Marketing

Summary Notes

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Romeodelee
1/1/2007
Summary Note Content

Marketing Strategy
Step 1
Step 2
Step 3
Step 4
Step 5
Step 6
Step 7
Step 8
Step 9
Step 10
Step 11
Step 12

Summary Notes
4C Diamond sub model
STP: Segmentation
STP: Targeting
STP: Positioning
SMD: Differentiation
SMD: Marketing Mix
Product
Price
Place
Chapter 13: Retailing and Wholesaling
Promotion
Chapter 15: Advertising, Sales promotions and PR
Chapter 16: Personal selling and Direct Marketing
SMD: Selling
BSP: Brand
BSP: Service
BSP: Process
Balanced Scorecard
Chapter 17: Competitors
Chapter 20: The Global Marketplace
Chapter 18: Digital age

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It’s all about Marketing Strategy

Step 1 – Analyse your Landscape

I’ll first analyse the landscape of Singapore through the 4C Diamond sub-model.
This model consists of 4 mutually exclusive, collective-exhaustive factors:
Change, Customer, Competitor and Company. The study of these factors will
help to produce an outlook of the future business landscape.

Technology Changes

The advancement in technology has not only helped to make work more efficient
but also created new medium for business activities such as the e-commerce.
The fierce competitions in the internet service provider also see cheaper
package that bring the rise in the number of Singapore internet access users.
According to IDA Singapore, there are already 2.2m internet subscribers in 2006.
Singapore Government offering 2 years (From Jan 07) free wireless broadband
access in Singapore public area will also further increase the number of
Singapore internet user. In all, internet access is cheaper to both residential and
corporate users. Another area is the advancement in 3G technology. There are
360000 3G users in 2006 and IDC expect it to grow by 50% in 2010. With 3G,
users can access the internet anywhere with their mobile phone.

Social Cultural Changes

In 2007, there is an increase in consumer sophistication as they could easily

access to the internet to obtain their required information. Consumers now not
only want to fulfil their needs, wants but also expectation. Improve in lifestyle
also make consumer more empowered to realise their rising expectation.

Political-Legal Changes

Government tried to strengthen its economy by attracting more foreign

investment into Singapore. It also created more lenient business regulations that
help to do business easier in Singapore. Registrations and regulation information
can easily be obtained from the internet. More FTA with foreign countries also
helps to doing business easier and cheaper overseas.

Interaction of the force

Advancement in technology has created an “e-lifestyle” where people start doing

more things on the internet. More lenient business regulations also increase the
popularity of e-commerce.

Economic

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Singapore on pace with economic globalization not only help them strengthen
their economy and increase their GDP but also help local companies take
advantage of the globalization.

The Market

Singapore’s involvement in the intensive globalization has also invited foreign

companies to compete in the domestic market. This mean it is more difficult for
companies to survive the fierce competition if they cannot keep up with the
changes.

Competitor

I can’t predict who is your competitor now. But fear of those who are established,
with competitive advantages and the ability to adapt to the new landscape.

Consumer

Population of 4.5m in 2006. Consumer now can easily obtain information regard
most products on the internet easily. Not only an increase in expectation, they
are also more careful with their purchase. Generally, they now not look solely at
quality and brand as before, but weigh the quality of a product against its price
in order to ensure optimum value. They are smart and careful buyer now.

Company

- Quantity and quality of resources

- Competitive advantages

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Step 2 – TOWS Analysis
Threats
- Regional and Global
Competitors
- A new competitor in your
home market.
- Price wars with competitors.
- A competitor has a new,
innovative product or service.
- Competitors have superior
access to channels of
distribution.
- Taxation is introduced on your
product or service.
Opportunities
- A developing market such as
the Internet.
- Mergers, joint ventures or
strategic alliances.
- Moving into new market
segments that offer improved
profits.
- A new international market.
- A market vacated by an
ineffective competitor.
Weakness
- Lack of marketing expertise.
- Undifferentiated products or
services (i.e. in relation to your
competitors).
- Location of your business.
- Poor quality goods or services.
- Damaged reputation.
Strength
- Your specialist marketing
expertise
- A new, innovative product or
service
Example
- Competitive market.
- Being a global retailer means that
you are exposed to political
problems in the countries that you
operate in.
- Intense price competition is a
threat from lower production cost.
- Copycat competitors
- Exchange currencies
- Substitute products
Example
- Product development offers Nike
many opportunities
- Co-branding with other
manufacturers of food and drink,
and brand franchising to
manufacturers of other goods and
services both have potential.
- To take over, merge with, or form
strategic alliances with other global
retailers, focusing on specific
markets such as Europe or the
Greater China Region.
Example
- Sell products across many sectors
(such as clothing, food, or
stationary), it may not have the
flexibility of some of its more
focused competitors.
- Income of the business is still
heavily dependent upon its share of
the footwear market. This may
leave it vulnerable if for any reason
its market share erodes.
Example
- Nike is a global brand
- Starbucks Corporation is a very
profitable organization, earning in
excess of $600 million in 2004.The
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 - Location of your business
- Quality processes and
procedures
- Any other aspect of your
business that adds value to
your product or service.
company generated revenue of
more than $5000 million in the
same year.
- Wal-Mart is a powerful retail
brand. It has a reputation for value
for money, convenience and a
wide range of products all in one
store.
- Wal-Mart has grown substantially
over recent years, and has
experienced global expansion

Step 3 – Winning the mind share

Segmentation: “View your market creatively”

1. To view the market from a unique angle and in a different way from your
competitors.
2. Segmentation used must reflect buying or using behaviour and determine
the customer’s reason to buy.

Static Attribute Segmentation

Look at similar, “static” attributes, which do not necessarily reflect buying or
using behavior and do not directly influence the customer’s decision to buy.

A. Geographic Segmentation
Dividing a market into different geographical units such as nations, states,
region, counties, cities, or neighbourhoods.

B. Demographic Segmentation
Dividing the marketing into groups based on demographic variables such
as age, sex, family size, family life cycle, income, occupation, education,
religion, race and nationality.
- Age and Life-cycle segmentation
o Dividing a market into different age and life-cycle groups
- Gender segmentation
o Dividing a market into different groups based on gender
- Income segmentation
o Dividing a market into different income groups

Dynamic Attribute Segmentation (Use this if possible)

Identifies similar “dynamic” attributes, or attributes that reflect human
characteristics of customers (interests, habits, attitudes, beliefs) which directly
influence the customer’s reason to buy.

A. Psychographic Segmentation
Dividing a market into different groups based on social class, lifestyle, or
personality characteristics.
B. Behavioral Segmentation

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 Dividing a market into groups based on consumer attitude, usage and
product response.

Individual Segmentation
Ultimate level of segmentation, where segmentation is performed on the
smallest unit of any market (Individual or “segment of one”).

3. Segments targeted must be significant size and have sufficiently good

prospects for future growth.
4. Must be creative when performing market segmentation, adopting a
different approach from our competitors.

Step 4 – Winning the mind share

Targeting: “Allocate your resources effectively”

After segments have been identified, the next step is targeting which is to
evaluate and determine which one to serve. This strategy help to allocate
resources effectively as the company’s resources are limited.

3 Criteria company should address when evaluating and determining which

segments to target.

1. Ensure market segment is big enough and will be profitable enough for
company to get involved in.
a. Choose segment that is currently small but appear attractive and
profitable for the future.
i. Examine current competition in sector and its potential to
grow
2. Targeting strategy must based on company’s competitive advantage
a. Company need capabilities, core competencies and competitive
advantages to carry out differentiation that is aimed at beating
competition.
b. Must analyse closely whether chosen market segment is in line
with, and supports, company’s long-term objectives.
3. Market segment must be base on competitive situation that will directly or
indirectly influence the attractiveness of the target segment.
a. Intensity of segment rivalry
b. Potential new entrants
c. Industry’s barriers to entry
d. Existence of substitute products
e. Presence of complementary products
f. Growth of buyer bargaining power and supplier bargaining power.

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Step 5 - Winning the mind share

Positioning: “Lead your customer credibly”

The strategy for leading your customers credibly. It is about earning customers’
trust to make them willingly follow your company.

Determining positioning based on 4 assessments

- Customer
- Company
- Competitor
- Change

1. Customer
Positioning should be perceived by customers and be their “reason-to-
buy”. This will happen if your positioning describes the value that you
bring to your customer.

Example

When the newly founded Amazon.com decided its positioning would be

“the most convenient book retailer with the biggest selection and the
lowest price”, this excellent value was reflected in what the company was
trying to offer. And excellent value has become the main determinant for
customers who choose to use Amazon’s services.

2. Company’s internal capabilities

Positioning should reflect the company’s strengths and competitive
advantages.

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 Example

Amazon’s positioning accurately describes the company’s strength and

core capabilities that form the basis of its competitive advantage.

3. Competitors
Company’s positioning should be unique, so that it can be easily
differentiated itself from its competitors.

4. Changes that occur within the business environment

Company’s positioning must be sustainable and always relevant with the
changes in the business environment. Positioning is essentially planting a
perception, identify and personality in the mind of consumer. In order to
make positioning as strong as possible, they must be consistent and
unchanging. This will help to avoid creating confusion for consumer.

Example

Changi Airport, won Best Airport in the World award many times, positions
itself as the “Most User-Friendly Airport in the world”. Its unique marketing
research programme provide critical information to its decision makers to
keep abreast of developments in its customers, competitors and changing
environment, and to leverage its resources to respond accordingly.

Positioning Example

1. Sony – Innovation
2. Giordano – Value for Money
3. Wal-Mart – Everyday low price
4. Singapore Airlines – Excellent service quality

These companies have achieved this because they have consistently used
the same positioning statement over a long time, and have not changed
them one iota.

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Step 6 – How to win market share

Differentiation: “Integrate your content, context and infrastructure”

We must create a truly different and unique value for customer by satisfying the
3 dimensions of differentiation, which is integrating the content (what to offer),
context (how to offer it) and infrastructure (the enabler) of the company’s offers
to the customers.

Differentiation
- Product
 Features, Performance, Style & Design
 Attributes as consistency, durability, reliability or repairability
- Volvo provides new and better safety features
- Whirlpool designs its dishwasher to run more quietly
- Bose positions its speakers on their striking design
characteristics
- Services
 Speedy, convenient or careful delivery
- BankOne has opened full-service branches in supermarkets to
provide location convenience along with Saturday, Sunday,
and weekday-evening hours
 After sale service
- Channels
 Design channel’s coverage, expertise and performance
- Amazon.com, Dell and Avon set themselves apart with their

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 high quality direct channels
- People
 Hiring and training better people than their competitors do
- Disney people are known to be friendly and upbeat
- IBM offer people who make sure that the solution customers
want is the solution they get. “People who get it. People who
get it done.”
- Image
 A company or brand’s image should convey the products’ distinctive
benefits and positioning
 The image must be supported by everything the company says and
does.
 Symbols such as the MacDonald’s golden arches, Nike Swoosh,
Google’s colourful logo can provide strong company or brand
recognition and image differentiation
 The chosen symbols, characters, and other image elements must be
communicated through advertising that conveys the company’s or
brand’s personality

Step 7 – How to win market share

Marketing Mix: “Integrate your offer and access”

Marketing mix is about integrating a company’s offer, logistics and

communications. The company’s offer, consisting of products and prices, should
be well integrated with access including company’s places (channel distributions)
and communications to create a powerful marketing force in the marketplace.
Right communication media must be selected to raise awareness and aid recall
by the target market.

I therefore recommend the creative marketing mix that supports marketing

strategy (segmentation-targeting-positioning) of the company and builds
marketing value (brand-service-process).

Show how your company create its products, determine their prices, control their
channels and implement their promotion strategy to beat the competition.

4Ps (Product, Price, Place and Promotion)

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Product (product life cycle and adaptation)
Uniform Product Undifferentiated (Mass) Marketing Fruits, raw materials

Product vary in Concentrated (Niche) Marketing Camera, Automobile

design Differentiated (Segmented) Marketing

Limited Resources Concentrated (Niche) Marketing

Product’s life cycle Undifferentiated (Mass) Marketing Only one model

stage Concentrated (Niche) Marketing launched
Launch
Product’s life cycle Differentiated (Segmented) Marketing
stage
Mature
Price (approaches and strategies)
- Do not set too high or too low
- Price decision must be coordinate with product design, distribution, and
promotion decisions to form consistent and effective marketing
programmes.
Promotion (Integrated marketing communication, social responsibility,
advertising, sales)
- Creative Promotions
- Advertising, personal selling, sales promotions, public relations and direct
marketing to reach consumers
Place (location, channel distribution, distribution/wholesaler/retailer and partner
idea)
- Retailers select places that are highly accessible to the target markets in
areas that are consistent with the retailers’ positioning
- Online retailing

Step 8 – How to win market share

Selling: “Integrate your company, customer and relationship”

Selling is the tactic of creating a long-term relationship with customers through a

company’s products. Company must be able to sell feature, benefit and solution
to the customer. Customer relationship management is important here because
it help build good relationships and solve customer problems. This will help
create superior customer value and satisfaction, which in turn help to turn
customer into becoming “loyalists”.

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Step 9 – How to win the Heart share

Brand: “Avoid the commodity-like Trap”

Our brand is developed through our positioning and differentiation which
supported with solid marketing mix and selling strategy. Brand is a reflection of
our value to our customer. Value in this case is defined as “total get” divided by
“total give”. We will create a strong brand by ensuring that “total get” of
functional benefit and emotional benefit to the customer is greater than “total
give” from the customer such as price and other expenses. Also ensure to
produce a higher “total get” / ”total give” compared to our competitors. Once
strong branding is establish through high satisfaction and recognition of quality,
our company can be a price maker and not just a price taker.

Do note that need to position the brand in their customer’s minds.

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Have to establish mission and vision for the brand. Must deliver promised set of
features, benefits, services and experiences consistently to the buyers.

Function Benefit Example

Based on product/services attribute Car = durability, safety or driving
that provides functional utility to your comfort.
customers. Food = taste, nutritional value or
freshness.

Case Study
Popular Bookstore offers strong
function benefit through its
conveniently locations and a wide
range of reasonably priced products.
Emotional Benefit Example
Based on product/service attribute that Feeling energetic after drinking Coke
provides emotional utility Feeling safe driving a Volvo
Price
Cost paid to obtain product or services
Other expenses
Cost when using and consuming
product/service

For branding decision of new product.

