www.studyMarketing.org 1

1. Marketing Mix and Key Marketing Activities

2. Developing Market Segmentation
3. Product Planning and Development

4. Promotion Mix : Advertising, Publicity, Personal Selling and Sales Promotion
5. Distribution Planning and Pricing Strategy



Marketing Mix and Market Segmentation



studyMarketing.Marketing Credo There is only one valid definition of business purpose : to create a customer Peter Drucker www.org 4 .

org 5 .studyMarketing.Marketing Mix Product Price Target Market Place Promotion www.

org 6 .studyMarketing.Key Marketing Activities Consumer Analysis Product Planning Distribution Planning Promotion Planning Price Planning www.

and deletion of old products Outlines price ranges and levels. product positions. and the use of price as an active or passive factor 7 Price Planning www. price adjustments. packaging. product assortments.Key Marketing Activities Consumer Analysis Examination and evaluation of consumer characteristics. needs.studyMarketing.org . pricing techniques purchase terms. options. brands. and purchase processes Product Planning Development and maintenance of products.

Key Marketing Activities Distribution Planning Establishment of channel relations. transportation. personal selling. inventory management.studyMarketing. and wholesaling Promotion Planning Combination of advertising. warehousing. physical distribution.org 8 . publicity. allocation of goods. and sales promotion to drive sales revenue www.

studyMarketing.Product/Market Matrix Existing Products Market Penetration Market Development New Products Product Development Diversification Existing Markets New Markets www.org 9 .

and innovative uses are discovered for a mature product 10 • Market Development • • www. new market segments are emerging due to changes in consumer lifestyle/demographics.Product/Market Matrix Market Penetration • The firm seeks to achieve growth with existing products in their current market segments.studyMarketing. aiming to increase its market share Effective when the market is growing or not yet saturated The firm seeks growth by targeting its existing products to new market segments Effective when a local or regional business looks to wider its market.org .

org .studyMarketing.Product/Market Matrix Product Development • • The firms develops new products targeted to its existing market segments Effective when the firm has a core of strong brands Diversification • The firm seeks growth by targeting its existing products to new market segments Diversification is utilized so that the firm does not become overly depend-ent on one product line 11 • www.

org 12 .Market Segmentation Market Segment The division of a market into different homogeneous groups of consumers Should be: • measurable • accessible by communication and distribution channels • different in its response to a marketing mix • durable (not changing too quickly) • substantial enough to be profitable www.studyMarketing.

Geographic Demographic Based on variables such as age. gender. income.studyMarketing. population density. occupation. education. climate. and population growth rate. ethnicity.org 13 .Types of Market Segmentation Based on regional variables such as region. and family status www.

attitudes.Types of Market Segmentation Psychographic Based on variables such as values.studyMarketing. and lifestyle Behavioral Based on variables such as usage rate and patterns.org 14 . brand loyalty. price sensitivity. and benefits sought www.

Establishing an appropriate marketing plan 15 www.studyMarketing.Step in Planning A Segmentation Strategy Determining characteristics and needs of consumers for the product category of the company Analyzing consumer similarities and differences Developing consumer group profiles Selecting consumer segment (s) Positioning company’s offering in relation to competition.org .

studyMarketing.org 16 .Product Planning and Development www.

org 17 .Products : Types of Goods Convenience Goods Types of Goods Shopping Goods Specialty Goods www.studyMarketing.

org 18 .Convenience Goods • Convenience Goods • Those purchased with a minimum of effort.studyMarketing. because the buyer has knowledge of product characteristics prior to shopping The consumer does not want to search for additional information (because the item has been bought before) and will accept a substitute rather than have to frequent more than one store www.

such as candy. milk. or aspirin for a headache • www.studyMarketing.Convenience Goods • Convenience Goods • Staples are low-priced items that are routinely purchased on a regular basis. such as detergent. a tire to replace a flat. such as an umbrella during a rainstorm. and ice cream Emergency goods are items purchased out of urgent need. and cereal Impulse goods are items that the consumer does not plan to buy on a specific trip to a store. a magazine.org 19 .

