CHAPTER 1: DEFINING MARKETING FOR NEW REALITIES.

 The scope of marketing: What marketing is, how it works, who does it, and what is marketed.
 Marketing: Meeting needs, profitably.
 What is marketed: Goods, services, events, experiences, persons, places, properties, organizations,
information, and ideas.
 A marketer is someone who seeks a response—attention, a purchase, a vote, a donation—from
another party, called the prospect.
 CORE MARKETING CONCEPTS:
1. Needs, Wants and Demands:
a) Needs-Basic human requirements such as air, food, water, clothing and shelter.
b) Wants-Needs become wants when directed to specific objects that might satisfy the need.
c) Demands-Wants for specific products backed by an ability to pay.
2. STP- Segmentation, targeting, positioning
3. Offerings and brands: Companies address customer needs by putting forth a value proposition, a set
of benefits that satisfy those needs. A brand is an offering from a known source. A brand name
identifies the source and carries many associations in people’s minds that make up its image.
4. Marketing Channels: Communication channel, Distribution Channel and Service Channel.
5. Value and Satisfaction: Value is primarily a combination of product quality (specification and
actual product), service, and price (QSP) and it is called the Customer Value Triad.
6. Supply chain
7. Competition

 Marketing environment-It consists of the task environment and the broad environment.
a. Task environment-It includes the actors engaged in producing, distributing and promoting the
offer.
b. Broad environment-It consists of six components: demographic environment, economic environment,
social-cultural environment, natural environment, technological environment and political-legal
environment.

 4 A’s of Marketing:

1. Acceptability-It is the extent to which a firm’s total product offering exceeds customer expectations.
2. Affordability-It is the extent to which customers in the
target market are able and willing to pay the product’s price.
3. Accessibility-It is the extent to which customers are able
to readily acquire the product.
4. Awareness-It is the extent to which customers are
informed regarding the product’s characteristics, persuaded
to try it, and reminded to purchase.
 Holistic Marketing concept: it is based on the
development, design, and implementation of marketing
programs, processes and activities that recognize their
breadth and interdependencies.

 Relationship Marketing-A key goal of marketing is to

develop deep, enduring relationships
 with people and organizations that directly or indirectly affect the success of the firm’s marketing
activities. Relationship marketing aims to build mutually satisfying long term relationships with key
constituents in order to earn and retain their business.
 Integrated Marketing-It occurs when the marketer devises marketing activities and assembles marketing
programs to create, communicate and deliver value for the consumers.
 Internal Marketing-It is the task of hiring, training and motivating able employees who want to
serve customers well.
 Performance marketing is optimizing financial and nonfinancial returns to business and society
from marketing activities and programs.

Chapter 2: Developing Marketing Strategies and Plans

1) STP -: Segmentation (Segment the market), targeting (select the appropriate target), positioning
(develop the offering's value positioning)

2) THE VALUE CHAIN -: Michael Porter has proposed the value chain as a tool for identifying ways
to create more customer value. It consists of 9 strategic relevant activities - 5 primary and 4 support
activity.
Primary are a) Inbound logistics, b) Operations, c) Outbound logistics, d) marketing, e) service , while
secondary are 1) Procurement, 2) Tech development, 3) HR management, 4) Firm infra.

3) Most large companies consist of 4 organizational levels a) Corporate b) Division c) Business d) Product
4) All corporate headquarters take 4 planning activities, namely

a) Defining the corporate mission

b) Establishing strategic business units

c) Assigning resources to each strategic business unit

d) Assessing growth opportunity.

5) Strategic planning must be prioritized under 3 key areas

a) Managing the business as an investment portfolio

b) Assessing the markets growth rate

c) Establishing a strategy.

6) Assessing growth opportunities -: Assessing growth opportunities includes planning new businesses,
downsizing, and terminating older businesses. If there is a gap between future desired sales and projected sales,
corporate management will need to develop or acquire new businesses to fill it. Eventually every company
wants growth and in order to do this the first option is to identify opportunity for growth within current
businesses (intensive opportunities). The second is to identify opportunities to build or acquire businesses
related to current business (integrative opportunity) and the third is to identify opportunity to add attractive
unrelated business (diversification opportunities) .

7) Corporate Culture -: “The shared experiences, stories, beliefs, and norms that characterize an organization
is known as corporate culture”. Walk into any org. and the first thing you see is the corporate culture – the way
people dress, talk to one another, and greet customers.

8) SWOT Analysis -: The overall evaluation of a company’s strengths, weaknesses, opportunities, and threats
is known as SWOT analysis. It’s a way of monitoring external and internal marketing environment.

9) There are three ways to tapping market opportunities,

a) The first is to offer something that is in short supply (Ex. Electric cars),

b) The second is to supply an existing product or service in a new and superior way,

c) The third can often lead to a totally new product or service.

10) Environment threat -: An environment threat is a challenge posed by an unfavorable trend or development
that, in the absence of defensive marketing action, would lead to lower sales or profit.

11) The business unit sets objectives and then manages by objectives (MBO). Now, for an MBO system to
work, the unit’s objectives must meet four criteria’s:

a) They must be arranged hierarchically, from the most to least important.

b) Objectives should be quantitative whenever possible.

c) Goals should be realistic.

 d) Objectives must be consistent.

12) PORTER’S GENERIC STRATEGY -: Michael Porter has proposed 3 generic strategies that provides a
good starting point for strategic thinking

a) Overall cost leadership – lowest production and distribution costs.

b) Differentiation – business concentrates on achieving superior performance.

c) Focus – The businesses focus on 1 or more narrow market segments.

13) A marketing plan usually contains the following sections:

a) Situation analysis

b) Marketing strategy

c) Marketing tactics

d) Financial projections

e) Risk evaluation.

Chapter 3 CREATING LONG-TERM LOYALTY RELATIONSHIPS

“Successful marketers are those who carefully cultivate customer satisfaction and loyalty.”

 Traditional Organization Chart- A pyramid with the president at the top, management in the middle, and
frontline people and customers at the bottom.

 Managers who believe the customer is the company’s only true “profit center” follows Figure 3.1(a).
 Successful marketing companies invert the chart to look like Figure 3.1(b).
 Defining Value
1. Customer Perceived Value – It is the difference between the prospective customer’s evaluation of all the
benefits and costs of an offering and the perceived alternative.

b) Total customer benefit- It is the perceived monetary

value of the bundle of economic, functional, and
psychological benefits customers expect from a given
market offering because of the product, service, people
and image.
c) Total Customer Cost – It is the perceived bundle of
costs customers expect to incur in evaluating, obtaining,
using, and disposing of the given market offering,
including monetary, time, energy, and psychological
costs

Figure 3.2 Determinants of Customer Perceived

Value perceived alternatives.
Customer Value Analysis – A strategy to reveal the
company’s strengths and weaknesses relative to those of
various competitors. The steps involved are: -
1. Identify the major attributes and benefits that customer value – Customers are asked what attributes,
benefits and performance levels they look for in choosing a product and vendors.
2. Assess the quantitative importance of the different attributes and benefits – If the ratings given by
customers diverge too much, the marketer should cluster them into different segments.
3. Assess the company’s and competitors’ performance on the different customer values against their rated
importance – Customers describe where they see the company’s and competitors’ performance on each
attribute and benefits.
4. Examine how customers in a specific segment rate the company’s performance against a specific major
competitor on an individual attribute or benefit basis – The company can charge higher price, or it can
charge the same price and gain more market value if company’s offer exceeds the competitor’s offer on all
attributes and benefits.
5. Monitor customer values over time – A continuous redo of customer values and competitors’ standings as
the economy, technology, and product features change.
Delivering High Customer Value

 Loyalty – A deeply held commitment to rebuy or re-patronize a preferred product or service in the future despite
situational influences and marketing efforts having the potential to cause switching behavior,
 Value proposition – Cluster of benefits the company proposes to deliver.

Total Customer Satisfaction

 A person’s feelings of pleasure or disappointment that results from comparing a product or service’s perceived
performance to expectations.
 If Performance > Expectations, customer is satisfied; else dissatisfied.
Product and Service Quality

 Quality – It is the totality of features and characteristics of a product or service that bear on its ability to satisfy
stated or implied needs.
 Higher levels of quality result in higher levels of customer satisfaction, which support higher prices and lower
costs (often).
Customer Profitability
 A profitable customer is a person,
household, or company that over time
yields a revenue stream exceeding the
company’s cost stream for attracting,
selling and serving the customer.
 Customer Profitability Analysis uses
activity-based costing (ABC) to
identify the real costs associated with
serving each customer.

Figure 3.3 Customer – Product profitability Analysis

Customer Lifetime Value – The net present value

of the stream of future profits expected over the customer’s lifetime purchase.

Retention Dynamics – The marketing funnel identifies the percentage of the potential target market at each
stage in the decision process, from merely aware to highly loyal.

Figure 3.4 The Marketing Funnel

Brand Communities – It is a specialized community of consumers and employees whose identification and
activities focus around the brand. The three characteristics identifying brand communities:

1. Sense of felt connection to the brand, company, product, or other community members.
2. Shared rituals, stories and traditions that help convey the meaning of the community.
3. A shared moral responsibility or duty to both the community as a whole and individual community members.
Customer Relationship Management – It is the process of carefully managing detailed information about
individual customers and all customer “touch points” to maximize loyalty. It is important because a major driver
of company profitability is the aggregate value of the company’s customer base.

CHAPTER 4 COLLECTING INFORMATION AND FORECASTING DEMAND

It consists of people, equipment, and procedures to gather, sort analyze, evaluate, and distribute needed
timely, and accurate information for decision makers.

