Marketing definition

Marketing is the social and managerial process that addresses the needs through processes
of creating and exchanging products and values. It is the science to identify, create and
deliver value to meet the needs of a reference market, making a profit » Philip Kotler
"Marketing is the process that plans and realizes design, price policy, promotion and
distribution of ideas, goods and services designed to create markets and meet individual
and organization goals" American Marketing Association
"The idea is that the industry is a process of customer satisfaction, not a process of
production of goods" (Theodore Levitt) The Foundation of Marketing as a Scientific
Discipline.
Marketing term, in its modern meaning, includes any activity inherent in the movement of
goods from the point where they were produced to the one they are consumed. It
therefore includes advertising, promotion, pricing, product planning and market analysis, in
terms of current and potential consumers.
The only purpose of companies must be to reach customer satisfaction because it is the
customer who determines exactly what the business is and every business has only two
basic functions: MARKETING and INNOVATION which can not be considered as two
separate functions of the rest of the 'company.
Marketing is the set of activities undertaken
by the company to meet needs through
exchange processes
 History of the term MARKETING
The term "marketing" was used for the first time in the USA around 1910, although the origins of this technique date
back to the mid-seventeenth century in Japan.
It is said that a merchant from Tokyo constantly visited his customers only to listen to them and to understand what
their needs and wishes were. He collected this kind of information and started to find or create what they had asked
for.
Another process that has favored the concept of marketing is that of the First and Second Industrial Revolution in
Great Britain during the second half of the 1700s and mainly concerned the metallurgical and textile sectors, with
the invention of the flying quill, a wooden tool on which the yarn was wrapped and ran along the weaving frame.
Between 1910 and 1920 the first institutions and organizations that brought together the regular traders of this
sector came to the United States; in the 1930s, the first courses in marketing, distribution, sales, and techniques to
get to know the market, in other words market research, began in American universities.
The diffused sales process and the size of the US market, which is difficult to cover in a capillary manner, have
characterized the development of this discipline, focusing on operators mainly on the distribution market. Market
analysis and sales opportunities have come to the fore in this way. Towards the end of the 1950's and early sixties,
marketing came to Italy, favored by increased availability of goods and services.
Concepts related to marketing term  SOCIAL PROCESS

• LISTENING
• INTERACTION
• COMMUNICATION
• CREATION OF VALUE
• RELATIONSHIP
• Everything revolves around the consumer and his satisfaction. The
purpose of marketing is to create value around the company, brands,
products or services
The marketing-oriented company does not try to sell everything
it produces but produces what it can sell (Philip Kotler, 1965)
SALE ORIENTATION MARKETING ORIENTATION

• Product • Needs
• Promotion and sale • Production related to needs
• Profit bounded to production • Profit linked to customer
volumes satisfaction
 Main marketing activities

Marketing environment analysis

Consumers’ needs analysis ANALYTICAL MARKETING
Competitors’ analysis

Target selection and positioning

Creation of new products/services
and reparing current products STRATEGIC MARKETING

Product
Price
OPERATIVE MARKETING
Placement
Promotion
Analytical Marketing

In analytical marketing, various tools are identified through which market

they can be carried out using quantitative parameters.
The aim of this kind of analysis is to have a framework for the development
of marketing strategies. Thanks to the theoretical-logic formulas and the
numerous variables on which analytical marketing is based, you will be able
to make an eevaluation of the market and its potential, defining above all the
absolute market share . In general, two macro-spheres of analysis can be
identified: one for competition and market physiology and demand. It is a
necessarily multidisciplinary approach since the dimensions to be analyzed
are the most varied.
Analytical marketing is therefore the collection of data that becomes key
information for strategic planning.
ANALYTICAL MARKETING is based on the collection of information related to market demand, that is, the
total volume of a product (Y) that would be purchased by a given group of customers (a), in a specific
geographical area (b) and in a period of defined time (c):

(a) • Age, • Sex, • Social Condition, • Cultural Level, • Family Composition, • Work Activities
(b) • Customer • Province • Region • State • World
(c) • Short Period • Middle Period • Long Term
(Y) • Single Product • Product Group • Product Line • Industry Sales • National Sales

HISTORICAL ANALYSIS
The series of past sales of a product can be analyzed in its four main components:
Trend (T) = Result of population development, capital accumulation process, technological evolution
Cycle (C) = indicates oscillatory sales movement
Seasonality (S) = refers to changes in recurring sales on an hourly, weekly, monthly or quarterly basis
Accidental Events (E) = all unpredictable components. They should be eliminated from past data in order
to detect normal sales behavior
Alcune delle principali fonti di dati

