Chapter 1: Managing Profitable Customer Relationship
5 - Step Model of Marketing Process
Step 1: understand the
Marketplace and Customer
Needs and Wants
5 basic Marketing Concepts:
A) Needs – basic necessity-
physical needs, social needs
etc
Wants- shaped by culture
and personality.
Demand=wants+buying
power
B) Market Offerings- p&s,
experience offered to a
market
C) Value & Satisfaction –
customer have expectations
about the value and
satisfaction that market
offerings will deliver and buy
accordingly.
D) Exchange – act of
obtaining a desired object
from someone by offering
something in return.
Exchange> relationship
E) market – set of actual &
potential buyers of a product.
Step 2: Design a customer-
driven marketing strategy
i) choose target market
ii) choose value proposition
Marketing Mgmt: art & science
of choosing target market &
building profitable relationship
with them.
5 Alternative Concepts:
A. Production- lower
production costs
B. Product –product
improvement
C. Selling – sell unsought
products
D. Marketing- customer-
centered
E. Societal Marketing – deliver
value to customers by
maintaining/improving
consumer and society’s
wellbeing.
sfc)u
n
o
C
(W
ati lSiyp
ert&
m fi
Step 3: Construct a marketing Step 4: Build Profitable Step5: Capture value from
program that delivers relationship & create customers to create profit &
superior value customer delight customer equity
Marketing program consist of A. Customer relationship A. Create Loyalty and
marketing mix (4 Ps) Management (CRM) Retention – customer delight
A. Product - Process of building & creates emotional
B. Price maintaining CR by delivering relationship with a p&s.
C. Place superior customer value and
D. Promotion satisfaction. B. Growing Share of
i) customer value: customer Customers – the share the
evaluation of the benefits and company gets of customers
costs of a p&s as compared to purchasing in their product
its competitor. (benefits- categories.
cost=customer value)
ii) customer satisfaction C. Building Customer Equity –
depends on: own customers for life by
- product’s perceived capturing their lifetime value.
performance (P)
- buyer’s expectations (E)
3 situations:
- P=E  satisfied
- P<E  Dissatisfied
- P>E  Delighted/Happy
B. Partner Relationship
Management (PRM)
-inside> employees fr other
dept
-outside> distributors,
suppliers,retailers
Chapter 2: Company and Marketing Strategy: Partnering to build Customer Relationship

Strategic planning is the process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing
opportunities.

4- Step in Strategic Planning

Step 1: Defining a Market-
Oriented Mission
organization’s purpose—
what it wants to accomplish
“invisible hand”
market oriented
Step 2: Setting Company
Objectives and Goals
The company turns its
mission into detailed
supporting objectives.
Step 3: Designing the Business Portfolio Step 4: Planning Marketing: Partnering to
Build Customer Relationships
A Business portfolio is the collection of 1. Partnering with Other departments
businesses and products within the company
-should work in harmony
Business portfolio planning involves: -O
rati
e
p
R Fin
vlo
d kTIfgyget all dept to “think customer”
tsch
m & M
1. Analyzing the Current Portfolio
i. identify SBU.
ii. assess attractiveness of SBUs
iii. decide how much support each deserves.

2. Shape Future Portfolio by

i. Developing Strategies for Growth
Existing Product New Products
Product
Existing 2. Partnering with Others in the Marketing
Market Development
System
Penetration -modified or
Market suppliers, distributors, and customers.
-Make > sales new
products.

Market Diversification
Development -start or buy
New
-New product
Market Demographic outside their
/ geographic current
market product

ii.Downsizing- close non-profitable SBUs

Marketing Strategy -this is the broad logic under which the company attempts to develop profitable relationships.

Customer-Driven Marketing Strategy Managing the Marketing Effort

This process involves market segmentation, market targeting, Includes four marketing management functions of analysis, planning,
differentiation, and positioning. implementation, and control.
Marketing Analysis
Analysis should be performed to understand the markets and marketing
Market Segmentation divide
environment the company faces.
SWOT analysis

Market Targeting Evaluate and select

Market Differentiation Positioning is arranging the product to

& Positioning have desirable position in consumers
minds

Marketing mix (4 Ps)

A. Product – goods and services offered
B. Price – money customers pay Using SWOT:
C. Place – make the product available 1. Analyze Market & Marketing environment. (Find O&T)
D. Promotion- the activities that communicate 2. Analyze S & W to determine which O to pursue.
3. Match S with O, overcome W & minimize T.
Chapter 6: Customer-Driven Marketing Strategy: Creating Value for Target Customers

Step1: Market segmentation Step2: Target Marketing Step 3: Market Positioning

dividing a market into smaller groups of buyers with The place a product occupies in consumers’
distinct needs, characteristics, or behaviors mind relative to competing products.

