Marketing Review

Core Concepts

CHAPTER 1:
Marketing: “Managing profitable customer relationships”

1. What is marketing?

Simply put: Marketing is the delivery of customer satisfaction at a profit.

Goals: Attract new customers by promising superior value and keep and grow current
customers by delivering satisfaction.

2. Marketing definition

Process by which individuals and groups obtain what they need and want, through
creating and exchanging products and value

3. What are Consumers’ Needs, Wants, and Demands?

Needs - state of felt deprivation including physical, social, and individual needs (i.e.
hunger)
Wants - form that a human need takes as shaped by culture and individual personality
(i.e. bread)
Demands - human wants backed by buying power (i.e. money)

4. How Do Consumers Choose Among Products and Services?

Value Gained From Owning a Product + Costs of Obtaining the Product = Customer
Value
Product’s Perceived Performance in Delivering Value Relative to Buyer’s
Expectations is Customer Satisfaction
Total Quality Management Involves Improving the Quality of Products, Services, and
Business Processes

5. How Do Consumers Obtain Products and Services?

Exchanges – The act of obtaining a desired object from someone by offering

something in return
Transaction – A trade of values between two parties
Relationships – Building a network by adding financial benefits, social benefits,
structural ties and profitable customers

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 6. Modern Marketing System

7. Marketing Management

The art and science of choosing target markets and building profitable relationships
with them.

Involves managing demand,

Marketing which involves managing
Management customer relationships

Finding and increasing

Demand
Management
demand, also changing or
reducing demand such as in
Demarketing
Profitable Attracting new customers
Customer and retaining and building
Relationships relationships with current
customers

8. Marketing Management Philosophies

Production Concept - Believes that customers want products that are available and
affordable. The focus for improvement and cost reduction is on production and
distribution in supply chain

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Product Concept - Believes that customers want products with the best features and
highest quality. Company will focus on product and quality improvement

Selling Concept – Believes that consumers will not buy enough of the firm’s products
unless it undertakes a large-scale selling and promotion effort. Company will focus on
selling in the short term rather than developing a long term relationship with
customers
Marketing Concept – This philosophy holds that achieving organizational goals
depends on knowing the needs and wants of target markets and delivering the desired
satisfactions better than competitors do.
Social Marketing Concept - Company aims to fill the needs and wants of customers
better than competitors and in a way that is good for the customer, for society and for
the environment

CHAPTER 2:
“Company and Marketing Strategy”

1) Strategic Planning

It is the process of developing and maintaining a strategic fit between the

organization’s goals and capabilities and its changing marketing opportunities.

Steps in Strategic Planning

Analyze Strategic Business Units

Decide which SBU’s should receive more, less, or no investment

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* BCG Growth Share Matrix

High Low
Market Share
sdfsdfsdf

Stars
High Question
LowMarks
Question Marks
Marke
High growth, low share
?
t High growth & share
High growth, low share
Profit potential Build into Stars or phase out
Growt May need heavy investment to
Build into Stars or phase out
Require cash to hold market share
Require cash to hold market share
h Rate grow
Low
Cash
CashCows
Cows Dogs
Dogs
Low growth, high share Low growth & share
High Low growth, high share
Established, successful
Established, successful
Low growth & share
Low profit potential
Low profit potential
SBU’s
SBU’s
Produce cash
Produce cash

2) Product - Market Expansion Grid - Growth Strategies

Existing New
Products Products

Existing 1. Market 3. Product

Markets Penetration Development

New 2. Market
4. Diversification
Markets Development

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Market Penetration – A strategy for company growth by increasing sales of current
products in current market segments without changing the product
Market Development – A strategy for company growth by identifying and developing
new market segments for current company products
Product Development – A strategy for company growth by offering modified or new
products to current market segments
Diversification – A strategy for company growth through starting up or acquiring
businesses outside the company’s current products and markets

3) Connecting With Customers

Market Segmentation – Dividing a market into distinct groups of buyers who have
distinct needs, characteristics, or behavior and who might require separate products or
marketing mixes.
 Geographic (Areas, Countries)
 Demographic (Occupation, Income, Gender, Age, Nationality, Religion)
 Psychographic (Lifestyle, Social Class, Personality)
 Behaviors
Target Marketing – The process of evaluating market segmentation’s attractiveness
and selecting one or more segments to enter
Target Positioning – Arranging for a product to occupy a clear, distinctive, and
desirable place relative to competing products in the minds of target customers