• ISTAT ( ISTAT (www.istat.it www.istat.it): censimenti su popolazione,

industria e servizi, ): censimenti su popolazione, industria e servizi,
indicatori congiunturali, attitudini e comportamenti sociali, ec indicatori
congiunturali
• SITI ISTITUZIONALI dei Ministeri (es. l’Osservatorio sul commercio del
Ministero dell’ ’Industria – www.minindustria.it), Regioni, Unioncamere,
Banca d’Italia, Istituti di ricerca (Tagliacarne, Censis, ecc.)
• ASSOCIAZIONI DI CATEGORIA: es. Assinform (www.assinform.it)
Associazione nazionale degli Artigiani ecc
• QUOTIDIANI E PERIODICI: Affari&Finanza, Corriere Economia, Il Sole24Ore,
Il Mondo, L’Impresa, Largo Consumo, Mark Up, ecc.
Competitors’ Analysis

# 1 - Finding the Competitors: Identify and select with great care the specialized companies in the
sale of your own products-services OR make analyzes on the internet
# 2 - Collection of Competitors’ Information: Budget; financial balances and economic and financial
indicators; corporate structure (shareholders and quotas); corporate offices covered by the
exponents in other companies; information about any negatives
# 3 - Processing the information : Creating tables, charts or spreadsheets on sold products, turnover,
risk rate, return on investments and annual growth rate
# 4 - Analysis of the organizational structure of competition: it allows to understand the corporate
structure and hierarchies. Turnover ratio / employees; help from external consultants and for which
sector. Often, it's complicated to find these info but the internet is back to us again thanks to
Linkedin
KNOW THE COMPETITORS

• Number of competitors, their size, degree of competitiveness, strengths and weaknesses, growth
rate
• Create a competitive map, entry barriers in the various placements: styling, price, technology,
range, brand
• Reference segment
• Type of competition: pioneer, followers, aggressive, weak, winning
• Production, sales and distribution structure
• Degree of market coverage
• International level
 FACTOR MY BUSINESS STRENGTH WEAKNESS COMPETITOR A COMPETITOR B

Product

Price

Quality

Selection

Service

Reliability

Stability

Expertise

Company Reputation

Location

Appearance

Sales Method

Credit Policies

Advertising

Image
Strategic Marketing refers to all the techniques used to create a plan of actions to drift the success of
a brand, Company or product. In fact, every company needs to plan long-term goals, usually three to
five years, that take into account overall profitability and product portfolio, aiming at maximizing
revenue and achieving results.
Strategic marketing is strongly bound to the analytical one: after having deeply analyzed the key
points of the analytical mktg you will be able to measure the attractiveness in terms of quantitative,
qualitative (with reference to marketability) and dynamic (with reference to the duration which is
represented by the life cycle of the product).

The strategic marketing plan is drafted through 5 different phases:

- Analysis of the situation and the context, also corporate and not just social
- Identification of objectives
- Definition of marketing strategy (marketing mix)
- Operational Action Plan
- Control and implementation: Monitoring and measurement of results; Confirmation of the goals
according to evolution; check the timing and effects of the actions that the plan plans to develop
 Analysis of the situation – SWAT MATRIX
The first phase evaluates the BACKGROUND where the trends, risks, opportunities and forecasts of market evolution work. In
addition, business opportunities are assessed by highlighting strengths
You define a SWOT matrix: Strength, Weakness, Opportunities and Threasts:

STRENGTH WEAKNESS
High skills Very strong products among competitors
New product or service Location of the activity
Location of the activity Better distribution capacity of
Cost benefit through know how competitors
Brand and strong reputation Poor reputation
Lack of investors
OPPORTUNITY THREATS
Market Development New competitors or new products
Strategic alliances Price war
New market segments Commercial barriers
Market driven by a weak competitor External Threats
 STRENGTHS
Advantages of proposition
Capabilities
USP's (unique selling points)
Resources, Assets, People
Experience, knowledge
Financial reserves
Marketing - reach, distribution, awareness
Innovative aspects
Location
Price, value, quality
Accreditations, qualifications, certifications
Processes, systems, IT
Cultural, attitudinal, behavioural of the Management
OPPORTUNITIES
Market developments
Competitors' vulnerabilities
Industry or lifestyle trends
Technology development and innovation
Global influences
New markets
Geographical, export, import
Market response to tactics, e.g., surprise
Major contracts
Business and product development
Information and research
Partnerships, agencies, distribution
Market volume demand trends
WEAKNESSES
Disadvantages of proposition
Gaps in capabilities
Lack of competitive strength
Reputation
Financials; few investors
Own known vulnerabilities
Timescales, deadlines and pressures
Cashflow, start-up cash-drain
Effects on core activities, distraction
Processes and systems
Suppliers
THREATS
Political effects
Legislative effects
Environmental effects
IT developments
Competitor intentions
Market demand
New technologies, services, ideas
Vital contracts and partners
Obstacles faced
Insurmountable weaknesses
Employment Market
Financial and credit pressures
Seasonality, weather effects
Identification of the objectives (Strategic Marketing)

