Marketing Word

Lecture Notes for Marketing Management MBA - AASTMT
Dr. Ali Abdel-Bar by Mostafa El-Bedawy
CHAPTER 1 CREATING AND CAPTURING CUSTOMER

VALUE
1 MARKETING
● Marketing: means customer satisfaction.
○ How we satisfy customer need or wants?
By creating values
○ Why we create values?
To capture values in returns
○ How to capture values?
By creating values
○ How to create values?
By understanding the marketing process
2 MARKETING PROCESS
● Marketing Process: the process by which companies create value for customers
and build strong customer relationships in order to capture value from
customers in return.
● Five steps = Four to create values + One to capture value.
● Customer is the only BOSS, and our aim is to satisfy the customer need or want.
● What is marketed?
Goods, services, events & experiences, persons, places and properties,
organizations, information, ideas, etc.
● The goal of marketing is to attract new customers and keep & grow current
customers.
○ Current customer is more important than potential customer because our
current customer is our gate to a new customer, besides we cannot attract a
new customer while current customer is not satisfied.
■ Satisfied customers buy again and tell others about their good
experiences.
■ Dissatisfied customers often switch to competitors and disparage the
product to others.
● Market means my product market.
● Marketing management orientations (Chapter one - slides from 26 to 34).
2.1 UNDERSTAND THE MARKET BASE THAT YOU WILL

OPERATE THERE.
● Study the customer need or want.
● Study the whole market not your target segment.
1.1.1. FIVE CORE CONCEPTS
To understand the marketplace & the customer needs or wants, you need to
understand the five core concepts
● Needs, wants, and demands

○ Needs: states of felt deprivation, they include
■ Basic physical needs for food, clothing, warmth,
■ Safety; social needs for belonging and affection;
■ Individual needs for knowledge and self-expression.
○ Needs are the essential lower order needs (e.g. eating, safety, marriage is
both physiological and social ‫)عشق الروح ملهوش اخر لكن عشق الجسد فاني‬.
○ Wants are the form of human needs shaped by culture and individual
personality (e.g. eating fish, meat, etc.).
○ Demands: human wants that are backed by buying power.
○ Demand is having both the willing and the purchase power to be counted as
one of the target segment.
● Market offerings (products, services, and experiences)
○ Marketing offering means offering a package (combination) not a product
(e.g. car; product, service, spare parts, resale value, information, experience,
history, brand name, reputation, etc.).
● Value and satisfaction
○ Value: total benefits are more than total cost (‫)المنتج يستاهل اكتر من كدا‬.
■ Benefits include praise of people, prestige, etc.
■ Cost includes price, distance, crowd, time, effort, etc.
○ Satisfaction: your perception (‫ )تعرفك علي المنتج‬exceeds your expectation.
■ Expectations come from word of mouth, advertisement, private
experience, etc.
■ Marketers should set the right level of expectations not too high or too
low; they should not raise their customer expectations because customer
satisfaction will be very hard.
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E.g. tell your customers that the car is stable at 160 while it is stable at
180, so when they perceive the car; they are satisfied at 160 and
delighted at 180. On the other hand, if you tell your customer that the car
is stable at 180, and the car is not stable at 175, they will be unsatisfied
even if it is stable at 160.
● Exchanges (marketing core concept) and relationships
○ Exchange: the act of obtaining a desired object from someone by offering
something in return.
○ Exchange conditions
■ Two buyers.
■ Buyers have something value (‫)كل طرف يملك شيئ له قيمه‬
□ Customer has money.
□ Seller has T-shirt.
■ Value from the other side
□ The customer evaluates the T-shirt and buys it if it is a value product
for him (‫)المنتج يستاهل‬.
□ Seller wants the money.
■ Freedom.
■ Communication (‫)الفاترينه‬.
● Markets
○ Market: the set of all actual and potential buyers of a product or service.
○ Marketers are concerned with demand only (not supply & demand), because
market opportunities occur when there is an unsatisfied demand; which
indicates that
■ The supply is low.
■ The supply is high but does not match customer demand (need or want).
E.g. In 1998, there was a recession in the market of cars; the supply was
20000 monthly and only 18000 are sold. But the marketers noticed that
LADA & Fiat prices range from 20000 to 30000 and Mitsubishi & Peugeot
prices range from 50000 to 80000, so they decided to create a market
opportunity and introduced a new car “Daewoo” in the segment between
30000 and 50000; which had a high demand.
○ To open a new business ask yourself two questions
■ Is there an unsatisfied demand in the market?
■ Can you deliver your customer a higher level of satisfaction at the same
price level?
2.2 DESIGN A CUSTOMER DRIVEN MARKETING STRATEGY
● Marketing management is the art and science of choosing target markets and
building profitable relationships with them.
○ What customers will we serve? >>> Selecting customers to serve >>> Market
segmentation & targeting.
○ How can we best serve these customers? >>> Choosing a value proposition
>>> differentiation & positioning.
● Who is the segment you will target and how to serve them.
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2.1.1. MARKET SEGMENTATION

