Definition of Marketing

the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.
Proses perencanaan dan melaksanakan bayangan pengertian, Menetapkan harga, Promosi, Dan distribusi ide, Barang, Dan pelayanan-pelayanan membuat penukaran yang memuaskan sendiri dan sasaran hasil organisatoris.

 E.g. Vitasoy

Exchange a process by which two or more persons give and receive something of value.
Perubahan Proses dengan dua atau lebih orang memberi dan menerima sesuatu berharga.

The Marketing Concept Focus on the Customer

Market focus
Customer orientation Co-ordinated marketing Profit seeking

Drawbacks of Marketing Concept

ignores public

influences values & ideas

Recent Development
-- Societal Marketing Concept
Concerns public welfare
and social responsibility e.g. CLP

The role of Marketing

Marketing Analysis
Marketing Planning Marketing Implementation

Marketing Control

Marketing Research
Gathering, recording and analysis of data to solve a specific problem that is too important to be answered by guessing
an informational input to decisions

What M.R. can tell ?

How satisfied the consumers are
How products are perceived Evaluate the sales potential Determine the effectiveness of ad Predict the impact of price changes

The Marketing Research Process

Defining the Problem & Research Objectives
Developing the Research Plan Implementing the Research Plan

Interpreting and Reporting the Findings

1. Defining the problem and research objectives

to find out the real problem but not the
symptom set the research objectives research approaches:
exploratory

descriptive
causal

Examples
Exploratory Research Our sales are declining and we dont know why. Would people be interested in our new-product idea? Descriptive Research Causal Research What kind of people are buying our products? What features do buyers prefer in our product? Will buyers purchase more of our product in a new package Which of the two advertising campaigns is more effective?

2. Developing research plan

Determine specific information needs
Source of information secondary data
Internal External

primary data

Benefits and Limitations of Secondary Data

Benefits Low cost Less effort Less time Sometimes more accurate Some information only from secondary sources Limitations Collected for other purpose No control over data collection Potential accuracy problem May not be reported in required form May be outdated May not meet requirements A number of assumptions made

 Planning primary data collection

research approach

contact methods
sampling plan research instruments

Research approach
Observational research
survey research focus group

experimental research

Contact methods
Telephone survey
mail questionnaires personal interviews

Sampling plan
sampling unit

sampling size
sampling procedure

Sampling Techniques
Probability Sampling

All population members have a known probability of being in the sample

Simple Random Sampling

Each population member, and each possible sample, has equal probability of being selected Stratified Sampling
The chosen sample is forced to contain units from each of the segments or strata of the population

Sampling Techniques (Contd.)

Cluster Sampling
Involves dividing population into subgroups Random sample of subgroups/clusters is selected and all members of subgroups are interviewed Very cost effective Useful when subgroups can be identified that are representative of entire population

Research instrument
The most common instrument is questionnaire
what questions to ask

question structure
wording of question

order of question

Implementing the research plan

collecting and
analyzing data

Interpreting and reporting the finding

Interpret the findings, draw conclusions and report to management
the manager will utilize these findings to make decisions

Consumer behaviour
refers to the buying behaviour of final consumers
it includes the analysis of factors that influences purchase decisions and product use

Definition
Consumer behaviour studies how individuals, groups,and organizations select, buy, use, and dispose of goods, services, ideas,or experiences to satisfy their needs and desires.

Consumer Behaviour
Marketing and other stimuli Buyers black box Buyers response

External factors
1. Culture

2.

Social factor
- reference groups

3.

Family

4.

Salesperson

5.

Advertising

e.g. Fancl

6.