INTERNAL RECORDS

The order to payment cycle

 The heart of internal record is order to payment cycle

Sales information system

 It provides timely and accurate sales report to managers to act upon

MARKETING INTELLIGENCE SYSTEMS

It is a set of procedures and sources that managers use to obtain every day information about
developments in marketing environment. It supplies happenings data

Eight ways to improve marketing intelligence

 Train and motivate the sales force to spot and report new developments
 Motivate distributors, retailers, and other intermediaries to pass along important intelligence
 Hire external experts
 Network internally and externally
 Set up a advisory panel
 Take advantage of government related data resources
 Purchase information from outside firms and vendors
 Collecting marketing intelligence on the internet
INDENTIFYING MAJOR FORCES

The demographic environment

 Population growth
 Population age mix
 Ethnic and other markets
 Educational groups
 Household patterns
The economic environment

 Consumer psychology
 Income distribution
 Income, savings , debt, and credit
The sociocultural environment

 Views
 Core cultural values
 Subcultures
The natural environment

The technological environment

 Accelerating pace of growth

 Unlimited opportunities for innovation
 Varying R&D budgets
 Increased regulation of technological change
The political-legal environment

 Increased business legislation

 Growth of special interest groups
MEASURES OF MARKET DEMAND

 Potential market
 Available market
MARKET DEMAND

The total demand of the market is market demand

MARKET FORECAST

Only one level of industry marketing expenditure will actually occur. The marketing demand
corresponding to that level is market forecast

MARKET POTENTIAL

Market potential is the limit approached by market demand as industry marketing expenditures approach
infinity for a given environment

COMPANY DEMAND

Company demand is company’s estimated share of market demand

TOTAL MARKET POTENTIAL

It is the maximum sales available to all the firms in an industry during given period of time.

ESTIMATING FUTURE DEMAND

 Survey of buyer’s intentions
 Composite of sales force
 Expert opinion
 Past sales analysis
 Market test method

Chapter 5 CONDUCTING MARKET RESEARCH

The Scope of Marketing Research

Marketing Research – It is the function that links the consumer, customer, and public to the marketer through
information. It designs the method for collecting information, manages and implements the data collection
process, analyses the results, and communicates the findings and their implications.

 Marketing Insight (Basis of successful marketing programs) – Provide diagnostic information about how
and why we observe certain effects in the marketplace and what that means to marketers.
 Creative and affordable ways to hire the services of a marketing research firm:
 Engage students & Professors to design and carry out projects
 Use the internet
 Check out rivals
 Tap into marketing partner expertise
 Tap into employee creativity and wisdom
The Marketing Research Process

 Step 1: Define the problem

 Step 2: Develop the research plan
 Step 3: Collect the information
 Step 4: Analyze the information
 Step 5: Present the findings.
 Step 6: Make the decision

Data sources of the Marketing Research Process

 Observational Research – Fresh data observed from customers shopping destinations or products consumed
by them.
 Ethnographic Research – Concepts and tools from anthropology and other social science disciplines to
provide deep cultural understanding of how people live and work.
 Focus Group Research – Gathering 6-10 people for demographic, psychographic or other considerations
and convened to discuss various topics at length for a small payment.
 Survey Research – Assessing people’s knowledge, beliefs, preferences, and satisfaction and to measure these
magnitudes in the general population.
 Behavioral Research – Customers leave traces of their purchasing behavior in store scanning the catalogue
purchases and customer databases.
 Research Instruments – Questionnaires & Qualitative Measures
 Deep Metaphors according to Zaltman:

 Balance
 Transformation
 Journey
 Container
 Connection
 Resource
 Control
Neuromarketing – Brain research on the effect of marketing stimuli. Firms use ECG technology to correlate
brand activity with physiological cues such as skin temperature or eye movement and thus gauge how people
react to ads.

Sampling Plan

 Sampling Unit: Whom should we survey?

 Sample Size: How many people should we survey?
 Sampling Procedure: How should we choose the respondents?
Contact Methods

 Mail Contacts
 Telephone Contacts
 Personal Contacts
 Online Contacts
Marketing Metrics – Set of measures that helps marketers quantify, compare and interpret their performance.

Marketing-Mix Modelling – It analyses data from a variety of sources, such as retailer scanner data, company
shipment data, pricing, media, and promotion spending data, to understand more precisely the effects of specific
marketing activities.

Marketing Dashboards – Concise set of interconnected performance drivers to be viewed in common

throughout the organization. Market based-scorecards:

 Customer- performance scorecard records how well the company is doing year after year on customer-based
measures.
 Stakeholder- performance scorecard tracks the satisfaction of various constituents who have a critical
interest in and impact on the company’s performance.
 Figure 5.1 Marketing Measure Pathway

Chapter6: ANALYSING CONSUMER MARKETS

 Consumer behavior is the study of how individuals, groups, and organizations select, buy, use and
dispose of goods, services, or experience to satisfy their needs and wants.
 Consumer’s buying behavior is influenced by culture, social and personal factors.

CULTURAL FACTORS
 Culture is a fundamental determinant of a person’s wants and behavior.
 Each culture consists of smaller subcultures that include nationalities, religions, racial groups, and
geographic regions.
 Social stratification refers to a system by which a society ranks categories of people in a hierarchy
called the social classes. These are, lower lowers, upper lowers, working class, middle class, upper
middles, lower uppers and upper uppers.

SOCIAL FACTORS
These include reference groups, family and social roles and statuses.
 REFERENCE GROUPS: A person’s reference groups are all the groups that have a direct or indirect
influence on their attitudes or behavior.
 Groups that have a direct influence are called membership groups, some of which are primary groups
with whom a person interacts fairly continuously and informally, such as family, friends, neighbors
and co-workers.
 Secondary groups include religious, professionals and trade union groups with which formal
interaction takes place.
 People are also influenced by groups that they do not join:
 Aspirational groups are those that a person hopes to join
 Dissociative groups are those whose values or behavior an individual rejects.
 An opinion leader is the person who offers informal advice or information about a specific product or
product category.
 Cliques are smalls groups whose members interact frequently
FACTORS THAT WORKS TO IGNITE PULIC INTEREST IN AN IDEA BY MALCOLM
GLADWELL:
The Law of the Few – three types of people work to spread the idea like an epidemic.

 Mavens: people knowledgeable about big and small things.

 Connectors: people who know and connect with a great number of people.
 Salesman: who possess natural persuasive power
 Stickiness: an idea must be expressed so that it motivates people to act.

The Power of Context: sees whether those spreading an idea are able to organize groups and
communities around it.

SHILL MARKETING: Some people are paid by companies to anonymously promote their product or
service in public areas. It is also called Stealth Marketing.
 Family is the most influential reference group. It includes:
 Family of orientation – consists of parents and siblings
 Family of procreation – includes the spouse and children

 A role consists of activities a person is expected to perform. Each role connotes a status.

PERSONAL FACTORS:
These include:

 AGE AND STAGE IN THE LIFE CYCLE: taste in food, clothing, furniture and recreation is related
to age.
Consumption is influenced by the family life cycle and the number, age and gender of people in the
household at any point of time.

Psychological life- cycle matters. Behavior of an adult changes as a person goes through the different
stages of life.

Critical life events such as marriage, childbirth, divorce, relocation, etc. requires the help from banks,
lawyers, etc.

 OCCUPATION & ECONOMIC CIRCUMSTANCES: marketers identify different occupational

groups that have major interest in their in their products or service and can even customize for certain
occupational groups. E.g.: computer software companies design different soft wares for lawyers,
brand managers, etc.
 PERSONALITY & SELF-CONCEPT: personality is the set of distinguishing human
psychological traits that lead to relatively consistent and enduring responses to environmental stimuli
including buying behavior.
 Includes trails like self- confidence, dominance, autonomy, sociability, etc.
 Brand personality is the specific mix of human traits that can be attributed to a particular brand.
Traits of Brand personality identified by Jennifer Aaker are
 Sincerity (down to earth, honest, wholesome and cheerful)
 Excitement ( daring, spirited, imaginative and up to date)
 Competence ( reliable, intelligent, successful)
 Sophistication ( upper-class and charming)
 Ruggedness ( outdoorsy and tough)

 LIFESTYLE & VALUES: A lifestyle is a person’s pattern of living in the world as expressed in
activities, interests and opinions. Lifestyles are shaped whether consumers are money constrained or
time constrained.

 Consumer decisions are also influenced by core values, the belief systems that underlie attitudes and
behaviors.

KEY PSYCHOLOGICAL PROCESSES

4 Key psychological processes are motivation, perception, learning and memory.

MOTIVATION
 Biogenic needs – arise from physiological states of tension such as hunger, thirst, discomfort.
 Psychogenic needs – arise from psychological states of tension such as need for recognition, esteem or
belonging.
 Need becomes a motive when it is aroused to a sufficient level of intensity to drive us to act.

THEORIES OF HUMAN MOTIVATION:

FRUED’S THEORY:
 Freud assumed that psychological forces influencing people’s behavior are largely unconscious and
people don’t understand their motivations completely.
 Someone who examines specific brands will react not only to their stated capabilities but also to
other less conscious cues like such as shape, size, weight, etc.
 Laddering technique: a technique that lets us trace a person’s motivations.
 Projective technique: motivation researchers use various projective techniques such as word
associations, sentence completion, picture interpretation, etc.
MASLOW’S THEORY:
 Human needs are arranged in a hierarchy, from physiological needs
to safety needs, social needs, esteem needs, and self-actualization
needs.
 People will satisfy their most important needs first and then move
to the next.

HERZBERG’S THEORY:
2 Factor theory – includes dissatisfies and satisfiers
 The absence of dissatisfiers is not enough to motivate a purchase,
satisfier must be present.
Has two implications:
 Sellers should do their best to avoid dissatisfiers
 The seller should identify the major satisfiers or motivators of purchase.
PERCEPTION:
 Perception is the process by which we select, organize, and interpret information inputs to create a
meaningful picture of the world.
 It depends not only on physical stimuli but also on the stimuli’s relationship to the surrounding
environment.
SELECTIVE ATTENTION: - it means that marketers must work hard to attract consumers notice.
The challenge is to explain which stimuli people will notice. Findings are:

 People are more likely to notice stimuli that relate to a current need.
 People are more likely to notice stimuli they anticipate.
 People are more likely to notice stimuli whose deviations are large in relationship to the normal size
of the stimuli.
SELECTIVE DISTORTION: it is the tendency to interpret information in a way that fits our
preconceptions.

SELECTIVE RETENTION: due to selective retention we are likely to remember the good points
about a product we like and forget good points about the competing products.

SUBLIMINAL PERCEPTION: it requires customer’s active engagement and thoughts. It describes

situations in which weak stimuli are perceived without awareness.

LEARNING:
Learning induces changes in our behavior arising from experience. It is produced through interplay of
drives, stimuli, cues, responses and reinforcement.

 A drive is a strong internal stimulus impelling actions.

 Cues are minor stimuli that determine when, where and how a person responds.
 Discrimination means we have learned to recognize differences in sets of similar stimuli and can
adjust our responses accordingly.
EMOTIONS:
Consumer response might not be cognitive and rational. It may be driven by emotions and invoke
different kinds of feelings.

