Definition of Marketing the process of planning and executing the conception, pricing, promotion,...

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Transcript of Definition of Marketing the process of planning and executing the conception, pricing, promotion,...

Page 1: Definition of Marketing the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to.
Page 2: Definition of Marketing the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to.

Definition of Marketing

• 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.

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• E.g. Vitasoy

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Exchange• a process by

which two or more persons give and receive something of value.

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The Marketing Concept -Focus on the Customer

• Market focus

• Customer orientation

• Co-ordinated marketing

• Profit seeking

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Drawbacks of Marketing Concept

• ignores public

• influences values & ideas

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Recent Development-- Societal Marketing Concept

• Concerns public welfare

and social responsibility

• e.g. CLP

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The role of Marketing

• Marketing Analysis

• Marketing Planning

• Marketing Implementation

• Marketing Control

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Marketing Research

• Gathering, recordingand analysis of data

• to solve a specificproblem that is tooimportant to be answered by guessing

• an informational input to decisions

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What M.R. can tell ?

• How satisfied the consumers are

• How products are perceived

• Evaluate the sales potential

• Determine the effectiveness of ad

• Predict the impact of price changes

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Defining the Problem & Research Objectives

Developing the Research Plan

Implementing the Research Plan

Interpreting and Reporting the Findings

The Marketing Research Process

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1. Defining the problem and research objectives

• to find out the real problem but not the

symptom

• set the research objectives

• research approaches:

– exploratory

– descriptive

– causal

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Examples

ExploratoryResearch

Descriptive Research Causal Research

Our sales aredeclining and wedon’t know why.

What kind of peopleare buying ourproducts?

Will buyers purchasemore of our productin a new package

Would people beinterested in ournew-product idea?

What features dobuyers prefer in ourproduct?

Which of the twoadvertisingcampaigns is moreeffective?

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2. Developing research plan

• Determine specific information needs

• Source of information– secondary data

• Internal • External

– primary data

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Benefits and Limitations of Secondary Data

Benefits

• Low cost

• Less effort

• Less time

• Sometimes more accurate

• Some information only from secondary sources

Limitations• Collected for other purpose• No control over data collection• Potential accuracy problem• May not be reported in required

form• May be outdated• May not meet requirements• A number of assumptions made

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• Planning primary data collection

– research approach

– contact methods

– sampling plan

– research instruments

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Research approach

• Observational research

• survey research

• focus group

• experimental research

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Contact methods

• Telephone survey

• mail questionnaires

• personal interviews

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Sampling plan

• sampling unit

• sampling size

• sampling procedure

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Sampling TechniquesProbability Sampling

• All population members have a known probability of being in the sample

Simple Random Sampling

• Each population member, and each possible sample, has equal probability of being selected

Stratified Sampling

• The chosen sample is forced to contain units from each of the segments or strata of the population

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Sampling Techniques (Contd.)

Cluster Sampling

• Involves dividing population into subgroups

• Random sample of subgroups/clusters is selected and all members of subgroups are interviewed

• Very cost effective

• Useful when subgroups can be identified that are representative of entire population

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Research instrument

The most common instrument is questionnaire

• what questions to ask

• question structure

• wording of question

• order of question

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Implementing the research plan

• collecting and analyzi

ng data

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Interpreting and reporting the finding• Interpret the findings, draw conclusions and

report to management

• the manager willutilize these findingsto make decisions

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Consumer behaviour

• refers to the buying behaviour of final consumers

• it includes the analysis of factors that influences purchase decisions and product use

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Definition

Consumer behaviour studies how individuals, groups,and organizations select, buy, use, and dispose of goods, services, ideas,or experiences to satisfy their needs and desires.

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Buyer’s black box

Buyer’s response

Marketing and other stimuli

Consumer BehaviourConsumer Behaviour

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External factors

1. Culture

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2. Social factor

- reference groups

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3. Family

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4. Salesperson

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5. Advertising

e.g. Fancl

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6. Situation

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Internal factors

1. Perception

– the process by which we select organize and interpr

et these stimuli into a meaningful and consistent pict

ure

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Esteem Needs

2. Motivation

• to fulfill some kind of need

Self-actualization Needs

Esteem Needs

Social Needs

Security Needs

Physiological Needs

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3. Learning

• creates changes in behaviour through experience and practice

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4. Attitude

• Consistently favourable or unfavourable evaluation, feelings and tendencies toward an idea.

