Chapter 1  not enough time to make notes, pretty intuitive

Chapter 2  Understanding marketing management within a global

context
Buyers can:
Management – process that involves the major functions of planning, organizing, leading
and controlling resources in order to achieve goals

Process of management:
- Planning
- Organizing
- Leading
- Control

Why management is difficult?

- Complex
- Uncertain
- Variety
- Individuals
- Interactions
- Formal systems
- Social systems

Marketing management – business discipline which achieves goals through the practical
application of marketing techniques and the management of a firm’s marketing resources
and activities.

Network marketing – can build mutually satisfying long-term relationships with key parters
in order to earn and retain their business

Internationalization – process through which a firm moves from oparting solely in the
domestic or home marketplace to operating in international markets

Globalization – business orientation based on the belief that the world is becoming more
homogeneous and that distinctions between national markets not only are fading but for
some offerings will eventually disappear.

Key points:
1. Management – process that involves the major functions of planning, organizing,
leading and controlling resources in order to achieve goals
2. Planning is the process of establishing goals and objectives and selecting future
course of action in order to achieve them
3. Marketing is not only done by the marketing department
4. Global marketing is a core feature for many businesses
5. Modes of entry: indirect exporting, direct exporting, licensing, joint ventures, direct
investment
Chapter 10  seeking and developing target marketing
differentiation strategies
Mass marketing – seller engages in the mass production, mass distribution and mass
marketing communication – Coca-Cola

Niche marketing – narrowly defined customer group seeking a distinctive mix of benefits or
values, are generally small, but have a sufficiently attractive size, profit and growth potential.
They are less likely to attract many other powerful competitors

Psychographics – divided into different groups on the basis of psychological/personality

traits, lifestyle or values
- Activities,
- Interests
- Opinions
o VALS framework – one of the most popular commercially available
classification systems based on psychographic measurements – it signifies
values and lifestyles.

SEGMENTATION  TARGETING  POSITIONING

Positioning – act of designing the company’s market offering and image to occupy a
distinctive place in the minds of the target market.

Points-of-difference – attributes or benefits that are strongly associated with a brand – IKEA
 affordable design

Points-of-parity – associations that are not necessarily unique to the brand but may in fact
be shared with other brands

Perceptual or positioning mapping – marketing tool that enables marketers to plot the
position of their offering – two dimensions are used

Differentiation strategies:
- Competitive advantage – ability to perform in one or more ways that competitors
cannot or will not match

Key points:
1. Target marketing includes three activities: market segmentation, market targeting
and market positioning
2. Markets can be targeted at four levels: segments, niches, local areas or individuals
3. Market segments must be measurable, substantial, accessible, differentiable and
actionable

Chapter 12  creating and managing brands and brand equity

Brand – name, symbol, logo, design or image used to identify a product or service . it adds
value over and above product’s functional performance
Brand exists to distinguish a particular product or service from its competitors

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

Roles of brands:
- Functional role of brands – relates to actual performance of the product or service
- Emotional role of brands – building emotional ties with the customer rather than
focusing on how the product works
o Emotions – affective state of consciousness in which feelings of joy, fear, hate
or love are experienced – these emotions play powerful role in the
customer’s selection
o Emotional branding – engaging the customer in the level of senses and
emotions – making a deep, lasting, intimate emotional connection to the
brand

Brand promise – clear idea and value proposition

Lifestyle brand – brand that attempts to embody the interests, attitudes and opinions of a
group or a culture and can be seen as a way to break free of the cutthroat competition
within a category by connecting with consumers on a more personal level.

Brand identity – way a company aims to identify or position itself

Brand image – how the consumer actually perceives the visual or verbal expressions
Brand knowledge – consists of all the thoughts, feelings, images, experiences beliefs and so
on that become associated with the brand
Brand equity- - added value the brand gives a product or service

Brand religion model – describes the evolution of the role of brands in consumers’ lives as a
five-stage process

Brand cultures – brand fully embedded in social life’s of their consumers

Brand vision – offers a clear and consistent message about the value of the brand

Brand elements – trademarkable, identify and differentiate the brand, example: Nike, logo
and slogan.

Brand element should be:

- Memorable
- Meaningful
- Likeable
- Transferable
- Adaptable
- Protectable
- Easy to recognize and recall
Brand slogans – should remind consumers of brand’s attributes

Brand mantra – articulation of the heart and soul of the brand and is usually short, three- to
five-word phrase.
- Communicate
- Simplify
- Inspire

Individual brand names – P&G has Head&Shoulders, Pantene – if one product fails it doesn’t
harm the whole company and its other products

Blanket corporate, famile or house names  house brand = umbrella brand  example
Apple. Development cost are lower because there is no need to manage a separate brand
name ir spend heavily on advertising

Separate family or house names for all products and services – Inditex  Zara, Massimo
Dutti – each brand targets different consumers

Corporate name combined with individual product names – Toyota Corolla, Toyota Yaris etc

Line extension – parent brand develops a new product or service within a product or service
category it currently serves – new flavours, forms, colors, ingredients and package sizes

Category extension – parent brand develops a different product or service category form the
one it currently serves

Brand line – all products and services under a particular brand

Brand mix – set of all brands a particular seller makes

Branded variants – specific brand lines supplied exclusively to specific retailers or

distribution channels

Licensed product or service – brand name has been licensed to others – harry potter films,
accessories etc.

Advantages of brand extensions:

- Lower costs
- No need for new name
- Lower production cost – similar packages
- Reduce risk

Disadvantages of brand extensions:

- May cause the brand name to be less strongly identified with any one product
- Brand dilution – when consumers no longer associate a brand with specific or very
similar product
- May fail
 - May harm the parent brand image

Brand portfolio – set of all brands and brand lines that a particular company offers
- Flankers – a new product introduced by a company that has already an established
product in the same segment
- Cash cows – a product or service that makes a lot of money over a long period of
time for the company that sells it, often money that is used to support the company's
other activities
- Low-end entry level – relatively low-priced brand in the portfolio may often be to
attract customers to the brand franchise
- High-end prestige – the role of a relatively high-priced brand is often to add prestige
and credibility to the entire portfolio

Reinforcing brand image requires innovation and relevance. The brand must always be
moving forward in the right direction.