MEMORY:
 Includes short term memory (STM) - a temporary and limited repository of information, and Long term
memory (LTM) – a more permanent repository.
 ASSOCIATIVE NETWORK MEMORY MODEL views LTM as a set of nodes and links.
 Nodes are stored information connected by links that vary in strength.
 Brand association consists of all brand related thoughts, feelings, perceptions, attitudes, etc.

MEMORY PROCESSES:
 MEMORY ENCODING describes how and where information gets into memory.
 MEMORY RETRIEVAL is the way information gets out of the memory,

THE BUYING DECISION PROCESS: FIVE STAGE MODEL

Problem Recognition: The buying process starts when the buyer recognizes a problem or need
triggered by internal and external stimuli.
INFORMATION SEARCH: consumers search for limited information.

 Two levels of engagement in the search – heightened attention and information search.
 Information sources include personal, commercial, public and
experimental sources.
 Search dynamics - by gathering information the consumer learns about
competing brands and their features.
Total set → Awareness Set → Consideration Set → Choice Set → Decision

EVALUATION OF ALTERNATIVES
Some concepts help us understand consumer evaluation processes.

 The consumer is try to satisfy the needs.

 Consumer is looking for certain benefits from product solutions.
 Consumers sees each product as a bundle of attributes.

BELIEFS & ATTITUDES:

 A belief is a descriptive thought that a person holds about something.
 A person’s enduring favorable or unfavorable evaluations, emotional feelings and actions and
tendencies towards some object or idea.

EXPECTANCY VALUE MODEL:

This model of attitude formation posits that consumers evaluate products and services by combining their
brand beliefs – the positives and negatives.

PURCHASE DECISION:
Consumers often take “mental shortcuts” called heuristics or rule of thumb in this decision process.
There are 3 types: conjunctive heuristics, (set a minimum standard and accept the first product that
meets the standard) lexicographic heuristics, (choose the best brand on the basis of its perceived most
important attribute) and elimination-by-aspects heuristics (When faced with multiple options this
method first identifies a single attribute or feature that is most important to the decision maker and
eliminates products that do not have that attribute).

Intervening Factors:-

 Attitude of Others
 Unanticipated risk factors
1. Financial
2. Physical
3. Functional
4. Social
5. Psychological
6. Time
 Decision Heuristics:-
 Availability
 Representatives
 Anchoring and Adjustment
Framing

 The manner in which choices are presented to and seen by a decision makers
 Mental Accounting :The way consumer’s code, categorize, and evaluate financial outcomes of choices

Chapter 7: Analyzing Business Markets

What is organization buying?

It is a decision-making process by which formal organization establish the need for purchased products and
services to identify, evaluate, and choose among alternative brands and suppliers.

1) Business marketers contrast sharply with consumer markets in some ways, however. They have:

a) Fewer but larger buyers

b) Close supplier-customer relationship

c) Professional purchasing

d) Multiple buying influences

e) Multiple sales call

f) Derived demand

g) Inelastic demand i.e. not much affected by the price changes

h) Fluctuating demand

i) Geographically concentrated buyers i.e. it helps to reduce selling costs

j) Direct purchasing

2) Buying situations -: The business buyer faces many decisions in making a purchase. There are basically
three types of buying situations, namely:

a) Straight rebuy i.e. in a straight rebuy, the purchasing department reorders items like office supplies and
bulk chemicals on a routine basis and chooses from suppliers on an approved list.

b) Modified rebuy i.e. The buyer in the modified rebuy wants to change product specifications, prices,
delivery requirements, or other terms.

c) New task i.e. purchaser buys a product or service for the first time.

3) The buying center -: Webster and Wind call the decision making unit of a buying organization the buying
center. The buying center includes all the members of the organization who play any of seven roles in the
purchase decision process
 a) Initiators

b) Users

c) Influencers i.e. people who influence the buying decisions

d) Deciders i.e. people who decide on product requirements or on suppliers

e) Approvers i.e. people who authorize the proposed actions

f) Buyers

g) Gatekeepers i.e. people who have power to prevent sellers from reaching members of the buying center.

4) Stages in the buying process

Patrick J. Robinson and his associates identified eight stages and called them buy-phases, they are:

a) Problem recognition

b) General need description

c) Product specification

d) Supplier search

e) Proposal solicitation

f) Supplier selection

g) Order-routine specification

h) Performance review.

5) E-Procurement -: Websites are organized around 2 types of e-hubs, vertical hubs centered on industries
(plastics, steels, chemicals, paper) and functional hubs (logistics, media buying, advertising, energy
management). In addition to these websites, companies can use e-procurement in other ways as well

a) Set up direct extranet links to major suppliers

b) Form buying alliances

c) Se up company buying sites

6) Some companies handle price oriented buyers by setting a lower price but establishing restrictive
conditions, a) Limited quantity, b) No refunds, c) No adjustments and d) no services.

7) Several forces influence the development of a relationship between business partners. Four relevant ones
are availability of alternatives, importance of supply, complexity of supply, and supply market dynamism.
Based on these we can classify buyer-supplier relationships into eight categories: -

a) Basic buying and selling

b) Bare bones
 c) Contractual transaction

d) Customer supply

e) Cooperative systems

f) Collaborative

g) Mutually adaptive

h) Customer adaptive

Chapter 8 Tapping into Global Market

A global firm operates in more than one country and captures R&D, production, logistical, marketing and
financial advantages not available to purely domestic competitors.
Some successful Global firms Nike, MTV, and Coca-Cola
 Factors that can draw companies into the International markets:
1 Better profit opportunities than the global markets.
2 Large customer base to achieve economies of scale.
3 Broader market
4 Global completion at home market.
5 Service to international customers.
 Risk involved in going into the global market:
1 Failure in designing competent product.
2 Difference in business culture.
3 Foreign regulations and high costs.
4 Lack of international experience
5 Change in political and business law and foreign currency.
 International process has 4 stages:
 No regular export
 Export via sole agents.
 Establishment of 1 or more sales subsidiaries.
 Production facilities abroad.
 How many markets to enter:
1. Waterfall approach: One at a time. Examples: General Electric, BMW.
2. Sprinklers approach: Many countries together. Example: Microsoft.
3. Thinking global, planning local. Example: KFC

 Different potential markets: Brazil (resource rich), Russia (exporter of gas, oil, steel and aluminum), India
(Youth population and cultural diversity), China (manufacturing and retailing), South Africa (health,
education, social services) Indonesia (popular brands).

 Which market to enter:

1. Indirect exporting: Less investment and risk
2. Direct Export: Domestic Division, overseas subsidiary, sales rep. and foreign agents.
3. Licensing: Engage in international market. Example: Hyatt and Marriot.
4. Joint Ventures: Example McDonalds.
5. Direct Investment: Buying interest company.
 6. Acquisition: Example SABMiller.
 Marketing Program:
Standardized marketing program (low cost) and adapted marketing program (example, Oreo)
Global similarities and differences w.r.t, age, preferences, brand perception, internet usage.
Marketing adaptation: Examples, taste of Coca-Cola, McDonald’s menu layout and staples.
 Global product strategies:
 Product Standardization (Facebook, Twitter)
 Product adaption: Straight extension (no changes), dual adaptation (change in product and
communication), product invention (backward and forward), (new product).
 Brand element adaptation: Change in brand name, logo, slogans and advertisements.
 Global communication strategies: Communication through creative and attractive messages, slogans,
advertisement, etc.
 Global pricing strategies: price escalations, transfer prices, grey markets, counterfeit products.
 Global distribution strategies: intermediaries, transportations, financing, risk management.
 Country of origin effects:
Building country images through movies, emergence of global players etc.
Consumer perception of country of origin: domestic products, reputation of country for a particular
product/service.
Five international product and communication strategies:

Chapter 9: IDENTIFYING MARKET SEGMENTS AND TARGETS

 EFFECTIVE TARGET MARKET REQUIRES:

1. Identify distinct group of buyers with different needs and wants
2. Select multiple markets to enter
3. Establish, communicate and deliver right benefits
 Market segment: group of customers with similar needs and wants
Basis of division
1. Descriptive: geographic, demographic and psychographic
2. Behavioral: consumer benefit, usage occasions
 Geographic segmentation: on the basis of nations, states, regions etc.
 Grassroots marketing: marketers make marketing personally relevant to individual consumer, e.g.: Nike
sponsoring local school teams
 Regional marketing: right down to a specific zip code
 PRIZM: potential rating index, a geoclustering approach considering 5 factors:
1. Education
2. Family life cycle
3. Urbanization
4. Race and ethnicity
5. Mobility

 Demographic segmentation: on variables such as age, family size, family life cycle, gender, income,
generation etc.

US India

Silent generation (1925-1945) Pre independence against oppression

Baby boomers (1946-1964) Post-independence: communist

Gen X (1964-1977) Late after independence: socialist

Gen Y (1977-1994) Liberals: favour capitalism

Millennial Global millennial: pro-capitalist

Psychographic segmentation: using psychology and demographics

1. Strategic business insight’s VALS framework:
2. Classification based on psychographic measurements
3. Main dimensions of VALS segmentation framework are consumer motivation & and consumer
resources
Three primary motivations: ideals, achievement and self- expression
Primary classification:

1. Innovators
2. Survivors
3. Ideals: thinkers & believer
4. Achievement: achievers and strivers
5. Self-expression: experiencers & makers

 Behavioral segmentation: marketers divide consumers into groups on the basis of their knowledge, attitude,
and use of, response.
 Needs and benefits:
 Enthusiasts:
 Image seeker
 Savvy shoppers
 Traditionalist
 Satisfied sippers
 Overwhelmed
 Decision roles: initiator, influencer, decider, buyer and user
 User and usage related variables-
 Occasions: e.g. Air-travel triggered by business vacations, family etc.
 User status: non-users, ex-users, potential users, first time users and regular users
 Usage rate: light, medium and heavy product users
 Buyer-readiness stage: aware, unaware, informed, interested, desire the product, intend to buy.
 Loyalty status: hard core loyals(will buy one brand all the time), split loyal(loyal to 2-3 brands), shifting
Loyal (who shift loyalty)

Attitude: enthusiastic, positive, indifferent, negative, and hostile

 Effective segmentation criteria

Steps in segmentation process:
1. Needs-based segmentation
2. Segment identification
3. Segment attractiveness
4. Segment profitability
5. Segment positioning
6. Segment “acid test”
7. Marketing-mix strategy
 Favorable rate of market segments on 5 criteria:
1. Measurable-size, purchasing power and characteristics of segment
2. Substantial- large, growing and profitable
 3. Accessible- effectively be reached and served
4. Differentiable- distinguishable and respond differently to different marketing mix
5. Actionable – effective program can be formulated
Threats these forces poses: intense segment rivalry, new entrants, substitute products, buyer’s growing
bargaining power & supplier’s growing bargaining power

Selecting market segments to target:

 Full market coverage: firm attempts to serve all customer groups with all the products they might need. E.g...
Microsoft, coca cola etc.
 Multiple segment specialization: diversified segments, which may or may not be inter related. Under this
product and market specialization comes.
 Single segment- firms here concentrate on one segment. E.g... Porsche targets sport car enthusiasts whereas
Volkswagen targets small car market. Under this niche segment also comes, a group seeking distinctive mix
of benefits
 Individual marketing: when firms individualize offerings, messages and media
 Legal and ethical issues with target markets: marketers should not take unfair advantage of vulnerable groups.
Egg. High powered appeals presented by animated characters will overwhelm children and lead them to
consume sugared serials or poorly balanced break fasts.

