PRINCIPLES OF

MARKETING

HO THI HAI THUY

F O R E I G N T R A D E U N I V E R S I T Y,
HO CHI MINH CITY CAMPUS
INTRODUCTIONS

Ho Thi Hai Thuy (MS.)

Foreign Trade University, Hochiminh city campus
Email: hothihaithuy.cs2@ftu.edu.vn
Tel: 0987 867 288
Teaching/Research:
Principles of Marketing
Marketing Management
International Marketing
Intellectual Property
AGENDA

• Course introduction
1

• Group presentation
2
Marketing is selling
and advertising?
 COURSE OUTLINE

1
• Overview of Marketing

2
• The marketing environment

3
• Methods of market research

4
• Consumer market and buying behavior of consumers

5
• Market and buying behavior of organizations

6
• Market segmentation, target and position market

7
• Product Policies

8
• Pricing policies

9
• Distribution policies

10
• Policies to promote and support business
COURSE RESOURCES

• Text book:
Principles of Marketing (Kotler & Amstrong, 17th edition)
• Analysis of case studies in lectures
• Lecture slides
• Individual/Group presentations
• Others: http://strategydeck.com
• https://www.brandsvietnam.com/
• https://www.facebook.com/groups/189764204699455
8/members
/
GAM7 (Rio Book)
Watch Advertisements, go shopping
GRADING

• Class attention/homework: 10%

• Midterm: 30% (group presentation)
• Final Exam: 60%
• Bonus marks: individual/group activities
HOMEWORK

Interview 1 marketer
- Job title, Company, Tasks/roles in the company, Marketing
definition, career path, career requirements, motivation….
- Upload your interview (video, text, word/ppt file on group)
- Post title: Class – group name – HW – Marketer Interview
- Deadline: 24:00 – Wed 6 Nov, 2019
 NG
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CHAPTER 1: Overview of Marketing

CONTENT

Definitions of marketing
Functions of marketing
Modern Marketing system
Career path of Marketing
Major terms in marketing
Marketing management philosophies
DEFINITIONS OF MARKETING

Marketing

American Philip Kotler

Marketing
Association
- AMA
DEFINITIONS OF MARKETING

American
American marketing
marketing association
association

1985 2013
1960
DEFINITIONS OF MARKETING

1960: “The performance of business activities

that direct the flow of goods and services from
producers to consumers.”
DEFINITIONS OF MARKETING

1985: “Marketing is the process of planning and

executing the conception, pricing, promotion,
and distribution of ideas, goods and services to
create exchanges that satisfy individual and
organizational objectives.”
DEFINITIONS OF MARKETING

2013

Marketing is the activity, set

of institutions, and processes Offerings is some combination
for creating, communicating, of products, services,
delivering, and exchanging information, or experiences
offerings that have value for offered to a market to satisfy
a need or want.
customers, clients, partners,
and society at large.
PHILIP KOTLER’S DEFINITION

http://www.youtube.com/watch?v=RKL6KFlJdaM&list=PLA62747E5A6151D34a
PHILIP KOTLER’S DEFINITIONS OF MARKETING

(In narrow business

(Broadly defined)
context)
• A social and • Marketing is the
managerial process by process by which
which individuals and companies create value
groups obtain what for customers and build
they need and want strong customer
through creating and relationships in order to
exchanging products capture value from
and values with others. customers in return.
(Kotler et al, 2017)
FUNCTIONS OF MARKETING
MODERN MARKETING SYSTEM
Client Agency
• Creative
• Research
• Branding
• Digital
• Media
• Pr, Event
HOMEWORK

In person, make a list of Marketing agencies in Viet

Nam
MODERN MARKETING SYSTEM

sales

Finance R&D

HR
Marketin factory

g
Supply
IT
chain

Legal Purchasing
Marketing System of CocaCola Vietnam

Agency
Supplier
BTL

Agency
ATL

Customer Sales Trade Brand

Analysis Media

Agency
Market
Research
Source: Huy Coca cola)
CAREER PATHS IN MARKETING

Chief
Brand Assistant
Marketing Pr manager
manager brand manager
officer

Creative Account
Copy writer Art director
director manager

Account Marketing
MR Analyst Ad manager
executive executive

…….
EVOLUTION OF MARKETING
PHILOSOPHIES
1. Production
Concept

2. Product
Concept
5. Societal Marketing Key
Concept Marketing
Concepts

3. Selling
4. Marketing Concept
Concept
THE PRODUCTION CONCEPT

The philosophy that consumers will favor products

that are available and highly afforable
and
that management should therefore focus on
improving production and distribution efficiency.
THE PRODUCTION CONCEPT

consumers

available Highly
affordable
product

Improving
Improving
distribution
production
efficiency

organization
1908 – 1927
 THE PRODUCTION CONCEPT

It is useful in 2 types of situation:

1. The demand for a product > the supply
2. The demand for a product < the supply
But the product’s cost is too high
And improved productivity is needed to bring it down.
THE PRODUCT CONCEPT

The idea that consumers will favour products that offer

the most quality, performance and features and that
the organisation should therefore devote its energy to
making continuous product improvements.
THE PRODUCT CONCEPT

consumers

Most Performance
quality +
product features

Product
improvement

organization
1864 - 1968
THE SELLING CONCEPT
The idea that consumers will not buy enough of
the organization’s products unless the
organization undertakes a large-scale selling
and promotion effort.
Most firm practise the selling concept when they
have overcapacity. Their aim is to sell what
they make rather than make what the market
wants.
 THE SELLING CONCEPT
The idea that consumers will not buy enough of the organization’s
products unless the organization undertakes a large-scale selling
and promotion effort.
Most firm practise the selling concept when they have overcapacity.
Their aim is to sell what they make rather than make what the
market wants.
It focuses on creating sales transaction in the short term rather than
on building long term and profitable relationships with customers.
The selling concept is also practised in the non-profit area
THE MARKETING CONCEPT

The marketing concept holds that achieving

organizational goals depends on determining the
needs and wants of target markets and delivering
the desired satisfactions more effectively and
efficiently than competitors do.
THE MARKETING CONCEPT

customer
value

Company’s
profit
 Selling concept Marketing concept

Starting point

Focus

Means

Ends

Perspective
DISCUSSION

Is there any conflicts between consumer short-run

wants and consumer long-run welfare?
SOCIETAL MARKETING CONCEPT

The idea that the organisation should

determine the needs, wants, and interests of
target markets and deliver the desired
satisfactions more effectively and efficiently
than competitors in a way that maintains or
improves the consumer’s and society well-
being.
SOCIETAL MARKETING CONCEPT

consumers

Societal
MKT
concept

organization society
DISCUSSION

Distinguish Societal marketing >< Social

Marketing?
MARKETING DEVELOPMENT

Marketing
4.0
Marketing
• Digital/soci
3.0 ety
• value
Marketing
2.0
• Customer’s
need
Marketing
1.0
• product
MARKETING MIX
MARKETING DEVELOPMENT
PHILIP KOTLER’S DEFINITIONS OF MARKETING

Marketing 4.0 is a marketing approach that combines

online and offline interaction between companies and
customers (2016)
In the digital economy, digital interaction alone is not sufficient. In fact, in
an increasingly online world, offline touch represents a strong
differentiation. Marketing 4.0 also blends style with substance. While it is
imperative for brands to be more flexible and adaptive due to rapid
technological trends, their authentic characters are more important than
ever. In an increasingly transparent world, authenticity is the most
valuable asset.
DISCUSSION

Have the 4P's of Marketing Become

Outdated?
CORE MARKETING CONCEPTS

NEEDS

TRANSACTIONS WANTS

MARKETING

EXCHANGE DEMANDS

PRODUCTS MARKETS
NEEDS

A state of felt deprivation

NEEDS
 Needs

Latent needs: are

Current needs needs they don’t
even know they have
MASLOW’S HIERARCHY OF NEEDS

When needs were not satisfied, a person will do one of

2 things:
- Look for an object that satisfied it
- Or try to reduce the need
WANTS
The form that a human need takes as shaped by
culture and individual personality.
Eg: a hugry person in US may want ….
a huger in China may want…..
a huger in VN….
As a society evolves, the wants of its members
expand. As people are exposed to more objects that
arouse their interest and desire, producers try to
provide more want-satisfying products and
services.
DISCUSSION

“A LOT OF TIMES, PEOPLE

DON’T KNOW WHAT
THEY WANT UNTIL YOU
SHOW IT TO THEM”
STEVE JOBS
DEMANDS

Human wants that are backed by buying power.