Brand revitalization – is to understand what the sources of brand equity are to begin with.

Brand equity – value added on products and services through the brand – plays a major role
in enhancing the financial value

Brand value chain – a structured approach to assessing the sources and outcomes of brand
equity and the manner in which marketing activities create brand value

Brand audit – consumer-focused procedure to assess the health of the brand

Brand tracking – studies that collect quantitative data from consumers on a routine basis
over time to provide marketers with consistent, baseline information about how their
brands and marketing programmes are performing on key dimensions
- Tracking studies – meand of understanding where, how much an in what ways brand
value is being created

Great brands must:

- Offer and communicate a clear, relevant customer promise
- Build trust by delivering on that promise
- Drive the market by continually improving the promise
- Seek further advantage by innovating beyond the familiar

Key points;
- Brand is a name, symbol, logo intended to identify the products of one one company
and to differentiate them from those of competitors.
- Brand names, logos, symbols, designs  brand elements
- Brand extension – using an established brand name to introduce new offering. Line
or category extension. Line  new colors, flavors, sizes of the already existing
products. Category  new product
- Brands can play a different roles within the brand portfolio: flankers, cash cows, low-
entry level and high-end prestige
 - Making promises must be aligned with delivering those promises  it can create
customer value, loyalty and brand value

Chapter 13  digital and global brand management strategies

Digital branding – creation and management of brands through the use of all forms of digital
technologies
- Offline or traditional
- Online or digital
The human and physical relationships must be aligned with the digital world
Digital branding creates countless new opportunities for brand building

Brand promise – clear idea and value proposition

What can impact brand experience:

- Every interaction
- Every communication
- Every mobile or internet interaction
- Sales contact
- Service delivery
- Customer service
- Website
- Social networking commentary
- Self-service experience

Digital brand health check – assessment of how the brand is adhering to its strategic
direction in the digital world

Brand advocate – powerful consumer who is willing to recommend a brand to their friends
or advocate for the brand  super users

Marketers must study own media (company website) and earned media (customer-created
channels such as brand communities)

Social networking – the activities, practices and behaviors among communities of people
who gather online to share information, knowledge and opinions  mostly user-generated
content, so company has little or no control of the content posted

Loyalty loop – consumer moves from making a one-off purchase to developing loyalty with a
brand

Open innovation – suggests that companies can and should use external ideas as well as
internal ones and allows customers to make suggestions for companies

Brand community – a group of people who share an interest in a specific brand and create a
parallel social, universe with its own values, rituals, vocabulary and hierarchy.
Digital brand community – social network of individuals who interact through specific
technologies, potentially crossing geographical and political boundaries in order to pursue a
mutual interest in a specific brand

Companies may communicate with brand communities by following one or more of 5

approaches:
1. Fight – the sense of ‘us versus them’ – real Madrid vs fc Barcelona
2. Role model – to be inspired by and to aspire to be – to create unified feelings among
community members
3. Exchange – gift giving and knowledge sharing, strategic networks and alliances
4. Manifestation – need for the tradition, rituals, symbols and icons
5. Progression – looking forward, striving for development and innovation

Global brand – company that is available in many nations and through it may differ from
country to country, the brand has a common goal and similar identity. Global brands have a
‘voice’ = mission. Examples: Apple, McDonalds

Global community – people around the world view themselves as potential partners or even
family members in a vast, increasingly interconnected human global family

Culture – set of basic values, perceptions, wants and behaviors in a society

Taking a brand global is a difficult step to reverse

Risks of taking a brand into international markets:

- Foreign markets can have different operating environments
- Different cultural histories and social institutions

Iconic brands – those brands that customers regard with awe – Zara, IKEA, Mercedes, cartier,
Rolex, Gucci, Apple, Google, Nike

Operating a global brand strategy

1. Understand the similarities and differences in the global branding landscape
2. Don’t take shortcuts in brand building
3. Use all elements of the marketing mix
4. Embrace integrated marketing communications
5. Cultivate brand partnership and establish interfaces
6. Balance standardization and customization needs
7. Balance global and local management control
8. Establish operable guidelines
9. Implement a global brand equity measurement system
10. Leverage brand elements

Integrated marketing communication – IMC – coordination and integration of all marketing

communication tools, avenues, functions and sources into a seamless programme that
maximizes the impact on consumers
Alternative ways to enter a new global market
- Geographic extension – exporting existing brands into the new market
- Brand acquisition – acquiring existing brands already sold in the new market but not
owned by the firm
- Brand alliance, joint venture, partnership or licensing agreement – creating some
form of brand alliance with another firm

Balance between standardization and customization is CRUCIAL

Standardization – ‘one size fits all’, helps keep the costs low by using the same activities and
reaching out to as many people as possible with the same marketing

Customization – marketing activities will be more successful when customized or adapted to

local conditions and circumstances in the marketplace

Glocal strategy – standardizes certain core elements and localizes other elements –
compromise between global and local marketing strategies.

Glocal marketing – mix of pure global marketing strategy and the recognition that locally
related issues need to be considered. Allows for local and global marketing activities to be
optimized simultaneously.

Advantages of glocal marketing:

- Consumers feel that the brand is relevant to them and is tailored to their needs and
wants
- Harmony between the different levels of marketing activity
- Brands gain greater market share

Levels of adaptation:
- To suit a region
- To suit a country
- To suit a city
- To suit a retailer

Global brand equity measurement system – procedures designed to provide timely, accurate
and actionable information for marketers on how the brand is performing in each market.