Please refer to note if you are starting a new brand for a new product
Brand development
Brand Brand Name Brand Sponsorship
Positioning Selection
4 types:
4 types:
Have 3 levels: Involves:
 Line extension
 Manufacturer brand
 Attribut  Selecti
 Brand extension
es on  Private brand

 Benefits  Licensing  Multi-brands

Step 10 – How to win the Heart share

Service: “Avoid the business-category trap”

Service is a value enhancer that helps to create a lasting value for customers
through products and services.

Enhances value by:

 More for more (Total get > total give) compared to competitors
 More for same ( Total get = total give) compared to competitors
 More for less (Total get > total give) compared to competitors

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  Same for less (Same total get but lower total give) compared to
competitors
 Less for less (Lower total get and lower total give) compared to
competitors

With the five formulae above, our company will be able to deliver world-class
value, local value and even individual value, suitable to the customer’s
characteristics.

Step 11 – How to win the Heart share

Process: “Avoid the function-orientation trap”

It is the value enabler which is reflected through the product quality, cost and
delivery of a company to customers. We must ensure high quality in the supply-
chain process and maintain it from raw material to finished products. One must
also be able to establish relationships with organizations that have the potential
to add value. Strategic alliance could be from suppliers, customers or even
competitors. (Outsourcing, merging and acquiring help to improve process)

Finally, value should not only be created for external customers and investor
customers, but also the people of the organization. They are the one that keep
the company going.

Step 12 – Balancing scorecard

Final step is to be able to create value to the 3 main stakeholder of the company
which are the people, customer and shareholder. Scorecard is a controlling and
monitoring tool to ensure that the main stakeholders receive an equal dose of
superior value. (Refer to note if you have time. Hero, you sure you got time or
not!)

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Summary Notes

4C Diamond sub model

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 4C Diamond sub model looks at and analyzes various recent developments in the
business environment based on Change, Competitors, Customers and Company.

 Gives us the existing condition and current developments within the

company
 And also an OUTLOOK of the future business landscape
 Macro and Micro environment
 Globalization
 Technology
 Ethics
 TOWS and SWOTS (to do outside in first so that you will not analyze the
environment with what you can do first)

The 4 Cs

1. Change – Forces of change consist of 5 elements

Technology

Political-legal changes

Social-cultural changes

Economy (central change drivers)

Market (ultimate force of change)

- They are value migrators to product and company. Companies have to consider
which product-orientated, process oriented and information-based technologies
are likely to become critical value migrates in their respective industries.

2 distinctive Variables

Immediacy of impact Tangibility of impact

Time base How distinctive the force of impact on

companies
Force of change is immediate or
incremental Technology is primary force

4 major streams and 2 minor streams

Technology  Economy  market

Advancement in Technology, dramatically affect the economy system will then

affect the market. (I.e. development of e-commerce, change economy, and new
online markets are formed). It calls on the destruction of old ways of living and
the realization of new markets/ opportunities.

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Example: Apple came up with PCs, Compaq used the technology to snatch
market share, with the intense competition to make everything smaller and
faster. The Laptop was invented.

Reverse: Technology  Economy market

When composite growth in all markets is seen, it forms a cumulative increase in

GDP that will therefore develop the economy which will then determine the level
of technology adoption.

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Political Legal Economy  Social Cultural

Political change comes first as “buy-ins” by managers. Once staff is committed, a

program of economic nature takes place (i.e. new strategies, new plans). Once
tasks are schieven, corporate culture should be changes to SUPPORT the new
strategy in order to sustain the success of implementation

Reverse: Political LegalEconomy  Social Cultural

This occurs when values held by society change the rationale of an economic
system which then accelerates the shaping of new political/ legal environment.

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Technology  Social Cultural

New technologies always provide better accommodations for society as it makes

life easier.

Reverse: Technology Social Cultural

People’s lifestyle inspires new technology to be developed.

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Political Legal  Market

Changes in political/legal environment affect the market i.e. FTA agreements

Reverse: Political Legal  Market

Changes in market also change the political/ legal environment i.e. high demand
for pirated goods forces govt. to establish laws against copyright infringement.

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Technology  Political /legal

Increase in technology created more transparency in the legal system, making

the country more democratic. Opening up the economy to more international
laws that will ultimately affect the political/ legal environment to more variables.

Reverse: Technology  Political /legal

New patents will encourage the creation of new technology.

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Social Cultural  Market

When people place more emphasis on convenience, there will be an increase

demand for markets to go online for people’s preference.

Reverse: Social Cultural  Market

With developments in the marker, cultural and society also changes as people
are more educated and have more information. Generally, the society in general
will “advance”

Info: 78% (from 74% in 2005) of households in Singapore had at least

one computer (i.e. desktop/laptop)

Computer users

Computer usage is more common among the young. 85% of the resident
population aged 10 to 14 years is computer users, compared to 68% for the 15
to 59 years age group, and 28% for the above 60 years age group. Overall, the
proportion of computer users aged 15 years and above remained at 65% in
2006.

Home Internet penetration

The proportion of households with access to the Internet at home accounted for
71% of the total households in 2006. 66% of the households in public housing
had access to the Internet at home, compared to 87% of households in private
housing. The gap between the home Internet penetration rates of households in
private and public housing has narrowed.

Source:
http://www.ida.gov.sg/doc/Publications/Publications_Level2/2006_hh_exec
%20summary.pdf

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 2. Competitors

-Should always keep an eye on competitors in the market, Competition can be

stiff in global market setting.

-The company must also provide greater customer value, also gain strategic
advantage by positioning their offerings against competitor’s offerings

3 dimensions of analysis

General Aggressiveness Capability

The number of The extent which these The ability of the

competitors in the
industry
Potential competitors
Availability of substitutes
competitors implement competitor to implement
creative and effective the challenge.
strategies
Ie. Strong financial
4 points backing, huge intangible
assets and solid
Price and quality technology backing.
Timing and know-how

Stronghold

Deep- pocket

3. Customers (Customers: Taken from Re-thinking Marketing TB)

• Have their needs and wants as well as expectations

• Customer expectations influences customer satisfaction

Information that Factors that

influence customer Company
can be accessed
easily expectation

Competitors and
the level of
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Three dimensions you can use to observe a customer profile
• Enlightened  ability to influence other customers through for example
education
• Informationalized  ability to evaluate the choices offered to the customer
o occurs mainly because the customers has easy, swift access to
information
• empowered  ability of the customer to realize his or her decisions to buy
or use a product
o dominant dimension when the level of competition starts to rise

Three aspects of behaviour to evaluate the process of forming or

changing consumer behaviour
• Cognitive  what’s in the mind of customers
o the enlighten dimension that is related to product knowledge
• Affective  what’s the customers’ motive
o the informationalized dimension since it causes the customer to
evaluate each of the brands that exist in the market
• Connative  what’s the overt behaviour of customers
o the empowered dimension or the tendency to adopt a certain
behaviour towards a certain product

The company thus should

• assess the competitive setting to entail the identification and evaluate
players that are strong or weak
• pay attention to potential threats
• assess the customers’ profile  identifying relevant consumer trends and
identify the likely impact of the forces of change on them
• gather insightful information about customers by studying the likely
changes in customer composition
• produce a winning value app when the company can offer more
comprehensive, solution-oriented products

3. Customer  Value Demander (Textbook)

Types of customers
Consumer markets  individuals and households
Business markets  buy goods and processes for further production
Reseller market  buys goods and services and reseller at a profit
Govt markets  govt agencies that buy goods and services to produce public
service
International markets  consists of those markets in other countries

Consumer Buying Behaviour

The buying behaviour of final consumers – individuals and households who buy
goods and services for personal consumption

Characteristics affecting the consumer behaviour

1. Cultural

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 2. Social
3. Personal
4. Psychological

Cultural factor
Culture  the set of values, perceptions, wants and behaviour learned by a
member of society from the family
Must understand the culture in each international market and adapt their
marketing strategies accordingly

Subculture
That of a group of people with shared value systems based on common life
experiences nationalities, religions, racial groups and geographic regions

Social class
Relatively permanent and ordered divisions in a society whose members share
similar values, interests and behaviours
Measured as a combination of occupation, income, wealth and other variables

Social
- Family
- most impt consumer buying org in society
- Role and status
- a role consists of the activities people are expected to perform
according to the persons around them
- each role carries a status reflecting the general esteem given to it
by the society

Personal
- Age and life cycle stage
- many marketers define their target markets in terms of life-cycle
stage and develop appropriate products and marketing plans for
each stage

- Occupation
- affects the goods and services bought

- Economic situation
- marketers of income-sensitive products watch trends in personal
income, saving and interest rates

- Lifestyle
- a person’s pattern of living as expressed in his or her activities
(work. Hobbies and social events), interests (food, fashion, family)
and opinions (about themselves, social issues, businesses and
products)

- Personality and self concept

- personality refers to the unique psychological characteristics that
lead to relatively consistent and lasting responses to one’s own
environment
- a brand personality is a mix of human traits that may be attributed
to a particular brand
 sincerity (down to earth, honest, wholesome and cheerful)

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  excitement (daring, spirited, imaginative and up to date)
 competence (reliable, intelligent and successful)
 sophisticated (upper class and charming)
 ruggedness (outdoorsy and tough)

Psychological factors
- Motivation
- a need that is sufficiently pressing to direct the person to seek
satisfaction of the need
- Maslow’s hierarchy of needs
- Perception
- the process by which people select, organize and interpret info to
form a meaningful picture of the world
- selective attention, distortion and retention
- Learning
- changes in the individual’s behaviour arising from experience
- occurs thru the interplay of drives, stimuli, cues, responses and
reinforcement
- Beliefs and attitudes
- a descriptive thought that a person holds about something
- a person’s consistently favourable evaluation, feelings and
tendencies toward an object or idea

Four types of buying behaviour (see pg 3)

Complex buying behaviour
- high consumer involvement in a purchase and significant perceived
differences among brands
- consumers may be highly involved when the product is expensive,
risky, purchased infrequently and highly self impressive
- Dissonance-reducing buying behaviour
- consumers are highly involved with an expensive, infrequent or
risky purchase but see little diff among brands
- buy relatively quickly and respond only to a good price or to
purchase convenience
- Habitual buying behaviour
- lower consumer involvement and few significant perceived brand
diff
- Variety seeking buying behaviour
- low consumer involvement but significant perceived brand diff
- do a lot of brand switching for the sake of variety
- must encourage habitual buying behaviour

Stages in the adoption process  the mental process through which an

individual passes from first
• awareness – the consumer becomes aware of the new product, but lacks
info about it
• interest – the consumer seeks info about the new product
• evaluation – the consumer consider whether trying the new product

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 • trial – the consumer tries the new product on a small scale to improve his
or her estimate of its value
• adoption – the consumer decides to make full and regular use of the new
products

The buyer decision process

• need recognition
• information search
• evaluation of alternatives
• purchase decision
• post purchase behaviour

Need recognition
• recognizes the need or the problem
• triggered by internal or external stimuli

Information search
• customer is aroused to search for more information, the consumer may
simply have heightened attention or may go into active info search
• personal  family, friends, acquaintances  word of mouth
• commercial  advertising, salesperson, dealer, display
• public  mass media, consumer rating org
• experiential sources  handling, examining, using the product
• awareness and knowledge of the available brands and features increases

Evaluation of alternatives
• consumer uses info to evaluate alternative brands in the choice set
• do careful calculations and logical thinking or not at all

Purchase decision
• the buyer’s decision about which brand to purchase
• attitudes of others or unexpected situational factors may cause a diff btw
purchase intention and purchase decision

Post purchase behaviour

• consumer takes further action after purchase, based on their satisfaction
or dissatisfaction
• r/s btw consumer’s expectations and product’s perceived performance
• impt to keep them satisfied so as to retain them and build lasting r/s with
the customers

24 | P a g e
4. Company  Value Decider

1. Sets the company’s mission, objectives, broad strategies and policies

2. Work in harmony to provide superior customer value and satisfaction
3. identify and assess the existing and potential resources that the company
owns
a. strength or weakness?
b. A source of sustainable competitive advantage?
c. Whether they fit the environment in which the company is operating
d. Opportunities and threats that exist

What are resources?

- tangible assets
- intangible assets
- organizational capabilities

Tangible assets
- physical resources
- nature of the resources such as condition, capabilities etc
- determine their usefulness in gaining a competitive advantage

Intangible assets
- Company’s reputation, brand equity, customer r/s, production knowledge,
technological know-how, patents and trademarks
- Unique and difficult to be copied by competitors

Organizational capabilities
- A combination of assets, people and processes that organizations use to
transform input into output
- Include a set of abilities describing efficiency and effectiveness
- A sustainable competitive advantage most of the time
- greater efficiency
- better quality output

Value of a firm’s resources is the intersection of

- Demand
- Scarcity
- Appropriateness
- Cannot be replicated by competitors and it is when the profits it generates
are captured by the firm

25 | P a g e
Only use the resources if
- they able to contribute to the fulfilment of a customer’s needs at a price
the customer is willing to pay
- they are rare and in such short supply that your competitors cannot easily
acquire them and replicate your competitive advantage
- you can ensure that you can capture profits created by your unique and
valuable resources

Once the outlook is conducted, the next step is to design the

COMPANY’S ARCHITECTURE

- Explore: the opportunities and threats to your business environment

- Engage: immerse in the architecture

- Execute: implement the architecture to achieve the vision and mission

Special bond b/w brand, positioning and differentiation

- Positioning: a ‘promise’ from the company to customer

- To give credibility to this promise, and in order to be perceived positively by the

customer, the promise must be supported by strong differentiation

- Positioning with strong differentiation  strong brand equity  strong brand

image

 strengthens positioning

26 | P a g e
 - Self-reinforcing mechanism which is self repeating and increases in
magnitude, becoming more and more solid and hence strengthening the
company’s CA

STP: Mind Share Strategy

- In the Strategic Business Unit (SBU) level of a company

- Company strategy (how we want to approach the whole thing based on 4Cs,
STV and PCS):

Porter (cost leader, differentiation and focus)

Treacy and W (operational excellence, customer intimacy, product leader)

1. Segmentation (Pg 57-62)

- MAPPING STRATEGY

- ‘Viewing your market creatively’

 Establishing the mission( ‘reason for being’)

 art of identifying and pinpointing opps. emerging in the market e.g.
Casio

27 | P a g e
  Viewing the market based on geographic, demographic, psychographic
and behavior variables

- Focus more on resource allocation: decide on the segments that can be

served best

 greatest CA  can focus more on customer satisfaction  clearer insight

into

the competition and determine your market position-  dominate your

segments

- Basis of STV

- Key factor in beating the competition  viewing market from a unique angle
from

your competitors

- Types of segmentation:

Static Attribute Segmentation

Look at similar, “static” attributes, which do not necessarily reflect buying or

using behavior and do not directly influence the customer’s decision to buy.

