Chapter 1- Marketing

Marketing = Process by which companies engage customers. Managing markets to bring

about profitable customer relationships.
Five core customer and marketplace concepts:
1. Need, wants and demand
2. Marketing offering = products offered to a market to satisfy a need.
a. Marketing myopia = more attention to the specific products a company offers
than to the benefits and experiences produces by these afterwards.
3. Value and satisfaction = Customers from expectations about the value and satisfaction
4. Exchanges and relationships = Obtaining a desired object from someone by offering
something in return
5. Markets = Set of all actual and potential buyers of a product or service

Marketing management orientations

Focus on strategies that will engage target customers and build profitable relationships
Five marketing strategies
1. Production concept = Products that are available and highly affordable
2. Product concept = Products that offer the most quality performance
3. Selling concept = Will not buy enough of the firm’s products unless the firm
undertakes a large-scale selling and promotion effort
4. Marketing concept = Achieving organizational goals depends on knowing the needs
and wants of target markets and delivering the desired satisfactions better than
competitors do
5. Social marketing concept = company’s marketing decision should consider
consumer’s needs and wants

Engaging customers and managing customer relationships

1. Customer relationship management = Process building and maintaining profitable
customer relationships by delivering superior customer value and satisfaction
2. Customer satisfaction = Product’s perceived performance matches a buyer’s
expectations.
3. Customer engagement marketing = Making the brand a meaningful part of consumer
conversation
4. Consumer-generated marketing = Brands exchanges created by consumers
5. Partner relationship management = Working closely with partners in other company
departments and outside the company

Outcomes of creating customer value

Customer lifetime value = Value of the entire stream of purchases a customer makes over a
lifetime
Share of customer = Costumer’s purchasing that a company gets in its product categories
Customer equity = Total combined customer lifetime values of all the company’s customers.
There are four types of customer
 1. Strangers = Low potential profitability and little project loyalty
2. Butterflies = Potentially profitable but not loyal
3. True friends = Both profitable and loyal
4. Barnacles = Highly loyal but not very profitable

Chapter 2 - Company and marketing strategy

Strategic planning
Process of developing and maintaining a strategic fit between the organization’s goals and
capabilities
1. What is our business?
2. Who is the customer?
3. What do customers value?
Mission statement = satisfying basic customer needs.

Business portfolio
Collection of businesses and products that make up the company
Portfolio analysis = process by which management evaluates the products and business that
make up the company
Strategic business units SBU are identified
1. Stars = high growth - high share business
2. Cash cows = low growth - high share business
3. Question marks = high growth -low share business
4. Dogs = low growth - low share

Developing strategies for growth or downsizing

A portfolio-planning tool for identifying company growth opportunities through market
penetration.
1. Market penetration = Company growth by increasing sales of current products
2. Market development = Identifying and developing new market segments
3. Product development = Growth by offering modified new products
4. Diversification = Growth through starting up or acquiring business outside the
company’s current products and markets

Marketing mix 4P’s

Set of tactical marketing tools that the firm blends to produce the response it wants in the
target market.
1. Product
2. Price
3. Place
4. Promotion
The four P concept only takes the seller’s view or market
Marketing mix 4A’s
1. Acceptability
2. Affordability
3. Accessibility
4. Awareness

Managing marketing effort

Requires the five marketing management functions
1. Analysis
a. SWOT analysis
i. Strengths = internal capabilities that may help a company reach its
objectives
ii. Weaknesses = internal limitations that may interfere with a company’s
ability to achieve its objectives
iii. Opportunities = external factors that the company may be able to
exploit to its advantage
iv. Threats = Current and emerging external factors that may challenge the
company’s performance
2. Marketing planning
3. Marketing implementation = turning marketing strategies and plans into marketing
actions
4. Marketing department organization
a. Functional organization = marketing activities are headed by a functional
specialist
b. Geographic organization
c. Product management organization
d. Customer management organization = selling one product line to many
different types of markets
5. Marketing control = evaluating the results of marketing strategies
a. Specific marketing goals
b. Measures its performance
c. Evaluates the differences between expected and actual performance
d. Corrective action between goals and performance

Marketing return on investment ROI

Net return from a marketing investment divided by the costs of the marketing investment

Chapter 3 - Analyzing the marketing environment

Marketing environment = actors and forces outside marketing that affect marketing
management’s ability to build and maintain successful relationships with target customers

Microenvironment
Actors close to the company affect its ability to serve its customers
1. Company
2. Suppliers
3. Public
4. Customer
The company might target any or all of the five types of customer
1. Consumer market = personal consumption
2. Government markets = government agencies that buy goods to produce public
services
3. International markets = buyers in other countries

Macro environment
1. Demographic
2. Economic environment
3. Natural environment
4. Technological environment
5. Political environment
6. Cultural environment

Chapter 5 - Consumer Markets and Buyer Behavior

Consumer buyer behaviour = buying behaviour of final consumers.

