MARKETING MANAGEMENTMARKETING MANAGEMENT

Lecture Notes for Business Introduction

By Fahmy Radhi

Marketing ConceptsMarketing Concepts

Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of idea, goods, and service to create exchanges that satisfy individual and organizational objective

Marketing Mix is the combination of products, price, promotion, and distribution, used to satisfy the needs of the target market

ProductVarietyQualityDesignFeaturesBrand NamePackagingServices

ProductVarietyQualityDesignFeaturesBrand NamePackagingServices

Price

List priceDiscountsAllowancesCredit Terms

Price

List priceDiscountsAllowancesCredit Terms

Promotion

AdvertisingPersonal SellingSales PromotionPublic Relations

Promotion

AdvertisingPersonal SellingSales PromotionPublic Relations

PlaceChannelsCoverageAssortmentsLocationsInventoryTransportationLogistics

PlaceChannelsCoverageAssortmentsLocationsInventoryTransportationLogistics

Target Costumers

IntendedPositioning

Target Costumers

IntendedPositioning

Marketing Mix

Marketing ActivitiesMarketing Activities

Product: Develop new products Modify existing

products Test-market products Select brand name Package product

Pricing:Establish price

objectivesConduct cost

analysisAnalyze

competitor’s priceSet actual prices

Marketing ActivitiesMarketing Activities

Promotion: Determine types of

promotion Design the advertising

massage Selecting advertising

media Schedule the

advertisements

Distribution: Select wholesalers and

retailers Establish procedures

for handling and moving products

Find the best locations for plants, warehouses and retail outlets

MarketMarket

Market is people with the authority, financial ability, and willingness to purchase a product

Types of Market:Consumer market - for personal useIndustrial market - to use in the production

or resell

Target MarketingTarget Marketing

Target market - a group of people that has similar wants and needs which a firm directs its marketing activities

Undifferentiated approach – one marketing mix for a product to the total market

Market Segmentation approach – the division of the total market into segment with marketing mix directed to different segment

Market SegmentationMarket Segmentation

Market segment – division of heterogonous market into homogonous market based on different characteristics

Segmentation Based: Geographic bases - city, region Demographic bases - sex, race, marital Psychographics - a person’s attitude, lifestyle Product-related - brand loyalty

PRODUCTPRODUCT

Product - a good, service or idea, including all attributes provided in an exchange between buyer and seller

Product Classification: Consumer goods – products purchased by

consumers for personal use Industrial goods – product purchased by

companies to produce other products

Classifying GoodsClassifying Goods

Consumer Goods: Convenience good –

inexpensive and regularly consumed

Shopping goods – moderately expensive and infrequently

Specialty goods – expensive and rarely

Industrial goods: Raw material Components parts Equipment and

installations Services

Product Line and Product Product Line and Product MixMix

Product Line - a group of related products that are considered a unit because of marketing, technical or use similarity

 Product Mix - the total group of product offer sale, or all of the firm’s product lines

Product Differentiation – creation of product or product image that differs from existing product to attract consumers

Product AttributesProduct Attributes

Brand - a name, sign, symbol, design, or combination a company’s product to distinguish it product from others

Packaging - the development of a container and graphic design for a product

 Labeling - the display of important information on a product package

PRICINGPRICING

Price - the value that buyer exchange for a product in the marketing transaction

Pricing Objective:– Market share– Profit– Return on Investment– Status Quo

Pricing Decision and MethodsPricing Decision and Methods

Factors in Pricing Decisions:– Price and non-price competition– Supply and demand– Consumer perception of price

Pricing Methods:– Cost-Oriented Pricing - Mark-up Pricing– Demand-Oriented Pricing - Break event point– Competition Oriented Pricing

Pricing StrategiesPricing Strategies

Pioneer pricing – leadership pricing in the market Price skimming – setting an initial high price to

cover new product cost and generate a profit Penetration pricing – setting an initial low price to

establish a new product in the market Psychological Pricing – setting an initial high

price to respond irrationally consumers Price Discounting – Price reduction offered as an

incentive to purchase

PROMOTIONPROMOTION

Promotion - the communication of favorable, persuasive information about a firm or product in order to influential buyers

Promotional Objectives: Informing Increasing sales Stabilizing sales Positioning the product Building a public image

The Promotion MixThe Promotion Mix

Promotion Mix - the combination of advertising, personal selling, sales promotion, publicity used to promote a specific product

AdvertisingAdvertising

Non-personal communication to a target audience through a mass medium, such as TV, Radio, newspapers, or magazines, and outdoor display