Chapter 10: CRAFTING THE BRAND POSITIONING

Developing a brand Positioning

All market strategy is built on Segmentation, Targeting and Positioning (STP)

Positioning is the act of designing a company’s offering and image to occupy a distinctive place in the minds
of the target market. For example: Domino’s pizza targets customers who are convenience-minded pizza lovers.
Their value proposition is a delicious and hot pizza delivered promptly to the customer’s doorstep.

Value proposition can be defined as why the target market should buy the product
Positioning requires that marketers define and communicate similarities and differences between their brand
and its competitors. Deciding on positioning requires:

 Choosing a frame of reference by identifying the target market and relevant competition:
It defines which other brands a brand competes with and which should be the focus of competitive analysis.
The process has two steps:
1. Identifying competitors: The starting point for the same would be category membership i.e. the
product or sets of products with which the brand competes
2. Analyzing competitors: This step involves gathering information such as strengths and weakness of
the competitors.

 Identifying the optimal points of parity and points of difference:

 Points of difference: These are benefits that customers strongly associate with a brand, positively evaluate and
believe they could not find to the same extent with a competitive brand. For example, Apple’s POD is its
distinct design, ease of use and management style.
To determine whether a brand association can truly function as points of difference, some key considerations
follow which are desirable to consumer, deliverable by the company and differentiating from competitors.

Points of parity: Attributes or benefit associations that are not necessarily unique to the brand but may in fact
be shared with other brands. They come as follows;
a) Category points of parity: attributes that consumers view as essential to credible offering within a
product category
b) Correlational points of parity: potentially negative associations that arise from the existence of
positive associations for the brand
c) Competitive points of parity: They are designed to overcome weaknesses considering competitor’s
points of difference

Choosing specific POPs and PODs:

Perceptual Maps: Perceptual maps are visual representations of consumer perceptions and preferences
Emotional Branding: Building on the performance gives an advantage to strike an emotional chord with
customers

 Creating a brand mantra:

a) Designing a brand mantra: the three ways to design a brand mantra are communicate simplify and inspire
b) Establishing a brand positioning: the ideal way towards establishment is to follow the 90-10 rule and should
be applicable to at least 80 percent of the products in the brand
c) Communicating category membership: the three ways to convey a brands category membership are
announcing category benefits, comparing to exemplars and relying on the product descriptor
d) Monitoring competition: the useful variables to assess potential threat are share of market, share of mind
and share of heart.
 Narrative Branding: The five elements of narrative branding are:
a) The brand story in terms of words and metaphors
b) The way consumers engage with the brand
c) Expression for the brand
d) The way the brand engages the senses
e) The role the brand plays in lives of consumers

CHAPTER 11- CREATING BRAND EQUITY

 Brand: A name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or
services of one seller or group of sellers and to differentiate them from those of competitors.
 Brand Equity: added value endowed to products and service with consumers. It may be reflected in the
way consumers think, feel and act with respect to the brand as well as prices, market share and profitability.
 The Consumer Based Brand Equity: the differential effect brand knowledge has on customer response to
the marketing of that brand.
 Three ingredients of Brand Equity:
1. Arises from difference on consumer response.
2. Differences are result of consumer's brand knowledge.
3. Reflected in perceptions, preferences and behavior related to the marketing of a brand.
 Brand Promise: marketer's vision of what the brand just be and do for consumers.
 Brand equity models:
a) Brand Asset Valuator Model by advertising agency Young and Rubicam(Y&R):
1. Energized differentiation: degree to which brand is seen different from others and it's pricing power.
2. Relevance: the appropriateness and breadth of a brand's appeal.
3. Esteem: perceptions of quality and loyalty
4. Knowledge: how aware and familiar customers are.

Brand stature=Esteem + Knowledge

Brand strength=Energized differentiation + Relevance

b) Brand Dynamics Model:

1. Power: prediction of brand's volume share
2. Premium: brand's ability to command premium price
3. Potential: probability that a brand will grow value
share.
c) Brand Resonance Model:
1. Brand salience: how often and how easily customers
think of the brand under various consumption and
purchase decisions
2. Brand performance: how well product/service meets
customers' functional needs.
3. Brand imagery: the extrinsic properties of the product or
service.
4. Brand judgments: focus on customer's own personal
opinions and evaluations.
5. Brand feelings: customer's emotional response and
reactions to the brand
6. Brand resonance: how in sync the customers feel with the brand.

 Building Brand Equity

Three main sets of brand equity drivers:

1. Initial choice for brand elements
2. Product and service and all accompanying marketing activities and supporting marketing programs
3. Other associations indirectly transferred typo the brand by linking out to a place/person or a thing.
 Brand Elements: Devices that can be trademarked, that identify and differentiate the brand.
Should be MEMORABLE, MEANINGFUL, LIKABLE, TRANSFERABLE, ADAPTABLE, and
PROTECTABLE.
 Brand Contact: any information bearing experience, whether positive or negative, a customer or prospect
has with the brand, its product category or its market.
 Integrated Marketing: mixing and matching marketing activities to maximize their individual and
collective effects.
 Internal Branding: activities and processes that help inform and inspire employees about brands.
 Important principles for internal branding are:
1. Choose the right moment
 2. Link internal and external marketing
3. Bring the brand alive for employees
4. Keep it simple.
 Brand Value Chain: structured approach to assessing the
sources and outcomes of brand equity and the way marketing activities create brand value.
 Measuring Brand Equity
a) Brand audit- It is a focused series of procedures to assess the health of the brand, uncover its sources of brand
equity and suggest ways to improve and leverage its equity.
b) Brand-tracking studies- It uses the brand audit as input to collect quantitative data from consumers over time
and provide baseline information about how the brands and marketing programs are performing.
 Managing Brand Equity
a) Brand reinforcement- It is explored by creating more brand awareness. It includes brand recall and
recognition, with the aim to improve the strength, favorability, and uniqueness of their customer's brand
associations.
b) Brand revitalization- A strategy to recapture lost sources of brand equity and identify and establish new
sources. This may include product modification or brand repositioning.
 Brand Portfolios- It is the set of all brands and brand lines a particular firm offers for sale in a particular
market segment.
 Brand Extensions- It means introducing a new products under the strongest brand names.
 Customer Equity-It is the total combined customer lifetime values of all the company’s customer.
 Devising Brand Strategy-Reflects number of common and distinctive brand elements, deciding how to
brand new products based on
 Brand line: Consists of all products original as well as line and category extension
 Brand Mix: Set of all brand lines supplied to specific retailers

Chapter 12: ADDRESSING COMPETITION AND DRIVING GROWTH

 Growth strategies:
Grow by building market share, developing committed customers, powerful brand, innovation, acquisitions,
merger & reputation by social responsibility.
 Growing the core: Focusing on their most successful existing products and markets.
(Any industry that is red hot today may be ice cold tomorrow)
Three main strategies for growing the core:
I. Make the core of the brand as extensive as possible (Galaxy chocolate has successfully competed with
Cadbury by positioning itself as” your partner in chocolate indulgence”).
II. Drive distribution through both existing and new channels (Costa Coffee found new distribution routes
using drive through outlets, vending machine and school coffee shops).
III. Offer the core product in new formats or versions (Maruti Suzuki relaunched Alto as Alto K10)
 Market leader: Who has maximum share in the market (Maruti Suzuki).
 Market Challenger: Intends to be dominant & have high aspirations (Hyundai Motors).
 Market Follower: Have some share in market and willing to maintain that (Mahindra, Ford).
 Market Niches: Serving small segments larger firms don’t reach (Audi, BMW).

 Expanding total market demand:

New Customers: Market penetration (those who might use it but do not), new market segment strategy (those
who have never used it) & Geographical expansion strategy (those who live elsewhere).
More Usage: (i) Additional opportunities to use the brand (like a normal digestion pill can also be used as after
party digestion problem precaution pill)
 (ii) New ways to use a brand (ITC, from a tobacco company to products like notebooks and package food)
 Protecting market share
I. Proactive marketing: (i) Responsive marketing (it finds a stated need and fulfils it). (ii) Anticipative
marketing (looks ahead to needs customers may have in near future). (iii) Creative marketing (discovers solutions
customers did not ask for but to which they enthusiastically respond).
A company basically needs 2 proactive skills: Responsive Anticipation (happens before a given change) &
Creative Anticipation (after the change takes place).

II. Defensive Marketing: (i) Position defense - Fortify strengths, USP, occupying most desirable place in
consumers mind (Maruti Suzuki – Service station Ad).
(ii) Flank defense - Safeguard weak areas, protect the weak fronts, Avoid possible counterattack (Colgate into
Herbal paste).
(iii) Preemptive defense - Offense is the best defense, All-round Offence, before any defense (SBI-banker to
this Indian Campaign).
(iv) Counter offensive defense- Counterattack, invade attacker, Attack their flank (Big Bazar Vs. Big Basket,
TOI Vs. The Hindu).
(v) Mobile defense - Market broadening & Diversification (ITC-Lifestyle, Dabur- Real juices)
(vi) Contraction defense - Give up weaker markets & focus on strong ones (Tata’s TOMCO to HLL in 1993).

