Chapter 1

What is Marketed - Goods Services Events Experiences Persons Places Properties

Organizations Information Ideas
Core Marketing Concepts
Needs: the basic human requirements such as for air, food, water, clothing, and shelter
Wants: specific objects that might satisfy the need
Demands: wants for specific products backed by an ability to pay

Q) The New Marketing Realities

Q) Market ouutcomes
New consumer capabilities
Can use online resources as a powerful information and purchasing aid
Can search, communicate, and purchase on the move
Can tap into social media to share opinions and express loyalty ,
Can actively interact with companies
Can reject marketing they find inappropriate or annoying
Can extract more value from what they already own

New company capabilities

Can use the internet as a powerful information and sales channel, including for individually
differentiated goods
Can collect fuller and richer information about markets, customers, prospects, and competitors
Can reach customers quickly and efficiently via social media and mobile marketing, sending targeted
ads, coupons, and information
Can improve purchasing, recruiting, training, and internal and external communications Can
improve cost efficiency

Q) Holistic Marketing
Relationship marketing
aims to build mutually satisfying long-term relationships with key constituents in order to earn and
retain their business• Customers • Employees • Marketing partners • Financial community
The ultimate outcome of relationship marketing is a unique company asset called a marketing
network, which consists of the company and its supporting stakeholders with whom it has built
mutually profitable business relationships

Integrated Marketing
Devise marketing activities and programs that create, communicate, and deliver value such that
“the whole is greater than the sum of its parts.”

Internal Marketing
The task of hiring, training, and motivating able employees who want to serve customers well
Performance Marketing • Financial accountability • Environmental impact • Social impact

--------------------
Defining the Role of Marketing in the Organization • Production concept • Product concept •
Selling concept • Marketing concept • Market-value concept

New competitive environment – Deregulation – Privatization – Retail transformation –

Disintermediation – Private labels – Mega-brands

Organizing the Marketing Department

• Functional organization • Geographic organization • Product or brand organization • Market
organization • Matrix organization
Chapter 3
Analysing consumer markets
Consumer behavior – The study of how individuals, groups, and organizations select, buy, use, and
dispose of goods, services, ideas, or experiences to satisfy their needs and wants

Q) What Influences Consumer Behavior?

Cultural factors – Culture – Subcultures – Social classes
Social factors
Reference groups include all the groups that have a direct or indirect effect on a person’s beliefs,
decisions, and behavior – Family – Roles and Status
 Primary group is family
 Aspirational groups
 Dissociative groups
 Opinion leader or influencer offers informal advice or information about a specific product
or product category
Personal factors – Age/stage in life cycle – Occupation and economic circumstances – Personality
and selfconcept – Lifestyle and values
Personality • By personality, we mean a set of distinguishing human psychological traits that lead to
relatively consistent and enduring responses to environmental stimuli including buying behavior
Life-style A lifestyle is a person’s pattern of living in the world as expressed in activities, interests,
and opinions
Consumer Psychology • Consumer motivation • Perception • Learning • Memory
Consumer Motivation • Consumer needs – Basic human requirements ▪ Biological ▪ Psychological –
Wants – Demands Consumer motivation –
A need becomes a motive when it is aroused to a sufficient level of intensity to drive us to act
Perception – The process by which we select, organize, and interpret information inputs to create a
meaningful picture of the world
• Selective attention – Marketers must work hard to attract the notice of consumers – Subliminal
perception – (Subliminal perception has long fascinated armchair marketers, who argue that
marketers embed covert, subliminal messages in ads or packaging. Consumers are not consciously
aware of them, yet they affect behavior.) • Selective distortion – Tendency to interpret information
in a way that fits our preconceptions
Emotions

Memory
• Memory models – Short-term memory—a temporary and limited repository of information – Long-
term memory—a more permanent, essentially unlimited repository ▪ Episodic memory ▪ Semantic
memory ▪ Procedural memory
• Associative network memory model – Brand associations—all brand-related thoughts, feelings,
perceptions, images, experiences, beliefs, attitudes that become linked to the brand node
• Memory processes – Memory encoding—how and where information gets into memory – Memory
retrieval—the way information gets out of memory

Q) The Buying Decision Process

The consumer typically passes through five stages
 Problem recognition
 Information search Personal sources – Commercial sources – Public sources – Experiential
sources - Search Dynamics -> Total set – awareness set – consideration set – choice set -choice
 Evaluation of alternatives – Beliefs and attitudes – Information processing – Expectancy-value
model
 Purchase decision – Decision heuristics—rules of thumb – Level of consumer involvement ▪
Elaboration likelihood model – Intervening factors • Types of perceived risk – Functional risk –
Physical risk – Time risk – Financial risk – Psychological risk – Social risk
 Postpurchase behavior – Postpurchase satisfaction – Postpurchase actions – Postpurchase uses
and disposal
 Chapter 6
Identifying market segments and target customers
Targeting – The process of identifying customers for whom the company will optimize its offering
Mass marketing – the firm ignores segment differences and goes after the whole market with one
offer
Targeted marketing – Sell different products to all the different segments of the market ▪ One-to-
one approach
Mass customization – The ability of a company to meet each customer’s requirements—to prepare
on a mass basis individually designed products, services, programs, and communications