● Market segmentation: dividing the market into smaller segments because we
work in a large heterogeneous market.
● You should select a segment/ segments to serve (not obligatory).
● Can we target the whole market with one market offering?
Yes we can but we should not, because if we target the whole market with one
market offer, we cannot deliver to our customer in a certain segment superior
value and satisfaction.
● Market segment (target market): group of customers who share a common
need or want not common characteristics (e.g. Costa customers are of different
professions).
3.1.1. TARGETING
● Target marketing refers to selecting which segments to go after.
● Targeting: evaluating each market segment’s attractiveness in order to select
the right segment/ segments to target.
● Segment attractiveness: Is it attractive to do business for that segment alone or
not?
○ Segment size & growth rate: number of customers in the segment and to
what extend the market is promising.
Note that: a company wants to select segments that have the right size and
growth characteristics. The largest, fastest-growing segments are not always
the most attractive ones for every company. Smaller companies may lack the
skills and resources needed to serve larger segments. Or they may find these
segments too competitive.
○ Segment structure: factors that affect long-run segment attractiveness
■ Supplier power.
■ Customer purchasing & bargaining powers.
■ Number of competitors.
■ Aggressiveness of competitors (‫)يتفقوا عليا‬.
■ Potential of new entrants.
■ Sustainability and stability.
○ Company objectives and resources: a company should only enter segments
in which it can create superior customer value and gain advantages over its
competitors.
4.1.1. DIFFERENTIATION
● Value proposition: How a company will create differentiated values for targeted
segments to satisfy their needs or wants, and what positions it wants to occupy
in those segments.
● Differentiation: introducing different market offerings at least one market
offering for each target segment to create superior customer value & satisfaction
● Selecting a target segment/ segments to serve in order to differentiate my
market offering by customizing my market offering based on customer need or
want.
● Wrong concept: we should differentiate our marketing offering from competitors
by checking competitors’ market offerings. In other words, differentiation
happens in market.
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● Right concept: we do not need to check competitors’ market offerings; we need
to customize our market offering based on customer need or want. In other
words, differentiation happens in factory.
● For a company to differentiate its market offerings, it must have
○ Customers who understand its differentiation, because each differentiation
for the company is cost.
○ Number of customers who pay adequate revenue for the company to achieve
profitability or close the segment.
5.1.1. POSITIONING
● Positioning: arranging process for the market offering to occupy a clear,
distinctive and desirable place relative to competing products in the minds of
target customers (not in the market).
● Five factors = two in marketers’ hands (measurable) + three immeasurable.
○ Benefits: choose higher benefits at the same price level.
○ Price: choose lower price with the same benefits.
○ Perception.
○ Impression.
○ Feelings.
● The companies try to occupy the clear distinctive right position (not the first
position) based on the five factors.
● Position and sales volume are not related.
● Positioning differs according to target segment, customer, etc.
2.3 CONSTRUCT AN INTEGRATED MARKETING PLAN AND
PROGRAM
● Integrated marketing program: comprehensive plan that communicates and
delivers the intended value to chosen customers.
● Once you said that is your target segment, you should abstract your marketing
mix.
● Marketing mix: a set of marketing tools that work together to satisfy the
customer need or want and build good relationship with the customer.
● Controllable factors as marketers can manage them because other factors are
uncontrollable (e.g. customer income – culture - religion).
● Marketers rule is how to manage controllable factors in order to adapt with
uncontrollable factors.
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Product
Marketing Mix
Four Ps
Promotion Marketing Tools Price
Marketing Functions
Controllable Factors
Place
6.1.1. PRODUCT
● Product: developing a new product that satisfies customers need or want within
their budget (not a quality product).
● Marketing has no concerns towards quality unless it is linked to customer
satisfaction as customers search for the products that satisfy their need or want
and not searching for the highest quality product.
7.1.1. PRICE
● Price: setting a reasonable price which is the amount of money we charge for
benefits.
● Price is a part of product personality which creates product value image of
customer.
○ Low prices affect product personality negatively especially for prestige’s
products.
● Markets are divided according to prices into quality oriented and price oriented.
● Price of product is determined by three major facts: cost, competition ( ‫اسعار‬
‫)السوق‬, and value.
8.1.1. PLACE
● Place: where we should offer our product?
● Offering your product in the right place with the right intensity.
● The right place is where your target segment.
● Intensity wrong concept: sales volume increases as intensity increases.
● Intensity right concept: product value image is affected negatively as intensity
increases because effort is a part of the product value image, so the distribution
strategy depends on the type of the product.
○ Convenience products are of intensive distribution, and no effort is required.
○ Shopping products are of selective distribution, and effort is required.
○ Special products are of exclusive distribution, and huge effort is required.
○ Unsought products have no distribution strategy, because it can be
convenience or shopping products.
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9.1.1. PROMOTION
● Promotion: means market communication.
● Tell your customer a positive message about your product ( ‫)تسمع سمعة جيدة عن المنتج‬.
● Types of messages
○ Informative message (‫)انا منتج جديد‬
○ Persuasive message (‫)انا احسن من اللي بالي بالك‬
○ Reminder message (‫)ال شيئ يفوق الخبرة‬
● How to deliver positive message?
● Main promotion mix
○ Advertising
■ One way communication
■ No interaction
■ One message for all (genders – ages – religion, etc.) >>> we cannot
customize our message.
■ Wide scope
■ Fast
■ Low cost/ person
■ Short message
■ Targeting waste.
■ Suitable for convince products and shopping products of large numbers of
customers (e.g. Toyota Corolla).
○ Person selling
■ One to one communication
■ Expensive
■ Slow
■ High interaction
■ Customized message
■ Correct targeting
■ Low waste as I select my customer.
■ Suitable for industrial products.
○ Sales promotion (discounts – tasting companies – offers – competitions –
samples – nearly expired products)
■ Short term incentives encouraging the customer to buy or to switch from
brand to brand by reducing or eliminating the risk of the first trial.
○ Public relation (‫)رشاوي‬
■ Build and maintain a good relationship (media public – local publics –
internal publics – institutions – neighbors – police).
○ Direct marketing: when my market is very special with small numbers of
special customers.
■ In e-mails, Dear Mr. Name not Dear sir.
2.4 BUILD AND MAINTAIN A GOOD RELATIONSHIP WITH
YOUR CUSTOMER.
● Customer Relationship Management (CRM): the overall process of building and
maintaining profitable customer relationships by delivering superior customer
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● Deliver superior value and satisfaction to your customer.
● Customer- perceived value: the difference between total customer value and
total customer cost.
● Value: total benefits are more than total cost (‫)المنتج يستاهل اكتر من كدا‬.
○ Benefits include praise of people, prestige, etc.
○ Cost includes price, distance, crowd, time, effort, etc.
● Customer satisfaction: the extent to which a product’s perceived performance
matches a buyer’s expectations.
○ If the product’s performance falls short of expectations >>> the customer is
dissatisfied.
○ If performance matches expectations >>> the customer is satisfied.
○ If performance exceeds expectations >>> the customer is highly satisfied or
delighted.
● Satisfaction: your perception (‫ )تعرفك علي المنتج‬exceeds your expectation.
○ Expectations come from word of mouth, advertisement, private experience,
etc.
○ Marketers should set the right level of expectations not too high or too low;
they should not rise their customer expectations because customer
satisfaction will be very hard.
E.g. tell your customers that the car is stable at 160 while it is stable at 180,
so when they perceive the car; they are satisfied at 160 and delighted at 180.
On the other hand, if you tell your customer that the car is stable at 180, and
the car is not stable at 175, they will be unsatisfied even if it is stable at 160.
● Customer relationship levels and tools (Chapter one - slides from 42 to 44).
2.5 CAPTURE VALUE
● After creating superior customer value, the firm creates highly satisfied
customers who stay loyal, buy more, and talk favorably to others about the
company and its products; which mean greater long-run returns for the firm.
● Outcomes: customer loyalty & retention, sales, market share, customer share,
profit, customer equity (selling the company with its customers), etc.
● Customer equity: the total combined customer lifetime values of all of the
company’s customers (treating customers as assets that need to be managed
and maximized).
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CHAPTER 7 CREATING VALUE FOR TARGET

CUSTOMERS
DESIGN A CUSTOMER DRIVEN MARKETING STRATEGY
building profitable relationships with them.
○ What customers will we serve? >>> Selecting customers to serve >>> Market
segmentation & targeting.
○ How can we best serve these customers? >>> Choosing a value proposition
>>> differentiation & positioning.
● Who is the segment you will target and how to serve them.
● The main aim of this process is to clarify the target segment to be able to
construct a right customized marketing mix.
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3 SELECTING CUSTOMERS TO SERVE

3.1 MARKET SEGMENTATION
● Companies must identify the parts of the market they can serve best and most
profitably.
● Market segmentation: dividing the market into smaller segments/ markets
because we work in a large heterogeneous market.
○ For small market, we do not need to divide, we can target with one market
offering.
○ Once you select a segment, your product market is called segment/ market.
● You should select a segment/ segments to serve (not obligatory).
● Can we target the whole market with one market offer?
Yes we can but we should not, because if we target the whole market with one
market offer, we cannot deliver to our customer in a certain segment superior
profession).
○ Customers of different market segments (original market) are
heterogeneous.
○ Customers of the same market segment are relatively homogeneous.
● Multiple market segmentation is used to identify smaller, better-defined target
groups.
● Market segmentation classification
○ Segmenting consumer markets.
○ Segmenting business markets (Chapter seven - slides 19).
○ Segmenting international markets (Chapter seven - slides 20 & 21).
● Major consumer market segmentation bases
Segmentation Variable Examples
Nations, regions, states, counties, cities, neighborhoods,
Geographic
population density (urban, suburban, rural ‫)ريفي‬, climate.
Age, gender, education, occupation, income,
Religion, race, ethnicity (‫)األصل العرقي‬,
Demographic
Generation, nationality,
Family size, life-cycle stage, family life cycle (‫)مراحل الحياة المختلفة‬.
Psychographic Social class, lifestyle, personality traits.
Behavioral Occasions, benefits, user status, usage rate, loyalty status.
● Geographic segmentation: a company may decide to operate in one or a few
geographical areas or operate in all areas but pay attention to geographical
differences in needs and wants.
● Demographic variables are the most popular bases for segmenting customer
groups. One reason is that consumer needs, wants, and usage rates often vary
closely with demographic variables. Another is that demographic variables are
easier to measure than most other types of variables. Even when marketers first
define segments using other bases, such as benefits sought or behavior, they
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must know a segment’s demographic characteristics to assess the size of the
target market and reach it efficiently.
● Behavioral variables are the best starting point for building market segments.
● Income: divides the market into affluent, middle-income or low-income
consumers.
● Benefits: based on benefits offered by the product like toothpaste (sensitivity,
whitening, smell, etc.).
● User Status: markets can be segmented into nonusers, ex-users, potential users,
first-time users, and regular users of a product.
● Usage Rate: markets can also be segmented into light, medium, and heavy
product users.
● We cannot use a single base to divide the market; we should use multiple bases
so that the target segment becomes clearer. On the other hand, using too many
bases may cause loss of a potential customer or sales opportunity. We use
adequate number of bases till the target segment is clear enough to construct
marketing mix.
● Requirements for effective segmentation
○ Measurable: the size, purchasing power, and profiles of the segments can be
measured.
■ Relate the immeasurable bases to measureable bases.
○ Accessible (‫)اعرف اوصل ليها‬: the market segments can be effectively reached
and served.
○ Substantial (‫)مستقرة ومكملة معايا‬: the market segments are large or profitable
enough to serve.
○ Differentiable: the segments are conceptually distinguishable and respond
differently to different marketing mix elements and programs.
Example: If men and women respond similarly to marketing efforts for soft
drinks, they do not constitute separate segments.
○ Actionable (‫)عملي‬: effective programs can be designed for attracting and
serving the segments.
● Examples down in the note section (Chapter seven - slides from 11 to 24).
● Marketers should use marketing segmentation bases not only for market
segmentation, targeting, differentiation, and positioning, but also for every
marketing decision.
3.2 TARGETING
● Target marketing refers to selecting which segments to go after.
10.1.1. EVALUATING MARKETING SEGMENTS
● Segment attractiveness: Is it attractive to do business for that segment alone or
not?
○ Segment size & growth rate: number of customers in the segment and to
what extend the market is promising.
Note that: a company wants to select segments that have the right size and
growth characteristics. The largest, fastest-growing segments are not always
the most attractive ones for every company. Smaller companies may lack the
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skills and resources needed to serve larger segments. Or they may find these
segments too competitive.
○ Segment structure: factors that affect long-run segment attractiveness.
■ Suppliers control power.
■ Customer purchasing & bargaining powers.
■ Number of competitors.
■ Aggressiveness of competitors (‫)يتفقوا عليا‬.
■ Potential of new entrants.
■ Sustainability and stability.
○ Company objectives and resources: A company should only enter segments
in which it can create superior customer value and gain advantages over its
competitors.
11.1.1. SELECTING TARGET MARKET SEGMENT
● Target marketing strategies
○ Undifferentiated targeting strategy/ universal approach/ mass marketing/
total marketing (no segmentation)
■ Targeting all market segments if about (60 – 70) % of the market
segments consumes your product (e.g. salt).
■ Strategy focuses on what is common in the needs of consumers rather
than on what is different.
■ Mass marketers often have troubles competing with more-focused firms
that do a better job of satisfying the needs of specific segments.
○ Concentrated targeting strategy
■ Focusing on a segment.
■ A firm goes after a large share of one or a few smaller segments.
■ More effective and efficient.
○ Differentiated targeting strategy/ segmented marketing
■ Divide the market and target more than one segment.
■ It creates more total sales than undifferentiated marketing across all
segments.
■ It increases the costs of doing business (e.g. marketing plans for separate
segments require extra marketing research, forecasting, sales analysis,
promotion planning, and channel management).
● Micromarketing is the practice of tailoring products and marketing programs to
suit the tastes of specific individuals and locations. Rather than seeing a
customer in every individual, micro marketers see the individual in every
customer.
○ Local marketing: tailoring brands and promotions to the needs and wants of
local customer groups (e.g. cities, neighborhoods, and even specific stores).
■ Location-based marketing: by coupling mobile phone services with GPS
devices, many marketers are now targeting customers wherever they are
with what they want (e.g. marketers reaching people near their stores,
looking to make a decision).
■ Social Local Mobile (SoLoMo) search revolution: refers to the ability of
on-the-go consumers to get local information fast (e.g. pinpoint the
location of the store closest to his location).
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○ Individual marketing/ one-to-one marketing/ mass customization/ markets-
of-one marketing: tailoring products and marketing programs to the needs
and preferences of individual customers.
■ It is the process by which firms interact one-to-one with masses of
customers to design products and services tailor-made to individual
needs.
12.1.1. CHOOSING A TARGET MARKET
● Companies need to consider many factors when choosing a market-targeting
strategy, depending on
○ Company resources
■ Concentration marketing is more suited when the firm’s resources are
limited.
○ Product variability.
■ Undifferentiated marketing is more suited for uniform products, such as
grapefruit or steel.
■ Differentiation or concentration marketing is more suited for products
that can vary in design, such as cameras and cars.
○ Product life-cycle stage.
■ Undifferentiated or concentrated marketing is more suited when a firm
introduces a new product; it may be practical to launch one version only.
■ Differentiated marketing is more suited in the mature stage of the
product life cycle.
○ Market variability.
■ Undifferentiated marketing is more suited if most buyers have the same
tastes, buy the same amounts, and react the same way to marketing
efforts.
○ Competitor’s marketing strategies.
■ Differentiation or concentration marketing is more suited if competitors
use undifferentiated marketing.
■ Undifferentiated marketing can be suicidal if competitors use
differentiated or concentrated marketing.
● Socially Responsible Target Marketing (Chapter seven – slide 37).
4 CHOOSING A VALUE PROPOSITION

