Professional Documents
Culture Documents
MARKETINg
1.
What is marketing?
There are many definitions of marketing. The better definitions are focused upon customer orientation and satisfaction of customer needs. Marketing is the social process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others. Marketing is the management process that identifies, anticipates and satisfies customer requirements profitably "Kotler". The Chartered Institute of Marketing (CIM). The CIM definition (in common with Barwells definition of the marketing concept) looks not only at identifying customer needs, but also satisfying them (shortterm) and anticipating them in the future (long-term retention).
The right product, in the right place, at the right time, at the right price. 2. Differentiate Between sales and Marketing?
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Emphasis is on consumer needs and wants Management is profit oriented View business as consumer satisfying processes Company first determines customers needs and wants and then decides on how to deliver a product to satisfy these wants Views customer as the very 16 purpose in business.
3.
Needsstate of felt deprivation for basic items such as food and clothing and complex needs such as for belonging. i.e. I am hungry. Wantsform that a human need takes as shaped by culture and individual personality. i.e. I want a hamburger, French fries, and a soft drink. Demandshuman wants backed by buying power. i.e. I have money to buy this meal.
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4.
The marketing mix is probably the most famous marketing term. Its elements are the basic, tactical components of a marketing plan. Also known as the Four Ps, the marketing mix elements are price, place, product, and promotion. Read on for more details on the marketing mix. Packaging (Given by Mc carthy). 5. Marketing and Core Competences
A core competence is the result of a specific unique set of skills or production techniques that deliver value to the customer. Three tests of core competence.
Provides potential access to a wide variety of markets. Should make a significant contribution to the perceived customer benefits of the end product. Should be difficult for competitors to imitate.
6.
The value chain is a systematic approach to examining the development of competitive advantage. It was created by M. E. Porter in his book, Competitive Advantage (1980). The chain consists of a series of activities that create and build value. They culminate in the total value delivered by an organisation.
Operations.
This is where goods are manufactured or assembled. Individual operations could include room service in an hotel, packing of books/videos/games by an online retailer, or the final tune for a new cars engine.
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Outbound Logistics. The goods are now finished, and they need to be sent along the supply chain to wholesalers, retailers or the final consumer. Marketing and Sales. In true customer orientated fashion, at this stage the organisation prepares the offering to meet the needs of targeted customers. This area focuses strongly upon marketing communications and the promotions mix. service This includes all areas of service such as installation, after-sales service, complaints handling, training and so on. suPPorT ACTiViTies Procurement
This function is responsible for all purchasing of goods, services and materials. The aim is to secure the lowest possible price for purchases of the highest possible quality. They will be responsible for outsourcing (components or operations that would normally be done in-house are done by other organisations), and ePurchasing (using IT and web-based technologies to achieve procurement aims).
Technology Development
Technology is an important source of competitive advantage. Companies need to innovate to reduce costs and to protect and sustain competitive advantage. This could include production technology, Internet marketing activities, lean manufacturing, Customer Relationship Management (CRM), and many other technological developments. Human Resource Management (HRM) Employees are an expensive and vital resource. An organisation would manage recruitment and s election, training and development, and rewards and remuneration. The mission and objectives of the organisation would be driving force behind the HRM strategy. Firm Infrastructure This activity includes and is driven by corporate or strategic planning. It includes the Management Information System (MIS), and other mechanisms for planning and control such as the accounting department.
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Quality is a product or services ability to meet the customers need or want. Quality is difficult to define, and varies with each consumer. 10. What are the components of quality for products and services? Products
Performance The product does what it is supposed to do. Features The product includes all the specifications that it says it has or that are required, this includes safety measures. Reliability The product performs consistently. Durability When the product is being used it has to last under the conditions of normal use. Serviceability The product is easy to maintain or repair either by the consumer or by providing a warranty which says the company will provide repairs. Aesthetics This is important to consumers, products have to look good, and this contributes to a brand equity and identity. Perception Even if the product has good quality, if the customer does not think so, then it wont sell. The customer has to have positive feelings about the product, the company, the brand name and the employees.
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services
Responsiveness Services are performed in a prompt manner. Reliability The service is performed right, the first time, and all subsequent times. Assurance Knowledgeable and friendly employees are essential as customers will equate employees behavior with the entire company. If a customer has a bad experience with an employee, they will be less likely to purchase from the entire companys offerings. Customers expect technical competence and professionalism from salespeople. Empathy Providing individualized attention to customers will make them feel special and keep them coming back. Tangibles Some services provide physical evidence that they occurred, for example a restaurant cooks (service) and provides the food (product).
Product use
How customers use product installation, components, accessories, raw material, eaten, professional service.
Buying situation
Buying situation rebuy, modified rebuy, new purchase.
Purchasing Method
Purchasing methods Internet, long term contract, warranty, financing, cash on demand.
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Behavior
Needs economic, functional, psychological, social. Benefits quality, service, economy, convenience, speed. Attitude toward product Enthusiastic, positive, indifferent, negative, hostile. User status Nonuser, ex user, potential user, first time user, regular user. Loyalty status None, medium, strong, absolute. Brand Familiarity Unaware, aware, informed, interested, desirous, intending to buy. Occasion Regular occasion; special occasion, convenience, comparison shopping, unsought product. Type of problem solving needed routine, limited, extensive. Information required low, medium, high.