Each company must have a MISSION, i.e. the goals it wishes to achieve from the medium to long term, taking
into account the following points:
• The business sector in which it intends to operate
• The reason why it is intended to operate in this area
• Customers who want to "reach"
• The elements that customers look for in the product to define its value
• The type of business you intend to be
• The elements that can distinguish the business from all the others

• Increase market share • Increase sales volumes • Get on new markets • Improve sales • Improve profitability
• Develop a new product
Operative marketing

Operative marketing has the task of realizing the strategies defined in the previous phases, by allocating resources (money,
professionalism, technology) the most effective way.
There are several tools that help you realize the last step of an effective marketing plan and are tailored to your business
needs.
Operative marketing is based on 4P theory:
Product - Price - Place - Promotion

The features of the Product are created to meet the needs of the consumer. The decisions to be taken concern the
appearance, the name, the quality, the packaging and, possibly, the level of after sales service
Price policies are how much the customer is willing to pay for a specific brand (brand awareness). This is the only item that
generates a revenue while all the others are among the costs
Place or distribution channels are used to reach certain consumers. The product must be presented to the customer at the
right time and in the right place to be purchased. It is very important to properly define the distribution channel
The Promotion involves the activities adopted to make the product known and appreciated. You will not only have to tell that
a specific product exists but you will need to provide all the information you need to persuade the buyer
 PRODUCT - #1 MARKETING MIX
A product can be a tangible good or an intangible service that meets a need or lack of consumers. Whether you are selling custom
pallets and wooden products or providing luxury accommodation, it is imperative to have a clear understanding of exactly what your
product is and what makes it unique before you can market it successfully. So during the product development phase, marketing has
to do a thorough research into the product life cycle they are creating. A product has a certain life cycle that includes the growth
phase, the maturity phase, and the sales reduction phase. It is important that marketers reinvent their products to stimulate greater
demand once they reach the stage of decline in sales (see section 5, pp. 63/66)
When developing the right product, you have to ask the following questions:
What does the customer want from the service or product?
How will the customer use it?
Where will the customer use it?
What characteristics should the product meet to meet customer needs?
What is the name of the product?
Do you have a catchy name?
What are the sizes or colors available?
How is the product different from the competition products?
How does the product appear?
 PRICE - #2 MARKETING MIX
The price of the product is basically the amount that a customer pays for to enjoy it. Price is a very important component of the marketing mix definition.

It is also a very important component of a marketing plan as it determines your firm’s profit and survival. Adjusting the price of the product has a big impact on the
entire marketing strategy as well as greatly affecting the sales and demand of the product.

This is inherently a touchy area though. If a company is new to the market and has not made a name for themselves yet, it is unlikely that your target market will be
willing to pay a high price.

Although they may be willing in the future to hand over large sums of money, it is inevitably harder to get them to do so during the birth of a business.

Pricing always help shape the perception of your product in consumers eyes. Always remember that a low price usually means an inferior good in the consumers eyes
as they compare your good to a competitor.

Consequently, prices too high will make the costs outweigh the benefits in customers eyes, and they will therefore value their money over your product. Be sure to
examine competitors pricing and price accordingly.

When setting the product price, marketers should consider the perceived value that the product offers. There are three major pricing strategies, and these are:

- Market penetration pricing

- Market skimming pricing: fm a very high price to reduce it during product life

- Neutral pricing

Here are some of the important questions that you should ask yourself when you are setting the product price:

a) How much did it cost you to produce the product?

b) What is the customers’ perceived product value?

c) Do you think that the slight price decrease could significantly increase your market share?

d) Can the current price of the product keep up with the price of the product’s competitors?
PLACEMENT - #3 MARKETING MIX
Placement or distribution is a very important part of the product mix definition. You have to position and
distribute the product in a place that is accessible to potential buyers.
This comes with a deep understanding of your target market. Understand them inside out and you will discover
the most efficient positioning and distribution channels that directly speak with your market.
There are many distribution strategies, including:
- Intensive distribution
- Exclusive distribution
- Selective distribution
- Franchising
Here are some of the questions that you should answer in developing your distribution strategy:
a) Where do your clients look for your service or product?
b) What kind of stores do potential clients go to? Do they shop in a mall, in a regular brick and mortar store, in
the supermarket, or online?
c) How do you access the different distribution channels?
d) How is your distribution strategy different from your competitors?
e) Do you need a strong sales force?
f) Do you need to attend trade fairs?
g) Do you need to sell in an online store?
PROMOTION - #4 MARKETING MIX
Promotion is a very important component of marketing as it can boost brand recognition and sales. Promotion is comprised of various
elements like:
- Sales Organization
- Public Relations
- Advertising
- Sales Promotion
Advertising typically covers communication methods that are paid for like television advertisements, radio commercials, print media, and
internet advertisements. In contemporary times, there seems to be a shift in focus offline to the online world.
Public relations, on the other hand, are communications that are typically not paid for. This includes press releases, exhibitions, sponsorship
deals, seminars, conferences, and events.
Word of mouth is also a type of product promotion. Word of mouth is an informal communication about the benefits of the product by
satisfied customers and ordinary individuals. The sales staff plays a very important role in public relations and word of mouth.
It is important to not take this literally. Word of mouth can also circulate on the internet. Harnessed effectively and it has the potential to be
one of the most valuable assets you have in boosting your profits online. An extremely good example of this is online social media and
managing a firm’s online social media presence.
In creating an effective product promotion strategy, you need to answer the following questions:
a) How can you send marketing messages to your potential buyers?
b) When is the best time to promote your product?
c) Will you reach your potential audience and buyers through television ads?
d) Is it best to use the social media in promoting the product?
e) What is the promotion strategy of your competitors?
f) Your combination of promotional strategies and how you go about promotion will depend on your budget, the message you want to
communicate, and the target market you have defined already in previous steps.
THE IMMUTABLE LAWS OF MARKETING
 THE LAW OF THE
LEADERSHIP
It is better to be the first than better than others
Marketing is a battle of perceptions and not of products