Situation

Internal factors
1. Perception
the process by which we select organize and interpret these stimuli into a meaningful and consistent picture

2. Motivation
to fulfill some kind of need
Self-actualization Needs

Esteem Needs Esteem Needs

Social Needs Security Needs Physiological Needs

3. Learning
creates changes in behaviour through experience and practice

4. Attitude
Consistently favourable or unfavourable evaluation, feelings and tendencies toward an idea.

5. Personality
refers to the unique psychological characteristics that lead to relatively consistent and lasting responses

E.g. Vita Distilled Water

6. Demographic factors
such as age, sex, income, education, occupation,.

Industrial Buying behaviour

Industrial market
Consists of all the individuals and
organizations acquiring goods and services

that enter into the production of other

products and services that are sold, rented, or supplied to others

Types of buying situations

Straight rebuy
modified rebuy new task buying

Industrial buying process

Recognise the problem
determine product needs and describe product specifications search for suppliers assess and select suppliers evaluate overall performance

Participants in the industrial buying process

Users
influencers

buyers
deciders

gatekeepers

Factors affecting industrial buying behaviour: External factors

Level of demand economic outlook budget constraints supply conditions political/legal and competitive environmental changes rate of technological change

: internal factors
Organizational influences
interpersonal influences

Differences between consumer market and industrial market

Buying motive: Industrial market Businesses do not buy products for final consumption. Instead, they make purchases to be used directly or indirectly in meeting the needs of final consumers. Consumer market For direct consumption

Differences between consumer market and industrial market

Size of purchase: Industrial market Consumer market

Tend to be larger

Tend to be smaller

Differences between consumer market and industrial market

Frequency of purchase:
Industrial market Less frequent Consumer market More frequent

Differences between consumer market and industrial market

Buyer-seller relationship:
Industrial market Consumer market

Stable and long term Businesses that relationship with seller produce products for sale to final consumers often have little contact with customers

Differences between consumer market and industrial market

Product:
Industrial market Consumer market

More complex, customized; product support is critical.

Less complex, standardized; product support is important

Differences between consumer market and industrial market

Price:
Industrial market Consumer market

Competitive bidding and negotiation; list prices on standard products

List prices

Differences between consumer market and industrial market

Distribution:
Industrial market More direct (shorter) Consumer market Less direct (longer)

Differences between consumer market and industrial market

Promotion:
Industrial market Emphasis on personal selling Consumer market Emphasis on advertising

Marketing strategy
the plan of action for accomplishing the marketing objectives consists of
specific strategies for target market marketing mix marketing expenditure level

Analyze and select target market

Market the set of all actual and potential buyers of a product

 steps of selecting target market market segmentation market targeting market positioning

Step 1

Marketing Segmentation

Market segmentation
the act of dividing large, heterogeneous (dissimilar) markets into smaller, homogeneous (similar) submarkets.

Advantages of segmentation
Precise market definition
better analysis of competition

rapid response to changing market needs

effective resources allocation

effective strategic planning

Dimensions for segmenting consumer markets

Geographic segmentation
dividing the market into different geographical units.

Demographic segmentation
dividing the market into groups based on variables like age, sex, family size, family life cycle, income, occupation, education, religion, race, nationality,
popular because of
consumer needs vary closely with demographic variables easier to measure

Psychographic segmentation
based on social class, lifestyle, or personality characteristics

Segmentation by benefits
base on what a product will do rather than consumer characteristics

Criteria for effective segmentation

Substantial enough to serve
Accessible by marketing means

Differentiable:
conceptually distinguishable and responding

differently

 Actionable:
effective programs can be designed for

attracting target customers

Measurable:
size of market segment, purchasing
power and profile of target customers

Step 2

Market Targeting

 to reveal the firm market-segment opportunities to evaluate the various segments

segment size and growth segment structural attractiveness company objectives and resources

Undifferentiated marketing
A firm decides to ignore market segment differences and go after the whole market with one offer. E.g. McDonald

Differentiated marketing
A firm decides to target several market segments and design separate offers for each
E.g. Giordano: men, ladies

Concentrated marketing
A firm goes after a large share of one or a few sub-markets.
Selected segments Specific products Specific markets

Step 3

Market Positioning

Market positioning
to arrange for a product to occupy a clear, distinctive and desirable image relative to competing products in the minds of target consumers.