 Increasing Market Share:

Four factors which companies should consider:
(i) The possibility of provoking antitrust (Microsoft & Intel have had to fend off numerous lawsuits and legal
challenges).
(ii) Economic cost (firm should consider optimal market share, exceeding it might result in fall in market share
gains).
(iii) The danger of pursuing the wrong marketing activities (Companies that attempt to increase market share
by cutting prices more deeply than competitors typically don’t achieve significant gains because rivals meet the
price cuts so buyers do not switch).
(iv) The effect of increased market share on actual and perceived quality (to have enough resources with respect
to the demand company creates in the market).

Market Challenger strategies:

I. Defining the strategic objective and opponent(s): (i) It can attack the market leader, (ii) it can attack firms
of its own size that are not doing the job and are underfinanced, (iii) It can attack small local and legal firms,
(iv) It can attack the status quo.
II. Choosing a general attack strategy: (i) Frontal attack-the attacker matches opponent’s product,
advertising, price and distribution.
(ii) Flank attack – identifying shifts that cause gaps to develop in the market, then rushing to fill gaps.
(iii) Encirclement attack – capturing a wide slice of territory by launching a grand offensive on several fronts.
It makes sense when the challenger commands superior resources.
(iv) Bypass attack – diversifying into unrelated products, diversifying into new geographical markets &
innovation of new products.
(v) Guerrilla attack – small, intermittent attacks, conventional and unconventional, including selective price
cuts, occasional legal actions, to harass the opponents.
 Market follower strategies:
1. Cloner – emulates the leader’s products, name, packaging with slight variations.
2. Imitator – copies something from the leader but differentiates on packaging, advertising, pricing or location.
3. Adapter – takes leader’s products and adapts or improves them.

 Market Nicher strategies:

Creating Niches, Expanding Niches and Protecting Niches – They know their target customers so well they
can meet their needs better than other firms by offering high value, but they can also charge a premium price,
achieve lower manufacturing costs and shape a strong corporate culture and vision.

 Product life cycle Marketing Strategies:

Most product life cycles are portrayed as bell-shaped curves, typically divided into four stages:
(i) Introduction – Period of slow sales growth as the product is
introduced in the market. Profits are non-existent because of heavy
expense of product introduction.
(ii) Growth – Period of rapid market acceptance and substantial profit
improvement.
(iii) Maturity – Slowdown in sales growth because the product has
achieved acceptance by most potential buyers. Profits stabilize or
decline because of increased competition.
(iv) Decline – Sales show a downward drift and profits erode.

 Common Product Life Cycle patterns:

(i) Growth-Slump-Maturity pattern – Sales grow rapidly when the product is first introduced and then fall to
petrified level sustained by late adopters buying the product for the first time or replacing some other product.
(ii) Cycle-Recycle pattern - Pharmaceutical company aggressively promotes its new drug, producing the first
cycle, later sales start declining.
(iii) Scalloped pattern – Sales of nylon showed a scalloped pattern because of many users – parachutes, hosiery,
shirts, carpeting, boat sails, automobile tires – discovered over time.
 Style, fashion & Fad Life cycles:
(i) Style – It can last for generations and can go in and out of vogue.
(ii) Fashion – Four stages- distinctiveness, emulation, mass fashion & decline.
(iii) Fad – Adopted with great zeal, peak early and decline very fast.

 Stages of life cycle:

(i) Introduction – Low sales, high cost per customer, negative profits, few competitors.
(ii) Growth – Rapidly rising sales, average cost per customer, rising profits, growing competitors.
(iii) Maturity – Peak sales, Low cost per customer, high profits, decrease in competitors.
(iv) Decline – Declining sales, low cost per customer, declining profits, declining number of competitors.

Chapter 13: SETTING PRODUCT STRATEGY

A product: Anything that can be offered to market to satisfy a want or need, including physical goods,
services, experiences, events etc.

 Product Levels: The customer-value hierarchy

In its market offering, a marketer needs to address five product levels. Each level adds more customer value
and together the five constitute a customer value hierarchy. They are as follows:

I. Core benefit: It is the service or benefit that the customer is availing

II. Basic product: The additional benefits that come with core benefits
III. Expected product: The quality of the basic product which the customer expects
IV. Augmented product: The product that exceeds the customer’s expectations
V. Potential product: The products that encompasses all the possible product stages
 Product Classifications:
1. Durability and Tangibility: The products are classified as durable, non-durable and services
2. Consumer Goods Classification: They are categorized as shopping goods, specialty goods and unsought
goods.
 Product Differentiation: Products can be differentiated by the following:
1. Form
2. Features
3. Performance Quality
4. Conformance Quality
5. Durability
6. Reliability
7. Reparability
8. Style
9. Customization
 Services Differentiation: Services can be differentiated by the following;
1. Ordering Ease
2. Delivery
3. Installation
4. Customer Training
 5. Customer Consulting
6. Maintenance and Repair
7. Returns
 Design: offers a potent way to differentiate a position a company’s products and services. Design is the
totality of the features that affect the way the product looks, feels and functions. Design can shift consumer
perceptions to make a brand experience more rewarding.
 Luxury Products: upgraded versions of simple products in terms of quality, reliability, durability and
uniqueness. They are sold at a significantly higher price.

Marketing Luxury brands:

1) Controlling and Maintaining Image

2) Making an aspirational image

3) Brand architecture management

4) Attractive logos, symbols, packaging

The Product Hierarchy:

1) Need family(security)
2) Product family (savings and income)
3) Product class (financial institutions)
4) Product line (life insurance)
5) Product type (term life insurance)
6) Item (prudential renewable life insurance)

Product System: A group of diverse but related items that function in a compatible manner

Product Mix: It is a set of all products and items a seller offers to sale

Packaging: All activities of designing and producing the container for a product

Labelling: It is the process of designing and adding a tag or elaborately designed graphic that is a part of the
package

Warranty: Formal statements of expected product performance by the manufacturer

Guarantee: They are statements that reduce the buyer’s perceived risk. A formal assurance that certain
conditions will be fulfilled, especially that a product will be repaired or replaced if not of a specified quality.

Chapter 14 – DESIGNING AND MANAGING SERVICES

 Service: A service is any act or performance one party can offer to another that is essentially
intangible and does not result in the ownership of anything. Its production may or may not be tied to
a physical product. Increasingly, however, manufacturers, distributors, and retailers are providing
value-added services, or simply excellent customer service, to differentiate themselves.
Categories of Service Mix
The service component can be a minor or a major part of the total offering. There are distinguishing five
categories of offerings:
1) Pure tangible good: The offering consists primarily of a tangible good such as soap, toothpaste, or
salt. No services accompany the product.
2) Tangible good with accompanying services: The offering consists of a tangible good accompanied
by one or more services. Typically, the more technologically advanced the product, the greater the
need for a broad range of high-quality supporting services. Services are often crucial for cars,
computers, and cell phones.
3) Hybrid: The offering consists of equal parts goods and services. For example, people patronize
restaurants for both the food and its preparation.
4) Major Service with accompanying minor goods and services: The offering consists of a major
service along with additional services or supporting goods. For example, though the trip includes a
few tangibles such as snacks and drinks, what airline passengers buy is transportation. This service
requires a capital intensive good-an airplane-for its realization, but the primary item is a service.
5) Pure service: The range of service offerings makes it difficult to generalize without a few further
distinctions.

 Services vary as to whether they are equipment based (automated car washes, vending machines) or
people based (window washing, accounting services).
 Service companies can choose among different processes to deliver their service.
 Some services need the client's presence.
 Services may meet a personal need (personal services) or a business need (business services). Service
providers typically develop different marketing programs for personal and business markets.
 Service providers differ in their objectives (profit or nonprofit) and ownership (private or public).
These two characteristics, when crossed, produce four quite different types of organizations.
Distinctive Characteristics of Services
Services have four distinctive characteristics that greatly affect the design of marketing programs:
intangibility, inseparability, variability, and perishability.

1) INTANGIBILITY

Unlike physical products, services cannot be seen, tasted, felt, heard, or smelled before they are bought.
To reduce uncertainty, buyers will look for evidence of quality by drawing inferences from the place,
people, equipment, communication material, symbols, and price. Therefore, the service provider's task is
to "manage the evidence," to "tangibilize the intangible."

2) INSEPARABILITY

Whereas physical goods are manufactured, put into inventory, distributed through multiple resellers, and
consumed later, services are typically produced and consumed simultaneously. Because the client is also
often present as the service is produced, provider-client interaction is a special feature of services
marketing.
3) VARIABILITY

Because the quality of services depends on who provides them, when and where, and to whom, services
are highly variable.

a) Invest in good hiring and training procedures.

Better-trained personnel exhibit six characteristics:

Competence, Courtesy, Credibility, Reliability, Responsiveness and Communication.

b) Standardize the service-performance process throughout the organization...

c) Monitor customer satisfaction.

4) PERISHABILITY
Services cannot be stored, so their perishability can be a problem when demand fluctuates.

Demand or yield management is critical-the right services must be available to the right customers at the
right places at the right times and right prices to maximize profitability.

Several strategies can produce a better match between demand and supply in a service business.

On the demand side:

 Differential pricing will shift some demand from peak to off-peak periods
 Non-Peak demand can be cultivated.
 Complementary services can provide alternatives to waiting customers.
 Reservation systems are a way to manage the demand level.

On the supply side:

 Part-time employees can serve peak demand.

 Peak -time efficiency routines can allow employees to perform only essential tasks during peak
periods.
 Increased consumer participation can be encouraged.
 Shared services can improve offerings.
 Facilities for future expansion can be a good investment.

A Shifting Customer Relationship

Customers complain about inaccurate information; unresponsive, rude, or poorly trained personnel; and
long wait times. Even worse, many customers find their complaints never actually successful reach a live
human being because of slow or faulty phone or online customer service.
It doesn't have to be that way.

E-mail response must be implemented properly to be effective. One expert believes companies should:

(1) Send an automated reply to tell customers when a more complete answer will arrive (ideally within 24
hours);
(2) ensure the subject line always contains the company name;
(3) Make the message easy to scan for relevant information; and
(4) Give customers an easy way to respond with follow-up questions.

PROFIT TIERS
Firms have decided to raise fees and lower service to those customers who barely pay their way and to
coddle big spenders to retain their patronage as long as possible.