Leverage brand elements – non-verbal brand elements such as logos, symbols and
characters are more likely to directly transfer effectively – meaning must be clear

Developing country – nation with a lower living standard, underdeveloped industrial base
and low HDI, they are becoming more and more important. They are highly diverse group –
companies still struggle to get reliable information about consumers, particularly about
those consumers with low incomes
BRIC economies  Brazil, Russia, India, China + S – South Africa

Strategy choices for entering developing economies:

- Adapt the strategy – adapt its business model for different countries while keeping its
core value propositions constant
- Change the contexts
- Stay away

Celebrity branding – using celebrity’s position of prominence to create awareness and to

start a conversation about a brand. The celebrity should have high recognition, must have a
clear and popular image, perceived credibility must be high in consumers’ minds. Consumers
must trust celebrity

Advantages of celebrity branding:

- Enhance both the company image and brand attitude
- Celebrity endorsements can lead to increased profits and sales
- Can make advertising campaigns stand out form the clutter

Celebrity dangers:
- Easy way for the image of the celebrity to be negatively portrayed which can damage
brand  included ‘morality clause’ that allows company to drop the celebrity if
warranted by inappropriate behavior.

Many celebrities are a brand themselves – Beckhams, Rihanna

Country branding – more complex than product or service branding

Power and quality of each country’s brand image by combining the following six dimensions:
1. Exports
2. Governance
3. Culture and heritage
4. People
5. Tourism
6. Investment and immigration

Key points:
1. Digital branding is often controlled by a consumer
2. Social networking – post, discuss, share and evaluate brands
3. Brand community – group of people who share their interest in a specific brand and
create a parallel social universe with its own values, rituals. They can be consumer,
company driven or mix of both
4. Glocal strategies mean changing some apects of the brand to reflect the local market
in ehich it is operating while maintain many of the global brand aspects.

Marketing – chapter 16 – pricing

Pricing practices have changes significantly  easy access to credit, technological changes
like internet.

Internet allows sellers to discriminate between buyers and buyers to discriminate between
sellers

Buyers can:
 Get instant price comparisons from thousands of vendors
 Name their price and have it met
 Get products free

Sellers can:
 Monitor customer behavior and tailor offers to individuals
 Give certain customers access to special prices
 Let customers decide the price

Buyers and sellers can negotiate prices in online auctions and exchanges

Pricing is a huge dilemma for companies  bc good price can bring satisfactory returns and
also strengthen sales and accurately reflect on value

Not simple pricing BUT pricing strategy

Tactics to find out how much customers value a company’s offerings:

- Get researchers to perform discrete choice analysis
- Ask customers directly
- Company employees – they know about customer needs, wants, values

Economists assume that consumers are ‘price takers’

Marketers tell that consumers often actively process price information – knowledge prior
purchase, formal communication – ads, informal communications – friends, family

Customer reference points:

- Fair price, typical price, last price paid, competitor prices, expected future price,
usual discounted price

Customer expectations are important  the higher the price is, the higher the expectations
are!!

Many sellers believe that prices should end with odd number  39,99 is more like 30 than
40 for many consumers.

Market penetration pricing – price as low as possible, to win a large market share,  costs
fall so they can cut the price even more
When: market is highly price sensitive, low price discourages actual and potential
competitors
Market-skimming pricing – prices start high and slowly decrease, to skim the maximum
revenue possible  good for well-established brands. Can be fatal when a also well-known
competitor decides to lower the prices
When: a lot of buyers have a high current demand, high price does not attract more
competition to the market, high price communicates the image of a superior product.

Low-price-sensitive:
- More unique product
- Low-cost items
- Items that are bought infrequently
- Few or no substitutes/competitors
- If higher price is justified
- If the price is a small part of an overall experience/if it will be used long

Companies prefer customers who are less price sensitive

How to measure the demand:

- Surveys – how many units would be bought and at what price
- Price experiments – different prices for the same product in different location to see
how it affects sales
- Statistical analysis

Fixed costs – they do not vary with production level or sales revenue
Variable costs – vary directly with the level of production
Total costs = fixed + variables
Average cost – cost per unit at that level of production.

Pricing methods:

Mark-up pricing – the most elementary, adding a standard mark-up

Mark-ups are generally higher on seasonal items, specialty items, slower-moving items,
items with high storage and handling costs, demand-inelastic items

Target-return pricing – when the firms determines the price that would be its target rate of
return on investment – ROI
What if sales is lower  need to calculate break-even point

Much depends on:

- Price elasticity
- Competitors’ prices

Perceived-value pricing – made up of several elements, firm must deliver those benefits and
customers need to recognize them, companies use other tools to communicate and enhance
the values
Key – deliver more value than the competitor and to show it to the prospective buyers

Value pricing – winning loyal customers by charging a fairly low price for a high-quality
offering – IKEA
Everyday low pricing – EDLP – constant low price with no promotions/sales
High-low pricing – higher prices normally, but often runs sales/promotions

Going-rate pricing – price based mostly on competitors’ prices -> same, lower or higher than
competitors

Auction-type pricing – popular especially in the internet

- English auctions – one seller, many buyer, the highest bid wins
- Dutch auctions:
o One seller and many buyers – seller gives a high price and then slowly
decrease it until someone buys it
o One buyer and many buyers – buyer says what he wants to buy, sellers
compete to offer the lowest price, each seller knows what the last bid was
and decides whether to go lower
- Sealed-bid auctions – suppliers can submit only one bid and cannot see other bids

Consumers are willing to pay higher prices for known products than for unknown products
The price must be consistent with company pricing policies
Policies – banks charge for too many withdrawal, dentists for no-shows up

Other parties’ reaction to the price changes is also important

Companies usually don’t set a single place  develop a pricing structure!