Shopping Goods Shopping Goods • Those for which consumers lack sufficient information about product alternatives and their attributes.studyMarketing.org 20 . and therefore must acquire further knowledge in order to make a purchase decision www.

consumers get information about and then evaluate product features. and other factors.Shopping Goods • Shopping Goods For attribute-based shopping goods. Sony electronics and Calvin Klein clothes are marketed as attribute-based shopping goods • For price-based shopping goods.studyMarketing. consumers judge product attributes to be similar and look around for the least expensive item/store 21 www.org . The goods with the best combination of attributes is purchased. options. warranty. performance.

• • They are willing to make a significant purchase effort to acquire the brand desired and will pay a higher price than competitive products. For specialty goods. consumers will not make purchases if their brand is not available. Substitutes are not acceptable. if necessary.Specialty Goods • Specialty Goods Those to which consumers are brand loyal.studyMarketing. They are fully aware of these products and their attributes prior to making a purchase decision.org 22 . • www.

Rentedgoods Service Owned-goods service

Type of Services




Rentedgoods Service
Involves the leasing of a good for a specified period of time. Examples include car, hotel room, apartment, and tuxedo rentals

Owned-goods service

Involves an alteration or repair of a good owned by the consumer. Examples include repair services (such as automobile, watch, and plumbing), lawn care, car wash, haircut, and dry cleaning Provides personal service on the pan of the seller; it does not involve a goods. Examples include accounting, legal, and consulting services



Characteristics of Services

• •

The intangible nature of many services makes the consumer's choice more diffi-cult than with goods
The producer and his or her services are often inseparable The perishability of services prevents storage and increases risks

Service quality may be variable



Product Life Cycle Growth Maturity Introduction Decline www.org 26 .studyMarketing.

studyMarketing.org Informative Persuasive 27 .Product Life Cycle Characteristics Introduction Growth Marketing objective Attract innovators and opinion leader to new product Increasing Expand distribution and product line Rapidly increasing Industry sales Competition Industry profits Customers Product mix Distribution Pricing None or small Negative Innovators One or two basic models Depends on product Depends on product Some Increasing Affluent mass market Expanding line Rising number of outlets Greater range of prices Promotion www.

studyMarketing. (C) terminate Decreasing Industry sales Competition Industry profits Customers Product mix Distribution Pricing Promotion Substantial Decreasing Mass market Full product line Greatest number of outlets Full line of prices Competitive Limited Decreasing Laggards Best-sellers Decreasing number of outlets Selected prices Informative www. (b) revive.Product Life Cycle Characteristics Maturity Decline Marketing objective Maintain differential advantage as long as possible Stable (a) cut back.org 28 .

studyMarketing.org 29 .New Product Planning Idea Generation Product Screening Concept Testing Business Analysis Product Development Test Marketing Commercialization www.

org . systematic search for new product opportunities It involves delineating sources of new ideas and methods for generating them • Product Screening • After the firm identifies potential products.studyMarketing. it must screen them Many companies use a new-product screening checklist for preliminary evaluation 30 www.New Product Planning • Idea Generation • A continuous.

studyMarketing.org 31 .Screening Checklist GENERAL CHARACTERISTICS OF NEW PRODUCTS Profit potential Existing competition Potential competition Size of market Level of investment Patentability Level of risk MARKETING CHARACTERISTICS OF NEW PRODUCTS Fit with marketing capabilities Effect on existing products (brands) Appeal to current consumer markets Potential length of product life cycle Existence of differential advantage Impact on image Resistance to seasonal factors PRODUCTION CHARACTERISTICS OF NEW PRODUCTS Fit with production capabilities Length of time to commercialization Ease of product manufacture Availability of labor and material resources Ability to produce at competitive prices www.