Geographic Location
Region of world, country North America, South America, Africa, Asia, Europe. Regions within that country (For Example USA) Pacific Northwest, South, Midwest, New England. Size of city population under 5,000 people to 4 million or more. Urban vs. rural country, city, large city = more resources, more independence; country=more dependence on neighbors and pooling resources. Climate cold, hot, rainy, desert, beaches, mountains.
Demographics
Income under $5,000 to $250,000+ a year. Gender male, female, neither, both. Age Infant, toddler, preschool, tween (age 8 to 12), teen, college age, 20, 30, 40, 50, 60, 70-90. Family size 1 person, 2, 3, 4, 5 or more. Family life cycle young, single, engaged, DINKS (double income no kids), SINKS (single income no kids), married with kids (babies, toddler, elementary school age, teen, older), recently divorced, empty nester (children have moved out), same-sex couples, single parents, extended parents (grandparents raising their grandchildren), retired (either wealthy or Medicare dependent/poor). There are also Boomerang Kids (adult children have moved back home), Cougar/Silver Fox (Cougar is a 40-60 year old weathly, single, career driven woman seeking a younger man; Silver Fox is a 40-60 year old wealthy, single, career driven man seeking a younger woman). Job unemployed, housewife, part-time, full-time, student, professional, craftsperson, farmer, retired. Education grade school or less, some high school, high school graduate, some college, college graduate, graduate degrees. Religion Christian, Jewish, agnostic, atheist, Muslim, Islam etc.
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Race White, Black, Asian, Hispanic, Native American, mixed race, etc. Culture/nationality American, French, English, African, Russian, Indian etc. Generation (For Example USA) GI Generation, Silent, Matures, Baby Boomer, Gen X, Gen Y, Boomlets.
Psychographics
Lifestyle interests, hobbies, activities, interests, opinions, values, media preferences. Everyone has two lifestyles, the one they are in now, and the one they desire to be in, which is usually better than the current one. Almost all decisions are influenced by the buyers current and desired lifestyle.
Personality traits
Sincerity. Excitement. Competence. Sophistication. Ruggedness. social class Lower, middle-low, middle, middle-upper, upper, upper-upper, working class, blue collar. Targeting is the second stage of the SEGMENT Target POSITION (STP) process. After the market has been separated into its segments, the marketer will select a segment or series of segments and target it/them. Resources and effort will be targeted at the segment. Positioning is all about perception. As perception differs from person to person, so do the results of the positioning map e.g what you perceive as quality, value for money, etc, is different to my perception. However, there will be similarities. Products or services are mapped together on a positioning map
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strategies for the differing stages of the Product Life Cycle. introduction The need for immediate profit is not a pressure. The product is promoted to create awareness. If the product has no or few competitors, a skimming price strategy is employed. Limited numbers of product are available in few channels of distribution. Growth. Competitors are attracted into the market with very similar offerings. Products become more profitable and companies form alliances, joint ventures and take each other over. Advertising spend is high and focuses upon building brand. Market share tends to stabilise. Maturity. Those products that survive the earlier stages tend to spend longest in this phase. Sales grow at a decreasing rate and then stabilise. Producers attempt to differentiate products and brands are key to this. Price wars and intense competition occur. At this point the market reaches saturation. Producers begin to leave the market due to poor margins. Promotion becomes more widespread and use a greater variety of media. Decline. At this point there is a downturn in the market. For example more innovative products are introduced or consumer tastes have changed. There is intense price-cutting and many more products are withdrawn from the market. Profits can be improved by reducing marketing spend and cost cutting.
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15. Problems with Product Life Cycle In reality very few products follow such a prescriptive cycle. The length of each stage varies enormously. The decisions of marketers can change the stage, for example from maturity to decline by price-cutting. Not all products go through each stage. Some go from introduction to decline. It is not easy to tell which stage the product is in. Remember that PLC is like all other tools. 16. Pricing & Pricing strategies
There are many ways to price a product. Lets have a look at some of them and try to understand the best policy/strategy in various situations. Premium Pricing Use a high price where there is a uniqueness about the product or service. This approach is used where a a substantial competitive advantage exists. Such high prices are charge for luxuries such as Cunard Cruises, Savoy Hotel rooms, and Concorde flights. Penetration Pricing The price charged for products and services is set artificially low in order to gain market share. Once this is achieved, the price is increased. This approach was used by France Telecom and Sky TV. economy Pricing This is a no frills low price. The cost of marketing and manufacture are kept at a minimum. Supermarkets often have economy brands for soups, spaghetti, etc. Price skimming Charge a high price because you have a substantial competitive advantage. However, the advantage is not sustainable. The high price tends to attract new competitors into the market, and the price inevitably falls due to increased supply. Manufacturers of digital watches used a skimming approach in the 1970s. Once other manufacturers were tempted into the market and the watches were produced at a lower unit cost, other marketing strategies and pricing approaches are implemented.
17. Define Place in Marketing Mix Place is also known as channel, distribution, or intermediary. It is the mechanism through which goods and/or services are moved from the manufacturer/ service provider to the user or consumer. 18. There are six basic channel decisions:
Do we use direct or indirect channels? (e.g. direct to a consumer, indirect via a wholesaler). Single or multiple channels. Cumulative length of the multiple channels. Types of intermediary (see later). Number of intermediaries at each level (e.g. how many retailers in Southern Spain). Which companies as intermediaries to avoid intrachannel conflict (i.e. infighting between local distributors).