in those segments.
4.1 DIFFERENTIATION
● Differentiation: introducing different marketing offerings at least one marketing
● Selecting a target segment/ segments to serve in order to differentiate my
market offering by customizing my market offering based on customer need or
want.
● Wrong concept: we should differentiate our marketing offering from competitors
by checking competitors’ market offerings. In other words, differentiation
happens in market.
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● Right concept: we do not need to check competitors’ market offerings; we need
to customize our market offering based on customer need or want. In other
words, differentiation happens in factory.
● For a company to differentiate its market offerings, it must have
○ Customers who understand its differentiation, because each differentiation
for the company is cost.
○ Number of customers who pay adequate revenue for the company to achieve
profitability or close the segment.
4.2 POSITIONING
● Consumers are overloaded with information about products and services. They
cannot reevaluate products every time they make a buying decision. To simplify
the buying process, consumers organize products, services, and companies into
categories and “position” them in their minds.
● Consumers position products with or without the help of marketers. But
marketers do not want to leave their products’ positions to chance. They must
design marketing mixes to give their products the greatest advantage in selected
target markets.
○ Perception.
○ Impression.
○ Feelings.
● The companies try to occupy the clear distinctive right position (not the first
position) based on the five factors.
● Position and sales volume are not related.
● Positioning differs according to target segment, customer, etc.
● Choosing a differentiation and positioning strategy
○ Identifying a set of possible competitive advantages to build a position.
■ Competitive advantage is an advantage over competitors gained by
offering consumers greater value, either through lower prices or by
providing more benefits that justify higher prices.
■ Providing superior value from
□ Product differentiation (e.g. Subway differentiates itself as the healthy
fast-food choice).
□ Service differentiation (e.g. speedy, convenient, or careful delivery).
□ Channel differentiation (e.g. Amazon.com is a smooth-functioning
direct channel).
□ People differentiation (e.g. Disney World people are known to be
friendly and upbeat).
□ Image differentiation (e.g. Ritz-Carlton means quality; this image must
be supported by everything the company says and does).
○ Choosing the right competitive advantages.
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■ Choose the competitive advantages that build its positioning strategy. It
must decide how many differences to promote and which ones.
■ Difference to promote
□ 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 more 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 cannot easily copy the difference.
□ Affordable: Buyers can afford to pay for the difference.
□ Profitable: The Company can introduce the difference profitably.
○ Selecting an overall positioning strategy.
■ Developing a Positioning Statement: To (target segment), our (brand) is

(concept) that (point of difference).
■ 1: BMW.
■ 2: Passat.
■ 3: Korean cars.
■ 4: Brilliance.
■ 5: Chinese cars.
○ Communicating and delivering the chosen position to the market.
● For already existing companies, I have to check
○ Targeting the right segment.
○ Issues with the product: core, quality, features, attribute, branding, labeling,
packaging, etc.
○ Pricing.
○ Distribution strategy.
○ Communication strategy.
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CHAPTER 8 PRODUCT, SERVICE, AND BRANDS

BUILDING CUSTOMER VALUE
● We will study only the marketing mix
○ Two lectures for product.
○ One lecture for pricing.
○ One lecture for distribution.
○ One lecture for promotion.
● Product: is anything we offer to the market to satisfy customer need or want.
● Product is anything that can be offered in a market for attention, acquisition,
use, or consumption that might satisfy a need or want.
● Service is a product that consists of activities, benefits or satisfaction that is
essentially intangible and does not result in the ownership of anything.
● Experiences represent what buying the product or service will do for the
customer.
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5 PRODUCT LEVELS
● Any product consists of core, actual, and augmented products.