org . critical use of business analysis is essential to eliminate marginal items 32 • www.studyMarketing.New Product Planning • Concept Testing Concept testing presents the consumer with a proposed product and measures attitudes and intentions at this early stage of development Concept testing is a quick and inexpensive way of measuring consumer enthusiasm • • Business Analysis Business analysis for the remaining product concepts is much more detailed than product screening Because the next step is expensive and timeconsuming product development.

promotion. econo-mies of scale. control over price. estimates of future raw materials and other costs.and long-run total and perunit profits. potential competitors. channel intensity Total and per unit costs. startup vs. short.studyMarketing. strengths and weaknesses of competitors. testing). product development.and long-run sales potential. short. production. channel needs. patent search.org . rate of repurchases. continuing costs. use of existing facilities and resources. likely competitive strategies in response to new product by firm Product planning (engineering.Business Analysis Variables Factors Demand projections Cost projections Considerations Price/sales relationship. break-even point Short-run and long-run market shares of company and competitors. return on investment (ROI) 33 Competition Required investment Profitability www. distribution Time to recoup initial costs. speed of sales growth.

Test marketing involves placing a product for sale in one or more selected areas and observing its actual performance under the proposed marketing plan.org . and attitude and usage testing. branding. The purpose is to evaluate the product and pretest marketing efforts in a real setting prior to a full-scale introduction 34 • Test Marketing • www. packaging.New Product Planning • Product Development • Product development converts a product idea into a physical form and identifies a basic marketing strategy It involves product construction. product positioning.studyMarketing.

studyMarketing.org 35 .New Product Planning • Commercialization After testing is completed. the firm is ready to introduce the product to its full target market. This is commercialization and corresponds to the introductory stage of the product life cycle Commercialization involves implementing a total marketing plan and full production • www.

studyMarketing. Publicity. Personal Selling and Sales Promotion www.Promotion Mix : Advertising.org 36 .

org 37 .studyMarketing.Promotion Mix Advertising Publicity Target Market Personal Selling Sales Promotion www.

and create awareness and favorable attitudes Television ad for a Kodak video camera High High Moderate To deal with individual consumers.org 38 . to close sales Retail sales personnel explaining how a Kodak video camera works Moderate High Moderate To stimulate short-run sales. to resolve questions.studyMarketing.Promotion Mix Factor Audience Message Cost Advertising Mass Uniform Low per viewer or reader Mass Uniform None for media space and time. to increase impulse purchases Example A Kodak video camera displayed at consumer photography shows www. can be moderate costs for press releases and publicity materials No formal sponsor in that media are not paid Low None High To reach a mass audience with an independently reported message Newspaper article reporting on the unique features of a Kodak video camera Publicity Personal Selling Small (one-to-one) Specific High per customer Sales Promotion Varies Varies Moderate per customer Sponsor Company Company Company Flexibility Control over content and placement Credibility Major goal Low High Moderate To appeal to a mass audience at a reasonable cost.

studyMarketing.Four Key Steps to Advertise Determine message content and devise an ad Specify the location of an ad (media placement) Choose how many variations of a basic message to utilize Outline a promotion schedule www.org 39 .

waste is a significant factor in advertising.org 40 .Things to Consider in Advertising Waste is the portion of an audience that is Waste not in a firm's target market.studyMarketing. Reach refers to the number of viewers or Reach readers in the audience www. Because media appeal to mass audiences.

studyMarketing. where ads may appear daily and advertising strategy may be easily changed Message permanence Message permanence refers to the number of exposures one advertisement gener-ates and how long it remains with the audience www. radio.org 41 . and television. It is greatest for newspapers.Things to Consider in Advertising Frequency Frequency is how often a medium can be used.

org 42 . Clutter is low when a limited number of ads is presented and high when many ads are presented. Television often has the highest persuasive impact because it is able to combine audio. Clutter involves the number of ads that are contained in a single program. animation. etc. issue. Clutter www. color. of a medium. and other appeals.studyMarketing. video.Things to Consider in Advertising Persuasive impact Persuasive impact is the ability of a medium to stimulate consumers.

