Thursday, 12 October 2017

MARKETING 2nd half of 1st Semester

I. Marketing Mix
A. Product Classification
1. Business to consumer

Product designed for use ultimately by consumers

2. Business to business

Product that contributes directly or indirectly to the output

B. Types of products

Installations

Major Capital investments fir new factories: heavy machines

(cell site towers, airplanes) - dont need to promote to consumers

Accessory Equipment

capex items that cost less than installations and last for shorter periods
(computers, office furniture)

Component parts and material

Finished business products of one producer that become part of the final products
of another producer (tires, intel chip, bose radio)

Raw Materials

Natural resources such as form products, lumber, copper that become part of a
final product
5. Supplies

Regular items needed for daily operation; MRO maintenance, repair, (Light
bulb, paper, ink)
6. Business services

Intangible products firms buy to facilitate their production and operating

processes
C. Product

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Function/features

Appearance

Packaging

Brand
II. Product Life Cycle
1. Product Development

When a company finds and develops a new product; sales are zero and investments
are high.
2. Introduction stage

Period of slow sales growth; consumers in the awareness and trial stage; profit almost
non-existent because of heavy start up costs
3. Growth Stage

When the product is already known and consumers are in the repurchase stage; profits
rise because promotion costs are spread over a large volume and unit manufacturing
costs fall
4. Maturity stage

Slow down in sales growth; profit level decline due to spending more to defend
against competition; market prices drop; overcapacity to due increase in producers
5. Decline stage

Sales decline due to: shift in consumer tasks, technological advances, fewer
competition
III. Extending the Product life cycle

Increasing frequency of use

increasing the number of users - spread your target market (geographically)

Finding new users for the product

IV. Packaging

To protect the product en route to the consumer. (from production plant to warehouse to
store to the consumer)

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To preserve the product for further customer use

To make product storage and display more practical and effective

To showcase the product attributes/USP

How much quantity of the product should be contained in the package?

What physical attributes should the packaging have to facilitate customer use?

What legal requirements must the package comply with?

What is the most appropriate shape of the package?

V. Branding
I. Elements of a Brand
A. Trade Name
The trademarked name by which the product is to be known
BPTC
B. Logo
The visual symbol or image that will identify the product
C. Tagline
An optional catchphrase
D. Colors
Specific color/patterns associated with the brand
E. Shapes
Actual shape or form of the product or its packaging that is identifiable with the brand
F. Sound, Scents, and Tastes
Attributes that can be sensed that could help establish brand recall and expectations
Ex: Shangri-La Hotels have their own scent

II. Levels of Meaning

1. Attributes
Physical characteristics of the product itself
2. Benefits
What consumers stand to gain from patronizing the brand
3. Values
The core values that the brand is identified with
4. Culture
Culture or sub-culture that brand is identified with
5. Personality

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If the brand were a person, what would be his personality

6. User
The specific target market that the brand becomes associated with

III. The Product Mix

1. Width
Number of different product lines
2. Length
Number of products offered in a product line
3. Depth
Variety of a particular product

Cannibalization one product eating up on the market share of another

product produced by the same company
o Reasons why companies do this
1. more shelf space exposure of the product

2. competition will eat their own market if they dont allow such thing
( Coke Regular, Coke Light, Coke Diet, and Coke Zero)
Line Imaging promotions focusing on a flagship product in their line,
banking on its image spreading to the other products in the line
Ex: SAMSUNG S8
Halo Effect theyre doing something excellent so the other
products they have must be good too
Line Featuring promotions focused on the product in the line with the greatest value, hoping to
communicate that the entire line is composed of good value products

VI. PRICING

Exchange value of a good or service

Represents whatever the product can be exchanged for in the market place

Both dynamic and difficult to set; they shift in the response to many variables

Tool for communication and strategy

A. Pricing objectives
1. Profitability Objectives - purpose is to maximize profit; target return

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Marginal Analysis - method of analyzing the relationship among costs, sales

price, and increase in the sales volume.

Profit Maximization - point at which the additional revenue gained by increasing

the price of a product equals the increase in total costs

Target return objective -

2. Volume Objectives - sales maximization; market share

Setting prices to maximize sales volume

Market Share objective - goal of controlling a portion of the market for a firms
product
3. Meeting Competition Objectives

Price parity with competition (products are more or less the same

Deemphasizes the price element in the marketing mix

Focus is on non-price variables

4. Prestige Objectives

Establishing a relatively high price to develop and maintain an image quality and
exclusivity that appeals to status-conscious customers.