Consumer market = individuals that buy or acquire goods for personal consumption.

Characteristics affecting consumer behaviour

1. Cultural factors
a. Culture
b. Subculture (common life experience)
c. Social class
2. Social factors
a. Group
b. Family
c. Opinion leader
d. Online social networks
e. Word-of-mouth influence
3. Personal factors
a. Lifestyle
b. Personality
4. Psychological factor
a. Motive
b. Perception
c. Learning
d. Belief and attitudes
Maslow’s Hierarchy of needs
1. Self-actualization needs
2. Esteem needs
3. Social needs
4. safety needs
5. Physiological needs

Buying decision behaviour and the buyer decision process

1. Complex buying behaviour = high consumer involvement in purchase and significant
perceived differences among brands
2. Dissonance-reducing buying behaviour = high involvement but few perceived
differences among brands
3. Habitual buying behaviour = low consumer involvement and few perceived brand
differences
4. Variety-seeking buying behaviour = low consumer involvement but significant
perceived brand differences

The buyer Decision Process

1. Need recognition = recognized a problem or need
2. Information Research
3. Alternative evaluation
4. Purchase decision
5. Postpurchase behaviour

Adoption Process
The mental process through which an individual passes from first hearing about an
innovation to final adoption.
1. Awareness
2. Interest
3. Evaluation
4. Adoption

Individual differences in innovativeness

People differ greatly in their readiness to try new products
1. Innovators
2. Early adopters
3. Early mainstream
4. Late mainstream adopters
5. Lagging adopters

Five characteristics are important in influencing an innovation’s rate of adoption

1. Relative advantage
2. Compatibility
3. Complexity
 4. Divisibility
5. Communicability

Chapter 6 - Business markets and business buyer behaviour

Business buyer behaviour = buying goods and services for use in the production of other
products and services that are sold.
Marketers want to know
1. how business buyers will respond to various marketing stimuli
2. how marketing and other stimuli affect the buying organisation
Buying activity consists of two major parts:
1. Buying centre = individuals that play a role in the purchase decision-making process.
a. Users
b. Influencers
c. Buyers
d. Deciders
e. Gatekeepers
2. Buying decision progress
a. Problem recognition
b. General need description
c. Product specification
d. Supplier search
e. Proposal solicitation
f. Supplier selection
g. Order routine specification
h. Performance review

Business buying process = business buyers determine which products and services their
organizations need to purchase and find them.
Demand
1. Not much affected by price changes (short-run)
2. Tend to change quickly
3. Can cause large increases in business demand

Engaging business buyers with digital and social marketing

Two important technological advancements
1. E-procurement = purchasing through electronic connections between buyers and
sellers
2. B-to-B digital and social media marketing
Chapter 7 - Customer Value-driven marketing strategy

Marketers must design customer-driven marketing strategies that build the right relationships
with the right customers.

Marketing strategy
3 steps in designing a customer value-driven marketing strategy
1. Market segmentation = dividing the market into distinct groups of buyers who have
different needs.
a. Requirements for effective segmentation
i. Measurable
ii. Accessible
iii. Substantial
iv. Differentiable
v. Actionable
2. Market targeting = selecting one or more segments to serve
a. Market market = segment size and growth, company objectives and resources.
b. Differentiated marketing (segmented) = several market segments and designs
separate offers for each.
c. Concetrated marketing = targets several market segments and designs separate
offers.
d. Micromarketing = tailoring products and marketing programs to the need and
wants of specific segments.
3. Differentiation & Positioning
a. Differentiation = differentiating the market offering to create superior
customer value.
b. Positioning = arranging for a market offering to occupy a desirable place
relative to competing products.
i. Product position = the way consumers define a product on important
attributes.
ii. Customers organize products, services and companies.
c. Choosing a differentiation and positioning strategy
i. Competitive advantage = having lower prices or providing more
benefits that justify higher prices.
ii. Product differentiation = differentiated brand on performance style and
design.
iii. Service differentiation
iv. Channel differentiation
v. People differentiation
vi. Image differentiation

Choosing the right competitive advantage

A difference is worth establishing if it’s:
1. Important
2. Distinctive
3. Superior
4. Communicable
5. Preemptive
6. Affordable
7. Profitable

Selecting an Overall Position Strategy

Value proposition = full positioning of a brand- full mix of benefits on which it is positioned
The five winning value propositions
1. More for more
2. More for same
3. Same for less
4. Less for much less
5. More for less

Communicating and delivering the chosen position

The company must take strong steps to deliver and communicate the desired position to its
target consumer.

Chapter 18 - Creating Competitive Advantage

Competitive marketing strategies = Strong position of the company against competitors.

Competetiotr analysis= Identifying key competitors
1. Identifying competitors
2. Assessing competitors = knowing competitor’s mix of objectives
3. Selecting competitors to attack and avoid.
a. Customer value analysis= determines what benefits target customer value.
b. Good competitors play by the rule of the industry.

