Chapter 1

What is Marketing
Marketing is the process by which companies create value for customers and build strong
relationships in order to capture value from customers in return.
Goals of marketing:
 Attract new customers by promising superior value.
 Keep and grow current customers by delivering satisfaction.
Marketing Management Orientations
1. Production concept
2. Product concept
3. Selling concept
4. Marketing concept
5. Societal marketing concept

1.Production concept
 Consumers will favor products that are available and highly affordable.
 Organizations focus on improving production and distribution efficiency.
 This concept can lead to marketing myopia, which refers to the mistake of paying more
attention to the specific products a company offers than to the benefits
 and experiences produced by these products.
 Companies neglect to satisfy customer needs and build customer relationship.

2. Product Concept
 Consumers will favor products that offer the most quality, performance, and features.
 Organization should devote its energy to make continuous product improvements.
 This concept can also lead to marketing myopia.

3. Selling Concept
 The selling concept holds that consumers will not buy enough of the firm’s products
unless it undertakes a large-scale selling and promotion effort.
 It is typically practiced with unsought goods.
 The selling concept focuses on creating sales transactions rather than on building long-
term, profitable customer relationships.
 The aim is to sell what the company makes rather than making what the market wants.
 4. Marketing Concept
 Organization knows the needs and wants of target markets and deliver the desired
satisfactions better than competitors do.
 The selling concept take an inside-out perspective, while the marketing concept take an
outside-in perspective.

5. Societal Marketing Concept

 Organization will consider:
 - consumers’ wants and long-run interests,
 - the company’s requirements (profits) and
 - society’s long-run interests (Human welfare).

Societal Classification of Products

Deficient products
 Products that have neither immediate appeal nor long-run benefits.
 E.g., ineffective medicine.
Pleasing products
 Products that give high immediate satisfaction but may hurt consumers in the long run.
 E.g., junk food.
Salutary products
 Products that have low immediate appeal but may benefit consumers in the long run.
 E.g., bicycle helmets.
Desirable products
 Products that give both high immediate satisfaction and high long-run benefits.
 E.g., a tasty and nutritious breakfast food.

Marketing Process 3
Preparing an Integrated Marketing Plan and Program
 Marketing mix tools should be blended into a comprehensive integrated marketing
program.
Marketing Mix 4Ps
o Price
o Place
o Promotion
o Product

Marketing Process 4
Building Profitable Customer Relationships and create customer delight.
 Customer Relationship Management (CRM) is the overall process of building and
maintaining profitable customer relationships by delivering superior customer value and
satisfaction.
 It deals with all aspects of acquiring, keeping, and growing customers.

Customer Value
 Customer-perceived value – The customer’s evaluation of the difference between all the
benefits and all the costs of a marketing offer relative to those of competing offers.
Customer Satisfaction
Customer satisfaction – The extent to which a product’s perceived performance matches a
buyer’s expectations.
 Performance < expectation: dissatisfied
 Performance = expectations: satisfied
 Performance > expectations: highly satisfied or delighted.

Before buying => expectation

After buying => perceive performance

Marketing Process 5
Capturing Value from Customers
1. Creating customer loyalty and retention
 Good customer relationship management creates customer satisfaction.
 In turn, satisfied customers remain loyal and talk favorably to others about the
company and its products.
 Customer defections can be costly.

2. Growing share of customer

 Good CRM can help marketers increase their share of customer.
 Firms can create programs to cross-sell and up-sell to market more products to existing
customers.

3. Building Customer Equity

 Customer equity is the total combined customer lifetime values of all the company’s
customers.
 The more loyal the firm’s profitable customers, the higher its customer equity.
Chapter 2
Business portfolio planning involves 2 steps:
I. Analyze its current business portfolio or strategic business units (SBUs).
 Purpose: to decide which SBUs should receive more, less, or no investment.

II. It must shape the future portfolio.

 How to shape? by developing strategies for growth and downsizing.

BCG Growth-Share Matrix

a) Stars are high-growth, high-share businesses.
 They need heavy investments to finance their rapid growth.
 Eventually, their growth will slow down and they will turn into cash cows.

b) Cash cows are low-growth, high-share businesses.

 These successful SBUs need less investment to hold their market share. They produce
a lot of cash that the company uses to pay its bills and support other SBUs that need
investment.
 c) Question marks are low-share business units in high-growth markets.
 require a lot of cash to hold their share, let alone increase it.
 Management has to think hard about which question marks it should try to build into
stars and which should be phased out.

d) Dogs are low-growth, low-share businesses.