C. Geographic Segmentation
Dividing a market into different geographical units such as nations, states,
region, counties, cities, or neighborhoods.

D. Demographic Segmentation
Dividing the marketing into groups based on demographic variables such
as age, sex, family size, family life cycle, income, occupation, education,
religion, race and nationality.

- Age and Life-cycle segmentation

o Dividing a market into different age and life-cycle groups

- Gender segmentation
o Dividing a market into different groups based on gender

28 | P a g e
 - Income segmentation
o Dividing a market into different income groups

Dynamic Attribute Segmentation

Identifies similar “dynamic” attributes, or attributes that reflect human

characteristics of customers (interests, habits, attitudes, beliefs) which directly
influence the customer’s reason to buy.

C. Psychographic Segmentation
Dividing a market into different groups based on social class, lifestyle, or
personality characteristics.

D. Behavioral Segmentation
Dividing a market into groups based on consumer attitude, usage and
product response.

Individual Segmentation

Ultimate level of segmentation, where segmentation is performed on the

smallest unit of any market (Individual or “segment of one”).

Other Textbook Segmentation

Occasion Segmentation

Dividing the market into groups according to occasions when buyers get the idea
to buy, actually make their purchase, or use the purchase, or use the purchased
item

Benefit Segmentation

Dividing the market into groups according to the different benefits that
consumers seek from the product

Use Multiple Segmentation base

29 | P a g e
 - Help identify smaller, better defined target groups

International Market Segmentation

Forming segments of consumers who have similar needs and buying behavior
even through that are located in different countries

Level of Market Segmentation:

Mass Marketing Same product to all consumer No Segmentation

Segment Different products to one or more Some

Marketing segments Segmentation

Niche Marketing Different products to subgroups More

within segments Segmentation

Micro Marketing Products to suit the tastes of Complete

individuals and locations Segmentation

* Effective Segmentation

- View the market from a unique angle and in a different way from
competitors to

dominate over your competitors

- Must be able to reflect buying behavior and determine the customer’s

reason to

buy

30 | P a g e
  Dynamic attribute segmentation is superior to static attribute
segmentation. This method leads directly to buying behavior; it can
yield very valuable information for formulation of a suitable strategy for
influencing this behavior
 Geographic and demographic segmentation easier to perform, since
accurate and precise data is readily available. However, difficult to
build complete strategy incorporating positioning, differentiation,
marketing mix, selling, services, process and brand building efforts
with any kind of accuracy.

- Segments must be of significant size and have good prospects for future
growth

- Measurable: size, purchasing power and profiles of the segments can be

measured

- Accessible: the market segments can be effectively reached and served

- Substantial: the market segments are large and profitable to serve

- Differential: the segments are conceptually distinguishable and respond

differently to different marketing mix elements and programs

- Actionable: effective programs can be designed for attracting and serving

the segments

2. Targeting (Pg 62-65)

- selecting which segments to enter once the market is mapped and
segmented into groups of potential customers with similar characteristics and
behavior

- Way of allocating resources effectively i.e. selecting the right target market

- FITTING STRATEGY

- ‘Allocating your resources effectively’

1. Ensure market segment is big enough and will be profitable enough for
company to get involved in.
 Choose segment that is currently small but appear attractive and
profitable for the future
 Examine current competition in sector and its potential to grow
2. Targeting strategy must based on company’s competitive advantage
 Company needs capabilities, core competencies and competitive
advantages to carry out differentiation that is aimed at beating
competition

31 | P a g e
  Must analyze closely whether chosen market segment is in line with,
and supports, company’s long-term objectives
3. Market segment must be base on competitive situation that will directly or
indirectly influence the attractiveness of the target segment.
 Intensity of segment rivalry
 Potential new entrants
 Industry’s barriers to entry
 Existence of substitute products
 Presence of complementary products
 Growth of buyer bargaining power and supplier bargaining power

Undifferentiate Differentiated Concentrated Micromarketing

d (Mass) (Segmented) (Niche) (Local or
Marketing Marketing Individual
Marketing

Targeting Broadly Targeting Narrowly

Undifferentiated (Mass) Marketing

A market-coverage strategy in which a firm decides to ignore market segment

differences and go after the whole market with one offer

Company designs a product and a marketing program that will appeal to the
largest number of buyers.

Differentiated (Segmented) Marketing

A market-coverage strategy in which a firm decides to target several market

segments and designs separate offers for each

Example

Gap Inc has created 3 different retail store format (Gap, Banana Republic, Old
Navy) to serve the varied needs of different fashion segment

Developing a stronger position within several segments creates more total sales
than undifferentiated marketing across all segments.

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Concentrated (Niche) Marketing

A market-coverage strategy in which a firm goes after a large share of one or

few segments or niches

Company resources are limited.

Through concentrated marketing, the firm achieves a strong market position

because of its greater knowledge of consumer needs in the niches it serves and
the special reputation it acquires.

- Market more effectively

- Fine-tuning its products, prices, and programs to the needs of
carefully defined segments
- Market more efficiently
- Targeting its products or services, channel, and communication
programs toward only consumers that it can serve best and most
profitably

Example

Apple invests in research and development, making it the industry trendsetter.

For example, when the company recently introduced iTunes, it captured more
than 70% of the music download market. Such innovation has created a loyal
base of customers who are willing to pay more for Apple’s cutting edge products

* Note Concentrated marketing can be highly profitable. At the same time, it

involves higher than normal risks. Companies that rely on one or few segments
fir all of their business will suffer greatly if the segment turns sour. Or larger
competitors may decide to enter the same segment with greater resources.

Best to diversify in several market segment.

Micromarketing

The practice of tailoring products and marketing programs to the needs and
wants of specific individuals and local customer group

Local Marketing

- Tailoring brands and promotions to the needs and wants of local customer
groups (Cities, neighborhoods, and even specific stores)

Example

33 | P a g e
Citibank provides different mixes of banking services in each of its branches,
depending on neighborhood demographics

Problem

- Drive up marketing and manufacturing costs by reducing economies of

scales.
- Create logistic problems as companies try to meet the varied
requirements of different regional and local markets.
- Brand’s overall image might be diluted if the product and message
vary too much different localities.

Individual Marketing

- Tailoring products and marketing programs to the needs and

preferences of individual customers
o Customized Marketing
o One-to-one Marketing

Today’s technology has enable company to mass customization. It is the process

through which firms interact one-to-one with masses of customers to design
products and services tailor-made to individual needs.

Example

Dell allows users to create custom-configured computer through the internet.

User can choose their own configuration so to pay only what they want.

Choosing a Target Market Strategy

- Company Resources
- Product Variability
- Product Life-cycle stage

Uniform Product Undifferentiated (Mass) Fruits, raw materials

Marketing

Product vary in design Concentrated (Niche) Camera, Automobile

Marketing

Differentiated
(Segmented) Marketing

Limited Resources Concentrated (Niche)

Marketing

Product’s life cycle Undifferentiated (Mass) Only one model

stage Marketing launched

34 | P a g e
Launch Concentrated (Niche)
Marketing

Product’s life cycle Differentiated

stage (Segmented) Marketing

Mature

3. Positioning (Pg 65-68)

- After mapping the market and fitting the company’s resources into its
selected segment, a company has to define its BEING STRATEGY in the minds
of the target market  credible position in their minds

- ‘Lead your customers credibly’

- How to establish trustworthiness, confidence and competence for customers

- Once done  being in the minds of customers

- Customers:

 Positioning should be perceived positively by customers

 Be their ‘reason to buy’ once it describes the value that you bring to
them e.g. Amazon.com
 E.g. when the newly founded Amazon.com decided its positioning
would be “the most convenient book retailer with the biggest selection
and the lowest price”, this excellent value was reflected in what the

35 | P a g e
 company was trying to offer. And excellent value has become the main
determinant for customers who choose to use Amazon’s services

- Company’s internal capabilities:

 Should reflect their strengths and CA

 E.g. Amazon’s positioning accurately describes the company’s strength
and core capabilities that form the basis of its competitive advantage

- Company’s competitors

 unique positioning so that it can easily differentiate from the rest e.g.
Nokia

- Assessment of changes that occur within the business environment

 Positioning = planting the personality, identity and perception

 Hence, it must be consistent and unchanging e.g. Jollibean and Changi
Airport
 E.g. Changi Airport, won Best Airport in the World award many times,
positions itself as the “Most User-Friendly Airport in the world”. Its
unique marketing research program provide critical information to its
decision makers to keep abreast of developments in its customers,
competitors and changing environment, and to leverage its resources
to respond accordingly

Positioning Example

5. Sony – Innovation
6. Giordano – Value for Money
7. Wal-Mart – Everyday low price
8. Singapore Airlines – Excellent service quality

These companies have achieved this because they have consistently used
the same positioning statement over a long time, and have not changed
them one iota.

Positioning (Textbook)

Product positioning

The way the product is defined by consumers on important attributes (The place
the product occupies in consumers’ mind relative to competing product)

36 | P a g e
Positioning Task

- Identifying a set of possible competitive advantages upon which to build a

position
- Choosing the right competitive advantages upon which to build a position
- Choosing the right competitive advantages
- Selecting an overall positioning strategy
- Must effectively communicate and deliver the chosen position to the
market

Identifying possible Competitive Advantages

Competitive Advantages

An advantage over competitors gained by offering consumers greater value,

either through lower prices or by providing more benefits that justify higher
prices.

Positioning begins with actually differentiating the company offer so that it will
give consumers superior value.

Choosing the right competitive advantage

A difference is worth establishing to the extent that it satisfies the following

criteria:

- Important: The difference delivers a highly valued benefit to target buyers

- Distinctive: Competitors do not offer the difference, or the company can
offer it in a 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

37 | P a g e
The full positioning of a brand is the brand’s value proposition (the full mix of
benefits upon which the brand is positioned.

Example

Volvo’s value proposition hinges on safety but also includes reliability,

roominess, and styling, all for a price that is higher than average but seem fair
for this mix of benefits.

Possible Value Proposition

More for More

“More for more” positioning involve providing the most upscale product or
service and charging a higher price to cover the higher costs.

Example

Ritz-Carlton Hotels, Mont Blanc writing instruments, Mercedes-Benz automobiles

each claims superior quality, craftsmanship, durability, performance, or style and
charge a price to match. Not only is the marketing offer high in quality, it also
give prestige to the buyer. It symbolizes status and a loftier lifestyle. Often, the
price difference exceeds the actual increment in quality.

Problem

They often invite imitator who claim the same quality but at a lower price.
Luxury goods that sell well during good times may be at risk during economic
downturns when buyers become more cautious in their spending.

More for the Same

Companies can attack a competitor’s more-for-more positioning by introducing a

brand offering comparable quality but at a lower price.

Example

38 | P a g e
Toyota introduces its Lexus line with a “more-for-the-same” value proposition.
Not only is it cheaper, it also have comparable high quality to companies such as
Mercedes. In fact, it published surveys showing that Lexus dealers were
providing customers with better sales and service experiences than were
Mercedes dealership. Many Mercedes owners switched to Lexus, and the Lexus
repurchase rate has been 60%, twice the industry rate.

Same for Less

Offer same product at less price

Example

Dell offers equivalent quality computers at a lower “price for performance”.

Companies that do this are likely to have superior purchasing power and lower-
cost operation.

Other companies develop imitative but lower-priced brands in an effort to lure

customers away from the market leader. For example, AMD makes less
expensive versions of Intel’s market-leading microprocessor chips.

Less for much Less

“Less for much Less” positioning involves meeting consumers’ lower

performance or quality requirements at a much lower price.

Example

Econ minimart offer more affordable goods at very low price. Tiger Airway also
practices less for much less positioning. It charges incredibly low prices by not
serving food and not using travel agents.

More for Less

Best if possible – winning value proposition

39 | P a g e
Example

Dell computer to have better product and lower price for a given level of
performance.

Problem

In long run, companies find difficult to sustain such best of both positioning.
Offering more usually cost more, making it difficult to deliver on the “for less”
promise. Companies that try to deliver both may lose out to more focused
competitors.

SMD: Market Share Tactic

40 | P a g e
1. Differentiation (Pg 69-74)
- ‘Integrate your content, context and infrastructure’

- To make the promise given with positioning trustworthy and credible 

support with strong differentiation to prevent ‘over-promise’ or ‘under-deliver’
 strong brand integrity

Content Differentiation:

- value offered to customers

- what you actually offer to them (tangible part)

Context Differentiation:

- way you offer your product and service (intangible)

- efforts you put in to let customers perceive you differently from others

Infrastructure:

- technology, people and facilities used to create content and context

differentiation

- e.g. strong culture within the organization  employee productivity and

innovation due to shared knowledge amongst themselves

- e.g. strong and effective networking system

- e.g. Cisco

Solid differentiation was formed by offering a uniquely different “one-stop

stop” networking solution, which was integrated with a uniquely different
delivery through its Value-Chain B-Web Business Model. The business model
works excellently and is supported by a solid infrastructure-Cisco’s state-of-
the-art technology, constituency-focused people, strong salesmanship, a
strong information-sharing culture. They succeeded in integrating content,
context, and infrastructure to create a solid whole.

