or imagewise if a facility has wonderful nursing care but deplorable housekeeping. which can be seen and smelled almost instantly? Even with nursing. every time they visit. If unchecked or tolerated. then the quality designation (excellent. So all de partments must perform their duties extremely well to reach the status of "high quality. Absenteeism also impacts the facility's ability to maintain census. Both are internal failures but they can cause image and marketing problems externally: (1) absenteeism and (2) tolerance of mediocre work performance. then not only will their image be improved. offer rehabilitative therapies and have a subacute unit.encouragement and support.. it can devour entire departments and shifts. are offering the same kind of products. but each and every facility must do the actual heavy lifting to improve its image. The other has been repeatedly written about in the local newspaper for patient neglect and cited by the surveyors for poor care. fair or substandard) is going to be the packaging feature that makes the product more or less attractive. For example. it's simply because the facility is short-staffed. Residents are neglected and basic care is not provided not because the staff doesn't care or because they lack job skills. Empty beds turn up. two facilities are located in the same part of town. If every nursing facility tries to create a favorable impression and is at the same time committed to providing high-quality care and superior service. Which facility should have an easier time marketing itself? There are two specific areas of concern for administrators trying to improve their facilities' image in the community.e. but their marketing will be made easier as well. even thought the marketing and sales functions were carried out correctly and 'produced an admission . i. residents are not assisted with meals or kept hydrated. The admissions coordinator might be a great sales person--she admits residents. Quality care is the result of competent well-trained employees performing daily assignments consistently well. guided by precise and unequivocal policies and procedures. by the way. their loved one has complaints. If staff is short. Families do not buy he work of one department when they admit a loved one into a facility. When families approach staff. But no sooner are residents admitted than families get "second thoughts" about their decision because. skin breaks down and residents are not repositioned. These are quality killers and image busters. Quality care must be universal and not limited to the workings of one department. residents are not changed and kept dry. They both provide skilled nursing care. they hear the same old refrain: "We are short today. Both facilities. that families and members of the community come in to visit)? Absenteeism destroys both the quality as well as the continuity of care. therefore. nursing. But one facility has a history of deficiency-free surveys and an outstanding reputation among healthcare professionals in the area. Where Packaging Comes In Since the product of every nursing facility is some kind of care." Families become fed up and take their loved ones elsewhere.

When you bring your car to the dealer because of a problem and the service agent greets you with a smile. Not only are products packaged. in others. Just as the grade. It's unlikely you will use them again. color. we're back to packaging again. department heads. Both must match the customer's expectations for service to be judged satisfactory. i. but they didn't fix the problem (bad outcome). As you pull out into traffic. employees are allowed to rush through their assignments simply to get the job done. nor the condition of the' furniture nor the decor or the design. Rather. Still very nice. When you arrive back at the dealership to pick up your car. you probably won't go back to the restaurant. Instances of poor care can be traced back to absenteeism or the acceptance of mediocre performance. The process was fine (you were treated well). . look and perhaps even purchase the item. the grooming. Your expectations are high. Customer service has become so important because facilities have become almost identical in what they have to offer. Quality is a packaging element that makes the product more attractive and appealing.Another enemy of quality care is the. attentive and well groomed. attitude and appearance of employees influence a customer greatly.e. time management fails and some duties and assignments are simply never finished. All (or almost all) nursing facilities now have subacute units. Yes.. but how the bellman treats you makes that product more attractive. quality suffers. The better the quality of care. demeanor. the service manager explains what was done.. waiter was inattentive. design and shape of a product's package help a customer to stop. In some facilities. Both are management failures. arranges for transportation back to your job--you feel great. People-packaging techniques are not new. Notice that the common denominator in all the horror stories about nursing facilities is not the age of the building. The bellman who carries your bags when you arrive at the Marriott is certainly not the product. acceptance of mediocre work performance by supervisors or. People don't become upset and outraged by such factors. size. they will always remember how well it was done. attentive service. staff and employees can also be packaged as well. either. All facilities have private and semiprivate rooms. They have been around for a long time in all service-oriented businesses. the horror stories revolve around case failures. but people. The product is lodging. nicely prepared done exactly as ordered) but you went through hell to get it (process). the better the image and the easier it is to market. the car starts to lurch and hesitate again. So where can families detect significant difference? It is in the perception of friendly. waiter was slow. Families rarely remember how fast the 'job was done. Either way. When the meal you ordered (outcome) was wonderful (i. Airlines certainly use packaging techniques to train their flight attendants on how important it is for them to be friendly. calls you by name. He thanks you for the opportunity to be of service and hands you your keys. Every facility has a dining room and perhaps even a beauty shop. both must exceed expectations for service to bejudged as superior. Two factors are always considered by every customer: the process and the outcome.e.

they look for people who have had some experience in hotel housekeeping duties--then they train them to clean rooms the "RitzCarlton way. train your employees on how to do their jobs--but then also train them how to enhance customer service. it's part of the job. To ensure quality. There are men serving as porters who polish and buff the corridors. Mention the Ritz-Carlton Hotel chain and you know you are talking about a luxury hotel chain recognized the world over for luxurious accommodations and outstanding customer service. It's worth repeating: Service always involves outcomes and process. Sanders would always give the same answer. A lot of its jobs are similar to those found in a healthcare facility. powerful message. Since most lay persons cannot understand. after the applicant's background has been discussed and the job duties explained. What a simple. It is a place where the care and comfort of your guests is the highest Priority. We do.Families know when they have been treated well--and when they have been ignored or treated poorly. Posters advising "teamwork" are not going to get the job done. BetsySanders was vice-president and general manager for Nordstrom's Southern California division. There are housekeepers who clean rooms and wash toilet bowls. When the Ritz-Carlton hires housekeepers." The Ritz-Carlton Way." she replied. There are kitchen staff who scrub pots and wash dirty dishes. both have to be exceeded to be rated superior. . She frequently attended community events and fundraisers for charitable causes. Healthcare facilities must get serious about in-service training. The card has the Carlton's Creed neatly typed on it. they are forced to judge quality of care (technical) by the quality of service that accompanies the care. from their first day on the job. technical quality of care components. We insist that you do the same." Near the end of the first interview. It's not something "extra" or "additional work". Set your personal and professional goals high. employees understand exceptional service is expected of them. Let's take a look at some prime examples. Each and every Ritz-Carlton Hotel is more than a building made of brick and mortar. "We get our people from the same pool you do. "only we train them according to our expectations. Our number one goal is to provide outstanding customer service. The Nordstrom Way. All newly hired Nordstrom employees on the first day of orientation are given an Employee Handbook. Because Nordstrom is committed to superior customer service. Your facility can zip through the state survey but still fail miserably on service. We're glad to have you join us. much less evaluate. Your facility can pass one accreditation survey after another but still provide poor service. the human resources person hands each applicant 5" x 7" card. Both have to be met for a customer to be merely satisfied. On the first page they find this message: Welcome to our company. Invariably on these occasions she would be taken aside by one of her competitors who wanted to know where Nordstrom found all those wonderfully motivated and helpful employees.

then don't wait for an association to do something. no matter what services your facility offers. After the prospective employee reads that card. must pledge and promise to provide the finest personal service to each and every guest. you may want to have a "family resemblance" in the packaging of these products (i. recognition requirements . attentive. casual consumption. that your marketing is getting easier and easier.. See Product Line Stretching. the hiring manager asks the job seeker simple question: "Will you pledge and promise to do that?" Why can't long-term care facilities do the same? If you are as fed up as I am with all the negativity and poor images surrounding nursing facilities.Every employee who works at the will the package be filled? Some chutney producers are demanding wide-mouthed squat jars Downward stretching: introducing a new product into a product line at the lower priced end of the you want the consumer to identify your product by package colour or shape? (Be careful with this as fancy. Upward Stretching . you will want to consi following when choosing the right package: • • • • • • will you have more than one product? If so.e. Labelling Considerations | Nutritional Labelling | Universal Product Codes l Designing Your L | Other Points on Labelling | Packaging for Marketing | Resources Packaging for Marketing and Visual Appeal Along with protecting your product from light. similar packaging that looks related). moisture. oxygen. snack foods packed in plastic bags communicate fun. Then you will find. Two-Way Stretching. no matter what department. specially designed packaging can get exp image communication-for example. and handling. Sit down with your department heads and determine three ways the quality of care will be improved in each department during the next six months. environmentally friendliness. title. Make friendly. responsive service part of every job description. how the product will be stacked and displayed. or function. entertainment. technical requirements .

product. Co-branding involves marketing activity involving two or more products. Brand recognition and other reactions are created by the accumulation of experiences with the specific product or service. product or service. A brand has also been defined as an identifiable entity that makes a specific promise of value. logo. and media commentary. symbols and sound which may be developed to represent implicit values. Branding means creating reference of certain products in consumers mind. design. and design scheme that convey the essence of a company. fonts. and through the influence of advertising. it refers to the descriptive verbal attributes and concrete symbols such as a name. A brand is a symbolic embodiment of all the information connected to a company. or other feature that distinguishes products and services from competitive offerings. A brand represents the consumers' experience with an organization. product or service. color schemes. symbol. and even personality. term. . A brand is a collection of images and ideas representing an economic producer. A brand often includes an explicit logo. The key objective is to create a relationship of trust. design. A brand serves to create associations and expectations among products made by a producer. or service. slogan. both directly relating to its use.Trademarks Significance of a trademark • • • • • Distinguishes one company's goods from those of another Serves as advertisement for quality Protects both consumers and manufacturers Used in displays and advertising campaigns Used to market new products Brands A brand is a name. more specifically. ideas.

creating the impression that a brand associated with a product or service has certain qualities or characteristics that make it special or unique. One goal in brand recognition is the identification of a brand without the name of the company present. The psychological aspect. A brand owner may seek to protect proprietary rights in relation to a brand name through trademark registration. The art of creating and maintaining a brand is called brand management. Concepts Some marketers distinguish the psychological aspect of a brand from the experiential aspect. Whipple . When brand recognition builds up to a point where a brand enjoys a critical mass of positive sentiment in the marketplace.g. but one of the products has no associated branding (such as a generic. A brand which is widely known in the marketplace acquires brand recognition. political parties or religious organizations) may also be known as "branding". Marketers engaged in branding seek to develop or align the expectations behind the brand experience (see also brand promise). From the perspective of brand owners. which it used in the logo for go. sometimes referred to as the brand image.The brand. and "branding" and brand equity have become increasingly important components of culture and the economy. Advertising spokespersons have also become part of some brands. is a symbolic construct created within the minds of people and consists of all the information and expectations associated with a product or service. people may often select the more expensive branded product on the basis of the quality of the brand or the reputation of the brand owner. although it is more correctly used to specifically denote written or spoken linguistic elements of a brand. In non-commercial contexts. Where two products resemble each other. Consumers may look on branding as an important value added aspect of products or Disney has been successful at branding with their particular script font (originally created for Walt Disney's "signature" logo). but also for B2B (Business-to-Business). branded products or services also command higher prices. the marketing of entities which supply ideas or promises rather than product and services (e. for example: Mr. A brand is therefore one of the most valuable elements in an advertising theme. if the brand name exclusively identifies the brand owner as the commercial source of products or services. For example. In this context a "brand name" constitutes a type of trademark. store-branded product). This approach works not only for consumer goods B2C (Business-to-Consumer). as it demonstrates what the brand owner is able to offer in the marketplace. see Philip Kotler & Waldemar Pfoertsch. Brand name The brand name is often used interchangeably with "brand". as it often serves to denote a certain attractive quality or characteristic (see also brand promise). The experiential aspect consists of the sum of all points of contact with the brand and is known as the brand experience. now being described as "cultural accessories and personal philosophies". it is said to have achieved brand franchise.

actual service or product quality or performance.and by extension the branded company. for example a dining restaurant may create the following brand promise: "Carl's Steak House -"Our food is the best. product or service. Such brand personality traits may include seriousness. "culture (values)" and "consumer mentalisation". such as name and visual appearance. On the internalization side brand identity consists of "personality". Brand personality Brand personality is the attribution of human personality traits to a brand as a way to achieve differentiation. In this respect Kapferer positions brand personality as one factor within brand identity. and reflects the extent of brand franchise. The brand owner will seek to bridge the gap between the brand image and the brand identity.Brand identity is fundamental to consumer recognition and symbolizes the brand's differentiation from competitors. Brand promise Brand promise is a statement from the brand owner to customers. Interactions may include employees.The act of associating a product or service with a brand has become part of pop culture. Most products have some kind of brand identity. The brand promise is often strongly associated with the brand owner's name and/or logo. Brand identity may be defined as simply the outward expression of the brand. honest dealing. as well as packaging and graphics. warmth. or imagination. communication etc. For example BP describes its brand promise as "our fundamental beliefs" which have evolved over time." Brand value Brand equity or brand value measures the total value of the brand to the brand owner. which identifies what consumers should expect from all interactions with the brand. treating everyone with respect and dignity. BP continues "At the core of BP is an unshakable commitment to integrity. organisation. from common table salt to designer clothes. Brand identity How the brand owner wants the consumer to perceive the brand . "relationship" and "reflected consumer"."" Other brand owners may develop their brand promise into a detailed statement on the values. representatives. The brand promise may be expressed in a "tag line". which charts the brand identity along a constructed source and constructed receiver axis. . striving for mutual advantage and contributing to human progress. Brand personality is usually built through long-term marketing.Some practitioners however define brand identity as not only outward expression (or physical facet).of Charmin toilet tissue and Tony the Tiger of Kellogg's. with externalization on the one side and internalization on the other. but the memories we help you create are even better. In 1992 Jean-Noel Kapferer developed the Brand Identity Prism. On the externalization side brand identity consists of "physical facet". but also in terms of the values a brand carries in the eye of the consumer. characteristics and behaviour of their brand.

BP’s “Beyond Petroleum” branding is subverted by campaigners into headline such as “BP: Beyond Petroleum or Beyond Preposterous?” or “BP must move beyond petroleum as profits soar“. Brand value may also arise in terms of staff retention benefits (e. Branding policies There are a number of possible policies: Company name . whatever its derivation. in 1999 Nike's brand value was estimated at 8 billion US$.g. have valued their international brands at anything up to twenty times their annual earnings. secret recipe). there is also a legal dimension. particularly those related to decreased price competition. and other sui generis intellectual property regimes (e. Brand value can be negatively influenced. retailers' "own label" brands can be just as powerful. copyright. used by analysts to rationalize the difference between a company's "book value" and market value. Some campaign groups have thought to do this by deliberately subverting a brand’s image. Brand value.26 billion US$ in 2004 after Nike addressed its supply chain issues. Design Act). This attack may be visual.6 billion US$. The monopoly may also be extended. creating a negative association among consumers. existing client relationships). most "branding" is established by promotional means. For example. and Interbrand. For example. Facing media exposure and consumer boycotts over supply chain issues. for example. for example in the case of Coca-Cola or Microsoft. or focusing on the message. or even created. as pioneered by groups such as Adbusters.: Plant Varieties Act.g. The "brand". such as stock or machinery). especially in the case of consumer product brands. in effect. Brand monopoly In economic terms the "brand" is.A brand can be an intangible asset. may arise out of customer loyalty. is a very important investment for any organization.g. In all these contexts. for it is essential that the brand names and trademarks are protected by all means available. and its brand value can account for some of the difference. and rose back to 9. the market value of a company can far exceed its tangible assets (physical assets owned by the company. a device to create a "monopoly" — or at least some form of "imperfect competition" — so that the brand owner can obtain some of the benefits which accrue to a monopoly or unique point of sale. Nike's brand value declined in following two years to 7. by patent. trade secret (e. In this context. However. the ability of the company to attract and retain skilled and/or talented employees offering competitive salaries). Campaigning groups may deliberately target a company’s brand value to force a company into adopting a certain position or practices. For example. Up to 85 percent of a company’s market value might be intangible (for example know-how. RHM (Rank Hovis McDougall). logo or message. a brand consultancy. states that tangible assets may account for less than five percent of a company’s market value.

attitude branding is described by Naomi Klein as a "fetish strategy". it is just the company's name which is promoted (leading to one of the most powerful statements of "branding". Persil. a simple shopping experience and the anti-brand movement." . which secures its position in the PC market with the slogan "Intel Inside". Marketing labeled as attitude branding include that of Nike. Omo. especially in the industrial sector. which may even compete against other brands from the same company (for example. used by a number of suppliers of the endproduct. Individual branding Each brand has a separate name (such as Seven-Up or Nivea Sun (Beiersdorf)).it adds a greater sense of purpose to the experience. Starbucks. The most frequently quoted example is Intel. No Logo.Howard Schultz (president. or the affirmation that the cup of coffee you're drinking really matters. Attitude branding Attitude branding is the choice to represent a larger feeling. Brand development In terms of existing products. quality goods" in English. ceo and chairman of Starbucks "No-brand" branding Recently a number of companies have successfully pursued "No-Brand" strategies. Muji products are not branded. This no-brand strategy means that little is spent on advertisement or classical marketing and Muji's success is attributed to the word-of-mouth. before the company's downgrading. which like Muji. brands may be developed in a number of ways: Brand extension .[1] In the 2000 book. Although there is a distinct Muji brand. Other brands which are thought to follow a no-brand strategy are American Apparel. whether it's the challenge to do your best in sports and fitness.Often. "No one ever got fired for buying IBM"). may wish to guarantee its own position by promoting that component as a brand in its own right. examples include the Japanese company Muji. Derived brands In this case the supplier of a key component. the saying. Safeway. The Body Shop. Surf and Lynx are all owned by Unilever). which means "No label. Mercedes-Benz or Black & Decker) or even a range of subsidiary brands (such as Cadbury Dairy Milk. does not brand its products. "A great brand raises the bar -. which is not necessarily connected with the product or consumption of the product at all. and Apple Computer. Cadbury Flake or Cadbury Fingers in the United States). In this case a very strong brand name (or company name) is made the vehicle for a range of products (for example.

many fashion and designer companies extended brands into fragrances. the new product being one stage in this process. When Coca-Cola launched "Diet Coke" and "Cherry Coke" they stayed within the originating product category: nonalcoholic carbonated beverages. etc. This may be acceptable (indeed to be expected) if there is a net gain overall. hotels. a supplier pioneering a new market which it believes will be particularly attractive may choose immediately to launch a second brand in competition with its first. home textile. simply to soak up some of the share of the market which will in any case go to minor brands. . Caterpillar to shoes and watches. Mars extended its brand to ice cream. however there are many examples of small businesses that became very successful due to branding.The existing strong brand name can be used as a vehicle for new or modified products. Michelin to a restaurant guide. it may be the price the organization is willing to pay for shifting its position in the market. Dunlop extended its brand from tires to other rubber products such as shoes. in which the new brand takes business away from an established one which the organization also owns. for example. luggage. shoes and accessories. of differing quality. Multi-brands Alternatively. Marriott uses the name Fairfield Inns for its budget chain (and Ramada uses Rodeway for its own cheaper hotels). Adidas and Puma to personal hygiene. This also increases the total number of "facings" it receives on supermarket shelves. furniture. The rationale is that having 3 out of 12 brands in such a market will give a greater overall share than having 1 out of 10 (even if much of the share of these new brands is taken from the existing one). Procter & Gamble (P&G) did likewise extending its strong lines (such as Fairy Soap) into neighboring products (Fairy Liquid and Fairy Automatic) within the same category. In its most extreme manifestation. Sara Lee. Some people argue that it is not possible to brand a small business. Procter & Gamble is a leading exponent of this philosophy. (sun-) glasses. The main differences being that small businesses usually have a smaller market and have less reach than larger brands. in a market that is fragmented amongst a number of brands a supplier can choose deliberately to launch totally new brands in apparent competition with its own existing strong brand (and often with identical product characteristics). Alternatively. There is a difference between brand extension and line extension. uses it to keep the very different parts of the business separate — from Sara Lee cakes through Kiwi polishes to L'Eggs pantyhose. on the other hand. in order to pre-empt others entering the market. In the hotel business. to be sold without confusing the consumer's perception of what business the company is in or diluting higher quality products. tennis racquets and adhesives. Individual brand names naturally allow greater flexibility by permitting a variety of different products. running as many as ten detergent brands in the US market. Once again. Cannibalization is a particular problem of a "multibrand" approach. Small business brands Branding a small or medium sized business (SME) follows essentially the same principle a branding larger corporation. dish washing detergents. golf balls. home decor.

Lyle’s Golden Syrup makes a similar claim. although it is arguable that those which have switched their budgets to "buy space" in the retailers may be more exposed. a retailer's own branded product (or service). It would appear that the penetration of such generic products peaked in the early 1980s. More than 50 per cent of UK FMCG brand leaders have held their position for more than two decades. brands in the field of mass-marketing originated in the 19th century with the advent of packaged goods. These made a positive virtue of saving the cost of almost all marketing activities. but the evidence is that — at least in supermarkets and department stores — consumers generally expect to see on display something over 50 per cent (and preferably over 60 per cent) of brands other than those of the retailer.Own brands and generics With the emergence of strong retailers the "own brand". Industrialization moved the production of many household items. perhaps. the British brewery. the plain packaging (which was. effectively unbranded) goods have also emerged. and most consumers still appear to be looking for the qualities that the conventional brand provides. probably as an outgrowth of consumerism. however. been seen more in the pressure they have been able to exert on the owners of even the strongest brands (and in particular on the owners of the weaker third and fourth brands). Some of the more active marketers have now also switched to 'category marketing' . also emerged as a major factor in the marketplace. even the strongest own brands in the UK rarely achieve better than third place in the overall market. "generic" (that is. Bass & Company. The strength of the retailers has. having been named as Britain’s .in which they take into account all the needs of a retailer in a product category rather than more narrowly focusing on their own brand. emphasizing the lack of advertising and. When shipping their items. History Although connected with the history of trademarks[14] and including earlier examples which could be deemed "protobrands" (such as the marketing puns of the "Vesuvinum" wine jars found at Pompeii). which have maintained their marketing investments. and may outperform those products that are not otherwise strongly branded. At the same time. such as soap. from local communities to centralized factories. are likely to continue their strong performance. Where the retailer has a particularly strong identity (such as Marks & Spencer in the UK clothing sector) this "own brand" may be able to compete against even the strongest brand leaders. This means that strong independent brands (such as Kellogg's and Heinz). Indeed. often simply a vehicle for a different kind of image). Relationship marketing has been applied most often to meet the wishes of such large customers (and indeed has been demanded by them as recognition of their buying power). extending the meaning of "brand" to that of trademark. claims their red triangle brand was the world's first trademark. especially. Concerns were raised that such "own brands" might displace all other brands (as they have done in Marks & Spencer outlets). the factories would literally brand their logo or insignia on the barrels used.

Factories established during the Industrial Revolution. Naomi Klein has described this development as "brand equity mania". following the American Civil War. Marlboro cigarettes were notorious at the time for their heavy advertising campaigns. comes from Texas rancher Samuel Augustus Maverick who. fun or luxury. In response to the announcement Wall street stocks nose-dived for a large number of 'branded' companies: Heinz. Coca-Cola. Juicy Fruit gum. Companies soon adopted slogans. Coca Cola. manufacturers began to recognize the way in which consumers were developing relationships with their brands in a social/psychological/anthropological sense. in order to compete with bargain cigarettes. questioning the power of "brand value". Many brands of that era. local products. and Quaker Oats were among the first products to be 'branded'. and well-nuanced brand image. James Walter Thompson published a house ad explaining trademark advertising. originally meaning an unbranded calf. where the consumers buy "the brand" instead of the product. Phillip Morris purchased Kraft for six times what the company was worth on paper. decided that since all other cattle were branded. Many thought the event signalled the beginning of a trend towards "brand blindness" (Klein 13). and jingles which began to appear on radio and early television. . The packaged goods manufacturers needed to convince the market that the public could place just as much trust in the non-local product. such as Uncle Ben's rice and Kellogg's breakfast cereal furnish illustrations of the problem. it was felt that what they really purchased was its brand name. From there.the day Phillip Morris declared that they were to cut the price of Marlboro cigarettes by 20%. his would be identified by having no markings at all.oldest brand. Pricing Pricing refers to the amount of money exchanged for a product. generating mass-produced goods and needed to sell their products to a wider market. PepsiCo. It quickly became apparent that a generic package of soap had difficulty competing with familiar. Marlboro Friday April 2. the term "maverick". manufacturers quickly learned to build their brand's identity and personality (see brand identity and brand personality). with its green and gold packaging having remained almost unchanged since 1885. to a customer base familiar only with local goods. Campbell soup. This was an early commercial explanation of what we now know as branding. This value is determined by utility to the consumer in terms of money and/or sacrifice that the consumer is prepared to give for it. mascots. By the 1940s. This trend continued to the 1980s. In 1988. Around 1900. for example. Cattle were branded long before this. such as youthfulness. This began the practice we now know as "branding" today. in an effort to increase the consumer's familiarity with their products. Quaker Oats. Aunt Jemima.marked by some as the death of the brand[1] . 1993 . and is now quantified in concepts such as brand value and brand equity.

Penetration Pricing. See also eMarketing Price. Premium Pricing. Such high prices are charge for luxuries such as Cunard Cruises. There are many ways to price a product. This approach is used where a a substantial competitive advantage exists. Savoy Hotel rooms. Use a high price where there is a uniqueness about the product or service.Objectives • • • • • • Increase sales volume Increase revenue Achieve or increase profits Increase or maintain market share Eliminate competition Achieve advantages of mass production Factors influencing price-determination • • • • • • • • Production and distribution costs Substitute goods available Normal trade practices Fixed prices Reaction of distributors Reaction of consumers Nature of demand: o elastic/inelastic Form of market: o Perfect competition o Monopolistic competition o Monopoly o Oligopoly Steps to determine price • • • Determine market share to be captured Set up price strategy Estimate demand Evaluate competitors' reactions Pricing Strategies. Let's have a look at some of them and try to understand the best policy/strategy in various situations. . and Concorde flights.

wash and wax $4. Basic wash could be $2. the advantage is not sustainable. economy pricing. Supermarkets often have economy brands for soups. Product Line Pricing. penetration pricing. Premium pricing. Where there is a range of product or services the pricing reflect the benefits of parts of the range. other marketing strategies and pricing approaches are implemented. This is a no frills low price. Manufacturers of digital watches used a skimming approach in the 1970s. For example car washes. However. Optional Product Pricing. and the whole package $6. Once other manufacturers were tempted into the market and the watches were produced at a lower unit cost. Economy Pricing.The price charged for products and services is set artificially low in order to gain market share. Price Skimming. For example 'price point perspective' 99 cents not one dollar. However there are other important approaches to pricing. etc. Optional 'extras' increase the overall price of the product or service. . spaghetti. companies will charge a premium price where the consumer is captured. Once this is achieved. Psychological Pricing. They form the bases for the exercise. This approach was used by France Telecom and Sky TV. and the price inevitably falls due to increased supply. For example a razor manufacturer will charge a low price and recoup its margin (and more) from the sale of the only design of blades which fit the razor. and price skimming are the four main pricing policies/strategies. For example airlines will charge for optional extras such as guaranteeing a window seat or reserving a row of seats next to each other. the price is increased. Captive Product Pricing Where products have complements. This approach is used when the marketer wants the consumer to respond on an emotional. The cost of marketing and manufacture are kept at a minimum. Companies will attempt to increase the amount customer spend once they start to buy. rather than rational basis. Charge a high price because you have a substantial competitive advantage. The high price tends to attract new competitors into the market.