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20. Types of Channel intermediaries There are many types of intermediaries such as wholesalers, agents, retailers, the Internet, overseas distributors, direct marketing (from manufacturer to user without an intermediary), and many others. The main modes of distribution will be looked at in more detail. 21. Channel IntermediariesWholesalers
They break down bulk into smaller packages for resale by a retailer. They buy from producers and resell to retailers. They take ownership or title to goods whereas agents do not (see below). They provide storage facilities. For example, cheese manufacturers seldom wait for their product to mature. They sell on to a wholesaler that will store it and eventually resell to a retailer. Wholesalers offer reduce the physical contact cost between the producer and consumer e.g. customer service costs, or sales force costs. A wholesaler will often take on the some of the marketing responsibilities. Many produce their own brochures and use their own telesales operations.
i. Channel IntermediariesAgents Agents are mainly used in international markets. An agent will typically secure an order for a producer and will take a commission. They do not tend to take title to the goods. This means that capital is not tied up in goods. However, a stockist agent will hold consignment stock (i.e. will store the stock, but the title will remain with the producer. This approach is used where goods need to get into a market soon after the order is placed e.g. foodstuffs). Agents can be very expensive to train. They are difficult to keep control of due to the physical distances involved. They are difficult to motivate.
ii. Channel IntermediariesRetailers Retailers will have a much stronger personal relationship with the consumer. The retailer will hold several other brands and products. A consumer will expect to be exposed to many products.
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Retailers will often offer credit to the customer e.g. electrical wholesalers, or travel agents. Products and services are promoted and merchandised by the retailer. The retailer will give the final selling price to the product. Retailers often have a strong brand themselves e.g. Ross and Wall-Mart in the USA, and Alisuper, Modelo, and Jumbo in Portugal.
iii.Channel IntermediariesInternet The Internet has a geographically disperse market. The main benefit of the Internet is that niche products reach a wider audience e.g. Scottish Salmon direct from an Inverness fishery. There are low barriers low barriers to entry as set up costs are low. Use e-commerce technology (for payment, shopping software, etc) There is a paradigm shift in commerce and consumption which benefits distribution via the Internet
simple rules for successful sWoT analysis. Be realistic about the strengths and weaknesses of your organization when conducting sWoT analysis. SWOT analysis should distinguish between where your organization is today, and where it could be in the future. SWOT should always be specific. Avoid grey areas. Always apply SWOT in relation to your competition i.e. better than or worse than your competition. Keep your SWOT short and simple. Avoid complexity and over analysis SWOT is subjective.
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Once key issues have been identified with your SWOT analysis, they feed into marketing objectives. sWoT can be used in conjunction with other tools for audit and analysis, such as PEST analysis and Porters Five-Forces analysis. So SWOT is a very popular tool with marketing students because it is quick and easy to learn. During the SWOT exercise, list factors in the relevant boxes. Its that simple.
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4. How much time do consumers have for leisure? 5. What are the roles of men and women within society? 6. How long are the population living? Are the older generations wealthy? 7. Do the population have a strong/weak opinion on green issues? Technological Factors Technology is vital for competitive advantage, and is a major driver of globalization. Consider the following points: 1. Does technology allow for products and services to be made more cheaply and to a better standard of quality? 2. Do the technologies offer consumers and businesses more innovative products and services such as Internet banking, new generation mobile telephones, etc? 3. How is distribution changed by new technologies e.g. books via the Internet, flight tickets, auctions, etc? 4. Does technology offer companies a new way to communicate with consumers e.g. banners, Customer Relationship Management (CRM), etc?
24. Analyzing the environmentFive Forces Analysis Five Forces Analysis helps the marketer to contrast a competitive environment. It has similarities with other tools for environmental audit, such as PEST analysis, but tends to focus on the single, stand alone, business or SBU (Strategic Business Unit) rather than a single product or range of products. For example, Dell would analyse the market for Business Computers i.e. one of its SBUs. Five forces analsysis looks at five key areas namely the threat of entry, the power of buyers, the power of suppliers, the threat of substitutes, and competitive rivalry. The threat of entry.
Economies of scale e.g. the benefits associated with bulk purchasing. The high or low cost of entry e.g. how much will it cost for the latest technology? Ease of access to distribution channels e.g. Do our competitors have the distribution channels sewn up? Cost advantages not related to the size of the company e.g. personal contacts or knowledge that larger companies do not own or learning curve effects. Will competitors retaliate? Government action e.g. will new laws be introduced that will weaken our competitive position? How important is differentiation? e.g. The Champagne brand cannot be copied. This desensitises the influence of the environment. This is high where there a few, large players in a market e.g. the large grocery chains.
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If there are a large number of undifferentiated, small suppliers e.g. small farming businesses supplying the large grocery chains. The cost of switching between suppliers is low e.g. from one fleet supplier of trucks to another.
The power of suppliers. The power of suppliers tends to be a reversal of the power of buyers. Where the switching costs are high e.g. Switching from one software supplier to another. Power is high where the brand is powerful e.g. Cadillac, Pizza Hut, Microsoft. There is a possibility of the supplier integrating forward e.g. Brewers buying bars. Customers are fragmented (not in clusters) so that they have little bargaining power e.g. Gas/ Petrol stations in remote places.
The threat of substitutes Where there is product-for-product substitution e.g. email for fax Where there is substitution of need e.g. better toothpaste reduces the need for dentists. Where there is generic substitution (competing for the currency in your pocket) e.g. Video suppliers compete with travel companies. We could always do without e.g. cigarettes.
Competitive rivalry This is most likely to be high where entry is likely; there is the threat of substitute products, and suppliers and buyers in the market attempt to control. This is why it is always seen in the center of the diagram.