People have NARROW, BASIC NEEDS,
but almost UNLIMITED WANTS.
However
also have LIMITED RESOURCES.
Thus they want to choose products that provide the most
satisfaction for their money.
CUSTOMER-PERCEIVED VALUE

The customer’s evaluation of the difference between all

the benefits and all the costs of a marketing offer
relative to those of competing offers.
SATISFACTION

The extent to which a product’s perceived performance

matches a buyer’s expectations.
SATISFACTION

Performance
Expectation
 SATISFACTION
Satisfied customers buy again and tell Dissatisfied customers often
others about their good experiences. switch to competitors and
disparage the products to others.
PRODUCTS

Anything that can be offered to a market for

attention, acquisition, use or consumption that
might satisfy a want or need.
PRODUCTS

Objects Places ideas

people Services Organizations

Information …
ACTIVITIES
MARKET

Marketers see the sellers as constituting an industry and

the buyers as constituting a market. The relationship
between industry and market is shown as
MARKET

communication

Products/services
Industry (a Market (a
collection of collection of
sellers) money buyers

information
MARKET

Market is the set of all actual and

potential buyers of a product or
service
These buyers share a particular
need or want that can be satisfied
through exchange relationships.
EXCHANGE

Is the act of obtaining a desired object from

someone by offering something in return
EXCHANGE

Conditions making exchange possible

- At least 2 parties participate
- Each must have sth of value to offer the other
- Each must want to deal with the other
- Each must be free to accept or reject the other’s offer
- Each must be able to communicate and deliver
TRANSACTION

A trade between two parties that involves at least two

things of value, agreed-upon conditions, a time of
agreement and a place of agreement

Transaction is marketing’s unit of measurement

OTHER CONCEPTS

Content Convention rate Engagement rate Inbound/outbound Influencer/KOL

KPI (key Above the line

performance ATL/Below the line Organic traffic Reach Viral
indicator) BTL

USP (unique selling ATL/BTL Brand/branding/Bra

B2B/B2C Big Data
point) nd identity

Cross channel
MKT/
Buyer persona Insight Customer journey Trend
multichannel/
Omnichannel

ROI Target Tactics Strategy Campaign

WOM (Words of
mouth)/Buzz Trade Marketing Green Marketing Digital Marketing ….
Marketing
+
MARKETING PLAN
 N G
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CHAPTER 2:
THE MARKETING ENVIRONMENT
CONTENT

2.1. Definition

2.2. Levels of marketing environment

2.1 DEFINITION

The marketing environments are the

actors and forces outside marketing
that affect marketing management’s
ability to develop and maintain
successful transactions with its target
customers.
2.2. LEVELS OF MARKETING ENVIRONMENT

Marketing

The
microenvironment

The macroenviroment
2.2.1. THE COMPANY’S MICROENVIRONMENT
The forces close to the company that affect its ability to serve its
customers, include:
- The company
- Suppliers
- Marketing intermediaries
- Customer markets
- Competitors
- Publics
2.2.1. THE COMPANY’S MICROENVIRONMENT
THE COMPANY

- Financial capacity
- Technology, R&D
- Personnel
- Company’s culture
SUPPLIERS

They provide the resources needed by the

company to produce its good and services.
Suppliers are very important as supply
shortages, delays, labour strikes can seriously
affect marketing. Rising supply cost may
force price increases that can harm the
company’s sales volume.
MARKETING INTERMEDIARIES

Are firms that help the company to

promote, sell and distribute its good to
final buyers.
 MARKETING INTERMEDIARIES

• the individuals and organisations that buy goods and services to resell at a profit.
Resellers

• warehouse, transportation and other firms that help a company to stock and move
Physical goods from thei points of origin to their destination
distributio
n firms

• Marketing research firms, advertising agencies, media firms, marketing consulting

Marketing firms and other service providers that help a company to target and promote its
services products to the right market
agencies

• Banks, credit companies, insurance companies and other businesses that help
Financial finance transactions or insure agianst the risks associated with the buying and
intermedia selling of goods.
ries
CUSTOMERS

Consumer
markets

International Business
markets market

marketing

Government Reseller
markets markets

Institutional
markets
DISCUSSION

Buyer Customer

Consumer Client
COMPETITORS

A company in the same industry or a similar

industry which offers a similar product or
services.

To be successful, a company must provide greater

customer value and satisfaction than its competitors
NYDC CLOSURE IN VIETNAM
PUBLICS

A public is any group that has an actual or

potential interest in or impact on an
organization’s ability to achieve its
objectives.
PUBLICS

Citizen
action
Governmen publics Local
t publics publics

Media General
publics publics

Financial Internal
publics marketing publics
2.2.2. THE COMPANY’S MACROENVIRONMENT
DEMOGRAPHIC ENVIRONMENT

Demography is the study of human

population in terms of size, density,
location, age, sex, race, occupation, and
other statistics
DEMOGRAPHIC ENVIRONMENT

Growing
Ethnic Age
Diversity Structures

Education Key
Demographic
Trends

Changing
Family
Geographic Structure
Shifts
DEMOGRAPHIC ENVIRONMENT

Geographic Shifts in population

- Move from rural to metropolitan areas
- Change in where people work
+ Telecommuting, online
communication
+ Home office
+ Shared office (co-working space)
DEMOGRAPHIC ENVIRONMENT

Changing family structure

©2012 Pearson Education

DEMOGRAPHIC ENVIRONMENT

Changing age structure of the population

 Baby boomers. Born between 1946 and 1964. Most affluent in “western”
societies.
 Australia; Europe; USA
 Generation X. The baby boom was followed by a “birth dearth,” generation of
people born between 1965 and 1976. They developed a more cautious
economic outlook.
 High parental divorce rates
 Cautious economic outlook
 Less materialistic
 Family comes first
Millennials (gen Y or echo boomers) include those born between 1977 and
2000
 Comfortable with technology
 Gen Z (>2000): Who are you?
ECONOMIC ENVIRONMENT

The economic environment consists of factors that

affect consumer-buying power and spending
patterns.
Population
Income
Family size
Education
Life expectancy
Infrastructure
Unemployment
Cost of labour
THE ECONOMIC ENVIRONMENT

Economic Changes
Development Key in Income
Economic
Concerns for
Marketers

Changes
in Consumer
Spending Patterns
THE ECONOMIC ENVIRONMENT

Changing consumer spending patterns

- Product diffusion is the percentage of
households in a market that own a particular
product (rate of adoption of a new product)
ADOPTION OF INNOVATIONS
Percentage of Adopters

Early Majority Late Majority

Innovators

Early
Adopters Laggards
34% 34%

13.5% 16%

2.5%

Early Time of Adoption Late

 THE ECONOMIC ENVIRONMENT

Changing consumer spending patterns

- Engel’s Law: As family income increases, the percentage
spent on food declines, the percentage spent on housing
remains constant, and the percentage spent on savings
and other categories (luxury goods) increases.
Eg. For example, a family that spends 25% of their
income on food at an income level of $50,000 will spend
$12,500 on food. If their income increases to $100,000, it
is not likely that they will spend $25,000 (25%) on food,
but will spend a lesser percentage while increasing
spending in other areas. 
 THE ECONOMIC ENVIRONMENT
Food/beverages Clothing/footware Households Leisure&education
goods/ser

Australia 10.24% 3.90% 5.80% 14.35%

Thailand 27.23% 12.02& 9.22% 4.55%

India 43.44% 4.69% 2.91% 7.74%

THE NATURAL ENVIRONMENT

Increased costs Increased

of energy pollution

Government
intervention in
Shortages of
natural
raw materials
resource
Issues in management
Natural
environment
 Increased Focus on Minor
Regulation Improvements
Issues in the
Technological
Environment
High R&D Fast Pace of
Budgets Change
THE TECHNOLOGICAL ENVIRONMENT
DISCUSSION

How technologies transform Marketing?

THE POLITICAL ENVIRONMENT

Laws, government agencies and pressure groups

that influence and limit various organisations
and individuals in a given society.
THE POLITICAL ENVIRONMENT

Laws: Marketers need an awareness of:

- Differences between the written law and common
practice/interpretation
- Differing laws related to each element of the marketing Mix
- Product: laws to protect consumers
- Price: price control mechanism, dumpling, tariffs
- Distribution: regulations covering distribution channels
- Promotion: prohibition of advertising: use of
words/expressions
THE CULTURAL ENVIRONMENT

The cultural environment is made up of institutions

and other forces that affect society’s basic values,
perceptions, preferences, and behaviours.
People grow up in a particular society that shapes their
basic beliefs and values.
They absorb a world view that defines their
relationships to themselves and others.
CULTURAL ELEMENTS

Time-assumptions Language-
about time vary precision versus Religion-beliefs
across cultures ambiguity

Consumption Business/social
Importance of the
patterns-material customs–bribery,
context-verbal /
possessions / dress, etiquette, status,
non-verbal cues
mealtimes jokes, music.