org 43 . www. crisis fighting is used when bad reports are circulated.Publicity : Poor and Good Response Situation Fire breaks out in a company plant Poor Response Requests for information by media are ignored. The advertising campaign is stepped up. and spokespeople are made available to media to present company's competitive features. Company spokesperson states that tests are being conducted on products. uses of profits are detailed: research. There is an ongoing need for publicity. and contingency plans for bad reports. describes procedure for handling defects. New product introduced News story about product defects Advertising is used without publicity Requests for information by media are ignored. and answers questions. Pre-introduction news releases. Competitor introduces new product High profits reported Profits are rationalized and positive effects on the economy are cited. statistics. hostility is exhibited toward reporter of story. Overall view of publicity There is an infrequent need for publicity. community development. Good Response Company spokesperson explains the cause of the fire and company precautions to avoid it and answers questions.studyMarketing. and testimonials are used. Profitability is explained. data (historical and current) are provided. product samples. Extensive news releases. strong planning. blanket denials are issued.

Developing a Publicity Plan Setting objectives Outlining types of publicity Selecting media Creating publicity messages Timing publicity messages www.org 44 .studyMarketing.

Toyota explains its goals and objectives for the 2020.Publicity Type Publicity Type News publicity Business feature article Service feature article Example Macy's describes its decision to sell its stores in the Midwest. fast-speed microprocessor Finance release Product release Pictorial release Apple distributes photos showing all of its personal computer products and related software Mc Kinsey presents a biography of its president and his rise through the company. Intel announces its new. A trade association offers 10 tips on how to reduce home heating costs. Background editorial release Emergency publicity www.studyMarketing. General Electric distributes quarterly financial data about the company.org 45 . The Red Cross makes a request for aid to tornado victims.

etc. installation. To follow up after a good or service has been purchased To follow up when a repurchase is near To reassure previous customers when making a new purchase To maintain a good appearance by all personnel in contact with consumers To follow acceptable sales practices Demand-Oriented Information Persuasion Reminding Image-Oriented Industry and company www.. e.org 46 . film with a camera To placate dissatisfied customers To ensure delivery.Specific Personal Selling Objectives Type of Objective Illustrations To fully explain all good and service attributes To answer any questions To probe for any further questions To clearly distinguish good or service attributes from those of competitors To maximize the number of sales as a per cent of presentations To convert undecided consumers into buyers To sell complementary items.studyMarketing.g.

studyMarketing. referrals.org 47 .Personal Selling Process Customer Wants Prospecting (blind. repurchase) www. lead) Approach Sales Presentation Answering Questions (questions and objections) Close Follow up (satisfaction.

48 . and other prices. generally for new items. Publishers Clearinghouse sponsors annual sweepstakes and awards automobiles. Refund or A consumer submits proof-ofrebate purchase (usually to the manufacturer) and receives an extra discount.org First Alert home fire alarms provides $5 rebates to consumers submitting proof of purchase.studyMarketing. houses. Coupons Manufacturers or retailers advertise special discounts for customers who redeem coupons. Samples Free merchandise or services are given consumers.Types of Sales Promotion Type Characteristics Illustration P&G mails consumers a 25-centsoff coupon for Sure deodorant. Contests or Consumers compete for prizes by sweepstakes answering questions (contests) or filling out forms for random drawings of prices (sweepstakes). which can be redeemed at any supermarket. www. free samples were mailed to consumers. When Sunlight dishwashing liquid was introduced.