CUSTOMER EMPOWERMENT
Customers are becoming more sophisticated about buying product-support services and are pressing for
"services unbundling." They may want separate prices for each service element and the right to select the
elements they want. Customers also increasingly dislike having to deal with a multitude of service
providers handling different types of equipment

COPRODUCTION
The reality is that customers do not merely purchase and use services; they play an active role in the
delivery of that service every step of the way. Their words and actions affect the quality of their service
experiences and those of others, and the productivity of frontline employees
Customer Expectations
Customers form service expectations from many sources, such as past experiences, word of mouth, and
advertising. In general, customers compare the perceived service with the expected service. If the
perceived service falls below the expected service, customers are disappointed. Successful companies
add benefits to their offering that not only satisfy customers but surprise and delight them. Delighting
customers is a matter of exceeding expectations.

The service-quality model in figure below highlights the main requirements for delivering high service
quality.
 It identifies five gaps that cause unsuccessful delivery:

1. Gap between consumer expectation and management perception.

Management does not always correctly perceive what customers want.

2. Gap between management perception and service-quality specification.

Management might correctly perceive customers' wants but not set a performance standard.

3. Gap between service-quality specifications and service delivery.

Personnel might I poorly trained, or incapable offer unwilling to meet the standard; or they may be held
conflicting standards, such as taking time to listen to customers and serving them faster.

4. Gap between service delivery and external communications.

Consumer expectation is affected by statements made by company representatives and ads.

5. Gap between perceived service and expected service.

This gap occurs when the consumer misperceives the service quality the physician may keep visiting
the patient to show car but the patient may interpret this as an indication that something really is wrong.

Based on this service-quality model, researchers identified the following five determinants of service
quality, in order of importance:

I. Reliability: The ability to perform the promised service dependably and accurately
II. Responsiveness: The willingness to help customers and to provide prompt service.
III. Assurance: The knowledge and courtesy of employees and their ability to convey them and
confidence.
IV. Empathy: The provision of caring, individualized attention to customers.
V. Tangibles: The appearance of physical facilities, equipment, personnel, and communication
materials.

BEST PRACTICES OF TOP SERVICE COMPANIES

STRATEGIC CONCEPT
Top service companies are "customer obsessed." They have a clear sense of their target customers and
their needs. They have developed a distinctive strategy for satisfying these needs.

TOP MANAGEMENT COMMITMENT

Many companies have a thorough commitment to service quality. Their managements look not only at
financial performance on a monthly basis, but also at service performance.

HIGH STANDARDS
The best service providers set high service-quality standards. The standards must be set appropriately
high. We can distinguish between companies offering "merely good" service and those offering
"breakthrough" service, aimed at being 100% defect-free

MONITORING SYSTEMS
Top firms audit service performance, both their own and competitors', on a regular basis.

SATISFYING CUSTOMER COMPLAINTS

Companies that encourage disappointed customers to complain and also empower employees to remedy
the situation on the spot-have been shown to achieve higher revenues and greater profits

SATISFYING EMPLOYEES AS WELL AS CUSTOMERS

Excellent service companies know that positive employee attitudes will promote stronger customer
loyalty. Instilling a strong customer orientation in employees can also increase their job satisfaction and
commitment, especially if they're in service settings that allow for a high degree of customer-contact
time. Employees thrive in customer-contact positions when they have an internal drive to (1) pamper
customers, (2) accurately read customer needs, (3) develop a personal relationship with customers, and
(4) deliver quality service to solve customers' problems.

Given the importance of positive employee attitudes to customer satisfaction, service companies must
attract the best employees they can find. They need to market a career rather than just a job. They must
design a sound training program and provide support and rewards for good performance. They can use
the intranet, internal newsletters, daily reminders, and employee roundtables to reinforce customer
centered attitudes. Finally, they must audit employee job satisfaction regularly.

Managing Service Brands

Some of the world's strongest brands are services-consider financial service leaders. Like any brand,
service brands must be skillful at differentiating themselves and developing appropriate brand strategies.
Differentiating Services
Service marketers frequently complain about the difficulty of differentiating their services. The
deregulation of several major service industries-communications, transportation, energy, banking-has
resulted in intense price competition. To the extent that customers view a service as fairly homogeneous,
they care less about the provider than about the price. Marketers, however, can differentiate their service
offerings in many ways, through people and processes that add value. The offering can include
innovative features. What the customer expects is called the primary service package.

Can add second my service features to the package. Many companies are using the web to offer
secondary service features that were never possible before. Conversely, other service providers, are
adding a human element to combat competition from online businesses.

Developing Brand Strategies for Services

Developing brand strategies for a service brand requires special attention to choosing brand elements,
establishing image dimensions, and devising the branding strategy.

DEVISING BRANDING STRATEGY

Finally, services also must consider developing a brand hierarchy and brand portfolio that permits
positioning and targeting of different market segments. Marketers can brand classes of service vertically
on the basis of price and quality. Vertical extensions often require sub branding strategies that combine
the corporate name with an individual brand name or modifier.

 Identifying and Satisfying Customer Needs Customers have three

specific worries:
 They worry about reliability and failure frequency. A farmer may
tolerate a combine that will break down once a year, but not two or
three times a year.
 They worry about downtime. The longer the downtime, the higher the
cost. The customer counts on the seller's service dependability-the
seller's ability to fix the machine quickly, or at least provide a loaner.
 They worry about out-of-pocket costs. How much does the customer
have to spend on regular maintenance and repair costs?

Chapter 15: INTRODUCING NEW MARKET OFFERINGS

New-Product Options

 Make or Buy – A company can add new products through acquisition or development.
Challenges in New Product Development

 The Innovation Imperative

 New-Product Success
 New-Product Failure
 Fragmented Markets
 Social, economic, and governmental constraints
 Cost of development
 Capital Shortages
 Shorter required development time
 Poor launch timing
 Shorter product life cycle
 Lack of organizational support
Organizing New-Product Development

 Cross-functional teams – Develops a specific product or business.

 Crowdsourcing – Unpaid outsiders can offer needed expertise or a different perspective on a task or project
that might otherwise be overlooked.
 Stage-gate systems – Divides the innovation process into stages, with a gate or checkpoint at the end of each.
The stages in the new-product development process is shown in Figure 15.1.

Figure 15.1 the New-Product Development Decision Process

Managing the Development Process: Ideas

 Generating ideas
 Interacting with Employees
 Interacting with Outsiders
 Studying Competitors
 Adopting Creativity Techniques
 Using Idea Screening
 Managing the Development Process: Concept to Strategy

 Concept Development – Involves a category concept that defines the product’s competition.
 Testing – Presenting the product concept to target consumers, physically or symbolically, and getting their
reactions.
Conjoint Analysis – A method for deriving the utility values that consumers attach to varying levels of a
product’s attributes.

Managing the Development Process: Development to commercialization

 Product development
 Physical prototypes
 Customer tests
 Market testing
 Consumer-goods market testing
 Business-goods market testing
Commercialization

 When (timing) – First entry, Parallel entry and Late Entry

 Where - geographic strategy
 To whom – Target market prospects
 How – Introductory market strategy
Consumer Adoption Process

Adoption is an individual’s decision to become a regular use of a product and is followed by the consumer-
loyalty process.

Innovation is any good, service, or idea that someone perceives, as new, no matter how long its history.

Stages in the Adoption Process

1. Awareness – The consumer become aware of the innovation but lacks information about it.
2. Interest – The consumer is stimulated to seek information about the innovation.
3. Evaluation – The consumer considers whether to try the innovation.
4. Trial – The consumer tries the innovation to improve his or her estimate of its value.
5. Adoption – The consumer decides to make full and regular use of the innovation.
Factors Influencing the Adoption Process

 Readiness to try new products and personal influence

 Characteristics of the innovation
 Organizations readiness to adopt the innovations
 CHAPTER 16: DEVELOPING PRICING STRATEGIES AND PROGRAMMES

1. Price- one element of marketing mix that produces revenue

2. Reference prices: price that consumer considers justified to pay for a product/service in comparison to
competitor or in comparison to previously advertised price.
 Possible consumer reference price: fair price, typical price, last price paid, upper bound price, lower bound
price, historical competitor price, expected future price and usual discontinued price.
 Price-Quality inferences: consumer use price as an indicator of quality, higher the price higher the quality.
 Price endings- belief of sellers that prices should end in odd numbers. E.g. price like $299 is perceived to
be in 200 rather than 300 range.
 Setting the price:
 Selecting the pricing objective: survival, maximum current profit, maximum market share, maximum
market skimming, product quality leadership, and other objectives.
1. Determining demand: price sensitivity, price elasticity of demand
2. Estimating cost:
3. Types of cost: variable costs, fixed costs, total cost
4. Accumulated production: average cost falls with accumulated production experience
5. Target costing: cost can change an s a result of concentrated effort by designers, engineers.
6. Analyzing competitors’ price: prices can be set by observing the pricing of competitor’s products
7. Selecting a pricing method: after following all the steps the company is all set to decide the price.
8. Target-return pricing: the price which yield the company the target rate of return on investment
9. Perceived-value pricing: price of a product is determined by its perceived value in the mind of customer.
 Value pricing: fairly low price for high quality products
 EDLP: everyday low pricing: charging a constant low price with little or no price promotion or special
sales.
 Going rate pricing: when firm bases its price largely on competitor’s prices,
 Auction type pricing: in which buyers raise bids in order to take the product from sellers
 Selecting the final price: while selecting the price the firm must consider the additional factors, include
The impact of other marketing activities, company pricing policies etc.

1. Differentiated pricing:
 Customer segment pricing: e.g. - monuments charging low to students
 Product form pricing
 Channel pricing: whether purchased from vending machines, restraint
 Image pricing: e.g. Same perfume sold in different bottles by creating diff. images
 Location pricing: e.g. Theatre prices differently for diff. location of seats
 Time pricing: prices vary by day, hour or season.
2. Delayed quotation pricing: company decides the price when the product is finished or delivered.
3. Escalator clauses: the company require the customers to pay today’s as well as part of any inflation increase
that takes place before delivery.
4. Unbundling: maintaining the price but removing or pricing separately one or more elements of offer.
E.g. installation charges.
 Chapter 17: Designing and managing integrated marketing communication

Marketing communications are means by which firms attempt to inform, persuade and remind consumers
directly or indirectly about the products and brands they sell.

