UNIT 5 : MARKETING

Learning Objectives
 Define what Marketing is
 Identify the scope of Marketing
 Clarify core Marketing concepts
 Explain Marketing Channels
 Describe Marketing Mix
 Discuss factors influencing international product
policies, promotion policies, distribution policies and
pricing policies
What is marketing?
 According to the social definition, marketing is
societal process by which individuals or groups
obtain what they need and want through creating,
offering, exchanging products and services of value
freely with others.
 As a managerial definition, 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 goals.
Marketplace
 Traditionally, a “market” was a physical place
where buyers and sellers gathered to exchange
goods.
 The marketplace is physical, as when one goes
shopping in a store;
 The marketspace is digital, as when one goes
shopping on the Internet.
 Scope of Marketing
Marketing people are involved in marketing 10 types of
entities:
Goods from eggs to steel to hair dryers, food, clothing.

Services airlines, hotels, and maintenance, and repair people, as

well as professionals such as accountants, lawyers,
engineers, and doctors.
Experiences By orchestrating several services and goods, one can
create, stage, and market experiences
Events Marketers promote time-based events, such as the
Olympics, trade shows, sports events, and artistic
performances.
Persons Artists, musicians, CEOs, physicians, high-profile lawyers
and financiers, and other professionals draw help from
celebrity marketers
 Scope of Marketing
Places Place marketers include economic development
specialists, real estate agents, commercial banks,
local business associations, and advertising and
public relations agencies.
Properties intangible rights of ownership of either real property
(real estate) or financial property (stocks and bonds).
Organizations Organizations actively work to build a strong,
favorable image in the mind of their publics.
Universities, museums, and performing arts
organizations boost their public images to compete
more successfully for audiences and funds.

Information schools and universities; publishers of encyclopedias,

nonfiction books, and specialized magazines; makers of
CDs; and Internet Web sites.
Core Marketing Concepts
 Needs, Wants, and Demands
 Market Segmentation
 Brands and Trademarks
 Value and Satisfaction
 Marketing Channels
 Needs, Wants, and Demands

 Needs are the basic human requirements. People need air,

food, water, clothing, and shelter to survive. People also
have strong needs for recreation, education, and
entertainment.
 These needs become wants when they are directed to
specific objects that might satisfy the need.
 Example: A consumer in the United States needs food but
may want a hamburger, French fries, and a soft drink. A
person in Mauritius needs food but may want a mango,
rice, lentils, and beans. Wants are shaped by our society.
Demand
 Demands are wants for specific products
backed by an ability to pay.
 Many people want a Mercedes; only a few

are willing and able to buy one. Companies

must measure not only how many people want
their product, but also how many would
actually be willing and able to buy it.
 Market Segmentation

 Who is the target market for a product?

- Industrial goods (B2B): used for production or used in
producing other products: raw materials, component
parts
- Consumer goods (B2C): purchased by ultimate users or
consumers for personal use: consumer goods, shopping
goods and specialty goods
- Public goods (B2G): commodity or service that is made
available to all members of a society: security,
infrastructure, environment, heath, education
Market Segmentation

4 basic methods for segmenting a market

 Product-related: comfort, safety, luxury, good
value-for-money, convenience, durability, etc.
 Demographic: age, gender, education, family
life cycle, income, education, etc.
 Psychographic: attitudes, lifestyle, opinions,

values, self-image, etc.

 Geographical: region, postcode, etc.
Example
 For example, Volvo develops its cars for buyers to
whom safety is a major concern. Volvo, therefore,
positions its car as the safest a customer can buy.
Companies do best when they choose their
target market(s) carefully and prepare tailored
marketing programs.
Brand and Trademark

 Brand: a name, symbol or design (or some

combination) that identify a product
 Trademark: a name or symbol that cannot be used
by another producer
 Brand loyalty passes through three stages:
1. Brand awareness
2. Brand preference
3. Brand insistence
 Value and Satisfaction

 Value reflects the sum of the perceived tangible and

intangible benefits and costs to customers. It’s primarily a
combination of quality, service, and price (“qsp”), called
the “customer value triad.”