Here are four ways to calculate prices: • Cost-plus pricing . For example.Set your price to achieve a target return-on-investment (ROI). Once you've considered the various factors involved and determined your objectives for your pricing strategy.000 invested in the company. Videos and CDs are often sold using the bundle approach. Here sellers combine several products in the same package. or $10 profit per unit. This also serves to move old stock.Price your product based on the value it creates for the customer. you will always be operating at a profit. in • • . Value Pricing. This is usually the most profitable form of pricing. This approach is used where external factors such as recession or increased competition force companies to provide 'value' products and services to retain sales e.Set the price at your production cost.Product Bundle Pricing. Your expected sales volume is 1. Pricing to promote a product is a very common application. Geographical pricing is evident where there are variations in price in different parts of the world.000 units. Value-based pricing . You want to recoup all your investment in the first year. The most extreme variation on this is "pay for performance" pricing for services. so you add $10 (20% x $50) to the cost and come up with a price of $60 per unit.000 units in the first year.g. You decide that you want to operate at a 20% markup. now you need some way to crunch the actual numbers.000 profit on 1. including both cost of goods and fixed costs at your current volume. your fixed costs come to $30 per unit. value meals at McDonalds. Pricing Methods Four models for calculating your pricing As we said earlier. There are many examples of promotional pricing including approaches such as BOGOF (Buy One Get One Free). Your total cost is $50 per unit. and assume that you have $10. giving you again a price of $60 per unit. let's use the same situation as above. For example rarity value. there is no "one right way" to calculate your pricing. Geographical Pricing. and at current sales volume (or anticipated initial sales volume). or where shipping costs increase price. For example. Promotional Pricing. Target return pricing . plus a certain profit margin. So long as you have your costs calculated correctly and have accurately predicted your sales volume. your widgets cost $20 in raw materials and production costs. if you can achieve it. so you need to make $10.

$60 seems like a bargain . In that case. Have you figured salary for yourself in your costs? If not. there is one more major factor that must be considered. If your sales forecast is inaccurate. you must take into consideration the consumer's perception of your price. but many entrepreneurs seem to miss this simple concept. even if you don't have any direct competition. You have to make a living. For example. either by miscalculating costs or by inadequate market research to determine fair pricing. There is simply a limit to what consumers perceive as "fair". Meals under $5 are still a popular price point.Sometimes it simply doesn't matter what the value of the product is.people would just feel like they were being gouged. Your price should almost never be lower than your costs or higher than what most consumers consider "fair". However.000 in value. $300 or more for it. • Psychological pricing . but more than enough increase in sales to offset it. A little market testing will help you determine the maximum price consumers will perceive as fair. because it's "one bill" that people commonly carry.Ultimately. o o Now. If your product reliably produced that kind of cost savings. If it's obvious that your product only cost $20 to manufacture. "Enough under $20 to be under $20 with sales tax" is another popular price point. This may seem obvious. if people won't readily pay enough more than your cost to make you a fair profit.There are certain "price points" (specific prices) at which people become much more willing to buy a certain type of product. Simply put. how far off can you be and still be profitable? Ideally. Dropping your price to a popular price point might mean a lower margin. Popular price points . you need to reconsider your business model entirely. Fair pricing .maybe even too cheap. energy costs.If you want to be the "low-cost leader". you'd have a hard time charging two or three thousand dollars for it -. you must be priced lower than your competition. "under $100" is a popular price point. how do you combine all of these calculations to come up with a price? Here are some basic guidelines: • Your price must be enough higher than costs to cover reasonable variations in sales volume. you could easily charge $200. even if it delivered $10. your profit has to be enough for you to live on and still have money to reinvest in the company.000 a year in. you want to be able to be off by a factor of two or more (your sales are half of your forecast) and still be profitable. say. How can you cut your costs substantially? Or change your product positioning to justify higher pricing? • • . as are entree or snack items under $1 (notice how many fast-food places have a $0.99 "value menu"). you should probably be priced higher than most of your competition. Let's say that your widget above saves the typical customer $1.which you charge on a variable scale according to the results you achieve. and customers would gladly pay it. figuring things like: o Positioning . If you want to signal high quality. since they would get their money back in a matter of months.

worse. The winners packaged the chocolate with the "Amazing Sisters. Segments are important for positioning and merchandising the offering to ensure maximized sales at the established price point. be careful how customers perceive the offering. and even a substantial one if you create value for your customers. the initial increase resulted in more subscribers as the new price was more in line with its consumer-perceived value. You're certainly entitled to make a fair profit on your product. for example. the client could increase the price with only limited risk to its customer base. As a result. anxiety pricing. marketers too often underestimate the strategic importance of pricing. the number of close substitutes. Consider whether new products. and the strength of the consumer's bond with the product. including additional features to enhance the offering and enabling you to charge more. ultimately. • Assess the product's availability and near substitutes.but minus the merchandise value. you can price higher if consumers perceive your product and/or brand is significantly better. Customers considered the subscription worth the full subscription price -. leapfrog your offering. an online publishing client considered bundling subscriptions with $25 worth of merchandise its target market valued. This is particularly true for high-end. yielding depressed response and lower sales. price on parity if your product has better features. Don't limit your analysis to online distribution channels. in fulfilling the consumer's specific needs. The strategy instead decreased the value of my client's subscription in subscribers' eyes. they don't optimize revenue potential. whatever customers were willing to pay (under the $3 price point). and "flasher pricing. an established $3 price for a basic candy bar. examine your offering's benefits. Underpricing hurts your product as much as overpricing does. In fact. To avoid this. One client underpriced its subscription product. Two teams competed to sell the most M-Azing candy bars. The augmented offering sold for a whopping $5. The merchandise retailed on its Web site. potential customers will think it can't be that good. I've worked with companies that only take into account direct competitors selling through identical channels. This helps you better understand the offering's value to consumers. to augmented. An information client faced this situation with a premium product. Examine all possible ways consumers can acquire your product. both tangible and intangible. Its direct . Like the contestants. But remember. Competitors may define your price range. Consider how you can move your product from generic. including only its core physical attributes.Pricing is a tricky business. something is ultimately worth only what someone is willing to pay for it. or new technologies can compete with or. In doing so." two attractive blondes in short skirts. Pricing Factors to Consider • Determine primary and secondary market segments. The firm underestimated the uniqueness of its offering. new uses for existing products. In this case. • Survey the market for competitive and similar products." $20 for a view of a contestant's underwear with a candy bar. The losing team undermined the value of its product with a combination of generic pricing. As a result. To increase annual subscriptions. profitability. prestige brands. yielding higher profits than the other team's candy. Pricing Policy: Seven Factors to Consider Does your pricing maximize your revenue opportunities? A recent episode of "The Apprentice" underscores the importance of packaging and merchandising to pricing and. If the price is too low. or price lower if your product has relatively similar features to existing products.

competitors established the price for a similar offering. As the third player in this segment, its choices were price parity with an enhanced offering or a lower price with similar features.

Examine market pricing and economics. A paid, ad-free site should generate more revenue than a free ad-supported one, for example. In considering this option, remember to incorporate the cost of forgone revenue, especially as advertisers find paying customers more attractive. To gain additional insight from this analysis, observe consumers interacting with your product to better understand their connection to it. This can yield insights into how to package and promote the offering that can affect on pricing, features, and incentives.

Calculate the internal cost structure and understand how pricing interacts with the offering. I recommended a content client promote its advertising-supported free e-zines to incent readers to register. The client believed the e-zines had no value as the content was repurposed from another product, so it didn't advertise them. Yet the repurposed content was exactly what readers viewed as a benefit. By undervaluing its offering, the client missed an opportunity to increase registrations and, hence, advertising revenues with a product that effectively had no development costs.

Test different price points if possible. This is important if you enter a new or untapped market, or enhance an offering with consumer-oriented benefits. To determine price, tested three different price points for a book. It found the highest price yielded the greatest product revenue. Interestingly, the middle price yielded greater revenue over time, as it generated more customers to whom other related products could be marketed.

Monitor the market and your competition continually to reassess pricing. Market dynamics and new products can influence and change consumer needs.

Pricing is tricky, as "The Apprentice" contestants learned. Optimally, you should test to determine the best price and understand long-term goals. Determine price based on a number of factors. Most important is what potential customers are willing to pay and their value to your company over time. You don't want to hear, "You're fired," when it comes to pricing policies.
distribution - introduction
Distribution (or "Place") is the fourth traditional element of the marketing mix. The other three are Product, Price and Promotion. The Nature of Distribution Channels Most businesses use third parties or intermediaries to bring their products to market. They try to forge a "distribution channel" which can be defined as "all the organisations through which a product must pass between its point of production and consumption" Why does a business give the job of selling its products to intermediaries? After all, using intermediaries means giving up some control over how products are sold and who they are sold to. The answer lies in efficiency of distribution costs. Intermediaries are specialists in selling. They have the contacts, experience and scale of operation which means that greater sales can be achieved than if the producing business tried run a sales operation itself. Functions of a Distribution Channel

The main function of a distribution channel is to provide a link between production and consumption. Organisations that form any particular distribution channel perform many key functions: Information Gathering and distributing market research and intelligence - important for marketing planning Promotion Developing and spreading communications about offers Contact Finding and communicating with prospective buyers Matching Adjusting the offer to fit a buyer's needs, including grading, assembling and packaging Negotiation Reaching agreement on price and other terms of the offer Physical distribution Transporting and storing goods Financing Acquiring and using funds to cover the costs of the distribution channel Risk taking Assuming some commercial risks by operating the channel (e.g. holding stock) All of the above functions need to be undertaken in any market. The question is - who performs them and how many levels there need to be in the distribution channel in order to make it cost effective. Numbers of Distribution Channel Levels Each layer of marketing intermediaries that performs some work in bringing the product to its final buyer is a "channel level". The figure below shows some examples of channel levels for consumer marketing channels:

In the figure above, Channel 1 is called a "direct-marketing" channel, since it has no intermediary levels. In this case the manufacturer sells directly to customers. An example of a direct marketing channel would be a factory outlet store. Many holiday companies also market direct to consumers, bypassing a traditional retail intermediary - the travel agent. The remaining channels are "indirect-marketing channels". Channel 2 contains one intermediary. In consumer markets, this is typically a retailer. The consumer electrical goods market in the UK is typical of this arrangement whereby producers such as Sony, Panasonic, Canon etc. sell their goods directly to large retailers such as Comet, Dixons and Currys which then sell the goods to the final consumers.

Channel 3 contains two intermediary levels - a wholesaler and a retailer. A wholesaler typically buys and stores large quantities of several producers goods and then breaks into the bulk deliveries to supply retailers with smaller quantities. For small retailers with limited order quantities, the use of wholesalers makes economic sense. This arrangement tends to work best where the retail channel is fragmented - i.e. not dominated by a small number of large, powerful retailers who have an incentive to cut out the wholesaler. A good example of this channel arrangement in the UK is the distribution of drugs.
distribution - types of distribution intermediary
Introduction There is a variety of intermediaries that may get involved before a product gets from the original producer to the final user. These are described briefly below: Retailers Retailers operate outlets that trade directly with household customers. Retailers can be classified in several ways: • Type of goods being sold( e.g. clothes, grocery, furniture) • Type of service (e.g. self-service, counter-service) • Size (e.g. corner shop; superstore) • Ownership (e.g. privately-owned independent; public-quoted retail group • Location (e.g. rural, city-centre, out-of-town) • Brand (e.g. nationwide retail brands; local one-shop name) Wholesalers Wholesalers stock a range of products from several producers. The role of the wholesaler is to sell onto retailers. Wholesalers usually specialise in particular products. Distributors and dealers Distributors or dealers have a similar role to wholesalers – that of taking products from producers and selling them on. However, they often sell onto the end customer rather than a retailer. They also usually have a much narrower product range. Distributors and dealers are often involved in providing after-sales service. Franchises Franchises are independent businesses that operate a branded product (usually a service) in exchange for a licence fee and a share of sales. Agents Agents sell the products and services of producers in return for a commission (a percentage of the sales revenues)

Distribution - Channel Strategy
The following table describes the factors that influence the choice of distribution channel by a business:

the retailers to whom they sell. By contrast perishable products (such as frozen food.Influence Market factors Comments An important market factor is "buyer behaviour".g. Another factor is the extent to which producers want to maintain control over how.ideally suited to using intermediaries such as retailers. They may decide not to support a particular product if it requires too much investment (e. training.for example in the case of motor cars. there is no guarantee for a producer that their product/(s) are actually been stocked by the retailer. without giving as much priority to the needs of the other members of their distribution channels—namely. the only option may be to use agents and/or other distributors. so . Similarly. complex medical equipment sold to hospitals). train and equip a sales team. shop fitting etc. marketing. Another important factor is intermediary cost. Producers may also feel that they do not possess the customer-based skills to distribute their products. Product factors Large complex products are often supplied direct to customers (e. bread) require relatively short distribution channels . display equipment. Intermediaries typically charge a "mark-up" or "commission" for participating in the channel.g. IBM Business Consulting Services released a survey that compiled in-depth interviews with more than 100 sales. Only 9 percent of the retailers felt their suppliers had “a good understanding” of their business objectives. The gist of the survey was that retailers felt the product manufacturers have focused their efforts on the end users of the products (the consumers). how do buyer's want to purchase the product? Do they prefer to buy from retailers.1 There are several types of participants that make up a distribution channel. and merchandising executives at over 20 consumer products and retail companies. they effective lose control over the final consumer price. Which channels are best served to provide the customer with the information they need before buying? Does the product need specific technical assistance either to install or service a product? Intermediaries are often best placed to provide servicing rather than the original producer . meat. Retailers in particular invest heavily in properties. The willingness of channel intermediaries to market product is also a factor. If so. This might be deemed unacceptably high for the ultimate producer business. locally. since the retailer sets the price and any relevant discounts or promotional offers. Producer factors A key question is whether the producer have the resources to perform the functions of the channel? For example a producer may not have the resources to recruit. Direct distribution gives a producer much more control over these issues. via mail order or perhaps over the Internet? Another important factor is buyer needs for product information. Many channel intermediaries focus heavily on the customer interface as a way of creating competitive advantage and cementing the relationship with their supplying producers. Distribution Intensity THE RETAIL DISTRIBUTION CHANNEL E arly in 2005. If a manufacturer sells via a retailer. warehousing). installation and servicing. to whom and at what price a product is sold.

Retailers The characteristic that sets a retailer apart from other members of its distribution channel is that the retailer is the party who ultimately sells the product to its end user or consumer. and so on.” short for “business-tobusiness. there are several subcategories such as factory outlets. 32 Chapter 2 The Retail Distribution Channel In addition to a supply chain. They take the same types of financial risks as retailers. but extensive depth in that line. the more types of services it will generally offer—from a name-branded credit card. You will notice some overlap because. as in Chapter 1 with supply chain participants. and may arrange for shipment to those retailers. transporting. national chain store. Within the “discounter” category.let’s begin by listing them. or departments within companies. to on-site alterations. sells Ann Taylor branded clothing—not much breadth of product line there. on the other hand. but different than. so to speak. a smaller. These distinctions between various types of stores will be important as we discuss their participation in certain distribution channels. As you know if you’ve ever shopped for anything. The more exclusive or specialized the store. An Ann Taylor store. _ Product assortment. and providing other services related to making the products attractive to customers and encouraging their ultimate sale. for example. and facilitating the sales with services like consumer research. a supply chain. to liberal return policies for its loyal customers. you will learn about _ The members of a distribution channel and their functions _ How retailers fit into distribution channels _ How channel relationships are managed _ Strategic alliances One of the catchphrases of the last decade or so is “B2B. by bagging their own groceries and the like. and ordering are done by these companies. negotiations. since they purchase the products (thereby taking legal responsibility for them). Wholesalers Wholesalers are intermediaries or middlemen who buy products from manufacturers and resell them to the retailers. or can buy foreign product lines by becoming . The distribution channel is where the “deals” are made to buy and sell products. Every brick-and-mortar retailer can be classified as a large. or a franchisee. but perhaps does not have much depth (not many brands) in any given category of product. carries thousands of brands. extending credit. dollar stores. manufacturers and retailers participate in another give-and-take relationship known as a distribution channel or marketing channel. Retailers may be grouped according to any of the following four categories: _ Ownership. warehouse membership clubs. an independent retailer. Sales. PARTICIPANTS IN THE DISTRIBUTION CHANNEL retailers come in many shapes and sizes. as also previously mentioned. _ Service level. to do the “physical” work of manufacturing. Stores are generally either discounters or full-price retailers. specialty discount stores. In this chapter. The breadth and depth of product lines carried by the store depends a lot on its ownership. A distribution channel is similar to. A Kmart. retailers belong to several (or many) different supply chains. Then the supply chain kicks in. But we will attempt to keep them separate as we describe the functions of each in relation to the other. each group focused on making and marketing different products. _ Pricing philosophy. With the “big box” discounters. not an individual. regional chain store. The lines do blur between modern-day distribution channels and supply chains. customers pay for convenience and bypass traditional service.” This is a type of distribution channel in which the end consumer is a business. Wholesalers can gather product from around a country or region. and storing the goods. on the other hand. keep them in inventory until they are resold to retailers. consignment stores.

leaving the manufacturers to do what they do best—which is turn out the best possible product. Resident sales agents are good examples in retail. But the fact is that many producers are either too small or too large to handle all the necessary functions themselves to get their products to market. noncompeting firms can easily handle those functions cost-effectively. but discounters are retailers. Buying offices can also be considered a type of agent or broker. who sells to a consumer? It’s a fair question. and in some cases. This is when the producer sells to the retailer. is a direct channel marketer. too. can be handy because they know the laws and customs of the suppliers’ nations. like Lands’ End. specialty manufacturer who is terrific at making fine leather handbags but may not have the expertise to market its products as well as it makes them. This is when the same company that manufactures a product sells it directly to the consumer or end user. They reside in the country to which they sell products. do you think Pepsi has time to take and fill individual orders from households? Channel members like wholesalers and retailers are useful because they are best at specific aspects of sales in their markets. and they generally offer their own lines of credit so the retailer won’t have 34 Chapter 2 The Retail Distribution Channel We’ll set aside business-to-business channels for now and look at the four simple types of retail distribution channels for consumer products: _ Direct channel. Turning out tens of thousands of cases of soft drinks.importers. Conversely. but their agreements are different. are also direct channel sellers. The Need for Distribution Channels Why are all these layers needed in distribution? Why can’t a producer simply sell to a retailer. since they earn their money pairing up retailers with product lines from various manufacturers. for instance. that is exactly how it happens. and they can sell to wholesalers as well as retailers. . Having a distribution channel breaks the whole buying and selling process and all its related negotiations into manageable tasks. and foreign markets. Dell. but the products come from a variety of foreign manufacturers. _ Retailer channel. In B2B arrangements. each performed by companies that specialize in certain skills. or manpower to send someone overseas for manufacturers’ site visits to check out the new product lines can depend on a resident sales agent to do the job. Retailers that don’t have the money. for example. And in B2B channels. The term “wholesale” is often used to describe discount retailers (as in “wholesale clubs”). or they may not have the money to hire a team of full-time salespeople to court the customers and secure the orders. Mail-order catalog sales companies. this means they sell to distributors and end users. An intermediary who works for several small. not technically wholesalers. large companies need intermediaries because they are also in the business of manufacturing. The resident sales agent represents those manufacturers. and the retailer sells to the consumer. A resident sales agent does not always have merchandise warehoused and ready to sell. Using an import wholesaler. in that they do not take ownership of the products they sell. not marketing. as mentioned in Chapter 1. who pay the agent on commission. time. wholesalers may be called distributors. Consider the small. Agents and Brokers Agents (sometimes called brokers) are also intermediaries who work between suppliers and retailers (or in B2B channels). They are independent sales representatives who typically work on commission based Participants in the Distribution Channel 33 on sales volume. but he or she does have product samples for which orders can be placed and is responsible for bringing the items through the importation process. overseas shipping. An intermediary who specializes in importing and exporting can handle the intricacies of customs paperwork.

might sell some product lines at retail and others to commercial lawn care companies. in fact! It has become a necessity in our society. like many grocery items. Depending on how close their relationships. the more logical the dependence on agents and wholesalers—or on multiple retailers in different cities—to keep product sales strong and steady. each requiring different intermediary services. This factor encompasses two things: the population of an area and whether it is urban or rural. The most complex arrangement involves several transactions. who sells to a retailer . . _ Market size. Most top-dollar clothing designers and fragrance manufacturers do not want their products showing up anywhere and everywhere. what do they need and expect from their shopping experience. The more widely dispersed the stores. _ Agent or broker channel. channel members may also work together to purchase goods or services in greater quantity at discounts. _ Dual channel or multiple channel. for instance? Can you imagine how much more time and money you would spend having to buy every item at its source? How practical would it be to run out to the nearest farm to pick up a quart of milk and some salad ingredients on your way home from work? TYPES OF CHANNELS product makes this decision. . . Intermediaries play a role here. It is easier to sell direct to customers in a large city with lots of potential outlets for a product line. it is not usually the retailer who makes the decision to utilize one channel over the others. The producer of the Types of Channels 35 to deal with currency exchange or negotiate payment terms with a bank in another country. . these characteristics can be summarized as follows: _ The products themselves. and . who finally sells to the consumer or end user. The producer sells to an agent . There are several characteristics of product lines that make them more or less appropriate for a particular type of channel. . Even for consumers. as the manufacturer sells to a wholesaler . it also benefits from a short distribution channel. This term refers to the use of two or more channels to sell products to different types of customers. This comes from the ability of some channel members to store excess goods until they are needed. Long distribution channels correspond to small purchases.Wholesaler channel. . and to stockpile goods in anticipation of seasonal sales peaks. Briefly. and where are they willing to go to buy this type of product? How much quantity do they buy at a time? A channel may be chosen because it best reflects the end users’ buying habits. passing the savings on to customers. who sells to a retailer . either because the retailer doesn’t carry much inventory or the consumer buys the item in small quantities. . . If a product is perishable. _ The type of customer. . it requires the shortest. _ The producer’s level of control. They’ve worked hard to build an exclusive reputation. If a product is customized. . What if there were no supermarkets. often because the merchandise is being imported. There is no need for intermediaries when a customer orders a custom product directly from the company that makes it.Who are the customers. who sells to a wholesaler . Business-to-business customers have completely different needs and buying habits than individual consumers. the distribution chain is handy—beyond handy. _ How Channels Are Chosen Although retailers drive distribution channels. A lawnmower manufacturer. Another advantage of the distribution channel is its ability to even out the natural ebbs and flows of a supply chain. most direct distribution channel—which means the fewest possible intermediaries along the way. for example. who sells to the consumer. like an expensive assembled-to-order computer system.

not the producer. requires the distribution channel to be longer. _ Selective distribution involves a producer using a limited number of outlets in a geographical area to sell products. An advantage of this approach is that the producer can choose the most appropriate or best-performing outlets and focus effort (e. Exclusive distribution is sometimes requested by the retailer. . In exchange. and other perks to the exclusive distributor. the ability to hire and train their own sales representatives. training. training) on them. This was the case in the 1980s with video rental 36 Chapter 2 The Retail Distribution Channel stores. not quantity. Such a distribution arrangement can work toward the “exclusive” image of the product (because it’s harder to get).in other words . Selective distribution works best when consumers are prepared to "shop around" . from most restrictive to least restrictive—and remember. and the manufacturer (by implying that the company is interested in marketing “quality. . Smaller producers require a larger distribution chain in order to fill these roles.intensive. and they will count on the members of their channel to honor their wishes and not make bargain “deals. A producer is likely to sell direct when the company is large enough to handle the additional responsibilities that intermediaries would otherwise provide—credit to customers. but the fact is that even small-ticket items like toys are considered exclusive when they are in high demand. and everyone in-between.” _ The size of the producing company. retailer or distributor is used in a specific geographical area. until Blockbuster Video opened and began its climb to dominate the market. warehouses for their own goods. the producer or manufacturer offers sales assistance. Once a channel is selected. They are listed as follows. Exclusive distribution is thought of most frequently for high-dollar products such as luxury cars or Rolex watches. _ The size of the retailers. the term “restrictive” does not automatically have a negative connotation. and that placement of the product(s) meets the contractual agreements of producer. such as heavy equipment or high-tech products. point-of-purchase materials.g. the distribution strategy can take three different forms. to ensure that the retailer has something unique. that customers can’t get anywhere else. the retailer (for having “the only ones” available). This may also mean the retailer commits to not selling any products that are going to compete with the line. for example. Types of Distribution within Channels The channel members may handle different portions of the transaction. These producers will choose a distribution channel that ensures no discount merchants have access to their lines. one retail store or chain of stores has the legal right to market and sell the product line in a geographic area. exclusive distribution works well for extremely specialized product lines.they expect their distribution channel to work just as hard to protect and enhance their upscale image. but they must all agree on the end result—that the product(s) will be placed in the market in the manner desired by the producer or manufacturer. ordered to the customer’s specifications and budgeted for in advance of the purchase. A segment of the industry that is fragmented. retailer. in retail.they have a preference for a particular brand or price and will search out the outlets that supply. selective and exclusive distribution: Exclusive distribution is an extreme form of selective distribution in which only one wholesaler. with most of the stores operating as single units. In an exclusive distribution agreement. There are three broad options .”) In B2B commerce.