4 Bases of Segmentation: 3 steps in differentiation & positioning:

A. Geographic -nations, regions, states, 1. identify Competitive Advantage (CA)
B. Demographic - age, gender, family size 2. Choose the right CA
C. Psychographic- social class, lifestyle, or personality 3. Select Positioning Strategy.
characteristics.
D. Behavioral- knowledge, attitudes, uses, CA- advantage over competitors gained by
i) Occasion offering greater value. (↓P/give >benefits)
ii)Benefit Sources of CA:
iii) User Status 1. Product
iv) Usage 2. services
v)Loyalty Status 3. channels
4. people
Left-handedness is not measured. 5. image
Measurable
Therefore, unable to profile the
(M) Developing positioning statement is how a
segment.
company and brand positioning is done.
Co must target a segment that has
Strategies Advantages Disadvantages
Accessible (A) similar purchasing place or live in the To (target segment and need)
Undifferentiated Save cost Product not
same area. our (brand)
(mass creative,
is (concept)
Substantial The number of people in the segment marketing) more
that (point of difference).
(S) must be in a size that is profitable. competition
Differentiated Stronger Increase cost
The different segments must respond (Segmented positioning
Differentiable
differently to the marketing mix marketing) in each
(D)
applied to them. segment,
The size of the company must be able > sales
Actionable Concentrated Highly Highly rely on
to serve or act upon the segments
(A) (Niche profitable one/a few
that they created.
marketing) segment.
Micromarketing personalized, High cost,
(local or info- logistic prob,
individual intensive, brand image
marketing) long-term diluted
Chapter 7: Products, Services, and Brands: Building Customer Value

Levels of Products and Services 2. Branding – identify maker and distinguish them from competitors
1. Core value/benefit – What is the Elements: Brand Name (Spoken), Mark (symbol), Legal Trading Name
buyer really buying? Advantages of branding to :
2. Actual product – design, features, Buyer Seller
brand name Identify product Basis for product quality
3. Augmented product – Brand says quality & consistency Trademark, legal protection
additional .Support and warranty. Loyal customers know they get the Segment market
same features & quality
Product Classification:
A. Consumer Product: for personal consumption 3. Packaging- design & produce container/wrapper. It can protect elements
Convenience Shopping Specialty Unsought and market the brand.
Buying Frequent, Less frequent, Special Little
behavior immediately plan&compare purchase interest or 4. Labeling: 3 functions: (IDP) – Identifies, describes, promotes
quality, P, effort, accept knowledge
style no substitute 5. Product Support Services
Price Low Higher than High Varies To enhance customer service and satisfaction, safeguard against competition
convenience
Distribution Many Fewer than Exclusive in a Varies
Locations convenience few outlets
Example Toothpaste Clothing, TV Rolex Watch Life
Insurance
B. Industrial Product: for conducting business
C. Other Market Offerings
Organization, Person, Places, Ideas.
Product and Service Decision Branding Strategy.
1. Attributes : define the benefits Brand Strength is measured based on customer perception of:
Quality Features Design 1. differentiation
1. Level Competitive Style and design can add 2. relevance
Ability to perform its tool for value 3. knowledge
function. differentiatin Style – appearance 4. esteem
e.g. Phone can be used to g e.g thickness, screen size Powerful Brand -> High Brand Equity->provides competitive advantage
call, message, internet Design contributes to
2. Consistency e.g thumb product’s usefulness and
Free fr defects, consistent in print looks.
performance recognition e.g camera location. User
e.g phone does not lag or friendly (easy to hold)
shut down after using
Branding Strategy: Building Strong Brands Service Marketing
1. Brand Positioning : 3 levels Nature of Services
Product Attributes Desirable Benefits Beliefs and Values Intangibility Inseparability
Characteristics that Cost effectiveness, Hits consumer at a Airline passengers have nothing but Provider=service
differentiate with image that can satisfy deeper level, touching a ticket and the promise that they If the car service employee provides
others such as size, customer needs and universal emotions and their luggage will arrive safely at the service, then the employee
color wants the destination. becomes a part of the service.
Toothpaste can focus Focus on resulting in Focus on how they give Variability Perishability
on their ingredients teeth-whitening customers healthy, Marriot Hotels have reputation of Can’t be stored for later use.
and good taste benefits beautiful smiles for life good service. But certain Marriot Hotel rooms cannot be stored for
2. Brand Name Selection – choose a desirable name for your product Hotels staff may be unpleasant and later use. Co. tries to increase
slow. occupancy by offering lower rates.
3. Brand Sponsorship
Manufacturer’s Brand Distributor’s Brand
- Sell product under their own - Sell products under reseller’s
Manufacturer’s Brand brand
e.g Unilever Products –> Unilever e.g Unilever Product -> Tesco Brand
Brands
Licensed Brand Co- branding
- Rent a brand to other co. for a 2 brand names of 2 companies used
royalty or a fee on the same product.
e.g Walt Disney, Cartoon Network e.g Disney and Crocs Shoes