4) The Marketing Strategy and the Marketing Mix

Marketing Strategy – the marketing logic by which the company hopes to achieve
strong and profitable customer relationships. It involves deciding which customers to
serve and with what value proposition

Marketing Mix – the set of controllable tactical marketing tools-product, price, place
and promotion-that the firm blends to produce the response it wants in the target
market

5) Managing the Marketing Effort

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Marketing Control Process

CHAPTER 3:
“The Marketing Environment”

Marketing Environment

The actors and forces outside marketing that affect ability to develop and maintain
successful relationships with its target customers.

Micro-environment - Actors and forces close to the company that affects its ability to
serve its customers (Company departments, suppliers, customer markets, competitors,
publics)
Macro-environment - Larger societal forces that affect the MICRO- environment
(demographic, economic, natural, technological, political and cultural forces)

MACRO – ENVIRONMENT
Natural Political/Legal
Environment
Technology
Demographic

Your Product Category

Economic MICRO – ENVIRONMENT

Company Competitors
Culture Suppliers Customers
Intermediaries Public

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CHAPTER 4:
“Managing Marketing Information”

Marketing Information System (MIS)

People, equipment, and procedures to gather, sort, analyze, evaluate, and distribute
needed, timely, and accurate information to marketing decision makers.

Steps in Managing Marketing Information

1) Assessing marketing information needs

MIS Functions: Assess Information

Needs

Information What
Managers They Really
Would Like Need & What
to Have is Feasible to
Offer

BENEFIT vs COST 6

2) Developing Marketing Information

Marketers can obtain the needed information from internal data, marketing
intelligence and marketing research.

Internal Data – Electronic collections of information obtained from data sources

within the company. It should protect this information and can be a strategic and a
competitive advantage. It can be easily accessed and analysed.
Marketing Intelligence – The systematic collection and analysis of publicly
available information about competitors and developments in the marketing
environment.
Marketing Research – The systematic design, collection, analysis, and reporting of
data relevant to a specific marketing situation facing an organization.

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* Marketing Research Process

 Defining the problem and research objectives by:

Generic Types of Research Objectives

Purpose Of Each Type Of MR Type Of MR

Gathers preliminary information

that will help define the problem Exploratory
and suggest hypotheses. Research

Describes things = market Descriptive

potential for a product,
Research
demographics and consumers’
attitudes.

Test hypotheses about cause- Causal

and-effect relationships. Research

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 Developing the Research Plan:

Determine the exact information needed

Plan to gather the information

The Research Plan: Gathering Information

SECONDARY PRIMARY
1. Information That
Already Exists Information
Somewhere. Collected for
2. Is Obtained More the Specific
Quickly, Lower
Cost Purpose at

3. Might Not be Can Help To Hand.

Define The
Usable Data. Requires A Number
Problem Of Other Decisions
To Be Made
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 *Planning for PRIMARY DATA collection

 Research Approaches:

Primary Research Approaches

Observational
Survey
Gathering data by Causal or
observing people, Asking Experimental
actions and individuals about
situations attitudes, Using groups of
(Exploratory) preferences or people to
buying behaviors determine
(Descriptive) cause-and-effect
relationships
(Causal)

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 Contact Methods:
Information can be collected by mail, telephone, personal interview, or
online survey.
 Sampling Plan:
A sample is a segment of the population selected for marketing
research to represent the population as a whole.
 Research Instrument:
2 main instruments – the questionnaire and mechanical devices

 Implementing the research plan - The researchers next put the

marketing research plan into action. This involves collecting,
processing and analysing the information.

 Interpreting and Reporting the Findings - The market researcher must

now interpret the findings, draw conclusions and report them to
management.

3) Analysing Marketing Information

After gathering the information, managers may need help in applying the information
to their marketing problems and decisions. This help may include advanced statistical
analysis to learn more about relationships within a set of data. Companies are now
turning to Customer relationship management (CRM) – managing detailed
information about individual customers and carefully managing customer “touch
points” in order to maximize customer loyalty.

4) Distributing and Using Marketing Information

Information need to be routine distributed for decision making and non-routine

distributed for special situations
Information must be distributed to the right managers at the right time also.