Competitive Positions
1. Market leader = firm in an industry with the largest market share
2. Market challenger = firm that is fighting hard to increase its market share in an
industry
3. Market follower = firm that wants to hold its share in an industry without rocking the
boat
4. Market niches = firm that serves small segments that the other firms in an industry
overlook
Competitive Strategies
1. Overall cost leadership = working hard to achieve the lowest production and cost
2. Differentiation = highly differentiated product line and marketing program so that
comes across as the class leader in the industry
3. Focus = focus its effort on serving a few market segment
4. Operational excellence = superior value by leading its industry (price and
convenience)
5. Customer intimacy = tailoring its products to exactly match the need of the customer
6. Product leadership = offering a continuous stream of leading-edge products

Chapter 8 - Product
Product = anything that can be offered to a market for attention, acquisition, use, or
consumption that might satisfy a want or need.
Service = an activity, benefit, or satisfaction offered for sale that is essentially intangible and
does not result in the ownership of anything.

There are two extremes: pure tangible good and pure service. Between these two extremes,
there are a lot of goods-and-services combinations called experiences. Almost every
good/service is an experience.

There are two sorts of products:

1. Consumer product = a product bought by final consumers for personal consumption.

a. Convenience product = a consumer product that customers usually buy
frequently, immediately, and with minimal comparison and buying effort.
b. Shopping product = A consumer product that the customers compare on such
attributes as suitability, quality price, and style.
c. Speciality product = a consumer product with unique characteristics or brand
identification for which a significant group of buyers is willing to make a
special purchase effort.
d. Unsought product = a consumer product that the consumer either does to
know about or knows about but does not normally consider buying.
2. Industrial product = a product bought by individuals and organizations for further
processing or for use in conducting a business. There are three groups: materials and
parts, capital items and supplies and services.

Social marketing = the use of commercial marketing concepts and tools in programs designed to
influence individual/s behaviour to improve their well-being and that of society.

Individual product decision

1. Product attributes
2. Branding
 3. Packaging
4. Labelling and logos
5. Product support service

There are three levels of making product and service decisions: individual product and service
decisions, product line decisions and product mix decisions.

1. Product and service decisions:

a. Product quality = the characteristics of a product or service that bear on its ability to
satisfy stated or implied customer needs.
b. Product features and design of the product.
c. Branding. Brand = a name, term, sign, symbol, design, or a combination of these, that
identifies the products or services of one seller or group of sellers and differentiates
them from those of competitors.
d. Packaging = the activities of designing and producing the container or wrapper for a
product.
e. Labelling =how to use it safely, where it comes from or where it was made.
f. Product support services
2. Product line decisions
a. Product line = a group go products that are closely related because of the function in a
similar manner, are sold to the same customer groups, are marketed through the same
types of outlets, or fall within given price ranges.
b. Product line length: the number of items in the product line. A product line can be
expanded by adding more items within the present range of the line or by lengthening
the product line beyond its current range.
3. Product mix decisions
a. Product mix = the set of all product lines and items that a particular seller offers for
sale. The product mix consists of 4 dimensions: width (number of different product
lines), length (number of items within product line), depth (number of versions for
each product within the line) and consistency (how closely related the various product
lines are).

Characteristics of a service:

1. Service intangibility = services cannot be seen, tasted, felt, heard, or smelled before they are
bought.
2. Service inseparability = services are produced and consumed at the same time and cannot be
separated from their providers.
3. Service variability = the quality of services may vary greatly depending on who provides
them and when, where, and how they are provided.
4. Service perishability = services cannot be stored for later sale or use.

Extra marketing mix elements in service marketing are People, physical evidence and process.

Service profit chain

The chain that links service firm profits with employee and customer satisfaction
 1. Internal service quality – workplace design; job design; employee selection; tools for serving
customers; employee rewards
2. Employee Satisfaction
3. Employee retention/productivity
4. External Service Value
5. Customer Satisfaction
6. Customer Loyalty – Retention; Referral
7. Revenue Growth; Profitability

Three types of service marketing

1. Internal marketing = orienting and motivating customer contact employees and supporting
service employees to work as a team to provide customer satisfaction.
2. Interactive marketing = training service employees in the fine art of interacting with
customers to satisfy their needs.
3. External marketing = traditional marketing in which company markets their service
directly to the customer.

Service companies face three major marketing tasks : increasing their service
differentiation,quality and productivity.

Service differentiation is the process of differentiating your service from that of competing
firms,can be done via innovative features or differentiating in service delivery.

Service productivity is the process of increasing the productivity due to the rapid growth in
costs for service firms.

Brand equity = the differential effect that knowing the brand name has on customer response to the
product or its marketing. Strong positive brand equity has many advantages as high consumer
awareness and it helps when introducing new products.