However. Intensive distribution is usually required where customers have a range of acceptable brands to chose from. are great examples of intensive distribution—their individual unit prices are so low that thousands must be sold to make a profit. this intensive product availability requires a large and complex distribution channel in order to cover all the sales outlets. conflict does occur when the members of a distribution channel choose different ways to operate within the system. a customer will simply choose another _ Intensive distribution is the closest thing to blanket coverage in retail. and ultimately provides the best product and related services to the customer. whether you’re selling candy bars or luxury automobiles. and only a few are permitted to carry the product line. a “you can find it anywhere” theory of marketing. so the supplier can keep the inventory stocked at the right levels. this kind of cooperation runs counter to the tough. For many products. Intensive distribution aims to provide saturation coverage of the market by using all available outlets. The retailers share inventory and sales numbers. . Like so many other aspects of business. Ironically. In the meantime. if one brand is not available._ Selective distribution means the retailers are carefully screened. Channel cooperation would be ideal—a joint effort of all the members to create a supply chain that is flexible. secondary brand names. like candy and soft drinks.” They need the efficiency and the economy of scale. when things like labor strikes. they do realize the benefits of sharing tools and skills that allow them to analyze data and make decisions. but these are generally sold under separate. Do they work with only a small group of trusted suppliers and allow them to manage their own inventory in-store? Can they risk the downsides of working with only a few suppliers. or production problems might leave the stores in the lurch? And there are more nagging questions: Can they risk confidential information being leaked to competitors? How open should they be with other channel members? It is very hard for companies to develop the level of credibility and trust needed to establish tight working relationships. As with exclusive distribution. part of the goal here is to enhance the image of the product by making it harder (but certainly not impossible!) to obtain. their own products within the companies sell to. Retailers continuously weigh the costs and benefits of sharing data and working together. Manufacturers of these products depend heavily on their wholesalers to handle the sales functions—and will drop a wholesaler who is not performing well based on sales figures—which makes this type of wholesaling very competitive. sudden price hikes.g. cigarettes. Snack items. lower-priced merchandise lines to sell to discounters. In other words.) COMPANIESGO? The fact is that modern-day companies are often forced to participate in distribution channels for practical reasons—not really because they want to be “part of the team. information sharing is a trade-off. (The producers may have other. total sales are directly linked to the number of outlets used (e. or balk at sharing Channel Relationships . have differing goals. although in some ways. from supermarkets and convenience stores to vending machines and restaurants. gives each partner a competitive advantage. competitive side of traditional retailing. beer). This allows the retailer to charge full price. The ladies’ clothing industry is full of selective distribution agreements between designer labels and so-called “finer” department stores.

and so on. It’s better for everyone if the participants can figure out how to get along. The Retail Distribution Channel Companies participate in distribution channels. This game of “musical chairs” is difficult at best. if the end result is that it’s bogging down everyone else in the channel. whether the participants like it or not. Arkansas. Each step along the channel has a specific purpose that is met by one or more member companies. the company hasn’t updated its computer systems. it may be struggling financially. and retailers. It’s safe to say that no one in any distribution channel or supply chain wields as much authority in retail today as Wal-Mart. just to be conveniently located for Wal-Mart. Wal-Mart’s situation aside. They will also occur when retailers have service issues with the products and want to handle returns. economies of scale. any time. The world’s largest retailer literally treats its suppliers like extensions of its own business—manufacturers and wholesalers have free access to real-time data about how their product lines are selling at any Wal-Mart store. the CEO is uncommunicative or argumentative. and disastrous at worst. Like any kind of power. It is important to note that in a distribution channel. “authority” means the partner’s ability to either influence or control the behavior of any of the other partners in the channel. more generously) than what the manufacturer is willing to do. in turn.2 Similarly. channel leadership can be wielded to the benefit or detriment of the other companies. this Channel Captain Extraordinaire can require extraordinary things of its smaller partners. In this case. The company that has the most authority in the channel is referred to as the channel leader or channel captain. with offices for supplier representatives on-site in its plants. the supply chain partners provide the raw materials and logistics to meet the channel requirements. channel captains may take the lead in negotiating with a participating company that is not fulfilling its responsibilities—orders are late. In exchange. Hundreds of manufacturers have offices in Bentonville. There is a hierarchy in all distribution channels. any manufacturer that uses a Just-In-Time (JIT) system. Then. The wholesalers take the flack about it from retailers—who. at least in the case of price hikes. They also provide efficiency. Channel members negotiate with each other and offer complementary resources and services to move products “down the line” from manufacturers to consumers. In business-to-business channels. any of the participants can refuse to do business with any of the others—as long as someone amenable to the entire group is tapped to take over the role that the ousted business has played. then something must be done. and they consider it a small price to pay for increased access to their giant retail partner. Sharing this information allows the suppliers to plan their production runs. which determine their supply chain relationships. must listen to consumers’ complaints. agents or brokers. They can arise naturally from competition between multiple members of the same channel— retailers or wholesalers—who carry the same product line. has forged a unique type of channel relationship. Ford is known for its incredibly collaborative relationships with suppliers. from price cuts to the acquisition and use of expensive new technology like radio frequency identification. or exchanges differently (say. importers. Retail distribution channels consist of some combination of producers or manufacturers.CHANNEL RELATIONSHIPS information. Distribution channels are important because they allow for a continuous flow of product despite the natural peaks and slumps experienced in manufacturing and sales. A very common source of channel conflict is a producer’s decision to either increase or decrease prices. wholesalers or distributors. who do more than provide materials and parts—they help design the vehicles Ford produces. repairs. Whatever the case. and cost savings to members of the channel. The types . make their importing decisions. Areas of potential channel conflict are many.

money. This requires common objectives and the willingness to communicate and share knowledge. it must be forged between companies of the same type. High profit margin added to goods by wholesalers and retailers. or expertise to manage. Middlemen unable to transport. 3. In order to be truly strategic.Strategic Alliances A third and similar partnership arrangement between separate companies with products or skills to share is the strategic alliance. retailers and agents not actively selling. It also lets the consumer to be able to know how it works. and the pace continues unabated today as stores continue to branch into international sales. It should not involve the stronger channel member barking orders to the weaker one. Retailers commonly belong to several strategic alliances. . invest in technology together. They offer a way to share the risks of business expansion that. or ordering merchandise jointly for added buying power. Manufacturer unable to convince wholesalers or retailers to stock product. two retailers or two wholesalers. A promising collaboration would be the alliance of two similar types of retailers in two different countries to share product lines. A strategic alliance is more than two companies holding shares of each others’ stock. Reasons for indirect selling methods • • Manufacturer does not have the financial resources to distribute goods. Wholesalers. It must be collaborative. Distribution channels already established. if undertaken separately. In so doing. It must be horizontal. the individual companies may lack the time. they use each others’ distribution channels in the new country. and learn from each other. It must be beneficial to both. which allows them to share the use of already-established distribution channels in pursuit of business growth in new markets. Distribution (Place) Channels • • • • • Manufacturer to consumer (most direct) Manufacturer to wholesaler to retailer to consumer (traditional) Manufacturer to agent to retailer to consumer (current) Manufacturer to agent to wholesaler to retailer to consumer Manufacturer to agent to consumer ( ex : DCL. 2. Retailers have been forging strategic alliances since the 1950s. the alliance must have all three of the following characteristics: 1. That is.AMWAY ) Manufacturers Reasons for direct selling methods • • • • • • Manufacturer wants to demonstrate goods.

Selling agents act on an extended contractual basis. Wholesalers Reasons for using wholesalers • • • • • • • Bear risk of selling goods to retailer or consumer Storage space Decrease transport costs Grant credit to retailers Able to sell for the manufacturers Give advice to manufacturers Break down products into smaller quantities Reasons for bypassing wholesalers • • • • • • • • • • Limited storage facilities Retailers' preferences Wholesaler cannot promote products successfully Development of wholesalers' own brands Desire for closer market contact Position of power Cost of wholesalers' services Price stabilisation Need for rapid distribution Make more money Ways of bypassing wholesalers • • • • • • Sales offices or branches Mail orders Direct sales to retailers Traveling Agents Direct Orders Specific channel Agents • • • • Commission agents work for anyone who needs their services. Direct on-selling advantages. Manufacturer does not have a wide assortment of goods to enable efficient marketing. difficult to reach. Brokers specialize in the sale of one specific product. Buying agents buy goods on behalf of producers and retailers.• • • • • Manufacturer has no knowledge of efficient (specific) distribution. They receive a brokerage. . selling all of the products of the manufacturer. They do not acquire ownership of goods but receive del credere commission. Too many consumers in a large area. Manufacturer wishes to use capital for further production. They have an expert knowledge of the purchasing function. They have full authority regarding price and terms of sale.

radio. newspaper/magazines. outdoor) Choice of actors (New Trend) Design and wording Co-ordination Test results Personal sales Oral presentation given by a salesman who approaches individuals or a group of potential customers: .• Factory representatives represent more than one manufacturer. web. PROMOTION Marketing communications breaks down the strategies involved with marketing messages into categories based on the goals of each message. They operate within a specific area and sell related lines of goods but have limited authority regarding price and sales terms. There are distinct stages in converting strangers to customers that govern the communication medium that should be used. Advertising • • • • Paid form of public presentation and expressive promotion of ideas Aimed at masses Manufacturer may determine what goes into advertisement Pervasive and impersonal medium Functions and advantages of successful advertising • Task of the salesman made easier Objectives • • • Maintain demand for well-known goods Introduce new and unknown goods Increase demand for well-known goods/products/services Requirements of a good advertisement • • • • Attract attention (awareness) Stimulate interest Create a desire Bring about action Eight steps in an advertising campaign • • • • • • • • Market research Setting out aims Budgeting Choice of media (television.

including the nature of the product itself. but it does not build customer loyalty. A formal approach to this customer-focused marketing is known as SIVA (Solution. The starting point is always the consumer. A major drawback of sales promotion is that it is easily copied by competition. the sense of identifying market changes and the product innovation approach. Access). Product → Solution . place. consumer wants are the drivers of all strategic marketing decisions. Information. It cannot be used as a sustainable source of differentiation. Marketing Public Relations (MPR) • • • • Stimulation of demand through press release giving a favourable report to a product Higher degree of credibility Effectively news Boosts enterprise's image Customer focus Many companies today have a customer focus (or customer orientation). promotion) of marketing management. No strategy is pursued until it passes the test of consumer research. interactive relationship Personal interest Attention and response Interesting presentation Sales promotion Short-term incentives to encourage buying of products: • • Instant appeal Anxiety to sell An example of this is coupons or a sale. is driven by the needs of potential consumers. nor encourage repeat buys in the future. This system is basically the four Ps renamed and reworded to provide a customer focus. History attests to many products that were commercial failures in spite of being technological breakthroughs. Value. The SIVA Model provides a demand/customer centric version alternative to the well-known 4Ps supply side model (product. In the consumer-driven approach. Every aspect of a market offering.• • • • Live. People are given an incentive to buy. This implies that the company focuses its activities and products on consumer demands. Generally there are three ways of doing this: the customer-driven approach. price. The rationale for this approach is that there is no point spending R&D funds developing products that people will not buy.

as a formal `marketing plan'.and is amended accordingly. Information: Does the customer know about the solution? If so. It is also an interactive process. what it will cost. a few organizations may look at a practical plan which stretches three or more years ahead. a marketing plan without a sound strategic foundation is of little use. The marketing planning process In most organizations. and presented by them in Market Leader the journal of the Marketing Society in the UK. Value: Does the customer know the value of the transaction. It can be for a product or service. The model focuses heavily on the customer and how they view the transaction. While a marketing plan contains a list of actions. The essence of the process is that it moves from the general to the specific. from the overall objectives of the organization down to the individual action plan for a part of one marketing programme. or a product line. A marketing plan may be part of an overall business plan. a brand. Solution: How appropriate is the solution to the customer's problem/need? 2. Marketing planning aims and objectives . the plan has to be formalized. what are the benefits. how and from whom do they know enough to let them make a buying decision? 3. Marketing plans cover between one and five years. Marketing plan A marketing plan is a written document that details the necessary actions to achieve one or more marketing objectives. "strategic planning" is an annual process. so that the draft output of each stage is checked to see what impact it has on the earlier stages . Solid marketing strategy is the foundation of a well-written marketing plan. what might they have to sacrifice. Access: Where can the customer find the solution? How easily/locally/remotely can they buy it and take delivery? This model was proposed by Chekitan Dev and Don Schultz in the Marketing Management Journal of the American Marketing Association. what will be their reward? 4. To be most effective. Occasionally. typically covering just the year ahead. usually in written form.Promotion → Information Price Place → Value → Access The four elements of the SIVA model are: 1.

' Perhaps the most important factor in successful marketing is the `corporate vision'.indeed. a too rigorous concentration on the view that `We are in the business of making meat-scales'. In this context some factors related to the customer. may be: • • • • • • • Who are the customers? What are their key characteristics? What differentiates them from other members of the population? What are their needs and wants? What do they expect the `product' to do? What are their special requirements and perceptions? What do they think of the organization and its products or services? . has a strong vision of where its future lies. On the other hand. `We want to make a profit' is not too helpful in developing specific plans. all of IBM's marketing activities were underpinned by its philosophy of `customer service'. which should be included in the material collected for the audit. it is largely neglected by marketing textbooks. Abell suggested that the definition should cover three dimensions: 'customer groups' to be served. it was perhaps the main theme of the book by Peters and Waterman." If the organization in general. as IBM was during the early 1900s. The emphasis at this stage is on obtaining a complete and accurate picture. and its chief executive in particular. will lay the 'corporate mission'. and 'technologies' to be utilized . however. Thus. then there is a good chance that the organization will achieve a strong position in its markets (and attain that future). This `corporate mission' can be thought of as a definition of what the organization is. but all may need to be reviewed to determine just which 'are' the few. the definition of IBM's `corporate mission' in the 1940s might well have been: `We are in the business of handling accounting information [customer need] for the larger US organizations [customer group] by means of punched cards [technology]. might have limited its subsequent development into other areas. In a single organization. which in themselves offer the main context for the marketing plan. 'In Search of Excellence' said: "Nothing drives progress like the imagination. This definition should not be too narrow. and will be supported by its staff at all levels. This will be not least because its strategies will be consistent.Behind the corporate objectives. which in turn provides the context for these corporate objectives. The idea precedes the deed. in the form of their `Superordinate Goals'. or it will constrict the development of the organization. 'customer needs' to be served. a vision originally promoted by the charismatic Watson dynasty. Surprisingly. it is likely that only a few aspects will be sufficiently important to have any significant impact on the marketing plan. of what it does: 'Our business is …'. it should not be too wide or it will become meaningless. In this context. although not by the popular exponents of corporate strategy .

2. the coordinated planning of the individual products and services can contribute towards the balanced portfolio. 'Review of the marketing environment'. assume the resources of a very large organization. Advertising. Even so. In addition. Market data and miscellany . customers. and `garbage in. Financial data --Facts for this section will come from management accounting. sales promotion. as well as the current situation. garbage out' applies with a vengeance. The marketing system itself needs to be regularly questioned. research and development.format for a `brand reference book' (or. The structure of the facts book will be designed to match the specific needs of the organization. packaging. marketing research systems and the current marketing objectives and strategies. Sales and distribution data . 5. Product data --From production. 'Review of the marketing system'. This splits the material into three groups: 1. 4. political. distribution sections.From market research. the first task of this `annual' process should be to check that the material held in the current `facts book' or `facts files' actually 'is' comprehensive and accurate. because the validity of the whole marketing plan is reliant upon the accuracy of the input from this system. a `marketing facts book') was suggested by Godley more than three decades ago: 1. In most organizations they would be obtained from a much smaller set of people (and not a few of them would be generated by the marketing manager alone). 3. It is clear that the basic material to be input to the marketing audit should be comprehensive. A study of the company's marketing mix. the best approach is to accumulate this material continuously.may be applicable in many cases. . as and when it becomes available.(see below) 3. however.albeit product-based . His sources of data. A study of the organization's markets. and can form a sound basis for the marketing audit itself. but one simple format . planning process itself . indeed. It is apparent that a marketing audit can be a complex process. merchandising data . covering developing trends.Sales.when time is usually at a premium. 'Review of the detailed marketing activity'.suggested by Malcolm McDonald . cultural and technical environment. • 'Portfolio planning'. The last of these is too frequently ignored. typically annual. costing and finance sections. 2. A study of the marketing organization. in terms of the 7 Ps .Information from these departments.• • What are their attitudes? What are their buying intentions? A `traditional' . but the aim is simple: 'it is only to identify those existing (external and internal) factors which will have a significant impact on the future plans of the company'. who would in most cases act as a source for this information. since this avoids the otherwise heavy workload involved in collecting it as part of the regular. competitors and the overall economic. Accordingly.

James Quinn succinctly defined objectives in general as: "Goals (or objectives) state 'what' is to be achieved and 'when' results are to be accomplished. People. market share. They are essentially about the match between those 'products' and 'markets'. at some specific time in the future. money value. the marketing plan must be clear. Objectives for pricing. which will account for 80 per cent of the volume and 80 per cent of the `profit'.• '80:20 rule'. Process. This next stage in marketing planning is indeed the key to the whole marketing process. It needs to concentrate on the 20 per cent of products or services. The 7 Ps can sometimes divert attention from the customer. As it is quantified it can. in the framework that we have chosen to use. and on the 20 per cent of customers.Getting the product known . The marketing objectives state just where the company intends to be. by which marketing objectives will be achieved and.The actual product Promotion (advertising). objectives should be capable of measurement and therefore 'quantifiable'. The marketing objectives must usually be based. Examples are: Price. be unequivocally monitored. percentage penetration of distribution outlets and so on. within limits. and corrective action taken as necessary. Simplifying somewhat.The amount of money needed to buy products Product. To achieve the maximum impact. but the framework they offer can be very useful in building the action plans. An example of such a measurable marketing objective might be `to enter the market with product Y and capture 10 per cent of the market by value within one year'. They are part of the marketing strategy needed to achieve marketing objectives. Physical Environment. marketing strategies can be seen as the means. above all. and should not be confused with marketing objectives. converting these financial measurements into the related marketing measurements. • It is only at this stage (of deciding the marketing objectives) that the active part of the marketing planning process begins'. advertising and so on are at a lower level. are generally concerned with the 7 Ps. They typically relate to what products (or services) will be where in what markets (and must be realistically based on customer behaviour in those markets). Price and Promotion. but they do not state 'how' the results are to be achieved". on the organization's financial objectives. Place. '7 Ps': Product. concise and simple. This measurement may be in terms of sales volume. with which strategy is most often confused: "Policies are rules or guidelines that express the 'limits' within which action should occur. distribution. He went on to explain his view of the role of `policies'. or `game plan'. To be most effective.

Taking the right action at the wrong time can sometimes be almost as bad as taking the wrong action at the right time.Where the product is located People. even in terms of success in meeting its objectives.Placement. therefore.not the process of planning itself. or tone of the environment Process. experience. As in the rest of the marketing discipline. practical outcome of the whole planning process. sales. Exactly when it is the best time for each element of the strategy to be implemented is often critical. these detailed marketing programmes are the most important. that of the detailed plans. which spell out exactly what programmes and individual activities will take place over the period of the plan (usually over the next year). It is these programmes and activities which will then constitute the `marketing' of the organization over the period. profits and so on which these demand in practice. Having completed this crucial stage of the planning process. and on the strategies chosen to satisfy these needs. Again. A market or geographically oriented company will concentrate on each market or geographical area. and perhaps more positively. costs. The strategy statement can take the form of a purely verbal description of the strategic options which have been chosen. these strategies describe how the objectives will be achieved. Timing is. It should be noted.activities the plan cannot be monitored. as we have done. that they are not the only framework.The ambience. These plans should therefore be: . it might include a structured list of the major options chosen. The focus of the strategies must be the objectives to be achieved . depending upon your organization's specific strategies. The 7 Ps are a useful framework for deciding how the company's resources will be manipulated (strategically) to achieve the objectives. As a result. Only if it fits the needs of these objectives should you choose. the focus will vary. Without these specified . market research or anything else which helps you to look at your conclusions from all possible angles. Each will base its plans upon the detailed needs of its customers. indeed. and may divert attention from the real issues. you will need to employ judgement. Alternatively.How do people obtain your product In principle. Detailed plans and programmes At this stage.Represent the business Physical environment. an essential part of any plan. and should normally appear as a schedule of planned activities. Although these detailed plans may cover each of the 7 Ps. you will need to develop your overall marketing strategies into detailed plans and programmes. mood. the most important element is. One aspect of strategy which is often overlooked is that of 'timing'. to use the framework of the 7 Ps.and preferably quantified . you will need to re-check the feasibility of your objectives and strategies in terms of the market share. however. A product-oriented company will focus its plans for the 7 Ps around each of its products.

4. 2. Marketing budget. including special features 2. Focused . • • • The resulting plans should become a working document which will guide the campaigns taking place throughout the organization over the period of the plan.The temptation to proliferate activities beyond the numbers which can be realistically controlled should be avoided. Quantified .The predicted outcome of each activity should be.They should be achievable.They should be an unambiguous statement of 'exactly' what is to be done. Executive Summary 3. 3. 5. Content of the marketing plan A marketing plan for a small business typically includes Small Business Administration Description of competitors. including advantages and disadvantages for marketing 4. a complete marketing plan typically includes: 1. as far as possible. 6. Controls In detail. Financial Forecast 8. quantified. Realistic .Those who are to implement them should be committed to them. Current Situation . The 80:20 Rule applies in this context too. so that its performance can be monitored. Title page 2. Description of the product or service.Macroenvironment o economy .SWOT Analysis Objectives Strategy Action Programme (the operational marketing plan itself for the period under review) 7. and agree that they are achievable. If the marketing plan is to work.• • Clear . including the advertising and promotional plan 3. Description of the business location. and the lessons learned. Pricing strategy 5. including the level of demand for the product or service and the strengths and weaknesses of competitors 1. Agreed . Executive Summary Situational Analysis Opportunities / Issue Analysis . Market Segmentation Medium-sized and large organizations 1. every exception to it (throughout the year) must be questioned. to be incorporated in the next year's plan.

7. legal government technology ecological sociocultural supply chain Current Situation .Market Analysis o market definition o market size o market segmentation o industry structure and strategic groupings o Porter 5 forces analysis o competition and market share o competitors' strengths and weaknesses o market trends Current Situation .Internal o company resources  financial  people  time  skills o objectives  mission statement and vision statement  corporate objectives  financial objective  marketing objectives  long term objectives  description of the basic business philosophy o corporate culture Summary of Situation Analysis o external threats o external opportunities o internal strengths o internal weaknesses o Critical success factors in the industry o our sustainable competitive advantage Marketing research o information requirements o research methodology o research results Marketing Strategy .Consumer Analysis [4] o nature of the buying decision o participants o demographics o psychographics o buyer motivation and expectations o loyalty segments Current Situation . 6. 5.Product o product mix o o o o o o .4. 9. 8.

: skimming. Marketing Strategy .G.Price o pricing objectives o pricing method (eg. o by geographical market. or telephone) o word of mouth marketing (buzz) o viral marketing 13. flights. Marketing Strategy . frequency.segmented marketing actions and market share objectives o by product. Implementation o personnel requirements  assign responsibilities  give incentives  training on selling methods o financial requirements o management information systems requirements o month-by-month agenda  PERT or critical path analysis o monitoring results and benchmarks o adjustment mechanism o . or penetration) o discounts and allowances o price elasticity and customer sensitivity o price zoning o break even analysis at various prices 12. Marketing Strategy . and media o sales force requirements.promotion o promotional goals o promotional mix o advertising reach.: Web. demand based.E. o by customer segment. and management o sales promotion o publicity and public relations o electronic promotion (eg. techniques. brand image.Distribution o geographical coverage o distribution channels o physical distribution and logistics o electronic distribution 14. Marketing Strategy . 11. or competitor indexing) o pricing strategy (eg. o by distribution channel. and brand equity o the augmented product o product portfolio analysis  B.: cost plus.C. theme. Multi Factoral analysis  Quality Function Deployment 10.product strengths and weaknesses  perceptual mapping o product life cycle management and new product development o Brand name. Analysis  contribution margin analysis  G.

is probably a quarterly rolling review . Along with these. as with forecasts. Financial Summary o assumptions o pro-forma monthly income statement o contribution margin analysis o breakeven analysis o Monte Carlo method o ISI: Internet Strategic Intelligence 16. . Continuous monitoring of performance. are: Sales analysis Most organizations track their sales results. which are normally tracked.contingencies (What if's) 15.analysis'. Changes in the environment mean that the forecasts often have to be changed. at least in terms of the quantifiable aspects of the plans.the deviation from the target figures . and .which allows a more immediate picture of deviations to become evident. if not the wealth of backing detail. or. in non-profit organizations for example.planning one full year ahead each new quarter.. sales territories. However. it is important to put both quantities and timescales into the marketing objectives (for example. Performance analysis The most important elements of marketing performance.forces both the plans and their implementation to be realistic. to capture 20 per cent by value of the market within two years) and into the corresponding strategies. Appendix o pictures and specifications of the new product o results from research already completed o Measurement of Progress The final stage of any marketing planning process is to establish targets (or standards) so that progress can be monitored. Plans only have validity if they are actually used to control the progress of a company: their success lies in their implementation. then investigates the individual elements (individual products. Of course. `Micro. not in the writing'. against predetermined targets. in many cases the best (most realistic) planning cycle will revolve around a quarterly review. perhaps even more important is the enforced discipline of a regular formal review. Again. this does absorb more planning resource. the related plans may well also need to be changed. represents a most important aspect of this.with attention focused on them so regularly . Scenarios o Prediction of Future Scenarios o Plan of Action for each Scenario 17. Best of all. Accordingly. but it also ensures that the plans embody the latest information. customers and so on) which are failing to meet targets. which is a nicely pseudo-scientific term for the normal management process of investigating detailed problems. The more sophisticated track them in terms of 'sales variance' . the number of clients.

Where such market share is tracked. for instance. Financial Analysis The `bottom line' of marketing activities should at least in theory. Some useful measures are: • • • market research . the stock was not available or the product did not meet the customer's exact requirements customer complaints . however. The above performance analyses concentrate on the quantitative measures which are directly related to short-term performance.Market share analysis Few organizations track market share though it is often an important metric. essentially tracking customer attitudes.including customer panels (which are used to track changes over time) lost business . initiated by the General Electric Company and then developed by Harvard Business School. targeted segment relative share -in relation to the market leaders annual fluctuation rate of market share Expense analysis The key ratio to watch in this area is usually the `marketing expense to sales ratio'. although this may be broken down into other elements (advertising to sales. there may be a number of aspects which will be followed: • • • • overall market share segment share .the orders which were lost because. the figures which can be obtained (in the UK) from `The Centre for Interfirm Comparison'. for example. but now run by the Strategic Planning Institute. a firm's share of the market can decrease which bodes ill for future sales when the market starts to drop. using. or the organization itself. is typically by those making use of PIMS (Profit Impact of Management Strategies). and so on). There are a number of separate performance figures and key ratios which need to be tracked: • • • gross contribution<>net profit gross profit<>return on investment net contribution<>profit on sales There can be considerable benefit in comparing these figures with those achieved by other organizations (especially those in the same industry). be the net profit (for all except non-profit organizations. The most sophisticated use of this approach. and about what . which can also indicate the organization's performance in terms of its longer-term marketing strengths and may accordingly be even more important indicators. Though absolute sales might grow in an expanding market. where the comparable emphasis may be on remaining within budgeted costs). But there are a number of indirect measures.that in the specific. sales administration to many customers complain about the products or services.

represent an unequivocal projection of actions and expected results. However. which have already been formulated in the marketing plan itself. This approach assumes that promotion is a cost. for `information-rich' and productively focused discussions between the various managers involved. what can be afforded. to pull together all the revenues and costs involved in marketing into one comprehensive document. Someone. the two will run in parallel and will interact. thus. a forum. Budgets as Managerial Tools The classic quantification of a marketing plan appears in the form of budgets. They are the equivalent of `time-series' forecasting. and thus follows trends in sales. in that the budget will be set at a certain percentage of revenue. However.Ven: • • Affordable . Because these are so rigorously quantified. Other alternatives are based on a simple `percentage of sales' or on `what the competitors are doing'. rather than the other way round. It is assumed that next year's budgets should follow some trend that is discernible over recent history.This is a variation of `affordable'. and sometimes is seen as an avoidable cost. typically the managing director on behalf of the board. highly quantified. It is then used in monitoring performance in practice. The marketing budget is usually the most powerful tool by which you think through the relationship between desired results and available means. and.Use of Marketing Plans A formal. then provides an agreed context for their subsequent management activities. there are many other alternatives . However. but at least it forges a link with sales volume. perhaps the most important benefit of these plans is the planning process itself. they are particularly important. decides what is a `reasonable' promotional budget. and helps make choices about priorities. even for those not described in the plan itself. the rigorous. The plan. together with the associated discussions. budgets may cause a rethink of some of the more optimistic elements of the plans. They should. Percentage of revenue . . This typically offers a unique opportunity. in practice. although. indeed. At the very least. written marketing plan is essential. they should be capable of being monitored accurately. in that it provides an unambiguous reference point for activities throughout the planning period. The purpose of a marketing budget is. performance against budget is the main (regular) management review process.This may be the most common approach to budgeting. thus. This figure is most often based on historical spending. It is a managerial tool that balances what is needed to be spent against what can be afforded. it does imply that promotion is a result of sales. Approaches to budgeting Many budgets are based on history. What is more. Its starting point should be the marketing strategies and plans.

Industrial marketing Industrial marketing is the marketing of goods and services from one business to another. • • Marketing is one-to-one in nature. it obtains three proposals from suitable construction firms and after a long process of evaluation and negotiation it places an order with the organization that it believes has offered the best value for money. B2B Business to Business (or "Industrial") Typical examples of a B2B selling process are.. it matches their budgets. The main features of the B2B selling process are. neither makes any allowance for change. the service or product can expect to be nothing more than a follower. Analysis of the proposals and subsequent discussions determines that there is no price advantage to placing all of the work with one firm and the decision is made to split the work between the two firms based on an evaluation of each firm's capabilities. it assumes that the competitors know best.Both of these methods are seen by many managements to be `realistic'. They do not allow for the development to meet emerging market opportunities and. in which case. On the other hand. together with the resulting planned activities and then costs them out. as set out in the marketing plan. mining. Broadly (and inadequatly) marketing could be split into consumer marketing (B2C "Business to Consumer") and industrial marketing (B2B "Business to Business"). High value considered purchase. • • Competitive parity . . they continue to pour money into a dying product or service (the `dog').In essence. in that they reflect the reality of the business strategies as those managements see it. Differences between marketing and business plans. construction etc. After carefully documenting their requirements. at the other end of the scale. but "industrial marketing" is not confined to these types of business activities.In this case. An organization has significant need for legal services and obtains submissions from two law firms.. Zero-based budgeting . After discussing the proposal with the business owner it is decided to sign a contract to obtain the machine on a fully maintained rental and consumables basis with an upgrade after 2 years. this approach takes the objectives. It is relatively easy for the seller to identify a prospective customer and to build a face-to-face relationship. or spends a proportion of what the brand leader is spending. The word "industrial" has connotations of heavy machinery. He demonstrates a photocopier/fax/printer to the office administrator.. • • • An organization is seeking to build a new warehouse building. the organization relates its budgets to what the competitors are doing: for example. A sales representative makes an appointment with a small organization that employs 22 people.. On the other hand. or beats them.