Purpose: to reinforce or develop an image concerns a product in customer mind

Ways of positioning
Product features
product benefits associating the product with a use or application user category

Steps of positioning
1. Identifying a set of possible competitive advantages Selecting the right competitive advantages Communicating and delivering the chosen position to the market

2.

3.

Marketing Mix
the set of controllable marketing variables that the firm blends to produce the response it wants in the target market
4 Ps
product price place promotion

 A product is anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or need
3 levels of product
core product actual product augmented product

Product Classification
Convenience goods
Shopping goods Specialty goods Unsought goods

Classification of consumer goods

Individual product decisions

Product attribute decisions
Brand decisions Packaging decisions Product-Support decisions

Product Line Decisions

A product line is a group of products that
are related in function, customer-purchase needs, or distribution channels.

Product mix decisions

the set of all product lines and items that a particular seller offers for sale 4 dimensions
width length depth consistency

How new is new?

New to the world New to the firm Product line extensions Product improvement Product modification

Why does a company need new products? Obtain greater profits/ROI Capture larger market share Meet customers changing needs & tastes Shorter product life cycle Build competitive advantages Planned obsolescence

New product development

Steps: Product idea generation Product idea screening and product concept development Business analysis Product testing Market testing Commercialization

Product life cycle (PLC)

the course of a products sales and profit over its lifetime 4 stages:
introduction growth maturity decline

Sales and profit

Sales

Profit Introduction Growth Maturity Decline

Time

Introduction Stage
slow sales growth
profit are nonexistent

high promotion spending

a few competitors

usually focus on high-income groups

Growth Stage
rapid market acceptance
new competitors will enter

introduce new product features

market will expand

profit increases

Maturity Stage
slowdown in sales
competitors begin marking down prices,. to find better versions of the product drop in profit only well-established competitors

Decline Stage
sales fall off and profits drop

some firms withdraw from the market

Summary of Product Life-Cycle Characteristics, Objectives, and Strategies

INTRODUCTION Characteristics Sales Costs Low sales High cost per customer Profits Competitors Negative Few Rapidly rising sales Average cost per customer Rising profits Growing number Peak sales Low cost per customer High profits Stable number, beginning to decline Marketing Objectives Create product awareness and trial Maximize market share Maximize profit while Reduce expenditure defending market share Strategies Product Strategy Offer a basic product Offer product extensions, service, warranty Pricing Strategy High price, unique product/ cover introduction costs Promotion Strategy Mount sales Appeal to mass Emphasize brand Lower price with passage of time Price at or below competitors Set price to stay profitable or decrease to liquidate Reinforce loyal Diversify brand and models Phase out weak items and milk the brand Declining sales Low cost per customer Declining profits Declining number GROWTH MATURITY DECLINE

promotion for product market; emphasize awareness features, brand

differences, benefits, customers; reduce loyalty promotion expenditures

Place Strategy

Distribute through selective outlets

Build intensive network of outlets

Enlarge distribution network

Be selective in distribution; trim away unprofitable outlets

Ways to extend PLC

To increase the frequency of use
to add new user to find new uses

to change package size, label, or product quality

Factors influencing pricing decisions ---- Internal Factors

1. Business and marketing objectives

pricing objectives derive directly from company objectives

2.

Marketing mix strategy

must coordinate with product, design, distribution and promotion decisions

3.

Costs

set the floor for the price

External factors
1. The market and demand

Pricing in different types of market consumer perception of price and value

2.

Competitors prices and offers

3.