Q) Strategic vs Tactical Marketing

Strategic targeting
– Focuses on customers whose needs the company can fulfill by ensuring that its offerings are
customized to their needs

Target compatibility – Can the company create superior value for target customers?
 A reflection of the company’s ability to outdo the competition in fulfilling the needs of
target customers
 Business infrastructure • Access to scarce resources • Skilled employees • Technological
expertise • Strong brands • Collaborator networks
 Core competency – A source of competitive advantage and makes a significant
contribution to perceived customer benefits – Has applications in a wide variety of
markets – Is difficult for competitors to imitate

Target attractiveness – Can these customers create superior value for the company?
• Target attractiveness – The ability of a market segment to create superior value for the
company ▪ Monetary value ▪ Strategic value
• Monetary value – Customer revenues – Costs of serving customers
• Strategic value – Social value – Scale value – Information value

Tactical targeting
Identifies the ways in which the company can reach these strategically important customers
 Defining the customer profile – Demographic factors – Geographic factors – Behavioral factors
– Psychographic factors
 Aligning customer value and customer profile – Effectiveness – Efficiency
 Bringing segments to life – Personas ▪ Detailed profiles of one, or perhaps a few, hypothetical
target consumers, imagined in terms of demographic, psychographic, geographic, or other
descriptive attitudinal or behavioral information

Single-Segment Targeting • Niche marketing

Targeting Multiple Segments • Product specialization • Market specialization

Q) Segmenting Consumer Markets - Market segmentation –

Divides a market into well-defined slices
Demographic Segmentation
• Age – Our wants and abilities change with age
• Life cycle stage – A person’s major concern (e.g., divorce)
• Gender – Men and women have different attitudes and behave differently
• Income – Income segmentation is a long-standing practice
• Race and culture – Hispanic Americans – Asian Americans – African Americans
Geographic Segmentation
• Geographical segmentation – Divides the market into geographic units such as nations, states,
regions, counties, cities, or neighborhoods
• Combining geographic data with demographic data – Nielsen Claritas’ PRIZM ▪ Education and
affluence ▪ Family life cycle ▪ Urbanization ▪ Race and ethnicity ▪ Mobility
Behavioral Segmentation
• Marketers divide buyers into groups on the basis of their actions – User status – Usage rate –
Buyer-readiness stage – Loyalty status – Occasions
Psychographic Segmentation
• Buyers are divided into groups on the basis of psychological traits, lifestyle, or values

Segmenting Business Markets • Demographic factors • Operating variables • Purchasing approaches

• Situational factors • Personal characteristics
Chapter 7
Crafting a Customer Value Proposition and Positioning
Q) Developing a Value Proposition

Create value across three domains: – Functional value – Psychological value – Monetary value

 Total customer benefit – The perceived value of the bundle of functional, psychological, and
monetary benefits customers expect from a given market offering because of the product,
service, and image
 Total customer cost – The perceived bundle of functional, psychological, and monetary costs
customers will incur in evaluating, obtaining, using, and disposing of the given market
offering
 Customer value proposition – Based on the difference between benefits the customer gets
and the costs he or she assumes for different choices
 Customer value analysis – Reveals the company’s strengths and weaknesses relative to those
of various competitors • Identify the relevant attributes and benefits that customers value •
Assess the relative importance of these attributes and benefits • Assess the company’s and
competitors’ performance on the key attributes/benefits • Monitor customer value over
time

Q) Developing a Positioning Strategy

• Positioning – The act of designing a company’s offering and image to occupy a distinctive place in
the minds of the target market
Choosing a Frame of Reference • Frame of reference – Serves as a benchmark against which
customers can evaluate the benefits of a company’s offering

Points of Difference and Points of Parity

Points of difference (PODs) – Attributes/benefits that consumers strongly associate with a brand,
positively evaluate, and believe they could not find to the same extent with a competitive brand
• POD criteria – Desirable – Deliverable – Differentiating
Points of parity (POPs) – Attribute/benefit associations that are not necessarily unique to the brand
but may in fact be shared with other brands
• POP forms – Category – Correlational – Competitive
Perceptual maps – Visual representations of consumer perceptions and preferences

Creating a Sustainable Advantage

 Competitive advantage – The ability to perform in one or more ways that competitors cannot or will
not match ▪ Leverageable advantage
Three core strategies: – Differentiate on an existing attribute – Introduce a new attribute – Build a
strong brand