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There are some other terms used in branding. Brand equity is the addition of the brands attributes including reputation, symbols, associations and names. Then the financial expression of the elements of brand equity is called Brand Value. There are a number of interpretations of the term brand (De Chernatony 2003). They are summarized as follows: A brand is simply a logo e.g. McDonalds Golden Arches. A brand is a legal instrument, existing in a similar way to a patent or copyright. A brand is a company e.g. Coca-Cola. A brand is shorthandnot as straightforward. Here a brand that is perceived as having benefits in the mind of the consumer is recognised and acts as a shortcut to circumvent large chunks of information. So when searching for a product or service in less familiar surroundings you will conduct an information search. A recognised brand will help you reach a decision more conveniently. A brand is a risk reducer. The brand reassures you when in unfamiliar territory. A brand is positioning. It is situated in relation to other brands in the mind of the consumer as better, worse, quicker, slower, etc. A brand is a personality, beyond function e.g. Apples iPod versus just any MP3 player. A brand is a cluster of values e.g. Google is reliable, ethical, invaluable, innovative and so on. A brand is a vision. Here managers aspire to see a brand with a cluster of values. In this context vision is similar to goal or mission. A brand is added value, where the consumer sees value in a brand over and above its competition e.g. Audi over Volkswagen, and Volkswagen over Skodadespite similarities. A brand is an identity that includes all sorts of components; depending on the brand e.g. Body Shop International encapsulates ethics, environmentalism and political beliefs. A brand is an image where the consumer perceives a brand as representing a particular reality e.g. Stella Artois Reassuring Expensive. A brand is a relationship where the consumer reflects upon him or herself through the experience of consuming a product or service.
Marcoms tool that a marketer can employ for branding decision-making is the Four Banding Alternatives (Tauber 1981). Four Branding Alternatives is a strategic marketing communications technique. It is a fun and creative approach that can add value to any class that likes to discuss brands and how they could be innovatively developed. It is used when an organization considers adding a product to its portfolio and its associated brand name. The two variables for this matrix are Product Category (Existing or New) and Band Category (Existing or New). New Product a new product is developed with a series of new brand ideas and meanings to the consumer. Flanker Brand a new brand is introduced into a category where the organization already has established products. Line extension a current brand name is introduced into a category where the organization already has established products.
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Franchise extension a familiar brand is taken to a product category where it is unknown. Heres an example. Firstly lets recall that Four Branding Alternatives is a strategic tool, so you need to base it upon a very large organisation which is likely to own a number of brands. Examples would include car manufacturers, large IT companies, and conglomerates. You get the idea. An example for the Japanese company, Sony Inc is as follows: New ProductSony enters the market for music downloads under a new sub-branding idea and concept. Flanker BrandSony introduces the Sony Vaio laptops (as it indeed has). Line ExtensionSony enter the market for digital HD TVs (as it has). Franchise ExtensionSony enters the market for innovative environmentally friendly small cars that run on solar power.
30. Advertising
Advertising is an important element of the marketing communications mix. Put simply, advertising directs a message at large numbers of people with a single communication. It is a mass medium.
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The advert and its message, to an extent, would be designed to the specifications of the advertiser. So the advertiser can focus its message at a huge number of potential consumers in a single hit, at a relatively low cost per head. Advertising is quick relative to other elements of the marketing communications mix (for example personal selling, where an entire sales force would need to be briefedor even recruited). Therefore an advertiser has the opportunity to communicate with all (or many of) its target audience simultaneously.
There are two key categories of advertising, namely above-the-line and below-the-line. The definitions owe a lot to the historical development of advertising agencies and how they charge for their services. In a nutshell, above-the-line is any work done involving media where a commission is taken by an advertising agency, and below-the-line is work done for a client where a standard charge replaces commission. So TV advertising is above-the-line since an agency would book commercial time on behalf of a client, but placing an advert in a series of local newspapers is below-the-line, because newspapers tend to apply their own costing approach where no commission is taken by the agency i.e. instead the agency charges the client a transparent fee. There are many facets and elements to advertisingtoo many to be covered in this short lesson. Try some of the other lessons to build your knowledge
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34. Describe some of the approaches that are often considered under the Pr banner
interviews and photo-calls.
It is important that company executives are available to generate goodwill for their organisation. Many undertake training in how to deal with the media, and how to behave in front of a camera. There are many key industrial figures that proactively deal with the media in a positive way for example Bill Gates (Microsoft) or Richard Branson (Virgin). Interviews with the business or mass media often allow a company to put its own perspective on matters that could be misleading if simply left to dwell untended the public domain.
speeches, presentations and speech writing Key figures from within an organisation will write speeches to be delivered at corporate events, public awards and industry gatherings. PR company officials in liaison with company managers often write speeches and design corporate presentations. They are part of the planned and coherent strategy to build goodwill with publics. Presentations can be designed and pre-prepared by PR companies, ultimately to be delivered by company executives. Corporate literature e.g. financial reports Corporate literature includes financial reports, in-house magazines, brochures, catalogues, price lists and any other piece of corporate derived literature. They communicate with a variety of publics. For example, financial reports will be of great interest to investors and the stock market, since they give all sorts of indicators of the health of a business. A company Chief Executive Officer CEO will often write the forward to an annual financial report where he or she has the opportunity to put a business case to the reader. This is all part of Public Relations.