● Both actual and augmented surround the core.
● When developing products, marketers first must identify the core customer
value that consumers seek from the product. They must then design the actual
product and find ways to augment it to create this customer value and the most
satisfying brand experience.
5.1 CORE PRODUCT
● Core product: refers to the main function of the product for which the customer
is buying (e.g. the car is used for transportation >>> 4 wheels + chassis +
drivetrain + a seat).
● Core product is the main product, and no differentiation happens in this stage as
this stage is about the responsibility of the company not how the customer
perceives the product.
● Quality means that the product performs its main function >>> freedom from
defects (e.g. the car must move regardless its stability).
● Good core product makes profitability on medium & long term.
5.2 ACTUAL PRODUCT
● Actual product (‫)صورة الحقيقة للمنتج‬: refers to the product that the customer can
perceive (e.g. full car with seats, AC, mirrors, etc.).
● Actual product is putting the core product in a form that the customer can
perceive.
● Core product is a part of actual product.
● The relation between core and actual is that the actual is an adding value to the
core (sometimes actual reduce value of core e.g. packaging material react with
effective gradients of a medicine).
● Good actual product without good core product makes profitability on short
term.
● The core product is of absolute important but actual product is of relative
important depending on type of product
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○ Convince: the customer focus on core.
○ Shopping: the customer focus on both.
○ Special:
● The marketer has to maintain the pricing relationship between the core and the
actual (e.g. Cheese Domty is for 26 so the cheese is for 23 and the package is for
3).
● Quality level (perceived quality): depends on what value proposition the
company promises and the expectation of the customer and what he perceives.
It has a floor but has no ceiling.
● Product feature is the tool for differentiation, and all differentiation decisions
(marketing mix) can be changed except for features because it is done in the
factory not in the market (e.g. price, distribution & promotion can be changed
but not the feature >>> recall).
○ Product feature: a competitive tool for differentiating a product from
competitors’ products. This statement includes two mistakes
■ Product >>> marketing offering: reason is that the differentiation focuses
on the product.
■ Differentiation from competitors’ products >>> differentiation happens in
factory: reason is that the writer combines differentiation and positioning
together.
5.3 AUGMENTED PRODUCT
● Augmented product: refers to additional benefits (e.g. warranty, financial
proposals, quick repair services, website, applications, accessories, etc.).
● Augmented is in indirect relation with core but it helps in the final decision.
6 PRODUCT CLASSIFICATION
● Products are classified according to the types of consumers into
○ Consumer products: are products and services for personal consumption.
○ Industrial products: are products purchased for further processing or for use
in conducting a business (Check Lecture 8 from slide 18 to 21).
● Consumer products are classified according to ‘’ how consumer buy them’’ into
○ Convince products: customers usually buy them frequently, immediately, and
with minimal comparison and buying effort.
○ Shopping products: the customer spends much time and effort comparing
carefully on suitability, quality, price, and style.
○ Specialty products: of unique characteristics or brand identification for which
a significant group of buyers is willing to make a special purchase effort.
○ Unsought products: the consumer does not know about or knows about but
does not normally think of buying ( ‫منتج متنزلش مخصوص علشان تشتريه ذي الورنيش او‬
‫)مكنة لف ورق العنب‬. Unsought products are not classified, because it can be
convenience or shopping products; but never a specialty product.
6.1 THE RELATION BETWEEN MARKETING DECISIONS AND
PRODUCT TYPE
● The whole marketing decisions depend on the product type.
Page | 18
13.1.1. PRICE
● Pricing strategies: cost, competition (‫)اسعار السوق‬, and customer value (‫)تسعير الزبون‬.
● The degree of customer’s involvement ( ‫درجة تعمق الزبون في مجال المنتج اللي بيشترية مثل‬
‫ )مهندس ميكانيكي يشتري سيارة‬and his focus on specs affects the pricing decision, so the
pricing strategy depends on the type of the product.
○ Convenience products are of cost or competition based price, because the
customer is low involved and does not focus on specifications; so marketers
cannot move far away from the market price (e.g. ‫لو سعر الجبنة الدومتي زاد هيغير‬
‫)النوع النها في االول و االخر جبنة‬.
○ Shopping products are of competition based price.
○ Specialty products are of customer value based price.
● For convince product, do not invest in branding because customer has no loyalty
to brand and can switch to another competitor easily (e.g. if you find Nestle
water hot, you will buy Baraka).
● Relation with brands
○ No brand name >>> competition based price strategy with the lowest price in
the market (‫ )احكر منتج في السوق‬regardless the quality level you are offering. The
reason is to reduce the customer’s purchasing risk and that the brand
guarantees quality consistency (‫)الجودة كل مره اشتري‬.
○ Strong brand name >>> customer value based price strategy.
○ In practical life both product type and brand name play a rule
■ Convince & strong brand: set high price but not far from the market price.
■ Shopping & strong brand: set high price and go far from the market price.
■ Specialty & strong brand: set very high price regardless the market price.
14.1.1. DISTRIBUTION
● Distribution strategies: intensive, selective, and exclusive.
● Product value image is affected negatively as intensity increases because effort is
a part of the product value image, so the distribution strategy depends on the
type of the product.
○ Convenience products are of intensive distribution, and no effort is required
(our customer is not willing to afford effort to buy a convince product).
○ Shopping products are of selective distribution, and effort is required.
○ Special products are of exclusive distribution, and huge effort is required.
● Can you select a distribution strategy based on purchasing frequency?
Yes, very high purchasing power with selective distribution means the customer
spends a lot of time searching for the product (e.g. buying chips three time a day;
each for 4 hours, total is 12 hours per day), so the marketer is forced to increase
the distribution to intensive.
15.1.1. PROMOTION
● Promotion mix: advertising, person selling, sales promotion, public relation, and
direct marketing.
● The number of the customer and the degree of specs affect the promotion mix.
○ Convenience products are of huge number of customers and very low degree
of specs, so the promotion channel should be mass communication like
advertising.
Page | 19
○ Shopping products are of average/ large number of customers and high/
average degree of specs, so the promotion channel should be person selling/
sales promotion (villa in a compound/ T-shirt polo).
○ Specialty products are of very limited number of customers and very high
degree of specs, so the promotion channel should be direct marketing
(Bugatti).
● In table, the specialty product is of high price not higher because we cannot
compare it to shopping product and not the highest because it may not be the
highest as it is based on characteristics not on price.
Page | 20
7 PRODUCT AND SERVICE DECISIONS

7.1 INDIVIDUAL PRODUCT AND SERVICE DECISIONS
● Decisions concerned with a specific product in the product line (e.g. Nestle water
0.6l).
● Individual Product and Service Decisions
16.1.1. PRODUCT ATTRIBUTE

● Product attribute: the first thing you face when you develop a product from
scratch.
7.1.1.1 PRODUCT QUALITY
● Quality (core) means that the product performs the main function >>> freedom
from defects (e.g. the car must move regardless its stability).
● Quality level (perceived quality): depends on what value proposition the
company promises and the expectation of the customer and what he perceives.
It has a floor but has no ceiling.
● Product conformance quality is the product’s freedom from defects and
consistency in delivering a targeted level of performance.
● Product quality level is the level of quality that supports the product’s
positioning.
7.1.1.2 PRODUCT FEATURE
● Product feature: is the tool for differentiation, and all differentiation decisions
(marketing mix) can be changed except for features because it is done in the
factory not in the market (e.g. price, distribution & promotion can be changed
but not the feature >>> recall).
● Being the first producer to introduce a valued new feature is one of the most
effective ways to compete.
● The company identifies new features and decides which ones to add to its
product by periodically surveying buyers who have used the product and ask
them: How do you like the product? Which specific features of the product do
you like most? Which features could we add to improve the product? The
answers to these questions provide the company with a rich list of feature ideas.
The company can then assess each feature’s value to customers versus its cost to
the company. Features that customers value highly in relation to costs should be
added.
● Product feature: a competitive tool for differentiating a product from
competitors’ products. This statement includes two mistakes
○ Product >>> marketing offering: reason is that the main differentiation
focuses on the product.
○ Differentiation from competitors’ products >>> differentiation happens in
factory: reason is that the writer does not separate between differentiation
and positioning.
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7.1.1.3 PRODUCT STYLE AND DESIGN

● Style is concerned with the appearance only through eye catching.
● Style describes the appearance of the product.
● Design is concerned with the appearance (actual) and the performance (core).
● Design contributes to a product’s usefulness as well as to its looks.
● Style is part of design.
17.1.1. BRANDING
● Brand name is the key account that holds all the marketing activities.
● Brand identifies the maker or seller of a product and says something about
product quality and consistency.
● Brand can be name or term or sign or design or combination of them.
● Good core product creates and adds account to the brand name and vice versa.
● No brand name >>> competition based price strategy with the lowest price in the
market (‫ )احكر منتج في السوق‬regardless the quality level you are offering. The reason
is to reduce the customer’s purchasing risk and that the brand guarantees
quality consistency (‫)الجودة كل مره اشتري‬.
● Strong brand name >>> customer value based price strategy.
● Branding gives the seller several advantages
○ The brand name becomes the basis on which a whole story can be built about
a product.
○ The brand name and trademark provide legal protection for unique product
features so as not to be copied by competitors.
○ The brand name helps the seller to segment markets.
18.1.1. PACKAGING
● The main function is to carry/ hold and protect the main product (core).
● Packages must now perform many sales tasks from attracting buyers, to
communicating brand positioning, to closing the sale.
● The marketer has to maintain the pricing relationship between the core and the
actual (e.g. Cheese Domty is for 26 so the cheese is for 23 and the package is for
3).
● The customer may accept good core with poor actual, but he never accepts good
actual with poor core.
19.1.1. LABELING
● Identify the product.
● Describe things about the product (e.g. mineral water and nutrition facts).
● Promotes the brand: deliver a positive message to the customer.
● Labels are very important in hyper store because there are not interactions
between buyer and seller.
7.2 PRODUCT LINE DECISIONS
● Decisions concerned with the product line (e.g. Nestle water 0.3l - 0.6l - 1.5l).
● Product line: group of related products.
● Product line: is a group of products that are closely related because they
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.
● Product line length: number of products under a certain product line.
Page | 22
● Managers need to analyze their product lines periodically to assess each item’s
sales and profits and understand how each item contributes to the line’s overall
performance. If the line is too short the manager can increase profits by adding
items, and if the line is too long the manager can increase profits by dropping
items.
● Theoretically the product line length has a positive effect on product line
strength, as the number of products increases, the market share increases, but
practically one of the products is the reason for the market share, and we have
to drop other products of low demand (simplifying or downsizing) to increase
profitability.
● Marketing managers decisions related to product line

○ Product line filling: introducing new product in the same segment above or
below or between products.
○ Product line filling: occurs when companies add more items within the
present range of the line.
○ Product line stretching: introducing new product in a different segment
through upward stretching or downward stretching or both direction
stretching.
○ Product line stretching: is when a company lengthens its product line beyond
its current range.
■ Downward product line stretching: is used by ‘’companies at the upper
end of the market’’ to plug a market hole or respond to a competitor’s
attack.
■ Upward product line stretching: is used by ‘’companies at the lower end
of the market’’ to add prestige to their current products.
■ Combination line stretching: is used by ‘’companies at the middle range
of the market’’ to achieve both goals of upward and downward line
stretching.
● Marketing managers decisions related to product line are taken due to
○ Having extra capacity.
○ Having chance to make higher profitability.
○ Closing market gaps on competitors.
○ Dealer satisfaction.
○ Customer need.
Page | 23
● Introducing a product is a matter of differentiation (even adding color), and
differentiation is a certain cost to gain uncertain revenue (‫ )تكلفة مؤكدة و عائد محتمل‬or
certain revenue if there is a demand, besides filling a demand by introducing new
product may decrease the demand on another product >>> use business
portfolio analysis to divide your company into strategic business units and
evaluate each separately.
● Some products cannot be separated and are considered as one business unit ( ‫مثال‬
‫في خط انتاج الخضار لو خط القلقاس بيخسرني اقفله لكن لو خط الجزر بيخسرني مينفعش اقفله علشان بيتباع مع‬
‫)البسلة‬.
7.3 PRODUCT MIX DECISIONS