Q) Communicating the Positioning

Positioning statement – Communicating an offering’s category membership along with points of
parity and points of difference, and developing a narrative to convey the offering’s positioning
• Crafting a positioning statement – Attributes that describe the offering v ersu benefits delivered by
the attributes
Communicating category membership – Announce category benefits – Compare to exemplars – Rely
on the product descriptor
Communicating conflicting benefits – Challenge: consumers want to maximize both of the negatively
correlated attributes or benefits ▪ Develop a product or service that performs well on both
dimensions ▪ Launch two different marketing campaigns
• Positioning as storytelling – Narrative brandling ▪ Setting ▪ Cast ▪ Narrative arc ▪ Language – Primal
branding
Chapter 10
Building Strong Brands
– A brand is “a name, term, sign, symbol, or design, or a combination of them, intended to identify
the goods or services of one seller or group of sellers and to differentiate them from those of
competitors”

The Essence of Branding • Branding – The process of endowing products and services with the
power of a brand

The Role of Brands

Brands’ role for consumers – Set and fulfill expectations – Reduce risk – Simplify decision making –
Take on personal meaning – Become part of identity
Brands’ role for firms
– Simplify product handling – Organize inventory and accounting – Offer legal protection – Create
brand loyalty – Secure competitive advantage

Brand equity
– The monetary value of a brand ▪ Goodwill – The monetary value of all intangible assets of a
company
• Gauging brand equity – Cost approach – Market approach – Financial approach

Brand Power • Brand power – The ancillary value contributed by the brand to a product or a service
▪ Customer-based brand equity

Measuring Brand Power

Brand audit – Focused series of procedures to assess the health of the brand, uncover its sources of
brand equity, and suggest ways to improve and leverage its equity
Brand tracking – Brand audit is used as input to collect quantitative data from consumers over time,
providing consistent, baseline information

Q) Designing the Brand

Brand mantra – A three- to five-word articulation of the heart and soul of the brand ▪ Communicate
brand’s uniqueness ▪ Simplify brand essence ▪ Inspire
Choosing brand elements: – Memorable – Meaningful – Likable – Transferable – Adaptable –
Protectable
Brand characters – A special type of brand symbol—one with human characteristics that both
enhance likability and tag the brand as interesting and fun
Brand personality – The specific mix of human traits that we can attribute to a particular brand

Brand hierarchy –
Reflects the way in which a company’s brands are related to a company’s products and services, as
well as to one another

Managing Brand Portfolios

Brand portfolio – The set of all brands and brand lines a particular firm offers for sale in a particular
category or market segment
• Three strategies:
– House-of-brands strategy
– Branded-house strategy ▪ Flagship product ▪ Branded variants
– Sub-brand strategy
Cobranding aka dual branding – Two or more brands marketed together
▪ Same company cobranding ▪ Joint venture cobranding ▪ Ingredient cobranding

Brand Dynamics
• Brand repositioning – Back to basics strategy – Reinvention strategy
Brand extension – Advantages – Disadvantages ▪ Brand dilution

Managing a Brand Crisis

Guidelines – Empathy – Value – Strategy – Innovation

Luxury Branding
Chapter 8
Designing and Managing Products
Product Differentiation
• Core functionality • Features • Performance quality • Conformance quality• Durability • Reliability
• Form • Style customization

Product Design
Design – The totality of features that affect the way a product looks, feels, and functions to a
consumer
Power of design
• Is emotionally powerful • Transmits brand meaning/positioning • Is important with durable goods
• Makes brand experiences rewarding • Can transform an entire enterprise • Facilitates
manufacturing/distribution • Can take on various approaches
Approaches to design – Design thinking ▪ Observation ▪ Ideation ▪ implementation

Product portfolio
– Encompasses all products offered by a company, including various product categories & product lines
• Product portfolio – Width – Length – Depth – Consistency

Product line – A group of related products sold by the same company

Product map – Allows a company to see its main competitors at a glance – Helps planners to identify
market segments and spot market opportunities
Product Line Length • Line stretching – Down-market stretch – Up-market stretch – Two-way stretch
• Line filling • Line modernization • Line featuring • Line pruning

Managing Packaging
• All the activities of designing and producing the container for a product
Used as a marketing tool – Self-service – Consumer affluence – Company and brand image –
Innovation opportunity
Packaging objectives – Identify the brand – Convey descriptive and persuasive information –
Facilitate product transportation, protection, and storage – Aid consumption
Color – Carries different meanings in different cultures and market segments – Can define a brand
Labeling • Identifies • Grades • Describes • Promotes

• Guarantee – If a product fails to function as promised by the company or as customers expect, the
company will provide some type of compensation to the purchaser
• Warranties – Cover the repair or replacement of the purchased item and usually do not allow the
customer to return the product for a refund
Chapter 9
Designing and Managing Services
Service – Any act or performance one party can offer to another that is essentially intangible and
does not result in the ownership of anything
The Service Aspect of an Offering • A pure tangible good • A tangible good with accompanying
services • A hybrid • A major service with accompanying minor goods/services • A pure service
Characteristics of Services
• Intangibility • Services cannot be seen, tasted, felt, heard, or smelled • “Tangibilize the
intangible” – Place – People – Equipment – Communication material – Symbols – Price
• Inseparability Services are typically produced and consumed simultaneously
• Variability • The quality of services depends on who provides them, when and where, and to
whom – As such, services are highly variable
• Perishability • Services cannot be stored – Yield pricing
Demand side • Differential pricing • Nonpeak demand • Complementary services • Reservation
services Supply side • Part-time employees • Peak-time efficiency routines • Increased
consumer participation • Shared services • Facilities for future expansion