People will not buy the product if it is cheap

5. NPO Objectives

Non-profit organizations

The primary goal they need to raise funds to support their cause

Cost recovery - pricing just enough to recover actual cost of operations

Market Incentives -using lower than average pricing policy to encourage

increased usage of a good or service (Increase in usage in mass transportation
such as MRT, buses, etc. to decrease pollution and road traffic)

Market Suppression - using price to discourage consumption (e.g Alcohol,

cigarettes, high fee for parking in a disabled parking space)

B. Definitions

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Price Elasticity

Rate of the change in quantity is greater than the rate of change in price

Example:
2. Price Inelasticity

Rate of change in quantity is less than rate of change in price

Example:

VII. Pricing Strategies

A. Skimming

Intentionally setting a relatively high price compared with that of competitors

More Commonly used as a market-Entry price for distinctive goods or services with
little or no competition

Used to market higher-end goods

Used until supply begins to exceed demand or when competition catches up

Advantage - Makes you control demand (Quality control and no fulfillment problem)

Disadvantage - selling at a high price will attract competition

B. Penetration Pricing

Uses relatively low entry-price compared with competitive offerings to stimulate

trial

May extend over several stages in the product life cycle

C. Competitive Pricing
Matching other firms prices and concentrating efforts on the other aspects of the
marketing mix
Examples: Gasoline stations and Telecommunications companies
D. Discounting

Cash Discounts - price reduction in return for prompt payment of a bill

Trade Discount - incentives offered to resellers or participants in the selling process

Quantity Discounts - price reduction granted for large volume purchase

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Allowances - specifies deduction from list price, including a trade-in or promotional

allowance (e.g. car trade ins)

Rebates - refund of a portion of the purchase

VIII. Pricing Policies
A. Psychological Pricing

Odd Pricing - marketers set prices at odd numbers just under round numbers

Unit Pricing - states prices in terms of some recognized unit of measurement (such as
grams or liters)

Free Pricing/Bundling pricing - bundling products and combining their price but
offering the bundle as buy one and get the other free

Prestige Pricing - Establishing a relatively high price to develop and maintain an

image of quality and exclusivity that appeals to status conscious consumers
IX. Price Flexibility - Permitting variable prices for goods or services
A. Product-Line Pricing

Practice of setting a limited number of prices for a selection of merchandise and

marketing different product lines at each of these price levels (Example: Low price,
mid-price, Luxury price)

Disadvantage - What if cost of

B. Promotional Pricing

Pricing policy in which a lower than normal price is used as a temporary ingredient in
a firms marketing strategy

Loss Leader pricing - price offered to consumers at a price less than the cost to attract
them to the store in the hope that they will buy other merchandise at regular price

Leader pricing - variant of the loss-leader; prices are slightly above cost

Disadvantages
If it doesnt work
Consumer norms (example: promos that last too long)
X. Price-Quality Positions

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PRICE

PRODUCT High Medium Low

QUALITY

High Prestige

Medium Overpricing

Low Rip off Economy Strategy

XI. PLACE
A. Terms to remember
1. Distribution - moving goods and services from producers to customers
2. Distribution Channel - an organized system of marketing institutions and their
relationships that enhances physical flow and ownership of goods from producer to
consumer or business user. Also called marketing channel.
3. Logistics - process of coordinating the flow of info, goods and services among
members of the distribution channel.
4. Supply Chain management - the control of activities of purchasing, processing, and
delivery through which raw materials are transformed into products and made
available to final consumers.
5. Marketing Intermediary (Middleman) - an org that iterates between producers and
consumers or business users.
6. Wholesaler - an intermediary that possesses ownership of the goods it handles then
distributes these goods to retailers, other distributors or sometimes to end distributers.
B. Elements of Physical Distribution
1. Customer service - Level of customer service the distribution activates support
2. Transportation - How the firm ships its products
3. Inventory Control - Managing the level of the inventory the firm maintains at each
location
4. Protective packaging and materials handling - How the firm packages and efficiently
handles goods in the factory, warehouses, and transport terminals.
5. Order Processing - How the firm handles orders.

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6. Warehousing - The distribution systems location of stick and number of warehouses
the firm maintains
A. Storage
B. Distribution - They assemble the product that distribute. Placed in an area that is
easy to distribute the products (Near Customers).