4. Brand Development

Line extension Brand Extension

Existing -New Forms, color, sizes, Use current brand name to a
ingredients or flavour. new category
Brand E.g. Pantene Shampoo with e.gDrypers brand extended to
different ingredients toddler toiletries

Existing Product Category New Products Category

Multibrands
one category, many brands
e.g. Unilever Co. has Sunlight
and Cif brand
New Brands
- to compete with other
brands
believe that the existing
brand is declining.
e.g Matsuhita brands -
Panasonic, Technics, National

New
Chapter 8: Developing New Products and Managing the Product Life- Cycle.

New Product Development is the development of the original products, product improvements, modification, and new brands through firm’s own R&D effort.
A firm can obtain new products in two ways:
1. Acquisition—by buying a whole company, a patent, or a license
2. New-product development efforts.
Stage 1: Idea Generation – in search of new product ideas Step 5: Business Analysis
Internal sources: Review of sales, costs and profit projections
- Formal R&D process
- Pick the brains of its employees at all levels. Stage 6: Product Development
External sources: produce physical product.
1. Customers A large jump in investment.
2. Competitors
3. Distributors/Resellers Stage 7: Test Marketing
4. Suppliers introduced into realistic market settings.
5. Outsourcing
6. Crowdsourcing Stage 8: Commercialization
introducing the new product into the market.
Stage 2: Idea Screening - go through ideas and select feasible ones Decisions must be made concerning:
• Timing,
Stage 3: Concept Development and Testing • Where to launch the new product
- Product Idea is an idea of possible product • Market rollout.
- Product concept is a detailed idea
- Product image is how consumers perceive an actual product.

Concept Development – Several descriptions of the product are generated.

Concept Testing – test chosen concept with groups of target consumers.

Stage 4: Marketing Strategy and Development

Designing an initial marketing strategy for introducing new product
Product Life Cycle Stages (PLC)

The product life cycle has four distinct stages:

1.Introduction 2.Growth 3.Maturity 4.Decline

Competitors few growing stable & decline declining
Sales Slow growth rising Slowdown growth Declining
Cost per High average low Low
customer
Profit -/ low rising high Declining
Marketing Create awareness and Maximize market share Maximize profit & defend Reduce expenses
Objectives trial market share
Strategies Offer basic product Offer extension, service Diversify brand and Remove weak ones
:Product warranty model
Price Cost plus Maintain or lower price Match/beat competitors Cut price
Place/ Selective Intensive intensive Phase out unprofitable
Distribution ones
Promotion > ADV and sales promo >ADV, reduce sales promo >ADV to stress brand Reduce ADV & sales
benefit, increase sales promo
promo

Maturity Stage Strategies Decline Stage Strategies

1. Modifying the market 1. Maintain its brand
- increase consumption of current product.
e.g. WD-40 is for cleaning and protect tools. They expanded their market by 2. harvest the product (reduce cost)
finding new uses for WD-40. (for cleaning blackboards,repel a bear)
3. drop the product
2. Modifying the Product
-changing the quality, feature or style.
e.g. Toyota Vios facelift to attract buyers who want a new look.