 Satisfaction reflects a person’s judgments of a product’s

perceived performance in relationship to expectations. If
the performance falls short of expectations, the customer is
dissatisfied and disappointed. If it matches expectations,
the customer is satisfied. If it exceeds them, the customer is
delighted.
Marketing Channels

 Communication channels deliver and receive messages

from target buyers and include newspapers,
magazines, radio, television, mail, telephone,
billboards, posters, fliers, CDs
 Distribution channels to display, sell, or deliver the
physical products or service(s) to the buyer or user.
They include distributors, wholesalers, retailers, and
agents.
 Service channels to carry out transactions with potential
buyers. Service channels include warehouses,
transportation companies, banks, and insurance
companies that facilitate transactions.
Marketing Mix
Marketing mix is the set of marketing tools that
the firm uses to pursue its marketing objectives in
the target market.
The four Ps of marketing mix: Product, Price,
Place, and Promotion.
Marketing Mix
Product Price Promotion Place
- Product - List price - Sales - Channels
variety - Discounts promotion - Coverage
- Quality - Allowances - Advertising - Locations
- Design - Payment - Sales force - Inventory
- Features period - Public - Transport
- Brand name - Credit terms relations
- Packaging - Direct
- Sizes marketing
- Services
- Warranties
- Returns
Marketing Mix
 Robert Lauterborn suggested that the sellers’ four Ps
correspond to the customers’ four Cs.

4 Ps 4 Cs
Product Customer Solution
Price Customer Cost
Place Convenience
Promotion Communication
Total product offer
 Value-for-money: relationship between quality and
price
 Brand name and image
 Packaging
 Convenience of sales channel
 Store surroundings
 Service
 Speed of delivery
 Guarantee
Managing Marketing Activities
04 tactic issues managers deal with in day-to-day
marketing management:
- Product Policies

- Promotional Policies

- Distribution Policies

- Pricing Policies
International Product Policies
Many elements influence a company's decision of
whether to standardize or adapt its product when it
decides to "go international.”
✓ Laws and Regulations

✓ Cultural Differences

✓ Brand and Product Names

✓ National Image

✓ Counterfeit Goods

✓ Shortened Product Life Cycle

Laws and Regulations
 Companies undertake mandatory product
adaptation in response to a target market's laws
and regulations.
 Ethical issues can arise in the decision to adapt a
product to local laws in developing nations because
they often have weaker consumer-protection laws.
Ironically, this makes these markets more likely to
need protection.
Cultural Differences
 Companies also adapt their products to suit
cultural differences. Sometimes companies do
not need to modify their product if they can
identify a different need that the product
serves in the culture.
Brand and Product Names
 Although companies keep their brand names
consistent across markets, they often create
new product names or modify existing ones to
suit local preferences.
 Giving a product a name that offends local
buyers or is misleading can be a costly
mistake.
National Image
 The image of a nation where a company is
located that designs, manufactures, or
assembles a product influences buyers'
perceptions of quality and reliability.
Counterfeit Goods
 Counterfeit goods can damage buyers' image of a
brand when the counterfeits are of inferior quality -
which is nearly always the case.
 Buyers expect a certain level of craftsmanship from
any given brand but are disappointed with the
counterfeited product's performance tarnishing the
company's reputation.
Shortened Product Life Cycle
 Advances in telecommunications have altered
consumers around the world to the latest product
introduction
 The rapid pace with which technological innovation
occurs today is shortening the life cycle of products
 Shortened product life cycles are affecting the
timing of when to market internationally.
International Promotional Policies
Promotion mix: Efforts by a company to reach
distribution channels and target customers through
communications such as personal selling, advertising,
public relations, and direct marketing.
There are two general promotional strategies that
companies can employ in getting their marketing
message across to buyers: Pull strategy and Push
strategy
Pull and Push Strategies
 Pull strategy: A promotional strategy designed to
create buyer demand that will encourage channel
members to stock a company's product.
 Push strategy: A promotional strategy designed to
pressure channel members to carry a product and
promote it to final users of the product.
International Advertising
 International Advertising differs a great deal from
advertising in domestic market.
 Cultural differences may mean that ads must be
slightly modified for use in different nations or that
entirely new ads must be created.
 Companies can achieve consistency by
standardizing their basic promotional message,
creative concepts, graphics, and information content.
Blending Product and Promotional Polices

 When companies extend their marketing to

international market, they develop communication
strategies that blend product and promotional
policies
 Marketing Communication: The process of sending
promotional messages about products to target
markets.
Communicating Promotional Messages
 Marketing communication can be thought of as a circular
process. The company that has an idea it wishes to
communicate is the source of the communication. The idea
or promotional message that the company is trying to get
across to potential buyers is encoded - translated into
images, words, and symbols that are understood by the
audience.
 The promotional message is then sent to the audience
through various media. Once the audience receives the
message, they decode the message and interpret its
meaning. Information in the form of feedback (purchase or
nonpurchase) then flows back to the source of the
message.
Generic Promotional Methods