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CHAPTER 5:
“Consumer and Business Buyer Behaviour”

1) Consumer Market and Consumer Buyer Behaviour

Consumer Market – All the individuals and households who buy or acquire goods and
services for personal consumption
Consumer Buyer Behaviour – The buying behaviour of the final consumers,
individuals and households who buy goods and services for personal consumption

2) Characteristics Affecting Consumer Behaviour

Cultural:
Culture – The set of basic values, perceptions, wants and behaviours learned by
member of society from family and other important institutions.
Subculture – A group of people with shared value systems based on common life
experiences and situations
Social Class – Relative permanent and ordered divisions in a society whose members
share similar values, interests, and behaviours

Social:
Primary Groups – Groups we have face-to-face contact with and contact with
frequently
Secondary Groups – More formal groups and less contact with frequently
Opinion leader – Person within a reference group who, because of special skills,
knowledge, personality, or other characteristics, experts influence on others

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Psychological:
Motivation – A need that is sufficiently to direct the person to seek satisfaction of the
need
Perception – The process by which people select, organize, and interpret information
to form a meaningful picture of the world
Learning – Changes in an individual’s behaviour arising from experiences
Belief – A descriptive thought that a person holds about something
Attitude – A person’s consistently favourable or unfavourable evaluations, feelings
and tendencies toward an object or idea

3) Buyer Decision Process

 Need recognition – the buyer recognizes a problem or need. The need

can be triggered by internal stimuli (hunger, thirst, sex) or external
stimuli (friends, family, promotion)

 Information Search – Buyer search for the information about the

product or service through Personal Sources (family, friends, and
neighbours), Commercial Sources (Advertising, salesperson), Public
Sources (Mass media, TV) and Experiential Sources (handling or
examine the product).

 Evaluation of alternatives

Consumer May Use Complex Decision High Involvement

Consumer May Use Complex Decision
Rules, Careful & Logical Thinking Purchases
Rules, Careful & Logical Thinking

Consumers May Buy on Impulse Or Low Involvement or

Consumers May Buy on Impulse Or
Use More Simple Decision Rules Routine Purchases
Use More Simple Decision Rules

Consumers May Make Buying Decisions Performs All Decision

Consumers May Make Buying Decisions
on Their Own Roles Themselves
on Their Own
Consumers May Make Buying Decisions Who Plays One or More
Consumers May Make Buying Decisions
Only After Consulting Others Decision Roles?
Only After Consulting Others

 Purchase Decision

Purchase Intention (Attitudes of others & unexpected factors) Purchase Decision

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  Post-purchase behaviour

Whether the customer is satisfied or not with a purchase is all related to the
relationship between the consumer’s expectations and the product’s perceived
performance.
Almost all major purchases result in Cognitive Dissonance – or discomfort caused by
post-purchase conflict.

4) The Buyer Decision Process for New Products

The adoption process – The mental process through which an individual passes from
first hearing about an innovation to final adoption
Awareness: Consumer becomes aware of the new product, but lacks information
about it.
Interest: Consumer seeks information about new product.
Evaluation: Consumer considers whether trying the new product makes sense.
Trial: Consumer tries new product on a small scale to estimate its value.
Adoption: Consumer decides to make full and regular use of the new product.

5) Business Market and Business Buyer Behavior

Business buyer behavior – the buying behavior of the organizations that buy
goods and services for use in the production of other products and services or for
the purpose of reselling or renting them to others at a profit

The business buying process

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CHAPTER 6:
“Segmentation, Targeting and Positioning”

3 major steps in target marketing:

1. Market Segmentation
Dividing Markets into Smaller Segments that can be Reached More Efficiently and
effectively with Products and Services That Match their unique needs

Geographic segmentation
Demographic segmentation
Psychographic segmentation
Behavioral segmentation
Intermarket segmentation – Forming segments of consumers who have similar needs
and buying behavior even though they are located in different countries

2. Target Marketing
(How the firms evaluate and select target segments)

Evaluating market segments:

Segment Size and Growth - Analyze current segment sales, growth rates, and
expected profitability for various segments.
Segment Structural Attractiveness - Consider effects of: competitors,
availability of substitute products, and the power of buyers & suppliers.
Company Objectives and Resources - Examine company skills & resources
needed to succeed in that segment(s) and offer superior value & gain
advantages over competitors

Selecting market segments by:

 Mass media – same products to all customers (no segmentation)