Walking down a supermarket aisle. More reliance on branding. and be selling relatively low value products. More effort put into mass marketing (One to many).. the definitions are not clear cut. The family decides to order a pizza. contract negotiations. Greater reliance on distribution (getting into retail outlets). Competitive tendering . a single man aged in his early 30's sees a hair care product that claims to reduce dandruff. request for expression of interest. She has bought the same brand of tea for the last 18 years. sales and marketing activities aimed at B2B are distinctly different from B2C (as outlined above). preparing tenders. even though these definitions are blurred. print media) advertising to build the brand and to achieve top of mind awareness. Equally there are big ticket items purchased by non-business consumers (houses and motor vehicles being the obvious examples). However. She purchases a number of items including her favourite brand of tea. awarding of tender. Often the buying/selling process is complex and includes many stages (for example. Higher use of main media (television. However.. request for tender. making representations. An advertisement appears that advertises home delivered pizza.• • • Purchase decision is typically made by a group of people ("buying team") not one person. and signing of final contract). Lower value of purchase. the final purchaser is still a business. A pensioner visits her local shopping mall. B2C Business to Consumer (or "Consumer") Examples of the B2C selling/buying process are. an organisation that sells electronic components may seek to distribute its products through marketing channels). The main features of the B2C selling process are. • • • A family are at home on a Sunday night and are watching television. qualifying. He pick's the product and adds it to his shopping cart. • • • • • • • Marketing is one-to-many in nature.. For example. developing strategies and contract negotiations.. It is not practical for sellers to individually identify the prospective customers nor meet them face-to-face. Blurring between the definitions As in all things. Selling activities involve long processes of prospecting. wooing. radio. Decision making is quite often impulsive (spur of the moment) in nature. selection process.

Industrial marketing often involves competitive tendering (see tender, tendering). This is a process where a purchasing organisation undertakes to procure goods and services from suitable suppliers. Due to the high value of some purchases (for example buying a new computer system, manufacturing machinery, or outsourcing a maintenance contract) and the complexity of such purchases, the purchasing organisation will seek to obtain a number of bids from competing suppliers and choose the best offering. An entire profession (strategic procurement) that includes tertiary training and qualifications has been built around the process of making important purchases. The key requirement in any competitive tender is to ensure that...
• • • • • • • •

The business case for the purchase has been completed and approved. The purchasing organisation's objectives for the purchase are clearly defined. The procurement process is agreed upon and it conforms with fiscal guidelines and organisational policies. The selection criteria have been established. A budget has been estimated and the financial resources are available. A buying team (or committee) has been assembled. A specification has been written. A preliminary scan of the market place has determined that enough potential suppliers are available to make the process viable (this can sometimes be achieved using an expression of interest process). It has been clearly established that a competitive tendering process is the best method for meeting the objectives of this purchasing project. If (for example) it was known that there was only one organisation capable of supplying; best to get on with talking to them and negotiating a contract.

Because of the significant value of many purchases, issues of probity arise. Organisations seek to ensure that awarding a contract is based on "best fit" to the agreed criteria, and not bribery, corruption, or incompetence.

Bidding process
Suppliers who are seeking to win a competitive tender go through a bidding process. At its most primitive, this would consist of evaluating the specification (issued by the purchasing organisation), designing a suitable proposal, and working out a price. This is a "primitive" approach because...
• •

There is an old saying in industrial marketing; "if the first time you have heard about a tender is when you are invited to submit, then you have already lost it." While flippant, the previous point illustrates a basic requirement for being successful in competitive tendering; it is important to develop a strong relationship with a prospective customer organisation well before they have started the formal part of their procurement process.

Non-tender purchasing

Not all industrial sales involve competitive tendering. Tender processes are time consuming and expensive, particularly when executed with the aim of ensuring probity. Government agencies are particularly likely to utilise elaborate competitive tendering processes due to the expectation that they should be seen at all times to be responsibly and accountably spending

public monies. Private companies are able to avoid the complexity of a fully transparent tender process but are still able to run the procurement process with some rigour.

Developing a sales strategy/solution selling/technical selling
The "art" of technical selling (solution selling) follows a three stage process...

Stage 1: Sell the appointment: Never sell over the telephone. The aim of the first contact with a propsective purchaser is to sell the appointment. The reason is simple; industrial sales are complex, any attempt to sell over the phone will trivialise your product or service and run the risk of not fully understanding the customer's need. Stage 2: Understand their needs: The best method of selling is to minimise the information about your goods or services until you have fully understood your customer's requirements. Stage 3: Develop and propose a solution. The solution is (of course) developed from your (or the firm that you represent's) product or service offerings.

The important point about solution selling is that it is essential not to sell the solution before you understand the customer's requirements; otherwise you are highly likely to unwittingly sell them on how ill-suited your solution is to meeting their requirements. To illustrate; imagine a couple seeking the services of an architect start their first meeting with the inevitable "we want to build a house." If the architect leapt in at that point and proceeded to show them his favourite design influence "the Mediterranean look" only to discover that they hate "Mediterranean" and wanted something "a bit more Frank Lloyd Wright" he will have gone most of the way toward alienating the sale. You can see that if he had "kept his powder dry" for a bit longer and first discovered what they were looking for, he could have better understood which way to skew his pitch. He was equally capable of designing in a Frank Lloyd Wright style. The marketing function is able to support this solution sell through tactics like account-based marketing – understanding the requirements of a specific target organization and building a marketing program around these. As research shows, sales success is heavily weighted towards suppliers who can understand their audience before selling to them (in UK research, 77 per cent of senior decision-makers believe that the marketing approaches made by new suppliers are poorly targeted and make it easy to justify staying with their current supplier).

From cannon fodder to preferred tenderer
The term "cannon fodder" derives from the World Wars and refers to the massing of undertrained and recently recruited troops sent to the fronts to face the enemy. It was noted that such troops invariably had a short survival rate but provided the tactical advantage of distracting the enemy while professional soldiers mounted a flanking manoeuvre and came around from the side or from behind the enemy. In adopting the term to Industrial Marketing it means those bids being submitted that have no chance of winning but are involved to make up the numbers (you can't have only one bid in a "competitive" tender process; that wouldn't satisfy the requirements of probity (for example in government tenders, or for private enterprise the requirement to "truly test the market" and to "keep them honest"). The reader

might be wondering why anybody would go to all of the work of submitting a tender when they had no chance of winning; for the same reason that troops were sent in to battle to die; they thought they had a real chance.

The key features of a successful industrial sales organisation
In industrial marketing the personal selling is still very effective because many products must be customized to suit the requirements of the individual customer. Indicators such as the sales tunnel give information on the expected sales in the near future, the hit rate indicates whether the sales organization is busy with promising sales leads or it is spending too much effort on projects that are eventually lost to the competition or that are abandoned by the prospect.

The internet and B2B marketing
The "dotcom" boom and bust of the late 90's saw significant attempts to develop a new retailing business model; on-line shopping. Many entrepreneurs (and their investors) discovered that merely having a website (no matter how innovative) was insufficient to generate sales; the amount of conventional main media advertising required to promote the sites burnt cash at a faster rate than they could generate through on-line sales. They also presumed that consumers would eschew the irksome shopping experience (driving, parking, poor service etc.) for the wonder and convenience of shopping on-line. Some did; but not in sufficient numbers. There were many unforeseen problems and apart from some notable exceptions ( and others) the B2C online model was a spectacular failure. However, the same cannot be said of B2B selling where some quite impressive results have been achieved.

Guerrilla marketing
The term guerrilla marketing was coined by Jay Conrad Levinson in his 1984 book Guerrilla Marketing as an unconventional system of promotions on a very low budget, by relying on time, energy and imagination instead of big marketing budgets. The term has since entered the popular vocabulary to also describe aggressive, unconventional marketing methods generically.

Levinson's books include hundreds of "Guerrilla Marketing weapons," but they also encourage the guerrilla marketeer to be creative and devise his own unconventional methods of promotion. The marketeer uses all of his or her contacts, both professional and personal, and must examine his company and its products, looking for sources of publicity. Many forms of publicity can be very inexpensive, others are free.

and guesswork. Small businesses and entrepreneurs are able to obtain publicity more easily than large companies. The marketer should also concentrate on how many new relationships are made each month. It must understand the customer's needs. such as: • • • • • • • • • • • Viral marketing -.through social networks Ambient marketing Presence marketing Grassroots marketing Wild Posting Campaigns Alternative marketing Buzz marketing -. Use current technology as a tool to empower your business. according to Levinson. Instead of concentrating on getting new customers. they are closer to their customers and considerably more agile. It must build trust and support. Forget about the competition and concentrate more on cooperating with other businesses. aim for more referrals. the primary investments of marketing should be time. a company must establish a relationship with the customer. he states: "In order to sell a product or a service. The primary statistic to measure your business is the amount of profits. In The Guerrilla Marketing Handbook.Levinson says that when implementing guerrilla marketing tactics.word of mouth marketing Undercover marketing -. more transactions with existing customers. Yet ultimately. and imagination." Levinson identifies the following principles as the foundation of guerrilla marketing: • • • • • • • • • • Guerrilla Marketing is specifically geared for the small business and entrepreneur. energy. judgment. Instead of money. and larger transactions.interaction with product Tissue-pack marketing . not sales. Guerrilla Marketers should always use a combination of marketing methods for a campaign. Create a standard of excellence with an acute focus instead of trying to diversify by offering too many diverse products and services. and it must provide a product that delivers the promised benefits. It should be based on human psychology instead of experience. the Guerrilla Marketeer must "deliver the goods".subtle product placement Astroturfing -. small size is actually an advantage instead of a disadvantage.releasing company news to imitate grassroots popularity Experiential marketing -. Associated marketing trends The term Guerrilla Marketing is now often used more loosely as a descriptor for nontraditional media.

Demographic segmentation categorizes consumers based on such characteristics as age. In this process. Measurability is the degree to which a market segment's size and purchasing power can be measured. many firms place consumers into groups. Common characteristics used for consumer categorizations include demographic. but it is now increasingly adopted by large businesses. Categorizing consumers according to their locations is called geographic segmentation. Messages On Hold Cricket In December 2007. Four factors are generally reviewed to determine the potential of a particular market segment. attitudes. characteristics. Effective segments are measurable. It is one of the most popular methods of segmenting potential customers because it makes it relatively easy to identify potential customers. income level. or behaviors. cities. Social class. potential customers are categorized based on different needs. accessible. several guerrilla-marketing magnetic light displays in and around the city of Boston. Substantiality refers to the size of the segment in term of profitability for the firm. a staff member of on hold advertising company. and a portion of Interstate 93 were closed as police examined. uses. Ignignokt and Err. states. substantial. destroyed the devices. sparking a nationwide debate over wearing clothing with brand names. and occupation. Accessibility refers to the degree to which a market segment can be reached and served. . and actionable. shop. In behavioral segmentation. Several subway stations. characters from the Cartoon Network's latenight Adult Swim animated television series Aqua Teen Hunger Force. gender. or personality characteristics are psychographic variables used to categorize consumers into different groups. psychographic. lifestyle. marketers divide consumers into groups based on their knowledge. were mistaken for possible explosive devices. The act of ambush marketing was noticed and the staff member issued a fine for ‘displaying a sign without a permit’. geographic. Action ability refers to the degree to which a firm can design or develop a product to serve a particular market segment. a process called market segmentation. or responses to a product. and/or work. The suspicious objects were revealed to be ads depicting the Mooninites. and behavioral segmentation. Psychographic segmentation uses consumers' activities. Consumer characteristics are used to segment markets into workable groups. regions. Market segments are evaluated as to their attractiveness or potential for generating revenue for the firm.Guerrilla marketing was initially used by small and medium size (SMEs) businesses. and in some cases. and opinions to sort them into groups. bridges. took a life-size placard of cricket legend Shane Warne wearing a branded t-shirt and the company’s tell-tale ‘giant hand’ outside the West Australian Cricket Ground at the 3rd Ashes Test. removed. Consumers can be segmented geographically according to the nations. Massachusetts. interests. Controversy Aqua Teen Hunger Force On 31 January 2007. MARKET Segmentation In order to better manage the marketing effort and to satisfy the needs and wants of customers. or neighborhoods in which they live.

corporate marketing departments now focus on credit policies (see credit). Marketing is used both to increase sales of an existing product and to introduce new products. Giant corporations (or a small cluster of corporations) dominated single industries. including retail stores. a national mass market emerged. and conduct informal interviews with target audiences. a different marketing plan is needed for each segment in order to maximize sales and. marketing considerations play a major role in determining corporate policy. An undifferentiated marketing strategy occurs when a firm focuses on the common needs of consumers rather than their different needs. Britannica Concise Encyclopedia: marketing Activities that direct the flow of goods and services from producers to consumers. direct-mail marketing. producers design products to appeal to the largest number of potential buyers. and wholesaling. differentiated.Once the potential market has been segmented. By 1900. which aims to serve a large share of one or a very few markets. Market positioning is the process of arranging a product so as to engage the minds of target consumers. Firm managers position their products in such a way as to distinguish it from those of competitors in order to gain a competitive advantage in the marketplace. distinctive. distribution. and desirable relative to those of its competitors in order for it to be effective. Marketers may look for outlets through which to sell the company's products. The concentrated strategy. When using this strategy. product development. experiment with various marketing strategies. The last market coverage strategy is known as the concentrated marketing strategy. with a different product geared to each segment. This greater emphasis ultimately leads to a better understanding of the needs of the targeted segments. They may make psychological and demographic studies of a potential market. firms followed the logic of mass production as they sought to create a "democracy of desire" by universalizing the availability of products. as a result. and a small number of firms realized economies of scale previously undreamed of. firms create more total sales because of broader appeal across market segments and stronger position within each segment. Technological innovation mushroomed. and corporate communications. and concentrated. inventory. increase firm profits. firms need to station their products relative to similar products of other producers. Thus. With a differentiated marketing strategy. The position of a product in the marketplace must be clear. This approach allows firms to obtain a much stronger position in the segments it targets because of the greater emphasis on these targeted segments. A firm using a differentiated strategy makes a conscious decision to divide and target several different market segments. . customer support. Once primarily concerned with increasing sales through advertising and other promotional techniques. a process called product positioning. is best suited for firms with limited resources. Coverage Strategies There are three basic market-coverage strategies used by marketing managers: undifferentiated. Companies were able to produce goods in high volume at low prices. and transportation costs. The benefit of an undifferentiated strategy is that it is cost-effective because a narrow product focus results in lower production. In advanced industrial economies. Mass Marketing Spurred by a communications revolution and the completion of a national railroad network that by 1900 consisted of more miles of track than the rest of the world combined.

but more by the special value a particular market placed upon the goods. Another feature in the success of mass marketing was the creation and implementation of sales programs made possible by the spread of modern management structures and the division of corporate functions." Fully developed in the 1970s and 1980s. Shafner. Hart. and quantitative analysis made market research more important and accurate. as the social sciences matured. Market Segmentation The final stage of the twentieth-century market in America has been characterized as "market segmentation. independent of production costs. Standardized models were produced quickly. electric trolleys. and the explosion in magazine sales. In 1911. Wrigley's Chewing Gum after 1907. sweeping improvements in statistical methodology. Advertising media were powerfully supplemented by the use of subway cars. Forward integration into wholesaling also aided mass marketing. identically. Coca-Cola from the 1890s. The first advertising agency was established in 1869 as N. a process spurred by analysis of the depression of the 1870s. Ayer and Son. and the depression of the 1890s. which dropped the cost of car buying from $600 in 1905 to $290 by 1924. Franchise agreements with retailers were one key to the success of companies such as Coca-Cola. trams. his Model T sold to 15. John Wanamaker placed the first full-page advertisement in a newspaper in 1879. the Curtis Publishing Company instituted the systematic analysis of carefully collected data. Through these means—as well as coherent production and marketing plans—a mass market was created by World War II. Price was determined not so much by how cheaply something could be sold. W. behavioral science. with the appointment of its first director of commercial research. National brand names like the Singer Sewing Machine from the 1860s. billboards. manufacturers and retailers developed a range of instruments to shape and mold the market. and Maxwell House coffee around the same time heralded the "golden age of brand names. He had pioneered the marketing of the automobile so that it could be within the reach of almost all Americans. firms sought competitive advantage through the use of demographics and psychographics to more accurately pinpoint and persuade consumers of their products. By 1910. as it fought and beat Ford for the biggest market share of the booming automobile business. and in 1912 "talking signs" that allowed copy to move swiftly along boards from right to left first appeared on Broadway in New York City. Further developments came after the 1890s with flashing electric signs. when the chaos of market competition spurred efforts to make the market more predictable and controllable. photo technology and color lithography revolutionized the capacity to reproduce images of all kinds. consumerism as understood in the beginning of the twenty-first century did not triumph until after 1950. and Marx became the largest manufacturer of men's suits in America by the 1910s through research that suggested producing suits for fourteen different male body types and psychographic appeals in its advertising. In nineteen years of production. beginning in the 1870s and 1880s with meat packers like Gustavus Swift. However. During and after the 1920s.5 million . and only in black. when unsold inventory was blamed in part for the depth of the crisis. General Motors (GM) pioneered market segmentation in the 1920s. As the mass market emerged." Advertising also came into its own during the early decades of the twentieth century.Mass production required the development of mass marketing as well as modern management. Henry Ford was an exemplar of mass marketing.

a remarkable figure. largely the result of consumerism. GM made not one model to suit all. GM first tried merging with rivals to create a larger market force. It was in the 1920s that annual modifications to automobile models were introduced. marketers and advertisers sought ways to reach a more segmented society. meant that marketers needed to be much more sensitive to the differences between groups of Americans and their values. social. advertisers had developed eight consumer clusters for women alone. The creation of a "democracy of desire" came to characterize American society and its values. and moral development. and marketing generally. more sophisticated research developed as patterns of credit card spending were analyzed. and more sophisticated polling techniques another. GM made the ownership of automobiles both a status symbol and stylish. newer. and Ford was forced to retool and try to catch up with GM. and ethnic background led to more targeted advertising and a leap in TV advertising. By the 1960s. as consumer values shifted because of social change. and over forty lifestyle groups. Testing determined the relative perception of visual and verbal information at different ages and developmental stages.customers. Due to his methods. It was a . given the slowdown in economic growth in the preceding thirty years. which seized a generation of Americans who were born into the first generalized age of affluence in America. by 1921 Ford sold 55 percent of all new cars in America. television was deregulated into cable and satellite channels. about 60 percent of all toys sold in the United States were based on licensed characters from television. and seniors were similarly analyzed.5 billion in 1980. Age segmentation among children received particular attention. it was estimated that "kid power" accounted for sales of over $200 billion per year. Humor and gender differences were also studied to make marketing more successful. children. compared to 180. as researchers took into account neurological. but as a collection of segments with differing requirements and desires to be satisfied. Consumer spending jumped from $70. Television's Nielsen ratings offered one instrument. and segmented marketing. In trying to compete with Ford. and Internet usage was identified. By 1924. but then embraced individuality. Deregulation of children's programming in the 1980s led to cartoons becoming merchandising vehicles. gender. Ford's market share had been cut to 25 percent. but a number of different models to suit differing pocketbooks. movies. In 1997. By the 1990s. By 1987. or books. Further changes. It looked at the market not as an undifferentiated whole. The ability to identify who watched what shows according to age. from $12 billion in 1960 to $54. Serious foreign competition in American markets during the 1970s and 1980s also spurred innovation in market research. the number of cars produced in the United States was greater than 4 million. The development of marketing during the twentieth century matched and aided American economic growth and was symbiotic with the triumph of consumerism. product design. Census Bureau reported in 2001 that retail sales just for the fourth quarter accounted for $861 billion. after 1970. teens. By 1927.S. Generational differences became much more important. Market research also determined the kinds of junk mail that went to each individual and how advertising would appear on the Internet or on television. Despite the end of a long post–World War II economic expansion. emotional.8 billion in 1940 to $617 billion in 1970. easier forms of obtaining credit.000 in 1910. During the 1980s and 1990s. By 1985. The U. thanks largely to Ford. after 1970 consumer spending continued to grow.

transport. distribution being understood in a broader sense than the technical economic one. finance. that system met stiff competition from chain stores. which were organized for the mass distribution of goods and enjoyed the advantages of largescale operation. The village market or fair. enable businesses to buy and sell commodities for both immediate and future delivery. In the United States in the 19th cent. where nearly all production is intended for a market. The concurrent advent of the motor truck and paved highway. the typical marketing setup was one in which wholesalers assembled the products of various manufacturers or producers and sold them to jobbers and retailers. such as those of grain and cotton. In a modern capitalist economy. Recent years have seen the development of wholesale clubs. Modern Marketing At all points of the modern marketing system people have formed associations and eliminated various middlemen in order to achieve more efficient marketing. that part of the process of production and exchange that is concerned with the flow of goods and services from producer to consumer. before the development of caravan travel and navigation. as the strength of marketing smoothed its economic dominance around the planet. or otherwise have a hand in the process of transfer. such activities are just as important as the manufacture of the goods.distinctive quality that influenced the attitudes of the rest of the world toward the United States. In the 20th cent. was the chief retail marketing agency. warehouse. and farmers sell their products through their own wholesale cooperatives. which sell retail items to consumers who purchase memberships that give them the privilege of shopping at wholesale prices. Interregional exchange between disparate geographic areas depends on adequate means of transportation. insure. the itinerant merchant or peddler. Evolution of Modern Marketing In a subsistence-level economy there is little need for exchange of goods because the division of labor is at a rudimentary level: most people produce the same or similar goods. or promote the product. Independent stores may operate their own wholesale agencies to supply them with goods. Commodity exchanges. The general store superseded the public market in England and was an institution of the American country town. still further modified marketing arrangement. and the shop where customers could have such goods as shoes and furniture made to order were features of marketing in rural Europe. and the proliferation of the automobile has expanded the geographic area in which a consumer can make retail purchases. Thus. wholesale and retail. Wholesale houses operate outlets for their wares. The independent store. In popular usage it is defined as the distribution and sale of goods. Today large chain stores dominate the field of retail trade. Manufacturers often maintain their own wholesale departments and deal directly with retailers. . in economics. operated by its owner. but also those who develop. Marketing includes the activities of all those engaged in the transfer of goods from producer to consumer—not only those who buy and sell directly. the exchange of the products of one region for those of another was limited. making possible the prompt delivery of a variety of goods in large quantities. It is estimated in the United States that approximately 50% of the retail price paid for a commodity is made up of the cost of marketing.

T. Sometimes a service. often conducted by means of telephone interviews with consumers. particularly in the form of installment buying and selling. marketing firms tallying revenues of $5. Services are marketed in much the same manner as goods and commodities. Methods of marketing now include market research. Stewart in New York. is marketed through the same act that produces it. The number of customers. probably introduced (1841) by A. has been greatly increased by the practice of extending credit. especially trademarked and labeled goods. it can be used for negative purposes. motivational research. Criticism of marketing Some aspects of marketing. also known as business-to-business or B2B.9 billion in 1998. Then the argument follows that nonfree markets are imperfect and lead to production and consumption of suboptimal amounts of the product. governments and criminals. . saves sales clerks from haggling and promotes faith in the integrity of the merchant. Critics also point out that marketing techniques have been used to achieve morally dubious ends by businesses.S. Critics acknowledge that marketing has legitimate uses in connecting goods and services to the consumers who want them.Methods of merchandising have also been changed to attract customers. While it is ethically neutral. with the top 50 U. There are similar concerns in industrial markets. travel agents. like that of a repair person or physician. and through on-line transactions (“e-commerce”) on the Internet. by placing orders to specialized “home-shopping” television channels. booking agents for concert or theatrical performers.. and other means of determining consumer acceptability of a product before the producer decides to manufacture and market it on a large scale. especially promotion. such as selling unhealthy food to obese people or selling SUVs in a time of global warming. It is especially problematic in classical economic theory. In this way producer market power is attained as measured by profits that would not be realized under a free market. and the like. are the subject of criticism. In 1999 more than $308 billion was spent on advertising in the United States alone. Most marketers believe that marketing techniques themselves are amoral. The one-price system. Advertising has created an international market for many items. but it can also have a positive influence on consumer welfare. which is based on the assumption that supply and demand are independent. However. This raises a question on the effectiveness of the CIM’s definition of marketing (anticipating. identifying and satisfying customer needs profitably). Personal services may also be brokered by employment agencies. The Observer’s survey among 1. Marketing is accused of creating ruthless exploitation of both consumers and workers by treating people as commodities whose purpose is to consume. product promotion is an attempt coming from the supply side to influence demand. is a major industry in itself. Critics see a systemic social evil inherent in marketing.206 UK adult consumers in 2001 highlighted some of the stark changes our society has gone through in the last two decades. Industrial market segmentation attempts to provide some answers. Customers also buy through mail-order catalogs (much expanded from the original catalog sales business of the late 1800s). mainly in consumer marketing. especially for durable goods. Market research.

Their statements. no longer appropriate. far from being the second-hand rose of the scholarship. whereby a product or service is sold for the price the customer is willing to pay. time. misunderstanding. appropriate or even pertinent to what is actually happening on the ground”. creating an economic growth period never seen before in the United Kingdom. Brown suggests that “the traditional. to dismiss marketing as a failure is unfair. Its relevance is very much situational and depends on many factors such as the product. The marketing concept. some scholars such as Stephen Brown challenge the marketing concept in an extreme language.Core marketing elements such as segmentation. . A definitive statement cannot be made whether the conventional marketing concept is applicable in today’s environment. “marketing is endowed with considerable personal charm and has enjoyed more than its fair share of conquests” (Brown. together with other business disciplines. occasional inexplicable hitting of the jackpot”. which is why PostModern Marketing 2 was chosen as a key reference point for this chapter. e. This apparent love-hate relationship is proof in itself that even a skeptics find it difficult to deny the contribution that marketing has made and can make to customer satisfaction and economic value. However. and “indeed. Another success is the now commonly implemented value-pricing principle. failing. no-questions-asked refund policies. However. Marketing has helped create value through customized products. political and economic conditions and the inner workings of a company.' Of course all of the above is done for economic or political gain. Despite all this achievement. If Mr. they are complex topics that need a high level of effort. not for the sake of innovation. confusion. and using quotes such as “mid-life crisis” . location. both suppliers and customers get a fair deal. In the context of segmentation. not on a cost-plus basis. This way. targeting and positioning are still relevant in the modern (or post-modern) world.g. he condemns marketing by saying “marketing has to decide whether to expose its intellectual nakedness or press itself against the searing heat of postmodernism” . Even some government departments address the public not as ‘the Queen’s subjects’ or ‘the applicants’ any more but as ‘customers. the segment. anthropology and history. On the one hand Brown makes positive statements about marketing. linear. planning. intelligent thinking as well as resources to be implemented successfully. for better or worse. shopkeepers’ smile. operational and sales costs by helping to develop products because customers want them. marketing is now something of a fashion leader’ On the other hand. being abandoned. delivered nothing of value. comfortable cars. “in decline. anachronistic. and guaranteed delivery dates. implementation and control no longer seems applicable. 1998:16). environmental attention. in an unprecedented state of crisis. helped the UK to make the transition from a 19thcentury manufacturing economy to a modern model of success in the service industry. are relevant. step-by-step marketing model of analysis. Marketing also helps companies avoid unnecessary R&D. the increasing academic attention that is being devoted to marketing and consumption-related phenomena by non-business disciplines such as sociology. sometimes unfair. It has contributed to both customers’ and suppliers’ quality of life by selecting profitable customer satisfaction as its sole objective. failure.

relationships. Examples are General Electric. PriceWaterhouseCoopers. Weir Group and the BT Group to name but a few. The truth is that marketing today leads the way in segmentation. This refers mainly to promotion. quantification. relate their products and services to them. Contrary to Brown’s suggestion in his final paragraph.Brown had studied “the ground” before making his statement. models. promotion. define their value proposition and serve their customers accordingly. Smiths Aerospace. A brief visit to their websites can make this point clear. which is only one element within the marketing concept. innovation. he would have realised that companies are successful the world over precisely because they implement this model. and last but not least. HSBC. product management. rigour. Marketing Information Systems To understand the proper role of information systems one must examine what managers do and what information they need for decision making. it is time we banished banishing passion from works of marketing scholarship”. not less. Chapter Objectives This chapter has the purpose of leading the reader towards: • An understanding of the different roles managers play and how marketing information systems can support them in these roles • An appreciation of the different types and levels of marketing decision making • A knowledge of the major components of a marketing information system • An awareness of the often under-utilised internal sources of information available to enterprises • An ability to clearly distinguish between marketing research and marketing intelligence. Stephen Brown also has a constructive suggestion: “I reckon we need more passion in marketing. After all the contribution as well as further potential. we need objectivity. paradigm shifts and (some application of) science. pricing. distribution. We must also understand how decisions are made and what kinds of decision problems can be supported by formal information systems. BAE Systems. They segment their markets. One can then determine whether information systems will be valuable tools and how they should be designed. to deny its successes and try to reduce it to only promotion is a great injustice to the marketing profession as well as to academic insight. Structure of the Chapter . and • An understanding of the nature of analytical models within marketing information system. BOC Edwards.