Differentiation

- Product
 Features, Performance, Style & Design
 Attributes as consistency, durability, reliability or repairability
- Volvo provides new and better safety features

41 | P a g e
 - Whirlpool designs its dishwasher to run more quietly
- Bose positions its speakers on their striking design
characteristics

- Services
 Speedy, convenient or careful delivery
- BankOne has opened full-service branches in supermarkets
to provide location convenience along with Saturday, Sunday,
and weekday-evening hours
 After sale service

- Channels
 Design channel’s coverage, expertise and performance
- Amazon.com, Dell and Avon set themselves apart with their
high quality direct channels

- People
 Hiring and training better people than their competitors do
- Disney people are known to be friendly and upbeat
- IBM offer people who make sure that the solution customers
want is the solution they get. “People who get it. People who
get it done.”

- Image
 A company or brand’s image should convey the products’
distinctive benefits and positioning
 The image must be supported by everything the company says and
does.
 Symbols such as the MacDonald’s golden arches, Nike Swoosh,
Google’s colourful logo can provide strong company or brand
recognition and image differentiation
 The chosen symbols, characters, and other image elements must be
communicated through advertising that conveys the company’s or
brand’s personality

42 | P a g e
2. Marketing Mix (Pg74-75)
- ‘Integrate your offer and access’

Marketing mix is about integrating a company’s offer, logistics and

communications. The company’s offer, consisting of products and prices,
should be well integrated with access including company’s places (channel
distributions) and communications to create a powerful marketing force in
the marketplace. Right communication media must be selected to raise
awareness and aid recall by the target market.

- creates the content-context-infrastructure differentiation

3 types of marketing mix:

1. Destructive marketing mix-does not add customer value and does not
build the company’s brand

2. Me-too marketing mix-imitates other existing marketing mix from other

players in the same industry

3. *creative marketing mix-supports marketing strategy (segmentation-

targeting-positioning) of the company and builds marketing value (brand-
service-process)

- 4Ps (Product, Price, Place and Promotion)

- Product (product life cycle and adaptation)

- Price (approaches and strategies)

- Promotion (Integrated marketing comm., social responsibility, advertising,

sales)

- Place (location, channel distribution, distribution/wholesaler/retailer and

partner idea)

Marketing mix – MICE

Matching prices e.g. do not set too high or too low

43 | P a g e
 Innovative products – differentiation

Creative promotions

Effective placing

4Cs

- Customer soln

- Customer cost

- Convenience

- Comm.

- Company’s offer, consisting of products and prices, should be well

integrated with access

including company’s places and the right comm. media  powerful marketing
force

- creates the content-context-infrastructure differentiation  CREATION

TACTIC

Product

Chapter 8: Product, Services and Branding strategy

Product: anything that can be offered to a market for attention, acquisition,

use/consumption and that might satisfy a want or a need.

44 | P a g e
Consumer products: products and services bought by final consumers for
personal consumption

Industrial product: products that are purchased for further processing or for use
in conducting business.

For consumer products-go for differentiation advertisement

For industrial products-no need for advertisements as its more of quality that is
important.

Marketing considerations for the various types of consumer products (Table 8.1
pg 221)

These consumer products differ in the way consumers buy them and therefore in
how they are being marketed.

When making a product decision, you must consider these factors:

-Product attributes

-Branding

-Packaging

-Labeling

-Product support services

1. Product attributes (pg 225)

 Product quality (total quality management-pg 226)

- The ability of a product to perform its functions; it includes the product’s

overall durability, reliability, ease of operation and repair, and other
valued attributes.
 Product features

- Features are a competitive tool for differentiating the company’s product

from competitors’ products
 Product styles and design

- Good design contributes to a product’s usefulness as well as to it looks

45 | P a g e
 2. Branding (pg 235)
- helps consumers identify products that might benefit them

- tells buyer about product quality

- provides legal protection for unique product features

- helps seller segment the target markets

* refer to STV-value-branding as well

Brand equity: the positive differential effect that knowing the brand name has on
customer response to the product/services.

When positioning a brand, should establish a mission for the brand and a vision
of what the brand must be and do. A brand is a company’s promise to the
customer that guarantees a specific set of features, benefits

Brand positioning:

Lowest level: product attributes (least desirable as competitors can easily copy)

Mid level: desirable benefit

Highest level: strong beliefs and values

3. Packaging (pg 230)

- To attract attention

- To describe the product

- To provide instant customer recognition

E.g. Dutch Boy Paint- Twist and Pour paint container (paint that’s easy to carry,
doesn’t take a screwdriver to pry open and doesn’t dribble when pouring and
doesn’t take a hammer to bang close again)

4. Labeling (pg 231)

- Identifies product or brand

-Promote products through attractive graphics

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 5. Product support services (pg 232)
-Services that augment actual products

-Assessment of the value of the support services

-Costs of providing the services

After consideration, come up with a package of services that will both delight
customers and yield profits to the company

E.g. Hewlett Packard send pop-up chat boxes to visitors who were shopping on
HP.com’s pages for digital photography products. If a shopper takes a few
minutes to view some gear, up pops a photo of an attractive woman with the
words, “Hello, need information? An HP live chat representative is standing by to
assist you.”

47 | P a g e
Product life cycle

Sales and profits over the product’s lifetime

Refer to pg 274

Product development: begins when company finds and develops a new-product

idea

Sales are zero and the company’s investment costs mount

Introduction: period of slow sales growth as the product is introduced in the

market

Growth: period of rapid market acceptance and increasing profits

Maturity: period of slowdown in sales growth because the product has achieved
acceptance by most potential buyers. Profits level off or decline because of
increased marketing outlays to defend the product against competition

Decline: period when sales fall off and profits drop

E.g. Of products that tap the product life cycle curve effectively, Volkswagen
beetle and crayola crayons pg 278

48 | P a g e
Alternative PLC shapes in various industries

Price

Chapter 10: Pricing products

Price: amount of money and services/gds the buyer exchanges for an

assortment of products and services provided by the seller

-Element that captures the value created (becomes revenue to the firm)

Pricing decisions are affected by:

49 | P a g e
Internal factors:

Marketing objectives (pg 291)

E.g. Toyota developed its Lexus brands to compete with European luxury-
performance cars (BMW and Mercedes Benz) in the higher-income segment; this
required charging a high price.

Marketing mix strategy (pg 292)

-Price decision must be coordinate with product design, distribution, and

promotion decisions to form consistent and effective marketing programmes.

-Position their products on price and then tailor other marketing mix decisions to
the prices they want to charge.

-Price is a crucial product-positioning factor that defines the product’s market,

competition and design.

-Target costing

 Reverses the usual process of first designing a new product, determining

its cost and then finding out whether it is possible to sell at that price. It
starts with an ideal selling price that is based on customer considerations,
and then target costs that will ensure that the price is met.
E.g. Procter & Gamble

Costs factors (pg 294)

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- Fixed costs (overhead): costs that do not vary with sales of production levels

E.g. Executive salaries, rent

Variable costs: costs that vary directly with the levels of production (Pg 292)

E.g. Raw materials

Total costs: sum of the fixed and variable costs for a given level of production

- To price wisely, management needs to know how its costs vary with different
levels of production (Pg 295)

Organizational considerations (pg 297)

-Decide who within the organization should set the prices

-Small companies; prices are often set by top mgt rather than by marketing/sales
departments

-Large companies; prices are typically handles by divisional/product line

managers

-Industrial markets; salespeople might be allowed to negotiate with customers

within certain price ranges

External factors:

Nature of market and demand (pg 297)

-Costs set the lower limit of prices, market and demand set the upper limit

Competition (pg 301)

-Must consider competitors’ costs and prices and possible competitor reactions
to the company’s own pricing moves

Other external factors (pg 301)

-Economic conditions

-Government

-Social concerns

51 | P a g e
General Pricing approaches:

Cost-based pricing (cost-plus pricing) (pg 302)

-Adding a standard markup to the cost of the product

Break-even pricing (target profit pricing) (pg 303)

-Setting price to break even on the costs of making and marketing a product; or
setting price to make a target profit

Value-based pricing (pg 304)

-Setting price based on buyers’ perceptions of value rather than on the seller’s
cost

Competition-based pricing (pg 306)

-Setting prices based on the prices that competitors charge for similar products

52 | P a g e
Place

Chapter 12: Channel Distribution and Supply Chain management

1. How channel members add value

- Intermediaries buy large quantities from many products and break down
into the smaller quantities and broader assortments wanted by consumers

- play a very important part in matching supply and demand

- Bridges time, place and possession gaps that separate goods and services
from those who will use them

- Completes transactions like information, promotion, contact, matching,

negotiation, physical distribution, financing and risk taking

- From supply chain  value delivery network

2. No. of channel levels

- Direct marketing channel: no intermediary levels and the company sells
directly to the customers

- Indirect marketing channels: one or more intermediaries

E.g. businesses can sell products directly to their business customers

E.g. businesses can sell to intermediaries to sell to customers

- Producers’ point of view: greater no. of levels  less control and greater
channel complexity

E.g. physical flow of products, flow of ownership, payment flow, information

flow and promotion flow

3. Channel behavior
- A marketing channel consists of firms that have partnered for the same
good

53 | P a g e
- Depends on each other

- E.g. Ford dealer depends on Ford to design cars that meet consumer needs;
while Ford depends on their dealers to attract customers, persuade them to
buy Ford cars and service cars after sales

- The channel will be most effective if each member is assigned the tasks it
can do best

- E.g. Sony produces consumer electronic products that consumers will like
and to create demand through advertising; Best Buy displays their products
in convenient locations, answers their questions and complete sales

- Should understand and accept their roles, coordinate their activities and
cooperate to attain overall channel goals

 Channel conflict (cooperating to meet common goals means giving up

individual roles like acting for their self interests; argue who should do what
and for what rewards)

 Horizontal conflict
 Vertical conflict

4. Vertical Marketing systems

- Producers, wholesalers, retailers act as a unified system

- Corporate VMS

 channel leadership is attained through common ownership

 integrates successive stages of production and distribution under
single ownership
 coordination and conflict management are attained through regular
organizations
 E.g. Zara has control over every aspect of its supply chain, from design
and production to its distribution network: makes their own fabrics,
produces more that half of their clothes, new styles take place in their
own design centers  ship finished products straight to the stores,
eliminating warehouses  faster, more flexible and more efficient

- Contractual VMS

 independent firms at different levels and distribution who join together

through contracts to obtain more EOS

54 | P a g e
  coordination and conflict management are attained through
contractual agreements among channel members
 Franchises
 E.g. Ford and their independent dealers (manufacturer-sponsored
retailer franchise)
 E.g. Coca-Cola licensing bottlers who buy their syrup and bottles and
sells to retailers (manufacturer-sponsored wholesaler franchise)
 E.g. Auto rental like Hertz and Fast food chains like McDonalds (service-
firm- sponsored retailer franchise)

- Administered VMS

 Leadership assumed through the size and power of one or a few

dominant channel members
 E.g. GE command unusual cooperation from retailers regarding shelf
space, promotions and price policies
 E.g. Wal-Mart exert strong influence on the manufacturers

5. Horizontal Marketing Systems

- Two or more companies at one level join together to follow a new marketing
opportunity

- Can combine their financial, production, or marketing resources to

accomplish more than any company can alone

- E.g. McDonald’s partners with Wal-Mart to place express versions of its

restaurants in Wal-Mart stores

- Coca-Cola and Nestle jointly venture to market ready to drink coffee and tea

6. Multichannel Distribution systems

- sets up two or more marketing channels to reach one or more customer
segments

- E.g. IBM uses multiple channels to serve dozens of segments and niches,
ranging from large corporate buyers to small businesses to home office
buyers. They also sell through resellers and distributors so that consumers
can easily get them at specialty stores. They also use telemarketing to
service the needs of smaller companies

7. Changing channel organization

55 | P a g e
- Disintermediation

 Due to technology and direct and online marketing

 more and more products and service producers are bypassing
intermediaries and going directly to final buyers
 HP opened 3 direct web sites but sends orders to resellers who will
complete the orders, ship the products and get the commissions
=> uses direct marketing but also helps retailers

Channel Design decisions

1. Analyze consumer needs

- Marketing channels are part of the overall customer value delivery network

- Each channel member adds value for the customer

- Must find out what target customers want from the channels

 Faster delivery, greater variety, more add-ons services  greater the

channel service level

 Must also balance costs and customer price preferences

2. Setting channel objectives

- Which segments to serve and the best channels to use

- Aim is to minimize the cost of meeting cust. service requirements

- Also affected by company size and financial situation. the product (if it is
perishable, direct marketing must be used), competitors (not using their
channels), economic and legal constraints (depressed economy, use shorter
channels to economize)

3. Identify major alternatives

- Type of intermediaries

 any alternatives:
 expanding the company’s sales force
 manufacturer’s agency
 industrial distributors in different regions
- No. of intermediaries

 intensive distribution (convenience products)

 exclusive distribution (luxury automobiles, prestige women clothing)
 selective distribution (television, furniture)

56 | P a g e
4. Evaluating the major alternatives
- Economic criteria: compares the sales, costs and profitability

- Control issues

- Adaptive issues: long term but the channels must be flexible to adapt to
environmental factors

5. Designing International Distribution channels

- Each country has its own unique characteristics and hence global marketers
must adapt their channel strategies to existing structures

Channel Management decisions

1. Selecting channel members

- Determine what characteristics they have that can distinguish them from
the rest

- E.g. years in businesses, growth and profit record, cooperativeness,

reputation, size and quality of salesforce, location, customers and future
growth potential

2. Managing and motivating channel members

- Must be able to practice strong PRM to forge strong LT rls with channel
members

- See them as their first line customers and partners

- E.g. Wal-Mart and P & G work together to create superior value for
customers, planning goals and strategies, inventory levels and advertising
and promotions

3. Evaluating channel members

- Checking their performance

- Reward intermediaries who are performing well and adding good value to
customers

57 | P a g e
- Assist poor performers or replace them

- Must be sensitive to their dealers

Logistics

Involves getting the right product to the right customers in the right place at
the right time

To provide a targeted level of customer service at the least cost

1. Warehousing
- Storage warehouses: store goods for moderate to long periods

- Distribution centers: designed to move goods rather than support them

(large and highly automated)

2. Inventory management
- Affects customer satisfaction

- E.g. with too little stock, risks not having products when customers want to
buy

- E.g. with too much stock, it will lead to increase costs

- Just- in-time: carry small amts of stock for a few days of operations, but this
requires accurate forecasting with fast, frequent, and flexible delivery so that
new supplies will be available when needed