Account planning. Account management. Account managers work for an agency with the client (an agencys customers are called clients). Very often they will spend a lot of time with the client working as part of their marketing team. This is one way in which an agency works closely with its client and why the chemistry between a client and its agency needs to be right. The account manager makes sure that the correct information is passed from the client to the other members of the agency. He or she is a co-ordinator and time manager. The account planner will work on a brief that is fed back to the agency team.
Creative Team The first internal agency team members to see the brief tend to be the creatives and the media planners. The brief contains a proposition that the client wishes to communicate to the target audience. The creative team will transform the proposition into something exciting and attractive to the target audience. The creative team decide upon the creative concept. This will be a motivational idea. The words used to express the creative concept are called copy. The images, pictures and diagrams are created i.e. the design or layout. This is done by designers and copywriters. Beware some creatives! Creatives tend to be artistic and innovative. Hence their advice should be highly regarded and any criticism should be constructive. Traffic and Production Team The traffic and media team are in charge of the production of the physical and artistic output, i.e. the marketing communication. In the case of a TV advert, they would commission scripts, recruit a ctors (mainly via agents), film crews and supporting activities (such as costumes and catering). All ads are different and so the specifics will vary. In the case of print advertising, the traffic and production team would commission and sign-off all printed advertising material such as direct marketing materials, magazine ads or posters. Account Planning Team The account planning team work on the customers perspective, and take an outward look at the world. They support the creative teams by supplying data and opinion on what I actually occurring in the marketing in which advertising is to be placed. They tend to use secondary data to support decisions, and would rarely commission original research. However, with material supplied my organisations such as Mori, Datamonitor, ACORN, and otherthe account planning team can build an image of segments to help the creatives. Media Team The media team will organise the timing and scheduling of the marketing communications campaign. They will look at the range of media to be exploited, and then look at the best slots in which to run advertising. They will help a client to decide upon the duration of and individual slot, and how many of them to run. Here the expense and return to the client are key factors that influence decision-making. The two main skills of the media team are media planning and media buying. Today there is a wealth of data on which media buying can be based. There is software for planning and simulation.
37. What is Direct Marketing? Direct marketing is a channel free approach to distribution and/or marketing communications. So a company may have a strategy of dealing with its customers directly, for example banks (such as CityBank) or computer manufacturers (such as Dell). There are no channel
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intermediaries i.e. distributors, retailers or wholesalers. Thereforedirect in the sense that the deal is done directly between the manufacturer and the customer. 38. What are the different types of Direct Marketing? There are a number of direct marketing media other than direct mail. These include (and are by no means limited to):
Inserts in newspapers and magazines. Customer care lines. Catalogues. Coupons. Door drops. TV and radio adverts with free phone numbers or per-minute-charging.
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(h) Free samples (aka. sampling) e.g. tasting of food and drink at sampling points in supermarkets. For example Red Bull (a caffeinated fizzy drink) was given away to potential consumers at supermarkets, in high streets and at petrol stations (by a promotions team). (i) Vouchers and coupons, often seen in newspapers and magazines, on packs. (j) Competitions and prize draws, in newspapers, magazines, on the TV and radio, on The Internet, and on packs. (k) Cause-related and fair-trade products that raise money for charities, and the less well off farmers and producers, are becoming more popular. (i) Finance dealsfor example, 0% finance over 3 years on selected vehicles. Many of the examples above are focused upon consumers. Dont forget that promotions can be aimed at wholesalers and distributors as well. These are known as Trade sales Promotions.
SERVICE MARKETING
41 What is services marketing?
A service is the action of doing something for someone or something. It is largely intangible (i.e. not material). A product is tangible (i.e. material) since you can touch it and own it. A service tends to be an experience that is consumed at the point where it is purchased, and cannot be owned since is quickly perishes. A person could go to a caf one day and have excellent service, and then return the next day and have a poor experience.
43. People as part of the marketing mix People are the most important element of any service or experience. Services tend to be produced and consumed at the same moment, and aspects of the customer experience are
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altered to meet the individual needs of the person consuming it. Most of us can think of a situation where the personal service offered by individuals has made or tainted a tour, vacation or restaurant meal. Remember, people buy from people that they like, so the attitude, skills and appearance of all staff need to be first class. Here are some ways in which people add value to an experience, as part of the marketing mixtraining, personal selling and customer service. 44. Process as part of the marketing mix Process is another element of the extended marketing mix, or 7Ps.There are a number of perceptions of the concept of process within the business and marketing literature. Some see processes as a means to achieve an outcome, for exampleto achieve a 30% market share a company implements a marketing planning process. 45. Physical evidence as part of the marketing mix
Physical evidence is the material part of a service. Strictly speaking there are no physical attributes to a service, so a consumer tends to rely on material cues.
The customer reviews models and books a test-drive with her or his local dealer. He or she decides to buy the car and arranges finance. The car is then delivered from the factory, and returns every year for its annual service. Then after three years, the customer decides to trade in his or her car, and the cycle begins again. The longer-term life cycle is simply the shorter-term life cycles viewed consecutively.
3. Customer extensionOur customers are regularly returning to purchase from us. We introduce products and services to our loyal customers that may not wholly relate to their original purchase. These are additional, supplementary purchases. Of course once our loyal customers have purchased them, our goal is to retain them as customers for the extended products or services. GrowthThrough market orientation, innovative IT and value creation we aim to increase the number of customers that purchase additional or supplementary products and services. 4. Marketing Orientationmeans that the wholes organisation is focused upon the needs of customers. Customer needs are addressed by the Three Levels of a Product whereby the organisations not only supplies the actual, tangible product, but also the core product and its benefit, and also the augmented product such as a warranty and customer service. Marketing orientation will focus upon the needs of consumers for all three levels of a product. (N.B. market orientation and marketing orientation are not the same).
