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CtJ.apter 5
fostomer-driven Marketing Strategy
• Market segmentation: Divide the total market into smaller segments.
• Targeting: Select the segment or segments to enter.
• Differentiation: Differentiate the market offering to create superior customer value.
• Positioning: Position the market offering in the minds of target customers.

fagmenting consumer market

• Geographic segmentation divides the market into different geographical units such as nations,
regions, states, countries, cities, or even neighborhoods.
• Demographic segmentation divides the market into segments based on variables such as age, life-
cycle stage, gender, income, occupation, education, religion, ethnicity, and generation.
• Psychographic segmentation divides a market into different segments based on social class, lifestyle,
or personality characteristics.
• Behavioral segmentation divides a market into segments based on consumer knowledge, attitudes,
uses of a product, or responses to a product.

Market-Targeting Strategies (targeting broadly> targeting narrowly)

• Undifferentiated marketing (or mass marketing), the company designs a product and a
marketing program that will appeal to the largest number of buyers.
• Differentiated marketing increases the costs of doing business. The company must weigh
increased sales against increased costs when deciding on a differentiated marketing strategy.
• Concentrated marketing: When using a concentrated marketing (or niche marketing) strategy, a
fi rm goes after a la rge share of one or a few smaller segments or niches.
• Micromarketing includes local marketing and individual marketing described on the next slides.
o Localmarketing involves tailoring brands and promotions to the needs and wants of local
customer groups-cities, neighborhoods, and even specific stores.
o Individual marketing involves tailoring products and marketing programs to the needs and
preferences of individual customers. Also known as one-to-one marketing.

Chapter 6
_,fwo broad classes of product and services
• Goods are physical products that can be touched, felt and seen. Usually tangible. Goods are
often manufactured. Ca n be stored.
• Services are intangible activities that are performed for a customer's benefit. Usually intangible.
Services are produced and consumed simultaneously. Cannot be stored.

Jfiree distribution strategies for a consumer product

• Intensive distribution: Involves placing product in as many retail outlets as possible to maximize
availa bility and convenience for consumers. This strategy is suitable for low-priced, fast-moving
consumer goods (FMCG) such as soft drinks or snacks. Example: Coca-Cola .
• Selective distribution: Placing the product in a li mited number of retail outlets that meet
specifi c criteria, such as high-end department stores or specialty stores. This strategy is suitable
for products with specific target markets or unique features, such as luxury fashion brands.
Example: Chanel.
 • Exclusive distribution: Placing the product in a limited number of retail outlets, often wit~ strict
criteria for selection. Suitable for products with high-end or luxury positioning, such as high-end
watches or jewelry. Example: Rolex.

Consumer products are products and services bought by final consumers for personal consumption .
• Convenience products are consumer products and services that the customer usually buys
frequently, immediately, and with a minimum comparison and buying effort. Such as
Newspapers, Candy and Fast food.
• Shopping products are less frequently purchased consumer products and services that the
st
cu omer compares carefully on suitability, quality, price, and style. Such as Furniture, Cars,
Appliances.

• Specialty products are consumer products and services with unique characteristics or brand
identification for which a significant group of buyers is willing to make a special purchase effort.
Such as Medical services and Designer clothes.
• Unsought products are consumer products that the consumer does not know about or knows
about but does not normally think of buying. Such as Life insurance and Funeral services.

Industrial products are those products purchased for further processing or for use in conducting a
business.

• Materials and parts include raw materials and manufactured materials and parts.
• Capital items are industrial products that aid in the buyer's production or operations.
• Supplies and services include operating supplies, repair and maintenance items, and business
services.

Types of Service Industries

• Governments offer services through courts, employment services, hospitals, military services,
police and fire departments, the postal service, and schools.
• Private not-for-profit organizations offer services through museums, charities, churches,
colleges, foundations, and hospitals.
• Business organizations offer services such as airlines, banks, hotels, insurance companies,
consulting firms, medical and legal practices, entertainment and telecommunications companies,
real estate firms, retailers, and others.

fa rService Characteristics
• Intangibility refers to the fact that services cannot be seen, tasted, felt, heard, or smelled before
they are purchased.
• Inseparability refers to the fact that services cannot be separated from their providers.
• Variability refers to the fact that service quality depends on who provides the services as well as
when, where, and how the services are provided.
• Perishability refers to the fact that services cannot be stored for later sale or use.

