Table of Contents

Chapter 1.....................................................................................................................................................2
Chapter 2.....................................................................................................................................................6
Chapter 3...................................................................................................................................................13
Chapter 4...................................................................................................................................................19
Chapter 5...................................................................................................................................................25
Chapter 6...................................................................................................................................................29
Chapter 7...................................................................................................................................................35
 Chapter 1
Marketing: The strategic business function that creates value by stimulating, facilitating and fulfilling
customer demand.

Marketing mix: usually referring to E. Jerome McCarthy's 4 P classification for developing an effective
marketing strategy, which encompasses: product, price, placement (distribution) and promotion. When
it's a consumer-centric marketing mix, it has been extended to include three more Ps: people, process
and physical evidence, and three Cs: cost, consumer and competitor. Depending on the industry and the
target of the marketing plan, marketing managers will take various approaches to each of the four Ps.

Shareholders: Any person, company or other institution that owns at least one share of a company’s
stock. Shareholders are company's owners. They have the potential to profit if the company does well,
but that comes with the potential to lose if the company does poorly. A shareholder may also be
referred to as a "stockholder".

Stakeholders: A party that has an interest in an enterprise or project. The primary stakeholders in a
typical corporation are its investors, employees, customers and suppliers. However, modern theory goes
beyond this conventional notion to embrace additional stakeholders such as the community,
government and trade associations.

Consumer: the ultimate user of a good or service.

Need: the difference between a consumer’s actual state and some ideal or desired state.

Want: the desire for a particular product to satisfy a need in specific ways that depend on an individual’s
history, learning experiences and cultural environment.

Benefit: a product delivers a benefit when it satisfies a need or want.

Demand: results when one couples desire with buying power to satisfy a want.

Marketplaces: are the host locations for exchanges.

Several ways to generate value:

Form utility: the benefit marketing provides by transforming raw materials into finished products.

Place utility: the benefit marketing provides by making products available where customers want them.

Time utility: the benefit marketing provides by storing products until they are needed.

Possession utility: the benefit marketing provides by enabling the consumer to own and use the product
or to store it for future. For example, a bride can hire or buy her wedding dress.
Marketing is about exchanging relationships

Exchange: an exchange occurs when something is obtained in return for something else. For exchange
to occur, at least two people or an organization must be willing to make a trade, and each must have
something the other wants.

The evolution of the marketing concept:

1. Production era up until 1930: Works best in a seller’s market when demand is greater than
supply because it focuses on the most efficient ways to produce products. = Production
orientation

2. The selling era, 1920-64: A company-centered approach to business, which means that
management tries to move products rather than meeting customer needs and wants. = Selling
orientation

3. The consumer era, 1957-98: A customer-centered approach based on finding out what
customers want and need and then offering that. = Consumer orientation

4. The new era, make money and act ethically 1988 to the present. That means building long-
term bonds with customers and acknowledging the role of business within society.
This approach relies on customer relationship management (CRM), which involves
systematically tracking preferences and behaviors over time to tailor a value proposition. = New
era orientation


Social Marketing concept: maintains that marketers must satisfy customers’ needs in ways that are not
only profitable for the firm but also benefit society.

Green marketing strategy: an effort to choose packages, product designs and other aspects of the
marketing mix that are earth friendly but still profitable.

The consumer bill of rights

1. The right to be safe: products should not be dangerous when used as intended.
2. The right to be informed: businesses should provide consumers with adequate information to
make intelligent product choices. This right means that product information provided by
advertising, packaging and salespeople should be honest and complete.
3. The right to be heard: consumers should have the means to complain or express their
displeasure in order to obtain redress or retribution from companies.
4. The right to choose freely: consumers should be able to choose from a variety of products. No
one business should be allowed to control the price, quality, or availability of goods and
services.
How to imagine value: imagination is fundamental to marketing, creating value by finding better ways
of spending marketing money.

When you want to create ideas, you need to generate a stream of ideas to create value at three levels:

1. Strategic marketing investment

2. Value proposition
3. Marketing mix.

Book page 23.

How to predict value: the ways that you predict how marketing ideas will generate value before
choosing to implement them. This is different from the forecasting during annual budgeting.
There are three main approaches to choose from:

1. Extrapolations from the past

2. Simulations of the future
3. Analogies and scenarios

How to demonstrate value:

1. Find out exactly how and why marketing money is being used.
2. Find out how customers responded to marketing activities.
3. Investigate the patterns of revenues and profits
4. Gather data from outside your own firm.

What can be marketed?

1. Consumer goods and services: consumer goods are tangible products that individual consumers
purchase. Services are intangible products that we pay for and use but never own.
2. Business to business goods and services: is the marketing for goods and services from one
organization to another for further processing or for use in their business operations.
3. Not for profit marketing: Many not for profit organizations, including museums, zoos, charities
and even churches, practice the marketing concepts.
4. Idea, place and people marketing: marketing principles also get people to endorse ideas or to
improve their behavior.

Value has 2 perspective

1. From customer’s perspective: this value proposition includes the whole bundle of benefits the
firm promises to deliver not just the benefits of the product itself.
 2. From the seller’s perspective: it determines whether the exchange is profitable for the seller or
not.

Lifetime value of a customer: companies look at how much profit they expect to make from a particular
customer, including each and every purchase he or she will make from them now and in the future.

Creating competitive advantage: 1. identify the distinctive competency, 2. Turn the distinctive
competency into a differential benefit.

Competitive advantage: occurs when providing customers with a benefit the competition cannot, thus
giving consumers a reason to choose one product over another.

Distinctive competency: a firm’s capability which is superior to that of its competition.

Differential benefit: sets product apart from competitors products by providing either something
unique or more of something that customers want.

Value chain: this term refers to a series of activities involved in designing, producing, marketing,
delivering and supporting any product.

The main activities of a value chain are:

1. Bringing in materials to make the product = Logistics.

2. Converting the materials into the final product = Operations.
3. Shipping out the final product = Outbound logistics.
4. Marketing the final product = Marketing and sales.
5. Servicing the product/customer = Service.

Dark side of consumer behavior includes:

1. Addictive consumption: consumer addiction is a physiological or psychological dependency on

products or services. These problems include alcoholism, drug addiction and cigarettes.
2. Exploited people: sometimes people are used or exploited, willingly or not, for commercial gain
in the marketplace; these situations range from travelling road shows that feature dwarves and
midgets to the selling of body parts and babies on eBay.
3. Illegal activities: the cost of crimes committed against business has been estimated at around 4
billion pound per year. This includes attempts to put false items on an insurance bill to cover the
amount deducted because the item was old, to sneaking into a theatre to avoid paying
admission or to download music files from illegal file-sharing systems on the internet.
4. Shrinkage: a retail theft is committed every five seconds. Shrinkage is the industry term for
inventory and cash losses from shoplifting and employee theft. This is a massive problem for
businesses that is passed on to consumers in the form of higher prices.
Marketing as a progress

Marketing plan: document that describes the marketing environment, outlines the marketing objectives
and strategy and identifies who will be responsible for carrying out each part of the strategy.
Marketing mix : For determining the best way to present a good or service for consumers’
consideration’ marketers.

The marketing mix consist of four different elements. Product, place, price, promotion = 4Ps

First P product: a good or service, an idea, a place or a person, overall whatever is offered for sale in the
exchange.

Second P price: the amount the consumer must exchange to receive the offering.

Third P Promotion: all the activities marketers undertake to inform consumers about their products and
to encourage potential customers to buy these products.

Fourth P Place: refers to the availability of the product to the customer at the desired time and location.
This P is related to a channel of distribution.

Chapter 2
Business planning: an ongoing process of making decisions that guide the firm both in the short term
and the long haul. Planning identifies and builds on a firms strengths and it helps managers at all levels
make informed decisions in a changing business environment.
Marketing plan: a document that describes the marketing environment, outlines the marketing
objectives and strategies, and identifies how the strategies embedded in the plan will be implemented
and controlled.

The business plan has three levels of planning:

See book page 51!