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5. Personality

• refers to the unique psychological characteristics that lead to relatively consistent and lasting responses

E.g. Vita Distilled Water

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6. Demographic factors

• such as age, sex, income, education, occupation,….

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Industrial Buying behaviour

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Industrial market

• Consists of all the individuals and

organizations acquiring goods and services

that enter into the production of other

products and services that are sold, rented,

or supplied to others

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Types of buying situations

• Straight rebuy

• modified rebuy

• new task buying

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Industrial buying process

• Recognise the problem

• determine product needs and describe

product specifications

• search for suppliers

• assess and select suppliers

• evaluate overall performance

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Participants in the industrial buying process

• Users

• influencers

• buyers

• deciders

• gatekeepers

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Factors affecting industrial buying behaviour: External factors

• Level of demand• economic outlook• budget constraints• supply conditions• political/legal and competitive environmental

changes• rate of technological change

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: internal factors

• Organizational influences

• interpersonal influences

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Industrial market• Businesses do not buy

products for final consumption. Instead, they make purchases to be used directly or indirectly in meeting the needs of final consumers.

Consumer market• For direct consumption

Buying motive:

Differences between consumer market and industrial market

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Industrial market

• Tend to be larger

Consumer market

• Tend to be smaller

Size of purchase:

Differences between consumer market and industrial market

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Industrial market

• Less frequent

Consumer market

• More frequent

Differences between consumer market and industrial market

Frequency of purchase:

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Industrial market

• Stable and long term relationship with seller

Consumer market

• Businesses that produce products for sale to final consumers often have little contact with customers

Buyer-seller relationship:

Differences between consumer market and industrial market

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Industrial market

• More complex, customized; product support is critical.

Consumer market

• Less complex, standardized; product support is important

Product:

Differences between consumer market and industrial market

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Industrial market

• Competitive bidding and negotiation; list prices on standard products

Consumer market

• List prices

Differences between consumer market and industrial market

Price:

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Industrial market

• More direct (shorter)

Consumer market

• Less direct (longer)

Differences between consumer market and industrial market

Distribution:

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Industrial market

• Emphasis on personal selling

Consumer market

• Emphasis on advertising

Differences between consumer market and industrial market

Promotion:

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Marketing strategy

• the plan of action for accomplishing the marketing objectives

• consists of– specific strategies for target market– marketing mix– marketing expenditure level

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Analyze and select target market

Market• the set of all actual and potential buyers of

a product

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• steps of selecting target market–market segmentation–market targeting–market positioning

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Step 1

Marketing Segmentation

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Market segmentation

• the act of dividing large, heterogeneous (dissimilar) markets into smaller, homogeneous (similar) submarkets.

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Advantages of segmentation

• Precise market definition

• better analysis of competition

• rapid response to changing market needs

• effective resources allocation

• effective strategic planning

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Dimensions for segmenting consumer markets

• Geographic segmentation– dividing the market into different geographical

units.

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Demographic segmentation

• dividing the market into groups based on variables like age, sex, family size, family life cycle, income, occupation, education, religion, race, nationality,…

• popular because of– consumer needs vary closely with demographic

variables– easier to measure

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Psychographic segmentation

• based on social class, lifestyle, or personality characteristics

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Segmentation by benefits

• base on what a product will do rather than consumer characteristics

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Criteria for effective segmentation

• Substantial enough to serve

• Accessible by marketing means

• Differentiable:

– conceptually distinguishable and responding

differently

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• Actionable:

– effective programs can be designed for

attracting target customers

• Measurable:

– size of market segment, purchasing power

and profile of target customers

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Step 2

Market Targeting

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• to reveal the firm market-segment

opportunities

• to evaluate the various segments

– segment size and growth

– segment structural attractiveness

– company objectives and resources

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Undifferentiated marketing

• A firm decides to ignore market segment differences and go after the whole market with one offer. E.g. McDonald

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Differentiated marketing

• A firm decides to target several market segments and design separate offers for each– E.g. Giordano: men, ladies

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Concentrated marketing

• A firm goes after a large share of one or a few sub-markets.– Selected segments– Specific products– Specific markets

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Step 3

MarketPositioning

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Market positioning

• to arrange for a product to occupy a clear, distinctive and desirable image relative to competing products in the minds of target consumers.