Marketing communications mix consists of eight major modes of communication which are

1) Advertising
2) Sales Promotion
3) Events and experiences
4) Public relations and publicity
5) Online and social media marketing
6) Mobile Marketing
7) Direct and database marketing
8) Personal Selling

The communication process models:

1) Marco model;

2) Micro model
 Developing effective communication:

1) Identify target audience: This process focuses on targeting the buyers, potential buyers, influencers,
groups and individuals.
2) Determine objectives: Communication objectives are set which are as follows:
3) Establish need for category
4) Build brand awareness
5) Build brand attitude
6) Influence brand purchase intention

1) Design communications: formulating the communications to achieve the desired response requires
answering three question which are 1) what to say (message strategy), 2) how to say it (creative strategy) and
3) who should say it (message source)
2) Select channels: Communication channels may be personal (face to face or person to audience conversation)
or non-personal (communication via mass media)
3) Establish budget: This is done by 1) Affordable methods, 2) Percentage of sales method, 3) Competitive
parity method, 4) Objective and task method and 5) Communications budget trade-offs
4) Decide on media mix
5) Measure results: Measuring the effectiveness of the marketing communications mix requires asking
members of the target audience whether they recognize or recall the communication, how many times they
saw it, what points they recall, how they felt about the communication and what their previous and current
attitudes about the product are.
6) Manage integrated marketing communications: Marketing communications planning that recognizes the
added value of a comprehensive plan to evaluate the strategic role of a variety of communication disciplines
and that combines them to provide clarity consistency and maximum impact through the seamless
integration of discrete messages.

Chapter 18: MANAGING MASS COMMUNICATIONS: ADVERTISING, SALES PROMOTIONS,

EVENTS AND EXPERIENCES, AND PUBLIC RELATIONS

 Advertising is any paid form of non-personal presentation and promotion of ideas, goods, or services
by an identified sponsor.

 M’s of Advertising:
1) Mission: What are our advertising objectives
2) Money: How much can we spend and how do we allocate our spending across media types
3) Message: What should the ad campaign say?
4) Media: What media should we use?
5) Measurement: How should we evaluate the results?
 Advertising Objectives:
1) Informative advertising
2) Reminder advertising
3) Reinforcement advertising
4) Persuasive advertising
 Factors to Consider in Setting an Advertising Budget
1 Stage in the product life cycle
2 Market share and consumer base
3 Competition and clutter
4 Advertising frequency
5 Product substitutability
 Developing the Advertising Campaign
1 Message generation and evaluation
2 Creative development and execution
3 Legal and social issues
 Choosing the Media
1 Reach (R): number of households exposed to a particular media schedule at least once during a specific
time period
2 Frequency(F): number of times a particular household is exposed to a media schedule during a specific time
period
3 Impact(I): qualitative value of an exposure through a given medium
4 Total number of Exposure(E): E=R x F, also called Gross Rating Points (GRP)
5 Weighted Number of Exposures (WE): = WE= R x F x I or WE= GRP x I.

 Choosing Among Major Media Types

1 Target audience and media habits
2 Product characteristics
3 Message characteristics
4 Cost
 Major Media Types
6. Outdoor
1. Newspapers
7. Yellow Pages
2. Television
8. Newsletters Brochures
3. Direct mail
9. Telephone
4. Radio
10. Internet
5. Magazines
 Place Advertising
1. Billboards
2. Public spaces
3. Product placement
4. Point-of-purchase
 Factors Affecting Timing Patterns
1. Buyer turnover: expresses the rate at which new buyers enter the market.
2. Purchase frequency: number of times buyer buys the brand in a given time period
3. Forgetting rate: rate at which customer forgets the brand
 Media Schedule Patterns
1. Continuity
2. Concentration
3. Flighting
4. Pulsing
 Evaluating Advertising Effectiveness
 Communication-Effect Research
a) Consumer feedback method
b) Portfolio tests
c) Laboratory tests
1. Sales-Effect Research

Sales promotions consist of a collection of incentive tools, mostly short term, designed to stimulate quicker
or greater purchase of products or services by consumers or the trade.

Why Sponsor Events?

1. To identify with a particular target market or life style
2. To increase brand awareness
3. To create or reinforce consumer perceptions of key brand image associations
4. To enhance corporate image
5. To create experiences and evoke feelings
6. To express commitment to community
7. To entertain key clients or reward employees
8. To permit merchandising or promotional opportunities

Using Sponsored Events

1. Establish objective 3. Design programs
2. Choose events 4. Measure effectiveness

Ideal Events
1. Audience closely matches target market
2. Event generates media attention
3. Event is unique with few sponsors
4. Event lends itself to ancillary activities
5. Event enhances brand image of sponsor

Public Relations: It includes a variety of programs to promote or to protect a company’s image or individual
products.
Tasks Aided by Public Relations
1. Launching new products
2. Repositioning a mature product
3. Building interest in a product category
4. Influencing specific target groups
5. Defending products that have encountered public problems
6. Building the corporate image in a way that reflects favorable on products

Public Relations Functions

1. Press relations
2. Product publicity
3. Corporate communications
4. Lobbying
5. Counseling

Major Tools in Marketing PR

1. Publications
2. Events
3. Sponsorships
4. News
 5. Speeches
6. Public Service Activities
7. Identity Media

Decisions in Marketing PR
1. Establish objectives
2. Choose messages
3. Choose vehicles
4. Implement
5. Evaluate results

Chapter 19 ONLINE MARKETING

A large part of owned media consists of online marketing communications.

Four main categories of online marketing communications-

 Web sites
 Search ads
 Display ads
 E-mail

Advantages
 Marketers can easily trace effects by counting unique visitors
 They can offer and send tailored information
 Contextual placement-can buy ads for their own offering

Disadvantages
 Consumer can easily screen out the messages
 Bogus clicks created by software sites.

ONLINE MARKETING COMMUNICATION OPTIONS

Websites
 Companies must design websites that express their purpose, history, products, and vision.
 The site should download quickly, easy to understand, easy to navigate to other pages.
 Physical attractiveness should be ensured by- individual page should be clean, typeface should visible along
with fond.
Search ads

 An important component of online marketing is paid search.

 Broader search terms are useful and should be
 Search terms should be spotlighted on appropriate pages.
 Display ads

 These are rectangular boxes containing text and pictures that companies pay to place on relevant websites.
 Interstitials are ads that pop up between websites they contain animations and videos.
Email

 It allows marketers to inform and communicate with customers at a fraction of the cost of the direct-mail.
 Emails must be timely, targeted, and relevant.
SOCIAL MEDIA

Social media are a means for consumers to share text, images, audio, and video information with each other
and with other companies.

SOCIAL MEDIA PLATFORMS

 Online Communities and forums

 These are initiated and run by people, consumers etc.
 Blogs
 Blogs are regularly online journals or diaries have become an important outlet for word of mouth.
 Social networks
 Social networks have become an important force in both business to business, business to consumer
marketing.
USING SOCIAL MEDIA

 Social media allows customer to become engaged with a brand at perhaps a deeper and broader level than
before.
 Marketers must understand that when it comes to social media only some customers engage with some
brands and even then, only for some time.
VIRAL MARKETING

 IT is an online form word of mouth that encourages consumers to pass along company developed products
or services.
MOBILE MARKETING

Characteristics of mobile device

 One user
 Always on and carried everywhere
 Allows immediate consumption
 Highly interactive
Effective mobile marketing programs: features

Mobile ad should occupy only 50 % of the screen

 Only pair of phrases should be used
 Logo should be placed in right corner of the ad frame
 Ad should have at least one bright color.
Chapter 20: MANAGING PERSONAL COMMUNICATIONS: DIRECT AND DATABASE
MARKETING AND PERSONAL SELLING.
Direct Marketing

Direct marketing is an interactive marketing system that uses one or more media to effect a measurable
response or transaction at any location.

Benefits of direct marketing:

 For customers: home shopping can be fun, convenient, and hassle-free. It saves time and customers
can do comparative shopping.
 For sellers: direct marketers can have the profiles of customers so that they can customize and
personalized messages. In the long run, direct marketers can build a continuous relationship with each
customer.
 The public and ethical issues in direct marketing (weakness in using direct marketing): irritation,
unfairness, deception and fraud, invasion of privacy.
Channels

Direct marketers can use a number of channels to reach individual prospects and customers:-

 Direct mail: involves sending an offer, announcement, reminder, or other item to a person.
 Catalog marketing: companies may send full-line merchandise catalogs, specialty consumer catalogs,
and business catalogs usually in print form but sometimes as CDs, videos, or online.
 Telemarketing: is the use of the telephone and call centers to attract prospects, sell to existing
customers, and provide service by taking orders and answering questions.
 Other media: direct response advertising (infomercials), at home shopping channels, and interactive
TV.
Interactive Marketing
The newest channels for direct marketing are electronic. The internet provides marketers and consumers
with opportunity for much greater interaction and individualization through well-designed web sites as
well as online ads and promotions. Well-designed web sites have context, content, community,
customization, communication, connection, commerce. The forms of online ads and promotion such as
banner ads, sponsorships, search-related ads (advertisers pay only if people click on the links)

Designing the Sales Force

Sales personnel serve as a company’s link to its customer. Sales representative covers six positions:

 Deliverer
 Order taker
 Missionary
 Technician
 Demand creator
 Solution vendor
Objectives: include prospecting, targeting, communicating, selling, servicing, information gathering and
allocating.

Strategy: choosing the most effective mix of selling approaches either a direct sales force (sales using
telephone and receive visits from buyers and field sales) or contractual sales force (reps receive
commission)

Sales force structures: entails dividing territories by geography/territories, product structure (based on
product lines to customers in many location), or market (based on profiles of industries using the product
lines).

Size: estimates how large the sales force needs to be involves. Suppose there are 1000 A accounts and
2000 B accounts. An accounts require 36 calls a year, and B accounts require 12 calls a year. Thus, a
company needs 60,000 sales calls a year. Suppose the average rep can make 1000 calls a year, the
company would need 60 full-time sales representatives. Compensation: what types of salaries,
commissions, bonuses, expense accounts in determining total compensation?