3.Modifying the Marketing Mix

- changing one or more marketing mix elements
e.g Nissan can give discount on their price to attract more buyers. They can
also launch more print AD, TV and radio AD to promote their cars.
Chapter 9: Pricing Considerations and Strategies: Understanding and Capturing Customer Value

Factors Affecting Price Decisions New Product Pricing Strategies

1. Customer Perceptions of Value (Value-Based Pricing) _customer Market Skimming Pricing Market Penetration Pricing
driven, not based on cost. High Initial Price Low Initial Price
1.1 Good-value Pricing ( Right combination at fair price) Product high quality & image Market must be price sensitive
McD Value Meals When lower price, sales increase
1.2 Value-added Pricing (add features to support higher price) Production costs for small Production costs must fall when
Tupperware offers lifetime warranty. Prices remain high. quantity cannot be too high sales increase
Competitor cannot enter easily Low price keep out competitors-
2. Company and Product Costs (Cost-Based Pricing)_Product driven maintain low price
Price= cost+ return rate
2.1 Cost Plus Pricing = cost + standard mark up. Product Mix Pricing Strategies
= RM20+RM10 (50% mark up) Pricing Description Examples
2.2 Break Even Analysis/Target Profit Pricing- The firm tries to determine Strategies
the price at which it will break even or make the target profit it is Product Line Setting price steps Sony TV product lines:
seeking. between product line 1. BRAVIA LED –RM1-2K.
Other Considerations items. 2. LED Smart- RM5-6K.
1. Internal 3. Curved Screen RM8-10K
1.1 Marketing Strategy, Objective and Mix Optional Pricing optional Buy laptop- carrying case is
1.2 Organization (Who sets the price) -Product products/ accessories optional
2. External sold with main product
2.1 The Market and Demand Captive- Pricing product that HP printer – Printer
Pure Com Monopolistic Oligopolistic Monopoly Product must be used together cartridges
No of Many Many Few One By-product Pricing low value by- Zoos can sell their by-
seller products to get rid of product, animal waste and
Product Uniform Differentiate Uniform Astro, TNB them save on disposal costs.
(wheat, d (steel) Product Pricing bundles of McD Value Meals
copper) (toothpaste) Non-uniform Bundle products sold together
(cars)
Barriers No No Yes, high cost Yes,
to entry or technology government
control
Control No Yes Yes Yes
Price
2.2 Competitors’ strategies and Prices
Price Adjustment Strategies

Pricing Strategies Examples

Discount & Cash discount – price discount when paying
allowances bills early
Trade-in allowances – price reduction when
turning in an old item.
Segmented
 Customer-segment Children and adult pay different ticket prices
pricing to Sunway Lagoon.
 Product-form Different version of G-Shock watches are
pricing priced differently.
 Location pricing Tickets for different locations in a
theatre/stadium is priced differently
 Time pricing Parking fees are charged differently on
weekdays and weekends.
Psychology pricing Pricing based on psychological effect.
Perceived higher price as having higher
quality.
Promotional Pricing Temporarily reducing prices to increase short-
run sales. JCard Day
Geographical Pricing FOB-origin pricing, Uniform-delivered pricing,
Zone pricing, Basing-point pricing, Freight-
absorption
Dynamic Pricing Adjusting prices Based on situations
International Pricing Adjusting prices for international markets
Chapter 10
Marketing (Distribution) Channel- system that enhances the physical
flow of goods and services from producer to consumer/business user.
Marketing Intermediaries – organizations between producers & user.
1. retailer
2. wholesaler and etc
Supply Chain Management (SCM) – Managing upstream and
downstream value-added flow of materials, final goods and information
among suppliers, co, resellers and final consumers.
SCM
Marketing (Distribution) Channel

How intermediaries add value: perform key functions:

- To complete transactions
Marketing Logistics (Physical Distribution)
 Information - Planning, implementing & controlling the physical flow of materials,
 Promotion final goods & info from origin to consumer to meet their
 Contact requirement at a profit.
 Matching - 1. Outbound logistic
 Negotiation - 2. Inbound logistic
- to fulfill the completed transactions - 3. Reverse logistic
 Physical distribution -
 Financing Major Logistic Functions
 Risk taking 1. Warehousing – when production & consumption do not match.
Types of Channel 2. Inventory Management- balance between carrying too much or too
little inventory
Direct Channel – no intermediary, producers sell directly to end users 3. Transportation – shipping products via trucks, rail, water, pipeline
Indirect Channel – one/more intermediaries and air.
4. Logistic Information Management- suppliers, wholesalers, retailers
link up IT system.
Chapter 11
Retailing- selling p&s directly to final consumer for their personal use.
Types of retailers Description
Specialty Stores Narrow product lines,
deep assortment
Department stores Wide variety of product
lines, each in separate
dept
Supermarkets Wide variety of food,
laundry & household
products. Large,Low-
cost,low-margin,high-
volume
Convenience Stores Limited product lines,
Small, open long hours.
Superstores Deep assortment of a
( Category Killers) particular line, Very large
specialty stores
Superstores Large assortment of food
(Hypermarkets) products, non-food and
services. Bigger than
Supermarket.
Wholesaling- selling p&s to those who resell or business use.
Examples Functions provided by wholesalers.
Vincci, Popular 1. Selling and promoting
2. Buying and assortment building
Parkson 3. bulk breaking
4. warehousing
5. transportation
Giant 6. Financing
7. risk bearing
8. market information
9. management services and advices
7-eleven Types of wholesalers:
1. Merchant wholesalers – own the goods
IKEA 2. Brokers & agents – do not own the goods
2.1 Brokers- bring buyer and seller together for negotiations. E.g real
estate brokers.
AEONBig 2.2 agents – represent buyers or sellers on a more permanent basis.
Chapter 12,13,14