1) Strategic planning: This planning is done by top level corporate management. This part consist
of Define the mission, Evaluate the internal and external environment, Set organizational or
business unit objectives, Establish the business portfolio, Develop growth strategies
Definition: is the managerial decision process that matches the firms resources (such as its
financial assets and workforce) and capabilities (the things it is able to do well because of its
expertise and experience) to its market opportunities for long term growth.
2) Functional planning: planning done by top functional level management such as the firms
marketing director. First perform a situation, Second set marketing objectives, Third develop
marketing strategies, Fourth implement marketing strategies, Fifth monitor and control
marketing strategies
Definition: functional planning or tactical planning, gets its name because it is accomplished by
the various functional areas of the firm, such as marketing, finance and human resources.
Functional planning typically includes both a broad five year plan to support the firm’s strategic
plan and a detailed annual plan for the coming year
3) Operational planning: planning done by supervisory managers. First develop action plan to
implement the marketing plan, Second use marketing metrics to monitor how the plan is
working.
Definition: operational planning focuses on the day to day execution of the functional plans and
includes detailed annual, semi-annual or quarterly plans. And it might show exactly how many
units of a product a salesperson needs to sell per month or how many television commercials
the firm will place on certain channels during a season.

Steps in the strategic planning process are:

 Define the mission

 Evaluate the environment
 Set objectives
 Establish the business portfolio
 Develop growth strategies

1st step: Strategic planning:

Strategic business units (SBUs): Individual units representing different areas of business within the firm
that are each different enough to have their own mission, business objectives, resources, managers and
competitors.

Mission statement: a formal document that describes the organization’s overall purpose and what it
hopes to achieve in terms of its customers, products and resources.
2nd step: Evaluate the internal and external environment

Environmental analysis: includes a discussion of the firm’s internal environment (strengths and
weaknesses), as well as the external environment (opportunities and threats). = SWOT analysis.

PESTEL analysis: a framework or tool used by marketers to analyze and monitor the external marketing
environment factors that have an impact on an organization. The result of this is used to identify threats
and weaknesses which is used in a SWOT analysis. PESTEL consist of Political, Economic, Social,
Technological, Legal and Environmental.

Indicators of economic health:

GNP (Growth national product): measures the value of all goods and services produced by a country’s
individuals or organizations, whether located within the country’s border or not.

GDP (Growth domestic product): The total value of goods and services a country produces within its
borders in a year.

Economic infrastructure: the quality of a country’s distribution, financial and communications systems.

Standard of living: an indicator of the average quality and quantity of goods and services a country
consumes.

Levels of economic development:

1. LDC (Less developed country): economic base is agricultural, most nations in Africa and
South America.
2. Developing countries: economy shifts from agriculture to industry. Standards of living,
education and the use of technology rise.
3. Developed countries: boasting sophisticated marketing systems, strong private
enterprise and market potential for many goods and services. Advanced economy.

Business cycle: All pattern of changes or fluctuations of an economy. Prosperity, recession and recovery.
Huge effect on consumers.

The competitive environment

Competitive intelligence: the action of defining, gathering, analyzing, and distributing intelligence about

products, customers, competitors, and any aspect of the environment needed to support executives and
managers making strategic decisions for an organization.
Disposable income: the amount of money people have left after paying for necessities.

Product competition: competitors offering different products in attempt to satisfy the same consumers,
needs and wants.

Brand competition: competitors offering similar goods or services fight for a share of the consumer’s
wallet.

Monopoly: one seller controls a market because the seller is the only player in town. Feels little pressure
to keep prices low or to produce quality goods or services.

Oligopoly: relatively small number of sellers, each holding substantial market share in a market
consisting of many buyers. Because there are few sellers each is very conscious of the others actions. =
Airline industry.
Monopolistic competition: many sellers who compete for buyers in a market. Each firm, however, offers
a slightly different product, and each has only a small share of the market. = Sports shoe manufacturers,
Nike reebok adidas...

Perfect competition: many small sellers, each offering basically the same good or service. No single firm
has a significant impact on quality, price or supply.

Technical Environment

Patent: legal document issued from a country’s patent office that gives inventors or individuals and
firms the exclusive rights to produce and sell a particular invention in a country (or countries).

The political and legal environment

Nationalization: when a domestic government reimburses a foreign company (often not for the full
value) for its assets after taking it over.

Expropriation: a domestic government seizes a foreign country’s assets.

Local content rules: are a form of protectionism stipulating that says a certain of the proportion of a
product must consist of components supplied by industries in the host country or economic community.

Socio-cultural environment
Refers to the characteristics of the society, the people who live in that society and the culture that
reflects the values and beliefs of the society.

Demographics: these are statistics that measure observable aspects of a population, such as size, age,
gender, ethnic group, income, education, occupation and family structure.
There are three different norms:

1. Custom: is a norm handed down from the past that controls basic behavior, such as the
division of labor in a household.
2. Mores: are customs with a strong moral overtone. Mores often involve a taboo, or
forbidden behavior, such as incest or cannibalism. Violation of mores often meets with
strong punishment from other members of society.
3. Conventions: are norms regarding the conduct of everyday life. These rules deal with
the subtleties of consumer behavior, including the ‘correct’ way to furnish one’s house,
wear one’s clothes, host a dinner party, and so on.
Ethnocentrism: is the tendency to prefer products or people of one’s own culture over those from other
countries.

3rd step: Set organizational or SBU objectives

SMART: Specific-Measurable-Attainable-Relevant-Time bound

1. Specific: Can the detail in the information sufficient to pinpoint problems or

opportunities? Is the objective sufficiently detailed to measure real-world problems
and opportunities?
2. Measurable: Can a quantitative or qualitative attribute be applied to create a metric?
3. Actionable: Can the information be used to improve performance? If the objective
doesn’t change behavior in staff to help them improve performance, there is little point
in it!
4. Relevant: Can the information be applied to the specific problem faced by the
marketer?
5. Time-related: Can the information be viewed through time to identify trends?

4th step Establish business portfolio

Book page 70.

To establish the business portfolio we have to remember three facts

1. For firms with different SBUs, planning also includes allocating resources among the
businesses.
2. Each SBU is a separate profit center within the larger corporation.
3. Each SBU is responsible for its own costs, revenues and profits.
Portfolio analysis: is a tool management used to assess the potential of a firm’s businesses portfolio. It
helps management decide which of its current SBUs should receive more – or less- of the firm’s
resources, and which of its SBUs are most consistent with portfolio analysis process.

BCG growth-market share matrix: focuses on determining the potential of a firm’s existing successful
SBUs to generate cash that the firm can the use to invest in other businesses.

Book page 72.

Stars: SBUs whose products have a dominant market share in high-growth markets.

 Requires funding to keep up with production and promotion demands.

 Strategies seek to maximize market share in the face of increasing competition.

Cash cows: have a dominant market share in a low-growth potential market.

 Product is well established and market share can be maintained easily.

 Firms milk cows of profits to fund growth of other products in portfolio.
 Too many cows can become a liability due to the lack of growth potential.

Question marks: SBUs with low market shares in fast-growth markets

 Sometimes called problem children

 The firm has failed to compete effectively.
 The dilemma? Investing more money into the SBU may
 improve market share in a high potential market; OR
 Result in negative cash flow and failure.

Dogs: have a small share of a slow-growth market.

 Specialized products in limited markets unlikely to grow.

 Firms may sell dogs to smaller firms or eliminate product from market.

5th: Develop growth

Book page 73

1. Market penetration strategies: seek to increase sale of existing products to existing

markets such as current users, non-users and users of competing brands within a
market.
2. Market development strategies: introduce existing products to new markets.
Expanding into a new geographic area, or reaching new customer segments within an
existing geographic market.
3. Product development strategies: create growth by selling new products in existing
market. Product development may mean extending the firm’s product line by
 developing new variations of the item, or it may mean altering the firm’s product to
provide enhanced performance.
4. Diversification strategies: emphasize both new products and new markets to achieve
growth.

Steps of marketing planning:

1. Perform a situation analysis: the first step in developing a marketing plan is for
marketing managers to conduct an analysis of the marketing environment. SWOT
analysis by searching out information about the environment that specifically affects
marketing communications program.

2. Set marketing objectives: once marketing managers have a thorough understanding of

the marketing environment, the next step is to develop specific marketing objectives.
Marketing objectives are more specific to the firm’s brands, sizes, product features and
other marketing mix related elements.