These are the brand strategy decisions:

1. Brand positioning= this can be on three levels. The lowest level is product attributes, the
next level is a benefit and the most desirable level is beliefs and values.
2. Brand name selection =
a. Say something about the product’s benefits and qualities.
b. Easy to pronounce, recognize and remember
c. Distinctive.
d. Extendable.
e. Translate easily into foreign languages
f. Capable of registration and legal protection.
3. Brand sponsorship = a manufacturer has 4 sponsorship options.
a. National Brand
b. Store brand
c. Licensing
d. Cobranding
 e. Ingredient branding
4. Brand development: a company has 4 choices for developing brands:
a. Line extension = extending an existing brand name to new forms, colours, sizes,
ingredients, or flavours of an existing product category.
b. Brand extension = extending an existing brand to new product categories.
c. Multi-brand = extending a new brand to an existing product category.
d. New brands = extending a new brand to new product categories.

Four crucial factors for brand extension/brand equity success

1. Fit Parent Brand and extension

2. Parent brand conviction and experience – Brand equity
3. Retailer Acceptance
4. Marketing Support

Chapter 9 - New product development

New-product development = the development of original products, product improvements, product
modifications, and new brands through the firm’s product development efforts.

The new-product development process:

1. Idea generation = the systematic search for new-product ideas. There is internal,
external and crowdsourcing = inviting broad communities of people into the
new-product innovation process.
2. Idea screening = screening new-product ideas to spot good ideas and drop poor ones
as soon as possible.
3. Concept development and testing.
a. Product concept = a detailed version of the new-product idea
stated in meaningful consumer terms.
b. Concept testing = testing new-product concepts with a group of target consumers to
find out if the concepts have strong consumer appeal.
4. Marketing strategy development = designing an initial marketing strategy for a new product
based on the product concept.
5. Business analysis = a review of the sales, costs, and profit projections for a new product to
find
out whether these factors satisfy the company’s objectives.
6. Product development = developing the product concept into a physical product to ensure that
the product idea can be turned into a workable market offering.
7. Test marketing = the stage of new-product development in which the product and its proposed
marketing program are tested in realistic market settings.
8. Commercialization = introducing a new product into the market.

Co-Creation in product development

1. Marketing research cost lower

2. Less R&D costs
3. Reduced risk
Customer-centred new-product development = new-product development that focuses on finding
new ways to solve customer problems and create more customer-satisfying experiences.

Team-based new-product development = new-product development in which various company

departments work closely together, overlapping the steps in the product development process to save
time and increase effectiveness.

Systematic new product development = innovation management system to collect review evaluate
and manage new product ideas

New product development in turbulent times = innovation more often helps than hurts in making
the company more competitive and positioning it better for the future

Product life cycle PLC = the course of a product’s sales and profits over its lifetime.

1. Style = a basic and distinctive mode of expression.

2. Fashion = a currently accepted or popular style in a given field.
3. Fad = a temporary period of unusually high sales driven by consumer enthusiasm and
immediate product or brand popularity.

PLC has 5 distinct stages:

1. Product development: the company finds and develops new product ideas. The sales are zero
and the company makes investment costs.
2. Introduction stage = the PLC stage in which a new product is first distributed and made
available for purchase. The profits are negative or low, because of the low sales and high
distribution and promotion expenses.
3. The growth stage = is the PLC stage in which a product’s sales start climbing quickly.
4. The maturity stage = is the PLC stage in which a product’s sales growth slows or levels off.
Most products are at this stage. The company tries to modify the product by changing its
characteristics. Increase consumption by finding new customers. Modifying the marketing
mix also improves sales.
5. Decline stage = the PLC stage in which a product’s sales fade away. Maintain, harvest or drop
a product.

Chapter 10 - Price
Price = the amount of money charged for a product or service, or the sum of the values that customers
exchange for the benefits of having or using the product or service.

Major pricing strategies:

1. Customer value-based pricing = setting price based on buyers’ perceptions of value

rather than on the seller’s cost.
2. Cost-based: Design -product cost -set a price
3. Value-based: assess customer needs - target price to match - determine the cost
-design product. There are two methods of Value-based pricing:
 a. Good-value pricing = offering just the right combination of quality and good
service at a fair price.
b. Value-added pricing = attaching value-added features and services to
differentiate a company’s offers and charging higher prices.
Everyday low pricing (EDLP) = charging a constant everyday low price with
few or no temporary price discounts.
High-low pricing = charging higher prices on an everyday basis but running
frequent promotions to lower prices temporarily on selected items.
4. Cost-based pricing = setting prices based on the costs of producing, distributing, and
selling the product plus a fair rate of return for effort and risk. (opposite of
value-based) The types of costs:
a. Fixed costs (overhead) = costs that do not vary with production or sales level.
b. Variable costs = costs that vary directly with the level of production.
c. Total costs = the sum of fixed and variable costs for any given level of
production.
d. Experience curve (learning curve) = the drop in the average per-unit
production cost that comes with accumulated production experience. The
x-axis is accumulated production and the Y-axis is the cost per unit and then
there is a downward-sloping line. There are two methods:
i. Cost-plus pricing (markup pricing) = adding a standard markup to the
cost of the product.
ii. Break-even pricing (target return pricing) = setting the price to break
even on the costs of making and marketing a product, or setting the
price to make a target return.
5. Competition-based pricing = setting prices based on competitors’ strategies, prices,
costs, and market offerings. See what competitors charge for their products.