- RFID, smart tag tech: fully automated handing of inventory

3. Transportation
- Speed

- Dependability

- Avaliability

- Costs

- affects the price, delivery performance, condition of goods when they arrive
 cust satisfaction

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- E.g. train, truck, air, water and Internet

- Can also use intermodal transportation: combining two or more modes of

transports

4. Logistics Information management

- channel partners linking up to share info and to make better joint logistics
decisions

Integrated Logistics management

The logistics concept that emphasizes teamwork, both inside the company
and among all the marketing channel organizations, to maximize the
performance of the entire distribution system

- Cross functional teamwork inside the company

- Building logistics partnerships

- 3rd party logistics

 outsourcing logistics tasks to other companies to increase efficiency at

lower costs
 allows the company to focus more on their core business
 integrated logistics companies are able to understand increasingly
complex logistics environment and can help them expand their global
marketing coverage

59 | P a g e
Chapter 13- Retailing and Wholesaling

Retailing

All the activities involved in selling products directly to final consumers for their
personal, non-business use

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Classifications of retailers (Pg 373-378)

Amount of service

- Self service retailer: provides few or no services to buyers, usually for

convenience goods e.g. Best Buy

- Limited service retailers: provides a no. of services to shoppers e.g. Sears that
provides more sales assistance as they carry more shopping goods that need
more info

- Full service retailers: provide full range of services to shoppers as they carry
more specialty goods for which customers wish to be waited on e.g. Neiman
Marcus

Product line

Relative prices

Organizational approach

Target market and positioning decisions:

- must be able to define their target markets well and position themselves
strongly (Pg 379)

Product assortment and services decisions:

Product assortment

- Differentiate the retailer while matching target shopper’s expectations

- Offer merchandise that no other competitor carries

- Offer surprise merchandise

- Highly targeted product assortment

Services mix

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- E.g. some retailers invite customers to ask questions or consult service
representatives in person or via phone/keyboard

Store’s atmosphere

- plan one that suits the target market and moves them to buy

Experimental marketing  transporting customers into unusual, exciting

shopping environment

Price decision:

- High markups or lower volume (mostly specialty stores)

- Low markups on higher volume (mass merchandisers and discount stores)

- E.g. Bijan boutique on Rodeo Drive in Beverly hills sells the most expensive
menswear in the world. Its ‘by appointment only’ policy is designed to make its
wealthy, high profile clients comfortable with these prices. Hence, they sell a low
volume but make hefty profits

Promotion decision: Pg 383

- Advertising, personal selling, sales promotions, public relations and direct

marketing to reach consumers

Place decision:

- Retailers select places that are highly accessible to the target markets in areas
that are consistent with the retailers’ positioning

- Most stores today cluster together to increase their customer pulling power and
to give them the convenience of a one stop shopping

- E.g. Central business districts

- E.g. Shopping centers

Future of retailing: Pg 385-389

 New retail forms and shortens retail life cycles

Wheel-of-retailing concept:

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- Many start off as low margin, low price, low status operations

- Challenge established retailers by increasing their costs and margins increase

- However, as time goes by, the new retailers’ costs will start to increase with
more offers of services after their success

- have to increase their prices and will be replaced again

 Nonstore retailing

- Online retailing

- Easier to use websites

- Improved online service

- E.g. online auctions like e-Bay, online travel companies like Travelocity

63 | P a g e
 Retail convergence

- Increasingly selling the same products at the same prices to the same
consumers in competition with a wider variety of other retailers

- Eg. You can buy books at independent local bookstores or at discount stores
like Borders

- Greater competition for retailers and greater difficulty in differentiating

offerings b/w chain superstores and independently owned stores

 Growing importance of retail technology

- Advanced IT and software systems to produce better forecasts, control

inventory costs, order electronically, send emails b/w stores, and even sell to
customers within stores

- E.g. touch screen kiosks in petrol kiosks, self scanning systems, smart cards

making shopping easier for customers

Wholesaling

Activities involved in selling goods and services to those buying for resale or
business E

Functions of Wholesalers:

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Selling and promoting

- Help manufacturers reach many small customers at a low cost

- Wholesalers have more contacts and is often more trusted

Buying and assortment building

- Select items and build assortments needed by their customers, thereby saving
the consumers much work

Bulk breaking

- Break bulk into small qtys

- Save their customers money

Warehousing

- Hold inventories  reducing costs and risks of suppliers and customers

Transportation

- Quicker delivery as they are closer to producers

Financing

65 | P a g e
- Gives customers credit and finance their suppliers by ordering early and paying
bills on time

Risk bearing

- Taking title and bearing the costs of theft, damage, spoilage and obsolescence

Market Info

- Gives customers and suppliers about competitors, new products and price
developments

Management services and advice

- Helps retailers train their sales clerks, improve store layouts and displays and
set up accounting and inventory control systems

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Types of wholesalers:

67 | P a g e
Wholesaler marketing decisions:

Target market and positioning decisions

- Choose a target group by size of customer (only large retailers)

- Need for service (customers who need credit)

- Type of customers (convenience stores)

- Identify the more profitable customers, design stronger offers and build better
rls with them

Marketing mix decisions

- Cutting down on the no. of lines they carry, choosing to carry only the more
profitable customers

- Also rethinking which services count most in building strong customer rls and
which should be dropped or charged for

 Find the mix of services most valued by their target customers

- Price: new pricing approaches

E.g. cut margins on some lines to win impt new custs and may ask supplier for
price breaks which in turn can lead to higher suppliers’ sales

- Promotion: trade advertising, sales promotions, personal selling and public

relations; need to come up with an overall positioning strategy and to make
greater use of supplier promotion materials and programs

- Place: choose their locations, facilities and Web locations carefully

68 | P a g e
Trends in wholesaling

In the LR, their only reason for existence comes from adding value by increasing
effectiveness and efficiency of the entire marketing channel

Must constantly increase their services and reduce costs

69 | P a g e
70 | P a g e
Promotion

Chapter 14: Integrated Marketing communications strategy (IMC)

The changing comm. environment:

1. More and more marketers are developing focused marketing programs

designed to build closer rls with customers in more narrowly defined
micro-markets
2. Vast improvements in IT are speeding the movement toward segmented
markets and hence shifting away from mass marketing

The need for IMC:

- Shift from mass marketing to target marketing

- Corresponding use of a larger, richer mix of comm. channels and promotion

channels: advertising messages from different media and different promotional
approaches all become part of a single message  conflicting messages 
confused company images and brand positions

- Comm. often comes from different company sources

IMC  company carefully integrates and coordinates its many comm. channels
to deliver a clear,

consistent and compelling message about the organization and its

brands

 builds brand equity and strong rls by tying tog all the images and brand
messages

 company’s advertising and personal selling comm. have the same

message, look and feel as

its website; public relations materials say the same thing as its direct
mail campaign

 recognizes all contact pts where the cust may encounter the company,
products and its

brands

 produces better comm. consistency and greater sales impact

71 | P a g e
  may have a marketing comm. director that has overall responsibility for
all comm. efforts

The view of IMC: Pg 404 - 405

- Identify the target audience

- Shaping a well-coordinated promotional program to obtain the desired audience

response

- Viewing comm. as managing the cust rls over time

- Customers differ  comm. programs must be developed for specific segments,

niches and individuals

- To comm. effectively, marketers need to understand how comm. works

Steps in developing effective IMC:

1. Identifying the target audience

- individuals, groups, special publics or the general public

72 | P a g e
- will affect what will be said, how it will be said, when it will be said, where it
will be said and who will say it

2. Determining the comm. objectives (Pg 406-407)

3. Designing a message
 Message content
- Rational appeals: audience’s self interests, showing that the product will
produce the desired benefits

- Emotional appeals: stir up either positive or negative emotions e.g.

happiness, joy, guilt, fear; can also use humor to capture attention, make
people feel good and give a brand personality

- Moral appeals: audience’s sense of what is ‘right’ and ‘proper’; urge people
to support social causes like a cleaner environment, better race relations,
equal rights for women and aid to the disadvantaged

 Message structure
- draw a conclusion or leave it to the audience

- whether to present a one-sided argument (mentioning only their strengths)

or a two-sided argument (mentioning their strengths and shortcomings)

 Message format

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- strong format to capture attention

- presenters image like dress, poise, gestures, facial expressions

- sound, words and voices

- eye catching pictures, headlines

- watch the texture, color, size and shape

 Personal comm. channels

- two or more people comm. directly with each other, face to face, over the
telephone, through the mail, or even through an Internet chat

- allows for personal and feedbacks

- carries great weight for products that are risky, expensive or highly visible
 seek opinions of knowledgeable people

- opinion leaders  people whose opinions are sought by others by supplying

influencer with the product on attractive terms or by educating them so that
they can inform others

- Buzz marketing  involves cultivating opinion leaders and getting them to

spread info abt a product or service to others in their communities

 Non-personal comm. channels

- media that carry messages w/o personal contact or feedback e.g. mass
media, atmospheres and events

- e.g. television, radio, newspapers, signs, posters, designed environments

that create or reinforce the buyer’s learning toward buying a product, staged
occurrences that comm. msgs to target audiences

4. Selecting the message source

- using highly credible sources

74 | P a g e
- celebrity endorsers

 Must ensure that they are reputable so that it will not lead to
embarrassment and a tarnished image

5. Collecting feedback
- asking the target audience members whether they remember the message,
how many times they saw it, what points they recall, how they felt about the
message, and their past and present attitudes toward the product and
company

The impact of marketing comm. tools on customers’ responses

A – PR and Publicity

B – Advertising

C- Personal selling

D- Sales promotions

Setting the total promotion budget:

4 steps:

75 | P a g e
 1. Affordable method
- sets the promotion budget at the level they think they can afford

 completely ignores the effects of promotions on sales as they place it as last

spending priority

2. Percentage-of-sales method
- setting their promotion budget at a certain % of current or forecasted sales

- simple to use, helps management think about the rls b/w promotional
selling, selling price and profit per unit

 see sales as the cause of promotions rather than the results

 based on availability of funds rather than opportunities
 budget varies from yr-to-yr, long range planning is difficult

3. Competitive-parity method
- setting promotion budget to match competitors

- competitors’ budgets represent the collective wisdom of the industry

- spending what competitors spend helps prevent promotion wars

 companies differ greatly and have their own promotion needs

 does not necessarily prevent promotion wars

4. Objective-and-task method

- sets its promotion budget based on what it wants to accomplish with

promotion

- defining specific promotion objectives

- determining the tasks needed to achieve those objectives

- estimates the costs of performing these tasks

- forces management to spell out its assumptions abt the rls b/w $ spent and
promotion results

 hard to identify what specific tasks will achieve stated objectives

76 | P a g e
 Setting the overall communication mix:

Advertising

- reach masses of geographically dispersed buyers at low cost per exposure

- enables the users to repeat the message many times

- large scale: seller is large, popular and successful  tend to view the
advertised products more legitimately

- very expressive

- build long term image for a product

- trigger quick sales

 impersonal and cannot be directly persuasive

Sales promotions (Chapter 15)

Public relations (Chapter 15)

77 | P a g e
Personal selling (Chapter 16)

Direct marketing (Chapter 16)

78 | P a g e
Promotion mix strategies:

Push strategy

- pushing the product through distribution channels to final consumers

- producer directs its marketing toward channel members to induce them to

carry the product and to promote it to final consumers

Pull strategy

- producer directs its marketing activities toward final consumers to induce

them to buy the product

Depends on type of market

- B2C – ‘pull’ more, putting more funds into advertising, followed by sales
promotions, personal selling, and then public relations

- B2B – ‘push’ more, putting more funds into personal selling, followed by
sales promotions, advertising and public relations

Depends on PLC

- Introduction stage – more advertising and PR for high awareness, sales

promotions for early trial, personal selling for carrying the product

- Growth stage – advertising and PR continues but sales promotions can be

reduced

- Mature stage – sales promotions more impt than advertising as cust alr
know the brands

79 | P a g e
- Decline stage - advertising, PR, personal selling fall but sales promotions
may still be strong

Integration promotion mix: Pg 420

- Analyze internal and external trends that can affect the company’s ability to
do business

E.g. determine the strengths and weaknesses of each comm. function 

develop combi of promotional tools

- Audit the packages of comm. spreading thrg the organization

- Identify all contact points for the company and its brands

E.g. ensure consistency of comm. at each pts with the overall strategy

- Team up in comm. planning

Socially responsible marketing comm.: Pg 420-421

80 | P a g e
Advertising and sales promotions

- must avoid deceptive and false advertising

- avoid bait and switch advertising that attracts buyers under false pretences

- companies can use advertising and other forms of promotion to encourage

and promote socially responsible programs and actions e.g. Caterpillar
protects the Amazon rainforest by advertising to promote the cause

Personal selling

- must follow the rules of fair competition

- must not lie to customers or mislead them abt the advantages of buying a
product

- must match advertising claims

81 | P a g e
Chapter 15 – Advertising, Sales promotions and
PR

Advertising

Setting advertising objective:

Specific comm. task to be accomplished with a specific target market during a

specific period of time

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Informative Used heavily when introducing a new product
advertising Used to build primary demand

Persuasive More important as competition rises

advertising Build selective demand
Have to persuade that its brand offered the best
quality for their money
Some may become comparative advertising: directly
or indirectly compares with other brands

Reminder advertising Important for mature products – keeps consumers

thinking about the product e.g. Coca-Cola

Setting the advertising budget:

Depends on PLC

- new products need large advertising budget to build awareness and gain
consumer trial

- mature brands usually require lower budgets as a ratio to sales

Depends on market share

- when building the market share, more advertising is needed compared to

maintaining it only

Depends on no of competitors

- the greater the no of competitors, the more advertising is needed to

differentiate themselves against the rest

Depends on undifferentiated brands

- need more advertising to set them apart from the rest

83 | P a g e
Developing advertising strategy:

Creating the advertising message

- To gain and hold attention, they must be better planned, more imaginative,
more entertaining and more rewarding to customers

- New trends: TiVo trend  companies are coming up with 6-second ad spots
that run in the time it takes for a customer to fast forward through a commercial
break

- decide what message will be comm. to customers

- must get consumers to think about or react to the product or company in a

certain way

 must make them believe they will benefit from doing so

- identify customer benefits

- developing compelling creative concept ‘Big Idea’  bring the message

strategy into life and memorable

- advertising appeals should be meaningful, believable and distinctive (must be

better than the rest, believe that it will deliver the promised benefits)

84 | P a g e
- must also choose a positive tone/ edgy humor to break the clutter

- memorable and attention getting words

- format elements e.g. illustration must be strong to draw attention; headline

must be enticing; copy i.e. the main block must be simple but strong and
convincing

Selecting advertising media

- Deciding on reach, frequency and impact (more it is, the higher the impact)

- Media habits of the target consumers (must reach them effectively)

- Nature of product e.g. fashion magazines are best in color magazines and
automobiles on TV)

- Different types of messages e.g. announcing sale in TV or over the radio,

technical data in magazines

- Cost e.g. TV is generally more costly

- Type of media vehicles (specific media within each general media type)

- Media timing (decide how to schedule the advertising over the yr; follow
seasonal patterns, oppose seasonal patterns or same coverage)

- Choose the pattern of the ads (continuity and pulsing)

Evaluating advertising

Communication effects

- copy testing tells us whether the ad is communicating well

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Sales effects

- compare past yr sales with past yr advertising expenditures

- experiments (e.g. vary the amt it spends on advertising in different markets

and measure the differences in sales)

Organizing for Advertising

- Advertising agencies (Pg 440)

International Advertising decisions

- standardization lowers costs, greater global advertising coordination and a

more consistent worldwide image

- however, different countries have different cultures, demographics and

economic conditions

 think global but act locally!