Relationship with
authority Nationalism
(Hofstede, 1980)
LANGUAGE BLUNDERS

Mitsubishi realized that Pajero was not the right name for a car
in Spanish speaking countries, so they changed it to Montero.
General Motors tried to sell the Chevrolet Nova in Latin
America, only to find that people found "no va" (doesn't go) a
funny name for a car.
Mazda has a van in Japan called the Laputa, but they made the
mistake of selling it under that name in Spanish-speaking
countries.
A car that would need a new name in Spain is the Nissan Moco
(they even have it in the right shade of green)!
RELIGION

• People find in religion a reason for being, the belief in a

higher power and the belief that they are part of the
“bigger picture‟.
• Religion has an impact on international marketing.
◦seen in a culture’s values and attitudes towards
entrepreneurship, consumption and social organisation.
MANNERS AND CUSTOMS/MATERIAL ELEMENTS
• Products are used differently according to manners and customers
(examples?)
• Material culture is related to the way society organizes its economic
activity.
◦Economic infrastructure: transportation (e.g. roads), energy (e.g.
electrical power plants), Communications (e.g. landline, mobile and
internet)
◦Social infrastructure: Housing, health, education
◦Financial and marketing infrastructures: Banks, research firms
◦Cultural convergence: Globally, consumers are showing a greater
acceptance of equipment for personal use (e.g. mobile phones, personal
computers and Internet use).
Changing consumer spending patterns
- Product use differences
For example, appliances in European
households tend to be smaller than those in
Australian households.
MANNERS AND CUSTOMS/MATERIAL ELEMENTS
(CONT.)
• The ability of marketers to reach consumers is affected by ownership of
radios, personal computers or televisions.
• Potential problem areas for marketers arise from an insufficient
understanding of:
◦different ways of thinking in the host country
◦the decision-making process and personal relations
◦the allocation of time for negotiations.
Example: The number eight in Chinese culture is of great significance.
AESTHETICS

• What is good taste?

• What is and what is not acceptable?
For example, attitudes towards sex in advertising differ across
cultures.
• Colours can have symbolic value (e.g. white is the colour of
mourning in India and Japan).
• International firms must be mindful of local tastes and
concerns when designing their facilities.
TOOLS FOR ENVIRONMENT ANALYSIS

- PEST/PESTEL
- SWOT -> TOWS
- 5 FORCES
- ….

127
SWOT

Strengths Weaknesses
(Điểm mạnh) (điểm yếu)

Opportunities Threats
(cơ hội) (Thách thức)
129
PESTEL

130
HOMEWORK

- Read 1 story of success or failure of 1 brand.

- Analyze the marketing environments which
might lead to that success or failure
- Summarize your work in a pdf file and upload on
our marketing group.
- Deadline:
 F
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Chapter 3: MARKETING RESEARCH

THE MARKETING INFORMATION SYSTEM
THE MARKETING INFORMATION SYSTEM

Big Data: The huge and complex data sets generated

by today’s sophisticated information generation,
collection, storage, and analysis technologies.
THE MARKETING INFORMATION SYSTEM

Customer insight: Fresh marketing information-based

understandings of customers and the marketplace
that become the basis for creating customer value,
engagement, and relationships.
HOMEWORK

- Read more about insight

- Give an example of a good insight that has been
implemented in a campaign of some brand.
- Upload your work on our Marketing group
MARKETING RESEARCH DEFINITION

The systematic design, collection,

analysis, and report of data
relevant to a specific marketing
situation facing an organisation.

Some large companies have their own research department, some hire
outside research specialists, some purchase data collected by outside
firms…
TYPES OF MARKETING RESEARCH

Promotional Distribution
Product research Sales research
research research
• Oopportunities • Methods of • Methods of • Volume &
for new promotion Distributions Value shares
product • Ideas for the • Power of • The
developement campaign current or effectiveness of
• Product • Media needs for new sales methods
requirement • Effectiveness channels and techniques
• Product of • Location of • Adequacy of
performance communication warehouse/reta sales training
compared to il outlets & rewards
competitor’s
• Packaging
• Pricing

Brandsvietnam
MARKETING RESEARCH DEFINITION

Marketing research is the function that:

- links the consumer, customer, and public to the marketer
through information--information used to identify and define
marketing opportunities and problems;
- generate, refine, and evaluate marketing actions; monitor
marketing performance; and improve understanding of
marketing as a process.
- Marketing research specifies the information required to
address these issues, designs the method for collecting
information, manages and implements the data collection
process, analyzes the results, and communicates the findings
and their implications. (AMA, 2004)
MARKETING RESEARCH DEFINITION

It can
- Gives MKT insights into customer motivations,
purchase behavior, and satisfaction
- Help them to assess market potential and market
share or measure the effectiveness of pricing,
product, distribution, and promotion activities
- Provide relevant, up-to-date information on market
- Indicate trends
- Take the guess work out of decision-making
MARKETING RESEARCH DEFINITION

It can not
- Provide a miracle cure
- Make your decisions for you
 RESEARCH PARADIGMS
Quantitative Qualitative

Descriptive or causal methods of research Exploratory methods of research

Larger sample sizes Smaller sample sizes

The researcher plays a separate The researcher plays an inseparable role to the
role from that of the subject subject

Data is analysed via maths and statistics Data is analysed subjectively

MARKETING RESEARCH PROCESS

Step 2: Step 3:
Step 1: Implementing Step 4:
Defining the Developing the research
problem and the research plan- Interpreting
research plan for collecting and and reporting
objectives collecting analyzing the the findings
information data
STEP 1: DEFINING THE PROBLEM AND RESEARCH OBJECTIVES

Marketing decision problem

Marketing research problem

Research objectives
STEP 1: DEFINING THE PROBLEM AND RESEARCH OBJECTIVES

• Define the problem: the marketing

decision problem -> the marketing
research problem
STEP 1: DEFINING THE PROBLEM AND RESEARCH OBJECTIVES

The marketing decision problem: The reason for the

research
- Helps researcher understand “what is to be done?”
- But defined from management perspective
Eg should we change our ad campaign in the Hochiminh
market?
- Critical phase of the marketing research process.
- Inadequate problem definition is a leading cause of
failure of marketing research projects.
STEP 1: DEFINING THE PROBLEM AND RESEARCH OBJECTIVES

Symptoms (of the problem)

Declining sales
Decline in profits
Losing market share

Inability to meet sales forecasts

Low traffic
Dissatisfied customers
Management
STEP 1: DEFINING THE PROBLEM AND RESEARCH
OBJECTIVES
Possible causes

Superior promo by rival

Low-quality product or service
Incorrect pricing

Inappropriate distribution channels

Low awareness of company or brands
Poor image of the company
Unmotivated sales force

Researcher
STEP 1: DEFINING THE PROBLEM AND
RESEARCH OBJECTIVES

The Market Research Problem (MRP)

- The MRP is a broad and comprehensive
description of the information required to
make the management decision
Eg. To understand the decision making process of
potential university students in their choice of
university .
STEP 1: DEFINING THE PROBLEM AND
RESEARCH OBJECTIVES
The Market Research Problem (MRP)
- The MRP it should:
 Guide the researcher towards all information needed to
address the management decision problem
 Assist the researcher in formulating the specific research
objectives
 Suggest possible ways the data could be collected (the
research design)
THE DISTINCTION BETWEEN THE MDP AND THE MRP

MDP MRP
What information is
What the decision needed and how that
maker (DM) needs to information can be
do) obtained effectively
and efficiently?

Action oriented
Information oriented
(decisions)

To determine
Should a new product
consumer preferences
be introduced to
and purchase
complement our
intentions for the
current range?
proposed new product.
STEP 1: DEFINING THE PROBLEM AND RESEARCH OBJECTIVES
RESEARCH OBJECTIVES

Exploratory • Marketing research to gather preliminary

information that will help decline problems and
suggest hypothesis
research • Eg. Observational research

Descriptive • To better describe marketing problems, situations, or

markets, such as the market potential for a product
or the demographics and attitudes of customers
research • Eg. Survey research

Causal • Causal research: marketing research to test

hypotheses about cause and effect relationships.
research • Eg. Experimental research
STEP 2: DEVELOPING THE RESEARCH PLAN FOR COLLECTING INFORMATION

SECONDARY PRIMARY
DATA DATA
STEP 2: DEVELOPING THE RESEARCH PLAN FOR COLLECTING INFORMATION
SECONDARY DATA

Information that already exists somewhere,

having been collected for another purpose.

Eg. Company’s internal database, commercial data services,

government sources. Eg. The Nielsen company; Cnn,
Factiva, Lexisnexis, internet…
STEP 2: DEVELOPING THE RESEARCH PLAN FOR COLLECTING
INFORMATION

SECONDARY DATA

Advantages Disadvantages

Cost Current

Speed Relevant

Accuracy

Impartial
STEP 2: DEVELOPING THE RESEARCH PLAN FOR
COLLECTING INFORMATION

PRIMARY DATA
Observatio
n
Research
Survey
approaches

Experiment
STEP 2: DEVELOPING THE RESEARCH PLAN FOR COLLECTING INFORMATION

PRIMARY DATA

Observation: Involves gathering primary data

by observing relevant people, actions, and
situations.
Researchers often observe consumer behavior to glean customer
insights that they can’t simply obtain by asking questions.
In research labs, using high tech cameras and other equipment, or
in in natural environment.
http://www.youtube.com/watch?v=QX_oy9614HQ
OBSERVATION

Obtain information that

people are unwilling or
unable to provide

Feelings, attitudes,
motives, private behavior
can’t be observed; short-
term; difficult to interpret
SURVEY RESEARCH

Gathering primary data by asking people

questions about their knowledge, attitudes,
preferences, and buying behavior.
SURVEY/QUESTIONNAIRE TYPES

Person administered Self administered

 Telephone  Direct mail outs
 Home  On-line
 Shopping Mall  Shopping Mall

A D VA N T A G E S
Lower cost
More respondent control
A D VA N T A G E S Less interviewer bias
High response rates Ability to gather data on many respondents in
Rapport established between researcher and a small time frame
interviewee Ability to ask socially sensitive questions