● Decisions concerned with different product lines (e.g. nestle water, nestle ice
cream, etc.).
● Product mix: consists of all the products and items that a particular seller offers
for sale.
A B C D E
1 1 1 1 1
2 2 2 2 2
3 3 3 3 3
4 4 4 4 4
5 5 5 5
6 6 6 6
7 7
8 8
9
10
● Product mix width: number of product lines.
● Product mix width: is the number of different product lines the company carries.
● Product mix length: number of all products under all product lines.
● Product mix length: is the total number of items the company carries within its
product lines.
● Product mix depth = product line length: number of products under each
product line.
● Product mix depth: is the number of versions offered of each product in the line.
● Product mix consistency: correlation between product lines (e.g. in technology,
distribution, etc.).
● Consistency: is how closely the various product lines are in end use, production
requirements, distribution channels, or some other way.
○ It is good from the marketing point of view as it reduces cost, but it is bad
from business point of view as it includes high business risk ( ‫)كله في سلة واحدة‬
and the solution is diversification (e.g. business in electric devices only is
more risky than business in electric devices and cars).
● Marketing managers decisions related to product mix
○ Widening its product mix by adding new product lines.
○ Lengthen its existing product lines to become a more full-line company.
○ Deepen its product mix by adding more versions of each product.
○ Increase/ decrease product line consistency depending on whether it wants
to have a strong reputation in a single field or in several fields.
Page | 24
8 NATURE AND CHARACTERISTICS OF A SERVICE
● Intangibility refers to the fact that services cannot be seen, tasted, felt, heard, or
smelled before they are purchased.
○ For service, the first impression is the last impression as it cannot be
corrected.
● Inseparability refers to the fact that services cannot be separated from their
providers.
○ It requires two persons in a direct contact: service provider and customer.
○ Service is produced once customer arrives and ends by his departure.
○ Both the provider and the customer affect the service outcome.
● Variability refers to the fact that service quality depends on who provides the
services as well as when, where, and how they are provided.
○ Service is always provided in a different way even if it is the same person.
○ Standardization is anti-service nature as service is built on human
relationships.
● Perishability refers to the fact that services cannot be stored for later sale or use.
○ Some doctors charge patients for missed appointments.
● Canceled (slides from 44 to 49).
9 BRANDING STRATEGY: BUILDING STRONG BRANDS

● There is not pure product or pure service; it is a package.
● Brands are a key element in the company’s relationships with consumers.
○ Products are created in the factory, but brands are created in the customers’
mind.
○ Brands represent consumers’ perceptions and feelings about a product and
its performance.
○ A brand is what people say about you when you’re not in the room.
○ Brand strength is measured along four consumer perception dimensions
■ Differentiation: what makes the brand stand out? The brand must be
distinct, or consumers will have no reason to choose it over other brands.
However, the fact that a brand is highly differentiated doesn’t necessarily
mean that consumers will buy it. The brand must stand out in ways that
are relevant to consumers’ needs.
Page | 25
■ Relevance: how consumers feel it meets their needs.
■ Knowledge: how much consumers know about the brand.
■ Esteem: how highly consumers regard and respect the brand.
● Brand equity: the differential effect that knowing the brand name has on
customer response to the product or its marketing.
○ Brand equity is counted in company’s assets and raises company’s value.
○ Brand valuation: is the process of estimating the total financial value of a
brand.
○ Brand equity is a measure of the brand’s ability to capture consumer
preference and loyalty.
○ High brand equity provides a company with many competitive advantages.
Because consumers expect stores to carry the particular brand, the company
has more leverage in bargaining with resellers. Because a brand name carries
high credibility, the company can more easily launch line and brand
extensions. A powerful brand also offers the company some defense against
fierce price competition.
○ Customer equity: the value of customer relationships that the brand creates.
○ Companies need to think of themselves not as portfolios of brands but as
portfolios of customers.
9.1 MAJOR BRAND STRATEGY DECISIONS
20.1.1. BRAND POSITION

● Difference between brand positioning and market offering positioning is that
○ We target a brand not a product.
○ We target the whole market not a market segment.
○ Perception.
○ Impression.
○ Feelings.
● Brand positioning decisions include
○ Product attributes: are the least desirable level for brand positioning.
Competitors can easily copy attributes. More importantly, customers are not
interested in attributes as such; they are interested in what the attributes will
do for them (e.g. Pampers invented disposable diaper).
○ Product benefits: e.g. Pampers (the resulting containment and skin-health
benefits from dryness), FedEx (guaranteed on-time delivery), Nike
(performance), Lexus (quality), and Wal-Mart (low prices).
Page | 26
○ Product beliefs and values: are the most desirable level for brand
positioning. Becoming love-marks that “inspire loyalty beyond reason’’. They
are positioned on strong beliefs and values; engaging customers on a deep
emotional level (e.g. Pampers as a “where we grow together” brand that’s
concerned about happy babies, parent-child relationships, and total baby
care).
● When positioning a brand, the marketer should establish a mission for the brand
and a vision of what the brand must be and do. A brand is the company’s
promise to deliver a specific set of features, benefits, services, and experiences
consistently to buyers. The brand promise must be simple and honest.
21.1.1. BRAND NAME SELECTION
● Brand name selection decisions include
○ Easy to pronounce, recognize, and remember.
○ Suggest benefits and qualities of the product (e.g. WATER for mineral water).
○ Extendable (e.g. sharp describes LED but not AC spit unit).
○ Translatable for the global economy (e.g. dirty zizo <<< ‫)زيزو النتن‬.
○ Distinctive (e.g. Lexus).
○ Capable of registration and legal protection.
22.1.1. BRAND SPONSORSHIP
● Check slide 56.
● Brand sponsorship decisions include
○ Manufacturer’s brand/ national brand: the manufacturers launch the
product and sell their output under their own brand names (e.g. Samsung
Galaxy tablet).
■ It has long dominated the retail scene.
○ Private brand/ store brand/ distributor brand: the manufacturer may sell to
resellers who give the product a private brand.
■ Private brands offer much greater selection.
■ As consumers become more price-conscious, they also become less
brand-conscious.
■ Consumers are becoming loyal to store brands for price and positive
experiences.
○ Licensed brand: Other manufacturers market licensed brands; starting by
giving you the right to produce and ending by franchising (product shape
obligation).
○ Co-brand: two companies can join forces and co-brand a product, where
brand protects brand (e.g. hyper one and Carrefour one).
Page | 27
23.1.1. BRAND DEVELOPMENT STRATEGIES
● Brand development decisions include

○ Line extension (filling/ stretching): introducing new LED carrying the same
name Samsung.
■ Differentiation including new forms, colors, sizes, ingredients, or flavors.
■ A line extension works best when it takes sales away from competing
brands.
■ A company might introduce line extensions as
□ A low-cost.
□ A low-risk way to introduce new products.
□ Meet consumer desires for variety.
□ Use excess capacity.
□ Command more shelf space from resellers.
○ Brand extension: investing of brand name by introducing new product under
the same brand name (e.g. Mitsubishi elevator).
■ A brand extension gives a new product instant recognition and faster
acceptance. It also saves the high advertising costs usually required to
build a new brand name.
■ An overextended brand may confuse the image of the main brand.
○ Multibrands
■ Multi-branding offers a way to establish different features that appeal to
different customer segments, lock up more reseller shelf space, and
capture a larger market share.
■ Introducing product of lower/ higher quality under a new brand name
(e.g. BMW introduces lower quality cars under Brilliance and Toyota
introduces luxury cars under Lexis).
■ Increase market share by increasing purchasing probability specially if
customer of low loyalty (‫( >>> )اكل نفسي قبل ما حد ياكلني‬e.g. 4 types of washing
machines cleaner >>> my probability is 1/4 >>> by introducing nearly the
same cleaner under another brand name >>> my probability is 2/5).
Page | 28
■ A major drawback of multi-branding is that each brand might obtain only
a small market share, and none may be very profitable. The company may
end up spreading its resources over many brands.
○ New brands: introducing new product under new brand name (e.g. daily
dress can introduce Galabia in Saudi Arabia under the name of ‫)ثوب االصيل‬.
■ A company might introduce new brands when
□ The power of its existing brand name is waning, so a new brand name
is needed.
□ Introducing a new product category for which none of its current
brand names are appropriate.
10 NEW-PRODUCT DEVELOPMENT PROCESS
● A firm can obtain new products in two ways