Countertrade – when buyers lack sufficient hard currency (money) to pay for their
purchases. It may account for 15-25% of world trade

Forms of countertrade:
- Barter – the buyer and seller exchange good with no money involved
- Compensation deal – seller receives some % of the payment in cash and the rest in
products
- Buyback arrangement – seller sells sth (equipment, technology) to another country
and agrees to accept as a partial payment products manufactured with the supplied
equipment
- Offset – the seller receives full payment in cash but agrees to spend a substantial
amount of the money in that country within a stated time period

Companies give discounts and allowances for early payment, volume purchases and off-
season buying
- Cash discount – a price reduction
- Quantity discount – a price reduction to those who buy large volumes
- Functional discount – offered by a manufacturer to trade-channel members if they
will perform certain functions as selling, storing, etc
- Seasonal discount – a price reduction to those who buy merchandise or services out
of season
- Allowance – an extra payment designed to gain reseller participation in special
programmes

Discounting can be useful but cannot be overdone

Especially useful when company can customer agrees to sign a longer contract, order
electronically, or buy large quantities.

Net price analysis – real price of the offering, which may be affected by discounts and other
expenses that reduce the price.

Promotional pricing:
- Loss-leader pricing – drop the price on well-known brands to stimulate store traffic
- Special-event pricing – example: back-to-school
- Cash rebates – can help clear inventories, car companies use them to encourage
purchase of the manufacturers’ products within a specified period of time
- Low-interest financing
- Longer payment terms
 - Warranties and service contracts – promote sales by adding a free or low-cost
warranty
- Psychological discounting – setting artificially high price and then offers the product
at normal price  misleading practices are illegal

Price discrimination – selling one product at different prices

- First-degree price discrimination – price depends on the intensity of one’s demand
- Second-degree price discrimination – lower prices for larger volume
- Third-degree price discrimination – different price to different classes of buyers:
o Customer-segment pricing – different groups of buyers, different prices
o Product-form pricing – different versions of the same product are priced
differently
o Image pricing – same product priced differently based on different images
o Channel pricing – different price depends on type of the shop (coca-cola,
different prices in restaurants and in fast-foods)
o Location pricing – the same product priced differently based on location
(airports, city centres)
o Time pricing – prices varies by season, day or hour

Yield pricing – discounted but limited purchases, higher-priced late purchases, lowest rates
on unsold inventory just before expiring

Price discrimination: when:

- Segmentable market
- Segments have different intensity of demand
- Member of lower-priced cannot resell to the higher-priced members – and the other
way around
- Can’t be illegal

When to cut prices:

- Excess plant capacity
- To dominate market through lower prices

Traps of price-cutting strategy:

- Low-quality trap
- Fragile market-share trap – low price buys market share but not loyalty – they will
switch to the next, lower prices
- Shallow-pocket trap – companies can have not sufficient reserves to survive with
other, high-priced competitors
- Price-war trap – competitors can respond by offering even lower prices

Price increases:
- Cost inflation
- Overdemand
Ways to increase prices:
 - Delayed quotation pricing – do not set a final price till the product is finished or
delivered – products with long production time
- Escalator clauses – pay today price but also all or part of any inflation increase that
happens before delivery
- Unbundling – pricing parts that were free before – delivery, installation
- Reduction of discounts – stops offering discounts/sales

Consumers prefer slower price increases over sudden, sharp ones. It is good to give advance
notice – so they can do forward buying.
Sudden price increases have to be explained

Low-visibility price moves; eliminating discounts, increasing minimum order sizes, etc
- Shrinking the amount of the product instead of raising the price
- Substituting less expensive materials or ingredients
- Reducing or removing product features/services
- Using less expensive packaging material or larger package size
- Reducing the number of sizes and models offered
- Creating new economy brands

Product differentiation and customization and communicating that clearly to customers is

crucial in price increasing activity but also in competing against cut-price players that what
to gain market share
How to differentiate the product:
- Design cool products – Apple
- Continually innovative – Gillette
- Offer unique product mix
- Brand a community – red bull
- Sell experiences – starbucks

Companies have to persuade consumers to pay for added benefits!

Key points – chapter 16:
1. Companies do not set one price, but do pricing strategy
2. There are different approaches to setting prices  market-skimming, market-
penetration, target-return pricing, perceived-value, value pricing, auction-type
pricing.
3. Countertrade is also an important part of pricing – it is 15-25% worldwide trade –
types of countertrade: barter, compensation deal, buyback arrangement, offset.
4. Discounting and promotions are important but cannot be overdone. Its important to
see what the competition is doing. Too low prices and to often sales can indicate low
quality
5. Price discrimination has 3 degrees. First – demand, second – volumes, third –
different classes, different prices. Some forms can be illegal
6. There are multiple ways to increase or decrease price.
7. Consumers do not like sharp and sudden price increases

Chapter 17  designing and managing marketing communications

Companies have to communicate with present and potential customers, stakeholders and
the general public.

What to day, how and when to say it, to whom and how often.

Consumers are taking a more active role in the communication process – they are deciding
what communications they want to receive and how they want to communicate to others
about the products they choose to purchase and use.

There are multiple forms of communications

Marketing communications – means by which firms attempt to inform, persuade and remind
customers – directly or indirectly – about the brands. It is a voice of the company and its
products/brands. It allows companies to link their brands to other people, places, events,
brands, experiences, feelings and things.

Technology has changed the way customers process information and gives them ability to
choose to process it at all – internet, smartphones  rethink traditional practices.

Social media created new online marketing communication platforms

Commercial clutter – confusion or noise caused by multiple messages in multiple media

Consumers are increasingly selective both in their choice of media, marketers are continually
being challenged in their attempts to gain their attention.