org . whereby the consumer buys one item and gets a second one for a penny. Gifts Consumers are given gifts for making a purchase or opening a new account. www.studyMarketing." which attracts large crowds. fashion shows.Types of Sales Promotion Type Characteristics Illustration Bonus or Consumers receive discounts multipacks for purchasing in quantity Some stores run I-cent sales. Savings banks offer a range of gifts for consumers opening new accounts or expanding existing ones. Chewing gum sales in supermarkets are high because displays arc placed at checkout counters.In-store displays remind purchase customers and generate displays impulse purchases. and other activities. 49 Point-of. Virtually every major league baseball team has an annual "Old Timers' Day. Special Manufacturers or retailers events sponsor celebrity appearances.

t-shirts.Sales Promotion Advantages • • • It helps attract customer traffic and maintain brand or store loyalty Quick results can be achieved Some forms of sales promotion (calendars. Pens.studyMarketing.org 50 . etc) provide value to the consumer and are retained by them. and these forms can provide a reminder function Impulse purchases can be increased through in-store displays • www.

Consumers may view discounts as representing a decline in product quality and believe the firm could not sell its offerings without them.org 51 . Instead. consumers may not make purchases if the items are sold at regular prices. • www.Sales Promotion Disadvantages • The image of the firm may be lessened if it continuously runs promotions. they will stock up each time there is a promotion. or other special deals are used frequently. rebates. When coupons.studyMarketing.

www.org 52 . In the short run this generates consumer enthusiasm. or sweepstakes instead of by product quality.Sales Promotion Disadvantages • Sometimes sales promotions shift the focus away from the product onto secondary factors. coupons. Consumers may be attracted by calendars. because a productrelated differential advantage has not been developed. In the long run this may have adverse effects on a brand's image and on sales. and durability. functions.studyMarketing.

studyMarketing.Distribution Planning and Pricing Strategy www.org 53 .

These organizations or people are known as channel members or middlemen. and customer transactions.studyMarketing.Distribution Planning • Distribution planning is systematic decision making regarding the physical movement and transfer of ownership of a product from producer to consumer.org 54 . It includes transportation. Distribution functions are carried out through a channel of distribution. which is comprised of all the organizations or people involved in the process. storage. • • • www.

well-established reputable stores Few in number. Many in number. some channel control and loyalty. brand loyal Moderate in number. channel control and loyalty. willing to travel to store. all types well-established. trend setters.org . sales volume and profits Channel members Customers Few in number. Many in number. channel acceptance. better stores of outlets Moderate in number. price stability and high profit margins Selective Distribution Moderate market coverage.Intensity of Channel Coverage Characteristics Objectives Exclusive Distribution Prestige image. conveniencesomewhat willing to oriented travel to store 55 www. good sales and profits Intensive Distribution Widespread market coverage. brand conscious. solid image.studyMarketing.

watches Groceries. good service May be difficult to carve out a niche Intensive Distribution Mass advertising. magazines www.studyMarketing. nearby location. household products.org 56 . pleasant shopping conditions. good service Limited sales potential Selective Distribution Promotional mix. pleasant shopping conditions.Intensity of Channel Coverage Characteristics Marketing Emphasis Exclusive Distribution Personal selling. items in stock Limited channel control Major Disadvantages Examples Automobiles. caviar Furniture. clothing. designer clothes.

enthusiasm for product.studyMarketing.Methods of Channel Cooperation Factor Manufacturer Action Channel Member Action New-product introduction Thorough testing.org 57 . sales force incentives. adherence to scheduled dates Good shelf location and space. shipments immediately checked for accuracy Attractive in-store displays. assistance in test marketing Proper time allowed for delivery. development of national advertising campaign. adequate promotional support Prompt filling of orders. participation in cooperative programs Proper installation and servicing of products Delivery Promotion Sales force training. cooperative programs Product guarantees Product quality www. knowledgeable salespeople.

Pushing and Pulling Strategy Pushing Strategy Manufacturer Pulling Strategy Manufacturer Channel members Channel members Consumers Consumers www.org 58 .studyMarketing.

org Systematic decision making by an organization regarding all aspects of pricing 59 .studyMarketing.Price Planning Represents the value of a good or service for both the seller and the buyer A Price Price Planning www.