Other external factors

economic conditions reseller conditions

Government

Pricing Objectives
Profit maximizing objective
Market share objective

Competition objective
Social objective

Image objective

General Pricing Approaches

Cost-based approach
Buyer-based approach Competition-based approach

Pricing Strategies for New Products

Market-skimming pricing

Penetration pricing

Price-adjustment strategies
Discount pricing and allowances
cash discounts quantity discounts functional discounts seasonal discounts trade-in allowances promotional allowances

 Discriminatory pricing
customer-segment pricing product-form pricing location pricing time pricing

 Psychological pricing

Promotional pricing
loss leaders special event pricing cash rebates

Promotion tools
advertising
sales promotion public relations personal selling

Setting the promotion budget

Affordable method
ignores the effect of promotion on sales

Percentage-of-sales method
wrongly view sales as the cause of promotion rather than as the result

Competitive-Parity method

Objective-and-task method

Five important decisions

1. Setting objectives
to inform, persuade, or remind

2. Setting the advertising budget

stage in the PLC market share competition advertising frequency product differentiation

3. Creating the advertising message

message generation message evaluation message execution

4. Selecting advertising media

reach, frequency, impact

media types
media vehicles

media timing

5. Advertising evaluation
communication effects sales effects

Sales promotion
A wide variety of short-term incentive tools
coupons premiums contests buying allowances

to stimulate consumers, the trade partners, and the companys own salesforce

Purposes of sales promotion

to stimulate consumer trials, to reward loyal customers, to increase repurchase rate, to cement long-term relationship with retailers,
used together with advertising or personal selling

Steps of sales promotion

Setting sales-promotion objectives
selecting sales-promotion tools pretesting and implementing evaluating

Public relations
Building good relations with the companys various publics obtaining favorable publicity building up good corporate image
handling or heading off unfavourable rumors, stories and events

Public relations tools

Create news speeches special events written materials audiovisual materials corporate identity materials contributing money and time to publicservice activities

Major public relations decisions

Setting public relations objectives
choosing public relations messages and vehicles implementing the public relations plan evaluating public relations results

Steps of sales management

Setting salesforce objectives designing salesforce strategy structure, size and compensation recruiting and selecting training supervising evaluating

Personal Selling Process

Prospecting
Preapproach Approaching the prospect Making the presentation Handling Objections

Close the sale

Follow up

Factors affecting the promotion mix

Type of product/market
push vs. pull strategy buyer readiness state

PLC stage

 The role of distribution is getting a product to its target market. Channels of distribution: the routes followed by products as they change ownership in the movement from production to consumption

Distribution channel functions

Information
promotion contact matching

Negotiation
physical distribution financing risk taking

Designing distribution channel

Selecting the proper type of distribution channel selecting the types of middlemen
determining the intensity of distribution

Meaning of logistics
the movement of all materials :
raw materials : from the sources to the processing point finished goods : from the plant to ultimate customers

 concerns with the management of physical flow

Major logistics activities

Transportation Protective packaging

inventory maintenance acquisition order processing warehousing materials handling product scheduling information maintenance

Definition
Service is an activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product Diamond medical diagnosis

The Servuction system

5 elements influence the service: Organization and system (invisible) Environment (visible) Contact personnel / service provider Customer A Customer B

The Servuction System

Characteristics of service
Intangibility
inseparability

heterogeneity
perishability
fluctuating demand

Characteristics of Services differing from Goods

Goods tangible Services intangible Resulting Implications Services cannot be inventoried, patented, readily displayed/ communicated Marketing Strategies Tangibilize the intangible The Peninsula

Characteristics of Services differing from Goods

Goods Services Resulting Implications Mkt Strategies
Service delivery & customer satisfaction depend on employee actions Service quality depends on many uncontrollable factors No sure knowledge that service delivered matches what was planned & promoted HRM mgt
recruit Train

standardized

heterogeneous

Process standardization empowerment Service recovery

Characteristics of Services differing from Goods

Goods
Production separate from consumption

Services
Inseparability of production & consumption (interaction)

Resulting Implications
Customers participate in & affect the transaction Customers affect each other Employees affect the service outcome Decentralize may be essential Mass production is difficult