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Purpose:• to reinforce or develop an image concerns

a product in customer mind

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Ways of positioning

• Product features

• product benefits

• associating the product with a use or application

• user category

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Steps of positioning

1. Identifying a set of possible competitive advantages

2. Selecting the right competitive advantages

3. Communicating and delivering the chosen position to the market

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Marketing Mix

• the set of controllable marketing variables that the firm blends to produce the response it wants in the target market

• 4 Ps– product– price– place– promotion

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• A product is anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or need

• 3 levels of product– core product– actual product– augmented product

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Product Classification

• Convenience goods

• Shopping goods

• Specialty goods

• Unsought goods

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Classification of consumer goods

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Individual product decisions

• Product attribute decisions

• Brand decisions

• Packaging decisions

• Product-Support decisions

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Product Line Decisions

• A product line is a group of products that

are related in function, customer-purchase

needs, or distribution channels.

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Product mix decisions

• the set of all product lines and items that a particular seller offers for sale

• 4 dimensions– width– length– depth– consistency

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How new is “new”?

• New to the world

• New to the firm

• Product line extensions

• Product improvement

• Product modification

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Why does a company need new products?

• Obtain greater profits/ROI• Capture larger market share• Meet customers’ changing needs &

tastes• Shorter product life cycle• Build competitive advantages• Planned obsolescence …

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New product development

Steps:• Product idea generation• Product idea screening and product

concept development• Business analysis• Product testing• Market testing• Commercialization

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Product life cycle (PLC)

• the course of a product’s sales and profit over its lifetime

• 4 stages:– introduction– growth– maturity– decline

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Introduction Growth Maturity Decline

Sales

Profit

Time

Sal

es a

nd

pro

fit

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Introduction Stage

• slow sales growth

• profit are nonexistent

• high promotion spending

• a few competitors

• usually focus on high-income groups

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Growth Stage

• rapid market acceptance

• new competitors will enter

• introduce new product features

• market will expand

• profit increases

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Maturity Stage

• slowdown in sales

• competitors begin marking down prices,…. to find better versions of the product

• drop in profit

• only well-established competitors

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Decline Stage

• sales fall off and profits drop

• some firms withdraw from the market

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Summary of Product Life-Cycle Characteristics, Objectives, andStrategies

INTRODUCTION GROWTH MATURITY DECLINE

Characteristics

Sales Low sales Rapidly rising sales Peak sales Declining sales

Costs High cost per

customer

Average cost per

customer

Low cost per

customer

Low cost per

customer

Profits Negative Rising profits High profits Declining profits

Competitors Few Growing number Stable number,

beginning to decline

Declining number

Marketing

Objectives

Create product

awareness and trial

Maximize market

share

Maximize profit while

defending market

share

Reduce expenditure

and milk the brand

Strategies

Product Strategy Offer a basic product Offer product

extensions, service,

warranty

Diversify brand and

models

Phase out weak

items

Pricing Strategy High price, unique

product/ cover

introduction costs

Lower price with

passage of time

Price at or below

competitors’

Set price to stay

profitable or

decrease to liquidate

Promotion Strategy Mount sales

promotion for product

awareness

Appeal to mass

market; emphasize

features, brand

Emphasize brand

differences, benefits,

loyalty

Reinforce loyal

customers; reduce

promotion

expenditures

Place Strategy Distribute through

selective outlets

Build intensive

network of outlets

Enlarge distribution

network

Be selective in

distribution; trim

away unprofitable

outlets

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Ways to extend PLC

• To increase the frequency of use

• to add new user

• to find new uses

• to change package size, label, or product quality

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Factors influencing pricing decisions ---- Internal Factors

1. Business and marketing objectives

• pricing objectives derive directly from

company objectives

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2. Marketing mix strategy

• must coordinate with product, design, distribution and promotion decisions

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3. Costs

• set the floor for the price

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External factors

1. The market and demand

• Pricing in different types of market

• consumer perception of

price and value

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2. Competitors’ prices and offers

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3. Other external factors

• economic conditions

• reseller conditions

• Government

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Pricing Objectives

• Profit maximizing objective

• Market share objective

• Competition objective

• Social objective

• Image objective

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General Pricing Approaches

• Cost-based approach

• Buyer-based approach

• Competition-based approach

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Pricing Strategies for New Products