3. Develop marketing strategies: in the next stage of the marketing planning process,
marketing managers develop their actual marketing strategies. They make decisions
about what activities they must accomplish to achieve the marketing objectives.
 Selecting a target market: the target market is the market segment selected because
of the firm’s belief that its offerings are most suited to winning those customers. The
firm assesses the potential demand- the number of consumers it believes are willing
and able to pay for its products- and decides it has the distinctive competencies that
will create a competitive advantage in the marketplace among target consumers.
 Developing marketing mix strategies: marketing mix decisions identify how
marketing will accomplish its objectives in the firms target markets by using product,
price, promotion and place (4 Ps) it is important to note that these should be
mutually reinforcing and supporting and not decisions taken in isolation.
1st p – Product: the most fundamental part of the marketing mix, firms simply can’t
make profit without something to sell
2nd p - Price: determines how much a firm charges for a product.
3rd p – Promotion: is how marketers communicate product benefits and features to
the target market.
4th p – Place: or distribution strategies outline how, when and where the firm will
make the product available to targeted customers (the place component).

4. Implement and control the marketing plan: once the plan is developed it’s time to get
to work and make it successful. During the implementation phase, marketers must
have some means to determine to what degree they are actually meeting their stated
marketing objectives. Often called control, this formal process of monitoring progress
entails the three step of (1) measuring actual performance (2) comparing this
performance to the established marketing objectives or strategies (3) making
adjustments to the objectives or strategies on the basis of this analysis.
ROMI (return on marketing investment): how an investment on marketing affects the firm’s success,
financially and otherwise.

This concept heightens the importance of identifying and tracking appropriate marketing metrics.

Action plan: document that lists what steps must be taken in order to achieve a specific goal.

Action plan template:

1. Title of action plan: give the action plan a relevant name

2. Purpose of action plan: what do you hope to accomplish by the action plan, what specific
marketing objective and strategy within the marketing plan does it support?
3. Description of action plan: what are the steps involved? This is the core of the action plan. It
describes what must be done in order to accomplish the intended purpose
4. Responsibility for the action plan: what person(s) or organizational units are responsible for
carrying out the action plan? What external parties are needed to make it happen? Who specifically
has final ownership of the action plan? Who is accountable for it?
5. Timeline for the action plan: provide a specific timetable of events leading to the completion of the
plan. If different people are responsible for different elements of the timeline, provide that
information.
6. Budget for the action plan: how much will implementation of the action plan cost? The sum of all
the individual action plan budget items will ultimately be aggregated by category to create the
overall budget for the marketing plan
7. Measurement and control of the action plan: indicate the appropriate metrics, how and when
they will be measured, and who will measure them?
Corporate culture: determines much of its internal environment. That means value, norms and beliefs
that influence the behavior of everyone in the organization.

World trade: refers to the flow of goods and services among different countries – the value of all the
exports and imports of the world’s nations.
Learning the table is important.

GATT later WTO: established under the UE (United Nations) after the Second World War, the general
agreement on tariffs and trade (GATT) did a lot to reduce the problems that protectionism creates. This
regulatory group is now known as the World Trade Organization (WTO). The WTO was established
During GAAT, s 1986-94 Uruguay Round and effectively replaced GATT in 1995.
The WTO nearly has 150 members (and around 30 more negotiating memberships), the WTO member
nations account for over 97 per cent of the world trade. The objective of WTO is to help trade flow
smoothly, freely, fairly and predictable.

Economic communities: coordinate trade policies and ease restrictions on the flow of products and
capital across their borders.

Protectionism: government adopts policies in which it enforces rules on foreign firms designed to give
home companies an advantage.

Quotas: are limitations on the amount of a product allowed to enter or leave a country. Quotas can
make goods more expensive to a country’s citizens because the absence of cheaper foreign goods
reduces pressure on domestic firms to lower their prices.

Embargo: is an extreme quota that prohibits specified foreign goods completely.

Tariffs: or taxes on imported goods, gives domestic competitors an advantage in the marketplace by
making foreign competitors’ goods more expensive than their own goods.
Choosing a market-entry strategy
Book page 89

Licensing agreement: a firm (the licenser) gives another firm (the licensee) the right to produce and
market its product in a specific country or region in return for royalties.

Franchising: is a form of licensing that gives the franchisee the right to adapt an entire way of doing
business in the host country.

Joint venture: two or more firms create a new entity to allow the partners to pool their resources for
common goals.

Born global firms: these are companies that deliberately try to sell their products in several countries
from the moment they are created rather than taking the usual path of developing business in their local
market and then slowly expanding into other countries.

Choosing a market mix strategy

Straight extension strategy: retains the same product for domestic and foreign markets

Product adaptation strategy: recognizes that in many cases people in different cultures do have strong
and different product preferences.

Product invention strategy: means a company develops a new product as it expands to foreign market.

Grey market goods: or parallel imports are items that are imported without the consent of the
trademark holder.
 Chapter 3
MKIS: marketing information system is a process that first determines what information marketing
managers need and then gathers, sorts, analyses, stores and distributes relevant and timely marketing
information to system users. Note MKIS also known as MIS.

Making and delivering value: making marketing value => understanding consumer’s value needs =>
creating the value proposition => communicating the value proposition => Delivering the value
proposition. Book page 107

MKIS system includes three important components:

1. Four types of data:

 1. Internal company data: the internal company data system uses information from within
the company to produce reports on the results of the sales and marketing activities.
Intranet: is an internal corporate communications network that uses internet technology to link
company department, employee and databases

 2. Marketing intelligence: a method by which marketers get information about everyday

happening in the marketing environment.
Futurists: people who try to imagine different scenarios, or possible future situation that might occur
and assign a level of probability to each

 3. Marketing research: refers to the process of collecting, analyzing and interpreting data
about customers, competitors and the business environment to improve marketing
effectiveness.

Syndicated research: is general research collected by firms on a regular basis, then sold to other firms.

Custom research: is research conducted for a single firm to provide answers to specific question. This
kind of research is especially helpful for firms when they need to know more about why certain trends
have surfaced.

 4. Acquired databases: a large amount of information that can be useful in marketing

decision making is available in the form of external databases.
2. Computer hardware and software to analyze that data and to create reports
3. Information and the decision makers who use it.
MDSS: or marketing decision support system is a system that includes analysis and interactive
software that allows marketing managers, even those who are not computer experts, to access
MKIS data and conduct their own analyses, often over the company intranet.
Statistical modeling software: allows managers to examine complex relationships among
factors in the marketplace.
Data mining: is a process in which analysis sift through data to identify unique patterns of behavior
among different customer groups.
Data mining can be used in four different categories:

1. Customer acquisition: many firms work hard to include demographic and other information
about customers in their database.
2. Customer retention and loyalty: the firm can identify big spending customers and then target
them for special offers and inducements other customers won’t receive. Keeping the most
profitable customers coming back is a great way to build business success because keeping good
customers is less expensive than constantly finding new ones.
3. Customer abandonment: sometimes a firm wants customers to take their business elsewhere
because servicing them actually costs the firm too much.
Market basket analysis: firm can develop focused promotional strategies based on their records of
which customers have bought certain products.