Mkt Strategies
isolate technical core decrease contact level Increase customer participation

Characteristics of Services differing from Goods

Goods Services Resulting Implications Mkt Strategies

Nonperishable

Perishable -fluctuate demand

Difficult to synchronize supply & demand with service Services cannot be returned / resold Services cannot be inventoried

Capacity mgt Queuing mgt

Marketing Mix for Services

+ Product Price Promotion Place
People Process Physical evidence

Singapore air

Product
Tangiblize the intangible core and supplementary services customization vs. standardization

the service mix

Price
Customer being inseparable in the process, outlay by customers include:
Time Physical effort Psychological burdens (mental effort, negative feelings) Negative sensory burdens (unpleasant sensations affecting any of the 5 senses)

Price
Good understanding of the costs is needed as decrease of above burdens justify higher pricing Difficult to define a unit of service, considering:
Visible vs. invisible Difference in speed Direct contact vs. impersonal channel

Promotion
Different from advertising for goods

Intangible nature
vivid information that produce a clear impression on the senses, e.g. symbols Services are harder for customer to evaluate Use tangible cues, e.g. high calibre personnel (DHL)

Strong organizational image Use personal information source, e.g. celebrity endorsements Engaging in post-purchase communication

Place
Identify core services Reduce contact of low contact element e.g. download application forms Use of technology to create new channels:
e.g. Octopus for ticketing, online shopping

Convenience Number of outlets Location scheduling

Fluctuating Demand
Supply side Cross training Use part time staff Rent or share facilities & equipment Schedule down time during period of low capacity (take vacation) Extra service hours Use technology Use price Demand side Price discrimination Reservation Overbook Queuing (make the waiting more tolerable) Shift demand Change the salespersons assignment Create promotional events

People
Importance of customer contact personnel
Internal marketing (customer focus philosophy, bonus, awards, recognition as incentive)

Ritzcarlton

Internal Marketing

Process
Customer involvement in production
Educate customers in using technology or selfservice

Develop service oriented internal process Logistic support Empowerment of staff for service recovery

Physical Evidence
Intangible nature makes service difficult to evaluate Communicate through corporate image, word of mouth, pricing physical evidence, warranty, awards
ritzcarlton

Judge by process, post-purchase information search needs re-assurance

Meaning of CRM
the process of creating,
maintaining, and enhancing strong, valueladen relationships with customers and other

stakeholders.

Rationale behind CRM

to retain current customers vs. to attract new customers new Marketing view: the science and art of finding, retaining and growing profitable customers

 challenges changing demographics more sophisticated competitors overcapacity

customer lifetime value

Key concepts in relationship building

Customer satisfaction perceived performance > expectations Customer loyalty and retention create emotional affinity, not just rational preference

share of customer cross-selling

Tools to build lasting customers

Frequency marketing programs
affinity program

co-marketing and co-branding

customisation and prompt response

create long term contract

 Frequency marketing programs

 affinity program

 co-marketing

 Co-marketing

http://www4.mercedes-benz.com/amgiwc/index.html?loc=en

 Co-branding

Sony Ericsson Mobile Communications was established in 2001 by telecommunications leader Ericsson and consumer electronics powerhouse Sony Corporation. The company is owned equally by Ericsson and Sony.

Meaning of consumerism

a movement that put pressure on businesses to consider consumer needs and interests consumer rights
right to be informed right to be heard right to safety right to choose

Why consumers need protection?