• Replace the concept of «FIRST» with that of • Es: Rimmel  Mascara

«LEADER»
• The law of Leadership applies to any product, • Es: Scotch  Adhesive tape
brand or category
• Es: Kleenex Paper
• The public / customer perceives as superior
the first product that has in mind  the
handkerchiefs
leading brand is the first in the customer's
mind, even if it is not the best
• Es: Coca Cola vs Pepsi Cola
• BENCHMARK: comparison of its product to • Es: Gilette vs Bic
the best on the market. The Benchmark is the
essential element of a process called
"management oriented towards total quality"

Cfr the law of mind

 THE LAW OF CATEGORY
If you can not be the first of a category, invent a new one in which to
become the number ONE
• Discussing about a brand, customers are not reliable because they are influential.
If we talk about the category, the customers are more open because they are not
interested in what is better but what is new.
• When one launches a new product one of the questions that arises is: “why is
this new product better than the others?" But it is very important to ask also: "of
which category is this product the first?"
• Es: Hertz car rental  from short-term rental to long-term rental
 THE LAW OF THE MIND *
THE LAW OF PERCEPTION
*It is better to be the first in mind than the first ones on the market
Marketing is not a battle of products, it is a battle of perceptions
The role of Consumer behavior in marketing
 Types of consumers’ decision

A large decision can be break down in several smaller decision.

- How to find out new styles? What colour, style and size?
- Where to buy and how to pay? How many items?
- When to buy? Is it possible to try the purchase?
- Need accessories?
- Buy alone? Which assitant to approach to have infos?
- Buy on brick and mortar or on line? Delivery time?

MARKETING RESEARCH IS NECESSARY TO DETERMINATE WHICH DECISIONS ARE IMPORTANT TO THE PARTICULAR TARGET
MARKET
All consumers are unique but have few details in common: AGE – GENDER – INCOME – FAMILY SITUATION
ecc.

- PSICHOLOGICAL AND SOCIAL CHARACTERISTICS  Product (1° P marketing Mix)

- A) perseption and garment sizing: no more standard sizes
- B) status recognition
- C) environmental issues
- D) involvement: low level invlovement  impulse buying (mostly for in store promotion); high level
involvement  research, visit in many stores by the customers
- PSICHOLOGIAL CHARCARTERISTICS  Price (2° P marketing Mix)
- Price = quality  perceptual process
- PSICHOLOGICAL CHARACTERISTICS –> Positionin (3° P marketing Mix)
- Athmosphere and design; where, when, how do customers buy
- PSICHOLOGIAL CHARACTERISTICS  Promotion (4° P marketing Mix)
- A) knowledge of consumers’ habits which enables the selection of appropriate promotion
- B) well known personality  credibility to the product/brand; disadvantages for scandals; overexposure
for too many brands (cfr. pg227/229). Case history: Kate Moss, Sienna Miller, David Beckham
The Consumers’ decision process
Problem Recognition 2) Information Search  3)Evaluation of alternatives 4) Purchase  5) Post purchase evaluation
1) Beginning: customer’s recognition of a need awareness. Awareness grow through comments by people we know, fashionable and
unfashionable products, change of social status; Trendsetters vs Marketers.
2) Innate knowledge (in memory) = brand or store knowledge. External sources: feedback by a friend, presenters on television program,
advertising on posters seen in the street, advertising or windows’ display
3) Evaluation varies from individual to individual; staff can address a choice via facts and advise. Sensation vs perception
4) When all the alternatives have been made, the choice is done
5) Post sale collection of information relates to repeat the purchase or to customers’ complaints. A satisfied customer is a repeated
customer
Type of customers
Promiscous  shop around for the best deal
Occasional  sometimes buy from us
Loyal  usually buy from us
Insisitent  only buy from us

Which are the customers we are interested in?