New Services Realities

• Increasing role of technology
• Fundamentally changing how value is delivered to customers • Power to make service
workers more productive
• Importance of the increasingly empowered customer • Unbundled service choices • Social
media to spread the word
• Customer coproduction Active engagement in the service process – One-third of all service
problems are caused by the customer • Redesign processes and redefine customer roles •
Incorporate the right • Create high-performance customers • Encourage “customer
citizenship
• Need to engage employees as well as customers Allow employees to: – Pamper customers
– Read their needs – Develop a personal relationship with them – Deliver high-quality
service

Achieving Excellence
• External marketing – Preparing, pricing, distributing, and promoting the service to customers
• Internal marketing – Training and motivating employees to serve customers well
• Interactive marketing – Employees’ skill in serving the client

Best Practices of Top Service Companies

 Customer-centricity – seeing the world in general, and a company’s services in particular, from
the customer’s point of view
 Service quality • The best service providers set superior quality standards – Voice of the
customer measurements – Importance–performance analysis
 Cater to high-value customers • Special discounts • Promotional offers • Special service
 Manage customer complaints Extra role behaviors • Call centers • Customer service
representatives

Differentiating Services
• Ease of ordering • Speed and timing of delivery • Installation, training, and consulting •
Maintenance and repair • Returns
Innovation with Services • Online travel • Retail health clinics • Private aviation
Managing Service Quality • Managing customer expectations • Incorporating self-service
technologies
 Managing Product-Service Bundles
Key service differentiators
– Ordering – Delivery – Installation – Customer training – Customer consulting – Maintenance –
Repair
Chapter 18
Developing New Market Offerings

The Process of Developing New Market Offerings

• The innovation imperative – Continuous innovation is a necessity – Incremental innovation vs.
new to the world innovation
• Managing innovation – Assign responsibility to departments in charge of current offerings –
Establish new product departments – Open innovation centers – Establish venture teams ▪
Intrapreneurs – Create forums for sharing ideas – Create cross-functional teams combining different
skillsets

The Stage Gate Approach to Developing New Offerings

Stage gate framework

 Idea generation and validation

 Concept development and validation
 Business model design and validation
 Offering implementation and market testing
 Commercial deployment

The stage gate framework has three goals:

– Develop a desirable offering that target customers will find attractive
– Develop a technologically feasible offering that the company will find doable
– Develop a viable offering that will create value for the company and its collaborator

Generating Viable Ideas

• Top-down idea generation – Begins with identifying a market opportunity followed by
developing an offering specifically designed to address this opportunity
Bottom-up idea generation – Starts with an invention and then seeks to identify an unmet
market need

Idea Validation
• Assess desirability and viability • Two potential errors: – Failure to reject an idea that has little
or no merit – Rejection of a good idea
Research Tools • Observing customers • Interviewing customers • Interviewing employees and
experts • Analyzing the competition • Crowdsourcing

Concept Development
• Prototype – A working model of the offering that aims to flesh out the original idea and weed
out potential problems before the actual offering is created
Alpha testing – Evaluation of the product within the firm • Beta testing – Tests the product with
customers

Concept Validation
• Two key questions: – Can a functional prototype and, later, a fully functional version of the
offering be built? – Does it fulfill the identified customer need better than the alternative
options?

Concept to Strategy
• Conjoint analysis – Deriving the utility values that consumers attach to varying levels of a
product’s attributes

Business Model Design

• Can the product idea be translated into a commercial one? – Viability – Feasibility – Desirability
Three components: – Identifying the target market – Articulating the offering’s value proposition
– Delineating the key attributes of the product offering

Business Model Validation

• Do target customers find the offering desirable, and does it create value for these customers?
• Is it feasible for the offering to be built as planned? • Is the offering viable—that is, able to
create value for the company and its collaborators?

Offering Implementation
• Developing the core resources – Business facilities – Supply channels – Distribution channels –
Skilled employees – Access to capital
Developing the market offering – Making the prototype market-ready ▪ Create the final product
or service ▪ Develop the brand ▪ Set prices ▪ Determine sales promotions ▪ Effectively
communicate offering benefits

Commercial Deployment • Commercialization – Informs target customers about the company’s

offering and makes the offering available to these customers

Selective Market Deployment • Allows company to conduct testing in a natural environment

and observe how target customers, competitors, and company collaborators react to the
offering

Market Expansion
Three key activities: – Ramping up the facilities involved in the offering’s production – Promoting
the offering to all target customers – Ensuring that the offering is available to the entire target
market
 Chapter 11
Managing Pricing and Sales Promotions