D I S A D VA N T A G E S D I S A D VA N T A G E S
Time consuming Very time consuming
Expensive to administer Lower response rates than person administered
May lead to biased responses surveys
EXPERIMENTAL RESEARCH

Gathering primary data by selecting matched groups of

subjects, giving them different treatments, controlling
related factors, and checking for differences in group
responses.
Experimental research tries to explain cause-and-effect
relationships
Eg. McDonald’s, before adding new sandwich to its menu,
might use experiments to test the effects on sales of 2
different prices it might change.
PRIMARY DATA COLLECTION
CONTACT METHODS

Mail Telephone Personal Online

Flexibility Poor Good Excellent Good

Quantity of data Good Fair Excellent Good

collected

Control of Excellent Fair Poor Fair

interviewer effects

Control of sample Fair Excellent Good Excellent

Speed of data Poor Excellent Good Excellent

collection

Response rate Poor Poor Good Good

Cost Good Fair Poor Excellent

PRIMARY DATA COLLECTION
CONTACT METHODS

Talking w people on
the streets, in their
Individual interviewing
homes, offices,
shopping mall

Personal
interviewing
Personal interviewing
that involves inviting 6-
10 people to gather for a
Focus group
few hours with a trained
interviewing
interviewer to talk about
a product, service, org,
on important issues.
PRIMARY DATA COLLECTION
CONTACT METHODS

Online marketing research:

Collecting primary data online through internet
surveys, online focus groups, web-based
experiments, or tracking consumers’ online
behavior.
Advantages: cost, speed, more interactive, engaging,
easier to complete, less intrusive than traditional
contact methods.
STEP 3: IMPLEMENTING THE RESEARCH PLAN-COLLECTING
AND ANALYZING THE DATA

This involves collecting, processing, analyzing the

information.
Data collection can be carried out by the company’s
marketing research staff or by outside firms.
The data collection phase of  the marketing research process
is generally the most expensive and the most subject to
error.
Researchers should watch closely to make sure that the plan
is implemented correctly.
STEP 4: INTERPRETING AND REPORTING THE FINDINGS
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Chapter 4: CONSUMPTION
MARKET AND BUYING
BEHAVIOR OF CONSUMERS
CONSUMER BEHAVIOUR

Looks at:
How people, groups and organisation select, buy, use
and dispose of goods, services, ideas or experiences to
satisfy their needs and wants….
CHARACTERISTICS INFLUENCING
CONSUMER BEHAVIOUR

Consumer purchases are strongly influenced by two

groups of factors:

• Internal characteristics that determine our behaviour:

 Psychological
 Personal

• External influences that represent the environment in

which the individual behaviour takes place:
 Cultural
 Social
PSYCHOLOGICAL FACTORS

 A buyer's decisions are influenced by psychological factors

such as:
 Motivation
 Perception
 Learning
 Personality
 Self concept
 Belief
 Attitude
PSYCHOLOGICAL FACTORS – MOTIVATION

Motive is a need that is sufficiently pressing to direct

the person to seek satisfaction of the need
Motivation describes behavior that is energized
Behavior is energized by needs
Needs occur when a gap exists between the desired
state of affairs and the current state of affairs
The bigger the gap, the greater the need, the more
motivation.
PSYCHOLOGICAL FACTORS – PERCEPTION

Perception ‘The process by which people select,

organise and interpret information to form a
meaningful picture of the world’.
How a person acts is influenced by his or her
perception of the situation. Two people with similar
motivation and in the same situation might act quite
differently because they perceive the situation
differently.
PSYCHOLOGICAL FACTORS: LEARNING

Learning: Changes in an individual’s behaviour arising

from experience.
When people act, they learn. Learning describes
changes in an individual's behaviour arising from
experience.
The significance of learning theory to marketers is that
they can build demand for a product by associating it
with strong drives, using motivating cues and
providing positive reinforcement.
PSYCHOLOGICAL FACTORS – PERSONALITY

Personality: A person’s distinguishing psychological

characteristics that lead to relatively consistent
and lasting responses to his or her own
environment.
Closely tied to motivation and is usually described in
terms of traits such as self-confidence, dominance,
sociability, autonomy, defensiveness, adaptability and
aggressiveness.
DISCUSSION

Brand Personality = Customer personality?

PSYCHOLOGICAL FACTORS : SELF CONCEPT

The beliefs a person holds about their own attributes

and how he/she evaluates these qualities.
A person’s perception of himself or herself
Examples - Self image
Self Esteem
OTHER TYPES OF SELVES

Each individual has many different selves:

Ideal Self
Actual self
Social self
Extended self
PSYCHOLOGICAL FACTORS: BELIEF

A descriptive thought that a person holds about

something.
Marketers are interested in the beliefs that people
formulate about specific product and services
because these belief make up product and brand
images that affect buying behaviour.
If some beliefs are wrong and prevent purchase, the
marketer will want to launch a campaign to correct
them.
PSYCHOLOGICAL FACTORS: ATTITUDES

A person’s consistently favourable or unfavourable

evaluations, feelings and tendencies towards an
object or idea.
Attitudes are difficult to change. Thus a company
should actually try to fit its products into existing
attitudes rather than try to change attitudes. Of
course, there are exceptions in which the greater cost
of trying to change attitudes may pay off.
PERSONAL FACTORS

A buyer's decisions are also influenced by personal

characteristics such as:

 Age and Lifecycle stage

 Occupation
 Education
 Economic Situation
 Lifestyle
184
CULTURAL FACTORS

Cultural factors exert the broadest and deepest

influence on consumer behaviour. Marketers need to
understand the role played by the:

 Culture

 Subculture

 Social class
CULTURAL FACTORS

Culture ‘The set of basic values, perceptions, wants and

behaviours learned by a member of society from
family and other important institutions’.
Subcultures—‘smaller groups of people with shared
value systems based on common life experiences and
situations’.
Social classes are ‘relatively permanent and ordered
divisions in a society whose members share similar
values, interests and behaviours’.
SOCIAL FACTORS

Household type
Roles and Status
Membership Groups
HOUSEHOLD TYPES

The members of a person’s household can strongly

influence buyer behaviour.
We can distinguish between two household types in the
buyer’s life.
- The family of orientation - The buyer’s parents make
up the family of orientation.
- The family of procreation—the buyer’s spouse and
children—exert a more direct influence on everyday
buying behaviour.
MEMBERSHIP GROUPS

Groups that have a direct influence on a person’s

behaviour and to which a person belongs
Groups that have direct (face-to-face) or indirect
influence on the person’s attitudes or behaviour
Marketers try to identify the reference groups of
their target markets due to the influence they have on
a consumer’s attitudes and self-concept
Group influence is strongest on conspicuous
purchases, or those items that are most likely to be
seen by others
190
191
DISCUSSION

- WOM, eWOM
- KOL, Opinion leader
THE BUYER DECISION PROCESS

Need recognition

Information search

Evaluation of alternative

Purchase decision

Postpurchase behavior
THE BUYER DECISION PROCESS (OTHER
MODELS)
THE BUYER DECISION PROCESS (OTHER
MODELS)

196
ADOPTION OF INNOVATIONS
Percentage of Adopters

Early Majority Late Majority

Innovators

Early
Adopters Laggards
34% 34%

13.5% 16%

2.5%

Early Time of Adoption Late

STAGES IN ADOPTION PROCESS

Awarenes Evaluatio
Interest Trial Adoption
s n
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Chapter 5: BUYING BEHAVIOR OF

ORGANIZATION
 BUSINESS TO BUSINESS MARKETING
Business Markets
Where products and services are used in operations of
businesses and organisations for their internal needs
and not directed at end consumers.

Business marketing, defined as

Those activities that facilitate exchanges involving
products and customers in markets where goods and
services are used for purposes other than personal
consumption.
What’s in a name……..

Bu si nes s to Bu s ines s M ark e ti n g

Industr
ial Mar
keting
Business Marketin
g

g a n is at i o n s
eti n g t o O r
Mark
BUSINESS AND CONSUMER MARKETING
Common to both:
The marketing concept – market driven:
Customer comes first
Know customers and competitors
Integrated approach
BUSINESS MARKET VS CONSUMER MARKET
WHERE THEY DIFFER

• Fewer buyers
Market structure and • Larger buyers
demand • Geographic concentration of users

• More buyers effort

Nature of the buying • More professional purchasing effort
unit
• More complex buying decisions
Types of decision and • More formalised
• Buyer and seller are often much more dependent on each other
the decision process

• Direct purchasing
Other characteristics • Reciprocity
• Leasing
BUSINESS CUSTOMER CATEGORIES

Commercial enterprises

Governmental organisations

Institutions
COMMERCIAL ENTERPRISES

Manufacturers / Processors
 Factories
 Original equipment manufacturers (OEMs)
Other Marketing Providers
 Dealers / distributors / resellers
Service Providers
 Most businesses
 Transport
 etc
GOVERNMENT

Governmental units – national and local- that

purchase or rent goods and services for
carrying out the main functions of government.
Purchase products and services for defence,
education, public welfare, and other public
needs.
INSTITUTIONS

Schools; hospitals; nursing homes, prisons and

other institutions that provide goods and
services to people in their care.
Similar to government needs and buying
behaviour
Consider FTU:
 Buildings > Furnishing and fittings.
 Consumables.
 Operation support eg Vehicles; PCs; AV.
BUSINESS / ORGANIZATIONAL MARKETS
WHAT THEY BUY

Major equipment
Accessories
Fabricated & component parts
Process materials
Raw materials
Maintenance, repairs, operating
supplies
Business services
CLASSIFYING GOODS FOR B2B
Entering goods
 Raw material / manufactured parts that become part of
finished product

Foundation goods
 Goods used to produce end product such as plant &
machinery; facilities; office equipment.