 The decision process
Problem recognition
Information search
Evaluation of alternatives
Purchase
Post-purchase evaluation

Psychological factors Sociological factors

Perception vs sensation Groups
Learning The family
Motivation Opinion leaders
Attitudes Difussion
Personality Social stratification
Lifestyles Cutlure
The perception law: all truth is relative

All marketing rules can change on the base of the dialog between info collected by the marketers and
customers’ perception.
Marketing operators base their theories on the base of analysis but need also to consider that customers could
have wrong perceptions
Example: - Audi vs Mercedes and BMW
- Japanese cars vs American ones and Harley Davidson
- Coca Cola vs Pepsi Cola
 THE LAW OF FOCUSING
The most powerful concept of marketing is to own a word in the mind of
the potential customer
The leader has the "word" that represents the category: es IBM, Coca Cola, Nintendo, Apple

Very often the word or a symbol is representative of a certain brand and nothing can be done to change the
perception that the market has towards that product.
Good marketers can identify with one word a whole project of promotion or launch of a brand.
Words are grouped into different categories:
FINALIZED TO BENEFIT: es. generates well-being, prevents health problems (Colgate)
FINALIZED TO THE SERVICES: es. home delivery (Amazon)
FINALIZED TOWARDS A PUBLIC TARGET: ex. Millenials, younger age group (Pepsi Cola)

One enters the mind of potential clients, one "settles" and maintains leadership. Customers' minds need symbols
that quickly identify the characteristics of a product.
A FOCUS is created to have the LEADERSHIP in the MIND of the public / consumer taking advantage of
PERCEPTION, considering on which peg of the customer's mental SCALE our product is positioned

The law of focusing applies to all categories of products or services that you want to sell or that you want to
discourage: eg. use of occasional drugs  interest in a social status
 THE LAW OF SCALE
The strategy to be adopted depends on which level of the scale your
products occupy
The goal is to occupy the first level of the scale in the mind of the customers but there are also strategies for those who are on the second
or third level.
The mind is selective and customers use their own scales to decide which information to keep or reject.

A MIND ACCEPTS ONLY NEW DATA THAT ARE COHERENT WITH ITS SCALE PRODUCTS FOR THE CATEGORY IN QUESTION

There is a relationship between market share and position on the scale and it is: 4; 2; 1

Distinction between products of high interest and low interest:

HIGH: products used every day (clothing, toothpaste, cereals, drinks, cigarettes) scale with many pegs
LOW: products rarely used (lawnmowers, furniture, suitcases) scale with few pegs

EXERCISE: apply the law of scale on the brands of Fast Fashion

Products that give prestige, cars, watches, jewelry, cameras have many levels even if they are not purchased / used daily.

A human mind can usually not manage more than 7 pegs at the same time and for a good marketing plan we ask ourselves the following
questions:

1) On which level of the scale in the customer's mind is our product positioned?
2) Are we present on that scale?

Not all categories of products or services provide for a scale

 THE LAW OF THE
PERSPECTIVE
The effects of a marketing plan can be expressed over a prolonged
period of time
Long-term effects are often the opposite of short-term effects.

Marketing activities can bring immediate benefits, but long-term analysis shows that these activities can prove negative
over the period.

ARE THE SALES INCREASE OR REDUCE THE BUSINESS OF A COMPANY?

In the short term they increase them: large discounts favor a noticeable volume of business but limited in time. In the
long run they destabilize them because potentials need to be educated to buy at "normal" prices
What do the balances say to customers? That the regular price is too high, it is not always justified.

The sales periods are no longer restricted to canonical periods of the year, in January and June, but allow the customer to
buy at other times at advantageous prices: sales, outlet, fidelity card, coupon.

Tenders, coupons and discount coupons educate consumers to buy only when they can make a good deal
 PRICE POLICY
cfr: fm pag 177 to 195 Fashion Marketing book (chapter 7)
Price policy is fundamental for a company because it allows to quantify and
achieve the pre-set economic objectives  PROFITABILITY in the short, medium
and long term, MARKET PENETRATION and SPECIFIC TARGET SEGMENT.

Objectives of the price policy:

- STUDYING THE PRICE ISSUE COMPARING WITH THE MARKET AND CONSUMER
NEEDS
- PROPOSE A WHOLESALE PRICE AND A RETAIL PRICE
- ENSURE COMPETITIVITY OF THE PRICE
- BUILD PROFITABILITY
A good pricing policy must always consider a series of conditioning elements:

- MARKET ECONOMIC SITUATION OF THE MARKET: possible presence of a period of recession

- MARKET PRICE AND COMPETITION:
A) acceptance of the market price and competition
B) lower price to better meet the needs of the market respect for the quality and reliability of the product, explaining that
the low price is for commercial purposes only. Risk: the product is considered "out of fashion" or a replica.
C) higher price to define a higher ranking corresponds to a real increase in quality
- PRODUCT COST
- PRODUCTION POTENTIAL: aligning the price with the production capacity, avoiding dead times that will make the costs
rise.