 Segment marketing – Different products to 1 or more segments (some
segmentation)
 Niche marketing - Different products to subgroups within segments (more
segmentation)
 Micromarketing - Products to suit the tastes of individuals and locations
(complete segmentation)

3. Positioning for Competitive Advantage

Product position – the way the product is defined by consumers on important

attributes-the place the product occupies in consumer’s minds relative to competing
products

Steps in choosing the right positioning strategy:

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  Identifying possible competitive advantages
Identifying an advantage over competitors gained by offering consumers greater
value, either through lower prices or by providing more benefits that justifies higher
prices

The competitive advantages can be “Product differentiation”, “Services

differentiation”, “Image differentiation”, “People differentiation” and “Channel
differentiation.

 Choosing the right competitive advantages

Not all the differences are meaningful and worthwhile. Therefore, the company must
carefully select the ways in which it will distinguish itself from competitors. A
difference is worth establishing to the extent that it satisfies the following criteria:

Important: the difference delivers a highly valued benefit to target buyers

Distinctive: Competitors do not offer the difference, or the company can offer it in a
distinctive way
Superior: the difference is superior to other ways that customers might obtain the
same benefit
Communicable: the difference is communicable and visible to buyers
Preemptive: Competitors can not easily copy the difference
Affordable: Buyers can afford to pay for the difference
Profitable: The Company can introduce the difference profitably

 Selecting the overall positioning strategy

The full positioning of a brand or the full mix of benefits on which it is positioned is
call value proposition.

 Developing a Positioning Statement

The company must give out a statement that summarizes company or brand
positioning.

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CHAPTER 7 & 8:
“Product, Services and Branding Strategy”
& “New Product Development – Product Life Cycle”

1) What is a product?
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.
Includes: Physical Objects, Services, Events, Persons, Places, Organizations, Ideas

2) What is a service?
A service is a form of product that consist of activities, benefits, or satisfactions
offered for sale that are essentially intangible and do not result in the ownership of
anything.
Includes: banking, hotels, tax preparation, repair services

3) Levels of Products and Services

 Core product: benefits and services

 Actual product: Styling, features, packaging, brand name, quality and others
attributes that combine to deliver core product benefits
 Augmented product: includes warranty, after sale service, installation, delivery
and credit and built around the core and actual products

4) Product and Service Classifications

Consumer Product
Product bought by final customer for personal consumption

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 Convenience Products
Buy frequently & immediately
Low priced
Mass advertising
Many purchase locations
i.e Candy, newspapers
Specialty Products
Special purchase efforts
High price
Unique characteristics
Brand identification
Few purchase location
Shopping Products
Buy less frequently
Higher price
Fewer purchase locations
Comparison shop
i.e Clothing, cars, appliances
Unsought Products
New innovations
Products consumers don’t
want to think about
Require much advertising & Personal selling

Industrial Product
Product bought by individuals and organizations to further processing or for use in
conducting a business

Other Marketable Entities

 Organizations - Profit (businesses) and nonprofit (schools and churches).
 Persons – Politicians, entertainers, sports figures, doctors, and lawyers.
 Places - Business sites, new residents, and tourism.
 Ideas (social ideas marketing) – Public health campaigns, environmental
campaigns, and others such as family planning, or human rights.

5) Product and Service Decision

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Product and Service Attributes
Developing a Product or Service Involves Defining the Benefits that it will Offer
Such as:

Ability
Abilityof
ofaaProduct
Productto
toPerform
PerformIts
ItsFunctions;
Functions;
Product
ProductQuality
Quality Includes Level & Consistency
Includes Level & Consistency

Differentiates
Differentiatesthe
theProduct
Productfrom
fromCompetitors’
Competitors’
Product
ProductFeatures
Features Products
Products

Process
Processof
ofDesigning
DesigningaaProduct’s
Product’sStyle
Style&&
Product
ProductStyle
Style Usefulness
Usefulness
&&Design
Design

Branding
A name, term, sign, or design, or a combination of these intended to identify the
goods or services of one seller or group of sellers and to differentiate them from those
of competitors

Brand Strategies

Product Category
Existing BranNew
d
Line Extension Exte
Existing
nsio
Mult New
n
ibra Bran
New
nds ds
Brand Name

 Line Extension - Existing brand names extended to new forms, sizes, and
flavors of an existing product category.