 They may generate enough cash to maintain themselves but do not promise to be
large sources of cash.

Step (i): Analyzing the current business portfolio

 Management first step identify the key businesses that make up the company called
strategic business unit (SBUs).

Step (ii): shape future portfolio downsizing

 Downsizing means to prune or divest businesses that are unprofitable or that no
longer fit the strategy.
 Reasons to abandon products or markets:
o Rapid growth of the company
o Lack of experience in a market
o Change in market environment
o Decline of a particular product

Step (ii): shape future portfolio developing strategies for growth

The Product/Market Expansion Grid a tool for identifying company growth opportunities

The Product/Market Expansion Grid

a) Market penetration
Increasing sales of current products to current market segments without changing the
product. Example, Lego Company boosted its spending on advertising to increase sales
volume for its Lego brand toys.
 b) Market development
Identifying and developing new market segments for current company products.
Example, Lego Company (from Denmark) expands business to Malaysia.

c) Product development
Offering modified or new products to current market segments. Example, Lego Company
create latest Lego Ninjago bricks set.

d) Diversification
Starting up or acquiring businesses outside the company’s current products and markets.
Example, Lego Company venture into theme park business called Legoland.

Chapter 3
Marketing environment
 The actors and forces outside marketing that affect marketing management’s ability to
build and maintain successful relationships with target customers.
 Studying the marketing environment allows marketers to take advantage of opportunities
and combat threats.
 Marketing intelligence and research are used to collect information about the
environment.
The Microenvironment
 The actors close to the company that affect its ability to serve its customers.

1. The Company
 The interrelated groups that form the internal environment. All departments share
responsibility for understanding customer needs and creating value.
2. Marketing Intermediaries
 Firms that help the company promote, sell, and distribute its goods to final buyers.
 Resellers (wholesalers, retailers)
• Find and sell to customers
 Physical Distribution Firms
• Stock and move goods
 Marketing services agencies
• Research, advertising, media and consulting services
 Financial intermediaries
• Finance transactions or insure against the risks associated with the buying
and selling of goods. (bank & insurance)

3. Publics
 Publics are any group that has an actual or potential interest in or impact on an
organization’s ability to achieve its objective.
 7 types of publics include:
• financial: ability to obtain funds (=financial intmdr)
• media: carry news and editorial opinion
• government: develop public policy to guide commerce with sets of laws
and regulations. (especially giving subsidy, impose tax)
• Citizen-action: consumer organization, minority and environmental group.
• local publics: neighbourhood residents
• General publics: concerns about the image of the company.
• Internal publics: employees, workers, managers

4. Customers
 Consumer markets
• Households buy for personal consumption.
 Business markets
• Buy for use in production processes.
 Reseller markets
• Buy to resell at a profit.
 Government markets
• Buy to produce public services.
 International markets
• Buyers in other countries
The Macroenvironment
• Consists of the broader forces that affect the actors in the microenvironment.

1. Demographic
 Demography is the study of human populations in terms of size, density, location, age,
gender, race, occupation, and other statistics.
Marketers analyze:
o a) Changing age
o b) Changing family structures
o c) Geographic populations shift
o d) educational characteristics
o e) Population diversity

2. Economic
 The economic environment consists of factors that affect consumer purchasing power
and spending patterns.
 Changes in major economic variables such as income, cost of living, interest rates and
savings and borrowing patterns have a large impact on the marketplace.

Changes in Consumer Spending

• In recent years, American consumers spent freely, fueled by income growth, a
boom in the stock market, rapid increases in housing values and other economic
good fortunes. (Prior year 2008)
• However, the free spending and high expectations of those days were dashed by
the global economic crisis. (Year 2008 – 2009)
• Value marketing –Marketers offer just the right combination of product quality and
good service at a fair price.

3. Natural
 Involves natural resources that are needed as inputs by marketers or that are affected
by marketing activities.
 Key trends include:
• Shortages of raw materials (water, food, forests, oil)
• Increased pollution (disposable of chemical waste)
• Increased government intervention (enforce pollution standards, impose law,
set policy)
 Firms have to focus on creating environmentally sustainable strategies that the planet
can support indefinitely.
4. Technological
 The technological environment includes forces that create new technologies, creating
new product and market opportunities.
 The technological environment is the most dramatic force now shaping our destiny.
 Technology has released such wonders as antibiotics, robotic surgery, miniaturized
electronics, smartphones and the internet.
• Radio-frequency identification (RFID) is technology to track products through
various points in the distribution channel.
 Government agencies investigate and ban potentially unsafe products.