Target costing = pricing that starts with an ideal selling price and then targets costs that will
ensure that price is met.

Different types of markets:

1. Pure competition: Marketing strategy has little/no role.

2. Monopolistic competition: Marketing strategies are useful- advertising.
3. Oligopolistic competition: a few large sellers; marketing strategy important.
4. Pure monopoly: one seller.

The market and demand

Demand curve = a curve that shows the number of units the market will buy in a given
period, at different prices that might be charged.
Price elasticity = a measure of the sensitivity of demand to changes in price. If demand
hardly changes with a small price change.
Chapter 11 - New Product price strategies
Market-skimming pricing (price skimming) = setting a high price for a new product to
skim maximum revenues layer by layer from segments willing to pay the high price; the
companies make fewer but more profitable sales.

Market-penetration pricing = setting a low price for a new product to attract a large number
of buyers and a large market share.

Product mix pricing strategies:

1. Product line pricing

2. Optional product pricing
3. Captive product pricing
4. By product pricing
5. Product bundle pricing

Product line pricing = setting the price steps between various products in a product line
based on cost differences between the products, customer evaluations of different features,
and competitors’ prices.

1. Optional-product pricing = the pricing of optional or accessory products along with

the main product.
2. Captive-product pricing = setting a price for products that must be used along with the
main product.
3. By-product pricing = setting a price for by-products to make the main product’s
price more competitive.
4. Product bundle pricing = combining several products and offering the bundle at a
reduced price.

Price adjustment strategies

1. Discount = a straight reduction in price on purchases during a stated period in larger

quantities.
2. Allowance = promotional money paid by manufacturers to retailers in return for an
agreement to feature the manufacturer’s products in some way.
3. Segmented pricing = selling a product or service at two or more prices, where the
difference in prices is not based on differences in costs.
a. Product form
b. Location-based
c. Customer-segment
d. Time-based
4. Psychological pricing = pricing that considers the psychological of prices and not
simply the economics; the price is used to say something about the product.
 a. Reference prices = prices that buyers carry in their minds and refer to when
they look at a given product.
5. Promotional pricing = temporarily pricing products below the list price, and
sometimes even below cost, to increase short-run sales.
6. Geographical pricing = setting prices for customers located in different parts of the
country or world.
a. FOB-origin pricing = a geographical pricing strategy in which goods are
placed free on board a carrier; the customer pays the freight from the factory
to the destination.
b. Uniform delivered pricing = a geographical pricing strategy in which the
company charges the same price plus freight to all customers, regardless of
their location.
c. Zone pricing = a geographical pricing strategy in which the company sets up
two or more zones. All customers within that zone pay the same total price;
the more distant the area, the higher price.
d. Based-point pricing = a geographical pricing strategy in which the seller
designates some city as a basing point and charges all customers the freight
cost from that city to the customer.
e. Freight absorption pricing = a geographical pricing strategy in which the seller
absorbs all or part of the freight charges to get desired business.
7. Dynamic pricing = adjusting prices continually to meet the characteristics and needs
of individual customers and situations.
8. International pricing: the price of the product is different in different countries,
because it may be more expensive to get it there.

Pricing within Channel levels:

1. Price-fixing = seller set the price without talking to the competitors.

2. Predatory Pricing = setting a low price to compete and punish.
3. Deceptive pricing = wrong price savings – increase the price then make a sale.
4. Price discrimination = charging more money for the same.

Chapter 12 - Delivering customer value

Value delivery network = a network composed of the company, suppliers, distributors, and,
ultimately, customers who partner with each other to improve the performance of the entire
system in delivering customer value.

Marketing channel (distribution channel) = a set of interdependent organizations that help

make a product or service available for use or consumption by the consumer or business
user.Marketing channels constits of :
 1. Direct marketing channel : a marketing channel that has no intermediary channel
2. Indirect marketing channel : a marketing channel containing one or more intermediary
levels.

Marketing Channel – Key functions:

1. Information
2. Promotion
3. Contact
4. Matching
5. Negotiation
6. Physical Distribution
7. Financing
8. Risk Taking

The length/the number of intermediaries:

Channel level = a layer of intermediaries that performs some work in bringing the product
and its ownership closer to the final buyer.

1. Direct marketing channel = a marketing channel that has no intermediary levels.

2. Indirect marketing channel = a marketing channel containing one or more
intermediary levels.

Channel conflict = disagreements among marketing channel members on goals, roles and
towards- who should do what and for what rewards. Vertical is among different levels in the
same channel. Horizontally is among the same levels of the channel.