Distribution objectives

To effectively reach your target market

To minimize costs of dissemination

C. Types of Distribution Channels
1. Direct Channel - simplest and shortest distribution channel; moves goos directly from
producer to the ultimate user
A. Direct Selling
2. Channels using intermediaries

Producer to Wholesaler to retailer to consumer

Producer to wholesalers to business user

Producer to agent to wholesaler to retailer to consumer

Producer to agent to wholesaler to business user

Producer to agent to business

3. Dual distribution - the movement of products through more than one channel to reach
the target market
4. Reverse channels - designed to return goods to their producers

D. Distribution Intensity
1. Intensive - all available channels
1.1.Advantages
1.2.Disadvantages
2. Selective - limited number of channels
2.1.Advantages
2.2.Disadvantages

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3. Exclusive - distribution through single wholesaler or retailer in a specific geographic
region
3.1.Advantages

Guaranteed buyer
3.2.Disadvantages

If the distributer cant sell his products then he cant sell to anyone
E. Distribution Terms
1. Price policies
2. Conditions of Sale
3. Territorial Rights
4. Services and Responsibilities
F. Functions of Distribution Channels

Gather info about customers

Communicate and promote products

Reach the proper market

Negotiate with buyers

Take orders

Finance inventory-keeping

Finance consumer purchases (When someone buys and offers an installment plan)

Assume risks of channel work

Move physical products

Provide payment facilities

Oversee transfer of ownership

Pros Cons

In-house distribution system Full control over the distribution Expensive to set up, requiring new
process skills

Outsources distribution system Ease and speed of mobilizetion

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G. Types of Distributorships
1. Wholesalers
2. Company sales force
3. Value-added reseller
4. Professional sales agencies
5. Specialty dealers
6. Aggregators
7. Online resellers
H. Types of Retailers
1. Specialty Stores
2. Department stores
3. Supermarkets
4. Convenience stores
5. Super stores
6. Showrooms

XII. PROMOTIONS -
A. Hierarchy of Effects
1. Awareness - Realization of your product
2. Knowledge - comprehension about your products features and benefits
3. Liking - Positive feeling towards your product
4. Preference - Deciding your product is better than others
5. Conviction - Product is worth buying
6. Purchase - Actually buying your product
B. Promotions Mix

Portfolio of different kinds of media employed to push the message to consumers

Try to achieve optimal blending of the elements of personal and non-personal selling to
achieve promotional objectives

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1. Elements of the Promotional Mix
A. Personal Selling - Sellers promotional presentation. (Person-person with the
buyer e.g face-face, over the phone, through video conferencing)

Advantages - Permits accurate measurement of effectiveness, Possibility of

tailor-fitting message to customer

Disadvantages - Time consuming, limited Audience, costly (per customer)

B. Non-personal selling - Promotion that includes activities conducted without being
face-to-face with the buyer.
C. Advertising

Any paid, non-personal communication through various media about a firm, a

product, or idea by a sponsor identified in a message intended to inform or
persuade members of a particular audience.

Involves mass media (e.g print media, TV, radio, movie screenings, electronic)
1. Advantages - Reaches a large group, cheaper per unit basis
2. Disadvantages - cannot close sales
D. Terms to remember
1. Above-the-line communications - traditional mass media
2. Below-the-Line communications - more targeted, smaller scale executions Including
the use of social media
3. Through-the-line communications - combination of above-the-line and below-the-
line.
E. Product Placement

Marketers pays a few to display a product prominently in a film, a music video, TV

show.

Brand Channel Awards

Mercedes-Benz - 9 out of 31 top films in the U.S. (28%) in 2015

Apple - 7 out of 31 (23%)

Fast and the Furious 7 - 48

Reverse product placement - creating

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F. Sales Promotion

Marketing activities that stimulate consumer purchasing and dealer effectiveness.

Includes displays, trade shows, coupons, contests, samples. premiums, and
product

Trade Promotion - sales promotion that appeals to marketing intermediaries rather

than to consumer
1. Advantages

Produces an immediate consumer response

Attracts attention and creates product

2. Disadvantages

Difficult to differentiate from competitors efforts

A. Direct Marketing

use of direct communication to a consumer or business designed to generate a

response in the form of an order, a request for further information (lead generation),
or a visit to a place of business to purchase (traffic generation)

Includes direct mail, recorders telemarketing, direct-response advertising and

infomercials, direct-response print advertising, electronic media
1. Advantages

Generates an immediate response

Covers a wide audience with targeted advertising

Allows complete, customized, personal message

Produces measurable results

2. Disadvantages

Suffers from image problem

involves a high cost per customer

Depends on quality and accuracy of mailing lists

May annoy customers

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