In one sense.. colleagues. peers. The attention of managers increase rapidly from one issue to another. is of limited value as an aid to information system design. For instance. Managers want to work on issues that are current. current. high speed fragmentation. specific and ad hoc. government officials.The chapter opens with a wide-ranging discussion of the functions of management. Planning Organising Coordinating Deciding Controlling Such a model emphasises what managers do. secretaries. up-to-date. More recently. ad hoc. Behavioural models are based on empirical evidence showing that managers are less systematic. the stress has been placed upon the behavioural aspects of management decision making. routine information receives less attention. Managers are involved in a complex and diverse web of contacts that together act as an information system. • Variety. certain. The nature of the pressures may be different but there is no evidence that they are any less intense. The model also emphasises that the activities of managers is characterised by variety. espoused by writers in the 1920's. current. the various types and levels of decision that marketing managers must make. There is simply not enough time for managers to get deeply involved in a wide range of issues. more reactive and less well organised than the classical model projects managers to be. 3. but not how they do it. hearsay. gossip in brief. of interactions. . The classical model of what managers do. Internal reporting systems. competitors. 5. This then comprises the first half of the chapter whilst the second pan deals with the main components of a marketing information systems. or why. work brevity specific contacts Such behavioural models stress that managers work at an unrelenting pace and at a high level of intensity. marketing intelligence systems and analytical model banks are all discussed. 4. less reflective. fragmentation and brevity. although uncertain information. The classical model identifies the following 5 functions as the parameters of what managers do: 1. 2. with very little pattern. Managers prefer speculation. and so forth. • Issue preference • Complex web • Strong preference for verbal media. The Functions of Management Clearly. This is just as true for managers operating in the developing world as in the developed world. managers operate a network of contacts throughout the organisation and the environment. Historical. behavioural models describe 6 managerial characteristics: • High volume. whilst intuitively attractive in itself. A problem occurs and all other matters must be dropped until it is solved. They converse with customers. such as Henry Fayol. Research suggests that a manager's day is characterised by a large number of tasks with only small periods of time devoted to each individual task. marketing research systems. information systems that claim to support managers cannot be built unless one understands what managers do and how they do it.

their own information channels. By developing their own long-term commitments. Second. termed as informational roles. Nevertheless. they allocate resources where they are needed in the organisation. senior managers can control their personal agendas. Managerial Roles Mintzberg suggests that managerial activities fall into 3 categories: interpersonal. In the area of interpersonal roles. who bring to their attention crises and activities that must be attended to immediately. require less effort and bring a faster response. until recently these contributions have been confined to narrow. high-level managers are at the mercy of their subordinates. most up-todate information and redistributing it to those who need to know. In the area of decision making. can be identified. These systems make a much larger contribution in the field of informational roles. Managers act as entrepreneurs by initiating new kinds of activities. most concrete. and professional work stations that can enhance a manager's presentation of information are significant. information processing and decision making. While information systems have made great contributions to organisations. Much work needs to be done in broadening the impact of systems on professional and managerial life. the numerous deadlines. they handle disturbances arising in the organisation. Lastly. it has generally been found that successful managers appear to be able to control their own affairs. office systems. and he or she uses whatever tools are available to be an effective communicator. only recently have decision support systems and microcomputer-based systems begun to make important contributions. acting largely as a communications aid in some of the newer office automation and communication-oriented applications. Less successful managers tend to be overwhelmed by problems brought to them by subordinates.Several studies have found that managers prefer verbal forms of communication to written forms. successful managers are those who can control the activities that they choose to get involved in on a day-to-day basis. among levels of the management team. attempting to motivate subordinates. and their own networks. Communication is the work of the manager. within each level. An important interpersonal role is that of figurehead for the organisation. receiving the latest. management control and operations control. A second set of managerial roles. and they mediate between groups in conflict within the organisation. a manager acts as a leader. It is one of the areas that information systems have sought most of all to affect (with mixed success). something that engages most of a managers time. large-scale MIS systems. Verbal media are perceived to offer greater flexibility. transaction processing areas. Managers act as the nerve centre for the organisation. Decision making can be divided into 3 types: strategic. Despite the flood of work. and the random order of crises. Decision Making Decision making is often seen as the centre of what managers do. A more familiar set of managerial roles is that of decisional roles. . To some extent. information systems are extremely limited and make only indirect contributions. managers act as a liaison between various levels of the organisation and.

Strategic decision making: This level of decision making is concerned with deciding on the objectives, resources and policies of the organisation. A major problem at this level of decision making is predicting the future of the organisation and its environment, and matching the characteristics of the organisation to the environment. This process generally involves a small group of high-level managers who deal with very complex, non-routine problems. For example, some years ago, a medium-sized food manufacturer in an East African country faced strategic decisions concerning its range of pasta products. These products constituted a sizeable proportion of the company's sales turnover. However, the company was suffering recurrent problems with the poor quality of durum wheat it was able to obtain resulting in a finished product that was too brittle. Moreover, unit costs were shooting up due to increasingly frequent breakdowns in the ageing equipment used in pasta production. The company faced the decision whether to make a very large investment in new machinery or to accept the offer of another manufacturer of pasta products, in a neighbouring country, that it should supply the various pasta products and the local company put its own brand name on the packs. The decision is strategic since the decision has implications for the resource base of the enterprise, i.e. its capital equipment, its work force, its technological base etc. The implications of strategic decisions extend over many years, often as much as ten to fifteen years. Management control decisions: Such decisions are concerned with how efficiently and effectively resources are utilised and how well operational units are performing. Management control involves close interaction with those who are carrying out the tasks of the organisation; it takes place within the context of broad policies and objectives set out by strategic planners. An example might be where a transporter of agricultural products observes that his/her profits are declining due to a decline in the capacity utilisation of his/her two trucks. The manager (in this case the owner) has to decide between several alternative courses of action, including: selling of trucks, increasing promotional activity in an attempt to sell the spare carrying capacity, increasing unit carrying charges to cover the deficit, or seeking to switch to carrying products or produce with a higher unit value where the returns to transport costs may be correspondingly higher. Management control decisions are more tactical than strategic. Operational control decisions: These involve making decisions about carrying out the " specific tasks set forth by strategic planners and management. Determining which units or individuals in the organisation will carry out the task, establishing criteria of completion and resource utilisation, evaluating outputs - all of these tasks involve decisions about operational control. The focus here is on how the enterprises should respond to day-to-day changes in the business environment. In particular, this type of decision making focuses on adaptation of the marketing mix, e.g. how should the firm respond to an increase in the size of a competitor's sales force? should the product line be extended? should distributors who sell below a given sales volume be serviced through wholesalers rather than directly, and so on. Within each of these levels, decision making can be classified as either structured or unstructured. Unstructured decisions are those in which the decision maker must provide insights into the problem definition. They are novel, important, and non-routine, and there is no well-understood procedure for making them. In contrast, structured decisions are repetitive, routine, and involve a definite procedure for handling them so that they do not have to be treated each time as if they were new.

Structured and unstructured problem solving occurs at all levels of management. In the past, most of the success in most information systems came in dealing with structured, operational, and management control decisions. However, in more recent times, exciting applications are occurring in the management and strategic planning areas, where problems are either semi-structured or are totally unstructured. Making decisions is not a single event but a series of activities taking place over time. Suppose, for example, that the Operations Manager for the National Milling Corporation is faced with a decision as to whether to establish buying points in rural locations for the grain crop. It soon becomes apparent that the decisions are likely to be made over a period of time, have several influences, use many sources of information and have to go through several stages. It is worth considering the question of how, if at all, information systems could assist in making such a decision. To arrive at some answer, it is helpful to break down decision making into its component parts. The literature has described 4 stages in decision making: intelligence, design, choice and implementation. That is, problems have to be perceived and understood; once perceived solutions must be designed; once solutions are designed, choices have to be made about a particular solution; finally, the solution has to be implemented. Intelligence involves identifying the problems in the organisation: why and where they occur with what effects. This broad set of information gathering activities is required to inform managers how well the organisation is performing and where problems exist. Management information systems that deliver a wide variety of detailed information can be useful, especially if they are designed to report exceptions. For instance, consider a commercial organisation marketing a large number of different products and product variations. Management will want to know, at frequent intervals, whether sales targets are being achieved. Ideally, the information system will report only those products/product variations which are performing substantially above or below target. Designing many possible solutions to the problems is the second phase of decision making. This phase may require more intelligence to decide if a particular solution is appropriate. Here, more carefully specified and directed information activities and capabilities focused on specific designs are required. Choosing among alternative solutions is the third step in the decision making process. Here a manager needs an information system which can estimate the costs, opportunities and consequences of each alternative problem solution. The information system required at this stage is likely to be fairly complex, possibly also fairly large, because of the detailed analytic models required to calculate the outcomes of the various alternatives. Of course, human beings are used to making such calculations for themselves, but without the aid of a formal information system, we rely upon generalisation and/or intuition. Implementing is the final stage in the decision making process. Here, managers can install a reporting system that delivers routine reports on the progress of a specific solution, some of the difficulties that arise, resource constraints, and possible remedial actions. Table 9.1 illustrates the stages in decision making and the general type of information required at each stage. Table 9.1 Stages in the decision making process
Stage of Decision Making Information Requirement 1 Intelligence Exception reporting

2 Design 3 Choice 4 Implementation

Simulation prototype "What-if simulation Graphics, charts

In practice, the stages of decision making do not necessarily follow a linear path from intelligence to design, choice and implementation. Consider again the problem of balancing the costs and benefits of establishing local buying points for the National Milling Corporation. At any point in the decision making process it may be necessary to loop back to a previous stage. For example, one may have reached stage 3 and all but decided that having considered the alternatives of setting up no local buying points, local buying points in all regions, districts or villages, the government decides to increase the amounts held in the strategic grain reserve. This could cause the parastatal to return to stage 2 and reassess the alternatives. Another scenario would be that having implemented a decision one quickly receives feedback indicating that it is not proving effective. Again, the decision maker may have to repeat the design and/or choice stage(s). Thus, it can be seen that information system designers have to take into account the needs of managers at each stage of the decision making process. Each stage has its own requirements.

Components of a marketing information system
A marketing information system (MIS) is intended to bring together disparate items of data into a coherent body of information. An MIS is, as will shortly be seen, more than raw data or information suitable for the purposes of decision making. An MIS also provides methods for interpreting the information the MIS provides. Moreover, as Kotler's1 definition says, an MIS is more than a system of data collection or a set of information technologies: "A marketing information system is a continuing and interacting structure of people, equipment and procedures to gather, sort, analyse, evaluate, and distribute pertinent, timely and accurate information for use by marketing decision makers to improve their marketing planning, implementation, and control". Figure 9.1 illustrates the major components of an MIS, the environmental factors monitored by the system and the types of marketing decision which the MIS seeks to underpin. Figure 9.1 The marketing information systems and its subsystems

or various personnel working in the functional departments holding these pieces of data.The explanation of this model of an MIS begins with a description of each of its four main constituent parts: the internal reporting systems. production. • Product type. Below. Often the entrepreneur. The internal records that are of immediate value to marketing decisions are: orders received. comparing . is a list of some of the information that can be derived from sales invoices. storing. but even this small set of records is capable of generating a great deal of information. size and pack type by • Average value and/or volume of sale by • Average value and/or volume of sale by type of • Average value and/or volume of sale by • Average value and/or volume of sale by sales person territory account industry customer territory account industry By comparing orders received with invoices an enterprise can establish the extent to which it is providing an acceptable level of customer service. the methods (and technologies) of collection. However. stockholding and logistical data. size and pack type by • Product type. either in the form of an individual entrepreneur or in the functional departments of larger businesses. manpower. These are but a few of the internal records that can be used by marketing managers. size and pack type by type of • Product type. In the same way. marketing intelligence system and marketing models. Internal reporting systems: All enterprises which have been in operation for any period of time nave a wealth of information.a fully fledged MIS should have these components. marketing. do not see how it could help decision makers in other functional areas. That is.with many in the industrialised countries being computerised and few in the developing countries being so . this information often remains under-utilised because it is compartmentalised. retrieving and processing data notwithstanding. marketing research system. Similarly. decision makers can fail to appreciate how information from other functional areas might help them and therefore do not request it. It is suggested that whilst the MIS varies in its degree of sophistication . information is usually categorised according to its nature so that there are. for example. financial. stockholdings and sales invoices. size and pack type by • Product type.

suppliers and customers. it is not unintentional Semi-focused Again. consumers or distributors from which the same data is collected at regular intervals. it is a largely informal process of observing and conversing. It involves them in scanning newspaper trade magazines. Marketing intelligence systems: Whereas marketing research is focused. often involving panels of farmers. such as collectors. Enterprises with vision will also encourage intermediaries. Marketing research is a proactive search for information. broadcasts etc. yet they are both proactive. market intelligence is not. Some enterprises will approach marketing intelligence gathering in a more deliberate fashion and will train its sales force. Marketing research systems: The general topic of marketing research has been the prime ' subject of the textbook and only a little more needs to be added here. the scope of the search is likely to be narrow in scope and far less intensive than marketing research Formal search Marketing intelligence is the province of entrepreneurs and senior managers within an agribusiness. Whilst the behaviour is unfocused and the manager has no specific purpose in mind. That is. and pay less attention to political. the marketing manager of a firm considering entering the business of importing frozen fish from a neighbouring country may make informal inquiries as to prices and demand levels of frozen and fresh fish. with trade associations. the manager may focus more on economic and business publications. A marketing intelligence system is a set of procedures and data sources used by marketing managers to sift information from the environment that they can use in their decision making. after-sales personnel and district/area managers to take cognisance of competitors' actions. business journals and reports. data is collected in a purposeful way to address a well-defined problem (or a problem which can be defined and solved within the course of the study). as well as to competitors. international aid agencies. This scanning of the economic and business environment can be undertaken in a variety of ways. scientific or technological media. In addition it involves management in talking to producers. For instance. These monitoring or tracking exercises are continuous marketing research studies. Informal search This describes the situation where a fairly limited and unstructured attempt is made to obtain information for a specific purpose. There would be little structure to this search with the manager making inquiries with traders he/she happens to encounter as well as with other ad hoc contacts in ministries. The information will be required to address a specific issue. the enterprise which commissions these studies does so to solve a perceived marketing problem. In many cases. hears and watches exposes him/herself to information that may prove useful. importers/exporters etc. Moreover. Whilst this sort of activity may seem to share the characteristics of marketing research it is carried out by the manager him/herself rather than a professional researcher. customer complaints and requests and distributor problems. For example. This is a purposeful search after information in some systematic way. . by virtue of what he/she reads. Whilst the ad hoc study and continuous marketing research differs in the orientation. the manager is not in search of particular pieces of information that he/she is scanning actively searching but does narrow the range of media that is scanned.stockholding records with orders received helps an enterprise ascertain whether its stocks are in line with current demand patterns. Nonetheless. The other form of marketing research centres not around a specific marketing problem but is an attempt to continuously monitor the marketing environment. economic forecasts and other media. including2 Unfocused scanning The manager.

Strategic decisions are characteristically one-off situations. These models may be computerised or may not. Brand switching models are stochastic since these express brand choices in probabilities whereas linear programming is deterministic in that the relationships between variables are expressed in exact mathematical terms. inventory records and sales invoices. Strategic decisions have implications for changing the structure of an organisation and therefore the MIS must provide information which is precise and accurate. control (or tactical) and operational. Internal reports include orders received.e. econometric and financial models are the analytical subsystem of the MIS. even if this is likely to be less accurate then more formal and complex information systems. Again. supply. Typical tools are: • Time series sales modes • Brand switching models • Linear programming • Elasticity models (price. organising. Managers play at least three separate roles: interpersonal. MIS has less to contribute in the case of a manager's informational role than for the other two. demand. A marketing information system has four components: the internal reporting system. MIS. Marketing .) • Regression and correlation models • Analysis of Variance (ANOVA) models • Sensitivity analysis • Discounted cash flow • Spreadsheet 'what if models These and similar mathematical. i. the marketing intelligence system and marketing models. the marketing research systems. Control decisions deal with broad policy issues and operational decisions concern the management of the organisation's marketing mix. informational and decisional. statistical. Given the nature of the work. those containing a probabilistic element whereas others are deterministic models where chance plays no part. A relatively modest investment in a desktop computer is enough to allow an enterprise to automate the analysis of its data.retailers. Information systems have to be designed to meet the way in which managers tend to work. incomes. managers tend to rely upon information that is timely and verbal (because this can be assimilated quickly). coordinating. traders and other middlemen to be proactive in conveying market intelligence back to them. Chapter Summary Marketing information systems are intended to support management decision making. Management has five distinct functions and each requires support from an MIS. in electronic form or otherwise. MIS has to support each level. These are: planning. Marketing models: Within the MIS there has to be the means of interpreting information in order to give direction to decision. decisions and controlling. can support these roles in varying degrees. Research suggests that a manager continually addresses a large variety of tasks and is able to spend relatively brief periods on each of these. Three levels of decision making can be distinguished from one another: strategic. etc. Some of the models used are stochastic.

marketing intelligence is less specific in its purposes. 3. What are stochastic models? 2. is chiefly carried out in an informal manner and by managers themselves rather than by professional marketing researchers. Which elements of the marketing environment are mentioned in the chapter? 8. attainable. To which management role does the textbook suggest MIS has least to contribute? 5. measurable and quantifiable objectives The need to set a time horizon for marketing research A reporting period The research proposal Step 1: Problem definition Step 2: Hypothesis generation Step 3: Decision on type of study Step 4: Decision on data collection method Step 5: Development of an analysis plan Step 6: Data collection Step 7: Analysis of data Step 8: Drawing conclusions and making recommendations Chapter Summary Key Terms Review Questions Chapter References . According to Kotler. Key Terms Deterministic Internal Marketing Model Operational Stochastic Strategic Tactical plans models reports intelligence banks decisions models decisions Review Questions 1. what are the contributing elements to an MIS? it 7. What are the 3 levels of decision making outlined in this chapter? 6. By contrast. concise. Name the four components of an MIS. What differences are there between marketing research and marketing intelligence? The Role Of Marketing Research Chapter Objectives Structure Of The Chapter The role and limitations of marketing research A definition of marketing research The purpose of the research Clear.research takes the form of purposeful studies either ad hoc or continuous. What were the functions of management that Henry Fayol identified? 4.

Marketing research is charged with helping to reduce such uncertainties. .In essence. In the social sciences. to achieve the target. decision making research brief proposal. of these alternatives. Chapter Objectives The objectives of this chapter are to: • Define the role of marketing research in • Outline the contents of a • Outline the contents of a research • Explain in detail each of the principal steps in research design... lends itself to deterministic modelling. and Structure Of The Chapter This chapter begins by explaining the limitations of marketing research in so much that it serves to reduce rather than remove the risks attendant to decision making. including: the media used. the phenomenon under investigation rarely.. Consider the marketing problem of determining how much to spend on promotion in order to achieve a given market share. The discussion proceeds to an outline of the research brief which has to be drawn up for the guidance of the individual or group charged with executing the study. and this includes marketing and marketing research. the effectiveness of the promotional message. Marketing managers may seek advice from marketing research specialists. not to mention the many dimensions of the product. However. the length and frequency of the campaign. There are a great many more intervening variables. The role and limitations of marketing research "Marketing research does not make decisions and it does not guarantee success".... Marketing researchers work with probabilistic models of the form: y = f(x1). The link between promotional expenditure and sales is not so direct as that between pressure and temperature. At this point. x is a necessary and sufficient condition for y to occur. it is marketing managers who make the final marketing decision and not the researcher. ". That is. if ever. For instance.but will never remove it. management is about decision making. marketing research will increase the probability that the decisions which management has to take will help attain the organisation's marketing objectives. where possible. Decision is invariably surrounded by uncertainties and. therefore. an increase in pressure is usually necessary and sufficient to bring about a rise in air temperature.(fx2). the researcher has to respond to the brief with a research design. In the fields of science and engineering researchers are often working with deterministic models of the world where y = f(x). that marketing research does not guarantee success. is simply a recognition of the environment within which marketing takes place. The second observation. risks. In this text an eight step research design is proposed and the reader will find a fairly thorough discussion of each of these steps within the chapter. This reflects the fact that in order for a target market share to be reached some promotion (amount unknown) is necessary but will not be sufficient. on its own. At best. and indeed it is important that research reports should specify alternative courses of action and the probability of success.f(xn).. price and distribution.

The new rice mill produced a negligible percentage of brokens. The third of the key terms in the definition given a little earlier was analytical. He/she must also interpret the data in terms of what the it means to the organisation which commissioned the research. In Thailand. The agricultural engineering company went through the expensive and time-consuming process of importing the machine into Thailand. Intuitively a successful product would be predicted. The prospective customer did not see it as a problem at all. Rather the best that a competent researcher and a well designed study will be able to offer is a reduction in the amount of uncertainty surrounding the decision. The marketing researcher's task goes beyond the collecting of data. Knowing that 60% of those interviewed thought that product A was superior to product B is. the information necessary to address the problem. The more effective milling machine simply did not fit into the Thai rice processing system. the methods to be employed in gathering the information and the analytical techniques to be used to interpret it. Such a research plan is only considered adequate if it specifies: the research problem in concise and precise terms. Marketing research seeks to set about its task in a systematic and objective fashion. The machine was introduced into Thailand where existing rice milling machines were of a design which resulted in a high percentage of brokens (broken kernels). it has to be converted into . Data is equivalent to the raw materials of manufacturing. The company's assessment of the market was hardly objective. A definition of marketing research Green and Tull1 have defined marketing research as follows: "Marketing research is the systematic and objective search for. marketing researchers employ the scientific method. It is for these reasons that marketing researchers cannot guarantee that decisions based on their information will always prove 'successful'. Since they do not have sufficient cash to pay for milling their rice they get paid in 'brokens'. systematic. smallholders take their rice to a miller. They saw the 'brokens' as a problem which their product solved. notions and opinions into explicit propositions (or hypotheses). At the same time alternative explanations of the event or phenomena of interest are given equal consideration. They set up extensive distribution and servicing facilities only to be surprised when the mill failed to gain acceptance. information relevant to the identification and solution of any problem in the field of marketing. as far as possible. These are tested empirically. The miller then sells the 'brokens' for animal feed. Maintaining objectivity in marketing research is essential if marketing management is to have sufficient confidence in its results to be prepared to take risky decisions based upon those results. The model is further complicated by the fact that these interactions are themselves often not understood.Y is a function of a number of variables and the interactions between them. and analysis of. This means that a detailed and carefully designed research plan is developed in which each stage of the research is specified. Not many years ago an agricultural engineering company developed an improved rice milling machine. objective and analysis. The characteristics of the scientific method are that it translates personal prejudices." The key words in this definition are. in itself. launched with hardly any need for marketing research when the new mill had such obvious advantages over existing products. of little value. The organisation needs to know the alternative ways it can respond to this data. To this end.

In response.information before it becomes useful in decision making. the sample would . particularly soft drinks. To begin with. at what times of day. They wanted information on the coffee drinking habits of these young people: how much coffee they drank. promotion. In particular. The question remains as to how the researcher decides where to focus the study. instant or ground coffee. and simply never developed the coffee drinking habit. The purpose of the research It is not at all unusual for marketing managers to neglect to tell the researcher the precise purpose of the research. sales. The initial reason for the study had been a suspicion. in practice. and to what depth each issue should be investigated. measurable and quantifiable way • a time horizon • a resource allocation. they simply state what they think they need to know. The market research brief Marketing research can be concerned with any of a variety of aspects of the market: the product. concise. packaging. To appreciate the difference consider the case of the marketing research agency which was contacted by the International Coffee Organisation (ICO) and asked to carry out a survey of young people in the age group 15-24. On such occasions its methods tend to be less theoretically rigorous and its analysis more superficial. Instead. distribution. including the budget and facilities • a reporting period. with meals or between meals. Although the need for precision and thoroughness in marketing research has been stressed here. Since the researcher cannot investigate everything about a market. moreover. Therefore management often seeks answers through marketing research in the shortest time possible and. The process of convening data into information is achieved through analysis. The answer should lie in a document called the research brief. Had this been explained to the research company then it is likely that their proposals would have been radically different. Important information is that information which directly assists in making decisions and the ICO had not told the research company the purpose of the research. there is a perpetual conflict between the demands of expediency and the search for truth. In fact much of the information was interesting rather than important. he/she must be selective. etc. This is not quite the same thing. pricing. The brief must inform the researcher which aspects of the market are particularly important. The research design is a set of guidelines given to the researcher by the person(s) who have commissioned the research and/or the individual(s) who are to make use of the results in their decision making. which other beverages they preferred and so on. buyer behaviour. The reality is that management is frequently under pressure to make timely decisions. attainable. the research brief should include: • the purpose of the research • the objectives stated in a clear. They often do not appreciate the need to do so. the research organisation developed a set of wide-ranging proposals which included taking a large random sample of young people. that an increasing percentage of young people were consuming beverages other than coffee. it is to be remembered that. Each of these components of the brief is explained in a little more detail in the section that follows. at minimum cost. on the part of the ICO.

have been composed of 15-24 year old non-coffee drinkers rather than a random sample of all 15-24 year olds. Clear. Second. the focus would have been non-coffee drinking habits rather than coffee drinking habits. if any. However. line drawings and by supplying product specifications to prospective buyers. attainable. it is concise! Here is another case to be considered. An audit of the environment was undertaken too. product quality or unique product features. . The problem with the objective is that the marketing manager needs to know the potential market for the new tree-lifter is that it is not attainable. In large measure. The product's potential depended very much on such initiatives. The researchers were able to look at precedents. Since the company had no involvement in the agricultural engineering sector.1.e. i. they had no agreements with distributors. They examined the pattern of response on past occasions when one or other of those companies already in the market had launched a new product. A small engineering firm had purchased a prototype tree-lifter from a private research company. and transplanting such trees in another location. attainable. as shown in Figure 1. concise. measurable and quantifiable objectives Suppose that the marketing manager states that he needs to know the potential market for a new product his/her organisation has been developing. they had no salesmen trained in selling into this industry and so on. since the company had not decided their pricing policy an important element could not be tested. This machine was suitable for lifting semi-mature trees. complete with root-ball intact. measurable and quantifiable. no idea of which. it was also possible to gauge the likely reaction from competitors. prior to acquiring the rights to the tree-lifter. concise. One could find out how many treelifters were currently being sold but this is not the same as the objective set by the marketing manager. At first glance this might appear to meet all of the requirements of being clear. but the missing component was the company's' own plans for exploiting the market. In practice it would possibly meet only one of these criteria. It was thought to have potential in certain types of tree nurseries and plantations. The researchers began by looking at the basis of competition to determine whether it was on price.1 The components of market potential It was possible to test customer reaction to the concept of the new tree-lifter by showing pictures. of the distributors would be prepared to stock their product. Figure 1. The market potential for any new brand is a function of at least 4 things. Unless the purpose of the research is stated in unambiguous terms it is difficult for the marketing researcher to translate the decision-maker's problem into a research problem and study design.

money and manpower allocated. competitors and the environment. at the time. management is often seeking quick answers from marketing research.The solution would have been to undertake a study which would have described the market in detail in terms of customers. they can decide how much the management can afford to spend. Management can start with the problem and work out how much it will cost to solve it. In addition there are several characteristics of a good research brief and these are that it: • means the same thing to all concerned • does not ask for irrelevant information • defines the relevant populations to be measured • identifies the correct variables to be measured • specifies the degree of accuracy really needed within the main results • specifies an order of priorities when the sample has to be broken down for the purposes of analysing data for subgroups. In the end. Whichever the approach to resource allocation adopted. because of time pressures. In practice the decision-makers prefer the latter approach and the researchers the former. As was said earlier. some kind of compromise develops. including the budget and facilities There are essentially two approaches to establishing the resource allocation to a particular marketing research exercise. and whether presentations are to be made to a group (nature and size of the group) or an individual. and the deadline for the final report. and . The company could then have put a marketing plan together and conducted a follow-up study to test their propositions out on the marketplace. The need to set a time horizon for marketing research Inevitably there are deadlines which the marketing research activity must fit and these must be stated clearly at the outset of the research. Alternatively. A resource allocation. whether verbal or written. He or she is likely to put forward a design which is less elegant. A reporting period The researcher must also know from the outset of the study the points in time when interim reports are required. The form of interim reports should also be specified at the outset. if any. and gives rise to less precise information but delivers the results on schedule. it is imperative that the researcher is aware of the financial and other constraints within which he/she must complete the work. and seek the best answer they can for the time. The researcher rarely gets all of what he/she judges is required to reach a satisfactory conclusion but if the research proposal is well thought out and persuasively presented some concessions can be obtained. If the researcher is aware of the time constraints then this will become an overriding factor when he/she plans the research design.