See: consumer purchase behavior: psychological variable, differentiation, variable price / quality
 COSTING
A costing is an estimate of all the costs involved in a project or
a business venture
Activating a good costing evaluation allows to better manage the problem of costs
maintaining a good quality level and monitoring production, distribution, marketing and
sales costs.
The costing consists of:
- PRODUCTION COST
- FIXED COSTS: these are Company costs such as personnel, administrative costs, rent,
heating, utilities, legal assistance, insurance, taxes
- SALES AND DISTRIBUTION COSTS: these are business costs related to commercial
activities such as sales personnel, transport, logistics, communication, promotion,
advertising
- VARIABLE COSTS: these are not constant costs and change with the quantity produced.
Any costs related to short, long and medium-term indebtedness linked to investments
concentrated mainly on production or distribution / sale fall within variable costs.
- PROFIT COEFFICIENT: every Company must profit from its activitie
 COSTS COMPONENTS EURO IN %
INDUSTRIAL COST
Raw material € 4,50 15%
Packaged material € 2,00 4%
Employees € 2,00 10%
Auxiliary services (light / heating) € 1,20 4%
Variable costs (new machines / repair) € 2,30 5%
Transport and logistics € 1,50 7%
Fixed costs of the department € 2,50 12%
TOTAL INDUSTRIAL COST € 16,00 54%
SALES AND DISTRIBUTION COSTS
Sales staff € 2,00 7%
Sales charges € 2,00 4%
Transport and logistics € 1,50 7%
Finished products warehouse € 1,50 5%
Advertising € 2,00 4%
Office and branch costs € 2,00 10%
Fixed costs € 2,50 8%
TOTAL SALES AND DISTRIBUTION COSTS € 13,50 46%
TOTAL COSTS € 29,50
SELLING PRICE € 49,90
CONTRIBUTION MARGIN € 20,40 41%
 TURNOVER

BREAK EVEN POINT

_ REVENUES

_
COSTS &
REVENUES
_ TOTAL COSTS VARIABLE COSTS

LOSS
_

FIXED COST
_

0
VOLUME & TURNOVER
 DIFFERENTIATION OF PRICE POLICIES
• Policy based on the sale price: price based on costs and expenses. Low price but with sufficient margins to
face increased costs and expenses
• Policy based on the market price: respect of the price of competition few margins of maneuver related to
costs
• Policy based on consumer expectations: difficult situation because it provides very detailed research work
• Profitability-based pricing policy: assess the company's earnings regardless of the price of the competition
or the needs of the market. High risk policy
• Attack price policy: prices that are decidedly low compared to the competition which will not be able to
cope with too aggressive downturns. Policy applicable only by an economically strong company because
they envisage margin sales «0» or even negative
• Defense-based pricing policy: regulated by competition. Risk of not having profitability or revision of product
positioning
• High price policy: adoptable by prestigious brands because it is often the consumer who demands a high
price for a quality guarantee. Considerable promotional support must be provided
• Low price policy: adopted when there is a strong and widespread distribution. The high volume of items sold
guarantees sufficient profitability
• Global price policy: decision to adopt an indistinct price among the various countries. Useful on a part of the
digital channel (Flash Sales) but questionable in other situations
DIGITAL DISTRIBUTION

Cfr Annual Conference slides:

D’Imporzano Accenture
Global B2C report
Zalando
Sent by email
FASHION DISTRIBUTION
Cfr scan fm page 196/216
COMMUNICATION AND PROMOTION POLICY
To implement the Communication and Distribution policies some specificities must be considered:

- SEASONALITY AND LIFE CYCLE OF THE PRODUCT: immediate and effective communication due to the short life
cycle of the product  every 6 months, a new collection
- NUMBER OF TARGET CONSUMERS
- QUICK PURCHASE PROCESS

COMMUNICATION ACTIONS MUST BE COHERENT WITH THE COMPANY IMAGE

The objective of the communication policy is to increase sales primarily but also to open new markets, reinforce the
company image, explain the qualitative elements of the product

DEFINITION OF THE OBJECTIVES TO BE REACHED IN THE SHORT, MEDIUM AND LONG-TERM:

Increase in sales and market shares: medium term
Reinforce or create a corporate image: medium / long term
Presenting products to customers: short term
Help the sales force activity: short term

DEFINE THE BUDGET AT THE BEGINNING OF YEAR TO DEDICATE TO THE COMMUNICATION POLICY AND CHECK THE RESULTS
QUARTERLY
STEPS OF AN EFFECTIVE COMMUNICATION POLICY

DEFINITION OF GENERAL OBJECTIVES: increase in sales and market shares;

increase in the number of consumers; reach Leadership position
DEFINITION OF SPECIFIC OBJECTIVES: improvement of the corporate image;
make known the existence of the product; support sales force
DEFINITION OF COMMUNICATION INTERVENTIONS: budget and media
choice
DEFINITION OF MESSAGE ON SPECIFIC SEGMENT
CREATION OF VARIOUS TYPES OF ADS
LAUNCH CAMPAIGN
CHECKS OBJECTIVES REACHED
 WHICH MEDIA?