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  Brand Extension - Existing brand names extended to new or modified
product categories.
 Multibrand - New brand names introduced in the same product category.
 New Brands - New brand names in new product categories.

Packaging
The activities of designing and producing the container or wrapper for a product

Labeling
Printed information appearing on or with the package
Performs several functions:
 Identifies product or brand
 Describes several things about the product
 Promotes the product through attractive graphics

Product Support Services

Companies use product support services as a major tool in gaining competitive
advantage

6) Product Line Decisions

Product
ProductLineLineLength
Length
Number
NumberofofItems
Itemsininthe
theProduct
ProductLine
Line

Stretching Filling
Lengthen beyond Lengthen within
current range current range

Downward
Both Directions

Upward

7) Product Mix Decisions

 Width – number of different product lines

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 Length – total number of items the company carries within product lines
 Depth – number of versions offered of each product in line

8) Services Marketing

9) Stages of New Product Development

 Idea generation: the systematic search for new product ideas.

Everyone in company can give ideas about product everyday
 Idea screening: helps spot good ideas and drop ones as soon as
possible. Look at the market side/ potential; consumers give their
ideas to new product managers
 Concept development and testing:
Develop new product ideas into alternative detailed product concepts
-> Test the new-product concepts with groups or target customers
-> Product image is the way consumers perceive an actual or potential
product
Ex: BMW wants to introduce Minicar
 Develop new concepts (small car, economical cars)
 Show the target customers
 Marketing strategy: 3 parts
Part 1: describes target market, planned product positioning, sales,
market share, and profit goals
Part 2: outlines product’s planned price, distribution, and marketing
budget for the first year
Part 3: describes long-run in sales, profit goals, and marketing mix
strategy
 Business analysis: look at the cost, cash flow, profitable, etc
 Product development: answer step 5. If profitable market ->
develop product. If no -> eliminate product concepts
 Test marketing: allows the marketers get experiences with
marketing the product, find potential problems. 3 major types of
test marketing:
Standard: produce sample product, select some potential market
(Saigon, big city, etc)
Controlled: focus on specific market (metro, coop mark)
Simulated:

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  Commercialization: introducing the new product into the market
When is the right time to introduce product?
Where to launch a new product?

10) Product Life Cycle

 Product development: begins when the company finds and

develops a new product idea
 Introduction: slow sales growth, the product is being introduced in
the market.
 Growth: rapid market acceptance and increase profits
 Maturity: slowdown in sales growth
 Decline: sales fall and profits drop

CHAPTER 9:
“Pricing Product: Pricing Considerations and Strategies”

1) What is Price?
The exchange value of a good or service in the market place. Price is the only element
in the marketing mix that produces revenues; all others represent cost

2) Factors affecting Price Decisions

Internal Factor

 Marketing Objectives
Internal factors
o Marketing objectives External factors
o Marketing mix strategy o Nature of the market and
o Cost demand 20
Pricing o Competition
o Organizational
considerations
decisions o Other environmental
factors
 Survival
Low Prices Hoping to Increase Demand

Current Profit Maximization

Marketing Choose the Price that Produces the Maximum
Objectives Current Profit, Etc.

Market Share Leadership

Low as Possible Prices to Become
the Market Share Leader

Product Quality Leadership

High Prices to Cover Higher Performance Quality
and R&D

 Marketing Mix: 4Ps

Product Design

Nonprice
Positions Price Distribution

Promotion

 Types of Costs
Fixed Costs
(Overhead)
Costs that don’t
vary with sales or
production levels
Executive Salaries, Rent
Variable Costs
Costs that do vary
directly with the
level of production
Raw materials

Total Costs
Total Costs

External Factors

 Market and Demand

Market:

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 Pure competition: a market in which many buyers and sellers who has little effect
on the price
Monopolistic: a market in which many buyers and sellers who trade over a range
of prices such as Vietnam car market, or gas market
Oligopolistic: few sellers who are sensitive to each other’s pricing/ marketing
strategies such as restaurant
Pure monopoly: there is single seller in market

Demand:
A demand curve is a curve that shows the number of units the market will buy in a
given time period at different prices that might be charged.
Price elasticity refers to how responsive demand will be to a change in price

Price elasticity of demand = % change in quantity demanded/% change in price

 Competitor’s Costs, Prices and Offers

A consumer considers to the price and value against of comparable products made by
other companies.
The company needs to learn the price and quality of each competitor’s offer.