○ Acquisition: by buying a whole company, a patent, or a license to produce
someone else’s product.
○ The firm’s own new-product development efforts (its own R&D efforts).
● New products fail due to
○ The company may overestimate market size.
○ The actual product may be poorly designed.
○ It might be incorrectly positioned.
○ It might be launched at the wrong time.
○ It might be priced too high.
○ It might be poorly advertised.
● To create successful new products, a company must understand its consumers,
markets, and competitors and develop products that deliver superior value to
customers.
11 PRODUCT LIFE-CYCLE STRATEGIES

● Check slides from 61 to 68.
● Know the stage you are in and select the adequate marketing strategy.
Page | 29
● Introduction stage
○ High cost.
○ High price.
○ Low demand.
○ Low sales.
● Decline stage
○ Major modification to start a new cycle or increase advertising dose or ‫اكرام‬
‫( الميت دفنه‬your trend is your friend).
Sales Growth Profits
Development Zero High cost
Introduction Slow None
Growth Rapid Increasing
Maturity Slowdown Decline
Decline Fall off Drop
Page | 30
CHAPTER 10 PRICING: UNDERSTANDING AND

CAPTURING CUSTOMER VALUE
● Price: amount of money we charged for a product or a service (for a benefit).
● Price is the sum of all the values that consumers give up in order to gain the
benefits of having or using a product or service.
● All marketing mix elements represent cost, and value is created except pricing; it
generates revenue, and value is captured.
● Price is the most flexible marketing mix elements. It can be changed quickly.
12 MAJOR PRICING STRATEGIES

● Five pricing strategies = 3 for existing product + 2 for new products.
12.1MAJOR PRICING STRATEGIES FOR EXISTING PRODUCTS
● Three main factors influencing pricing process
○ Product cost.
○ Competitors’ pricing.
○ Customer value: how our customer perceives and values our product.
○ Other internal and external factors.
24.1.1. COST BASED PRICING STRATEGY
● Cost based pricing strategy: setting product price based on calculation of variable
cost plus fixed cost to get total cost -for producing, distributing, and selling the
product- then adding a standard mark up (profit margin) to get product price.
○ Fixed costs/ overheads are the costs that do not vary with production or
sales level (e.g. bills for rent, heat, interest, executive salaries).
○ Variable costs are the costs that vary with the level of production (e.g.
packaging, raw materials).
● A company's costs is the key element in cost based pricing strategy.
● We assumed that the customer will accept the price regardless competitors’
prices and regardless the customer evaluation that total benefits are more than
total cost (best in monopoly case).
● Cost Plus Pricing and Break-Even Analysis & Target Profit Pricing (slides 12 & 13).
● Once you choose cost based pricing strategy, you should put a standard markup
for all your products. If you decide to put variable markup depending on the
product, it becomes value based pricing strategy with a fatal mistake that you are
the one who values the product not the customer.
25.1.1. COMPETITION BASED PRICING STRATEGY
● Competition based pricing strategy: competitors’ prices range is a guideline but
we should select competitors targeting the same segment.
● The key element for competition based pricing strategy are
○ How consumers perceive my product relative to competing products?
We assumed that the customer perceives my product equally like
competitors’ products which is not true. If consumers perceive my product at
a greater value relative to competing products, the company can charge a
higher price. If consumers perceive my product at a lower value relative to
Page | 31
competing products, the company must either charge a lower price or change
customer perceptions to justify a higher price.
○ How strong current competitors and what are their current pricing
strategies?
If the company faces a host of smaller competitors charging high prices
relative to the value they deliver, it might charge lower prices to drive weaker
competitors from the market. If the market is dominated by larger, lower-
price competitors, the company may decide to target un-served market
niches with value-added products at higher prices.
● We assumed that the customer perceives my product equally like competitors’
products which is not true. If consumers perceive my product at a greater value
relative to competing products, the company can charge a higher price. If
consumers perceive my product at a lower value relative to competing products,
the company must either charge a lower price or change customer perceptions
to justify a higher price.
26.1.1. CUSTOMER VALUE BASED PRICING STRATEGY
● Understanding how much value consumers place on the benefits they receive
from the product and setting a price that captures that value.
● Asking the customer how he perceives my product and how much he will pay for
it and what is the maximum price he will pay for it.
● It is the safest strategy to achieve sales volume, as I made a contract with the
customer to buy my product for that price.
Example
Page | 32
● Product costs set the floor for prices (e.g. 100 L.E.).
● Customer perceptions of the product’s value set the ceiling for prices (e.g. 240
L.E.), and above this price
○ Book: there is zero demand.
○ Dr. Ali: there is a dramatic decline (‫ )هبوط حاد‬in the demand, as the customer
may break price ceiling for the quality anti quantity (‫)يشتري كمية اقل مقابل جودة اعلى‬
● Guideline = (ceiling + floor)/2 = (240 + 100)/2 = 170.
○ If customer perceives my product as competitors’ product >>> price 170-200.
○ If customer perceives my product lower than competitors’ product >>> price
150-170.
○ If customer perceives my product more than competitors’ product >>> price
200-240.
○ Taking in consideration internal and external factors including competitors’
strategies and prices, the overall marketing strategy and mix, and the nature
of the market and demand.
● Cost based pricing strategy; here I lost 20 L.E.; which is more profit I can achieve.
● Selling more by being the lowest price in the market is not always true because
out of fear for the quality, the customer may precise that the lowest price is the
lowest price in the dense area which is 170, and reject 150.
● Cost-based pricing is often product driven. The company designs what it

considers to be a good product, adds up the costs of making the product, and
sets a price that covers costs plus a target profit. Marketing must then convince
buyers that the product’s value at that price justifies its purchase. If the price
turns out to be too high, the company must settle for lower markups or lower
sales, both resulting in disappointing profits.
● Value-based pricing reverses this process. The company first assesses customer
needs and value perceptions. It then sets its target price based on customer
perceptions of value. The targeted value and price drive decisions about what
costs can be incurred and the resulting product design. As a result, value-based
pricing means that the marketer cannot design a product and then set the price.
Pricing begins with analyzing consumer needs and value perceptions, and the
price is set to match perceived value.
Page | 33
12.2PRICING STRATEGIES FOR NEW PRODUCTS

27.1.1. MARKET-SKIMMING PRICING STRATEGY
● Market-skimming pricing is a strategy with high initial prices to “skim” revenue
layers from the market.
● Used in quality market.
● Setting a very high price as a reward for innovation.
● Everything in the product has to be distinctive from normal, so as not to let the
customer calculate the extra cost.
● When competitors begin to produce, stop to produce this model.
‫مثل تالجة تكلفتها خمسة االف تباع بستة االف ازود مبرد ماء بتكلفة الف و اغير الشكل تماما والخامات و التقسيمة‬ ●
‫الداخلية بتكلفة الف اخرى و ابعها بسته و عشرون الفا (التغيير الجذري في التالجة حتي ال يقول الزبون زودوا‬
‫حنفية بعشرين الف) و عند تقليد المنافسين اوقف هذا المنتج تماما حتى ال افقد المصدقية لدى العميل و اقوم بتصنيع‬
.‫منتج اخر و تحديد استراتيجة التسعير بالقواعد القديمة كمنتج متاح في السوق‬
28.1.1. PENETRATION PRICING STRATEGY
● Market-penetration pricing sets a low initial price in order to penetrate the
market quickly and deeply to attract a large number of buyers quickly to gain
market share.
‫مثل كرسي بذراع اول مرة ينزل في السوق‬ ●
Number of chairs Cost Price Profit margin
1 100 102 2
10,000 98 102 4
100,000 92 102 10
1,000,000 84 98 14
● Due to mass production and learning curve, a huge cost reduction is achieved
and the price is reduced and the profit margin increased and the market is
blocked for competitors.
● Used for well established companies of huge history in their industry with big
financial stability.
Page | 34
CHAPTER 12 MARETING CHANNELS:

DELIVERING CUSTOMER VALUE
● How to deliver your customer the created value (core customer value)?
.)21:00 ‫ الي‬9:00‫ من‬7 ‫ شركة امات الدواجن (التسجيل‬:‫مثال‬ ●
13 SUPPLY CHAIN AND VALUE DELIVERY NETWORK
● Supply chain consists of
○ Upstream partners include raw material suppliers, components, parts,
information, finances, and expertise to create a product or service (e.g.
suppliers).
○ Downstream partners include the marketing channels/ distribution channels
that look toward the customer (e.g. wholesalers & retailers/ resellers).
● Supply chain business views
○ Supply chain “make and sell” view includes the firm’s raw materials,
productive inputs, and factory capacity.
○ Demand chain “sense and respond” view suggests that planning starts with
the needs of the target customer, and the firm responds to these needs by
organizing a chain of resources and activities with the goal of creating
customer value.
○ Value delivery network companies today are engaged in building and
managing a complex, continuously evolving value delivery network; which is
the firm’s suppliers, distributors, and ultimately customers who partner with
each other to improve the performance of the entire system.
14 MARKETING CHANNEL - DISTRIBUTION CHANNEL