Before choosing the media, some conditions must be defined:

- DIFFUSION CAPACITY: it must be fast and penetrating. Evaluate the
communication activities on the base on your financial capabilities
- GRADE OF RECEPTION: the communication must be pleasant and
easily absorbed by the consumer
- PENETRATION GRADE: it must reach the greatest number of
customers, even potential ones, both for impulse buying and
«reasoned»
- REPETITION RATE: a campaign must be repeated several times to
obtain results
 COLLECTIONS’ INTRODUCTION
The choice of the media depends on the budget, the target, the objectives that the company has set
itself, the receptivity.

COLLECTION F/W: January / March

COLLECTION S/S: September / October

SALES AGENTS by the CUSTOMERS: the seller presents the sample and collects the orders 
evaluation of sales trends
PRESS: it must be aligned with the market segment and the nation
EXHIBITIONS: there are both observers and customers. You can present the collection and go into
production on the basis of the orders. Excellent opportunity if you select the correct events
FASHION SHOWS: can be organized in different locations and orders are collected only by those who
attend them or have been invited. Useful also for press
SHOWROOM: collection are presented to the trade (wholesalers, buyers, retailers) and ad hoc
presentations are made
 COMMUNICATION BY PRESS

Press is the most effective and used media in fashion field and for it up to 50% of the marketing budget is assigned. More pages a
company can buy and more contacts, especially in the trade, can gather.

- DAYLY NEWSPAPAER AND PERIODIC PRESS: useful for products destined to widespread use because it allows to reach a high number
of users
- SPECIALIST PRESS: highly selected users, not necessarily "common" readers but also professionals. Distinguished category: men's,
women's, children's, bride's, furs, jewels. Very careful layout, full of details, usually with many pages. Usually monthly or quarterly
periodicals

Free editorial articles: we provide garments free of charge that are inserted, together with others, in photo shoots. A good press
office is needed for contacts with the editorial staff but also to create ad hoc communication messages. It is a cheap activity but the
journalist could express opinions favoring or disfavoring the product / brand promotion
Paid advertorial articles: they better characterize the offer. High costs but justified by a better quality of the article
Paid Advertising Message: both for national and international magazines. You will have to highlight the product with the images and
few words. It is addressed to a high audience and must be planned frequently so that it can be presented on several occasions and
published in more numbers
 MOST KNOWN MAGAZINES

• MAN: GQ (initially quarterly, now monthly) L'Uomo Vogue, Man

Harper's Bazar
• WOMAN: Cosmopolitan, Modern Woman, Elle, Glamor, Grace, Marie
Claire, Vanity Fair, Vogue, Harper's Bazaar, Flare, I Woman, D Republic,
Tu Style
• BIMBO: Vogue Children, Women Children
• BRIDE: Bride, Vogue Bride

• Interesting both in the paper and digital versions

 COMMUNICATION AT FAIRS

The presence of a brand or a company at an fair is extremely advantageous, although an

important investment in terms of organization, time and money is necessary:
- PRE-EXHIBITION ORGANIZATION: invitations, study of the communication at the stand,
selection of samples, announcement of the fair catalog, website announcement
- CONSOLIDATION OF ITS OWN BRAND
- PRESENCE OF BUYER AND SPECIALIZED TRADER
- MEETING OPPORTUNITY WITH NEW CUSTOMERS AND POTENTIALS CUSTOMERS
- FOOTPRINT IN A NEW INTERNATIONAL MARKET
- COLLECTION OF USEFUL CONTACTS: attention to visitors "time wasters"
- HIGH COSTS: space rent, stand preparation, samples, qualified personnel, models
- POST FAIR ANALYSIS: follow-up actions, qualitative and quantitative evaluation of
collected contacts, cost evaluation
 MOST KNOWN FAIRS

• ITALY: PITTI IMMAGINE UOMO, BIMBO, FILATI, WHITE MILANO,

MILANO UNICA, MIPEL, MICAM, LINEA PELLE, SUPER, COMOCREA,
SPOSAITALIA
• ABROAD: PREMIERE PARIGI E MOSCA, PROJECT LAST VEGAS, MAGIC
INTERNATIONAL LAS VEGAS, PURE LONDON, SALON INTERNACIONAL
DE MODA MADRID, CIFF COPENHAGEN, HAUTE COUTURE PARIGI,
PROJECT NEW YORK, SALON INTERNATIONAL DE LA LINGERIE PARIGI,
PREMIERE CLASS PARIGI
 COMMUNICATION AT SHOWROOMS