Conventional distribution channel = a channel consisting of one or more independent

producers, wholesalers, and retailers, each a separate business seeking to maximize its profits,
perhaps even at the expense of profits for the system.

Vertical marketing system (VMS) = a channel structure in which producers, wholesalers,

and retailers act as a unified system. One channel member owns the other, had a contract with
them, or has so much power that they all cooperate.

1. Corporate VMS = the successive stages of production and distribution under single
ownership - channel leadership is established through common ownership.
2. Contractual VMS = the independent firms at different levels of production and
distribution join through contracts.
a. Franchise organization >channel member, called a franchise, links serial stages
in the production-distribution process.
i. Manufacturer-sponsored retailer
ii. The manufacturer-sponsored wholesaler franchise system
 iii. Service-firm sponsored retailer franchise system
3. Administered VMS = coordination of the successive stages of production and
distribution through the size and power of parties.

Horizontal marketing system = a channel agreement in which two or more companies at

one level join to follow a new marketing opportunity.

Multichannel distribution systems = are distribution systems in which a single firm sets up
two or more marketing channels to reach one or more customer segments.

Disintermediation = the cutting put off marketing channel intermediaries by product or

service producers or the displacement of traditional resellers by radical new types of
intermediaries.

Marketing channel design = designing effective marketing channels :

1. Analyzing customer needs

2. Setting channel objectives
3. Identifying major channel alternatives and evaluating those alternatives

Types of intermediaries: sell indirectly through retailers or direct sale

Types of distribution :

1. Intensive distribution = stocking the product in as many outlets as possible.

2. Exclusive distribution = giving a limited number of dealers the exclusive right to
distribute the company’s products in their territories.
3. Selective distribution = the use of more than one but fewer than all of the
intermediaries who are willing to carry the company’s products.

Marketing channel management = selecting, managing, and motivating individual channel

members and evaluating their performance over time.

Marketing logistics (physical distribution) = planning, implementing and controlling the

physical flow of materials, final goods, and related information from points of origin to point
of consumption to meet customer requirements at a profit.

Supply chain management = managing upstream and downstream value-added flows and
related information among suppliers, the company, resellers, and final customers.
Distribution centre = a large, highly automated warehouse designed to receive goods from
various plants and suppliers, take orders, fill them efficiently, and deliver goods to customers
as quickly as possible.

Warehouses =store well for moderate to long periods.

Intermodal transportation = combining two or more modes of transportation.

Integrated logistics management = the logistics concept that emphasizes teamwork to

maximize the performance of the entire distribution system.

Third-party logistics = an independent logistics provider that performs any or all of the
functions required to get a client’s product to market.

Implementing the P of place from the marketing mix:

The choice of channel members is based on:

1. Length of channel
a. The number of channel levels, can be direct or indirect, considerations:
i. Producers lose more control and face greater channel complexity when
there are more channels
ii. For international channels: could lead to price escalations
2. Width of the channel (number of intermediaries)
a. Market coverage, how will you distribute: exclusive, selective or intensive
3. The number of channels:
a. Multichannel distribution; bricks, flicks and clicks

Channel choices criteria:

1. Economic criteria
2. Control
3. Adaptability

Chapter 14 - Customer value

Information processing model of communication

1. Exposure = the person must see or hear the communication.

2. Awareness = the person must notice the communication.
3. Comprehend = the person must understand the intended message or arguments of the
communication.
4. Intend to act= the person must plan to act in the desired manner of the
communication.
5. Take action = the person must actually act in the desired manner of the
communication.

Promotion mix (marketing communications mix) = the specific blend of promotion tools,
that the company uses to persuasively communicate customer value and build customer
relationships.
 1. Advertising = any paid form of non-personal presentation and promotion of ideas,
goods, or services by an identified sponsor.
2. Sales promotion = short-term incentives to encourage the purchase or sale of a
product or service.
3. Personal selling = personal presentation by the firm’s sales force to make sales and
build customer relationships.
4. Public relations = building good relations with the company’s various publics by
obtaining favourable publicity, building up a good corporate image, and handling or
heading unfavourable rumours, stories, and events.
5. Direct marketing = direct connections with carefully targeted individual consumers to
both obtain an immediate response and cultivate lasting customer relationships.

Major factors of changing marketing communications

1. Consumers
2. Marketing strategies
3. Digital technology

Integrated marketing communications (IMC) = the integration by the company of its

communication channels to deliver a clear, consistent, and compelling message about the
organization and its brands.