Marketing communications mix:

- Advertising – paid form of non-personal presentation
 - Sales promotion – short-term incentives of ideas
- Events and experiences – company-sponsored events
- Public relations and publicity – programmes designed to present a company’s image
- Direct marketing – use of mail, telephone, email to communicate directly
- Interactive marketing – online activities and programmes designed to engage
customers
- Word-of-mouth marketing – people-to-people/written/oral or electronic message
- Personal selling – face-to-face interaction with one or more prospective purchasers –
pokazy, thermomix

All communicate value that can be perceived by buyers – décor, furniture, consumer service

Marketing communications activities must be integrated to deliver a consistent message to

achieve the appropriate strategic positioning.

Marketers need to assess which experiences and impressions will have the most influence at
each stage of the buying process
Marketers should be media neutral and evaluate all the different possible communication
options according to effectiveness criteria

Awareness – when audience is unaware, the communicator’s task is to build awareness

Knowledge – customer may have awareness but not be sure about much more about the
product
Liking – making people favorable for your product
Preference – developing preference over other products
Conviction – need to build purchase intent
Purchase

Developing effective communications:

1. Identify the target audience – clear target: potential buyers, current users, individuals
or groups. It has a criticial influence on what to say, how, where, when and to whom
2. Determine the communcations objectives
a. Category need
b. Brand awareness
c. Brand attitude – brands may be negatively oriented (problem removal,
problem avoidance) or positively oriented (social approval)
d. Brand purchase intention
3. Design the communications
a. Message strategy – appeals, themes or ideas that will be connected with the
brand
b. Creative strategy – how message is being expressed
i. Informational appeal – focuses on offering quality or benefits –
problem solving, clear benefit, influential people
ii. Transformational appeal – focuses on non-market offering-related
benefit or image – shows what kind of person uses a brand. Can use
negative appeals (fear, guilt, shame) or positive (love, pride, joy).
 c. Message source – message delivered by popular sources can achieve higher
attention and recall (argument for celebrities)
d. Global adaptation
4. Select channels – it is becoming more and more difficult as channels are becoming
more fragmented and cluttered.
a. Personal communications channels – two or more ppl communicate face to
face, person to audience over telephone or mail
i. Word of mouth
ii. Social networks
iii. Buzz and viral marketing
1. Buzz generates excitement, publicity, people are flattered to be
included
2. Viral marketing – based on concept of cool, encourages to pass
impressions of company to other users
iv. Opinion leaders – can stimulate interes
v. Blogs
b. Non-personal communications channels – directed to more than one person
i. Media
ii. Sales promotions
iii. Events and experiences
iv. Public relations
v. Guerrilla marketing – doing everything to get noticed
c. Integration of communications channels
i. One-to-one communication is often more effective than mass
communication, mass media affect personal attitudes and behavior,
reaches more ppl
5. Establishing the total budget
a. Affordable method – setting the budget at what they think the company can
afford – marketing communication is not an investment!
b. Percentage-of-sales-method – seeting the budget as a specified percentage of
sales
c. Competitive parity method – set budgets to achieve share-of-voice parity
with competitors
d. Objective-and-task method – developing budget by defining specific
objectives, determining the tasks that must be performed to achieve these
objectives  sum of cost is a budget
e. Financial considerations
i. Modelling - econometric and simulation techniques
ii. Payback period – amount of exposure time needed to redeem the
budgeted cost of the marketing
iii. Profit optimization – the point at which the marginal revenue from the
spend exceeds the marginal costs
6. Deciding on the marketing communications mix
a. Advertising
b. Sales promotions
c. Public relations and publicity – its qualities: high credibility, ability to catch
buyers off guard, dramatisation
 d. Events and experiences – they must be relevant, involving and implicity
e. Direct and interactive marketing – customized, up-to-date and interactive
messages
f. Word-of-mouth
g. Personal selling
h. Factors in the mix:
i. Type of market
ii. Buyer readiness stage
iii. Product life cycle stage
7. Measure results – outcomes and revenues form marketing activity, how target
audience was impacted
8. Managing the integrated marketing communications process – strategic approach to
the planned management of an organisation’s communications. Main purpose: to
develop relationships with audience that have the same value.
The more coordinated, the better

Marketers should never lose sight of the importance of putting the customer and consumer
first and not allow themselves to become overwhelmed with the complexities of media
content choices. Social media created an opportunity to create content to connect with
people on a one-to-one basis.

Key points:
1. Modern marketing is not only about developing good product with accurate price
but also about communicating with present and future customers, stakeholders and
general public
2. Marketing communication mix has 8 modes of communication: advertising, sales
promotion, public relations and publicity, events and experiences, direct marketing,
interactive marketing, word-of-mouth marketing and personal selling
3. Communication process has 9 elements: sender, receiver, message, media, encoding,
decoding, response, feedback and noise
4. Effective communication has 8 stages: identify the target audience determine
objectives design the communication select the channels establish budget
decide on communication mix measure results manage IMC
5. Communications channels may be persona or non-personal
6. While deciding on communication mix, marketers have to examine the advantages
and costs of each communication tool
7. Interconnected marketing puts emphasis on the factors that have to be managed in
the digital and offline eras
8. Technology enabled the possibility of communicating with consumers on a personal
basis
9. Marketers have refocused activities across a choice of different media platforms.

Chapter 18  Managing mass and personal communications

Advertising --. Any paid form of non-personal presentation and communication of market
offerings

Advertising programme always starts by identifying the target market and buyer’s motives –
five major decisions: the five M’s:
- Mission
- Money
- Message
- Media
- Measurement

Successful social marketing is based on the primacy of storytelling and creating and
propagating a compelling narrative.