Understanding Pricing • Negotiations between buyers and sellers • One price for all buyers •
Internet pricing
Consumer Psychology and Pricing • Reference prices • Image pricing • Price cues

Q) Setting the Price

Six main steps:
 Defining the pricing objective • Common pricing objectives: – Short-term profit – Market
penetration – Market skimming – Quality leadership
 Determining demand • Price elasticity of demand – The degree to which a change in price leads
to a change in quantity sold
 Estimating costs • Fixed costs – Costs that do not vary with production level or sales revenue •
Variable costs – Vary directly with the level of production • Total costs – The sum of the fixed
and variable costs • Experience curve effects – Experience curve – Experience curve pricing
 Analyzing competitors’ costs, prices, and offers • Firm must take competitors’ costs, prices, and
reactions into account – Value-priced competitors
 Selecting a pricing method • Three major considerations in price – Costs ▪ Set a price floor –
Competitors’ prices ▪ Provide an orienting point – Customers’ assessment of unique features ▪
Establish a price ceiling

Economic value-to-customer pricing – Based on buyer’s image of product, channel deliverables,

warranty quality, customer support, and softer attributes
Competitive pricing – The firm bases its price largely on competitors’ prices
Auction pricing – English (ascending) – Dutch (descending) – Sealed-bid

 Setting the final price

Price discrimination – Occurs when a company sells a product or service at two or more prices
that do not reflect a proportional difference in costs ▪ First degree ▪ Second degree ▪ Third
degree
• Third degree price discrimination: – Customer segment pricing – Product form pricing –
Channel pricing – Location pricing – Time pricing

Product Mix Pricing

Loss-leader pricing • Optional feature pricing • Captive pricing • Two-part pricing • By-product
pricing • Product bundling pricing
Managing Incentives
• Incentives – Sales promotion tools, mostly short-term, designed to stimulate quicker or greater
purchase of particular products or services by consumers or the trade
Incentives as a Marketing Device • Sales promotions – Can produce a high sales response in the
short run but little permanent gain over the longer term – Can prompt consumers to engage in
stockpiling – Can devalue the company’s offering in buyers’ minds

Incentive decisions
• Establishing the objectives of incentives – Consumer incentives – Retailer incentives
• Defining the size and approach for incentives – Determine size – Establish conditions for
participation – Decide on duration – Choose a distribution vehicle – Establish timing – Set total
sales promotion budget
• Selecting Consumer Incentives Price reductions Coupons Cash refunds Price packs Premiums
Frequency programs Prizes Tie-in promotions Seasonal discounts Financing
Selecting trade incentives – Allowances – Free goods – Price-off – Payment discount
• Selecting sales force incentives – Aim to encourage the sales force to support a new product
or model, boosting prospecting and stimulating off-season sales
Chapter 12
Managing Marketing Communications

• Marketing communications – The means by which firms attempt to inform, persuade, and
remind consumers about the products and brands they sell

Macromodel of marketing communications – Articulates the interaction between the sender

(company) and the recipient (consumer) of the communication message

Micromodel of marketing communication – Concentrates on consumers’ specific responses to

communications

Generating a consumer response: – Awareness – Knowledge – Liking – Preference – Conviction –

Purchase

Setting the communications benchmarks

Defining the focus of company communications – Communications objective ▪ A specific task and
achievement level to be accomplished with a specific audience in a specific period – Creating
awareness – Building preferences – Inciting action

– Quantitative – Temporal

• Determining the communications budget – Objective and task budgeting ▪ Consider: – Stage in
product life cycle – Product differentiation – Market share – Message complexity – Reach –
Competitive communication – Available resources

Identifying the Target Audience • Start with a clear target audience in mind – Ask questions ▪ Is
the target new to the category or a current user? ▪ Is the target loyal to the brand, loyal to a
 competitor, or someone who switches between brands? ▪ If a brand user, is he or she a heavy or
a light user

Crafting the Communication Message • Message should: – Resonate with consumers rationally
and emotionally – Distinguish the brand from competitors – Be broad and flexible enough to
translate into different media, markets, and time periods

Marketing Communications Mix • Advertising • Mobile communication • Events and experiences

• Public relations and publicity • Packaging • Personal selling • Online and social media
marketing • Direct marketing • Word of mouth

Developing a Media Plan

Consider: – Audience quality – Audience attention probability – Editorial quality – Ad placement
policies and extra services

• Media timing and allocation – Macroscheduling decision – Microscheduling decision •

Consider: – Buyer turnover – Purchase frequency – Forgetting rate

• Four strategies for launching a new product – Continuity – Concentration – Flighting – Pulsing •
Areas of dominant influence

Determining the Message Appeal

• Informational appeals – Elaborate on product or service attributes or benefits ▪ One-sided vs.
two-sided arguments • Transformational appeals – Elaborate on a non-product related benefit
or image ▪ Negative/fear vs. positive appeals