 Other Factors
Social, Reseller, Economic, Government factors

3) Approaches of Setting Price

a) Cost-based pricing

Cost-Plus Pricing is an Approach That Adds a Standard Markup to the Cost of the
Product  the simplest pricing method but it ignores the current demand &
competition

b) Value-based pricing
Setting price based on buyer’s value perceptions of value rather than on the seller’s
cost

c) Competition-based pricing

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Company Sets Prices Based on What Competitors Are Charging (Going-rate) or
Company Sets Prices Based on What They Think Competitors Will Charge (Sealed-
bid)

d) Relationship pricing

Includes special relationship, enrichment, shared risks and rewards

4) New Product Pricing Strategies

Use under These Conditions:

Market-Skimming
Setting a High Price for a New
– Product’s Quality and Image
Must Support Its Higher
Product to “Skim” Maximum
Price.
Revenues from the Target
Market. – Costs can’t be so high that
Results in Fewer, But More they cancel the Advantage
Profitable Sales. of Charging More.
I.e. Intel
– Competitors shouldn’t be
able to enter Market Easily
and undercut the High Price.

Market Penetration
Setting a Low Price for a New
Product in Order to “Penetrate”
the Market Quickly and Deeply.
Attract a Large Number of Buyers and
Win a Larger Market Share
I.e. Dell
Use under These Conditions:
– Market must be Highly Price-Sensitive
so a Low Price Produces More Market
Growth.
– Production/Distribution Costs Must Fall
as Sales Volume Increases.
– Must Keep out Competition & Maintain
Its Low Price Position or Benefits May
Only be Temporary.

5) Product Mix Pricing Strategies

 Product line pricing: setting price steps between product line items

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 Ex: if companies have product line target low price => decide low price
for product
 Captive- product pricing: pricing products that mist be used with the main
product
Ex: You buy camera, you have to buy buttery =>buttery is captive-product
 Product-bundle pricing: pricing bundles of products sold together
Ex: Double Rich shampoo +shower sold into a package (increase sale
volume, and cheaper than by separated product)
 Optional-product pricing: pricing optional products sold with main products
Ex: buy a pack for mobile-phone =>pack is optional product b/c you can
buy it or not, it not effect to main product (mobile-phone)
 By-product pricing: pricing low-value by-products to get rid of them
Ex: in the zoo, sell Zoo-Doo (fan chuong), it’s a kind of fertilizer
 Zoo-doo is by-product

6) Some Price Adjustment Strategies

 Discount
 Psychological
 Segmented
 Promotional pricing
 Value pricing
 Geographical pricing
 International pricing

CHAPTER 10:
“Marketing Channels and Supply Chain Management”

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 1) What is a Distribution Channel?
Set of interdependent organizations involved in the process of making a product or
service available for use or consumption by the consumer or business user

2) Distribution Channel Functions

 Information: gathering and distribution marketing research

 Promotion: developing and spreading persuasive communications about an
offer
 Contact: finding and communicating with prospective buyers
 Matching: shaping and fitting the offer to the buyer’s needs
 Negotiation: reaching an agreement on price and other terms of the offer
 Physical distribution: transporting and storing goods
 Financing: acquiring and using funds to cover the cost of the channel work
 Risk tasking: assuming the risks of carrying out the channel work

3) Channel Behavior & Organization

The channel will be most effective when:

Each member is assigned tasks it can do best.
All members cooperate to attain overall channel goals and satisfy the
target market.
When this doesn’t happen, conflict occurs:
Horizontal Conflict occurs among firms at the same level of the
channel, i.e. retailer to retailer.
Vertical Conflict occurs between different levels of the same channel,
i.e. wholesaler to retailer.
Each channel member’s role must be specified and conflict must be managed.