• Market-skimming pricing

• Penetration pricing

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Price-adjustment strategies

• Discount pricing and allowances

– cash discounts– quantity discounts– functional discounts– seasonal discounts– trade-in allowances– promotional allowances

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• Discriminatory pricing

– customer-segment pricing

– product-form pricing

– location pricing

– time pricing

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• Psychological pricing

• Promotional pricing– loss leaders– special event pricing– cash rebates

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Promotion tools

• advertising

• sales promotion

• public relations

• personal selling

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Setting the promotion budget

Affordable method

– ignores the effect of promotion on sales

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Percentage-of-sales method

• wrongly view sales as the cause of promotion rather than as the result

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Competitive-Parity

method

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Objective-and-task method

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Five important decisions

1. Setting objectives– to inform,

persuade, or

remind

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2. Setting the advertising budget

• stage in the PLC

• market share

• competition

• advertising frequency

• product differentiation

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3.Creating the advertising message

• message generation

• message evaluation

• message execution

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4.Selecting advertising media

• reach, frequency, impact

• media types

• media vehicles

• media timing

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5.Advertising evaluation

• communication effects

• sales effects

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Sales promotion

• A wide variety of short-term incentive tools– coupons– premiums– contests– buying allowances

• to stimulate consumers, the trade partners, and the company’s own salesforce

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Purposes of sales promotion

• to stimulate consumer trials, to reward loyal customers, to increase repurchase rate, to cement long-term relationship with retailers,……

• used together with advertising or personal selling

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Steps of sales promotion

• Setting sales-promotion objectives

• selecting sales-promotion tools

• pretesting and implementing

• evaluating

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Public relations

• Building good relations with the company’s various publics obtaining favorable publicity

• building up good “corporate image”

• handling or heading off unfavourable rumors, stories and events

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Public relations tools

• Create news• speeches• special events• written materials• audiovisual materials• corporate identity materials • contributing money and time to public-

service activities

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Major public relations decisions

• Setting public relations objectives

• choosing public relations messages and vehicles

• implementing the public relations plan

• evaluating public relations results

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Steps of sales management

• Setting salesforce objectives• designing salesforce strategy• structure, size and compensation• recruiting and selecting• training• supervising• evaluating

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Personal Selling Process

• Prospecting

• Preapproach

• Approaching the prospect

• Making the presentation

• Handling Objections

• Close the sale

• Follow up

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Factors affecting the promotion mix

• Type of product/market

• push vs. pull strategy

• buyer readiness state

• PLC stage

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• The role of distribution is getting a product to its target market.

• Channels of distribution: the routes followed by products as they change ownership in the movement from production to consumption

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Distribution channel functions

• Information

• promotion

• contact

• matching

• Negotiation

• physical distribution

• financing

• risk taking

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Designing distribution channel

• Selecting the proper type of distribution channel

• selecting the types of middlemen

• determining the intensity of distribution

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Meaning of logistics

• the movement of all materials :– raw materials : from

the sources to the processing point

– finished goods : from the plant to ultimate customers

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• concerns with the management of physical flow

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Major logistics activities

• Transportation

• inventory maintenance

• order processing

• warehousing

• materials handling

• Protective packaging

• acquisition

• product scheduling

• information maintenance

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Definition

• Service is an activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything.

• Its production may or may not be tied to a physical product

• Diamond medical diagnosis

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The Servuction system

5 elements influence the service:• Organization and system (invisible)• Environment (visible)• Contact personnel / service provider• Customer A• Customer B

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The Servuction System

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Characteristics of service

• Intangibility

• inseparability

• heterogeneity

• perishability

– fluctuating demand

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Characteristics of Services differing from Goods

Goods Services Resulting Implications Marketing Strategies

tangible intangible Services cannot be inventoried, patented, readily displayed/ communicated

Tangibilize the intangible

The Peninsula

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Characteristics of Services differing from Goods

Goods Services Resulting Implications Mkt

Strategies

standardized heterogeneous •Service delivery & customer satisfaction depend on employee actions•Service quality depends on many uncontrollable factors•No sure knowledge that service delivered matches what was planned & promoted

•HRM mgt–recruit

–Train

•Process standardization•empowerment•Service recovery

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Characteristics of Services differing from Goods