Selecting the Message Source

• Source credibility is important – Expertise – Trustworthiness – Likability • Principle of
congruity – Communicators can use their good image to reduce some negative feelings toward a
brand but might lose some esteem with the audience

Developing a Creative Brief

ADPLAN framework – Attention – Distinction – Positioning – Linkage – Amplification – New
equity

Formula for measuring different stages in the sales impact of advertising

Chapter 15
Designing and Managing Distribution Channels

The Role of Distribution Channels

• Distribution channels – Sets of interdependent organizations participating in the process of making
a product or service available for use or consumption – Intermediaries: ▪ Merchants ▪ Agents ▪
Facilitators

Distribution Channel Functions

• Three common characteristics of channel functions – Use up scarce resources – Can often be
performed better through specialization – Can be shifted among channel members
• The question for marketers is not whether various channel functions need to be performed—they
must be— but, rather, who is to perform them • Activity flow – Forward flow – Backward flow –
Both forward and backward

Channel Levels • Zero-level channel (direct marketing channel) • Single-level channel • Dual-level
channel • Reverse-flow channel

Multichannel Distribution
• Using two or more marketing channels to reach customer segments in one market area
• Benefits – Increased market coverage – Lower channel cost – Customized selling options •
Tradeoffs – Potential for conflict and issues with control and cooperation
Managing multiple channels
Channel-Management Decisions
• Establishing objectives and constraints
Exclusive distribution • Selective distribution • Intensive distribution
• Three main characteristics of franchising: – The franchisor owns a trade or service mark and
licenses it to franchisees in return for royalty payments – The franchisee pays for the right to be part
of the system – The franchisor provides its franchisees with a system for doing business
• Franchise formats: – Manufacturer-sponsored retail franchise – Manufacturer-sponsored
wholesale franchise – Service-firm-sponsored retailer franchise

Motivating Channel Members

• Channel power – The ability to alter channel members’ behavior so they take actions they would
not have taken otherwise
Types of power: – Coercive power – Reward power – Legal power – Expert power – Referent power
Channel partnerships – Conventional marketing channels – Vertical marketing systems ▪ Channel
captain – Horizontal marketing systems

Vertical Marketing System • A unified system of producer, wholesale(s), and retailer(s) – Corporate
vertical marketing system – Administered vertical marketing system – Contractual vertical marketing
system
Horizontal Marketing System • Two or more unrelated companies combining resources to exploit a
market opportunity

Channel Cooperation and Conflict

• Channel conflict – Generated when one channel member’s actions prevent another channel
member from achieving its goal
• Types of channel conflict – Horizontal channel conflict – Vertical channel conflict – Multichannel
conflict
• Causes of channel conflict – Goal incompatibility – Differences in strategies and tactics – Power
imbalance – Unclear roles and rights
• Managing channel conflict – Strategic justification – Dual compensation – Superordinate goals –
Employee exchange – Joint membership – Co-potation – Diplomacy, mediation, and arbitration –
Legal recourse

Q) Managing Market Logistics

Market logistics – Includes planning the infrastructure to meet demand and then implementing and
controlling the physical flows of materials and final goods from points of origin to points of use to
meet customer requirements at a profit
Supply chain management – Includes strategically procuring the right inputs (raw materials,
components, and capital equipment), converting them efficiently into finished products, and
dispatching them to the final destinations
Objectives
• Make decisions on a total-system basis – Consider ▪ Customer requirements ▪ Competition
Decisions
• Order processing: – How should we handle orders? ▪ Order-to-payment cycle • Warehousing: –
Where should we locate our stock?
• Inventory: – How much stock should we hold? ▪ Just-in-time inventory management •
Transportation: – How should we ship goods? ▪ Containerization
Chapter 14
Personal Selling and Direct Marketing
Personal Selling • Personal selling – Direct interaction with one or more prospective buyers for the
purpose of making presentations, answering questions, and procuring orders
• Personal selling – Customized – Relationship oriented – Response oriented

Q) Personal Selling as a Process

• Some companies use BANT – Does the customer have the necessary budget, the authority to buy,
a compelling need for the product or service, and a timeline for delivery that aligns with what is
possible?
• Pre approach – Learn about the prospect company – Understand the who, when, where, how and
why in the purchasing process – Choose the contact approach – Plan an overall sales strategy
Presentation and demonstration – FABV approach ▪ Features ▪ Advantages ▪ Benefits ▪ Value
Persuasion – Psychological resistance – Logical resistance
Closing – Know how and when to close the sale – Offer inducements • Servicing – Follow up and
maintenance – Build long-term relationship

Managing the Sale

SPIN – Situation questions – Problem questions – Implication questions – Need-payoff questions
Q) Designing the Sales Force

Sales force objectives – Tasks completed by salespeople ▪ Information gathering ▪ Targeting ▪

Communicating ▪ Selling ▪ Servicing ▪ Allocating

• Sales force strategy – Direct vs. contractual sales force

• Sales force structure – Connection between sales force strategy and structure ▪ Organize around –
Geographic regions – Products – Services – Customer needs