Sales promotions

Consists of ST incentives to encourage the purchase or sales of a product or

service

Reasons for rapid sales growth

- Generate immediate sales

- Company faces more competitions and competing brands are less

differentiating

- Advertising efficiency has declined because of rising costs, media clutter and
legal restraints

- Customers are becoming more deal oriented and ever-larger retailers are
demanding more deals from manufacturers

- reinforces the product’s position and build LT rls with customers e.g. frequency
market programs or loyalty clubs

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Major sales promotion tools

Consumer promotions (Pg 443-445)

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Trade promotions (Pg 445)

88 | P a g e
Business promotion tools

- generate business leads, stimulate purchases, reward customers and motivate

salespeople

- e.g. conventions, trade shows and sales contest (motivates salespersons to

increase performance)

Developing the sales promotion program

- decide how to promote and distribute the promotion program

- evaluate their sales promotion programs by comparing sales before, during and
after

- surveys to provide info on customers recalling the promotion, what they

thought of it, how many took advantage of it and how it affected their buying

Public relations

• Very believable

• Reaches people who avoid salespeople and ads

• Can dramatize a company or product

• Tends to be used as an afterthought

• Planned use can be effective and economical

E.g. news, speeches, special events and buzz marketing campaigns to spread
brand message

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 Should be blended well with other promotional activities within the company’s
overall integrated marketing comm. effort

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Chapter 16: Personal selling and Direct
Marketing

Personal selling

Involves 2 way comm. b/w salespeople and individual customers, whether face to
face, by telephone, through video or Web conferences

The role of the salesforce:

- works directly with customers

- works with retailers and wholesalers to gain their support and to help them to
be more effective in selling the company’s products

- represent the company to customers

 find and develop new customers and comm. info abt the company’s
products and services
 sell products by approaching customers, presenting their products,
answering objections, negotiating prices and closing sales
 provide cust service, carry out market research and intelligence work

- represent customers to company

 relay customers concerns

 learn abt cust needs and work with marketing and non-marketing people
to create more cust value

- should be more concerned with more than just producing sales and should work
with others to produce cust satisfaction and company profit

Designing sales force structure and strategy: Pg 459- 470

Territorial

Product

91 | P a g e

Customer
 - to reduce the time demands
on their outside sales force,
many companies have
Inside
increased the size of the inside
sales force

- E.g. of an inside sales force

Experienced telemarketers
sell

complex chemical products by

telephone at DuPont’s
Customer

Telecontact Center

92 | P a g e
Recruiting and selecting salespeople:

- performance difference

- intrinsic motivation

- disciplined work style

- ability to close a deal

- ability to build rls with custs

- top salespeople are customer problem solvers and rls builders: see the world
through the eyes of the customers

- companies must analyze the job and the characteristics of the most successful
salespeople to identify the traits needed

Training salespeople:

- must know and identify with the company

- learn about the products

- learn about the competitors’ and customers’ characteristics e.g. buying habits
and motives

- learn how to make effective presentations hence must be trained in the basics
of the selling process

- understand field procedures and responsibilities

Compensating salespeople:

- Fixed amt (salary)

- Variable amt (usually commissions or bonuses)

- Expense allowance for job related expenses

- Fringe benefits give job security and satisfaction

Supervising salespeople:

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- Some companies set sales quota to motivate employees, sales contests to spur
the selling force to make a selling effort above what would be normally expected
and sales meetings to air feelings and identify in a group

Evaluating salespeople:

- sales reports

- salespeople have to write up their completed activities on call reports and

submit expense reports

- personal observations

- customer surveys

- talks with other salespeople

The Personal selling process:

Prospecting

Pre-approach

Approach

Presentation

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Direct Marketing

Benefits to buyers:

– Convenient

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– Easy to use

– Private

– Ready access to products and information

– Immediate and interactive

Benefits to sellers:

– Powerful tool for building customer

relationships

– Can target small groups or individuals

– Can tailor offers to individual needs

– Can be timed to reach prospects at just the

right moment

– Gives access to buyers they could not reach

through other channels

– Offers a low-cost, efficient way to reach

markets

Forms of direct marketing:

- Telephone marketing: Accounts

for more than 36% of all direct
marketing sales; used in both
consumer and B2B markets and
can be outbound or inbound

- Direct mail marketing: sending

an offer, announcement,
reminder or other item to a
person e.g. flyers, brochures;

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personal and flexible, easy to measure results and permits high target-market
selectivity

- Catalog marketing: more and more are going electronic with the Internet

- Direct response TV marketing: direct response advertising (gives you a no to

call), infomercials (provide info and edn msgs) and home shopping channels

- Kiosk marketing: info and ordering machines e.g. in stores, airports

3. Selling
- ‘Integrate your company, customer and rls’

- creating a LT rls with customers through a company’s products

- to generate the financial returns after ST  CAPTURE TACTIC

- feature selling  benefit selling  soln selling

- best salespersons are those that are good rls builders and customer
problem solvers

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98 | P a g e
BSP: Heart Share Value

1. Brand
- ‘Avoid the commodity-like trap

- When we determine positioning and differentiation, and support them with

solid marketing mix and selling strategy, we are developing brand

- Developed through the application of the right S, T and V

- creativity in determining segmentation and targeting; right choice of

positioning; development of strong differentiation supported by appropriate
marketing mix and selling strategy; and development of solid service and
process

- V = (Fb + Eb)/ P + E

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- Total get:

 Functional benefit (Benefit based on a product attribute that

provides functional utility to customers; relates directly to the
functions performed by the product and service)
 Emotional benefit (Benefit based on a product attribute that
provides emotional utility)

- Total give:

 Price (cost paid by the customer to obtain your product and service)
 Other expenses (cost to the customer when using and consuming
product and service)

- Brand is the equity of the firm that add value to the products and services it
offers

- Creates value for the consumers by enhancing satisfaction and recognition

of quality

- Liberate itself from the supply and demand curve

2. Service
- ‘Avoid the Business-Category trap’

- VALUE ENHANCER

- creates a lasting value for customers through products and services

- Service = Solution  gives real soln to customers

- Enhances value by:

 More for more (Total get > total give)

 More for same ( Total get = total give)
 More for less (Total get > total give)
 Same for less (Same total get but lower total give)
 Less for less (Lower total get and lower total give)

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3. Process
- ‘Avoid the function-orientation trap’

- Reflects the product quality, cost and delivery of a company to customers

- VALUE ENABLER

- Manage the supply-chain process

- Requires hub of network organizations where it can establish rls with

organizations that have potential to add value  Strategic Alliance

- Must be able to create value for external and investor customers and the
people in the organization

- your people, your goods and cash flow  the image that you create

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The S-T-V Triangle: Value

“How to win the heart share”

Value

Responsibility of the corporate level and is intended to win the heart share of the
of target markets.

Value can be defined as “total get” divided by “total give” :

Value = Total Get / Total Give = (Functional Benefit + Emotional Benefit) /

( Price + Other expenses)

Total Get : Benefit Functional Benefit Product attribute that provides

(Fb) functional utility to customer.
This benefit is directly attributed to
functions performed by the product
or service.
Eg. : car : durability, driving comfort,
safety
Food : taste,nutritional value or
freshness
Example: Popular Bookstore offers
strong functional benefit to its
customers through its convenient
locations and wide range of
reasonably priced products.
Emotional Benefit Product attribute that provides
(Eb) emotional utility.
Eg: feel energetic after drinking
Coke, feeling safe when driving
Volvo
Total Give : Cost Price (P) Cost paid by customer to obtain
product
Other Expenses (Oe) Cost to customer when using and
consuming the product or service
Strong Brand = High functional and emotional benefits, low price and low other
expenses

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Note: Every company must do its utmost to produce higher “total get”- “total
give” compared to its competitors.
E.g. of value: Legend is very successful in China because consumers perceive it
as offering a very good value for its computer. Affordable price for high quality
products comparable to famous brand name.

The 3 elements under value are:

Brand Value Indicator Enables the company to avoid the commodity

trap
Service Value Enhancer Paradigm of the company to always meet or
exceed the customer’s needs, wants and
expectations
Process Value Enabler Enables the company to deliver the value to
customers through the process both internally
and externally.

The Jollibee case shows how this Filipino fast-food market leader has won the
heart share (value) with:

Brand Conceived as a fast-food outlet of high quality but reasonably priced

food products
Servic Food(F)
e Deliver quality food

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(FSC) Service (S)
Efficient Service
Comfortable Setting(C)
Proces
s

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Brand: Avoid the Commodity-like trap

The right application of STV is important to build a brand

S - Creative in determining segmentation and targeting, right choice of

positioning,

T - Developing a strong differentiation supported by appropriate marketing mix

and selling strategy

V - Developing solid service and process

Developing Brand = Positioning + [Differentiation + support (solid marketing mix

+ selling strategy)] + (solid service and process)

Brand is a reflection of the value that you give to your customer – value indicator
of company and product

Base on the Value Formula, a strong brand will be marked by :

Total Get: High Functional and Emotional Benefit

Total Give: Low price and other expenses

Must try to get the largest possible “Total Get” – “Total Give” ratio.

Definition: Brand is the equity of the firm that adds value to the products and
services it offers. Brand is an asset that creates value for customers by
enhancing satisfaction and recognition of quality.

With brand, the company can liberate itself from supply-demand curve and be
the price- maker

Branding Strategy (Lecture Notes- Products, Services and Branding)

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A brand is not a differentiation strategy; it is an identifier that distinguishes the
company from competitors.

To the Customer…
Consumers use brands to identify products they wish to:
 Purchase repeatedly OR
 Avoid Purchasing
Brands:
 Simplify Shopping
 Imply Consistent quality
 Reduce perceived risk in buying

An Overview of Branding Decisions

Brand
Positioning Brand Brand Sponsorship Brand development
Name
Has 3 levels: Selection 4 types: 4 types:

 Attribu Involves:  Manufacturer brand  Line extension

tes  Private brand  Brand extension
 Benefi  Selec  Licensing  Multi-brands
ts tion  Co-branding  New Brands
 Beliefs  Prote Step 1: Brand Positioning
and ction
values
Brand Need to position their brands in their customer’s minds.
Positioning Have to establish mission and vision for the brand. Should
deliver to customer promised set of features, benefits,
services and experiences consistently to the buyers.
They can position on 3 levels:
1. Attributes
Least desirable level because competitors can copy easily
2. Benefits
Go beyond attributes of product
3. Strong Beliefs and Values
Build on emotions
Brands must engage customers on a deeper level, touching
on universal emotion.
The strongest brands are positioned on strong belief and
values.

When positioning a brand, marketers should establish a

mission and vision for the brand. Brand is the company’s
promise to deliver specific set of features, benefits, services,
and experiences consistently to the buyers.

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Step 2: Brand Name Selection

Step 2: Brand Desirable quality for a brand name:

Name 1. Suggest something about the product’s benefit and
Selection qualities
2. Easy to pronounce, recognize and remember -
3. Distinctive – Kodak
4. Extendable
5. Translate easily to foreign language meanings
6. Capable of registration and legal protection
Step 3: Brand Sponsor Decision

Manufacturer Brand Sell their output based IBM sell their own
on their own output under their own
manufacturer’s brand manufacturer brand
name name.
Private Brand A brand created and NTUC
owned by a reseller of a
product or service
Licensing Get brand name from Disney
previously created by
other manufacturers,
celebrities, for a fee.
This will give them
instant and proven
brand name.
Co-branding Practice of using the Sony-Ericsson
established name of 2
different companies on
the same product
Step 4: Brand Development

Product Category
Existing New
Bran Existin Line Extension Brand Extension
d g Using a successful brand Using a successful brand to
Nam name to introduce additional launch a new or modified
e items in a given product product in a new category.
category under the same Instant recognition and
name, such as flavors, faster acceptance
colour, or package size. Should not confuse customer
Low-cost,low-risk on the image of the main
Eg: Mercedes S,E,C,A class brand
Eg. Disney Cruise Line
New Multibrands New Brands
Introducing additional brands When the power of its
in the same category. A way existing brand names are
to establish different getting weak or
features and appeal to inappropriate and a new
different buying motives. brand is needed.
Each brand might obtain Like multibranding, will result
small market share in the company spreading its
Eg. P&G, Nestle resources.

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 Eg. Honda created Acura to
differentiate its luxury car
from its established Honda
line.

Managing Brands - Brand Repositioning Decision

Must continuously communicate brand’s position to the public. Marketers spend

huge amount of money on advertising to create awareness and build preference
and loyalty.

Company need to train employee to be customer-centered and carry on internal

brand building to make them enthusiastic and understand about the brand
promise.

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Brand Equity

Def: The positive differential effect that knowing the brand has on customer
response to the product or service.