Companies blend their international product and

promotional policies to create five generic
promotional methods.
✓ Product/communications extension (dual extension)

✓ Product extension, communications adaptation

✓ Product adaptation, communications extension

✓ Product/communications adaptation (dual

adaptation)
✓ Product invention
Product/communications extension (dual extension)

Product/communications extension (dual extension)

extends the same home-market product and
marketing promotion into target markets.
Product extension, communications adaptation

❑ Product extension, communications adaptation

extends the same product into new target markets
but alters its promotion.
❑ Communications are adapted because the same
product satisfies a different need, serves a different
function, or appeals to a different type of buyer.
Product adaptation, communications extension

Product adaptation, communications extension adapts

a product to the requirements of the international
market while retaining the product's original
marketing communication
Product/communications adaptation (dual adaptation)

 Product/communications adaptation (dual

adaptation) adapts both the product and its
marketing communication to suit the target market.
 The product itself is adapted to match the needs or
preferences of local buyers.
 The promotional message is adapted to explain
how the product meets those needs and
preferences.
Product invention

Product invention requires that an entirely new product

be developed for the target market.
 International Distribution Policies
 Distribution: Planning, implementing, and controlling the
physical flow of a product from its point of origin to its
point of consumption.
 Distribution channel: The physical path that a product
follows on its way to customers.
 Designing Distribution Channel
Degree of Exposure
 An exclusive channel is one in which a manufacturer grants

the right to sell its product to only one or a limited number

of resellers.
An exclusive channel gives producers a great deal of
control over the sale of their product by channel members
such as wholesalers and retailers.
 An intensive channel is one in which a producer grants the

right to sell its product to many resellers.

An intensive channel does not create strong barriers to
channel entry for producers nor give them much control
over such reseller decisions as what competing brands to
sell.
Designing Distribution Channel
Channel Length and Cost
Channel length refers to the number of intermediaries
between the producer and the buyer.
In a zero-level channel - which is also called direct
marketing - producers sell directly to final buyers.
A one-level channel places only one intermediary between
producer and buyer.
Two intermediaries make up a two-level channel, and so
forth.
Generally, the more intermediaries in a channel, the more
costly it becomes because a greater number of players
must tack on to the product a charge for their services.
Designing Distribution Channel

Influence of Product Characteristics

Value density: The value of a product relative to its
weight and volume.
As a rule, the lower a product's value density, the
more localized the distribution system.
Special Distribution Problems
❑ A nation's distribution system develops over time

and reflects its unique cultural, political, legal, and

economic traditions.
❑ Companies can experience a great deal of

frustration and financial loss simply by not

understanding fully the local market in which they
operate.
❑ A high incidence of theft and corruption can present
obstacles to distribution.
International Pricing Policies
There are 02 pricing policies companies use in
international markets
 Worldwide Pricing

 Dual Pricing
Worldwide Pricing
Worldwide pricing is a pricing policy in which one
selling price is established for all international
markets.
A worldwide pricing policy is very difficult to achieve
because nations have different levels of production,
exporting, and distribution costs, purchasing power
among buyers, and currency values.
Dual Pricing
 Dual Pricing: A pricing policy in which a product has
a different selling price in export markets than it
has in the home market.
 When a product has a higher selling price in the
target market than it does in the home market (or
the country where production takes place) it is
called price escalation.
Factors affecting Pricing Decision
Several factors have an important influence on
managers' pricing decisions.
 Transfer prices

 Arm’s length Pricing

 Price Controls

 Dumping
Transfer Prices
 Transfer Price: the price charged for products
sold between a company's divisions or
subsidiaries.
 In the past, companies enjoyed a great deal of
freedom in setting their transfer prices and did
so to reduce their tax burden and tariffs.
Arm’s length Pricing
 But today many governments regulate internal
company pricing practices by assigning
products approximate transfer prices based on
a so-called arm's-length price: the free-market
price that unrelated parties charge one
another for a specific product.
Price Controls
❑ Price controls are upper or lower limits placed
on the prices of products sold within a country.
❑ Upper-limit price controls are designed to

provide price stability in an inflationary

economy.
❑ Lower-limit price controls prohibit the lowering
of prices below a certain level
Dumping
❑ Dumping occurs when the price of a good is
lower in export markets than it is in the
domestic market.
❑ When a country's government charges another
nation's producers of dumping a good on its
market, antidumping tariffs are typically
imposed to punish producers in the offending
nation.
THANK YOU!