4) Conventional Distribution Channel vs. a Vertical Marketing System

Types of Vertical Marketing System (VMS)

 Corporate VMS: common ownership at different levels of the channel

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 Ex: Duc Phat bakery: they own store, make the cakes and sell cakes
 Contractual VMS: contractual agreements among channel members, sign
contract
Ex: System Union in Sydney sign contract with TRG
 Administered VMS: leadership is assumed by one or a few dominant
members, don’t need sign contract

5) Innovations in Marketing Systems

 Horizontal marketing system: two or more companies at one channel level join
together to follow a new marketing opportunity.
Ex: ATM & supermarket
 Hybrid marketing system: a single firm sets up two or more marketing
channels to reach one or more customer segments.
Ex: retailers, catalogs, sales force

6) Number of Marketing Intermediaries

 Intensive distribution: stocking the product in as many outlets as possible, for

low risk item, make product available everywhere
Ex: shampoo, toothpaste
 Exclusive distribution: giving a limited number of dealers the exclusive right
to distribute the company’s products in their territories, middle-risk.
Ex: motorbikes b/c you can select
 Selective distribution: the use of more than one but less than all the
intermediaries who are willing to carry the company’s products, for every
luxury items

CHAPTER 12 & 13:

“Integrated Marketing Communication: Ads, Sales Promotion,
Public Relations, Personal Selling & Direct Marketing”
1) The Marketing Communication Mix
The specific mix of advertising, personal selling, sales promotion, and public relations
a company uses to pursue its advertising and marketing objectives

2) Integrated Marketing Communications (IMC)

The concept under which a company carefully integrates and coordinates its many
communications channels to deliver a clear, consistent, and compelling message about
the organization and its products

3) Setting the Overall Communication Mix

Promotion Mix Strategies

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  Push Strategy – A promotion strategy that calls for using the sales force and
trade promotion to push the product through channels. The producer promotes
the product to wholesalers, the wholesalers promote the retailers, and the
retailers promote to consumers

 Pull Strategy – A promotion strategy that calls for spending a lot on

advertising and consumer promotion to build up consumer demand. If the
strategy is successful, consumers will ask their retailers for the product, the
retailers will ask the wholesalers, and the wholesalers will ask the producers

4) Advertising

Advertising is centuries old and is used by: Business firms, nonprofit organizations,
professionals, and Social agencies.

Setting Ads Objectives

Ads Objective is a specific communication task to be accomplished with a specific
target audience during a specific period of time

 Informative Ads – inform consumer or build primary demand

 Persuasive Ads – build selective demand
 Comparative Ads – compares one brand to one another
 Reminder Ads – keeps consumers thinking a bout a product

Setting the Ads Budget

Methods of Setting the Advertising Budget for Each Product and Market

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Developing Ads Strategy

Selecting the advertising media advertising strategy consists of two major

elements and companies are realizing the benefits of planning these two elements
jointly:
a) Creating the Advertising Messages:
 Develop a message focus on customer’s benefits
 Creative concept “big idea” visualization or phrase
 Advertising appeals meaningful, believable, and distinctive, there are 2
main advertising appeals: informational/rational and emotional
 Message execution styles: testimonial evidence, scientific evidence,
technical expertise, personality symbol, musical, mood or image,
fantasy, lifestyle, and slice of life

b) Selecting the advertising media:

 Deciding on reach, frequency, and impact
 Choosing among the major media types
Mass media: broadcast media, in-store media, outdoor media, and
transit (ads on buses)
Interactive media: company website, rich media, banner ads
Direct marketing: letters, bill inserts, fax ads, phone & email
 Selecting specific media vehicles
 Deciding on media timing

Campaign Evaluation

Communication Effects: Is the Ad Communicating Well?

Sales Effects: Is the Ad Increasing Sales?

5) Sales Promotion

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Sales Promotion Offers Short-Term Incentives to Encourage Purchase or Sales of a
Product or Service and offers Reasons to Buy NOW

Sales Promotion Objectives

Consumer Promotions: increase short-term sales or help build long-term market share.
Trade Promotions: get retailers to:
carry new items and more inventory,
advertise products,
give products more shelf space, and
Buy product ahead.
Sales Force: getting more sales support.
In general, sales promotion should focus on consumer relationship building

Major Sales Promotion Tools

 Sample: Trial amount of a product Trial amount of a product

 Coupons: Savings when purchasing specified products
 Cash Refunds: Refund of part of the purchase price
 Price Packs: Reduced prices marked on the label or package
 Premiums: Goods offered free or low cost as an incentive to buy a product
 Advertising Specialties: Articles imprinted with an advertiser’s name given as
gifts
 Patronage Rewards: Cash or other award offered for regular use of a product
 Point-of-Purchase: Displays or Demonstrations at the Point of Purchase
 Contest: Consumers Submit an Entry to be judged
 Sweepstakes: Consumers Submit Their Names for a Drawing
 Games: Consumers Receive Something Each Time They Buy That May Help
Them Win a Prize