It is how much a consumer is willing to pay more for the brand name. Once have
taken the steps in establishing brand, a successful brand will have high brand
equity.

E.g. Coke, Nike

Pyramid shows the different level of brand loyalty that exists:

* Beware when building up brand Equity

Brand becomes so established that they end up being a generic name for the
item. The item is then recognized with the brand. Examples of such cases are:

• Xerox for photocopy

• Pampers for diapers
• Kleenex for facial tissue
• Scotch tape for adhesive tape
• Classic case in Singapore : F&N vs. Mirinda – Sarsi

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Companies eventually lose the name of product and brand equity as a generic
name.

Brand Life Cycle

Branding is closely related the marketing mix (4Ps) throughout its life cycle.

Modifying the market

Finding new uses to your product increases the popularity of your brand and the
item

E.g. WD-40

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Service: “Avoid the business-category trap”

Paradigm of the company to always meet or exceed the customer’s needs, wants
and expectations

To become a real service business a company must continuously enhance the

value of its products and service. It will then be able to provide constant value,
which will create a long lasting value and build customer relationship.

Referring to the value formula, there are 5 generic value strategies to enhance
value.

Generic Value Application Formulae

Winning Value Application

“Get” (for) “Give” (compared to
competitors)
More (for) More
More (for) Same
More (for) Less
Same (for) Less
Less (for) Less

With these strategies, players will be able to deliver:

 world-class value
 local value
 individual value

Nature and characteristics of services:

To distinguish if it is a Product or a Service

Intangibility Cannot be seen, tasted, felt, heard or smelled before purchase

Inseparabili Produced and consumed at the same time
ty
Variability Quality may vary, depending on who provides, when, were and
how
Perishabilit Cannot be stored for later sale or use.
y

The Service Profit Chain

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The chain that links service firm profits with employee and customer satisfaction.

The 3 types of marketing in service industries: (Figure 8.6 pg 246)

 Internal Marketing by a service firm to train and

Marketing effectively motivate its customer-contact
employees and all the supporting service people
to work as a team to provide customer
satisfaction.
Marketers get everyone to be customer
centered.
 Interactive Marketing by a service firm that recognizes that
Marketing perceived service quality depends heavily on the
quality depends heavily on the quality of buyer-
seller interaction.
In service marketing, service quality depends on
both service deliverer and quality of the delivery.
 External Traditional marketing using the 4 Ps.
Marketing
Managing Service Differentiation (pg 243)

Managing Service Quality

Managing Service Productivity

Customers do not merely want a product/ service. They are purchasing the whole
experience

Elements of service Example from Hilton Hotel

Tangible Fine Dining
Executive Club
5* luxury
Shopping
Augmented Corporate Account
Loyalty Programmes
Credit Cards
Complementary Wedding Exhibition
Board and Logging

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Process: “Avoid the function-orientation trap”

Enables the company to deliver the value to customers through the process both
internally and externally

Process reflects the product quality, cost and delivery of a company to

customers

Company has to be the captain of the supply-chain process. They should manage
the supply-chain process from raw materials to finished products, in a way that
would enhance value-creating activities and reduce or eliminate value-eroding
activities within the company.

Case: Café de Coral in Hong Kong (pg 99-rethinking marketing)

A firm should also be the hub of network organization, where it can establish
relationship with organization that has the potential to add value. The best
known term for this is strategic alliance These partnering organizations may be
the company’s suppliers, customers or even competitors

Examples of Strategic Alliances:

Benchmarkin
g
Re-
engineering
Outsourcing
Merging POSB and DBS
Acquisition

Supply Chain and the Value Delivery Network pg 339

Value delivery Network

Definition: The network made up of the company, suppliers, distributors and

customers who partner with each other to improve the performance of the entire
system.

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Major Logistics Functions

Balance scorecard

Purpose of the Scorecard

- Tool for controlling and monitoring the company’s mission to deliver value to
the three main stakeholders

- People, Customers and Shareholders

- The right customers will keep an ongoing rls with the people and have a sense
of ownership and belonging. In addition, the right shareholders will provide
superior perceived value to the customer  PCS is a two-way closed loop

- Hence, a scorecard is needed to keep it moving along this loop

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Value equation

Company and buyer:

- Buyer’s total get = functional and emotional benefit

- Buyer’s total give = price he pays for the good + any other expenses incurred
during consumption

- Company’s total get = revenue and cash

- Company’s total give = offer in terms of products and services to the buyer and
improvement

Company and worker:

- Worker’s total get = salaries, bonus or stock options; self fulfillment

- Worker’s total give = professional engagement and personal involvement

- Company’s get = productivity and creativity

- Company’s give = rewards given to workers

Company and investor:

- Investor’s get = dividends and gains from increase in share value

- Investor’s give = share price and o/c when they buy the shares

- Company’s get = money + commitment and trust of investor to the company’s

performance (monetary and non-monetary)

Acquiring, Satisfying and retaining the three main stakeholders

- Once they have become your customers, people and stakeholders, you must
satisfy and retain them by converting them into loyal customers, committed
people and LT shareholders

- Value exchange must take place in a win-win manner:

 Increasing customer’s, people’s and shareholder’s total get and reducing

as far as possible their total give
 Must also increase your company’s value by increasing your company’s
total get and reducing total give

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  Customer acquisition  Customer satisfaction  Customer retention

Scorecard: Controlling and monitoring value drivers

- Must know what drives value and where value is created in the SBUs so that
company will be able to allocate its resources in a more focused way

- Value drivers: value levers and value risk

 Value risk (employee turnover as company has no direct control)

 Value lever (employee compensation as you can directly control it through
direct managerial action; customer satisfaction as you can directly
implement programs)

- Value indicators:

 Best way to translate your main stakeholders’ value message into action
 Gives your organization a view on how management wants strategies to
be carried out
 Find and develop value levers and value risk indicators that are specific to
its organization
 Must look at both historic and predictive measures ( performance
measures to create value in the past and future)
 E.g. from EPS, ROI, ROE and ROA to new ones like FCF, economic profit
like EVA and residual income
 E.g. TSR (total shareholder return)  company to achieve a healthy cash
flow so that it can drive dividends and share price appreciation
 E.g. EVA (economic value added)  true profit

Value culture

- All people throughout the organization share the view that the company’s most
important mission is to create value for its three main stakeholders

- Must state what values you want the people in your organization to have

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- Once created, they must be able to influence, be manifest in, the people’s
behavior

Amazon – creative destruction

MarkPlus – crisis

Converse – structural change

Kodak - inability to adapt to external change

Secret Recipe and Kinokuniya – Differentiation

Scorecard – Customer

Customer Relationship Marketing (Lecture 6)

Cost 5 times to attract a customer than to retain an old one.

Losing a customer means losing the entire stream of purchases over a lifetime of
patronage- the customer lifetime value

Customer delivered Value

Total Customer Value Total Customer Cost

Product Value Monetary
Services Time
Personal Energy
Image Psychic

Customer Satisfaction

Expectations based on customer’s past buying experiences, opinions of friends &

marketer and competitor Information and Promises.

The key is to promise only what you can deliver and deliver more than
what you promise.

Customer Loyalty and Retention (lecture 6 Notes- Competitor, CRM, and personal
selling)

Highly satisfied customers produce benefits because:

117 | P a g e
  They are less price sensitive
 They remain customers longer
 They talk favorably about the company and products to others

Extras: Customer Equity

Customer Relationship management (CRM)

- Overall process of building and maintaining profitable cust rls by delivering

superior cust value and satisfaction

- Deals with all aspects of acquiring, keeping and growing customers

- Important as losing a customer means losing the entire stream of purchases

over a lifetime of patronage  Customer lifetime value (Customer equity)

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 Customer’s perceived value:

- cust evaluation of the difference b/w all benefits and all the costs of a
marketing offer relative to those competing offers

E.g. FedEx gives fast and reliable package delivery and makes cust feel impt,
compares value of them with UPS etc. However, it is only based on perceived
value

Customer satisfaction:

- depends on the product’s perceived performance relative to a buyer’s

expectations

- aim is to delight cust by promising only what companies can deliver

- aim is to generate cust value profitability and not to maximize cust satisfaction
as lowering prices, increasing services will increase their costs

Expectations

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Customer loyalty and retention:

Highly satisfied (Delighted) cust produce benefits:

- less price sensitive

- remain cust longer

- talk favorably abt the company and products to others

e.g. frequency market programs that reward cust who buy frequently or in large
amt: Airlines offering frequent flier programs like Singapore SIA KrisFlyer

e.g. club marketing programs that offer members special discounts and create
member commitments like Harley Davidson

e.g. can also add structural ties as well as financial and social benefits:
McKesson Corporation sets up an online system to help small pharmacies
manage their inventories, order entry and shelf space

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Chapter 17- Competitors
Michael Treacy and Fred Wiersema
Competitive strategies based
on Value disciplines
Operational excellence
Customer intimacy
Product Leadership
How it delivers superior value to gain
leadership positions
- Leading the industry by price and
convenience
- Works to reduce costs and to create a lean
and efficient value delivery system
- Customers: those who want reliable, good
quality products and services but want it
cheaply and easily
E.g. McDonald’s is extremely efficient and
their service is top notch
E.g. Wal-Mart delivers cheap but good quality
goods to customers
E.g. Southwest Airlines has cheap airfares but
good service and quality
- Precisely segmenting its markets and
tailoring its products/services to match
exactly the needs of the customers
- Satisfies them by having a close rls and
intimate knowledge abt them
- Builds detailed customer bases
- Empowers their marketers to respond
quickly to cust needs
- Customers: those who are willing to pay a
premium to get precisely what they want
E.g. The Ritz-Carlton gives top service and
cust are willing to pay more for that
satisfaction
- Offers a continuous stream of leading edge
products/services
- Aims to make its own and competing
products obsolete by coming up with new
ideas, products and solutions
- Customers: those who want new soln
regardless of costs like price and
inconvenience
E.g. Intel and Microsoft
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Michael Porter

Strategies that firms can How it is approached

adopt for basic competitive
positioning
Overall cost leadership
Differentiation
- Lowest production and distribution costs
- Low costs  lower prices compared to
competitors  larger market share
E.g. Wal-Mart and Dell
- Highly differentiated product line and
marketing program  class leader
- Customers will own this brand if its price is
not too high
E.g. IBM and Caterpillar (IT and heavy
construction equipment)

Focus - Focuses on a few market segments rather

Middle-of-the-road (losing
strategy)
than the whole market
E.g. Ritz-Carlton focuses on top 5% of the
corporate and leisure travelers
- Do not carry out a clear strategy and hence
does the worst
- Not standing out as the lowest cost, highest
perceived value or best in serving
- Try to be good at all strategic counts but
end up good at none
E.g. Sears, Holiday Inn and Kmart

Competitive strategies based Description

on the firm’s roles in the
target market
Market leader - Firm with the largest market share
- Usually leads the rest in price changes, new
product innovations, distribution coverage
and promotion spending
- To remain no. 1

122 | P a g e
 1. Expand the total market (Refer to Ansoff’s
Product/ Market expansion grid)
- Developing new uses, new users and more
usage of its products through demographic or
geographic segmentation
E.g. Revlon found new users by convincing
women to do not wear perfume to try
- Discovering and promoting new uses for the
products
E.g. Intel invests heavily to develop new PC,
networking and telecomm to increase dd for
microprocessors
- Encourage more usage by convincing people
to use the product more often or more per
usage E.g. Campbell urges people to drink
soup more often by running more ads
containing new recipes

2. Protect market share by expanding market

share
- Prevent/fix weaknesses that can be
opportunities for competitors
- Prices must always be consistent with the
value that cust desires
- Must maintain good cust rls  ‘plug holes’
so that competitors cannot enter
- Continuous innovation so that it can
increases its effectiveness and value to cust

- Profitability increases as a business gains

share relative to competitors in its served
market
E.g. Lexus holds only a small share in the
total car market, but it is a high share
company in its luxury performance car
segment
- Profitability may not necessary come from
higher share. Must make sure your costs in
gaining higher share < profits
Market Challenger - Must define which competitors to challenge
and its strategic objectives
1. Can attack the market leader to take over
market leadership
E.g. Wal-Mart began as a nicher in small
towns and went on to challenge Sears,
gaining leadership less than 25 yrs later

2. Gain more market share by attacking

other firms
- direct challenge

3. Avoid the leader and challenge firms of its

own size, or smaller ones

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 4. Full frontal attack
- Attacking the competitors’ strengths,
matching their products, advertising, price
and distribution

5. Indirect attack
- When they have fewer resources
- Attack competitors’ weaknesses
E.g. Dell found a foothold against IBM in the
personal computer market by selling directly
to consumers
E.g. Southwest Airlines challenged American
by serving the over-looked short haul, no frills
commuter segment at smaller, out of the way
airports
Market Follower - Must be able to find the right balance b/w
following closely enough to win customers
from the market leader but following at a
close enough distance to avoid retaliation
- Must keep costs low, service and quality
high

1. Imitator
- Copies but differentiates from the leader
E.g. Crocodile and Lacoste

2. Adaptor
- Adapts the leader’s products
E.g. Krispy Kreme and J Co. successfully
adapted KK and overtook them. J Co. started
off with a good reputation as they had
celebrity endorsement

3. Cloner
- emulates the leader’s products
- complete imitation
E.g. Roda and Rado watches

Market Nicher - Firms that serve small segments not

pursued by other firms
- Profitable as they end up knowing the target
customer group so well that it meets their
needs best
- Because of the added value, they can
charge higher prices

Premium price
E.g. Bulthaup is a furniture company that
offers holistic services and good quality

High value

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 E.g. Patek Philippe

High quality
E.g. HP calculators operate in high end and
high quality market

High service
E.g. Oriental hotel in Bangkok

Specialization
E.g. Neville Clark

- Multiple niching to increase their chances of

survivals
E.g. Alberto Culver niches in hair, skin, and
personal care products, seasonings and
sweeteners and home products

Defence strategies

1. Position defence
- Complacency, ignoring competition

2. Flanking
- looking out for areas that are not covered by other competitors and cover with
an extent that it will not be disastrous

- Not leaving any areas out by covering all aspects so that competitors cannot
take over you

E.g. Adidas, Nike and Reebok

3. Preemptive

4. Counter offensive
- By giving better services

5. Mobile
- Move away to other new market segment areas when attacked and venture
into them

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6. Strategic withdrawal
- ‘Not your cup of tea’  withdraws from the market

E.g. FisherPrice vs. Quateroats

Attack Strategies

1. Frontal
- tend to end up as suicidal

- should always avoid this strategy

E.g. Nike is very difficult to counter, Asics came up with ‘Just did it’ but Nike is
still dominant

2. Flanking
- targeting at different markets segments

E.g. Harley-Davidson targets at hurly burly people vs. Honda targets at more
friendly, quieter feel

3. Encirclement
- Gradual step by step attack

4. Bypass
E.g. Colgate does not overtake Crest

Balancing Customer and

competitor orientations

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Product Customer
Competitor
orientation Market orientation
orientation
orientation
Product orientation:

- Do not care abt cust and competitors

Customer orientation:

- Only care abt cust developments and strategies

- In a better position to identify new opps and LR strategies

- Know what the emerging needs to be served best are and can give superior
value to these cust

Competitor orientation:

- Only care abt competitors

- Always tracking competitor’s moves and trying to find strategies to counter

them

- Allows the company to develop a fighter orientation, watching for its

weaknesses and searches for competitors’ weaknesses

- However, the company becomes too reactive and carries out on their moves
based on competitors’ moves rather than cust rls strategy

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Market orientation:

- Covers all aspects

- Watches competitors and try to beat them

- Also watches cust and find innovative ways to build profitable cust rls by
delivering more value than competitors do

Chapter 20- The Global Marketplace

Ansoff’s Growth Matrix

- Diversification: new products  new customers in new markets  Going

Global!