7 Steps in the marketing research process

Book page 117

1. Define the research problem: the first step in the marketing research process is to clearly
understand what information managers need. This step referred to as defining the research
problem.
 Specifying the research objectives: what questions will the research attempt to answer.
 Identifying the consumers population of interest: what are the characteristics of the
consumer groups of interest
 Placing the problem in an environmental context: what factors in the firms internal and
external business environment might be influencing the situation.
2. Determine the research design: once marketers have isolated specific problems, the second step of
the research process is to decide on a plan of attack. This is the research design, which specifies
exactly what information marketers will collect and what type of study they will do.
 Secondary research: the very first question marketers must ask themselves when
determining their research design is whether the information required to make a decision
already exists or not. Note: it is often helpful to start with the secondary research as a first
step even if it does not lead to the actual solution, it may give a better understanding of the
research problem or aid in the design of further primary research.
 Secondary data: data that have been collected for some purpose other than the problem at
hand are called secondary data.
 Primary research: information collected directly from respondents to specifically address
the question at hand. It includes demographic and psychological information about
customers and prospective customers, customers’ attitudes and opinions about products
and competing products, as well as their awareness or knowledge about a product and their
beliefs about the people who use those products.
 Exploratory (qualitative) research: is research conducted for a problem that has not been
clearly defined. It often occurs before we know enough to make conceptual distinctions or
posit an explanatory relationship. Exploratory research helps determine the
best research design, data collection method and selection of subjects. Marketers use
exploratory research to generate topics for future, more rigorous studies to come up with
 ideas for new strategies and opportunities or perhaps just to get a better handle on a
problem they are currently experiencing with a product.
 Consumer interviews: are one on one discussion in which an individual shares his or her
thoughts in person with a researcher.
 Focus group: is the technique that marketing researchers used most often for collecting
exploratory data. Focus groups typically consist of five to nine consumers who have been
recruited because they share certain characteristics.
 Projective techniques: to get at peoples underlying feelings, especially when they think that
people will be unable or unwilling to express their true reactions about it
 Case study: is a comprehensive examination of a particular firm or organization. In business
to business marketing research in which the customers are other firms, for example,
researchers may try to learn how one particular company makes its purchases. The goal is to
identify the key decision makers, to learn what criteria they emphasis when choosing among
suppliers and perhaps to learn something about any conflicts and rivalries among these
decision makers that may influence their choices.
 Ethnography: is a different kind of in depth report. It is a technique borrowed from
anthropologists who go to live with the native from months or even years. This approach
has been adapted by some marketing researchers who visit peoples home or participate in
real life consumer activities to get a handle on how they really use products.
 Descriptive (quantitative) research: probes systematically into the marketing problem and
bases its conclusions on a larger sample of participants. Descriptive research is typically
expressed in quantitative terms-averages, percentages or other statistics summarizing
results from a large set of measurements.
 Cross-sectional design: this approach usually involves the systematic collection of responses
to a consumer survey instrument, such as a questionnaire, from one or more samples of
respondents at one point in time.
 Longitudinal design: tracks the responses of the same sample of respondents over time.
 Causal research: attempts to understand cause-and-effect relationships. Marketers use it
when they want to know if a change in something is responsible for a change in something
else.
3. Choose the method for collecting primary data: in this step researchers try to figure out just how to
collect the data. Primary data collection methods can be broadly described as either survey or
observation.
 Survey methods: survey methods involve some kind of interview or other direct contact
with respondents who answer questions.
 Questionnaires: with a totally unstructured questionnaire, the researcher loosely
determines the questions in advance.
 Mail questionnaires: are easy to administer and offer a high degree of anonymity to
respondents.
 Telephone interviews: usually consist of a brief phone conversation in which an interviewer
reads a short list of questions to the respondent.
 Face to face interviews: a live interviewer asks questions of one respondent at a which
allowed the interviewer to adapt questions to the specific situation and possibly gain deeper
insights, that’s much less common today because of fears about security and because the
large numbers of dual income families make it less likely to find people at home during the
day.
  Online questionnaires: are growing in popularity, mainly due to their ability to reach a large
number of people, speed of distribution and collection and low cost.
 Observational methods: observation is a type of data collection that uses a passive
instrument in which the researcher simply records the consumer’s behavior- often without
their knowledge.
 Personal observation: they simply watch consumers in action to understand how they react
to marketing activities.
 Unobtrusive measures: that measure traces of physical evidence which remain after some
action has been taken when they suspect that people will probably alter their behavior if
they know they are being observed.
 Mechanical observation: is a primary data collection method that relies on non-human
devices to record behavior.
 Three factor influence the quality of research results:
 Validity: is the extent to which the research actually measures what it was intended to
measure.
 Reliability: is the extent to which the research measurement techniques are free of errors.
 Representativeness: is the extent to which consumers in the study are similar to a larger
group in which the organization has an interest. This criterion for evaluating research
underscores the importance of sampling, the process of selecting respondents for a study.

Online research:
Online research is very fast, it’s relatively cheap and it lends itself well to forms of research from
simple questionnaires to focus groups.
 Cookies: are text files inserted by a website sponsor into a user’s hard drive when the user
connects with the site. Cookies remember details of a visit to a website, typically tracking which
pages the user visits.
 There are some ways companies are using the internet to get feedback from consumers four of
them is in below.
first new-product development Second estimating market response Third exploratory
research Fourth Instant messaging.
 Disadvantages of online data collection
 Poor people and elderly do not have equal access to the internet.
 Many people who participate just for enjoyment or for getting paid
 Competitors can learn about a firms marketing plans, products,…
 Unclear who is responding
 No assurance of honesty
 Limitations inherent with self-selected samples
 Advantages of online data collection
 It is very faster than the traditional ways
 No time limit
 Flexible question patterns
 Low cost
 No interviewer bias
 Access regardless of geographic location
4. Design the sample: in this step we indicate from whom we should obtain the necessary data. In this
stage researchers collect most of their data from a sample of the population of interest. There are
two main types of samples: probability and non-probability samples.
 Probability sampling: each member of the population has some known chance of being included in
the sample. Using a probability sample ensure that the sample is representative of the population
and that inferences about the population made from the sample are justified.
 Simple random sampling: the most basic type of probability sample is a simple random sample in
which every member of a population has a known and equal chance of being included in the study.
In most studies, the population from which the sample will be drawn is too large for a hat, so
marketers generate a random sample from a list of members of the population using a computer
program
 Systematic sampling: sometimes researchers use a systematic sampling procedure to select
member of a population in which they pick the nth member of a population after a random start.
Researcher know that studies that use systematic samples are just as accurate as with simple
random samples.
 Stratified sampling: another type of probability sample is a stratified sample in which a researcher
divides the population into segments that are related to the study’s topic.
 Non-probability sampling: entails the use of personal judgment in selecting respondents in some
cases just asking whomever they can find. With a non-probability sample, some members of the
population have no chance at all of being included in the sample.
 Convenience sample: is a non-probability sample composed of individuals who just happen to be
available when and where the data are being collected.
 Quota sampling: that include the same proportion of individuals with certain characteristics as is
found in the population. The quota sample is much like the stratified sample except that with a
quota sample, the researcher uses his or her individual judgment to select respondents
5. Collect the data: this is Implementation phase there are some problems for gathering the data As
follows.
 Gathering data in foreign countries: market conditions and consumer preferences vary
worldwide, and there are major differences in the sophistication of market research
operations and the amount of data available to global marketers.
 Local customs: can also be a problem in Latin American countries offering money for
interviews is generally considered rude or in Saudi Arabia bans gathering of four or more
people except for family or religious events, and it’s illegal to stop strangers on the street or
knock on the door of someone’s house.
 Cultural differences: also affect responses to survey items.
 Language: some translation just don’t come out right. In some cases entire subcultures
within a country might be excluded from the research sample. In fact, this issue is becoming
more and more prevalent inside the US as non-English speakers increase as a percentage of
the population.
 Back translation: to overcome language difficulties researchers use a process called back-
translation, which requires two steps, first a native speaker translates the questionnaire into
the language of the targeted respondents. Then this new version is translated back into the
original language to ensure that the correct meaning survive the process.

6. Analyze and interpret the data: first marketers tabulate the data- that is, they arrange the data in a
table or other summary form so they can get a broad picture of the overall responses. Based on the
 tabulation and cross-tabulations, the researcher must then interpret or draw conclusions from the
results and make recommendations.
 Tabulating: arrange the data in a table or other summary form is called tabulating.
 Cross-tabulation: means that the data are examined by subgroups.
 Enter, clean and code data
 Choose appropriate techniques for analysis
 Interpret analysis
7. Prepare the research report: the final step is to prepare a report of the research results. In general,
a research report must clearly and concisely tell the readers what they need to know in a way that
they can understand. A typical report includes the followings:
 An executive summary of the report that covers the high points of the total report.
 An understandable description of the research methodology.
 A complete discussion of the results of the study including the tabulations, cross-tabulations
and additional statistical analyses.
 Limitations of the study( no study is perfect)
 Conclusions and recommendations for managerial actions based on the results.
 Chapter 4
Consumer behavior: the process individuals or groups go through to select, purchase use and dispose of
goods, services, ideas or experiences to satisfy their need and desires.

Habitual decision making: consumer makes little or no conscious effort, they don’t search for
information, and they don’t compare alternatives, rather they make purchases automatically. The price
is one of the main factors.

Extended problem solving: when consumers make very important decisions such as buying a new house
or a car- they carefully go through the steps (outlines problem recognition, information search,
evaluation of alternatives, product choice and post purchase evaluation.

Perceived risk: The level of uncertainty of a consumer, depending upon whether the purchase he/ she is
making will be worth it or not. The perceived risk is higher when a more expensive purchase is going to
be made.