Manufacturer may be unfair to consumers
consumers may be unable to judge the quality insufficient information to evaluate service advertisements are exaggerating concern about health

Consumer protection in Hong Kong

Legislation

Consumer Council

Responses of businesses to consumerism

Provide more and better information
improve product safety quicker response to consumer complaints

provide customers with a wide range of products and services

International marketing
The process of focusing the resources and objectives on global market opportunities

Environmental forces in International Markets

Cultural environment
economic environment political and legal environment

Standardization vs. adaptation

Arguments for standardization
reduce costs moving to a world living style

international brand

Arguments for adaptation

most exported goods needed adaptation

take care of environmental differences

max. sales and profits through customization

favours local management inputs

Methods of entering overseas market

Exporting contract manufacturing licensing franchising joint venture strategic alliance direct investment countertrade

Factors affecting the choice of entry strategy

desired speed
firm expertise costs flexibility resources profit objectives

Marketing in the case of economic downturn

moving down-market
lowering price promoting image of good quality and durable find new markets

This production is sponsored by the

Contents of a Marketing Plan

Situational analysis

Marketing Objectives
Selecting the Target Market

Developing marketing mix

Budget Controls

Product attribute decisions

Product quality
Product features Product design

Brand decisions
To brand or not to brand
Brand sponsor manufacturers brand private brand Licensed brands Co-brands

 Brand equity High level of consumer awareness, loyalty

Lower marketing costs

Consumer expect stores to carry the brand

The company has more bargaining power in channeling

High credibility
Easily launch brand extensions

Powerful brand
Defense against fierce price competition

Brand Strategy / Brand Development

line extensions

brand extensions
Multi-brands new brands

Product Existing New

Brand

Existing Line Extension

New MultiBrands

Brand Extension
New Brands

 Brand Positioning Attributes Benefits Beliefs /values

Create surprise, passion excitement

Brand Re-positioning
Competitors close positioning cutting market share Customers wants may shift Technology
www.euyansang.com

Brand Name selection Suggest benefits and qualities

Easy to pronounce, recognize

Distinctive, extendable Capable of registration and legal protection

Packaging decisions
to create benefits: protection, economy,
convenience and promotion Major decisions:
the main functions specific elements of package

selecting the package design

Product-Support Services Decisions

deciding which product-support services
to offer how to deliver the services to customers

Cost-based approach
Cost-plus Pricing
to add a standard mark-up to the cost

Breakeven analysis and Target Profit Pricing

Buyer-based Pricing
base on the products perceived value

Competition-based pricing
Going rate pricing
base on competitors price

Market-skimming pricing
Set an initial high price

after initial sales slow down, it lowers the price to draw in the next price-sensitive layer of customers and so on

Penetration pricing
set an initial low price
seek to generate consumer interest and stimulate trial purchase

Types of distribution channel

1.
producer

customer

2.

manufacturer

retailer

consumer

3.

manufacturer

wholesaler

retailer

consumer

4.

manufacturer agent

wholesaler
retailer consumer

5.

manufacturer
agent retailer consumer

Factors affecting choice of distribution channel

Industrial goods vs. consumer goods
no. of customers

importance of control
characteristics of products services

Determining the types of middlemen

Wholesalers
full-service merchant wholesalers

limited service merchant wholesalers

manufacturer-owned wholesaler agent

Retailers
store retailing nonstore retailing

Factors affecting the choice of middlemen

Manufacturer requirement

costs

Determining the intensity of distribution

Intensive distribution
exclusive distribution selective distribution

Observational Research
Observing relevant people, actions and situations
unwilling or unable to provide

limitations:
feelings, attitudes and motives, or personal behaviour

long-run or infrequent behaviour

Survey
Find out people knowledge, attitude,
preference, or buying behaviour gather descriptive information structure or unstructured

 Flexibility
however: cannot remember privacy time pressure appear to be smart pleasing answer

Focus Groups
Small group of people, led by a moderator
opened discussion of a product/service or buyer behaviour focus on specific problems or market opportunities

Experimental Research
Explain cause-and-effect relationships
between experimental (independent)

variables and dependent variables

Legislation - Ordinances
Weights & Measure

Sale of Goods

Trade Descriptions

Control of Exemption Clauses

Toys & Children Products Safety

Consumer Goods Safety