Factors Affecting Pricing Decisions Consumers Competitors Cost Channel Members Government Total Effects on Price Decisions www.studyMarketing.org 60 .

Consumers and Price Decisions • The relationship between price and consumer purchases and perceptions is explained by two economic principles — the law of demand and price elasticity of demand The law of demand states that consumers usually purchase more units at a low price than at a high price Consumers • • The price elasticity of demand defines the sensitivity of buyers to price changes in terms of the quantities they will purchase www.studyMarketing.org 61 .

org . total revenue goes up when prices are decreased and goes down when prices rise In-elastic Demand • • • Inelastic demand takes place if price changes have little impact on quantity demanded Price elasticity is less than 1 With inelastic demand. price elasticity is greater than 1 With elastic demand.studyMarketing.Consumers and Price Decisions Elastic Demand • • • Elastic demand occurs if relatively small changes in price result in large changes in quantity demanded Numerically. total revenue goes up when prices are raised and goes down when prices decline 62 www.

so that total sales revenue remains constant.Consumers and Price Decisions Unitary Demand • Unitary demand exists if changes in price are exactly offset by changes in quantity demanded. Price elasticity is 1 • www.org 63 .studyMarketing.

studyMarketing.Competitors and Price Decisions • Competitors Another element contributing to the degree of control a firm has over prices is the competitive environment within which it operates www.org 64 .

similar goods and services.org 65 . well-differentiated goods and services. and strong control over price by individual firms www.Competitors and Price Decisions Marketcontrolled price environment • Characterized by a high level of com-petition. and little control over price by individual companies Companycontrolled priced environment • Characterized by moderate competi-tion.studyMarketing.

buses.studyMarketing.org 66 . Examples are public utilities.Competitors and Price Decisions Governmentcontrolled price environment • Characterized by prices set by the government. taxis. and state universities www.

and then sell other brands for lower prices. This is often done to increase the sales of their own brands www.studyMarketing. place high prices on it.Channel Members and Price Decisions • A wholesaler or retailer can gain stronger Channel Members control over price by stressing its importance as a customer to the manufacturer. and developing strong dealer brands so that consumers are loyal to the seller and not the manufacturer • Sometimes retailers engage in selling against the brand. stocking competitive items.org 67 . whereby they stock merchandise. refusing to carry unprofitable product.

studyMarketing. and the impact of price increases www.org 68 .Channel Members and Price Decisions • To ensure channel member cooperation with Channel Members price decisions. price guarantees. the manufacturer needs to consider four factors: channel member profit margins. special deals.

Government and Price Decisions Price fixing regulations Government Prohibitions against price discrimination among channel members Unfair sales acts : predatory pricing 69 www.studyMarketing.org .

Cost and Price Decisions Cost Cost of raw materials and supplies Labor cost Advertising Cost Pricing Decisions Distribution Cost www.org 70 .studyMarketing.

Price Strategy Cost-based Price Strategy Price Strategy Demand-based Price Strategy Competitionbased Price Strategy www.org 71 .studyMarketing.

studyMarketing.org 72 . and then adding the desired profit to these figures Demand-based Price Strategy The marketer sets prices after researching con-sumer desires and ascertaining the range of prices acceptable to the target market www. the marketer sets prices by computing merchandise.Price Strategy Cost-based Price Strategy With a cost-based price strategy. and overhead costs. service.

at the market. real or perceived differences between brands or stores.org 73 . services provided.studyMarketing. image. or above the mar-ket. depending on customer loyalty. and the competitive environment www.Price Strategy Competitionbased Price Strategy • • The marketer sets prices in accordance with competitors Prices may be below the market.

Recommended Further Readings 1. Prentice Hall www.org 74 . Joel Evans and Barry Berman.studyMarketing. Marketing Management. Prentice Hall 2. Marketing. Phillip Kotler.

End of Material www.studyMarketing.org 75 .

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