3 Major Advertising Objectives:

Promotion Mix Tools 1. Informative – new product
1. Advertising Paid form of non- TV, Billboard, 2. Persuasive – to compete with competitors
personal presentation newspaper 3. Reminder - mature product
2. Sales Promotion Short-run incentives to Coupon, contest
encourage sales Public Relation tools:
3. Direct Marketing Direct connections with Tele- marketing, 1. Publicity
targeted individual direct mail 2. Special Publication
4. Personal Selling Personal presentation by 1-1 selling or cars 3. Community Project
sales force 4. Fund-raising
5. Public Relations Building good Fund raising, event 5. Special Event Sponsorship
relationship with public sponsorship 6. Public Affairs activities
for favorable publicity Tools Advantage Disadvantage
1. Advertising Advertiser control impersonal
Integrated Marketing Communication (IMC) – integration of its many message
communication channels to deliver a clear, consistent and compelling 2. Sales Promotion Attract attention Effects short-lived
message. 3. Direct Selective and specific Low response rate
Marketing
4. Personal Selling More flexible, specific expensive
5. Public Relations Very believable Cannot control
message
Promotion Mix Strategies: Push or Pull
Personal Selling Direct Marketing
Salesperson directly interacts with (potential)customers. Connecting directly with carefully targeted individual consumers to:
1. get immediate response
Steps in Selling Process 2. build lasting relationship
1. Prospecting & Find potential customers and screen them
qualifying Forms of Traditional Direct Marketing
2. Pre-approach Learn more about a prospect before calling 1. Direct Mail
3. Approach Meeting for the first time 2. Catalog Marketing
4. Presentation & Tell “product story” & benefits to buyers 3. Telemarketing
demonstration 4. Direct Response TV
5. Handling Seek out, clarify & overcome objections 5. Kiosk Marketing
Objections 6. Internet Marketing
6. Closing Ask customer for an order
7. Follow-up After sales, to ensure satisfaction & repeat Forms of Digital Marketing
business 1. Online Marketing
2. Social Media Marketing
Sales Promotion 3. Mobile Marketing
Short-term incentives to encourage purchase
Consumer Promotion
1. Coupon
2. Sampling
3. Premium-offered for free (gifts)
4. cash refund
5. contest
6. POP display/demo
Trade Promotion
1. free advertising items – pens, calendar,memo pads
2. Price deal (discount / allowances)
3. sales contest (for salespeople)
4. Trade shows (exhibition)
Chapter 3 Chapter 5
Microenvironment – actors close to the co. Characteristics Affecting Consumer Behavior
Company Depts in the co. e.g Accounts, purchasing, R&D. Culture Culture, Subculture and Values, perception, wants
Suppliers Provide the resources when needed Social class & behaviours
Intermediaries Resellers, logistics co, marketing services, financial Social Reference group, People around the
Customers Consumer, business, reseller, family, roles and status individual
government,international Personal Age & life Cycle, Based on individual
Competitors Products are substitutes Occupation, economic differences
Publics Financial, media,government, general public. situation,
lifestyle,personality
Macroenvironment- larger societal forces Psychological Motivation, perception, Based on individuals
Demographic Population size, location, age, gender, race, learning,beliefs & thinking
occupation attitudes
Economics Purchasing power and spending pattern
Natural Availability of natural resources, environmental Buyers Decision Process
issues Steps Description
Technological New products and methodologies, e-commerce 1.Need Recognition Buyers recognize a need
Political Law and regulations 2. Information search Search for information from
Cultural Society basic values, perception, preferences, different sources
behavior 3. Evaluation of alternatives Process information and evaluate
alternatives
4. Purchase decision Buy most preferred brand
5. Postpurchase behaviour P<E = disappointment,
P=E = satisfied
P>E = Delightful