Facilitating goods
 Goods and services that support operations, includes
office supplies, maintenance /repairs; services.
BUSINESS BUYER BEHAVIOR
Major Types of Buying Situations
Straight rebuy is a routine purchase decision such as reorder without any
modification
Eg. Electricity, water, gas, office supplies, gum, cigarettes, bulk chemicals
Modified rebuy is a purchase decision that requires some research where
the buyer wants to modify the product specification, price, terms, or
suppliers
Eg. New cars, consulting services, electrical components, personal
computers
New task is a purchase decision that requires thorough research such as a
new product
Eg. Custom-built offices, complets buildings, bridges, installations
(machinery, computer systems), weapon system…
 PARTICIPANTS IN THE BUSINESS BUYING
PROCESS
Buying center is all of the individuals and units that
participate in the business decision-making process.
Members:
Deciders - make the buying decision
Influencers - provide info, eg Quality control; R&D
Secondary Roles
Users - those who use the product
Gatekeepers - control the flow of info to other members
Buyers - authorised to select vendor, do transaction.
BUYING CENTRE
COMPOSITION AND NUMBER

Depends on buying task:

Straight rebuy
Modified rebuy
New task

Depends on roles:
Area of responsibility
Source of relevant information
THE MAIN INFLUENCES ON BUSINESS BUYERS

Environmental Organizational Interpersonal Individual

• economic • objectives • Authority • Age
• Technological • Policies • Status • Education
• Political • Procedures • Empathy • Job position
• Competitive • Org structure • persuasiveness • Personality
development • systems • Risk attitudes
BUSINESS BUYER BEHAVIOR

The Buying Process

 BUSINESS BUYER BEHAVIOR
E-Procurement – buying on the internet

Online purchasing

Company buying sites

BUSINESS BUYER BEHAVIOR
E-Procurement
Advantages
 Access to new suppliers
 Lowers costs
 Speeds order processing and delivery
 Shares information
 Sales
 Service and support
Disadvantages
 Can erode relationships as buyers search for new
suppliers
 Security
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H

SEGMENTATION, TARGET AND

POSITIONING
1. MARKET SEGMENTATION
Segment
A segment is a group of
customers who share one or
more similar characteristics,
and therefore have similar
product/service needs.
Market
Segmentatio
n
Dividing a market into
smaller segments with
distinct needs,
characteristics, or behavior
that might require separate
marketing strategies or
mixes.
WHY SEGMENT MARKETS?

Provides Increase
Focus profit
Identify and Greater efficiency,
Compare best less waste, improved
marketing marketing
opportunities. performance.

Concentrate Reduces
company resources vulnerability by
on most profitable “matching” resources
segments. to segment needs
Segmenting consumers markets

Geographic Demographic

Psychographic Behavioral
223
SEGMENTING INDUSTRY MARKETS

Less scope to segment than in consumer

markets, because:
fewer segmentation variables
markets concentration & dominance
Segmentation variables harder to discern
SEGMENTING INDUSTRY MARKETS

Geographical Demographical Benefits sought User status

Customer
Purchasing
Usage rate Loyalty status operating
approaches
characteristics

Situational Personal
factors characteristics
 SEGMENTING INDUSTRY MARKETS
INDUSTRY / ECONOMIC ACTIVITY

Standard Industry Codes (SIC)

 Agriculture, Forests and Fisheries
 Mining
 Construction
 Manufacturing
 Transportation
 Communications
 Wholesale trade
 Retail trade
SEGMENTING INTERNATIONAL MARKETS

Geographic location: Western Europe, the Pacific Rim, the

Middle East, Africa
Economic factors
Political and legal factor
Cultural factors: languages, religions, customs, values…
Intermarket / cross-market segmentation
REQUIREMENTS FOR EFFECTIVE
MARKET SEGMENTATION
To be useful, market segments must be:

Measurable Accessible Substantial

Differentiable Actionable
2. SELECTING TARGET MARKET SEGMENTS

Market A target
Targeting market
The process of consists of a set of
evaluating each market buyers sharing
segment’s common needs or
attractiveness and characteristics that the
selecting one or more company decides to
segments to enter serve.
SELECTING TARGET MARKET SEGMENTS
Undifferentiated marketing
• ignore segmental differences;

Differentiated marketing
• develop specialized marketing activities for different segments;

Concentrated (niche) marketing

• develop one set of marketing plans for a few segments.

Micromarketing
• Tailoring products and marketing programs to the needs and wants of
• specific individuals and local customer segments; it includes local marketing
(cities, neighborhood, specific store) and individual marketing .
 C. Concentrated Marketing
Segment
Segment33 Company
Company
Segment
Segment22 Marketing
Marketing
Mix
Mix
Segment
Segment11
B. Differentiated Marketing
Segment
Segment33 Company
CompanyMix
Mix33
Segment
Segment22 Company
CompanyMix
Mix22
Segment
Segment11 Company
CompanyMix
Mix11
A. Undifferentiated Marketing
Company
Company
Market
Market Marketing
Marketing
Mix
Mix
MARKET COVERAGE STRATEGIES
CUSTOMER PERSONA
CUSTOMER PERSONA
INSIGHTS

An unrecognized fundamental human truth

A new way of viewing the world that causes us to
reexamine existing conventions and challenge the
status quo
A penetrating observation about human behaviour
that results in seeing consumers from a fresh
perspective
A discovery about the underlying motivation that
drive people’s action
Insight Truth

Fact
INSIGHT
INSIGHT
INSIGHT
INSIGHT

reality relevant

resonate reaction
MARKET POSITIONING

  Product position is the way the product is defined by

consumers on important attributes—the place the
product occupies in consumers’ minds relative to
competing products
MARKET POSITIONING

Competitive advantages: An advantage over competitors

gained by offering greater customer value, either by having
lower prices or providing more benefits that justify higher
prices.
Possible value differences: A company can differentiate along
the lines of product, services, channels, people, imange…
Unique selling point (USP): which difference to promote?
product: BMW - “The Ultimate Driving Machine
services: Tiki – 2 hour delivery
channels: Amazon
people: Singaporeairlines, The coffee house
image: Cocacola
IDENTIFYING A POSITIONAL DIRECTION BY
PERCEPTUAL MAPPING
IDENTIFYING A REPOSITIONING DIRECTION
CHOOSING A DIFFERENTIATION AND POSITIONING STRATEGY

Selecting an overall positioning strategy:

DEVELOPING A POSITIONING STATEMENT

To (target segment and need) our

(brand) is (concept) that (point of
difference).
“To busy multitaskers who need help remembering
things, Evernote is a digital content management
application that makes it easy to capture and
remember moments and ideas from your everyday
life using your computer, phone, tablet, and the
web.”
REPOSITIONING
HOMEWORK

- Go shopping, and take picture of a product

whose packaging impresses you most in the
positive or negative way. Give the reason for that.
- Suggest changes for its packaging if you are not
satisfied with that.
- Upload your work
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Chapter 7: PRODUCT POLICIES

WHAT IS A PRODUCT?

Anything that can be offered to a market

for attention, acquisition, use, or
consumption that might satisfy a want or
need.
• Tangible objects
• Services
• Events
• Persons
• Places
• Organizations
• Ideas
PRODUCTS

Services are a form of product that consists of

activities, benefits or satisfaction that is essentially
intangible and does not result in the ownership of
anything
Banking, transportation, consulting, medical care….
PRODUCTS

Organizations marketing: create, maintain, or change the attitudes

and behavior of target consumers toward an organization.
Person marketing: create, maintain, or change the attitudes and
behavior of target consumers toward a person.
Presidents, entertainers, professionals….
Place marketing: create, maintain, or change the attitudes and
behavior of target consumers toward particular places.
nations, cities, regions..
Social marketing: the use of commercial marketing concepts and
tools in programs designed to influence individuals’ behavior to
improve their well being and that of society.
Wilderness protection, clean air, human rights, racial
equality…
LEVELS OF PRODUCT AND SERVICES
PRODUCT AND SERVICE CLASSIFICATIONS

Products

Consumer Industrial products

products A product bought by
A product individuals and
bought by final organizations for further
consumers for processing or for use in
personal conducting a business
consumption
r y.c
le
gal
e
em
th
w w.
w
om
CONSUMER PRODUCTS