5 Steps of consumer decision making process

1. Problem recognition: occurs whenever a consumer sees a significant difference between their
current state of affairs and some desired or ideal state.
2. Information search: step of the decision making process in which the consumer checks his
memory and surveys the environment to identify what options are out there that might solve
his or her problem. Increasingly consumers are using web search engines to find information.
The role of marketing in the information search step: is to make the information consumers
want and need about their product easily accessible.
Behavioral targeting: the basis for this approach is that by watching what you do online,
marketers can deliver advertisements for products and services you are actually looking for.
3. Evaluation of options: the time that consumer decide on a few true contenders. First armed
with information, a consumer identifies a small number of products in which he or she is
interested. Second he narrows down the choices by deciding which of all the options are
feasible and by comparing the pros and cons of each remaining option.
Evaluative criteria: the important characteristics of a product or service.
4. Product choice: deciding on one product and acting on this choice is the next step in the
decision making process.
Heuristics: are rules that help simplify the decision making process.
Brand loyalty: where people buy from the same company over and over because they believe
that the company makes superior products.
Country of origin: when we assume that a product has certain characteristics if it comes from a
certain country. For example when a product comes from Germany we assume that the product
is very precise and has a high quality.
5. Post-purchase evaluation: in this step consumer evaluates just how good the choice was.
Level of consumer satisfaction/dissatisfaction: determined by the overall feeling, or attitude, a
person has about a product after purchasing and using it.
The influences on consumers are in three main categories: internal, situational and
social influences.

Perception: the process by which people select, organize and interpret information from
the outside world.
Exposure: the extent to which a stimulus is capable of being registered by a person’s
sensory receptors.
Subliminal advertising: messages are hidden in advertisements in order to affect
consumers in their sub consciousness.
Attention: the extent to which mental processing activity is devoted to pay attention to
messages that speak to their current needs.
Interpretation: the process of assigning meaning to a stimulus based upon prior
associations a person has with it and assumptions he or she makes about it.
Motivation: an internal state that drives us to satisfy needs.
Hierarchy of needs: that categorizes motives according to five levels of importance, the
more basic needs being at the bottom of the hierarchy and more sophisticated level, he
must first meet the lower level’s needs.
Learning: is a change in behavior caused by information or experience.

Behavioral learning theories: assumes that learning takes place as the result of connections that form
between events that we perceive.

Behavioral learning has 3 types

1. Classical conditioning: a person perceives two stimuli at about the same time. After a
while, the person transfers his response from one stimulus to the other.
2. Operant conditioning: which occurs when people learn that their action result in
rewards or punishments. This influences how they will respond in similar situations in the
future.
3. Stimulus generalization: the good or bad feeling associated with a product will ‘rub off’
on other products that resemble it.
Cognitive learning: in contrast to behavioral theories of learning, cognitive learning theory views people
as problem solvers who do more than passively react to associations between stimuli. It occurs when
consumers make a connection between ideas or by observing things in their environment.

Observational learning: occurs when people watch the actions of others and note what happens to
them as a result. They store these observations in memory and at some later point use the information
to guide their own behavior.

Attitudes: someone’s lasting evaluation of a person, object, or issue. Consumers have attitudes towards
brands.
Affect: refers to the overall emotional response a person has to a product. Affect, the feeling
component, is usually dominant for expressive products such as perfume.

Cognition: the knowing component, is the beliefs or knowledge a person has about a product and its
important characteristics. It is especially important for complex products, such as computers, where we
may develop beliefs on basis of technical information.

Behavior: the doing component, involves a consumers intention to do something, such as the intention
to purchase or use a certain product. For product such as cereal, consumers purchase and try the
product on the basis of limited information and then form an evaluation of the product simply on the
basis of how the product tastes or performs.

Personality: the set of unique psychological characteristics that consistently influence the way a person
responds to situations in the environment.

Personality has 5 elements as follows:

1. Innovativeness: the degree to which a person likes to try new things.

2. Materialism: the amount of emphasis placed on owning products. Materialistic consumers focus
on owning products simply for the sake of ownership
3. Self-confidence: the degree to which a person has a positive evaluation of her or his abilities,
including the ability to make good decisions.
4. Sociability: the degree to which a person enjoys social interaction.
5. Need for cognition: the degree to which a person like to think about things and expend the
necessary effort to process brand information.

Self-concept: a person’s self-concept is his attitude towards the self and is composed of a mixture of
beliefs about one’s abilities and observations.

Age group: a person’s age is another internal influence on purchasing behavior. Many of us feel that we
have a closer connection with people of our own age because we share a common set of experiences
and memories about cultural events. Goods and services also appeal to a specific age group. Many
marketers divide age groups to the five range, (1) children, (2) teenagers (3) Young adults (4) middle
aged (5) elderly

Family life cycle: expresses the stages through which family members pass as they grow older.

Lifestyle: is a pattern of living that determines how people choose to spend their time money and
energy and that reflects their values, tastes and preferences. Expressed through preferences for sports
activities, music interests and political opinions.

Psychographics: the study of personality, values, opinions, attitudes, interests, and lifestyles. Because
this area of research focuses on interests, attitudes, and opinions, psychographic factors are also called
AIO variables. One way to do this is to describe people in terms of their activities, interests and
opinions. Also known as AIOs.
Situational influences on consumers’ decisions

Can be divided into two categories:

1. Physical environment
 In-store displays: a marketing communication tool that attracts attention. Although most
displays consist of simple racks that dispense the product or related coupons, some marketers
use elaborate performances and scenery to display their products.
 Place-based media: a growing way to target consumers in non-traditional places. Today
messages can pop up in airports, doctor’s office, college cafeterias and health clubs.
2. Time
 Season
 Time available
 Perceptions of time poverty

Time poverty: responsiveness of consumers towards innovations that make them save time.

Social influences

1. Culture: think of culture as a society’s personality. It is the value, beliefs, customs and tastes
produced or practiced by a group of people.
2. Subculture: a group coexisting with other groups in a larger culture whose members share a
distinctive set of beliefs or characteristics.
3. Social class: is the overall rank of people in a society. People who are within the same class work
in similar occupations, have similar income levels, and usually share tastes in clothing,
decorating styles and leisure activities.
Note: luxury goods often serve as status symbols, visible markers that provide a way for people
to flaunt their membership in higher social classes (or make others believe that they are
members).
4. Group membership: anyone who’s ever ‘gone along with the crowd’ knows that people act
differently in groups than they do on their own. There are several reasons for this phenomenon.
 Reference groups: set of people a consumer wants to please or imitate. Consumers ‘refer to’
these groups in evaluating their behavior.
 Conformity: consumers often change their behavior to gain acceptance into a particular
reference group. Conformity is at work when a person changes as a reaction to real or
imagined group pressure.
 Opinion leaders: a person who influences others attitudes or behaviors because others
perceive them as possessing expertise about the product.
5. Gender role: society’s expectations regarding the appropriate attitudes, behaviors and
appearances for men and women.
 Sex-typed products: marketers play a part in teaching us how society expects us to act as men and
women. As consumers, we see women and men portrayed differently in marketing communications
and in product promoted to the two groups.

C2C e-commerce: refers to online communications and purchases that occur among individuals without
directly involving the manufacturer or retailer. Most popular online c2c formats: Gaming, Chat rooms,
rings and lists, Boards, Blogs.
 Chapter 5
B2B (business to business) marketing

Marketing of goods and services that businesses and organizations buy for purposes other than personal
consumption.

Organizational markets (business to business markets): include manufacturers, wholesalers, retailers

and a variety of other organizations, such as hospitals, universities and governmental agencies.

In B2B marketing we have the same basic principles as B2C however there are four characteristics that
make B2B marketing different from B2C.

1. Large buyers: products often have to do more than satisfy an individual’s needs. They must meet
the requirements of everyone involved in the company’s purchase decision.
2. Number of customers: organizational customers are few and far between compared with end
consumers. In Europe, there are several million consumer households but significantly fewer
businesses or organizations.
3. Size of purchases: B2B products can influence consumer purchases, both in the quantity of items
ordered and in the price of individual purchases
4. Geographic concentration: business customers are often located in a small geographic area rather
than being spread out across a country.

Business to business demand

Demand in business markets differs from consumer demand. Most demand for B2B products is derived,
inelastic, fluctuating and joint.