5. Political and Social

a. Increased legislation
b. Social responsibility
c. cause-related marketing

A. Increased legislation
 Political environment consists of laws, government agencies and pressure groups that
influence or limit various organizations and individuals in a given society.
 Governments develop public policy to guide commerce – sets of laws and regulations
that limit business for the good of society as a whole.

B. Socially Responsible Behavior

 Companies are encouraging their managers to “do the right thing”. The boom in
online, mobile, and social media marketing has created a new set of social and ethical
issues.

C. Cause-Related marketing
 Many companies are now linking themselves to worthwhile causes to build more
positive images.
• For example, purchase a special edition bottle of Dawn dishwashing
detergent, and P&G will donate a dollar to help reduce and rehabilitate
wildlife affected by oil spills.
 6. Cultural
 The Cultural Environment is made up of institutions and other forces that affect a
society’s basic values, perceptions, preferences, and behaviors.
 Core beliefs and values (more persistence)
• Passed on from parents to children
• Reinforced by schools, churches, business, and government
 Secondary beliefs and values
• More open to change than core beliefs
• Believing in marriage is core beliefs.
• Believing in getting early marriage is secondary beliefs.
 Marketers want to predict cultural shifts to spot new opportunities or threats.

Chapter 5
The Buyer Decision Process

a. Need recognition
b. Information search
c. Evaluation of alternatives
d. Purchase decision
e. Post purchase behavior

A. Need Recognition
 Need recognition can be triggered by:
• Internal stimuli. E.g., Hear stomach growl (hungry)
• external stimuli
o Influences from outside source. E.g. Someone’s recommendation, design, brand
name, advertisement.

B. Information Search
 An interested consumer may or may not search for more information.
 The sources of information:
• Personal sources (Eg. family, friends)
• Commercial sources (Eg. Advertisement, salesperson, packaging)
• Public sources (Eg. mass media, consumer rating organizations, Internet searches)
• Experiential sources (Eg. handling, examining, using the product)
C. Evaluation of alternatives
 Evaluation process refers to how consumers process information to arrive at brand
choices.
 In some cases, consumers use careful calculations and logical thinking.
 At other times, the same consumers do little or even no evaluating. Instead, they buy on
impulse and rely on intuition.

D. Purchase Decision
 Generally, the consumer’s purchase decision will be to buy the most preferred brand.
 2 factors can come between the purchase intention and the purchase decision:
• Attitudes of others (someone important to you influence your decision)
• Unexpected situational factors (a sudden drop in competitors pricing)
 Thus, preferences and even purchase intentions do not always result in an actual purchase
choice.

E. Post-Purchase Behavior
 The difference between the consumer’s expectations and the product’s perceived
performance will determine how satisfied the consumer is.
• If product falls short of expectations, the consumer is disappointed.
• If it meets expectations, the consumer is satisfied.
• If it exceeds expectations, the consumer is delighted.
 Cognitive dissonance is inner tension/ discomfort caused by post-purchase conflict. This
dissonance occurs in most major purchases.

The Buyer Decision Process for New Products (Stages in the adoption process)
 Awareness
• Consumer becomes aware of the new product, but lacks information about it.
 Interest
• Consumer seeks information about new product.
 Evaluation
• Consumer considers whether trying the new product makes sense.
 Trial
• Consumer tries new product on a small scale to improve his or her estimate of its value.
 Adoption
• Consumer decides to make full and regular use of the new product.
Business Markets and Business Buyer Behavior
Business buying behavior refers to the buying behavior of the organizations that buy goods and
services to:
 Use in the production of other products and services.
 Resell or rent them to others at a profit.

Differences between Business Markets and Consumer Markets

a. Market structure and demand
 Business market involve far more dollars and items than do consumer markets.
 Business market contains far fewer but larger buyers.
 Business demand is derived from consumer demand. (Business demand that comes from
the demand for consumer goods)

b. Nature of the Buying Unit

 Business purchases usually involve more decision participants and a more professional
purchasing effort.

c. Types of decision & decision process

 Business buyer face more complex decisions.
 Business buying process tends to be longer and more formalized.
 Buyers and sellers are often much more dependent on each other in business market.