Convenient Shopping Specialty Unsought

product product product product
• A consumer • A consumer • A consumer • A consumer
product that product that product with product that
customers the customer, unique the consumer
usually buy in the process characteristics either does not
frequently, of selecting or or brand know about or
immediately, purchasing, identification knows about
and with usually for which a but does not
minimal compares on significant normally
comparison such attributes group of consider
and buying as suitability, buyers is buying.
effort quality, price, willing to
and style make a special
purchase
effort.
INDUSTRIAL PRODUCTS
Entering goods (materials and parts)
 Raw material / manufactured parts that become part of finished
product
 Farm products: wheat, cotton, fruits, vegetables; natural products:
fish, lumber, crude petroleum; component materials: iron, yarn,
cement, wires, tires, casting...
Foundation goods (Capital items)
 Goods used to produce end product such as plant & machinery;
facilities; office equipment.
 Factories, offices, generators, drill presses, large computer systems,
elevators, computers, fax machines, desk...
Facilitating goods (supplies and services)
 Goods and services that support operations, includes office supplies,
maintenance /repairs; services.
 Paper, pencils, paint, brooms, window cleaning, computer repair,
consulting services, advertising services....
PRODUCT AND SERVICE DECISIONS

Product attribute

Branding

Packaging

Labeling

Product support service

PRODUCT AND SERVICE ATTRIBUTES

Quality
Feature
s

Style &
design

Product attributes
BRANDING

A brand is a name, term, sign, symbol, or design, or

a combination of these, that identifies the
products or services of one seller or group of
sellers and differentiates them from competitors.
PRODUCT VS BRAND

A Product is what the firm makes

A Brand is what the customer buys
A Product can be copied
A Product can be quickly outdated
A Brand is Unique
A Brand is what makes the firm’s product
unique
A Brand can go on and on, forever….
WHAT IS A BRAND?

A promise of future expectations

A brand must consistently measure up to your
promise-everyday at every touch point

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WHAT IS A BRAND?

Earns an emotional connection with consumers

Consumers have a unique emotional connection with
your brand

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WHAT IS A BRAND?

Is your behaviours
Behaviours are aligned to yours core values – It’s not
what you say, it’s what you do.

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BRAND ARCHITECTURE

It is the structure of the brand in an organizational

entity that defines how various brands and sub-
brands in a company’s portfolio are related to each
other or are different from one another.
Brand architecture provides a hierarchy that depicts the
roles and relationships within the products and
services that make a company’s portfolio and makes
sure that the external stakeholders understand the
value of what the brands offer.

277
BRAND ARCHITECTURE

278
BRAND HEALTH TRACK/DIAGNOSIS

279
HOMEWORK

- In person, read about Private/store brand; co-

brand
- Give example
PACKAGING

The activities of designing and producing the container

or wrapper for a product.
PACKAGING

VIEW
V : Visibility

I : Informative

E : Emotional impact

W: Workability
LABELING

Labels range from simple tags attached to products

to complex graphics that are part of the
packaging.
Functions:
identifies the product or brand (eg. Name)
describe several things about the product
promote the brand, support its positioning, and connect
with customers.
PRODUCT SUPPORT SERVICES
PRODUCT LINE

A group of products that are closely related because

they function in a similar manner, are sold to the
same customer groups, are marketed through the
same types of outlets, or fall within given price
ranges.
PRODUCT MIX

The set of all product lines and items that a particular

seller offers for sale.
Product mix width refers to the number of different
product lines the company carries.
Product mix length refers to the total number of items a
company carries within its product lines
Product mix depth refers to the number of versions
offered for each product in the line.
the consistency of the product mix refers to how closely
related the various product lines are in end use,
production requirements, distribution channels, or
some other way.
SERVICES MARKETING
THE NATURE AND CHARACTERISTICS OF A SERVICE
THE 7PS: SERVICES PARADIGM
STAGES OF THE PRODUCT LIFE CYCLE

9 - 293
USES OF PLC

A predictive or forecasting tool

A planning tool- it provides useful descriptions of
competitive marketing strategies at different stages of
the PLC
A control tool
It is NOT formula for magical predictions
HOMEWORK

Go shopping and take the pictures of some

product’s price tags that impress you. Analyze the
reasons behind that pricing decisions of the
brand/company.
Show your work on our Marketing group
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Chapter 8: PRICING POLICIES

AGENDA

Considerations
Major pricing Additional Pricing
affecting price
strategy strategies
decision
• Customer value • Customer value • New product
• Cost based pricing pricing
• Competition • Cost plus pricing • Product Mix
• Demand • Breakeven pricing Pricing
• Competition based • Price adjustments
pricing
• Price elasticity of
demand
WHAT IS A PRICE?

Price is the amount of money charged for a

product or service.
It is the sum of all the values that consumers
give up in order to gain the benefits of having
or using a product or service.

Price produces revenue;

all other elements in the marketing mix
represent costs
PRICING OBJECTIVES

Revenue Profit
TR = P x Q  = TR – TC

Market share
MARKET SHARE

Market share represents the percentage of an

industry, or a market's total sales, that is earned
by a particular company over a specified time
period.
Market share is calculated by taking the company's
sales over the period and dividing it by the total
sales of the industry over the same period.
MS value = (Company’s TR / Market’s TR)*100%
Or MS volume = (Company’s Q/ Martket’s Q)*100%
1. CONSIDERATIONS AFFECTING PRICE DECISION

Customer
Cost
value

Competition Demand
MAJOR PRICING STRATEGY

Considerations Major pricing strategy

Customer value Customer value based pricing

Cost Cost plus pricing & Breakeven pricing

Competition Competition based pricing

Demand Price elasticity of demand

CUSTOMER VALUE BASED PRICING

Price set in accordance with

customer perceptions about the
value of the product/service
rather than the seller’s cost
Examples include status
products/exclusive products
COST BASED PRICING

Cost – plus pricing (markup pricing): add a

standard markup to the cost of the product.
MARKUP PRICING

Markup as a % Markup
=
of Selling Price Selling Price

= 15
60

= 25%
MARKUP PRICING

Markup as a % Markup
=
of Cost Cost

= 15
45

= 33%
BREAK-EVEN PRICING

The breakeven point is the point at which costs of

producing the product equal revenue from selling
the product.
Setting price to break even on the costs of making
and marketing a product or setting price to make
a target return
BREAKEVEN POINT

Fixed Costs
___________________
Breakeven Point =
Price - Variable Costs

315
MAJOR PRICING STRATEGIES

Break-Even Analysis and Target Profit Pricing

PRICE – DEMAND RELATIONSHIP
Price elasticity of demand illustrates
the response of demand to a change in price

Inelastic demand occurs when demand hardly changes

when there is a small change in price

Elastic demand occurs when demand changes greatly for

a small change in price
ELASTICITY OF DEMAND
INELASTIC DEMAND

eg: Electricity
Price

P2

P1

Q2 Q1
Quantity
320
ELASTICITY OF DEMAND
ELASTIC DEMAND
Price

P2
Vehicles

P1

Q2 Q2
Quantity
321
ELASTICITY OF DEMAND
REVIEWED
Inelastic (Electricity)
Price

Elastic
( Vehicles)

Quantity
322
ADDITIONAL PRICING STRATEGIES

New product Product Mix

pricing Pricing

Price
adjustments
2.1. NEW PRODUCT PRICING STRATEGIES

Market
skimming pricing

Market
penetration
pricing
SKIMMING VS. PENETRATION PRICING
Skimming:
Setting a high price for a new
product to skim maximum revenues
layer by layer from the segments
willing to pay the high price;
the company makes fewer but
more profitable sales
The product’s quality & image
must support its higher price,
& enough buyers must want
the product at that price
The cost of producing a smaller
volume cannot be so high that
they cancel (annul) the
advantage of charging more
Competitors should not be
able to enter the market
easily & undercut the
high price
325
SKIMMING VS PENETRATION PRICING
Penetration:
Setting a low price for a new
product in order to attract a large
number of buyers and a
large market share
The market must be highly
price sensitive so that a low
price produces more
market growth
Production & distribution costs
must fall as sales volume
increases
The low price must help
keep out the competition, and
the penetration pricer must
maintain its low-price position
327
PRODUCT MIX PRICING
PRICE ADJUSTMENT STRATEGIES

Discount and allowance pricing

Segmented pricing

Psychological pricing

Promotional pricing

Geographic pricing

Dynamic and online pricing

International pricing
Reduces prices to reward customer responses such as
paying early or promoting the product
cash discount for paying promptly;
quantity discount for large volume;
functional (trade) discount for selling, storing, distribution, and
record keeping.
trade-in allowance
promotional allowance to reward dealers for participating in
advertising or sales support programs.
Customer segment pricing -
different customers pay different prices for the same product
or service. [although no differences in costs ]

Product form segment pricing –

different versions of the product are priced
differently but not according to differences
in cost.