● 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.
● Intermediaries offer producers greater efficiency in making goods available to
target markets. Through their contacts, experience, specialization, and scale of
operations, intermediaries usually offer the firm more than it can achieve on its
own.
● A company’s channel decisions directly affect every other marketing decision.
○ Pricing depends on whether the company works with national discount
chains, uses high-quality specialty stores, or sells directly to consumers online
○ The firm’s sales force and communications decisions depend on how much
persuasion, training, motivation, and support its channel partners need.
○ How well new products fit the capabilities of its channel members.
14.1CHANNEL MEMBERS FUNCTIONS
● Information in two directions: channel members give the customer a positive
message about my product and advise me with important requirements required
by the customer (counted as a market research).
Page | 35
● Promotion: persuasive communications about an offer. Wholesaler can force
retailer to buy my product and introduce it to the market due to the huge
investment between them.
● Contact: finding and communicating with prospective buyers. Wholesaler knows
much more retailers than you can ever know.
● Matching: Wholesaler knows well market segments in his area and he shapes
and fits the offer to the buyer’s needs, including activities such as manufacturing,
grading, assembling, and packaging.
● Negotiation: Reaching an agreement on price and other terms of the offer and
making contracts for your product.
● Physical distribution: Transporting and storing goods. Wholesaler knows the
right way to load the car and to deliver the product without any damage.
● Financing: Acquiring and using funds to cover the costs of the channel work. If I
trade my product with the retailer, he will take it and pay later and I may get a
loan from the bank with an interest rate to cover my new operation cost. But if I
trade my product with the wholesaler, he will give me a deposit which is
considered a loan of free interest.
● Risk taking: if my product is not sold, the retailer will return it to me, while the
wholesaler will split the loss between himself and the retailer.
14.2THE NATURE AND IMPORTANCE OF MARKETING
CHANNELS
● Intermediaries reduce the amount of work that must be done by both producers
and consumers.
● The role of marketing intermediaries is to transform the assortments of products
made by producers into the assortments wanted by consumers. Producers make
narrow assortments of products in large quantities, but consumers want broad
assortments of products in small quantities. Marketing channel members buy
large quantities from many producers and break them down into the smaller
quantities and broader assortments desired by consumers.
Page | 36
14.3NUMBER OF CHANNEL LEVELS
● Channel level: Each layer of marketing intermediaries that performs some work
in bringing the product and its ownership closer to the final buyer.
● The number of intermediary levels indicates the length of a channel.
● Direct marketing channel has no intermediary levels, the company sells directly
to consumers (e.g. channel 1).
● Indirect marketing channels containing one or more intermediaries (e.g.
channels 2 & 3).
● From the producer’s point of view, a greater number of levels mean less control
and greater channel complexity.
● Number of channel levels connected by type of flow
○ Physical flow of products.
○ Flow of ownership.
○ Payment flow.
○ Information flow.
○ Promotion flow.
● Number of channel levels depends on
○ The product cannot endure two levels (e.g. yoghurt).
○ Expiration period is short (e.g. 6-7 days).
○ Weak packaging.
● Factors affecting choice of distribution strategy
○ Effort: as the customer wills to afford less effort to buy the product, the
product distribution shifts to intensive distribution.
○ Purchasing rate: as the purchasing rate increases, the product distribution
shifts to intensive distribution.
Page | 37
15 CHANNEL DESIGN DECISIONS – HOW TO CHOOSE

DISTRIBUTION STRATEGY
● Analyzing consumer needs: How customers buy your product? And what do
customers need from the channel?
○ Distant to travel: Do consumers want to buy from nearby locations or are
they willing to travel to more distant and centralized locations?
○ In person versus online: Would customers rather buy in person, by phone, or
online?
○ Breadth of assortment: Do they value breadth of assortment or do they
prefer specialization?
○ Customer service: Do consumers want many add-on services (delivery,
installation, repairs), or will they obtain these services elsewhere? The faster
the delivery, the greater the assortment provided, and the more add-on
services supplied, the greater the channel’s service level.
○ Minimizing the cost of meeting customer service requirements: The Company
must balance consumer needs not only against the feasibility and costs of
meeting these needs but also against customer price preferences.
● Setting channel objectives
○ Targeted levels of customer service: identify several segments wanting
different levels of service.
○ Which segments to serve and the best channels to use in each case?
○ Company’s channel objectives are influenced
■ The nature of the company: the company’s size and financial situation
determine which marketing functions it can handle itself and which it
must give to intermediaries.
■ Its products: perishable products, for example, may require more direct
marketing to avoid delays and too much handling.
■ Its marketing intermediaries
■ Its competitors: a company may want to compete in or near the same
outlets that carry competitors’ products.
■ The environment: such as economic conditions and legal constraints.
○ What do you want from distributors? (E.g. transport – transport & store).
● Identifying major channel alternatives
○ Types of intermediaries: refers to channel members available to carry out
channel work (e.g. company sales force, manufacturer’s agency, and
industrial distributors).
○ Number of marketing intermediaries: determine the number of channel
members to use at each level (intensive, selective, and exclusive).
○ Responsibilities of channel members: The producer and the intermediaries
need to agree on the terms, responsibilities of each channel member, price
policies, and conditions of sale, territory rights, and the specific services to be
performed by each party.
○ For example type and number of transportation (e.g. 4 refrigerated trucks at -
30oC).
● Evaluation major alternatives
Page | 38
○ Economic criteria: evaluate each channel in terms of total benefits provided
versus total cost.
○ Control: giving channels some control over the marketing of the product (e.g.
Concrete can control its T-shirts better than a seller who tells the customer to
take unknown T-shirt of the same textile but cheaper).
○ Adaptive criteria: means the company wants to keep the channel flexible so
that it can adapt to environmental changes (e.g. your distributors cannot
adapt to your huge growth rate).
Page | 39
CHAPTER 14 COMMUNICATING CUSTOMER VALUE

INTEGRATED MARKETING COMMUNICATIONS STRATEGY
● Tell your customer a positive message about your product ( ‫)تسمع سمعة جيدة عن المنتج‬.
● Types of messages
○ Informative message (‫)انا منتج جديد‬
○ Persuasive message (‫)انا احسن من اللي بالي بالك‬
○ Reminder message (‫)ال شيئ يفوق الخبرة‬
● How to deliver positive message?
● Integrated marketing communications (IMC) involves identifying the target
audience and shaping a well-coordinated promotional program to obtain the
desired audience response.
● Communication elements (slide 4).
16 MAIN PROMOTION MIX - MARKETING

COMMUNICATION MIX
● The choice of the right promotion mix depends on product type and target
segment.
16.1ADVERTISING
● Advertising is any paid form of non-personal presentation and promotion of
ideas, goods, or services by an identified sponsor (e.g. broadcast, print, internet,
mobile, outdoor, etc.).
● One way communication
● No interaction
● One message for all (genders – ages – religion, etc.) >>> we cannot customize our
message.
● Wide scope
● Fast
● Low cost/ person
● Short message
● Targeting waste.
Page | 40
● Suitable for convince products and shopping products of large numbers of
customers (e.g. Toyota Corolla).
16.2SALES PROMOTION
● Sales promotion is the short-term incentive to encourage the customer to buy or
to switch from brand to brand by reducing or eliminating the risk of the first trial
(e.g. discounts, coupons, displays, demonstration, tasting companies, offers,
competitions, samples, nearly expired products, product on product).
16.3PUBLIC RELATION (‫)رشاوي‬
● Public relations involves building and maintaining 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 (e.g. media public, press releases, sponsorships, local publics, internal
publics, institutions, neighbors, police, special events, webpages).
16.4PERSON SELLING
● Personal selling is the personal presentation by the firm’s sales force for the
purpose of making sales and building customer relationships (e.g. sales
presentations, trade shows, and incentive programs).
● One to one communication
● Expensive
● Slow
● High interaction
● Customized message
● Correct targeting
● Low waste as I select my customer.
● Suitable for industrial products.
16.5DIRECT MARKETING
● Direct marketing involves making direct connections with carefully targeted
individual consumers to both obtain an immediate response and cultivate lasting
customer relationships (e.g. direct mail, telephone, direct-response television, e-
mail, Internet to communicate directly with specific consumers, catalog, kiosks,
and telemarketing).
● When my market is very special with small numbers of special customers.
● In e-mails, Dear Mr. Name not Dear sir.
17 THE NEW MARKETING COMMUNICATION