Business Types of Buying Situations

Straight rebuy
 Buyer routinely reorders something without any modifications. Buyers purchase the same
products routinely under approximately the same terms of sale. (e.g., Repurchase of raw
materials without modification)
Modified rebuy
 Buyer wants to modify product specifications, prices, terms, or suppliers. A new task
purchase is changed the second or third time it is ordered. (e.g., Changing some specs on raw
materials)
New task
 Buyer purchases a product or service for the first time to perform a new job. It requires
development of product specifications, vendor specifications and procedures for future
purchases of that product. (e.g., Machineries)
System (solution) selling
 Buying a packaged solution to a problem from a single seller. Avoids the separate decisions
involved in a complex buying situation. (e.g., complete set of PC with systems)
The Business Buying Process
1. Problem recognition
2. General need description
3. Product specification
4. Supplier search
5. Proposal solicitation
6. Supplier selection
7. Order- routine
8. Performance review
E-Procurement (buying on internet)
 Purchasing through electronic connections between buyers and sellers usually online.
 Online purchasing can be implemented in many ways:
• Reverse auctions. put their purchasing request online and invite suppliers to bid for the
business.
• Online trading exchanges. companies work collectively to facilitate the trading process.
• Company buying sites. Company posts its buying needs and invites bids, negotiates terms
and places order.
• Extranet links with key suppliers. Create direct procurement accounts with suppliers; eg:
Intel supplier & Dell buyer system linked.

Chapter 6
Market Segmentation
Market segmentation involves dividing a market into smaller segments of buyers with distinct
needs, characteristics, or behaviors that might require separate marketing strategies or mixes.
Major Segmentation Variables for Consumer Markets
Geographic Segmentation
 Geographic segmentation calls for dividing the market into different geographical units such
as nations, regions, states, countries, cities, neighborhoods or even climate.
 Companies are localizing their products, advertising, promotion, and sales efforts to fit the
needs of individual regions.
Demographic Segmentation
Dividing the market into segments based on variables such as age, life-cycle, gender, income,
occupation, education, religion, ethnicity (race) and generation.
a. Age and Life-Cycle segmentation is offering different products or using different
marketing approaches for different age and life-cycle groups.
b. Gender Segmentation has long been used in clothing, cosmetics, toiletries and magazines.
c. Income Segmentation has long been used by marketers for products and services such as
automobiles, clothing, cosmetics, financial services and travel.
Psychographic Segmentation
Dividing buyers into social class, lifestyle, or personality segments based on assessments of
activities, interests and opinions (AIO).
a. Social Class (car, clothes, store choice)
b. Lifestyle (frozen dinner, low fat yogurt, luxury items)
c. Cosmetic
Behavioral Segmentation
Behavioral segmentation divides a market into segments based on consumer knowledge,
attitudes, uses, or responses to a product.
a. Occasion Segmentation
 Dividing the market into segments according to occasions when buyers get the
idea to buy, actually make their purchase, or use the purchased item.
 For example, M&M’s Brand Chocolate Candies runs special ads and packaging
for holidays and events such as Christmas
b. Benefits Sought Segmentation
 Benefit sought segmentation means dividing the market according to the different
benefits that consumers seek from the product.
 For example, Pantene shampoo provide different benefits for consumers such as
anti-hair fall, anti- dandruff, hair shine, hair repair etc.
 c. User Status segmentation
 User status – Segments include nonusers, ex- users, potential users, first-time users,
and regular users.
 For example, P&G makes its Pampers are the diaper provided for newborns at most
U.S. hospitals (first time users).
d. Usage Rate Segmentation
 Usage Rate - Markets can also be segmented into light, medium, and heavy product
users.
 Heavy users are often a small percentage of the market but account for a high
percentage of total consumption.
 For example, most corporate women (office ladies) are heavy users for cosmetic
products.
e. Loyalty Status Segmentation
 Buyers can be divided into groups according to their degree of loyalty.
 Company can earn a lot by analyzing loyalty patterns in its market.
 Highly loyal customers can be a real asset.