1. Consumers are better informed

2. More communication
3. Less mass marketing
4. Changing communications technologies

Steps in developing effective marketing communication:

1. Identifying the target audience

a. 5 W (what,how, when,where, who)
2. Determine the communication objectives: Buyer-readiness stages: the stages
consumers normally pass through on their way to purchase, including:
a. awareness
b. knowledge
c. liking
d. preference
e. conviction
f. Purchase
3. Designing a message: ideally, the message should get attention, hold interest, arouse
desire, and obtain action (=AIDA model).
4. Choosing media:
a. Personal communication channels = channels through which two or more
people communicate directly with each other, including face-to-face, on the
phone, via e-mail, or even through texting or an internet chat. Word-of-mouth
 influence = personal communications about a product between target buyers
and neighbours, friends, family members, associates and other consumers.
Buzz marketing = cultivating opinion leaders and getting them to spread
information about a product or service to others in their communities.
b. Non-personal communication channels = are media that carry messages
without personal contact or feedback, including major media, atmospheres,
and events.
5. Selecting the message source: the people who promote the product, for instance,
dentist for toothpaste or bolt for shoes.
6. Collecting feedback: research the effect on the target audience

Message content = an appeal or theme that will produce the desired response;
rational,emotional and moral appeal.

Message structure = three message structure issues must be handled

1. Draw a conclusion or leave it to the audience

2. Present the strongest argument first or last
3. Present a one sided argument

Setting the promotion budget:

1. Affordable method = setting the promotion budget at the level management thinks the
company can afford.
2. Percentage-of-sales method = setting the promotion budget at a certain percentage of
current or forecasted sales or as a percentage of the unit sales price.
3. Competitive parity method = setting the promotion budget to match competitors’
outlays. Spend what competitors spend.
4. Objective-and-task method = developing the promotion budget by :
a. Defining specific promotion objectives.
b. Determining the tasks needed to achieve these objectives.
c. Estimating the costs of performing these tasks. The sum of these costs is the
proposed promotion budget.

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 channel
members, which in turn promotes it to final consumers.

Pull strategy = a promotion strategy that calls for spending a lot on consumer advertising
and promotion to induce a final consumer to buy the product, creating a demand vacuum that
pulls the product through the channel.

Socially responsible marketing communication

1. Communicate openly and honestly with consumers and resellers

 2. Avoid deceptive or false advertising
3. Avoid bait-and-switch advertising
4. Conform to all federal,state and local regulations

Chapter 15 - Advertising
Advertising = any paid form of nonpersonal presentation and promotion of ideas,ggods or
services by an identified sponsor

Marketing management must make four decisions when developing an advertising program:

1. Setting advertising objectives = a specific communication task to be accomplished

with a specific target audience during a specific period. There are three different
purposes:
a. Inform
b. Persuade
c. Remind = mature products, keep customers thinking about the product.

2. Setting the advertising budget = the dollars and other resources allocated to a product
or a company advertising program.
3. Developing advertising strategy = the strategy by which the company accomplishes
its advertising objectives. It consists of two major elements: creating advertising
messages and selecting advertising media.
a. Creating advertising messages. Madison and Vine = a term that has come to
represent the merging of advertising and entertainment to break through the
clutter and create new avenues for reaching customers with more engaging
messages. Creative concept = the compelling „big idea” that will bring an
advertising message strategy to life distinctively and memorably (meaningful;
believable; distinctive). Execution style = the approach, style, tone, words,
and format used for executing an advertising message.
b. Selecting advertising media = the vehicles through which advertising
messages are delivered to their intended audience.
i. Reach, frequency, impact and engagement
ii. Choose media type
iii. Select media vehicles
iv. Choose media timing
4. Evaluating advertising effectiveness and the return on advertising investment = the
net return on advertising investment divided by the costs of the advertising
investment.

Advertising agency = Marketing services firm that assists companies in planning, preparing,
implementing, and evaluating all or portions of their advertising programs.
Public relations: Building good relations with the company’s various publics by obtaining
favourable publicity; building up a good corporate image and handling or heading off
unfavourable rumours and stories. PR has a strong impact and lower cost than an
advertisement. Public relations tools include; news, written materials, videos, and corporate
identity materials.

Chapter 16 - Promotion
Sales promotion = short-term incentives to encourage the purchase or sales of a product or a
service. The tools to accomplish sales promotion:

1. Consumer promotions = sales promotion tools used to boost short-term customer

buying and involvement or enhance long-term customer relationships. One of the
biggest promotion tools is event marketing (event sponsorships) = creating a
brand-marketing event or serving as a sole or participating sponsor of events created
by others.
2. Trade promotions = sales promotion tools used to persuade resellers to carry a brand,
give it shelf space, promote it in advertising, and push it to consumers. Give an
advertising allowance: compensates retailers for advertising the product.
3. Business promotions = sales promotion tools used to generate business leads,
stimulate purchases, reward customers, and motivate salespeople.
4. Sales force promotions = sales promotion spending accounts for force.

The heavy use of sales promotions has led to promotion clutter, similar to advertising clutter.