MODEL
● Slide 10.
Page | 41
18 PROMOTION MIX STRATEGIES
18.1PULL STRATEGY
● If the producer has ability to make advertising campaigns.
● Producer make advertising campaign >>> customer >>> retailer >>> wholesaler
>>> producer.
● It is called pull strategy as the customer is the one who ask for the product.
● It is based on advertising.
● Best fits for consumer products, business to customer (B2C).
18.2PUSH STRATEGY
● Producer >>> wholesaler >>> retailer >>> producer.
● It is called push strategy as the producer is the one who force the product into
the market.
● It is based on personal selling.
● Best fits for industrial products, business to business (B2B).
Page | 42
BRIEF
● Marketing: means customer satisfaction.
● Marketing Process: the process by which companies create value for customers
and build strong customer relationships in order to capture value from
customers in return.
● Needs: states of felt deprivation
● Wants: are the form of human needs shaped by culture and individual
personality
● Demands: human wants that are backed by buying power.
● Exchange: the act of obtaining a desired object from someone by offering
something in return.
● Market: the set of all actual and potential buyers of a product or service.
building profitable relationships with them
● Market segmentation: dividing the market into smaller segments because we
work in a large heterogeneous market.
professions).
in those segments.
● Differentiation: introducing different market offerings at least one market
● Integrated marketing program: comprehensive plan that communicates and
delivers the intended value to chosen customers.
● Marketing mix: a set of marketing tools that work together to satisfy the
customer need or want and build good relationship with the customer.
● Price: amount of money we charge for benefits.
● Sales promotion: Short term incentives encouraging the customer to buy or to
switch from brand to brand by reducing or eliminating the risk of the first trial.
● Customer Relationship Management (CRM): the overall process of building and
maintaining profitable customer relationships by delivering superior customer
● Customer- perceived value: the difference between total customer value and
total customer cost.
● Value: total benefits are more than total cost (‫)المنتج يستاهل اكتر من كدا‬.
● Customer satisfaction: the extent to which a product’s perceived performance
matches a buyer’s expectations.
● Satisfaction: your perception (‫ )تعرفك علي المنتج‬exceeds your expectation.
Page | 43
● Customer equity: the total combined customer lifetime values of all of the
company’s customers.
● Micromarketing is the practice of tailoring products and marketing programs to
suit the tastes of specific individuals and locations. Rather than seeing a
customer in every individual, micro marketers see the individual in every
customer.
● Competitive advantage is an advantage over competitors gained by offering
consumers greater value, either through lower prices or by providing more
benefits that justify higher prices.
● Product is anything that can be offered in a market for attention, acquisition,
use, or consumption that might satisfy a need or want.
● Service is a product that consists of activities, benefits or satisfaction that is
essentially intangible and does not result in the ownership of anything.
● Experiences represent what buying the product or service will do for the
customer.
● Consumer products: are products and services for personal consumption.
● Industrial products: are products purchased for further processing or for use in
conducting a business.
● Convince products: customers usually buy them frequently, immediately, and
with minimal comparison and buying effort.
● Shopping products: the customer spends much time and effort comparing
carefully on suitability, quality, price, and style.
● Specialty products: of unique characteristics or brand identification for which a
significant group of buyers is willing to make a special purchase effort.
● Unsought products: the consumer does not know about or knows about but
does not normally think of buying.
● Product Conformance Quality is the product’s freedom from defects and
consistency in delivering a targeted level of performance.
● Product Quality Level is the level of quality that supports the product’s
positioning.
● Style describes the appearance of the product.
● Design contributes to a product’s usefulness as well as to its looks.
● Brand identifies the maker or seller of a product and says something about
product quality and consistency.
● Product line: is a group of products that are closely related because they
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.
● Product line length: number of products under a certain product line.
● Product line filling: introducing new product in the same segment above or
below or between products.
● Product line filling: occurs when companies add more items within the present
range of the line.
● Product line stretching: introducing new product in a different segment through
upward stretching or downward stretching or both direction stretching.
● Product line stretching: is when a company lengthens its product line beyond its
current range.
Page | 44
● Downward product line stretching: is used by companies at the upper end of the
market to plug a market hole or respond to a competitor’s attack.
● Upward product line stretching: is by companies at the lower end of the market
to add prestige to their current products.
● Combination line stretching: is used by companies in the middle range of the
market to achieve both goals of upward and downward line stretching.
● Consistency: is how closely the various product lines are in end use, production
requirements, distribution channels, or some other way.
● Product mix depth: is the number of versions offered of each product in the line.
● Product mix length: is the total number of items the company carries within its
product lines.
● Product mix width: is the number of different product lines the company carries.
● Perishability refers to the fact that services cannot be stored for later sale or use.
● Variability refers to the fact that service quality depends on who provides the
services as well as when, where, and how they are provided.
● Inseparability refers to the fact that services cannot be separated from their
providers.
● Intangibility refers to the fact that services cannot be seen, tasted, felt, heard, or
smelled before they are purchased.
● Brand equity: the differential effect that knowing the brand name has on
customer response to the product or its marketing.
● Brand valuation is the process of estimating the total financial value of a brand.
● Customer equity: the value of customer relationships that the brand creates.
● Price: amount of money we charged for a product or a service (for a benefit).
● Fixed costs/ overheads are the costs that do not vary with production or sales
level (e.g. bills for rent, heat, interest, executive salaries).
● Variable costs are the costs that vary with the level of production (e.g.
packaging, raw materials).
● Market-skimming pricing is a strategy with high initial prices to “skim” revenue
layers from the market
● Market-penetration pricing sets a low initial price in order to penetrate the
market quickly and deeply to attract a large number of buyers quickly to gain
market share.
● Value delivery network is the firm’s suppliers, distributors, and ultimately
customers who partner with each other to improve the performance of the
entire system.
● 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.
● Channel level: Each layer of marketing intermediaries that performs some work
in bringing the product and its ownership closer to the final buyer.
● Advertising is any paid form of non-personal presentation and promotion of
ideas, goods, or services by an identified sponsor (e.g. broadcast, print, internet,
mobile, outdoor, etc.).
● Sales promotion is the short-term incentive to encourage the customer to buy or
to switch from brand to brand by reducing or eliminating the risk of the first trial
Page | 45
(e.g. discounts, coupons, displays, demonstration, tasting companies, offers,
competitions, samples, nearly expired products).
● Public relations involves building and maintaining 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 (e.g. media public, press releases, sponsorships, local publics, internal
publics, institutions, neighbors, police, special events, webpages).
● Personal selling is the personal presentation by the firm’s sales force for the
purpose of making sales and building customer relationships (e.g. sales
presentations, trade shows, and incentive programs).
● Direct marketing involves making direct connections with carefully targeted
individual consumers to both obtain an immediate response and cultivate lasting
customer relationships (e.g. direct mail, telephone, direct-response television, e-
mail, Internet to communicate directly with specific consumers, catalog, kiosks,
and telemarketing).
Segmentation Variable Examples
Nations, regions, states, counties, cities, neighborhoods,
Geographic
population density (urban, suburban, rural ‫)ريفي‬, climate.
Age, gender, education, occupation, income,
Religion, race, ethnicity (‫)األصل العرقي‬,
Demographic
Generation, nationality,
Family size, life-cycle stage, family life cycle (‫)مراحل الحياة المختلفة‬.
Psychographic Social class, lifestyle, personality traits.
Behavioral Occasions, benefits, user status, usage rate, loyalty status.
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Lecture Notes for Marketing Management MBA - AASTMT

Dr. Ali Abdel-Bar by Mostafa El-Bedawy

CHAPTER 1 CREATING AND CAPTURING CUSTOMER

2.1 UNDERSTAND THE MARKET BASE THAT YOU WILL

● Needs, wants, and demands

2.1.1. MARKET SEGMENTATION

CHAPTER 7 CREATING VALUE FOR TARGET

3 SELECTING CUSTOMERS TO SERVE

4 CHOOSING A VALUE PROPOSITION

■ Developing a Positioning Statement: To (target segment), our (brand) is

CHAPTER 8 PRODUCT, SERVICE, AND BRANDS

● Any product consists of core, actual, and augmented products.

7 PRODUCT AND SERVICE DECISIONS

16.1.1. PRODUCT ATTRIBUTE

7.1.1.3 PRODUCT STYLE AND DESIGN

● Marketing managers decisions related to product line

7.3 PRODUCT MIX DECISIONS

8 NATURE AND CHARACTERISTICS OF A SERVICE

9 BRANDING STRATEGY: BUILDING STRONG BRANDS

20.1.1. BRAND POSITION

23.1.1. BRAND DEVELOPMENT STRATEGIES

● Brand development decisions include

10 NEW-PRODUCT DEVELOPMENT PROCESS

● A firm can obtain new products in two ways

11 PRODUCT LIFE-CYCLE STRATEGIES

CHAPTER 10 PRICING: UNDERSTANDING AND

12 MAJOR PRICING STRATEGIES

● Cost-based pricing is often product driven. The company designs what it

12.2PRICING STRATEGIES FOR NEW PRODUCTS

CHAPTER 12 MARETING CHANNELS:

14 MARKETING CHANNEL - DISTRIBUTION CHANNEL

14.3NUMBER OF CHANNEL LEVELS

15 CHANNEL DESIGN DECISIONS – HOW TO CHOOSE

CHAPTER 14 COMMUNICATING CUSTOMER VALUE

16 MAIN PROMOTION MIX - MARKETING

17 THE NEW MARKETING COMMUNICATION

18 PROMOTION MIX STRATEGIES

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