Location pricing –
the product sold in different geographic areas is priced
differently even though the cost is the same.
Examples???
when prices are temporarily priced below list
price or cost to increase demand
Loss leaders
Special event pricing
Cash rebates
Low-interest financing
Longer warrantees
Free maintenance
RISKS OF PROMOTIONAL PRICING

Used too frequently, and copies by competitors can

create “deal-prone” customers who will wait for
promotions and avoid buying at regular price

Creates price wars

PSYCHOLOGICAL PRICING

Form of value pricing (consumer based)

Used to play on consumer perceptions, e.g. $1,990
High value goods priced according to what
consumers THINK should be the price
May be slightly below certain perceived price points,
e.g. <$2,000 computer
DYNAMIC AND ONLINE PRICING

Adjusting prices continually to meet the

characteristics and needs of individual customers
and situations
 F
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MO T Chapter 9: DISTRIBUTION
H

POLICIES
CONTENTS

What is distribution

Distribution channels

Intermediaries in
distribution channels

Distribution strategies
WHAT IS DISTRIBUTION

Includes company activities that make the

product available to target customers.
Involves:
Channel management
Transportation
Warehousing
Inventory management
Wholesale
Retail
WHAT IS DISTRIBUTION
Supply chain: Managing upstream and downstream
value-added flows of materials, final goods, and
related information among suppliers, the
company, resellers, and final consumers.
Upstream partners are firms that supply the
raw material, components, parts, information,
finances, and expertise to create a product or
service
Downstream partners include
the marketing channels or distribution channels that
look toward the customer, form a vital
connection between the firm and its customers.
WHAT IS DISTRIBUTION
 DISTRIBUTION CHANNELS
Marketing channels (or distribution channels): a set of
interdependent organizations that help make a
product or service available for use or consumption
by the consumer or business user.
Manufactures, agents, wholesalers, retailers, customers
partner with each other to improve the performance
of the entire system
DISTRIBUTION CHANNELS
 DISTRIBUTION CHANNELS
FUNCTION AND IMPORTANCE OF CHANNEL INTERMEDIARIES

Intermediaries offer producers greater efficiency in

making goods available to target markets.
Through their contacts, experience, specialization,
and scale of operations, intermediaries usually
offer the firm more than it can achieve on its
own.
DISTRIBUTION CHANNELS
FUNCTION AND IMPORTANCE OF CHANNEL
INTERMEDIARIES

Smooth flow of goods and services

Large quantity of limited variety ->

Limited quantity of a wide variety
DISTRIBUTION CHANNELS
FUNCTION AND IMPORTANCE OF CHANNEL
INTERMEDIARIES
DISTRIBUTION CHANNELS
FUNCTION AND IMPORTANCE OF CHANNEL INTERMEDIARIES
Information: The collection and dissemination of marketing research information about
potential and current customers, competitors, and other actors and forces in the
marketing environment. 
Promotion: The development and dissemination of persuasive communications designed
to attract customers to the offer. 
Negotiation: The attempt to reach final agreement on price and other terms so that
transfer of ownership or possession can be effected. 
Ordering: Marketing-channel members' communication of intentions to buy to the
manufacturer. 
Financing: The acquisition and allocation of funds required to finance inventories at
different levels of the marketing channel. 
Risk taking: The assumption of risks connected with carrying out the channel work. 
Physical possession: The successive storage and movement of physical products from raw
materials to the final customers. 
Payment: Buyers' payment of their bills to the sellers through banks and other financial
institutions. 
Title: The actual transfer of ownership from one organization or person to another. 
DISTRIBUTION CHANNELS
FUNCTION AND IMPORTANCE OF CHANNEL
INTERMEDIARIES
DISTRIBUTION CHANNELS
NUMBER OF CHANNEL LEVELS
DISTRIBUTION CHANNELS
NUMBER OF CHANNEL LEVELS

Direct marketing channel: a marketing channel that

has no intermediary level
DISTRIBUTION CHANNELS
NUMBER OF CHANNEL LEVELS

Many businesses, especially small ones and those just

starting up, sell directly to customers.
The advantage of this approach is a certain degree of
control over prices and selling activities
Disadvantages: lack retailing expertise.
DISTRIBUTION CHANNELS
NUMBER OF CHANNEL LEVELS

Indirect marketing channel

Channel containing one or more intermediaries levels
(wholesalers, retailers)
• Advantages:
Middlemen are sales professionals
Useful when location of home base is too far from consumers
Greater sales volume potential
Frees producer to focus on production
• Disadvantages:
More expensive than direct distribution
Less control over product
INTERMEDIARIES IN DISTRIBUTION
CHANNELS
WHOLESALER

Wholesaling: all the activities involved in selling

goods and services to those buying for resale or
business use.
Wholesaler: a firm engaged primarily in wholesaling
activities.
Wholesalers buy mostly from producers and sell
mostly to resellers, industrial consumers, and
other wholesalers.
WHOLESALER
FUNCTIONS OF WHOLESALER

Selling and Promotion Financing

Buying and assortment Risk bearing
building Market information
Bulk breaking Management services
Warehousing
Transportation
WHOLESALERS
TYPES OF WHOLESALERS

Merchant • An independent owned wholesale business that

wholesalers takes title to the merchandise t handle

• a wholesaler who represents buyers or sellers on a

Agents relatively permanent basis, performs only a few
functions, and does not take title to goods

• A wholesaler who does not take title of goods and

Brokers whose function is to bring buyers and sellers
together and assist in negotiation

Manufacturer's • Wholesaling by sellers or buyers themselves rather

sales branches and than through independent wholesalers.
offices
RETAILERS
Retailing includes all the
activities in selling products
or services directly to final
consumers for their personal,
non-business use

Retailers are businesses whose

sales come primarily from
retailing
RETAILERS
Specialty stores
• Narrow product line with deep assortment: sporting-goods store, bookstores, florists,
furniture stores

Department stores
• Wide variety of product lines: clothing + home furnishing + household goods

Convenience stores
• A relatively small store located near residential areas, Limited line of high-turnover
convenient goods

Supermarkets
• A relative large operation designed to serve the consumer’s total needs for grocery and
household products

Discount store
• Carries standard merchandise sold at lower prices with lower margins and higher volumes
Distribution channels of FMCG
On Premise Off
Premise
General Trade: vendor, kios, local Modern Trade:
market, roadside vendors CVS, supermarket, hypermarket, shopping
food stalls, canteen… mall, hospital, hotels. E commerce

Horeca
(hotel/hospital+res
taurant+catering/ca
nteen, …)
GT OR MT?

Is Modern Trade the future growth driver for

FMCG?
Identify trends in retailing?
DISTRIBUTION STRATEGIES

Intensive
Channel Selective
Distribution
Strategies

Exclusive
DISTRIBUTION STRATEGIES

Intensive distribution: a strategy in which the

company uses as many outlets as possible
DISTRIBUTION STRATEGIES

Exclusive distribution: the producer gives only a

limited number of dealers the exclusive right to
distribute its products in their territories.
DISTRIBUTION STRATEGIES

Selective distribution: the use of more than one but

fewer than all the intermediaries who are willing
to carry the company’s products.
DISTRIBUTION STRATEGIES

Intensive distribution: a strategy in which the

company uses as many outlets as possible
Exclusive distribution: the producer gives only a
limited number of dealers the exclusive right to
distribute its products in their territories.
Selective distribution: the use of more than one but
fewer than all the intermediaries who are willing
to carry the company’s products.
DISTRIBUTION STRATEGIES

Manufactures are constantly tempted to move from

…. ………………..or …………………………..
distribution to more ……………………………
distribution to increase the coverage and the sales.
TRENDS IN DISTRIBUTION?

Shop in shop?
Cross-channel/multichannel/omni channel?
Others?
HOMEWORK

In person, read more about Trade marketing

 Y
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CHAPTER 10: POLICIES TO

PROMOTE AND SUPPORT BUSINESS
AGENDA

The Promotion Mix

Promotion Mix Strategies

Integrated Marketing
Communications
THE PROMOTION MIX

The promotion mix is the specific blend of

advertising, public relations, sales promotion,
personal selling, and direct-marketing tools that
the company uses to persuasively communicate
customer value and build customer relationships.
Advertising
Publics relation
Personal selling
Direct Marketing
Sales Promotion
THE PROMOTION MIX
Advertising
Advertising is any paid form of non-personal
presentation and promotion of ideas, goods, or
services by an identified sponsor
Broadcast
Print
Internet
Outdoor
THE PROMOTION MIX
Advertising
Major advertising decisions
THE PROMOTION MIX

ADVERTISING
Reach
 The number of people exposed to a retailer’s promotion
efforts in a specific period.
Frequency
 The average number of times each person who is reached is
exposed to a retailer’s promotion efforts in a specific period.
Message Content
 The characteristics of the promotional form influence the
message
 What is the best media to convey retailer’s message and
achieve desired outcome?
 How does it complement / interact with message in other
media?
THE PROMOTION MIX
Public relation
Public relations involves building good relations
with the company’s various publics by
obtaining favorable publicity, building up a
good corporate image, and handling or
heading off unfavorable rumors, stories, and
events

Public relations is a very believable form of

promotion that includes news stories,
features, sponsorships, and events
 THE PROMOTION MIX
PUBLIC RELATIONS
FUNCTION OF PR DEPARTMENT