1. Derived demand: demand that either comes directly or indirectly from consumer demand.
2. Inelastic demand: means that business customers buy the same quantity whether the price
goes up or down. A BMW Z5 Roadster 3.0i has a list price starting at just over £40,000. If the
price of tires, batteries or stereos goes up or down, BMW still must buy enough to meet
consumer demand for the Z5.
3. Fluctuating demand: Small changes in consumer demand can create large increases or
decreases in business demand.
 Acceleration principle: (multiplier effect) means that changes in consumer behavior has a ripple
effect through several related businesses.
4. Joint demand: occurs when two or more goods are necessary to create a product.
Note: Companies try to avoid dependence on specific suppliers by dealing with multiplier suppliers
whenever possible.
Types of business-to-business markets

Producers: purchase products for the production of other goods and services that they in turn sell to
make a profit.

Resellers: buy finished goods for the purpose of reselling, renting or leasing to other businesses.

Organizations: government may be the only customers for certain products. Government may purchase
a range of goods and services, ranging from thousands of notepads and paintbrushes, to rail tickets,
hotel rooms and the like.

Non-for-profit institutions: are organizations with educational, community and other public service
goals, such as hospitals, churches, universities, museums and charitable and lobby groups.

The nature of business buying

3 different buying situations:

SIC (standard industrial classification): a numerical coding system whereby companies that operate
within specific industrial sectors (their SIC cod) can be identified.

1. Buying situation: like end consumers, business buyers spend more time and effort on some
purchases than on others.
Buy class: a buy class framework identifies the degree of effort required by firm’s personnel to collect
information and make a purchase decision.
Straight re-buy: routine purchase of items that a B2B customer regularly needs. The buyer has
purchased the same items many times before and routinely reorders them when supplies are low, often
from the same suppliers.
Modified re-buy: occurs when a firm wants to shop around for suppliers with better prices, quality or
delivery times.

New-task buy: uncertainty and risk characterize buying decisions in this classification, and they need the
most effort because the buyer has no previous experience on which to base a decision.

2. The professional buyer: professional buyer frequently carry out buying in B2B market. These
people typically have a title such as purchasing manager, purchasing director or head of
purchasing. Focus on economic factors beyond the initial price of a product including
transportation and delivery charges, accessory products or supplies, maintenance, disposal
costs, etc. Large firms practice centralized purchasing – one department does all buying.

3. The buying Centre or decision-making unit (DMU): group of people in the organization who
participate in the decision-making process is referred to as the buying center. It may include
production workers, supervisors, engineers, secretaries, shipping clerks and financial officers.
There are six roles in the buying center as follows:

1. Initiator: begins the buying process by first recognizing that the firm needs to make a purchase.
2. The user: member of the buying center who actually needs the product. The user’s role in the
decision-making unit varies.
3. Gatekeeper: is the person who controls the flow of information to other members. Typically the
gatekeeper is the purchasing agent who gathers information and materials from salespeople,
schedules sales presentations and controls suppliers’ access to other participants in the buying
process.
4. Influencer: affects the buying decision by dispensing advice or sharing expertise. By virtue of
their expertise, engineers, quality control specialists and other technical experts in the firm
generally have a great deal of influence in purchasing equipment, materials and component
parts used in production.
5. The decider: member of the buying center who makes the final decision. This person usually has
the greatest power within the decision-making unit. He or she often has power within the
organization to authorize spending the company’s money.
6. The buyer: is the person who has responsibility for executing the purchase. Although the buyer
often has a role in identifying and evaluating alternative suppliers, this person’s primary function
is handling the details of the purchase.

The business buying decision process

Five steps, book page 206.

1. Step one: problem recognition: as in consumer buying, the first step in the business buying
decision process occurs when someone sees that a purchase can solve a problem.
2. Information search: (For purchases other than straight re-buys) the buying center searches for
information about products and suppliers.
Developing product specifications: that is a written description of the quality, size, weight,
 color, features, quantity, training, warranty, service terms and delivery requirements for the
purchase.
Identifying potential suppliers and obtaining proposals: the potential suppliers will receive a
formal written request for a proposal, or ask for a quotation that requires specific detail such as
price and terms for supplying the product.
3. Evaluation of options: at this stage of the business decision process, the DMU assesses the
proposals. Total spending for goods and services can have a major impact on the firm’s
profitability, so all other things being equal, price is the primary consideration. Pricing
evaluations must take into account discount policies for certain quantities, returned-goods
policies, the cost of repair and maintenance services, terms of payment and the cost of financing
large purchases.
4. Product and supplier selection: that is the selection of the best product and supplier to meet
firm’s needs. Reliability and durability rank especially high for equipment and systems that keep
the firm’s operations running smoothly without interruption.
Single sourcing: occurs when a buyer and seller work quite closely together. It is particularly
important when a firm needs frequent deliveries or specialized products.
Multiple sourcing: means buying a product from several different suppliers. Under this system,
suppliers are more likely to remain price competitive.
Outsourcing: occurs when firms obtain outside suppliers to provide goods or services that might
otherwise be supplied in-house. Outsourcing is an increasingly popular strategy, but also a
controversial one.
Reverse marketing: instead of sellers trying to identify potential customers and then pitching for
business, buyers try to find suppliers capable of producing specific needed products and then
attempt to ‘sell’ the idea to the suppliers.
5. Post-purchase evaluation: an organizational buyer assesses whether the performance of the
product and the supplier is living up to expectations.

B2B e-commerce

Refers to an online exchange between two or more businesses or organizations. B2B e-commerce
includes the exchange of information, products, services and payment. Allows marketers to link
directly to suppliers, factories, distributors and their customers. Reduces time necessary to order
and deliver goods, track sales and get feedback.

Extranets and private exchanges: although the internet is the primary means of B2B e-commerce,
many companies maintain intranets, which provide more secure means for conducting business.

Intranet: is an internal corporate computer network that uses internet technology to link company
departments, employees and databases.
Extranet: allows to link outsiders to the organization to access its intranet.
Private exchange: links invited groups of suppliers and partners over the web.

There are three ways to prevent security threats:

Authentication: making sure only authorized individuals are allowed to access a site.

Firewalls: combination of hardware and software that ensures only authorized individuals to gain entry.

Encryption: scrambling a message so that only another individual who has the right ‘key’ for deciphering
it.

Chapter 6
Market fragmentation: this condition occurs when people’s diverse interests and backgrounds divide
them into numerous different groups with distinct needs and wants. Due to this diversity, the same
goods or service will not appeal to everyone.
Target marketing strategy: in which they divide the total market into different segments based on
customer characteristics, select one or more segments and develop products to meet the need of those
specific segments.

Target marketing strategy: selecting and entering a market

Step 1:Segmentation

The process of dividing a larger market into smaller pieces based on one or more meaningful, shared
characteristics.

Segmentation variables: represent dimensions that divide the total market into fairly homogeneous
groups, each with different needs and preferences.

Segmenting consumer market can be divided into three main categories

1. Behavior
2. Psychographics
3. Demographics: (1)age, (2)gender, (3)family life cycle, (4)income and social class, (5)ethnicity, (6)
place of residence,

Generation Y consumers: born between 1977 and 1994.

Demographics: measurable characteristics such as gender and age. Demographics vital to identify the
best potential customers for a good or service. These objective characteristics are usually easy to
identify, and then it’s just a matter of tailoring messages and products to relevant groups.

1. Segmenting by demographics: age

Age: Consumers of different age group have different needs and wants.

Generational marketing: Members of a generation tend to share the same outlook and priorities. A
focus on such segments is often called generational marketing.

2. Segmenting by demographics: gender

Many products, from fragrances to footwear, appeal to men or women either because the nature of the
product or because the marketer chose to appeal to one sex or the other.

3. Segmenting by demographics: family life cycle

Because family needs and expenditures change over time, one way to segment consumers is to consider
the stage of the family life cycle they occupy.

4. Segmenting by demographics: income and social class

The distribution of wealth is of great interest to marketers because it determines which groups have the
greatest buying power. It should as no surprise that many marketers yearn to capture the hearts and
wallets of high-income consumers.

5. Segmenting by demographics: ethnicity and place of residence

Recognizing that people’s preference often vary depending on where they live, many marketers tailor
their offerings to appeal to different regions. This is also known as geographic segmentation.

Segmenting by psychographics: segments markets in terms of shared attitudes, interests and opinions.
Segments include demographic information such as age and income, but also includes richer
descriptions. The personality of consumers may therefore be used as a base to segment the market.
Lifestyle also can be used as a base to segment the market.
Social class: is another base that can be used to segment customers and it is one thing that visitors from
overseas find quite peculiar about UK culture.