The eight steps are set out in figure 1. The research proposal Having received the research brief. the researcher responds with a research proposal. For example.2. responsibility for ensuring that the research proceeds along clearly defined lines rests with the decision-maker. the decision-maker could be asked what he has in mind when he uses the term market potential. This is a document which develops after having given careful consideration to the contents of the research brief. Figure 1. In many instances the researcher has to take the initiative. In situations. they are not willing to fully disclose them. in which the researcher senses that the decision-maker is either unwilling or unable to fully articulate the objectives then he/she will have to pursue an indirect line of questioning. if they have. In theory. One approach is to take the problem statement supplied by the decision-maker and to break this down into key components and/or terms and to explore these with the decision-maker. Decision-makers seldom work out their objectives fully or.2 The research design Step 1: Problem definition The point has already been made that the decision-maker should clearly communicate the purpose of the research to the marketing researcher but it is often the case that the objectives are not fully explained to the individual carrying out the study. These are only briefly discussed here since the remainder of this textbook consists of a detailed explanation of each step. The research proposal sets out the research design and the procedures to be followed. This is a legitimate question since the researcher is charged with the responsibility to develop a research design which will provide the right kind .• does not pre-judge the selection of research techniques and procedures.

Instead. This process frequently proves of great value to the decisionmaker in that it helps him think through the objectives and perhaps select the most important of the objectives. consider the following hypothesis: . rather than variables. the hypotheses specify how the variables are related and that these are measurable or potentially measurable.of information. which are tested. the question is reduced to one or more hypotheses implied by these questions. For example. Other helpful procedures include brainstorming. reviews of research on related problems and researching secondary sources of information as well as studying competitive products.3 Characteristics of a sound definition of the research problem A hypothesis is a conjectural statement regarding the relation between two or more variables. Whilst seeking to clarify the objectives of the research it is usually worthwhile having discussions with other levels of management who have some understanding of the marketing problem and/or the surrounding issues. Step 2: Hypothesis generation Whilst it is true that the purpose of research is to address some question. Figure 1. Kerlinger 2 suggests that a welldefined marketing research problem tends to have three common characteristics as shown in figure 1. There are two key characteristics which all hypotheses must have: they must be statements of the relationship between variables and they must carry clear implications for testing the stated relations. "Does a person's age bear any relation to brand loyalty behaviour?". there may be interest in answering the question: "Does a person's level of education have any bearing upon whether or not he/she adopts new products?" Or. These characteristics imply that it is relationships. For example. Another approach is to focus the discussions with the person commissioning the research on the decisions which would be made given alternative findings which the study might come up with. Research questions are too broad to be directly testable. Statements lacking any or all of these characteristics are not research hypotheses. nonetheless one does not test research questions directly.3.

Three other manufacturers had entered the market by this time.. Animal ." This is a relation stated between one variable. There is a second advantage of stating hypotheses. The rest are merely interesting. usually of a broad nature. "level of education". A problem really cannot be solved unless it is reduced to hypothesis form. This makes them a poor animal feed since the lignin acts against digestibility and the low nutrient content means poor food value. e. Data and questions which enable researchers to test explicit hypotheses are important. "red meat consumption". The company. "There is no relationship between red meat consumption and the level of disposable incomes.4 Three types of marketing research study Exploratory research: The chief purpose of exploratory research is to reach a better understanding of the research problem. This includes helping to identify the variables which should be measured within the study. For example. if treated in a strong alkali. If these problems can be resolved then we may indeed have a hypothesis. other testable hypotheses may be deduced from it. Hypotheses are central to progress in research. i. They will direct the researcher's efforts by forcing him/her to concentrate on gathering the facts which will enable the hypotheses to be tested. The criteria have been met.a farmer's degree of innovativeness. plus a little heat.. even before data is collected." Consider a second hypothesis: "There is no relationship between a farmer's educational level and his degree of innovativeness with respect to new farming technologies.g. However. ". namely that implicit notions or explanations for events become explicit and this often leads to modifications of these explanations. the lignin breaks down and the nutrient content increases. because a problem is a question."Red meat consumption increases as real disposable incomes increase. Figure 1. "disposable incomes". Moreover. When there is little understanding of the topic it is impossible to formulate hypotheses without some exploratory studies. However. Step 3: Decision on type of study Marketing research can be carried out on one of three levels: exploratory. and another variable.e." We may also encounter difficulties in agreeing an appropriate measure of the other variable. both variables are potentially measurable.e. The point has been made that it is all too easy when conducting research to collect "interesting data" as opposed to "important data". After this period sales began to slow down." Again there is a clear statement of the relationship being investigated but there are question marks over the measurability with respect to at least one of the variables i. However for the purposes of statistical testing it is more usual to find hypotheses stated in the so-called null form. descriptive or causal. A company was established to exploit this technology and did so successfully for 4 seasons. and is not directly testable. crop residues such a straw are high in lignin (a wood-like substance) and low in nutrients. On occasion a given hypotheses may be too broad to be tested.

Feed Systems. distributors may not be promoting the product aggressively. there are occasions when the researcher will want to know why a change in one variable brings about a change in another. In some cases. For example. The researcher may. Causal research: Causal research deals with the "why" questions. The principal difference between exploratory and descriptive research is that. If he/she can understand the causes of the effects observed then our ability to predict and control such events is increased. for example. perhaps because of a prior exploratory study. and so on and on. the alternative ways in which products are currently distributed. in the case of the latter. Note that the researcher is able to describe the relationship rather than explain it. did not know whether the whole industry had slowed down or if only their product was suffering. Such research can take the form of literature searches. This is a good example of a situation where insufficient knowledge prevented the development of clear objectives. but in other instances these three typologies will represent phases within a single marketing research investigation. a descriptive study specifies the number and size of market segments. Step 4: Decision on data collection method The next set of decisions concerns the method(s) of data gathering to be employed. descriptive and causal. be able to predict how fast the per capita consumption of red meat is likely to rise over a given time period. a research programme will be of one kind or another. Nor did they know if the problem was temporary in that perhaps the market comprised of "early adopters" had been saturated but it was only a matter of time before other farmers began to buy their systems when they saw how well they worked. informal personal interviews with distributors and users/non-users of the product and/or focus group interviews with farmers and/or distributors. When descriptive research is conducted the researcher must already know a great deal about the research problem. It was also possible that if a problem did exist it could lie in any one of a number of areas: animal populations might be declining. That is. . observation. Exploratory research is intended to help researchers formulate a problem in such a way that it can be researched and suggest testable hypotheses. In summary then there are three distinct types of marketing research study: exploratory. customers may be experiencing difficulties in getting the chemicals. and is in a position to clearly define what he/she wants to measure and how to do it. The main methods of data collection are secondary data searches. This type of study can involve the description of the extent of association between variables. since the problem could not be articulated with any precision and therefore research of an exploratory nature was required. The purpose of each is summarised in figure 1. Typically.4. listing and comparison of the attributes and features of competitive products. the survey. Descriptive research: As the name suggests. the researcher may observe that there is an association between the geographical location of consumers and their tendency to consume red meat. specific research questions have been formulated before the research is undertaken. Nonetheless if the relationship between the two is fairly stable this descriptive information may be sufficient for the purposes of prediction. etc. descriptive research is concerned with describing market characteristics and/or marketing mix characteristics.

Before interviews are conducted the following checklist should be applied: • Is it known how each and every question is to be analysed? (e. The various issues relating to data collection constitute the main body of the text and therefore. have the questions been properly coded? • Have the questions been scaled correctly for the chosen statistical technique? (e. tests of association." Where the data is quantitative there are three determinants of the appropriate statistical tools for the purposes of analysis. or multivariate methods are to be used?) • Does the researcher have a sufficiently sound grasp of these techniques to apply them with confidence and to explain them to the decision-maker who commissioned the study? • Does the researcher have the means to perform these calculations? (e. so they are simply noted here.5 Data collection methods Step 5: Development of an analysis plan Those new to marketing research often intuitively believe that decisions about the techniques of analysis to be used can be left until after the data has been collected. is there sufficient time to complete them and then to check them?) • If a computer program is to be used at the data analysis stage. which univariate or bivariate descriptive statistics. to reveal its characteristic elements and structure.g.a process of resolving data into its constituent components. Each of these topics is dealt with later on.. Step 6: Data collection At this stage the researcher is ready to go into the field and collect data. Thus data analysis can be described as: ".g. are not dwelt upon here. a t-test cannot be used on data which is only ranked) There is little point in spending time and money on collecting data which subsequently is not or cannot be analysed. Such an approach is ill-advised. Therefore consideration has to be given to issues such as these before the fieldwork is undertaken. access to a computer which has an analysis program which he/she is familiar with? Or. the prefix 'ana' meaning 'above' and the Greek root 'lysis' meaning 'to break up or dissolve'. . parametric or nonparametric hypotheses tests. Step 7: Analysis of data The word 'analysis' has two component parts. These are the number of samples to be compared.g.experimentation and consumer panels.. Figure 1. if the calculations have to be performed manually.

each involving different numbers of samples. question in marketing research. The measurement of the responses of fruit juice drinkers to the trial formulation in no way affects or influences the responses of the sample of non-fruit juice drinkers. This question might be asked in either of the two following ways: Please indicate to which of the following age categories you belong (a) 15-21 22 Over 30 years ___ (b) How old are you? ___ Years Table 1. related) or independent of one another (i. but common.1 summarises the mathematical properties of each of these levels of measurement. Suppose however a sample were given two formulations of fruit juice to taste. or related. when the measurement taken from one sample in no way affects the measurement taken from another sample. In many instances the age of respondents will be of interest. Suppose a fruit juice processor wishes to test the acceptability of a new drink based on a novel combination of tropical fruit juices. whether these samples are related or unrelated to one another and the level of measurement then the selection of the appropriate statistical test is easily made. Samples are said to be dependent. This is because the individual will make a comparison of the two products and his/her response to one formulation is likely to affect his/her reaction or evaluation of the other product. samples = 1 Comparing the responses of a sample of regular drinkers of fruit juices to Number those of a sample of non-fruit juice drinkers to a trial formulation. the samples would be considered dependent or related to one another. samples = 2 Comparing the responses of samples of heavy. Take for example the outline of test B above. In this case.e.1 Levels of measurement years 30 years ___ ___ .whether the samples being compared are independent of one another and the level of data measurement. The third factor to be considered is the levels of measurement of the data being used. interval or ratio scaled. Once the marketing researcher knows how many samples are to be compared. i.e. There are several alternative research designs which might be employed. samples = 3 of of of The next consideration is whether the samples being compared are dependent (i.e. the same individuals are asked first to taste formulation X and then to taste formulation Y. ordinal. Therefore. To illustrate the importance of understanding these connections consider the following simple. Test A Test B Test C Comparing sales in a test market and the market share of the product it is Number targeted to replace. Table 1. moderate and infrequent fruit Number juice drinkers to a trial formulation. responses to product X and responses to product Y. unrelated). the samples are independent of one another. Data can be nominal. The researcher would have two sets of sample results. That is.

Marketing researchers have to plan ahead for the analysis stage. allows all statistical tests to be used including the more powerful parametric tests whereby cause-and-effect can be established. It would make sense to coordinate the fieldwork with data analysis so that the interim picture was of either wheat or maize milling since the two are likely to differ in terms . Otherwise the whole exercise becomes increasingly inefficient. since it gives the analyst ratio data. Whether the data is to be analysed manually or through the use of a computer program. Figure 1. cleaned (i. For instance. This may require careful planning of the sequencing of fieldwork. suppose that research was being undertaken within a particular agricultural region with a view to establishing the size. errors removed) and the proposed analytical tests tried out to ensure that they are effective before all of the data has been collected. It often happens that data processing begins whilst the data gathering is still underway. their dependence or independence and the levels of measurement does affect how the data can be analysed. Format (b). on the other hand.6 Selecting statistical tests The individual responsible for commissioning the research may be unfamiliar with the technicalities of statistical tests but he/she should at least be aware that the number of samples. Figure 1. These are at opposite ends of the hierarchy of levels of measurement. A second logistical issue concerns any plan to build up a picture of the pattern of responses as the data comes flowing in.Measurement scale Nominal Measurement Level Frequency counts Examples Producing categories Mathematical properties grading Confined to a small number of tests using the mode and frequency Ordinal Interval Ranking of items Placing brands of cooking oil Wide range of nonparametric in order of preference tests which test for order Relative differences of Scoring products on a 10 Wide range of parametric tests magnitude between point scale of like/dislike items Absolute differences of Stating how much better one All arithmetic operations magnitude product is than another in absolute terms. number and type of milling enterprises which had established themselves in rural areas following market liberalisation. Thus a simple change in the wording of a question can have a fundamental effect upon the nature of the data generated. If by accident or design format (a) were chosen then the analyst would have only a very small set of statistical tests that could be applied and these are not very powerful in the sense that they are limited to showing association between variables and could not be used to establish cause-and-effect. Those who submit marketing research proposals involving quantitative data should demonstrate an awareness of the factors that determine the mode of analysis and a capability to undertake such analysis. where it exists. It may be that the West of the district under study mainly wheat is grown whilst in the East it is maize which is the major crop.6 provides a useful guide to making that final selection.e. This includes ensuring that once the task of preparing the data for analysis has begun there is a steady and uninterrupted flow of completed data forms or questionnaires back from the field interviewers to the data processors. Another important aspect relates to logistics planning. Ratio Choosing format (a) would give rise to nominal (or categorical) data and format (b) would yield ratio scaled data. data can be coded.

within their final report. The manager or other individual initiating the research must provide guidance to the researcher in the form of a research brief. experienced researchers will ensure that the greater part of the report focuses upon 'must know' type information. In order to do so effectively. With respect to the marketing planning function. information that would be useful to have if time and resources within the budget allocation permit (should know) and there will be information that it would be nice to have but is not at all directly related to the decision at hand (could know). Moreover. In writing a research proposal. That is. It is information which management needs to reduce the inherent risks and uncertainties in management decision making. the time by which it must be completed. nor does it guarantee success. data remains of potential.g. This document should state the purpose of the research. Chapter Summary Marketing research serves marketing management by providing information which is relevant to decision making. the researcher should determine what the marketing manager's priorities are with respect to the research study. marketing research has to be systematic. as opposed to actual use. Rather. hammer versus plate mills) as well as screen sizes and end use (e. Step 8: Drawing recommendations conclusions and making The final chapter of this textbook is devoted to the topic of report writing. it is perhaps worth noting that the end products of marketing research are conclusions and recommendations. Too often marketing research reports chiefly comprise a lengthy series of tables of statistics accompanied by a few brief comments which verbally describe what is already self-evident from the tables.g. marketing research helps to identify potential threats and opportunities. to that which is considered 'must know' information. the budget to which the . marketing research helps to reduce the uncertainty surrounding the decisions to be made. In particular he/she should distinguish between what the manager: • • • could know must should know know This means that there will be information that is essential in order for the marketing manager to make the particular decision with which he/she is faced (must know). However. the proportions prepared for animal versus human food).of the type of mill used (e. provides information to enable marketing managers to evaluate those alternatives and advises on the implementation of the alternatives. in the course of the study. experienced researchers would be careful to limit the information which they firmly promise to obtain. generates alternative courses of action. Without interpretation. When conclusions are drawn from raw data and when recommendations are made then data is converted into information. its objectives. objective and analytical. Customer oriented marketing researchers will have noted from the outset of the research which topics and issues are of particular importance to the person(s) who initiated the research and will weight the content of their reports accordingly. Marketing research does not itself make the decisions.

It is only when the analysis plan has been considered that fieldwork. This is followed by the generation of hypotheses. as far as is possible. an exploratory study. Customer oriented marketing researchers will have noted from the outset of the research which topics and issues are of particular importance to the person(s) who initiated the research and will weight the content of their reports accordingly. Tull and Albaum. Where the research is more qualitative in nature then it is still recommended that hypotheses should be developed. This will probably only be done if it is intended that statistical analysis is to be undertaken. questioned and understood the research brief the onus is then upon the marketing researcher to respond by preparing the research design.e. 1 Name the 3 key words used in the definition of marketing research by Green. the null form. 3. in the form of data collection.researcher must work in developing the research design and the timing and frequency of any interim reports which the researcher is expected to make. 2. Key Terms Analysis Causal Continuous Descriptive Exploratory Hypotheses Interval Nominal Ordinal Primary Ratio Research Research Research Secondary research plan research research research research scales scales Scales research scales brief design proposal Review Questions From your knowledge of the material in this chapter. i. give brief answers to the following questions below. What are the main items of information which should be included in a research brief? . The final step in the research design would be to write the report. Having read. These should include alternative hypotheses. i. the researcher has to develop an analysis plan. Define the term 'hypothesis'. depending upon what is already known about the research problem one of three types of study might be undertaken. Research design begins with an accurate and. should be undertaken. Before proceeding further. There will then be an intermediate stage whereby the hypotheses are restated in a testable form. a descriptive study or a causal study. precise definition of the problem.e. What are the 3 types of research described in this chapter? 4.

Name the 3 factors which determine which is the appropriate statistical test to conduct on data obtained from a random sample. Name 4 characteristics of a good research brief. This being the case. 6. choices have to be made between the mathematically superior probabilistic sampling methods and the more pragmatic non-probability sampling methods. 8. Chapter Objectives This chapter serves to teach the reader to: • Distinguish between probabilistic and non-probabilistic sampling • Understand the bases for stratifying • Make an informed choice between random and quota • Comprehend multistage sampling. the requirement that samples be representative of the population from which they are drawn has to be offset against time and other resource considerations. • Appreciate the use of area or aerial sampling. What is the aim of exploratory research? 7. Why is it important to devise a data analysis plan before collecting the data Chapter : Sampling In Marketing Research Chapter Structure Random Systematic Stratified Sample Quota Cluster Area Sampling The Type I Example Chapter Key Review Chapter References Of The Objectives Chapter sampling sampling samples strata sampling sampling sampling testing hypothesis errors size Summary Terms Questions sizes and and errors calculations null and of within multistage statistical type sample II Following decisions about how data is to be collected the next consideration is how to select a sample of the population of interest that is truly representative.5. methods samples samples and Structure Of The Chapter . At the same time.

Figure 7. The first is the desire to avoid bias in the selection procedure. In the purest sense this does not give rise to a true random sample since some systematic arrangement is used in listing and not every distributor has a chance of being selected once the sampling fraction is calculated. stratified sampling and cluster sampling. Thereafter we go through our sampling frame selecting every 5th distributor.2 Systematic sampling as applied to a survey of retailers . the principal non-probability method. if there are 100 distributors of a particular product in which we are interested and our budget allows us to sample say 20 of them then we divide 100 by 20 and get the sampling fraction 5. gives each member of the target population a known and equal probability of selection. Bias in the selection can arise: • if the selection of the sample is done by some non-random method i. Other designs. However. index. can retain the essential element of randomness but manage to increase precision by incorporating various restrictions and refinements. These cause selection or sample bias and can only be avoided if a random method is used.e.1 Methods of sampling It can be seen that there is a dichotomy . The two basic procedures are: 1 the lottery method. To arrive at a systematic sample we simply calculate the desired sampling fraction. to be described shortly. Thereafter.g. A number of illustrative calculations are presented. Random sampling Random.probability and non probability sampling methods. Figure 7. Figure 7.1 gives an overview of the sampling methods that are either explained within this chapter or are explored in the exercises which accompany this textbook. population record) does not adequately cover the target population • if some sections of the population are impossible to find or refuse to co-operate. Two major principles underlie all sample design. systematic sampling. and highlights the advantages and disadvantages of each method. These include simple random sampling. selection is consciously or unconsciously influenced by human choice • if the sampling frame (i. e. quota sampling. The statistical aspects of sampling are then explored. because there is no conscious control of precisely which distributors are selected. picking 2 the use of a table of random numbers. e. the second is to achieve the maximum precision for a given outlay of resources. all but the most pedantic of practitioners would treat a systematic sample as though it were a true random sample. numbers out of a hat or bag Systematic sampling Systematic sampling is a modification of random sampling.The early part of the chapter outlines the probabilistic sampling methods. list. is explained and its strengths and weaknesses outlined.g. or probability sampling.e. The text which follows explains these methods in some detail.

.. 6. how many strata should be constructed and what stratum boundaries should be used? 3 Sample sizes within strata. Thus we may consider that to stratify according to "heavy users". race. prior stratification would not be possible. 3. What might have to be done in this case at the analysis stage is to correct proportional representation. age. then random samples taken within each stratum. 23. i. 22. 21. It is only possible to do this if the distribution of the population with respect to a particular factor is known. only a moderate amount of coffee or drinks coffee very occasionally. 25. what characteristics should be used to subdivide the universe/population into strata? 2 The number of strata.. i. there are 3 key questions which have to be immediately addressed: 1 The bases of stratification. 99 5. 2 7. and if it is also known to which stratum each member of the population belongs. if one wanted to stratify a sample of individuals in a town by age. 10.e.. Sample Numbered Stores 1 2 3 4 5 1. i. the population is divided into a number of strata. 96 12 17. geographical region. how many observations should be taken in each stratum? Bases of stratification Intuitively. 16. 24. but if there is no general population list showing the age distribution. Draw a random number 1-5. When stratified sampling designs are to be employed.Systematic sampling Population = 100 Food Stores Sample desired = 20 Food Stores a... 8. "moderate users" and "light .. 20. Random stratified sampling is more precise and more convenient than simple random sampling. 15. 11. 100 Stratified samples Stratification increases precision without increasing sample size. e. Sample every Xth store. 97 13 18.. Examples of characteristics which could be used in marketing to stratify a population include: income. 9.e. For example. in a study of coffee consumption we may believe that behavioural patterns will vary according to whether a particular respondent drinks a lot of coffee. b.. one could easily get figures of the age distribution. it seems clear that the best basis would be the frequency distribution of the principal variable being studied..e. possession of a particular commodity. Stratification can occur after selection of individuals. Stratification does not imply any departure from the principles of randomness it merely denotes that before any selection takes place. sex.g. 98 14 19. 4. Weighting can easily destroy the assumptions one is able to make when interpreting data gathered from a random sample and so stratification prior to selection is advisable.

If each stratum could be made as homogeneous as possible. e. as many as possible should be used. there is usually interest in many variables. then more strata may be justified. the "residual" or "unexplained" variation will dominate. socio-economic group. computer science.g. geography etc.g. As regards number of strata. Past a certain point. Similarly it is important to maximise differences in stratum means for the key survey variables of interest. If a single overall estimate is to be made (e. Number of strata The next question is that of the number of strata and the construction of stratum and stratification on the basis of one may not provide the best stratification for the others. the population mean could be estimated with high precision. as a whole. Secondly. a point may be reached quickly where creation of additional strata is economically unproductive. and engineering students as a whole. "How big a sample must be drawn from each?" Consider a situation where a survey of a twostratum population is to be carried out: . Stratification removes the second type of variance from the calculation of the standard error.g. If estimates are required for population subgroups (e. history. we stratified students in a particular university by subject speciality . two difficulties may arise in attempting to proceed in this way. The only approach is to create strata on the basis of variables. even if one survey variable is of primary importance. chemistry. that are believed to be highly correlated with the principal survey characteristics of interest. Total variance within a population has two types of natural variation: between-strata variance and within-strata variance. This is desirable since stratification has the effect of removing differences between stratum means from the sampling error. Sample sizes within strata Proportional allocation: Once strata have been established. However. or can be made available. the latter complaint can be attended to since it is possible to stratify after the data has been completed and before the analysis is undertaken. and questioned them about the distinctions between training and education. In this way a relatively limited sample within each stratum will provide a generally precise estimate of the mean of that stratum. in turn. its mean could be estimated with high reliability and. and little improvement will be effected by creating more strata. 2 Depending on the costs of stratification. First. some practical problems limit the desirability of a large number of strata: 1 No stratification scheme will completely "explain" the variability among a set of observations. etc. mathematics. However. firm size. the question becomes. for example. engineering. sex. not just one. However. Stratification ensures that variation between strata does not enter into the standard error by taking account of this source in drawing the sample. The theory goes that without stratification we would expect variation in the views expressed by students from say within the marketing speciality and between the views of marketing students. current data on its frequency is unlikely to be available. In general.users" would provide an optimum stratification. Suppose. the average per capita consumption of coffee) we would normally use no more than about 6 strata. it is desirable to make up strata in such a way that the sampling units within strata are as similar as possible. for which information is. farm size. age. by region and/or age group).