An advertising goal/objective is. Communication targeted at a preselected audience at a

specific time to stimulate increased sales. Types of advertising:
- Informative advertising – create brand awareness and knowledge of new market
offerings
- Persuasive advertising – create liking, preference, conviction and purchase of a
market offering
- Reminder advertising – aims to stimulate repeat purchase of market offering
- Reinforcement advertising – convince current purchasers that they made the right
choice

Advertising objective should emerge from studying the current marketing situation.

Factors that affect advertising budget decisions:

- Stage in the product life cycle – new products typically need larger advertising
budget to build awareness and gain consumers. Established brands have lower
advertising budget measured as a ratio to sales.
- Market share and consumer base – high-market-share brands need less advertising
- Competition and clutter – strong competition leads to more heavy advertisements
(to get noticed among competitors)
- Advertising frequency
- Product substitutability – commodity-like classes (beer, banks) need heavy
advertising to established a differential image

Less and less money for advertising as the product matures, when product is well
differentiated from the competition.

Social media make the advertising process more complex for marketers  audience
fragmentation, new media form factors

Advertisers seek ‘the big idea’

Creative brief  positioning statement  key message, target audience, communication
objectives, media
The use of computers has substantially reduced the costs of advertisement development

‘open source’ or ‘crowd-sourcing’ – using consumers as their creative team

Secret of effective originality in advertising – putting familiar words and pictures into new
relationships that affect viewers’ emotions and senses.

TV ads:
- Creates noise
- High volume
- Ads can be easily forgotten or ignored
- Properly designed and executed can improve brand equity and affect sales and
profits
- Costly
Print ads:
- Bigger ads in magazines gain more attention
- Picture, headline and copy matter in that order picture must be interesting to draw
attention, headline must be catchy and lead person to read the copy
Radio ads:
- Particularly effective at morning and evening commuting times
- Especially useful for small local businesses
- Lack of visual images

Ads must be carefully made to not offend the general public, as well as any ethnic groups,
racial minorities or special interest groups

Media selection – finding the most cost-effective media to deliver the desired number

Reach – the number of different persons or households exposed to a particular media

Frequency – number of times within the specified time period that an average person or
household is exposed to the message

Impact – qualitative value of an exposure through a given medium

Media planners consider:

- Target audience media habits – example: tv is the most effective for reaching
teenagers
- Product characteristics
- Message characteristics
- Cost – tv is more expensive than radio

Place advertising:
- Place advertising/out-of-home advertising – billboards, digital screens, public spaces,
transport advertising
Product placement – marketers pay high fees so that their goods will make appearances in
films and on television. Aston Martin, Omega  James Bond films

Point of purchase (POP):

In-store advertisements, examples: on shopping trolleys, aisles, shelves  they are at the
point of purchase so in the shops

Evaluating alternative media:

Main advantage of non-traditional media  can reach a very precise and captive audience in
a cost-effective manner. Massage still must be simple and direct

Purchase frequency  number of times during the period that the average buyer buys the
product

Communication-effect research  copy testing  determine whether an advertisement is

communicating effectively

Portfolio tests ask consumers to view or listen to a portfolio of advertisements and then
check if consumers are able to recall the advertisements and its content

Laboratory tests use of equipment to measure physiological reactions to an ads

Sales promotion – mostly short-term incentive tools to stimulate quicker and greater
purchase of particular market offerings
- Consumer promotion – samples, coupons, cash refund offers
- Trade promotion – money off, free goods, advertising and display allowances
- Sales force promotion – trade shows and conventions

Loyal brand users tend not to change their buying patterns as a result of competitive
promotions

Successful sponsorships require choosing the appropriate events. It is about creating

experiences by connecting an offering with unique ad interesting experiences

Public relations – variety of programmes to promote or protect a company’s image or

individual offerings
- Press relations – presenting news and information about the organization in the most
positive light
- Goods/market offering publicity – sponsoring efforts to publicize specific marketing
offerings
- - corporate communication – understanding of the organization through internal and
external regulations
- Lobbying – working with government to promote or defeat legislation and regulation
- Counselling – advising management about PR
Marketing Public Relations – they support corporate or market offering/product promotion
and image making.
MPR= publicity
- Launching new products
- Repositioning a mature product
- Building interest in a product category
- Influencing specific target groups
- Defending products that have encountered public problems
- Building a corporate image in a way that reflects favorably on its brand offerings

Direct marketing – use od consumer-direct channel to reach and market offerings to

customers without using marketing middlemen. Examples: direct mail, catalogue marketing,
telemarketing

Many marketers build or try to build a long-term relationships with customers through
reward programmes and club programmes – starbucks, star alliance

Public and ethical issues of direct marketing ads:

- Irritation
- Unfairness – some marketers take advantage of some buyers
- Deception and fraud – intended misleading
- Invasion of privacy

Key principles of personal selling:

- Situation questions
- Problem questions
- Implication questions
- Need-payoff questions

Six steps of selling:

1. Prospecting and qualifying
2. Pre-approach
3. Presentation and demonstration
4. Overcoming objections
5. Closing
6. Follow-up and maintance

Key points – chapter 18

1. Advertising is any paid form of non-personal presentation and promotion of ideas,
goods or services by an identified sponsor. Not only companies, but also non-profit,
charities and government agencies
2. Developing an advertising programme is a 5 step process: set advertising objectives
 establish a budget  choose the advertising message and creative strategy 
decide on the media  evaluate effects
3. Sales promotions are short-term incentive tools. Consumer, trade, business
promotions
 4. Events and experiences are used to become a part of more personal moments in
consumers’ lives.
5. PR involves a veriety of programmes to promote or protect a company’s image or its
products
6. Direct marketing is an interactive marketing system that uses one or more media;
include face-to-face selling, direct mail, telemarketing.
7. Word-of-mouth is buzz and viral marketing.

Chapter 19  marketing channels

Marketing channel – channel of activities to reach the end consumer – wholesalers, retailers,
distributors, internet. Often a set of interdependent organizations participating in the
process of making a [product or service available for use or consumption.