Segmenting by behavior: slices consumers on the basis of how they act towards, feel about or use a
product. Many marketers segment the market based on usage frequency. Typically marketers often
distinguish between users and non-users by segmenting their current customers further into groups of
heavy, moderate and light users. Another way to segment a market based on behavior is to look at
usage occasions, or when consumers use the product most. Many products are associated with specific
occasions, whether time of day, holidays, business functions or casual get together.

Segmenting business to business market

Organizational demographics also help B2B marketers to understand the needs and characteristics of its
potential customers. These classification dimensions include the size of the firms either in total sales or
number of employees, the number of factories, whether they are a domestic or a multinational
company, policies on how they purchase and the type of business they are in. B2B market may also be
segmented on the basis of the product. Many industries use the Standard Industrial Classification (SIC)
system to obtain information about the number of companies operating in a particular industry.

Step 2: Targeting

Marketers evaluate the attractiveness of each potential segment and decide which of these groups they
will invest resources in to try to turn them into customers. The customer group or groups selected are
the firm’s target market.

Targeting the market has three step as follows:

1. Evaluating market segments: in this part we have to ask several questions and try to answer every
one of them
 Are members of the segment similar to each other in their product needs and wants and at the
same time, different from consumers in other segments?
 Can marketers measure the segment?
 Is the segment large enough to be profitable now and in the future?
 Can marketing communications reach the segment?
 Can the marketer adequately serve the needs of the segment?
2. Developing segment profiles: is a description of the typical customer in the segment. it is helpful to
generate a profile of each to really understand segment members, needs and to look for business
opportunities
3. Choosing a targeting strategy:

Undifferentiated targeting strategy: strategy is appealing to a broad spectrum of people. Efficient due
to economies of scale. Effective when most consumers have similar needs. Example: Tesco, Apple.
Differentiated targeting strategy: develops one or more products for each of several customer groups
with different product needs. Appropriate when consumers are choosing among well-known brands
with distinctive images and it is possible to identify one or more segments with distinct needs. Example:
Elseve, L’Oreal, Lancome.

Concentrated targeting strategy: entails focusing efforts on offering one or more products to a single
segment. Useful for smaller firms that do not have the resources to serve all markets. Example: Hard
Candy.

Custom marketing strategy: is common in an industrial context whereby a supplier often work with one
or a few large clients and develops products and services that only these clients will use. Segments are
so precisely defined that products are offered to exactly meet the needs of each individual.
Mass customization: is a related approach in which a company modifies a basic product or service to
meet the needs of an individual. Example: Proctor & Gamble’s products at Reflect.com

Step 3: positioning

Developing a marketing strategy aimed at influencing how a particular market segment perceives a good
or service in comparison to the competition.

There are four stages in positioning as follows:

1. Analyze competitors’ positions: marketers must understand the current stage of the market.
What competitors are out there, and how does the target market perceive them? Aside from
direct competitors in the product category, are there other products or services that provide
similar benefits?
2. Define your competitive advantage (Offer a product with a competitive advantage).
In this stage we have to offer a good or service with a competitive advantage to provide a
reason why consumers will perceive the product as being better than the competition.
3. Finalize the marketing mix: in this stage marketers must finalize the marketing mix by putting all
the pieces into place. The elements of the marketing mix must match the selected segment.
4. Evaluate responses and modify as needed: in final stage marketers evaluate the target market’s
responses so they can modify strategies as needed. Over time, the firm may find that it needs to
change which segments it targets, or even alter a product’s position to respond to marketplace
changes.
Re-positioning: Changing a brand's status in comparison to that of the competing brands. Repositioning
is effected usually through changing the marketing mix in response to changes in the market place,
or due to a failure to reach the brand's marketing objectives.

Brand personality: is something to which the consumer can relate, and an effective brand will increase
its brand equity by having a consistent set of traits. This is the added-value that a brand gains, aside
from its functional benefits.
 Perceptual map: a vivid way to construct a picture of where products or brands are located in
consumers’ minds.

CRM (customer relationship management)

Programs that allow companies to talk to individual customers and adjust elements of their marketing
programs in light of how each customer reacts to elements of the marketing mix. CRM is about
communicating with customers and about customers being able to communicate with a company one to
one. CRM views customers as partners.
Four steps in one to one marketing.

1. Identify customers and get to know them in as much detail as possible.

2. Differentiate among these customers in terms of both their needs and their value to the
company.
3. Interact with customers and find ways to improve cost efficiency and the effectiveness of the
interaction.
4. Customize some aspect of the products or services that you offer to each customer. This means
treating each customer differently based on what has been learned through customer
interactions.

Characteristics of CRM

1. Share of customer: when a firm trys to make an existing customer buy more goods from the
firm rather than competitors. For example a person buys 6 shoes a year and that customer buys
2 shoes a year from one firm. That firm trys to make customer buy 3 or 4 or even 6 shoes from
that firm a year. And if the firm succeeds the firms share of customer increase.
2. Lifetime value of the customer: is the potential profit generated by a single customer’s
purchase of a firm’s products over the customer’s lifetime. With the CRM a customer’s lifetime
value is identified as the true goal, not an individual.
3. Customer equity: today an increasing number of companies are considering their relationships
with customers as financial assets. Such firms measure success by calculating the value of their
customer equity- the financial value of customer relationships throughout the lifetime of the
relationships.
4. Focusing on high-value customers: using a CRM approach, customers must be prioritized and
communication customized accordingly.
The strategic implementation of CRM:

CRM is a strategic approach that is concerned with creating improved shareholder value through the
development of appropriate relationship with key customers and customer segments. CRM unites the
potential of relationship marketing strategies and IT to create profitable, long term relationships with
customers and other stakeholders.

Chapter 7
Good: a tangible product, something that we can see, touch, smell, hear, or process.

Service: A type of economic activity that is intangible, is not stored and does not result in ownership. A

service is consumed at the point of sale.
Layers of the product concept

A product can be divided into three levels which are a series of different features and benefits which
helps in its segmentation targeting and positioning. Thus the three levels of a product are the ones
which help to define the product in a better manner. These three levels are

1. The core product: the core product consist of all the benefits the product will provide for
consumers or business customers. Marketing is about supplying benefits – not products.
Example: A customer purchases a 1/2′′ drill bit. What does s/he want?
A 1/2′′ hole!

2. The actual product: The second layer of the product, the actual product, is the physical good or
the delivered service that supplies the desired benefit. Actual product also includes appearance,
styling, packaging and the brand. Example:
A washing machine’s core product is the ability to get clothes clean, but the actual product is a
large, square, metal apparatus.

3. Augmented product: consists of the actual product plus other supporting features such as
warranty, credit, delivery, installation and repair service after the sale.
Classifying products

Marketers classify products into categories because the categories represent differences in how
consumers and business customers develop new product and a marketing mix that satisfies customer
needs.

1. Classifying goods: how long does the product last.

Marketers classify consumer goods as durable or non-durable depending on how long the
product lasts.
 Durable goods: are consumer products that provide benefits over a period of months, years, or
even decades, such as cars, furniture and appliances. We are more likely to purchase durable
goods under conditions of high involvement.
 Non-durable goods: such as newspaper and food, are consumed in the short term. We are
more likely to purchase non-durable goods under condition of low-involvement.
2. Classifying goods: marketers also classify products based on where and how consumers buy the
product. We can think of both goods and services as convenience products, shopping products,
specialty products or unsought products.
 Convenience product: typically is a non-durable good or service that consumers purchase
frequently with a minimum of comparison and effort. Consumers expect these products to be
handy and they will buy whatever brands are easy to obtain. In general, convenience products
are low priced and widely available.
Staples: such as milk, bread and petrol are basic or necessary items that are available almost
everywhere. Most consumers don’t perceive big differences among brands. When selling staples,
marketers must offer customers a product that consistently meets their expectations for quality and
make sure it is available at a price comparable to the competition’s price.

Impulse product: something people often buy on the spur of the moment. With an impulse product,
marketers have two challenges: to create a product or package design that is enticing that reaches out
and grabs the customers, and to make sure their product is highly visible, for example by securing prime
and-aisle or checkout-till space.