This is termed proportional allocation. The most common approach would be to sample the same proportion of items in each stratum. In this example. Others think that although it is clearly less sound theoretically than probability sampling. Still others believe that with adequate safeguards quota sampling can be made highly reliable and that the extra cost of probability sampling is not worthwhile. Quota v random sampling The advantages and disadvantages of quota versus probability samples has been a subject of controversy for many years. the overall sampling fraction is: Thus. so the available total sample size is 500.000 × 0.Stratum Number of Items in Stratum A B 10.. So: sr = W1 1 + W2 2 + W3 3 + .5%) = 450 × 0. once again.. but we know that the individuals assigned to stratum A were more varied with respect to their opinions than those assigned to stratum B.000 90. this method of allocation would result in: Stratum A (10. Where proportional sampling has been employed we do not need to weight the means of the individual stratum when calculating the overall mean. it can be used safely in certain circumstances. statisticians criticise the method for its theoretical weakness while market researchers defend it for its cheapness and administrative convenience. we had stratum A and stratum B. Some practitioners hold the quota sample method to be so unreliable and prone to bias as to be almost worthless.000 Stratum B (90.5%) = 50 The major practical advantage of proportional allocation is that it leads to estimates which are computationally simple. Generally.Wk k Optimum allocation: Proportional allocation is advisable when all we know of the strata is their sizes.000 If the budget is fixed at $3000 and we know the cost per observation is $6 in each stratum. Quota sampling Quota sampling is a method of stratified sampling in which the selection within strata is nonrandom. Selection is normally left to the discretion of the interviewer and it is this characteristic which destroys any pretensions towards randomness. In situations where the standard deviations of the strata are known it may be advantageous to make a disproportionate allocation. Optimum allocation minimises the standard error of the estimated mean by ensuring that more respondents are assigned to the stratum within which there is greatest variation. Suppose that. Main arguments against: Quota sampling .

did interviewers place respondents in groups where cases are needed rather than in those to which they belong. 3 If fieldwork has to be done quickly. suppose that a survey is to be done in a large town and that the unit of inquiry (i. especially in developing countries where rural areas are sparsely populated and access difficult). and so are the headaches of non-contact and callbacks. 4 Strict control of fieldwork is more difficult.1 It is not possible to estimate sampling errors with quota sampling because of the absence of randomness. but we must remember that precision is lost.. though. 2 The interviewer may fail to secure a representative sample of respondents in quota sampling. 2 It is easy administratively. one has materially simplified and made cheaper the fieldwork. 4. If respondents within clusters are homogeneous with respect to such things as income. For example. One does not have the security. with consequent high fieldwork costs and much inconvenience. One approach would be to pick the 200 by some random method.e. The labour of random selection is avoided. However.g. 1 in 100) and include all the households within these areas in our sample.e. than a small number of large clusters. One might decide therefore to concentrate the sample in a few parts of the town and it may be assumed for simplicity that the town is divided into 400 areas with 50 households in each. are those in the over 65 age group spread over all the age range or clustered around 65 and 66? 3 Social class controls leave a lot to the interviewer's judgement.000 households. the unit from which data are to be gathered) is the individual household. Suppose further that the town contains 20. A simple course would be to select say 4 areas at random (i. Cluster and multistage sampling Cluster sampling: The process of sampling complete groups or units is called cluster sampling. Quota sampling is independent of the existence of sampling frames. e. A quota interview on average costs only half or a third as much as a random interview. this would spread the sample over the whole town. A large number of small clusters is better. Some people argue that sampling errors are so small compared with all the other errors and biases that enter into a survey that not being able to estimate is no great disadvantage. Whether single stage cluster sampling proves to be as statistically efficient as a simple random sampling depends upon the degree of homogeneity within clusters. The overall probability of selection is unchanged. all other things being equal. to obtain immediate public reaction to some event. they do not fully represent the population and will. situations where there is any sub-sampling within the clusters chosen at the first stage are covered by the term multistage sampling. therefore. perhaps to reduce memory errors. quota sampling may be the only possibility. provide . (All the more so if the survey were to be conducted in rural areas. but by selecting clusters of households. socioeconomic class etc. all of them listed on convenient records. of being able to measure and control these errors.e. i. For example. Main arguments for: quota sampling 1 Quota sampling is less costly. and that a sample of 200 households is to be selected.

Multistage sampling: The population is regarded as being composed of a number of first stage or primary sampling units (PSU's) each of them being made up of a number of second stage units in each selected PSU and so the procedure continues down to the final sampling unit. This is the main method of sampling in developing countries where adequate population lists are rare.3 Aerial sampling . In short. then polling districts. The area to be covered is divided into a number of smaller sub-areas from which a sample is selected at random within these areas.e. administrative districts are sub-divided into wards. households or addresses. The necessity of multistage sampling is easily established. in which case we have a two-stage sample. Area sampling Area sampling is basically multistage sampling in which maps. It would be more usual to introduce intermediate sampling stages. with the sampling ideally being random at each stage. urban districts or parliamentary constituencies. PSU's for national surveys are often administrative districts. either a complete enumeration is taken or a further sub-sample. i. the lower cost of cluster sampling often outweighs the disadvantages of statistical inefficiency.larger standard errors. cluster sampling tends to offer greater reliability for a given cost rather than greater reliability for a given sample size. Within the selected PSU one may go direct to the final sampling units. serve as the sampling frame. Figure 7. On the other hand. such as individuals. rather than lists or registers.

roads. canals. If there is an accurate map of the area we can superimpose vertical and horizontal lines on it.4 depicts the procedures involved. Then.3 the columns and rows are given numbers. number these and use them as a reference grid. Sampling points are selected on the basis of numbers drawn at random that equate to the numbered columns and rows of the grid. Using random numbers. railways.g.4 Multistage aerial sampling Suppose that a survey of agricultural machinery/implement ownership is to be made in a sample of rural households and that no comprehensive list of such dwellings is available to serve as a sampling frame. hills or mountains. A variation is to divide the area into "parcels" of land. These "parcels" (the equivalent of city blocks) can be formed using natural boundaries e. such as that shown above. Figure 7. As in figure 7. Alternatively. If sufficient information is known about an area then it is permissible to construct the "parcels" on the basis of agro-ecosystems.A grid. Figure 7. each square in the grid is allocated numbers to define grid lines. If the area is large. This can serve as a convenient sampling frame. sampling points are chosen within each square. The town area is then divided into blocks and these blocks are numbered and a random sample . etc. Figure 7.4 gives an impression of the pattern of sampling which emerges. Using random numbers points can be placed on the map and data collected from households either on or nearest to those points. if the survey is of urban households then clusters of dwellings such as blocks bounded by streets can be identified. is drawn and superimposed on a map of the area of concern. rivers. it can be subdivided into sub-areas and a grid overlayed on these.

then the alternative hypothesis may be accepted. Case (b). we collect data which should yield direct information on the acceptability of that hypothesis. in the above example.e. indicates the predicted direction of the difference and a one-tailed test is called for. The data we collect often requires to be compared and when comparisons have to be made. statistically significant) or whether they are due to random error or chance. or b. we may wish to know whether a particular promotional campaign has succeeded in increasing awareness amongst housewives of a certain brand of biscuit. after the promotional campaign. H1: There is a difference between the proportions of housewives aware of the brand. The null hypothesis is a hypothesis of no differences. before and after the campaign". and we must try and establish whether these differences are real (i. Thus. After the campaign we obtain another measure of the awareness. railway lines and rivers make good boundaries. Before the campaign we have a certain measure of awareness. say y%. Streets. we must take into account the fact that our data is collected from a sample of the population and is subject to sampling and other errors. The remainder of this paper is concerned with the statistical testing of sample data. One assumption which is made is that the survey results are based on random probability samples. H1: There is an increase in the proportion of housewives aware of the brand. . we would expect some differences. on the other hand. The null hypothesis in this case would be that "there is no difference between the proportions aware of the brand. For example. The situation when a one-tailed test is used are: (a) comparing an experimental product with a currently marketed ones (b) comparing a cheaper product which will be marketed only if it is not inferior to a current product. we organise it into frequency distributions and calculate averages or percentages.of them is selected. easily identifiable by field workers and every dwelling must be clearly located in only one block. Since we are dealing with sample results. these statistics on their own mean very little. before and after the campaign. The boundaries of the blocks must be well defined. The alternative hypothesis (H1) is a statement relating to the researchers' original hypothesis. To this end. Case (a) does not indicate the direction of change and requires a TWO-TAILED test. But often. The null hypothesis The first step in evaluating sample results is to set up a null hypothesis (Ho). We formulate it for the express purpose of rejecting it. Sampling and statistical testing Research is conducted in order to determine the acceptability (or otherwise) of hypotheses. Having set up a hypothesis. If the null hypothesis is rejected. the alternative hypothesis could either be: a. This empirical data requires to be organised in such a fashion as to make it meaningful. say x%. Note that these are clearly two different and distinct hypotheses. It is formulated before we collect the data (a priori).

We can of course increase the chance of making a type I error which will automatically decrease the chance of making a type II error. Referring back to our example. We will reject Ho. ratio. There are basically two types of statistical test. e.01 and if we had set our significance level in advance at 0. i. This is the type II error. and (3) the mathematical properties of the scale which we have used. so as to reject the null hypothesis of A = B = 50% at. Type I errors and type II errors The choice of significance level affects the ratio of correct and incorrect conclusions which will be drawn.g. then we require to use a parametric test. a 5% significance level. Non-parametric tests do not require this type of assumption and relate mainly to that branch of statistics known as "order statistics". known as the critical region (or level). and only if. (These issues are covered extensively in the data analysis course notes). If however. Thereafter.e. parametric and non-parametric. if a statistical test yields a value whose associated probability of occurrence is equal to or less than some small probability. Common values of this critical level are 0. then we shall accept the null hypothesis A = 50% on nearly half the occasions as shown in the diagram overleaf. We discard actual numerical values and focus on the way in which things are ranked or classed. that the distribution of the sample means is normal. interval. say.Parametric tests and non-parametric tests The next step is that of choosing the appropriate statistical test.05. If it is more important to avoid .5 Type I and type II errors Correct Conclusion Incorrect Conclusion Accept a correct hypothesis Reject a correct hypothesis Reject an incorrect hypothesis Accept an incorrect hypothesis Consider the following example. If. Given a significance level there are four alternatives to consider: Figure 7. Clearly we can set a sample size. If we get a sample which yields 62% (and there will be 5 chances in a 100 that we get a figure greater than 60%) and the null hypothesis is in fact true. then we make what is known as a Type I error. (2) whether we have more or less than two levels of the independent variable. the choice between alternative types of test is determined by 3 factors: (1) whether we are working with dependent or independent samples. In a straightforward test of two products. the real population is A = 62%. means and standard deviations). This depends on the relative importance of the two types of error. on the other hand. our null hypothesis. If we assume. Obviously some sort of compromise is required. If it is more important to avoid rejecting a true hypothesis (type I error) a high confidence coefficient (low value of x) will be used. 60% of the population prefer the product. In this situation we shall be saying "do not market A" when in fact there is a market for A.01. population values are "parameters". if we had found that the observed difference between the percentage of housewives aware of the brand from pre-to-post-campaign could have arisen with probability 0.e.02 then we would reject the null hypothesis and accept our alternative hypothesis. then we would accept the Ho.05 and 0. Parametric tests are those which make assumptions about the nature of the population from which the scores were drawn (i. for example. we may decide to market product A if. ordinal or nominal. we found the probability of this difference occurring was 0.

therefore. calculate the standard error of the difference and then ask "How far away from the zero difference hypothesis is the difference we have found from our samples?" To enable researchers to answer this question. researchers rarely base their decisions on a single significance test. then refer to a chart to ascertain the probability of such a difference occurring. innocent. a type II error will have been made: the jury has accepted the null hypothesis of innocence when the man is really guilty. a type I error. . 2. then one of the differences is likely to give significant results. If the jury absolves the man. The majority of tests are likely to be parametric tests where researchers assume some underlying distribution like the normal or binomial distribution. in fact. Now. Researchers will obtain a result. if 20 questions were asked in our "before" and "after" survey and we test each question at the 5% level. Most people will agree that in this case. An analogy with the legal profession may help to clarify the matter. make statistical tests on the key questions and look for consistent significances. a low confidence coefficient may be used. These. even if there is no real difference in the population. Economic considerations of alternative actions is often just as important. Example calculations of sample size 1. He/she may have a rough idea of the likely percentage. We must remember that when one makes a series of tests. is the more serious. Then. Statistical significance is not always the only criterion for basing action. a type I error will have been made: the jury has rejected the null hypothesis of innocence although it is actually true. guilty. if consistent patterns emerge. Suppose a researcher wishes to measure a population with respect to the percentage of persons owning a maize sheller. and wishes the sample to be accurate to within 5% points and to be 95% confident of this accuracy. they convert their actual difference into "standard errors" by dividing it by its standard deviation. Consider the standard error of a percentage: Assume that the researcher hazards a guess that the likely percentage of ownership is 30%. of course. Under our system of law. In practice. For example. Significance tests may be applied to the answers to every question in a survey but the results will be only convincing. say a difference between two means. convicting an innocent man.accepting a false hypothesis. We do not usually base our conclusions on the results of one particular question. some of the correct hypotheses will be rejected by chance. but we ask several. in fact. when he is. No mention is made in these notes of considerations of costs of incorrect decisions. we may conduct a product test to find out consumers preferences. a man is presumed innocent of murder until proved otherwise. For example. if a jury convicts a man when he is. are the basic steps in the statistical testing procedure.

But 2. [SE(p)] must equal 5% (the level of accuracy required) i.e.

i.e. It is necessary to take a sample of, say, 340 (rounding up). Generally, then, for percentages, the sample size may be calculated using:

for accuracy at the 95% level. Case 1: In a census taken 6 years ago, 60% of farms were found to be selling horticultural produce direct to urban markets. Recently a sample survey has been carried out on 1000 farms and found 70% of them were selling their horticultural produce to urban centres direct. Situation: Population statistics (P = 60%) are known Question: Has there been a change in 6 years or is the higher percentage (p = 70%) found due to sampling error? When the population value is known, we can know the sampling error and we use this error for the purpose of our statistical test. The standard error of a percentage is always pq/n, but in this case the researcher puts p, the population value, in the formula and uses the size of the sample, n, to ascertain the standard error of the estimate, p = 70%. The null hypothesis for this case is: "There is no difference between the sample percentage of farms selling direct to urban areas and the population percentage of farms found to be selling direct 6 years ago" (i.e. the sample we have drawn comes from the population on which the census was carried out and there has been no change in the 6 years). This must be a 2-tailed test as it could not be assumed that there would either be more or less farms selling produce direct six years later.

Standard error

PQ where Q=100 P

Statistical test:


N.B. This has infinite degrees of freedom.

t=6.45 If reference is made to the table for a two-tailed test with infinite degrees of freedom, it can be seen that t = 3.29 which shows that there is only a 1/1000 chance of our result (p = 70%) being due to sampling error, since 6.45 > 3.29. Researchers realise that the probability of this having occurred because of sampling error must be even smaller than 1/1000. Thus they are able to say that the probability that the percentage of households selling direct is now 70% is at least 999/1000 and that the null hypothesis is refuted at beyond 1/1000 level of significance. If researchers claim this, they shall be wrong less than 1 in 1000 times. Case 2:. Six months ago, it was found from a sample survey that 20% of shoppers in a certain urban area buy fresh fruit from street vendors rather than established shops or supermarkets. A second survey, independent of the earlier one, is carried out on 500 respondents and it is found that 24% of them buy fresh fruit and vegetables regularly from street vendors. Is there any real difference? Situation: The two surveys are carried out on different occasions, so the two samples may well be subject to different amounts of error. Due to this researchers use both estimates of error. Question: Has the percentage of gift shoppers changed? Null hypothesis: There is no difference in the percentages of housewives buying from street _ vendors six months ago and now. This is a 2-tailed test.
Six months ago P1 = 20% n1 = 200 Now P2 = 24% n2 = 500

Standard error of Since P1 is independent of P2


= 3.3% Test of significance

N.B. This has infinite degrees of freedom. Since 1.18 < 1.64, the difference is not significant at even 1/10 (10%) level, so the null hypothesis is not refuted and researchers do not accept that there is any significant change in the percentage of women buying fresh fruit and vegetables from street vendors. Case 3: 54% of rural housewives are found, in a sample of 200, to include fish in their family's weekly diet. However, in a sample of 100 urban housewives only 33% said that fish was a regular part of their diet. Situation: The same commodity is being investigated on the same occasion by listing two parts of a population. Question: Is there any difference between rural and urban housewives in their regular consumption of fish? Null hypothesis: There is no difference between the two social class groups in their regular consumption of fish. This is a two-tailed test.
ABC P1 = 33% n1=100 DE P2 = 54% n2=200

no. = 33 = c1 no. = 108 = c2

Standard error of


This has infinite degrees of freedom).N.44 > 3. Researchers take an average value of p. Thus the difference in fish consumption between rural and urban housewives is significant at beyond 1/1000 level.B. Two months later. 200 housewives are interviewed in June to determine their purchases of a canned fruit juice.B. after an intensive promotional campaign. Case 4:. Since 3. Situation: The same sample is interviewed on two different occasions (or assessing two different products). the null hypothesis is refuted at beyond the 1/1000 level. they are reinterviewed with the same object. Question: Is there any difference in purchases of the product between June and September? Null hypothesis: Purchases % There is no difference in purchases of the product between June and September (A two-tailed test).44 (N. S.E. since they believe both the rural and urban families to be alike and the circumstances of measurement of p1 and p2 are exactly the same. the two-tailed t-value for 1/1000 level of significance for 0 degrees of freedom.1 Significant test t= 3. June September 20 32 Sample size = n = 200 . So = 6.29.

5 0. Table 7. the difference between the June and September purchases is significant at beyond the 1/1000 or 0.5 ( . It cannot assume that simply because the sample mean was 10.25 . Their responses appear in table 7. samples do not and cannot give point estimates. rather than testing hypotheses. the term which takes into consideration how each person behaves both in June and September.5 litres. For example. To calculate this range researchers need to know the standard deviation as well as the mean.e.5 litres that this is necessarily a good estimate of the average purchases of all farmers in the population. In the middle column you will see that researchers have subtracted each of the individual values from the mean.29 with 0.The last term under the square root sign = 2 × Covariance of the two assessments.54 Significance test This has infinite degrees of freedom.1% level.1 below.25 6. Rather a sample will give a range within which it is thought the true population value lies. The standard deviation is calculated as follows: Suppose a small sample of say 8 farmers is taken and asked how much Bugdeath they bought each month. = = 3. like 10. Confidence intervals for the mean Sometimes the task is one of estimating a population value from a sample mean.5 litres per month. (i. Since 3.0 degrees of freedom.5 litres.1 Calculating the mean and standard deviation X Consumption in litres 5 8 8 11 -X -5.X2) 30. In the end column these values have been squared and summed to give the total variance. suppose from a sample of 100 farmers it is found that their average monthly purchases of the Insecticide Bugdeath were 10.5 -2. Their mean consumption is 10.5 -2. Indeed.25 6.25 0. the null hypothesis is refuted at this level).39 > 3.

This is the best estimate that can be given on the basis of such a small sample.96. it is estimated that most farmers buy somewhere between 7. From the standard deviation researchers must now calculate the standard error if they are to project from what are sample figures to the population.5 =5 to 17 litres So. (Students may have to be reminded that if they look up their statistical tables they will see that 95% of the area under the curve equates to a Z value of 1.25 12. The standard error is calculated by dividing the standard deviation by the square root of the sample size.67 and 13.67 litres and 13.25 Total variance = 86. i.96.5±5.83 litres. the calculation becomes: (Standard Error) Confidence Interval = 10. If researchers want to be 95% sure of a correct prediction then they must multiply their standard error by 1.e.5 0. researchers are 95% confident that the true value of farmers' usage of Bugdeath is between 5 and 17 litres.57 rather than 1.25 0.11 11 14 16 X=10.83 =10.) Thus. In other words. the .00 To calculate the standard deviation researchers divide the total variance by the sample size to obtain the standard deviation i. Sampling bias arises when selection is consciously or unconsciously influenced by human choice. only 68% of the values under a normal distribution curve lie between ±1 standard deviation.5 0. Chapter Summary Two major principles underlie all sample design: the desire to avoid bias in the selection procedure and to achieve the maximum precision for a given outlay of resources. This example serves to show the mechanics of the confidence interval calculation and the poor estimates we get from small sample sizes. As those who have studied elementary statistics will know.25 30.96.33 litres.5 ± 1.33 litres.e. viz: Thus the estimate is that the average consumption is 10..5 3.96 × 2.5 litres plus or minus 2. Students who have had a basic training in statistics will also know that if they wanted to be 99% confident then the Z value would be 2.5 0.5 5. researchers can only be 68% sure that the true consumption level is between 7.

the population is divided into a number of strata. Where there is sub-sampling within the clusters chosen at the first stage. That is.all other things being equal . i. the term multistage sampling applies. Systematic sampling is a modification of random sampling. and if it is also known to which stratum each member of the population belongs. and little improvement will be effected by creating more strata (2) a point may be reached where creation of additional strata is economically unproductive. then the final sampling units such as individuals. and so are the headaches off non-contact and callbacks. Some argue that sampling errors are so small compared with all the other errors and biases that not being able to estimate standard errors is no great disadvantage. perhaps to reduce memory errors. the "residual" variation will dominate.e.sampling frame inadequately covers the target population or some sections of the population cannot be found or refuse to co-operate. The process of sampling complete groups or units is called cluster sampling. and if fieldwork has to be quick. Stratification increases precision without increasing sample size. it is not possible to estimate sampling errors. There is no departure from the principles of randomness. the labour of random selection is avoided. Using cluster samples ensures fieldwork is materially simplified and made cheaper. The best basis would be the frequency distribution of the principal variable being studied. Stratification has the effect of removing differences between stratum means from the sampling error.than a small number of large clusters. The population is regarded as being composed of a number of first stage or primary sampling units (PSU's) each of them being made up of a number of second stage units in each selected PSU and so the procedure continues down to the final sampling unit. are those in the over 65 age group spread over all the age range or clustered around 65 and 66? Social class controls leave a lot to the interviewer's judgments. The interviewer may fail to secure a representative sample of respondents in quota sampling. A quota interview on average costs only half or a third as much as a random interview. Some practical problems limit the desirability of a large number of strata: (1) past a certain point. larger numbers of small clusters is better . cluster sampling tends to offer greater reliability for a given cost rather than greater reliability for a given sample size. households or addresses: . It merely denotes that before any selection takes place. Therefore. Random stratified sampling is more precise and more convenient than simple random sampling. quota sampling may be the only possibility. Multistage sampling involves first selecting the PSU. Sample sizes within strata are determined either on a proportional allocation or optimum allocation basis. With respect to statistical efficiency. then a random sample is taken within each stratum. or probability sampling. Random. with the sampling ideally being random at each stage. gives each member of the target population a known and equal probability of selection. did interviewers place respondents in groups where cases are needed rather than in those to which they belong. Quota sampling is a method of stratified sampling in which the selection within strata is nonrandom. It is only possible to stratify if the distribution of the population with respect to a particular factor is known.g. Strict control of fieldwork is more difficult. To arrive at a systematic sample we simply calculate the desired sampling fraction and take every nth case. e. Quota sampling is independent of the existence of sampling frames.

5. Explain the term 'proportional allocation'. This is the main method of sampling in developing countries where adequate population lists are rare. Name the 3 non-probability sampling methods shown in the opening section of the chapter. Explain the term 'primary sampling units 'PSUs' 7. 10. What are the 2 types of statistical tests? 9. 3. Define the term null hypothesis'. rather than lists or registers. Which Z value equates to a 95% confidence level? The Marketing Environment. Key Terms Area Cluster Confidence Degrees Multistage Non-parametric Null Parametric Proportional Quota Random Random Sample Significance Standard Stratified Systematic Type I errors and type II errors sampling sampling intervals freedom sampling tests hypothesis tests allocation sampling number sampling mean test errors samples sampling of Review Questions 1. serve as the sampling frame. Define the term 'random sampling' 2. .Area sampling is basically multistage sampling in which maps. Outline the arguments against quota sampling. 8. 6. Explain the meaning of a 'type I error'. What are the 3 key questions to be posed when employing stratified sampling? 4.

There are three key perspectives on the marketing environment. There may be aggressive competition and rivalry in a market. It is continuously changing. . It includes suppliers that deal directly or indirectly. economics and technology. The internal environment. A company does not generally influence any laws (although it is accepted that they could lobby or be part of a trade organization). and other local stakeholders. and the marketer needs to compensate for changes in culture. It is a more local relationship. Globalization means that there is always the threat of substitute products and new entrants. and the firm may exercise a degree of influence. Micro tends to suggest small. The macro-environment This includes all factors that can influence and organization. politics. consumers and customers. The micro-environment This environment influences the organization directly. The wider environment is also ever changing.The marketing environment surrounds and impacts upon the organization. but this can be misleading. In this context. namely the 'macroenvironment. but that are out of their direct control. and the company needs to be flexible to adapt. micro describes the relationship between firms and the driving forces that control this relationship.' the 'micro-environment' and the 'internal environment'.

Sociocultural forces. wages and finance. Political (and legal) forces. Materials and Markets. The external environment can be audited in more detail using other approaches such as SWOT Analysis. etc. 2. You must consider issues such as: 1. What is PEST Analysis? It is very important that an organization considers its environment before beginning the marketing process. suppliers. and Technological forces. 2. Marketers need to consider the state of a trading economy in the short and longterms. Michael Porter's Five Forces Analysis or PEST Analysis.' Essentially we use marketing approaches to aid communication and change management. ASEAN. You need to look at: 1.g. The organization's marketing environment is made up of: 1. They are generally audited by applying the 'Five Ms' which are Men. Political Factors.How stable is the political environment? 2. The internal environment is as important for managing change as the external.All factors that are internal to the organization are known as the 'internal environment'. The level of inflation Employment level per capita. The micro-environment e.Will government policy influence laws that regulate or tax your business? 3.g. Interest rates.g. Machinery. Economic forces. NAFTA. environmental analysis should be continuous and feed all aspects of planning. staff (or internal customers). These are known as PEST factors. Money. 3. and the spending power of consumers and other businesses. agents and distributors. our external customers. What is the government's policy on the economy? 5. and so on.What is the government's position on marketing ethics? 4. In fact. The political arena has a huge influence upon the regulation of businesses. 3. As marketers we call the process of managing internal change 'internal marketing. Does the government have a view on culture and religion? 6. Is the government involved in trading agreements such as EU. Long-term prospects for the economy Gross Domestic Product (GDP) per capita. office technology. . etc. Sociocultural Factors. our competitors. PEST Analysis. The internal environment e. This is especially true when planning for international marketing. or others? Economic Factors. The macro-environment e.

It is very important that such factors are considered. . Consider the following points: 1.g. it may take one of many different shapes. Does technology allow for products and services to be made more cheaply and to a better standard of quality? 2. Its duration may be as short as a few months for a fad item or a century or more for product categories such as the gasoline-powered automobile. an example of which is shown below: Product Life Cycle Curve The life cycle concept may apply to a brand or to a category of product.How long are the population living? Are the older generations wealthy? 7. Customer Relationship Management (CRM).How much time do consumers have for leisure? 5.Does language impact upon the diffusion of products onto markets? 4. Technology is vital for competitive advantage. books via the Internet. new generation mobile telephones. etc? 4.What is the dominant religion? 2. Factors include: 1.The social and cultural influences on business vary from country to country.What are attitudes to foreign products and services? 3.Do the technologies offer consumers and businesses more innovative products and services such as Internet banking. etc? The Product Life Cycle A product's life cycle (PLC) can be divided into several stages characterized by the revenue generated by the product. banners. If a curve is drawn showing product revenue over time.g. auctions. flight tickets. etc? 3.Does technology offer companies a new way to communicate with consumers e.Do the population have a strong/weak opinion on green issues? Technological Factors.What are the roles of men and women within society? 6. and is a major driver of globalization.How is distribution changed by new technologies e.