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5. Value Creationcentres on the generation of shareholder value based upon the satisfaction of customer needs (as with marketing orientation) and the delivery of a sustainable competitive advantage. 6. innovative iTis exactly thatInformation Technology must be up-to-date. It should be efficient, speedy and focus upon the needs of customers. Whilst IT and/or software are not the entire story for CRM, it is vital to its success. CRM software collects data on consumers and their transactions. Huge databases store data on individuals and groups of individuals. In some ways, CRM means that an organisation is dealing with a segment of one person, since every consumer displays different purchasing habits and preferences. Organisations will track individuals, and try to market products and services to them based upon similar buyer behaviour seen in other individuals (e.g. When Amazon tells you that customers that viewed/bought the same product as you, also bought another product). CRM is a term that is often referred to in marketing. However, there is no complete agreement upon a single definition. This is because CRM can be considered from a number of perspectives. In summary, the three perspectives are:
Products tend to be fairly complex (e.g. financial services or new cars). There is some contact between buyer and seller after the sale so that an ongoing relationship is built. Client/prospects need specific information. The purchase tends to involve large sums of money.
50. Personal selling involves a selling process Is summarised in the following Five Stage Personal Selling Process. The five stages are:
1. Prospecting. 2. Making first contact. 3. The sales call. 4. Objection handling. 5. Closing the sale.
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short Questions
1. Above the line:
Above the Line is the term commonly used for advertising for which a payment is made and for which commission is paid to the advertising agency. Methods of above the line advertising include television and radio, magazines, newspapers and Internet.
3. Added value:
Added value refers to the increase in worth of a product or service as a result of a particular activity. In the context of marketing, the added value is provided by features and benefits over and above those representing the core product.
4. Advertising:
Advertising is any paid form of non-personal presentation and promotion of ideas, goods and services through mass media such as newspapers, magazines, television or radio by an identified sponsor.
5. Advertising budget
The total amount of money that a marketer allocates for advertising over a period of time
6. After-sales service
The services received after the original goods or services have been paid for. Often this service is provided as part of a warranty or guarantee scheme.
7. Agent
Part of the distribution channel. An agent is effectively a wholesaler who represents buyers and sellers on a relatively permanent basis, performs only a few functions and does not take title to goods
8. Ambush marketing
A deliberate attempt by a business or brand to associate itself with an event (often a sporting event) in order to gain some of the benefits associated with being an official sponsor without incurring the costs of sponsorship. For example by advertising during television coverage of the event.
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9.
Ansoff matrix
A model used in strategic marketing planning. The Ansoff Product/Market matrix model links marketing strategy with the general strategic direction of a business. It maps four potential product-market strategies - e.g. market penetration, product development, market development and diversification - on a matrix showing new versus existing products along one axis and new versus existing markets along the other.
13. Benchmarking:
The process of comparing the products and services of a business against those of competitors in a market, or leading businesses in other markets, in order to find ways of improving quality and performance.
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16. Brand
A brand is the specific type of the product form. A brand represented by a brand name, symbol, design, logo, packaging is the identity of a particular product form that customers recognise as being different from others.
23. Breakeven
Breakeven is achieved when total contribution is equal to total fixed costs. Addition contribution earned after this point becomes profit.
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Contribution
Contribution per unit can be defined as selling price less variable costs. Overall contribution is the difference between total sales revenues and variable costs.
41. Cross-selling
Using a customers buying history to select them for related offers, e.g.a car alarm for new car buyers.
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50. Differentiation
A marketing strategy aimed at ensuring that products and services have a unique element to allow them to stand out from the rest.
55. Distributors
Companies that buy and sell on their own account but tend to deal in the goods of only certain specified manufacturers.
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56. Divest
A strategy based on the Boston Matrix. Here the company can divest the SBU by phasing it out or selling it - in order to use the resources elsewhere (e.g. investing in the more promising question marks).
57. Dogs
A term used in the Boston Group Matrix. Unsurprisingly, the term dogs refers to businesses or products that have low relative share in unattractive, low-growth markets. Dogs may generate enough cash to break-even, but they are rarely, if ever, worth investing in.
60. e-commerce
The use of technologies such as the Internet, electronic data exchange and industry extranets to streamline business transactions.
61. endorsement
The promotion of some kind of product recommendation or affirmation, usually from a celebrity, implying to the potential customer that a product is good.
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68. Forecasting
The process of estimating future demand by anticipating what buyers are likely to do under a given set of marketing conditions (e.g. economic confidence, disposal income, pricing levels).
69. Franchising
The selling of a license by the owner (franchisor) to a third party (franchisee) permitting the sale of a product or service for a specified period. In business format franchising the agreement will involve a common brand and marketing format. Many service businesses are operated under franchise include well-known brands such as Burger King, KFC and KwikPrint.
75. Harvest
A strategy based on the Boston Matrix. Here the company reduces the amount of investment in order to maximize the short-term cash flows and profits from the SBU. This may have the effect of turning Stars into Cash Cows.
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76. Hold
A strategy based on the Boston Matrix. Here the company invests just enough to keep the SBU in its present position.
82. Influencer
A person in a group buying situation (e.g. a family) who exerts significant influence in the final buying decision.
83. initiator
A person in a group buying situation (e.g. a family) who first suggests buying a particular product or service.