Requirements for Effective Segmentation

To be useful, market segments must be:
 Measurable - The size, purchasing power, and profiles of the segments can be
measured. (statistic)
 Accessible - The market segments can be effectively reached and served.
 Substantial - The market segments are large or profitable enough to serve.
 Differentiable - The segments are conceptually distinguishable and respond
differently to different marketing mix elements and programs.
 Actionable - Effective programs can be designed for attracting and serving the
segments.

Market Targeting
 Market targeting refers to the process of evaluating each market segment’s attractiveness
and selecting one or more segments to enter.
 A target market consists of a set of buyers who share common needs or characteristics
that the company decides to serve.
Evaluating Market Segments Attractiveness
In evaluating different market segments, a firm must look at:
i. Segment size and growth
 Analyze sales, growth rates and expected profitability.
ii. Company objectives and resources
 The segments must match with the company’s long-run objectives.
 Company must have the skills and resources needed to succeed in an attractive
segment.
iii. Structural attractiveness
A segment is less attractive if:
 Strong and aggressive competitors or easy for new entrants to come into the
segment.
 The existence of many actual or potential substitute products may limit prices and
 the profits. (Car vs motorbike; coffee vs tea)
 Strong and powerful of buyers.
 Strong and powerful of suppliers who can control prices.

Selecting Target Market Segments

4 Market Targeting Strategies
a. Undifferentiated Marketing
 Using an undifferentiated marketing (or mass marketing) strategy, a firm decides to
ignore market segment differences and go after the whole market with one offer.
 Focuses on what is common in the needs of consumers.
 Designs a product that will appeal to the largest number of buyers.
 Example product: mineral water, sugar, salt

b. Differentiated Marketing
 Using a differentiated marketing (or segmented marketing) strategy, a firm decides to
target several market segments and designs separate offers for each.
 Examples: shampoo (Pantene), instant noodles (Maggi).

c. Concentrated Marketing
 also called as niche marketing strategy.
 Instead of going after a small share of a large market, a firm goes after a large share
of one or a few segments or niches.
 It can market more effectively by fine-tuning its products, prices and programs to the
needs of carefully defined segments.
 Can be highly profitable but high risks too.
  Example: BMW car, Mont Blanc pen, Rolex watch.

d. Micromarketing
 Tailoring products and marketing programs to the needs and wants of specific
individuals and locations.
Local marketing
 Tailoring brands and promotions to the needs and wants of local customer segments
cities, neighborhoods, and even specific stores.
Individual Marketing
 Tailoring products and marketing programs to the needs and preferences of individual
customers (also known as one-to-one marketing)

Chapter 7
Product and Service Classification
Product and services fall into two broad classes based on the types of consumers who use them:
1. Consumer products - Serve consumer markets
2. Industrial products - Serve business markets

1. Consumer Products
 Consumer products are products bought by final consumer for personal consumption.
 Classified by how consumers buy them:
a. Convenience products
b. Shopping products
c. Specialty products
d. Unsought products

A. Convenience Products
Consumer products that customers usually buy frequently, immediately, and with minimal
comparison and buying effort.
• Low priced
• Placed in many locations to make them readily available
• E.g., candy, magazines, toothpaste and fast food (items sold in convenience store or
mini mart)
B. Shopping products
Consumer products that the customer, in the process of selecting and purchasing, usually
compare on such attributes as suitability, quality, price, and style.
• Less frequently purchased
• Distributed through fewer outlets
• Greater sales support
• E.g., Furniture, clothing, cars
C. Specialty products
Consumer products with unique characteristics or brand identification for which a significant
group of buyers is willing to make a special purchase effort.
• E.g., Specific brands of cars (eg. Lamborghini, Ferrari), designer clothes, and the
services of medical or legal specialists.
D. Unsought Products
Consumer products that the consumer either does not know about or knows about but does
not normally consider buying.
• E.g., life insurance, pre-planned funeral services.