As the product progresses through its life cycle.Product development is the incubation stage of the product life cycle. the primary goal is to establish a market and build primary demand for the product class. assuming a skim pricing strategy for a high profit margin as the early adopters buy the product and the firm seeks to recoup development costs quickly. Growth Stage The growth stage is a period of rapid revenue growth. there may be price competition and/or increased promotional costs in order to convince consumers that the firm's product is better than that of the competition. Some firms may announce their product before it is introduced.Promotion is aimed at building brand awareness. The following are some of the marketing mix implications of the introduction stage: • • • • Product . Promotion . During the introduction stage.Generally high. but such announcements also alert competitors and remove the element of surprise. Distribution . The marketing team may expand the distribution at this point. sales will be low until customers become aware of the product and its benefits. Introduction Stage When the product is introduced. The introductory promotion also is intended to convince potential resellers to carry the or few products. sales will increase further as more retailers become interested in carrying it. In some cases a penetration pricing strategy is used and introductory prices are set low to gain market share rapidly. Advertising costs typically are high during this stage in order to rapidly increase customer awareness of the product and to target the early adopters. During the introductory stage the firm is likely to incur additional costs associated with the initial distribution of the product.New product features and packaging options. changes in the marketing mix usually are required in order to adjust to the evolving challenges and opportunities. . the goal is to gain consumer preference and increase sales. Once the product has been proven a success and customers begin asking for it. When competitors enter the market. These higher costs coupled with a low sales volume usually make the introduction stage a period of negative profits. often during the later part of the growth stage. During the growth stage. Samples or trial incentives may be directed toward early adopters. relatively undifferentiated Price .Distribution is selective and scattered as the firm commences implementation of the distribution plan. improvement of product quality. The marketing mix may be modified as follows: • Product . There are no sales and the firm prepares to introduce the product. Sales increase as more customers become aware of the product and its benefits and additional market segments are targeted.

Sales promotions may be offered to encourage retailers to give the product more shelf space over competing products. reducing marketing support and coasting along until no more profit can be made.Emphasis on differentiation and building of brand loyalty. the profitability may be maintained longer. advertising expenditures will be reduced.The number of products in the product line may be reduced. Distribution . they do so at a slower pace. Distribution . Unit costs may increase with the declining production volumes and eventually no more profit can be made. Incentives to get competitors' customers to switch. Harvest it. Price . During the maturity stage. or customer tastes change. Trade discounts are minimal if resellers show a strong interest in the product.New distribution channels and incentives to resellers in order to avoid losing shelf space. increasing usage per customer. the firm generally has three options: • • • Maintain the product in hopes that competitors will exit. or reduced to capture additional customers. Discontinue the product when no more profit can be made or there is a successor product. Promotion . Marketing mix decisions may include: • • • • Product . Competition may result in decreased market share and/or prices.Maintained at a high level if demand is high. The marketing mix may be modified as follows: • Product . The firm places effort into encouraging competitors' customers to switch. While sales continue to increase into this stage. Decline Stage Eventually sales begin to decline as the market becomes saturated. Maturity Stage The maturity stage is the most profitable. Rejuvenate surviving products to make them look new again.Modifications are made and features are added in order to differentiate the product from competing products that may have been introduced.• • • Price . If the product has developed brand loyalty. During the decline phase. Because brand awareness is strong.Increased advertising to build brand preference. Promotion .Possible price reductions in response to competition while avoiding a price war. the product becomes technologically obsolete. and converting non-users into customers. The competing products may be very similar at this point. Reduce costs and find new uses for the product. increasing the difficulty of differentiating the product.Distribution becomes more intensive. the primary goal is to maintain market share and extend the product life cycle. .

Learning Curve Models Stages of The Product Life Cycle . Distribution . Limitations of the Product Life Cycle Concept The term "life cycle" implies a well-defined life cycle as observed in living organisms. For example. cycle life cycle Customer and Society Perspectives 4. the product life cycle concept helps marketing managers to plan alternate marketing strategies to address the challenges that their products are likely to face. Industry versus product 3. Four components of Life cycle Cycle Management 10.• • • Price . 7. but products do not have such a predictable life and the specific life cycle curves followed by different products vary substantially.Stages of the product life 2. Relationships over the 5. Why companies are product life cycle perspective reluctant to use the life cycle concept. Promotion . Prices may be maintained for continued products serving a niche market.Expenditures are lower and aimed at reinforcing the brand image for continued products. Problems created by 15. Combined Summaries of Product Life Cycle Management Articles some 1.Distribution becomes more selective. Objectives From Producer. Consequently. the life cycle concept is not well-suited for the forecasting of product sales.Susman 1989 Marketing or Sales Perspective . managers may conclude that the product is in the decline phase and therefore cut the advertising budget. Benefits of the PLC 6.Prices may be lowered to liquidate inventory of discontinued products. if sales peak and then decline. Final Customer Product 12. Producers Costs 11. thus precipitating a further decline. It also is useful for monitoring sales results over time and comparing them to those of products having a similar life cycle. Life cycle strategies 8. PLC Graphic cycle costs traditional focus 16. Stages of the product life 9. Nonetheless. Channels that no longer are profitable are phased out. Ways to estimate life 14. Trade-off investment Life Cycle Costs study 13. Furthermore. critics have argued that the product life cycle may become self-fulfilling.

e. Industry Life Cycle Versus Product Life Cycle Industry examples . Could have one of the following: Startup Decline Abandon Startup Growth Decline Abandon Startup Growth Maturity Decline Abandon Startup Growth Maturity Revitalization Decline Abandon Startup Growth Abandon Maturity Revitalization Decline Revitalization Decline Production Perspective Conception Design Development Production Logistical Support Customer or Consumption Perspective Operations Support Disposal Note the difference between Revenue Producing Life Versus Consumable Life Perspectives Revenue producing life . forms and brands. convertibles.consumer’s perspective.Automobiles. Edsels Product classes. Steel Product examples . Pontiacs Objectives From Producer.Startup Growth Maturity Decline Abandon The length and sequence between the stages is not predictable.Pontiacs. Customer and Society Perspectives Perspective Objective Methods ..producer’s perspective Consumable life . Automobiles.g.

Sales growth. . Process R&D. Low Plant & Equipment. pollution.e.Producer Maximizing life cycle profits Revenue enhancement and cost reduction (See Susman’s Exhibit 2) Customer Maximize performance Perform life cycle trade-off relative to price and after studies (See White & purchase costs Ostwald 1976) Minimize externalities .Government Relationships over the Products Life Cycle* Production Stages Marketing Stages Strategic objectives Conception. Moderate Process R&D Quality High Product R&D. Quality High Product R&D. Moderate Process R&D &Advertising. High Process R&D. Advertising and Plant & Equipment. Profits vary depending on company’s position in the industry. fines etc. Advertising andPlant & Equipment. regulation. Moderate Advertising and Plant & Equipment. Profits Cash flows& profits Performance indicators Expense indicators Quality Moderate Product R&D. Production & Production & Production Production & Design & Logistical Logistical & Logistical Logistical Development Support Support Support Support Startup Startup Growth Maturity Decline. Price Moderate Product R&D. Revitalize Abandon or Design for low Sales growth production & consumption costs. but Positive & Peak then Decrease.g. Increasing for decrease. Profits Zero Negative. unsafe products Society . increasing. innovator. High Process R&D.. Price Low Product R&D. Laws.

Recognizes that customer consumption costs are important. Measures production. Measures production. The ratio of the operating and support costs to the acquisition costs of a product is an important consideration for the customer. cycle Measures product design & process innovations to lower fabrication & assembly costs e. 3.g. logistical logistical support costs & support costs & consumption consumption costs. Supports a forward pricing strategy based on the experience (learning) curve. production costs. snap together parts. the life cycle concept recognizes that actions taken in the design and development stages to generate revenue and lower costs provide long run benefits. parts reduction. 4. Supports the value chain concept while traditional cost accounting supports the value added concept. For example.. Measures production costs. Provides a long term perspective that produces decisions that lead to better long term results. Measures Measures production. production. Measures production costs.Risks High technological risk for innovator. 2. Charging high prices to enhance revenue invites competitors to enter. logistical support costs & consumption costs. Benefits of Product Life Cycle Perspective The life cycle perspective: 1. . This shows that low consumption costs must be designed into the product. logistical support costs & consumption costs. Recognizes that maximizing revenue and minimizing costs at every stage might not maximize profits over the product life cycle. Traditional costing Life costing R&D treated as Measures period costs. Measures production costs. Traditional accounting systems measure only production costs or the value added by production. costs. Lower market risk for innovator. For example. standardizing the product design to lower costs sacrifices flexibility. High market risk fornoninnovator.

5. 3.5. purchasing. By 2. Short term mentality. quality control or maintenance may shrink as a result of designing more reliable products. i. Why companies are reluctant to use the life cycle concept. delivering products to customers and installing products and training customers to use them. For example. CAM-I Cost Breakdown Structure 1. The PLC perspective also places emphasis on lower logistical support costs such as storing finished goods. 1. Stages in the Product Life Cycle (Czyzewski & Hull 1991) Startup Growth Maturity Harvest . Charge premium prices. Helps provide better information for investment decisions. functions. 2. High hurdle (discount) rates used for investment justification. Benefits not distributed evenly to functional groups. Life cycle strategies 1. Modify the product continuously and compete on the basis of product uniqueness. Standardize the product quickly and compete on the basis of low cost. related to the long run and value chain. life function activities cycle within within stage.plastic and snap together parts.e.. 4. Places emphasis on designing products to lower fabrication and assembly costs. Total Life Cycle Costs = Sum of the costs across all the life cycle stages. and common interchangeable parts. By tasks within activities. 2. using more molded parts . By 3. By 4. stages. such as reducing the number of parts. Cash flow problems. Lack of data needed to understand the product life cycle.

A product life cycle budgeting system is an improvement over traditional budgeting because the underlying assumptions change over the products life cycle stages.refers to balancing process measurements and results measurements based on the critical success factors at each stage. Factors Critical at Each Stage T Critical Factor Time Customer requirements & T satisfaction quality Target pricing T T Analysis Startup Entry Growth Maturity Decline Withdrawal T T T T T T T T T T Resource requirements T Continuous improvement T Cash flow T T T T T T T T T T T T T 3. The Life Cycle Model has Seven Stages Analysis Startup Entry Build or Growth Maturity Decline Withdrawal 2. Advanced Cost Management Systems (based on a process view of the business) provide the link between the budgeting process and the reporting process. Four Components of Life Cycle Management (Adamany & Gonsalves 1994) 1.allows managers to evaluate a company’s investments as a whole. 4. The portfolio approach helps managers smooth the peaks and valleys of the . A Balanced Set of Performance Measures . Portfolio Theory .

It is also helpful in planning resource requirements and budgets at each functional level. Logistics. A trade-off investment study is illustrated below based on an example provided by White and Ostwald (1976). 4. Net disposal costs. 5. costs. An aerospace firm requested bids on a vacuum chamber designed to simulate high altitude pressures for electronic equipment. Marketing. Service. Design. Producers Costs . Production. Product Characteristics Product price Product from Vendor A Data* Costs $200. they used a two year life for the equipment and did not discount the cash flows. delay. cash using investments. 5. revitalization Life Cycle Costing Trade-off Study .Consumption Perspective (White and Ostwald 1976) The life cycle concept is obviously important from the consumption perspective. Two vendors submitted bids and data that are used in the cost calculations in the table. The idea was to illustrate the type of analysis that needs to be performed. 2. Cost of 3. Product & process conception. as well as measuring the effects of various "investment kickers". costs. Maintenance 7. To keep it simple. Final Customer Product Life Cycle Costs (Artto 1994) 1. it helps show how mature. Purchase delivery Installation Operating Support & problems and price. Guarantees. 6. costs. For example.000 Product from Vendor B Data* Costs $170. 6.investment cycle. 3. 7. 8. 2. development.(Artto 1994) 1. cash generating investments can be used to fund startup. Product 4.000 . costs.

000 1 man $8 per hour 2.880 2 weeks i.920)(8kwh)(.e.Life Installation costs Labor requirements Labor rate Machine run time Labor costs Maintenance rate Corrective maintenance: 2 years 3.114 * Data from vendor specifications and local management estimates.314 $297.025) (2yrs) 9 kilowatt hours $.000 After 180 hours of use.. 4 hours per service 864 (2.920 per year (2.025 (2. .920)(2 men)($8)(2yrs) $6 per hour 300 hours 93.e.400 Parts & Supplies cost (% of product 1% price) Input power: Kilowatt hours per 8 kilowatt hours machine hour.720 2 years 4. 15. Costs cycles) (Round (2..920÷500)(40)($6)(2yrs) 2.920)(9kwh)(.920)($8)(2yrs) labor $6 per hour 500 hours 46.360 (2. Cost per hour.440 Mean time between failures. Power costs Total kilowatt $.632 1. 1 week (i.920÷300)(80)($6)(2yrs) 9. 40 hours) Mean time to repair. (2.920÷180)(80)($6)(2yrs) 2% 3. 80 hours.025 (2.920÷160)(4)($6)(2) 2.920 per year (2. 8 hours per service.000 2 men $8 per hour 2.025) (2yrs) 1.600 Preventive maintenance: CycleDowntime Cost (Round cycles) After 160 hours of use.168 $256.

3. 2. 2.estimate costs of DM. 3. Need target cost strategy.need horizontal communication and control. Need to eliminate variance analysis.. (See CAM-I Figure 2-3 and Figure 2-4). Consumer Perspective Purchase Operating Support Maintenance Disposal Societal Perspective Disposal costs plus externality costs. Life cycle costs include the producers cost. Shields and Young make a distinction between life cycle costs and whole life costs.A note on Shields and Young 1991 80-85% of the life cycle costs are committed early in the products life cycle.need cross-functional teams including both design and manufacturing engineers. Too much hierarchy. Parametric models use non-linear regression models. 4. .g.estimate costs based on similar component or product. 5. $1 spent on pre-manufacturing activities can save $8-$10 on manufacturing and post manufacturing costs. Analogy . Over the wall structures . (See the Hertenstein & Platt summary).need employee empowerment. Need flatter organizational structures. Vertical organizations have a myopic focus . Industrial engineering and cost accounting . There are three ways to estimate life cycle costs: 1. Whole life costs include the consumers costs as well as the producers costs. e. Problems created by traditional focus: 1. Too little employee participation . Standard cost for planning and control. DL and the usual overhead application. health costs from pollution.

. In the second article the authors emphasize how to deal with changes in the competitive environment. For more on the process-product matrix see the Hayes & Wheelwright summaries. Services marketing Services marketing has incurred an explosive amount of scholarly research in the last 20 years. how to compete. a set of concepts and a body of . many do move down the diagonal of the matrix as indicated by the arrows.The Process-Product Matrix Two articles by Hayes and Wheelwright combine the stages of the process life cycle with the stages of the product life cycle. The idea conveyed in the matrix is that products tend to evolve from low volume. Although some products do not evolve in this way. and in some cases to higher-volume commodities. however since 1986 there has been no debate concerning the notion that services are distinct from products. In the first article the emphasis is on competitive strategy. one of a kind specialty items. Both articles use the process-product matrix illustrated below as a basis for discussing strategy. and thus deserve a special approach. i.e. The matrix shows a different view of the product life cycle than most of the articles mentioned above. to higher volume major products. to multiple low volume products.

The actors are 'live' and performing (producing) at the same time as the audience are watching (consuming). 2006) as "deeds. Firstly there is no stock. This brings us to the concept of interactive marketing. These factors make it harder to consistently give quality service. & Bitner. not only because of the random and unpredictable nature of the animals. If you buy a Ford Focus here in Australia. there is difficulty in patenting them. in which tangible output and discrete transactions were the focus. and relationships are central (Vargo & Lusch. highlighting why services marketing is different from basic product marketing. Four idiosyncratic features of services will now be given. pot plants etc). Marketers main concern would be the procedure for when things do not go as planned. and there will be different customers each time. Fisk. 1998). The final distinction that differentiates services from products is their perishability. operational staff carries out much of the marketing function (Klassen. and then finish with an explanation of the extra P's found in the services marketing mix. And finally. Russel. chances are they will both be exactly the same. tables. 1994). meaning they differ with each use. which is important to marketers because customers will have a particular set of expectations in mind. and performances". and performances for the benefit of another entity or the entity itself. the photo taken of you riding the rollercoaster. Services are defined in (Zeithaml. Bitner. making it hard for marketers to advertise the quality of the service. and then go and buy the same model in America. evolving from a goodsdominated view. making it easy for other firms to copy your service. Another distinguishable feature about services is the fact that it's both produced and consumed at the same time. A good metaphor for this is being at the theatre. processes. resold or returned at all. to a service-dominant view. It will begin by defining services marketing and giving some background knowledge on its divergence from product marketing. Vargo and Lusch define services as the application of specialized competences (knowledge and skills) through deeds.knowledge (Brown. This essay will explain the distinguishing features of services marketing. because services don't physically exist. even though during a service physical evidence will be apparent in the form of things like medicine the doctors prescribes to you. Arguably the most distinguishing feature about services is their intangibility. Another notable aspect about products is that on average they stay the same. services simply cannot be stored. as opposed to products where customers do not see how the product is manufactured. and marketers are left to the advertising and promotion. but the guide may be in a different mood. For example a wildlife tour will never be the same twice. It will then examine the four characteristics of services. 2004). & Gremler. & Chrisman. While some products perish very quickly (like water balloons). or the food on your plate in a restaurant. Customers cannot simply return the service and ask for another . In a service. the weather will have changed. Consumers can be compared to an audience. where they watch actors (employees) perform on stage (physical location like a business store) amongst props (physical objects like chairs. saved. in which intangibility. This invisibility creates a number of issues for marketers. None of these are physical objects in which a customer can take ownership of. exchange processes. Secondly services cannot be shown or displayed to customers. processes. Services are different in that they are heterogeneous. based primarily on what was promoted in the service and previous experiences in the particular industry. making it hard to manage supply and demand. giving examples where possible. In the last century there has been a large shift in marketing thought.

The process is important because people participate in it. mechanisms and flow of activities by which the service is delivered. Services marketing differs from product marketing from the fact that three extra P's are added to the original marketing mix. During that installation the buyer may form an opinion of the service provider as a whole based purely on that IT professionals performance. The sixth 'P' is physical evidence. no matter how small their role may be. which comprise of everyone that influences the buyer's perceptions. define it as the environment and its instruments. With product marketing the marketing mix includes the four P's. For example in white water rafting a customer might be dissatisfied if. What is services marketing? . It is crucial that marketing managers address consumer fears regarding risk that results before. When purchasing a service. Services are distinguished from products by four characteristics. the perceived quality of service drops. and after consumption of credence services. making it a hot topic for not only marketers. especially with credence service's like financial advisors or legal advice. making their performance and appearance critical to gaining a high perceived quality of service. for example a dentist or lawyer. If passengers are forced to wait a long time for their flight. in an attempt to make up for their failing service. This would usually come in the form of a professional looking workspace. Sometimes a person is the sole service provider. and their perishability. intangibility. and when these are not met. price. It also includes any physical objects that assist in the delivery of the service. it is up to the service provider to offer the customer some kind of compensation. Since the customer does not have the knowledge or experience to judge the actual service. including the procedures. customers often have a set of expectations of the process of the service. they were told they had to carry the raft to the top of the river first. unlike products. Services Marketing and the Extended Marketing Mix (7P's). however would change with each service provider. physical evidence and process. Customers have an active role in the production. product. Services represent at least 70% of the nation's total GDP for at least 5 countries. Finally there is the service process. people. and thus can influence the outcome of their own service or the service of others. place and promotion. they are heterogeneous. For example a large family with screaming children interrupting a young couples romantic dinner at a restaurant. they instead turn their attention to other things. For example in a doctors surgery cleanliness would be expected. including the buyer themselves. there is simultaneous production and including the physical evidence of service quality. Firstly there is people. Services use the same elements plus three more to help account for their unique nature. including the United Kingdom and Australia. during. employees could provide free coffee and refreshments while they wait. where the process is behind doors. Every person is important to the marketer. when they arrived. Consider an IT professional who installs computers in people's homes. which is the environment in which the service is delivered and where the firm and customer interact. With some services customers may find it hard to judge the quality of the service. but anyone competing in the business world.

e. and from the provider of the service. and even then it will be staged in a different place with many different finalists.A service is the action of doing something for someone or something. motor insurance may have a certificate. the engineer or his equipment. material) since you can touch it and own it. not material). you cannot take a live theatre performance home to consume it (a DVD of the same performance would be a product. It is largely intangible (i. and then return the next day and have a poor experience. once a 100 metres Olympic final has been run. Variability. For example. but the financial service itself cannot be touched that once it has occurred it cannot be repeated in exactly the same way. Western economies have seen deterioration in their traditional manufacturing industries. Right of ownership . but you do not own the service. A service tends to be an experience that is consumed at the point where it is purchased. A person could go to a café one day and have excellent service. since you merely experience it. Intangible .e. process and people. and a growth in their service economies. and cannot be owned since is quickly perishes.from the point where it is consumed. For example. returning to the same garage time and time again for a service on your car might see different levels of customer satisfaction. it is intangible. For example. For example.since the human involvement of service provision means that no two services will be completely identical. Perishable .e.and cannot have a real. A product is tangible (i.physical evidence. Service Marketing Mix . there will be not other for 4 more years. and do not take ownership of it. or speediness of work. also known as the 7P's . not a service).is not taken to the service. physical presence as does a product. an engineer may service your air-conditioning. For example. Therefore the marketing mix has seen an extension and adaptation into the extended marketing mix for services. You cannot sell it on once it has been consumed. So often marketers talk about the nature of a service as: Inseparable .

Many British organisations aim to apply for the Investors In People accreditation. The service marketing • • • • • • • • Physical evidence. so the attitude. as well as briefing him or her on dayto-day policies and procedures. people buy from people that they like. Remember. and aspects of the customer experience are altered to meet the 'individual needs' of the person consuming it. training centre or conference . Recruiting the right staff and training them appropriately in the delivery of their service is essential if the organisation wants to obtain a form of competitive advantage. vacation or restaurant meal. Consumers make judgements and deliver perceptions of the service based on the employees they interact with. training of bar staff. Training. skills and appearance of all staff need to be first class. mix comprises off Product the 7’p’s. which tells consumers that staff are taken care off by the company and they are trained to certain standards. In practice most training is either 'on-the-job' or ' Staff should have the appropriate interpersonal skills. Off-thejob training sees learning taking place at a college. A training and development plan is constructed for the individual which sets out personal goals that can be linked into future appraisals. aptititude. The induction will involve the person in the organization's culture for the first time. as part of the marketing mix . personal selling and customer service. These include: Price Place Promotion People Process Lets now look at the remaining 3 p’s: People An essential ingredient to any service provision is the use of appropriate staff and people. People are the most important element of any service or experience. and service knowledge to provide the service that consumers are paying for. Training should begin as soon as the individual starts working for an organization during an induction. Here are some ways in which people add value to an experience. Services tend to be produced and consumed at the same moment.g. let us now look at the marketing mix of a service. Most of us can think of a situation where the personal service offered by individuals has made or tainted a tour.Having discussed the characteristics of a service. All customer facing personnel need to be trained and developed to maintain a high quality of personal service.' On-the-job training involves training whilst the job is being performed e. At this very early stage the training needs of the individual are identified.

or communicating with a salesman). Customer services provided expertise (e. Some see processes as a means to achieve an outcome. Their in-depth knowledge supports them as they advise customers on the best purchase for their needs. . This is tough selling. or mail. or 7P's. Imagine you walk into Burger King and you order a Whopper Meal and you get it delivered within 2 minutes. It's best viewed as something that your customer participates in at different points in time. Customer services can add value by offering customers technical support and expertise and advice. Here are some examples to help your build a picture of marketing process. there are creative sellers. The disposition and attitude of such people is vitally important to a company. What was the process that allowed you to obtain an efficient service delivery? Banks that send out Credit Cards automatically when their customers old one has expired again require an efficient process to identify expiry dates and renewal. Personal Selling There are different kinds of salesperson. and these may be either 'internal' or 'external. Today. controlling service engineers.g. actually closing the sale is not of great importance at this early stage.g. customer service can be achieve a 30% market share a company implements a marketing planning process. An efficient service that replaces old credit cards will foster consumer loyalty and confidence in the company. The forth type is the technical salesperson. processes that measure the achievement marketing objectives.' The internal sales person would take an order by telephone. but not particularly customer focused.e. The second type is the order taker. and tends to o ffer the biggest incentives.facility. Attention needs to be paid to Continuing Professional Development (CPD) where employees see their professional learning as a lifelong process of training and development. For the purposes of the marketing mix. offering advice on IT and software) and coordinate the customer interface (e. a technical sales engineer. on the selection of financial services). email or over a counter.telemarketing and Internet marketing can be integrated. The external sales person would be working in the field. and selling is of less importance e. i. the salesperson builds goodwill with customers with the longer-term aim of generating orders. for example . process is an element of service that sees the customer experiencing an organisation's offering. services and experiences are supported by customer services teams. from the customer's point of view. fast food. over the telephone or using the Internet. In both cases little selling is done. Another view is that marketing has a number of processes that integrate together to create an overall marketing process. All views are understandable. The skill is identifying the needs of a customer and persuading them that they need to satisfy their previously unidentified need by giving an order.g. Finally. and so effective customer service is vital. Process Refers to the systems used to assist the organisation in delivering the service. or improving or ruining a company's reputation. as with those missionaries that promote faith. People tend to buy from people that they like. Creative sellers work to persuade buyers to give them an order. A further view is that marketing processes are used to control the marketing mix. Customer Service Many products. Again.There are a number of perceptions of the concept of process within the business and marketing literature. e. Process is another element of the extended marketing mix.g. technical support(e.g. The next sort of sales person is the missionary. His or her main task is to deliver the product. Here. There is the product delivery salesperson. The way in which a complaint is handled can mean the difference between retaining or losing a customer. for example .

Processes essentially have inputs. Strictly speaking there are no physical attributes to a service. At each stage of the process. you arrive at your destination. On an aircraft if you travel first class you expect enough room to be able to lay down! Physical evidence is an essential ingredient of the service mix. friendly environment. Booking a flight on the Internet . Take a look at the lesson on value chain analysis to consider a series of processes at work. including some of the following: . physical evidence and people enhance services. Marketing adds value to each of the stages. consumers will make perceptions based on their sight of the service provision which will have an impact on the organisations perceptual plan of the service. If you walk into a restaurant your expectations are of a clean.from the moment that you arrive at the dockside. There are many examples of physical evidence. throughputs and outputs (or outcomes). Your ticket/booking reference arrive by e-mail or post.Going on a cruise . experiencing a similar service at the same time. and other serves or products are extended and marked to them. you are greeted. markets: • Deliver value through all elements of the marketing mix. This is a highly focused marketing process. You have two weeks of services from restaurants and evening entertainment. This is all part of the marketing process. You catch your flight on time. • Customers are retained. Physical evidence is the material part of a service. to casinos and shopping. • Feedback can be taken and the mix can be altered. and arrive refreshed at your destination. Physical Evidence Where is the service being delivered? Physical Evidence is the element of the service mix which allows the consumer again to make judgements on the organisation. • The process itself can be tailored to the needs of different individuals. You enter details of your flights and book them. so a consumer tends to rely on material cues.the process begins with you visiting an airline's website. your baggage is taken to your room. and your baggage is delivered to you. Finally. Process.

The stadium itself could be impressive and have an electrifying atmosphere. . and your seats are comfortable and close to restrooms and store.• • • • • • • • • • Packaging. Brochures. Business cards. . Uniforms. You travelled there and parked quickly nearby. and large banks and insurance companies (e. Internet/web pages. A sporting event is packed full of physical evidence. All you need now is for your team to win! Some organisations depend heavily upon physical evidence as a means of marketing communications. Lloyds of London). tickets and despatch notes). parcel and mail services (e. for example tourism attractions and resorts (e. .g. . Signage (such as those on aircraft and vehicles).g. Paperwork (such as invoices. Disney World). . Furnishings. Your tickets have your team's logos printed on them.g. and players are wearing uniforms. The building itself (such as prestigious offices or scenic headquarters). Mailboxes and many others . To summarise service marketing looks at: . UPS trucks).

of a of Intangibility Perishability service that ownership are: Inseparability The Service marketing mix involves analysing the 7’p of marketing involving.The Characteristics (1) Lack (2) (3) (4) (5) Heterogeneity. process to manage then with a product. Price. Promotion.e. Process and People. Place. to standardise a service is far more difficult as there are more input factors i. . physical evidence. Physical Evidence. people. Product. To certain extent managing services are more complicated then managing products. products can be standardised.