Integrated marketing channel system

Intermediaries = agents, distributors, wholesalers, retailers

Challenge – choosing the right channel, convincing them to carry your products/services and
getting them to work as partners. Channel members have earned margins that account for
30-50% of the ultimate selling price.

Channels affect all other marketing decision, like pricing (online discounters or high-quality
boutiques).

Multichannel marketing – two or more marketing channels to reach target customers.

More and more customers are using more than one shopping channel!

Value network – complementary system of partnerships and alliances that a firm creates to
source, augment and deliver its offerings. It includes a firm suppliers and its suppliers’
suppliers. Includes valued relationships with a range of suppliers, distributors and retailers
what is called supply or value network management.

Network – system of interconnected people, tech and things that can be defined as “set of
connected business relationships’.

Supply networks – complex and challenging, bc of outsourcing and offshoring  challangers

for management

Outsourcing – contracting out a business to other company

Offshoring – relocation of a business process from one country to another

Channel member functions:

 - Gather info about potential and current customers, competitors and other important
players
- Negotiate and reach agreements on price and other terms
- Develop persuasive communication to stimulate purchasing
- Take over risk associated with carrying out channel work
- Provide storage or movement of products or services
- Oversee actual transfer of ownership

Channel functions:
- They use up scarce resources
- Can be performed better through specialization
- Can be shifted among channel members

Shifting functions to intermediaries lowers the cost, but the intermediary charge to cover its
work

Zero-level channel – manufacturer sells directly to the final customer – food markets, apple,
politicians

One-level channel – only one selling intermediary – retailer or selling agent – ticketmaster

Reverse-flow channels: to reuse products or containers, to recycle products, to dispose of

products and packaging

Consumer often plays a central role in services  prosumer – a composite of production and
consumer

Consumer may choose the channels they prefer based on price, product assortment and
convenience

Each channel has unique strengths and weaknesses

Channel alternatives differ in 3 ways:

- Types of intermediary – companies should look for innovative distribution channels
- Number of intermediaries
o Exclusive distribution – severly limiting the numbers of intermediaries –
ROLEX
o Selective distribution – only some of available intermediaries carry a
particular product – STIHL
o Intensive distribution – goods or services in as many outlets as possible –
food, drinks, sweets, newspapers
- Terms and responsibilities of channel members – each member must be treated
respectfully and given opportunity to be profitable
o Price policy
 o Conditions of sale
o Distributors’ territorial rights
o Mutual services and responsibilities

Each channel alternative will produce a different level of sales and costs – firms will to their
best to maximize demand at the lowest overall cost.

To customers the channels are the company – when they buy something at the store they
don’t think about transportation company but about the firm that made the product

Firms can train, show hot to use market research and other capability-building to motivate
and improve intermediaries’ performance

Channel power – ability to alter channel members’ behavior so that they take action that
they would not have taken otherwise
o Coercive power – a threat to stop the relationship
o Reward power – manufacturer offers an extra benefit for carrying out the
results
o Legitimate power – a particular behavior is warranted under the contract
o Expert power – manufacturer has a special knowledge that the intermediaries
value
o Referent power – manufacturer is so highly respected that intermediaries are
proud to be associated with it

More sophisticated companies try to have more long-term partnership with distributors

Marketers must evaluate intermediaries’ performance

Underperformers have to be counselled, retrained, motivated or terminated

Channel strategy is not constant, it changes constantly (adding or dropping individual market
channel or channel member, developing a totally new way to distribute).

Why change is needed:

- Channel may not work as planned
- Consumer buying behavior changes
- Market expands
- New competition arises
- Innovative distribution channels emerge

Adding or dropping individual channel member requires an incremental analysis.

Channel integration and systems:

- Vertical marketing systems:
o Conventional distribution channel – independent producer, wholesaler and
retailer – each is a separate business, each seek to maximize its own profits
even if it reduces profit for the system as a whole
 o Vertical marketing system – VMS – producer, wholesaler and retailer act like a
unified system – it eliminated conflict
o Channel steward – one channel member owns or franchises the others or has
so much power that they all cooperate
- Corporate VMS – successive stages of production and distribution under single
ownership
- Administered VMS – successive stages of production and distribution through the
size and power of one of the members.
- Contractual VMS – independent firms at different levels of production and
distribution, integrating their programme on a contractual basis to achieve
economies or sales
o Wholesaler-sponsored voluntary chains
o Retailer cooperatives
o Franchise organizations

Horizontal marketing system – two or more unrelated companies put togheter resources to
exploit an emerging marketing opportunity.

Channel conflict – when one channel member’s actions prevent another channel form
achieving its goal
- Horizontal channel conflict – between members at the same level
- Vertical channel conflict – between different levels of the channel
- Multichannel conflict – when manufacturer has two or more channels that sell to the
same market

Managing channel conflict

- Strategic justification – developing special versions of products for different channel
members
- Dual compensation – paying existing channel for sales that new channel is making
- Superordinate goals
- Employee exchange
- Joint memberships
- Co-optation
- Diplomacy, mediation and arbitration
- Legal proceedings

Multichannel marketing – uses two or more distribution channels to reach one or more
customer segments

Showrooming – browsing and purchasing on different channels or even different stores or

online.

Companies need to be everywhere that customers want them to be.

Multiplicity of channels – customers seeking information and demanding products and

services from an ever-increasing range of sources
Pure-click company – only website
Brick-and-click – website and normal store

Customer service is very important

Websites should be easy, fast, simple and easy to use, payment method must be trustworthy

Location-based services – emergency services, navigation systems, tourist tour planning –

location-dependent and context-sensitive

Key points:
- Most companies use one or more marketing or distribution channels to reach final
customer
- Companies use intermediaries when they do not have the finances or ability to do it
themselves – the most important functions performed by intermediaries 
promotion, negotiation, ordering, financing
- Many alternatives for reaching a market – direct selling, one or more channels
- Training and motivating intermediaries for them to be effective
- Long-term relationships can be profitable for all channel members
- Multichannel – multiple channels to market
- Omnichannel – seamless integration of all physical and digital channels to market
- Increased use of location-based services and geofencing – it is targeting customers
based on their location!