2. Industrial Products
 The distinction between a consumer product and an industrial product is based on the
purpose for which the product is purchased.
 Industrial products are those purchased for further processing or for use in conducting a
business.
Can be categories into 3 types:
Materials and parts
a) Raw materials (e.g. farm products & natural products such as gold, petroleum)
b) Component parts (tires, Intel processors)

Capital items
Industrial products that aid in the buyer’s production or operations, including installation and
accessory equipment (e.g., computer, machineries and office equipment)

Supplies and services

a) Operating supplies (e.g., paper, uniforms, gloves)
b) Repair & maintenance items (e.g., Painting, cleaning services)
Building Strong Brands: (4) Brand Development
Line extension (EB, EP)
Extending an existing brand name to new forms, colors, sizes, ingredients, or flavors within a
product category (e.g., Bliss yogurt drink: apple, mango flavor...)
Brand extension (EB, NP)
Extending an existing brand name to new product categories (e.g., Samsung: TV, computer, hp)
Multiband (NB, EP)
Marketing many different brands in a given product category (e.g., PepsiCo: soft drinks- Pepsi,
Mountain Dew; energy drink – Gatorade; fruit drinks - Tropicana); (P&G shampoo: Rejoice,
Pantene, Clairol)
New brands (NB, NP)
Created for new product category, or when interest in existing brands decreases (e.g., P&G:
Pampers diapers/ Rejoice shampoo)

Brand Strategy: Building Strong Brands

4 major brand strategy decisions need to be considered:
1. Brand positioning
 Attributes
 Benefits
 Beliefs and values

2. Brand name selection

 Selection
 Protection

3. Brand sponsorship
 Manufacturer’s brand
 Private brand
 Licensing
 Co-branding
 4. Brand development
 Line extensions
 Brand extensions
 Multi brands
 New brands

Chapter 8
Product Life-cycle (PLC) Stages
PLC is the course of a product’s sales and profits over its lifetime.
1. Product Development
 Begins when the company finds and develops a new-product idea.
 Sales are zero and the company’s investment costs mount.
2. Introduction Stage
 Sales: slow sales growth
 Profits: are nonexistent in this stage because of the heavy expenses of product
introduction.
3. Growth Stage
 Sales: grow rapidly due to the rapid market acceptance.
 Profits: increasing profits
4. Maturity Stage
 Sales: slowdown in sales growth as product has achieved acceptance by most potential
buyers.
 Profits: drop because of increased marketing outlays to defend the product against
competition.
5. Decline stage
 Sales: Declining sales
 Profits: Declining profits

Chapter 9
3 Major Pricing Strategies
1. Customer Value-based Pricing
Customer Value-Based Pricing refers to the setting of price based on buyer’s perception of
value rather than on the seller’s cost. Price is set to match perceived value. There are 2 types:
a. Good-value pricing
involves offering just the pricing right combination of quality and good service at a
fair price. There 2 types:
i. Everyday low pricing (EDLP)
 ii. High-low pricing
b. Value-added pricing
involves attaching value- added features and services to differentiate a company’s
offers and charging higher prices.

2. Cost-Based Pricing
Cost-Based Pricing involves setting prices based on the costs for producing, distributing and
selling the product plus fair rate of return for its effort and risk.
a. Cost-Plus Pricing (or markup pricing)
Adding a standard markup to the cost of the product.
b. Breakeven Pricing
The firm tries to determine the price at which it will break even or make the target
return it is seeking.

3. Competition-Based Pricing
 Setting prices based on competitors’ strategies, prices, costs, and market offerings.
 No matter what price it charges – high, low or in between – the company must be
certain to give customers superior value for that price.

Other Internal and External Considerations Affecting Price Decision

Internal
1. Overall Marketing Strategy, Objectives, and Mix: product design, distribution & promotion
2. Organizational Considerations
 Small co.: top management
 Big co.: product line managers
External
3. The Economy
 boom, recession, inflation & interest rate affect consumer purchasing power & cost of
production
4. The Market and Demand
5. Others: Government
 Control price
 Resellers
 Social concern
1. Idea Generation
Idea generation – is the systematic search for new-product ideas.
 Internal sources
• The formal R&D process
• Intrapreneurs within the company.
 External sources
• Through distributors, suppliers, competitors and customers.
 Crowdsourcing
• inviting broad communities of people into the new-product innovation process.
2. Idea screening
 Screening new-product ideas in order to spot good ideas and drop poor ones as soon as
possible.
3. Concept Development and Testing
 Product concept is a detailed version of the new-product idea stated in meaningful
consumer terms.
 Concept development – The marketer’s task is to develop the new product into
alternative product concepts, find out how attractive each concept is to customers, and
choose the best one.
Example of concept development for electric car:
Concept 1: An affordably priced midsize car designed for running errands and visiting
friends.
Concept 2: A mid-priced sporty compact appealing to young singles and couples.
Concept 3: A high-end midsize SUVs.
 Concept testing is testing new-product concepts with a group of target consumers to find
out if the concepts have strong consumer appeal.
 Concept testing is done using a description, picture or model of the product.
 Asking consumers about their reactions.
4. Marketing Strategy Development
 Marketing strategy development is designing an initial marketing strategy for introducing
the product to the market.
The marketing strategy statement consists of 3 steps:
i. The first part describes the target market; the planned value proposition; and the
sales, market share and profit goals for the first few years.
ii. Outlines the product’s planned price, distribution and marketing budget for the
first year.
iii. Describes the planned long-run sales, profit goals and marketing mix strategy.
5. Business Analysis
 Business analysis is a review of the sales, costs, and profit projections for a new product
to find out whether these factors satisfy the company’s objectives.
6. Product development
 Product development is developing the product concept into a physical product in order
to ensure that the product idea can be turned into a workable market offering.
7. Test marketing
 Test marketing is the stage of new-product development in which the product and
marketing program are tested in realistic market settings.
8. Commercialization
 Commercialization involves introducing a new product into the market.
 Companies must decide:
• When to introduce the product
• Where to introduce the product
o Single location, state, region, nationally, internationally
• Develop a market rollout plan