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Looking at the Global marketing environment

The International trade system: Pg 554

- Restrictions e.g. tariffs, quotas, embargos, exchange controls and non-tariff

trade barriers

The World Trade Organization and GATT (General Agreement on Tariffs

and Trade): Pg 555

- Helps trade as they reduce tariffs and other international trade barriers

- Sets global standards for trade

- WTO enforces GATT rules, overseeing GATT, mediating global disputes and
imposing trade sanctions

Regional Free Trade zone/ Economic communities: Pg 556

- Groups of nations organized to work toward common goals in the regulation of

international trade

E.g. EU set up to create a single European market by reducing barriers to the

free flow of products, services, finances and labor among member countries and
developing policies on trade to non members

E.g. NAFTA (North American Free Trade Agreement) establishes a free trade zone
among the U.S, Mexico and Canada

- Reducing tariffs and legislation

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- Expand the business markets

- Place high duties on imports and local goods will be cheaper  price
differentiation

Industrial analysis

Economic environment:

- Subsistence economies (few market opps)

- Raw materials exporting economies (rich in one or more n/r and poor in other
ways, good markets for large equip. tools and supplies; if there are many
wealthy foreigners, market for luxury goods)

- Industrializing economies (manufacturing  more imports needed)

- Industrial economies (major exports of manufactured goods, services and I;

trade among themselves)

- Income distribution

Political-Legal Environment:

- Attitudes towards international buying (Are they receptive or hostile?)

E.g. India bothered foreign businesses with import quotas, currency restrictions
etc. and hence U.S left India

E.g. Singapore is very open to foreign investors and give them more incentives
and favorable conditions

- Government bureaucracy (extent to which the host govt. runs an efficient

system for helping foreign companies e.g. efficient custom handling, good
market info)

E.g. bribery in some countries makes it easy for U.S to enter

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- Political stability (some prefer to do in unstable situations but this will affect the
way they handle business matters and finances)

- Monetary regulations (paying in what currencies, are the currencies blocked,

exchange rate risks to sellers)

Cultural environment:

- Sellers must examine the ways consumers in different countries think abt and
use products before planning a marketing environment

- Must always be respectful, not abt right or wrong

E.g. McDonald’s and Coca-Cola placed the Saudi-Arabian flag on their packaging,
offending the Muslims as it includes a passage from the Koran and they feel that
such a holy message should not be tossed in the garbage

E.g. Nike came up with their ‘Air’ logo that resembled ‘Allah’ in Arabic script and
immediately apologized and pulled them out of distribution

- Business norms vary from country to country

E.g. South Americans like contact when they talk business but Americans will
back off. In the end, both will feel offended

E.g. Americans tend to become impatient while having to spend time in polite
conversations with Japanese

- Understanding cultural nuances can give companies advantage when

positioning their products internationally

Corporate strategy  should go int?  SWOTS  which market to enter 

industrial analysis  competitive forces (Porter’s forces, stronger than SWOTS as
you are now looking at the market)

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Deciding to go international:

- Counter foreign attacks on the domestic market

- Foreign markets have higher profit opportunities

- Stagnant of shrinking domestic markets

- Need larger cust base to achieve EOS

- Reduce dependency on single market

- Follow cust who are expanding

- Sourcing for supplies that are cheaper and of better quality

Deciding what markets to enter

Must define what their international objectives and policies are

- What vol. of foreign sales (Does it want to start small or expand more than its
own domestic mrk)

- How many countries to market in (Must be careful not to spread them too thinly
or expand beyond their capabilities)

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- What type of countries to enter (attractiveness depend on product,
geographical factors, income, climate, population etc.)

 Choose the possible countries and rank them based on market size, market
growth, cost of doing business, competitive advantage and risk level

Deciding on how to enter (Pg 565-568)

Joint ownership:

- May be buying an interest in the firm or the two parties will be forming a new
business

- Needed for political and economic reasons (firm may lack the financial, physical
and managerial resources and the foreign govt. may require it as a reason for
entry)

E.g. KFC entered Japan through a joint ownership venture with Japanese
conglomerate Mitsubishi

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-> However, the partners may disagree with what should be done with earnings

E.g. Americans like to reinvest earnings for growth while local firms like to keep
them

Direct I:

- Development of foreign-based assembly or manufacturing facilities

- Lower costs in the form of cheaper labor or raw materials

- Foreign firms having I incentives and freight savings

- Improves image in host cty as it creates jobs

- Able to have a deeper rls with govt. cust, local suppliers, distributors allowing it
to adapt its products to the local firms better

- Full control over I  develop marketing and manufacturing policies to serve its
LT objectives

- Value added- skilled labor can also be an attraction

- By having full control over investment, it can better serve its long term
international objectives

-> Many risks involved such as restricted or devalued currencies, falling markets
or govt. changes (political problems, not democratic but even in democratic
countries, elections do happen and there may be changed policies)

-> Money problems: difficult to bring your profits in; exchange rate risks

-> Some form of control needed

-> There may be a chance that they can take over your investment

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Deciding on the Global marketing program

Standardized marketing mix

- selling largely the same products and using the same marketing approaches
worldwide

- especially true with globalization and tech which makes cust wants and needs
more similar

- global branding  greater brand power  reduced costs from EOS

Adapted marketing mix

- producer adjusts the marketing mix elements to each target market, bearing
more costs but hoping for a larger market share and return

- better to tailor the products to fit the specific needs of cust

- cust in diff ctys have varied cultures and differ significantly in spending power,
product preferences, shopping patterns  hard to change  adapt their
marketing mix to fit their needs

E.g. McDonald’s uses the same basic operating formula in its rests. all around
the world but adapts its menu to the local culture (uses chili instead of ketchup
in Mexico; roast pork on a bun in Korea; serves chicken, fish and veg in India
with 2 mutton burgers)

Five Global Product and Promotion strategies:

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Straight product extension

- marketing a product in a foreign product w/o any change

- need to find out if the product will be used by foreign cust and what form they
prefer

E.g. Kellogg cereal, Gillette razors, Heineken beer

E.g. General Foods came up with a standard powdered Jell-O, only to find out
that British cust prefer a solid wafer or cake form

E.g. Philips only started to profit in Japan after reducing the size of their
coffeemakers to fit into smaller Japanese kitchens

Product adaptation

- changing the product to meet the local cust needs and wants

E.g. Procter & Gamble’s Vidal Sassoon shampoos contain a fragrance that varies
in amt, more in Europe and less in Japan

E.g. Nokia customizes all their phones according to different groups

Product invention

- creating something new for a specific country market

- can be maintaining or reinforcing earlier products forms that can be well

adapted to the needs

E.g. Volkswagen continued to sell its VV-Beetle model in Mexico

- can also be creating a new product to meet a need in a given cty

E.g. Sony added the ‘U’ model to VAIO personal com line to meet the unique
needs of the Japanese

Communication adaptation

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- fully adapting their advertising messages to local markets

- changes have to be made due to media availability

E.g. Coca-Cola sells low calorie beverages Diet coke in North America, U.K but
light elsewhere

E.g. Guy Laroche uses similar ads in Europe and Arab countries but lesser
sensuality in the latter

Dual adaptation

Pricing

- charging a uniform price all around the world

- charge what consumers in each country will pay

- use a standard markup of costs everywhere

- International prices > domestic prices due to price escalation

- additions of transportation costs, tariffs, importer wholesaler and retailer

margin to its factory price

E.g. Gucci

E.g. Levis

- Companies may be guilty of dumping (foreign subsidiary charging less than its
costs or less than it charges in its home market e.g. R&D costs all absorbed into
its home market)

- Economic and tech forces have led to an impact on global pricing

E.g. Twelve European Union countries have adopted the euro as a common
currency, creating “pricing transparency” and forcing companies to harmonize
their prices throughout Europe

Distribution channels

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(ii) Supervises the channels as part of the channel itself

(iii) Moves the products to the borders of the foreign nations

(iv) Moves the products from their foreign entry point to the final consumers

- no and type of intermediaries e.g. When Coca-Cola first entered China, cust
have to cycle to bottling plants to get their soft drink. Now, Coca-Cola has set
up direct distribution channels, investing heavily in refrigerators and trucks
and upgrading wiring so that retailers can have coolers

- size and character of retail units abroad e.g. large scale retailers in U.S and
small tiny shops in India

Deciding on the Global Marketing Organization Pg 576-577

Organize an export department

- sales increase, it will expand to include various marketing services so that it

can actively go after businesses

- will not exist in joint ventures or direct I

Create international divisions/ subsidiaries

- geographical organizations

- world product groups

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- international subsidiaries

Become a global organization

- think of them as global marketers and not national marketers who sell their
products abroad  go Global but act locally!

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Chapter 18- Digital age

Marketing strategy in the Digital age

E commerce:

- Involves all the buying and selling processes supported by electronic means,
primarily the Internet

- Different from e-business, which includes all electronics-based info exchanges

within or between companies and customers)

- Includes e-marketing and e-purchasing

- E-marketing is the marketing side of e-commerce: company efforts to comm.

about, promote and sell products and services over the Internet

- E-purchasing is the flip side of e-marketing; buying side of e-commerce:

companies purchasing goods, services and info from online suppliers

Benefits to buyers

1. Convenient
- can avoid the traffic and finding of parking spaces

- can do comparative shopping by surfing the web sites

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2. Easy and private
- encounter fewer hassles and do not need to meet salespeople or open
themselves up to persuasion

- do not need to wait for or spend time with salespeople as they can just know
about products and services

3. Greater product access and selection

- unrestrained by physical boundaries and can offer an almost unlimited
selection to consumers almost anywhere in the world

4. Comparative info
- provides more info in more useful forms

E.g. Amazon.com offers top 10 product lists, extensive product descriptions,

expert and user product reviews and recommendations

5. Interactive and immediate

- can interact with sellers’ sites to create exactly the configuration of info,
products or services they desire then order dl them from the spot

Benefits to sellers

1. Build cust relationships

- one-to-one, interactive nature

- companies can interact online with cust to learn more abt specific needs and
wants

- online cust can ask qns and volunteer feedback

 increase cust value and satisfaction through product and service refinements

2. Reduce costs and increase speed and efficiency

- link directly to suppliers, factories, distributors and customers and hence
businesses can cut costs and pass savings on to cust

- e-marketers avoid the maintaining of a store and the relates costs of rent,
insurance and utilities

- cust deal directly with sellers and hence it results in lower costs and improved
efficiency for channel and logistics functions

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- costs of producing digital catalogs is much lesser than printing and mailing
paper ones

3. Greater flexibility
- E.g. online catalog can be adjusted daily or even hourly, adapting product
assortments, prices and promotions to match changing market conditions

4. Truly global medium

- allows buyers and sellers to click from one cty to another in seconds

B2C (Business-to-consumer)

- the online selling of goods and services to final services

- the Internet demographics have changed significantly and almost 2/3 of the
U.S. households surf the Internet

- Internet provides e-marketers access to a broad range of demographics

segment

E.g. reaches consumers in all age groups; teens using the net for entertainment
while the older generations uses it for more serious stuff like investment, buying
of automobiles and travel packages

- the exchange process via the Internet has become more cust initiated and cust
controlled

- people using the Internet places greater value on info and tend to respond
negatively to messages aimed only at selling vs. traditional markets that target a
somewhat more passive audience

- most useful for products and services when the shopper seeks greater ordering
convenience or lower costs

- provides great value to buyers looking for info abt differences in product value
and features

B2B (Business-to-business)

- offer product info, cust purchasing and cust support services online

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- open trading exchanges: huge e-marketspaces in which buyers and sellers find
each other online and share info and complete transactions efficiently

- private trading exchanges: links a particular seller to its own trading partners;
gives sellers greater control over product presentation and allow them to build
deeper rls with buyers and sellers by providing value-added services

E.g. corporate buyers can visit Sun Microsystems’ Web site (www.sun.com),
select detailed descriptions of Sun’s products and solns, request sales and
service info and interact with staff members

C2C (Consumer-to-consumer)

E.g. Ebay

- gives people more access to much larger audiences than the local flea market
or newspapers classified

- involves interchange of info through Internet forums that appeal to specific

special-interest groups; for commercial or non-commercial purposes e.g. web-
logs/ blogs which are used as a medium for reaching carefully targeted
consumers

- means that online visitors do not just consume product info – increasingly they
create it

C2B (Consumer-to-business)

- consumers can search out sellers on the Web, learn about their offers, initiate
purchases, and give feedback

- consumers can drive transactions with businesses

E.g. Priceline.com where buyers bid for airline tickets, hotel rooms, rental cars
and home mortgages, leaving the sellers to decide whether they want to accept
their offers

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