Managing the Sales Force

There are five steps involved:

 Recruiting and selecting sales representatives (based on sales performance, personality, and skills).
 Training the representatives in sales techniques and in the company’s products, policies, and customer
satisfaction orientation.
 Supervising the sales force (how much time reps should spend prospecting for new accounts) and
helping reps to use their time efficiently (use “phone power”, simplify record keeping, using the
computer).
 Motivating the sales force and balancing quotas, monetary rewards, and supplementary motivators
1. Motivation/Training
2. Efforts
3. Performance
4. Rewards
5. Satisfaction

Evaluating sales representatives (by sales report between activity plan and write-ups of activity results;
and sales performance)

Principles of Personal Selling

Sales training approaches try to transform a salesperson from a passive order taker into an active order
getter who engages in customer problem solving. Most trainers agree that selling is six-step process:

 Prospecting and qualifying prospects: the salesperson can sort out the target market by mail or phone
so that salespeople can assess the prospects’ interest and financial capacity.
 Pre approach about the prospect company: the salesperson could consider what it needs, who is
involved in the purchase decision and its buyers personal characteristic and buying style.
 Presentation and demonstration: the salesperson uses: features of products, advantages (features’
strength relative to competitors’ brands), benefits (economic and social benefit), and value monetary.
 Overcoming objection: the salesperson asks the buyers to clarify their objection.
 Closing: the salesperson offers the specific inducements such as special price, extra quantity so that
consumer will be no regret to make transaction.
 Follow up and maintenance: the salesperson’s visit or call will detect any problem or satisfaction the
target market has

Chapter 21

Marketing Channels: Set of pathways a product or services follows after production, culminating in purchase
and consumption by the final end user.

Merchants: Intermediaries such as wholesalers and retailers who buy take title to and resell the merchandise.
Agents: Intermediaries such as brokers and sales agents who search for customers and negotiate on
producer’s behalf but do not take title to the goods.
Facilitators: Intermediaries such as Transport companies, banks who do not take title to goods nor negotiate
purchases of goods.

In Managing Intermediaries, the firm must decide how much effort to devote to push and to pull marketing.

Push Strategy: It uses the manufacturer’s sales force trade promotion money to induce intermediaries to
carry, promote and sell the product to end users.
Pull Strategy: The manufacturer uses advertising, promotion and other forms of communication to persuade
consumers to demand the product from intermediaries, thus inducing the intermediaries to avoid it.

Multichannel Marketing: It reaches two or more marketing channels to reach customer segments in one
market area.
Integrated marketing channel system: A channel system in which the strategies and tactics of selling
through one channel reflects the strategies and tactics of selling through one or more other channels.
Value Network: A system of partnership and alliances that a firm creates to source, augment and deliver its
offerings.
Marketing Channels:
 Channel-Design Decisions:

1. Analyzing customer needs and wants.

2. Establishing objectives and constraints.
3. Identifying major channel alternative.
 Number of Intermediaries:
 Exclusive Distribution: It severely limits the number of intermediaries.
 Selective Distribution: It relies on only some of the intermediaries willing to carry a particular product
 Intensive Distribution: It places the goods or services in as many outlets as possible.
 Responsibilities of channel members:

1. Price Policy calls for the producers to establish a price list and schedule of discounts and allowances that
intermediaries see as sufficient.
2. Conditions of sale refers to the payment terms and producer guarantees.
3. Distributor’s territorial rights define the distributor’s territories and the terms under which the producer
will enfranchise other distributors.
4. Mutual services and responsibilities must be carefully spelled out, especially in franchised and exclusive-
agency channels.

 Major channel alternatives evaluated on economic, control and adaptive criteria.

 Channel Management Decisions:

1. Selecting channel members.

2. Training and motivating channel members.
3. Evaluating channel members.
4. Modifying channel design and arrangements.
5. Channel Modification Decisions
6. Global channel consideration.

 A conventional marketing channel consists of an independent producer, wholesaler(s), and retailer(s).

 A vertical marketing system includes the producer, wholesaler(s), and retailer(s) acting as unified way.
 A horizontal marketing system is a system in which two or more unrelated companies put together
resources and programs to exploit an emerging marketing opportunity.
 Ecommerce uses a Website to transact or facilitate the sale of products and services online.
 Pure click companies are those companies that have launched a Website without any previous existence as
a firm.
 Brick and click companies are the existing companies that have added an online site for information or e-
commerce.
 M-Commerce marketing practices:

1. Advertising and Promotion.

2. Geofencing: The idea of geofencing is to target customers with a mobile promotion when they are within a
defined geographical space.

 A conflict is generated when one channel member’s action prevent another channel member from achieving
its goal.
 Types of conflicts and competition:
1. A horizontal channel conflict occurs between channel members at the same level.
2. A vertical channel conflict occurs between different levels of the channels.
3. A multichannel conflict exists when the manufacturer has established two or more channels that sell to the
same market.

Strategies to manage channel conflicts:

1. Strategic Justification.
2. Dual Compensation.
3. Superordinate Goals.
4. Employee Exchange.
5. Joint Memberships.
6. Co-optation.
7. Diplomacy.
8. Legal Resources.

CHAPTER 22: MANAGING RETAILING, WHOLESALING AND LOGISTICS

Retailing includes all the activities in selling goods or services directly to final consumers for personal,
nonbusiness use. A retailer is any business enterprise whose sales volumes comes primarily from retailing.
Consumers today can shop for goods and services at store retailers, non-store retailers, and retail organizations.
a) Store retailers -: Perhaps the best-known store is the department store. It is mainly of 4 levels of service -

1. Self Service
2. Self-Selection
3. Limited service
4. Full service
b) Non-Store retailing -: Mostly found in stores, but it has been growing quickly through e commerce and m
commerce. Non-store retailing falls under 4 major categories –

1. Direct Marketing
2. Direct Selling
3. Automatic Vending
4. Buying service
Major types of corporate retail organizations: -

1. Corporate chain store – Two or more outlets owned and controlled for ex Pottery Barn
2. Voluntary chain – Wholesaler sponsored group of independent retailer’s ex IGA
3. Retailer Cooperative – Independent retailers using a central buying org
4. Consumer cooperative – A retail firm owned by its customers
5. Franchise org – Contractual association between a franchisor and franchisees Ex Marriot
6. Merchandising conglomerate – Combining several diversified retailing lines and forms under central
ownership, with some integration of distribution and management.
Private label brand -: A private label brand also called distributor/reseller brand is a brand that retailers and
wholesalers develop. Benetton, the body shop, and Marks & Spencer carry mostly own brand merchandise.
 Wholesaling includes all the activities in selling goods or services to those who buy for resale or business
use. Wholesalers can perform one or more of the following functions-

a) Selling and promoting

b) Buying and assortment building

c) Bulk breaking

d) Warehousing

e) Transportation

f) Financing

g) Risk bearing

h) Market info

I) Management services and counseling

Market Logistics includes planning the infra to meet demand, then implementing and controlling the
physical flows of materials and final goods from points of origin to points of use to meet customer requirements
at a profit. It has 4 steps –

a) Deciding on the company’s value proposition to its customer.

b) Selecting the best channel

c) Developing operational excellence in sales forecasting, warehouse management, material management

d) Implementing the solution.

CHAPTER 23: MANAGING A HOLISTIC MARKETING ORGANIZATION FOR THE LONG RUN
IMPORTANT SHIFTS IN MARKETING AND BUSINESS PRACTICES:

1. Reengineering- building processes and breakdown walls between departments.

2. Outsourcing – buying goods and services from outside domestic or foreign vendors.
3. Benchmarking – Studying best practice companies to improve performance.
4. Supplier partnering – Partnering with fewer but better value adding suppliers.
5. Customer partnering – Working more closely with customers to add value to operations.
6. Merging – Acquiring or merging with firms to gain economies of scale and scope.
7. Globalizing – Increasing efforts to thin global & act local.
8. Flattering – Reducing the number of organizational levels to get closer to customer.
9. Focusing – Determining most profitable business and customers and focusing on them.
10. Justifying – Becoming more accountable by measuring analyzing and documenting the effects of marketing
actions.
11. Accelerating – Respond more quickly to changes in environment.
 12. Empowering – Produce more ideas and take more initiative.
13. Broadening – Factoring the interests of customers, employees, shareholders and stakeholders.
14. Monitoring – Tracking what is said online and offline.
15. Uncovering – Using data mining and analytical methods to develop customer insights.

Internal marketing – everyone in the organization accepts the concepts and goals of marketing and engage in
identifying, providing and communicating customer value.

Organizing the Marketing Department:

(i) Functional organization - Marketing vice president coordinates following activities: marketing
administration, advertising and sales promotion, sales manager, marketing research manager and new products
manager.
(ii) Geographic organization – There are national sales manager who supervises regional managers who
supervises zonal managers who supervises district managers who supervises salespeople.
(iii) Product or brand management organization – HUB & SPOKE system, the product or brand manager is at
the center, with spokes leading to various departments representing working relationships.

PRODUCT TEAMS: (iv) Marketing management organization – Market cantered organizations and customer
management organization, which deals with individual customers rather than the mass market or even market
segments.
(v) Matrix management organization – Companies with multiple product line may adopt matrix organization
employing both product and market managers.

Socially responsible marketing:

Taking a more active, strategic role in corporate social responsibility is thought to benefit not just customers,
employees, community and the environment but also shareholders.

Corporate social responsibility:

Raising the level of socially responsible marketing calls for
making a three-pronged attack that relies on proper legal, ethical,
social responsibility behavior.

Legal behavior – Organizations should ensure every employee

knows and observes relevant laws.
Ethical behavior – Business practices come under attack
because business situations routinely pose ethical dilemmas.
Social Responsibility behavior – Marketers must exercise their
social conscience in specific dealings with customers and
stakeholders (some top-rated companies for CSR are Whole
Foods, Walt Disney, Coca-Cola, and Google).
Sustainability – the ability to meet humanity’s needs without harming future generations- now tops many
corporate agendas.
Social Marketing:
 (i) Cognitive campaigns – Explain nutritional values of
different foods
(ii) Behavioral campaigns – Demotivate cigarette
smoking
(iii) Action campaigns – Motivate people to say yes on a
certain issue
(iv)Value campaigns – Alter ideas about abortion.

Marketing Control:
The process by which firms assess the effects of their
marketing activities and programs and make necessary
changes and adjustments.
(i) Annual-Plan Control – Ensures the company achieves
the sales, profits and other goals established in its annual
plan.
(ii) Profitability Control – Companies should measure
profitability of their products, territories, customer groups,
segments, trade channels and order sizes to help the
determine the next step of marketing.
(iii) Efficiency Control – Find efficient ways to manage sales force, advertising, sales promotions and
distribution.
(iv) Strategic control – Companies should reassess its strategic approach to the marketplace with a good
marketing audit.
MARKETING AUDIT – It is a comprehensive, systematic, independent, and periodic examination of a
company’s or business unit’s marketing environment, objectives, strategies and activities.
(i) Comprehensive – Covers all the major marketing activities of a business
(ii) Systematic – Most important improvement is in higher priority
(iii) Independent – Self audits, in which managers rate their own operations.
(iv) Periodic – Time to time audit