Three Types of Services Marketing

• External marketing
• Internal marketing means that the service firm must orient and motivate its customer-contact
employees and supporting service people to work as a team to provide customer satisfaction.
• Interactive marketing means that service quality depends heavily on the quality of the buyer-
seller interaction during the service encounter.
 C~pter7
f iur steps in Product Life Cycle
Introduction Stage (a new product is first launched)
• Slow sales growth
• Little or no profit
• High distribution and promotion expenses
Growth Stage (early adopters will continue to buy, and later buyers will start following their lead,
especially if they hear favourable word of mouth)
• Sales increase
• New competitors enter the market
• Profits increase
• Economies of scale
• Consumer education
• Lowering prices to attract more buyers
Maturity Stage (poses strong challenges to marketing management)
• Slowdown in sales
• Many suppliers
• Substitute products
• Overcapacity leads to competition
• Increased promotion and R&D to support sales and profits
Decline Stage (sales decline for many reasons, including technological advances, shifts in consumer
tastes, and increased competition)
• Maintain the produ·ct
• Harvest the product
• Drop the product

Chapters
Three major pricing strategies
• Customer value-based pricing (uses the buyers' perceptions of value rather than the seller's cost)
o Good-value pricing is offering just the right combination of quality and good service at a fair
price.
o Everyday low pricing (ED LP) involves charging a constant everyday low price with few or
no temporary price discounts.
o High-low pricing involves charging higher prices on an everyday basis but running frequent
promotions to lower prices temporarily on selected items.
0 Value-added pricing attaches value-added features and services to differentiate a company's
offers and thus their higher prices.
• Cost-based pricing (sets prices based on the costs for producing, distributing, and selling the
product plus a fair rate of return for effort and risk)
Fixed costs are the costs that do not vary with production or sales level. Such as Rent, Interest,
Executive salaries.
Variable costs vary directly with the level of production. Such as raw materials, packaging.
Total costs are the sum of the fixed and variable costs for any given level of production.
o Cost-plus pricing adds a standard mark-up to the cost of the product.
o Break-even pricing (target return pricing) is setting price to break even on costs or to make a
target return .
 • Competition-based pricing is setting prices based on competitors' strategieS, coS ts, priceS, and
market offerings.

J6ur parts of the external environment affect businesses

• Economic factors: The state of the economy, such as inflation, GDP growth, and unemployment,
affects consumer spending power and, in turn, pricing strategies.
• Competitive factors: The level of competition in the market, the number of competitorS, and
their pricing strategies all affect company's pricing strategies.
• Technological factors: Technological advancement can affect a company's production costs and
enable it to offer lower prices or create new products that meet consumer needs better.
• Legal and political factors: Laws and regulations such as taxes, tariffs, and trade policies can
affect a company's pricing decision and profit margins. Political instability and uncertainty can
also affect pricing strategies by causing fluctuations in currency exchange rates or supply chain
disruptions.

Chapter 10
Five promotion mix tools for communicating customer value
• Advertising refers to any paid form of nonpersonal presentation and promotion of ideas, goods,
or services by an identified sponsor. Advertising includes broadcast, print, online, mobile,
outdoor, and other forms.
• Sales promotion is a short-term incentive to encourage the purchase or sale of a product or
service. Such as Discounts, Coupons, Displays, Demonstrations.
• Personal selling is the personal interaction by the firm's sales force for the purpose of engaging
customers, making sales, and building customer relationships. Such as Sales presentations, Trade
shows, Incentive programs.
• Public relations involves building good relations with the company's various publics by obtaining
favourable publicity, building up a good corporate image, and handling or heading off
unfavourable rumours, stories, and events. Examples of public relations include press releases,
sponsorships, events, and webpage.
• Direct and digital marketing involves engaging directly with carefully targeted individual
consumers and customer communities to both obtain an immediate response and build lasting
customer relationships. Examples include catalogs, social media, mobile marketing.

Steps in Developing Effective Marketing Communication

• Identify the target audience
• Determine the communication objectives
• Design the message
• Choose the media to send the message
• Select message source and collect feedback

f atting the Promotional Budget .

• Affordable method sets the promotion budget at the level management thinks the company can
afford.
• Percentage-of-sales method sets the promotion budget at a certain percentage of current or
forecasted sales or as a percentage of the unit sales price.
• Competitive-parity method sets the promotion budget to match competitors' outlays.
• Objective-and-task method develops the promotion budget by specific promotion objectives
and the costs of tasks needed to achieve these objectives.