Chapter 13
A. Personal Selling
Personal selling is the personal presentation by the firm’s sales force for the purpose of making
sales and building customer relationships.

The Nature of Personal Selling

 The term salesperson covers a wide range of positions such as salesman, sales
representatives, sales consultants, account executives and sales engineers.
 Personal selling is the interpersonal part of the promotion mix and can include:
• Face-to-face communication (physical meeting)
• Telephone communication (using phone call)
• Video or Web conferencing (eg. Hangout meet video call)
 Some firms have no salespeople at all
 A salesperson might be
• an order taker, such as the department store salesperson standing behind the counter,
which is the least creative sales position.
• an order getter, whose position demand creative selling and relationship building for
products and services ranging from appliances to industrial equipment.

Linking the Company with its Customers

Salespeople are an effective link between the company and its customers to produce customer
value and company profit by
 Represent the company to customers
 •They find & develop new customers & information about the company’s
products/services.
 Represent customers to the company
• They learn about customers needs & work with marketing department to create
greater customer value.
 Working closely with marketing
• Ideally, the sales force and other marketing functions should work together closely to
jointly create value for customers. Unfortunately, some companies still treat sales and
marketing as separate functions and the groups may not get along well.

Social Selling: Online, Mobile, and social media Tools

 Provide salespeople with powerful tools for
• Identifying and learning about prospects
• Engaging customers
• Creating customer value
• Closing sales
• Nurturing customer relationships
 Help sales forces to be more efficient, cost- effective, and productive

B. The Personal Selling Process

Steps in the Selling Process
1. Prospecting and qualifying
 Prospecting: Identifying qualified potential customers.
 The best source of prospects is referrals.
 Sources of referrals: current customers, suppliers and social network contacts.
 Qualifying involves identifying good customers and screening out poor ones by looking
at their financial ability, volume of business, needs, location and growth potential.
2. Preapproach
 Sales person learns as much as possible about a prospect before making a sales call. Eg:
What the buyer needs, who is involved in the buying, characteristics and buyer styles.
 Salesperson should set call (Visit) objectives.
 Another task is to determine the best approach (personal visit/phone call/ email), best
timing and determine sales strategy.
3. Approach
  is the process where the salesperson meets and greets the buyer and gets the relationship
off to a good start and involves the salesperson’s:
• Appearance
• Opening lines
• Follow-up remarks
4. Presentation and demonstration
 Presentation: Telling the “value story” to the buyer, showing how the company’s offer
solves the customer’s problems.
 The qualities that buyers value most include good listening, empathy, honesty,
dependability and thoroughness

5. Handling objections
 Handling objections is the process where salespeople resolve problems that are logical,
psychological, or unspoken.
 In handling objections, the salesperson should:
• use a positive approach
• seek out hidden objections
• take objections as opportunities to provide more information.
6. Closing
 Closing is the process where salespeople should recognize signals from the buyer—
including physical actions, comments, and questions—to ask for a order and finalize the
sale.
 Closing is difficult for some salespeople because they lack confidence, feel guilty about
asking for an order, or may not recognize the right time to ask for an order.
7. Follow-up
 Following up after the sale to ensure customer satisfaction and repeat business.