Press relations or press agency

Product publicity
Public affairs
Lobbying
Investor relations
Development
 THE PROMOTION MIX
PUBLIC RELATIONS
OBJECTIVES & ROLE OF PR
Increase awareness of the retailer and its strategy mix
Maintain or improve company image
Show the retailer as a contributor to the public’s quality of
life
Demonstrate innovativeness
Present a favourable message in a highly believable
manner
Minimize total promotion costs
 THE PROMOTION MIX

Public Relations
Major public relations tools
News
Speeches
Special events
Publicity: annual reports, brochures, articles, company
newsletters, magazines, DVDs, online video
Corporate identify materials: logos, brochures, signs,
bz cards, uniforms
Public service activities
DISCUSSION
THE PROMOTION MIX
Personal selling

Personal selling is the personal presentation by

the firm’s sales force for the purpose of
making sales and building customer
relationships
Sales presentations
Trade shows
Incentive programs
 THE PROMOTION MIX
PERSONAL SELLING

Personal selling is the most

effective method at certain
stages of the buying process,
particularly in building
buyers’ preferences,
convictions, actions, and
developing customer
relationships
 The Promotion Mix
Personal Selling
Role of personal selling staff

Persuade customer to make a purchase

Stimulate purchases of impulse items or products
related to customers’ basic purchases
Complete the sale transactions
Provide feedback
 The Promotion Mix
Personal Selling
Role of personal selling staff

Provide adequate levels of customer service

Improve and maintain customer satisfaction
Create awareness for items marketed through
the media
Web, mail, and telemarketing
THE PROMOTION MIX
Sales Promotion

Sales promotion is the short-term incentive to

encourage the purchase or sale of a product
or service
THE PROMOTION MIX
SALES PROMOTION TOOLS

Point-of-Purchase
Contests
Coupons
Frequent-Shopper Programs
Prizes
Samples and any other
Referral Gifts “for a limited-time”
selling efforts outside of
Specialty Items the ordinary
Special Events promotion routine
THE PROMOTION MIX
SALES PROMOTION
PURPOSE / ROLE OF SALES PROMOTION

To increase short-run sales volume

To maintain customer loyalty
To emphasize novelty
To complement other promotion tools
THE PROMOTION MIX

Direct marketing
Direct marketing involves making direct
connections with carefully targeted
individual consumers to both obtain an
immediate response and cultivate lasting
customer relationships—through the use of
direct mail, telephone, direct-response
television, e-mail, and the Internet to
communicate directly with specific
consumers
Catalog
Telemarketing
Kiosks
THE PROMOTION MIX
DIRECT MARKETING BENEFITS

• Tool to build customer relationships

• Low-cost, efficient, fast alternative to reach
markets
• Flexible
• Access to buyers not reachable through other
channels
THE PROMOTION MIX
FORMS OF DIRECT MARKETING
Face-to-face selling

Direct-mail marketing

Catalog marketing

Telephone marketing

Direct-response television marketing

Kiosk marketing

Digital direct marketing

Online marketing
PROMOTION MIX STRATEGIES
 INTEGRATED MARKETING
COMMUNICATIONS

Integrated marketing communications (IMC) is the

integration by the company of its communication
channels to deliver a clear, consistent, and compelling
message about the organization and its brands
Integrated marketing communications are composed of
advertising, sales promotions, trade shows, personal
selling, direct selling, and public relations…
HAAGEN – DAZS LOVES HONEY BEES
HTTP://WWW.YOUTUBE.COM/WATCH?V=SWFG17SF0YQ

Marketing
COMMUNICATION PROCESS
STEPS IN DEVELOPING EFFECTIVE
MARKETING COMMUNICATION
1. Identify the target audience

2. Determine the communication objectives

3. Design communications

4. Select channels

5. Establish budget

6. Decide on marketing communication mix

7. Measure results

8. Manage IMC
STEPS IN DEVELOPING EFFECTIVE
MARKETING COMMUNICATION

1. Identifying the Target audience

What will How it will The audience may be
be said be said potential buyers or current
users,deciders, influencers,
individual, groups, particular
When it Where it publics, or general publics,
will be said will be said those who make the buying
decision or those who
influence it.
Who will
say it
STEPS IN DEVELOPING
EFFECTIVE MARKETING
COMMUNICATION
2. Determining the Communication Objectives
STEPS IN DEVELOPING
EFFECTIVE MARKETING
COMMUNICATION
2. Determining the Communication Objectives
Marketers seek a purchase response that results
from a consumer decision-making process that
includes the stages of buyer readiness
STEPS IN DEVELOPING EFFECTIVE
MARKETING COMMUNICATION

AIDA Model
Get Attention
Hold Interest
Arouse Desire
Obtain Action
AIDA

Marketing
Promotion and the Hierarchy of Effects
Behavioral Objective Promotional Mix
Hierarchy of Effects
of Promotion Relevant to Each Step

Awareness
Informative Advertising, Public
Provide
Relations, Point-of-Purchase,
Information
Window Displays
Knowledge

Liking
Change Competitive Advertising,
Attitudes Personal Selling, Sales
and Feelings Promotions
Preference

Conviction
Reminder
Stimulate
Advertising, Personal Selling,
Desires
Frequent-Shopper Programs
Purchase
STEPS IN DEVELOPING EFFECTIVE MARKETING
COMMUNICATION
3. Designing a communications
MESSAGE STRATEGY: searches for appeals,
themes, or ideas that will tie in to the brand
positioning and help establish points-of-parity or
points-of-difference.
STEPS IN DEVELOPING EFFECTIVE
MARKETING COMMUNICATION

Message Structure
The communicator must put the messages together in a logical way.
Three message-structure issues need to be considered.
1.       Whether to draw a conclusion or leave it to the audience.
2.       Whether to present a one-sided or two-sided argument.
3.       Whether to present the strongest arguments first or last.
 Message Format
The communicator needs a strong format for the message, which is
based on different communication tools. For example, the
communicator must consider words, sounds and voices when
the message is to be carried over the radio.
STEPS IN DEVELOPING EFFECTIVE MARKETING
COMMUNICATION
3. Designing a communications
Creative strategy
Information (rational) appeal - relates to the
audience’s self-interest
Transformational Emotional appeal - attempt to stir
positive or negative emotions to motivate
purchase
STEPS IN DEVELOPING EFFECTIVE
MARKETING COMMUNICATION

Message source
The message’s impact is affected by
audience view of the communicator
Celebrities Role Model / Aspire / Like
 Athletes
 Entertainers
Professionals Credibility
 Health care providers
 STEPS IN DEVELOPING EFFECTIVE
MARKETING COMMUNICATION
4. SELECT CHANNELS
Personal
selling
Personal
Personal channels
channels

Word of
mouth

Print
media
Non-personal
Non-personal
channels
channels
Broadcast
media

6
40
4-
STEPS IN DEVELOPING EFFECTIVE MARKETING
COMMUNICATION

Personal communication involves two or more

people communicating directly with each other.
It is effective because it allows personal addressing
and feedback
Face to face
Phone
Mail
E-mail
Internet chat
STEPS IN DEVELOPING EFFECTIVE
MARKETING COMMUNICATION
Choosing channels
Personal Communication

Opinion leaders (KOL)– person[s] within a reference

group who exerts social influence on others,
because of their special skills, knowledge,
personality, or other characteristics,

Buzz marketing/viral Marketing - cultivating opinion

leaders and getting them to spread information
about a product or service to others in their
communities
STEPS IN DEVELOPING EFFECTIVE
MARKETING COMMUNICATION

Non-personal communication is media

that carry messages that affect the
buyer directly without personal
contact or feedback, including
major media,
atmospheres, and
events
STEPS IN DEVELOPING
EFFECTIVE MARKETING
COMMUNICATION
Non-Personal Communication Channels
Major media - print, broadcast, display, and online media
Atmospheres are designed environments that create or
reinforce the buyer’s leanings toward buying a product
Events - that communicate messages to target audiences
 Press conferences
 Grand openings
 Exhibits
 Public tours
5. ESTABLISH BUDGET
Four common methods used to set the total budget for
communication:
 Affordable method
 Percentage-of-sales method
 Competitive-parity method
 Objective-and-task method
Affordable budget method sets the budget at an
affordable level
Ignores the effects of promotion on sales
Percentage of sales method sets the budget at a
certain percentage of current or forecasted
sales or unit sales price
Easy to use and helps management think about the
relationship between promotion, selling price,
and profit per unit
Wrongly views sales as the cause rather than the
result of promotion
Competitive-parity method sets the budget to match
competitor outlays
Represents industry standards
Avoids promotion wars
Objective-and-task method sets the budget
based on what the firm wants to accomplish with
promotion and includes:
Defining promotion objectives
Determining tasks to achieve the objectives
Estimating costs
 DECIDE ON MARKETING
COMMUNICATION MIX
Advertising
PR
Sales promotion
Personal selling
Direct marketing
MEASURING
COMMUNICATION RESULTS
Reach and frequency (the percentage of target market
exposed to a communication and the number of
exposures),
Get feedback from target audience
see / aware of / ad / TVC
recall and recognition scores,
Review / make changes.
how many people bought the product, liked it, and
talked to others about it.
Other behavior resulting from it?
MEASURING COMMUNICATION RESULTS
MANAGING THE INTEGRATED MARKETING
COMMUNICATIONS PROCESS