84. innovators
Innovators are those who adopt new products first. They are usually relatively young, lively, intelligent, socially and geographically mobile. They are often of a high socioeconomic group (ABs).
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88. involvement
The level of interest, emotion and activity which the consumer is prepared to expend on a particular purchase.
89. Labeling
Packaging information that can be used for a variety of promotional, informational and legal purposes.
90. Laggards
The group of consumers who are typically last to buy a new product.
92. Lifestyle
Lifestyle is a persons pattern of living as expressed in his or her activities, interests and opinions.
94. Logo
A graphic, usually consisting of a symbol and/or group of letters that identifies a company or brand.
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names, manufacturers can gain widespread distribution (for example by retailers who want to sell the brand) and build customer.
99. Market
A market is the demand for a particular product or service, often measured by sales during a specified period.
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of-the-road path. Businesses that try to be good at everything are rarely particularly good at anything.
111. Marketing
The all-embracing function that links the business with customer needs and wants in order to get the right product to the right place at the right time.
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119. Mission
A mission describes the organizations basic function in society, in terms of the products and services it produces for its customers.
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126. objectives
Measurable aims of a business set for a given period (e.g. marketing objectives for the next year).
OCCASION
127. segmentation
A basis of segmenting a market based on occasions when buyers get the idea to make a purchase, actually buy, or use a purchased item.
128. opportunities
Opportunities are any feature of the external environment which creates conditions that a business can exploit to its advantage. If the business is successful in exploiting opportunities, then it will be better placed to achieve its objectives.
130. Packaging
The activities of designing and producing the container or wrapper for a product.
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136. Positioning
Positioning is how a product appears in relation to other products in the market.
139. Price
The price of a product may be seen as a financial expression of the value of that product.
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146. Product
A product is defined as anything that is capable of satisfying customer needs.
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154. Promotion
One of the four Ps of the marketing mix. Promotion is all about businesses communicating with customers.
158. Publicity
Promotional activities designed to promote a business and its products by obtaining media coverage not paid for by the business.
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166. Threats
Threats are any aspect of the external environment which cause problems and which may prevent achievement of objectives. Almost by definition, what presents a threat to one business offers an opportunity to other businesses.
167. Trademark
Legal designation indicating that the owner has exclusive use of a brand.
170. Vision
The long-term aims and aspirations of the company for itself.
171. Weaknesses
Weaknesses are any aspect of the business which may prevent the business from achieving its objectives. Weaknesses are a source of competitive disadvantage. Management should seek ways to reduce or eliminate weaknesses before they are exploited further by the competition.
172. Wholesaler
Often part of the distribution channel; involves the selling of goods in large quantities to be retailed by others quantify, such as subjective opinions and value judgments, typically unearthed during interviews or discussion groups.
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176. Questionnaire
Base document for research purposes, providing the questions and structure for an interview or selfcompletion and providing space for respondents answers.
179. retailers
Retailers operate outlets that trade directly with household customers.
182. sample
A small group of items selected from a larger group to represent the characteristics of the larger group. Samples are often used in marketing research because it is not feasible to interview every member of a particular market; however, conclusions about a market drawn from a sample always contain a sampling error and must be used with caution. The larger the sample, in general, the more accurate will be the conclusions drawn from it.
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187. sponsorship
Supporting an event, activity or organization by providing money or other resources that is of value to the sponsored event. This is usually in return for advertising space at the event or as part of the publicity for the event.
188. star
A term used in the Boston Group Matrix. Stars are high growth businesses or products competing in markets where they are relatively strong compared with the competition. Often they need heavy investment to sustain their growth. Eventually their growth will slow and, assuming they maintain their relative market share, will become cash cows.
189. strapline
A slogan often used in conjunction with a brand name, advertising and other promotional methods (e.g. Guinness is good for you).
192. strengths are a particular skill, resource or distinctive competence which the business
possesses and which will enable it to achieve its stated objectives. Strengths are a source of competitive advantage. As such they should be protected and built upon.
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194. Telemarketing
Telemarketing (sometimes also referred to as telesales) is a method of direct marketing in which the telephone is used to contact potential customers in order to reduce the time spent in making personal visits. Traditionally, products such as double glazing and central heating have been marketed using this technique.
197. Advertising agency young and rubicam (y&r) developed a model of brand equity
called Brand Asset Valuator (BAV). What is the intent of the BAV model? List and briefly characterize the five key components (pillars) of brand equity.
Answer: The BAV model is based on research of almost 500,000 consumers in 44 countries. BAV provides comparative measures of the brand equity of thousands of brands across hundreds of different categories. There are five key componentsor pillarsof brand equity. These pillars are: (1) differentiationmeasures the degree to which a brand is seen as different from others; (2) energy measures the brands sense of momentum; (3) relevancemeasures the breadth of a brands appeal; (4) esteemmeasures how well the brand is regarded and respected; and (5) knowledgemeasures how familiar and intimate consumers are with the brand. For additional information on the BAV model, see chapter section.
198. The creation of significant brand equity involves reaching the top or pinnacle of the brand pyramid. List and briefly characterize the six components of the brand resonance pyramid.
Answer: The six components of the brand resonance pyramid include brand: (1) saliencerelates to how often and easily the brand is evoked under various purchase or consumption situations; (2) performancerelates to how the product or service meets customers functional needs; (3) imagery deals with the extrinsic properties of the product or service, including the ways in which the brand attempts to meet the customers psychological or social needs; (4) judgmentsfocus on consumers own personal opinions and evaluations; (5) feelingscustomers emotional responses and reactions with respect to the brand; and, (6) resonancerefers to the nature of the relationship that customers have with the brand and the extent to which customers feel that they are in sync with the brand. For additional information on the brand resonance pyramid, see chapter material.