Developing the Sales Promotion Program

Decide on the Size of the Incentive  Set Conditions for Participation  Determine
How to Promote and Distribute the Promotion Program  Determine the Length of
the Program  Evaluate the Program

6) Public Relations

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

Major Public Relations Functions

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 Press relations or press agency – Creating and placing newsworthy
information in the news media to attract attention to a person, product, or
service
 Product Publicity – Publicizing specific producers
 Public Affairs – Building and maintaining national or local community
relations
 Lobbying – Building and maintaining relations with legislators and
government officials to influence legislation and regulation
 Investor Relations – Maintaining relationships with shareholders and others in
the financial community
 Development – How Pubic relations with donors or members of non-profit
organisations gain financial or volunteer support

7) Personal Selling

The Natural of Personal Selling

Most salespeople are well-educated, well-trained professionals who work to

build and maintain long-term relationships with customers.
The term salesperson covers a wide spectrum of positions from:
Order taker (department store salesperson)
Order getter (someone engaged in creative selling i.e. Lear
Corporation)

The role of the Sales Force

Involves two-way, personal communication between salespeople and

individual customers.
Personal selling is effective because salespeople can:
probe customers to learn more about their problems,
adjust the marketing offer to fit the special needs of each customer,
negotiate terms of sale, and
Build long-term personal relationships with key decision makers.

Managing the Sales Force

Designing Sales Force Strategy and Structure

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  Territorial sales force structure – A sales force organization that assigns
each salesperson to an exclusive geographic territory in which that
salesperson sells the company’s full line
 Product sales force structure – A sales force organization under which
salesperson specialize in selling only a portion of the company’s products
or lines
 Customer sales force structure – A sales force organization under which
salesperson specialize in selling only to certain customer or industries
 Complex sales force structure - Forms Are a Combination of Any Types of
Sales Force Structures
 Team Selling – Using teams of people from sales, marketing, engineering,
finance, technical support, and even upper management to service large,
complex account

Recruiting and Selecting Salesperson

Training Salesperson

Compensating Salesperson

Supervising Salesperson

Evaluating Salesperson

The Personal Selling Process

The steps that the salesperson follows when selling, which include prospecting
and qualifying, preapproach, approach, presentation and demonstration, handling
objections, closing, and follow-up

 Prospecting and Qualifying – The step in the selling process in which the
salesperson identifies qualified potential customers
 Preapproach – The step in the selling process in which the salesperson
learns as much as possible about a prospective customer before making a
sales call
 Approach – The step in the selling process in which the salesperson meets
the customer for the first time
 Presentation – The step in the selling process in which the salesperson tells
the “product story” to the buyer, highlighting customer benefits

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  Handling Objections – The step in the selling process in which the
salesperson seeks out, clarifies, and overcomes customer objections to
buying
 Closing – The step in the selling process in which the salesperson asks the
customer for an order
 Follow up – The step in the selling process in which the salesperson
follows up after the sale to ensure customer satisfaction and repeat
business

8) Direct Marketing
Direct communications with carefully targeted individual consumers to obtain an
immediate response

Customer Databases and Direct Marketing

Customer Databases – An organized collection of comprehensive data about

individual customers or prospects, including geographic, demographic,
psychographic, and behavioral data. It allows companies to offer fine-tuned marketing
offers and communications to customers.

Forms of Direct Marketing

 Telephone Marketing – Using the phone to sell directly to customers

 Direct Mail Marketing – Direct marketing through single mailings that include
letters, ads, samples, foldouts, and other “salesperson with wings” sent to
prospects on mailing lists
 Catalog Marketing – Direct marketing through print, video, or electronic
catalogs that are mailed to select customers, made available in stores, or
presented online
 Direct-response TV Marketing – Direct marketing via TV, including direct-
response TV Ads and home shopping channels
 Kiosk Marketing - Placing information and ordering machines at various
locations

An Integrated Direct Marketing

Direct marketing campaigns that use multiple vehicles and multiple stages to improve
response rates and profits

Public Policy and Ethical Issues in Direct Marketing

 Irritation of Customers
 Unfairness, Deception, and Fraud
 Invasion of Privacy

THE END T______________T

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