Sales force size – Workload approach

 Group customers into size classes according to annual sales volume

 Establish desirable call frequencies for each customer class
 Multiply the number of accounts in each size class by the corresponding call frequency to arrive
at the total workload for the country
 Determine the average number of calls a sales representative can make per year
 Divide the total annual calls required by the average annual calls made by a sales representative
to arrive at the number of sales representatives needed

Salesforce compensation – Fixed amount – Variable amount – Expense allowances –

Benefits - Straight salary, straight commission, and combination of two

Q) Managing the Sales Force

 Recruiting the sales force
– Don’t hire the wrong person – Predictors of high performance ▪ Composite tests and
assessment centres that simulate the working environment and assess applicants in an
environment similar to the one in which they would work
 Training and supervising the sales force
– Median training period ▪ Industrial-products companies—28 weeks ▪ Service companies—12
weeks ▪ Consumer-products companies—4 weeks
 Managing sales force productivity – Norms for prospect calls ▪ Companies often specify how
much time reps should spend prospecting for new accounts – Using sales time efficiently ▪ Time-
and-duty analysis and hour-by-hour breakdowns of activities – Sales technology ▪ The
salesperson today has truly gone digital
 Motivating the sales force – Monetary and nonmonetary rewards – Salesperson type and
compensation ▪ Stars ▪ Core or solid performers ▪ Laggards
 Evaluating the sales force – Sales reports ▪ Activity plans ▪ Write-ups of activity results ▪ Territory
marketing plan
Direct Marketing
• Direct marketing – The use of consumer direct channels to reach and deliver goods and
services to customers without using intermediaries
• Direct marketing channels – Direct mail – Catalog marketing – Telemarketing – Infomercials
The future…. – Market niches – Customer interaction as an opportunity to up-sell, cross-sell, or
just deepen a relationship
 Chapter 17
Driving Growth in Competitive Markets
Assessing Growth Opportunities • Consider: – The types of products and markets a company
should focus on – The ways in which a company can manage its product–market growth strategy
over time

Product–Market Growth Opportunities

• Product–Market Growth framework – Market penetration strategy – Market development
strategy – Product development strategy – Diversification strategy

Q) Product Life Cycle Marketing Strategies

• Product life cycle – Introduction – Growth – Maturity – Decline
Introduction Stage
• Sales growth is low • Profits are negative or low • Promotional expenditures are high • Prices are
higher • Focus is on buyers who are the most ready to buy

Growth Stage
• To sustain rapid market share growth now:
– Improve product quality and add new features – Add new models and flanker products
– Enter new market segments
– Increase distribution coverage and enter new distribution channels
– Shift from awareness and trial communications to preference and loyalty communications
– Lower prices to attract the next layer of price-sensitive buyers

Maturity Stage • Growth • Stability • Decaying maturity

Strategies:
– Market growth ▪ Convert nonusers ▪ Attract competitors’ customers ▪ Increase usage among
current users – Increase the number of usage occasions – Increase consumption with each occasion
– Create new usage occasions
– Product modification ▪ Quality improvement ▪ Feature improvement ▪ Style improvement

Decline Stage • Harvesting and Divesting – Harvesting – Divesting • Eliminating Weak Products

Alternative Product Life Cycle Patterns • Fads • Trends

Chapter 20
Tapping into Global Markets
 Deciding Whether to Go Abroad
Benefits of foreign markets: – Better profit opportunities – Larger customer base allows for
economies of scale – Can diversify markets – Counteract global competitors – Follow customers –
Transfer ideas and products
But there are risks: – General risks associated with entering a new market – Specific risks associated
with doing business in a different country

Major decisions in international marketing

Deciding Which Markets to Enter • How many markets to enter – Waterfall Approach – Sprinkler
Approach – Born Global
Evaluating Potential Markets • Consider: – Physical proximity – Cultural proximity – Fewer countries
– Underserved populations

Modes of entry in foreign markets

Q) Deciding How to Enter the Market

Indirect exporting – Working through independent intermediaries ▪ Domestic-based export
merchants ▪ Domestic-based export agents ▪ Cooperative organizations ▪ Export-management
companies

Direct exporting – Handling one’s own exports ▪ Domestic-based export department ▪ Overseas
sales branch ▪ Traveling export sales representatives

Licensing – Licensor issues a license to a foreign company to use a manufacturing process,

trademark, patent, trade secret, or other item of value for a fee or royalty ▪ Management contract ▪
Contract manufacturing ▪ Franchising

Joint ventures – Foreign investors have often joined local investors in a joint venture company in
which they share ownership and control

Direct Investment – The foreign company can buy part or full interest in a local company or build its
own manufacturing or service facilities