Goods Services Resulting Implications Mkt

Strategies

Production separate from consumption

Inseparability of production & consumption

(interaction)

•Customers participate in & affect the transaction•Customers affect each other•Employees affect the service outcome•Decentralize may be essential•Mass production is difficult

•isolate technical core•decrease contact level•Increase customer participation

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Characteristics of Services differing from Goods

Goods Services Resulting Implications Mkt

Strategies

Non-perishable

Perishable-fluctuate demand

•Difficult to synchronize supply & demand with service•Services cannot be returned / resold•Services cannot be inventoried

•Capacity mgt•Queuing mgt

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Marketing Mix for Services

• Product • Price• Promotion• Place

+• People • Process• Physical evidence Singapore air

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Price

Customer being inseparable in the process, outlay by customers include:

• Time• Physical effort• Psychological burdens (mental effort, negative

feelings)• Negative sensory burdens (unpleasant

sensations affecting any of the 5 senses)

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Price

• Good understanding of the costs is needed as decrease of above burdens justify higher pricing

• Difficult to define a unit of service, considering:– Visible vs. invisible– Difference in speed– Direct contact vs. impersonal channel

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Place

• Identify core services• Reduce contact of low contact element e.g.

download application forms• Use of technology to create new channels:

– e.g. Octopus for ticketing, online shopping

• Convenience• Number of outlets• Location• scheduling

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Fluctuating Demand

Supply side• Cross training• Use part time staff• Rent or share facilities &

equipment• Schedule down time during

period of low capacity (take vacation)

• Extra service hours• Use technology• Use price

Demand side• Price discrimination• Reservation• Overbook• Queuing (make the waiting

more tolerable)• Shift demand • Change the salesperson’s

assignment• Create promotional events

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People

• Importance of customer contact personnel– Internal marketing (customer focus philosophy, bo

nus, awards, recognition as incentive)

• Ritzcarlton

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Internal Marketing

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Process

• Customer involvement in production– Educate customers in using technology or self-

service

• Develop service oriented internal process• Logistic support• Empowerment of staff for service recovery

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Physical Evidence

Intangible nature makes service difficult to evaluate

• Communicate through corporate image, word of mouth, pricing physical evidence, warranty, awards

• ritzcarlton

• Judge by process, post-purchase information search – needs re-assurance

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Meaning of CRM

• the process of creating,

maintaining, and

enhancing strong, value-

laden relationships with

customers and other

stakeholders.

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Rationale behind CRM

• to retain current customers vs. to attract new customers

• new Marketing view: the science and art of finding, retaining and growing profitable customers

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• challenges– changing demographics– more sophisticated competitors– overcapacity

• customer lifetime value

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Key concepts in relationship building• Customer satisfaction

– perceived performance > expectations

• Customer loyalty and retention– create emotional affinity, not just rational

preference

• share of customer– cross-selling

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Tools to build lasting customers

• Frequency marketing programs

• affinity program

• co-marketing and co-branding

• customisation and prompt response

• create long term contract

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• Frequency marketing programs

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• affinity program

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• co-marketing

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• Co-marketing

http://www4.mercedes-benz.com/amgiwc/index.html?loc=en

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• Co-branding

Sony Ericsson Mobile Communications was established in 2001 by telecommunications leader Ericsson and consumer electronics powerhouse Sony Corporation. The company is owned equally by Ericsson and Sony.

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Meaning of consumerism

• a movement that put pressure on businesses to consider consumer needs and interests

• consumer rights– right to be informed– right to be heard– right to safety– right to choose

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Why consumers need protection?

• Manufacturer may be unfair to consumers

• consumers may be unable to judge the

quality

• insufficient information to evaluate service

• advertisements are exaggerating

• concern about health

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Consumer protection in Hong Kong

• Legislation

• Consumer Council

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Responses of businesses to consumerism

• Provide more and better information

• improve product safety

• quicker response to consumer complaints

• provide customers with a wide range of products and services

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International marketing

• The process of focusing the resources and objectives on global market opportunities

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Environmental forces in International Markets

• Cultural environment

• economic environment

• political and legal environment

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Standardization vs. adaptation

Arguments for standardization

• reduce costs

• moving to a world living style

• international brand

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Arguments for adaptation

• most exported goods needed adaptation

• take care of environmental differences

• max. sales and profits through customization

• favours local management inputs

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Methods of entering overseas market