Emergency products: are those products we purchase when we are in dire need. Bandages, umbrellas
and something to unblock the bathroom sink are examples of emergency products.

 Shopping products: are goods or services for which consumers will spend time and effort
gathering information on price, product attributes and product quality. They are likely to
compare alternatives before making a purchase.
Shop bots: computer programs that find sites selling a particular product.

 Specialty product: are Rolex watches, specialty products have unique characteristics that are
important to buyers at any price.
 Unsought products: are goods or services (other than convenience products) for which a
consumers has little awareness or interest until a need arises. For university graduates with
their first, real job, retirements plans and disability insurance are unsought products. It is
 requires a good deal of advertising or personal selling to interest people in these kinds of ways
to interest consumers in unsought products.

Business to business products

Organizational customers purchase items to use in the production of other goods and services or to
facilitate the organization’s operations. We can divide B2B product into five categories:

1. Equipment: refers to the products an organization uses in its daily operations. Heavy
equipment, sometimes called installations or capital equipment, includes items such as buildings
and robotics used to assemble cars.
2. MRO products: maintenance, repair and operating are goods that a business customer
consumes in a relatively short time. Maintenance products include light bulbs, mops cleaning
supplies and the like.
3. Raw materials: are products of the fishing, lumber, agricultural and mining industries that
organizational customers purchase to use in their finished products. For examples: steel
manufacturer changes iron ore into large sheets of steel, iron ore is raw material.
4. Processed materials and special services: processed materials are produced when firms
transform raw materials from their original state. Organizations purchase processed materials
that become a part of the products they make. Company that creates aluminum cans for redbull
buy aluminum ingots for this purpose.
5. Component parts: are manufactured goods or subassemblies of finished items that
organizations need to complete their own products.

Equipment:
installations &
accessories

Specialised
services Processed
materials
Business
 classes
MRO Raw
supplies materials

Component
parts and
materials

New product: is one that is entirely new or changed significantly and that product may be called new
for only six months. From a marketing perspective, new is anything a customer perceives as new and
different.
The process of innovation
Innovation: anything that customers perceives as new and different.
Types of innovation: innovations differ in their degree of newness, and this helps to determine how
quickly the target market will adopt them. Because innovation that are more novel require us to exert
greater effort to figure out how to use them, they are slower to spread throughout a population than
new products that are similar to what is already available. Innovation continuum is based on the
amount of disruption or change.

Developing new products

Product development doesn’t simply mean creating totally new products never before on the market.
For many firms product development is a continuous process of looking for ways to make an existing
product better or finding just the right width of leg for this year’s new jean style. We have seven phase
in developing new product.

1. Phase one: idea generation: marketers use a variety of sources to come up with great new
product ideas that provide customer benefits and that are compatible with the company
mission. Sources of new ideas Customers Sales people Service providers anyone with direct
customer contact.
2. Phase two: product concept development and screening: Although ideas for products initially
come from a variety of sources, it is up to marketers to expand these ideas into more complete
product concepts. Product concepts describe what feature the product should have and what
benefits they will provide for consumers. Evaluate chance for success.
3. Phase three: marketing strategy development: Develop a marketing strategy to introduce the
product to the marketplace. This means that marketers must identify the target market,
estimate its size, and determine how the product can be positioned to address the target
market’s need.
4. Phase four: Business analysis: Assess how a new product will fit into a firm’s total product mix.
Evaluate whether the product can be a profitable contribution for an organization’s product mix.
5. Phase five: Technical development: in which a firm’s engineers work with marketers in refining
the design and production process. (1) Develop one or more prototypes, (2) Evaluate prototypes
with prospective customers, (3) if applicable, and apply for a patent.
 Prototypes: a first or preliminary version of a device or vehicle from which other forms are
developed.
6. Phase six: Test marketing: this means the firm tries out the complete marketing plan- the
distribution, advertising and sales promotion but in a small geographic area that is similar to the
larger market it hopes to enter.
 Negative side: test marketing is extremely expensive. A test market also gives the competition a
free look at the new product, its introductory price and intended promotional strategy- and an
opportunity to get to the market first with competing product.
 Positive side: by offering a new product in a limited area of the market, marketers can evaluate
and improve the marketing program. Sometimes test marketing uncovers a need to improve the
product itself. Simulated test markets eliminate competitive viewing and cost less.
 7. Phase seven: Commercialization: launching of a new product, and it requires full-scale
production, distribution, advertising and sales promotion. For this reason, commercialization of
a new product cannot happen overnight.
Adoption and diffusion

Product adoption: is the process by which a consumer or a business customer begins to buy and use
new goods, services or idea.

Diffusion: describes how the use of a product spreads throughout a population.

Stages in consumer adoption of a new product

Individuals and organizations pass through six stages in the adoption process.

1. Awareness: learning that the innovation exists is the first step in the adoption process. To make
consumers aware of a new product, marketers may conduct a massive advertising campaign
called a media blitz.
2. Interest: In this stage, a prospective adopter begins to see how a new product might satisfy an
existing or newly realized need. Interest also means that consumers look for and are open to
information about the innovation.
3. Evaluation: prospect weighs the costs and benefits of the new product.
 Impulse purchase: a purchase made without any planning or search effort.
4. Trial: in the trial stage, potential buyers will actually experience or use the product for the first
time.
5. Prospect: a prospect actually buys the product. If the product is a consumer or B2B good, this
means buying the product and learning how to use and maintain it.
6. Confirmation: a customer weighs expected versus actual benefits and costs.
The diffusion of innovations

Diffusion describes how the use of a product spreads throughout a population. There are five categories
of adopters: (1) innovators, (2) early adopters, (3) early majority, (4) late majority and (5) laggards.

1. Innovators: are roughly the first 2.5 percent of adopters. This segment is extremely adventurous
and willing to take risks with new products. Innovators are typically younger and better off
financially than others in the population, as well as worldly and well educated.
2. Early adopters: approximately 13.5 percent of adopters, buy product innovations early in the
diffusion process but not as early as innovators. Unlike innovators, early adopters have greater
concern for social acceptance.
3. Early majority: roughly 34 percent of adopters, avoid being either first or last try an innovation.
They are typically middle-class consumers and are deliberate and cautious. Early majority
consumers have slightly above average education and income levels.
4. Late majority: about 34 percent of the population, are older and more conservative and typically
have lower than average levels of education and income. They try to avoid trying a new product
until it is no longer risky. By that time the product has become an economic necessity or there is
pressure from peer groups to adopt.
5. Laggards: about 16 percent of adopters are the last in a population to adopt a new product.
Laggards are typically lower in social class than other adopter categories and are bound by
tradition. By the time laggards adopt a product, it may already be superseded by other innovation.
Note: by understanding these adopter categories, marketers are able to develop strategies that fusion
process, marketers may put greater emphasis on advertising in special interest magazines to attract
innovators and early adopters.

Product factors affecting the rate of adoption: researchers have identified five characteristics of
innovations that affect the rate of adoption are (1) relative advantage, (2) compatibility, (3) complexity,
(4) trial ability, (5) observability.

1. Relative advantage: is the degree to which a consumer perceives that a new product provides
superior benefits.
2. Compatibility: is the extent to which a new product is consistent with existing cultural values,
customs and practices. Anticipating compatibility issues early in the new product development
stage, marketing strategies can address such problems in planning communications programs,
or there may be opportunities for altering product designs to overcome some consumer’s
objections.
3. Complexity: is the degree to which consumers find a new product or its use difficult to
understand.
4. Trial ability: is the ease of sampling a new product and its benefits.
5. Observability: refers to how visible a new product and its benefits are to other who might adopt
it. The ideal innovation is easy to see.

How organizational differences affect adoption

Just as there are differences among consumers in their eagerness to adopt new products, businesses
and other organizations are not alike in their willingness to buy and use new industrial products. New or
smaller companies may be more nimble and able to jump onto emerging trends. Those that do often are
rewarded with higher sales.
Innovations firms: Firms that welcome product innovations are likely to be younger companies in highly
technical industries with younger managers and entrepreneurial corporate cultures. Early adopter firms
are likely to be market share leaders that adopt new innovations and try new ways of doing things to
maintain their leadership.

Early majority firms: firms that adopt new products only when they recognize that they must innovate
to keep up are in the early majority

Late majority firms: tend to be oriented toward the status quo and often have large financial
investments in existing production technology.

Laggard firms: firms are probably already losing money.