Chapter 20  Managing process, people and physical evidence

Customers today are more involved, more educated, more digital and mode demanding,
they also have more choice and are less tolerant of poor performance

Service process design – description of the procedures to be followed in service delivery –

how service system operates

Properly designed service process allow inexperienced people to learn to do it good quickly
Types:
- Service process design – way in which the service operates and is designed to fulfil
customer needs and the objectives of the company
- Service process delivery – how service should be delivered
- Service product – how product can satisfy customer and its experience

Issues of service process design:

- The degree of technology utilized – how much human vs how much technology
- The degree of visibility – how much front office vs how much back office – how much
of the process should be visible to the end customer
- The degree of customization
- The degree of accessibility – how easy to get the service is for customer

Customization – making/providing an offering according to a customer’s individual

requirements

Mass customization – use of flexible computer-aided manufacturing systems to produce

custom output each time

Issues of service process delivery:

- Duration – any type of queues – the more waiting, the lower customer experience
- Efforts of employees – personnel’s ability to interact well with customers
- Reliability – customers like to get what they expected – consistency, integrity and
dependability of the process

Service blueprint – pictorial map of the essential components of the service performance.
Key steps in preparing it:
- Identifying processes
- Sequencing – how many steps/how complex the process should be
- Visibility – how much of the process is revealed to the customers
- Timing – standard timing for each stage
- Tolerance – scenario, how long the customer is prepared to wait if something goes
wrong
- Fail point identification – stages where things may go wrong
 - Profitability

Benefits of service process blueprint

- Easy to determine which activities are really necessary
- Which processes can be deleted or modified
- Support staff and helps in training and motivation

Forms of variability:
- Arrival variability – customers like to arrive at different times. Some service cannot be
timed, but those that can be controlled, waiting time analysis and waiting time
standards can be used
- Request variability – not agreeing to special orders reduces the complexity, but
agreeing to them can increase the service experience
- Capability variability – some customers can perform tasks easily and others have to
be managed through the process
- Effort variability – customers decide how much effort they are prepared to make,
marketers offer incentives
- Subjective preference variability – personal preferences are important – different
customers will experience the same service differently

The less variability, the easier to manage

Reduction – reduce variability and focus on the operations and getting the customer to
accept the lack of variability and to conform to the operation rules

Stages of customer satisfaction

- Avoid dissatisfaction
- Try to create satisfaction
- Monitor how satisfaction and dissatisfaction are linked
- Try to involve customer
- Try to create a feeling of achievement on the part of the customer

Satisfied customer will not only visit the service again, but also act like ambassadors.

Service delivery system should be flexible enough to cope with different customers and
understand they wants

How customers evaluate service quality:

- Reliability – the ability to perform the service dependably, accurately and
consistently
- Responsiveness – ability to provide prompt service
- Assurance – the knowledge and courtesy of employees and their ability to convey
trust
- Empathy – individualized attention to customers
- Tangibles – design, furniture, carpet, wallpapers
Customer experience concerns the experience with the human or interrelational aspect of
the company to customer interaction.

Service personnel – any staff members who have interactions with customers – customer
loyalty is often earned or lost because of customer service

Service personnel have to have task competency and behavior skills. They have to be
competent in the task that they perform but also have to provide guidance and help
throughout the process and act as advisers

Emotional intelligence – identify, assess and control the emotions of oneself or of the group.

Task competency and emotional intelligence are both important and needed. Facial
expressions and body language is also crucial.

Talent management – attracting highly skilled staff, integrating new staff and developing and
retaining current staff to meet current and future business objectives

Failure = service did not meet the customer’s expectation

Co-creation of value – ongoing realization of mutual firm-customer value

Different level of service:

- Self-service
- Self-selection – find products on their own, but can ask for guidance
- Limited service – services like shopping support, credit for customers who need more
info and assistance
- Full service – ready to assist in every phase of the locate-compare-select process

Main customer management techniques:

1. Normative behavior control – emotional rather than the rational, involves shame,
blame and pride. Uses peer pressure, norms of behavior and other social influences
to shape behavior
2. Instrumental controls – specific tangible costs and rewards designed to induce
desired behavior, reward and punishment, example: banks charge for too many
withdrawals

Customer-to-customer interactions – direct or indirect engagement between customers, can

have huge influence, not under the control of the company
Managing the physical evidence and experience environment
Physical evidence – surrounding or environment – buildings, furnishing, layout, colour, signs.
All combined create the brand image, impact both customer and service provider’s behavior
and experience of the service

Atmosphere – creation of a sense or experience – brightness, size, smell, temperature,

music, softness, shape
Showrooming – visiting stores to look at and try out products that are then purchased
elsewhere.

Factors that influence customer enjoyment:

- Motivator factors – satisfaction and derive from actual service or experience, what
customers actually get
- Hygiene factors – cause dissatisfaction if missing, but do not necessarily satisfy if
increased.

Use and understand of senses – sight, sound, touch and smell.

All brands must try to build two or more senses into the brand appeal!

Self-service technologies – tech interfaces allowing customers to produce services

independent of involvement of direct service employees. Offer many benefits but also have
problems.

Radio frequency identification device – RFID – smart tags that can be read in real time and at
a distance. Example: toll card for highroads

Key points:
- Senses!
- Role of technology!
- Personnel is really important for overall customer experience – must be trained, have
proper skills, emotional intelligence and task competence.