Developing the sales promotion program

1. Determine the size of the incentive = a certain minimum incentive is necessary if

promotion is to succeed
2. Set conditions for participation = incentives might be offered to everyone or only to
select groups
3. Decide how to promote and distribute the promotion program itself= how do we give
out the promotion
4. Decide on the length of the promotion = too short will be missed by many prospects,
to long will lose some its act now forces
5. Evaluate the return on sales promotion efforts

Chapter 19 - The global marketplace

Global firm = a firm, that, by operating in more than one country, gains R&D, production,
marketing and financial advantages in its costs and reputation that are not available to purely
marketing domestic competitors,

Major global marketing decisions:

1. Looking at the global marketing environment. Look at different points:

a. The international trade system. Regional free trade zones (free trade zones) = a
group of nations organized to work toward common goals in the regulation of
 international trade. (EU) Economic environment (subsistence; raw material;
emerging; industrial)
b. Political-legal environment (political stability)
c. Cultural environment (different norms and taboos)
2. Deciding whether to go global
3. Deciding which markets to enter
a. Indicators of market potential: demographic characteristics (population age),
sociocultural factors (consumer lifestyles, beliefs and values), geographic
characteristics (transportation structure), political and legal factors (political
stability), economic factors (GDP size and growth).
4. Deciding how to enter the market
a. Exporting = entering foreign markets by selling goods produced in the
company’s home country, often with little modification. They can export
indirectly, through intermediaries, and export directly by handling their
exports.
b. Joint venture = entering foreign markets by joining with foreign companies to
pro due or market a product or service. This can be done through:
i. Licensing = entering foreign markets through developing an agreement
with a licensee in a foreign country.
ii. Contract manufacturing = a joint venture in which a company contracts
with manufacturers in a foreign market to produce its product or
provide its service.
iii. Management contracting = a joint venture in which the domestic firm
supplies the management know-how to a foreign company that
supplies the capital; the domestic firm exerts management services
rather than products.
iv. Joint ownership = cooperative venture in which a company creates a
local business with investors in a foreign market, who share ownership
and control.
c. Direct investment = entering a foreign market by developing foreign-based
assembly or manufacturing facilities. The commitment, risk(devalued
currency; falling market), control, and profit potential grows from exporting to
direct investment.
5. Deciding on the global marketing program
a. Standardized global marketing = an international marketing strategy that used
the same marketing strategy and mix in all of the company’s international
markets.
b. Adapted global marketing = an international marketing approach that adjusts
the marketing strategy and mix elements to each international target market,
which creates more costs but hopefully produces a larger market share and
return.
6. Deciding on the Global Marketing organization
a. Organize an export demand
b. Creation of an international division
 c. Becoming a global organization

The marketing mix internationally:

1. The P of product internationally

a. Straight production extension = marketing a product in a foreign market
without making any changes to the product
b. Product adaptation: adapting a product to meet local conditions or wants in a
foreign market
i. Government regulations
ii. Electrical current standards
iii. Measuring systems
iv. Operating systems
c. Product invention = creating new products or services for foreign markets
2. The P of promotion internationally
a. Is all about the need to change the specific communication message & media
strategy because of differences in environmental and cultural requirements.
3. The P of price internationally
a. The pricing strategy is one of the most critical and complex issues in global
marketing. A company must consider multiple sets of
i. Market conditions
ii. Cost factors
iii. Competitors
iv. Government regulation
b. Price escalation = the added costs incurred as a result of exporting products
from one country to another, factors that lead to higher prices are:
i. Cost of transport
ii. Inflation
iii. Middleman
iv. Taxes
v. Tariffs
vi. Administrative costs
4. The P of Place internationally
a. Positioning = where and to whom do I want to sell my product , channel
distribution is based on this decision
b. Learn about the distribution of different countries, and how do people get a
hold of the product

Whole-channel view = Designing international channels that take into account the entire
global supply chain and marketing channel, forging an effective global value delivery
network.

Communication adaptation = A global communication strategy of fully adapting

advertising messages to local markets.
International marketing is the process of planning and executing the conception, pricing,
promotion, and distribution of ideas, goods, and services to create exchanges that satisfy
individual and organizational objectives. The steps are;

1. Understanding the marketplace and customer needs and wants

2. Design a customer-driven marketing strategy
3. Construct an integrated marketing program that delivers superior value
4. Build profitable relationships and create customer delight
5. Capture value from customers to create profits and customer equity

In international marketing it depends on countries:

1. Demographic characteristics
2. Geographic characteristic
3. Political and legal factors
4. Economic factors
5. Sociocultural factors

Hofstede’s dimension of culture

1. Power distance = degree of inequality among people which the population of a

country considers as normal.
2. Uncertainty avoidance = degree to which people prefer structure over unstructured
situations
3. Individualism = degree to which people prefer to act as individuals rather than as
members of groups
4. Masculinity = degree to which values like assertiveness, performance, success and
competition prevail over values like the quality of life, maintaining warm personal
relationships, and service care for the weak
5. Long-term orientation = values oriented toward the future