The showroom is the place where customers and buyers can meet the collection.
Showrooms can be internal to the company or external, single-brand or multi-brand 
attention not to "cannibalize" the products
The staff is highly specialized and sales oriented: they select the customers according to
the budgets that the buyers have defined. They are active all year round but especially
during the launching period of the collection. The introduction of the collection in the
showroom allows more meticulous choice and the results are very satisfying
Customers can select the products without haste and enjoying a pleasant atmosphere
supported by skilled professionals in the presentation and sales

Select showrooms with international contacts and aligned to the product placement

Visit the website: www.modemonline.com for updated list of active showrooms, both
domestic and international ones
 COMMUNICATION AT THE CATWALKS

Traditionally fashion catwalks take place twice a year, early spring (F/W collection)
and early autumn (S/S collection). They are held in different locations: hotel,
showroom, by the company, on the occasion of fairs. The goal of the fashion shows
is to inform the public (both trade and consumers), introduce the collections, refine
the offer before the sale, entertain the public.

Environment, choreography, products, models, direction, set design, music, casting,

party / refreshments post show involve a commitment of time, money and
important know-how. An excellent organization is necessary in order not to leave a
negative memory towards guests.
Two negative aspects: they are very expensive and do not give buyers the
opportunity to study the product correctly. A follow up after a fashion show is
always necessary.
SALES POLICY
A TEST APPROACH TO CUSTOMER SUPPORT
• Main objective: customer satisfaction
• Smart sales negotiation
• Personal selling
• Management of customers’ visits
• Formulation of a targeted offer: presentation of the samples, price
and price list, conditions of sale, payments and creditworthiness of
the customer
• Order fulfillment
• Post sales
• Management of any disputes
 INTELLIGENT NEGOTIATION: SELL MEANS CONVINCING

WATCHWORD: collaboration and transparency.

Perform an analysis of customer needs to understand their real needs.
Through the comparison the various steps of the negotiation will be
defined: comprehension, clarification, conciliation, trust.
Initially there is a discrepancy of interests on the various topics, mainly
price, quantity, terms of sale, delivery of goods: customer requests
must be kept in due consideration to create credibility and reliability.
TRADING REQUIRES TIME, CONSTANCE, WILL AND INTELLIGENCE:
SIMPLE NEGOTIATIONS HIDE BAD SURPRISES
 WHAT DO CUSTOMERS WANT?

• Customers want to save money and time

• Customers want to earn more
• Increase their earnings
Your customer does not care how goodand beautiful you are, but what you or your product can do
for him.
TIPS:
1) ¾ of the work is made by the first impression: Adapt your look to the situation (not always the
formal dress is the right one) reminding you to take care of every detail: your image becomes
your business card.
2) Study, investigate and identify the customer's needs: Find out what his/her problem is - and
solve it with your product or service
3) Use non-verbal communication: Defensive barriers are lowered and potential customers are
more likely to trust
4) Make you feel like you're his friend: Being a good seller means doing good for others, not
yours.
 PERSONAL SELLING
Personal selling is a personal attitude to customer contact for the sale.
Finalizing a sale does not only provide sales capacity but, above all,
considerations of marketing, ethics and professionalism.
Personal Selling means personal art of presentation, ability to dialogue,
communication, intuition and persuasion.
Only by establishing good interpersonal relationships with the partners
/ customers, good business objectives achieved. A negotiation does not
have to be an abstract stereotype but an excellent human relationship
to create and maintain with personal selling
 VISITING THE CUSTOMERS

Planning of visits: number of daily visits, geographical arrangement of the

area, transfer times
• Preparation of the visit: check the position of the client in terms of
payments, order history, fixation of the target-visit
• Objectives to be achieved: new customer to be conquered, regular
customer to visit, order increase, courtesy visit
• Object of the visit: presentation of the collection, launch of the new
product, order collection, handling of complaints and objections
• Tools required for the visit: customer card, price list, catalog, advertising
material
• ALWAYS HAVE THE MASTERY OF THE TOPICS YOU SHOULD DISCUSS: EVERY
UNCERTAINTY MAKES CONVERGING THE CUSTOMER'S CHOICE TO OTHER
BRANDS / COMPANIES
 THE CORRECT OFFER
THE RIGHT PRICE IS WHAT THE CUSTOMER IS POSSIBLE TO PAY NOT THAT WHICH IS
REQUIRED BY THE SELLER
The most important customers have to pay special attention: their prices will be lower than
others because they make higher orders, they have greater contractual power.
The seller must present slightly higher prices to have the chance to apply a discount always
respecting the price policy and the company's policy.
You can evaluate various aspects that help the acceptance of the price by the customers:
- Minimum amount of the order
- Size / color subdivision
- % of returns
- Terms and forms of payment
- Year-end awards if the customer reaches certain turnovers and has demonstrated loyalty
to the brand