Types of Advertising:– Primary-Demand Advertising: for all products– Selective Brand Advertising: for specific products– Institutional Advertising: create public image

Advertising PromotionAdvertising Promotion

Advertising Media – variety of communication devices for carrying massage to potential customers

Direct Mail – delivery massage directly to customer places

Internet Advertising – put the massage into website or mailed directly to customer email

Personal SellingPersonal Selling

Person-to-person communication with one or more prospective customers in order to make sale

Telemarketing – using telephone to perform the personal selling process

Types of Salespeople:– Order Getter– Order taker– Support salespeople

Sales PromotionSales Promotion

An activity that offers customers or marketing intermediaries direct incentives for purchasing a product

 Type of Sales Promotion:– Coupon: reduces the price of a product by stated

amount at the time of purchase– Rebate: an extra discount– Free Sample– Contest: consumer compete for prizes– Trade show

Publicity and Public RelationPublicity and Public Relation

Publicity - a non-personal form of communication transmitted in news story form and not paid for directly sponsor

 Public Relations - a set of communication

activities designed to create and maintain a favorable public image for firm

 

SpecialEvents

SpecialEvents

WrittenMaterialsWritten

Materials

PublicService

Activities

PublicService

Activities

SpeechesSpeeches

NewsNews

AudiovisualMaterials

AudiovisualMaterials

CorporateIdentity

Materials

CorporateIdentity

Materials

Web SiteWeb Site

Major Public Relation Tools

Promotional Strategy:Promotional Strategy:

Push Strategy: promotion of a product to wholesaler or retailers in the marketing channel, who in turn promote the product to consumers

Pull Strategy: promotion of a product direct to consumers to stimulate strong consumer demands

DISTRIBUTIONDISTRIBUTION

Channel of Distribution - a group of interrelated organization that directs the flow of products from producers to ultimate consumers

Marketing Intermediary - an individual or organization in marketing channel that provides a link among producers, other channel members, and final consumer

Type of Marketing Channels:Type of Marketing Channels:

Consumer Products: Producer-consumer: plant and flower, services Producer-retailer-consumer: automobile, furniture Producer-wholesaler-retailer-consumer: e.g.

convenience goods Producer-Agent/broker-wholesaler-retailer-

consumer: e.g. consumer products

Type of Marketing ChannelsType of Marketing Channels

Industrial Products:producer-industrial user: heavy

equipment and machineryproducer-wholesaler-industrial

user: tools and automotive parts

Distribution OveragesDistribution Overages

Intensity Distribution - market coverage in which all available outlets are used for distributing a product

 Selective Distribution - Market coverage in which only some of the available outlets are used for distributing a product

 Exclusive Distribution - Market coverage in which one outlet is used in specific geographic area for distributing a product

WholesalingWholesalingThe marketing activities of intermediates who sell to retailer,

industrial users, and other wholesalers.

Types of Wholesalers: Merchant Wholesaler: takes ownership of goods and the risks

associated with ownership Sales Branch: a manufacture-owned wholesaler that take title

to products, risks, and provides service Agent: a wholesaler hired by a buyer or seller on a permanent

basis and paid commissions Broker: a wholesaler who bring together buyers and seller on

temporary basis

RetailingRetailing

The marketing activities involved in selling products to final consumers for personal or household use

Department Store: a large retailer organized into separate departments and offering a full line of services and wide product mix

Supermarket: a large self-service retailer that stock a wide variety of groceries and a limited assortment of nonfood products

RetailingRetailing

Catalog Showroom: a form of warehouse show-room where customers select products from catalogs sent to customers’ homes or available in the store

Direct Marketing: non-store retailing that uses non-personal media to introduce products to consumers who then purchase the product by mail, telephone, computer, or TV

Physical DistributionPhysical Distribution

Those activities that involve the movement of products through marketing channels from manufacturer to customer, including:

Transportation: shipping goods to customers by rail, air, truck, water, and pipeline

Warehousing: the receiving, storing, and shipping activities involved in the physical distribution of goods

Order Processing: the receipt and preparation of an order for shipment

Material Handling: the physical handling of products during transportation and warehousing

Basic Channels of DistributionBasic Channels of Distribution

Manufacturers/products

Agents/brokers

Wholesalers/distributors

RetailersRetailers

Consumers and organizational end users

Typical Distribution of DrugsTypical Distribution of Drugs

Manufacturers

Marketing Agents

Retailers/Wholesalers/Distributors

Private GPs/specialists

Group Procurement

Office

RetailPharmacy

Public Hospitals / Institutions