Acquisition – Acquiring local brands for their brand portfolio

Q) Deciding on the Global Marketing Program

Standardized marketing program versus localized marketing program
Advantages of Standardized Program
• Economies of scale • Lower marketing costs • Power and scope • Consistency in brand image •
Ability to leverage good ideas • Uniformity of marketing practices
Disadvantages of Standardized Program
• Differences in consumer needs, wants, usage patterns • Differences in consumer response to
marketing programs • Differences in brand development process • Differences in legal environment
Q) Global Product Strategies
• Three global product strategies: – Straight extension – Product adaptation – Product invention •
Dealing with counterfeit products
Consider: – How to position the brand – Whether to adapt the brand – Any country-of-origin
effects
Brand adaption – Certain elements may require change • Country of origin effects – Use positive
associations

Global Pricing Strategies

• Two basic choices:
– Uniform price everywhere
– Market-based price in each country

Global Communication Strategies

• Use the same message everywhere
• Use the same message and creative theme globally but adapt the execution to a specific market
• Develop a global pool of ads and select by country
• Create country specific ads

Global Distribution Strategies

• Channel differences – Various distribution systems – Size and character of retail units • Gray
market – Diverts branded products from authorized distribution channels either in-country or across
international borders
Chapter 2
Marketing Planning and Management
Developing Market Offerings
Strategy involves choosing a well-defined market in which the company will compete and
determining the value it intends to create in this market
Tactics, also called the marketing mix, make the company’s strategy come alive

Developing the Marketing Strategy • Two components: – Target market – Value proposition

Identifying the Target Market • The Five Cs:

 Customers • Target customers are the individuals or organizations whose needs the company
plans to fulfill
 Competitors aim to fulfill the same needs of the same customers that the company is targeting
 Collaborators work with the company to create value for target customers
 Context is the environment in which the company and its collaborators operate
 Company develops and manages a given market offering

Developing a Value Proposition

• Customer value • Collaborator value • Company value
• An optimal value proposition balances the value for customers, collaborators, and the company

3v Market Value principle

Designing the Marketing Tactics • The market offering is the actual good that the company deploys
in order to fulfill a particular customer need
Planning and Managing Market Offerings
G-STIC Approach
 Set a goal
Setting a Goal • Goal focus: – Monetary goals – Strategic goals • Performance benchmarks: – Quantitative
benchmarks – Temporal benchmarks
 Develop a strategy
• Target market – Customers – Competitors – Collaborators – Company – Context
Value proposition – Customer value – Collaborator value – Company value
 Design the tactics
Resource development • Development of the offering • Commercial deployment

 Define an implementation plan

• Three main functions: – Describes the company’s goal and proposed course of action – Informs the
relevant stakeholders about the goal and action plan – Persuades the relevant decision makers of the
viability of the goal and the proposed course of action
Contents of the Marketing Plan
• Executive summary—the “elevator pitch” • Situation overview—an overall evaluation of the environment
• G-STIC section—the core of the marketing plan – Goal – Strategy – Tactics – Implementation – Control •
Exhibits
 Identify a set of control metrics
Evaluate performance—use benchmarks to track progress • Monitor the environment—take corrective
actions as necessar

Flowchart of action planning GSTIC

 Updating the Marketing Plan • Marketing plans are not static; they need updating in order to
remain relevant

Conducting a Marketing Audit • An effective marketing audit should be: – Comprehensive –

Systematic – Unbiased – Periodic
Evaluating a Marketing Plan • Is the plan simple/succinct? • Is the plan complete? • Is the plan
specific? • Is the plan realistic?
Chapter 19
Customer acquisition funnel

Q) Managing Customer Satisfaction and Loyalty

• Understanding customer satisfaction –
Satisfaction is a person’s feelings of pleasure or disappointment that result from comparing the
perceived performance (or outcome) of a product or service with expectations

• Product and service quality as a driver of customer satisfaction

– Quality
– Performance versu consistency

• Measuring customer satisfaction

– A highly satisfied customer:
▪ Stays loyal longer
 ▪ Buys more
▪ Talks favorably about the company
▪ Pays less attention to competing brands
▪ Is less sensitive to price
▪ Offers ideas to the company
▪ Costs less to serve than new customers

Building customer loyalty

– Interact closely with customers
– Develop loyalty programs
– Build brand communities

Q) Customer lifetime value (CLV)

– The monetary equivalent of the value that customers
will create for the company during their tenure with
the company
– aka customer equity

Customer profitability analysis

– Activity-based costing
▪ Aims to identify the real costs associated with
serving each customer—the costs of products and
services based on the resources they consume

Customer Lifetime Value and Brand

Equity
• Both types of equity matter:
– Customer equity focus:
▪ Bottom-line financial value
– Brand equity focus:
▪ Brand strategy

Building Customer Lifetime Value

• Improve customer service
• Engage customers
• Enhance the growth potential of each customer
• Manage unprofitable customers
• Reward the most profitable customer

Creating Customer Loyalty by Building

Trust
• Three building blocks:
– Competence
– Honesty
– Benevolence

Measuring Customer Lifetime Value

• Customer lifetime value
– The net present value of the stream of future profits
expected over the customer’s lifetime purchases
• Consider:
– Monetary value
– Strategic value