• Exporting• contract manufacturing• licensing• franchising• joint venture• strategic alliance• direct investment• countertrade

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Factors affecting the choice of entry strategy

• desired speed

• firm expertise

• costs

• flexibility

• resources

• profit objectives

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Marketing in the case of economic downturn

• moving down-market

• lowering price

• promoting image of good quality and durable

• find new markets

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此項製作由「優質教育基金」贊助This production is sponsored by the

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Contents of a Marketing Plan

• Situational analysis

• Marketing Objectives

• Selecting the Target Market

• Developing marketing mix

• Budget

• Controls

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Product attribute decisions

• Product quality

• Product features

• Product design

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Brand decisions

• To brand or not to brand

• Brand sponsor– manufacturer’s brand– private brand– Licensed brands– Co-brands

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• Brand equity• High level of consumer awareness, loyalty

• Lower marketing costs

• Consumer expect stores to carry the brand• The company has more bargaining power

in channeling

• High credibility• Easily launch brand extensions

• Powerful brand• Defense against fierce price competition

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Brand Strategy / Brand Development

– line extensions

– brand extensions

– Multi-brands

– new brands

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Product

Existing New

Brand Existing Line

Extension

Brand

Extension

New Multi-

Brands

New

Brands

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• Brand Positioning– Attributes– Benefits– Beliefs /values

• Create surprise, passion excitement

• Brand Re-positioning• Competitor’s close positioning cutting market s

hare• Customers’ wants may shift• Technology• www.euyansang.com

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Brand Name selection

• Suggest benefits and qualities

• Easy to pronounce, recognize

• Distinctive, extendable

• Capable of registration and legal protection

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Packaging decisions

• to create benefits: protection, economy,

convenience and promotion

• Major decisions:

– the main functions

– specific elements of package

– selecting the package design

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Product-Support Services Decisions

• deciding which product-support services

to offer

• how to deliver the services to customers

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Cost-based approach

• Cost-plus Pricing– to add a standard mark-up to the cost

• Breakeven analysis and Target Profit Pricing

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Buyer-based Pricing

• base on the product’s perceived value

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Competition-based pricing

• Going rate pricing– base on competitors’ price

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Market-skimming pricing

• Set an initial high price

• after initial sales slow down, it lowers the price to draw in the next price-sensitive layer of customers and so on

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Penetration pricing

• set an initial low price

• seek to generate consumer interest and stimulate trial purchase

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Types of distribution channel

1.producer

customer

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2. manufacturer

retailer

consumer

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3. manufacturer

wholesaler

retailer

consumer

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4.manufacturer

wholesaler

retailer

consumer

agent

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5.manufacturer

agent

retailer

consumer

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Factors affecting choice of distribution channel

• Industrial goods vs. consumer goods

• no. of customers

• importance of control

• characteristics of products

• services

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Determining the types of middlemen

Wholesalers

• full-service merchant wholesalers

• limited service merchant wholesalers

• manufacturer-owned wholesaler

• agent

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Retailers

• store retailing

• nonstore retailing

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Factors affecting the choice of middlemen

• Manufacturer requirement

• costs

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Determining the intensity of distribution

• Intensive distribution

• exclusive distribution

• selective distribution

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Observational Research

• Observing relevant people, actions and situations

• unwilling or unable to provide

• limitations:– feelings, attitudes and motives, or personal

behaviour

– long-run or infrequent behaviour

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Survey

• Find out people knowledge, attitude,

preference, or buying behaviour

• gather descriptive information

• structure or unstructured

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• Flexibility

• however:

– cannot remember

– privacy

– time pressure

– appear to be smart

– pleasing answer

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Focus Groups

• Small group of people, led by a moderator

• opened discussion of a product/service or

buyer behaviour

• focus on specific problems or market

opportunities

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Experimental Research

• Explain cause-and-effect relationships

between experimental (independent)

variables and dependent variables

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• Weights & Measure 度量衡條例

• Sale of Goods 貨品售賣條例

• Trade Descriptions 商品說明條例

• Control of Exemption Clauses管制免責條款條例

• Toys & Children Products Safety玩具及兒童產品安全條例

• Consumer Goods Safety消費品安全條例

Legislation - Ordinances