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199. There are six criteria used in creating brand elements. The first three can be characterized as brand building in terms of how brand equity can be built through the judicious choice of a brand element. The latter three are more defensive and are concerned with how the brand equity contained in the brand element can be leveraged and preserved in the face of different opportunities and constraints. List and briefly characterize the six criteria.
Answer: The six elements are: (1) memorable, (2) meaningful, (3) likable, (4) transferable, (5) adaptable, and (6) protectible. For characterizations, see chapter materials.
201. identify and describe the four value stages of the brand value chain.
Answer: The brand value creation process begins when the firm invests in a marketing program targeting actual or potential customers. Next, customers mindsets are assumed to change as a result of the marketing program. This change affects the way the brand performs in the marketplace through the collective impact of individual customers deciding how much to purchase and when, how much theyll pay, and so on. Finally, the investment community considers market performance and other factors such as replacement cost and purchase price in acquisitions to arrive at an assessment of shareholder value in general and the value of a brand in particular.
202. The decision as to how to brand new products is especially critical. When a firm introduces a new product, it has three main choices. What are those choices?
Answer: The firm can: (1) develop new brand elements for the new product, (2) apply some of its existing brand elements, or (3) use a combination of new and existing brand elements.
203. in what ways can brand extensions improve the odds of new-product success?
Answer: Consumers make inferences and form expectations about the composition and performance of a new product based on what they already know about the parent brand and the extent to which they feel this information is relevant to the new product. By setting up positive expectations, extensions reduce risk and may make it easier to convince retailers to stock and promote a brand extension because of increased customer demand. From a marketing communications perspective, an introductory campaign for an extension doesnt need to create awareness of both the brand and the new product, but instead can concentrate on the new product itself.
204. There are a number of specific roles brands can play as part of a brand portfolio. List and briefly describe the four roles described in the text.
Answer: The four roles are: (1) flankersor fighting brands. These are positioned with respect to competitors brands so that more important (and more profitable) flagship brands can retain their desired positioning; (2) cash cowssome brands may be kept around despite dwindling sales because
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they still manage to hold on to a sufficient number of customers and maintain their profitability with virtually no marketing support. These cash cow brands can be effectively milked by capitalizing on their reservoir of existing brand equity; (3) low-end entry-levelthe role of the relatively low-priced brand in the portfolio often may be to attract customers to the brand franchise. Retailers like to feature these traffic builders because they are able to trade up customers to a higher-priced brand; and, (4) high-end prestigethe role of a high-priced brand in the brand family often is to add prestige and credibility to the entire portfolio. For additional information on the four roles, see chapter materials.
205. Assume you are a marketing manager that wishes pursue a process of strategic brand management. List the four main steps that you would most likely go through to accomplish this task.
Answer: The steps would be: (1) identifying and establishing brand positioning; (2) planning and implementing brand marketing; (3) measuring and interpreting brand performance; and, (4) growing and sustaining brand value.
206. How does the American Marketing Association define the term brand?
Answer: A brand, according to the AMA, is a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors.
207. What valuable functions can brands perform for the firm?
Answer: Brands simplify product handling and tracing and help to organize inventory and accounting records. They also offer the firm legal protection for unique features or aspects of the product. Brand loyalty provides predictability and security of demand for the firm, and it creates barriers to entry that make it difficult for other firms to enter the market. Loyalty can also translate into customer willingness to pay higher prices.
208. your company desires to have positive customer-based brand equity. What has to occur for this to happen?
Answer: A brand is said to have positive customer-based brand equity when consumers react more favorably to a product and the way it is marketed when the brand is identified as compared to when it is not.
209. Volvo has a strong brand association with respect to brand knowledge when consumers perceive it as a very safe care (safety). explain the concept of brand knowledge.
Answer: Brand knowledge consists of all the thoughts, feelings, images, experiences, beliefs, and so on that become associated with the brand. In particular, brands must create strong, favorable, unique brand associations with customers.
210. List five advantages shared by other strong brands that you will most likely need to emulate to accomplish this objective.
Answer: Strong brands have the following advantages: (1) improved perceptions of product performance; (2) greater loyalty; (3) less vulnerability to competitive marketing actions; (4) less
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vulnerability to marketing crises; (5) larger margins; (6) more inelastic consumer response to price increases; (7) more elastic consumer response to price decreases; (8) greater trade cooperation and support; (9) increased marketing communications effectiveness; (10) possible licensing opportunities; and, (11) additional brand extension opportunities. Students are to pick five advantages.
217. Customer
The actual or prospective purchaser of products or services. The library user is the librarys customer.
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218. Demarketing
The process of reducing the demand for a product--or decreasing consumption. For example, the library discontinues offering income tax assistance and forms.
222. Point-of-Purchase
Promotional materials placed at the contact sales point designed to attract user interest or call attention to a special offer.
223. Product
A bundle of attributes or features, functions, benefits and uses capable of exchange, usually in tangible or intangible forms. The librarys products include materials to use, questions answered, story hours, online searching, etc.
226. reach
The number of people or households exposed to a particular advertising media or media schedule during a specified time.
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228. self-concept
The ideas, attitudes, and perceptions people have about themselves.
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